Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

WEDNESDAY, JUNE 4, 1997

Afternoon

Volume 5, Number 13

(Part 2)

[ Page 3895 ]

The House resumed at 6:36 p.m.

[The Speaker in the chair.]

Hon. J. MacPhail: In Committee A, I call Committee of Supply. For the information of the members of the Legislature, we'll be debating the estimates of the Ministry of Municipal Affairs and Housing and the Ministry of Agriculture, Fisheries and Food. In this House, I call Committee of Supply. For the information of the members, we'll be debating the estimates of the Ministry of Health.

The House in Committee of Supply B; G. Brewin in the chair.

ESTIMATES: MINISTRY OF HEALTH AND

MINISTRY RESPONSIBLE FOR SENIORS

(continued)

On vote 40: minister's office, $462,000 (continued).

S. Hawkins: I just want to wrap up the ambulance issue, then, by asking the minister if there is any thought to putting alternative practices into place to improve response times for paramedics. I know I alluded to that earlier. Other jurisdictions, I understand . . . . In Australia they use motorcycle paramedics. I'm talking about the urban centres where it's very, very busy, and we're looking at resources that can get to people quickly. The motorcycle paramedics apparently go through busy urban streets to get to patients as quickly as possible.

San Francisco, I understand, has gone so far as to train and encourage neighbour responders. If you have medical people living in communities, perhaps that is a way to go -- given we've got a growing population, given the fact that we do want to improve response times. I wonder if there's been discussion with the B.C. Ambulance Service with regard to using alternative practices, if I can put it that way.

Hon. J. MacPhail: Yes. The suggestions are valuable. We actually are using bike crews at special events and determining the success of those. But yes, we are looking for ways other than the regular crewed ambulance for actually meeting the needs where populations are much more concentrated. We'll continue to examine all possibilities in that area.

S. Hawkins: One last issue with regard to this is the 911. I know that was something that was quite highly publicized in the recent past. I wonder if the Ministry of Health is working with the AG with respect to getting provincewide 911, and what their role has been in that issue to date.

Hon. J. MacPhail: Yes, there will be future policy on that, but whatever future policy is being planned, we're part of it -- the B.C. Ambulance Service.

L. Reid: I'm pleased to enter into the conclusion of this debate on Health estimates this evening. I want to spend just a few moments on accountability questions. I've certainly raised this issue with the minister many times in the past, in terms of how best to provide some kind of cost-benefit analysis to the taxpayer. How are we going to return some kind of reasonable product and then indicate the value of that product?

The question I raised in this Legislature in a private member's statement on April 4 -- two months ago today -- was around the reference-based-pricing question, because the request at the time was for evidence-based research. The responder of the day rose to his feet -- as did the minister -- and said every decision this government reaches is based on evidence. I requested, exactly eight weeks ago today, a copy of that study that indicated that this was a good direction for the province of British Columbia -- that this was a good direction for seniors and users of the Pharmacare system. I do not have that report today, and I would ask the minister to kindly comment.

Hon. J. MacPhail: There is a UVic study that has not been released yet; they've issued a news release about it, but they haven't issued the study yet. As soon as they release that, we would be more than happy to make that study available. They have released the details of the study, which they've done through public commentary, about the satisfaction of the reference drug plan. As soon as they give it to us, I'll make it available completely. In the meantime, we keep track of our own statistics internally.

L. Reid: I appreciate the minister's offer. What I believe she is referring to is the post-study. What was promised to me was the study that led up to the initial decision that, indeed, reference-based pricing was a good thing -- based on that study. That has been promised upwards of a year. So it would seem to me that probably we're having a discussion about two separate studies. The original study that allowed the decision to be taken -- that said this was a good direction -- is the one I'm after.

The post-survey, if you will -- in that the program has now been operational and people are responding to it, based on the quality of service they might or might not have received -- is interesting, and as one aspect of the discussion, I will certainly await that study. But what I was told eight weeks ago, and what I was told almost a year ago, is that the ministry itself had a study -- was conducting a study and was completing its own evidence-based research -- that would indeed indicate that this was a reasonable direction.

Many dollars were spent around this province citing this study: "No, no, no, you opposition people don't need to be agitated by this. We have a study that says we've done our homework." We're now probably in the fourteenth month. I simply want access to the study. If the minister could kindly comment.

Hon. J. MacPhail: Let me offer this to the member. The evaluation committee meets regularly; it's ongoing, and it's determining the evaluation. I would be more than happy to have the hon. member meet with that committee. A final report is not anticipated; they're doing ongoing evaluation. I would be more than happy to have that member meet with the committee and ask any questions and have any information that we have available, as well.

In the meantime, we're doing our own assessment around the issues of hospital utilization. There is ongoing determination about the effects of the reference drug program -- all of which we keep records on.

[6:45]

L. Reid: I do appreciate the minister's offer; I'd be pleased to attend the meeting. However, again, what the minister is referring to is a post-assessment tool. When the member for Esquimalt-Metchosin rose in this House and responded to me on April 4, he said: "I can assure the hon. member that this government doesn't move without doing its research in all areas of public policy, and that includes reference-based pricing."

[ Page 3896 ]

Evidence-based research in the area of reference-based pricing has now been promised to me for more than fourteen months -- not the post-evaluative framework that this minister has now referenced twice but the evidence-based, principled, decent research that led up to this government taking that decision to implement, to impact all British Columbians with, a reference-based pricing program. I think the minister is more than aware that this is a dramatically different program than generic substitution. This is a program that links chemically different products by category.

That's the issue for British Columbians who are being impacted -- in numerous cases, negatively -- by this program. I want to know where the research is that established this direction initially.

Hon. J. MacPhail: I'm sure the member has been asking this question since we introduced it, which would be two estimates ago.

We consulted with New Zealand, we consulted with European jurisdictions; our staff met on that basis, and we reviewed all of the studies about referenced drug plans and reference-based pricing in the field and designed our program on that basis. I'm more than willing to offer every single staff resource available about the genesis of this program. There's no hesitation to do that, but if the member is looking for a document that compiles all of this . . . . This was an initiative that required a lot of effort, a lot of staff time and a lot of staff investigation. I can make the historical record, through interview, completely available.

Also, the court case that the pharmaceutical companies brought against the referenced drug plan has all of the public documentation. If we've got that assembled in one place, I'll give that to the hon. member.

L. Reid: I appreciate the offer, and if indeed that information is assembled, I would appreciate that. That would be a very good place to start.

It troubles me that it has taken 14 months to get to that offer. It seems to me if that information had been readily available, I would have had it long before now, because it seems to me that this minister has been very forthright with information that has been requested. That causes me great concern; I'm not convinced it exists. I think this government travelled the province citing a study that probably doesn't exist.

That's a huge concern for me, and I can tell this minister that I sat in numerous public meetings where "the study" -- never available -- was referred to endlessly: "This is a good policy direction for this province, because we have done a study." Fourteen months later the minister maybe says that there is a compilation of material somewhere. That doesn't provide any comfort to me.

Certainly to someone who has watched this issue in all its manifestations for many, many months, it's not what this minister stands for in terms of decent principled research when she talks about evidence-based research guiding the actions of this government. We don't have that before us today. I'm truly troubled, minister, when it comes to whether or not that information was the benchmark from which the new program was created. It seems to me that it probably was not. I have serious concerns about that.

This minister has heard me rise and talk many times in this Legislature about reasonable measurement tools, about accountability and about reporting out appropriately to the public. Well, I'm asking these questions on behalf of my constituents, who are faced with this program that's not working for them. They too are being told: "We studied it; we have a study; we completed a study and that's why we went down this road." I'm not hearing that that is in fact a valid comment -- and I'm not hearing it from the minister, which troubles me further.

Hon. J. MacPhail: There are two aspects to alleviating the concerns of the member's constituents. One is that we will make available the public documents that were tabled in the court case. I've just asked staff whether a study has ever been cited, and there has never been one study ever cited in our presentation of referenced drug plans.

The hon. member is shaking her head. Is it a particular official that's been doing that, or whatever? Well, the assistant deputy minister has never done that. What we need to do is get the hon. member together with our staff at the ministry and work out the lack of communication. The staff is more than willing to do that. I'm more than willing to have the member meet with the evaluation committee.

We didn't just put the policy in place and then say: "Oh well, here's a policy and we're not going to evaluate it and make sure that it's the best for health care." There is ongoing evaluation. I mean, each and every time a physician prescribes a medication, there's ongoing evaluation. The evaluation committee looks at all that evidence. We also have the therapeutics initiative, upon which we rely, and the pharmaco-economics initiative. We monitor utilization of other health care resources. The BCMA is involved in the evaluation, etc.

The fears expressed . . . . And I know; I hear about fears expressed around this all the time. I'm very concerned about those fears. I'm very concerned about anecdotal evidence where patients say that they're not receiving the best possible health care.

When we get those complaints, we investigate them. On the basis of the stories, there's always a solution. There is always a solution to the problem: proper procedure isn't being followed; there's a misunderstanding between the patient and the doctor; there's a concerted action to refuse to cooperate that has nothing to do with medical care. We can resolve those concerns, and we can resolve them very quickly. So we're monitoring the health outcomes of the reference drug plan. And frankly, we've also said that where there is major concern that's broadly based concern, we'll review and, if necessary, change.

L. Reid: I appreciate the offers to be involved and to be apprised of the post-evaluative framework. I truly appreciate that offer on behalf of the minister, and I look forward to those meetings. In terms of what led up to that policy direction, if that compilation is indeed available, I would welcome that as well. What continues to concern me is the impact that this is having on upwards of 400,000 British Columbians. That number is growing by the day.

If there is indeed a plan for that kind of volume evaluation, that would be a good thing to share with us, as well, because many folks will never be asked the question as to whether or not this is a useful program for them. And many more folks today, I think, are experiencing difficulty with the program. So if there are ways for us to find out more about the evaluation plan that's in place, I'd be happy to share that directly with my constituents and to indicate that perhaps this is an area that they may wish to address in more detail. I could direct them to somewhere a little more specific to their needs.

If I can just change topics for a moment, and I know you've covered MSP in some detail . . . . My question is very specific to WCB claimants. There are care providers and there

[ Page 3897 ]

are claimants around this province whose bills remain unpaid for, on average, six months. It seems to be a particular backlog for the Medical Services Plan in their dealings with the Workers Compensation system. I think, in that the minister has been very generous in her offers this evening, if there's an opportunity for improved communication around who is indeed responsible for that backlog . . . . The WCB will say it's the MSP; MSP will say it's the WCB. I don't know the answer to the question, and I would be delighted to rectify that.

There are a number of care providers . . . . A physiotherapist is a standard provider for people who are involved in rehabilitation, in terms of returning to work. Their bills remain unpaid. I have six cases before me today where their bills remain unpaid for upwards of a year. Your average physiotherapist can't carry that kind of overhead, if you will. When they call the board they are told, "No, no, no -- that's a WCB-MSP issue," as opposed to taking any responsibility for activating the process. If the minister could comment.

Hon. J. MacPhail: I thank the member for bringing this to my attention. I've just discussed it with the Deputy Minister of Health, and we're well aware of the problem. Believe you me, it is a bureaucratic problem. It does require a solution. There is a difference in the way that WCB claims are paid, in terms of whether they're paid on a contractual basis rather than a fee-for-service basis. So there has to be . . . . Before the expenditure can be made, there has to be evidence of the service given -- none of which satisfies, I'm sure, the practitioner. So we're well aware of the problem.

