1998 Legislative Session: 3rd 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, APRIL 21, 1998

Afternoon

Volume 8, Number 22

[ Page 7035 ]

The House met at 2:05 p.m.

Hon. L. Boone: In the gallery today are some important people who met earlier with my staff, and I'd like the House to help me greet them: Peggy Boon -- no relation to myself; Boon without an "e," I might add -- from the Delta Association for Child Development; Cathy Gilbert of Delta School Readiness; Heather Leech of the Surrey Association for Early Childhood Education; and Karen Olive of the Step-by-Step Child Development Society. They are here with 20 other parents and children from the lower mainland to indicate their support for an integrated service delivery model for children with special needs. So would the House please help me welcome them.

Hon. S. Hammell: Hon. Speaker, I'd like to introduce some special guests that have joined me today to launch the awards program and to mark Prevention of Violence Against Women Week. This new awards program will pay tribute to organizations, individuals and businesses across B.C. for their work on prevention of violence against women. Tracy Porteous is with the B.C. Association of Specialized Victim Assistance and Counselling Programs. She is one of my partners. Also with her is Greta Smith, the executive director of the B.C. and Yukon Society of Transition Houses -- another partner.

With them are Kathy Skovgaard and Coreen Douglas, Bruce Brown of the Western Communities RCMP, Mayor Jean Brown of the town of Lake Cowichan, Carole James of the B.C. School Trustees Association, Nancy Poole from the B.C. Centre of Excellence for Women's Health, Janet Rabinovitch from the Prostitute Empowerment Education and Resource Society, and Kirsten Nadiger and Mark Sudeith, the youth delegates to my January symposium on prevention of violence against women. Would the House please make them welcome.

C. Clark: I have three quick sets of introductions to make. The first one is of someone I noticed in the gallery, Ann Wicks, who was recently elected to the Young Liberals executive. I hope the House will make her welcome.

I understand that the mayor of Anmore, which is in my constituency, is also in the precincts -- to speak to the Minister of Environment about the expropriation of land that will be happening as a result of Bill 25. I hope the House will make the mayor of Anmore welcome.

Third, I would like to add my welcome to the parents of special needs children who are here today. We welcomed them in our caucus room earlier, and they met with the Leader of the Opposition. I know the minister hasn't had time to meet with them herself, but she did welcome Karen Olive, who is also from my community. I'll add Joanna Knowles, who is also here from the Step-by-Step Child Development Society, which is facing imminent closure as well. I hope the House will make them welcome.

G. Robertson: In the House today we have Councillor Bill Harrison from Campbell River and also Ken Sumanik from the B.C. Mining Association. Would the House please make them welcome.

L. Stephens: It's a lucky day for me today. I have two more constituents from Langley in the gallery today: Carl and Sherri Kottmeier, a husband who is working in the mining industry and a wife who is concerned about the future of mining in British Columbia. Would the House please make them welcome.

Hon. I. Waddell: We have a number of people from the cooperative housing movement here today in the House: Mark Acheson, who is the president of the Cooperative Housing Federation of British Columbia; Christopher Wilson of the Cooperative Housing Federation of Canada; Merrilee Robson from CHF Canada; Pat Fenner, one of my constituents, from CHFBC; John Overbeck from the Vancouver Island Cooperative Housing Association; and Gary Panagiotidis, president of the Cooperative Housing Federation of British Columbia. Would the House please make these cooperative people welcome.

F. Gingell: I would like to introduce some young people who are in the building today, some special needs children who, because of their needs, are not sitting in the gallery but are in a special viewing room: Maggie, Dorothy, Carl and William Gilbert, children of Cathy; and Tessa, who is the daughter of Kim Spangberg, who is also here in the gallery. I ask you all to please join me in making them most welcome.

J. Weisbeck: It is my pleasure today to introduce a number of students from Camosun College and the University of Victoria student societies. They are here today to meet with me to discuss the current situation in post-secondary education, to give their comments and concerns. Sitting in the gallery are Sonia Bujan Fernandez, Ann Wicks, Larry Lewis, Jason Noble, Kathy Loewen, Hamish McArthur, Chris Gehrig and Derek Madson. Would the House please make them welcome.

The Speaker: I recognize the Minister of Fisheries.

Hon. D. Streifel: Oh, finally.

Interjections.

Hon. D. Streifel: Hon. Speaker, the folks across the way should know that it's poor form to heckle during introductions.

I have the pleasure today to introduce a very, very good friend of mine who is travelling over to Victoria for a few days with her travelling companions, Molly and Mildred. I'd like to introduce to the House my wife Linda. Would the House please make her welcome.

G. Campbell: I'd like to recognize Dan and Rina Berkshire, who are both here from Campbell River -- very active proponents of the mining industry in British Columbia. I hope the House will make them welcome.

Hon. M. Farnworth: In the gallery today we have visiting the consul general of Mexico, Mr. Gabriel Rosales Vega. Would the House please make him welcome.

Hon. J. Pullinger: It's my pleasure today to introduce four groups of people who are here. First of all, I would like to introduce some constituents: Leona and Mike Paton and Alice and David Pearson, who are in the members' gallery. They've come down to see how this Legislature works and have lunch at the Legislature, and I'm delighted they're here.

Secondly, I have an employee from my ministry, Valerie Hollett. Valerie, bless her, has been working in my office to help out for a short time, and I'm very, very happy to have her there. I'm very grateful and also very happy that she's here today. I would ask everyone to make her welcome as well.

[ Page 7036 ]

Thirdly, I have Jean Brown, who is the mayor of the town of Lake Cowichan and a friend, who I'm delighted to see is here with the Minister of Women's Equality. Also here is Kathy Skovgaard, also a friend and the head of WAVAW, Women Against Violence Against Women, in Duncan. Both of them have done a great deal for women and to end violence against women.

Last but not at all least is my executive assistant, Doug Creba, who is sitting in the members' gallery. Would the House please help me make all of these people very welcome indeed.

Hon. J. Kwan: I too would like to ask the House to welcome the mayor of Anmore, whom I will be meeting with later on today. In addition, I'd like to extend a special welcome to Merrilee Robson, who is a strong community activist in our community, especially in the area of women's issues and housing issues. Would the House please make them feel very welcome.

A. Sanders: In the gallery today is Mr. Archie Stroh. He is a constituent and the senior vice-president and general manager of Kal Tire. Would everyone please make him welcome.

G. Hogg: There are a number of persons present today who work with and receive services from the Surrey Association for Early Childhood Education, SAECE. They are here to discuss service delivery to special needs children. I'd like to introduce Heather Leech, Elayne and Leo Brenzinger and their son Alexander, Brian and Trish Ward-Hall and their daughter Alisha, Julie terLaak and her children Anya and Lara, Renee Groome and Colleen Elgood. Would the House please make them welcome.

K. Krueger: In the precincts with us today is city councillor Dr. Russ Gerard, a prominent Rotarian in Kamloops, where he is affectionately known as Dr. Dog. Would the House please make him welcome.

R. Thorpe: Most members of the House will recognize this as . . . .

The Speaker: No props.

[2:15]

R. Thorpe: No props? This is not a prop. It's for the Okanagan Wine Festival, which is held in the spring and in the fall. One of the key volunteers of this very successful event is in the House today, Alison McNeil from Kelowna. I ask the House to please make her feel very welcome.

Hon. A. Petter: In the precincts today is a very lively group of students from Cordova Bay Elementary School in my constituency. They were peppering me with comments and questions on everything from federalism to bicycle trails, so their interests clearly correspond to my own. I ask the House to make them very welcome.

Hon. D. Zirnhelt: Visiting us today in the precincts from the town of Williams Lake is the manager of Gibraltar Mines, a very important employer in the Cariboo, Tom Milner. Please make him welcome.

P. Nettleton: Please join me in welcoming someone who is no stranger to this House, a great mayor from a great town: Frank Read from Vanderhoof.

F. Randall: In the gallery I notice Paul Stevenson. He is here with the mining group, and he's with Booker Gold. Also I notice Myrna Kitchen, who I spent a lot of time with last year arranging the first Mining Day in British Columbia. I know that she's leaving the Mining Association and going to work with Greystone, but I just want to acknowledge the excellent job that she's done with the association. She's a great organizer. Would the House please make them welcome.

Oral Questions

APPOINTMENT OF COMMISSIONER OF INQUIRY

INTO LEAKY CONDOS

G. Farrell-Collins: My question is to the Minister of Municipal Affairs. Last night, on BCTV, a woman by the name of Dawn Schumaker raised serious concerns about a substandard building that she and her child live in. It turns out that this building was constructed through the British Columbia government's low-cost housing program at the time when Dave Barrett was the Premier of British Columbia.

This is one citizen who made it clear that she would be uncomfortable making a presentation to Dave Barrett as the commissioner looking into the leaky-condo issue, because, in her words, she felt that he had a conflict of interest and may not be willing to come to the conclusions that are necessary. The minister in this House has continually assured us that Mr. Barrett will hear the views independently and that the people will feel comfortable presenting to him. Well, hon. Speaker, here is at least one individual . . .

The Speaker: Hon. member, your question is?

G. Farrell-Collins: . . . who is very uncomfortable. Will the minister admit that Dave Barrett is not suited to do this job because of his political bias, number one, and number two, because of his conflict of interest?

Hon. J. Kwan: I'm very glad that the member opposite raised the issue. In fact, in 1975-76 there were indeed a number of projects developed under a developer called the Dunhill group. That group, under Dave Barrett's, the former Premier's, leadership did a lot of social housing across the province. The project that the hon. member across the floor mentions is in fact a project that was built by Dunhill. The only exception is that shortly after the project was developed, it was sold to a private developer. The private developer then made the project available on a rental basis and then, subsequent to that, sold it off to different people through a strata type of arrangement.

Of course, the important point here is this: of all the projects, the thousands of projects that were developed in that period . . . . I have spoken with the staff of BCHMC. None of the projects which were managed by BCHMC have shown any substantive problems as have been identified by the member opposite with respect to this project.

The Speaker: The Opposition House Leader for the first supplementary.

G. Farrell-Collins: I think the minister highlights the whole issue here, in that it's not just builders; it's not just developers; it's not just management companies; it's not just architects. There's more than enough blame to go around here. The point of the question is this: despite what this minister assured us of earlier, we have an individual who is uncomfort-

[ Page 7037 ]

able presenting her case to Dave Barrett as the commissioner, because she feels that he has a conflict of interest. His government is the government that built that project. She lives in it. She feels uncomfortable because of, in her words, Dave Barrett's conflict of interest and his unwillingness to get to the bottom of it. Will the minister admit that in addition to his bias, Dave Barrett also has a perceived conflict of interest by the very people who may want to present to him?

Interjections.

The Speaker: Order, hon. members.

Hon. J. Kwan: If there is a bias on this issue with the former Premier, the current commissioner, that bias would be that he is intent on getting to the bottom of this issue and that he is biased towards the victims in this issue. He wants to make sure and I want to make sure . . . . My expectation is that the inquiry will come forward with two major focuses. The first is: how are we going to deal with the current problems today, what options are available to the victims who are faced with this problem today, who has what responsibility and to what degree, and how will we make them accountable?

The second piece is future protection for future homeowners. We must do everything we can to prevent this from ever happening again. I have no doubt that Commissioner Barrett will deliver on those expectations.

I wish that the members opposite would stop playing politics and come forward and work with the government and work with the commissioner to put an end to this question.

The Speaker: The Opposition House Leader on his second supplementary.

