1993 Legislative Session: 2nd Session, 35th 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, MAY 4, 1993
Afternoon Sitting
Volume 9, Number 16
[ Page 5815 ]
The House met at 2:04 p.m.
Hon. L. Boone: Today in the members' gallery we have some very special guests from Vietnam. Professor Tu, Secretary of the Central Committee of Vietnam, is leading a delegation across Canada focusing on socio-economic issues in the Canadian context, including the study of human resource planning in support of economic development. The delegation is accompanied by Ambassador Bai, Vietnam's ambassador to Canada, and Peter Boothroyd from the University of British Columbia Centre for Human Settlements. Please join me in giving them a warm welcome to our Pacific province, British Columbia.
V. Anderson: In the House today are three members of the Native Fishing Association, Alvin Dixon, Arnie Smith and Allan Okabe, who are here to visit with members of the opposition and the government. Would we please make them welcome.
B. Copping: I'm very pleased to introduce to the House today a long-time friend, one of my first patients and a retired faculty member from BCIT, Trudy Ramsay. Would the House please make her welcome.
R. Kasper: Visiting us in the gallery today are Pat Horler, Doreen Doucette and Councillor Gordon Maxwell from the district of Langford. Would the House please make them welcome.
Hon. T. Perry: I wonder if I could second the welcome of the Minister of Government Services to the Ambassador of Vietnam. Our ministry has a budding relationship with the Open University of Vietnam in Ho Chi Minh City, and I would also like to extend greetings.
I'd like to introduce to members of the House four students from the University of B.C. doctoral program in nursing, Lynne Maxwell, Rosalie Starzomski, Patricia Rodney and Janice McCormick, who are with us today to observe the debate.
L. Reid: It's my pleasure to welcome to the legislative precinct this afternoon Mr. D. Thomson, a teacher from Hawthorne Elementary School in Delta, and 44 grade 7 students. I would ask the House to please make them welcome.
Oral Questions
SALARY AND BONUS PROVISIONS FOR ORDER-IN-COUNCIL APPOINTMENTS
W. Hurd: My question today is for the Premier. Yesterday the Premier conceded to the auditor general's findings that 49 of 389 OIC appointments failed to disclose proper details of remuneration and salary bonuses. Having had 24 hours to review the report, does the Premier except in principle that his government should disclose all salary and bonus provisions when the OIC appointments are made?
Hon. M. Harcourt: Yes, the auditor general did make some recommendations on how we could improve the OIC information. But I understand that that information can be obtained through the OIC office, combined with the GPSD. If the opposition were to do their homework, they could get that information.
W. Hurd: The opposition has been doing its homework in the Premier's own office. I refer to some correspondence from the deputy minister addressed to Mr. Parasiuk, indicating that his annual salary will be $155,000 plus a performance bonus. The bonus details are to be negotiated in keeping with other Crown corporation performance bonus plans, but tailored to the mandate of the B.C. Trade Development Corporation. Does the Premier support these pay-as-you-go bonus provisions within the B.C. Trade Development Corporation, which is under his own mandate? How do they fit in with the recommendations by the auditor general?
The Speaker: The hon. member for Surrey-White Rock.
W. Hurd: Perhaps I could ask one basic question then. Will the Premier instruct all the ministers responsible for Crown corporations to table the bonus provisions for the heads of those corporations? Will he do that honourable thing today?
ESSENTIAL SERVICE DESIGNATION FOR SCHOOL TEACHERS
C. Serwa: My question is directed to the Premier. Welcome home, Mr. Premier. Given the number of teachers' strikes in the province and the pending strikes in the Vancouver School District, will you spare this unnecessary pain and amend the Labour Code to restore education as an essential service?
Hon. M. Sihota: As the honourable member knows, section 72 of the Labour Regulation Act allows any school board to make an application with regard to the essential nature of education services. As I indicated in this House several days ago, an application has been made by one board, and I believe another one has now indicated it will make an application; so they are exercising the authority they have under the legislation.
C. Serwa: My question is again directed to one of the premiers. It is regrettable that this government is so beholden to the BCTF that it doesn't have the courage to simply tell the Labour Relations Board that education is in fact an essential service. When is this government going to learn that parents are sick to death of having their children treated as political footballs in the battles over teachers' settlements? Why doesn't the Premier do
[ Page 5816 ]
the right thing for once and restore education from kindergarten to grade 12 as an essential service?
Hon. M. Sihota: An astounding comment coming from a member whose party gave teachers the right to strike through Bill 20 in this Legislature. He should understand that if one looks at our experience with teachers' disputes, over the last couple of years the disputes have generally been resolved without labour disruption; and when there has been labour disruption, usually the disruption has lasted for approximately a week. In the last little while we've had some disputes that have gone on for some time. Quite frankly, that's a reflection of the fact that there isn't a lot of money in the system due to the government's difficult fiscal situation.
C. Serwa: Final supplemental to the Minister of Women's Equality. The minister has often expressed a great deal of concern for working women in the province, women who ordinarily can't find child space at the best of times. What does the minister expect those thousands of women to do when the schools are out on strike? Why isn't she standing up for women and children in this particular situation and demanding that education be treated as an essential service?
BUY B.C. PROGRAM
R. Chisholm: My question is to the Premier. Does the Premier realize that the Buy B.C. advertising program had no B.C.- or Canadian-owned firms in the final cut? In fact, all final contestants were American-owned. What message is the Premier sending when the Buy B.C. program has been bought by America?
Hon. B. Barlee: Again, I believe the member has not quite got his facts correct. First of all, the president of the firm -- if we're talking about Ravenwolf, and I imagine we are -- is a Canadian, I think from the Cowichan Valley. His major office is in Vancouver and he has an office in the United States. Part of our Buy B.C. is to concentrate on cross-border shopping. To do that effectively, we should be aware that our rivals in the United States have certain advantages. He is using mostly Canadian contractors, but he is also dipping into some contractors in the United States. We know exactly what he is doing. And he's doing it very well, by the way.
R. Chisholm: I think the hon. minister should check his facts, because all three companies in the final cut are American-owned.
Again to the Premier -- and hopefully he will answer this one -- how does the Premier expect British Columbians to Buy British Columbia when the provincial government is buying New York City?
Hon. B. Barlee: Perhaps the member has not gone downstairs into the members' restaurant. Everything there is British Columbia produce. Perhaps the member flies through his own riding, but if he goes by ferry he'll see that virtually everything on the ferry is British Columbia produce, with the exception of coffee. We have had some difficulty with the coffee, but that's processed in British Columbia. And the oranges are presenting us with some technical difficulties. If the member sometimes bothers to relieve himself from the boredom of this House, perhaps he would like to go downstairs and have a VQA wine. The increase in VQA wines went up 200,000 litres last year -- 36.84 percent. I think it speaks for itself.
[2:15]
PREMIER'S ASIAN TRADE MISSION
A. Cowie: I trust the Premier had a crate of B.C. apples when he went to Asia as well.
While the Premier was on his quarter-million-dollar trip to Asia, I trust that he told everybody about beautiful B.C. and how wonderful it is. Did the Premier also tell the people of Asia, especially the corporate business people, about the corporate capital tax, the increased fees and the ill-fated property tax which was nixed while he was away?
Hon. M. Harcourt: The opposition finally asked a question that is appropriate to my office as Premier instead of asking the minister, as they should under our rules, who is responsible for Agriculture, or the minister who's responsible for Labour. But they finally have asked a question to which it's appropriate for me to answer, and that is my trip to Asia. Yes, I did talk about British Columbia and yes, we did eat B.C. apples while we were there. As a matter of fact, we served a whole variety of B.C. agriculture and fishery products in Tokyo, in Osaka and other parts of Asia. They were very well received, hon. member, very well received. I can also say that they were aware of the fact that British Columbia had reduced its deficit 35 percent from last March to this March, that we were finally making a dent in the deficit we were left by the Social Credit government before us. They appreciate that there is finally a government in this country that's doing something about the deficit, not just talking about it.
The Speaker: Supplemental, hon. member.
APPOINTMENT OF AG DEPUTY MINISTER
A. Cowie: I'm glad the Premier ate apples while he was away.
Also while he was away, we had some discussion over senior appointments. I take it that the Premier is in agreement with the patronage appointment of Ms. Maloney and is in agreement with her radical left-leaning socialist viewpoints. Did the Premier tell the Asian business people that his government was hiring left-leaning socialist believers as senior public servants?
Hon. M. Harcourt: I take it that the member is referring to the dean of the University of Victoria law school. He is probably aware that there was a recent letter that was publicly published which said: "We would like to congratulate the Premier on his appointment of Ms. Maloney as deputy minister to the Attorney General. She is both an accomplished scholar and an acknowledged community leader." It was
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signed by Grant Bernyeat, who is a bencher of the Law Society; Justice Thomas Dohm; Mobina Jaffer; John McLaren; Kathryn Neilson; Sam Scully; Lynn Smith, the dean of the Law School at the University of British Columbia; and Brian Wallace, the treasurer of the Law Society of British Columbia.
A. Cowie: The Premier certainly must be worried about Ms. Maloney, having prepared himself well for that little speech. Will the Premier ask the Attorney General to table Ms. Maloney's contract in the best interests of open and honest government?
Hon. M. Harcourt: It was the Attorney General who was well briefed and prepared for that question, because it would probably have been more appropriate for you to ask the minister about the new Deputy Attorney General, a woman of great accomplishment who is going to serve with distinction the people of British Columbia.
PREMIER'S CONFIDENCE IN CONSUMER SERVICES MINISTER
R. Neufeld: My question is to the Premier. This is within your mandate, Mr. Premier. While the Premier was off on his junket to Asia, the Deputy Premier stated that the entire cabinet has the fullest confidence in the Minister of Consumer Services, without reservation.
Is the Premier equally confident that the Minister of Consumer Services will be cleared of any wrongdoing by the Law Society, and is it why he has refused to ask for the minister's resignation pending the outcome of the Law Society's investigation?
Hon. M. Harcourt: Well, after the track record of the Social Credit cabinet, it takes a lot of gall for that member to stand up and talk about investigations, conflicts of interest and resignations. Quite frankly, to stretch into an investigation a routine request by the Law Society for information on a lawyer -- when they receive hundreds of these requests a year -- is to do great harm to due process, which every citizen is entitled to, including cabinet members.
R. Neufeld: We're not talking about the Social Credit cabinet; we're talking about your cabinet, Mr. Premier; they're your ministers. Exactly how confident is the Premier that the Minister of Consumer Affairs has done absolutely nothing that would compromise British Columbians' confidence in him? Does he realize that he has staked the reputation of the entire cabinet on the presumption that the reputation of the Minister of Consumer Affairs is beyond reproach?
The Speaker: It seems that the hon. member is asking for an opinion of the Premier. The way the question is worded, it does not appear to the Chair to be in order. I will recognize the hon. member for North Vancouver-Seymour.
GOVERNMENT INVOLVEMENT IN CHINA'S THREE GORGES PROJECT
D. Jarvis: Surprise, surprise: my question's to the Premier. Sir, while you were away on vacation I asked the Environment minister whether he supported the Three Gorges project. He was blissfully unaware of the issue. Now that the Premier has returned, I'm wondering if you have briefed the Environment minister on the environmental massacre and also the loss of the river dolphins, cranes and 102 villages that will be removed, plus....
The Speaker: Order, please. When the House returns to order, I will ask.... Please state your question, hon. member.
D. Jarvis: I'm wondering if the Premier.... Sir, were you aware of the consequences of what is happening in the Three Gorges project when you decided to back up this project?
Hon. M. Harcourt: The opposition can't even get the ministers right, and now they can't even get the countries right.
If the hon. member realized the tremendous opportunities in Asia in an area where British Columbia is the best in the world -- hydroelectric sustainable energy -- instead of disparaging them, he would understand the advantage of having an environmentally sensitive, British Columbia Crown corporation helping developing countries like China to develop sustainable hydroelectricity for their people.
I take it that the two other alternatives the member is coming out in favour of are nuclear and coal. I can't think of two less desirable alternatives to hydro electricity than nuclear and coal.
Hon. L. Boone: I ask leave to make an introduction, which I neglected to do earlier.
Leave granted.
Hon. L. Boone: I take pleasure in recognizing an employee of the government. It's not very often that we get an opportunity to praise those people who work so hard on our behalf. In the gallery today we have John Pollard, who recently received the gold award from the Institute of Public Administration of Canada for improvements in the property registry system. Would the members of the House please give our thanks to John for the excellent work he does on behalf of the province.
Hon. A. Charbonneau tabled the annual report of the British Columbia Railway Group.
Hon. M. Sihota: I call Committee of Supply B. Committee A is sitting as well, dealing with Labour estimates.
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Orders of the Day
The House in Committee of Supply B; E. Barnes in the chair.
ESTIMATES: MINISTRY OF HEALTH AND MINISTRY RESPONSIBLE FOR SENIORS
(continued)
On vote 47: minister's office, $419,400 (continued).
G. Wilson: I don't know if the minister needs some time to get staff in.
Perhaps I might commence my questions to the minister on a matter that was raised just prior to recessing at noon, which had to do with the new boards that are going to be established and how those boards are going to function in the interim period between now and 1996. One of the concerns that has been expressed by a number of people is that there won't be any election to those boards until 1996. Those boards will effectively operate by appointment, and in the interim period they will be involved in duplicative spending of hospital dollars that have gone forward.
[2:30]
I wonder if the minister might want to clarify, specifically on two counts: one, how these boards will interact with the existing union board of health system and how we're going to see that interaction take place; and two, why it would not be deemed to be useful to have those new boards to be elected prior to 1996. Why would we not move to full election sometime within the next year?
Hon. E. Cull: There are two reasons why we won't move to election in the next year. One is that we're going to need at least a year to establish some pilots on how the community health councils should be formed, what functions should come together and how we should deal with existing financing arrangements, which may already be in place. It is going to take some time to sort that out with the various players. We also want to give the communities some opportunity to try out different models so that they can see what works in other communities -- some communities are not ready to get over the turf wars and move into the kinds of arrangements that are going to be necessary -- and those communities that aren't quite as ready as some of the more eager communities will have an opportunity to observe and learn from their successes and mistakes. So one part of the answer for the next year is that we're in a pilot phase.
The second part, quite frankly, is that it's expensive to run elections. The recommendation of everyone who has looked into this in terms of how to best move to an elected system from the hodgepodge of society boards, appointed boards and other arrangements that we have right now is to put it into the same cycle, process and administrative system as the municipal election. It will simply be cheaper to do the election in 1996 as part of the municipal elections, when there will already be voters lists, voting stations and all the rest that has to be done. It's the same reason that school boards tend to piggyback on municipal elections.
G. Wilson: Once again, as someone who has come off a regional hospital district and is looking at the allocation of moneys, I can accept what the minister is saying with respect to the union board of health operation and the operation of this new board in terms of being a pilot project to see the integration of those services. Would the minister comment then as to what the role is likely to be with respect to the provision and approval of budgets over the next several years with respect to not only hospitals but other ancillary services that exist in communities such as Sechelt, to use Sechelt as an example. I'm very familiar with how that budgetary process works because I've been, at least in part, involved with it. We would be most anxious to see how prioritization of dollars will work under this new system. Where you do prioritize dollars, who is going to have the final authority in terms of what gets put forward for allocation? We have some serious requirements there obviously, and we'd like to make sure that scarce dollars are prioritized in accordance with community needs. How is it going to work?
Hon. E. Cull: The whole question of allocating dollars is not likely to...in fact, I'll say now that it will not occur until we get the elected boards in place in 1996. It is not feasible, even with the councils that are now forming, that in the next number of years they would be ready to assume the responsibility, with all of the details in place, and that we would have sorted out the capital funding arrangements, which are now being sorted out with the Union of B.C. Municipalities. Individual budgets will continue to be prepared as they are now, but in the transition period those budgets will be prepared in consultation and cooperation with one another, moving toward an integrated system.
The first job of any emerging health council will be to map out the plan for how to get from where they are now, with two, three, four, five, 16 boards -- whatever number they are amalgamating -- to where they're going to be in 1996. There will be a difference in councils and boards as a result of the different makeups of the communities that are coming together. In Vancouver we don't expect one community health council to run all of the health services in downtown Vancouver, but in Dawson Creek, that's not unrealistic. Different models will have to be developed over the next year. That's part of what this transition phase is all about. In the interim period the boards that exist right now will continue to prepare budgets, but more and more in cooperation with one another.
Should a community advance to the stage where it decides voluntarily to amalgamate, as in the case of some of the hospital and long term care boards around the province, we will facilitate that amalgamation, and the responsibilities that each board had separately will then be held collectively by the new council. Those are steps that are yet to be taken. The whole process that we are engaged in right now is a community development process, which means there has to be some time for the community players to work together and sort out their
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own solutions and come back to the ministry for whatever assistance or guidance they need to put those solutions in place.
G. Wilson: As elated as everybody in Powell River was to hear before lunch that this budget is going to open 15 beds for extended care, people are going to be somewhat distressed by what they've just heard. Notwithstanding the budgetary process for this year, which most people will recognize is now in place -- whether they like it or not, the dollars that are available, as scarce as they are, have been allocated at 3 percent -- what we're hearing is that this new regional system is going to be essentially phased in over the next little while, without any meaningful management of budget in terms of preparation or in terms of actual prioritization and allocation moneys, save and except for consultation -- whatever that means. I don't mean to be facetious, but there are some that would argue that there hasn't been a great deal of consultation with some parts of the health care system -- whether that's right or wrong. It would seem to me that these new regional boards are going to be very duplicative in terms of the personnel to be brought in, in terms of the required consultation process and in terms of their ability to facilitate dollars. They're not even going to have final authority until after the next provincial election, when there might be yet another hiatus in the health care system or not, depending on circ*mstances. What's the functional purpose of the board, if what we're doing is spending a long time deferring any meaningful use of it until after not only the next municipal election but, I would guess, after the next provincial election? Most people thought these were going to be in place soon.
Hon. E. Cull: It's been very clear since February 2, when we made the announcement, that we're looking at a transition period of three and a half to five years. You can't turn the direction of health care around overnight; you can't turn it around in a year. The point is these bodies exist right now. They are making decisions right now. Many of them are not democratic in any sense of the word -- in how they were put in place or in how they operate. Some of them are models of democracy in their community. I would venture to say, though, that most people in most communities do not know who sits on their hospital board or who sits on their union board of health. In fact, there is a disturbing lack of knowledge about what a union board of health even is, not only from the community at large but from the other parts of the health care system, which don't seem to know who these individuals are and what they do. There are already a number of bodies in place, one way or another, that make decisions affecting our health care in our communities each and every day. There's a multitude of boards all over the province, in different places, which got there by different means and with different mandates and different responsibilities, and with very little accountability in the public sense of the word -- people knowing who they are and what they are doing. These boards all exist out there right now. In the transition phase, we're talking about pulling significant players together in each community and having them work towards amalgamation. Instead of independent decisions -- the hospital figuring out its budget over here and the union board of health setting its priorities over here, and the long term care facility making another decision in another board meeting -- they will now be required to come together and start making those decisions as a group. They will not necessarily at that point be a legal entity of an elected community health council, but in the transition period they can start to act like one; they can start to sort out the relationship.
I'll go back to the story I alluded to this morning, where I said a community had identified a problem and a solution, but they had no way to get there. Even in this transition period we should be able to start to break down those barriers. I will now tell you what the example is, because I think it's useful to illustrate this. We have a situation where there is a community that has a hospital. It also has an alcohol and drug treatment program which is open during the day, nine to five, regular office hours. After hours, between five and nine, the people who would arrive at the doors of the alcohol and drug centre go to the emergency ward of the hospital. The hospital has calculated that on an annual basis it costs them -- I haven't got the number now, but $260,000 comes to mind -- to treat those people who show up there between five and nine. It would cost less to open the alcohol and drug treatment centre 24 hours a day. In fact, if they could open it up 24 hours a day, and transfer over that money, the hospital would have money left over, to spend on something else, because it wouldn't be treating those people, and its emergency room would be less crowded. It's a classic example of a problem and a solution that people can see but can't get to, because the hospital right now doesn't have an easy way to plan its budget in cooperation with the people who do the budgeting for the alcohol and drug treatment centre, and if they even could do the planning, it's very difficult for them to physically move dollars from one part of the system to another. So we all sit there looking at this solution, not having a way to get to it.
We're trying to create a way to make those solutions possible. In the interim, if the people who are creating the budget for the alcohol and drug treatment centre are able to do so in consultation, discussion and cooperation with the hospital board, and the hospital board can start to explore these things with the other agencies in the community, they can then say: "We're going to make a decision to change this service here, to reduce it. We know that's going to create a demand over there, but we can now start to plan for budgeting so that that demand can be met over there." I think that's the best illustration I can come up with. There are many examples like that, but that's exactly what we're trying to do in the period between where we are now and where we want to be.
When we get to the point of an elected health council, there will be one body with the responsibility for overseeing budgets for all of those different parts of the system. A regional body will ultimately be responsible for receiving a global budget for health
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services and preparing that in accordance with standards set by the ministry and the wishes of the community in terms of where their priorities are. Not only can they start to make those sensible trade-offs, but they can say: "We've got a list of ten things we want to do in our community; we know we can only fund one or two. Which are the most important things?" Maybe in Powell River, it will be a program targeted at young men in the community or working people in the mills or woods in your community; maybe in White Rock, it will be something targeted to seniors; and maybe in a native community, it might be targeted at young mothers and helping them have healthier babies. It gives them all more of an opportunity to start to set those priorities to reflect their needs, not just some greater provincial understanding of what the needs are.
G. Wilson: That sounds great. From our perspective, where we've been advocating the creation of a ministry of community development -- where you can in fact have an integration of full services at the community level; not just health services, but all other aspects where they can be integrated at the community level -- I would argue that that really is the final analysis. That's certainly where I would like to see things go: a ministry of community development to look after all the needs of the individual, not just a portion of their needs, in which you have to have various files and agencies.
My involvement in many interagency meetings in my own community on the Sunshine Coast certainly underscores the need to try and get that kind of work together. The more we start to put that kind of system in place, the more everybody recognizes the extent to which the health needs of one individual may well be a product of their housing requirements or lack thereof, their dietary issues, their transportation problems, or whatever else may be creating stress, tension or physical difficulty.
Coming back to these boards, because there seems to be some contention.... Again, I come back to a letter -- and I trust that I'm not catching the minister off guard here -- that I know was communicated on April 15 to the minister. This letter -- with a copy to myself and Debra McPherson of the BCNU -- is from Ann Bakewell, a registered nurse on the Sunshine Coast. I don't think Ann would mind me raising these issues, because I think they are very relevant to the current debate. She talks about the tri-union agreement with the government, and the extent of this model of movement toward integrated agreements within the health care system as a part or product of this kind of general sense toward regionalization and centralization within the communities of control over health care financing. We look at your budget and we see that this is a very substantive part of the cost of delivering services is the salary and collective agreement portions of your budget.
[2:45]
I wonder if you might want to comment on some of the concerns here, because it would seem on the one hand that there is a fairly good argument that this notion of moving toward tri-union agreements is really not the most fiscally responsible way to deal with that. It could be argued -- and I would like to hear the minister argue against it -- that greater flexibility between the bargaining units is better. It positions those people in the communities to effectively negotiate agreements that look after the diverse needs within communities rather than coming up with a standard model for solutions. That's point one. There are, I think, another six points in the letter. Maybe we could get some feedback on that, and in particular talk about how that may be related to the overall concept that's being promoted here as fiscal accountability.
Hon. E. Cull: The member might know that there are seven employers and, I think, 35 unions involved in health care in B.C. Having so many different players does create real problems for a system that's in transition. The difficulty in having skilled nurses and other health care professionals move from, say, the hospital setting to the community setting is not only training but is often contractual barriers. A whole variety of things -- wages, benefits, portability of seniority, working conditions -- create some very real and sometimes very impassable barriers for people to move to one sector from the other, even when they want to do so. A situation like we're in right now, where there is a lot of transition and shifting, does create major difficulties that we're striving to overcome.
With respect to your comments on the tri-union arrangements, we are not in any way amalgamating contracts. Under the accord worked out over the last number of months, the contracts for the three unions remain separate. Even the application of some parts of the accord are interpreted differently for each of the three unions involved, recognizing the points you make about flexibility, different working conditions, different working situations, the different people represented by the unions.
Like centralization versus decentralization, this whole question of how we organize ourselves in bargaining and collective agreements is very much like the situation of Closer to Home. There are two forces at work here. On the one hand it would be nice to have everything as standardized as possible. On the other hand you want to make sure that you have maximum flexibility to represent the needs of different groups in different communities. So you're striving for a balance all the time. It's not a black and white situation; it's not either/or. You're trying to find your position along the spectrum that is most advantageous to the reform of the health care system and to the people who make their living from it and depend on it.
G. Wilson: We can debate that point at another time as we get into the longer philosophical question on the whole Closer to Home business. I understand the desire by government to try to work out some kind of system to make the negotiation and ratification of collective agreements simpler in what is a very complex set of jurisdictions. I understand the complexity of it. The difficulty here is that we end up with a deal that's been signed, or hopefully ratified and taken care of, and we move toward a collective agreement without the
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funding provisions to allow the hospital adequate resources to honour that agreement without layoffs. Yet the hospital doesn't have any proposition to be able to direct those layoffs at the feet of the government, which is where they really should be. What we end up with is the ability to lay off being taken away. As a result, you end up with hospitals looking really bad when they have to move toward their only other alternative, which is basically to cut service in an attempt to reduce the cost of labour. It seems to me that it's less than forthright, frank and honest to say that the tri-union agreement is good for the province because it allows for the centralization of the negotiation process to a degree -- and granted, it's only to a degree -- even though you're not amalgamating collective agreements, unless you're prepared to fund the hospitals to the letter of the agreement, which is a very expensive proposition. It's one that I would argue the minister can't do. Can the minister talk about those problems?
Hon. E. Cull: I regret the member didn't join the debate on this subject earlier, because we did have quite a thorough canvassing around the cost arrangements with respect to the accord and what the hospitals will be getting in their budgets. I'll just state two things about it. You can't cut service to save labour costs in the hospital sector; 80 percent of the hospital costs are labour costs. You really don't have a lot of other places that you can look to for significant cuts.
The hospitals that have done their budgets this year, both with and without the accord, will tell you that it is to their financial advantage to have the accord. It will give them more money to maintain services than if they had to honour the collective agreements that have already been negotiated, stand and require a 4 percent increase in wages as of April 1993 and parity with the BCGEU for the HEU employees by October 1994. HLRA estimates they would be somewhere between 9 percent and 11 percent increases at that point. The accord is cheaper to the hospitals when you go through your budgets and do that analysis. If you add the reduction of 4,800 FTEs across the system to that, you come up with what is relatively a flat-wage bill across the industry for the three-year term of the agreement. The cost of the agreement has been estimated by the HLRA and the government at $57 million over the three-year period.
G. Wilson: With all due respect to the minister, when you say you can't cut costs because 80 percent is absorbed in salaries and benefits, that may be true, but 20 percent isn't. When you're looking at cost savings of anywhere from 3 to 7 percent, you can find that within 20 percent of your operating costs, and that's being done -- certainly in the hospitals in my own community, I know, because they don't have a choice and find themselves in a situation where they are now starting to have to make decisions with respect to the provision of services at the hospital that they can adequately afford to staff and run and whether or not they should be taking beds out of service -- or even shutting down floors, if it comes to that -- because of the inability to meet the agreement requirements that have been signed without major layoff.