We're well aware of other problems in the way we pay drug claims to WCB, through WCB, etc. We're making good progress in the area of getting drug claims paid on time. I confess: this is an outstanding problem that needs to be resolved.

L. Reid: I appreciate the minister's sense that perhaps we can find a solution to this. What troubles me is that I know a number of people are being turned away from reasonable care providers in communities, because the care provider has put up a sign, "We do not handle WCB claims," because they simply cannot take the frustration any longer of being embroiled in enormous paperwork and enormous backlog.

I wasn't clear on the minister's comment when she said contractual. That's an arrangement between the Medical Services Plan directly with, I assume, the Workers Compensation system in British Columbia, because individual care providers are paid on a fee-for-service basis. I mean, the physiotherapists in question have not contracted to the WCB. They are private care providers who happen to receive patients who happen to be WCB claimants. Could the minister comment?

Hon. J. MacPhail: I'd like the member to stop asking questions, because it gets worse as . . . .

Okay, health care practitioners make claims to the MSP for WCB claims. We actually act as the agent to pay those claims. But we need approval from the WCB; we pay on behalf of the WCB. So the contractual arrangement is that we make the payments, but they adjudicate the claim because eventually it will be charged against the WCB. It's the adjudication that is taking a substantial amount of time.

So let me offer -- now that I actually understand the problem in detail -- that I'll see what I can do in terms of alleviating the concern. The last thing that makes sense is for the health care practitioner to be the one that absorbs the responsibility of the delay in the payment. But I now understand. I hold out hope that we may be able to resolve this.

L. Reid: If the minister is taking it on, it would warm my heart.

I'd like to perhaps offer a solution, that at some point some Minister of Health -- hopefully this one -- will come to the table and take responsibility for the medical programming that goes on in the Workers Compensation system. There's no reason in the world why that cannot be aligned with a major teaching hospital in this province, which would finally give it some credibility and, frankly, put in place some levels of accountability that are notoriously absent today.

I'm putting this on the table because I want the minister -- knowing full well that this job is as enormous as it is -- to look at the fact that a two-tier level of health care does exist in this province. It exists for people who are WCB claimants. The level of care they receive is dramatically different than the level of care for any other patient in this province. It is a two-tier system. If this government is truly committed to ensuring that health care is universal and accessible to all British Columbians, regardless . . . .

If they're injured at home on a weekend or at work, I mean, that should not determine the level of health care available to any single British Columbian. Yet today it does. Everyone else has said that's the way it's always been. It's not acceptable to me; it certainly is not appropriate.

Any member of this House will stand up and say we support a single level of health care. It is time to operationalize that belief, because, truly, if you are an injured worker in this province your access to health care is dramatically different. Any member of this House will tell you that, because I'm sure every single MLA has had Workers Compensation claimants come to them for service. They're the ones who don't get to see a physiotherapist when their injury happens. They see one three months later, when the WCB has somehow adjudicated it through their paper maze.

They don't get diagnostic tools in place; they don't get X-rays; they don't get surgeries. Oftentimes, a year or a year and a half has gone by -- not appropriate.

[7:00]

It's the filter -- the screen, if you will -- that is creating a very significant second layer of health care, because the number of work-related injuries in this province goes up every year. We simply say: "Here is the access to health care. But you won't be able to get through the maze for probably 18 months. Good luck. It's too bad you were injured at work."

I appreciate that this is currently under the Ministry of Labour, but it's a health issue. Where the rubber hits the road in the Workers Compensation system is around health care delivery and access to reasonable service. I truly understood the minister's problem when she said it's a bureaucratic problem; it absolutely is. But because they have refused to resolve that bureaucratic problem for upwards of 15 years, health care is being compromised in this province. You're not a different calibre of patient because you happen to have received a work-related injury. It seems to me it will take someone of this minister's strength to get the ball rolling, but it's time the discussion was held.

There's no reason for workers in this province to be shuffled off to little rooms at the Workers Compensation Board to be seen by individuals who call themselves medical advisers but who sometimes have zero medical training. It's misleading in the extreme. Those individuals are not aware that they are not physicians, for the most part. That will

[ Page 3898 ]

change this year. The fight has been long and arduous on that. Now we will look at people who are on the active list at the College of Physicians and Surgeons of B.C. But this organization has been in place since 1917, so you can only appreciate how many people have had their health care compromised up to this point. It's truly an issue that needs attention. I would welcome the minister taking it on.

Hon. J. MacPhail: Thank you very much for those comments. Two things: in the meantime, we'll investigate a solution to claims payment; the broader issue of responsibility for health care costs is one that I'm extremely interested in -- in all areas of who's responsible for our health care costs. I'm actually going to discuss with my staff how we can approach this in terms of the royal commission presentation and see what our role is there. So I do very much appreciate the member raising the matter.

L. Reid: I want to thank the minister for those comments. But I certainly was here in terms of giving the minister a heads-up. That will be the basis of my presentation to the royal commission; I certainly believed it was important that you hear it from me first. I think you indeed should take on the Workers Compensation system. I thank you most sincerely.

S. Hawkins: I'd like to go back to the drug plan. I understand that I did have the opportunity to meet with ministry officials and get an overview of the drug plan. I understand there are several different parts to the plan. I understand that through PharmaNet -- I believe it was the family plan -- the costs associated increased quite substantially. I wonder if the minister or the ministry officials would again just reiterate why those costs went up. Do they perceive that they will continue to go up?

Hon. J. MacPhail: What's good news for the taxpayer turns out to be, because of the introduction of technology, a cost on the system. Prior to the introduction of PharmaNet, any person who wished to make a claim for a prescription had to save the receipt, put it in a drawer and then make a paper claim. What happened, I can only assume, was that lots of families put the receipt in the drawer and then never made the claim. So they were actually at a loss for the entitlement to benefits.

On PharmaNet, the computer keeps track of the claim and pays out automatically. So about double the number of families now are receiving a cheque from Pharmacare. I think it was about 52,000 who were making claims before, and there are now about 116,000, so it's more than double the number of families. As a result of that, the pressure on the system, the extra cost has risen from $46 million per year for that plan to almost $78 million. Over $30 million of extra claims are being paid out as a result of PharmaNet, which is good news, I guess, for working families.

S. Hawkins: I suppose that was kind of a surprise for the budgeting in the drug plan. Now, is that something that will increase? Is that something that the ministry perceives will increase?

Hon. J. MacPhail: Actually, it didn't come as a surprise; we predicted that and budgeted for it. It's a one-time cost, because now everyone is captured by PharmaNet. We know the exact amount of claims that can be made.

S. Hawkins: I also want to talk about reference-based pricing. I know we've had this discussion with respect to a motion in the House, but I just want to address it again in estimates.

This is a policy that replaces a drug that is ordered by a physician with another group of drugs that Pharmacare says works just as effectively. Certainly the minister knows our concerns with this policy, because groups -- seniors groups, other groups . . . . She gets the same letters that I do, because they usually come addressed to the minister and to my attention. The concern is that patients aren't on the drugs that are most effective for them.

I have the same concern as the member that was speaking prior to me has, and that is: if the patient goes on a drug that the doctor didn't order -- it's replaced by Pharmacare . . . . Certainly if the patient wants to pay the difference between the drug that the doctor ordered and the one Pharmacare wants them to have, they can do that. It sounds like two-tiering to me, but that's the system that's set up. But if the drug does not agree with the patient, does the Pharmacare program or the Ministry of Health track drug-related incidents that go back to the doctor, back to emergency or associated hospitalizations? Do they keep track of that?

Hon. J. MacPhail: Yes, we do, and I'll just provide that information now. There is monitoring specifically to seniors, and I actually have the diagrams here. We'll make a copy of this available now, if you wish.

The first figure shows that there's been no change of rate of hospitalization. So let me go into more detail around that. Among seniors who switched gastric drugs after October 1, 1995, the rate of hospitalization for gastro-intestinal bleeding was unchanged. The average rate was 60.0 hospitalizations per week in the two years before reference-based pricing versus 60.6 hospitalizations per week during the six months after reference-based pricing.

Among seniors who switched nitrates for heart pain after November 1, 1995, the rates of hospitalization for fainting and heart attack were unchanged. The average rate for fainting was 73.5 hospitalizations per week in the two years before the reference drug plan versus 72.2 hospitalizations per week during the five months after reference-based pricing. For heart attack, the average rate was 73.1 hospitalizations per week in the two years before reference-based pricing versus 68.8 after reference-based pricing.

Among seniors who switched non-steroidal anti-inflammatory drugs, NSAIDs, after November 22, 1995, the rate of hospitalization for gastro-intestinal bleeding was unchanged. The average rate was 49.9 hospitalizations per week during the two years before the reference drug plan versus 49.8 hospitalizations after.

We introduced the drugs that lower blood pressure just in January of this year. we're keeping the stats for that, but the initial months -- it is only initial -- show no change in the weekly incidents of patients who, for the first time in at least one year, received medical services with diagnostic codes for heart attack or stroke and who switched their blood pressure drugs. The average incidence of first services for heart attack was 9.4 patients per week in the first two months, compared with 12.2 patients per week during the nine months before.

We are very concerned about making sure that this is good for patients as well. We are monitoring it all very carefully and will continue to do so.

[ Page 3899 ]

S. Hawkins: I'm wondering if the minister can tell me who's doing these studies, or this tracking, and where it is being conducted.

Hon. J. MacPhail: The data that I quoted is the internal monitoring of the utilization rates and the Medical Services Plan billings. We will give this to the evaluation committee for a reference drug plan, but they, too -- the evaluation committee -- are using their own evaluation methods on the reference drug plan.

S. Hawkins: Are there any studies being done between a control group, if you will, of patients who are taking the drugs the doctor ordered and the patients that are being reference-based? I honestly feel that when policies like these are put into place, there should be hard scientific evidence that this is indeed working.

We know that other jurisdictions have tried reference-based pricing. We know that it was tried in Germany and that they abandoned it. We know that it has been tried in HMOs, which are organizations in the States, and it's been abandoned. Where they restrict formularies, they find that their health care costs increase. We know that in the past few years health care costs in this province kept increasing. Is there any scientific basis to reference-based pricing working?

Hon. J. MacPhail: Yes, we are tracking it. According to their own personal medical data of patients that have switched medications, there's been no statistically significant increase in either hospital utilization or in the patient visits. We'll continue to track that.

S. Hawkins: This is a policy that this opposition will follow very carefully. I think there are very few areas that I get a lot of letters on, and this is certainly one that I do get a lot of letters, phone calls and concerns on.

I would also just like to ask the minister who advises what group. Is it still the therapeutic initiatives group that advises on this policy?

[7:15]

Hon. J. MacPhail: Now, there were two parts to that question: the therapeutics initiative and then who advises us. The therapeutics initiative does the clinical advice on use of drugs. They're not part of our advisory committee. We use the information that they release to the broad public and to the medical community. We use that in our evaluation of moving forward on a reference drug plan, but there's a reference-based pricing expert committee which the ministry has struck that assists our Pharmacare division on reference drug pricing.