G. Farrell-Collins: If the government doesn't want to play politics with this, why don't they just act on the recommendations they've had for two and a half years? If the government doesn't want to play politics with this, why did they appoint the most prominent NDP politician to grace British Columbia in the last century?

The Speaker: Hon. member, is that your question?

G. Farrell-Collins: No, hon. Speaker, I'm getting there.

Interjections.

The Speaker: Order, hon. members.

G. Farrell-Collins: I know the Premier is offended that he is not the most prominent NDP politician. He may be the most infamous, but he's certainly not the most famous.

Hon. Speaker, my question is for the Minister of Municipal Affairs. Ms. Schumaker has made her case clear. She does not feel comfortable presenting to this political appointee who is heading up the commission. Will the minister replace him with someone who is independent and prove that she has no intention of playing politics but would rather look for real solutions for the people who have been victimized?

Hon. J. Kwan: Hon. Speaker, I know that the members across the floor know very well the actions that this government has taken on the issue of leaky condos. They know very well that we have been in consultation with industry on this issue for the last number of years. Many recommendations were in fact brought forward by industry, and to date, no agreement has been reached with the industry on these issues. I have appointed an inquiry to get to the bottom of this issue and to prevent this from ever happening again.

More importantly, to date, none of the reports talk about how to deal with the problem now. A lot of people have been saying that maybe we can do this and maybe we can do that. But nobody has sat down to seriously look at this issue, and we must get down to it. That's what the inquiry is intended to do.

NEGOTIATIONS WITH BCTF

G. Wilson: Hon. Speaker, my question is to the Premier. Who authorized Mr. Penikett, Mr. Pratt and Mr. Avison to bypass free collective bargaining and negotiate directly with the B.C. Teachers Federation?

Hon. G. Clark: Nobody bypassed free collective bargaining. BCPSEA, the public sector school trustees component of the bargaining, was bargaining with the B.C. Teachers Federation for over a year. They resolved very few issues, and they had reached an impasse. Both the BCPSEA and the BCTF asked the government to intervene to assist in collective bargaining. That development took place over the last few months. Intensive negotiations took place between the government and the B.C. Teachers Federation to arrive at what is truly a historic agreement -- one that I'm very proud of.

It comes on the heels of increased funding and portable reductions, full funding for enrolment and inflation, new funding for technology and now significant additional resources to reduce class sizes in K-to-3 and hire 2,500 new teachers in the classrooms over the next three years. That is leadership from this government and this caucus to show that education is a priority in working with our teachers to accomplish something for the public good.

The Speaker: The member for Powell River-Sunshine Coast on his first supplementary.

G. Wilson: Hon. Speaker, my question is to the Minister of Education. What the intervention of the Premier's Office has done is demonstrate that the experiment in provincewide collective bargaining by this government has been an unmitigated disaster. Can the Minister of Education tell us two things? How much money has their experiment in provincewide bargaining cost us in an attempt to get a collective agreement that was unable to be achieved by their negotiating process? Secondly, does the collective agreement that is before the teachers today include additional dollars for capital expenditures that will be required as a result of additional teachers?

Hon. P. Ramsey: I'm pleased that this issue has finally been raised in this House. We're now in the twentieth day of this session. Finally we have a question on education, and it doesn't come from the Liberal opposition.

What government's decision to get involved with negotiations with teachers has accomplished is a significant landmark agreement with British Columbia's teachers to put additional resources where they are needed: into the classrooms of this province. All British Columbians who have children in school will benefit from this agreement. It means that whether your child is enrolled in grade 2 in Fort St. John or in Saanich, he or she will have the same class size, the same support from counsellors, the same support from teacher-librarians, the

[ Page 7038 ]

same support from special education resource teachers outside the classroom to make sure that every child gets a good start. That's what this agreement is about, and I think all members of this House should support it.

SPECIAL NEEDS DAY CARE POLICY

C. Clark: At least one special needs day care in British Columbia has already closed, and there are many, many more on the verge of extinction as a result of this government's policy. The parents of those children are here today to talk to the minister, and she has refused to speak to them. They've taken the day off work; they've gotten sitters for their kids. They've dragged their kids all the way over to Victoria so that they can meet with the minister, and she said no. So I want to ask her today . . . .

I want to give her this opportunity in the House, since she's so busy that she can't meet with those parents who've come over here today, to tell them that she will abandon this plan and that she will not sacrifice these children's future in another failed NDP experiment in the reorganization of social services.

Hon. L. Boone: It's too bad that the hon. member didn't bother to call me and find out what was actually happening, because my staff met with these parents today. In fact, we've been working very hard with this community to deal with this issue.

Supported child care is something that has been brought about, with the support of the parents, to actually empower parents to make decisions as to which day care they go to. Money is put into the hands of the parents so that they have those choices. Yes, I recognize that there have been some problems around some areas. Some have actually moved into supported child care on a regional basis, and it's going well.

There are areas where supported child care is not proceeding as it should be. I recognize that; I knew about it in my own area before I became minister. I've met with parents, and I've met with care providers in the past. We have today advised the parents that we are extending the time to March 1999, and we are putting in a team . . . .

[2:30]

Interjections.

The Speaker: Thank you, minister.

Hon. L. Boone: Hon. Speaker, the member opposite asked me a question, and then she doesn't even listen to me. And we have . . . .

Interjections.

The Speaker: Order, hon. members.

Hon. L. Boone: We have a team that is going in . . . .

Interjections.

The Speaker: The minister is replying to a question.

Hon. L. Boone: Well, hon. Speaker, obviously the opposition doesn't even want to hear the answer. But I'm sure the parents here recognize that we are giving them until March 31 . . . . We will in fact be reviewing this, and we are going to be making sure that all children are given the opportunity.

MUNICIPAL BANNING OF SLOT MACHINES

G. Plant: Gambling. Last week Supreme Court Justice Leggatt upheld the bylaw banning slot machines in Surrey. He said there's basically no difference between a slot machine and a video lottery terminal. In fact, he said this: "There are no distinguishing features between the machines other than the use of a television-style picture tube . . . which does not affect the game." Given all the speeches that this government has made opposing VLTs, will the minister now agree with Mr. Justice Leggatt that NDP slot machines are just as harmful as VLTs? And will he ban them from any municipality that does not want them?

Hon. M. Farnworth: I'm not going to comment right now on the issue of the opposition's gaming policy because, as we've seen, it's one thing one month and another thing the next month. The fact of the matter is that we are aware of the decision that came down on Friday, and I can tell you that our attorneys are reviewing it. We will be making some announcements on that in the very near future.

But what I am concerned about, and the opposition doesn't seem to be concerned about, are the 86 jobs which are at stake in Surrey. They talk about jobs all the time. But when it comes to their own political advantage, they're willing to sacrifice 86 jobs for political expediency. I say shame on the opposition. Shame on them!

There'll be more to come in the next few days, so I ask the opposition to stay tuned.

Interjections.

Hon. M. Farnworth: The red light is on, hon. members.

Tabling Documents

Hon. D. Lovick: It is my honour to present the annual report for the Ministry of Labour, 1996-97.

Orders of the Day

Hon. J. MacPhail: I'd like to begin by making two announcements to the House, if I could. One is that we will be sitting tomorrow. Secondly, I would like to ask leave of the House that the Special Committee of Selection be able to sit during House hours at 5 p.m.

Leave granted.

Hon. J. MacPhail: In Committee A, I call Committee of Supply. For the information of the members, we will be debating the estimates of the Ministry of Agriculture and Food and perhaps the Ministry of Human Resources. And in this House, I call Committee of the Whole to debate Bill 2.

BUDGET MEASURES IMPLEMENTATION ACT, 1998

(continued)

The House in committee on Bill 2; W. Hartley in the chair.

section 13.

G. Farrell-Collins: First of all, I didn't get a chance to do it this morning when we started so I'll take the opportunity

[ Page 7039 ]

now. I just want to thank the minister for making her staff available for a briefing for the members of the opposition, and I'd like to thank the staff for attending. In their comments and in subsequent phone calls they've been most helpful, and I'd like to just offer my thanks for that.

One of the questions I wasn't able to get answered -- but I actually managed to figure this one out on my own -- was the concern I raised in second reading yesterday about the old

section 3(6) of the Insurance Premium Tax Act with regard to the possibility of a new tax applying to medical plans. In doing further reading of the act, I found that the way you've gotten around that is in the definition section. That clears up my concern with regard to that section. I know that the member for Delta South has some questions on an additional section, so I'll just remove my reservation that I raised in second reading yesterday.

Sections 13 to 24 inclusive approved.

section 25.

F. Gingell: I would like to start the discussion on

section 25 by reading from Hansard of May 2, 1995, when this government brought in the Securities Amendment Act, 1995. The then Minister of Finance was the member for Oak Bay-Gordon Head. In introducing the bill in second reading, she stated: "The two key features of the bill are: first, the commission will be a Crown agent and all revenue received under the Securities Act will be paid directly to the commission rather than to the consolidated revenue fund . . . .

" The minister went on to say: " . . . and money that the commission receives but does not immediately need must be placed with the minister for investment." Later the minister said: "A common message I received during these consultations, and one on which there was widespread consensus, was the need to provide the Securities Commission with greater resources and budget flexibility."

So here we have come to this point almost three years later and the Securities Commission is being stripped of the reserve fund that it has. Now, I have the financial statements for the Securities Commission up to March 31, 1997; I haven't got them for the year that has just ended. But at that point they had roughly $12 million in reserves. Did the minister discuss with the B.C. Securities Commission what their priorities are? What are the things that they haven't done, would like to get done and now may be restricted from doing in the future because these funds have been stripped from the commission?

Hon. J. MacPhail: No, I have not yet met with the Securities Commission directly; my staff have. If I could just clarify, because I'm sure the language of the member opposite is intentional, to be a bit provocative . . . . If I could just give the background to this, when this fund was set up, it was intended that the Securities Commission be able to have access to enough sources of money in order to be able to plan their projects and do their business in a way that allowed them freedom from year-by-year budgeting allocations.

In all of the contemplation of the Securities Commission, it was not ever estimated that a surplus of almost $17 million would build up. In fact, because of the bull market that we've been experiencing over the last couple of years, the surplus has been generated since 1995 when they became autonomous. So such a surplus was never contemplated in 1995; nor was this kind of surplus necessary for the plans that they wished to carry out. The surplus did come about because of the record level of filings, the securities financings and the registration of securities market participants as a result of the bull market.

Discussion did take place among staff about the transfer of the maximum amount, not to exceed $12 million. That does still leave a fund of $5 million. At no time has the commission ever anticipated needing more than that. Even though in the consultation there will not be agreement, I don't . . . . I personally haven't met with them, but I don't expect that the Securities Commission would come to me and say that they agree with . . . . But it is quite feasible for them to carry out their . . . .

F. Gingell: As we all know, the bull will get chased out by the bear, and times will change. Just the same way that the economy of British Columbia has gone from number one to number ten, the level of the volume of transactions and approvals and filings through the commission will change. If one goes back to the original concept in 1995 . . . . I quote further from Hansard: " . . . the commission will be able to hire employees directly, as opposed to under the Public Service Act." Further on in the minister's speech at that time, she stated: "The commission will also be able to hire additional staff to respond to the regulatory needs of industry."

I am sure we all recognize that the Securities Commission has a whole series of priorities. One of the priorities that we have discussed in this House, particularly during estimates in the last two years, has been the issues surrounding cooperation with the Royal Canadian Mounted Police in relation to the fraud squad, which the commission is committed to fund up to a total of $1 million per year. In discussions in estimates a year ago, we got the very clear impression that this exercise has been a failure, that the results have been dismal.