I put to the minister that the other alternative is obviously to change the structure by which the makeup of workers in the hospital is established and move away from part-time or casuals into full-time contracted workers, which removes certain flexibility. I can tell you again that this has been a very hot and contentious issue in our local hospital in Powell River, because it removes the flexibility of the workforce for service in hours that are less desirable for work, especially for women who have families and are health care providers who feel that they want to apportion some of their time there.
I think it's wrong to say that you can't take it off the service end, because you can, and they are. It's important to recognize that in the agreement, as has been pointed out very effectively by Ms. Bakewell in her letter, you end up providing a fairly significant problem for local communities where the number of health care workers who are there and working is finite. Once they leave the community, they're gone -- to the point that you can't reclaim them if your budget's increased. It's not like you can simply say, "Well, we're going to downscale or downsize, and when things look better we're going to hire you back," because if people can't get work, they leave.
I've told the minister that Powell River is an isolated community. If we lose health care providers, they're gone from the community, and it becomes a major problem to attract people back into the community. You can argue the same thing for St. Mary's Hospital in Sechelt. I wonder if it wouldn't be better to recognize that within this system of financing there are regional needs that are going to be driven by the geographic location and demographic operations within these hospitals, so that we can diminish the loss of service and the potential loss of health care workers through a more flexible system of funding that could be available to hospital administrators. I wonder if the minister would comment on that.
Hon. E. Cull: If hospitals that you're aware of are starting to close beds or reduce services due to their budgets this year, they're doing it as a result of the collective agreements they negotiated in past years, which apply now to those hospital workers because the accord has not been ratified. They are dealing with the contract they negotiated with the nurses, the arbitrated settlement they have with HEU and the contract they negotiated with HSA. So you can't tie what's happening now to the accord. Those are the things that are going to happen without the accord. In fact, the accord may facilitate the retention of those workers in the community, because the hospitals -- instead of having to face a 4 percent wage bill on April 1 this year without the accord -- would be facing a 1 percent wage bill, which gives them 3 percent more room to retain those people and do some of the flexible things that I think you were alluding to.
I don't have the full figures here for the Coast-Garibaldi health unit, but I just looked at the mental health services. Last year we added 29 mental
[ Page 5822 ]
health positions in that region. One of the things we have to recognize in all of this debate is that we are talking about a reduction of 10 percent of the acute care workforce over the three-year period. That is our objective, so that we can redeploy those people into other parts of the health care system or, if they leave the health care system entirely, be able to use the money that funds those positions in other parts of the health care system. There are new people coming along all the time. There are people graduating from training programs, and there will be some reallocation. But this is not a temporary layoff situation with these people to be hired back, as you suggested.
We are looking for an industry-wide reduction in acute care services of 10 percent of the employees in the system right now. That will vary from community to community because some communities are growing and will need more resources. Some communities are declining or remaining fairly static and have a very high level of resources compared to the provincial average. When you weren't in the House we were talking about the range which in some communities is as high as seven beds per thousand, which is a very high level of acute care bed resources. It will be higher than any provincial average across the country right now, but certainly much higher than the B.C. average, which is about 3.3 or 3.2.
G. Wilson: I appreciate the minister's patience, in that I have not had a chance to review the Blues from earlier on. If this discussion has been dealt with or canvassed, I will yield to my critic to let me know.
Maybe the minister can correct some facts if I'm incorrect. It would seem that this government would argue that the contract currently underway, which it seeks to have ratified, is going to be cheaper for hospitals. Where 10 percent of workers are going to be laid off and can't be dealt with through an early retirement program, this contract provides that comparable jobs will be found for them within the community. I understand that some of that has been discussed earlier on, and I don't want to go back through it.
[3:00]
With respect to comparable jobs, using Sechelt as an example, the jobs that are likely to pay what a registered nurse or hospital staff member could expect to be paid working for St. Mary's Hospital in Sechelt are nonexistent. In fact, I would ask the minister to give me some definition of where on the Sunshine Coast -- and I'll give you the opportunity to include Gibsons through to Pender Harbour -- you are going to find comparable jobs when you lay off these workers.
Hon. E. Cull: One of the things that always distresses me whenever I go into a community, and particularly if I'm talking to a community group about Closer to Home and community-based services, is that somebody will always stand up and say: "There aren't any community-based services in our community." I invite you, hon. member, if you haven't done so, to go down to the Coast-Garibaldi Health Unit and talk to the staff, the nurses and the other professionals there, many of whom make as much as the people you're talking about. Whether there's a direct comparability and whether there might be some retraining -- we'd have to look at individuals to see what can happen. You will find many individuals within the community sector who earn very good wages providing health services, and they do an excellent job for the people in our communities. They're not as visible as those who work at the hospitals. I just wish those people were more visible to the people in their community. It's unfortunate that they're not. I think that their work needs to be better recognized.
The figures were given this morning, and I urge you to have a look at the Blues. At least a third of the reduction in this year's share of the 4,800 FTEs will be achieved through attrition, early retirement and transfers to other programs that are hiring. In terms of the positions of people who are having to move somewhere else in the community and who require relocation or retraining, one-third of those will be done simply through attrition, early retirement and other voluntary transfers.
G. Wilson: I appreciate my colleague from the third party giving me this morning's Blues so I can look at the horrendous figures my critic raised earlier today. I won't have to go through them again to remind British Columbians how horrendous the figures are.
Let me come back to this, because I am actually quite familiar with the Coast-Garibaldi Health Unit. As I said, because of my background -- having spent some time on the regional hospital board, having been involved with the community services society board and having been an active member of my community and an elected member at the regional level of government -- I'm very familiar with how it works. I can say with some confidence that in theory there may be some comparable jobs, and one might even argue that on paper there might be some comparable jobs, but in practice and in reality, the nature of the workforce on the Sunshine Coast -- and I would guess that Powell River would not be much different; and if those two areas are in fact that way, I would suspect that I could find many other areas in British Columbia -- is such that people do not have the flexibility to travel or relocate without a fairly significant disruption to families. You might argue that that is tough if you're in a profession and you're downscaling.
When it becomes a strategy for managing hospital financing, you suggest that as part of that strategy we're going to provide the expectation -- I can't think of any other word to describe it -- that there are going to be additional jobs in the community. I can tell you that in the area I'm most familiar with and in which I've been involved politically at the local level for some time, those simply don't exist.
That raises another matter that Ms. Bakewell mentions in her letter to you. I'm sure you have given, or will be giving, a detailed response to her letter. She suggests that when the community is unable to provide those kinds of services and people are unable to get those additional jobs, it will mean that the financially strapped or nonexistent hospitals will be forced to
[ Page 5823 ]
continue paying for laid-off employees. If that isn't correct, then I'd like to have it corrected.
If it is correct, then I would ask the minister what kind of analysis has been done on the administration of this contract -- on the potential additional costs that hospitals are going to have to absorb as a result of the administration of arbitration in many grievance disputes. On top of that, if hospitals find themselves in a layoff position and have to absorb continued costs, how much planning has gone into that form of administration, given that they're financially strapped now and can't provide services to patient care?
Hon. E. Cull: A number of things have to be considered here. First of all, without the accord the hospitals still have a 3 percent budget increase, which for most of them means considerably less than 3 percent. There will still have to be reductions in the hospitals this year -- in fact, more of a reduction than with the accord, because they'll have to deal with the 4 percent wage increase. They won't have the flexibility of some of the other provisions that have been agreed to in terms of contract changes. Even laying off people will take longer than it would with the accord, which means more people will have to be laid off if they're to balance their budget, because they'll have more people in the system waiting to go through the process that was negotiated freely between the hospitals and the unions to deal with layoff, bumping and all of those kinds of provisions. The accord makes it easier for hospitals to deal with this.
A significant downsizing, in the order of 10 percent, is taking place in this industry, and if you're suggesting that we shouldn't accept some responsibility for helping those employees move from where they are -- hopefully they'll stay in the health care system, but if not, be retrained or somehow reabsorbed back into the workforce in appropriate places -- then we have a philosophical difference. We can agree that this philosophical difference is a difference between your party and mine. In the past, governments have just axed budgets and said: "Workers, you're on your own. Good luck. There's the UIC office. If you don't qualify for UI, head down to social assistance. If you don't like it here, move somewhere else."
We're taking a different approach because we value the people who work in our health care system. We're saying that there has to be a better way of making these changes, and recognizing that you can't do it all on the backs of the workers. We have allowed for retraining, relocation and early retirement. We're trying to facilitate preferential hiring; a hospital that is hiring people because it's got 25 new beds coming on stream can hire people from a hospital that may be closing beds. The whole system can work better and more humanely, and I think it has to be done that way.
We recognize that not all hospitals will have the same amount of flexibility to deal with the requirements of the accord. In this morning's debate we discussed the fact that the vast majority of layoffs will be in the large urban centres, because that's where the vast majority of institutions and workers are. Fortunately, it also happens to be where the vast majority of the new jobs are, because all of these things tend to flow with the population; so in the larger centres, where we have the biggest problem, we also have the most capacity to deal with it. Notwithstanding that, we've protected the very smallest hospitals with a 2.4 percent budget increase this year, which is higher than Powell River got, as I'm sure you know, and higher than most hospitals in the province will get. The very smallest hospitals got that protection because if you're a diagnostic and treatment centre and you lose one person, you have to replace that person. You don't have the flexibility to deal with attrition. It's not really usable in a small centre.
We've recognized that the next category of hospitals up from the very smallest ones may need some assistance, so the accord provides a $3 million budget for the hospital employers to assist those smaller hospitals to meet the terms of the accord and perhaps get the little bit of extra time that they may need to live up to the agreements. But if you look at the HLRA figures and the costing they've put out, no matter what assumptions you make about the way contracts will go in the future, in all cases it is cheaper overall to the hospitals to have the accord than it is to not have the accord. If you have not seen the HLRA document on that, which does the calculations, I would be very happy to provide it to you.
G. Wilson: On the surface and at first blush this sounds great, but when you start to think about it in practical terms, in terms of the smaller communities that have an existing health care worker pool, what we're looking at here, in the judgment not only of myself but of many who are professionals in the field, is that we're likely to have one of three things happen with this new system. The first is that the number of jobs will remain constant in some areas, and there will either be a slight increase in nurses because of the lift that is going to be administered by these hospitals, or an expectation of a greater amount of work done for the same number of hours worked. There's a fear that this might be a product of it. I think that will be an extremely small percentage and probably isolated to one or two areas that have been brought to my attention.
The second thing is more likely, and I'd like the minister to comment on this. When you have a small community such as Sechelt, where a number of people moved into the region and were unable to bring portable seniority rights in and are essentially working as part-time staff, when those positions are increased and vacant ones come forward, they are going to find themselves in a situation where people in the displaced pool that's been created by this downscaling of workers can come into the community and take them instead of the local workers without seniority rights who were already there. Whether this is a fear that's been discussed with the minister or not, it has certainly been discussed with me by a number of people. There is a growing concern that those people who have found that they are casual RNs -- they moved in, have been working for a couple of years and have become disadvantaged because they are casual -- would very
[ Page 5824 ]
much like to move toward full-time employment. It's likely that because they were unable to transfer their seniority rights, they are simply going to be bypassed in this process. If that's so, it's likely to create some concern in the local communities; if it isn't so, then maybe we should clarify it right now.
S. Hammell: I'd like to ask leave to make an introduction.
Leave granted.
S. Hammell: I'd like to introduce to the House about 60 students and their adult supervisors from Bonaccord Elementary School in Surrey. They are here as part of their grades 4 and 5 social studies program. Would the House please make them welcome.
Hon. E. Cull: To the member: the information you have isn't correct. If the hospitals have a position that's 0.4 right now and they want to expand it to a 0.8 or full-time position, they have the ability to allow the person who's an incumbent in that position or other employees at the hospital to fill that position before they designate it as a vacancy that is available to the hiring pool.
G. Wilson: As I understand it, the portability of seniority will not apply even to those people who are casual RNs who were unable to take seniority into the community they are currently working in. In other words, given that there's an existing job that is going to be moved from casual to increased hours, possibly full time or whatever that might be, this new displaced pool is not going to allow somebody from outside the region to move their portable seniority rights in and take that job. Is that correct?
Hon. E. Cull: It's correct if I'm understanding how you're phrasing this. Let me have another try at it. The seniority that's coming in with someone doesn't apply until there's a vacancy; the vacancy doesn't apply until the hospital says that there's a vacancy, so if there's somebody in there working part-time who may have a couple of years experience as a casual, that person can still be allowed -- if they want to and the management agrees that the person is a suitable candidate for the job -- to take the full time position, and the seniority of someone else coming in will not affect it. But once the position has been determined to be vacant and the hospital says it has a vacancy, because there isn't anybody in the hospital who wants to increase their part-time hours to full-time, or there is no one who is able to do that, then that position goes into the vacancy pool. Someone coming in -- it may be an operating room nurse with 20 years of experience who has some seniority when she comes in -- doesn't come in the way she does now, with no seniority whatsoever. That allows for the portability of seniority, but it doesn't allow that to displace people who are already employed in hospitals.
[3:15]
G. Wilson: I understand that it's not going to necessarily displace this individual, but it is likely to terminate their ability to move from.... Let me be specific here, because Ms. Bakewell, who is a registered nurse and is operating in this system, knows better than I do. If I could just read this paragraph, it might clarify this point.
"At my hospital there will be several casual RNs who have been here, some for two years, in hopes of getting a regular position. Now, for over two years they are at a disadvantage for posted jobs, as nurses from the other institutions can port their seniority. This is seen as grossly unfair by our casuals, who couldn't port their B.C. seniority when they moved here.
"In addition, as a slap in the face, they will be asked to cover vacant positions while someone from the displaced pool moves and is oriented. You may have bought labour peace on the big scale, but within institutions there may be a considerable degree of unrest."
If that isn't so, then we need to clarify that position. As I understand it, once a person is able to port their seniority, that seniority will apply for the longevity of their employment. People who were building seniority within the community are going to be disadvantaged, because they will have new employees coming in with much more seniority than they could ever hope to gain by their years of service in that community. Is that not right?
Hon. E. Cull: This is starting to get very complicated. As you have indicated, you are reading from a letter that was sent to me on April 15. I will be replying to it in detail, so there will be a specific answer to that. The vacancy has to appear before the seniority is ported into a new institution. If there is a casual in a part-time position and the hospital wants to increase that to a full-time position, until they declare it a vacancy that casual employee can apply for and fill that position. It doesn't become a vacancy in the pool that is then open to other people coming in under this arrangement, until the hospital has declared that there isn't anybody they wish to hire from within the system to fill that position.
The same thing works with different positions in the hospital. If there's a full-time vacancy and somebody else who is full-time in the hospital wants to move into it, they have the opportunity to do so. The original vacancy may not be the one that ends up in the pool at the end of the day. As I said, this is starting to get very complicated, and I will send you a copy of the response to that.
G. Wilson: It gets more complicated. Having experienced the maintenance and management of seniority rights and collective agreements in another life -- especially when you get into collective agreements affecting "professionals" and the whole nature of job specialization, job training and everything else that gets into it -- I know that it does get a bit complicated.
I wonder if we could move on to a couple of other subjects, and then I'd yield to our Health critic. One has to do with the union board of health. The minister
[ Page 5825 ]
brought up a very important point with respect to the general lack of knowledge. I don't have any empirical evidence to support what I'm about to say, but certainly from my working experience in this field, I think that there is a general lack of knowledge in the public about three things: (1) I don't think most people understand the role of the union board of health in the provision of health care service in the community; (2) as a result of that, they don't understand the substantial powers of the union board of health; and (3) they don't understand the degree to which the union board of health may act as a preventive agency or move toward preventive action in certain areas.
Under this new scheme, I wonder whether we are gong to have the same kind of provisions in whatever new system comes in. It would strike me that one of the things the union board of health has been effective in doing is starting to put in place at a local level some governance over some of those areas, especially when you get down to the whole question of community safety, community health hazards and those general provisions for liveable society kinds of regulations.
Hon. E. Cull: Yes, indeed. In fact, the Associated Union Boards of Health have been involved in the development of New Directions right from day one. They've had a representative on the minister's advisory committee. They were very actively involved with a number of members through our working groups and in all of the forum that we created to discuss the royal commission recommendations. They have been working with us since the launch of the New Directions paper to continue to provide input, advice, guidance and lots of good help to the development of health councils and regional health boards. I consider them to be key players and leaders in bringing about the kinds of changes that we want to see.
G. Wilson: One of the areas that might be cost-effective in reducing the overall demand on community health dollars is a greater degree of integration or liaison between community-based services -- certainly non-profit services -- and the union board of health so that they can interface much more directly. I know that within my own community there are several areas in which that can be effected right away. I wonder if the minister has a comment on that, because it seems we could implement some significant cost savings with very little disruption and a greater enhancement of these two areas. One has to do with inspection regulation on community-based health services -- especially those that are run by non-profit societies. I can refer to one example, which is the overall regulation and maintenance of a home that has been established for people with mental handicaps, where people are brought from institutions back into the community -- which I think most of us would applaud. The second is with respect to local non-profit societies that are operating on the regulation of substance abuse, and also the pseudo -- and I use the word very liberally -- transition house. I'm not talking about homes specifically dedicated to women subjected to violence; I'm talking about safe houses -- that's the correct word. There doesn't seem to be -- and maybe it's just my own experience in the communities that I'm working in -- the same level of integration on those two levels -- inspection and regulation.
Hon. E. Cull: I'm going to have to keep my comments on this somewhat general. Earlier this morning when we were discussing the format of today's debate, I agreed with the opposition critic that we would not get into community and family health issues today, so I don't have staff here that will be able to support me on this. But in a very general sense I agree with you. I think that the fragmentation, particularly in the area of alcohol and drug, was a result of the former government's TRY program, whereby a whole variety of agencies were set up or funded and created to deliver programs without a lot of evaluative criteria or monitoring being established in the first place. We end up with a whole variety of different groups out there doing things, often not well integrated with one another.
One of the things that we have done is try to use the union boards of health to assist us to make some sense of the variety of services that are in their communities. In some cases, they act a bit like mediators on issues of whether groups should continue to provide services or continue to be funded, and whether they are providing adequate services. Last year in the estimates we had a debate on a particular alcohol and drug program in the Fraser Valley. The union board of health there was very effective in bringing the community together with the agency and the ministry staff to work out a solution that in the end satisfied us from a funding and criteria point of view, and satisfied the community from a service point of view. So I do see an ongoing role for the union boards, in their current format and in the revolving format as part of the community health council, in starting to pull these services together.
[M. Farnworth in the chair.]
Here in the Victoria area, the Capital Health Council, an outgrowth of the Victoria Health Project, has been in operation for some time, and they are indeed doing that. They began under the VHP doing it with seniors services. They are now doing it with mental health services, which is really very exciting. I would hazard a guess that there's probably something like 45 different agencies in the Victoria area providing services in some fashion to people who are mentally ill. Imagine trying to make some sense out of all of that and to keep it coordinated. If you look at the administrative duplication, the potential for overlap and gap, it's quite frightening. What the Capital Health Council is doing here now is starting to bring that together and make some sense out of it so the duplication can be eliminated. And by eliminating it, those funds can then be redirected to the areas that are being missed right now and sorely neglected.
G. Wilson: I won't continue on that line of questioning. I apologize if I wasn't aware there wasn't a prior agreement with respect to those particular
[ Page 5826 ]
questions. I would be happy to return at the time that you have the appropriate staff here, because I do have a series of other questions on that.
Let me very briefly then come to the last question, and hopefully you have the appropriate staff to answer this. It has to do with capital construction in health. I wonder if there is an estimate of the number of dollars that would have been expended through your ministry this year, prior to the creation of Build B.C., that will not be expended should that legislation pass. Within the budgetary figures this year, how much of the capital expenditures under construction will in fact be administered through this new Crown agency that traditionally, or last year, would have been spent in your ministry?
Hon. E. Cull: The entire capital budget that has been approved for the Ministry of Health will be administered by the Ministry of Health.
G. Wilson: I understand that. I understand that what's in here as capital expenditures will be expended through this ministry. What I'm curious to know is whether the minister is aware of additional projects that under normal, traditional circ*mstances would have been funded through the Ministry of Health but will be administered through Build B.C. The reason I'm asking this -- because it's not a trap or a trick question, or I wouldn't tell you if it was -- is that I'm trying to get a handle on where federal dollars are going that generally come into the province for the construction of hospitals. Are they still coming into this ministry, or are they going elsewhere? Where are the federal transfer moneys that come into this province going this year?
Hon. E. Cull: There's actually very limited funding coming in from the federal government, and it's tied to specific projects where there is some federal cost-sharing of capital, like the long term care facilities for veterans or things like that. But that's a very small amount, and I'm only aware of one project right now. There may be more, but I'm aware of one project in the Victoria area that falls into that category.
The funds in our capital budget are the funds available for hospital and other health care facility construction this year. It's the total amount of money; there isn't any more money anywhere else, and there wouldn't have been any more money. I appreciate you're not trying to ask a trick question here, and I'm not trying to give a trick answer. But the money shown in the estimates is the total amount of money available for hospital and other health-related construction this year.
G. Wilson: I'm a little confused now, because in the debate on Bill 3 the Minister of Finance said the opposition's holding up passage was going to stop construction of hospitals in the province of British Columbia. But what I'm hearing the Minister of Health saying is that there is no money allocated in Bill 3 to the Build B.C. corporation, or whatever it's going to be called, and that all of the capital construction is going to be financed out of the Ministry of Health. Is that correct?
Hon. E. Cull: There are four elements to the B.C. 21 program. One of them is the acceleration of social capital, and the acceleration of social capital with respect to the Ministry of Health is in the Health ministry's budget.
[3:30]
G. Wilson: Could the minister help me out here for a moment? Could we see how that's reported here? If it's one of the four elements under B.C. 21, Bill 3, how is that identified in this budget? How do we know where this accelerated social capital is in this budget?
Hon. E. Cull: I'm getting confused with this line of questioning, but it's under the debt-servicing amount that is provided in the ministry's budget. It allows for an acceleration of some projects that would normally be built over the next number of years to be built sooner rather than later. I assume you're looking at page 166. You'll see there hospital construction and renovation under the ministry operations.
G. Wilson: Again, I'm only trying to understand. Please don't think I'm trying to create trouble where trouble isn't warranted. Believe me, there'll be enough trouble in areas where it is warranted. My understanding is we're looking at $112.7 million. Is that the estimate figure we're looking at here? On page 166, if we look under hospital construction and renovation....
Interjection.
G. Wilson: Okay. Excuse me: $121.2 million is the figure we're looking at. Is the minister saying that is to be apportioned as the accelerated social capital and administered under Bill 3? Is that correct?
Hon. E. Cull: That is the debt-servicing portion of our operating funds that will allow us to carry out our capital budget this year, and it will be combined in some cases with other capital projects that will be coordinated by the B.C. 21 program. The B.C. 21 program -- and I'm not going to get into the debate on that, because I know we're having a thorough and exhaustive and exhausting, and sometimes some would say tedious, debate on that particular bill -- has four components. One is the acceleration of social capital, and the social capital that applies to the Ministry of Health is here either in our operating fund for debt servicing or in our capital budget.
The Chair: Member.
G. Wilson: Thank you, Mr. Chairman, and I certainly won't forget you. After all, one experience with you in the chair is unforgettable, I can assure you.
If we could come back to the minister, the $121.2 million is the debt-servicing portion of the operating funds. That is only a partial amount of what will be coordinated through Bill 3? What I'm trying to work out
[ Page 5827 ]
here is: in terms of the actual expenditure of these dollars, where is the administration of that money going to be? Where is the authority to spend that $121.2 million going to be made in terms of the actual allocation of dollars? Are we only looking at basically the cost of the debt that's going to be created under Bill 3? In other words, is this real money being spent on money that is committed through your ministry, or is that debt servicing of moneys that are going to be borrowed under Bill 3? That's my question.
Hon. E. Cull: There are two aspects to this. We have a capital budget, and this is the debt-servicing portion for our capital budget which appears in our operating budget. You're still with me on this? I can see you nodding and saying yes. Okay. This money will be entirely approved through the regular approvals, but initially by the ministry and the Minister of Health, and then it goes through the normal Treasury Board approvals. It will not be borrowed by the Crown corporation which is created under Bill 3, which is created to deal with transportation projects, not with health projects.
G. Wilson: So then all of this comment we have had in the debate on Bill 3 about not wanting to be building hospitals is just.... It appears that the minister is saying that any capital construction on hospitals is going to be administered through the capital budget that we see here. No additional money -- money that is not reported in this budget through this ministry -- will be borrowed on behalf of the people of British Columbia for the construction of health care facilities. Is that correct?
Hon. E. Cull: The answer is yes, but it doesn't preclude us from doing our capital construction in cooperation with other ministries that also do capital construction, or from doing other parts of community capital projects in a more integrated way. That's what we're looking at. I really don't want to get into the B.C. 21 debate, but I'll remind you again that there are four components to it. One component is to accelerate the building and improving of key social capital facilities, including hospitals, education facilities and the like. B.C. 21 allows us to accelerate our capital investments in these areas and to cooperate, as part of a five-year planning process, with other ministries that are doing this so that we have a coordinated and focused approach to our capital investments, not one that is segmented into individual ministries.
The Chair: I would just like to bring to the attention of members of the House that we must be careful not to stray into legislation that is currently under debate. There's a fine dividing line, and I would ask members to bear that in mind when we're doing estimates.
G. Wilson: Thank you, Mr. Chairman. The only stray that I've ever had occasion to be acquainted with was a cat when I was child, and I certainly wouldn't want to end up with the same problem that that one had. I will keep to the straight and narrow, I can assure you.
I apologize if I'm being a bit pedantic on this issue, but I really do want to understand it. It's certainly important to me, and hopefully to the people of B.C., to understand how it's going to work. What exactly is the figure for capital construction that will be administered by the Ministry of Health under the authority of this minister, and what portion will be assigned through some kind of cooperative venture with other ministries? Could we have some definitive figures, like A, B and C, and the numbers?
Hon. E. Cull: The total capital budget is $317 million for '93-94. That's for major capital. There's another $76.95 million for minor capital. It's likely that the money that's in there for community health centres -- I'm sorry, I don't have the figure broken out at this point -- may be part of the B.C. 21 projects, because those facilities are more than single-ministry facilities. But until the details are determined on which communities are likely to take advantage of the community health centre concept and what other opportunities are out there for co-locating with other ministry capital projects and other levels of government that may be doing capital projects, we're not going to be able to give you a more precise figure.
G. Wilson: I appreciate the clarity with which the minister has answered. I'm clear now on what the minister is saying. Of the $317 million for major capital projects, plus the $76.95 million for minor capital projects, there may be some that are more community based -- community oriented, presumably -- and might be administered through this B.C. 21 fund.
Interjection.
G. Wilson: The minister is saying coordinated through this fund. If that's so, is there somewhere in this budget where the administrative cost of those projects will be carried? Will it be carried through administrative support in this ministry? Will it be carried through administrative support in B.C. 21? Where do those dollars come from?