They advise on the addition of new categories, the consultation process regarding protocols and the implementation of therapeutic guidelines. The people who sit on that are ministry officials, the office of health technology assessment, the hospital representatives, experts from the hospital sector, from the University of British Columbia, from the drug and poison centre -- clinical pharmacologists. Just to name some of the past members, Dr. Janet Martini, Dr. David Blair, Mr. Derek Daws and Dr. Malcolm McClure are some of the people who have sat on that committee.

S. Hawkins: I assume, then, that this is the core committee that makes the decision of whether a drug group will be reference-based or not. They obviously, from what the minister says, use the advice of a group that is called the therapeutics initiative. I understand that in this budget year the therapeutics initiative group will get $575,000. I wonder what service they provide for that money and what accountability they have to the ministry for that service.

Hon. J. MacPhail: Yes, the member is correct, in that the government provides $575,000 to the therapeutics initiative. They then are required to do the evaluation of new drugs. They also do conferences and education sessions with health care practitioners, and then they also issue communications. I know I'm not allowed to use props, but here are the . . . . I have the binder of the . . . . They issue information bulletins to practitioners, and they do teleconferences. Those are the therapeutics letters that I mentioned. They do provide a public annual report, and they do drug assessment.

They do the critical evaluation of new drugs in British Columbia, and their standards are the best evidence obtained from scientific literature.

L. Reid: In terms of the minister's final comment that their role is to evaluate the scientific literature available on different drug products and then render a decision -- again coming back to the accountability question -- I have some concerns on whether or not that is an exhaustive look at each of those drug products. It seems to me there is a great variation in the level of material and the amount of material they would look at, product to product.

There have been references made that one or two articles have sometimes sufficed in the selection of a particular product to be reference-based, and in other cases there's been a great deal more work done. If this is, you know, the ERIC clearinghouse for drug research and they look at articles that are readily available, how does that figure into the ministry's overall plan for accountability?

Again, for the record, these are not the people who actually conduct the research; these are the individuals, from my understanding from what the minister has said, who read the articles from scientific journals about particular drug products that are new to the market. To me there are huge gaps in how accountable that process really is. If the minister can assure us, I would delight in that. But how can she assure us that indeed the work has been done? Is it possible that this committee would reach a decision based on the reading of a single article?

Or is there a criterion in place that says they have to look at seven different articles or nine different articles? Is there a way for us to be sure that that is indeed a credible, exhaustive process?

Hon. J. MacPhail: I'm glad you asked this question, because I don't want to influence the reputation of the therapeutics initiative by suggesting that they support or don't support a reference drug plan. They have clearly said that they have absolutely no opinion on the reference drug plan. They don't support it, and they don't not support it -- fix that in Hansard , if you can. They're tied in with the Cochrane Institute, which is an evidence-based scientific research institute. Their evaluation procedures are well accepted in the world of university research.

Original research, of course, is a very complex and costly procedure. Billions of dollars are spent worldwide. The therapeutics initiative researches every single peer review on a drug -- all the journals. They do the full range of research. I wouldn't, for a moment, challenge their legitimacy or their credentials on this area. They do the full review, and they issue their letter.

I actually had a meeting with them. They're very serious and very committed to what they consider an extremely valuable

[ Page 3900 ]

research initiative at the university. They are tied in with the university -- not with any other institution -- and they stand behind all of their initiatives. They also made it quite clear to me that I am never to invoke their name in any way that besmirches their reputation, and I have clearly made that commitment.

L. Reid: The minister referenced the Cochrane Institute. Could the minister provide some information on where they exist and who they report to?

Hon. J. MacPhail: That's an interesting question. The Cochrane Institute was originally out of Oxford, but it's a virtual organization -- an international organization. They provide the gold standard in terms of what is evidence-based research. They have a very high standard of criteria that has to be met. The therapeutics initiative is attached to the Cochrane Institute. I'll make available to the member whatever written material we have in terms of the organization.

L. Reid: If their goal is indeed evidence-based research, perhaps the ministry could have looked at that when it came to creating evidence-based research for reference-based pricing. If they truly are the gold standard, I would have appreciated this ministry building that into the original plan so that we would not have had to spend 14 months requesting the study.

S. Hawkins: My questions still relate to the therapeutics initiative. Is this a group set up by the ministry and totally funded by the ministry for the information they receive on review of drugs?

Hon. J. MacPhail: It's a three-year grant. This is the third year of the grant. They are fully funded by the Ministry of Health, but they operate at arm's length and take no direction from us.

S. Hawkins: I understand that. I'm just passing these concerns on to the minister, because the minister showed a binder of information that's supposed to be published . . . . Perhaps the ministry can investigate this, and if they do know, they can relate the information to us now. I understand that newsletters aren't being published monthly, as the objectives originally had stated they would be, and that local and regional meetings have essentially stopped happening. Is that the information that the ministry has?

Hon. J. MacPhail: They are to do ten newsletters a year, and from the most recent information we have, they are meeting that goal. I accept that as a question for me to investigate -- that they're meeting the terms of the contract -- and we will do that.

L. Reid: The minister referenced that this is indeed a grant program to operate the therapeutics initiative, and it's in year three. Could the minister comment on what happens next year, as it will be another three-year contract that comes into force, and if these appointments are still order-in-council appointments, are they staggered in any way? Will people be leaving the board this year and new entities coming on side?

Hon. J. MacPhail: In terms of what happens, we'll have to leave that for future estimates. Actually, the committee membership is not by OIC. The doctors request committee membership and gather up the committee membership. It does change from time to time, but it's not through government appointment. A government representative sits on it, but we don't make the appointment.

[7:30]

L. Reid: From the minister's comments, am I to understand that she is not aware of the individuals whose names are being put forward for consideration on the therapeutics initiative? I think the response was that in terms of future funding, that would be decided at a later point. Are we to understand that the possibility exists that the therapeutics initiative will not exist after this year? Or is this a long-term initiative on behalf of this government? It's got to be one or the other.

Hon. J. MacPhail: I can't commit myself to future estimates. It's just not appropriate for me to do that. I get asked all the time to make commitments for future funding, and I just can't do it. Am I committed to the therapeutics initiative? Yes. The scientific directors are responsible for assembling the committee of scientists from across the community to be the directors for the therapeutics initiative.

L. Reid: The second part of that question was: are those names known to the minister prior to the selection process?

Hon. J. MacPhail: No.

S. Hawkins: Back to who gives advice to the ministry when they are reference-basing a group of drugs. I understand that last October, when the heart drugs came on board, the Canadian Cardiovascular Society, in an unprecedented move, released a press release saying that they were opposed to reference-based pricing of the heart drugs, and they felt that it was risky and dangerous. Were they consulted before those groups of drugs were put on this pricing initiative?

Hon. J. MacPhail: We've had a good debate around Bill C-91 on these issues, and I don't want to besmirch anybody's reputation in the process of this.

The Canadian Cardiovascular Society issued the press release, and immediately thereafter, the Centre for Evaluation of Medicines wrote a letter to the Canadian Journal of Cardiology refuting the position taken by the members in the Canadian Journal of Cardiology. I made that letter available to the public. It puts in question the position taken by the Canadian Cardiovascular Society, but let me just very . . . . Well, I don't know whether we need to get into this, because the Canadian Cardiovascular Society is funded by Pharmaceutical Manufacturers Association companies. They admit to that.

The position paper that they put forward was criticized by the Centre for Evaluation of Medicines here in Canada, which says that not only does the paper contain a number of inaccuracies, but furthermore, the background paper published adjacent to the position paper is produced by two employees of the pharmaceutical industry who have a commercial conflict of interest as evaluators of the reference-based pricing policy.

So there we are. I have listened to both sides. Our ministry is well aware of the positions taken around this matter, and we will continue to seek information from the experts on what are the best evidence-based decisions.

S. Hawkins: I would hate to think that a doctor or a cardiovascular or cardiology expert would be basing their decision about what drug is good for their patient on who might fund their organization. I think that's a big leap to be

[ Page 3901 ]

taking, and we could certainly get into that discussion. We know that different groups back different organizations. We know where governments get their backing and we know where other groups get their backing. This is patient-centred; these are patient-focused kinds of issues here. I don't think I hear the minister -- I hope I don't hear the minister -- saying that that press release was a result of influence from a drug company. I hope that's not what I'm hearing.

I have talked to cardiologists; I have talked to cardiovascular surgeons. I think I brought this up in the House the other day. They are questioning the longer waiting lists for cardiac surgery, and there's no evidence . . . . I don't know if the ministry has any evidence . . . . But they're wondering if maybe patients are getting sicker on the reference-based drugs, thereby making their condition worse; then they need their cardiac surgery sooner and they're put on a wait-list.

Now, that's anecdotal stuff I'm hearing, and I don't know if the minister is hearing stuff like that. I hope the ministry looks into that, because several heart surgeons have brought those concerns forward. And I would hate to think that we are looking behind the concerns that front-line providers have for their patients and looking at where their organization might get funding. I would hate to think that the ministry would in any way even . . . . Well, I hope that's not what I'm hearing from the minister. I hope that what I'm hearing is that these front-line workers are concerned about patients and these are concerns they're bringing forward.

I want to move on to the special authority forms, and I understand that there was quite a bit of work involved around the special authority forms. I understand that there was money added to the physician MSP budget, and I understand that part of the $10 million that was added to the physician budget was in response to work around special authority forms. Is that correct?

Hon. J. MacPhail: The negotiations with the BCMA are always interesting. The negotiations for increased funding in the last fiscal year had the BCMA putting a whole range of issues on the table that required -- in their view -- extra compensation. The Ministry of Health negotiators had a view on a range of issues that should affect Medical Services Plan utilization as well. The BCMA put forward what they thought should be the compensation package. The Ministry of Health put forward a substantially lower number. A total compensation package of $10 million was agreed upon without attachment to any specific . . . . It was a total comp package with no identification of specific issues.

S. Hawkins: I guess it's all a matter of perception.

I also want to canvass briefly the area of special authority forms. How many are being received daily by the ministry?

Hon. J. MacPhail: Special authority approvals cover three categories: reference drug plan, low-cost alternative and restricted drugs. I can deal with them in total. For reference drug plan, the requests per year were 50,000. It varies daily, so I would appreciate it if I could give an annual figure; it varies substantially daily. The number of prescriptions under special authority for reference drug plan is about 5 percent of overall prescriptions annually. So that was 50,000 prescriptions for reference-based pricing. Low-cost alternative are 3,000; special authorities and restricted drugs, 15,000.

S. Hawkins: What's the turnover time for a special authority form?

Hon. J. MacPhail: The turnover time for reference drug plan special authorities is within 48 hours -- a maximum of 48 hours. But on the restricted drugs, it's a much more complicated process for special authority, and admittedly that could take up to four weeks. It's usually much shorter than that, but there are times when it does take up to four weeks. But not for the reference drug plan.

S. Hawkins: For the time period where it's extended more than 48 hours, what provision is made for the patient to get the drugs they need?

Hon. J. MacPhail: Well, the reference drug plan approval is within 48 hours, but on the restricted drug approval, the examples are usually of ones that are experimental drugs or still clinical-trial drugs. So the Pharmacare program works with the physician to get it as quickly as possible. But I offer this: a life is not threatened by the longer approval program for restricted drugs.