This has been caused by one thing: the inability of the RCMP to hire people with the right skills. You appreciate that the securities industry is a very highly paid industry, so the Securities Commission or the RCMP -- and the RCMP is subject to some constraints -- has to offer salaries that are competitive and that will get these people.

[2:45]

Recognizing the importance of having a fraud squad that both detects and prosecutes criminal fraud, has Treasury Board or the minister's office in the past put any restrictions onto the Securities Commission, either in the number of people it may hire or on the amount of money it is allowed to pay them? I think that's the question.

Hon. J. MacPhail: I wonder if the member is thinking of two issues, perhaps wrongly. But I'll see if I can address the concern in my comments.

The issue around the RCMP and the money that they are paid is unaffected by our government guidelines or compensation package. It's a separate issue. But to address the separate issue of compensation for the B.C. Securities Commission, they do have financial autonomy and they are outside the Public Service Act. We have granted them that by legislation. But as a Crown agent, they are still subject to the Public Sector Employers Council guidelines, as is every Crown agency. However, I have been informed that the commission is submitting a compensation package to PSEC for consideration shortly, and it will be considered.

F. Gingell: Has the minister's staff, then -- I understand that you haven't had an opportunity yet to meet with the commission, from what you say -- received any submission

[ Page 7040 ]

from the Securities Commission to get a feel for their priorities? The reason I bring this up is that I've just touched one issue: fraud detection and prosecution. The lack of success in the arrangements that were previously made has been, in my opinion -- and I've done a little research on the issue -- the result of restrictions placed on the Securities Commission by Treasury Board, or whoever, in the amount of money they may pay and the people they may hire. The purpose of setting up the commission as a separate Crown agency in the first place was to free them from these restrictions, so that they can respond to pressures of the marketplace.

Hon. J. MacPhail: It's an interesting point for legislative debate, but I will address it. I will raise that issue with the Securities Commission when I meet with them. To date, it's my view that Treasury Board decisions have not hampered the Securities Commission. But I am particularly interested in the evaluation of the fraud project and, as you have rightly outlined, its lack of success. That's why the evaluation must continue, even if the project does -- to see what we can learn from it and to see what the next method has to be by which we detect fraud. I will certainly explore the concerns directly with the commission and report back to you, if you wish.

F. Gingell: There are some more priorities that I'm afraid will get swept under the table because of this financial exercise. I must admit that, to an extent, I use your intention to strip $12 million from the Securities Commission as an opportunity to bring up some of these issues.

I would like to get onto the record the fact that in trying to put together a national securities regulation regime, one of the major stumbling blocks has been the province of Ontario, which has looked at the Ontario Securities Commission as a cash cow. They have made substantial profits, or revenues, for Ontario's provincial consolidated revenue fund from the operation of the Securities Commission. When it came to pulling them all together into one organization, the province of Ontario was suggesting to the federal government that they should receive a major capital sum to compensate them for giving up their income stream.

British Columbia, on the other hand, was critical of Ontario for doing that -- for taking that position -- because in British Columbia you had established that the Securities Commission was self-funding. It wasn't going to be used as an income stream for the provincial government. That was all clearly stated in the debate when Bill 5 was brought in and the Crown agency was set up.

Now, finally, Ontario is beginning to come on side. They have agreed, as I understand it, that they shouldn't expect to receive a capital sum, and they are making the changes necessary to allow the Ontario Securities Commission to be self-funding, to maintain their own bank accounts and to keep those revenues for the purpose of delivering services. It seems to me that British Columbia is going in the opposite direction.

I appreciate that this bill, in

section 25, deals only with a one-time deal. But the minister knows, as I do, that taking $12 million from the Securities Commission can become habit-forming, and it's a nice place to look for funds. Is it possible for the minister to give the Legislature assurance that as well as Bill 2 indicating that it's only a one-time deal, it isn't the intention of this government to bring in

section 25 on a regular basis?

Hon. J. MacPhail: No, the legislation clearly is a sunset piece of legislation. You see that the sun sets in 1999 and that this is a one-time transfer. Just to clarify what did happen in Ontario very recently, the change was to a self-funded model. Actually, the legislation in Ontario also allows exactly what you don't want to happen here, which is regular transfers of excess funding as determined on a yearly basis by the Minister of Finance in Ontario. Perhaps your comments would be appropriate for Ontario but not here. This is clearly a one-time transfer with a sunset clause.

Sections 25 to 30 inclusive approved.

section 31.

G. Farrell-Collins: I'll give the minister a moment to have her staff come in. I don't have a great deal of questioning on this. I just want the minister to clarify and confirm for us that what this

section does is close a loophole in the tax system that allowed people -- particularly, I would expect, businesses -- to lease vehicles from another jurisdiction and then operate them in British Columbia without paying the tax that somebody would have to pay if they were to lease the vehicle from a B.C. company. Is that correct?

Hon. J. MacPhail: Yes.

G. Farrell-Collins: Does the government have any explanation for why businesses may choose to lease their vehicles in other jurisdictions as opposed to British Columbia?

Hon. J. MacPhail: I want to be clear. I expect that you're suggesting -- I may be anticipating you wrongly -- that business is being done outside, in Alberta, in order to avoid what you would call a high tax regime in British Columbia. I wonder if that's the nature of your question. That's not the case; that's not what's behind this amendment at all. It's for people who move into the province who had formerly held a lease outside of the province.

G. Farrell-Collins: Just so I'm clear, let's say, for example, I lived in Alberta or Saskatchewan, and I purchased a vehicle there -- not leased but purchased. If I moved to British Columbia and I was going to register that vehicle here, would I be required to pay the social service tax on that vehicle? I've never done that -- not for 20 years. I'm not sure if that's the case or not.

Hon. J. MacPhail: I'm sorry, did you say purchase a vehicle?

G. Farrell-Collins: Yes.

Hon. J. MacPhail: Oh, all right; I was just wondering. That's not addressed in this section, but the answer to the question is yes.

G. Farrell-Collins: I just wanted to know that. I'm surprised. I guess that's another debate for another time. Given that that's the case, this merely ensures that the same thing applies to leases. Is that correct?

Interjection.

G. Farrell-Collins: Yes -- thank you.

F. Gingell: I'm not sure that this question is relevant, but I was listening to the exchange. Recently I have had a constitu

[ Page 7041 ]

ent who has been involved in a problem where they had leased an automobile in Ontario. Their job had moved them from Ontario to British Columbia. Because the company from which the automobile was leased was not registered in British Columbia . . . . Though they were probably willing to pay the provincial tax, ICBC was not willing to insure it, because the owner, a corporation in Ontario, was not registered in British Columbia. Has that anomaly been dealt with in this section?

Hon. J. MacPhail: Let me offer the member this: that is not addressed by this issue, but it sounds like a good piece of casework -- I'm desperate for casework -- that I'd like to take up on your behalf.

Sections 31 to 39 inclusive approved.

section 40.

G. Plant: Could the minister tell me what it was about the transitional refund provisions that required clarification?

Hon. J. MacPhail: Clarification on the amendments?

Interjection.

Hon. J. MacPhail: Whatever. I'll just comment, and then you can decide supplementals.

[3:00]

The amendments clarify the transitional refund provision established on March 31, 1993, when the social services tax rate was changed from 6 percent to 7 percent. The 1993 provision provides a 1 percent tax refund in cases where a purchaser entered into a contract to purchase goods before the tax rate increase was announced, but who paid the higher tax rate because the goods were delivered after the increase. The amendments in

section 40 of this bill are retroactive to March 31, 1993.

G. Plant: The use of the term "clarifies" in the explanatory note suggests that there was something unclear before which is now being made clear. I guess my question is: what is it that was unclear that now has to be made clear?

Hon. J. MacPhail: Subsection (1) of

section 40 establishes that the 1 percent refund is not available unless the contract requires the purchaser to take delivery of a specific quantity of a tangible personal property before a specific time. That's the clarification.

Now I'll anticipate your question about why. Let me just say that the wording of the refund provision has been interpreted broadly by businesses with long-term agreements for the supply of energy, as a specific example -- both electricity and natural gas. These contracts guarantee delivery of up to certain amounts of energy, but they don't commit the purchaser to buy any specific amount. So adjustable tariffs are set to reflect the amount of energy actually used. The agreements extend indefinitely. Several businesses applied to the province for the 1 percent transitional refund.

Allowing the refund under such circumstances would provide these businesses with a lower rate of tax in perpetuity, a tax concession not available to any other businesses in the province. That was clearly not the intent of the refund provision. The taxation branch denied the refund claims, and this denial was upheld on appeal to the minister.

One of the businesses appealed the minister's decision to the Supreme Court of B.C. earlier this year. The court ruled that such contracts satisfied the conditions of the refund provision and that the business was entitled to the 1 percent refund. As a result of that decision, several other businesses have since submitted refund claims for similar contracts, and to date, those claims total over $13 million.

What this amendment in

section 40 does . . . . And I'm well aware of the comments made by the member for Vancouver-Little Mountain yesterday. I took very careful note of them. The intent of this 1 percent transition refund was never to give a tax break in perpetuity to certain businesses that have open-ended contracts. It was for a very specific consumer-oriented purpose. What this

section does is clarify that the 1 percent refund is not available on open-ended contracts of an unspecified quantity or duration.

G. Plant: I thank the minister for that explanation. It's not uncommon for the courts to interpret a taxing provision in a way which is contrary to the apparent intent of the government in enacting the taxing provision. In terms of whether or not there was confusion that should be cleared up on a going-forward basis in order to ensure that the bill and the provision does give effect to the original intention, I don't think there would be that much cause for complaint.

But I think there is cause for complaint when the intention of the amendment is to operate retroactively, in effect taking away from those who have litigated the point the victory that they have earned by dint of their effort and their expense in the courts of British Columbia. The word "expropriation" gets used in lots of contexts, and I think it could be used not unfairly here.

I guess the issue that I would leave with the minister is: why in this particular case has she seen fit to put forward a bill which not only fixes the problem prospectively and not only fixes the problem retrospectively, but operates in the purest sense retroactively to take from taxpayers moneys that a Supreme Court judge has effectively said are theirs? Why is it necessary to go that extra step? I suggest -- and I'm sure the minister would agree -- that that is a relatively draconian step. Taxpayers rely on the advice they get from their advisers about the meaning of taxation provisions. When they think they have an entitlement, they go to the trouble of litigating it.

The way our legal system works best is, of course, when the decisions are respected. Here, the government is obviously unhappy with the decision of the judge, and rather than pursue an appeal -- which would be another alternative, I suppose -- the government is using the extraordinary powers that it has by virtue of a majority in this House to take a step beyond that which, taking all public policy interests into consideration, is reasonable. Maybe I could leave the minister with the opportunity to once again explain why it is necessary to not simply clarify the thing working prospectively, working forward, but to undo the judgment of the court in the case that she referred to.

Hon. J. MacPhail: Actually, the company that applied for the refund waited until the very last moment of 1996, three years after the transitional period had been introduced, to even ask for the refund. They had in the interim booked the extra cost of the taxation. Their shareholders had already paid for it and the charge had been accounted for. All of the costs of them complying with the intent of the legislation were in place up until that point, which would be a pretty solid indication that they knew the intention of the legislation and that the intention of the legislation was clear.