Hon. E. Cull: Administrative support in this ministry, with the dollars coming from our operating budget.
G. Wilson: I assume that community health centres would still be under major capital expenditures; they wouldn't be out of the minor $76.9 million. Or would they?
Hon. E. Cull: Minor projects are $1.5 million or under. So some of them conceivably could be, depending on the nature of the project.
G. Wilson: It brings to mind the Pender Harbour clinic, which is in need of a little expansion and some facilities. I'm sure it would come in just under $1.5
[ Page 5828 ]
million if the minister is keen to get rid of some of that money.
Interjection.
G. Wilson: That's good. High on the list, I hope.
More directly on the question of the expenditure of that money, the minister has said that the B.C. 21 dollars will be determined depending upon which communities take advantage of these opportunities. I'm paraphrasing what I think the minister said. I'm not quoting for Hansard's point of view, although it would be interesting to compare. If that's the case, who then directs the priorities on that spending? Is the priority on expenditure going to be made within the Ministry of Health, or will the priority be made by the new board of B.C. 21?
Hon. E. Cull: I'm sorry, hon. member, I've forgotten the first half of your question because I was focusing on the second half and your reference to Hansard.
The projects are determined by the Ministry of Health. We go through criteria, which you and I discussed earlier today in terms of long term care facilities and all the rest. We work through those projects.
Now I recall the first part of your question. It's not what the community needs and the shape of community health centres that will determine whether or not it's part of B.C. 21. What is needed in the community and what opportunities exist in the community will determine whether or not that community has a community health centre. We're not going around dropping health centres on communities. We're looking for opportunities for partnering: for hospitals to bring in health units; for health units to work with long term care facilities; for non-profit groups to work with municipal groups and ministry groups. We're looking to provide a larger facility with more professionals in one location and a concept of teamwork that might not be available through separate, discrete facilities and rented spaces. We now deal with most of our health care space needs.
The determination of whether a community gets a health centre comes from the community, working with the ministry, working with our budget. We set the priorities for which hospitals will get extensions, expansions, new beds, new programs and more long term care facilities. The coordination of some of these projects will be B.C. 21, particularly the community health centres because they have the ability to involve not only the Ministry of Health but also Attorney General or Education or some of the other players.
G. Wilson: I know my colleague from the third party needs to get some questions in before 4 o'clock, so I'd certainly yield, although I would reserve the opportunity to come back at a later time.
[3:45]
Just one last question. It would seem to me that if the ministry is going to be maintaining and managing all of those funds to the tune of roughly some $400 million, or certainly $390 million, then why do we need the B.C. 21 to administer any of this construction? I realize that's slipping into the other debate. Having seen the Chair's anguish on that question, let me rephrase that to say: could all of this money be expended, or is it anticipated that all of this money will be expended, strictly on the priorities that are established within the Health ministry? Is the minister confident of that? There is a certain suspicion out there that some other agency might be more politically driven, and therefore have the right of political reward prior to some hiatus event, like an election, for example. Could the minister tell us whether or not she is confident that all of those priorities will indeed be maintained and established through the Ministry of Health?
Hon. E. Cull: Yes, I am confident that the priorities of the Ministry of Health will be maintained. When I first ran for election to this Legislature, one of the things I was most concerned about was the lack of coordination between capital budgets at the provincial level: the fact that we miss opportunities to locate day cares at schools or integrate health centres with educational facilities -- in colleges, for example. There are all kinds of potential opportunities which I felt the government was missing because they did not have the vision or the wisdom to put an umbrella over their capital projects and start to look at how they could better manage, coordinate and integrate them with one another. I think what we're talking about here is moving us into the direction of a better managed capital budget, which will allow me to feel that we're achieving some of the objectives I set out to achieve when I first ran for elected office.
G. Wilson: I have one last comment, and then I will yield. What the minister has just outlined -- and I offer it for future budget preparation and future estimates -- is the need for a ministry of community development. This has been long advocated by members in the Liberal opposition. It would integrate community services, reduce duplication, reduce cost to the public; not be a new Crown agency, which essentially increases debt and increases costs to the public. With that, I yield to my colleague.
The Chair: I now recognize the unforgettable member for Prince George-Omineca.
L. Fox: Thank you for recognizing my talents in that way.
I'm finding the debate really interesting, and the member from Sunshine Coast has entered into an area that I would like to ask one or two questions about. I found the debate about the total capital quite interesting. It seems to me that the partners in this particular initiative will be, by and large, the regional hospital districts, because they play a role in financing hospital extensions, extended care facilities, health clinics and so on. What is going to be the role of these agencies in the determination of facilities built and coordinated within your ministry, but also, as I understand it, partially coordinated within B.C. 21?
[ Page 5829 ]
Hon. E. Cull: The regional hospital districts continue to have a very important role in the planning around the facilities in their communities. As we move to a regional health board which will not only be responsible for hospitals but will be responsible for community health facilities, long term care facilities and other facilities which make up the total of the building stock for health care services in a community, that input from the regional level will be as important -- in fact even more important -- in starting to shape what the plan should look like. As I said in answer to the member speaking just before you, the Ministry of Health has criteria. We have priorities, we work with communities to establish those priorities, and that is not changed by the way our capital budget is being managed this year.
L. Fox: Is there going to be any change in the funding with respect to some of the new health care needs for the community -- for the delivery of Closer to Home services and health care services? What share of the funding is expected to come from the regional health boards?
Hon. E. Cull: There's no change to the proposals for funding of health care services, either operating or capital, under the new scheme -- with one exception. The exception is whether the cost-sharing for hospital and other facilities that are cost-shared with the province will remain a function of the regional hospital district or move to the newly created regional health board. The answer to that question is now being determined through a committee that involves the Union of B.C. Municipalities. So we're working directly with local government to determine what is the best location for that ongoing function of cost-sharing of capital facilities. Beyond that, the arrangements for the operating funds of health care facilities and other services remain as they are now: primarily paid for by the Ministry of Health through provincial revenue.
L. Fox: As I understand it then, the share ratio of 20 percent regional health board and 80 percent Health ministry with respect to some of the minor facilities and the 40-60 percent sharing will still be retained. Then I guess the argument could be made that the priority for which region gets this newfound money and newfound capital may very well be based on the ability of that particular taxation agency to tax and the willingness of the taxpayers within that regional hospital district to accept the taxation levy of 20 percent or 40 percent. Would the minister not agree that that might be a factor?
Hon. E. Cull: I agree that there is that element to it, but that is not a change from the system we've had in place for many, many years. If you're suggesting that the government pick up 100 percent of the capital cost to avoid the difficulty that some regional hospital boards go through when they have to face decisions about capital funding, then I think we're into a massive increase of expenditure at the provincial level.
L. Fox: The minister should know that assumptions are always very dangerous. She didn't know what I was suggesting. I was really suggesting that there may be disparities in the level of care and kind of facilities available dependent on the ability to pay of a respective region of this province.
I guess there I lead into another area that concerns me. I know there hasn't been a lot of dialogue between the ministry and the regional hospital districts as to what the ministry's expectations will be of those districts, given the new demand for services and the demand for capital to deliver those services, as well as what the liability on those respective taxing authorities will be.
Hon. E. Cull: The ministry will continue to work with regional hospital districts, and with regional health boards as they are created, to develop the priorities for health facilities in their community, particularly those that have to be cost-shared. But as we move to a system which sees us put more emphasis on community-based services and less on expanding the acute care system, I suggest that we will probably end up with things being less expensive for the regional taxpayer in the long run. We're talking very theoretically here. But I suggest that since hospitals would be less expensive and indeed more cost-shared if we're starting to shift to community-based services -- which means that we reduce the need to expand our acute care sector -- that may be good news not only for provincial taxpayers but also for regional taxpayers.
L. Fox: Once again, those are very comforting words from the minister, but perhaps with a lot of assumptions in them, as there were in an earlier statement. I think one of the main concerns around this issue is the fact that there is no finite plan. There is no real direction coming from the ministry with respect to: (a) how these new regional hospital districts should be formed; and (b) what's expected of them in terms of the delivery of services, capital facilities and also, I guess, the formation of the boards.
A few months back I was amazed when I read in the newspaper the minister's response to a question from a press member on why these regional boards weren't going to be elected. In her explanation, the minister suggested that the public wasn't responsible enough to elect members who would necessarily reflect the interests of the government. While that isn't a direct quote, it's pretty much a paraphrase of the statement.
Interjection.
L. Fox: Perhaps, but those kinds of statements from the minister, the lack of direction coming out of the ministry and the fact that each one of these regional areas is in limbo.... Nobody even has a definition of where their boundaries are going to be, and at the same time we're seeing horrendous amounts of money shifted from acute care into home-based delivery. In essence, I think the people of B.C. feel that health care under this minister is a mess, and we're not sure where we're going. I had actually not intended to get into
[ Page 5830 ]
this area, because I can't conclude it, but as a general statement I guess that's a concern. The public and the health care professionals in B.C. accept that there has to be a change in health care. They accept the fact that we can no longer continue to support vacant beds and that we have to modernize in how we deliver health care. Our concern is that this change is not going to achieve the two objectives of supplying top quality health care at a lower cost to the taxpayer.
I'll leave it at that and allow the minister to make some responses.
Hon. E. Cull: I can assure the member that we are not going to be able to provide top quality health care to people in this province if we don't start making some of the structural changes that we have proposed in our New Directions. If you look at what is happening across this country and what other provinces are doing, every province in Canada has recognized the need for major structural change in the health care system. There was a very interesting editorial in the Globe and Mail, which I recommend to you -- I'm sorry, I don't know whether it was Friday or Saturday -- reflecting on the situation in Ontario and some of the comments that have been made around the Tory leadership race with respect to health care.
[4:00]
In Ontario, Quebec, Nova Scotia and Manitoba they're reducing beds. In Saskatchewan, they have decided to close 51 small hospitals. All across the country decisions are being made about the need to make structural changes in our health care system. If we think we can stick our head in the sand and not start to change the way our health care system is functioning, yet still provide quality care and not end up with a system that is totally unaffordable by our taxpayers, then we...you're wrong. It just can't happen that way. We do have to make some changes. We are making changes based on the Royal Commission on Health Care that your party established, hon. member. It set in motion a credible panel of non-partisan individuals that listened to people in every part of the province and came up with 379 recommendations, which, for the most part, we're implementing -- the first province in Canada to actually implement a royal commission. I'm not sure what the motive was behind the former government for establishing it; maybe they just wanted to put health care off into a commission for a couple of years so it would go away and not bother them, and intended to leave it there on the shelf. But we don't intend to leave it on the shelf; it's a good report, and many of the recommendations are worthy of our support.
You talk about the concern about how regional health boards will be formed, and what's expected of them. It's an interesting thing around consultation, hon. member, because on the one hand, if you want to have consultation about changes in the health care system, then you can't go to them with the recipe which says: "This is what the health board will look like; this is how you will create it; this is what a community health council will be." If you're going to have consultation, then you have to spend a little bit of time with the community asking some of the questions and letting them answer some of those questions.
We have deliberately not developed the recipe book for community health councils or regional health boards in terms of this being the only way it can be done. We don't want a cookie-cutter approach. We want the community health council in Vanderhoof to reflect the needs of Vanderhoof, not the needs of somebody who dreamt it up in Victoria. There is an opportunity for us to have some flexibility and some creativity around this. I can tell you that if we had gone out with a printed document that said, "Here you go, implement this," we would be hearing howls from the community: "Wait a second; you haven't considered our needs, and you haven't considered our reality."
Despite the fact that we haven't got the cookie cutter ready to stamp out these councils all around the province, we do have a lot of the answers. If the communities interested in this approach will work with the executive directors who have been established by the ministry to assist them in working their way through this process, they can get the answers quite readily. There are 22 health units within the province, and those are the initial boundaries for the formation of the regional health boards. But we respect the fact that places like the Sunshine Coast or Fort Nelson, which may be part of a larger region, don't really feel like they're part of that larger region, and so we're willing to work with those communities to see if we can't move those boundaries to reflect the realities of the community. We're starting with the 22 health unit boundaries. If you don't have a map of those boundaries, I'd be happy to share them with you, and we will make adjustments as necessary to reflect the needs of the communities.
We are in the process of putting together a community workbook that will not tell communities what a community health board should look like and be like and all of the details of putting it together, but will give them guidance and advice to sort it out for themselves. That community workbook has been developed in consultation with some of the people who are very interested in how we go about this job. The associated union boards of health and the BCHA made it very clear they didn't want us to go out the door and say: "This is how you do it." They wanted to have some input first, so we are trying to work through our ideas with them. But those guide individuals who will be able to go out there and work with communities and help them sort their way through this are, or soon will be, available.
As we go through the transition period, the communities will start to develop a health council and learn some things about how best to integrate the boards that are already there and how to overcome those hurdles. We will then be able to take that information, document it and provide it to other communities still struggling with the concept, still somewhat shy of getting into the concept, or maybe too busy fighting with one another to be able to enter into the concept, which unfortunately still happens in too many places in this province. But there certainly is guidance; there is not prescription. I think that at this
[ Page 5831 ]
point if we were to have a prescribed, detailed program that gave no flexibility to communities, we would hamstring all of the ideas we're trying to put in place.
I'm not even going to comment on your rewording of the remarks you've attributed to me, but I will say that in 1996, when these boards are in place, they will be two-thirds elected by people in this province.
The Chair: Before I recognize the hon. member, I'd just like to remind members that when remarks are addressed through the Chair, it makes them easier for the members to hear.
L. Fox: I thought I was addressing all my remarks through the Chair, as I'm sure the minister was.
I'll make a couple of observations, through you, Mr. Chair, to the minister. One really good quote, which I think suggests it more accurately than the last one, from the Rafe Mair show -- and we all know how fair that program is -- is: "Democratic society hasn't really worked particularly well for us in the past."
What I'm really amazed at is that this minister talks about the consultative process when in fact we've seen the history of the lack of it on her part in the last two years with respect to the doctors; and the closing of Shaughnessy Hospital, where she openly suggested Friday morning that in fact any consultation would have been a sham. The minister makes a point that the royal commission suggested all these changes. I concur; they did. They suggested how to develop new directions in health care. They also suggested another thing, the structuring of a community health council to develop and implement a strategy for those kinds of things.
Hon. Chair, another issue here is that clearly you cannot allow 22 regional boards to do their own thing. There have to be some general rules and concepts as to what we're trying to achieve. I'm very confident that had the minister decided that she was going to increase the health care budget for a couple of years, develop four or five pilot projects with the involvement of people from rural, urban and semiurban areas within the province and come up with a workable model that could be refined to meet regional needs, it would have been possible to develop a program to look after the displaced people within the acute care system. We wouldn't have had this huge sellout by the Finance minister to the health care unions' leadership. We wouldn't have had to give away those kinds of employment guarantees, because we would have dealt with this in a very coordinated and communicative kind of way. We would have dealt with all the stakeholders involved to achieve these things for the interests of all British Columbians.
I just had to stand up and defend what I said earlier and show amazement with regard to the consultation and how that should work, when in fact we have seen no leadership from that minister with respect to consultation in the last two years.
Hon. E. Cull: If that member had a look back at the ministers who have been sitting in the Minister of Health's chair for the last 17 or 18 years, he would find that in the last 18 months there has probably been more consultation done by this minister and this ministry than was done over the sum total of those ministers' years. The process that we have put in place and that we have for the New Directions for health care is one that's inclusive and involves many stakeholders who couldn't even get through the door when the former government was in power. The process that you're asking for -- of sorting out what the health council should do, how they should do it and who should be there -- is the process that we're engaged in right now. At some point you have to start that process. As you get into that process, there's a lot of discussion about how it goes and how it doesn't go. That's where we are. If you're suggesting that we should have had a group of civil servants sitting in the Richard Blanshard Building sorting out all of these answers so that we could have come out in February with the announcement that this was what it was going to be, I don't accept that.
You talked also about a massive redistribution of funding to the community health sector, and I just wanted to check my figures before I came back to you on that. The shift this year has been less than 1 percent, and I wouldn't call that massive. In fact, I think it should be more than it is, but that's all we could do without disrupting the system more.
L. Reid: In response to your comment on more consultation happening in the last 18 months, this is not a drive to mediocrity. What we have seen in the last 18 months in terms of consultation is certainly not something we're going to hold up and applaud. My hon. colleague is absolutely correct: there has not been consultation around the doctors' question, and there has not been consultation around the Shaughnessy Hospital question. If that is something you're holding up as a benchmark to say that you are somehow doing better than a previous administration, that's completely unworkable for the opposition. That is not a point we can accept today.
In terms of where I wish to proceed in the next 20 or 30 minutes, I want to pay particular attention to Review of Diagnostic Laboratory Services from the Department of Health, Province of Saskatchewan, October 1992. This report was prepared by Dr. Miles Kilshaw for the Saskatchewan government. I believe we need to touch on a number of issues in this report, because I believe tremendous clarification is required before we can proceed.
My reading of this report, and certainly the reading of many individuals, suggests that many of the conclusions are based on inadequate or inaccurate information. We are essentially taking the position that the Kilshaw recommendation means the death of private labs in Saskatchewan, and we believe that similar recommendations would mean the death of private community labs in British Columbia. There is tremendous impact around this question, and it has tremendous impact in terms of a number of examples. Let me just begin with two. In understanding the impact of the report based on the province of Saskatchewan.... We're of the belief that a current report is underway in the province of British Columbia
[ Page 5832 ]
as we speak. They comment on diagnostic services being no longer available close to a doctor's office. They give the example of at least a half-hour to an hour's drive to the hospitals for tests after visiting your doctor and possible lineups to register at the local hospital. This is the direction of the report in Saskatchewan. Would you comment on the status of the report currently underway in British Columbia?
Hon. E. Cull: The report underway in British Columbia is composed of a team of individuals who have been assigned the responsibility of reviewing diagnostic services. They are in the information-collection phase right now. They are conducting interviews with interested people who have something to say or who have some stake in diagnostic services in this province. I'm expecting the report later this year. I'll get the termination date for you; I think it's September of this year.
L. Reid: In terms of the impact of this particular report, the opposition does have significant concerns, and we look at situations around the lineups for lab and x-ray services at hospitals. In-patients will get priority because they are sicker. There are issues surrounding some of these comments that must be explored by this minister, like the wasted time in getting the tests done -- at least one-half to a whole day, compared to the present time allotment of 30 or 40 minutes. We are making the comparison between what is going to be the impact in Saskatchewan, a province that moves away from community-based laboratory testing to a hospital model.... We are all well acquainted with lineups in terms of acquiring a service in a hospital. Whether you move through a clinical model in the hospital or an emergency department, the waits are not of a minimal variety, shall we say.
We also believe that the report is going to touch on longer waits to receive test results from hospitals, and we're not sure that that's in the best interests of patient care in this province. And we are certainly looking at some of the results out today that say that a number of our community labs can make a report within 28 to 48 hours. That's superb service, and I don't believe it's something we wish to move away from. We also take a look at continuing impact and delay in receiving appropriate medical care. We believe that to move away from the current system will only introduce delays into the system. No availability of in-home lab services will mean patients will have to stay longer in acute care beds until laboratory tests can be done in a hospital.
If indeed these recommendations come to pass in Saskatchewan, they will have the impact that I have just addressed. If similar recommendations are reached in British Columbia, we can only assume that the best services are not going to be provided and that the patient is once again not going to be considered a priority in this province. To introduce any change in the system that guarantees a longer wait is not a valuable exercise, in the eyes of the official opposition, and is one we would ask the minister to address. Can she guarantee that none of these possible recommendations will create added hardship for the patients in British Columbia?
[4:15]
Hon. E. Cull: I'm going to seek some direction here, because I don't believe it is appropriate for me to be answering questions about a diagnostic review in Saskatchewan. I don't see any similarity between what the Saskatchewan government is doing and what the government of British Columbia is doing with respect to health care services. We haven't cut budgets overall by 3 percent, we are not proposing to close 51 hospitals and we're not increasing the Pharmacare deductible to $1,700 for the average family. All of those directions have been pursued in Saskatchewan because of their unique budget situation and, presumably, the circ*mstances of their health care system.
The diagnostic services review team consists not only of Dr. Miles Kilshaw, who was involved in the Saskatchewan study, but also Sheila Gallagher, who is with the Attorney General in British Columbia; Deborah Shera, who is with our Medical Services Commission; Dr. Gary Tompkins, head of the department of economics at the University of Regina; Dr. Keith Walker, chief of the department of laboratory medicine of the Greater Victoria Hospital Society, but very recently from the University of Alberta, where he was head of medicine; and Dr. David Hynes, chief of the department of diagnostic imaging at St. Joseph's Health Centre in Toronto, Ontario.
I know there has been a lot of speculation about the Saskatchewan report. But the very preliminary information that I have from this diagnostic team is that the situation here is different, and I think we can expect results and recommendations consistent with the needs of British Columbia and consistent with the circ*mstances in British Columbia. Interviews with people involved in diagnostic services are underway. Until we've collected all the information, I think it's quite pointless to speculate about whether the Saskatchewan report will look anything at all like the one in British Columbia.
L. Reid: Private labs in all communities throughout British Columbia currently provide services to over 10,000 patients daily -- two million patients per year. Mobile lab services provide services to another 50,000 patients in their own homes or in extended or nursing care situations. This service not only helps patients stay in their homes, but also allows for early discharge from hospital. Our labs allow and help transport over one million patient samples to public facilities.
The Cancer Control Agency, Red Cross and provincial laboratories provide medical pathology and technical support to remote centres in British Columbia, including remote hospitals which do not have pathologists on site, and provide employment to B.C. residents in their own communities. Eighty percent of employees in lab and x-ray facilities are female.
My point in making the case for the current status of British Columbia lab technology is that it allows for greater clarification for this Minister of Health. Based on the Saskatchewan example, impacts will come to
[ Page 5833 ]
bear on this particular state of affairs in community lab work.
I appreciate the minister giving me the names of the individuals who are involved, but Dr. Kilshaw is neither a pathologist nor a radiologist. Again, my comment reflects on process. The diagnostic groups within our province were not asked to participate in any kind of discussion. We have some difficulty with the Kilshaw recommendation being transplanted, out of the blue, from Saskatchewan to British Columbia. There seems to be less opportunity for British Columbia laboratory technologists to be involved in this process. I did note the names you provided, regarding their backgrounds, etc., and it pleases me greatly that there are some economic folks involved in that process.
With respect to the implementation of the recommendations and the impact this will have in Saskatchewan, there will be carryover in British Columbia if the individuals who provide those services are not consulted. This is another sham with a fraudulent consultation process in place, because it simply has not occurred. If you can clarify in any way, shape or form why the medical community was excluded from this process -- it is ongoing without their involvement -- I would welcome your comments.
Hon. E. Cull: Let's clarify this, because we do have three medical doctors involved in a six-person review team. The medical community has not been excluded from the review team.
In addition, the lists of individuals or groups who are going to be contacted by the review team include just about everyone that you can imagine in the medical community who might have something to say on this, including all hospital administrators, the College of Physicians and Surgeons, the University of British Columbia faculty of medicine, the B.C. Health Association, the B.C. Medical Association, the B.C. Association of Laboratory Physicians, the B.C. association of radiologists, the B.C. association of cardiologists, the Health Sciences Association of B.C., the provincial laboratory, the Health Labour Relations Association, the Council of University Teaching Hospitals, representatives of privately owned and operated diagnostic facilities and anyone else who feels that they have something to contribute to this particular review.
The specific question that I believe the member is getting at is: why was the BCMA not asked to appoint members to sit on this review team? The BCMA wrote to us as soon as we advised them that the review team had been struck and said they wanted to have three members on the team and approve the terms of reference before they would participate.
One of the difficulties that you have when you get into the health field, as you can see from this list, is that if I ask three members of the BCMA to sit on the review team, I should ask three members of the Health Sciences Association, whose members are the workers who provide the services in all of those labs and carry out the lab tests and much of the work that has been done. I think they have an equal right to sit at the table. I probably should ask the hospitals who operate the public labs to have three people -- so we're up to nine now. We certainly could not offend the private labs by not having their representatives on there -- we're up to 12. You start to look at the various bodies that have a legitimate right to have input in this study and if you put them all on the review team, we're going to have to hold the meetings in this chamber just to have enough seats for everyone to sit around one area together. It's not practical.
I certainly learned that the hard way, I will confess, when we put together the minister's advisory committee on the royal commission. Despite the fact that we had four doctors, five nurses and hospital and community people there, there was always one group that felt it was just as legitimate as someone else at the table and really should have been invited to be there. We made a cut off at 26, because we didn't think a group much larger than that would be able to function effectively.
Instead of having a huge, unwieldy and unworkable review team, we have picked a team of people who have different expertise, are recognized in their field for the work that they have done and have said they will consult widely with all of the bodies that have an interest in this area. Indeed we have invited them to meet with us to share information to make representation, and they are.
We've gone one step further, because we are concerned with the points that have been raised by the B.C. Medical Association. We have suggested that rather than having the review team be this large 20- or 30-person body, we will create an advisory body that can review the draft results as they're coming along to make sure that the review team is reflecting the wishes of the organizations represented on the advisory body.
I'll just say a word about private labs. As I've said, we have some very preliminary information coming in right now. But from what we learn, private labs are very efficient and effective in this province, and I haven't seen anything yet to indicate that they will not continue to have an effective role in diagnostic treatment in British Columbia.
L. Reid: Dr. Kilshaw is not a pathologist or radiologist. Can you perhaps expand on the qualifications that allowed you to select him for this role?
Hon. E. Cull: I'm just looking for it here. I was going to ask her to go on, but I've just found it. Dr. Miles Kilshaw is a respiratory internist and medical administrator. He has wide clinical experience, as well as administrative experience in hospitals and with the Ministry of Health. He has recently completed the diagnostic laboratory services review in Saskatchewan, as you've already noted, and has served on many advisory committees and several boards in the health care field.
L. Reid: You made mention that a consultation process is going to commence with a group, such as the B.C. College of Physicians and Surgeons. I'm not convinced that all the parties you mentioned are currently part of that consultation process. Could you
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give a time line as to when it was initiated and when it intends to conclude its review?
Hon. E. Cull: The list of bodies that I have indicated have all been invited to participate. The committee has started its consultation. In fact, I think there's been some travelling to different centres in the province -- extensive travelling, I'm being advised by the chair of the Medical Services Commission. As of April 16 of this year, they had consulted with almost 200 individuals, including 72 physicians from 13 hospitals and several health care-related organizations. However, as I said, they are in the beginning phases of their work, and I'm sure they will make many more consultations and have much more discussion before they start putting pen to paper and writing out recommendations.
L. Reid: Will the committee's report, hon. minister, be submitted on time, or do you anticipate it coming in earlier than scheduled?
Hon. E. Cull: There will be an interim report -- I'm just learning from the chair -- that should be on time, and it's expected in early July.
L. Reid: We are basically discussing a report that looks at a decrease in service delivery in Saskatchewan. Certainly the minister herself has made reference many times today to the 51 hospital closures in that province. There will also be 20 closures of Saskatchewan community hospital laboratories. Given that, do you have plans to decrease the number of community laboratories in place in British Columbia? You made mention of maintaining the role, maintaining the effectiveness, and certainly I support that. Is it the intent of securing this report to decrease the number of community laboratories currently operational in British Columbia?