S. Hawkins: Also, there were concerns about malpractice suits over this Pharmacare policy by practitioners that prescribe, and I'm wondering: if the patient can't afford to buy the drug that the doctor orders and they must go on the reference-priced drug because that's all they're going to get, because that's all they can afford, who assumes the liability if there is injury to the patient?

Hon. J. MacPhail: At the last meeting I had with the B.C. Medical Association, they raised this concern. There is certainly recognition that there is no evidence yet of this situation occurring. It is a future concern that the BCMA is raising with us. I'm listening very carefully. We're in discussions around the whole issue of the reference drug plan. The fear, to date, is unfounded, but it doesn't mean that it isn't an issue that we have to deal with.

Certainly there's a recognition on our part -- and the physicians freely recognize, as well -- that there are a whole host of adverse drug reactions unrelated to any reference drug plan or any Pharmacare program. It is in the context of the whole wealth of information and court decisions around adverse drug reactions that we need to consider this issue. We are talking to the B.C. Medical Association about it.

[7:45]

S. Hawkins: I think the minister can appreciate that if the practitioner wrote the prescription and the patient filled it and that was the drug that he or she ordered then he or she would be responsible. But when it's a prescription that the practitioner is writing but the patient can't afford the drug that the doctor ordered, and it's being replaced, there is a grey area there, and the ministry should look at that very seriously, because I think they're going to have a fight on their hands. The practitioners, from my dealings with them, are absolutely not willing to assume that liability, because that's not the drug they ordered for that patient.

I'm going to move ahead to a couple questions that I've been asked by pharmacists. One is that they feel that they're assuming more and more responsibility -- or they would like to assume more responsibility -- for patient teaching in the way of compliance and drug education. They have a disease management plan -- and I believe the ministry is aware of it -- where pharmacists would assume an expanded role. Where are the discussions to date, and is the ministry considering this in their Pharmacare program?

[ Page 3902 ]

Hon. J. MacPhail: Yes, there are discussions going on about disease management, which is where the pharmacists would counsel a client-patient on the use of their medication. As always, it's a matter of: what are the fiscal implications for this? I know, just personally, that my pharmacist . . . . The whole pharmacy chain that I deal with has an outreach to patients. It's very effective, especially in areas for treating children's illnesses, etc. But the issue really is: is there any compensation for this, and if so, what?

We have managed to compensate pharmacists in other areas where they actually do clinical intervention -- there's specific compensation. But we have managed to hold steady on the dispensing fee; we haven't had to cut back on that dispensing fee, as almost every other jurisdiction has. In exchange, we have suggested to the pharmacists that part of the dispensing fee is the interaction with the consumer. So that's where it stands.

S. Hawkins: This has to do with compensation as well, and I understand there was an issue -- and it may be resolved; the minister can advise me -- with respect to the added duties that the pharmacists took over when PharmaNet was implemented. I know they presented a case to Pharmacare to get some compensation for that. Has that been resolved?

Hon. J. MacPhail: Yes, we actually just very recently reached an agreement with the pharmacists' association on compensation -- an overall compensation package that compensates pharmacists for the workload associated with PharmaNet. The final agreement was signed very recently.

S. Hawkins: I appreciate that response. I'm glad it's resolved. A final issue . . . . I'd be remiss if I didn't bring it up. It doesn't have anything to do with Pharmacare, so you're off the hook there. It has to do with something I brought up earlier in estimates. It concerns provincial programs that are now going to be the responsibility of the Vancouver-Richmond health board. I wonder if I can take two minutes to canvass that.

One particular program that I've been getting letters about is the British Columbia Centre for Disease Control. There is a concern that these programs will go to one board and that that board may not consider, I guess, the effects of the rest of the province in their responsibility. I understand that the B.C. Centre for Excellence in HIV/AIDS is under that board. I understand . . . . Well, certainly the British Columbia Centre for Disease Control is under that board.

I want to know how the ministry is going to ensure that the quality of these programs is maintained on a provincewide basis when it's being dealt with by one board that's being represented by a super-board, if you will, which is the Vancouver-Richmond health board.

Hon. J. MacPhail: Clearly, the ministry officials are well aware of this issue, because they're all involved in it. It is an important issue; there's no question. I'll give two parts to the answer: one is the whole issue of provincial programs going to a particular regional health board. We have a very clear mandate: the main one is the Vancouver-Richmond health board about funding allocation. The cluster-board model is also set up in a way that gives particular attention to provincial programs.

That's the reason why the Vancouver-Richmond health board actually has the ability to appoint three members more than any other board -- to allow for representation outside the geographic region represented by the Vancouver-Richmond health board.

And yes, the point is well taken on the B.C. Centre for Disease Control. That's why it has not been transferred yet. We're setting up an advisory committee, of which our provincial health officer will stick-handle the consultation about the best method of ensuring the integrity of the B.C. Centre for Disease Control, given the new regionalized health model. They are looking at similar health models with similar centres in other jurisdictions, including the United States. All of that will be done before the transfer actually takes place.

S. Hawkins: I appreciate the answer. That is something that we will be watching, as well. There are certainly funding concerns around that, too. And that's something we'll be keeping our eye on.

At this time, I guess I'd like to say -- thankfully, some would say -- that I would like to conclude the debates for the Ministry of Health estimates. I must say that I've thoroughly enjoyed them. I think we've had good debate. I don't think there's one issue that was raised that wasn't important to British Columbians and to patients in this province. And I must say that I am still concerned about health care in this province. And this side of the House will be vigilant: we will be speaking for patients.

I want to thank the ministry staff for their patience and for the information. It's very, very helpful. And I hope to get some briefings this year and to work with some of the ministry officials. So at this time, I'd like to say thank you. And that concludes debate.

Hon. J. MacPhail: Thank you. And just before we call the votes, I, too, thank the hon. members throughout the House very much for the debate. I would just like to personally reassure the members that I always knew the job was a big one before and now, after the debate, I know that it's a giant job. I certainly do appreciate, even in moments of frustration, the valuable advice I receive from everybody in this House.

But I'd also like to take the opportunity in the whole chamber, the whole building -- as people are listening to me -- to really, truly thank the ministry staff. I am constantly impressed by the expertise contained in the ministry and by the way in which they patiently advise me. The leadership of this ministry is quite exceptional, and to each and every one of them standing throughout the building, I say thank you very much. And I wish I could join you for a celebration, but I can't leave this chamber. Anyway, go and have one, but thank you very much to the staff.

Vote 40 approved.

Vote 41: ministry operations, $6,869,553,000 -- approved.

Vote 42: vital statistics, $7,862,000 -- approved.

Hon. J. MacPhail: I move that the committee rise, report resolutions and ask leave to sit again.

Motion approved.

The House resumed; G. Brewin in the chair.

Committee of Supply B, having reported resolutions, was granted leave to sit again.

Hon. J. Pullinger: I call Committee of the Whole to debate Bill 9.

[ Page 3903 ]

TOURISM BRITISH COLUMBIA ACT

(continued)

The House in committee on Bill 9; G. Brewin in the chair.

Hon. J. Pullinger: Before we commence, I would like to introduce my staff that are here with me again today. Beside me is Lyn Tait, who is the deputy minister; Rod Harris, sitting behind me, is CEO of Tourism British Columbia; Dennis Carson, who is legal counsel for the Ministry of Attorney General, who knows all those intricate details about the legislation that I don't.

section 11.

[8:00]

I. Chong: At last count, we were on

section 11. I was just having to check Hansard to see where we were, so I didn't have to repeat my questions. I ask the hon. Chair to just bear with me for a moment, so I can find my place. At the time we adjourned, I believe there was a vote.

section 11, when we were discussing the business plan, there were some concerns -- and those concerns still exist -- as to carrying out certain functions, the mandate, of the new special operating agency. I'm wondering . . . . I did, I recollect, ask about the fact that because this is a transition year, because we don't have the business plan before us, the new special operating agency would likely continue on with the mandate it had when it was within the branch of the ministry.

I'm wondering whether the minister can provide just a very brief outline or overview, because we don't have a business plan -- particularly if there are any proposed changes to what was previously done through the ministry and what will now be expected to be done with the special operating agency.

[F. Randall in the chair.]

Hon. J. Pullinger: Tourism British Columbia has been an SOA, as the member knows, and we are now in a period of transition. In the act, as the member knows, the legislation is retroactive to April 1 for functional purposes. We are in a period of transition right now where the special operating agency is continuing to do its work and review programs and provide the marketing service for British Columbia and the tourism industry in the province. As they review the programs, they are also developing the business plan.

So very soon after -- within a reasonably short time -- the first board of the new agency is in place, there will in fact be a somewhat late business plan for this fiscal. And there will also be one in place for next year prior to the next fiscal. It's just simply late because we're in a period of transition.

I. Chong: I appreciate that clarification from the minister, because that was not what I was led to understand last week when we were canvassing this particular section. We thought we would be looking at this current fiscal, '97-98, to be carrying on, and that the first business plan we would be seeing would be for the '98-99 year, and that it would be prepared and provided prior to the next fiscal. But what I'm hearing from the minister now is that we will get a somewhat truncated version for the balance and remainder of the year, so that we can see what the business plan and objectives will be for the remainder of the fiscal.

One thing that the minister mentioned, which caused my eyebrows to be raised was that the business plan . . . and the board would be meeting and reviewing programs, etc. I'm wondering whether it is part of the mandate of the board to be reviewing programs and policies -- essentially doing some, I would think, administrative kinds of things -- or whether the board would be more empowered to deal with marketing. My assumption, I guess -- whether right or wrong, and I stand to be corrected -- was that the new, empowered board, would be primarily focused on marketing and programs related to marketing.

I'm wondering whether that has changed from the previous operation that was set up through a ministry.

Hon. J. Pullinger: The current SOA board is in transition -- it is the SOA board -- and in this period of transition is reviewing current programs, etc., so that when the new board is in place soon, it will be prepared to move forward rapidly. So that work is being done now. As the member knows, it's is not really part of this legislation.

Just to clarify -- we discussed this earlier -- the Tourism British Columbia agency that we're creating here will take all of the programs that are currently in my ministry, with the exception of land use policy, overall policy and some of the development that will be a shared function. I think that's all of them.

I. Chong: The question that I have for the minister, as a supplemental to her response . . . . When she says that the current board is at this time carrying out its duties as best as it can and perhaps setting up some targets and goals, will the new board, when it comes in place, be required to follow through on those things? What I'm after is that if the new board is not comfortable or not in agreement with what the old board had set out, is there provision for the new board to deviate from, I guess, a partial plan that was provided to them? Will the new board be able to act almost immediately to set its own priorities, its own business plan, for the remainder of the year?

Hon. J. Pullinger: The current board is an industry board, and they're very much in touch with the tourism industry. I have also made a commitment, which I think is an appropriate one -- and I'm sure the member would agree -- that there will be some rollover from the existing board to the new board, so they will carry that information with them. Technically, the new board will be fully empowered when it comes on, when it's appointed and Tourism British Columbia is up and running. It will be fully empowered to make changes if it so wishes, but in all fairness, I think it's really a bit of a moot point.