They, I guess, saw what could be interpreted -- and I have no malice of intention -- as a windfall for them in this, which was clearly outside the intent of the legislation. They would have had a windfall that

[ Page 7042 ]

no other company would, and that was not the intent of the legislation, and it's not the intention of taxation policy. There is a often a call in this House to level the playing field and to make sure that the playing field is fair and available in an equal way to all. That's what the intention of this is.

G. Plant: The minister's comments raise two issues in my mind. The first is that while it is possible to speak -- and we do speak in this House -- about the intention of legislation, obviously the intention, ultimately, is fundamentally a product of the words used. In this case, we have the word of a Supreme Court judge -- who I would think has a generally more reliable word than the word of most legislators in this House -- as to what in fact the statutory intention was. In this particular case, the judge said that the intention was other than that which the minister has expressed. Fair enough.

I think we all read the government's press releases, and we know what the government thinks it's intending to do. The issue always is: do the words actually achieve that intention? I'm still troubled by the fact that when we do have a Supreme Court judgment interpreting a taxing provision, the response of the government is not simply to correct the problem going forward -- which is typical -- but also to reach back into the past and, in effect, claw back the outcome of the judgment.

That takes me to the second concern and my question. The minister spoke a few minutes ago about the potential risk to the provincial treasury of claims in the order of $30 million. Was that . . . ?

Hon. J. MacPhail: It was $13 million.

G. Plant: Oh, $13 million. That's helpful, first of all. Given the lapse of time and whatever limitation provisions may or may not operate with respect to making these claims, is the minister saying that there were, in fact, some $13 million in claims out there that would have been timely and could have been made consistent with the judgment of the court in this case? I'm only aware of claims in the order of a total of something less than $1.5 million. Is there really another $11.5 million out there where taxpayers could have relied on this judgment to obtain release?

Hon. J. MacPhail: Yes, the government has received claims for that amount. But due diligence still has to be done on the claims.

Sections 40 to 49 inclusive approved.

Title approved.

Hon. J. MacPhail: I move the committee rise and report the bill complete with amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 2, Budget Measures Implementation Act, 1998, reported complete with amendment.

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

Hon. J. MacPhail: With leave, now.

Leave granted.

Bill 2, Budget Measures Implementation Act, 1998, read a third time and passed.

Hon. J. MacPhail: I call committee on Bill 3.

INCOME TAX AMENDMENT ACT, 1998

The House in committee on Bill 3; W. Hartley in the chair.

[3:15]

section 1.

G. Farrell-Collins: We said pretty much everything we needed to say about this bill in second reading. There are essentially, for all intents and purposes, three parts. The first five sections are really the changes to income tax as it applies to personal income tax, small business income tax and subsequent amendments. The other section, the second part of the bill, is the anti-avoidance provisions, which we don't have a big problem with. The latter portion of the bill is the changes to income tax as it applies to the television and film industry -- the government's incentive program which, again, we spoke on in second reading.

I'll say a few words about

section 1, and perhaps the Chair will forgive me if I spill over slightly into the other sections. Then I'll just leave it at that, and we can do this part. I don't need to rehash -- at least I hope I don't need to -- what I said yesterday in second reading.

Members on this side of the House spoke at length about the requirement of the government to make some significant changes in the income tax structure in this province to give individuals and small businesses the opportunity to participate more readily in the economy, to give individuals a break in their taxes -- a fairly onerous tax burden which continues to be the highest in western Canada, with the highest marginal income tax rate in the country. Those tax breaks for individuals in particular should have been implemented sooner rather than later.

We on this side believe that we should have significant tax cuts on income for individuals and that the marginal income tax rate is part of our problem in developing the high-tech sector in particular and other areas where we have highly trained, highly experienced and highly educated individuals who we need to contribute to the economy. We made those points at length yesterday; I don't need to make them again today.

The only other points I might add are the comments we made yesterday also with regard to the income tax for small and medium-sized businesses. Again, we on this side of the House feel the need for a significant change of direction to be made by the government to encourage those small and medium-sized businesses to do what they do best: get out there and create jobs.

On all of those points I would say that at least in words, the opposition and the government tend to agree. Where we differ is on the magnitude of the changes required to actually have an impact on the economy. Certainly we feel that we need a far more significant break. We need a far more significant tax cut for small businesses than what we see here. But that's only part of the problem. In estimates and other debates, we will certainly be talking about the regulatory regime, which needs to be addressed. But we did speak about all these items yesterday.

I'll restate and reaffirm my comments in perhaps as strenuous and as vigorous a manner as I did yesterday without having to actually do it. I'll just state that we believe that there should be some significant cuts in taxes to get the direction

[ Page 7043 ]

clearly stated out there to individuals and small businesses that this is a good place to do business and a good place to live. You can come and build your business here; you can create jobs and opportunities for others. Once you do that and work hard, you will be able to keep a little more of that money and use it for things like providing for your family and yourself and participating in the economy as a consumer.

With that, I will take my seat. It looks like the Minister of Small Business has something to say. We are on

section 1, but I have no problem with him addressing those issues all at once if it's fine with the minister.

Hon. I. Waddell: I thank the member for his remarks. I have a few remarks I'd like to make on that. With respect to small business, it is the engine of job creation in the province. We should always remember that 96 percent of jobs are created by small business and that 99 percent of the businesses in this province are small businesses, and they create jobs.

I got a letter today on a small project. I visited an exhibition of small business projects by entrepreneurs who had been encouraged by the ministry and who had some ideas. A fellow had taken some alder -- wood that is normally discarded -- and he started to make picture frames out of it and do things with it. I bought one; it cost me $12 for the picture frame. It's really interesting, and it's a nice design. Here was this useless wood being ground up, which he's now using. But the important thing in the letter was that he said: "My wife and I are working at this job, and we had hired someone part-time.

That part-time person has become full-time, and now we are hiring two other people." There's three jobs from one little project. That's pretty good. If you can do that over and over and over again, you can create jobs for British Columbians.

I heard the member in question period say a few things, like that in January, B.C. had lost 19,000 jobs. But, you know, in March we had a job gain. So we're moving. It's not easy, but we're moving, and we're creating jobs.

What the ministry and the government did was consult with the small business community. My predecessor went out -- and she should get credit for that -- and spent a lot of time consulting with the small business community. And we acted in the budget in a number of ways. There was a commitment to a reduction in taxes for 40,000 small businesses. That's pretty good. Another 10,000 small businesses will get tax relief from the corporate capital tax, because we raised the ceiling on that. There's another tax relief for small business.

Then we made a commitment to cut red tape. Just today the Minister of Highways and I announced that . . . . Members know the road signs that the little tourist operators have to put up, the blue ones -- and they're paying. There's a woman tourist operator in Kamloops. She's paying, for a little fishing place, $250 for this sign. She rents rooms out at $25 a night, so it takes ten nights to pay for that sign. She complained, and we heard it. We listened, and we've changed that. Now you say: "Well, you guys put it on in the first place." That's true, that's true.

You know, there's a user-pay thing in your own municipalities. I don't know about you, but I got a letter to pay extra for the water, extra for the garbage, extra for all this . . . .

The Chair: Minister, I might just remind you that we are dealing with a

section of the bill in committee here.

Hon. I. Waddell: All right. Let me just say that you'll see that this bill deals with having consulted people and listened to them. We dealt with the film community this way. You'll see in this bill, specifically, measures to help Canadian film-makers, and members should look carefully at that. We listened to them, and we've delivered on that. You'll look and you'll see a basic tax credit of 20 percent for eligible labour costs here in the bill. You'll see a regional incentive, and you'll see a training incentive. So that's mainly . . . . There are a lot of these clauses in this bill.

Once again, I say, in conclusion, that the government heard from small business, heard from the community and has delivered on these promises to create jobs for British Columbians.

The Chair: Thank you. That's very interesting, but we are dealing with this

section of the bill. I would urge all members to address their remarks to the bill.

Sections 1 to 6 inclusive approved.

section 7.

G. Farrell-Collins: There's a whole bunch of stuff here which is an amendment to the act. Really, the issue that I want to raise is just this one. It's on page 11 of the bill. It's

section 82, not of this act, but the act that it amends. It's the training tax credit for this particular industry. As it applies to this industry, it sounds wonderful. I know there are lots of other industries out there, particularly in the high-tech sector and probably others, who would love to have similar training tax credits. Can the minister tell me if there are any plans to have this type of legislation apply to any other industries? Or are we leaving it just with the film and TV industry alone?

Hon. J. MacPhail: Well, actually, even though it addresses future policy, I don't mind answering it. We're not considering it at the moment, but certainly we'll be monitoring this very carefully. If it works, it could be a model to guide us elsewhere. We do have ITAC to advise us on such matters.

Sections 7 to 9 inclusive approved.

Title approved.

Hon. J. MacPhail: I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 3, Income Tax Amendment Act, 1998, reported complete without amendment, read a third time and passed.

Hon. J. MacPhail: Committee on Bill 4.

CAPITAL FINANCING AUTHORITY

REPEAL AND DEBT RESTRUCTURING ACT

The House in committee on Bill 4; W. Hartley in the chair.

section 1.

G. Farrell-Collins: Given the comments of the member for Delta South yesterday, with his unreserved support for the bill, I don't have any particular questions. We've had a brief

[ Page 7044 ]

ing; the member for Delta South has asked all the questions that he needs to. We're comfortable with what the government is doing, and we'll pass it.

[3:30]

Sections 1 to 20 inclusive approved.

Title approved.

Hon. J. MacPhail: I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 4, Capital Financing Authority Repeal and Debt Restructuring Act reported complete without amendment, read a third time and passed.

Hon. J. MacPhail: I call Committee of the Whole to consider Bill 5.

BC-ALCAN NORTHERN DEVELOPMENT FUND ACT

The House in committee on Bill 5; W. Hartley in the chair.

section 1.

R. Neufeld: In

section 1, the

definitions "Alcan" and "fund" are fairly straightforward. The definition "Northwestern British Columbia" includes the Nechako River basin and other areas prescribed by regulation. Can the minister tell me, first off, why we would have "other areas prescribed by regulation"? Is there some other area of the province this could apply to, other than the Nechako basin? For my clarification, the Nechako basin covers how many regional districts?

Hon. D. Miller: As I said in second reading, it will be those areas that have been impacted by the original development. Nechako River basin is clearly part of that, not all of that. There have not been any regulations promulgated with respect to the bill.

There have just been some unfortunate resignations from the advisory board. I say that because the individual I referred to the other day, Mr. Blattner, who was the chair, I thought would be outstanding. Unfortunately, his wife has suffered a serious farm accident and he's not able to continue. So we're in the process of adding some new members to the board. We will take the advice of the advisory board, but it's clear from my remarks and I think, from the remarks of my colleague that the fund is aimed at those areas that have been impacted by that original development.

R. Neufeld: Just clarify a little bit more for me, if you would, "other areas prescribed by regulation." I know there's no regulation put forward yet, but what would other areas encompass? Are we talking about Prince George? Are we talking about Prince Rupert? What are we actually talking about, other than the Nechako basin, which I guess is probably pretty easily defined. What other areas would be affected by this claim? If you're talking about other areas that are affected by it, there are hydro developments that have to take place to be able to supply hydro for Alcan.

Would it mean some of those other areas it would be transferred to around the province? Or is it just specifically the Nechako basin?

The second part of my question was: how many regional districts does the Nechako basin cover?

