2008 Legislative Session: Fourth Session, 38th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, APRIL 1, 2008

Morning Sitting

Volume 29, Number 3

CONTENTS

Routine Proceedings

Page

Introduction and First Reading of Bills

Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act (Bill 16)

Hon. R. Neufeld

Point of Privilege

C. Wyse

Committee of the Whole House

Budget Measures Implementation Act, 2008 (Bill 2) (continued)

J. Horgan

Hon. C. Taylor

B. Ralston

Hon. B. Penner

Proceedings in the Douglas Fir

Room

Committee of Supply

Estimates: Ministry of Transportation (continued)

M. Karagianis

Hon. K. Falcon

S. Fraser

C. Trevena

C. Wyse

[ Page 10693 ]

TUESDAY, APRIL 1, 2008

The House met at 10:03 a.m.

[Mr. Speaker in the chair.]

Prayers.

Introduction and

First Reading of Bills

GREENHOUSE GAS REDUCTION

(RENEWABLE AND LOW CARBON

FUEL REQUIREMENTS) ACT

Hon. R. Neufeld presented a message from His Honour the

Lieutenant-Governor: a bill intituled Greenhouse Gas Reduction (Renewable and

Low Carbon Fuel Requirements) Act.

Hon. R. Neufeld: I move the Greenhouse Gas Reduction

(Renewable and Low Carbon Fuel Requirements) Act be introduced and read for a

first time now.

Motion approved.

Hon. R. Neufeld: Mr. Speaker, I am pleased to present the

Greenhouse Gas Reduction (Renewable and Low Carbon Fuel Requirements) Act. The

province is committed to taking action on climate change by reducing greenhouse

gas emissions. We have made a commitment to reduce the carbon emissions

intensity of transportation fuels by at least 10 percent by the year 2020. We

have made a commitment to have renewable fuels blended in our diesel fuels and

our gasoline to a 5 percent average by 2010, and we have made a commitment to

adopt a low-carbon fuels requirement similar to the state of California.

This legislation delivers on those commitments by establishing a

new regulatory framework that will reduce greenhouse gas emissions from

transportation fuels in our province. The proposed legislation will reduce

greenhouse gas emissions from transportation fuels in two ways.

First, the renewable fuel requirement stipulates that fuel

suppliers must supply a prescribed percentage of renewable fuels. The required

amount will be set in regulation and will fulfil the B.C. energy plan

commitment.

[1005]

Second, the low-carbon fuel requirement will empower the province

to set regulations for specific carbon intensity targets that will reduce the

amount of carbon emitted per unit of energy in transportation fuels.

This legislation will support British Columbia's commitments to

climate action, reduce the environmental impact of transportation fuels and

contribute to a sustainable low-carbon economy.

Hon. Speaker, I move that the bill be placed on the orders of the

day for second reading at the next sitting of the House after today.

Bill 16, Greenhouse Gas Reduction (Renewable and Low Carbon Fuel

Requirements) Act, introduced, read a first time and ordered to be placed on

orders of the day for second reading at the next sitting of the House after

today.

Point of Privilege

C. Wyse: I rise to speak to my point of privilege raised in

this House on Thursday, March 13, 2008. I reserved my right at the first

opportunity to do so.

The following outlines the factual basis for my points of

privilege — that the House should find that the Minister of Small Business and

Revenue misled the House and that he be directed by the House to apologize and

correct the record.

During Committee of Supply for the Ministry of Small Business and

Revenue on Tuesday, March 11, 2008, I informed the minister that staffing

numbers in the B.C. Assessment Williams Lake office had gone from nine to five

FTEs. The response: "There are no staff reductions at the Williams Lake B.C.

Assessment office."

In addition, I questioned the minister on service provided by the

Williams Lake office: is the farm category being transferred to the Kamloops

office, effective March 15? The response: "I have been advised that farm

specialization has been handled out of Kamloops for some two years now."

On March 13, 2008, I was sent a document from my constituency

office in Williams Lake that supported my contention and contradicted the

minister's answers in estimates. I am submitting this document, along with the

Hansard record, with my motion.

Therefore, I have raised my matters of privilege reserved at the

earliest possible opportunity in that the Minister of Small Business knowingly

misled the House on March 11, 2008, by denying staff reductions at the Williams

Lake B.C. Assessment office and by advising that farm specialization has been

handled out of Kamloops for some two years. I am also submitting the required

accompanying motion.

Hon. R. Thorpe: I reserve the right to reply.

Orders of the Day

Hon. R. Thorpe: I call in this chamber committee stage

debate of Bill 2, Budget Measures Implementation Act, 2008; and in Committee A,

Committee of Supply, for the information of members, continued estimates debate

on the Ministry of Transportation.

Committee of the Whole House

BUDGET MEASURES

IMPLEMENTATION ACT, 2008

(continued)

The House in Committee of the Whole (Section

B) on Bill 2; S.

Hammell in the chair.

The committee met at 10:10 a.m.

[ Page 10694 ]

section 33 (continued) .

J. Horgan: It's a pleasure to participate in the debate on

Bill 2, particularly with respect to

section 33.

As I read the section,

section 33 is repealing

section 25 of the

Hydro and Power Authority Act. I'm wondering if the minister could give a

rationale for repealing that section.

Hon. C. Taylor: The reason is that since 1964, there have

been 13 times that the debt cap was changed. Because we are now moving into a

situation where we are confident that B.C. Hydro will be doing major rebuilds

and builds, we felt that the proper way to approach it was just by removing the

debt cap.

J. Horgan: Will this not have an impact on the cost of

borrowing for the Crown corporation?

Hon. C. Taylor: No, because we do the borrowing on B.C.

Hydro's behalf.

J. Horgan: With respect to deemed equity, as I understand

it, a special direction to Hydro in January — No. 28, I believe — increased the

deemed equity from 20 percent to 30 percent. Is there any correlation between

that special direction and the amendments in this bill?

Hon. C. Taylor: No. There isn't a relationship between the

two issues.

J. Horgan: So is the minister saying that there will be no

increased cost of borrowing to B.C. Hydro as a result of this amendment?

Hon. C. Taylor: Only in that they will be borrowing more,

which is our assumption, because of the rebuilds that will go on. In terms of

the cost of borrowing, we borrow on their behalf.

J. Horgan: So there will be no increase in the cost of

borrowing that larger quantum to meet the requirements of maintenance operations

as a result of this amendment.

Hon. C. Taylor: There's no change in price because of this,

but there will be, we are assuming, a change in quantity.

J. Horgan: Does the minister believe that this increase in

the amount to meet the requirements will have a negative impact on Hydro's

projects and potentially put it at a disadvantage to private projects?

Hon. C. Taylor: I've been assured that the answer is no.

J. Horgan: Does this amendment have any impact on the

dividend and return to the treasury from the Crown?

Hon. C. Taylor: The removal of the debt cap will not affect

the dividend that's payable to the government.

[1015]

J. Horgan: So B.C. Hydro will be borrowing more to meet its

requirements, whether it be on maintenance or any potential new projects that

are approved by cabinet. As I understand the energy plan, Hydro can only proceed

with new generation projects if it has approval from cabinet.

The cost of borrowing has not increased. The amount of borrowing

has increased to meet a larger quantum as time goes by. Inflation is factored

in. But as I read the budget documents, the expectation over the three-year plan

is that the dividend from Hydro to the Crown would be constant or increase.

I'm wondering: if B.C. Hydro is taking on more debt and it's

meeting its requirements to the growing demand for electricity, how is it that

we're going to be borrowing more money, expending more money, to pay back that

debt and still meet the obligation to the Crown?

Hon. C. Taylor: As is the pattern, B.C. Hydro will present

their business plan, including whatever their borrowing is, to BCUC when they

discuss what rates will be charged. Those decisions, the business case, have to

have BCUC approval.

J. Horgan: But BCUC doesn't set the dividend. Treasury

Board does. Or Treasury Board requests from Hydro their financials to

demonstrate that they can provide a dividend to the Crown.

Does this amendment have any impact on that calculation, and will

the steady dividend over the next three years have an impact on ratepayers?

Hon. C. Taylor: The removal of the debt cap is not related

to this question, but when B.C. Hydro does present to BCUC, they do present a

return on equity — part of their business case as well.

J. Horgan: Well, in my experience with the dividend, it

fluctuates based on what the ROE was to the Crown. As I read the budget

documents, I saw a constant request for cash from the Crown to Treasury Board

for social purposes, and that's all to the good.

But as I read this amendment, you're saying to B.C. Hydro: "Go and

incur more debt on behalf of your ratepayers, but be sure that while you're

doing that, you're meeting our needs, which is a steady flow of income." In the

past that dividend was based on the profitability of the corporation and its

debt load.

I'm wondering: if you're now increasing the ability to incur debt

and still requesting the same amount of money, how is it that the company is

going to be able to keep rates low for taxpayers?

Hon. C. Taylor: As disclosed in the budget documents on

page 192, there are rate increases that are assumed in the numbers that the

member opposite has been citing.

[1020]

[ Page 10695 ]

J. Horgan: My concern is that these rate increases are

designed to maintain the dividend rather than to provide electricity at the

lowest cost possible to ratepayers. I'm wondering if the minister could explain

why we've forecasted rate increases over the next three years

We've allowed the corporation to borrow more money, but we're

insisting that they continue to pay the same level of rent back to the Crown.

That's putting aside increases in water rentals, which I'm sure I'll have to

canvass elsewhere. In this instance, I see an opportunity for the Crown to keep

taking money from B.C. Hydro without them being able to run their business in

the best interests of ratepayers rather than running their business in the

interests of the Treasury Board.

Hon. C. Taylor: The dividend is not in this document — what

we anticipate that B.C. Hydro will be paying. Perhaps the member opposite is

referring to the net income line.

J. Horgan: Is that not where we determine what the dividend

will be?

Hon. C. Taylor: The net income, while it's obviously

related to what dividend can be paid, is not directly the number that would be

paid to government.

J. Horgan: Well, maybe I'll just ask for a bit of a lesson

from the minister and her staff, capable as they are, on how we then determine

what the dividend will be. Maybe I'm missing something.

Hon. C. Taylor: There are many factors that come into play.

BCUC makes a decision looking at the business case as presented. What we've

tried to do in the budget is show from the numbers in the business case, which

B.C. Hydro has presented, what those rate increases would be and what the net

income would look like.

But we'd be very happy to pull in the experts from B.C. Hydro for

any kind of briefing that perhaps we all can partake in to see what that exact

formula is and how you move from the net income to the amount for the dividend.

J. Horgan: Well, I remember from my time hanging out with

B.C. Hydro that low-water years meant less money to the Crown, and it meant less

return on equity as well.

[1025]

As we look at increased borrowing to meet maintenance needs and

any other potential expansions that are approved — and we're looking at the

budget documents that say we're going to have a flat net revenue over time — do

we factor in high-water years and low-water years when we're coming up with that

calculation? Does that have an impact on the dividend?

Hon. C. Taylor: The second line in that chart shows

reservoir water inflows at about 100 percent, so that's the way we've budgeted

it. But the member is absolutely correct that you do have years where it's lower

or it's higher, which then would have an effect on those numbers that we're

projecting going forward.

J. Horgan: I thank the minister for her response.

Again, the feedback that I've been getting on B.C. Hydro of late

and the government's role in assisting that corporation in managing the affairs

of electricity users is a concern that rates are increasing beyond the rate of

inflation. Special directions to the commission with respect to water rentals

are going to have another effect, which is certainly not the subject of our

debate here today.

