2007 Legislative Session: Third Session, 38th Parliament
HANSARD BLUES
This is a DRAFT TRANSCRIPT ONLY of debate in one sitting of the Legislative Assembly of British Columbia. This transcript is subject to corrections, and will be replaced by the final, official Hansard report. Use of this transcript, other than in the legislative precinct, is not protected by parliamentary privilege, and public attribution of any of the debate as transcribed here could entail legal liability.
(Blues)
HANSARD BLUES DRAFT TRANSCRIPT
COMMITTEE OF SUPPLY (SECTION A)
WEDNESDAY, MAY 16, 2007
Afternoon Sitting
PROCEEDINGS IN THE
DOUGLAS FIR ROOMCommittee of Supply
ESTIMATES: MINISTRY OF ECONOMIC
DEVELOPMENT AND MINISTER
RESPONSIBLE FOR THE ASIA-PACIFIC
INITIATIVE AND THE OLYMPICS
(continued)The House in Committee of Supply (Section A); S. Hammell in the chair. [DRAFT TRANSCRIPT ONLY]
The committee met at 2:47 p.m. [DRAFT TRANSCRIPT ONLY]
On Vote 24: ministry operations, $265,742,000 (continued). [DRAFT TRANSCRIPT ONLY]
H. Bains: I thank the minister and the staff that are present today to help us through the questions. I will be asking questions around the Olympics and Olympics-related items that I think we are all anxiously awaiting. [DRAFT TRANSCRIPT ONLY]
There are a number of issues that were raised. Because of time constraints, rather than going through a whole variety of issues, we will move quickly into some of the important areas where I believe some questions need to be answered and that are actually key to us having these games delivered efficiently and with accountability and transparency. Because of the lack of time available during these estimates, I will be concentrating on some of the key issues that I believe are very important for the public and for this House to get some answers to. [DRAFT TRANSCRIPT ONLY]
Quite a bit has been made…. Whether we read the Auditor General's report, the business plan that has been presented, the many media reports or many others, there are folks anxiously waiting to see some answers about the Olympics on the issues of accountability and transparency. They believe that there isn't enough of the accountability and transparency that is needed around these Olympics. [DRAFT TRANSCRIPT ONLY]
I'll start my questions around that. First of all, the Auditor General clearly indicated in his report that more transparency is needed, saying on page 34 that in his view there isn't enough transparency and that we need more transparency. My question is, first of all, why isn't there…? One of the areas that I think is identified in there for him to come to that conclusion is that of having a definition around the Olympic-related cost. Had this government done that, I think we probably wouldn't be arguing back and forth and the public wouldn't be arguing with the minister on whether certain costs are Olympic-related or not. [DRAFT TRANSCRIPT ONLY]I think other Olympics prior to these Olympics that we will be hosting — whether it was in Torino or in New South Wales, in Sydney — had their definition. So why has the minister or this government decided not to have defined what the Olympic-related costs would be? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I'll start, hon. Chair, by introducing the staff that have joined me today to support me in these discussions. Annette Antoniak is the president and CEO of the Olympic Games secretariat. Jeff Garrad is the chief financial officer for the Olympic Games secretariat. Doug Callbeck is the ADM for the management services division of the Ministry of Economic Development. We are also joined by Doug Foster, who is with the Ministry of Finance. [DRAFT TRANSCRIPT ONLY]
Actually, I've tried to be quite clear over this last year that we do have a definition for what the cost is to the provincial government for the staging of the Olympic and Paralympic Games in 2010. I think that what it really boils down to is that the member and others may disagree with the definition that I have put forward. [DRAFT TRANSCRIPT ONLY]
I guess everybody has the right to their own definition. I think anybody that wants to can go out and compile a list of things that they think are Olympic-related. I know that the media have done that. I've actually been a little bit amused by some of the things that some of the media reports have included. I know that the member has tried to lump things into things that he feels are Olympic-related. But I welcome that. Anybody can have whatever definition they want. [DRAFT TRANSCRIPT ONLY]
I think the bottom line is that whatever it is that you want to lump into that Olympic basket, according to your definition or anybody else's definition, the costs are actually spelled out. We're pleased to provide costs of activities that the provincial government is engaged in. If somebody, in their own personal definition, wants to say that that's an Olympic cost, then they can add that in too. [DRAFT TRANSCRIPT ONLY]
We've made it quite clear that we made commitments prior to being awarded the games. At the time of the bid, we made commitments in the bid documents to the IOC of the things that we would fund by the provincial government. We costed those to $600 million, which included at that time a very healthy contingency of $137 million. [DRAFT TRANSCRIPT ONLY]
According to all bona fide estimates that I have seen…. Certainly, our estimates are that we will be able to deliver on all of those costs of staging the Olympic Games that we've committed to, and we will do that within our $600 million envelope. [DRAFT TRANSCRIPT ONLY]
H. Bains: I think it's unfortunate that the minister says that there is a definition, a clear definition. Perhaps in the minister's mind, there is a clear definition, but in the minds of the public, in the minds of the taxpayers and, above all…. Not only the mind of the factual information that the Auditor General…. He actually is an independent body of this House — doesn't take sides, isn't supposed to be biased, isn't supposed to be politically motivated. [DRAFT TRANSCRIPT ONLY]
These are his words. I'll read to you and the minister through the Chair: "The province, however, has not yet developed a comprehensive definition of the Olympic cost." Clearly, either there is no definition, or this definition was not made available to the Auditor General when he was looking into the finances of the Olympics. [DRAFT TRANSCRIPT ONLY]
My question to the minister is: then is the Auditor General wrong? Or was that definition not made available to the Auditor General? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: If the member also wants to refer to page 54 in the Auditor General's report, he will see the written response from the province with regard to the provincial definition of games costs. I won't read it all, but what it says in there basically is what I said in my previous answer. [DRAFT TRANSCRIPT ONLY]
I would also point out to the member, if I can quickly find the right page here, that the Auditor General looked at the $600 million envelope and the charges that were against that $600 million envelope. As soon as I find the right page, he will note that there is a…. Here it is. It's on — no. My apologies. [DRAFT TRANSCRIPT ONLY]
I might not be able to find it quick enough here. What it does is it notes that we had projected our cost at $600 million for the direct costs of staging the games and living up to our obligations to the IOC. Actually I just found it here — page 41. The first column says that the bid estimate, 2002, in millions of dollars is 600. The second column says: "Estimates provided by the province to the Auditor General in 2006," and shows $600 million. The third column says: "Estimate by the Office of the Auditor General, $600 million." That's in the Auditor General's report from last year. [DRAFT TRANSCRIPT ONLY]
So I think the bottom line is that we've been totally transparent in terms of all of the costs that the provincial government is incurring within that $600 million envelope. It has been fully disclosed. It's been available through public accounts. There is absolute total transparency. If you want to take the member's definition of what might be Olympic-related costs, or perhaps one of the television outlet's definition, they, too, can make up their own compiled list of what they feel should be in that definition, because all the numbers are available. [DRAFT TRANSCRIPT ONLY]
Some people will argue and have argued that the Sea to Sky Highway should be included in our costs of staging the Olympic Games. I fundamentally disagree with that, because that's a project that would have gone ahead anyways. But the cost of the Sea to Sky Highway is totally transparent. [DRAFT TRANSCRIPT ONLY]
If the member wants to include that in his tally, he is welcome to do that, as he is with any expenditure of the provincial government regardless as to what ministry or what field it is. If he wants to come up with a tally of his definition of Olympic-related costs, the numbers are there and he can do that tally. [DRAFT TRANSCRIPT ONLY]
H. Bains: I think if we stay with what the Auditor General has said in one paragraph, and then certainly we can move to the other areas as well. [DRAFT TRANSCRIPT ONLY]
After, the Auditor General said: "The province, however, has not yet developed a comprehensive definition of the Olympic cost." Clearly, he didn't say that he disagreed with the definition. He didn't say that he couldn't find it. He said no definition existed. That's what I interpret this statement to be. [DRAFT TRANSCRIPT ONLY]
Then he went on to say this… The minister continues to say the $600 million envelope. He talked about that as well. He said: "The funding envelope does not include many expenditures that will or may be incurred in connection with the games." That's what the Auditor General is saying. This is an independent party, as I said earlier. This person has no axe to grind with anybody. He has no political motivation to come up with these definitions or these statements. [DRAFT TRANSCRIPT ONLY]
It is very clearly for the benefit of the taxpayers. He came up with the report, which I think is very comprehensive, in which he did a very good job in defining what the Olympic costs should be. By the minister continuing to stick to the envelope of $600 million, I think that's where the problem will continue to go on and will continue to cloud the public confidence. [DRAFT TRANSCRIPT ONLY]
The Auditor General and everyone else — every taxpayer out there that actually sees it, feels it, to see what the real cost of the Olympics is — know well that $600 million is not the cost and that it is more like over $2 billion that is decided in here in the Auditor General's report. [DRAFT TRANSCRIPT ONLY]The total cost to the provincial taxpayers is $1.9 billion. That's what the Auditor General has said. When you consider all of the costs that have been off-loaded to the municipalities and when you talk about off-loading the cost over to the government-supported institutions such as UBC — he added that up. All of that is in here. It's not $600 million. Clearly he's making a point that this envelope does not cover those costs. [DRAFT TRANSCRIPT ONLY]
Then he went on to say this. The minister that looked at New South Wales said this: "The definition is consistent with that used by the government of New South Wales in the Sydney 2000 games…." That's what the Auditor General is recommending. [DRAFT TRANSCRIPT ONLY]
I think the questions continue to be…. Number one, rather than getting into this argument of what is a Olympic-related cost and what isn't a Olympic-related cost, I think the public needs to know how much it's going to cost them, the total, whether they live in Richmond, Vancouver or Vanderhoof. They need to know what their cost is. How many of their tax dollars are being spent to stage these games? [DRAFT TRANSCRIPT ONLY]