Hon. E. Cull: It's not the intent of the report at all.
L. Reid: Could the minister perhaps expand on the intention of this report? We have discussed earlier a model to streamline the process and to understand more fully whether or not there's duplication in the system. When the minister sought out Dr. Kilshaw to produce this report, what was the mandate given to him by yourself?
Hon. E. Cull: The terms of reference are to review diagnostic services in the province and recommend changes aimed at improving the cost effectiveness and the quality of the services. The scope of the work involves all diagnostic services, including diagnostic laboratories, medical imaging services, electro-diagnostic services and pulmonary function services, all as part of the review. The terms of reference go on for several pages, and I don't think I should take the time to read them into the record right now. But I would be happy to share them with the member if she hasn't already seen them.
L. Reid: I would appreciate the terms of reference, hon. minister.
I go back, in terms of requiring clarification, to the issues of homebound individuals, people in the communities, because I think there's a definite connection between the shift to community care and those folks who would require some kind of laboratory service in their own homes. If indeed the intent is to maintain community laboratories, we can only assume that the individuals who require those kinds of laboratory services in their own homes will be able to secure them over time.
Hon. E. Cull: I'm going to have to ask the member to repeat that -- I'm sure I heard her say it, I was just checking with my staff person here -- about laboratory services in your own home. You mean in your home community, I'm assuming, not in your own home, or we're talking about something that I'm not familiar with.
L. Reid: There are currently in place in British Columbia services for the homebound -- i.e., blood work, etc. -- that you can have done in your own home. I'm not anticipating any change in that; I'm wondering if the minister is. It seems to me that community laboratories, which provide services to long term care facilities, provide basic diagnostic workups in an individual's home. It's a service that we would like to promote in terms of shifting to community care. Correct or otherwise?
Hon. E. Cull: It's my understanding that it's just the blood or other samples that are required for the diagnostic testing that are taken in the home, but the testing isn't done in the home.
[4:30]
L. Reid: The minister is quite correct. We are talking about home visits to be involved in laboratory work at some point, wherever it begins in the process.
Is it the intention of the minister, in keeping with the royal commission Closer to Home, to continue that kind of service delivery, if indeed we wish to have people receiving medical care in their own home?
Hon. E. Cull: Clearly our intent is to continue to expand services that are available in people's own homes, but unless you have shifted off the topic of diagnostic services entirely, there is no connection between the diagnostic review and the home nursing services or other services that are available in the ministry. We are not intending, through the review of the diagnostic services, to impact on the taking of the test, whether they take place in doctors' offices or by nurses in people's homes, or where a community nurse and long term care facilities were indeed in the hospital. Those services continue, and we would, as part of our overall efforts to expand community-based services, be enhancing those as part of a larger package of services that require enhancement.
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L. Reid: I believe the minister and I are in agreement that collection services will continue to occur in individual homes and in long term extended care facilities in this province. My question refers specifically to who will be making those collections of whatever sample it happens to be. Are we looking at that role being adopted by the new community employees, the ones that were advertised for to encourage more people to work in the community care sector in British Columbia, or will those collections still be taken by medical laboratory technologists?
Hon. E. Cull: I guess we're into an area here where I don't have as much information as the member who is questioning me on it. But if there are laboratory technologists going into people's homes collecting samples, as opposed to community health nurses, again, I don't see any intention to change that. My understanding is that the vast majority of those tests are in fact collected by physicians, community health nurses and others who are providing home care, not specialty diagnostic technicians.
L. Reid: There seems to be some discussion around the venture 2100 model. Is there any connection between the ministry's venture program and where we're going in terms of community care facilities?
Hon. E. Cull: The member is going to have to help me. What is venture 2100?
L. Reid: Well, I was hoping that the minister would know what was referred to.
We will shift for a moment into basically a discussion of negotiated settlements in British Columbia, particularly how it refers to the B.C. Medical Association. It's my understanding that unless a new agreement is reached and in place, the existing conditions are still in effect. If that's not the case, I certainly would wish to be more involved in the discussion, because there seems to be tremendous confusion around the question. The question pertains specifically to medical protection for physicians in the province -- i.e., insurance -- and refers to the educational components that the physicians in this province have funded over time.
If the existence of a new agreement does not allow discussion of those items, I'd be interested in knowing that. But my understanding is that with any negotiated settlement, the old conditions still apply in the absence of a new agreement. So it seems to me that the two issues currently in discussion between the British Columbia Medical Association and the B.C. Medical Services Commission leave tremendous room for uncertainty.
I'm interested in a policy statement; I'm interested in a format for this discussion. Let's begin with the first question: do negotiated settlements carry on until the next negotiated settlement is in place?
Hon. E. Cull: Under the terms of the newly adopted labour code, I believe that is the situation, in that when there is a certification drive underway, benefits cannot be changed. I'm sorry, I'm not familiar enough with all the sections of the labour code to be able to quote those to the member, but I believe that also applies during negotiations when a settlement has expired.
L. Reid: The minister has raised two interesting points. The master agreement between the province of British Columbia and the B.C. Medical Association has not expired. I believe that the master agreement is still in place; in fact, I would submit to the minister that that agreement does allow existing benefits to be carried forward. Is that not the case?
Hon. E. Cull: Even the BCMA acknowledges that the agreement has expired. The master agreement was wrapped into the working agreement that expired on March 31, 1992, and in our latest discussions with the BCMA they have accepted that as well.
L. Reid: The clarification that is still required.... Certainly I'm taking issue with the minister's comment on certification. Any labour group in this province that wishes to be certified does not give up what has been previously negotiated. That is absolutely true; that is a true statement.
Hon. minister, I will be happy to read into the record correspondence between the Medical Services Commission and the British Columbia Medical Association, because I believe there are issues that need to be addressed today. The issue is whether items and conditions under a previously negotiated contract are carried forward in the absence of a new contract. I believe that is correct. I would welcome your comments.
Hon. E. Cull: The correspondence which the member refers to.... She's a little out of date with the to and fro between the BCMA and Medical Services Commission chair on this one. But if we go back to the circ*mstances around the negotiations that were broken off by the BCMA prior to March 30 -- which I'll remind the member was the day the provincial budget was introduced in the Legislature -- we shared with the BCMA the full information around the fee-for-service budget for physicians this year. That budget shows very clearly $23.9 million for three benefit packages: continuing medical education, liability insurance and disability insurance. That is broken out in the budget calculations that were circulated to the BCMA and discussed with them at length in person by my staff. It was also included in material released publicly with respect to the budget this year so that anyone could see the makeup of this year's fee-for-service budget.
Subsequent to the BCMA breaking off negotiations, they wrote to the chair of the Medical Services Commission asking for clarification on those three separate benefit packages. A number of pieces of correspondence went back and forth. What confuses the issue is that the BCMA also had an offer.... We had been exchanging counterproposals in our negotiations between December and the breaking-off of negotiations in March. The BCMA's last request for their benefit
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package was not the $23.9 million that we had put on the table or the amount we have shown in the budget. Indeed, it was an amount somewhere around $27 million. I don't remember the exact number, but it was approximately $4 million higher this year and approximately $6 million higher next year.
All these things are negotiable, and in any collective bargaining there is always the trade-off in the monetary package between benefits and wages or, in the case of the BCMA, between fees and benefits. That had been a very important part of our overall discussions with them right from March 26 last year. There would have to be some give and take between benefits and fees -- that we'd be happy to increase fees but there would be a corresponding impact on benefits. There was certainly some relationship between the two. It was impossible to be able to confirm to the BCMA that they would be receiving the amount of money they had asked for in terms of benefits.
Subsequent to those letters being exchanged, the chair of the Medical Services Commission has again met with the BCMA, has clarified what money will be available this year and how the BCMA can access that money. I believe they've indicated to her that they will be taking the appropriate steps to access the money that is available in this year's budget.
L. Reid: For the member's information, the two benefits we're referring to are the medical education allowance, which was negotiated some 19 years ago, and the malpractice insurance rebate program, in force since 1985. The education allowance of $2,000 a year contributes to doctors' educational updating, while the insurance benefit pays for the doctors' malpractice insurance coverage. For obstetricians, neurosurgeons, heart surgeons and orthopedic surgeons this amounts to a loss of more than $16,000 a year. That is the current situation.
If there is a letter more recent than April 23, I would welcome it being entered into the record today. A letter received from Gillian Wallace, chair of the Medical Services Commission, and directed to Dr. Norm Finlayson:
"This is further to our conversation in which you sought clarification as to whether the Medical Services Commission would continue to fund the continuing medical education fund. As you are aware, the Medical Services Commission was willing, as part of the offer submitted to the British Columbia Medical Association in December 1992 and March 1993, to continue to fund the continuing medical education fund. However, in the absence of an agreement between the British Columbia Medical Association and the Medical Services Commission, the commission cannot commit to funding this benefit program for the 1993-94 fiscal year. Yours truly, G.P. Wallace."
If that is not the current state of the art, I would welcome your comments on the record.
Hon. E. Cull: If we go back and look at Hansard for the answer I gave immediately prior to the member reading that letter, she'll see that my statement of what the BCMA now understands to be the situation, what they have to do to apply for these benefits, and what information they need to give us is on the record. They also understand, though, that the benefits they originally asked for in their February offer to us are still subject to negotiation. There is a subsequent letter to the one that you have read out, dated April 29. There's another letter from the BCMA dated May 3, and I'm sure Norm Finlayson would be happy to give you those letters as well.
L. Reid: Hon. minister, I do recall your prior comments. This, however, is a New Democratic government in B.C. You are now suggesting that they can make application for previously negotiated benefits. This is collective bargaining, not collective begging. At the end of the day, the very first question I posed to you was whether or not existing items in contract stood in effect pending the next contract coming into force. I await an answer.
Hon. E. Cull: The BCMA master agreement and working agreement are not covered by the labour code and are not covered by the laws that you're indicating to us. The BCMA suggested in their press release that they would be covered because there was a "certification drive underway." They are not, in fact, even covered under that provision, because when the letters were being exchanged there was no certification drive underway. But there's not much point in arguing about the legalities of it.
[4:45]
Yes, the benefit package that has been there for the last number of years will continue to be there. The BCMA has known this since the middle of March, when we shared the budget information with them. Every year they have to apply for these benefits. They're not just sent in the mail on April 1 of the fiscal year. There is a requirement that documentation be received for some of the benefits because they're paid out as the amounts are calculated. It's not as simple as putting a cheque for $23.9 million in the mail. There are accounting procedures to ensure that the money is delivered in the fashion that it's supposed to be. The BCMA has been advised that there is nothing different this year from last year. They can continue to access that money as they have accessed it in the past.
L. Reid: For my clarification, is the B.C. Medical Association master agreement in effect today?
Hon. E. Cull: No.
L. Reid: In terms of Bill 84, the Labour Relations Code, I believe that no matter which group is seeking certification in the province of B.C., the Labour Relations Code does not permit benefits to be removed. Is that not your understanding?
Hon. E. Cull: One, benefits have not been removed. Two, at the date that the BCMA alleged benefits had been removed -- in fact, they had not been removed -- there was no certification drive underway. Had the benefits been removed -- and I repeat that they have not been removed -- the Labour Code, which
[ Page 5837 ]
doesn't apply -- but had it applied -- would not have been violated.
L. Reid: So your comment today is that the package for education and the package for malpractice insurance are still in place and will continue to be funded under the Medical Services Commission.
Hon. E. Cull: I was nodding at the member. Yes.
L. Reid: In terms of ongoing negotiation with the Medical Services Commission, you have said over time that the budget of the Medical Services Commission was up this year. In fact, they underspent by $55 million last year, so the increase doesn't return them to where they were. Would you be prepared to comment on why or how the expenditure was $55 million less over the previous year?
Hon. E. Cull: I think the fund was underspent by $55 million because of prudent fiscal management on the part of this government. I will give some credit to the physicians of the province, who, as the gatekeepers to medical services, obviously had a look at how they were practising medicine and changed some of the ways they were going about it, and some credit also to the patients, who I think have had their awareness of the costs of medical services raised over the last year.
Last year the budget for medical services was $1.271 billion. This year it is $1.291 billion. There is an increase of $20 million in the fee-for-service budget for physicians. That amount is calculated, though, by taking into consideration that the budget was underspent last year by $55 million. It is simply commonsense financial management to start with the true base before you start adding funding to reflect population, inflation or negotiated settlements. That's indeed what we've done. That's what we did last year. We took the true base of expenditure this year and added the benefit package and the assumptions about the benefits that have not yet been concluded in negotiations but which we have on the table anyway in order to honour the amounts that we have offered to them. They are part of that budget. In addition, there is the $15 million reserve fund that was established to deal with increases in utilization that were not anticipated in the setting of the budget.
L. Reid: In terms of how to account for that $55 million, it seems to me there were three factors. One, doctors closed their offices. Two, the HEU dispute resulted in various hospital closures around this province. And three, in terms of utilization patterns, I would concur with you that the BCMA did practise very prudently in terms of reducing utilization. The other two factors did in fact, I believe, result in the reduction of $55 million from the Medical Services Commission budget. Tying this to the current HLRA agreement, which will guarantee no labour disruption, we are looking at an anomaly. We will not be able to anticipate future reductions in the Medical Services Commission budget. In fact, I would submit today that this is not a reasonable basis on which to take a reduction in that budget, because there were factors beyond the control of this minister, quite frankly.
I would also submit for the record today that the majority of the reduction was the result of a labour dispute, and if that is not going to be a possibility, if we are guarding against this under the health labour relations accord, I believe we need to be more honest in our assessment of the current situation and fund the Medical Services Commission to a reasonable level. My take on your $55 million, based on what you anticipate to be reduced utilization, is that it's simply the best guess. Without the actual numbers coming in, you are basing it on projections of possible expenditure. I would ask that the minister provide some verification of these numbers, because I'm not clear that the public at large can understand this particular move unless they are provided with the data.
Hon. E. Cull: Well, I would like to note also for the record, while we're talking about the hard cap, that other provinces have this year started to follow suit with what has been going on here in British Columbia and are moving even further into the area of capping medical services budgets.
With respect to the impact of the hospital strike last year, there was an impact, but it was not a much larger impact than what was happening throughout the year. In fact, we are able to track expenditures in the Medical Services Plan on a monthly basis so we can keep that rolling along and see what's happening in terms of the expenditure of the Medical Services Plan budget with respect to our budget. Again, I think that's part of the prudent fiscal management that we have put in place under Bill 71, which says, "Let's have a budget; let's set it; and let's monitor how we're spending it month by month," in the same way that, presumably, anyone would monitor their own family budget as they proceeded through the month, to make sure they didn't run out of money by the time they got to the end of the month.
We have been able to monitor the budget every month. Last year the fund was underexpended, and while there was certainly a larger underexpenditure in April, it settled down quite quickly after that and returned to a fairly stable underexpenditure that was consistent throughout the entire year and, indeed, continues this year. And that is how we are able to monitor whether the amount of money that we have is going to be adequate to the end of the year on a monthly basis: we match up the payments to the amount of money in the budget and project it through to the end of the year. Right now, according to the chair of the Medical Services Commission, we look like we're going to be again coming in very close to a balanced budget at the end of this fiscal year.
L. Reid: I appreciate the minister's comments, and I would welcome the receipt of the documentation she was just referring to. Certainly verifying that information will allow us to render an opinion on it. As it stands, it's somewhat difficult.
In terms of an arbitration process, certainly the minister has taken tremendous pride in the HLRA
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accord in terms of allowing for arbitration, allowing for mediation, allowing for some framework agreement to be in place. Based on earlier comments today, it seems that this minister does believe in some kind of dispute resolution mechanism. My question has to be: why, if it's an appropriate process for the HLRA and the existing health unions in this province, is it not an appropriate process for the B.C. Medical Association, for physicians in this province? For the record, I have heard the minister respond every single time to the question and say that they don't have the opportunity to set the dollar value. Please know that that answer is no more acceptable today than it was for the last number of months. The issue is process. The issue is whether or not you are prepared to put in place a process for all British Columbians so that they can all take advantage of a dispute resolution mechanism -- mediation, arbitration, and a framework process. Will you be putting that in place for physicians in this province?
Hon. E. Cull: In December we provided a comprehensive offer to the BCMA which included new words for a master agreement, a working agreement and the cost-shared registered retirement savings plan. In February the BCMA provided a counterproposal, with language that they wanted to see with respect to mediation and conciliation in the working agreement. We then sent a counterproposal back to them on March 5 which included all of the language that the BCMA wanted. It's in article 9 of the current offer that is in the hands of the BCMA. It involves a number of clauses that allow the appointment of a conciliator and a mediator and the resolution of the dispute through to a final and binding decision on the part of the Medical Services Commission.
L. Reid: Did I hear the minister say that there will be arbitration in place for physicians in this province, or simply conciliation?
Hon. E. Cull: I said that we accepted the language that was put to us by the BCMA for this article. It includes conciliation, mediation and a final and binding decision by the tripartite Medical Services Commission. I repeat that this is the language that the BCMA tabled on February 23 and we've accepted in our latest offer to them.
L. Reid: In the April 26 estimates debate the minister said she was amused to hear us quote the conciliatory words in the BCMA proposal, because the language was exactly the same as in the government proposal. If this is truly the case, hon. minister, why is this dispute not resolved? Why has this proposal not been accepted?
Hon. E. Cull: The words you were quoting that I was amused about were the input to the budget, which has been our proposal all along. That's in article 8, and I'll refer you to that if you need to have a look at that later. But I've been quite aware of the date and also of the debate that we were in at that point.
Why has this not been resolved? It has not been resolved because despite the fact that: (a) we have offered the medical profession in this province cogovernance of the Medical Services Plan and input into the budget-setting process through a series of committees that they have suggested and we have incorporated into our budgeting time lines; (b) the Medical Services Commission gets to make a publicly recommended budget which includes their defence of why the government should fund it at the level that it should be funded; (c) we have offered mediation and conciliation on fees and benefits and an inflationary uplift this year -- which is entirely in keeping with other groups that are negotiating settlements right now -- and a cost-shared registered retirement savings plan -- again in keeping with other groups in the province....
Interjection.
Hon. E. Cull: The member says we took it away from them in the first place. But we gave back to the people of this province the right to ensure that we weren't 100 percent funding that registered retirement savings plan. It now requires matching contributions that have to be locked in and go into an RRSP in the first place. The public now has some guarantee that this money is indeed going where it's supposed to be going. We've offered them almost $24 million in benefits and a whole series of committees and processes around consultation on change in the health care system.
Despite all of that and the best efforts of our negotiating team, the BCMA is still unwilling to accept the fact that the budget will be established by the province through this process we're engaged in right now and that it is the right of the legislators in this House to establish that budget. It is the right of the government to determine what the relative allocation will be between parts of the health care budget. They have countered to us with proposals which are not only unacceptable, but totally unworkable when they call for us to delist services if there is a disagreement between their budget proposal and our budget proposal. This is not if there's a real dispute about the size of the budget, but just if the BCMA says: "We need $1.3 billion, not $1.2 billion." They have suggested and requested that we take services away from the people in this province because they might be right. Had we had the process in place last year which they insist has to be in place before they will come to an agreement with us, instead of being $55 million underspent, we would have been $95 million underspent. While you can say that we weren't particularly accurate in targeting the exact amount that was required, having offered a budget that was $55 million too rich, I can tell you that was certainly a lot more accurate than what the BCMA thought was going to be needed for the fee-for-service budget this year.
[5:00]
L. Reid: Hon. minister, with all due respect, I have seen this movie; I have read this book before. It is still an absolute load of rubbish, because you are still not
[ Page 5839 ]
prepared to address the issue, which is process. This is not about dollars. I'm not all that interested in hearing the same speech again. The question was specifically about mediation and binding arbitration. The question I posed to you was: will you put in place the same package that you've put in place under the HLRA, a process that mirrors the process put in place for theHLRA?
Hon. E. Cull: When they tell you it's not about the money, it's about the money. This is not about process at this point; it is about money. There is process, process, process in the agreements that we have been exchanging with one another. Yes, the accord has arbitration to resolve non-monetary items related to, in one case, what is a comparable job in a comparable region. If the BCMA and the government have disputes about non-monetary items, then I would be quite willing to accept the concept of arbitration on those non-monetary items.
I'm sorry that you've heard this story before, but it doesn't seem to be getting through to some people out there. What we are not willing to send to arbitration is the amount of money that is spent on medical services in this province, because to do that is to walk away from our responsibility as legislators and governors to set the budget for medical services and for other health care services.
L. Reid: Again I have to take issue with your comments, hon. minister. There has not been process in this province. There was no process surrounding Bill 13; there was no process surrounding Bill 14. I take extreme issue with your facts surrounding the pension plan under Bill 14. The original agreement was contributory and was registered. There was absolutely no reason, other than to mislead the public, for you to stand up and suggest it was something other than what it was. That is fact, and that is in debate in this House; it is in Hansard, it is in the Blues. That issue must be addressed today.
The Chair: The member for Burnaby North on a point of order.
B. Jones: I think it is time the member opposite learned that it is not parliamentary to suggest that any member of this House deliberately misled anybody.
The Chair: Did the member intend to suggest that the minister was deliberately misleading the House? I am sure that was not the member's intent.
L. Reid: The point I made in terms of the pension plan was factual, and the point still stands today that that pension plan was contributory and registered. So no, I can not accept the minister's suggestion that somehow there is process, process, process. I've not seen it. I can assure you that I have watched and participated in this debate for many, many months, and there has not been evidence of process. If I may confirm the minister's comment on non-monetary items: she is willing to put in place the process of arbitration for the physicians in this province. If that can be confirmed, we can move on.
Hon. E. Cull: I urge the member to get a copy of the original pension plan negotiated for doctors by the former government, because it did not require physicians to make a matching contribution. The BCMA has always held that because they had the room under the federal tax law to make a larger contribution than the contribution they would be getting from the taxpayers of this province, that of course it would be matched. But I have to remind the member that part of the impassioned rationale we get from doctors about why they need a pension plan is that they have not been able to set aside money in RRSPs. So it is very likely that without there being a specific legal requirement in the agreement -- as there was not in the former agreement -- that many doctors would not match that agreement and would not be able to make additional contributions to their RRSPs, despite the fact they may have had the tax room to do so.
We have changed it so that the money has to be matched dollar for dollar, so that the taxpayers will pay for only 50 percent of the pension money set aside for physicians. You will also note, when you have a look at that agreement, that there was no requirement that it go into a registered retirement savings plan, although there were a number of details that were still to be worked out. We have resolved those details so that there is a cost-shared pension plan offer in place with the physicians which requires them to match that $25 million as the money goes in and locks it into pension funds so it doesn't come out at some future date for some other reason.
L. Reid: It seems to me that under the HLRA there are still details to be worked out as well. You did not come back to the Legislature and deem that agreement not to have ever existed. There's limited rationale for that comment. In terms of my question, what I ask you to confirm for today is: are you prepared to put in place -- under non-monetary items -- an arbitration situation for physicians in this province similar to the HLRA accord?
Hon. E. Cull: If the physicians in this province are interested in talking to the government about a managed reduction of physicians in the order of 10 percent, of a way of making sure we can move those physicians to the parts of the province that are seriously underrepresented with respect to medical care -- in exchange for the kind of arrangement we have with hospital employees -- I would be delighted to sit down and work it out with them.
L. Reid: If the physicians in this province need to make some kind of an exchange to get fair treatment equal to other labour groups in this province, hon. minister, it is another example of no due process on behalf of this government.
H. De Jong: I noticed a little while ago that you were addressing the critic on the opposition side as the
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minister, and having just come from the other committee a little while ago, I was asking the minister some difficult questions and he was questioning me as though I was the minister in order to provide the answers. It's an interesting scenario today. Anyway, I've sat in that chair many times too and I share the confusion that the Chairman can get into sometimes, and I've certainly participated in that as well.
However, to get to the questions that I want to ask and to get away from the doctors -- who are, in my opinion, doing a tremendous job for the medical system in British Columbia -- I think this is probably one of the most difficult ministries -- as I see it, anyway -- for any minister to perform and to keep a lid on the expenditures as well as to be able to provide the maximum service to the public. What we have here is a system that is run socially at the top, you might say. The money is being provided through the public purse. The service is provided, to a large degree, by private entrepreneurs and people who work within the system. They all have their ambitions, and certainly they deserve their pay.
However, I want to get to one of my other question areas. I understand there is quite a variety of levels of inspection, or perhaps even the absence of inspection, of meat at abattoirs within the province. I know that the operators down in the lower mainland are complaining. They say: "Well, what is rejected here may well pass if it's slaughtered on the other side of Hope, because of the lack of inspection." This issue has come to the forefront recently with the incident in a particular restaurant on the outskirts of Seattle. I'm not sure whether there have ever been incidents directly derived from activities within an abattoir that was not inspected or was not within the inspection area of British Columbia. I would just like to have the minister's comment, because I believe the public of British Columbia understands that all meats are inspected. That is not quite true, and the public should not be of that opinion. Then a further question is: is it fair to apply inspection in one part of the province and not in another?
Hon. E. Cull: As I think the member is aware, the system of meat inspection that we have is inherited from the former government. As you know, it used to be handled by the Ministry of Agriculture up until 1988 and was then assumed by the Ministry of Health.
At the present time, 98 percent of all of the meat sold in British Columbia is inspected, but that does leave 2 percent that is not. Again, I would suggest that having been a member of the former government, the member may have a better insight into why the government of the day chose to set up the regulations this way. The legislation that has been in place for some years is enabling legislation that allows local governments to choose to become a meat inspection area. If they are a meat inspection area, then the Ministry of Health -- as did the Ministry of Agriculture prior to 1988 -- provides meat inspection free of charge to those local governments. As I said, 98 percent of the meat that is sold in the province is inspected, and I'm not aware of any food-borne illness that's been attributed to uninspected meat.
H. De Jong: I'm actually pleased to hear the minister's answer. I suppose the percentage will depend on the number of animals slaughtered east of Hope, the meat from which is consumed in British Columbia.
Another question regards the MSA General Hospital, the hospital within our constituency. A couple of years ago it was already decided that a new hospital would be built. I know the current property where the Ministry of Agriculture offices are situated has been designated -- in fact, has been purchased by the government -- for that particular purpose. The move of the agriculture facility is planned or underway to a different property. But lately I read in the local newspaper that this hospital wouldn't be ready until the year 2000. I think the minister knows very well that the MSA General Hospital is not sufficient today for the existing community, let alone the growth that has occurred over the last five years and which is continuing at a fast rate. I have real concern about the closure of one major hospital and the particular services that were provided there. Some of these services may not necessarily come to the central Fraser Valley, but it wouldn't be a bad idea to have others a little closer to the people, as the minister has indicated would happen. To have a hospital underway for seven years.... It seems a bit odd to me that this cannot be sped up two or three years at least. I'm sure that a lot of planning has already taken place with regard to a new hospital, and surely the ministry must have some models available indicating what is expected within a new hospital, be it 300-bed or 400-bed. Why does it have to take until the year 2000 before that hospital may be ready for community service?
[5:15]
Hon. E. Cull: I'll just point out that the MSA General Hospital has had one of the larger funding increases this year, which reflects the population growth in that area. We're certainly very conscious that the rapidly growing parts of the Fraser Valley do need more acute care hospital services. That's why we have planning on the books for a new 350-bed hospital, although those numbers may change as the planning is finalized and we look at the specific needs of the community when we get to the point of actual planning and construction.