These added costs to the corporation, according to the Utilities

Commission — whether it be purchasing costs of new energy supply — are leading

to higher rates. Although the minister did say earlier on, on this section, that

she felt that higher borrowing would not lead to an increase in rates, I'm

wondering if she could just say that one more time before I sit down and let

this

section go by so that ratepayers will have some comfort that what we're

talking about today is not going to mean more money out of their pocket.

Hon. C. Taylor: I didn't say that. I did say that the price

for borrowing would not change and that the quantum for borrowing would change.

That would be part of the business case that B.C. Hydro will present to BCUC

when they determine rates.

J. Horgan: And here I thought I was done. I should have

paid more attention to the minister's earlier responses. So the request to

remove the cap — did that come from B.C. Hydro, or was that a decision of

cabinet?

Hon. C. Taylor: This really came out of Treasury Board

because of the pattern that we'd had where you have a borrowing cap, but 13

times since '64 — every time there was a request for new expansion or dollars

for the heritage facilities — the cap kept being changed. That's gone on for a

lot of years. It was the pattern.

We didn't think that made sense, to keep changing the debt cap,

and we also recognize that government has made a strategic decision to not only

rebuild a lot of the heritage facilities but also look towards a future where

B.C. can be self-sustaining in clean energy. So recognizing that there would be

more of a build coming and rather than changing the debt cap year after year, we

felt it would be best to remove the debt cap.

J. Horgan: When was the last time the debt cap was changed?

Hon. C. Taylor: Hon. Chair, '84.

J. Horgan: So the debt cap hasn't changed since 1984, but

there's an ongoing request — a nagging desire — by B.C. Hydro to spend more

money to incur more debt. Rather than prudently manage that insatiable desire by

the senior managers at B.C. Hydro to fritter away ratepayers' hard-earned

dollars, we're going to

[ Page 10696 ]

just open the floodgates and let them have it. Is that what the minister is

suggesting?

Hon. C. Taylor: What the minister is suggesting is that the

government has set a policy where we are going to move toward a future for B.C.

where we are self-sustaining in clean energy. That means not only the

revitalization of a lot of the current facilities, but it will mean some new

builds.

[1030]

J. Horgan: As I understand the B.C. energy plan — and I've

been paying a lot of attention to it over the past little while — B.C. Hydro is

not in a position to generate its own new sources of supply. In fact, it is

dependent on the private sector to do that.

Certainly, I appreciate that 40-year-old facilities require new

turbines now and again, There are opportunities for upgrades at places like

Revelstoke and Mica, and that's going to be a capital cost.

But my recollection, again, was that B.C. Hydro was constantly

knocking at the door, and were it not for the good work of your staff at

Treasury Board and the staff of the previous ministers at Treasury Board, the

debt would have gone through the roof. So wouldn't we want to, as prudent

managers, keep one eye on the purse so that ratepayers are not adversely

affected by B.C. Hydro excesses?

Hon. C. Taylor: Nothing has changed in terms of the

process. Treasury Board still reviews the capital plans of Hydro. The capital

plans of Hydro are part of the BCUC application that is reviewed thoroughly when

they are deciding rates.

J. Horgan: Does Treasury Board participate in those plans?

Do they have access to those plans, and do they comment on those plans?

Hon. C. Taylor: They do come through the capital planning

process.

J. Horgan: So we haven't had a change in the cap in 24

years.

There's a requirement now to refurbish some of our older heritage

assets. There's a possibility of Site C proceeding many years out. Rather than

completely repealing

section 25, why not do what has been done in the past and

prudently allow Hydro to raise a little bit more money for the projects they

need rather than leaving it open-ended?

Hon. C. Taylor: We are comfortable with the review process

by Treasury Board through the capital planning process and also through the BCUC

process.

J. Horgan: Again, I'm not sure if that answered my

question. If you've got, as you do, a figure in the Hydro and Power Authority

Act,

section 25, the "Borrowing limitation," why not just amend that figure and

ensure that the pencils are sharper at Hydro — I'm not even getting a smile from

staff; I thought I might on that one — and have a little bit more control over

that borrowing rather than just leave it to chance potentially?

Hon. C. Taylor: Certainly, we could have continued the

pattern of the past, which was to keep changing the borrowing cap when you know

that you're going to exceed it. We felt that there were good processes in place

— the review by Treasury Board, the review by BCUC — to ensure that the capital

spending would be properly reviewed and overseen.

J. Horgan: From 1984 to present there has been Treasury

Board oversight. There has been BCUC oversight. Why not just continue on as we

have done? It's served the province well. It's kept that taxpayer-supported

debt, or that ratepayer-supported debt, in balance.

[1035]

It's provided low-cost power to British Columbians, and it's

ensured that there are checks and balances in place not just at the commission,

not just at Treasury Board but in legislation. Why not maintain that last level

of protection from overspending?

Hon. C. Taylor: We believe, as a government, that we are

moving into a time when there will be extra spending by Hydro to meet the

priorities of government. The minister who is responsible for B.C. Hydro, I

think, would be the first to say that he believes that B.C. Hydro has fallen

behind in terms of the revitalization of some of its heritage projects. We

really do believe that B.C. Hydro is going to step up the borrowing that it does

in order to meet its commitments.

We could go back to the pattern where between '64 and '84, 13

times — every time they needed to borrow money — they just changed the debt cap.

We didn't believe that was better oversight. We think the processes that are

available through Treasury Board and also through BCUC ensure that B.C. Hydro's

capital plan is well reviewed.

J. Horgan: Well, '64 to '84 was the growth period in

history for the corporation and for the province. That costs were escalating at

that time shouldn't come as a surprise. If we're going to be duplicating that

growth at Hydro, then I welcome that if those are going to be publicly owned and

publicly controlled assets.

I do want to ask if the Transmission Corporation is affected in

any way by this amendment.

Hon. C. Taylor: This specific legislation is about the

borrowing debt cap for B.C. Hydro.

J. Horgan: Is there a debt cap for the B.C. Transmission

Corporation?

Hon. C. Taylor: No, there's not.

J. Horgan: I appreciate that between 1964 and 1984 they

wouldn't have come for increases, because they didn't exist. Are we then relying

on the Treasury Board

[ Page 10697 ]

process and the Utilities Commission to manage and keep growth of that debt

under control?

Hon. C. Taylor: The short answer is yes.

J. Horgan: Short answers always lead to longer questions.

Then if there is no cap in place for the Transmission Corporation,

which again has aging infrastructure, one issue that causes me some concern —

and I'm anxious to hear the minister's response — is with respect to the

electrification of Highway 37, which is a project that's primarily of interest

to mining interests in the northwest of British Columbia.

It's an initiative that potentially could lead to high-paying jobs

for people in the northwest, and I would support that. But the negotiations, the

discussion around putting a 276-kilovolt line from Terrace north to Atlin is a

commercial arrangement being brokered by the Minister of Energy and the minister

of mines that could potentially see the Transmission Corporation incur

significant debt to put in place a transmission line that would ultimately just

benefit the private sector.

Is that a concern of the minister? Would that be something that

would go through the capital branch before it was approved?

[1040]

Hon. C. Taylor: I'll refer that question to the minister

responsible.

Sections 33 and 34 approved.

section 35.

B. Ralston: The purpose of this

section appears to change a

definition to conform with the federal act as a result of the creation of

section 8(1). Is that correct?

Hon. C. Taylor: Yes, it is.

Sections 35 to 37 inclusive approved.

section 38.

B. Ralston: Can the minister confirm that this

section

provides for the indexing of the low-income climate action tax credit?

Hon. C. Taylor: This provides for the threshold at which it

is reduced.

B. Ralston: I understand that the deduction will be indexed

to the consumer price index, and that will be dealt with by way of regulation.

Is that correct?

Hon. C. Taylor: This will be automatic. We won't have to do

regulations. It will be automatically indexed to inflation.

Section 38 approved.

section 39.

B. Ralston: This

section reduces the dividend tax credit

for the 2009 tax year and subsequent tax years. Can the minister explain the

rationale for the policy change?

Hon. C. Taylor: The policy behind this is to harmonize so

that whether the income comes either as wages or as dividend, they will be

comparable.

B. Ralston: I'm sorry. There was some background noise

here. I didn't hear part of the minister's answer. I wonder if she could repeat

it.

Hon. C. Taylor: The policy idea is to harmonize the

taxation policy so that whether the income comes as dividend or in other forms,

they are harmonized.

B. Ralston: "Harmonized" is one of those supremely

ambiguous words, which sometimes has some loaded political rhetoric associated

with it. Does that mean that the intention of this

section is to harmonize this

tax credit as income with other income so that the rate will be the same? Is

that what is intended?

Hon. C. Taylor: Yes, it is.

Section 39 approved.

section 40.

B. Ralston: This

section creates the enabling legislation

for the low-income climate action tax credit, so-called. In subsection (1)(

b) there is a reference to — and I'll read it — "who was resident in British

Columbia on the first day of the specified month and the preceding specified

month." Can the minister explain that this is related to eligibility to receive

the grant? Can the minister explain what the specified month is and what is the

intention of this particular

section of the legislation?

[1045]

Hon. C. Taylor: The specified month is the beginning of

each quarter, since this will be paid on a quarterly basis.

B. Ralston: That would determine continuing eligibility to

receive the grant. Is that correct?

Hon. C. Taylor: Yes. It will be determined each quarter.

Section 40 approved.

section 41.

B. Ralston: This

section sets out the definition for the

climate action dividend. Under

section 13.01, the proposed definition of

eligible individual means "a person who on January 1, 2008…." So in order to be

an eligible individual to receive the grant, you have to have been resident in

the province on that date. If you subsequently left, you remain eligible to

receive the grant?

[ Page 10698 ]

Hon. C. Taylor: Yes. The intent is to make sure that we

capture any of the children that were born in December, for instance. So as of

January 1, they would be eligible.

B. Ralston: So I suppose that Matt Cooke, who was on the

Vancouver Canucks and was traded to the Washington Capitals, after January will

still be eligible for his $100. I'm sure he'll be happy to hear that.

Under "eligible individual," paragraph (

b) describes: "…the parent

of the qualified dependant who primarily fulfils the responsibility for the care

and upbringing of the qualified dependant…."

"Qualified dependant" means — and it's referred to later in the

section…. So the intention is that "qualified dependants" — that is, children, I

think, someone who has not achieved the age of 18 years — and their parents…. In

other words, everyone in a family will be eligible to receive this payment. Is

that correct?

Hon. C. Taylor: Yes, that is correct.

B. Ralston: Under paragraph (

d) in the definition of

eligible individual — I'm not quite sure why the

section is drawn in this way —

it says: "…if a qualified dependant resides with the dependant's female parent,

the parent who primarily fulfils the responsibility for the care and upbringing

of the qualified dependant is presumed to be the female parent…." I'm not quite

sure what mischief that

section is seeking to avoid, but perhaps the minister

could explain just what that means.

Hon. C. Taylor: We are following the federal payment rules,

so this is picked up just to match that.

B. Ralston: By the federal payment rules, does the minister

mean the federal child tax credit?

Hon. C. Taylor: Yes, the federal child benefit.

Sections 41 and 42 approved.

section 43.

[1050]

B. Ralston: This

section reduces the general corporate

income tax rate from 12 percent to 11 percent effective at a rate to be set by

regulation, as I understand it. Can the minister explain the policy rationale

for the reducing of the general corporate tax rate and why this particular

reduction — from 12 percent to 11 percent — was chosen rather than 12 percent to

10 percent, for example? Can the minister also confirm when she expects this

will come into force?

Hon. C. Taylor: When government, as a policy, decided to

bring in a carbon tax, we looked at various models of how that might be

accomplished. We decided that the best form, first of all, would be to bring in

the carbon tax at a low level but to promise revenue neutrality for all of the

dollars that came in. Rather than government keeping on its books the dollars

gained from a carbon tax, we are making the commitment to return it to the

community in business tax cuts and personal tax cuts. This is the first step in

terms of what that model looks like.