The minister continues to say $600 million. But the Auditor General says that isn't true. I think that's what the public needs to know. Had the minister come up with the definition as New South Wales has done in Sydney, as Torino has done, I think we probably wouldn't be arguing about these costs, and the Auditor General wouldn't be critical of the government, about why they are not including the total cost of the games. [DRAFT TRANSCRIPT ONLY]
That's what my question comes to again. What is the definition of the Olympics, if there is one existing? Why was it not one presented to the Auditor General? If there is one that exists now, can the minister show us where it is anywhere written, in any of the documents, that that's the Olympic-related costs? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: There are a lot of inconsistencies in the Auditor General's report, and I will point one out just as an example to the member. The member used the specific example of the Richmond speed skating oval as something that was going to cost, as he said, the taxpayers of Richmond a whole bunch of extra money. That's actually not the case. [DRAFT TRANSCRIPT ONLY]
If you go into page 9 of the Auditor General's report, where it lists the capital budgets, it includes not only the provincial government's commitments to that but also the other third parties, as they say. [DRAFT TRANSCRIPT ONLY]
If you come down to the speed skating oval — as soon as I find it here — it talks about that having a provincial and federal commitment of $60 million. So there is $30 million from the province and $30 million from the federal government. But it then talks about third-party costs of $117 million, for a total of $178 million for the Richmond speed skating oval. You will notice that there is a little footnote 1 beside there. [DRAFT TRANSCRIPT ONLY]
Let's read footnote 1. It says: "The total projected cost is estimated by the city of Richmond to be $178 million. The amount of $117 million in the table represents Richmond's spending on the facility to enable it to have lasting legacy benefits to the community over and above the cost of having just a speed skating surface ready for the games." [DRAFT TRANSCRIPT ONLY]
The Auditor General included all $178 million in his grandiose number of $2-point-whatever billion that was. Yet he clearly states in his own footnote that it shouldn't be regarded as a cost of the Olympic Games. [DRAFT TRANSCRIPT ONLY]
There are a lot of examples like that. I could go through every one of them if you like. But I made it quite clear at the time the Auditor General's report came down that I would have to agree to disagree with the Auditor General in terms of things that he included in these Olympic-related costs. [DRAFT TRANSCRIPT ONLY]
As an aside, just to complete the story of the Richmond speed skating oval, the mayor and council of Richmond at the time said that the extra costs over and above the cost of building a speed skating oval would not be borne by the property owners in Richmond. The city of Richmond has delivered on that commitment. They said that it would come from extra casino revenues, and they said that it would come from the incremental value in the properties surrounding that new development that they are developing. [DRAFT TRANSCRIPT ONLY]
They actually, I think, even surprised themselves with what those surrounding properties were able to gain in terms of partly sale and partly long-term lease to a developer that brought into the city of Richmond $143 million. [DRAFT TRANSCRIPT ONLY]
So the city of Richmond may have put up an extra $117 million to build a facility over and above what was required for a speed skating oval, as acknowledged by the Auditor General. They have more than recouped that by the added value in property that is going to result from that legacy of that fabulous new facility. [DRAFT TRANSCRIPT ONLY]H. Bains: If the minister wants to engage in how these facilities are going to be funded and what methods are going to be used, whether it's the Richmond method or some other method, I think we can engage in that. But that's not the question. The question is, first of all, that government has to admit that that is an Olympic-related cost. [DRAFT TRANSCRIPT ONLY]
Once you do that, I think the public will still support you, Minister. The public will still support you because the public wants to see these games be successful. So do I, and so does the minister. But the issue is transparency and accountability, and that's where the disagreement is. [DRAFT TRANSCRIPT ONLY]
The minister is telling us that the Auditor General is wrong and the taxpayers are wrong. The only person that believes in those numbers is this minister and the people in his government. [DRAFT TRANSCRIPT ONLY]
The second argument I would like to bring to the minister's attention is this. If we are talking about how we are leaving legacies behind, then none of that should be considered as Olympic cost because everything will be left behind — with a very few being dismantled and moved way. [DRAFT TRANSCRIPT ONLY]
You talk about the Nordic centre. You talk about the oval. You talk about anything else. Whatever is being built to stage the games, legacies will be left behind. Those buildings will be left behind. Those sports venues will be left behind. If that's the argument, none of that — not even the $600 million — should be considered Olympic-related costs, because roads will be left behind. Callaghan Valley Road will be there. The buildings will be there. So what is the Olympic cost if that's the argument? [DRAFT TRANSCRIPT ONLY]
I think the public knows better, taxpayers know better, and the minister knows that they are actually footing the bill for all of those buildings and that this is an incremental cost to the taxpayers because we are hosting the games. That's what the issue is here. The Auditor General recognized that. The Auditor General listed that in the report. [DRAFT TRANSCRIPT ONLY]
I think part of the reason we are having this argument here, will continue to have this argument and the public will continue to have these questions is because the government failed to come up with a clear definition, as New South Wales and Sydney did and as the Torino Olympic Games did. This government didn't have it. The minister doesn't have it. So that's where the argument is. I think we will continue to have these arguments. [DRAFT TRANSCRIPT ONLY]
My question was: where is the definition? I haven't got that answer. I don't see it anywhere. The Auditor General didn't see it anywhere. [DRAFT TRANSCRIPT ONLY]
So I move on to the next question. It's still around transparency and accountability. If the minister and VANOC wanted to keep these games as transparent as they say they are, then why doesn't the minister, on behalf of the taxpayers, make an attempt to have VANOC be brought under the Freedom of Information Act? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I have this sense of déjà vu here, because I remember the member asking me the exact same question last year during estimates. The answer is going to be exactly the same as it was last year, and that is that VANOC is a federally incorporated not-for-profit corporation. They are not part of the provincial government. They are not a provincial entity, and therefore they are not subject to the provincial government's freedom-of-information laws. [DRAFT TRANSCRIPT ONLY]
VANOC has developed their own policies around transparency. They have actually put far more information out publicly than any other Olympic organizing committee ever has. As I understand it today, there are a bunch of new transparency measures that were approved at the board meeting this morning that they will be rolling out to make it even more transparent than they have been up till now. [DRAFT TRANSCRIPT ONLY]
If you look at every single cent that is spent by the provincial government in the staging of the Olympic Games and living up to our commitments, every single cent of that is subject to FOI. All of the actions that I take as a provincial government minister with regard to the Olympic and Paralympic Games are subject to the freedom-of-information law. [DRAFT TRANSCRIPT ONLY]
The activities of the provincial government's Olympic secretariat are subject to freedom of information. All of the expenditures go to public accounts and are there for scrutiny by the member and anybody else that would like to go through those particular reports. [DRAFT TRANSCRIPT ONLY]But if I can just go back to the Auditor General's report for one moment before I close off. The Auditor General did not identify one single expenditure that was not already public information — not one single expenditure. He identified a bunch of things that absolutely have nothing to do with the Olympics. [DRAFT TRANSCRIPT ONLY]
One of the things, for example, was the Olympic station of the Canada line. The only thing Olympic-related of that particular rapid transit station is the fact that the city of Vancouver chose to name it the Olympic station. It will not be used during the Olympic Games. It will not be used to transport our athletes. We're not going to be sending our athletes to the venues on the new RAV line, no matter how…. We know it's going to be a great service, but we also know that our athletes are going to be transported to their venues in nice, brand-new, fuel-efficient, environment-conscious General Motors products as a result of the General Motors sponsorship with VANOC and the Olympics. [DRAFT TRANSCRIPT ONLY]
I think that when it comes to transparency, as I say, everything we do is transparent. VANOC has established their own policies because they are independent of the provincial government. They have set out a whole bunch of new initiatives which take that even farther. [DRAFT TRANSCRIPT ONLY]
H. Bains: Thank you, Minister. I think they're independent of the government of British Columbia because this government chose to set them up that way. The federal government chose to set them up that way. They weren't just dropped down. It was the work of this government and the federal government and a number of other people to put together an entity so that we can host the games. At that table it was decided that they probably will be kept outside of the freedom-of-information legislation. [DRAFT TRANSCRIPT ONLY]
My question to the minister is this: does the minister feel that it should be subject to the Freedom of Information Act? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I could throw that question right back at the member. Is he talking about the federal freedom-of-information act or the provincial Freedom of Information Act? Given that this is a federally incorporated not-for-profit corporation, what would the logic be for us to force them to be subject to the provincial government's Freedom of Information Act? [DRAFT TRANSCRIPT ONLY]
H. Bains: My question is, then, Minister: are they under a federal freedom-of-information act? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The answer is no. They are an independent, not-for-profit corporation, federally chartered, and they are not part of the provincial government, nor are they part of the federal government. [DRAFT TRANSCRIPT ONLY]
H. Bains: I think that what I said earlier is exactly what happened. This government and the federal government sat at a table, decided they should not be subject to freedom of information under the federal law or the provincial law. Isn't that correct? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The member is not correct. It was not the provincial government and the federal government that got together and decided how VANOC should be structured. VANOC is actually structured according to the directions that came from the Canadian Olympic Committee, the Canadian Paralympic Committee and the IOC. It is actually the IOC that initially insisted that VANOC not be subjected to the provincial or the federal freedom-of-information laws. [DRAFT TRANSCRIPT ONLY]