I'm not aware that the hospital is not slated to come on until the year 2000, so I can't confirm that for you. But I can tell you that even if we were to start today, it would probably be at least four years until patients move into the facility, because of the complexities of building, equipping and staffing a hospital. They are just not things that are built quickly, particularly one of that size. The earliest the hospital could come on stream would be 1997. The decisions about when that hospital will be started and when it will be completed will be made in part of the overall planning context that we look at in terms of where the beds are needed in the province, and what the resources of the province and the taxpayers are to fund new acute care hospital beds.
[ Page 5841 ]
We have very clearly indicated that the priority for new beds and new facilities is in the Fraser Valley area and MSA has been identified as one such facility which needs replacing.
H. De Jong: I can appreciate the answer from the minister. I wish I could get a commitment from the minister that she would in fact make sure that that hospital is ready at the earliest possible date, and perhaps even the year 1997. The community has not been properly served by the existing facilities, particularly the shortage of beds and the available operating facilities. It's not just one or two complaints I get about that; there are a number of complaints. I highly respect the administrator's efforts as well as the board's efforts to accommodate the people as best they can. But surely a community growing as fast as Abbotsford and Matsqui combined deserves a good hospital as soon as possible.
Another area I'd like to touch on a little bit.... I talked about this last year as well, but we haven't seen much change in inspections related to sanitary facilities in the farming community.
I will give the minister an example of what's happening out there. It's a family farm in Matsqui Prairie. It's probably been in the family for 60 or more years. The younger farmer's family is growing and he wishes to build a new house, undoubtedly one that's slightly bigger and of a better quality than the house that's there now. Matsqui Prairie had a drainage system installed over the last couple of years through the ARDSA program, so drainage in Matsqui Prairie is far superior to what it has been at any time during the past 60 years. At the present time this farmer is told that he must wait for a whole year before the inspector will approve a new septic system. He'll have to do the testing in relation to that. There is no growth in the family other than that they're getting bigger and older. No additional houses are being placed on the farm. He's going to move the old one off and put the new one on. Surely this is not satisfactory. It's not satisfactory to the farmer who makes the application. It's not satisfactory to me as the representative here of the community. I'm sure, hon. minister, that you must have difficulty with a situation such as this.
Hon. E. Cull: The member and I have had an opportunity to discuss this issue off and on over the last year and a half. It's a very difficult one. I don't have different answers for him than I had at any other time during this year and a half. We have very poor soil conditions and very poor drainage in this area. The responsibility for approving septic tank systems and other sewage disposal systems is ultimately the responsibility of the medical health officer, with the environmental health officers who work in the health units doing the inspections and making decisions on this.
On the one hand, I understand full well the desire of the family to replace that system and build a house, but I also have to respect the fact that approvals made in the past, some of them by political people who overruled medical health officers and others who were trying to make appropriate health and safety decisions, led to some very serious pollution and water contamination problems around this province. I am not willing to interfere with that process. We have to be cognizant of the fact that the water system in this area is extremely fragile. Neighbouring areas are concerned about not only human pollution seeping into the system but potential pollution from farm activity -- nitrate and other pollution.
We really have to be very conscious of what we're doing in terms of approving septic and sewage system developments. There may be alternative methods for disposing of the sewage from the new house that can be worked out with the regional district or the municipality that has jurisdiction. Some municipalities in some jurisdictions do permit holding tanks and pump-and-haul. Those types of arrangements have to be worked out between the municipal authorities and the inspection authorities that approve septic systems.
H. De Jong: I am appalled at the minister's thoughts on this subject. For the minister to think that a farmer who has been on the property for 60 years and never had a problem with the septic tank on that particular property.... For this minister to say in this House that perhaps that farmer should get a holding tank, which he can get through the municipal bylaws that are in place, I think is absolutely shameful. If the minister only knew the cost of operating a holding tank and how tight farming is these days, even though this farm has been in the family for 60 years....
It's about time that this minister and this ministry took note of the festering bureaucracy surrounding this particular issue. It's nothing more than paper shuffling between the various desks and the Ministry of Health. It doesn't help the people in the area. It's not a matter of whether problems could arise with septic systems; it's absolutely nothing but bureaucracy. If this minister wishes to have an improvement or cost-saving within her ministry -- and I can well appreciate that cost-savings are necessary -- then I would suggest that much of this work should be done by private engineers rather than by the bureaucracy now being paid out of the public purse.
Hon. E. Cull: I spent 13 years working in the field of land development and land approvals. I can point out subdivision after subdivision in this province which has had to have extremely expensive remedial work done in either providing proper water systems after wells have been polluted or in having to put in sewage systems after inadequate systems were approved under great political pressure of the day. Those systems have failed and have created a health and pollution problem in those communities.
While I can appreciate that some of the alternatives to a septic field are more expensive, I can tell you that if that community has to replace its water system or has to put in a sewage system eventually, those costs for that farmer or property owner, and for all of the other property owners in that community, will be far greater. I'm very familiar with the alternatives that can be
[ Page 5842 ]
approved in different communities, and many of them are not as quick, as cheap and as easy as septic fields.
Our responsibility in the Ministry of Health has to be public health and safety. If you are asking me to direct the people who work for the Ministry of Health to ignore public health, to ignore what their professional judgment tells them will happen to our public health systems, our water and sewer systems in those communities, so that we can expedite the redevelopment of one particular property owner's home, I think we have to ask ourselves where we draw the line between the needs of the individual and the greater community's needs to have a safe and healthy water system and environment. My responsibility and the responsibility of the medical health officer is for the broader community there, and I expect those people to continue to do their work.
H. De Jong: I'm not sure whether this minister really understands what I'm talking about, because she's talking about a subdivision. I'm not talking about a subdivision; I'm talking about a 100-acre farm here. I know that problems have happened in subdivisions. There was one years ago in our municipality in the Sunvalley Crescent-Duncan Avenue area that should never have been allowed, but that was back in the sixties when there was literally no inspection. But for the minister to compare this to subdivisions -- and I know she's been a town planner in the past, with all respect....
An Hon. Member: Once a town planner, always a town planner.
H. De Jong: Well, that's possible -- maybe experience speaks here. Anyway, the point is that a situation that has existed for 60 years needs renewal, in terms of the septic field and everything else that goes along with it. The bureaucracy is not prepared to allow it to happen within one year, while this system has been in existence for 50 to 60 years already. That is the key, and this is why. The minister's saying that she believes in the professional competence of her staff. How come she does not believe in the professional competence of engineers who work in the same area and the same field and who have the same knowledge, perhaps even better knowledge, of the community than the so-called professional staff the minister has within her ministry? I don't think it is fair for the minister to indicate, or even to state, that she does not trust those in a private engineering business versus those who work in the public sector.
[5:30]
Again, I plead with the minister to take another look at this and see whether the bureaucracy really fulfils the mandate of the Ministry of Health or whether they have a heart for those who have farmed in this province for years and years, with never any problems, but who want a different house and can't have it.
Hon. E. Cull: The problem we face all over the province is that the one person who comes in wanting approval for a sewage system sometimes adds up to many hundreds of people, because everybody wants similar special treatment for their circ*mstances. I was glad to see that the member for Vancouver-Quilchena, who also has experience in these matters in various parts of the province -- 20 years, he said; he's much older than I am -- agreed with me on this point.
When it comes to the people who work in the Ministry of Health, I know that the medical health officer is working on behalf of the public. The public interest is first and foremost in that individual's mind. I hope that private engineering companies who may also have opinions on this would be representing the public interest, because they are required to professionally, but I can't guarantee that is true for everyone out there who has an opinion on the feasibility of a particular sewage disposal system. I do know that the people who work for the Ministry of Health are working on behalf of the public, and that's as it should be.
H. De Jong: I know that meetings have been held by the local health authorities in respect to this problem. It appears to me that it was very comfortable for all of the bureaucrats to huddle around the table and discuss this issue. Although I would not expect it, it would almost appear that they simply huddled on how they could prolong the agony further for the individuals involved. So my request to the minister is to please have some of these private consultants who are familiar with the area and knowledgeable in the field be part of those discussions within the area.
Hon. L. Boone: Those of us in the regions are very excited about the new directions in health care -- the fact that we are bringing services closer to home and will have those services available to us. There have been some suggestions in the media that the minister will be controlling all of these aspects from her office. Can the minister please explain to the people out there how New Directions is going to work, and that people really will be empowered to make some decisions in their lives?
Hon. E. Cull: Even if I had the intention of trying to control all of these processes out of my office, I can tell you there's certainly not enough hours in the day to deal with all the communities and all the complexities that we have in this province.
I think the New Directions paper released on February 2 is very clear about our intention with respect to the empowerment of communities to become involved in making decisions about health care. One of the major themes of the New Directions strategy is not only to bring services closer to home, but to bring decision-making closer to home. We're doing that by the establishment of community health councils and regional health boards throughout the province, not as a new layer of bureaucracy -- the last thing we need in health care is additional layers of bureaucracy -- but to bring together those community boards which are already there and already managing and administering a certain part of the health care system, often in isolation from other parts of the health care system. These councils will be formed at the community level
[ Page 5843 ]
by the people in the community. The ministry is not going to impose a new government structure upon communities around this province.
We have set out our expectation that communities will move towards this new government structure over three and a half years. Initially we suggested that there would be six communities in the province that would be what we called quick-start communities; they would be the ones fast off the mark in forming a health council, and they would start to pilot the ideas for the rest of the province. At last count, we had over 26 communities that either have started to form health councils or want to start health councils. We are working with them, through executive directors who have been appointed to provide additional assistance and through supportive material coming out of the ministry under our policy and legislation division, to help the communities come together, make sure it's an inclusive process involving health care providers and consumers in a community and start to form a council that will plan for health care services and set local priorities that really reflect the needs of that community.
D. Jarvis: Hon. Chair, a short while ago the member for Burnaby North criticized the member for Richmond East, and you required her to make an apology. I just wondered if I could have some clarification, because I wasn't in my proper seat at the time and couldn't bring it up. In Beauchesne's Rules and Forms it is okay in parliamentary language to use the words "misleading," "misled" or "misrepresentation."
The Chair: Hon. member, the point of order has already been dealt with. It would not be appropriate to deal with it at this time.
D. Jarvis: It's clarification.
The Chair: Unfortunately, that is not possible. Had you done it at the time of the point of order, I would have been in a position to clarify it.
D. Jarvis: Would you have at that time if I had been sitting in my chair?
The Chair: You would had to have been sitting in your seat. Unfortunately, hon. member, it's not possible. I would suggest that in future you go back to your seat and raise a point of order. I would be more than pleased to deal with it at the time it happens.
D. Jarvis: So I assume that if you do not bring up a regular point of order at the time, the member does escape. Does he?
The Chair: The Chair has made its ruling and would ask you to....
G. Wilson: I would acknowledge that we will all remain unclear on that point, except for those who....
Mr. Chairman, in following this debate, it's interesting to see just how diverse this ministry is. We've gone through everything from extended care to abattoirs in British Columbia. As I pointed out to the minister, the member for Abbotsford surely realized that despite differences in the slaughtering practices of abattoirs in the interior and the coast, any animal destined for slaughter is beyond Hope, in my judgment.
We hear now of quick-start communities, which is a bit like a modern lawnmower. We really do have a problem with respect to this New Directions, notwithstanding the comments from the member for Prince George.... I'm not sure whether it's north, south, east or west, but I know it's Prince George.
The Chair: Mount Robson.
G. Wilson: Oh, Mount Robson, excuse me.
This New Directions in terms of new communities is going to be complicated by virtue of the fact that there is going to have to be some integration with the existing services that are provided by -- and I think we've gone through some of this -- the union board of health and other local health authorities.
The member for Abbotsford does raise a very interesting and important point with respect to the interaction of local government with the health authorities around matters of public health safety, in particular with respect to the approval of new subdivisions. That is, I think, something that has come forward. Where we run into difficulties is when there is approval of these systems, when health permits are given, and we find after the subdivision is in place and working that the package systems that are in place no longer function. There is a great deal of concern by parents because they find young children in particular playing in areas that are set aside for septic reception. Often these are green spaces or fields no longer able to withstand the amount of effluent going into them. So it percolates to the surface and of course makes for very unpleasant, unhealthy circ*mstances. The minister will be aware that there is such a case in my own community, in Gibsons. Not only has there been a problem with the package plant in this particular subdivision, but the union board of health and the Ministry of Environment have cited this to be a problem. On a number of occasions the developer has been cited to come forward and put a proper system in place. It is a health hazard, there's no question about it.
There doesn't seem to be anybody with teeth who can enforce what has been required: that is, a new system. Essentially, the developer has been allowed to escape from rectifying what is an obvious health hazard. The Ministry of Health seems to be the only agency that really has any legal powers for enforcement. I wonder if the minister could comment on what system would better work, or what kind of dollars might be put into an existing system, to allow for better inspection and enforcement of violations, and to force those people who have been able to profit through subdivision to actually clean up when the systems they put in place do not work.
Hon. E. Cull: I'll have to take this question on notice to provide a more detailed answer to the member. I'm not sure of all the ins and outs of the
[ Page 5844 ]
authority of the Ministry of Health to take action to remedy problems after ststems have been approved and in place for some time and they fail. We obviously have a role. But I apologize -- I don't have all the details on exactly what our authority would be in that case.
You raise a very interesting set of questions which does not have a simple one-ministry answer. As we were talking about this issue with the member for Abbotsford, I was looking back at the member for Vancouver-Quilchena, recognizing that he also had some knowledge of this; and of course, you, as a former regional district board chair, probably had your fair share of handling these particular issues as well.
I think part of the difficulty we've had in the past is that in many cases approvals were given before all of the health permits were in place. Sometimes the health permits were given with a fair amount of direction as to what was and what wasn't approvable and how the body should go along with approving those subdivisions. I know some of that from having watched, in my former position, what happened in terms of what gets approved, what doesn't get approved and why. In terms of approvals, responsibility lies with the Ministry of Municipal Affairs, local governments, certainly the Ministry of Environment when the system is large enough that they get into the game, and also the Ministry of Health. Clearly, there is a responsibility on the part of all of those agencies when there is a health problem that comes up after an approval -- whether or not it was given with all the knowledge in the world; people sometimes make mistakes or the system fails for reasons that hadn't been anticipated. There is obviously an obligation to go back and try to do something to remedy it. Often those remedies involve the municipality putting in a system of some sort, either a piped sewer system or a piped water system. That's where Municipal Affairs gets involved. Recently, after many years -- I can't count how many years this was underway -- the area north of Fort St. John at Charlie Lake, which has a similar set of problems, finally got a sewage system, with the provincial government cost-sharing with the municipality and the regional district.
I will take your question and provide you with a more detailed answer as to exactly where the levers might be to remedy the specific case that you brought to my attention.
D. Streifel: This question is to the minister and has to do with the hospital in Mission. Mission is one of the communities in my constituency. In the minds of those who deal with the hospital in Mission there's been a funding problem over the past several years. The hospital has had a reputation of being very efficient and, as such, some years ago built up a surplus in their budget. That surplus was taken back by the ministry some years back, over a three-year period. Their base budget was reduced. Since then the hospital has run into fairly serious budgeting problems around their base budget. They requested the Minister of Health under the former government to give them a full review of their hospital and their funding levels, but they have been unable to get that. I'm wondering if this Minister of Health could give some hope to the Mission hospital regarding a full review around their base budget, as they have requested. As I stated, they were unable to get that consideration from the former government. I'm wondering if the minister can help out.
[5:45]
Hon. E. Cull: Earlier today we were talking about high-growth hospitals, and I read out a list of hospitals that will be receiving additional money through the funding formula that was worked out this year with the hospitals and representatives of the employees. Mission is indeed one of the hospitals that will receive additional funding as a result of the funding formula. It's a small amount, but I'm sure that every amount is appreciated. I can assure the member that we have been in touch with the chair of the Mission hospital and have assured him that there will be a full review of their hospital funding this year.
G. Wilson: I'm sorry, I didn't realize what I started this morning when I got those 15 beds for Powell River. But this trend is hopefully going to provide lots of good news for many communities.
I now have a rather important administrative question for the minister. I really didn't have a chance earlier on today to ask it, because I knew that there was a time constraint on another member. It has to do with the Coast-Garibaldi health unit and where it fits geographically. I think I did alert you to the fact that I wanted to get some response to that. The Coast-Garibaldi health unit is, of course, extremely important. It is an administrative entity within the Ministry of Health. There is a great deal of concern that the Coast-Garibaldi is going to be realigned or reassigned. What would clearly be preferable would be for it to be a unit clear unto itself, rather than being aligned, as it is currently, with the Squamish and Howe Sound area, which is a very large geographic area and makes travel somewhat difficult. But if it is going to be, we would all acknowledge that Powell River should remain a central portion of that unit.
There is some discussion -- and I'd like the minister to comment on this -- that the realignment is going to happen with Vancouver Island. As an executive member of the Association of Vancouver Island Municipalities, I can tell you that when our regional districts were aligned with the AVIM, it was a constant fight to try to get the attention that was necessary for the coast, because quite clearly we were dealing with municipalities in a very large jurisdiction with a great number of concerns unto themselves. So this question is extremely important for the administration of public health in both the Powell River and Sunshine Coast regions. If there is discussion for realignment, we'd be anxious to know what it is; and if we are going to go with Vancouver Island, we would like to know how we can start lobbying to make sure we do end up with the funding necessary to provide adequate public health for that region.
Hon. E. Cull: As I said earlier this afternoon, the starting point for the regional health boards -- not to be
[ Page 5845 ]
confused with the community health boards, which will be at the local community level -- will be the health units that already exist in the province. But that's just a starting point.
One of the health units is health unit 11, Coast-Garibaldi, which at the southern end takes in Gibsons and Sechelt up to Powell River, goes further north into the unpopulated area and comes across, including Whistler, Pemberton and Squamish -- all of that area. I'm sure you're familiar with the boundaries of the health unit. What we will be doing is working with those communities to determine what is a reasonable region -- what really is a region on the ground, where the people live, where the people get their services. Is this a region that functions, or is it not? I don't know the area well enough to know whether a region that includes Pemberton and Powell River is indeed a region. I suspect not, given what little I know of the geography in that area. So we will be working with communities to come up with a region that actually functions in a practical sense.
You have some concerns about it going over to Vancouver Island, which is clearly not in the cards at all, because even the existing health unit doesn't cross the strait and go over to Vancouver Island. For administrative purposes right now, however -- and this may be where the confusion is coming from -- we have divided the province into five macroregions. As you can imagine, if you're dividing B.C. into five, they're extremely large areas which, of course, don't function as real regions. The reason for that is just to assign staff to work in those communities right now to help them get up and running with respect to health councils and health boards. Coast-Garibaldi is probably in the same area as Vancouver Island, with one executive director responsible for maybe a dozen potential regions in that whole area. It's an administrative practicality at this point. As we proceed and start to refine the boundaries, the need for these macroregions will disappear. There won't be a need for somebody to be sort of overseeing all of it on that kind of basis. You have to assign staff somewhere. We've got six staff, so how do we do it? Alphabetically, by region or geographically? We've done it geographically.
G. Wilson: I think we need to recognize that the complexity of the geography of coastal British Columbia is such that often you can't draw a line on a map, because what looks like it has some relevance on a map has absolutely no relevance in terms of settlement. Until such time as we form government and get a road and a railway into Powell River -- unless, of course, your government wishes to do it for us, with a full port terminus to help diversify the economy -- it makes no sense to have the Pemberton-Squamish section aligned, except that historically and traditionally they have been. The difficulty we're going to run into, and I guess the concern that we have, is that in this negotiation as to what makes a sensible region, the Powell River region and north into Kingcome Inlet and Knight Inlet, and the areas up to Bella Bella, Bella Coola.... That coastal region really has two major population centres, and therefore it makes it difficult to argue, from a demographic point of view, that the region should receive similar funding to a region the size of Parksville-Qualicum or some other coastal community, even from Campbell River north to Port Hardy.
My next question is: where is this debate on the regions and what constitutes a region going to take place? How do we get into it, and how do we make sure as a community that the specific needs of the Sunshine Coast can be adequately addressed and debated? I know there are discussions underway in the community now. I've participated in some of them myself. But there is no confidence.... I shouldn't say there is no confidence. There is limited confidence that our voice is going to have equal weight to the larger, more aggressive areas of the province. I would argue that in light of the fact that this is extremely important -- the public health service, of course, is a very important component of communities -- there has to be some process whereby people feel confident that the logical side of the equation -- or even the reality of what life is like on the coast -- is taken into account. Can the minister tell us what the process is? How do we get involved, and how do we ensure that our concerns will be adequately and properly addressed in that process?
Hon. E. Cull: The process starts at the community level with the forming of those community health councils. Once we have community health councils, the determination then has to be which subset of community health councils forms a region. The starting point for the region will be the health unit boundary. The community health councils in that region will be coming together to look at whether that region makes sense.
In the Victoria area, for example, where the Capital Regional District is the health unit boundary, the community has already agreed that it does make some sense; this feels like a region; we have enough interrelationship with different parts of it -- even the far-flung parts of the southern Gulf Islands and Sooke -- that we do feel we're all part of a region here. But when you come to an area such as yours, I imagine there will be discussion, and new lines will be drawn on maps, based on the discussions of the councils in that area. Should it turn out that you're looking at some of the communities in one region -- one health unit, right now -- feeling that they have more affinity with communities in another health unit, then those communities will have to be brought in so that we can draw those lines. It's going to have to be a process of sorting it out at the community level, and many communities are already well into that process.
In my tour around the province in February and March, I met with a number of communities that have already addressed the issue -- "While we're part of this health unit, we're not part of a region that's natural with Haida Gwaii." The Nisga'a Valley is another good example. Fort Nelson is probably a good example -- they went through that with the regional district boundaries a number of years ago, and it probably makes sense that they are their own region for these purposes as well. Our intent is to listen and respond,
[ Page 5846 ]
and to try to help communities identify the natural patterns of regions regarding their relationships. And that's based on traffic, ferries, geography and all the rest.
I notice the time we're coming to, so I would like to move that the committee report progress and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
Committee of Supply B, having reported progress, was granted leave to sit again.
The Speaker: When shall the committee sit again?
Hon. M. Sihota: At the next sitting.
I would like to take this opportunity to remind all members that the House will convene at 2 o'clock on Wednesday. I know that I should have waited until my colleague reported from Committee A, but it's not the first time I put the wrong foot in my mouth.
Committee of Supply A, having reported resolutions, was granted leave to sit again.
Hon. M. Sihota: I should advise you that by agreement in Committee A, all parties have agreed that we will report out tomorrow after question period. That aspect of the debate can occur at that time.
Hon. M. Sihota moved adjournment of the House.
Motion approved.
The House adjourned at 5:58 p.m.
PROCEEDINGS IN THE DOUGLAS FIR ROOM
The House in Committee of Supply A; D. Streifel in the chair.
The Committee met at 2:39 p.m.
ESTIMATES: MINISTRY OF LABOUR AND CONSUMER SERVICES
(continued)
On vote 49: minister's office, $350,350 (continued).
L. Stephens: I just have a few questions to ask the minister in relation to small business. I'd also like to say that the advisory committee the minister has formed to look into employment standards is an important one that small business is happy to be part of. Small businesses recognize that they have some essential concerns regarding employment standards, in that small and medium-sized businesses do need to be included as part of the process and in decision making. It's encouraging to see the minister come forward with this committee.
The first question I would like to ask is: have there been feasibility studies done of the small and medium-sized businesses impacted by Bill 84? And if so, would they be available?
Hon. M. Sihota: Thank you for those opening comments. We're glad to have the participation of Kathy Sanderson, the Canadian Federation of Independent Business, Susan Arnold and others in that process. I believe they're meeting today.
I don't know why we would do a feasibility study. But the other day in Hansard I pointed out certifications, and the quantum and frequency of certifications among the small business sector, as a consequence of the Labour Code. If memory serves me right, about 40 percent of the applications we've had to date cover that sector of one to ten employees.
L. Stephens: I'd like to ask the minister to comment about the use of independent employment agencies to do temporary work for the government. There was an article today in one of the papers regarding the wages paid to these temporary employees. Does the ministry have a policy regarding the employment and pay scales of temporary employees?
Hon. M. Sihota: Really it is an issue that is dealt with by the Ministry of Government Services, not by our ministry. We, of course, do require those agencies to comply with the provisions of the Employment Standards Act. We also license employment agencies, and through that licensing system we monitor their activities.
L. Hanson: On that same line, Bill 84 has been in place now since January 1. So we haven't had a long record of experience with it as yet. You referred in your previous remarks to the number of certifications and so on that had come forward relating to small business. Is there any information available yet about the numbers of applications that come forward, the numbers that were approved and what size of certifications or numbers of employees are involved? I believe that before there was about a 75 percent approval level for certification applications.
Hon. M. Sihota: Actually I had all that information today. I put it all on the record, in terms of the frequency. I guess we can try to get it back up again. But the gist of it is that the vast majority of applications that have come in have had more than 55 percent, and very few of them have actually fallen into the 45-to-55 percent category -- in fact, from memory I think there were only two, and one was ordered to go to a vote because the evidence wasn't clear. The approval rating certainly hasn't been as high as 75 percent; it is significantly less than that. We've had, as a result of the
[ Page 5847 ]
applications, about 4,000 new employees certified since the introduction of Bill 84.
[2:45]
L. Hanson: And that's January, February, March; I suppose April would be a little early to have statistics. I guess what I was trying to get at is to get some indication of the increase in numbers of certification applications. I'm sure the minister remembers some of the claims the opposition made of what Bill 84 was going to do, and I wonder if there are any statistics yet to disprove or prove that.
Hon. M. Sihota: The information that I shared the other day with the committee clearly indicates that there's been an increase in certification applications, and the trend line in that regard is up. At the same time, as I cautioned when I was responding to the Liberal critic, we often get a lot of applications at the beginning of the year, so it has to be understood in that context -- and the statistics only went to March 31, so there was only a two and a half month experience. I think we need a little bit more time to get some evidence to be able to see whether or not there has been a material and significant increase in certifications.
Given what's happened so far, my own gut feeling -- I guess that's all I can talk about -- is that you will actually see an increase in the number of applications. I think that over the course of the year it will be certainly more than marginally up, and probably less than significantly up. One of the things that surprised me with the results -- and I said this at the time -- was the number that fell in the category of smaller employers: the one-to-ten-employee end of it. I think it was about 40 percent in that category. I indicated at the time that I had clearly underestimated the extent to which the labour movement would be able to secure some success from their point of view at that level. My suspicion, given that indicator, is that we will probably see an increase.
L. Hanson: My apologies for missing the information that you provided before. I guess I was involved elsewhere. I will look back at the records and see what information you did provide.
On a lighter note, you were talking this morning about Hydro and the difficulty with the snowpack. I just want to let you know that the Okanagan is again privileged to have a snowpack that is up to normal, or actually a little better. I think it's probably the only place in British Columbia.
Enough of that tourism plug. With permission, I would like to change the subject slightly. I would like to talk a bit about employment standards and some of the issues there. First of all, as leader, I guess I have a simple question. Historically we have used the employment standards officers as investigative officers in a number of areas that come under the Labour ministry, but sometimes they're used because they are already in the field. A message that I've been getting lately is that there has been quite an increase in the responsibilities those officers have historically had. Maybe the minister could comment on what that change might be, if there is a change, and on the number now in place compared to what historically has been in place.