We did analyze various options. There is $1.8 billion that we are

forecasting will come in over the next three years from the carbon tax to

government. We are returning that to the people and businesses of B.C. by

cutting personal income tax and by cutting the corporate income tax, which is

what this

section refers to, from 12 percent over a three-year track to 11

percent initially — we expect it to be at 10 percent — and the small business

tax, which I'm sure we will talk about, from 4.5 percent tracking down to 2.5

percent.

This is a policy issue. This is government saying that we do not

intend to keep on our books the revenue that comes in from carbon tax, but we

want to return to the people and businesses of B.C. the dollars in the form of

tax cuts. The first step is the corporate income tax cut from 12 percent to 11

percent. The change is effective July 1, 2008.

B. Ralston: The minister speaks of the application of the

carbon tax. Would the minister agree that the reduction of the corporate income

tax from 12 percent to 11 percent bears no relationship to what amount of carbon

tax any corporation may pay — whether they pay a slight amount or if they're in

a more carbon-intensive business, which requires that the impact of the carbon

tax will be greater on that business? There's no relationship between the amount

of carbon tax they're going to pay and this reduction of general corporate

income tax.

Hon. C. Taylor: I'm happy to spend some time talking about

the model that we ended up with, because we did consider various options and how

the tax cuts would take place. If we look at how we estimate the carbon tax will

be collected, we assume that approximately two-thirds of the dollars will be

collected from businesses. However, the model we have chosen in returning tax

cuts to the community in fact reverses it so that two-thirds of the benefit and

tax cuts go to individuals and only one-third to business.

We believe that this is the way we can make sure those who are on

low income are adequately protected, because we put in extra dollars for a tax

credit for low income. We also know that some businesses do pass on any increase

in cost to consumers. For both reasons we believe that the model we have chosen,

which over-emphasizes tax cuts for individuals, is a good model.

B. Ralston: The minister speaks broadly of revenue

neutrality, but I'm speaking about the impact of the carbon tax on the

individual firm. That's the question that the minister did not address in her

last response.

Would the minister agree that the impact of the carbon tax is

variable, depending on the business in which the firm is in; that the effect of

the carbon tax upon the bottom line of an individual company may be very

different; and that it bears no relationship to the general reduction in

corporate tax from 12 percent to 11 percent that's being proposed in this

section?

[ Page 10699 ]

Hon. C. Taylor: Of course, there is great variability in

businesses and in individual lives in terms of how much carbon fuel one does

use. Therefore, there is great variation.

[1055]

Our model in taking the corporate tax rates down in a three-year

track to matching the lowest in all of Canada, we believe, will be a great

benefit for businesses. We believe that it will be a selling point in trying to

encourage businesses to come to British Columbia, to invest in British Columbia,

to expand in British Columbia. But for sure, there is great variability with the

type of business and the choices that businesses have made in terms of what

fuels they will use.

B. Ralston: The minister refers to choices that businesses

have made. I suppose if you're in the trucking business and you're running a

trucking company, you don't have much choice — in the short term, in any event —

about the fuel you have to buy in order to run your business.

Would the minister agree that there is no recognition of the

unequal impact of the carbon tax upon business across the province and, in

particular, that this general reduction in corporate tax does not address that?

Hon. C. Taylor: I'm happy to have a discussion that doesn't

in fact relate specifically to these sections — about the general carbon tax and

what we're trying to do and the billion dollars of incentives we're putting into

businesses and technology and research around the province to help businesses

make adjustments. I'm also happy to talk about the carbon tax and why we're

starting it at a very low rate to give time, whether it's to truckers or to

various businesses or individual families, to make adjustments. I'm happy to

talk about the fact that we will be cutting taxes to a rate for both personal

and large and small business that, at a three-year track, will take us down to

matching many of the lowest rates in Canada.

You know, it's not a discussion that specifically relates to this

section, but if you would like me to do so, I will start to talk about

everything we're doing for truckers and other businesses to help them with these

changes.

B. Ralston: I appreciate the minister may want to divert

the discussion in that way. I'm just asking the minister to agree or not with a

specific proposition that the impact of the carbon tax upon a specific business

bears no relation to the reduction of the general income tax from 12 percent to

11 percent. It may reduce the amount of tax paid by a business, but the

combination of the implementation of the carbon tax and this reduction may in

the end result in an increased tax burden on individual companies in the

province.

Is the minister prepared to agree with that general proposition or

not?

Hon. C. Taylor: As I've already said, there is great

variability. We recognize as a government that there are different patterns of

doing business, different requirements for using fuel. That applies to families

as well. Of course there is great variability, and the income tax cuts and the

corporate tax cuts will not match in every single case.

What we have promised as a government is revenue neutrality in

terms of the carbon tax, but that does not mean revenue neutrality for each and

every business, because there is great variability.

B. Ralston: Can the minister advise: in the Treasury Board

modelling, what is the immediate cost of this reduction to the treasury?

Hon. C. Taylor: Page 100 of the budget book lists the

actual costs. For this particular measure, in '08-09 the cost is $75 million;

for '09-10 it's $128 million.

[1100]

Section 43 approved on division.

Sections 44 to 51 inclusive approved.

section 52.

B. Ralston: The next group of sections deals with the film

and television tax credit. This amendment proposes to amend the definition, or

adds the following definition of a distant location. Can the minister explain

the policy reason for adding this definition?

Hon. C. Taylor: As part of our review of the film tax

credits, when we were looking at whether they should be continued, and if so,

what model and pattern, our staff did a lot of consultation with the film

industry. The regional film commission recommended that this extra region be

recognized.

We also believe from a policy point of view of this government

that it's important to encourage film production around the province. It's a

billion dollar industry for us now. It's been a very good industry, but we want

it to be very good for all parts of the province. However, we recognize for film

production, whether it's from Los Angeles or wherever, that to encourage them to

move their production to Fort St. John has extra costs.

[K. Whittred in the chair.]

So this distant regional tax credit is designed to specifically

encourage many of these productions to move out of the lower mainland and

explore the rest of the province.

B. Ralston: Just so that there's some clarity, the

"prescribed area of British Columbia that is outside of the designated Vancouver

area," I understand that the boundary is a line in suburban Metro Vancouver….

Does the distant location then become all of the rest of British Columbia, or is

there an intention to create specific areas? What's the ambit of this proposed

section? Are

[ Page 10700 ]

there going to be a number of distant location designated areas, or is it

simply the rest of the province?

Hon. C. Taylor: Again, the specific definition is included

in the budget document, but Vancouver is regarded as one region. The nearby

region is the next description, and that extends from the designated Vancouver

area, north up to and including Whistler, east to include Hope, and includes the

capital regional district.

The distant region, therefore, will be the area of the province

beyond this nearby region. So we end up with three categories of tax credit.

Vancouver would have the lowest tax credit. More is included in the nearby

region, which includes Victoria and many of those suburban areas. Then the

distant is the richest tax credit, and that is to encourage productions to

really consider some parts of the province that they would not normally take

productions to.

B. Ralston: As I understand it, and perhaps imperfectly,

the regional tax credit for productions filmed outside the designated Vancouver

area is 12.5 percent. Is the minister able to advise what the proposed credit is

for distant locations?

Hon. C. Taylor: The rate would be 12.5 for the nearby

region, 18.5 for the distant and 6 percent goes up to 12.

[1105]

B. Ralston: One of the features of the film tax credit is

its recognition of qualified labour costs. I understand that in some American

jurisdictions that credit for qualified labour costs is available only to those

production companies who use unionized labour. Was that possibility…?

First of all, could the minister confirm that, as part of the

consultation? Secondly, was that considered as a basis for a credit for

qualified labour costs in British Columbia?

Hon. C. Taylor: The question of unionized labour is not

part of this

section or the bill that we're presenting. It's just based on

salaries and wages.

B. Ralston: The minister spoke earlier, though, of a

consultation with the economic actors in the film industry. That would include

producers and presumably some of the unions involved in providing the highly

skilled labour that's recognized, I think, globally as an important part of the

film industry here in British Columbia.

Can the minister confirm that that issue did come up in

discussions, and was it something that the minister considered in these

revisions to the tax credit?

Hon. C. Taylor: One of the pluses that came out of the

consultations with the ministry staff and people involved in film was an

awareness that there is a good relationship between the labour and the

employers.

Most of the consultations concentrated on whether or not the film

credits would be continued at all, whether they would be extended, whether there

would be a change between domestic and foreign credits. The regional film

commission, as I mentioned earlier, was very anxious to have an increased credit

for distant locations. Those were the main areas of consultation.

Section 52 approved.

section 53.

B. Ralston: This

section changes the definition of a

B.C.-based individual. As I understand it, the person is required to be resident

in B.C. every year rather than just the year the principal photography began.

Can the minister explain the rationale behind that proposed policy change?

Hon. C. Taylor: This is designed to be helpful to the

industry. On occasion, you would have a film production that might go over a

couple of years. So if the individual wasn't resident in B.C. right from the

beginning, they would not be eligible. This way, it's done on an annual basis.

The film industry is very pleased to have this change made to the legislation.

Sections 53 and 54 approved.

section 55.

B. Ralston: This section, as I understand it, provides an

additional credit of 5 percent for qualified B.C. labour expenditure. Can the

minister advise, through her officials: how does this compare with the recent

changes in the Ontario tax credit, which is a similar legislative scheme to this

one?

[1110]

Hon. C. Taylor: This matches the rate in Ontario for

domestic productions.

Sections 55 to 57 inclusive approved.

section 58.

B. Ralston: This section, as I understand it, adds an

additional 7 percent credit for the production services tax credit. Can the

minister explain what the production services tax credit is and why this policy

change is recommended in this section?

Hon. C. Taylor: This production services tax credit is for

foreign productions, and the increase is to match the rates in Ontario.

B. Ralston: I had understood that those credits were

available to both domestic and foreign producers, but there is no Canadian

content requirement. Can the minister confirm that?

Hon. C. Taylor: It is correct that if you don't meet the

requirements for the basic tax credit, then you would fall into this category.

[ Page 10701 ]

Section 58 approved.

section 59.

B. Ralston: I just wanted to confirm with the minister that

this extends the distant-location amendments to the production services tax

credit scheme. It seems to extend the proposed distant-location tax credit to

the production services tax credit program as well. Is that correct?

Hon. C. Taylor: Yes, that is correct.

Section 59 approved.

section 60.

B. Ralston: We discussed this earlier, but I just wanted to

confirm that this authorizes the cabinet to designate the distant location and

that the intention is as the minister described it. It will not be included in

the legislation, but there will be the three areas: the Vancouver area; the

suburban area; and the single distant location, which will be the rest of the

province.

Hon. C. Taylor: Yes, that's correct.

Section 60 approved.

section 61.

B. Ralston: These amendments deal with the International

Financial Activity Act. There are some

definitions that are changed, repealing a

definition of "active business" and substituting a "qualifying business." I'm

not clear why this is necessary. Is this to conform with federal law, or is

there some other reason?

[1115]

Hon. C. Taylor: This is our attempt to broaden beyond what

the federal description would be to encourage other businesses to locate here,

and this came out of consultations that ministry had conducted on this issue.

B. Ralston: The proposed amendment would substitute

"qualifying business" as defined in the regulations. So the regulations are

something that would be passed by cabinet, assuming this legislation passes, as

I'm sure it most likely will. Can the minister give a sense of the ambit that's

proposed for the regulations that this

section refers to?