Aside from that, it simply doesn't make any sense for them to be subject to a provincial freedom-of-information law, given that they are not part of the provincial government or any of its entities. [DRAFT TRANSCRIPT ONLY]H. Bains: Well, that's very interesting. So IOC, an outside body, and COC decided that these games should be kept secret from the taxpayers, who will be funding their venue construction to a large extent. And if that venue construction budget — $600 million on the provincial side and the federal government side — had gone over…. [DRAFT TRANSCRIPT ONLY]
The federal government came up with an additional $55 million. Luckily, the provincial government had enough contingency funding to dip into. So there is a real chance that more money would be going in at that time, and in fact it did. Somebody decided that the public will never get to know that part of the funding. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: When you talk about the venue construction, 50 percent of that is provided by the province. The total is $580 million, which I believe now includes a $55-million contingency still left within that $580 million budget. Fifty percent of that $580 million comes from the province out of our $600 million envelope, and every penny of that is subject to the provincial government freedom-of-information law. [DRAFT TRANSCRIPT ONLY]
The member is welcome to file any FOI request that he wishes to file. In fact, I would encourage him, if he has those kinds of inquiries, to first of all phone me. Come talk to me, and I'll try to get the information for him to save him the bureaucracy of going through the FOI process. But all of that information is available; all of that is totally transparent. [DRAFT TRANSCRIPT ONLY]
H. Bains: My questions continue along this line. Now we will move on to the board and the structure of the VANOC, because I think many people feel, and the Auditor General felt, that there is a veil of secrecy surrounding the decision-making process at VANOC vis-à-vis the board meetings, how the decisions are made. [DRAFT TRANSCRIPT ONLY]
The public will never find out, unless the minister is prepared to divulge that information here today, what was in the business plan. They called it version one of the business plan, and the minister called a work in progress, I think — words to that effect. The public will never find out what that was because of the secrecy surrounding those board meetings, because it's not FOIable. So my question is: why would the minister not take steps to make those board meetings public? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: VANOC is a complex organization. We're talking about a $1.6 billion operating budget that they have in place, and they have a lot of decisions to make. They have a lot of complex, commercially sensitive information that comes across that board table, I assume. I have never been invited to one. I'm not sure I would ever get invited to a board meeting. [DRAFT TRANSCRIPT ONLY]
But when you look at things like the very complex sponsorship agreements that they have, I can tell you those are very commercially sensitive. Just as the caucus meetings of the opposition are held in private so that the opposition can develop its particular positions and then take those publicly as a unified group, the same is true of the VANOC board. [DRAFT TRANSCRIPT ONLY]
I congratulate VANOC on the fact that they have been open. I know John Furlong has been very accessible to the media and has provided information whenever he can. Just to give you some of the measures that were approved by the board today: first of all, there's a posting of the board of directors meeting agenda on the website in advance of each board meeting. Secondly, it's hosting a media briefing following each board meeting, with the chair, the CEO and other directors. [DRAFT TRANSCRIPT ONLY]
VANOC will also issue and post to their website a news release of decisions taken at the board meeting. There's going to be hosting of regular press briefings; that will be held monthly throughout 2007. [DRAFT TRANSCRIPT ONLY]They will continue to deliver an annual fall update to the board of trade, which will be broadcast across the province and transcripts posted; place a supplement in major newspapers to inform the public of the progress of the games, as outlined in the VANOC business plan; conduct quarterly website on-line forums to ensure that Canadians communicate directly with VANOC. [DRAFT TRANSCRIPT ONLY]
I think they are making the measures to make sure that the public's questions are being answered and that public information is being provided. But I think they also have the right to get on with the very complex job of getting ready to host the games in 2010. [DRAFT TRANSCRIPT ONLY]
H. Bains: I will have comments about today's announcement later on. In order to really get to know what's going on behind those closed doors, the board meetings…. This is a publicly funded organization, and taxpayers who fund it actually have the right to see how their tax dollars are spent and how decisions are made on their tax dollars. [DRAFT TRANSCRIPT ONLY]
If the board meetings are not open — I saw clearly the answer the minister has given — why won't the minister ask them to release the minutes of the board meetings for the last three years? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: You know, those are decisions that VANOC has to make in terms of what they feel is appropriate to help inform the public. [DRAFT TRANSCRIPT ONLY]
I do want to correct something the member said. The member said that VANOC is being funded by taxpayers. Let's be really clear what is being funded by taxpayers out of the VANOC operating and capital budget. [DRAFT TRANSCRIPT ONLY]
The capital budget for VANOC is $580 million, and that is being funded 50 percent by the federal government and 50 percent by the province. The rest of the $1.6 billion operating budget is not being funded by the taxpayers. In fact, there is one component of it. The province, out of our $600 million, is putting in $20 million towards the operating budget of the Paralympic Games. That is the only provincial government expenditure that's going into that $1.6 billion operating budget. [DRAFT TRANSCRIPT ONLY]
The rest comes from revenues that they have to generate. It's coming from the sponsorship revenues which, as the member knows, are way above what they had initially projected. They had projected — what is it? — $435 million. But now they are projecting, because of huge success, $760 million. [DRAFT TRANSCRIPT ONLY]
They're getting revenue from international broadcasters, coming through the IOC — again, the highest ever paid for a Winter Olympic Games. It will also come from ticket sales. So the operating budget, except for that $20 million that I talked about, does not come from taxpayers. [DRAFT TRANSCRIPT ONLY]
H. Bains: Let me ask a few questions around this business plan that was presented a week ago and version one of the business plan. There are a number of questions surrounding the delay of the first business plan — or version one of the business plan; the minister will call it something else — and how we arrived at this business plan. [DRAFT TRANSCRIPT ONLY]
Can the minister tell this House: will you make an attempt to have that business plan, version one that was supposed to be delivered in April 2005…? Will you make that public? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: Just to back up a little bit. There is a requirement in the multiparty agreement that VANOC prepare a business plan and that they provide it to the provincial government and the federal government by a certain date. I think the wording in the multiparty agreement is that it's to be "submitted for approval." VANOC lived up to all their obligations. They developed a business plan. They passed it through their board of directors. They submitted it to the province in accordance with the multiparty agreement. We reviewed it; we did not approve it. [DRAFT TRANSCRIPT ONLY]
As I have said publicly before, but I'll say again in the House, one of the reasons why we could not approve it was that between the time that we had initially established the capital budget of $470 million, which it was initially, and the time that they came out with version one of their business plan, their cost estimates for capital had gone up. For us to approve version one of the business plan would have been to give approval to this new budget. [DRAFT TRANSCRIPT ONLY]
We did not have approval from Treasury Board for anything other than the 50-percent share of the $470 million that was there. For us to get access to the additional moneys that they requested required an explicit decision by Treasury Board to access the contingency fund that was there at the time of $130-some-odd million. VANOC lived up to their obligations; they submitted it. We did not approve it, because it did not reflect the measures that the province had approved. [DRAFT TRANSCRIPT ONLY]
VANOC then approached the whole issue of the increase in capital. We processed that through Treasury Board. We got Treasury Board approval for a $55 million charge against contingency to increase our 50-percent share of the new capital budget of $580 million. [DRAFT TRANSCRIPT ONLY]
The point is that the new business plan that has now been developed reflects the reality of VANOC where they are today going forward. Version one of the business plan is irrelevant. It has been totally superseded by version two of the business plan, which we have reviewed and done our due diligence on, and which has been approved by the province. I think what is important for the public is to be able to look at a solid business plan. [DRAFT TRANSCRIPT ONLY]
I hope the member feels the way that everyone else who has read that business plan feels: that it is a solid document and a business plan that's going to guide VANOC and inform the public as we go forward. [DRAFT TRANSCRIPT ONLY]
First of all, version one of the business plan is not ours. It's the property of VANOC. If they were to decide to release it, that would be their decision. I'm not sure that that would serve any useful purpose, given that version two of the business plan is now out and that it totally supersedes anything and everything that was in version one. [DRAFT TRANSCRIPT ONLY]
H. Bains: Can the minister tell us: was that the only reason for you not to approve that business plan — that you just mentioned? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: In reading through version one of the business plan, we got to the point where it showed that they were not reflecting what we had approved for our capital contribution. That was reason enough for us not to approve it. [DRAFT TRANSCRIPT ONLY]
H. Bains: When was that plan actually presented to the minister for the first time? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Maybe I could just ask for some clarification. Which of the plans is he referring to — version one of the plan? [DRAFT TRANSCRIPT ONLY]
H. Bains: Yes. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: If the member goes to look at the multiparty agreement, he will find that there's a requirement in there that said that that version of the business plan was to be provided, I believe, in April of 2005. They came to us and asked for an extension. We granted that extension, so they delivered version one of the business plan in either late June or July of 2005. [DRAFT TRANSCRIPT ONLY]H. Bains: When did the request come for additional funds for the capital? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The request from VANOC for the additional $55 million was received in December of 2005. [DRAFT TRANSCRIPT ONLY]
H. Bains: Therefore, the business plan was to be presented to the minister in April 2005. The request, as I hear the answer, for the additional funds came in December 2005. Is that correct? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I haven't got the exact dates, but that sounds about right. [DRAFT TRANSCRIPT ONLY]
H. Bains: When they actually were required to present the business plan, which was April 2005, they asked for and received an extension, and the business plan was presented to the minister in June, the minister said. [DRAFT TRANSCRIPT ONLY]
[D. Hayer in the chair.]