The industry collectively is very much behind the existing board and will be very much behind the new board. What's happening is a result of consultation with a knowledge of the industry.

I. Chong: I didn't want to belabour the point that the minister made earlier, except for the fact that I think the minister was aware that we were concerned about the board composition. Of course, I know the industry is in fact behind it, provided they felt there was the ability to have some independence and to move forward with what they view as their marketing objectives, which may be different from those of some of the board members who may currently be dealing more with the policy and program issues that are before them now.

Looking at

section 11 of the Tourism British Columbia Act, on the business plan that is to be prepared, it says that it's required to prepare revenue and expenditure proposals. I guess that would ordinarily be fairly easy, because the expenditure

[ Page 3904 ]

proposals would establish the revenue that the ministry would provide to it, because it was a part of the ministry. Given that this will now be based on a funding formula, can the minister advise how the board would be able to set their expenditure proposals, which are based on their revenue -- which they're not necessarily virtually assured, unless they are, and that's what I'd like the minister to be able to answer. If they are virtually assured in terms of dollars, is there a plus or minus percentage, shall we say, a range that those who are preparing the business plan are permitted to work with?

Hon. J. Pullinger: There are funding formulas in place, but with the permission of the member, I would like to suggest that we discuss that under the funding formula part of the legislation, if she concurs. I would be pleased to answer any more business plan questions.

I. Chong: I wasn't trying to engage in the discussion of the funding formula, because I know that's coming later on. When I referred to it, I was alluding to the fact that in the past, the ministry said we would have a $20 million budget for tourism, and then the board, with those numbers, would determine their expenditure proposals.

With no assurance as to what that dollar figure may necessarily be, I was wondering whether the minister would allow the business plan to have flexibility, plus or minus 1 percent, plus or minus a half a percent, of a $20 million target, a $19 million target or a $30 million target, whichever it may be. That would then allow the business plan to be developed and to deal with those expenditures, based on knowing that they could develop it with a revenue amount with some flexibility. If there is that, I'm wondering whether the minister can provide us with that plus or minus range.

Hon. J. Pullinger: The board of this new Tourism British Columbia will be made up primarily of business people. As they develop the business plan, I'm absolutely confident that they will use standard projections, economic projections, revenue trends and so on. They would plan for any increases or shortfalls in revenue and make provision for that in the business plan.

I. Chong: I'll accept the response from the minister at this point. I know the difficulty in preparing business plans, given the volatility of the tourism market. I know it has been a steady increase, but anything can happen. Our exchange rate here can suddenly go on par with the American dollar, and we could suddenly lose a lot of tourism revenues, and the hotel tax ones, from which revenues are going to be provided to this new Crown corporation, are certainly going to be dependent on that. With that, I will leave my questions on

section 11 and defer to the hon. member for Parksville-Qualicum.

P. Reitsma: I've got just one question on

section 11. All the questions have been asked, but I seek clarification from the minister on a statement she just made. The current board is carrying out and implementing the current programs. If that is the case, are the costs of those current programs, which have already started last year, based on funding that was supposed to take place last year? Is that being carried forward, or is that part of that $18 million or $20 million as of April 1? It's one thing to carry out current programs that were implemented based on last year. It's another thing, of course, having the funding. Is that predicated . . . ?

Of course, the programs last year were predicated on $24 million or $25 million, I think, as part of the three years of the small sliding scale. I seek some clarification on that.

Hon. J. Pullinger: The business plan is being prepared based on a fairly solid estimate of the funding that the new agency will have this year. I would be really happy to provide to the member the details of how that funding is going to work. But with the member's agreement, I would recommend that we defer that conversation about the details of how the funding formula will work until

section 22, where we talk about the details of that. That would be a more appropriate place, but I'd be delighted to answer the question.

R. Neufeld: There were earlier questions about plus or minus in total budget amounts. Is it not possible for the Crown corporation to carry forward surpluses of that nature -- or deficits, I guess you could say -- from one year to the next? Is that not possible under Crown corporations?

Hon. J. Pullinger: In fact, they can carry forward surpluses. Again, with the indulgence of the member, I would like to move on to the financial part of the act, because then we can discuss all the financing arrangements in detail. They are absolutely valid and appropriate questions, but I think it would be better to deal with them at a later part of the legislation.

[8:15]

Section 11 approved.

The Chair: Shall

section 12 pass? So ordered.

Interjection.

The Chair: Oh, is somebody up over there?

The member for Parksville-Qualicum.

P. Reitsma: Thank you, hon. Chair. It's hard to be in the corner, particularly when you're only 5 foot 18 inches. You know you're being overlooked at times.

section 12.

P. Reitsma:

Section 12 states: "The board must prepare and deliver to the minister, within 3 months after the end of the fiscal year of the corporation or at a later date that the minister may designate . . . . " I seek clarification from the minister in terms of how much later the designation may occur, and why it is up to the minister. If indeed it is up to the minister, really, that makes the first portion of the sentence redundant. If it's up to the minister, it could be done at any time. What would the circumstances be that it would be beyond three months?

Hon. J. Pullinger: The purpose of this

section is to provide for the standard reporting within three months. That's standard within the Crowns, and the format is standard. The additional part that the member alludes to -- the provision that enables me as the minister to extend that time -- is simply there in the event that there are some special circumstances, particularly in the first year when the business plan is late. So all that does is provide a little bit of flexibility. The board could come to me and simply say that it's unable to report within the three-month standard reporting period, and we could simply agree on a reasonable later date.

I expect that this year will be difficult. Rather than doing the business plan in advance of the fiscal year, it's being done

[ Page 3905 ]

during the fiscal year, because of the transition process. So I expect there may in fact be some difficulty in having that reported on time this year. It's primarily for that reason that this

section is in here.

P. Reitsma: I appreciate that, and I accept that perhaps that might be an example of being beyond the three months. But I would assume and I would take it that the absolute maximum, of course, will be March 31, 1998, before the end of the next fiscal year -- that the maximum will be a year after the date of the fiscal year.

Hon. J. Pullinger: Absolutely. It's a very hard-working board that we have now; I expect the next one will be just as good. And I would expect that if they're outside the three-month period, they won't be long outside it. The next business plan will be due to come to me 30 days before the end of this fiscal. So I'm sure that they'll want to have the other one complete as quickly as they can.

R. Thorpe: The annual report, as I understand it, is based on a fiscal year-end. So I don't understand, if the planning starts late this year, why that should have any impact on the delivery of the annual report -- when the thrust of the annual report is the financial year-end. Perhaps the minister could clarify that.

Hon. J. Pullinger: Good question. This year we will have a new auditor; we'll have a new system; we'll have a new board. And they will in fact be overlapping in their functions for this year and next.

Whereas from next fiscal on, it will roll out in a more orderly fashion. People will be more familiar with the new structure. So this year, I expect, will be a little more difficult than ensuing years.

R. Thorpe: When the minister receives this annual report . . . . As we know, from time to time here in the House, there seems to be some delay between when reports are put into ministerial offices and when they reach this House for the members. I was just wondering, since it's not clarified here, hon. Chair, what the minister's intentions are in delivering that annual report to this House.

Hon. J. Pullinger: I don't expect to deliver it to the House, but it will certainly be a public document and available to all members.

R. Thorpe: If the document for clarification is not going to be delivered to the Speaker, to the House, could the minister clarify where we will get that document, how we will get it and when we may expect to get it after she receives it?

Hon. J. Pullinger: In this rather lumpy year, I would certainly have no problem making a commitment to deliver it as soon as I get it and reasonably can, once everything is finalized. In future years I would expect that the report will be in within the three months, and so a reasonable time to request it would be towards the end of that three-month period.

I. Chong: Just a final question, I suppose, to follow up regarding the annual report. Again, to reiterate what my colleague the member for Parksville-Qualicum started regarding the three-month requirement at the end of the fiscal year and the later date that the minister may designate . . . . And I don't have a problem with that, recognizing that there are, and sometimes can be, special circumstances.

But can the minister advise whether in the previous reporting that has been done with the previous special operating agency, or indeed in any accounting that was done for Tourism B.C., there ever has been difficulty in meeting the deadline of three months? Is that a fairly common occurrence, or has the three-month requirement been met regularly?

Hon. J. Pullinger: The special operating agency has only been in place for one year, and a special operating agency really is a contract, if you like, or an agreement between any given ministry and the Ministry of Finance. It has an advisory board, so the reporting is done through the usual ministry reporting. So, in fact, this year the special operating agency's activities would be part of my ministry's annual report.

I. Chong: The other question I have, very quickly, is on

section 12(b), regarding the "financial statement in the form required by the Minister of Finance . . . showing the revenues, expenditures, assets and liabilities of the corporation at the end of the preceding fiscal year." That's fairly standard.

I have no problem with that, except I would like to ask the minister whether the reporting of the assets and liabilities, in particular -- being that this is a transition year -- will be at a fair market value as those assets are transferred over by the Ministry of Small Business, Tourism and Culture, whether those assets that are being transferred to the new Tourism B.C. Act will have an evaluation done when they're listed or whether the book value would be transferred. Essentially, that's what I'm asking.

Hon. J. Pullinger: With the agreement of the member, I would recommend we defer that to

section 15, which deals expressly with the transfer of property.

T. Nebbeling: Just a quick question. My main concern up to now has been how the transition period will take place between the minister being in control of tourism right up to today, and when the act is passed and has had assent. How do you foresee the transition, especially in regards to the board? And how can that board, which is going to go through a period of intense organization, operate without your control, in a sense, that you can exercise right now on the industry?

Hon. J. Pullinger: I'd be delighted to chat with the member outside the House. We've passed that

section on the annual report, so I have no problem dealing with those questions. I'd be happy to chat with you or provide you that information another way.

T. Nebbeling: The reason I'm asking this is that this board will not be able, in the short period of time that it will be in operation -- and that it can be factually in operation because of the organization having to be developed first -- to come up with an annual report next year that will reflect the activities of this year, be it through financial management . . . . So I am more questioning the ability of the board to provide you with a report in the next period. How are you going to accommodate that today?

Hon. J. Pullinger: I understand the question. There will be a great deal of continuity between what's happening now in my ministry and what happens with the new board. I fully expect that the normal accounting will take place. As it details later in the legislation, it is retroactive to April 1 for that very reason -- for clarity and transparencies. So I fully expect that we will have the first annual report as quickly after the end of this fiscal as is possible to do in this transition year.

[ Page 3906 ]

I. Chong: I hadn't quite concluded my comments regarding

section 12(

b) and the response that the minister gave me. The reason why I asked that particular question was not so much to talk about the assets being transferred, which is . . . .

Section 15 deals with transfer of property. But in this particular

section we are referring to items that will be listed on the financial statement, and

section 15 will not cover that. I didn't want to get there and find out we cannot deal with it.

As I understand it, certain Crown corporations and certain boards and agencies, I suppose, don't all report their assets and account for them perhaps in the same manner. When I say that, I mean full disclosure of assets, full disclosure of liabilities, market value, book values, amortization -- those kinds of things. Having served on Public Accounts for a year now, I've come to see that there are sometimes these kinds of discrepancies.