Hon. C. Taylor: Yes, I would have to say that it's the

intention at this point. But through regulation, it's intended that the

definition of "qualifying business" would include a substantial B.C. presence

test and that the business must incur a minimum of $300,000 in wages and employ

at least $10 million in capital in British Columbia. Alternatively, the

definition of "qualifying business" will include an active business of a

corporation as well.

B. Ralston: As I understand the international financial

activity centre, the present act gives the centre the ability or qualifying

businesses the ability to apply to have certain employees designated and then be

relieved of the obligation of paying any provincial income tax if they're

designated personnel.

Is it intended that in order to meet the qualification that's

proposed here in the prospective regulations, those employees who would be

employed by the business but designated as employees under the act and not

required to pay any provincial income tax would still meet the definition for

qualifying as part of the international financial activity centre?

I suppose the policy question is that if one of the qualifications

is to have employees, presumably there has to be some benefit to the province.

If they're not paying income tax, they may be of some benefit to the province

but obviously less benefit directly to the treasury. So that would be my concern

in this proposed regulation that the minister has offered.

Hon. C. Taylor: The definition of specialist is very

narrow. It's my understanding that there are only three in British Columbia at

this point, but it's not tied to this particular definition.

B. Ralston: There's a change in the definition of

"international financial business." It appears to follow the previous change,

the definition from "active business" to "qualifying business," and I just

wanted to confirm that. Is that correct?

Hon. C. Taylor: Yes, that is correct.

Sections 61 to 63 inclusive approved.

section 64.

Hon. C. Taylor: I move the amendment to

section 64 standing

in my name in the Orders of the Day .

SECTION 64,

by deleting the text shown as struck out:

Section 2 (2) is amended

(

a) in paragraph (g) (ii )

by striking out “ securities corporation ,” and

substituting “ securities corporation and is not a specified investment

business, as defined in

section 248 (1) of the federal Act, ” and

by striking out “securities for a prescribed purpose,” and

substituting “prescribed securities,” ,

and

(

b) by adding the following paragraph:

(r.1) providing, to a non-resident person, prescribed

management services that are directly related to the business operations of

the non-resident person;.]

On the amendment.

Hon. C. Taylor: Perhaps while the member opposite is

looking at the specific amendment, I could at least give an overview or

description. This amendment removes a restriction on the types of businesses

that can undertake the trading and money market investments, because this has

been accomplished already in

section 61 of the

[ Page 10702 ]

bill, which provides a revised definition of "international financial

business."

Amendment approved.

Section 64 as amended approved.

Section 65 approved.

[1120]

section 66.

B. Ralston: This changes or adds to the meaning of income

to an international financial business. Can the minister explain the policy

basis or the policy rationale for this proposed section?

Hon. C. Taylor: This is an existing policy that's just

being clarified.

Sections 66 to 68 inclusive approved.

section 69.

B. Ralston: Just on this

section and broadly on the

previous sections, can the minister advise what the estimated cost of these

revisions will be to the treasury?

Hon. C. Taylor: We are estimating that it would be about $2

million.

Section 69 approved.

section 70.

B. Ralston: This next set of amendments deals with changes

to the Motor Fuel Tax Act.

Section 70 proposes some changes and repeals some

definitions — "family farm," "family farm truck," "family farm truck emblem" and

"farmer" — and substitutes a single definition of "farm," which is "land

classified as a farm under the Assessment Act. "

The minister will be aware of some recent controversy, I think, in

the Saanich area and part of the peninsula here in the lower Island, where land

previously assessed as farmland was partially reclassified as residential land

and as a result had to pay higher taxes.

I understand that the Minister of Small Business and Revenue is

undertaking some review of that definition. Is this definition in concert with

the review that the Minister of Small Business and Revenue has proposed to

undertake or not?

Hon. C. Taylor: No, this in fact doesn't have anything to

do with the review that that minister is taking on. This is because there are

some even very small family farms that they incorporate, for whatever reason.

Under the previous definition, if you incorporated, then you didn't qualify as a

family farm. This just says that whether or not you incorporate, if you're a

farm, you're a family farm — so be it.

B. Ralston: As part of the routine consultation that likely

took place in this event, were the B.C. Agriculture Council and the typical

participants in the agricultural industries of the province consulted on this

definition?

[1125]

Hon. C. Taylor: Yes, and they're big supporters of this.

B. Ralston: There are some changes in the definition of

"locomotive fuel." Can the minister explain what the rationale is for that

change in the definition of locomotive fuel?

Hon. C. Taylor: This is to capture those vehicles that can

run on rails as well as on the highway, to ensure that they only qualify for the

locomotive fuel when they're actually on the tracks. When they're on highway,

then, they would revert to paying the full price.

B. Ralston: I'm advised that the clear fuel rate for diesel

is 15 cents and the locomotive fuel tax rate is three cents. Is that the

difference that the minister is referring to?

Hon. C. Taylor: Yes, it is.

Sections 70 to 72 inclusive approved.

section 73.

B. Ralston: This

section proposes to increase the Victoria

regional transit service tax on gasoline and diesel from 2.5 cents a litre to

3.5 cents a litre. I have some information from the B.C. Transit annual report

that that will increase the regional transit authority's revenue from

approximately $3 million to $3.5 million a year. Is that accurate?

Hon. C. Taylor: It will raise it by $3.2 million.

B. Ralston: The Victoria regional transit area — can the

minister confirm that that's within what are called the capital regional

district boundaries?

Hon. C. Taylor: Yes, it is.

Sections 73 to 77 inclusive approved.

section 78.

B. Ralston:

Section 78 proposes the first of a series of

amendments to the Park Act. This appears to expand the purpose for which the

minister may accept gifts and bequests. Can the minister explain — I think the

policy rationale is obvious — the expanded ambit of this proposed amendment?

Hon. B. Penner: I'll endeavour to answer this question in

response to the member's inquiry. In essence, this

section merely allows us to

accept bequests for a broader range of protected areas so that it's consistent

with the definition of a protected area.

[ Page 10703 ]

Sections 78 and 79 approved.

section 80.

B. Ralston: This

section repeals some regulations that give

power to set fees, collect fees and prescribe uses and services that fees are

charged for.

I'm grateful to the minister responsible for entering the debate.

That ordinarily doesn't happen, and it avoids the usual reference to ask the

question in estimates. I'm grateful to the minister for being here to answer

those questions.

Can the minister explain what the proposed new regulations will

accomplish and why the present ones are being repealed?

[1130]

Hon. B. Penner: In fact, this

section is intended to make

the process less cumbersome. Rather than having to go to an order-in-council,

these decisions can be made by the minister.

B. Ralston: At what point would they then become public as

an announcement by the ministry? In the same way, or is there some public input?

Sometimes there is public interest, as the minister will be aware, in park fees,

whether they're camping fees or fees for firewood. That's something that the

minister will be aware has been the subject of some public debate and, indeed,

public criticism.

I'm wondering if there's any opportunity for, or expectation that,

the public who have views on these sorts of things will be considered when new

regulations for park fees are set.

Hon. B. Penner: I would expect that the process wouldn't be

materially different than how it's done today, except for the process for

bringing it into legal effect. In addition, if I can look ahead briefly to

section 82(5), I believe…. It directs that the minister must make a list of fees

and fee ranges available annually to the public and whenever a fee changes. So

we would be required to make it public, whatever the fee change is.

Section 80 approved.

section 81.

B. Ralston: This

section adds a

section to the Park Act,

which is entitled "Selling merchandise and advertising space." It's a new

section that would allow the minister to create protected area-related products

to sell advertising space and to establish fees. Can the minister explain to

those who may be concerned about this introduction of selling merchandise and

advertising space in parks and conservancy areas, the rationale for the policy,

what he expects will be the effect of this amendment, and what would be the

revenue impact for the treasury?

[1135]

There is a reference in subsection (2) to establishing prices for

different classes of services, including advertising space. So I suppose the

concern would be: why is this being undertaken? Is it being undertaken to gain

revenue, or is it simply meant to inform the public and collect an offsetting

fee to recover costs of doing that kind of endeavour? Just what is the

rationale?

Hon. B. Penner: I think there's an opportunity for B.C.

Parks to generate additional revenue to go to providing an enhanced level of

services for the public. We've seen this in some other jurisdictions that have

pursued this, and they've done so with some success, particularly with the B.C.

150th anniversary but also with the B.C. Parks 100th anniversary that's coming

up very soon.

I think that there's an opportunity for B.C. Parks to capitalize

on that — for example, selling products that might have a B.C. Parks logo on it

and have partners sell them for us. You could maybe speculate about certain

well-known suppliers in the Vancouver area, whether it's Taiga, Mountain

Equipment Co-op or some similar commercial venture. We could perhaps license the

use of the B.C. Parks logo and generate a revenue stream back to B.C. Parks to

be used for parks purposes through that endeavour.

In addition — quite proud of this — last year we came out with

regional maps and brochures for the B.C. Parks system for the first time in

about 15 years. But we have to pay for this all on our own out of B.C. Parks's

revenue. If, for example, someone were to be able to underwrite the cost of this

and in return put a small logo — their company logo — at the bottom of the

brochure on the inside, that would defray costs for taxpayers while still

maintaining a level of service for the public in terms of getting information

they haven't otherwise been able to get over the last 15 years, except for last

year.

I've said all along in the development of this policy that B.C.

Parks will continue to hold the editorial pen, as it were. We will not accept

corporate logos or advertising that we deem to be unacceptable or lacking in

taste. We will maintain that level of control.

B. Ralston: The minister referred to other jurisdictions.

In order to get a sense of the minister's thinking on this topic, can he explain

or reference the other jurisdictions that he spoke of.

Hon. B. Penner: There are a number of jurisdictions across

Canada, I'm told, that have looked to the private sector to help raise

additional dollars for their parks services, including Ontario and Alberta.

Further, in my meetings with World Wildlife Federation officials or

representatives, they inform me that various jurisdictions in Australia have

been able to generate additional dollars for their parks system in this way.

It's something that I think will prove beneficial in the long run.

B. Ralston: I'm not asking the minister to disclose

specific suppliers. He mentioned some hypothetically, but I'm interested….

[1140]

[ Page 10704 ]

In bringing this legislation forward, has the ministry developed a

business case? Presumably, if legislative amendments are being sought here to

enable this activity to take place, there is some sense of a business case in

order to justify the amendment. So can the minister advise: was there a business

case study conducted? And what is the range of prospective revenue, appreciating

that not all the details are available at this point?

Hon. B. Penner: We've done some of that work. For example,

in the case of Ontario, I'm told that they're able to generate about $2 million

to $3 million annually through partnerships or looking for additional revenues

from the private sector in this way. We're not expecting to have that same

amount of revenue, certainly not in the near term. But we think that we do have

the opportunity, perhaps, to generate over the next couple of years in the

hundreds of thousands of dollars in additional revenue for B.C. Parks.

I mentioned just a moment ago — and I know I'm not supposed to

hold this up and use it as a prop, so I won't — that the new B.C. Parks map and

brochure that we introduced last year for six different regions, again, came out

of our direct operating budget. Then, once the money was spent and that print

run was complete, those brochures were gone. They were not kept in continuous

production.

So one of the things that the Minister of Finance has heard about

from me a number of times is that if we could have this kind of legislative

change we could perhaps charge a loonie for a B.C. Parks brochure and have that

stream of revenue go to keeping this park map or brochure available throughout

the busy season in the summer right into the fall.

My own experience last summer in visiting various tourist

information kiosks around the province, where I was specifically looking for

this on the shelves, was that, without exception, I was told by the staff

operating those different tourism information facilities that these brochures

were a hit and it was hard to keep them on the shelves. They went through them

at a record rate, and then their supply or sources were depleted by the end of

August.