That request for the additional $55 million wasn't there until December. So how is it that the minister could say that they knew at that time that they were looking for additional funding? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Version one of the business plan reflected numbers for the provincial government's share of capital construction that were greater than the $235 million that we had agreed to and that I had authority from Treasury Board to agree to. It was a number larger than $235 million. I don't remember what it was off the top of my head. [DRAFT TRANSCRIPT ONLY]
It was after that when we said to VANOC: "No, we're not approving this, because it reflects numbers that we have not agreed to." We said to VANOC at that stage that when it comes to their capital costs, they'd better do some really good work on costing out all of their structures. [DRAFT TRANSCRIPT ONLY]
We made it quite clear to them that what we were not interested in was for them to come back to Treasury Board every couple of months, saying: "This is more than we expected, and this is more than we expected." We wanted them to do their proper quantity survey work as to what each of these venues was going to cost so that we were going to come up with one number. [DRAFT TRANSCRIPT ONLY]
We weren't going to say to them that they had to stay precisely to the dime on each of their cost estimates. But the global number that they were requesting of the $55 million extra from the province — we made it quite clear that that was it. They were not to be coming back to Treasury Board for more money over and above that. They were going to have to adjust their budgets for these various venues from within that $580 million budget. [DRAFT TRANSCRIPT ONLY]
During that period of time, VANOC did a lot of good, detailed work. They did some good costing. They were pretty confident when they came back to us in December with that final request of the extra $55 million. To their credit and to the good work of their vice-president of construction, they are now operating well within that budget. [DRAFT TRANSCRIPT ONLY]
H. Bains: Hon. Chair, welcome. [DRAFT TRANSCRIPT ONLY]
If that was the instruction to VANOC…. But the minister will know that the contingency fund from that point has gone down further from $66 million to $55 million. So they haven't lived up to that expectation of the minister that the minister expressed at that particular time. That $55 million is it, as the minister said. They have dipped further, to the tune of $11 million, into the contingency fund — isn't it so? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The member is getting two things confused here. We added $55 million to the capital budget as the provincial government share, so the total increase in the capital budget was $110 million — half province, half federal. It went from $470 million to $580 million. [DRAFT TRANSCRIPT ONLY]One of the things that we were very specific on is that they needed to have an adequate contingency to cover the remaining outstanding risks that they were facing on their venue construction. They needed to quantify the risks, and they needed to have a contingency fund that was big enough to deal with those risks. But risks decline. As they get more contracts in place, and more certainty around their costs on all of the venue construction, then the risk declines. Therefore, the need for contingency declines over time as you move forward. [DRAFT TRANSCRIPT ONLY]
In the $580 million capital budget, they initially had a $66.8 million contingency fund. That was as of September 2006. I'm reading this from the performance and accountability agreement that I signed on the 13th of September, 2006, which sets out all of the obligations that VANOC has around their approach and their handling of their capital budget. [DRAFT TRANSCRIPT ONLY]
In the appendix, which is on page 11 of that agreement — it's up on the website for anybody to see — it actually explicitly says at what rate VANOC can draw down that contingency fund within that $580 million. So in September '06 the contingency fund was $66.8 million. In October of 2006 we had agreed right from the start that they could actually have drawn that down to $55 million at that point. By January of '07 they could have drawn it down to $45 million. By April of '07, which is where we are now, they could have drawn that contingency down to a remaining $40 million. [DRAFT TRANSCRIPT ONLY]
They are well ahead of that now. They have drawn into that contingency to the tune of about $11 million or $12 million, so they are still well on target to making sure that all of the venue construction is delivered within the $580 million fund. [DRAFT TRANSCRIPT ONLY]
H. Bains: Can the minister tell the House when the minister actually approved the additional $55 million? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I don't have the exact date of the Treasury Board decision. Our recollection is that it was about January or February of 2006. The decision was made that we would agree to their request for the additional $55 million, or agree to access our contingency fund or to draw down our contingency fund to that tune. There were several conditions in there. I guess the key condition was that it was subject to the federal government also agreeing to their $55 million. [DRAFT TRANSCRIPT ONLY]
The actual announcement of our additional $55 million happened, I think, some months later. I recall the event. It was when the Prime Minister was out in Vancouver. He and our Premier jointly announced the agreement to increase the venue budget by the $110 million. Just off the top of my head, I think that must have been about June or July of 2006. [DRAFT TRANSCRIPT ONLY]
H. Bains: When the minister decided that the business plan could not be approved, did the minister advise VANOC in writing? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I do not recall having replied to them in writing. But we certainly informed them verbally that we would not be approving it. [DRAFT TRANSCRIPT ONLY]
H. Bains: Were any instructions sent to VANOC — reasons for not approving, and what they needed to do in order to have that thing approved? Did any of those instructions go to VANOC? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: We certainly would have provided VANOC with feedback, but that would have been done in the course of meetings that the CEO of the Olympic secretariat would have had with VANOC. If the member is asking did we provide a formal written response to VANOC about the business plan, the answer is no. [DRAFT TRANSCRIPT ONLY]
H. Bains: So here is a business plan, and it's a comprehensive business plan. We are talking about taking responsibility of close to $2 billion when it comes to just the operating budget, and you add the capital budget — just going by those numbers. The minister simply verbally said, "I'm not approving it," and they simply accepted it? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The way the multiparty agreement was set up is that there was no requirement for us to approve it or not approve it. There was a requirement that VANOC submit it to us. We advised VANOC of our reasons, and they set to work on trying to proceed to address the issues we raised. Now, that's not just as a result of the fact that they had not reflected the capital budget we had approved previously. [DRAFT TRANSCRIPT ONLY]
We do this on a regular basis. There is an ongoing dialogue between VANOC and the provincial government, whether that's through the work that the CEO of the Olympic secretariat does in her meetings with VANOC officials or whether it's the meetings I have, which are on a regular basis, with the provincial representatives who sit on the VANOC board. We make sure they are aware of our priorities and our views, and they carry those messages. [DRAFT TRANSCRIPT ONLY]
H. Bains: One of the reasons that VANOC will give us on face-to-face meeting is that no instructions came from the minister when they decided not to approve it. Why would they make that statement? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: As I mentioned in the previous question, there were no formal written instructions that went to VANOC, but there were certainly discussions. [DRAFT TRANSCRIPT ONLY]
H. Bains: So as far as the minister is concerned, as far as the secretariat office is concerned, they knew exactly why the business plan was not being approved. They knew exactly what they needed to do to have that approved. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Yes, that is correct. As I've mentioned before, we made it very clear to VANOC that their capital budget did not reflect what had been approved by the provincial government. [DRAFT TRANSCRIPT ONLY]
H. Bains: I guess the question arises if the capital budget was the issue, because they were asking additional funds. We are talking about $580 million of the overall business plan. But the other part is the operation side, which is, according to the new business plan, $1.6 billion. [DRAFT TRANSCRIPT ONLY]
Why would they not make at least that part of the business plan available? They were doing the update on the capital side anyway. No one can understand the reason. Just because they were asking for additional funds…. That part can't be dealt with when you're still deciding through the Treasury Board whether that money should be going to VANOC or not. [DRAFT TRANSCRIPT ONLY]
The other part of the business plan — which is a larger part, the operation side — why was that part not approved? Why wasn't that part made public? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: I can't speak for VANOC. That's a question the member would have to put to them. I am aware that John Furlong and others at VANOC have indicated they felt very strongly that to have a truly robust business plan, they needed to have the learnings from Torino — to actually watch Torino unfold and to be able to have a chance to talk to those officials so that the business plan could be solid. [DRAFT TRANSCRIPT ONLY]
The other thing that was a big unknown at the time was on the revenue side. In fact, one of the things that I think really held up the release of the business plan or the finalization of the business plan this year was the fact that they needed to get certainty around their revenue dollars from the IOC. As the member knows, that happened only in the last few months. So VANOC was able to develop their version 2 of the business plan with a lot more certainty because of the fact that they had those questions answered, which they were not able to answer in mid-2005. [DRAFT TRANSCRIPT ONLY]
H. Bains: The minister said the approval of $55 million was decided in January of 2006. Did the minister undertake any due diligence or require any due diligence by VANOC before the minister would approve it? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Yes. As I mentioned to the member, we had received the request from VANOC in December, we believe it was — maybe give or take a month. From the time that version 1 of the business plan came down, we knew that VANOC was going to be requesting additional funds. So really throughout that whole period leading up even to their formal submission, we knew they were coming back to make a formal request for additional funds and access to our contingency. [DRAFT TRANSCRIPT ONLY]
During that period of time considerable due diligence was done — looking at venue costing, working with the VANOC officials in terms of what they were asking for. I remember we had several meetings that I participated in with VANOC about their challenges on the venue construction side and what the escalating cost implications were. Even by the time VANOC had submitted their formal request in December of 2005, we had already done a considerable amount of work reviewing where the cost pressures were. [DRAFT TRANSCRIPT ONLY]
We further engaged Partnerships B.C., as the member may be aware. We got ongoing advice from Partnerships B.C., actually, from the time that we first got them involved. They were looking at how, as we go forward with this budget of $580 million, we make sure that that is properly managed, that we get regular feedback on how the construction progress is being made to ensure that everything possible is being done to keep all of their venue construction costs within the $580 million. [DRAFT TRANSCRIPT ONLY]
As the member knows, the Partnerships B.C. report was made public. I think there were a couple of versions and drafts, and we the got the benefit of their advice through those months. They finalized their draft — I believe it was in October of 2006 — and we made that public. It's on our website. [DRAFT TRANSCRIPT ONLY]H. Bains: I guess the difference is that the federal government, when they requested additional funds, went and got an independent due diligence done. That was conducted. The report came in by the Pacific Liaicon group in May of 2006. The Partnerships B.C. report didn't come until June of that year, as I understand it, but this minister had already approved the funds in January. That just says a lot about the difference between the federal and this government's approach. They wanted to conduct due diligence by a third party, which happened to be independent, and this government had no formal due diligence requested or done before the funds were approved. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: That's actually not true. As I mentioned to the member, we did considerable due diligence on the venue cost challenges throughout 2005. Actually, I'll give the member the chronology of this. We approved the increased costs because we knew that those costs were going to be necessary. But what we said was that we wanted to engage Partnerships B.C. to make sure that VANOC was managing the capital budget in an appropriate way, that all of the risks were being identified and mitigated, that there was going to be no room for scope creep and extra things added in, and that we were actually going to deliver on what our obligations were and to make sure that it was going to happen within the budget. [DRAFT TRANSCRIPT ONLY]