So when I see

section 12(

b) stating that the financial statement will be in the form required by the Minister of Finance, I'm not sure what form that will take. If you're referring to the format, I can understand that -- assets go here; liabilities go there. But if we're talking about the revenues, expenditures, assets and liabilities -- the values that are going to be used -- the values of the assets in particular may play a significant role, because those valuations of those assets may be what will be levered for a financial operating line of credit and those kinds of things.

I would like to know from the minister, if I can, what kinds of values may be used, so that when they are given as security the board hasn't perhaps overextended itself -- things such as that.

Hon. J. Pullinger: I would expect, in this first year especially, that there will be very full disclosure. I am sure that the new board would agree fully with that. I expect that transferred assets, acquired assets and other relevant information of that kind would be fully reported, in fact, in the annual report.

The format that the member asked about would be a format that is developed in consultation with the new agency that's appropriate to it and to its function. That would be done in consultation with the comptroller general to ensure that the standard public accounting practices are met.

[8:30]

I. Chong: I am satisfied knowing that the comptroller general will be involved because, having served on Public Accounts, as I say, I have seen that he very much recognizes the values of assets to be transferred.

So with that, I thank the minister. I believe I have no further questions on

section 12 -- unless other members on this side of the House do.

Section 12 approved.

section 13.

P. Reitsma: If I might ask four points on

section 13 . . . . The first one: the appropriation and the amount equivalent to the net revenue collected under

section 3.1 of the Hotel Room Tax Act. Now I take it that the appropriation . . . . There's an 8 percent tax; 6.35 percent will go to the ministry, and 1.65 percent will be appropriated to this function. In other words, that's 20.64 percent of the 8 percent. It's figures, but the bottom line, of course, is the same thing. However, I have a couple of questions. Is there going to be a capped maximum? And what happens -- you never know what's going to happen in the future -- if by any chance the 8 percent hotel tax were to be reduced or increased? Will the effect of that funding correlate with that?

Hon. J. Pullinger: I'm glad the member asked that question. This is one of the absolutely key parts of the legislation and one of the parts that the tourism industry is very keen on -- to understate it. This

section provides for the percentage of the tax to go the Crown. It allows for the Crown to accrue that from year to year, which is very important. This is the

section that makes this Crown corporation very unique. We haven't been able to find any other jurisdiction that provides for a legislated percentage of the hotel tax, or of a tax, to fund a corporation to advertise and market tourism in this way. This is the innovation, to a large degree, in this legislation. It's the guts of it, if you like, and the part that really makes it go.

There is no cap in the legislation. The intention here is that they have a percentage of the tax, and as the industry grows, the tax dollars will grow and their portion of the tax dollars to fund their agency will grow. In effect, it's very much a linked system. The better the job they do of marketing British Columbia, the more the revenues will come in, because it's a percentage that they have.

And a clarification for the member: the 6.35 percent doesn't come to the ministry. It goes to consolidated revenue, just for clarification for the record. The other 1.65 percent will go to Tourism British Columbia. I hope that answers the question.

P. Reitsma: It answers one of the two questions. The second question . . . . While your crystal ball is probably the same as mine, hypothetical and what have you, nobody expected that the provincial sales tax would go up or down. In the event that hotel tax were to go up higher, will the 20.64 percent of the 8 percent hotel tax -- which is the 1.65 percent -- go up, as well? Conversely, if by any chance -- although I don't see it, but I'd still like to see it on the record in Hansard -- the hotel tax were to be decreased, will the percentage of the new tax be reflected in that?

Hon. J. Pullinger: This

section is the part that provides surety to the marketing corporation and the board, and it does so in the fact that if there's any change to the percentage, which I believe is what the member is asking, we would have to come back to this House and amend the legislation. The percentage is enshrined in the legislation.

P. Reitsma: The way I see it is that if the hotel tax were to go up to, say, 9 percent, then 20.64 percent of the 9 percent will go to Tourism British Columbia. If it were to go down to 7 percent, which is quite unlikely, in my mind, I would foresee a decrease in terms of the percentage related to the actual tax.

On 13(2): "Money received by the corporation from any source may be retained by it to be used and dealt with for its purposes." Being in small business myself, I would prefer to be using the word "shall" rather than "may," because it's ambiguous. It could be changed at the minister's discretion, depending on the crunch of revenues or expenditures. I'd like to see that clarified. Secondly, will any additional moneys received somehow be deducted from a base source, or is that simply in addition to what is being promised? So there are two questions.

Hon. J. Pullinger: To answer the last one first, the corporation has the power in other sections of the act to engage in

[ Page 3907 ]

entrepreneurial activities, if you like. In other words, it can take the Super, Natural B.C. logo and, in the example I've used, it can put that on a hat and sell it. If that were to happen now, in the arrangement we have now, by the rules of public accountability that money must go into the consolidated revenue fund. In other words, it can go sell a gazillion hats and make a whole bunch of money, and it doesn't benefit the special operating agency one whit.

Under this legislation, they not only have a dedicated portion of the hotel tax, as the member correctly describes, but they also have the ability as a separate entity to engage in activities that will raise other funds -- such as marketing their trademarks and logos, and whatever else they do -- and that money is then fully accounted for within the organization and can be carried forward from year to year. Again, that's one of the real selling items of this legislation. Under the existing rules, by the rules of accountability, additional funds that they may generate must go into consolidated revenue. Now they will go back into the new agency.

P. Reitsma: Maybe it's a bit of a throwaway question, but does the minister anticipate any increase or decrease in the 8 percent hotel tax at the moment? Is there anything the minister might know which she's not supposed to tell but might wish to share with us anyway?

Hon. J. Pullinger: Let me just give a report! No, seriously, the member is alluding to future policy, future issues, hypothetical things that may happen and also things that are outside the scope of the legislation and my ministry. It would be the Ministry of Finance that would determine those things. So for all of those reasons, I don't have an answer for the member.

P. Reitsma: I will take that as a definite undecided, I suppose. Being in the business myself, and particularly with the high season coming up, I do not actually anticipate it this year.

section 13(3):

"Tourism British Columbia must pay to the Minister of Finance and Corporate Relations, in the 1997-1998 fiscal year of the government, as a recovery to the Ministry Operations Vote of the Ministry of Small Business, Tourism and Culture, the costs reported by the minister as having been incurred by that ministry during that fiscal year in carrying out functions consistent with the purposes of this Act and with the mandate of Tourism British Columbia."

We're in a new fiscal year as of April 1. We've got April, May and June before this is passed. We're probably looking toward the end of June or beginning of July. So this new function has been operating for three months, which is one-quarter of the next year. Is it anticipated that a full one-quarter of the anticipated funding will be appropriated to the ministry, or is it a percentage? Keeping in mind, of course, that April and May, although very important in terms of marketing . . . . In fact, marketing should be starting the year before anyway. The high season is in June, and particularly July, August and the beginning of September, when, of course, more of the activities take place.

The question to the hon. minister is: can we expect, since three months have passed, that one-quarter of the anticipated appropriation of funding will be recouped by the ministry in total?

Hon. J. Pullinger: If the member will bear with us, I will try to explain why this rather complicated-looking

section is in here. The fiscal year of the new corporation will be the same as government, so in order to have a clean audit and transparent accountability for the entire year, we've put in place an arrangement whereby the hotel tax portion begins April 1, by a triggering mechanism we can talk about later on. So in order to continue to fund operations until such time as a new agency and the board is up and running, we have provided $6.5 million in my budget to fund the activities that are currently provided through my ministry.

When the new board comes on, there will be a back payment of the allocated tax dollars to April 1. The corporation will begin retroactively to April 1, so they will in fact have a payment from the Ministry of Finance back to April 1, at which time we will have our handout from our ministry to repay the moneys that we have expended to go through the transition period. I hope that's clear to the member.

P. Reitsma: One or two more questions on my part. The proposed convention centre in Vancouver, and all the ancillary buildings, hotels and business flowing from that, are, for all intents and purposes, extremely exciting. It's important. There is some talk that in order to facilitate such an expenditure and to make it attractive, perhaps concessions or a sliding scale of taxation in terms of room tax might take place or might happen. If that were the case, how would that affect the funding? Would they be exempt, as well, or would provisions be made that a certain percentage would be accrued to the new Tourism B.C. agency?

Hon. J. Pullinger: I regret that I can't answer the question, because it's based on a hypothetical future situation and, when it comes to taxation, issues that are outside this legislation and the control of my ministry. So I can't answer that, because it's hypothetical -- future.

P. Reitsma: My last question might have been asked before: is there guaranteed minimum funding for this coming year in terms of the SOA? We're talking about $18 million or $20 million. It could be less, depending on the sales of accommodation during this year. But is there minimum guaranteed funding -- an absolute baseline?

Hon. J. Pullinger: There's a funding formula in

section 22. I think that would be the appropriate place. I'd be happy to answer that.

[8:45]

R. Thorpe: I was trying to listen carefully. I thought I heard the minister say there was no cap on the legislation. I would just like it clarified that there's no cap on the funding.

Hon. J. Pullinger: Absolutely. If that's what I said, I was wrong. It is a percentage and there is no cap in the legislation on the dollars that are accrued through that percentage.

[J. Doyle in the chair.]

R. Thorpe: As the tourism industry concluded its last fiscal year at March 31 and is now in a transition . . . . It was my understanding that there may have been, or may be, some surplus dollars left over from the last fiscal year. First of all, is that factual? And secondly, how much is being transferred, and how, to this new corporation in this fiscal year?

Hon. J. Pullinger: My estimates contain a $1.3 million, one-time startup grant and the $6.5 million that I alluded to earlier for transition funding until such time as the hotel tax is paid retroactively and refunded.

[ Page 3908 ]

R. Thorpe: So if the surplus was there or is there, it's that $1.3 million that's flowing through for it this year. That's my understanding, then. Thank you.

How is the revenue tracking compared to the expenditures for the first two months of this fiscal year? That question obviously relates to

section 3. I just want to know how you're tracking on your revenue versus your expenditures.

Hon. J. Pullinger: We don't have that information here. I would propose that my estimates are still to come; we could canvass that detail more fully in estimates, because that's really the ministry funding.

[G. Brewin in the chair.]

R. Thorpe: That's fine; we'll canvass that in estimates. I'd appreciate that, and I'm sure the industry would appreciate it.

I know that it's difficult to speculate and to talk about hypothetical situations. But I'm sure that in developing the strategy in this bill and working with the industry, there has been some thought given in a global sense to projected revenues for the five-year business plan, which would be a normal business plan cycle. Could the minister share those figures for four fiscal years, to the nearest million dollars? Is that possible right now?

Hon. J. Pullinger: I don't have that kind of detail here. This is just simply the formula I have in the legislation. But again, we can certainly provide the best that we have in estimates, if the member's willing.

R. Thorpe: Yes. If that's an undertaking from the minister and staff that in estimates we'll have the annual funding for the next five years by year, that would be satisfactory.

We talk about the commitment to not capping the flow of revenue to the tourism industry. We talk about creating certainty for the tourism industry. I would just like to know, in the minister's words, how we as opposition . . . . What degree of comfort, what words of comfort, can you give us that there are not going to be clawbacks with respect to this program? There have been a number of clawbacks and broken promises with respect to tourism funding in the past two or three years. I just want to have some degree of assurance, in the minister's words, how this industry is going to be protected from clawbacks.