This proposed amendment will give us some additional flexibility

to keep generating revenue to keep these kinds of very helpful and useful

documents in supply. I think it's good for tourism overall. I think it's good

for families. If you go through one of the brochures, it highlights, in each

one, tips for families in different regions, things that you can do with your

children — short hikes, fishing expeditions, those types of things.

I think it has real benefit for the tourism industry and benefit

for individuals and their families. But more importantly, I think it's of

benefit for B.C. Parks by just getting the message out about the great services

and opportunities we offer.

B. Ralston: The reference in subsection (1)(

c) is to

advertising space, and it says "in those products." I take it from that wording

that the advertising space that's envisaged here is advertising space for the

specific type of products that the minister spoke of, and it's not generic

advertising of other commercial products. One can well imagine the range of

products that we are all subject to in our daily lives in various locations and

various mediums.

So it's specifically confined to advertising of the products that

the minister referred to and that are intended to be sold through B.C. Parks. Is

that correct?

Hon. B. Penner: I think I have the member's question

correct.

In terms of publications or those types of things, we would

consider whether or not we want that particular product, whether it's the

brochure or the Go Camping guide or if we produce something similar to

that ourselves…. We would decide whether we want to link ourselves to a possible

partner.

[1145]

There may well be cases where we decide that's not the most

appropriate partner to have linked to or associated with B.C. Parks, so we'll

have to develop that as we go forward. But you can probably imagine the types of

people who would want to associate with a B.C. Parks product — people who would

sell canoes or other outdoor gear, fishing gear, camping gear and the like.

B. Ralston: Obviously, my question wasn't clear enough.

I understood the wording of this

section to be that it would be

advertising confined to the sale of products, like the maps the minister

referred to, but not an opening — and I suppose this would be the public concern

— to a broad range of advertising about camping products or different kinds of

fuels for campfires. There's a wide range, and one can imagine that there might

be some public concern about opening up B.C. Parks to that kind of wide range of

advertising. I understood this

section to limit the possibility of advertising

to only those products that are for sale, like the map that the minister spoke

of.

If that's not the narrow definition, and I don't understand

correctly, I'd appreciate having that clarified.

Hon. B. Penner: There was considerable debate on this side

of the House about what the question was. I'll take a stab at it here.

I believe what the member is asking is: what kind of screen will

we apply to the type of advertising that we would accept? We're working on

policy in that regard. It's likely to be similar to the screen that's applied to

ethical funds and that type of thing, where there's a restriction on certain

types of advertising that would not be deemed appropriate or acceptable. It may

have its own unique flavour when it comes to B.C. Parks and may go further than

that, but that's still under development.

B. Ralston: Well, let me have another stab at this. In

subsection (1)(

a) there's a reference to maps, information materials, service or

promotional or educational products. Subsection (

b) says "sell products…to a

person for resale…" and "sell or otherwise dispose of advertising space in those

products."

I'm assuming that the term "products" refers to the same products

that are referred to in (

b) and the same

[ Page 10705 ]

products that are referred to in (a). That would limit the advertising that

could be done. For example, you go to a park. You might want to consume some

beverages or buy foodstuffs, but we won't be confronted with advertisements from

Safeway or Overwaitea advertising hot dogs and beverages for consumption in the

parks. I'm assuming that the purpose of this very fairly narrowly written

definition is to confine that reference to those products which are referred to

in (1)(a).

I apologize if I haven't made myself clear. I hope that question

is clearer.

Hon. B. Penner: Yes. Subsection 29.1(

c) refers to

subsection 29.1(1)(a), so that would be the limiting factor.

[1150]

Sections 81 and 82 approved.

section 83.

B. Ralston: These series of proposed changes to the Ports

Property Tax Act and extend a tax cap on property tax for designated businesses

in municipalities with port facilities…. The minister will be aware, and I

expect her officials are certainly aware, of the ongoing debate that has been

brought forward, I think, most recently by the mayor of Port Moody. It is the

view of many affected municipalities that the cap has the effect of unfairly

reducing municipal tax revenue from port facilities. I'm wondering what response

the minister has to that.

I'm advised that Port Moody — the only city, I believe, that will

see an increase in revenue as a result of these changes…. Well, maybe the Port

of Prince Rupert. But most of the lower mainland municipalities are of the view

that they're being obliged to provide a tax break without compensation.

Hon. C. Taylor: Yes, the ministry did extensive

consultations on this. We had promised to do a review because the initial policy

went to 2009, and we wanted to have municipalities and port businesses have the

opportunity to talk about it — if it was working and what changes should be

brought in. So I really do want to commend staff, because they kept coming back

with the list of everyone they talked to and did a remarkable job.

I would say that if you ask municipalities whether they want any

cap at all, they would say: "No. Ideally, we wouldn't want any cap." If you said

to the port businesses: "What do you think about the cap?" They'd say: "We would

want the cap there forever." The middle ground where we landed was that we would

continue the cap. We would increase the compensation from municipalities and tie

it to inflation but limit it to ten years.

So it's a middle ground that listened to a lot of the issues. As a

government, I have to say that we do believe in the policy. We believe in

helping our ports be competitive. We think it's an important part of our

economy.

B. Ralston: I believe it's not in this

section but in one

of the subsequent sections, but I will address it generally at this point.

From what I understand, the beginning of the consumer price index

increases, in the view of the municipalities, doesn't compensate for what has

taken place over the last several years. Can the minister explain why this

starting point was chosen and not something that would, in the view of the

municipalities, more fairly compensate them for the lost revenue that they're

experiencing?

Hon. C. Taylor: The date was chosen because that's the end

of the current policy and agreement. On a go-forward basis is where the changes

get made.

B. Ralston: As I understand it, the discussion did

include…. Certainly, the position of the affected municipalities was that they

were of the view that there was an opportunity to make that calculation

retroactive for the three previous years of the policy — notwithstanding the

minister's comments.

I gather, obviously, that the minister has decided not to accept

that. Can the minister explain why that is that case?

[1155]

Hon. C. Taylor: Yes, we heard lots of ideas and proposals.

We felt that where we landed with this policy was one that listened to both

sides on some of the issues that were involved.

One other thing that I should mention. This came directly from a

couple of the mayors who felt that if they could negotiate with the port

businesses a better situation and one that both sides agreed to, would we allow

them to do it? So we've included that as well.

We have designed the policy that we think protects port

competitiveness and compensates municipalities, but we have given them the

freedom so that if they can negotiate a deal that both sides believe is a good

one for their municipality, we will honour that.

B. Ralston: Noting the hour, I move that the committee

rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:56 a.m.

The House resumed; Mr. Speaker in the chair.

Committee of the Whole (Section B), having reported progress, was

granted leave to sit again.

Committee of Supply (Section A), having reported progress, was

granted leave to sit again.

Hon. R. Thorpe moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 1:30 p.m.

this afternoon.

The House adjourned at 11:57 a.m.

[ Page 10706 ]

PROCEEDINGS IN THE

DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF

TRANSPORTATION

(continued)

The House in Committee of Supply (Section A); H. Bloy in the

chair.

The committee met at 10:11 a.m.

On Vote 43: ministry operations, $970,553,000 (continued).

M. Karagianis: Minister, this morning I would like to

actually move into a slightly different topic. We've been talking about some of

the major projects, most of them outside of the Lower Mainland, so more of the

rural projects. I would like to move into some discussions here that would also

allow some of my colleagues to ask questions. Many of them are rural related.

I wanted to know the current status on maintenance contracts

around the province. It's my expectation and belief that there is a report that

would give us current status and update on all contracts currently underway with

the ministry across the province — who's carrying out those contracts and what

the current status is. Is that available to me?

Hon. K. Falcon: Just before…. I thought I would introduce

staff who are joining me here again for the benefit of members opposite and

perhaps those in our viewing audience. I'm joined by my assistant deputy

minister, Sheila Taylor; Kathie Miller; Mike Proudfoot; chief operating officer,

Peter Milburn; assistant deputy minister of partnerships, Frank Blasetti; and my

Deputy Minister, John Dyble. I welcome them and thank them, obviously, for being

here today.

With respect to the maintenance contracts, all of the areas that

have maintenance providers are all currently under contract. We have no major

concerns with any of the particular contracts, all of which, as I say, are under

contract. I'm not entirely clear what report the member opposite was referring

to. Maybe she could clarify that for my benefit.

M. Karagianis: I was expecting that there might be some

kind of report out on the maintenance contracts, the current status on any of

those, perhaps some kind of registry about complaints and resolution of those

complaints from communities across the province.

I know we talked a little bit yesterday about the implications of

some of the new public-private partnerships on those maintenance contracts as

well. Obviously, some of those will kick in.

The Kicking Horse Canyon. I believe the minister has talked about

the fact that that concessionaire is going to be taking over maintenance and all

operations of that specific project at some point.

So I'm just looking to get a picture of where the current

maintenance contracts are around the province; what the current status of them

is; what, if any, complaints have been registered; and the resolutions to those.

I would expect that there must be some kind of registry that tells us all of

that, and I'd just like to know how to find that information out.

[1015]

Hon. K. Falcon: In terms of the maintenance contractors, do

you want me to sort of give a listing of who they are and their areas? I wasn't

quite clear what you would prefer. I've got a listing of all the maintenance

contractors and the areas that they're responsible for, their service areas.

Like is that helpful?

M. Karagianis: That would be helpful.

Hon. K. Falcon: Okay, I'll do that, and then I'll answer

your question about the issue of how complaints are dealt with.

So the maintenance contractors for…. And I'll whiz through this.

If you want me to pause or slow down or stop, or if I didn't say it clearly,

then just go ahead and interject.

South Island is Mainroad South Island Contracting Ltd. Central

Island is Emcon Services. North Island is Emcon Services. Howe Sound is Mainroad

Howe Sound Contracting. Sunshine Coast is Capilano Highway Services Co. Lower

Mainland is Mainroad Contracting. Fraser Valley is Emil Anderson Maintenance Co.

South Okanagan is Argo Road Maintenance Inc. Kootenay-Boundary is Emcon

Services. Central Kootenay is Yellowhead Road and Bridge Ltd. East Kootenay is

Mainroad Contracting.

[1020]

Selkirk is HMC Services. Okanagan-Shuswap is Argo Road

Maintenance. Nicola area is VSA Highway Maintenance Ltd. Thompson is Argo Road

Maintenance Inc. South Cariboo is Interior Roads Ltd. Central Cariboo is

Interior Roads Ltd. North Cariboo is HMC Services Inc. Fort George is Yellowhead

Road and Bridge Ltd. Robson is Lakes District Maintenance Ltd. South Peace is

Caribou Road Services Ltd. North Peace is Yellowhead Road and Bridge Ltd.

Nechako is Yellowhead Road and Bridge Ltd. Lakes is Lakes District Maintenance

Ltd. Bulkley-Nass is Billabong Road and Bridge. Skeena is 141187 Ventures Ltd.

North Coast is O'Brien Road and Bridge Maintenance Ltd., and Stikine is Lakes

District Maintenance Ltd.

Now, with respect to how complaints are handled, each of the

maintenance contractors is required to keep tallies of any complaints they've

received and how they've dealt with those complaints. As part of the quality

assurance program within the ministry, we audit their reports to make sure they

are not only keeping that tally list but how they are responding to them. That

will form part of the annual service review that we do on the maintenance

contractors.

That annual service review includes other things too, as the

member will probably know, including

[ Page 10707 ]

stakeholder feedback. So we'll talk to the municipalities, police services,

school districts, trucking associations, etc., to also get feedback from them in

terms of how the respective maintenance contractors are dealing with issues in

their area. All of that will form part of the ratings that the maintenance

contractors will receive for the services they're providing.

M. Karagianis: With regard to the complaints process and

the audit process here, how does that affect bonus payments or performance

payments?