We went to Partnerships B.C. early in 2006. Basically, what we said to Partnerships B.C. is: we're actually going to be prepared to say yes to this additional $55 million, contingent on the federal government. We're going to do it, but we want to make sure that we have the proper oversight as we go forward, in terms of how that unveiled. [DRAFT TRANSCRIPT ONLY]
We went to the federal government, not the other way around. We went to the federal government and said that we were engaging Partnerships B.C. Would they like to be a part of the Partnerships B.C. report? They initially said to us that yes, they thought that was a great idea and that we would have one process under Partnerships B.C. which would be shared by both the federal and the provincial governments. Subsequent to that, the federal government decided to have their own separate review. They engaged Pacific Liaicon, subsequent to our Partnerships B.C. review being already well underway. [DRAFT TRANSCRIPT ONLY]
H. Bains: Are any of those recommendations by Partnerships B.C. before this government decided to agree on the additional $55 million…? Will the minister make those available, and when do they actually come to the minister? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Partnerships B.C. was not engaged prior to early 2006. The due diligence we did on the various venue construction challenges was done with in-house staff throughout the provincial government. [DRAFT TRANSCRIPT ONLY]
One of the conditions that came out of the Treasury Board decision was that…. I'd mentioned earlier that one condition was that the federal government had to agree to their share. But also one of the conditions was that this review be done in terms of how best to manage the oversight of this budget going forward. That's where Partnerships B.C. came in. Then the other condition that came out of the Treasury Board decision was that there be a performance and accountability agreement put in place. That is the agreement that was signed in September of that year. [DRAFT TRANSCRIPT ONLY]
H. Bains: I thought the minister just said earlier that when that business plan was presented to the minister, they knew that they were requesting more money. In December of 2005 the official request came from VANOC. Between the time that the business plan was presented and December, the minister, I thought, said that they were engaged with Partnerships B.C., trying to advise the minister about whether they were actually doing what they should be doing — managing their budget. [DRAFT TRANSCRIPT ONLY]
Then the minister also said that the decision to approve $55 million was in January, or 2006. So my question is…. Between the time that the business plan came and you found an area, which was the capital side of the area, that wasn't according to what the original estimates were, you decided not to approve it. [DRAFT TRANSCRIPT ONLY]In January, 2006, you approved $55 million. Well, what due diligence did the minister have done, whether it was Partnerships B.C.…? I thought the minister said earlier on that that's what the case was. Now the minister says it was internal. [DRAFT TRANSCRIPT ONLY]
Who actually conducted that review to advise the minister that we had done due diligence so that they could take it to the Treasury Board — that we know they are on sound footing? Based on what? That decision was made to approve $55 million. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I think if the member were to go back and review Hansard, he would see that I did not say at any point that Partnerships B.C. was engaged prior to early 2006. What I did say was that we knew there were going to be cost pressures and challenges around venue costing and that the due diligence we did around those cost pressures was an internal process within the provincial government and did not involve Partnerships B.C. at that period of time. [DRAFT TRANSCRIPT ONLY]
We went to Treasury Board, and Treasury Board acknowledged and accepted that there were going to be cost pressures on the overall budget in excess of the $470 million that had previously been approved. With that, Treasury Board approved the additional $55 million, which was the provincial government's share, with conditions. [DRAFT TRANSCRIPT ONLY]
Part of the conditions was that there be an independent review done of the cost of each of the venues to make sure that VANOC would actually be able to deliver all of the venue construction agenda within the $580 million and that all of the measures were being put in place to make sure that costs and risks could be mitigated to ensure that they would not have any reason to ever come back and ask for anything over and above the $580 million. [DRAFT TRANSCRIPT ONLY]
H. Bains: I guess that's what I'm getting down to. Finally, we're getting the answer that the $55 million additional funds were approved without having Partnerships B.C. engaged or having any other independent body engaged. Funds were approved. Subsequently, Partnerships B.C. decided to do — or whatever process it took — the review, and the report came in June. [DRAFT TRANSCRIPT ONLY]
So that's what my question was. You approved the funds without doing due diligence, by Partnerships B.C. or by anybody else, except that you had your internal review done and agreed on $55 million. That to me, and to many of the folks out there, wouldn't be the right way to handle this type of amount that was being requested. [DRAFT TRANSCRIPT ONLY]
The $55 million is a lot of money. Those funds were approved by the Treasury Board without having any due-diligence report in their hand. [DRAFT TRANSCRIPT ONLY]
Interjection. [DRAFT TRANSCRIPT ONLY]
H. Bains: There was none. There was none. Partnerships B.C. didn't start the review until early 2006, but the funds were already approved in January. That's what the minister said. Their report didn't even come until June of 2006. [DRAFT TRANSCRIPT ONLY]
The federal government actually engaged a third party, an outside party, to do due diligence. That report came in May. Based on that report, my understanding is that they agreed with the $55 million. So maybe the minister can explain those discrepancies. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I will explain again, because I don't think the member was listening. We did a thorough due diligence around the cost pressures that were faced for venue construction throughout the second half of 2005, even leading up to VANOC's request for the additional budget. [DRAFT TRANSCRIPT ONLY]
H. Bains: It was internal. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: That was done internally, and I'll tell the member that we have some very competent staff in the provincial public service. They did a first-class job of that review and that due diligence. I dare him to suggest otherwise. [DRAFT TRANSCRIPT ONLY]So Treasury Board recognized that the cost pressures were real. They acknowledged that VANOC was going to need the increased budget in order to deliver on the venue commitments, and they approved the $55 million with conditions. [DRAFT TRANSCRIPT ONLY]
I have said that one of the conditions was that the federal government had to agree to their share. Another condition was that there had to be a review around each of the venues to ensure that, going forward, we would be able to live within that $580 million budget and deliver all of the venues without increased risks or additional cost pressures coming back to the province. That is the process that Partnerships B.C. engaged in, and as the member knows, because he has read the report, I assume, they did a thorough and excellent job at that. [DRAFT TRANSCRIPT ONLY]
For the member to suggest that that $55 million was approved without appropriate due diligence is absolutely false. [DRAFT TRANSCRIPT ONLY]
H. Bains: Clearly, it shows that after the $55 million was approved, yes, there was an internal review, but Treasury Board put conditions still. Obviously, they weren't satisfied with what was being done. If they were satisfied by the internal review, then what was the need for engaging Partnerships B.C. to come up with their own report? That could have been done prior to approval of the $55 million. All of that should have been…. But that wasn't done. [DRAFT TRANSCRIPT ONLY]
Anyway, I'm going to move over to a different area. I would like to ask the minister about the ICBC sponsorship that is shown in the business plan. Can the minister tell us what the total value of this sponsorship is? [DRAFT TRANSCRIPT ONLY]
[B. Lekstrom in the chair.]
Hon. C. Hansen: It's $15 million. [DRAFT TRANSCRIPT ONLY]
H. Bains: In the business plan it talked about $18.5 million for the use of the facility and $110 million rent, plus the interest. [DRAFT TRANSCRIPT ONLY]
Interjection. [DRAFT TRANSCRIPT ONLY]
H. Bains: I'm sorry. It's $15 million. I've got it. Can we get the breakdown of this sponsorship? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: There is $9 million that will come from the net profit for the sales of licence plates in the province, which is a voluntary offer that allows for individual British Columbians to say: "Yep, I want to support the Olympics. I'm going to buy an Olympic plate, and I want my dollars to flow through ICBC to go towards the VANOC revenues." [DRAFT TRANSCRIPT ONLY]
The other $6 million is the estimated value of the insurance that would be provided to the VANOC fleet of vehicles, and that is being funded out of the marketing side of the optional insurance coverage that ICBC provides. [DRAFT TRANSCRIPT ONLY]
I think it's important to note that ICBC, when it comes to their optional coverage, is in a competitive industry. They compete with private sector operators. They have their marketing budget like any of the private sector insurance companies has. They have looked at this as a straight commercial operation and one that gives them marketing value for the dollars they are committing. [DRAFT TRANSCRIPT ONLY]H. Bains: I think one of the items, the $6 million, is clear. That is the total value of providing insurance to the vehicle. Then $9 million comes from the net profit on sales of these plates. Can the minister tell us: what is the net profit per plate? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I don't have that number, as to what it would break down to per plate. All of the costs to ICBC for the actual production and distribution of the plate are deducted, and it is only what is left after this that becomes the net profit, which then flows to VANOC. I apologize; I do not have the per-plate estimate as to what the costs would be, both in terms of the costs of production and distribution and of the cost of the net profit per plate. I don't have that with me. [DRAFT TRANSCRIPT ONLY]
H. Bains: When they arrived at $9 million, they must have known how many plates they would have to actually sell to commit $9 million. Have they given you any number on how many plates they'll have to sell? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: ICBC, as the member knows, reports through the Minister of Public Safety and Solicitor General. As I understand it, these questions were put to him when they were debating ICBC in this very chamber, and all of those detailed answers are available in Hansard. I don't have them with me right now. [DRAFT TRANSCRIPT ONLY]
H. Bains: ICBC is one. Is the minister, then, encouraging other Crown corporations to come and be their sponsor? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The answer is no. It's in fact quite the opposite. Early on in this process I made it very clear. I sent a letter to every minister that had the responsibility for a Crown corporation or a Crown agency that they explicitly were not to embark on any discussions with VANOC about sponsorships until such time as they made a case that these would be purely commercial operations and that we were not going to subsidize VANOC through any of the Crown corporations on anything that could not be justified on a commercial basis, and that policy stands today. [DRAFT TRANSCRIPT ONLY]
H. Bains: Let me ask a few more questions. I'm going back to the Auditor General's report. Can the minister explain the indemnification agreement that the province has signed with the IOC? How does that work? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: This is an area where I think there has been a lot of misunderstanding. I've heard people say that the provincial government has guaranteed the games and is liable for any deficit, should there be any deficit — which I know John Furlong has determined that there won't be. There is going to be nothing but black ink. Those comments when people talk about a guarantee from the province do not accurately reflect what the reality is. [DRAFT TRANSCRIPT ONLY]At the time of the bid what the province did was to give a covenant to the IOC. It is a covenant that says that any financial obligations by VANOC to the IOC would be backstopped, essentially, by the province. So that is the extent of the so-called guarantee. It is actually very limited in scope. [DRAFT TRANSCRIPT ONLY]
H. Bains: Therefore, if there is any deficit left behind by VANOC, by that definition, is the province responsible for that? [DRAFT TRANSCRIPT ONLY]
[The bells were rung.]
The Chair: Committee A will stand recessed until following the vote. [DRAFT TRANSCRIPT ONLY]
The committee recessed from 4:11 p.m. to 4:23 p.m. [DRAFT TRANSCRIPT ONLY]
[B. Lekstrom in the chair.]