Hon. D. Miller: I haven't added them up, so I don't know the answer to that question, but I don't think there are many. Regional districts tend to be fairly large. I'll just give you one example of where a specific impact was brought to my attention, and that's in Kitamaat Village, where the power transmission line has gone right through some areas of what was an aboriginal community. They feel -- and on the face of it, I think it's a very realistic and credible argument -- that they have been impacted. So in general they are saying: "We've got some ideas around economic development.

We want to make sure that our area will be considered by the advisory board." I quite deliberately spoke to that in second reading, to give that assurance in a speech in this House, and we're conveying that as well to the Haisla, who have yet to appoint a representative. We want a representative from the Haisla to be on the advisory board.

So the answer is very clear. It's those areas impacted in northwestern B.C. -- impacted by the original development.

R. Neufeld: Then we could rest assured on this side of the House that it will be northern British Columbia that will have the effect of this bill -- and no other part of the province.

Hon. D. Miller: Yes, I give my assurance, and quite frankly, the title is apropos with respect to that question: the BC-Alcan Northern Development Fund Act. So, absolutely.

Sections 1 and 2 approved.

section 3.

R. Neufeld: In relation to what the minister just talked about, Kitamaat Village was impacted. When we talk about the purposes of the fund, it talks about sustainable economic development in northwestern British Columbia; it talks about investment in new or existing businesses, creating new employment or stabilizing existing employment. This is not intended to be any kind of a compensation or anything, is it? When you talked earlier about the Kitamaat Village and how it has been impacted, will there be compensation given out of this fund? Or is this strictly to try and get new businesses going in that area to complement employment for those people?

Hon. D. Miller: Yes, precisely. In fact, that's exactly the kind of tack taken by the Haisla in our discussions -- without getting into any details. Quite frankly, it's very, very important that the advisory board do their work properly, that the people in northwestern B.C. have some confidence in the advisory board and that they take the time to work out ways in which they think the funds should be utilized. That's exactly the premise that was put to me just last week -- that there are some ideas around business development. Mostly, in those kinds of ventures, it's access to capital.

Clearly the fund can be used in a variety of ways -- loans, you name it -- with respect to how the funds can be utilized in the most effective way.

P. Nettleton: I wish at this time, if I may, to refer to a couple of documents which I think summarize, in a rather

[ Page 7045 ]

concise fashion, the concerns of the residents of the Nechako region. I'm certain that the minister is quite familiar with many of those concerns, but I think it's helpful, certainly from the point of the residents of this region as well as for the minister, to be reminded, as I say, in a rather concise fashion of the concerns of the residents of the Nechako region.

The first document that I would like to refer to is a position paper on the northern development fund, which was presented by . . . .

The Chair: Excuse me. The minister on a point of order?

Hon. D. Miller: Yes, Mr. Chairman. Again, with all due respect to the member, I'm prepared to listen to arguments in favour of the fund and its application in the region. This is simply enabling legislation to allow the fund to exist and be utilized in a manner that I'm sure the member would support. I don't wish to pre-empt anything the member is advancing, but it was starting to sound a little bit like a second reading debate to me -- with all due respect.

The Chair: Members, if we could stick to

section 3 rather than the principle of the bill, which we discussed in second reading.

P. Nettleton: I'm certainly disappointed that the minister appears to be taking the position that he's not prepared to hear a suggestion. As I say, it is a rather concise document which summarizes rather nicely the concerns of the residents in relation to Bill 5, the BC-Alcan Northern Development Fund Act. What I will do, if you like, is actually skip down to . . . . I'm just seeing what it is I can eliminate here.

The Chair: Excuse me, member. I'm having a little difficulty hearing, but what I would like the member to concentrate on is

section 3, the purpose of the fund.

P. Nettleton: I will just say very briefly, then, that the concerns of the residents of Nechako region as outlined by the Vanderhoof Chamber of Commerce and the district of Vanderhoof are that . . . . First of all, I should say that the proposal is supported by all of the communities in the valley. In 1949 the government of the day allowed one day for listening to the people of the region before they signed the Industrial Development Act. In 1987 the government of the day did not listen to the people of the region, in their view, and signed the 1987 agreement.

In 1997 their concern was that the government of the day listen to the concerns of the region and that those concerns be addressed with reference to compensation for lost opportunities experienced since 1952.

The other matter, of course, in relation to taxation is raised by the regional district of Nechako. They would like to see the minister address the whole question of taxation in relation to the impact on the Bulkley-Nechako regional district. So what I will do, then, is table these two documents for the benefit of the minister and, at some future date, discuss in some detail with the minister these documents and the concerns raised in these documents, and relay the response of the minister to the constituents of the Nechako region.

The Chair: That can be done by leave. Do members give leave?

Leave granted.

D. Symons: I would like to read

section 3(1), because I want to make a point about it. It says: "The purpose of the fund is to promote sustainable economic development in Northwestern British Columbia." I guess my concern here is that when we jump down to 3(2)(c), it talks about "supporting other goals that are consistent with subsection (1) and that the minister considers desirable."

I'm not moving it at this point, but I'm wondering if we were to omit that particular section, to amend the bill by leaving (2)(

c) out . . . . Considering that 3(1) is quite all-encompassing, what does 3(2)(

c) do that isn't already included in

section 3(1)?

Hon. D. Miller: The bill is simply drafted to reflect the fact that we do have an advisory board. They are beginning their work. There may be ideas that we had not contemplated. It simply gives some flexibility in terms of the bill so that the funds are allocated in an appropriate manner. But I want to continue to give the assurance that it would be sheer folly for the government or myself as the minister to deviate from the recommendations of the advisory board, which is made up of people from around the region with, I think, good representation. It just gives the added flexibility to utilize the funds in ways that northerners think are appropriate.

[3:45]

D. Symons: The purpose of my question is the bit about the "minister considers desirable." We have something called Forest Renewal. When it was explained in this House, Forest Renewal was going to be used just for incremental points in the forest industry. We found that incremental very quickly changed into basically whatever the government wanted to do. I would like some guarantee or something of that sort from the minister that the sort of thing that happened with the Forest Renewal funds -- which were described to us in this House one way but ended up over a period of time changing to quite a different way -- will not occur because of this particular part of this particular bill.

Hon. D. Miller: What the member says, in fact, buttresses my argument. But let me read from the schedule, which is the agreement between the B.C. government and Alcan. We have lifted the language from that "purpose of the fund" under

schedule 5. I'll be happy to make a copy, but the member probably has a copy. You'll see that, in fact, the language -- "to support such other goals consistent with the purpose of the fund" -- is exactly what's contained in the agreement. So it's reflected in the bill.

I could get into a very interesting debate about Forest Renewal, but I'll resist the temptation at this point.

R. Neufeld: I have a couple of questions on subsection (2)(c): " . . . supporting other goals that are consistent with subsection (1) and that the minister considers desirable." Would that indicate that the minister can arbitrarily make a decision on his own without the approval or recommendation of the committee that's been appointed? It almost reads that the minister responsible can make that decision entirely on his or her own. Would that be correct?

[ Page 7046 ]

Hon. D. Miller: Although ministers can make decisions on their own, I would say that they're subject to the processes -- Treasury Board, cabinet and those kinds of things. But yes, in fact, the final authority and responsibility for expenditures does rest with the government. To support the government and to ensure that we reflect the views of people in the region, we've established the advisory board, and their advice will be taken very, very seriously.

R. Neufeld: It troubles me some that . . . . I know that the minister is ultimately responsible in the end. During second reading debate, the minister spoke about the board that was going to be appointed, and in his earlier remarks, he said it was going to be what northerners wanted. Not that the minister isn't a northerner, but at some point in time it could be someone else. I just have a little difficulty. The minister can absolutely override the recommendations of the committee that he or she is appointing to make recommendations to the minister. I just don't quite understand why we would need that there.

It gives the minister the ability to override everything, and that would be troubling to me. I would think that rather than override them, even if the minister thought it was in the interests of northerners . . . . Maybe that board doesn't really think it's in the interests of northerners and the people that they've heard from.

So I do have some trouble with that part of the bill. I'm just wondering if there's some comfort we can get in that, other than maybe just having an amendment to remove it completely.

Hon. D. Miller: Until these things are done . . . . The fund was established as a result of this government aggressively pursuing an agreement with Alcan -- not only to establish this fund, which is, quite frankly, on the scale of expenditures that might be realized under the agreement that we have reached . . . . This is minuscule, relative to the potential for a new aluminum smelter in Kitimat -- some $1.2 billion or $1.5 billion, plus the cold-water release as well. So this is the normal construct of these types of bills.

Unfortunately, some might have that view, but there is a process, and final spending authority for these moneys does rest with the duly elected government and cabinet of the day. Part of the funding is coming from Alcan, but part of the funding is coming from general revenue.

I hear what the member has to say. I have given assurance on a number of occasions that it would be folly to try to ignore the advice of an advisory board, and I have absolutely no intention of doing that. So I'm sure that things will be fine.

R. Neufeld: I don't want to belabour this too long. I'm not trying to indicate that we don't support this. It's important to northerners; it's important to British Columbia what's taking place. I know that this is a small component. The other $50 million that was in the press release of August 5 is still waiting for some kind of an adjudication.

I am in favour of the bill; I spoke to that in second reading. But I did say that we had some concerns about how that money was to be expended. In the bill, we started out talking about even taking in other areas, as prescribed by regulation. That leaves it open quite a bit. We're now down to saying that it's what the minister considers desirable. He talked eloquently about northerners making the decision around this $15 million, and I appreciate that.

I just remind the minister that when his leader, the Premier, was in Prince George, he made a remark to northerners -- and that would have included people from the Nechako and people from all across the northwest. He said: "It cannot be bureaucratic. It has to be designed by northerners, driven by northerners, located, directed and managed in the north." Those are the Premier's own words. So when I read that, I assume that that board, which is going to make the decisions that surround the $15 million over three years, is going to be what the minister is going to do.

But the minister has clearly said that this is an escape hatch, so the minister can put money into things that the government considers desirable, because they contribute to the fund. I appreciate that they contribute to the fund -- Alcan and the minister. If we think about Alcan putting in their $7.5 million over three years, they only have two people on the board who can hopefully direct that money that would benefit the whole region. The rest is pretty well directed by government. So I don't know why the minister needs to have that kind of a sentence in there. Subsection (

c) would be fine up until "subsection (1)," and after that I think it gets just a little bit too overbearing and too specific to the minister.

Hon. D. Miller: I am tempted to explain why the bill is constructed this way. This is the normal way in which legislation is constructed. I don't think the member should try to read things into it that are not . . . . Let's go back and remind ourselves what we have here. We have a bill that gives life to a $15 million fund that was negotiated at the instigation of this government to benefit regions in northern B.C. that were impacted by the development. Really, let's not overcomplicate things or over-think things.

With respect to the comments you made and quoted, those pertain directly to another topic, which is the establishment of a northern commissioner's office. It's not part of this bill; it hopefully will be part of another piece of legislation, which we will be able to discuss in the House at the appropriate time.

This is the way legislation is drafted. I think that if you check through legislation, you'll find lots that have references to the minister. I'd try not to take it personally. It's just the way . . . . My colleague the lawyer here can support me in this. That's how they write these things. So I wouldn't get too worried about it.

R. Neufeld: We'll let that one go. I think we could probably stand here and argue forever and not get anywhere.

Section (2)(

b) says: " . . . creating new employment or stabilizing existing employment." Could the minister maybe just give me an idea of what is meant by stabilizing existing employment? Are there ways that small business . . . ? I'm not sure just how the fund will be divvied up at the end of the day. I guess that's up to the commission. Could a small business that's having some difficulty in one of those regions come to this fund and either ask for some help in creating new employment or ask for some funding to stabilize existing employment if they saw that they were on fairly shaky ground?