Hon. K. Falcon: What happens in terms of the maintenance

contractors is that there is an assessment system. There's a summer assessment

on how well they did during the summer months, and then there's a winter

assessment on how well they did in the winter months. It's based on written

performance criteria that they're responsible for adhering to and, of course, on

the audit process that we go through.

[1025]

There are assessments of their performance that are undertaken by

our local Ministry of Transportation staff. That's one level. There are also

assessments undertaken by our regional staff. That is another level of

assessment. Finally, there are the stakeholder assessments. The stakeholders,

which I mentioned earlier, being things like local municipalities, trucking

associations, school districts, police, etc.

There is a weighting that is allocated to each of those. The local

assessment portion, our local MOT staff, who would be working most closely with

the maintenance contractors…. Fifty percent of the weighting is predicated on

local assessment. The regional assessment represents 30 percent weighting, and

20 percent weighting is provided through the stakeholder assessment process. All

of that makes up the rating that ultimately is done annually for each of the

maintenance contractors.

M. Karagianis: Does that rating then affect their bonus

payments percentagewise? Perhaps if they have failed 50 percent or 25 percent,

does that then affect the bonus payment system?

Hon. K. Falcon: The short answer is yes. It absolutely

affects the performance payments that they may or may not receive, dependent

upon the kind of service that they've provided. It comes out through their

annual performance reviews, which are undertaken in both the summer and the

winter — the assessments.

They are entitled to earn…. There's a step-up process, so

depending on how well they do on each of the levels of assessment…. That will

also depend on what level of performance bonus that they could anticipate

receiving. The maximum that they're able to receive is 2 percent of the contract

value.

That can be a considerable sum of money for these maintenance

contractors, so there is a strong inclination for them to meet the performance

requirements of the contract. Otherwise, they will be dealing with hefty

financial…. Really, what they are is penalties, because if they don't get those

performance payments, then that is a significant financial cost and, we believe,

a significant disincentive to ensure that they do not provide a level of service

below what is, certainly, outlined and what we expect as part of their contract.

M. Karagianis: In the case of these bonuses, does the

minister have a reporting-out, basically — say, over the last five years — on

who has received bonuses, who has not and who has received only partial bonuses,

therefore providing kind of a snapshot of performance of these companies across

the province?

Hon. K. Falcon: The answer is yes.

M. Karagianis: Is that available to the public or to the

critic? How would I get my hands on that kind of report?

Hon. K. Falcon: Typically, when we get requests for

information on performance of individual contractors, that's usually what

happens. Someone is upset in an area, and they want to know what the situation

is. Did they get a bonus? Did they not get a bonus? We provide that information.

But I'm happy to provide the information on all of them for the member if the

member wishes. It's a fairly detailed list, but we can get that to the critic.

M. Karagianis: I would appreciate that very much.

Let me just ask, theoretically at this point: have any of these

contracts been cancelled due to poor performance? At what point does the

ministry determine that the contractor has not met the obligations? Is it one

year, two years, three years?

[1030]

What's the threshold to say: "You've not met your contractual

obligations here, and we're now going to look for a new maintenance contractor"?

Hon. K. Falcon: The answer is that, historically, yes, we

have had to cancel maintenance contractors in the ministry. We haven't,

according to staff, in the last seven years, but historically that has happened

in the past when maintenance contractors have not performed and they continued

to have non-performing. They had their contracts pulled. So that's something

that very much can happen.

The steps that go into something like that happening…. There are a

number of steps that would take place. The first is that if there is a pattern

of them not meeting their standards that are set out in the maintenance

contract, they would get a warning and non-conformance report from our quality

system we have in place. That would basically be letting them know — and this is

a written notice — that they are non-conforming in whatever aspect of their

maintenance contract they are not meeting the terms.

[1035]

If there is continuing to be non-performance even after the

written notice being provided and it's not

[ Page 10708 ]

remedied, we will issue a notice to comply to their bonding company. This is

a very serious situation for a maintenance contractor. Once their bonding

company is notified, of course, being financially responsible for the

performance of the maintenance contractor as part of the bond, they are going to

take a very vigilant interest in the fact that there's a problem. What will

likely happen is that they will move in and try and figure out what's going on

and deal with that.

If there's still a problem, we will start making payment

deductions for work that is not being done. So if we identify areas, whether

it's snow removal or mowing or whatever the case may be, where the work is not

being done, we start making deductions for payments. So that will start to

financially penalize them on issues where work is not being done.

The fourth step is that we have the ability to issue what's known

as single-event default, which means that they've defaulted in a particular area

and they're not going to receive any payment. They're issued a notice of

single-event default — or it could be total default, where the entire contract

is now considered to be in default.

In the event that that happens, the bonding company then has an

option of taking over the contract. We would then enter into negotiations. The

bonding company has the choice to either pay us out the value of the bond — then

we would re-tender the contract and have the work done by someone else — or,

through the negotiation process, may decide that they will continue to operate

and fund whatever costs are necessary to keep up the service commitments

required under the bond.

So those are the steps that take place to ensure that there is

accountability and that the performance is being done as outlined by the

maintenance contract.

M. Karagianis: In the case now — we discussed this at

length yesterday — of the change…. There's going to be a change in status for

some of these maintenance contractors when the public-private partnership

concessionaires take over. Kicking Horse Canyon and that entire corridor is one;

there will obviously be numerous others.

What is the process that you follow of notifying the current

maintenance companies that they will no longer be responsible now for the

specific areas being taken over by the new concessionaire?

Hon. K. Falcon: All of the maintenance contracts have an

article in the contract that allows for the provision of removal of some

section

of maintenance contract services that they are required to provide. There's an

adjustment that is made, obviously, to the payment made to the maintenance

contractor to reflect the fact that they'll no longer be responsible for a

certain area.

The Sea to Sky was actually one of the largest situations. In that

case, there was lots of notice. In fact, it was built into the maintenance

contractor's contract — the provision that when it went to a tendering process,

part of the tendering process would include maintenance. Most of these

contractors are well aware a long time in advance of the fact that this process

will take place. There's usually a very long construction period involved in

these projects prior to the maintenance being assumed by the new contractor

under the concession agreement. So there is sort of a long period of advance

notice to the existing maintenance contractors.

[1040]

M. Karagianis: My last question, before I allow one of my

colleagues to get up and ask a few questions about his particular constituency,

is with regard to climate change policies.

We're currently undergoing a significant sort of paradigm shift

here around climate change initiatives, both within government and from without.

What climate change policies or initiatives are being required now of any of the

maintenance contractors?

Hon. K. Falcon: The maintenance contractor community has

been very proactive working with the ministry on how they can contribute towards

dealing with issues of greenhouse gas. There's obviously a very important

self-interest there, too, and a good one — that there's a benefit of reducing

greenhouse gases in that you also reduce your costs. So there is a real

financial incentive for many of the maintenance contractors.

They've struck a committee that is looking at all the different

aspects of how they operate their businesses and coming up with best practices

in terms of reducing greenhouse gases and saving costs for the maintenance

contractors. Some examples that I've touched on in the past would be…. The

anti-idling measures is one. Another one is storing their vehicles overnight

within their buildings as opposed to leaving them outside. Traditionally, they

would leave them outside and then come out in the morning and leave them running

as they slowly warmed up. That would often have the cars idling for ten minutes

or more.

They are also doing things as straightforward yet effective as,

for example, taking their aggregate piles, which they use for their paving and

asphalt components, and covering them with tarps, as opposed to leaving them in

the open the way they used to. They would get wet, and then they would have to

take the aggregate and put it in these special drums that would dry the

aggregate. By using tarps, they can obviously avoid the whole drying process,

which is a financial savings and a significant reduction in greenhouse gases.

Those are the kinds of things that the maintenance contractors are

working with the ministry on. The good thing about this kind of thing is….. What

they can do is identify best practices that all of them can then utilize for the

benefit of all the maintenance contractors.

So this will be an ongoing process. We intend to work with the

maintenance community in not just trying to find the best ideas here in B.C. but

also adopting whatever the best practices are in other jurisdictions that are

also dealing with the challenge of rising fuel costs.

[1045]

M. Karagianis: Are there any costs associated with any of

these? I know that one of the members was asking

[ Page 10709 ]

questions yesterday about climate change action budgets. Does the ministry

have a budget specifically around climate change initiatives, costs that may be

accrued through the MOT as a result of climate change policies? Do we have that

budget, and what is that?

Hon. K. Falcon: In addition to the efforts that we will

undertake working with the different industry sectors on finding ways to use

best practices to reduce greenhouse gas emissions and help them save money, some

of which I reviewed with the member just a moment ago, the member will see it in

the Budget and Fiscal Plan. On page 27 you will see a

section there called

"Additional Transportation Initiatives" that outlines $33 million over four

years that this ministry will be investing to do things like electrifying the

ports, for example, as one way of reducing greenhouse gases.

It will include truck electrification stops. Where the trucks will

typically park their vehicles, often you will see them idling. They need the

power to run their generators. We want to electrify these truck stops to provide

them the option of plug-in, which will reduce idling, etc. There are a number of

initiatives under that program that we will be moving forward on. As I say,

we've allocated $33 million over four years towards those items.

S. Fraser: I've raised this several times in previous

estimates. It's regarding the alternate route proposals for Port Alberni. There

have been several. We've raised this a few times around the bottleneck that we

see with Highway 4 going to Port Alberni from the Qualicum Beach area.

I know the minister has not been willing to entertain the cost

associated with an alternative route. However, there has been some subsequent

work done, considerable work done by the Alberni-Clayoquot regional district on

this.

I know the minister is probably aware that there was an

alternative route proposal worked on by Charlie Haggard, who has since passed

away. There has been a committee formed through the regional district to address

the possibility of an alternate route. Charlie actually did a huge amount of

work on finding an appropriate route that could go through Horne Lake area that

might be feasible and might be economically feasible.

Now, I know that the minister had referred to the cost of this as

being cost-prohibitive, but since then what has happened is that a cost-benefit

analysis has been done on the benefits of an alternative route. It's actually

showing that it would be cost-beneficial to have this alternative route, that

there is merit, in the sense of a benefit there.

I'm just wondering if the minister is aware of any of this work.

Would he be willing to maybe meet with the regional district, the committee

involved, to look at this as a possibility?

[1050]

Hon. K. Falcon: I am aware that the Alberni-Clayoquot

regional district has undertaken a study to look into some of the options the

member mentioned. I think they were doing a version that had a slightly shorter

alternative route that they were proposing. They have provided a report — I

believe, just last month — to our ministry, which we're still in the process of

reviewing. We will take a look at that. But I think that the challenge….

We did a study on the recommendation of the RTAC. The regional

transportation advisory committee for the Island had recommended that we look at

the Horne Lake bypass option. We undertook a fairly significant study, which

formed the basis of the $40 million to $50 million cost that we anticipated that

alternative would provide.

Essentially, what it concluded was that the kind of traffic

volumes wouldn't justify that kind of a major investment and that what we ought

to do is keep focusing on providing improvements to Highway 4 that will provide

more passing-lane opportunities, more improvements to some of the areas that

will improve safety.

We have invested, since 2001, almost $14½ million on improvements

to Highway 4. So I think we've tried to go a long way towards dealing with some

of those issues. I realize that there still is some support for an alternative,

though I have to say on the record that I still remain a little bit skeptical in

terms of the cost benefit.

I will say to the member that staff will review that report, and

if the member wishes…. I don't know whether I'll be able to meet directly with

him, but I'll certainly arrange for staff to meet with the regional district to

go over the results of the review at such time as the staff has completed the

review.