On Vote 24 (continued). [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Just before the break for that division vote, the member asked a question. I think I wrote it down correctly. "If there is a deficit by VANOC, is the province responsible?" — or words to that effect. The answer is no. The limit of our responsibility would be for any indebtedness that existed between VANOC and the IOC. So if VANOC owed the IOC funds at that stage, then our covenant would click in. [DRAFT TRANSCRIPT ONLY]
I'll give the member a particular example, because I find this sort of helps explain to people where the province's "guarantee" does not happen. A number of months back or a year back — I forget exactly the month — VANOC went to the Royal Bank of Canada, the RBC, which is one of the national Olympic sponsors, to get a line of credit. RBC actually granted and set up a line of credit for VANOC. [DRAFT TRANSCRIPT ONLY]
In doing so, the bank had to evaluate what the risks were and what risks the bank was prepared to take on as they set up that line of credit. If there were any dollars owing at the end of the day on that line of credit, it would be the Royal Bank that would be responsible for that. They would be a creditor. The provincial government in no way is providing any kind of a guarantee to the Royal Bank for any debts that may exist between VANOC and the Royal Bank once the Olympic and Paralympic Games are all over. [DRAFT TRANSCRIPT ONLY]
I think it's important that we address these issues, but I do also want to emphasize and support the VANOC management, because they are working on an agenda that will ensure that there is not any kind of a deficit at the end of the process. I think they have good management structures in place to ensure that those risks are mitigated before they become cost pressures. [DRAFT TRANSCRIPT ONLY]H. Bains: What would be the circumstances where VANOC will owe money to the IOC? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The only area that we can identify in terms of what the circumstances are whereby VANOC has an obligation to flow dollars to the IOC…. The only one that we are aware of is around the share of national sponsorship dollars that flows to the IOC. When you wind up with a corporation that comes in with a $50 million sponsorship, the IOC is entitled to a percentage of that. If VANOC at the end of the day neglected to flow to IOC the amount that the IOC was entitled to, then that's an example of where our covenant might click in. [DRAFT TRANSCRIPT ONLY]
VANOC is being very careful to make sure that the dollars to cover that are set aside and that there is no risk to the province that for some reason VANOC may not live up to their obligation to transfer those dollars. [DRAFT TRANSCRIPT ONLY]
H. Bains: Under that scenario, if that's what it is, then that's what it is. Let me ask you this question. If a contractor or a supplier to VANOC ends up not getting paid because somehow under the circumstances VANOC has no more money, who is responsible for that person or that contractor? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: In that circumstance it would be VANOC as an independent not-for-profit corporation that would be responsible for any of those outstanding liabilities. But again, I just want to reiterate that I have full confidence in the VANOC management to ensure that all of their costs are covered and that there will be absolutely no deficit at the end of the day. I think there is every reason to have comfort that VANOC is on that track. [DRAFT TRANSCRIPT ONLY]
H. Bains: I guess all those contractors, the suppliers who are dealing with VANOC with the perception that they will be covered because ultimately the government is responsible…. And not only that, the Auditor General said in his report that "given the province has the ultimate responsibility for the financial outcome of the games, we feel there should be a regular and complete reporting of the total games costs to the taxpayers." [DRAFT TRANSCRIPT ONLY]
So I think it's not only a perception in people's minds out there. The Auditor General went out there, looked at those agreements and the data that was available to them and all of a sudden decided that the provincial government is ultimately responsible. [DRAFT TRANSCRIPT ONLY]
How was that perception created, and how is the minister going to correct that perception? Is the minister prepared to send a memo to all suppliers, all contractors, everyone who is dealing with VANOC that the provincial government is not responsible for any shortfalls as far as VANOC's revenue is concerned? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I'm certainly not aware of any supplier that would be under the impression that somehow their particular invoices to VANOC would be guaranteed by the province. They would have no reason to believe that. They enter into commercial arrangements with VANOC just like they would with any of their other customers. [DRAFT TRANSCRIPT ONLY]The Auditor General in his remarks talks about the guarantee. But as I explained to the member, the guarantee is very limited in scope. If the member wants to refer to the Auditor General's report, if he turns to page 56 — which is the response from the province — we make it very clear. The reference that the member quoted out of the Auditor General's report is, in fact, not clear around the extent of the province's responsibility. [DRAFT TRANSCRIPT ONLY]
We felt it was very important that in this report when it was first published last September, the extent of the provincial government's responsibility be very clearly set out. That is set out on pages 56 and 57 of the Auditor General's report. [DRAFT TRANSCRIPT ONLY]
H. Bains: Has the government signed any other indemnification agreement with any other entity — a city or anybody? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: There are what is referred to as participation agreements that have been signed with the city of Whistler and the city of Vancouver. In there, it says that the province would cover off certain costs over and above what those jurisdictions might otherwise have to incur. [DRAFT TRANSCRIPT ONLY]
What is important is that in the participation agreements, there is a specific requirement that the province has to agree to that obligation prior. So the province is not obligated for any costs incurred by Vancouver or Whistler unless we agree specifically in writing that we would accept responsibility for those costs. To date we have not accepted any such obligations. [DRAFT TRANSCRIPT ONLY]
H. Bains: Doesn't the host city contract require Vancouver "to indemnify IOC from any damages suffered by IOC…including all costs, loss of revenue and any damages that the IOC may have to pay to" a third party resulting from acts or omissions of VANOC or of the city? So by signing this agreement or this contract, isn't the province responsible for any losses flowing from the city? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: We are not obligated to be responsible for any of the city of Vancouver's obligations. The only way that those obligations could be transferred from the city of Vancouver to the province would be if we explicitly agreed to that, and we have not done so. [DRAFT TRANSCRIPT ONLY]
[S. Hammell in the chair.]
H. Bains: The covenant of the province says: "With respect to Theme 5, Question 5.1 of the Vancouver Candidature File: 4. The Province will: a. guarantee the potential financial shortfall of OCOG" — which is VANOC now — "subject to guarantee agreement(s) to be executed between the Province and the OCOG…." [DRAFT TRANSCRIPT ONLY]
In fact, it has been made clear from the Auditor General that the province is the residual guarantor of VANOC. So will the minister not agree that the responsibility of financial shortfall comes, actually, to the province? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: What this comes back to is the covenant that we have with the IOC. As I mentioned earlier, that is very limited in scope, and it is very specific to the obligations that VANOC has to the IOC, and that is the extent of the provincial government's covenant. [DRAFT TRANSCRIPT ONLY]H. Bains: I would like to move on to another area, which is…. Again, the Auditor General's report talked about…. On pages 6 and7 it said again: "The province has guaranteed to the IOC to cover any financial shortfall of VANOC, and since it has the resources and expertise to provide for this risk, we would have expected the province to implement a hedging strategy soon after the games were awarded for this manageable risk. As a result of not hedging U.S.-dollar revenue for broadcasting and international sponsorships at the time the games were awarded, approximately $150 million less in revenue will be realized." [DRAFT TRANSCRIPT ONLY]
That represents close to 10 percent of the overall budget of VANOC. Why was there no effective hedging strategy in place at the time the games were awarded? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I think the member referenced pages 6 and 7. The response from the province is set out on page 59 of the Auditor General's report. There it explains that VANOC sought and followed expert advice at the time. [DRAFT TRANSCRIPT ONLY]
One of the other challenges is that at the time VANOC had no idea what its revenues would be. So it's pretty hard to go to the markets and hedge a revenue that you don't know what it is. I think the more detailed explanation of that is set out in pages 59 and 60 of the Auditor General's report. [DRAFT TRANSCRIPT ONLY]
H. Bains: I think the Auditor General did a thorough review of what could or could not have been done or achieved at that time. For the minister to say that he didn't know whether there was anything to hedge…. Is that what the minister is suggesting? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: It's important to emphasize that VANOC is an independent body. VANOC seeks their own independent financial advice. They did in this case, and they followed the financial advice that they received with regard to hedging. [DRAFT TRANSCRIPT ONLY]
The other thing, which I mentioned in my previous response, is that VANOC did not have any certainty around its revenues. They did not know what they had to hedge. They didn't know what dollar denominations they were going to be receiving their revenues in. [DRAFT TRANSCRIPT ONLY]
To go out and hedge, you've got to hedge against the U.S. currency or perhaps against the euro or against whatever the relevant currency would be. They did not know what that currency would be. I think that for anybody today to look back in perfect hindsight and say, "Oh, well, if they had hedged on a speculative basis, they could have saved a whole bunch of money." [DRAFT TRANSCRIPT ONLY]
You could just as easily have looked back over any particular period in time when currency rates went in the other direction and people were saying: "Well, there would be tens of millions of dollars that could have been saved if you hadn't hedged." It's easy to look back in perfect hindsight on these things. [DRAFT TRANSCRIPT ONLY]
I think VANOC did the responsible thing. They sought expert advice, and they followed the expert advice. Now that they have more certainty around their revenues — in fact, as the certainty materialized — again, following expert advice, they have engaged in the hedging strategy at the time that was appropriate. [DRAFT TRANSCRIPT ONLY]H. Bains: There is nothing hindsight here. The Auditor General's 2002 review said that we were told in our first review that the bid corporation was planning to use hedging contracts to minimize the risk that these revenues might decrease as a result of change in foreign exchange. [DRAFT TRANSCRIPT ONLY]
In 2002 they were told that they would do it, but they didn't do it. For us to say now that it's hindsight…. It's not hindsight. That's how businesses protect themselves from the fluctuations of the currency when they're dealing with foreign currencies and the revenue in foreign currencies. That's a normal practice. That's what the other Olympic Games did. Australia did that. [DRAFT TRANSCRIPT ONLY]
The Auditor General must have a total revenue that was potential. Based on that, he calculated what could have been realized had we hedged that amount, and he came up with a number — $150 million. You wouldn't expect the Auditor General to pick those numbers out of the air and say: "Well, $150 million." [DRAFT TRANSCRIPT ONLY]
They have to have numbers. Based on what? The currency fluctuated, and he arrived at the number. How that fluctuation affected that revenue that was to come to VANOC…. The explanation of VANOC is not in line with what the minister is explaining. Their explanation was: "We weren't even there at that time." [DRAFT TRANSCRIPT ONLY]