Hon. J. Pullinger: First, I want to clarify that what we will provide in estimates is how we do the projection. I can't give hard numbers for future years; they are guesstimates. But we can certainly discuss how we do those projections. That's what my commitment is for estimates. I just want to be very clear about that.

Secondly,

section 13(4) is the ironclad assurance that the funds will flow to the Crown. It in fact exempts the Crown from

section 27(1)(

a) of the Financial Administration Act, which states that Treasury Board may, "by directive, control or limit expenditure under any appropriation." This

section 13(4) provides that exemption for this Crown corporation.

I would simply like to end my comment on this part by saying that I reject the editorial comments made by the member.

R. Thorpe: I'm not so sure which editorial comments you reject, but I guess that is your privilege -- to accept or reject whatever you want.

The Chair: Hon. member, through the Chair. We don't use the pronoun "you," as you recall. We refer to everybody in the third person.

R. Thorpe: Sorry, hon. Chair. I'm not so sure what editorial the minister is referring to.

R. Neufeld: There are so many clawbacks.

R. Thorpe: There have been so many clawbacks. Thank you very much for pointing that out and bringing it to my attention once again. This industry has suffered many of them. They have been led down the garden path on these issues before. If that's editorializing, caring about the tourism industry of British Columbia and all the people that work in that industry, so be it. I do care about the industry, and I do care about the employees.

The only way that this government or any government, as a matter of fact, can change the funding formula to ensure certainty of funding to the tourism industry, would be by introducing new legislation. Is that correct?

Hon. J. Pullinger: That's correct. It would take an amendment to the legislation.

I simply want to say that what we've done here is something that the tourism industry has wanted for years and years and years. As long as the marketing function was a function of government, then it was obviously subject to the vicissitudes of income to government, which depends on a whole lot of other things. What this really does is take this little chunk of revenue and put it aside into a place where they can count from year to year on a stable funding source. This whole funding formula that we're talking about here is innovative and, as far as we can find, not replicated anywhere -- which is great stuff.

I. Chong: I know this

section is being fairly heavily canvassed. I hope the minister appreciates that we're doing so because, at various times throughout the earlier sections, we were referred to

section 13: "Wait until we get there; we'll talk about it." I trust the minister will give us some latitude here when we ask these questions, which may appear repetitious to her. But for us and for the record we want very certain clarification.

I'd like to again ask the minister . . . . The funding formula that is proposed -- if we take a look, it refers to 1.65 percent of the purchase price of accommodation -- was based on the fact that they expect the purchase price of the accommodation to bear an 8 percent tax, so that the balance, the 6.35 percent, goes to consolidated revenue. A press release that was issued by the minister calculated that as a percentile and said roughly 20.64 percent of the total value . . . .

I'm wondering whether the minister can advise if it was the intent to establish the funding to represent 20.64 percent of whatever the hotel tax was. Or was it specifically meant to say 1.65 percent? I know it may be hypothetical -- whether there may be an increase or decrease -- but we have to be somewhat certain that the minister's intent for the funding formula does represent a guaranteed amount of the hotel tax, regardless of what may happen in the future.

Hon. J. Pullinger: Actually, that's under the new

section 24. But with the understanding that we'll just whiz on by

section 24, I'll answer it now.

[ Page 3909 ]

I've just received clarification that in fact it is 1.65 tax points that this will . . . . There were other questions, and I don't think I was very clear. So it will be 1.65 tax points that this has, by legislation.

I. Chong: I just want the minister to be aware that I had looked at

section 24. I was very certain of what I was saying here, and that's why I posed the question as I did -- 1.65 percent of the purchase price of accommodation, with the purchase price of accommodation attracting an 8 percent tax. The 1.65 percent of the 8 percent represents a 20.64 percentage of the pot, shall we say -- so that if $8 is collected, roughly $1.65 would go to that. But, you see, if the hotel tax -- and again, I realize this is hypothetical -- were to drop to 5 percent for some reason . . . .

If the government of the day decided that it would drop, can we somehow have an assurance that the 1.65 is what the intent was, and it might then represent 33 percent -- you know, if the hotel tax had, for example, dropped to 5 percent? Or was the intent to ensure that it represented 20.64 percent of the pot of money collected for the hotel tax in total? That is the question I was attempting to ask the minister. And if she and her staff are able to provide that, it would be more helpful for my next question.

Hon. J. Pullinger: I believe

section 24 enshrines the 1.65 tax points. Is that clear?

I. Chong: If that is where the act enshrines this and essentially guarantees it -- until legislation changes again -- then I will accept that from the minister. As I say, in a previous or earlier press release, the wording within that press release factored that amount out to be 26.4 percent. So I was trying to ensure that I knew what the intent was.

Given that 1.65 percent has been the guaranteed and secured amount, I want to just go back to a comment that the minister made earlier that this is what the tourism industry wants. I certainly agree that that is what the tourism industry wants. But I would advise the minister that based on previous collections of hotel tax revenues, the 1.65 percent of the purchase price of accommodation basically allows for approximately an $18 million pot. What the tourism industry in fact actually wanted was a $25 million budget to deal with.

The 1.65 percentage that was calculated, I think, was to work backwards to get to the level that the ministry was prepared to provide. I just want to make that clear for the minister.

The other item I want to speak to is that the minister advised earlier that the $1.3 million would be a startup cost, which I understand is a one-time amount that is not to be affected, clawed back or adjusted for. Also, a $6.5 million advance would be given, which is probably roughly one-third of the budget they expect for this current '97-98 fiscal year. Can the minister advise whether there would be any accounting done for interest to be charged on the advance of these moneys? Can I assume, or can the industry assume, that this $6.5 million advance that is given will not have to be paid back with interest to the ministry's budget?

[9:00]

Hon. J. Pullinger: I just want to clarify for the member that the 1.65 tax points was negotiated with industry. Industry has had a longstanding concern about the stability of funding and the ability to carry forward, which we address here. As I say, that has been the outstanding issue for a couple of decades that I know of. And the amount, the starting point . . . . Obviously, as the number of hotel rooms in the province grows -- and the industry has doubled since 1991, a record growth for the last five or six years . . . .

One can assume it will continue to grow -- perhaps not at that rate forever, but it will continue to grow. As the number of rooms grows, the number of dollars that flow through to the Crown -- to the agency, Tourism British Columbia -- will also grow. That's a negotiated starting place that will provide the kind of surety and growth they've long wanted.

The second point. The formula we have is that right now the marketing function is in my ministry, so we're simply spending the dollars in the normal way. But in order to have the maximum clarity and transparency of what this new Crown corporation is doing, the decisions that are being taken as of April 1 this year and the funds expended as of April 1 this year will in fact be included in the accounting for the new Tourism British Columbia. The act is retroactive to April 1. So, in essence, we're funding the activities through the ministry in the normal way right now.

When the act is proclaimed, the new board takes over, and they trigger the funding clause and have their funds. Then they will simply return to the ministry the funds that they have expended thus far. It's a little bit complicated, but it's designed to make an entire fiscal year report so that we have a benchmark to move from.

I. Chong: It's actually not that confusing. As I say, I just wanted to know. I recognize that it's merely an advance, and once everything is done, the advance will be paid back. I just want to ensure that that advance is considered an interest-free amount so that the new board would not have to be budgeting for that kind of unknown, shall we say.

The other question I have is in regard to

section 13(2): "Money received by the corporation from any source may be retained by it to be used and dealt with for its purposes." That section, I understand, can refer, as the minister alluded to earlier, to sales of the Super, Natural logo on T-shirts, hats, bags and things; that's understandable. Hopefully, that will be a source of additional revenue for the tourism industry, for their marketing.

The other thing I was curious about here is, if there was a surplus of money that was building up in this Crown corporation and it earned interest revenues in a short-term deposit, whether that money may be retained by it. The member for Parksville-Qualicum had wanted to ask about "may" versus "shall." If it was "shall," there's no question. "May be retained" refers to the fact that perhaps the ministry may request that the interest earned is not interest that it may keep. I want to ask the minister whether there will be any problem if in fact there is a surplus of cash that is on deposit and interest is earned -- whether it may, can and will stay with the Tourism B.C. board.

Hon. J. Pullinger: This

section provides for any funds accrued to the new agency to remain with the agency.

R. Neufeld: One brief question. I know that through the first year, it's a little difficult, but how will the revenue be paid from the Ministry of Finance to this corporation? Is it going to be paid monthly in future years? Is it paid quarterly, or something to that effect? I guess that leads into the question that the member for Oak Bay-Gordon Head, who just spoke, asked: will the corporation have to go out and borrow funds for maybe a three-month period to be able to continue to operate until they get paid by the Ministry of Finance? Just how will that work?

Hon. J. Pullinger: I've just confirmed that it will be paid monthly. Therefore there won't be any need to go out and do that kind of borrowing.

[ Page 3910 ]

P. Reitsma: My colleague from Okanagan-Penticton kind of made me push the button for clarification on one or two items. Just for my benefit: this funding formula -- is that good for one year, two years, three years, or in perpetuity? Is it to be reconfirmed every year?

Hon. J. Pullinger: Is the member alluding to the amount of funding or to the way the funding is paid out, like the monthly allotment?

Interjection.

Hon. J. Pullinger: The funding level, of course, or the percentage tax point, is in the legislation. The way that is paid is an arrangement that's been made or will be signed between the board and the Ministry of Finance. It's just simply an arrangement between the corporation and the Ministry of Finance. I would imagine that would just be a mutual convenience. I don't expect that there would be any major changes to that if it meets the needs of both parties, which it clearly does.

P. Reitsma: Perhaps I'm less clear than I thought I was. This is not a trick question at all. As the minister knows, when I was mayor in Parksville, we, of course, could not commit funding beyond one year in the budget. Maybe I should rephrase it. This funding is good for one year to X amount of dollars; I accept that. What about next year? Does it have to be reconfirmed? Does it have to be passed again? Or could it be withdrawn the second year, for that matter?

Hon. J. Pullinger: No. The reason for having this legislation is to provide stable, ongoing funding. I think perhaps -- I'm guessing here -- what we may be confusing here is that the new board needs to pass a bylaw to trigger the funding for the first time, just for all the technical reasons to make it flow. Something has to happen so that there is an agency for it to flow to. But from that point on it will just simply flow, and the only way we could change that funding formula is by changing the legislation. I hope that clarifies it.

P. Reitsma: That does. I would just like some indication . . . . I appreciate that, and I know that as councils, for instance, we cannot encumber future councils by making certain financial commitments onto them.

I just would like to know, for the sake of the industry -- which is my industry; I've been in that industry for 30, 31 years -- that they could look forward to maybe two or three years of security, and that it will not be somehow changed under this government in a rage of some sort, and that no legislation will be forthcoming that cancels what we've so frugally tried to attend to.

I agree with a number of editorials of my colleague from Okanagan-Penticton. That is, I . . . . You know, this has been a nice exchange for now, but I can well remember all the hoopla and the handshaking and the pictures taken in April of last year, when there was guaranteed funding. Hands were shaken on an agreement; signatures were put on agreements, for a three-year agreement -- almost $25 million with a little bit of a sliding scale. The election's over, and we all know that; everybody uses it all the time. But that funding was guaranteed for three years. The signatures were put on and, lo and behold, that changed.