Hon. M. Sihota: First of all, let me say that this year was the first time in years that I didn't get up to the Okanagan to ski, and I'm beginning to regret it. Although I was scheduled to be at Big White in March, I just didn't make it. To give the area a plug, I think that it has the best skiing in B.C. after Vancouver Island -- certainly better than Whistler. I don't know how he pulled it off, but it's always amazing when I go to Big White to see a run called the Serwa's. It's a constant political reminder.
In terms of the employment standards officers, it is true that we have seen an increased workload for those people in part because of the certification three-day turnaround requirement in the new code and in part because of more demands out of employment standards. In that regard, it's interesting to point out that in the Okanagan we are seeing virtually no overtime being paid to workers in the construction field. Obviously that brings in its level of complaints. We have seen a marked increase in human rights work as well. Also, as I said the other day, we have placed some responsibilities on a SWAT team that we've got working on fair wages.
We have, however, made provision for six additional officers to do employment standards work. And as the hon. member so well knows, returning to the Okanagan, we've actually opened a new office in Vernon.
L. Hanson: Am I to understand that the responsibilities of the field officers for employment standards haven't really changed; that there is just an increase in the workload?
Hon. M. Sihota: Yes, apart from fair wages, of course.
L. Hanson: I am aware of the office being opened. I'm also aware that concerns for the payment of overtime and holiday pay, and other issues that fit squarely in the Employment Standards Act and responsibility, are taking in many cases an abnormally long time to deal with. The question, when I asked about the responsibilities, was to see if that was the reason for doing it. But I don't think any of us fail to recognize that not everybody is totally responsible, and sometimes we do need a police force to make sure people live up to the rules.
Now, talking about employment standards for a minute.... I guess the Chairman will rule me out of order, and I will respect that if it's a request for a future policy. But I think this policy is already being made public, and that you hired an individual by the name of Hans Brown to do what is perceived, or at least publicized, as facilitation of the transfer of appeals to employment standards' decision to the Labour Relations Board. Now if that is public information or just speculation, I suppose you'll tell me in a minute. But if that is the case, it appears that the committee you have going around the province also has aresponsi-
[ Page 5848 ]
bility to see if that's a good idea or not. So I guess chicken and egg, cart before the horse, or whatever. Maybe you can give us some comments on that.
Hon. M. Sihota: That's a good question. It's certainly an issue we canvassed the other day, but let me just comment further. One of my concerns, if I can be candid about it, is that I don't want to convey the view that a decision has been made so as to circumvent the work of the employment standards review process. It's critically important to me as a minister that the process run its course, do its thing and make some recommendations to the government.
I want to put to bed any concerns people may have that somehow the engagement of Mr. Brown means the government is in the backrooms working on drafting the Employment Standards Act and going through a charade of a process. That's not the case; that's not what's happening.
I am concerned about that view being expressed, to the point where I've taken the opportunity to talk to the small business representatives, advising them that it is simply not the case. The hon. member from the Liberal Party raised concerns about this earlier. I just want to put that back on the record.
With regard to Mr. Brown, he does have a contract with the Labour Relations Board, and he is doing background work on the appeals system. That work is being done on the type and quantum of complaints we received and on some issues of procedure. A registrar's function is perhaps the best way to put it -- that would relate to an appeal mechanism.
We have, however, made a decision that we will go to an appeal mechanism at the Labour Relations Board. You may be aware that the ombudsman some time ago had made a recommendation that there be some kind of appeal mechanism outside of employment standards with regard to employment-standard issues. We have chosen, as a government, to have that occur through the Labour Relations Board.
As a consequence, in the terms of reference drafted for the committee going around the province, we have asked them to give us on an expedited basis their opinions on policies used in relation to that matter. In other words, the policy issue of establishing and how one establishes an appeal mechanism -- but not on the issue of whether one is to be established. We've indicated to them that one will be established. They can look at the issues as they relate to policy. We've tried to separate out "a registrar's approach," which we want to get up and running, from the kind of policy and structural work the committee has to do. That's what we're doing. We will continue to try to make clear to the parties that there is a differentiation of responsibilities.
The area of confusion occurred initially when there was a perception on the part of the small business representatives on the committee that somehow Mr. Brown was doing an entire review of the Employment Standards Act. That's not the case. Since then I have assured them that that is not the case, and in fact I have communicated that to them in writing so they've got the certainty of that in the statements that I've put forward to them. Some time ago the government indicated that it would proceed with a number of areas on an expedited basis; one was 2(2) and one was the appeal system. We're asking them to talk to us about the how-tos of those issues, not the whethers.
In advance of that -- if I may complete the answer so as to cover everything I think that's been really on the record -- last October, as a part of the Labour Relations Code review, we had anticipated moving on section 2(2) in the fall legislative session. I had indicated that when the labour code was brought forward. For a variety of reasons we didn't, but we had prepared some draft legislation to come forward in 2(2). You may recall there was a Queen's Printer strike at the time, and you may also recall that the debate on the code went on for some time. I understand that the small business community now has in its possession the draft legislation we were looking at at that time. I think concerns have been expressed as to whether or not that is the actual legislation.
Again, in correspondence that I've forwarded to the Canadian Federation of Independent Business, I've assured them that that really was reflective of where we were in October, not of where we are now, which is to allow the process to continue in the way that they've requested -- i.e., they came to us, they requested the opportunity not to proceed with 2(2) at this point, but rather to have the process deal on an expedited basis with the how-tos of 2(2). That doesn't cut at all into Mr. Brown's responsibilities.
[3:00]
Given the fact that we've already canvassed this issue, I thought I'd cover off the basic points. I think that completes the picture in terms of what's happening there.
L. Hanson: If I understand what the minister said, the decision has already been made to have the Labour Relations Board adjudicate appeals to decisions that may have been made under the Employment Standards Act. Did I also understand the minister to say that shifting it over there required a change to the legislation?
Hon. M. Sihota: It would. We've flagged that already by putting in the terms of reference that we want advice on how that should happen.
L. Hanson: I can understand the minister's sensitivity to perception, but I really have some difficulty in understanding how that perception could be influenced, when in fact the government has made a decision and has put some of the mechanism in place before there is a legislative change in the House to allow that decision to happen. Possibly that's part of the perception difficulty that the public sees with this issue. I'm sure that the minister can appreciate -- as I well know -- that in real life perception becomes reality, whether it is true or not.
So it seems to me there are pretty good grounds for the public to get that perception in this situation, where the government has hired Mr. Brown to facilitate a transfer of the appeal responsibility to the Labour Relations Board prior to actually getting the Legislature
[ Page 5849 ]
to agree that the change should be done -- and I recognize the majority that the government has in the House. In any case, I suspect that our discussion here is not going to change a whole bunch of things, but I think it might give the minister some indication why that perception came about in the first place.
I want to move off that issue and ask the minister a question about the number of professional arbitrators on the staff of the Labour Relations Board. Now that Bill 84 is in place, how many does he have, and what is the function of those arbitrators? I'd just add to the question that the arbitrators that I'm talking about are the full-time employees, not the contract people. I'll ask another question afterwards.
Hon. M. Sihota: I take it that you're talking about mediators.
L. Hanson: Mediators. Sorry.
Hon. M. Sihota: It is either six or seven, I'm quite sure. That is the range.
L. Hanson: Those are full-time mediators. As I understand from Bill 84 and discussion during the committee stage, a mediator is supplied at the request of the parties on a gratis basis. There isn't a charge for it.
Hon. M. Sihota: That's true.
L. Hanson: Thank you. When the supermediators -- Vince Ready, as an example -- are hired out of the ministry, are they paid by the parties, or does the ministry in some cases pick up the cost of supplying them?
Hon. M. Sihota: The reason I delayed so much is that I think the quantum of work going to some of these supermediators has decreased significantly, and I wanted to get some comfort in that regard. The bulk of the work is now being done by our mediators, but there are times when the parties ask for a private mediator. Take Mr. Ready's example on Fernie: that would have been borne by the parties.
We have had occasions to proceed with special mediators, and when we have, the cost has been incurred by us. We've had Graham Leslie in the police dispute in Vancouver; he would have been a special mediator. In the case of the Vancouver Island North teachers' dispute, we just announced Grant McArthur is to go in as special mediator. Mr. McArthur is one of our regular mediators, so that comes out of regular budget.
L. Stephens: I want to go back to the side agreements we talked about. I will speak with the Minister of Government Services during her estimates, but I would like to know from the minister whether or not fee-for-service arrangements such as employment services are something the minister thinks desirable, and I would like to assure small and medium-size businesses that private enterprise and fee-for-service is a desirable part of the economy.
Hon. M. Sihota: The ministry will from time to time go to the agency for work, and will from time to time -- and probably more frequently -- deal with hiring people as auxiliaries, and so bring a full-time auxiliary into the system, as opposed to doing a contract with an agency for less than 60 days.
As I understand the gist of your question, the issue which arises is: is this government in favour of helping out small businesses that provide these services, or is it not? I can see why you're looking at it that way. I'm not persuaded that's the way one ought to look at it.
We also have a lot of workers out there, particularly in a community like greater Victoria, who are part-time and looking for opportunities within government. So we're also very interested in making sure that that man or woman out there has an employment opportunity. We're going to be candid with them. If we're looking at something that's going to be more than 60 days or that leads to something which provides them some level of income stability, we may want to sidestep the agency and go straight to the person. It's really a question of who it is you're going to generate employment for. I guess we take a look at the options available to us.
If you're asking where I am personally, I'd rather be able to go to that individual out there who needs work and, if we have a job for them, see whether or not we can arrive at an arrangement.
L. Stephens: So if I understand the minister correctly, the first option would be to go to the general public or whoever, as opposed to an employment agency, but that the minister is not averse to using an employment agency from time to time, for a period of less than 60 days.
Hon. M. Sihota: If someone's away on holidays and we have a two- or three-week gap to fill, then we'll go to an agency. If we're looking for something more than that, then we've got some options and, depending on how much more we're looking at, we'd exercise some of the bias that I spoke of. That's not to assume the government's biased against small business; it's just that we have to make some concrete decisions.
L. Stephens: That's what I was looking for.
Another area that business is concerned about is the ferry system. I'm sure the minister is aware that business views the ferries as part of the transportation infrastructure and as an important part of the ability to do business -- also tourism, which affects small and medium-sized businesses as well. Would the minister have any assurances to business on the issue of disruptions of ferry services and the ability of business to move goods and services?
Hon. M. Sihota: The best assurance I can give the hon. member and the public at large is the assurance based on history. Over the last 20 years, approximately -- maybe 18 -- we've had two disruptions: one strike and one illegal work stoppage. In the case of the illegal work stoppage, we used provisions of the current labour legislation to get people back to work within hours of that occurring.
[ Page 5850 ]
L. Stephens: Thank you, Minister. That's very encouraging. It certainly does give comfort to business that it is something the minister is going to be looking at seriously and taking into consideration.
Having been in retail -- and consumer services being a large part of that business -- is there a policy or a program in the ministry to develop a strategy to achieve quality management and employee performance to the public? Is the ministry working with the Quality Council of British Columbia to develop any of these initiatives or programs?
Hon. M. Sihota: Given the frequency of interaction that this ministry has with the public at large, we do a lot of work with our employees with regard to the nature and the quality of service, and how one deals with the consumers of our services, but we don't do any work with the Quality Council.
L. Stephens: I was asking if the ministry really has any policies or any programs coming forward to make available a service to small or medium-sized businesses to achieve that management and employee performance for delivery of consumer goods in the consumer industry.
[3:15]
Hon. M. Sihota: I think you're really inquiring about issues that fall under the mandate of the Ministry of Economic Development, Small Business and Trade. They have some responsibilities there. We do things with the Better Business Bureau, and so on. We meet with them and give them ideas and suggestions in terms of the legislation that we're responsible for. But if you're asking us whether or not we have any specific allotment of funds to allow management and employees to deal with service quality issues, that doesn't fall under the mandate of our ministry.
J. Doyle: In my riding of Columbia River-Revelstoke is the small community of Field, whose power is generated by diesel. It's in the federal parks also, Mr. Minister. The people there are paying 20 cents for residential power -- people in the province are paying approximately 5 cents -- and commercial consumers are paying about 30 cents. I'd like to know what help the minister could give that community.
Hon. M. Sihota: That's a good question. I thank the member for it. As I said yesterday, there are a number of communities and areas in British Columbia that are inadequately serviced through hydroelectric power. There are some communities, for example, that rely on diesel, which is a very expensive way to generating power, as the hon. member pointed out.
I was giving the example yesterday of the Queen Charlottes, where we've just had a request for proposals go out for an independent power producer to provide cheaper power, to make sure that the consumers of power pay a lower rate. We obviously have obligations with regard to Field. We're well aware of the problems in Field, and we are most desirous of solving them. I have instructed the staff at B.C. Hydro to find a solution -- if I can put it that way -- to the Field problem, because we recognize that it's been a longstanding concern to that community and, in my view, a legitimate grievance. It's hard to believe that a community of that size -- situate as it is on the Trans-Canada Highway, so it's not remote and well off a major access route -- has to incur that kind of expense to receive power. The instructions that have gone to staff are to attend to that problem and to find a solution to it.
I appreciate that there are some deadlines; we are looking at July, for example, as a time of concern. We are trying to deal with the problem with dispatch. I don't want to create any false expectation in terms of our ability to deal with the problem immediately, but in the short term, and as soon as we can, we are going to deal with it. Instructions have gone out to staff to solve the problem, and I am confident that we will be able to solve it.
J. Doyle: You mentioned that this has been a long-term problem, and I appreciate any help I can get for the people of Field.
The Columbia Valley is a part of my riding, and also the West Kootenays in other ridings. Several dams were built there in the sixties: the Revelstoke Dam, the Mica Dam and other dams down through the Slocan Valley. That area gave a lot of land base from forestry for recreation, habitat and wildlife to keep the lights lit down here in Victoria, Vancouver, the Okanagan and all those places. One thing I would like to have to replace somewhat the great amount we gave over those years -- and we have never really been repaid for it -- is some assurance from the government that we could at least get natural gas.
Golden and the Windermere area, for instance, are not even on a grid with the Hydro, and so when somebody hits a pole around Canal Flats some miles north of Cranbrook, the power is out in Windermere and Golden. The power is at at least 100 percent of capacity sometimes -- well, I guess it can't be more than that. I'd like to see if we could get some assurances of natural gas. I think it would be helpful to homeowners. Winters really are winter up there. There are many resorts in the Columbia valley. It would make them more cost-effective. For any industry that may look at locating in that valley right now, it's not cost-effective for them to locate there, because we don't have natural gas or even any surplus of hydro available.
The Chair: I recognize the minister, with some caution that the issue of natural gas may be outside the purview of your ministry, but hydroelectric energy certainly is under your mandate.
Hon. M. Sihota: Certainly hydroelectric power is. I didn't realize.... I've been to Canal Flats. If I may for a moment digress, I had an interesting experience there back in 1980. I can remember, as a student hitchhiking across Canada, being stuck in Canal Flats waiting for a lift, and it took me a while to get out of there. That is why I remember the area. In any event, I did get to Cranbrook and went on with my journey. As I
[ Page 5851 ]
remember, Canal Flats had a sawmill operation. But that's a bit of a personal reflection on a community I've been through. As the hon. member knows, given my penchant for skiing, I have had the opportunity to enjoy winters in your area, and certainly the skiing there is phenomenal. In any event, that's got nothing to do with my responsibilities, although I'd be happy to be the minister responsible for skiing and only that. The opposition is trying to figure out how to make sure that my portfolio is reduced to that level.
The government, as a part of its budgetary measures, made some changes with regard to funding for the establishment of natural gas lines to different communities in British Columbia. Ever since we made that decision, I think we've heard fairly vigorously from communities expressing some frustration over that policy. In the context of my responsibilities as minister responsible for Hydro and general energy policy, we have to have a recanvassing of that issue to make sure there is adequate power and energy in various portions of the province. I've said that publicly before, and I'm not hesitant to say it here today.
As I said at a forum I spoke at yesterday, Hydro's obligation is greater with regard to areas such as the East Kootenays, where we had quite a taking of land and resources. I had the opportunity of meeting your mayor in Golden yesterday, and told him I'd be talking to you about the issue. There have been legitimate historical grievances from the Kootenays in general, be it East or West, about the taking of resources and provision of power to areas such as Victoria or Vancouver, and inadequate attention paid to areas you represent. We have an obligation to attend to those problems, and we're trying to.
You talked about Revelstoke, Mica and Golden. In terms of the context of Hydro, we have promised a systems review of our electricity-systems operations -- an operations review -- to make sure we're operating in a way that respects not just the need to have power but the tourism, recreation and other economic development opportunities that should accrue to the regions.
Second, for the first time in our history we have opened a new office in the Kootenays. In this case, it's Castlegar, so it's some distance from Golden or Revelstoke. The point I'm making is that part of our desire is to make sure we've got a presence in the Kootenays and that our policies reflect regional economic development needs there. We've moved into one community and I would not exclude consideration for opening another office in the East Kootenays, because I appreciate the vast difference in demand in some of the areas.
Third, you should know that we've made a strategic decision as a Crown corporation to engage at Hydro a vice-president of economic development, for regional economic development needs and to address some of these historical problems. That has not been the case in the past. With the person coming on board in the next couple of months, that should go a long way in tending to some of the concerns you have.
Fourth, we have planned and are working on a symposium in the Kootenays for June. We will bring together people from all areas of the Kootenays to talk about ways we can deal with these issues, be they property taxes, mitigation in addressing historical wrongs or options such as the gas line from Golden to Cranbrook that you talked about.
The economic development potential of what you're talking about is not lost on me or the government. We fully appreciate the economic benefits which would accrue to those communities if we were to do this. I must also say I appreciate your lobbying to make us mindful of those concerns.
I guess we have to make some basic decisions and develop an overall plan for the Kootenays. With the announcements we've made and the direction we're going in the next few months, we will be able to make further progress.
Finally, let me say this: I have committed myself to Hydro, to be in your area in July to meet with community leaders. Although I haven't said this to you and haven't formally made that announcement, I put it on the record now. We've targeted the last week of July as the week that I would spend in the region between Creston and Golden looking at our operations and demands. In that context I will have the opportunity to go to Windermere and Golden and once again to visit Canal Flats.
J. Doyle: One area I did not mean to forget about when we were speaking of natural gas -- I realize it is not this minister's responsibility, but the cost of building these dams was great in that area -- was Revelstoke. They've got dams all around them, yet they are somewhat locked in by having only hydro available.
Mr. Minister, my last question is about cogeneration, with limited hydro being available in some of these areas. There is a lot of waste from the wood industry. I would like to know where your minister is at on cogeneration and getting the independent power producers in.
Hon. M. Sihota: I think every MLA in British Columbia outside of Hope has come to see me about IPPs and opportunities for cogeneration. As we were saying earlier today, remarkable economic benefits could flow from cogeneration projects and independent power producers. In fact, solutions for different communities may lie in independent power producers. I was talking about Field earlier as another example of where we may be able to do an IPP instead of a direct Hydro program.
In December of last year we indicated a new formula for evaluating independent power producers. We have introduced that formula, and it is a social cost formula. We will look at economic development needs and energy needs, and we'll look at employment levels in a particular area and other social parameters to determine whether or not a project should go ahead.
[3:30]
A lot of IPPs are awaiting the results of the export policy review when it is made public, which is imminent. As I said before during estimates, the committee was required to report to government by March 31 and has 30 days after that to release the
[ Page 5852 ]
report. Once that report is out and a determination is made with regard to export, then we will be in a better position to make some final evaluative decisions on a variety of IPP projects. In that regard, I wouldn't underestimate your ability to knock at the door as aggressively as the other MLAs have.
H. De Jong: Mr. Chairman, I have a number of questions that are somewhat ranging in topic. I realize the minister has quite a range of responsibilities.
To get back to the debate we had last fall on Bill 84, it was during that debate that I spoke in favour of the agriculture community, particularly in light of the new act and its consequences. It would be very desirable to have a member representing the agriculture community serving on that board. The minister agreed with that. In fact, the following day the minister asked me to work on that and to eventually bring forth some names for that purpose. I would like to know where this board is. Has it been appointed? Or is it being considered to be appointed? Has a representative of the agriculture community been included in that process?
Hon. M. Sihota: Not only that, you didn't mention -- which I will mention on your behalf -- that you wrote to me and gave me some names of people who you thought would be appropriate. I made that commitment to you, and I will reiterate that commitment today. We fully intend to make appointments out of the agriculture sector, but we haven't made any appointments to date. When we do that, I can assure you there will be some representation from that industry.
It's an industry that I must commend for the degree to which it has worked cooperatively with the government around some very difficult public policy issues. In any event, I have made that promise to you, and that still stands. I appreciate the fact that you've given some names in the correspondence you forwarded. I can't tell you exactly when we'll get on to doing that, but when we do, I can assure you that there will be representatives from that industry.
H. De Jong: On to another subject, then: workers' compensation. I believe that the minister is well aware of the individual problems that I've brought to his attention. I'm certainly not going to get into those today. However, when a person has had 15 examinations by 13 different physicians recommended by that board, and still hasn't got an answer, it must be obvious not only to the people who are served by that organization, but to the minister as well, as it is to me, that the bureaucracy is beyond acceptance at that particular board. My question really is as a start-off on this one: is the minister contemplating anything in terms of change, or has he considered other ways, or better ways -- be it regional representation of the board, rather than one large bureaucracy in Surrey, or whatever other means -- to make that organization better available to the worker, particularly to those who have been hurt in the process?
Hon. M. Sihota: First of all, I want to say to the hon. member that I appreciate the fact that he has, from time to time, brought to my attention the names of people who have been affected by Workers' Compensation claims. Indeed, in the most recent one we do now have a workers' adviser trying to work though the problem with the individual involved.
The other day I indicated a whole series of changes -- I enumerated about eight or nine of them -- that I see us having to make to solve the problems as I see them at WCB, some of which, I said at the time, I think we're making good progress on, and the others which I think we still have to make more progress on. I did that in response to a question from the member for Powell River-Sunshine Coast. I would refer you to that discussion.
Let me just say in a general way: I agree. I have given explicit instructions to the board of review to bring about some changes. Those changes, again, are very close to being completed, to expedite the process so people don't have to sit around for 15 months -- or five months, or whatever it is -- waiting to get in. The other day in estimates I enumerated in detail what we intend to do in that regard. From an administrative point of view, there needs to be a better working within that bureaucracy. I said that the other day, and I outlined a number of steps that we can take. I don't want to repeat myself, but I put it very clearly on the record, and I want to say that I share the frustration that you have and that other members have expressed with regard to the inefficiencies in that system. Not only must they be changed, not only will they be changed, but they'll be changed very soon; in the very near future. As I said the other day, I've put considerable pressure on the board to bring about the requisite changes.
H. De Jong: My next question deals with the fair wage policy. From time to time, there are grants or programs in which business, agriculture and others are sharing with the government -- I'm thinking particularly in the agricultural area about the ALDA programs. Quite an amount of money has been made available through government -- provincial and federal -- to accommodate those programs.
Because of the involvement of provincial money, is the policy such that when those programs or those installations of works are tendered out by the farmer through an ALDA program, they are affected by the fair wage policy, or not?
Hon. M. Sihota: Before I answer, could I ask the member a question, because I'm certainly not the minister responsible for agriculture: is ALDA a provincial or a federal program?
H. De Jong: It is my understanding it's a provincial program.
Hon. M. Sihota: Sorry, I don't know who's questioning whom here anymore. Let me ask you this: is it a program that provides assistance for construction projects on farms? I just want to make sure I understand the issue before I give you an answer.
[ Page 5853 ]
H. De Jong: Yes, the minister is correct. Usually the program is limited to about $50,000 -- it could be up to $75,000 now -- per farmer. The loan is a low-interest loan; it's repayable over a long period of time. But the loan does involve provincial money, and it is for the purpose of building silos, irrigation setups and all that sort of thing.
Hon. M. Sihota: Sorry, I thought we'd gone back in time there, where the roles were reversed and you guys were in government.
H. De Jong: We will be.
Hon. M. Sihota: I don't know about that, but I'm glad you're not now, that's all I can say. We'll see what happens when we get to the next election.
I would venture to say that you wouldn't be covered by the fair wage program. Fair wage kicks in where the provincial contribution is $1.5 million or more, and of course if the program is limited to $50,000 or $75,000 it's well short of the minimum floor for fair wage. So it wouldn't be covered by the fair wage policy.
H. De Jong: Then my next question, I guess, may be a little bit more difficult for the minister to answer. Given that situation about the $1.5 million, and the fact that Crown corporations are basically at arm's length from the government, and having spoken to the minister on a number of occasions about the involvement or the ability not to get involved -- or the privilege of not getting involved, you might say -- in the detailed working of a Crown corporation, are Crown corporations in fact subject to this fair wage policy when the amount of expenditure is over those specific guidelines?
Hon. M. Sihota: The fair wage policy is just that: a policy, not a legislative direction. So it's up to each individual Crown to make a decision as to whether or not, and to what extent, it wishes to comply with the fair wage policy. BCBC is a different animal because it deals with construction projects within the province. But with regard to the Crown I'm responsible for -- B.C. Hydro -- Hydro's board has passed a fair wage policy. I don't know what the other Crowns have done. In the context of the Crown I'm responsible for, yes, there is a fair wage policy that the Crown applies. And certainly it exists with regard to BCBC. But I can't tell you about the situation with, for example, Transit, Ferries, ICBC or any other Crowns. I've never really asked. Probably not with ICBC.... Well, they might have a policy. I don't know what the policies are with the other Crowns.
H. De Jong: Mr. Chairman, I'm surprised that the minister would not know that. If I recall correctly, this minister spoke so highly of the fair wage policy when it was introduced in the House. I realize it's a policy, yet it was debated in the House. Also the fact that Crown corporations -- and there's one in the making now.... The answer from the minister is so vague as to whether these Crown corporations are paying those fair wages or whether it's a method of avoiding them. That's really the key question I want to ask.
Hon. M. Sihota: Okay, let me give greater clarity than that. As you indicated at the outset, Crowns are independent, and their boards can pass policies. In terms of the Crown that I'm responsible for, there is a policy in place with regard to fair wages. But there's also within that Crown a policy that deals with the Allied Hydro Council, which is traditionally an agreement Hydro has with the trade unions of a no-strike provision in return for a negotiated contract.
[3:45]
With regard to other Crowns, that's a decision that those Crowns will make. I think it's fair to say that the expectation is that Crowns will be included in the fair wage policy, but I can't enumerate every Crown to see whether they've passed a motion that says they do that. In some cases they may not need to do that. In the case of B.C. Hydro, for example, the Allied Hydro Council would cover off so much of the work that it would be superfluous for it to pass the thing. I think the expectation is that all Crowns will be covered by the fair wage policy. I don't know whether they've all passed resolutions. We think it's a positive instrument of public policy, and we are not trying to avoid the payment of fair wages by doing work through the Crowns. In fact, the expectation in government would be to the contrary.