Hon. D. Miller: Anything may be possible.

To go back to this mission of the member himself, I repeat: we want the advisory board to consider these questions and then report to the minister on the best way the fund can be utilized to achieve the objective. I don't want to pre-empt that work. I don't want to start imposing my views on that. I have some general experience, I suppose, with respect to funds and what ought to be avoided. You don't want to immediately be seen as a bank. It's been my experience, as

[ Page 7047 ]

well, that as soon as you announce that you've got some money, there's no end of people beating a path to the door, knocking on the door and making what they think is an outstanding case to get some of that money. I mean, you could probably spend it all in a week if you weren't careful -- which means being careful, talking to people . . . .

Interjection.

Hon. D. Miller: Or even in a day.

Interjection.

Hon. D. Miller: I could. It's not hard to spend $15 million in a day.

An Hon. Member: Or $329 million.

Hon. D. Miller: No, that was a bit more challenging. It's actually a fascinating story, which I may share one of these days -- long after these members are out of politics. Now I've lost my train of thought.

I think you generally have to be careful with funds, because people always see them as: "I'd like to get a piece of that." You don't want to supplant the ordinary financial institutions, for example. If someone comes to you because they think it's easier than going to a bank and meeting tougher criteria, then maybe you ought to send them back to the bank and say . . . . But we've got a board, and I expect the board will look at those kinds of questions and make some very intelligent recommendations to the minister.

R. Neufeld: I just wonder which bank the minister was going to send them back to. As I understand, they're not too sharp as operators.

I guess part of what bothers me about subsection (b), "stabilizing existing employment," is that it gets pretty broad. I recall very clearly the Forest Practices Code and what it was really designed to do when it was initially put into place, and that was to enhance the forests. Even with a board, I think that fund has got to the point where it's really not totally directed at what it was intended to be directed at from the start. Those are some of my fears when I see some of those comments in legislation, and I guess time will tell whether that's going to take place or not.

Section 3 approved.

section 4.

R. Neufeld:

Section 4 relates to the August 5 press release saying that $2.5 million will be put into a fund by both government and Alcan for three years. Can the minister tell me if that fund is actually up and running? Has Alcan contributed its $2.5 million, and has the ministry contributed its $2.5 million? Could I ask if there's a bank account number for that fund? How will it be administered? Will it be invested? And will interest from that money be paid back into that account and not into general revenue?

[4:00]

Hon. D. Miller: The answer is that in January we did receive $2.5 million from Alcan. Those funds are in an investment trust account with the provincial treasury. Once the special account is established under the legislation -- once the legislation is proclaimed -- Alcan's contribution plus any interest earned in the trust account will go into the fund and the interest contribution will be matched by government, using funds set aside in the MEI budget for '98-99.

An Hon. Member: Has it been put in?

Hon. D. Miller: No. It will be put in. The rate of interest is currently between 4.5 and 4.7 percent. Once the special account is established, the fund will earn interest according to government's interest offset program, currently at prime minus 1.75. Prime is currently 6.5 percent, just for your edification, and the interest offset is 4.75 percent. Provincial treasury obtains competitive rates for the short-term investments, and these returns are certainly better than bank rates.

Sections 4 and 5 approved.

section 6.

R. Neufeld: Just a quick question on

section 6. This could be normal procedure with lawyers and drafting legislation, but part of the last sentence says: " . . . operation of the fund to the Treasury Board and the annual report must include any information that the Treasury Board specifies." Is that standard procedure that that's put in there when it comes to funds of this kind? Or why is it there?

Hon. D. Miller: Yes, it's common practice.

Section 6 approved.

section 7.

R. Neufeld: The appointment of the board, which took place in January . . . . And I'm sorry to hear that there have been some resignations already. I don't take any issue with the board and what it's supposed to do. I'm just wondering why it is open-ended -- it seems to be. Subsection (2)(

a) says: "one or more members representative of the government"; subsection (2)(

b) says: "one or more members representative of local government"; and (2)(

c) says: "one or more members representative of business . . . . "

I think that now, if I remember the press release, there are 13 on that board other than the ones that resigned, but it could be a huge board if we just continue appointing people. Maybe the minister could enlighten me a little bit as to why that was done, taking into account (2)(f), where only two persons would be nominated by Alcan as its representatives. They've limited that, but the rest is open.

Hon. D. Miller: It came out of the agreement with Alcan.

R. Neufeld: Is the minister telling me that Alcan recommended that you have unlimited appointments made by government to this board and that it could get up to 30 people if he so wished? Is that correct?

Hon. D. Miller: No, the construct came as a result of the negotiations with Alcan.

R. Neufeld: I have a friendly amendment to that section, if the minister would accept it. I should read the amendment into the record.

[ Page 7048 ]

[SECTIONS 7(2) and 7(3), to amend as follows: delete 7(2)(a), (b), (c), (d), (e), (f), (

g) and to replace thereafter:

7. (2) (

a) two must be appointed by the board of each of the regional districts within the Nechako River basin and other areas prescribed by regulation;

(

b) one or more first nations representatives;

(

c) two persons nominated by Alcan as its representatives;

(

d) six must be appointed by the Lieutenant-Governor-in-Council.

And to replace

section 7(3) with the following:

(3) The chair of the advisory board shall be elected from among the members of the advisory board.]

This friendly amendment actually mirrors what you have in the Columbia Basin Trust Act. That's a bill brought forward by the government of the day. It really doesn't change anything significant in the bill, other than limit the number of persons that should be appointed. Like I say, we actually fashioned it after what comes out of the Columbia Basin Trust Act, and I'm sure that was put in place for a very good reason also.

On the amendment.

Hon. D. Miller: I would argue that the amendment, however friendly -- and I recognize that it is friendly -- is inconsistent with the wording of the legislation. With all due respect to the members of this House -- because they are supreme with respect to legislation -- this specific agreement with Alcan is mirrored . . . . The legislation mirrors the agreement, and the construct is one that was agreed to. I believe the northern members, or the people I've talked to, are aware of this and support this.

I think the proposed amendment, however friendly, is inconsistent with the agreement we've reached with Alcan. I would argue that I don't know why an amendment is required. It's very straightforward. The representation by various people is set out very clearly. I think the member is trying to change the construct to one in which the regional districts would have some controlling interest. I don't think that, quite frankly, is something that would sit well with people in northwestern B.C. That means no disrespect at all to the regional districts, but they are a duly constituted body under the Municipal Act.

They have a specific purpose, and I don't know that to overlap that and give them dominance with respect to the fund would be appreciated.

We have appointed citizens from across northwestern B.C., with absolutely no bias with respect to those appointments. We are trying to encourage further representation from the aboriginal community, and I would sincerely ask the member to consider my remarks and to support the bill as it's worded.

R. Neufeld: Well, I can obviously tell that the minister's fairly determined not to accept this friendly amendment that actually mirrors some of their previous legislation.

I wonder if I could ask the minister to provide to me the agreement written by Alcan that you say mirrors this piece of legislation. I don't specifically need it immediately, but if I could have that -- copies of that agreement, where they actually specify that this is how the board should be set out -- then maybe I'd be a little bit more comfortable.

Hon. D. Miller: I would be happy to provide that.

Just perhaps a nuance with respect to the way that the member stated it: this agreement is as a result of negotiations between the B.C. government and Alcan. So two parties were engaged in putting this agreement together. Whether one dominated with respect to the language or wording in any particular

section is something for conjecture, I suppose, but it is an agreement between the two parties. But we're happy to make it available.

G. Farrell-Collins: I just want to point out -- I think the minister sort of touched on it himself -- that despite the fact that the government goes out and negotiates an agreement, if that agreement requires a change in legislation -- or creation of new legislation to implement the agreement -- as the minister said, this House remains supreme. We are not forgoing . . . . This House should never put aside its right and indeed its duty to approve those changes. So while the government can go out and negotiate an agreement, this House has to ratify the provisions that require legislation. In this case I don't think it's a huge deal, but in other cases it may be.

I just want to reassert the right of this House to ratify, to amend, to change and to send any particular government or minister back to the negotiating table if the provisions of the negotiation are unacceptable to the members of this Legislature, who are elected. I just want to make that clear, because I think it's a tricky situation we get ourselves into if we negotiate these agreements and then say that they're ironclad, and we can't go back and change them if this House so deems. So I just want to clear that up. In this case it's not a big issue. But it is an important principle.

Hon. D. Miller: Well, I would certainly support what the member just said. In this particular case, I did say in my remarks that parliament is supreme with respect to legislation -- absolutely right. But in this case, in a practical sense, we now have a fund. We're entrenching that fund in legislation. We wouldn't be dealing with this had we not gone and negotiated with Alcan. It is new legislation, not an amendment. But I certainly appreciate what the member has said. That's why we have governments. That's an interesting topic as well, but I'll leave that for another day.

Amendment negatived.

Sections 7 to 9 inclusive approved.

Title approved.

The Chair: Shall I report the bill without amendment?

An Hon. Member: Aye.

Motion approved.

The House resumed; the Speaker in the chair.

Bill 5, BC-Alcan Northern Development Fund Act, reported complete without amendment, read a third time and passed.

Hon. M. Farnworth: By leave, I call Committee of the Whole to consider Bill 6.

Leave granted.

[ Page 7049 ]

BRITISH COLUMBIA HYDRO AND POWER AUTHORITY

RATE FREEZE AND PROFIT SHARING ACT, 1998

The House in committee on Bill 6; W. Hartley in the chair.

section 1.

G. Farrell-Collins: I have a couple of questions on

section 1, but one of them is particularly brief. When the government announced the so-called rate freeze -- and the Minister of Employment and Investment, I guess, is the one whose name appears on the press release -- they talked about . . . . I just want to read a couple of parts from the press release, because I think it is indicative of what the government says it's going to do. I'd like to compare that with what it's actually doing. The minister said:

"These initiatives ensure that B.C. Hydro customers share in the financial and operating successes of the Crown-owned utility . . . . It also means we can now move to immediately respond to concerns of the business community and the broader public with regard to the economy and creating jobs. Today's measures are part of the government's response to those concerns. By working with businesses and consumers to improve business competitiveness, we can improve the economy and create good job opportunities throughout B.C."

The issue here is a rate freeze. If the minister had done nothing with this freeze -- what he calls a freeze -- and hadn't brought this piece of legislation in, as far as hydro rates go, can the minister confirm that under the existing legislation Hydro would have been unable to increase its rates?

[4:15]

Hon. M. Farnworth: The rates were capped for residential customers only, but not business and commercial rates.

G. Farrell-Collins: What it says in the act as it stands . . . . And the minister is correct: this is for residential rates. Let's deal with residential rates in isolation for a moment. This is the act that was brought in in 1996. Subsection (2) says of the Hydro rate freeze: "During the freeze period, a residential electricity rate charged by the British Columbia Hydro and Power Authority must not exceed the residential electricity rate that was charged immediately before the freeze period." If the minister had done nothing with this bill, hadn't brought this bill in, can the minister confirm to me that residential hydro rates could not have gone up?

Hon. M. Farnworth: That is correct, except for the fact that the period was extended. So if you didn't extend the period, there would have come a point where the freeze would no longer have applied or the cap would no longer have applied.