S. Fraser: I just want to address one issue that the

minister raised: the improvements to the road, Highway 4. I think most of those

improvements are beyond Port Alberni. They're between Port Alberni and the west

coast — Tofino and Ucluelet. We're dealing with a pretty finite unit in the

Highway 4

section between Qualicum and Port Alberni. There's not really any room

between Cathedral Grove and Cameron Lake to expand or widen or create more

passing lanes. So I think we're pretty much maxed out on any improvements we can

do there, except maybe for maintenance.

There's another issue that has happened in the last year, since I

last raised this. The Alberni industrial review has come forward. That's being

looked at now by, certainly, the Minister of Forests, who initiated that review

— with a lot of pressure brought to the minister from the community, from

community groups and community members.

The industrial review also refers to this independent study done

and paid for and commissioned by the government. It also refers to an

alternative route as being an important part of an economic revitalization plan

for the region. I just hope the minister will take that into context — and that

his staff will, when they meet.

I'm happy to hear that they're willing to look at this. The

community is doing a lot of the work on this too, so it could be a good

partnership. I'm happy to hear that the minister has an open mind on this.

[ Page 10710 ]

I'm going to jump right on to the next

section now: Highway 4

beyond Port Alberni. The minister has already touched on the improvements that

have been happening there. I travel that road a lot, of course, and I have

noticed the improvements — the widening, the passing lanes. But there are, as

the minister and his staff know, substantial challenges in the bottlenecks that

exist, that are still there.

What we're getting is people moving a lot quicker now on these

sections that have been improved or widened — a lot quicker to get to these

bottlenecks. We're seeing a lot of people. They're cramming in a lot faster at

the bottlenecks that are happening — above Kennedy Lake, for instance. These

sections of road — I understand they're the most challenging pieces of the

highway.

Does the minister have any plans for how we are going to address

those bottlenecks? People are moving faster to the bottlenecks. As you know, in

the summer there are a lot of mobile homes or RVs — they call them rolling

roadblocks — and trucks and everything else and a lot of tourists travelling

there. They're all getting to the bottlenecks quicker, and that's actually

creating a problem on its own. So are we looking at alleviating those last

bottlenecks?

[1055]

Hon. K. Falcon: The member does correctly point out some of

the challenges on Highway 4 and, frankly, in some other areas of the province,

particularly where you've got seasonal fluctuations in traffic volume, where you

might have low traffic volume for significant portions of the year. Then, of

course, you get the summer traffic and the RVs, which drive a lot of the rest of

the travelling public a little bit crazy.

That's one of the reasons why we're trying to provide those

passing-lane opportunities — to give people that option of passing safely

through some of that slower-moving traffic and getting on to where they need to

go. What was happening prior to this, as the member would well know, is that

people were still passing, but they were doing it in a very unsafe manner and

putting themselves and others at risk.

Our goal for that area is twofold. First, we recognize that — the

member is right — this is very challenging terrain. There are big geotechnical

issues, and there are often very, very expensive costs associated with trying to

do road improvements. What I can tell the member is that we are continuing to

look at that road closely. We will be making further investments on Highway 4,

particularly investments that will have a safety return. Safety is always our

number one issue. We really want to try and make sure that the road continues to

improve in terms of safety.

I very much appreciate the member for Alberni-Qualicum raising

this issue. I think exactly what a good MLA should do is continue to make the

minister aware of this issue. I want him to know that we are going to continue

to make investments. You will see those coming forward. Again, safety is going

to be the number one thing, but I don't want to underestimate the challenge

there. It is quite significant, and the issues of terrain and the geotechnical

challenges are very significant.

S. Fraser: Thanks to the minister for that. We have an area

of the highway that is basically, for all effective purposes, cantilevered over

the lake. I don't see any way to repair that. I'm certainly not an expert, but I

don't see how you can repair that without shutting the whole highway down for an

extended period of time. I see the minister is agreeing with that. That's a big

challenge.

If I recall, back in the late '90s, when we were trying to bring

in the first UNESCO biosphere reserve in the area, which was successful — the

Clayoquot biosphere reserve…. That designation…. The government of the day

looked at…. We made the deal. We tried to get them to raise the priority of

fixing that highway to deal with some of those challenges.

I know that engineering work was done, to some extent, around how

to deal with those particular bottlenecks, which are a big problem. I think the

thought at the time was that we would have to go up and around the terrain, the

challenging topography that the minister is referring to. They would actually

have to go up and around the other side because there was no way to deal with

it.

Is that still on the books somewhere? Is that a possibility for

addressing those?

Hon. K. Falcon: Member, I had a meeting with some

representatives — and I apologize for not having all their names at the tip of

my tongue — from either Tofino, Ucluelet or both, I can't remember, and some

local first nations reps. We had a meeting in Victoria last year about this

issue, and they were very, very good and really helpful. They brought along some

great photographs and some video footage, and we went through it together.

[1100]

That was one of the commitments I made to them, that we were going

to look at what investments we could make that at least in the short term could

try and improve safety issues that they identified — no question — on some of

these roads. Unfortunately, in a province like British Columbia we do have roads

like this that are very, very challenging, particularly as traffic volume grows.

We discussed together ways in which we could make some

improvements that we thought would have some safety improvements. They seemed

quite happy with that. Actually, I remember them specifically touching on the

lake issue. I think what they were suggesting — and their biggest nightmare, of

course — was that if we did improvements to that section, it would shut down the

highway and then they would be, effectively, impacted to a huge degree.

They were talking about a logging road, I think it was. Was it an

old logging road on the other side of the lake? There was some discussion about

that. How we left that meeting was that what we would do is try and deal with

some safety issues we could fix now, because I think one of the dangers….

One of the things I always say to people when I meet with them is:

let's first of all try and figure out

[ Page 10711 ]

real, practical things we can do right now to create some improvements

immediately, in the short term. The longer term challenge is a much bigger

issue, and we'll have to take a look at that and really do a little bit more

work in terms of what that's going to involve.

That's kind of how I left it. I think that sort of addresses what

the member is talking about. But the member is absolutely right to just identify

what a challenge this

section of road is. It is really one of the most

challenging areas.

I think of this road and Highway 12 as being a similar kind of

challenge in terms of the fix being so huge and so expensive that we really have

to think about what improvements we can make today that can particularly create

some safety benefits for people immediately and then look to the longer term

about what the ultimate long-term answer is going to be for that area.

S. Fraser: Thanks to the minister for that. Being mindful

of the time, I'm just going to move on. We could talk about this one a lot. I

appreciate the minister's comments.

Just quickly, in the rural areas where there's no incorporated

municipality, approving officers are often from the ministry of highways. Just a

couple of points on that. I've had complaints that the ministry had neither the

policy nor the process in place to address adjacent homeowners, when

subdivisions are being built, in the ministry's role as approving officer.

I'm just going to quote here. "However, the Ministry of

Transportation has neither policy nor process in place to ensure that these

owners are notified of any application from a developer or to ensure that the

solicited or unsolicited information provided by an owner enters into the

approving officer's consideration of the developer's application."

The owners are feeling that they have valuable information they

might be able to provide or that they should be at least apprised of

development, yet the approving officer through the ministry isn't doing that.

I'm not faulting the approving officer, but there is no policy in place. Is that

something that the minister could comment on?

[1105]

Hon. K. Falcon: The areas that the member refers to, of

course, would be covered, I believe he correctly pointed out, by regional

districts. Regional districts are the body responsible for issues having to do

with zoning and whatever public process will be involved. All the approving

officer is doing… The approving officer will refer subdivision submissions to

the various agencies — to the regional district, to the health department, if

necessary, to the environment ministry, etc. — to get all of the feedback from

those groups.

I think that any concerns that the homeowners would have about

making sure they have their input, according to my staff, would best be directed

to the regional district, which is the appropriate body for dealing with that

kind of information.

S. Fraser: Being mindful of the time, I know that there are

others that need to ask questions. I have a few questions on this issue that I'd

like clarification on. Would it be all right if I provided that in written form

to the minister and his staff and I could await the response there?

I'll go on to my last topic quickly. The B.C. forest safety

ombudsman's report has just come out on forest safety on roads, and it has

specific recommendations that come with it. Of course, the minister is aware

I've raised this issue a number of times. Specifically, the Bamfield road in my

constituency is not safe, and I'm having a hard time getting…. It's the Ministry

of Forests. It's the Ministry of Transportation. It spans both, so it's

confusing.

The specific recommendation I'm going to just touch on right now

is from the ombudsman's report. "The province should establish a new public

highway designation for resource roads that serve as the primary or secondary

access roads for communities" — which, of course, is the Bamfield road and

others, like Zeballos road too. "The new designation would have clearly defined

standards for construction, maintenance, enforcement and be funded and resourced

similarly to the public highway system."

Now, this would be the responsibility of the ministry of highways.

Will you consider some of the recommendations, all of the recommendations, in

the Forest Safety Council ombudsman's report in the interests of public safety?

[B. Lekstrom in the chair.]

Hon. K. Falcon: Our staff is working with the Ministry of

Forests with respect to the B.C. forest safety ombudsperson's report. They have

primary responsibility for this. We will work with them, and we will provide

whatever advice our ministry has with respect to that, but it will be Ministry

of Forests that will take the lead on that.

With respect to Bamfield road, the member's right. This is a

long-term issue. It's a bit of a challenge because it is a private road owned by

a forest company. There has been a long-term historical agreement where we, as

the Ministry of Transportation, provide some dollars to help on the maintenance

upkeep of that particular road to reflect the fact that there are some folks and

some local first nations that use that road, and we're very much alive to that.

I believe we provide about $220,000 a year to look after maintenance upkeep on

that road.

But as I say, it is a private road. It is a longstanding issue. We

will continue to maintain our financial commitment to that road. We will, of

course, work with the local first nations to see and try and realize whatever

opportunities there are with the local first nations. I know that they've

expressed opportunities in the past to do road maintenance themselves, so we'll

continue to try and work with them to provide the best possible results for the

folks that utilize Bamfield road.

[1110]

S. Fraser: Thank you to the minister for that. Just a

clarification, though. The $220,000 that is given by the

[ Page 10712 ]

ministry to the forest companies is not for maintenance specifically, the way

I read it. It is specifically just to acknowledge the use of the public and

allow the use of the public on that road.

There's no maintenance

schedule that is enforced by the ministry

that I'm aware of. There is no requirement to ensure that the public road is up

to public road safety standards. And it's used by…. There are 3,500 students —

school kids — that travelled that road last year. That's expected to increase.

It's more than just a few locals travelling the road. There are thousands of

visitors there every year, too, for magnificent sport fisheries.

So I hope the minister will work well with the Minister of Forests

and Range and ensure that the Ombudsman's report's recommendations are taken

seriously.

Hon. K. Falcon: The way the $220,000 works is that it

actually does go towards improvements to the road. What happens is that the

private company which owns the road is responsible for, obviously, maintaining

it to their logging standard requirements. What we do is sit down every year

with the Ministry of Forests, with the forestry company and with representatives

from the community and figure out how the additional dollars can go and what

improvements should be made to the road to bring it to a higher standard —

albeit not a highway standard but a higher standard for the benefit of those

folks.

C. Trevena: I'd just like to follow up on my colleague the

member for Alberni-Qualicum on the issue of the crossover between the forestry

service roads and the ministry of highway responsibility roads. I've also been

dealing on the issue…. I know that a lot of money has now gone into the road in

Tahsis, and that is improving, and I'm very grateful for that.

But the road to Zeballos links a number of first nations

communities and other communities. It's eroding very rapidly. I know that the

Ministry of Forests is looking at this, but I would hope that the Ministry of

Transportation, in light of the forest safety ombudsman's report, will also have

a look at the ways that his ministry can invest in that road also.