All I'm after is some indication from the minister of some stability and security for the next two or three years. Whatever happens afterward, so be it; but at least our industry could look forward to some stability and security for the next two or three years, and some promise -- a definite promise -- by this minister that not next year, not two or three years from now, will legislation be introduced to reduce or annihilate this funding, as was done last year after the promise.

Hon. J. Pullinger: Just to clarify for the member, a special operating agreement is an arrangement between any given ministry and the Ministry of Finance -- those are the signatories. It's subject to all of the normal rules of money coming and going, and if money goes when the pulp prices go in the tank and cost the government $800 million and we made a commitment to fund health and education, that means things have to be cut.

In the interest of not being here forever, I will avoid the obvious temptation to talk about larger commitments to cuts from the other side of the House, but we have done something here that no other government in Canada, or anywhere else that we can find, has done. We have provided a legislated funding mechanism that will provide stable, ongoing funding for tourism marketing in this province.

That's a commitment that has never before been made by any government in this province or in this country, or by any government that we can find anywhere else with this kind of arrangement. So we have made a commitment here that is unprecedented. I think that speaks for itself. And if a future government wants to change it, they will have to bring it back to this Legislature and do so.

P. Reitsma: My final comment is that when I, in the estimates last year, to whoever then was the minister -- we've had so many, and as I indicated, I hope this revolving door is shut now so that we have some stability from that point of view as well . . . . Commitments were made last year in April -- three years -- but they were not legislated. That's what the industry was after; that's what I was after. And I was told at that time last year in the estimates that it wasn't necessary.

Let me assure you that I'm absolutely pleased and delighted that this now . . . . We've gone one step further. It is legislated, which means it's going to be ever so much harder to claw back on that. That's what I appreciate: to have legislation.

R. Neufeld: I can hardly resist some of the comments from the minister, talking about "unprecedented, never before happened in the Dominion of Canada, never before happened in the province of British Columbia." I suggest that the minister think back just a short time ago to one of her colleagues -- not in cabinet, but one of her colleagues in her caucus -- the Hon. Darlene Marzari, making an unprecedented commitment to a revenue-sharing plan for communities in British Columbia -- never before seen in the history of British Columbia. It lasted about two years. So, I mean, it's fine for you to stand up here and talk about something that this is . . . .

I guess what really prompted me was the minister talking about how great everything is that her government does, and that some future government may break this commitment. Well, my goodness, if any one of us have had a lesson about breaking commitments, we've certainly experienced it under the term of the NDP -- about breaking commitments. So I think the member from Parksville has a valid concern. I think they're trying to get across to the minister that they want some commitment from the minister -- as good as it is on paper, I guess, as good as it can be in writing -- that this money for

[ Page 3911 ]

Tourism British Columbia is going to be here at least as long as she's the minister and that the 1.65 percent will not change at all. I think that's the commitment that the member from Parksville is asking for.

It's a little hard to take when I hear the minister talk about how great this bill is. I think, actually, that the idea of it is great. The problem that British Columbians have and the tourism industry has is the government's commitment to promises that they've made to many different organizations, this being one of them. So I could hardly resist putting that on the record, about broken promises by the present government -- in fact breaking their own promises that they made hard and fast.

[9:15]

Hon. J. Pullinger: I just want to say I appreciate the absolutely non-partisan comments of the member from the corner. In the interests . . . . My staff say it's close to PJ time, so we don't want to extend this all night. So in that vein, I would just simply let the member's comment stand.

R. Thorpe: I just want to follow up on the comments of my friend from the Peace, too. The reason all of us on this side have talked about the commitment and the need to hear from the minister -- the commitment we need to hear from this government -- is because this government committed and promised funding to this industry on February 24, 1996. That didn't happen. They promised on April 22, 1996 -- by the Premier. That didn't happen. Then we hear that this is the greatest thing since sliced bread.

Well, please let us receive your personal assurance that this promise is going to be kept. That's what the tourism industry wants; they don't want another broken promise.

Hon. J. Pullinger: It's really interesting to note that it's the members opposite who are complaining and not the tourism industry. We took an unprecedented step in putting together a special operating agency, a special operating agreement with the first tourist industry board, something that the members opposite when they were here under the name of Socred would never do. For 20 years they had the opportunity to do that, and they wouldn't do it. We did that.

When it became apparent that federal Liberal funding clawbacks were going to affect health and education -- and our absolute top commitment, which we have kept, was to fund health and education, and we're doing that -- that meant that there wasn't the same amount of money for other things. You've got to cut something somewhere. The members opposite were prepared to cut about five times as much as what we've had to cut.

So rather than just cut it, we went back to the industry. I was once Tourism critic, and I know full well that this has been one of the outstanding requests of the ministry for well over two decades that I know of. We said: "Look, this is a reality of life. Funds to government are shrinking. So let's deal with that and move forward rather than backward." We have done that, and I'm proud that we've done that. It is a historic step.

The funding is secured by legislation. It's in the legislation. The funding formula is in the legislation. It's there. It's 1.65 tax points, and you have to change the legislation if you want to change the funding. That's about as secure as it can get, and it's more secure than we have ever had in British Columbia, or for that matter, anywhere else in this country. That's sure. That's about as secure as you can get.

If at some future time the legislation comes back to be amended, then we can argue about it at that time. But we have provided for surety of funding on an ongoing basis in a way that it hasn't been provided for before and in a way that the industries have wanted for 20 years. It is all provided for in this legislation. I'm not really sure what could be more secure.

Section 13 approved.

section 14.

R. Thorpe: With respect to this

section 14, I would like some clarification that it is not a mandatory requirement for this Crown to place its funds with the government, that it is solely a discretionary decision of the board of directors. I would like that clarified.

Hon. J. Pullinger: That's totally the decision of the corporation.

I. Chong: I know we're stepping up to speak on this, and we're from all corners of the room here. I know there are a lot of empty seats. In any event, I'd like to ask the minister about the investment powers in

section 14. In subsection (2), the money that is placed with the Minister of Finance and Corporate Relations is to be treated for all purposes as money placed with that minister under

section 40(5) of the Financial Administration Act. Can the minister advise us more clearly what that is? I do not have the Financial Administration Act with me.

Hon. J. Pullinger: This

section is an enabling clause that essentially allows the corporation to take advantage of higher returns by pooling investments with others through the Minister of Finance.

I. Chong: What I understand this minister to be saying is that the moneys placed with the Minister of Finance and Corporate Relations will be kept distinctly separate from the pooled money account. Somehow it's segregated and earmarked that it is money belonging to the Tourism British Columbia board.

Hon. J. Pullinger: It is sort of like if I were to put my own money in a mutual fund. The money would be pooled and invested collectively, but I would know how much I had through the accounting processes of the credit union.

P. Reitsma: I have just one or two questions on subsection (1). As pointed out, "The corporation may place with the minister . . . . " It doesn't say "must," so it is discretionary, as the minister just reconfirmed. If it goes to the Minister of Finance and Corporate Relations, what kind of a percentage, in terms of return on the investment and interest, might we expect, unless it's some statutory amount? Secondly, would the corporation be permitted to go outside with temporary surplus moneys, and would there be restrictions as to where they would be able to go when they go outside?

Interjection.

P. Reitsma: The second portion? Their excess moneys . . . . Is the corporation permitted to go to an outside agency other than the Minister of Finance and Corporate Relations to place money temporarily, and are there restrictions on that, too?

[ Page 3912 ]

Hon. J. Pullinger: If the board chose to invest directly, they could do that. I can't answer the questions about what the returns might be -- that fluctuates. If I can just clarify, it's like when you put your personal money into a mutual fund and it goes up and down with the various items in the portfolio. There would be the same thing in the Ministry of Finance, and there are managers who work very hard to make sure that the return is the best possible with the appropriate risk rates, etc. I can't put a number on that, but there are managers who do that in the Ministry of Finance.

P. Reitsma: I appreciate that. I just want some flexibility for the corporation if they deem it appropriate to invest temporarily outside the Ministry of Finance. That's fine, although there may be certain risks involved. I take it, then, that there are no restrictions put on the corporation in terms of investment -- although they would be wise not to take risks like Bre-X, of course.

Hon. J. Pullinger: Yes, we canvassed this fairly thoroughly under

section 6, but this

section here is an enabling clause. It allows the corporation if it so chooses to invest funds through the Ministry of Finance. The reason that I think the corporation would probably want to do that would be because it has the option there of being part of a greater pool of funds, which then gets a greater return. If they choose to take their funds and do it elsewhere . . . . I would be surprised if they did, but they certainly have that power. But I think they'd want to take advantage of the combined investment and greater return.

Section 14 approved.

section 15.

R. Neufeld:

Section 15(1): "For the purposes of this Act, the minister may designate property of the government, now in use by the Tourism Division of the ministry, that is to be disposed of to the corporation." Could the minister explain the term "property"? What would that encompass? I would assume that it would mean equipment and those kinds of things, but maybe she could be a little more definitive about what that property actually is. Is it office property or such?

Secondly, on subsection (2) of

section 15: "The government may dispose of to the corporation any property that, under subsection (1), the minister designates for disposal." How will that be costed out? How will the value be determined? How will the corporation have to, I would assume, pay government back for those assets? Will it be over a period of time or will it be immediately? How will that take place?

Hon. J. Pullinger: I would refer the member for the first part -- I will answer the question, but for more detail -- to the discussion of

section 6 around the property. It's desks and pencils, but it's also primarily intellectual property such as the Super, Natural British Columbia, Tourism British Columbia and SuperHost trademarks and things like that. It's the intellectual property, but it's also the desks and pencils.

The second part of the question is: how is that to be transferred? The answer is that an inventory and valuation of the assets is being undertaken now, and there will be an agreement signed between the province and the corporation regarding the transfer of those assets. There will be a full evaluation -- that's happening now -- but we expect that there will be a relatively nominal charge for the assets, just some sort of fair transfer.

R. Neufeld: Will trademarks and logos be costed out as a value, somehow, to the corporation? Or is this just a straight transfer?

I see the minister shake her head, so I gather from that that the trademarks and logos will just automatically transfer with absolutely no cost attached to them at all. No value. So it's really the pencils and the desks.

I guess the other part of my question is: how will the corporation be required to pay for that? I know the minister said that it's nominal dollars, but if you receive your money every month, and if it's actually . . . . In any startup of a business, when you buy all your assets right away you have to have some cash. So obviously they're going to have to use all their cash for assets for awhile, and they won't be able to do any work with tourism. Would I be correct in saying that? The minister said it would be nominal. What does the minister consider to be nominal?

[9:30]

Hon. J. Pullinger: The amount, I expect, will be more or less a token amount. You know, that hasn't been negotiated yet; that hasn't been discussed yet. It's in process. But I expect it will be a relatively token amount; we're not going to charge full market value or anything like that. It would simply be paid out of the funds that the corporation has, but, as I say, I expect it would be a very nominal, token kind of amount.

The other question the member asked was about the intellectual property. There is no charge to transfer. They're not going to sell that in any way; we're just going to transfer it over to the new corporation. But there will be conditions attached for appropriate usage, and certainly the industry is absolutely agreeable that that should happen. As the member understands fully, we need to protect that trademark in order for it to have value. So the appropriate conditio