G. Farrell-Collins: So if the minister had just brought in a

section that merely extended the date of the freeze, he would not have had to do what he does in this

section 1, which is actually provide a floor for the rates. In the act as it presently exists, it says: " . . . the Authority must not exceed the residential electricity rate that was charged." And in the new

section that we're looking at here, it says that "the rates and rate schedules that were in effect on December 10, 1997 and that are prescribed by the regulations are the only lawful, enforceable and collectable rates that the British Columbia Hydro and Power Authority may collect, charge or enforce . . . . " Before there was a cap, and it said that they couldn't go above that. Now, with this legislation, in addition to having that cap in place for another year, they have also put a floor. Before, if the B.C.

Utilities Commission had decided that hydro rates for residents should, in fact, go down, that would have been allowed to happen. Under this section, as the government's adding it now, hydro rates are no longer allowed to be reduced; they are no longer allowed to go down. In effect, the only change here -- aside from extending the freeze for one more year -- is to prohibit residential hydro rates from being reduced. Is that correct?

Hon. M. Farnworth: I guess the issue here is whether you look at residential consumers independently of industrial and commercial consumers or whether you look at the whole group in a total picture. That's what happened; we looked at the whole picture, the total picture, as opposed to this group versus this group versus this group. The issue became to move from a cap on residential to a freeze for the entire range of users of Hydro's system. What that did was bring some stability over the next number of years. That is what people want -- some stability.

They want to know that their rates aren't going to go up, and that's what's going to happen. The fact is that they also get a rebate. Everybody wins.

G. Farrell-Collins: Nice try, hon. minister. What happens is that everyone does win a little bit. The only problem is that the government wins a heck of a lot more than the little guy wins.

Let me ask this question of the minister. If the goal of this legislation was to cap everybody's hydro rates, then why doesn't this

section merely do that? Why doesn't it just extend it for another year but keep the cap on residential rates and just put a cap on non-residential rates? Wouldn't that be the best way to achieve a cap and achieve some stability so that Hydro customers know that their rates won't increase?

Hon. M. Farnworth: I understand where the hon. member is going. Where we will differ is on the fact that we've taken a broad-based approach, which is to look at the needs of everybody and say: "Let's deal with the issue for the range of consumers, not just on the basis of a good year but on the basis of what happens over a period of two or three years, and go forward from there." So the issue doesn't really matter, whether you want to deal with where the hon. member is going -- which I'm sure will be the next few questions down the road . . . . Suffice it to say that this is the best way that we can bring stability to both residential and industrial consumers.

G. Farrell-Collins: Let me ask the question more clearly. If the minister's intent was to ensure that on a broad range nobody's hydro rates go up, for whatever length of time the minister wishes, why doesn't this legislation just say that they can't exceed the rates that were charged for everybody in this period of time?

Hon. M. Farnworth: The answer to that question is pretty much the same as the previous answer, except that I'll be a little more clear. Each year you can't predict what the rainfall is going to be. You can't predict what the water levels in the reservoir are going to be. Accordingly, Hydro's revenues fluctuate. What this does is bring stability in terms of where revenues are and what customers can expect to pay in terms of rates. Then it takes into account the fluctuations that occur for Hydro, which are due to whether the reservoirs are up one year or down the next year.

G. Farrell-Collins: Can the minister give me a scenario? If he had done what I suggested, which is to cap the rates like

[ Page 7050 ]

the government did in 1996 -- on a broad base, as he says -- for a certain length of time at the pre-1996 rates, can he provide me with a scenario where under that provision, a residential, industrial or any other customer would have actually had their hydro rates go up?

Hon. M. Farnworth: Due to the rather technical nature of that particular question, what I'm willing to do is to go back and look through the formula that's calculated back to pre-1996 -- because this is now 1998 -- and I will get the information the hon. member wants.

G. Farrell-Collins: There's nothing technical about it. The fact of the matter is that this government said it was putting on a rate freeze, and what it said in its documents is that it's going to stop hydro rates from increasing. But what it's actually doing in this

section is not that. They don't need to bring in this

section in this way to achieve that. This

section goes much, much further. What this

section does is actually provide a floor. What this

section is designed to do is to ensure that hydro rates don't go down. What this

section is designed to do is not to protect the consumers from a rate increase; what it's designed to do is to protect the government from a rate decrease, so Hydro will have the money to feed off into general revenue.

If the minister is trying to achieve a rate cap, if he's trying to ensure on a broad basis that no individual or consumer or customer -- whether industrial or residential -- is going to see a rate increase, all he needs to do is to provide for a cap, saying that the rates shall not exceed those that were in existence at the time the original freeze came in in 1996. That's all he'd have to do. Can the minister tell me why it is that he chose not to go that route? If what he is really trying to do is to ensure that no rates go up, he could have done it that way.

I would probably suggest that we amend this section, then, if that's his goal. If his goal is to ensure that rates don't go down, then perhaps he should talk to us about that right now.

Hon. M. Farnworth: Again, hon. member, what this bill does is lock in the rates and ensure that there's no fluctuation or comparison of rates between good years and bad years and that there's stability for the customer, whether residential or industrial. The other thing is that we're locking in at the lowest rates of any hydro or power utility in North America, after Manitoba. The customer in this province is getting the cheaper . . . .

Interjection.

Hon. M. Farnworth: I said with the exception of Manitoba. Within North America, B.C. Hydro and Manitoba Hydro are the lowest-cost power producers on the entire continent. The fact is that the citizens of this province benefit from that.

G. Farrell-Collins: The fact of the matter is this: energy rates right across North America are dropping. As a result, B.C. Hydro's rates should be dropping also. This press release and backgrounder that the government put out in the minister's name is full of how well B.C. Hydro is doing and all the money B.C. Hydro is making -- the hundreds of thousands and millions and millions of dollars that B.C. Hydro is making in profits.

In the normal course of events, what would likely have happened if this government hadn't brought in this bill -- and in particular this

section which we're debating right now -- is this: one of these days this government's Crown corporation called B.C. Hydro would have found itself at the B.C. Utilities Commission defending itself against the likes of Dick Gathercole and his friends, who would be arguing for a residential rate decrease. Because if Hydro makes surplus profits . . . . If Hydro is making too much money as a regulated utility, customers can go to the B.C. Utilities Commission and apply for a rate decrease.

[4:30]

What this government is doing with this

section . . . . Let me just read part of it into the record again: "Without limiting subsection (1) and despite the Utilities Commission Act . . . .

" That means that no matter what the Utilities Commission decides to do, "the rates and rate schedules that were in effect on December 10, 1997 and that are prescribed by the regulations are the only lawful, enforceable and collectable rates that the British Columbia Hydro and Power Authority may collect, charge or enforce from December 10, 1997 to March 31, 2000 for the services to which those rates apply." What that means is this: even if Hydro were making a ton of money, hundreds of millions of dollars more than it needed as a monopoly, a regulated utility . . . .

If individual consumers -- residential or industrial Hydro customers -- band together and go to the B.C. Utilities Commission and say, "B.C. Hydro is taking in too much money; our rates are too high; Hydro doesn't need to have rates this high in order to maintain its business, pay its bills and deliver electricity; it doesn't need all this money; we demand that we have lower rates," the B.C. Utilities Commission would have to listen to that and make a determination. If you look at the documents that the government put out, the backgrounders which talk about what a great couple of years B.C.

Hydro's had, it would have been pretty easy for them to make their case.

In fact, industrial users had gone and applied for a rate decrease. The B.C. Utilities Commission was in the process of deciding that. We were likely to see rate decreases in the area of 7 percent. Who knows what the Utilities Commission would finally have decided? We were likely to have seen some significant rate relief for customers. So what the government did was step in and say, "Hang on a second; you can't do that, because if you do that, Hydro won't make all these extra hundreds of millions of dollars, and we, the government, won't be able to go into B.C.

Hydro and raid those surpluses and put them into general revenue," as they've done with the other special directions -- 2, 5 and 8, I think.

What's happened with the

section isn't a cap. They're not holding rates down; they're holding rates up. They're artificially stepping in, getting rid of the Utilities Commission, the independent rate-setting body, and holding the rates up. When our hydro rates would have gone down, they're holding them up. So the people of British Columbia are being told by this minister and this government that they're getting a really good deal; their rates aren't going to go up for the next number of years. But what they're not telling them is that in all likelihood, had the B.C.

Utilities Commission, the independent regulatory body, been allowed to set the rates for B.C. Hydro as it should, their rates would have gone down. They would have had a significant reduction in their hydro rates.

Hon. Chair, the motive for

section 1 in this bill is contained in

section 3, which we'll get to shortly. It shows exactly what the government's motive is for holding those rates up. It talks about draining the dividends into general revenue.

So despite what a wonderful pirouette the member has done, despite the triple axel, despite all the skating he's done on this issue in answering the questions so far, what he should

[ Page 7051 ]

really do is stand up, say what the bill is really about, take a bow, go collect his flowers and wait for the judges to give him their decision.

Hon. M. Farnworth: Well, if we're going to take a bow for freezing rates to the lowest in North America, I think we will. We shouldn't be adjusting rates on the basis of one year's water supply. The fact of the matter is that this bill is about freezing rates. That brings stability to residential customers, industrial customers, commercial customers; it's about bringing stability over a number of years.

It's about rebating some of B.C. Hydro's profits to the consumers of power in this province on the basis that last year was an extremely profitable year for Hydro for a number of reasons: the hole in the W.A.C. Bennett Dam, which created a huge drawdown on the reservoir and produced a great amount of surplus power that was sold off; and the fact that reservoirs throughout the province were at their highest level in decades because it was the wettest year in this province's history. That's what this is about: rebating some of that money back. And that's all.

G. Farrell-Collins: Let me ask the minister this question, then: if the idea was to ensure that Hydro's rates remain stable over the longer term -- i.e., not go up -- would it not have been wiser for the government to leave that surplus with B.C. Hydro so that in bad years when there is a demand to push rates upward beyond the cap, Hydro would have money to use at that time? Why not leave those funds with B.C. Hydro to offset any demand for a rate increase at that time?

Hon. M. Farnworth: Well, in response to the member's question, I think the fact that we're doing what we're doing takes into account the point he's trying to get at. What's going to happen in the future is that when you have those good years like we had last year, then we in fact will be able to do another rebate and rebate more of the money back. So the freeze will work. It will protect consumers, whether industrial or commercial. But at the same time then we'll have the opportunity, if we wish, if we get another year like last year -- which, quite frankly, I hope we don't . . . .

I mean, as much as a cash rebate . . . . I think most people would like a sunshine dividend, a little less rain than we got last year and more of a summer. But the ability for us to take that into account is well within the legislation.

G. Farrell-Collins: I don't know about the minister, but I've been in this House every summer. I don't know what summer is like anymore, it seems.

Interjection.

G. Farrell-Collins: We're working on it.

If the minister can tell me, then . . . . My estimation for the excess earnings for '96-97, '97-98 and '98-99 are about $450 million, over and above the earnings of Hydro. Now, if he's got a figure that's more accurate, I'd love to know it. Those are the figures I've pulled out. Can the minister tell me if we're in the ballpark of what those excess earnings are?

Hon. M. Farnworth: The rate structure is based on average water flows, okay, and has generated so much revenue. Last year we had excess rain, if you like, and the hole in the dam generated what some call excess revenues, part of which have been rebated. Now, in terms of what happens in the future -- which is where the hon. member, I think, has generated his number from, because he's extrapolating that forward -- that's hard to say, because you can't predict what the weather is going to be like, what the . . .