So it's up to the government, and they blame the government here. Look here, they're asking the government to implement the hedging. That's basically what it says: "Province to implement hedging." VANOC is actually telling me that it was up to the province, not up to them. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: When the bid committee said back in 2002 that they would engage in a hedging strategy, that is exactly what has happened. They wouldn't say that they had to go out and put a hedging strategy in place for some projected dollars in the future. So VANOC put a hedging strategy in place at the time that was appropriate. [DRAFT TRANSCRIPT ONLY]
Now, I can tell you that what the Auditor General's office did is look back on the planning assumptions that were provided by the IOC. There weren't revenues. There weren't dollars that they said: "These are dollars that are going to flow to VANOC from the IOC." They were purely planning assumptions. [DRAFT TRANSCRIPT ONLY]
If the member is suggesting that the province should take all the risk based on a planning assumption, and we incur all of the cost of a hedging strategy based on a planning assumption, then I think that this member would have every right to stand up in this chamber and be quite indignant if the province had done that. We did not do that, nor should we have done that. [DRAFT TRANSCRIPT ONLY]
I think the member has to acknowledge that VANOC sought expert advice, and they followed that expert advice, and they have a hedging strategy in place that was put in place at the appropriate time, first of all, when they knew what revenues there would be and, secondly, what currency those revenues would be forthcoming in. [DRAFT TRANSCRIPT ONLY]
H. Bains: My understanding is, a hedging strategy was put in place sometime last year. Can the minister tell us around when a hedging strategy was put in place? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: I think that probably the best way to respond to the member is for me to read from page 59 of the Auditor General's report, which is how the province responded to the Auditor General's comments. It says:
"The Auditor General suggests that at the time the games were awarded, the province should have implemented a hedging strategy to protect some of the expected games revenues from changes in exchange rates and that the province now work with VANOC to implement a comprehensive hedging strategy for its foreign-source revenues. VANOC has already implemented a hedging strategy in accordance with its own hedging policy approved by the VANOC board of directors. [DRAFT TRANSCRIPT ONLY]
"In 2003 the Vancouver 2010 Bid Corp." — which subsequently became VANOC — "was told by the IOC that it could expect to receive approximately $400 million U.S. in revenues from broadcast rights and other sources. However, the IOC did not inform the actual currency, amount or timing of the revenues until 2005. These factors are critical in deciding whether to undertake a hedging agreement as well as the long-term economic outlook for U.S. exchange rates. [DRAFT TRANSCRIPT ONLY]
"In 2003 there were also conflicting views about where U.S. exchange rates were headed. Some forecasters thought that exchange rates would strengthen, while others thought they would weaken or remain flat. In fact, forecasts in the 2003 budget indicated an exchange rate of 64.5 cents. To everyone's surprise, the current rates we are now experiencing are significantly higher than anyone thought at the time, with rates now at 88.2. [DRAFT TRANSCRIPT ONLY]
"VANOC's view, on the recommendation of its advisers, was that it would have been imprudent to hedge for unknown amounts at a time of conflicting exchange-rate forecasts. [DRAFT TRANSCRIPT ONLY]
"While the Auditor General has suggested that British Columbia should have stepped in, the province does not agree and believes that hedging is appropriate for revenues belonging to the entity undertaking the contracts. Broadcast and international sponsorship revenues provided by the IOC belong to VANOC, not the province. [DRAFT TRANSCRIPT ONLY]
"As noted by the Auditor General in this report, VANOC is independent of provincial control. The decision on whether or not to hedge was a decision of VANOC's board of directors and not the province. Had the province chosen to take that risk and hedged VANOC's revenues without an agreement with VANOC, and exchange rates turned out to be different than assumed, VANOC would have no obligation to honour the hedges, and the province would have had to absorb the loss — an extra cost to taxpayers. [DRAFT TRANSCRIPT ONLY]
"Although the Auditor General has had the benefit of now looking back with hindsight, the reality is that due to uncertainties at the time, it would have been imprudent for the province to commit taxpayers to this kind of exposure." [DRAFT TRANSCRIPT ONLY]That's in the Auditor General's report. It's been up on the website of the Auditor General since September of last year. [DRAFT TRANSCRIPT ONLY]
H. Bains: Let me go to the business plan now. When you compare that with the Auditor General's report, the Auditor General actually reported in his report that the total revenue was $1.8 million. The business plan that just came out shows that it's $1.6 million — $129,269,000. That's a difference of about $200 million. Can the minister explain why that difference? What's the reason for that shortfall of revenue forecast? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: There are two factors. I know that VANOC went through a very extensive process of looking at every single line item in their budget as the business plan was being developed. They made sure they eliminated any unnecessary expenditures from that budget. I think they actually did a pretty good job of sharpening their pencils and making sure that they could get their costs down to what would still deliver first-class games but to do so in the most cost-effective way. I think they were able, line by line, to sharpen their pencils and cut out costs. [DRAFT TRANSCRIPT ONLY]
The other thing that is significant is the way that broadcast revenues and expenditures are reflected. The broadcast revenues are now shown net of the costs of providing for the broadcast services. So it is a difference in presentation between the two reports. Apparently, the way that VANOC has presented this in their business plan is the way that it is required to be presented by the IOC. [DRAFT TRANSCRIPT ONLY]
H. Bains: So I guess I was talking about the revenue, and I was going to ask you about the cost side as well. But the revenue side has a difference of $200 million. Is the minister saying it's all because of that one line item that talks about the cost of providing the Olympic Broadcast Service? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I definitely need my glasses for this page, because I think it's about a 3.5 font that's here. What the business plan shows under the revenue side is the IOC contribution of $579.7 million — again, that's on the revenue side. Then it shows less the cost of providing OBS service, which is the Olympic Broadcast Service. That shows a deduction from the revenue of $178 million, and that brings down the net IOC contribution — again, this is on the revenues sheet — to $401.7 million. [DRAFT TRANSCRIPT ONLY]
H. Bains: I guess my question is…. When you look at the net revenue that is listed here in the business plan compared to the net revenue that is contained in the Auditor General's report, there's a difference of $200 million. My question is: is it only because of that one line item, that $178 million, or is there some other revenue forecast that didn't materialize? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: If you're talking about the $200-million difference that the member is referring to, $178 million of that is accounted for by the change in presentation. Instead of the Olympic Broadcast Service costs being reflected on the expenditure column, it's moved over to the revenue column to show that it is deducted from the IOC revenues. Revenues from the IOC are only reflected net of those broadcast revenues, so there is a deduction of $178 million. [DRAFT TRANSCRIPT ONLY]
I don't know what the exact difference is. I know we're using pretty round numbers of $1.8 billion versus $1.6 billion. I don't know what that exact number would be if we looked at it in greater detail, but $178 million of it is accounted for in that way. [DRAFT TRANSCRIPT ONLY]
H. Bains: Actually, it's a $203 million difference if you look at those two numbers. Some $178 million, or thereabouts…. Yeah, it is $178 million exactly. In order to make that kind of difference in the net revenue, it has to show on both the revenue and the expenditure side. Then we have to look at the expenses side. That part is also lower than the Auditor General's report. [DRAFT TRANSCRIPT ONLY]If the explanation is that $178 million was included in the revenue side and then it was deducted from the expenses side in the Auditor General's report, that makes sense. Then it still leaves you with about a $25 million difference. If that's the explanation, I take that. But if there are any other areas of revenue forecast that didn't materialize, then I would ask the minister to let the House know what they might be. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I think the bottom line is that what VANOC is doing is constantly refining their financial projections. As they get more certainty around their revenues, it allows them to get more precision in their financial numbers. With the business plan, the months immediately prior to the release of the business plan was when some of those revenues got finalized with regard to the transfers from the IOC. [DRAFT TRANSCRIPT ONLY]
VANOC will continue to make sure that they push towards more certainty on the revenue side, and that will be reflected on the expenditure side. One of the commitments VANOC has made is that they will not spend money they don't have. So if for any reason revenues were not to materialize, they would have to find appropriate adjustments on the expenditure side to compensate for that. [DRAFT TRANSCRIPT ONLY]
By and large, I think every review that we've seen of the business plan is that they've taken an appropriately conservative approach to the development of the business plan. There is a high level of confidence that their revenues will prove up, or the remaining elements of uncertainty on the revenue side will get proven up, and that their expenditures side will be adequately covered by those revenues. [DRAFT TRANSCRIPT ONLY]
H. Bains: The other line item is "Other revenue," which is $110,502,000. Can the minister explain what that revenue forecast is? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I gather this is the accumulation of a bunch of miscellaneous areas that they consolidated all into the one line item of "Other revenues." It includes things like asset disposal post-games. It includes things such as the charges to the various national Olympic committees that will come in from other countries. When they're in Canada or in British Columbia, they will be charged certain fees for different services that they will be looking to VANOC to provide. So this is really an accumulation of a whole bunch of these smaller line items into the one category of "other." [DRAFT TRANSCRIPT ONLY]H. Bains: That is a large amount of revenue tucked together in one area under "other." Isn't the minister worried that — these are some of the items that the minister has described — the revenue may not materialize to the tune of $110 million? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The revenues that they are projecting are based on the experience in other games, so there is a fair amount of certainty that they have based on that previous experience. We're paying very close attention to the oversight on how the financial plan unfolds. This particular line item is certainly no exception, and the CEO of the Olympic secretariat serves as the co-chair of the VANOC finance committee. [DRAFT TRANSCRIPT ONLY]
As such, we have our eyes and ears as close to the financial picture of VANOC as anyone could ever hope for, and it will be part of what we watch going forward. The bottom line is that if there's any indication that revenues are not going to materialize, then VANOC will be expected to adjust their revenue side appropriately. [DRAFT TRANSCRIPT ONLY]