Hon. K. Falcon: This will come as probably no surprise to

the members opposite. This has been a longstanding issue. It was an issue when

the members were in government. It's an issue when we're in government, where

there's always a cry for forestry roads to be put under the Ministry of

Transportation and have the Ministry of Transportation operate them. We've

maintained the same position that governments have maintained, really, for

decades in British Columbia — that that's not where we want to go. The road to

Zeballos is a good example of that.

One thing we do, though, is work with the Ministry of Forests. We

provide an annual dollar allotment — I haven't got the number on the top of my

head — to the Ministry of Forests to assist them in maintaining some of these

roads that do service small communities or first nations communities. That is

something that we will continue to do.

[1115]

But we do not intend, as all governments of every stripe have

maintained over the past, to try and get into the business of being responsible

for all of the forestry roads. We will continue to work closely with the

Ministry of Forests — in particular, any advice we can give them in terms of

advice on roads, although they're very good at it, I have to say. They've got a

ton of experience over in that ministry. We will continue to make a financial

contribution to assist them in roads like the road to Zeballos.

C. Wyse: Three questions of the minister — one on each one

of the highways in Cariboo South: 20, 24, and 97, just to help the minister.

The first one deals with the seal-coat portion of Highway 20. I

know that the minister, from correspondence that we've had on this item, is

aware of the lack of markings that exist when you have seal-coating. The

suggestion has been made about having indicators put along the side of the road

to mark where the actual road exists. There are areas where fog develops out

along this

section of road.

These are suggestions that have been made through my office from

frequent travellers in that part of the area. That suggestion has been conveyed

to the highways office located in Williams Lake. I would be looking for the

minister's commitment to have that idea investigated and implemented.

Hon. K. Falcon: I appreciate the member bringing that to

our attention, certainly to my attention. I know it's been brought to staff's

attention. I think it's a good thing, actually, to take a look at the issue of

roadside reflectors and try and see if there are areas along there where the

addition of roadside reflectors might help deal with that issue. I will follow

that up with staff. Anything that can improve safety for folks and that makes

some sense, we'll be happy to follow up on.

C. Wyse: I appreciate his commitment. There was no

implication that his staff would not have been investigating and working upon

this particular item. The community also wanted to show their commitment to try

and come up with practical solutions to a problem that has been ongoing.

The second issue is in Highway 24, East Lake Sheridan Road. The

minister has responded to me with questions when I did draw the conditions that

this approximately two kilometres of road disintegrates into as a result of

three gravel pit operations and a cement plant that exist with the travel upon

this particular road.

When there is rain or melting snow, the road turns into,

basically, a mud bath very quickly. The maintenance that is done upon the road

disintegrates, again, relatively quickly, and we end up with one of these

situations of capital versus maintenance improvements.

In discussions that we've had on this item this has not been given

a priority for paving, as it exists at this

[ Page 10713 ]

moment in time. I wish to draw personally to his attention that the conflict

between a maintenance contract versus where this sits on the priority for

capital paving is only going to deteriorate.

[1120]

I would like him to be aware of that item and his commitment to

have that particular issue reviewed for where it sits on the priority for

capital improvements.

Hon. K. Falcon: I appreciate the member's question, and I

think this is really a good sort of representative example of the challenges you

always face in the ministry, that you have obviously…. I think the member

recognizes…. But, we don't have unlimited dollars, so what we try to do is make

sure we deal with the higher-traffic areas first. That's one of the things we're

trying to do in the 100 Mile House area, in areas like Bridge Lake Road, Horse

Lake Road, Canim road south. Those are the areas that obviously are receiving

higher priority.

But in response to the letter the member wrote me, I think it was,

back in February, asking about East Lake Sheridan Road, we did make the

commitment, and I believe the maintenance contractor re-gravelled some of the

worst sections of that road. We made a commitment that the maintenance

contractor this year would re-gravel that route as part of their maintenance

program for this upcoming year.

Hopefully, that will bring about some improvements, but I

recognize that the gravel truck traffic along that road clearly has an impact on

the road. I still think that we're always right when we try to focus dollars on

the areas where we have the higher levels of usage to ensure that we're

maximizing the benefit of the limited taxpayer dollars that are available.

But I respect the question from the member, and I think that the

gravelling that's been done and the future gravelling that will be done will

hopefully, at least in some part, try and address the issue for East Lake

Sheridan Road.

C. Wyse: Once more, through to the minister, I appreciate

his response very much. I appreciate very much the attention that has been given

to this particular item.

Recognizing that the conflict that develops when you have

industrial use in an area versus the traffic generated by people does not

necessarily fit the usual model that exists, I can let the minister know that

the residents I have in Cariboo South who live in this general area are going to

be keeping me advised. I will, through his staff and himself, let him know how

successful this has been.

My third question comes to Highway 97. It's an item that is

referred to as nine mile corner. According to Pioneer Service and Towing of

Clinton, this particular stretch of the road has been subject to fatalities over

the year and near fatalities. This towing company has been in operation with the

same people for 30 to 40 years, so they have got a very long record of this

particular incident.

Similar to what happened to Mile 6, with straightening out and

making improvements, I am here directly to encourage the minister in the capital

upgrades that are planned on Highway 97 — that this particular item be included

in the capital improvement projects for the year 2008. We even could possibly

make this part of the four-laning of the Cariboo connector. It's a relatively

short section, a kilometre or whatever, but it would possibly be a start of that

aspect. So over to the minister for his commitment to have this construction

part be included in 2008.

[1125]

Hon. K. Falcon: I have to apologize because while you were

speaking about nine mile corner, I was wracking my brain to figure out where

nine mile corner is. I honestly don't know.

C. Wyse: It falls in the 20 Mile area.

Hon. K. Falcon: The 20 Mile area. Okay, good. The staff is

trying to figure that out, too, so I apologize.

C. Wyse: And my apologies.

Hon. K. Falcon: That's okay. With 43,000 kilometres of

highways, I sometimes lose track of….

Interjection.

Hon. K. Falcon: Exactly. I forget where nine mile corner

is. There's probably a pothole there too. But, nevertheless, I appreciate that.

One thing I can assure the member of is that in the improvements

we're doing on the Cariboo connector and the planning that goes into that, one

of the first and most important things we look at is accident history,

particularly if there are fatalities. We're very much alive to that issue.

If this is an area that has had an unfortunate history of

accidents and fatalities, then I can pretty much guarantee that as part of the

Cariboo connector process it will be high in the priority list of areas to be

improved. I will try…. In fact, if the member could send me a little e-mail

specifically saying where the area is, I'll doubly confirm that for the member.

The one thing I will say to the member — it's a good opportunity

to say it — is that a little bit of frustration I've had, and I've expressed

publicly too, is that a lot of the work in the Cariboo connector…. We are trying

to get federal dollars to share in that work. We want to leverage the provincial

investment. If I go and spend money now on projects, none of it is

cost-shareable. What we're trying to do is get the federal government into some

of these projects.

We've had some success now with the Simon Fraser Bridge up in

Prince George and some of the approaches. We've got significant federal dollars

there. That was after quite a bit of lobbying work being done. We're pleased

with that.

I'm going to be in Ottawa again — I think it's next week — and I'm

going to be again lobbying for more dollars for the Cariboo connector. But the

quicker we

[ Page 10714 ]

can get commitments there, the faster we can get a lot of these projects — on

which we are already spending a significant amount of money doing the design and

engineering work — so that they're shelf-ready and we can move immediately.

I am hopeful and feeling increasingly confident that we will have

some of those federal commitments shortly. But I haven't got them all there yet.

I appreciate the member bringing that to my attention. I'm always

especially concerned about areas where the member talks about fatalities. I'll

bet you the tow truck operator knows that area better than almost anybody.

Thanks for bringing that to my attention. If you fire me an e-mail, then I'll

make sure we get that on the radar.

M. Karagianis: I would like to discuss now the northern

port corridor that's been created from Prince Rupert through to Prince George. I

know that there's an expectation that there will be a lot of increased activity

along that corridor, and I have had meetings with communities along there that

are very concerned about a couple of aspects of the evolution of that corridor

as it gets busier.

First and foremost is the concern that those communities have for

hazardous spills and hazardous derailments and their lack of resources to

address that. Can the minister explain to me, in the case of a hazardous

material spill, whether it be by truck or by rail, whose responsibility it is to

move in, in an emergency capacity and deal with that event?

Hon. K. Falcon: As the member probably knows, the railways

are federally regulated, so any derailments, obviously, would be investigated by

the Transportation Safety Board. The good news is that there has been, I'm led

to understand, a fairly dramatic improvement in the derailments from all the

major railways, CN, BN and Canadian Pacific. So that's hopefully a trend that

will continue.

Obviously, if there's any environmental impact, the Ministry of

Environment would, no doubt, be the ministry that would be responsible for

getting on the scene immediately and working with the railway on ameliorating

whatever the impacts are. To the best of my knowledge, the Ministry of

Environment that would be involved in dealing with the results of any spills.

[1130]

M. Karagianis: Well, I know that many of the small

communities along that route are very concerned. A number of them met with me at

UBCM and voiced their concern around the emergency response to any kind of

hazardous material event. Even if it's trucks…. We're expecting to see,

presumably, an increase in truck traffic back and forth, container traffic from

the port to Prince George, where the inland port is — certainly traffic going

both ways.

There will continue to be an increased amount of hazardous

material moving along that corridor. In the case of a spill, it's great to say

it's a federal jurisdiction or the Environment Ministry, but in the case where

something happens in a community, they're the first responders.

What kind of resources has the ministry put in place? Have they

even put any kind of thought into the resources that those communities should

have on hand in order to address immediate emergency response?

Hon. K. Falcon: This ministry doesn't have responsibility

for that kind of response. The provincial emergency program, the Ministry of

Environment, other provincial agencies would have that responsibility. I will

say this: I don't think we should overexaggerate. That's the wrong word to use.

I apologize. I don't want to say that the member was overexaggerating.

I just don't think we should blow out of proportion the impacts

that the member is talking about. There will be very little increase in truck

traffic. Most of it will be moved by rail. There are railways going through

virtually every community in the province of British Columbia and have been for

over 100 years. This is not anything new — having rail traffic go through

communities.

We've got a long tradition of a pretty close working relationship

with all of the railways to deal with issues of derailments or spills.

Fortunately, they have been relatively minor in nature in terms of the impacts,

though there are obviously significant exceptions.

[H. Bloy in the chair.]

We'll continue to work closely with them, but it would not be this

ministry that would be responsible for resourcing issues related to cleanups.

That's the provincial emergency program, on the assumption that there's anything

significant in terms of the nature of the spill, or the Ministry of Environment

dealing with the more lower-level tipping over and cleaning up whatever

hazardous material may be emitted from the railcars.

M. Karagianis: I think the minister has categorized

correctly that the most likely hazardous material events would occur from rail

rather than from truck, although there is going to be, presumably, increased

trucking back and forth. There wouldn't be a need for an inland port in Prince

George. I've been there and have seen the containers stacking up.

It's not like those opportunities will not be there by road as

well as by rail. But in the case of an immediate event, like what happened in

the Cheakamus, are those communities expected….? Frankly, this is a question

that came to me from mayors of communities, so I'm not even speculating on why

they would be asking this question. It's not generated from me in any way; it's

from them.

They are concerned about first response in the case of an event in

their small communities, and their reliance, then, as I guess the minister is

saying, on the Environment Ministry or PEP. All of this takes some time to get

in action, to get some kind of crew to show up, even from

[ Page 10715 ]

PEP, for some of these communities that are quite small, modest little towns

along that rail.

Has the ministry considered in any way what the maintenance

company's responsibilities would be in that case, or are these communities

simply left to wait for a response to come from outside of their area, from