Interjection.

Hon. M. Farnworth: That's variable, because it's a combination of snowpack, rain and weather conditions in different parts of the province. Last year was very much outside the ordinary. So to suggest that that is going to carry forward is something that, you know . . . . I mean, if I could predict the weather, I think I could make a pretty good living outside this House selling that service. The fact is that we can't do that. So the rate freeze is taking into account what average rates are. If we do get another summer or year like last year, then we're in a position to make another rebate.

G. Farrell-Collins: What I would like to ask the minister, because I'm looking at what's happened in government . . . . The budget documents show that for '94-95, B.C. Hydro gave $198 million to the government in dividends. In '95-96 it was $114.8 million; in '96-97, $279.3 million; in 1997-98, the year just completed, it will be $369 million; and you're projecting it's going to be $373 million next year. Those are your numbers; those are from the Finance minister's documents. Obviously Hydro must also know those figures.

If you look at those excess revenues that Hydro has that it's rebating back to the government, and compare it to the amount of the rebate, there's a pretty shocking difference. What I'd like to hear from the minister is what the excess revenues are and what the rebate is. I mean, these numbers are here; they're in his press release. I'd like to hear the minister tell me what the excess revenues are and what the rebate is, in millions of dollars.

Hon. M. Farnworth: We've talked about fluctuations in rainfall, generating capacity, sales, and what have you -- however you want to look at it. The rate structures in place allow us to take into account fluctuations and to generate a certain amount of revenue to the province. That money goes to roads and hospitals and schools and services that the public of British Columbia want. Occasionally, in excess years like last year, almost a superrevenue is generated. That's why the rebate takes place.

We can't predict what happens in the future, and there may not be the same revenue-generation as last year, in which case we won't be in a position to give a rebate. We may be, but that's for the coming year to tell. But if you look back over the last five years, the rate of return that the government has received from Hydro is in fact less than what the Utilities Commission has allowed.

G. Farrell-Collins: I look at the budget figures for B.C. Hydro and the amounts that are returned and will return to the government in the government's own budget documents: $198 million in '94-95, $114 million in '95-96, $279 million in '96-97, $369 million last year and $373 million projected for this year -- hundreds of millions of dollars. After Hydro has paid its bills, after it has got its 14 percent return and all that sort of stuff, it's got all this money. Hydro gets these hundreds of millions of dollars after it has paid its bills and charged its customers and got its revenue.

After all of that, the amount that goes back to the customers in one of these "super" years . . . . I guess $279 million is different from $369 million the year before. I guess we're talking about the $369 million year, because the minister is talking about last year.

[4:45]

[ Page 7052 ]

So let's take '96-97 as an example, when $279 million went to the government. In '97-98, $369 million . . . . That's a $90 million increase in one year in the amount that goes back to government in revenues from B.C. Hydro. And what does the government do with this laudable rebate? How much does it give back? It gives back about $31.3 million. B.C. Hydro gets this windfall of $90 million, and the ratepayers get $30 million back -- that's one year. The other $60 million goes into government revenue. That's the whole point of this section.

Because if the government hadn't done that this windfall year, if they hadn't drained off the cash from this windfall year into their own pockets, what would have happened is that those individual ratepayers would have collected, banded together, done whatever -- I'm sure it would have been Dick Gathercole holding the flag at the front -- and they would have gone to the B.C. Utilities Commission and said: "Look at the windfall profits B.C. Hydro is making. We should have a rate decrease."

They are making an extra . . . . And I'm being very, very, very conservative in my estimation of a $60 million cash windfall for B.C. Hydro; I'm sure it's a lot more than that. The government takes $60 million into general revenue, the individual ratepayers get $31 million as a rebate, and there's no cut in the rates.

If the government wanted to provide stability and to ensure that these people were treated fairly, it could cap the rates -- as it did -- but allow the rates to fall. If you want to protect them from rate increases, if you want to provide stability so they can plan for what their maximum hydro rates are going to be, then cap them. I mean, I think it's a fictitious cap anyway, because the trend is down, not up. But if the minister wants to cap it, then cap it. If you cap it, you'll ensure that the rates don't go up without ensuring that they don't get the rebate and without stopping them from getting the rate reduction that they deserve.

There is no justification in anything the minister has said here today -- nothing, not one iota of justification for a rate floor. Every argument he makes is for holding rates down, and there's nothing that he said that would make the case for holding rates up, which is what he's doing with this section. Let me ask the minister this: is he concerned with keeping rates down, or is he concerned with keeping rates up? Which is it?

Hon. M. Farnworth: We're concerned with keeping rates competitive and keeping rates the lowest in North America.

G. Farrell-Collins: In doing so, is the minister concerned with keeping rates down, or is he concerned with keeping rates up?

Hon. M. Farnworth: We're concerned with keeping the lowest rates in North America, which they are, and in keeping stability. Stability can be defined in a number of ways, through certainty to residential customers so they know what to look forward to two or three years down the road, through certainty to industrial customers so they know what to look forward to two or three years down the road, through certainty through new forms of power production from independent power producers, for example.

There's a whole host of groups that can look forward to the lowest power prices in North America, and at the same time, there is stability and a rebate going back -- money back in the pockets of the consumer. I don't think that's happened anywhere else in North America. At the same time, there's hospital services, educational services and roads being provided. There's all the things that everyone wants to have provided, including, on occasion, requests from the opposition benches. It's all being done in a way that ensures the lowest power prices in North America.

G. Farrell-Collins: Well, let me do the translation. The translation is this: the government needs more cash to spend on other projects -- legitimate or not, but they need more cash. So what they've done is hold rates up and they've called that stability -- meaning that the rates won't go up or down over the next little while -- and as a result of holding rates up, they get a windfall of cash that they can put in their pockets for other things. Now, if that's what the government is doing, then go back to your office, get on the typewriter, hammer out a press release that says that, and take the hits for it.

If that's what you're going to do as a government, do it, and we'll argue about that. But at least tell people what you're really doing. I mean, is it so hard?

Does the minister think that the people can't understand? Does he think that they can't take the bad news, that he can't make the case for what he wants to do? If he wants to go out there and say: "No, look, we need money for all these things" -- which he just listed -- "and in order to do that, we need more money from B.C. Hydro. We've had a couple of good years. We're going to hold the rates fixed, even though you're entitled to a decrease. But you say you want all these services, so we're going to hold the rates up there. We're going to keep rates high. We're going to take the excess windfall, and we're going to put it into those things that you want."

Hon. Chair, if that's what the government wants to do, then do it, and we'll have the discussion about that. But tell people that. They're not stupid. They can get the argument. They'll decide whether they agree with it or not, but they can make that decision. Instead, the government hides behind this fake freeze. I don't know what it is. Whenever the government is confronted with a choice between telling people the facts and the truth or issuing a press release for a press conference, they choose the press release for the press conference. Why not just tell them what you're doing? They can figure it out; they can decide whether they agree with that or not.

Hon. M. Farnworth: I think it's a real stretch to say that the lowest rates in North America are artificially high when they've been frozen since 1993 and will be frozen for another few more years. During that entire time, they're not increasing, and with the effect of inflation, they're in fact going down.

G. Farrell-Collins: I think we've made clear what's actually happening here. The minister can say what he wants. He can call it what he wants, but it's clear. The government is artificially holding the rates high, higher than they would be in the normal course of justice and if the B.C. Utilities Commission had been allowed to do its job. The rates are artificially higher. There's a windfall profit that results for B.C. Hydro, and the government is taking that profit and using for other things and telling people that they're doing them a service.

They're not saying it in those ways, but that's what's happened. We know it, the minister knows it -- whether he'll

[ Page 7053 ]

actually say it in the House -- and I think the public is about to know it too. With that, I think we can move on to another section.

Sections 1 and 2 approved.

section 3.

G. Farrell-Collins: This is the other

section of the bill. The other one was the get-the-cash, and this is the spend-the-cash part. The first

section is the one that artificially held the rates high and generated the revenue. This

section is the one that, when the minister goes to B.C. Hydro, says: "Thank you very much for all the money. I'll put it into general revenue, and have a good year next year too, despite the rain."

I 'd like to read into the record what this one allows the government to do: "Despite the Utilities Commission Act" -- again circumventing the B.C. Utilities Commission -- "the Lieutenant Governor in Council" -- that's the cabinet and the minister, more appropriately -- "may issue directives" -- or orders telling the authority in a fiscal year that they have to pay the government an amount specified by the minister, by the Crown, by the government. There's also the stuff that requires them to pay a rebate. In this case, as I said earlier, it's . . . . I used the very generous figure of one-third -- although I think it's more like one-tenth or less -- going back to the consumers.

This is the

section where all becomes clear, where the motive behind the government's desire to hold rates artificially high -- artificially higher than they would be if the Utilities Commission was allowed to do its job -- happens. This is the

section where the motive is laid out in clear terms. This is the grab section.

Can the minister tell me if he intends to take more of the money for general revenue? There's a lot of leeway given here for the minister. He can take some of the money himself for the Crown, for the government, or he can give some of the money back in the form of rebates as a result of these artificially high rates. Can the minister tell me what the proportion is likely to be? Is it going to be sort of 90-10, 50-50, 60-40? What's it likely to be? How much is the government likely to get, and how much are the customers likely to get back with these windfall profits?

Hon. M. Farnworth: Well, the power to direct revenue to the government from Hydro is already there, and this is now allowing the power to direct revenue to be paid back to the customer, which wasn't there before. I guess in terms of what happens later this year, next year or two or three years down the road again depends in large part on the weather and if we have a hole in the dam, which I sincerely hope we don't. Then at that time it would be looked at.

G. Farrell-Collins: I realize that the dollar figures obviously will be determined at a later date. But certainly the minister has in mind, maybe, you know . . . . The reason I'm asking this . . . . Is he saying: "Okay, I need $300 million a year from Hydro; then whatever's left over we'll split up as a bonus"? Or is he saying: "Let's say Hydro gets $350 million in surplus revenue this year. Are we going to split it 50-50? Or does the first $300 million go to the government?" Is there some sort of scale there, or a plan? Or is the minister just going to sort of wing it at the end of the day when the Finance minister comes calling for more cash?

Hon. M. Farnworth: It comes back to, again: what will be is what will happen over the course of the year.

An Hon. Member: Que sera, sera.

Hon. M. Farnworth: No, no, no, hon. member, not que sera, sera. But in terms of what happens with the weather, of what happens with the amount of money that's generated, of what happens in power generation and how much is generated, that's something that will be known later, towards the end of the year. You'll be able to see whether in fact you're having a record year compared to last year.

Two things. Hydro should be earning a rate of return comparable to other investor-owned utilities; if that's the case, that's fine. If it's over and above that and there is a surplus and that is deemed to go back to customers in the form of a rebate, then at the appropriate time those decisions would be made -- not by myself, not by Hydro, not by the Minister of Employment and Investment, but in conjunction with the Minister of Finance. So to say whether it would be done on a 90-10 split or a 50-50 split, I think, depends (1) on the type of figure that you're dealing with, and (2) on exactly what the number is.

[5:00]

G. Farrell-Collins: If I heard correctly what the minister said -- and I'll have to check Hansard later -- he said that B.C. Hydro is entitled to a rate of return commensurate with what other utilities return to their shareholders. I believe it's 14.1 or 14.7; I can't remember the exact figure. And if there's any money over and above that, it should be returned back to the customers. I'm pretty sure that's what the minister said. Can he confirm to me if that's what he said?

Hon.