H. De Jong: This fair wage policy was a policy of the government. I understand that it was not debated in the House, although it was mentioned on numerous occasions. Certainly it has not sat well with the members of the opposition or with the public of this province.
At the same time, if this government was so sure that this fair wage policy was indeed necessary -- it was a fair wage policy, as they call it -- then I fail to understand why each Crown corporation can make its own decision on that particular issue. They may be at arm's length, but surely they are not that far removed from the government, are they?
[D. Lovick in the chair.]
Hon. M. Sihota: No, of course they're not. Government can communicate the desire to all other Crowns to have them covered. As I said, it is our expectation that they will all be covered. I just can't tell you whether they've all passed to their boards the requisite motion to do that. I don't have that data here. But in terms of the expectation, they would be covered by the fair wage policy.
I know that some have exceeded what's in the fair wage policy. I can give you the example of Hydro. I just don't have all the data, so I can't tell you with certainty whether each one has passed the requisite motion. If you're asking me whether or not the government expects them to comply with fair wages and have policies governing fair wages, the answer to that question is yes.
[ Page 5854 ]
G. Farrell-Collins: I have a couple of questions that were passed to me by the member for Surrey-White Rock. He asked me to ask them in his absence. One deals with the issue of small home contractors -- renovations, etc. -- and whether or not the Consumer Protection Act is going to apply to those types of renovations and to those contractors. Obviously he has concerns, as I have in my constituency, with less-than-adequate service being provided for the fee that has been paid. Although there are some very reputable companies out there doing this type of work, there are also a lot of handymen operating out of the back of their truck or their home, and the work is perhaps less than what would be expected.
Hon. M. Sihota: It is a matter of future policy, hon. member, and you know that.
G. Farrell-Collins: One of the other issues that is of concern is that at times companies may move into British Columbia and set up subsidiary companies. Those subsidiary firms don't always operate as well as they might profitwise, and they end up going belly up and leaving the province. Sometimes employees are left holding the bag and have salaries outstanding. Are there any plans to allow the employees to solicit those funds from firms outside the province?
Hon. M. Sihota: We enter into reciprocal agreements with other provinces so that when there is an order made by the employment standards branch for an attachment of wages, it flows to another jurisdiction through a reciprocal agreement.
G. Farrell-Collins: So the minister is saying that those agreements currently exist and that those employees can access those funds by way of those agreements?
Hon. M. Sihota: If you have a specific example, I'd like to see it, and we will let you know whether we can act on it. If you're looking at a constituency problem, you should let us know. If you are asking in general, what we would endeavour to do is get an order here in British Columbia, use a reciprocal agreement with another province and then seek to get that province to execute on the order.
G. Farrell-Collins: I will pass that on to the member for Surrey-White Rock, and if he does have a specific concern, I'll see to it that he forwards that to you for investigation.
I want to spend a bit of time on B.C. Hydro. We have touched on it off and on for the last few days, but I do want to ask a couple of questions. In looking at the quite pronounced profit levels of B.C. Hydro that we've seen over the last couple of years, they've been almost astounding, I guess we could say. The l992 annual report shows an operating profit of $401 million. It seems that even though about $180 million or $200 million was transferred to the rate stabilization account, there was a profit of about $220 million. Is it correct that those funds are being reverted into general revenue?
Hon. M. Sihota: This morning I had Hydro staff here, and at the 11:30 adjournment, I asked both parties whether or not they wished Hydro staff to return this afternoon. The answer was no. So I'm surprised we're getting into Hydro questions. The tradition, in terms of estimates, is that the opposition lets us know whether or not they require staff here with regard to the Crowns, in which case we make them available.
My answer to the question is that if he is suggesting that it's all going into general revenue within the province, that's not the case; it's a little bit more complicated than that. There is, of course, a call on the dividend this year, and we've indicated the extent of that dividend already. So the corporation is required to deliver on that dividend. But where that dividend comes from and how it's secured are totally other issues.
As I said the other day, one of the things that I asked Hydro to do before they made any application for rate increases or sought to make any changes with regard to the rate stabilization account was to find efficiencies from within. That was the first instruction to them before we would entertain a proposal to go ahead to the BCUC.
G. Farrell-Collins: I understand very well that the normal procedure is for the opposition to negotiate with the minister for various time slots for issues to come before the committee so that we can make better and more efficient use of the time of the professional staff who work for the ministry. Unfortunately, I guess, I left when there was still 30 seconds left on the clock, if I remember the minister correctly. I wasn't here for the statement. I would have been glad to have either continued or made him aware of that this afternoon. But the minister must also keep in mind that the opposition was given all of five minutes' notice that the Labour and Consumer Services estimates were going to come up in the first place. So I would assume that this type of respect and consideration is a reciprocal agreement between the minister and the opposition. I would hope that perhaps next time, next year, it will work in a little better way.
I do intend to continue with some of these questions. My understanding is that over the next four years there is an estimation that payments from Hydro to general revenue will amount to about $1.14 billion. However complex the minister want to claim it is, essentially the money is coming back to the government, whether through dividends or otherwise. I guess I have a concern over that. B.C. Hydro itself carries a debt, and interest payments on their $7 billion debt over the next four years could amount to somewhere around $2.9 billion. Shouldn't those surplus funds from B.C. Hydro be used to pay down that debt, so that we don't continue to pay those interest payments at the level at which they are?
Hon. M. Sihota: We have a debt management strategy with Hydro that's worked quite well over the years, and continues to work well. If you take a look at our debt servicing costs, we're actually in a pretty good situation. We've got some long-term debt that is still at
[ Page 5855 ]
the double-digit level -- 15 percent in fact in some cases -- and we're working that down. Some of that comes up in the next year or two.
Certainly we anticipate that our debt servicing costs will reduce over time. It is true that we could apply more revenue to bringing down that debt in an orderly way, and certainly that's part of the corporate strategy. But it would be wrong for the hon. member to assume that Hydro historically has taken the view that it takes all its revenue and simply pays down its debt. That isn't the approach that Hydro has taken in the past, nor is it the approach that it will take in the future. It will attend to its debt in a businesslike way, and it will attend to its dividends to the shareholder in a businesslike way.
G. Farrell-Collins: I guess we'll have to peruse that issue more in Public Accounts as we did last year, and look to see exactly what the plan is for Hydro in debt reduction. Certainly there may be times when it's best to keep that money accessible to Hydro for further investments. But I would say that if you're dealing with a portion of a $7 billion debt that's currently in double digits, it would be most prudent for the government and Hydro to be trying to pay that down as quickly as possible, no matter how much we have left over. As much as possible should be applied to that. Perhaps we can canvass that more thoroughly.
Hon. M. Sihota: I didn't say we weren't doing that.
G. Farrell-Collins: The minister says he didn't say we weren't doing that. Clearly, if the government is taking money from a dividend call on B.C. Hydro and putting it into general revenue, then they're not doing it. It means something different, unless the government is finding that they have their own debt they'd rather pay down that's at a higher level. That's certainly a possibility. If he wants to explain and defend the deficit-reduction plans for B.C. Hydro in more detail, I'd be glad to listen to them. I don't know if he intends to do that -- probably not.
I do have a couple more questions dealing with B.C. Hydro. I don't know if this issue was canvassed the other day, but it concerns the $12 million B.C. Hydro paid to set up a trial billing system in Victoria, which proved unworkable. After some months of trial, it was realized that the system was not going to work. B.C. Hydro had to get rid of that system and was left holding about a $12 million bill for the service. Can the minister explain what took place, and where the errors were made?
[4:00]
Hon. M. Sihota: I'm not sure what this has to do with estimates, but I'll be happy to answer the question.
The Daffron system -- which is what it was -- was part of the privatization initiatives under the previous administration several years ago. The previous administration made a conscious decision to move into what they called key business units. What they did was decide to decentralize Hydro operations into nine different sectors or regions of the province. Each of these key business units would take a look at its own administrative issues as a region. It would deal with billings, for example, and with accounts or personnel, each within that division. At the end of the day we had nine different entities, on a decentralization basis, running the operations of Hydro.
This is part of the scheme Mr. Bell brought to Hydro. It is my belief that one of the reasons for going this route was simply to achieve privatization objectives. If I'm wrong on that, the previous minister's here and I'm sure he could explain. That's certainly our understanding of the situation. It's up to him to defend his time period, but I can tell you that at the end of the day it's a legacy of the failure of privatization.
The region in Victoria was then asked to make a decision on its computer program and on developing a distinct program for billing in Victoria. Indeed it did, at a cost of some $8.6 million in the initial estimate. Subsequent to that, there were calls on Hydro for additional funds.
The system was not up to par in terms of what was required, as it turned out, and did not function properly. I'll give you some quick examples. People were sometimes not getting bills; an interesting number of consumers were not even billed for months, despite the fact that we'd gone to a monthly billing system.
More importantly, the computer systems weren't talking to one another. If you lived in Victoria and you moved to, let's say, Fort St. John, we would have no ability to track you, to send you the hydro bill left from the last month in Victoria. Under the mainframe system they had, when you moved we could forward the bill from the previous residence just by referencing the name and the previous address, because the bill would often come after people had moved out. It was not that they were trying to avoid the bill, it was just the way the billing system worked. The computers weren't communicating with one another; the various key business units weren't communicating with one another. In addition, it just did not seem to have the capacity to be able to do the work required.
A decision had to be made as to whether we would spend another $10 million or $12 million to try to correct the system we've got, or whether we should just wind it down. The board at its April meeting of this year made a determination to bring about some changes in the Victoria system: to go back to the mainframe system and move away from the Daffron system that we had here. Obviously that was not an easy decision to make, and obviously there are a number of people who have to be held accountable for the expenditure of some $12 million. Indeed, we have had some people leave the corporation since the decision was made to go in the direction that we're now going.
My conclusion is that the decentralization/privatization approach that was taken in this instance cost us about $12 million.
G. Farrell-Collins: My understanding of the issue wasn't so much that the software and the program and the system itself didn't work; it was that the interrelation between it and the others was causing the
[ Page 5856 ]
great problems. In fact, that system had been used with smaller utilities in Ontario and elsewhere.
My understanding also is that this was done in Victoria on a trial basis. I would suggest that in order to understand whether or not the system was going to work provincewide, one wouldn't look at the interaction between the old system and the new system to make that determination. Rather, one would look at how it worked within the district it was mandated in. If it was working properly there, then one would expand that throughout the rest of the province to ensure that that communication problem wasn't there. If it was a trial in Victoria, we were trying the system itself and not the interrelationship between it and the old system, because if the decision was made to go ahead, then there would be no old system. There would only be new systems, and I would assume that they would be able to speak to each other.
Was the decision to remove this system based on the communication problems between this system and the old system, or was it to do with actual problems within the system itself?
Hon. M. Sihota: It was both. You are right, it was a pilot project. Notwithstanding the fact that it was a pilot project, we still have to communicate with the other system whether we like it or not. Having said that and having amplified that point, I don't want to repeat myself, but it was a function of both of those concerns and the fact that the system itself just wasn't able to handle the capacity.
In defence of Hydro -- or if I may put it this way: in defence of the previous administration -- let me also say that if you go through the documentation, it's clear that staff had indicated within Hydro that not only was this a pilot project, but they wanted to do this because, in part, if it worked it would be cheaper in the long run than to change over the entire mainframe that we had. They realized, as you say, that it had been applied in other utilities. They weren't totally aware of the extent to which it could work within this jurisdiction, and within this province, given the demands that are made on the Hydro system. At the time, the previous administration did look at it, and it is true to say that they recognized that this was a venture which had risk to it, and I don't mean in the traditional sense; in the sense that it was more than just a passing risk and more than a traditional risk. They did try to iron out the wrinkles in that risk. If the project had worked, Hydro officials will argue that we would have saved a lot of money, and avoided having to make some of the changes we now have to make in any event.
So you're right. It was a pilot and it was based on certain assumptions of risk, and it certainly appeared over time that the thing wasn't going to work. At some point we had to make a decision to bite the bullet and vacate the field, and we did.
G. Farrell-Collins: One of the items that was reported was that a review was undertaken and that it cost $1.4 million. Was that review done before the system was brought on, as in that was the review to determine whether or not the system was suitable for the job? Was that the review that took place while the system was in operation, i.e., the monitoring of it to see if it was going to work for other jurisdictions? Or was that a review that took place to answer whether or not the system was actually doing its job towards the end when difficulties were noticed, and to determine whether or not it should be shut down and they should go back to the old system?
Hon. M. Sihota: Yes, as I remember.... Again, I'm functioning from a memory of a board meeting and the presentation that the board received -- certainly the briefing I had on it.
The $1.4 million.... Originally I think it cost about $8.6 million, and then $1.4 million was added on, which took it up to $10 million. In terms of some of the wind-down, $12 million is sort of the upper-limit estimate; it may be as low as $10 million and as high as $12 million. Be that as it may for the time being, I believe that is the cost of the analysis of the system during the course of when it started to develop problems, and then the ultimate evaluation and cost associated with making the decision that led us to wind down. As I recollect, it also involved some of the costs associated with modifying the system to try to see whether or not we could breathe life into it.
G. Farrell-Collins: When I see these numbers of such-and-such million or this many million, I always try to put it in context, so I can compare it to something I'm perhaps more familiar with. I look back at the labour review panel, which was $1.5 million, and I look at this review, which was $1.4 million. I guess it's not really a question; it's more of a comment, that I find it hard to see how that amount of money could be spent in that relatively short time. I guess it's very technical, and the people involved were specialists, and the costs were substantial. I guess we'll have to leave it at that. But it is a large amount of money.
The next time Hydro makes that type of decision, or the next system they go to try out, I would assume the testing, pretesting and analysis will be done beforehand, before we commit ourselves to $8.6 million worth of expenditures to try out a new system. I would assume next time it will be done a little bit differently. And I understand and agree with the minister that perhaps a certain portion of this doesn't fall within his tenure as the minister responsible.
I do have another question with regard to B.C. Hydro, and that's the interest rate charged on overdue accounts. We had representation to our caucus some time ago about interest charges in a general sense. One that was brought up was the interest charges and interest rates charged by B.C. Hydro specifically. Knowing that the minister is responsible both for Consumer Services and for B.C. Hydro, perhaps he can give us a bit of a description of those charges and why they are at the rate they are.
Hon. M. Sihota: I think the member should not presuppose that there wasn't work done in advance of the $8.6 million expenditure, to ascertain whether or not this was the best system available and to assess the
[ Page 5857 ]
quantum of the risk. Now we're really getting into a time well before my tenure, but certainly that was done as well. So I'm not too sure if you understood that; I just want to make sure that's clarified.
With regard to the interest rate issue, your colleague from Surrey-White Rock asked that very question, and I've already answered it.
G. Farrell-Collins: Then I will leave it. I will assume that he canvassed it thoroughly, as he usually does when he grabs hold of issues, and I'll leave it at that.
I do have a couple of other questions, fairly short ones. The "Home Ideas" show -- and we talked a little bit about PowerSmart this morning -- which is a program that the government has, where my understanding is that there's a bit of a tour that goes around the province, and there are demonstrations made to convince people that PowerSmart is in their best interests and that there are things that they can do within their homes and businesses to try to save and conserve energy. Can the minister tell us what the status of that program is? Is it being allotted for again this year at the same level? Is it increased? Is it decreased? What's the plan for that?
Hon. M. Sihota: For that kind of detailed question I had staff here this morning. Maybe the hon. member left 30 seconds too early, but I did canvass his party to see whether or not they wanted Hydro officials back.
I have received nothing which would suggest that the "Home Ideas" show is in any way subject to cost-cutting at Hydro or that it is in any way threatened. It's a very popular program that, I think, provides a lot of good advice, with a very strong personality in terms of Shell Busey. I think the program enjoys a high level of public support, so much so that I even find myself listening to the radio show on Saturday or Sunday mornings -- whenever it comes on. I'm always amazed at how much I learn. I have to give Mr. Busey a lot of credit; he's a remarkable man with a remarkable degree of knowledge.
We're spending about $63.6 million this year on PowerSmart, and within that amount is an allotment for that show. I don't see us losing that. As a regular listener, I would be most upset if we did.
G. Farrell-Collins: Despite the minister's accolades for the "Home Ideas" show, my understanding is that the program itself -- which I think he said Mr. Busey was responsible for -- has been cut to about 40 percent of what it was last year. The number of days that gentleman is involved in those programs has been cut from, I think, 232 to 92. That's a bit of a concern, given the minister's comments about the benefits of the show and the benefits of PowerSmart, which we all accept. I'm wondering why there has been that size of cut, given the accolades the minister has for that program.
[4:15]
Hon. M. Sihota: I don't know if your information is right. Certainly nothing has been brought to my desk that would indicate a review of that program. I'm trying to reflect on the decisions we made at the budget committee level with regard to PowerSmart, and that's certainly not my recollection. In any event, I'll be happy to inquire. This is what happens when the opposition asks staff to leave and then asks questions.
G. Farrell-Collins: Perhaps we should set the record straight. Clearly, the opposition didn't ask any staff to leave. It's up to the minister to either have the answers or have the staff here for his own benefit. It's not for the benefit of the opposition. Either the minister knows the answers or if he doesn't, then it's up to him to have his staff here for his own benefit, so that he can answer the questions. That's up to the minister to decide; it's certainly not up to the opposition. But if he wants to engage in that type of negotiation, I'd be thrilled to do that. Perhaps he should talk to the critics from the opposition and not just throw out an open-ended question as the committee is rising or adjourning. That's up to the minster to decide, of course. But it doesn't make him look good when questions are asked of him and he's not prepared and doesn't know the answers.
Given the minister's accolades for the program and for PowerSmart, can he give us his assurance that that program will not be cut and that, in fact, it will continue at least at the level it was last year?
The Chair: I want to respectfully remind members of the committee that we have proceeded very well, with considerable civility, in a rather high-toned debate. I would suggest that we try and continue and that we put an end to the sub rosa comments about who told whom, and when.
Hon. M. Sihota: I told the hon. member that I will inquire about the issue, and I will.
G. Farrell-Collins: I am sure the member will inquire; I know he has an affinity for the program. I guess I'm looking for an assurance from the minister, beyond an inquiry level, that the program will continue at least at its current level this fiscal year.
Hon. M. Sihota: Part of it is a board decision. Secondly, you've got to understand, hon. member, that I have nothing before me that would indicate that that program has been cut.
G. Farrell-Collins: I suppose the minister is reluctant to make that comment. I was just looking for an assurance from the minister that if it's within his power, he would ensure that the program continues at its present level, and if the board were considering any cuts to that program, he would direct them otherwise, stating quite clearly what the policy of the government is. I understand that traditionally these boards have been intended to operate with some independence; they don't always. Clearly the minister can make his views known to the board and make representations as to
[ Page 5858 ]
what the goals of the government are. He has said numerous times that he has given direction to the board. So I am looking for an assurance from the minister that he will give direction to the board that that program will continue much as it has, that we will continue to see that program do the good work it does and that the minister will make representation to the board to ensure that is the case.
Hon. M. Sihota: For the sake of repetition, I don't know whether or not that decision has been made. The hon. member says that it has. I don't have any information to the contrary.
I don't know what our contractual obligations are. I don't know whether or not a wind-down period on the contract that existed between the parties was envisioned with regard to that program. It may be that this was to determine what happened. I would have to get an answer to that question.
If this satisfies the hon. member, let me simply say that the views I would articulate to Hydro would be no different than the views I've articulated in this House.
G. Farrell-Collins: There is another program. I believe it is a federal program, if I am correct. There is a reason for asking the minister this question. It is the National Energy Conservation Association, where people who are currently on UIC -- I believe the term the government uses is "chronically unemployed" or "unemployable" -- are brought into a program. In this one, these people are brought in to engage in on-the-job training in the electrical field. They go into homes and industry and advise on methods and means to reduce electrical consumption. My understanding is that this program is being cut by the federal government. Again, I am not 100 percent clear on the facts. Perhaps the minister is more and better informed than I am. But if that type of program is being cut by the federal government, given the $63.5 million you've stated you're spending on PowerSmart, would this not be the type of program that could achieve two things in British Columbia: a reduction in unemployment and an increase in job training, and also a reduction in power consumption?
Hon. M. Sihota: B.C. Hydro offers a home audit program with regard to ideas on energy saving.
J. Weisgerber: I'd like to continue with some questions on Hydro as well, and I will do so risking the rebuke. Let me say at the start that the questions asked this morning were of a technical nature. The ones today relate pretty directly to government policy, and Mr. Hunt or Mr. Thompson wouldn't have been a great deal of assistance.
I'd like to start off by exploring the decision to require or request of Hydro the dividend in an amount that a normal private utility would generate for its shareholders. I understand that the position taken by the government is that Hydro should be required to return a dividend to the shareholders in an amount equal to the average in private utilities. I wonder if the minister could tell me on what basis the calculation is going to be made. Is it going to be made on the basis of assets or equity? It is rather critical for British Columbians to know on what basis you are going to assess the degree of dividend you expect from Hydro.
Hon. M. Sihota: I have already answered a lot of these questions from your party. It is return on equity.
J. Weisgerber: Could the minister tell us when he and the government are getting all the full dividend that they believe is warranted from Hydro in today's market.... If you were to realize a return equal to what a private utility would generate, how much, given the equity of Hydro, would that generate for Hydro today if you were able to achieve that?
Hon. M. Sihota: I'm not trying to be purposely evasive here, but given the fact that there is an application before the B.C. Utilities Commission on the issue, I'm not too sure if I should state the number. I'm really operating on an abundance of caution. Let me put it to you this way. Given that there is this application and that there is some concern around that number, I'm just not sure if I feel comfortable talking about the numbers that are under consideration here. Again I wish you had asked me about it this morning, because I'd probably have had a little more information as to where we are at the BCUC hearing.
I'll be happy to do this in terms of ranges. If you don't mind, I'll do it that way. The ranges are basically between $230 million and $400 million in terms of revenue that you'd expect to the province. In terms of the revenue that one would expect from the application, this would be about $80 million, or four percent of $2 billion worth of sales. So we'd be looking at about $80 million in revenue that's raised, should they approve the 3.9 percent application.
J. Weisgerber: I'm trying to recollect the numbers as I saw them. Is the minister suggesting that, given some growth in equity down the road, the maximum kind of amount that the government is looking for out of this, in total, when all of the rate increases have been achieved, is something in the range of $400 million annually from Hydro? Is he saying that if Hydro, given its equity, were paying a dividend equivalent to B.C. Tel, for example, that the total dividends would be in the $400 million range?
Hon. M. Sihota: Well, I guess that's always a problem when you give people a range -- you grab onto the higher, not the lower number. It could be a lower number. I purposely gave you a broad range because of the caution that I feel about the BCUC hearings. If I can express it to you another way, the return on equity.... We looked at various private sector utilities, and they range like this: West Kootenay Power and Light Co., I believe, is on the high side at about 22 percent, and B.C. Gas or Westcoast Energy is 12 percent or 12.5 percent. So that's the range you'd be looking at in terms of the return on equity. Those are the numbers that we've used to build our case for the Utilities Commission.
[ Page 5859 ]
In addition, I may also tell you that we're approaching it a lot differently than your administration did. Again, functioning from memory here, your administration, I believe, did not require the matter of the dividend to go to the Utilities Commission and to go through the kind of scrutiny that we're going through now. We are doing this in part to make sure that there is scrutiny around these numbers, and it's an opportunity for the industrial group which has raised concerns to express its views to the Utilities Commission.
So (1) you'd be wrong to seize on the higher number; (2) if you're asking me whether or not that was an annual number or a number over a four- or five-year period, it was an annual number that I was thinking of at the time; (3) the ranges in terms of utilities I've given you; and (4) we do have the scrutiny process in place with regard to the Utilities Commission.
The Chair: Before we proceed, may I just caution all members to please direct your comments through the Chair.
J. Weisgerber: First of all, let me say this: the previous administration only collected dividends from Hydro through efficiencies. There was never an approval given to Hydro to go to the Utilities Commission to request an increase in rates to cover dividends. That is a fundamental difference. The dividends paid by Hydro to the previous administration had to be developed out of efficiencies within the system. I think it's fair to say that there wouldn't be that kind of scrutiny, because there never was that kind of request.
Getting back to the issue -- 12.5 percent return on equity -- I'm trying to recall the equity at Hydro, and then I would have a good deal more sense of where we're going. I believe the assets are around $7 billion. In any event, we're looking at a fairly significant amount of money.
Hydro sales are about $1.5 billion a year. Half a billion dollars would represent 33 percent of that amount, so it would follow that in order to develop a dividend of that magnitude, rates would have to increase by a similar amount. The minister shakes his head, and that's what I would like to explore, because we look back, from the years 1985 through 1991, when this policy was announced. Had the policy been in effect in those five years, the inflation plus 2 percent would have developed a 40 percent increase in Hydro rates in the years 1986 through 1991. They actually went up by 9.6 percent. There would have been an additional 30 percent increase in Hydro rates in the immediately preceding five years that would have just about developed the amount of money that I've calculated Hydro will be expected to give to the government.
I'm curious to know what kinds of projections, in terms of rate increases, the minister sees as necessary in order to achieve what he has -- obviously on behalf of the government -- set out to acquire. It seems to me that rates are going to have to go up by between 25 and 40 percent in order to achieve that kind of dividend. I'm curious to know whether the minister agrees with that, and if he does, how long his or Treasury Board's staff project it will take on the basis of 2 percent over inflation to achieve that kind of a return.
[4:30]
Hon. M. Sihota: Remember when Mr. Eliesen was hired a year ago? The sort of bogeyman that the opposition was trotting out was the view that Mr. Eliesen had increased rates in one big swoop in Ontario by 20 to 25 percent, and that the same would happen here in British Columbia. First of all, that hasn't happened. Secondly, we've capped rates at inflation plus 2 percent -- or inflation plus 1 percent, depending on the year. Because of that, you can't have a situation where the rates increase by 24 or 25 percent in any given year. In fact, it would be materially much less than that.
Thirdly, I haven't looked to see whether or not you've secured all the savings through efficiencies or whether you had to go to BCUC. I'll take your word for it. But you've got to take my word that I've already told Hydro that they have to find revenue in terms of efficiencies, and that was the first place to start. I've said that a number of times during these estimates, and that's the direction that's been given to Hydro.
Fourthly, you know and I know the way in which your directive was worded: if the government wanted the funds, and if they weren't within efficiencies, you would bypass the BCUC system. In any event, that's probably history in terms of us getting into what you guys had passed. It's really more a case of what this administration has done; we've protected consumer interests by capping rates at 3.9 percent this year.
J. Weisgerber: I've got to tell you, Mr. Chairman, that I have a great deal of trouble accepting the notion that a 3.9 percent increase is somehow protecting the consumer, given that Hydro rates have never gone up in one year by 3.9 percent. If you're saying that you're protecting consumers from government, I would accept that. But I wouldn't accept that somehow you're protecting consumers from rate increases. In the years that I've examined Hydro's rate structure -- and I've gone back a fair way -- I think there was one year in the whole time when Hydro rate increases went up by that much. I'll repeat: in the five years leading up to 1991, Hydro rates went up by less than 10 percent in total. So to suggest that capping rate increases at 3.9 percent at a time of low inflation is to protect the consumers' interests, I can't accept.
The point I'm trying to come to here is that if we are going to achieve a dividend that requires an increase in Hydro rates of 25 percent to 33 percent -- and they will if you're going to get the kind of return you want from Hydro -- rates will have to go up by that amount. I'm curious to know, given the formula, how many years you think it will take at 3 or 4 percent a year before the government will achieve its full anticipated return on equity from Hydro.
Hon. M. Sihota: I guess we can debate all day in terms of where the previous administration was and where we were at. But if you follow the various economic forecast models.... I said this the other day
[ Page 5860 ]
when talking about one of them in response to a question from your colleague the member for Okanagan-Vernon, so we are really going over territory we have covered in estimates already. I indicated to him at the time that with regard to the formula your administration put forward, the model indicated that we could probably get away without any significant rate increases -- or any rate increases, in fact, if you want to put that argument forward -- for one to three years, depending on how the situation emerged. If you're looking at significant rate shock by the third year, it would be at least 11 percent.
So the model that your administration put forward was a little like ICBC, where you sort of reached into the rate stabilization account so much that ultimately there was nothing there, and one had to administer a significant rate shock. We're obviously trying to avoid that and provide some stability with regard to rates. So the stability is provided. There is no time period -- whether it's eight, ten or 12 years -- in terms of our calculations.
J. Weisgerber: Rate shock, I'm sure, in the electricity business particularly is something that no one would want to have. In any event, it seems to me that that kind of increase in rates would come only because of a sudden and significant increase in generating costs. We talked a bit earlier today about the plans Hydro had for new and increased generation facilities. I got the distinct sense that there were no major projects on the horizon, so I don't know what would cause an 11 percent increase. I don't see Hydro's costs going up that significantly. As a matter of fact, I would see, until some new generation facility was brought on, Hydro's rates staying pretty stable. I don't see a big push on Hydro rates. So I'd like more information on what might cause that kind of jump in the rates a couple of years down the road.
Hon. M. Sihota: One issue you touched upon was with regard to capital improvements. If memory serves me right, your administration made some assumptions with regard to capital projects. I don't think Mica was included, but I believe Keenleyside was one of the assumptions your administration made. I suspect we're probably working under that model. So that was one of the variables.
I should add that it would be incorrect for the hon. member to take my comments this morning to suggest that we aren't looking at capital developments. He says he got the genuine sense that we were not planning any developments. When we were talking about Kemano and downstream benefits, I explained some of my concerns around downstream benefits. But I think it would be wrong for him to operate under the assumption that we are not contemplating any major projects. Some of the forecasting that is occurring.... If you look at the electricity plan we issued earlier this year, you will see some assumptions in there in terms of capital works -- some of which we may have to bring forward depending, as we discussed this morning, on what happens in terms of Kemano and downstream benefits.
In terms of Kemano, there are a lot of issues there that have to be resolved. They have a contract to deliver to us by January 1, 1996, and I'm not sure that they can. It's fair to say that something swings on that, and that something else swings on what we do with downstream benefits.
The problem I'm having here is that it's all interrelated. Some of the decisions we may want to make with regard to downstream benefits will have an impact on what we do in terms of developments and also on what we may realize in terms of dividends, first of all.
Secondly, there are some considerations with regard to export. With the export report not being out at this point, that has an effect on the kind of revenue Hydro can generate and to what extent the dividend requirements can be met from export sales. I think the hon. member understands that. Given the fact that the Gathercole commission will very soon report out, you have to realize that a lot turns on that.
In terms of the dividend, you have to remember that some turns on our debt-servicing cost. We're looking at a downward situation, at least in the short term, in terms of some of those debt-servicing costs. Some of those locked-in mortgages we talked about earlier are coming up, and I think we can make some progress in terms of debt servicing. In fact, in last year's annual report, which I filed recently, one of the reasons that Hydro enjoyed the fiscal picture it had this year was because of exports and reductions in debt-servicing costs, in particular with regard to exports.
With respect to exports, there are other considerations. Apart from what we do on downstream benefits and what we do with the Gathercole commission when the report comes in, it's important to note that -- given what we were also discussing this morning as to whether we may be in a position to generate the kind of revenue we've generated in the past with regard to export -- all of that will have an adverse effect on our bottom line. Inasmuch as there are some dividend assumptions for this year which I think we can meet, I would not want to preguess whether or not we can do that next year.
J. Weisgerber: I want to make sure that I understand the scenario the minister is painting. As I understand it, there are a lot of variables, and the dividend takes last place. The variables are met. The government then doesn't demand of Hydro an automatic return on its investment and is prepared to take second place to the variables -- the capital costs and the downturns in exports. All those kinds of things would then take second place, and the dividend would flow more like it would with a private corporation but not necessarily a utility. A utility, it seems to me, has a mandated return on equity, investment or whatever, and it drives the rates to match the needs, to meet costs and a dividend. What I'm hearing from the minister is that Hydro would like to achieve and deliver those dividends, and the government would like to receive them, but there's a lot of uncertainty as to whether Hydro will be able to perform, to provide that kind of
[ Page 5861 ]
commercial return on investment to the province. Is that the direction I'm hearing?
Hon. M. Sihota: What both you and I have done is describe the tensions that exist. Given the fact that there is currently an application before the Utilities Commission, I am somewhat reluctant to speak one way or the other on that issue. I've laid out both sides of the tension. You know as well as I that there are calls the Minister of Finance can make -- and did make in my case -- in terms of general requirements of government. There are also corporate responsibilities as a Crown corporation in terms of how you see the world unfolding. In some ways we meet at BCUC to discuss some of these issues; some are resolved in cabinet and some at the Hydro board level. Yes, one or the other can drive the process. Yes, there is an application from the BCUC.
[4:45]
I am somewhat reluctant to elaborate any further. Any comments I make here might serve at that commission as evidence for them to determine what's driving what. You can understand the dilemma I'm in, given the fact there are currently hearings in place. Some of this will be resolved at the hearings -- some of the evidence that may occur during the hearings. It's quite possible I may have to give evidence at the hearings on directions the government has provided. At this point I'm not in front of the BCUC and have some reluctance in confirming that at this time. On another occasion or through a private briefing, I'd be quite happy to deal with these issues with the hon. member, but given the time frame we find ourselves in in terms of the BCUC hearings, I'm a little reluctant to go further.
J. Weisgerber: I will move off that specific issue to a related area. It seems pretty obvious that in order to meet the general expectations of government, Hydro will have to increase its reates by somewhere in the range of 25 to as high as 40 percent.
Interjection.
J. Weisgerber: Given the size of Hydro's sales and given the expectations, if you're going to return anywhere near a rate comparable to what's happening in privately-owned utilities, the mathematics lead you to the conclusion that the rate increases over time will have to be in the magnitude of 25 percent to 40 percent. The numbers simply won't fall into place otherwise.
I'd like to take a few minutes to talk to the minister about the role he sees for Hydro in creating a favourable economic climate in British Columbia. I think he would recognize, as I do, the tremendous potential that Hydro has and the significant influence it has on the economy of this province. It's one of the things that make B.C. Hydro such a fascinating subject, and one of the things that always draws ministers to spend a good deal of their time and energy on Hydro. Most people recognize that Hydro can have a tremendous influence on the future of the province and a very direct influence on economic issues. It also has the opportunity to influence related social and other issues.
I'll tell you up front that I'm concerned about the effect on the British Columbia economy, and particularly concerned about the effect on energy-intensive industries of a rate increase of the magnitude of 25 percent or higher. The resource industries, particularly mining, will be hard-pressed. They are enormous consumers of electricity, as the minister knows, and they are marginal now. Many of them are barely profitable. Many of them are in a loss position, so the effect on the economy of British Columbia becomes a serious consideration. The minister has said a number of times that he believes that the shareholders deserve a return on their investment. The shareholders are Hydro consumers themselves, so it's a little bit like taking it out of one pocket and putting it in the other. There is a good deal of that.
The other influence is on the economy of the province, and I'm wondering what kind of thoughts the minister has had -- what kind of projections he has done; what kind of studies they might have done -- on the effect of a 25 percent hydro increase on various endeavours in British Columbia.
Hon. M. Sihota: I'd never accuse you of playing politics, but it's amazing how on one hand we have a cap placed on rate increases -- which is inflation plus 2 percent -- and on the other hand somehow you think inflation plus 2 percent is going to equal 25 percent. You're not going to have a rate increase next year of 25 percent, or 40 percent, or 50 percent because we put that cap on. But I appreciate the headline potential when you say that 25 percent or 40 percent is going to be the rate increase. You did it last year and it didn't bear fruit, and the sky isn't falling in this year either. Not only that, we have some remarkably talented administration at Hydro, led by Mr. Eliesen, who can both deliver on dividend and achieve the economic potential of Hydro.
You're right about the impact on industries in terms of Hydro rate increases. Obviously rate design is an issue, and the extent to which the rate impacts upon residential, commercial and industrial users is an issue. The way in which we tried to design those rates is an important consideration. With respect to the $80 million that's forecast to be raised by the increase of 3.9 percent, which is before the Utilities Commission; that's 3.9 percent, which is before the Utilities Commission. I hate to tell you this, but the needle might be stuck: it is 3.9 percent, and it's before the Utilities Commission -- not 25 percent. With regard to that 3.9 percent, we expect to raise about $80 million in revenue. Of that $80 million, about $18 million would come from the industrial sector, and that would be the impact on mines -- not $18 million on mines, but on the industrial sector.
I don't know what quotient then is attributed to mines from that point on, but I know that we're quite sensitive to the competitive nature of all sectors -- be it pulp and paper or mining, which are the major users of energy. Because of that sensitivity and because of the fact that we intend to try to keep rates on the low side, we've tried to minimize the effect and we have indicated to the industries in question that we would assist them on the demand-side management through
[ Page 5862 ]
PowerSmart programs that we have, in order to cushion the blow of any rate increases.
There's a lot we can do on that side. There's a lot we have been doing in terms of providing assistance, and there's a lot more that we intend to do. There are also things we can do with the regulation, quite frankly, to reduce consumption. Some would argue, in theories that have been put forward -- which I'm sure you're aware of -- that increases in rates would actually have a positive effect in terms of conservation and reducing consumption. I guess that's a factor to bear in mind. With a combination of demand-side management and conservation techniques, it's hard to really calculate the direct impact it will have in terms of costs. We try to structure the design and the rate so as to recognize some of the situations that are faced by the industry, be it mining or pulp and paper.
In addition to that, we have historically enjoyed the second-lowest rates in Canada on industrial, commercial and residential power. Manitoba has generally had lower rates than ours, but we in British Columbia have been second. It gives us a competitive advantage over our trading partners to the south. In fact, inasmuch as we are looking at 3.9 percent here in British Columbia, it's interesting to note that Bonneville to the south of us, to its consumers, is looking at about a 20 percent rate increase. So, concerning the argument put forward by the opposition in terms of Washington State and our ability to compete there, let's not forget that they're looking at increases of 20 percent being put forward as a conservation instrument in those jurisdictions.
So I'm confident that -- given what's happening to the south of us, 20 percent in Washington State -- the 3.9 percent here is not going to hinder our competitive abilities at all, combined with demand-side and some of the conservation techniques we're looking at. We're in a relatively good position and still remain the second lowest in Canada.
[H. Giesbrecht in the chair.]
J. Weisgerber: Certainly I'd never want to come here and play politics in estimates. But if I were tempted to do that, I would be tempted to remind the minister that not only does British Columbia enjoy the second-lowest hydro rates, they also -- as a result of some 35 years of good administration in this province -- enjoyed the second-lowest sales tax rate, the lowest per capita debt in the country and the second-lowest taxes. But that's not what we're here to talk about today.
The reality is that Hydro may have some remarkable talent, but as remarkable as they are, the minister will not be able to achieve his stated objective -- to have Hydro return to the taxpayer a comparable, competitive return on investment or equity -- without a 25 percent increase in rates. He can say that any way he wants. But there is no other way to get a competitive level of return on equity comparable to what's happening in private utilities, without an increase of at least 25 percent. And I would say that was a very conservative estimate; I suggest the number 40 would be much closer than the 25. But I don't want to be seen as fearmongering, so I will suggest to you that 25 percent is where you are going to have to get to.
Now, you're not going to get there this year or next year unless you change the directive. But at 4 or 5 percent a year, it will take five or six years to increase Hydro rates by that much. I will say again: you can't achieve your stated objective, given Hydro's sales, without that kind of increase. It is physically impossible. There aren't those kinds of efficiencies in the system. Your sales are only $1.5 billion. If you want a return anywhere near $400 million, the mathematics seem pretty simple.
I want to say again that I think there is an opportunity here that shouldn't be wasted. In our economic bag of advantages that the Premier can take to Asia, that our ministers of economic development can use as they travel around seeking investment, you shouldn't overlook the attractiveness of competitively priced hydroelectricity. You shouldn't overlook the advantage of being able to say to potential investors: "We have the second-lowest hydro rates in the country." I believe you're going to move away from that. I believe you're on a course that's going to take British Columbia out of that enviable position. And I think it will, in the long run, provide more damage to the treasury than it will in fact incur or add to the treasury.
Hon. M. Sihota: You know, I'm tempted, as always, and certainly as my track record has demonstrated from time to time....
J. Weisgerber: I'm listening.
Hon. M. Sihota: Oh, you are. You're all ears.
J. Weisgerber: It's a trick I learned when I was the minister.
Hon. M. Sihota: Oh you did, eh? [Laughter.] I'm just surprised you can do two things at the same time, but I must say your talents are enormous.
Well, far be it from me to engage in politics, because I've never done that in terms of my life experience around here. But you know, the fact of the matter is that we inherited one of the worst deficits in the country. We've reduced the deficit from $2.4 billion to $1.5 billion -- that's something the previous administration was never able to do. We've reduced taxes for 28 percent of British Columbians, and only 8 percent of the wealthiest in British Columbia are now paying increases in taxes. So we've done very well in terms of the budget that we've introduced.
Based on your calculations of 40 percent -- which has gone up now, and I guess the next time you get up, it will be up to 50 or 60. You're saying that we will be looking at rate increases of 10 percent over the next four years, but that's not possible. First of all, we have a regulation in place that says inflation plus 2 percent, max; second, we've said that it has to go to the B.C. Utilities Commission for a review. So the process isn't the same as your administration's, which said that they could just order Hydro to pay, without regulatory review. We have provisions here for regulatory review.
[ Page 5863 ]
Notwithstanding this rate increase at 3.9 percent that has only been approved on an interim basis, we have still maintained rates at the second-lowest level in Canada, and we have not in any way handicapped our ability to compete with our trading partners.
[5:00]
You must be spending a lot of time reading papers from Washington State, because it is to the south of us that they are seeing rates increase by about 20 percent, and that's the current intention of BPA. Compared with Alberta, Saskatchewan, Ontario or Quebec, and except for Manitoba, we have the lowest rates of hydroelectric power, and under our assumptions, that will continue to be the case. We have significantly lower rates than Washington State or Oregon or California, who buy some of the electricity from us here in British Columbia. They help generate revenue for B.C. Hydro because we have revenue coming in from these exports, so that we aren't increasing costs to domestic producers or domestic users here. Let me say that we have done exceptionally well in this province, and we are continuing that tradition of doing exceptionally well. Hydro has been a relatively well-run corporation, and it will continue to be a relatively well-run corporation.
There are obviously some problems. I don't want to start going through some of the areas where I think the previous administration made significant mistakes with Hydro; but if we want to get into that debate, we can as well. There are areas where I think there are efficiencies, and there are areas where I think the previous administration made expenditures that didn't make sense. We talked about the $8.6 million, or $12 million, we've had to spend on the Daffron system, and there are all sorts of other examples that I can give you. But the bottom line is this: the regulation says inflation plus 2 percent. That means 3.9 percent this year. The regulation does not allow for 10 percent increases on an annualized basis, and only your argument would suggest that's the case. In addition to all of that, not only is your argument wrong, but remember it's subject to regulatory review with BCUC.
To get to your question, obviously we see that there is economic development potential with Hydro, and it should and will play a major role with regard to economic development in the following areas: first, in terms of capital works and ongoing infrastucture work within the province. Let me give you an example. Your administration deferred about $85 million worth of maintenance work. I think it was the Peat Marwick report that pointed out that there was a deferral in necessary maintenance of $85 million in order to generate the dividend that you had requested from Hydro. So we have some catch-up to do certainly in terms of maintenance, which will generate economic development and employment opportunities.
Second, we will engage in better utilization of the resource with some capital expenditures. An example is what we're doing at Stave Falls, where we're taking a 75-year-old generating facility and upgrading the turbines to take better advantage of the water that is currently spilling over to generate additional hydroelectric power. That means that we're going to have economic development and employment opportunities in that area.
In addition to that, we have to make some decisions regarding the availability of electricity, which will also generate economic development opportunities. An example is the Clayburn substation and a decision we've just taken as a board to proceed to servicing the Fraser Valley. In all of those areas we're looking at economic development and direct job creation through direct economic stimulation. There are other things that we're going to be doing in terms of the demand side, the conservation side, which will of course encourage the development of alternative technologies, which I think is an important way to go. Part of that falls within the mandate of the Ministry of Energy, and for part of it we'll be doing some work regarding Hydro.
We will, through PowerSmart, provide assistance to businesses, both small and large, to be able to do more work in terms of alternative technologies. Through various programs we will encourage the utilization of gas as an alternative to hydroelectric power where and when that makes sense.
In terms also of economic development, we have to make some decisions regarding export, which I say are imminent and will assist us in determining where we go with IPPs. That decision, as I say, is very imminent. In terms of IPPs and the type of economic development opportunities that will flow if we were to do a wide variety of IPP projects that can plug into a grid.... Again, it's another example of economic development projects that can occur.
There are other things that we can do in terms of economic development. For example, we have to do a better job in terms of supplies and the acquisition of supplies from local businesses. We're not doing a good enough job. In fact, I was at a symposium on Monday from Tumbler Ridge, which I guess is not in your riding.
J. Weisgerber: It is.
Hon. M. Sihota: It is? Okay. I was talking to the economic development officer from Tumbler Ridge, and he was making a heck of a good argument in terms of us being able to buy more of our goods and supplies in that region. It's something that we're prepared to do. She made a very good and compelling case in that regard. Again, that would be a secondary kind of economic development activity that we can take.
Fifth -- or sixth, wherever I am -- we have just sponsored through B.C. Hydro a whole series of regional economic development symposiums in four different regions of the province: the lower mainland; central Vancouver Island; your region of the province, in terms of the northeast portion of the province; and the interior. We've asked leading business and community activists -- the chambers of commerce and the regional economic development offices, and so on -- to work with Hydro regarding regional economic development strategies that Hydro can play a role in. That work has just been completed. In fact, as we speak right now, they are meeting at the conference centre here in Victoria. They are coming together with all of the regional ideas that they have and feeding them into
[ Page 5864 ]
Hydro so that we can do a better job of meeting regional economic development needs. They've identified areas of tourism, recreation, agriculture and education, in addition to the traditional regional economic development work that we can do.
In terms of areas like education, through Hydro we will be doing more. We are starting now to get in very aggressively in terms of apprenticeship programs, which obviously help young people receive opportunities in terms of economic development. In addition to that, to coordinate all this economic development activity, we will be engaging a vice-president of economic development. Part of our restructuring of Hydro is that we have restructured the operations with a specific mandate to engage in regional economic development initiatives that would assist both small and large businesses, both mining and pulp....
The Chair: Mr. Minister, I hate to interrupt, but your time has expired.
Hon. M. Sihota: Thank you. I was enjoying it so much. I'm sure the hon. member will have more questions to ask.
J. Weisgerber: In his review of the economic situation in the province and the debt that he inherited, I wouldn't want the minister to overlook the fact that his government in two budgets has doubled the accumulated debt of 125 years in this province. His government has accumulated a debt equal to the amount that all previous governments in British Columbia have accumulated. I wouldn't want him to overlook the fact that the direct and guaranteed debt of British Columbia has been increased by $6.4 billion. I wouldn't want him to overlook the fact that taxes in this province have increased by a billion dollars a year in each of the two budgets. But that's not what we're really here to talk about, so I will resist the temptation to follow that line of discussion.
The reality is that, had the minister's own formula been applied in 1986 to 1991, Hydro rates would have increased by 40 percent, using the inflation rate of the day through those five years. I don't think we're going to have Hydro rates increase by 25 percent in one year. I wouldn't expect that. But I do believe that over a period of time, Hydro rate increases are going to affect the attractiveness of British Columbia as a jurisdiction for investment. The minister can talk about all the things that Hydro is doing to stimulate economic growth. The fact is that they should be doing that, and it's commendable that they are, but it will not compensate for the damage being done by rate increases in the magnitude that have to occur for the government to achieve its stated objectives.
I didn't put the words in the minister's mouth about receiving a competitive return on investment. That announcement was made by his government. It's a decision made by his government to require from Hydro a given amount of money. That's not my calculation. Many people who will be affected by this decision have looked at comparable utilities and have made projections. You know, Mr. Chairman, and I'm sure the minister knows, that in order to achieve those, there will have to be significant rate increases, and that's unfortunate. It's unfortunate also that the minister simply won't recognize that, and then we could move on to something a bit more productive.
Hon. M. Sihota: I won't remind the hon. member that in the second-last year of his administration, they increased government spending by 13 percent, and that in the last year of that ill-fated administration they increased spending by 12 percent. I won't remind him that this administration, in its first budget, reduced expenditures from 12 percent to 7 percent, and this year from 7 percent to about 5 percent. I won't remind him that taxes have gone down in this budget for 28 percent of British Columbians. I won't remind him that 400,000 British Columbians are no longer paying Medical Services premiums and that 95 percent of homeowners saw an increase in the homeowner's grant, because all of that would be as out of order as his comments were.
In addition to that, in terms of competitive rates of return, I will remind the hon. member that his party has consistently said that the private sector should be used as a benchmark to determine whether government is receiving an adequate rate of return from the Crown corporations it governs. It is always argued that the private sector test should apply. We've gone to the private sector to see what the rate of return is and what the free market economy -- if I can put it that way -- is delivering. Predicated on real-life private sector models like West Kootenay Power and Light, Westcoast Energy or B.C. Gas, we've arrived at some numbers that we -- unlike the previous administration -- have said we will put in front of the B.C. Utilities Commission for review.
The previous administration was not prepared to take these matters directly to the B.C. Utilities Commission. They were prepared to defer stuff like necessary maintenance by some $85 million to try to jack that money out of B.C. Hydro. To make sure that increases of 25, 40, 45 or 50 percent, in terms of the comments by the hon. member, don't happen, and that the sky doesn't fall in and that these bogus arguments put forward by the opposition, these doomsday scenarios and some of the negativity that seems to permeate the opposition.... We as an administration have said that in order to make sure that consumers of electric power in B.C. have some comfort, we will provide a cap -- a ceiling -- of inflation plus 1 or 2 percent, to make sure that 25 percent or 30 percent or 45 percent doesn't happen.
If we had seen the kind of incredible spending we saw from the previous administration -- 12 percent one year, 13 percent the next year.... If it hadn't been for the goodwill of the electorate in changing the party in power, we might have seen expenditures of 20 or 25 percent, which would have resulted in the kind of increases in hydroelectric rates which that administration covertly wanted to achieve and which we have blocked by putting in this cap, in terms of inflation.
On top of that, with these increases British Columbia has the second-lowest electricity rate in the country,
[ Page 5865 ]
next to Manitoba -- where Mr. Eliesen, who now is running B.C. Hydro, set the tone for low rates -- and we're going to be able to achieve lower rates here.
Interjections.
The Chair: Order, please.
Hon. M. Sihota: In addition to that, to make sure that we don't have the kind of situation which occurred in Ontario or Quebec, we placed that cap of 3.9 percent this year, in terms of inflation plus 1 or 2 percent. In order to maintain our competitive abilities, this province -- in comparison to other jurisdictions, particularly to the south of us, where they are seeing rate increases of 20 percent at BPA -- has been able to maintain its competitive standing, in our ability both to compete against Washington State and, because of our lower electricity rates, to attract investors here to British Columbia.
[5:15]
In terms of the foresight and progressiveness demonstrated by this administration, we've been able to introduce and expand programs such as PowerSmart, to make sure that there is better demand-side management. And we've improved upon the PowerSmart situation we inherited. We've offered a galaxy of opportunities to the private sector, including assistance to them so they can be more efficient with regard to the utilization of hydroelectric power and can save from any of the rate increases that come their way.
When you look at what we've been able to achieve as an administration, we are competitive, we are power-smart, we are resource-smart and we have....
J. Weisgerber: You're just plain smart.
Hon. M. Sihota: We are just plain smart. And we will not succumb to the desire of the third party to increase rates by 25 or 30 percent -- which would probably have been inevitable, given the spending patterns under their administration.
I see it's 5:15. I will give you a rebuttal before I move the appropriate motion.
J. Weisgerber: I'm pleased that the minister raised the Mr. Eliesen question. When I looked at the documentary on Ontario Hydro, it occurred to me that Bob Rae must have offered this government some kind of future draft choice or something. Once they got rid of him, there must have been a deal. There must have been another draft choice that went with it, because in hockey trades at least you don't get rid of a player without having made some other side arrangement. But with the limited time, I'm not going to start into that.
I thought it amusing, though, that the minister didn't seem to understand when he talked about Hydro competing with other private sector businesses that what he was talking about were regulated utilities. My friend, that's not the real business world. The real business world is not comparing a private, regulated utility with a publicly owned utility. If you want Crown corporations to be competitive, put them out, like B.C. Rail, into the marketplace. Let them compete with private corporations that aren't regulated, and then you've established a fair test for Crown corporations.
To say in some bizarre way that Hydro, as a regulated utility, has to be able to get out there and compete with B.C. Tel and B.C. Gas, that you now have competition and that Hydro is living up to the test of competing with private corporations is patent nonsense. It's got nothing to do with being competitive. Both of them....
Interjection.
J. Weisgerber: I'm delighted to see we are going to have some other members rising to their feet. Surely they won't simply sit and chatter from their chairs but will want to jump up and contribute to the conversation.
It's fair to say that Hydro's paying a mandated return on equity, by regulation through the Utilities Commission, has absolutely nothing to do with its competitiveness as a corporation. It's an arbitrary figure that's set, an arbitrary figure that's added to rates -- an arbitrary 25 percent at least that's going to have to be added for the minister to achieve the kind of return he wants to see.
We could be here for a couple of days and wouldn't get much closer to an agreement. I'll allow the member for North Vancouver-Lonsdale to take his place and add something to the debate.
D. Schreck: Unaccustomed as I am to accepting invitations from the Leader of the Third Party, I can't resist the opportunity to comment on the wise policies, for which the minister is responsible, and on the economic return to the province from a major utility like B.C. Hydro.
I find it almost beyond comprehension that the self-described leader of the so-called, hoped for Free Enterprise Coalition Party would have the gall to argue that a major utility should not perform on the same basis as any private utility -- accountable to its shareholders. It's long overdue in this province that we had a utility that's measured by marketplace standards, so that we could set good public policy and expect out of a Crown corporation the same performance we would expect if we were private shareholders of that corporation. I commend the minister for bringing rational public policy decision-making to this province.
Vote 49 approved.
Vote 50: ministry operations, $32,501,650 -- approved.
Hon. M. Sihota: Hon. Chair, I move that the committee rise, report resolutions and ask leave to sit again.
Motion approved.
The Committee rose at 5:23 p.m.
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