H. Bains: I think it's very interesting that the minister and VANOC would use other Olympics' numbers when it suits them. When it doesn't suit them, they basically ignore them and say: "That doesn't apply to us." In this case, they chose that that's where the other Olympics were able to achieve these financial revenues, but when it comes to security and many other areas, they're ignored offhandedly by VANOC and by this minister. We'll talk about that a little later. [DRAFT TRANSCRIPT ONLY]
I want to move on to your transportation strategy. The line item here talks about a total of $124,109,000 in this particular area. Can I ask the minister if there is a transportation strategy in place for the games? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I think the member made reference to this being our transportation plan. It is VANOC's transportation plan. We are one of the partners that are working with VANOC, working to make the games a success. VANOC has engaged a vice-president for transportation, and they are working diligently to put all of the transportation planning in place. I know that they have made considerable progress on that already, and they're well on track to making sure that all of the transportation needs are going to be addressed over the coming two and a half years. [DRAFT TRANSCRIPT ONLY]
The member, I think, in opening his previous comments, talked about how we choose to ignore costs in some cases and accept costs from other Olympics in other cases. We learn from the experience of other Olympic Games with regard to all of their costs and all of their experiences. If the member wants to get into a discussion of security later, I'd be pleased to do that, but there's absolutely nothing to indicate that the approach to security for these games is in any way inappropriate or underfunded compared to any of the other Olympic Games that we have experienced in recent history. [DRAFT TRANSCRIPT ONLY]
H. Bains: Yes, I will talk about security, but let me stay on the question I was trying to put on transportation strategy. When do you expect a comprehensive strategy on transportation to be released? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I don't have any expectation that VANOC is going to roll out a document called "A Transportation Strategy." They have transportation needs that are very complex, and they have a team at VANOC led by a vice-president-level position that is looking at all of those. They will develop their strategies, their approaches and their contracts as necessary to ensure that all those transportation needs are met. [DRAFT TRANSCRIPT ONLY]H. Bains: So the public will never know from that answer if there's a transportation strategy and what that looks like — how the spectators, the public, the tourists and the athletes will be moved back and forth. If the minister says that the strategy may not be made available to the public…. I guess that's what I heard the minister say. [DRAFT TRANSCRIPT ONLY]
Can the minister say if any contracts or any agreements have been finalized or are underway with the different service providers in this particular area, whether they're buses or something else? Or have they finalized any of that yet? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: We're talking about an operating budget for VANOC, which is $1.6 billion. The provincial government's involvement in that operating budget is $20 million for the Paralympic Games. The entire rest of that operating budget is funded by VANOC through private sector contributions and through sources other than the provincial government. [DRAFT TRANSCRIPT ONLY]
I do not work with VANOC on a day-to-day basis about how they're meeting their transportation requirements. The member may want to put that question to VANOC. I know he's had briefings from VANOC. I know VANOC has offered to brief him as often as he wishes to be briefed. So that would be a question to put to them. [DRAFT TRANSCRIPT ONLY]
But I can assure the member that VANOC is not going to…. Given the amount of security that is going to be involved around the movement of athletes, the movement of dignitaries, the movement of the Olympic family, I would be very surprised if VANOC is going to be making their transportation plans public. [DRAFT TRANSCRIPT ONLY]
H. Bains: I guess from the answer that the minister is telling the House that as far as this minister's responsibility towards the Olympics is concerned, it's only around $600 million, and if anything else is happening at VANOC offices — how they run their business outside of the $600 million — that's not the responsibility of this minister? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: To repeat the member's question: is it the responsibility of this minister? The answer is no. Are we interested, and are we involved, and are we involved in a partnership with VANOC? You're right: we are. We are working very closely with VANOC. We are supportive. [DRAFT TRANSCRIPT ONLY]
I know the member often stands up and says how he's supportive of the Olympics. And then all of his actions demonstrate that he's not. He's not supportive of VANOC. He's not supportive of the management team at VANOC. We are very supportive of the management team at VANOC and what they are doing, because I think they are doing a first-class job. [DRAFT TRANSCRIPT ONLY]
But am I going to involve myself in the day-to-day activities on the operating side of the Olympics and Paralympic Games? The answer is no. I will oversee and take responsibility for the provincial government's involvement in the Olympics. [DRAFT TRANSCRIPT ONLY]
I think, as we have discussed before, I am proud of that involvement, and I'd be pleased to be accountable for all of the details about any of the provincial government's responsibilities with regard to the Olympic and Paralympic Games. [DRAFT TRANSCRIPT ONLY]
H. Bains: The minister is correct that I have made statements that I support the Olympics. I supported them when I got elected. I supported them before I got elected, and I still support them. But if holding this minister's feet to the fire and if holding VANOC's feet to the fire…. If somehow you translate that into that I'm not in support of the Olympics…. The minister is wrong. I do support, and I will continue to hold this minister's feet to the fire. I will continue to hold, on behalf of the taxpayers, VANOC's feet to the fire. [DRAFT TRANSCRIPT ONLY]
My question is this. If the minister is saying that his responsibility as a minister on behalf of the B.C. taxpayers ends at $600 million — it starts and ends within that $600 million envelope — then the minister should say so. Is that correct? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Just to back up, I think the member…. It was in the context of whether I am responsible for VANOC's transportation plan. VANOC is responsible for VANOC's transportation plan. We have made commitments and obligations to the successful delivery of the Olympic and Paralympic Games, and I will take responsibility for the provincial government's involvement. That covers a whole bunch of areas. [DRAFT TRANSCRIPT ONLY]
I am sure that when it comes to the transportation planning that the Ministry of Transportation will be as supportive and assist VANOC in any way as they develop their particular obligations. If I can play a role in helping to facilitate that interaction between the Ministry of Transportation and VANOC, I'll be pleased to do that. [DRAFT TRANSCRIPT ONLY]H. Bains: My question was if the minister will hold VANOC responsible for all they have undertaken on behalf of this government and on behalf of the taxpayers — such as transportation strategy, security, risk management, human resources and many others which are actually listed in the business plan here. [DRAFT TRANSCRIPT ONLY]
I am asking questions to this minister. Does this minister feel that he, on behalf of the taxpayers, needs to understand whether they have a comprehensive transportation strategy? If they do, will the minister — through, perhaps, the office of the secretariat — assure B.C. taxpayers that: "Yes, they have a transportation strategy. Yes, I'm satisfied with that strategy." Is the minister prepared to make that statement? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Clearly, we will work with VANOC and be supportive in any way we can when it comes to all of their needs. But if the member is asking me if I am going to ensure that there is a transportation strategy that's made public, the answer is no. [DRAFT TRANSCRIPT ONLY]
I'm not sure whether VANOC is going to come out with one document or whether there is going to be a series of initiatives managed by their vice-president of transportation. But all of those things are not actually managed in their conversations with me; they're managed through the board of directors. [DRAFT TRANSCRIPT ONLY]
Yes, three of the board members of VANOC are provincial government appointees. I meet with them on a regular basis to make sure that the interests of the province are being reflected. We have a partnership with VANOC in terms of delivering successful games, and it's in that spirit that we are approaching all of these issues. [DRAFT TRANSCRIPT ONLY]
So yes, VANOC is developing all of their transportation plans. They will, I'm sure, put out public information about how the public may be impacted by the various transportation initiatives that they will be unfolding as we get closer to the Olympics. [DRAFT TRANSCRIPT ONLY]
That is their decision to make. I'm not going to go in and micromanage the affairs of a federally incorporated, not-for-profit corporation, of which the province is one of the partners. I expect that the board of directors will do their job. I expect that the management team will do their job. [DRAFT TRANSCRIPT ONLY]
H. Bains: I think now we are finally coming to a realization that the minister does have some responsibility. There is a reason why we have appointed board members to represent the B.C. government. There is a reason there is a secretariat office set up to look after the interests of B.C. taxpayers. [DRAFT TRANSCRIPT ONLY]
As such, there is a responsibility on the minister and this government to make sure that the interests of taxpayers are looked after, whether it's a transportation strategy, whether it's delivery of the games altogether, whether it's the construction of the venues or whether it's security or a number of other issues that involve delivering of the games. [DRAFT TRANSCRIPT ONLY]
That's where the responsibility sits. It sits with this minister to make sure the overall delivery of the games is conducted in a manner that will be in the best interests of the B.C. taxpayers. That's why these questions are appropriate. [DRAFT TRANSCRIPT ONLY]
For the minister to say that that's only VANOC and to throw his hands in the air and say: "I have nothing to do with that. I'm not going to go and micromanage…." I didn't ask the minister to go micromanage. I asked the minister if he will make sure, on behalf of B.C. taxpayers, that all those strategies and everything surrounding the delivery of those games is conducted in a safe, efficient manner. [DRAFT TRANSCRIPT ONLY]
That's your responsibility as the Minister Responsible for the Olympics. That's why I'm asking you those questions in this House — to make sure that the taxpayers understand and that they have comfort in this minister that those needs are actually met, by making sure that the transportation strategy is there so that they as the public during that two- or three-week period aren't stuck somewhere out there because somebody mismanaged. [DRAFT TRANSCRIPT ONLY]
That's the responsibility of this minister well ahead of time. We still have two years to make sure that the taxpayers are actually satisfied with everything that is involved, whether it's the transportation or security or medical or whatever else is involved. [DRAFT TRANSCRIPT ONLY]That's why the questions are coming, and that's why I think it's the responsibility of the minister to make sure that he says in this House for the benefit of the taxpayers that yes, he will ensure that there is a workable transportation strategy in place. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The bottom line is that we are engaged with VANOC on a day-to-day basis. We sit at the table with them as they develop their plans in multitudes of areas. [DRAFT TRANSCRIPT ONLY]
I think the bottom line is that a part of our obligation is not to micromanage how VANOC organizes the games. Our obligation is to make sure that there is a competent team that is in place that is actually managing the affairs of VANOC. I can say unequivocally that there is a very competent team that enjoys our 100-percent confidence. [DRAFT TRANSCRIPT ONLY]
Secondly, we have our representatives that are sitting on the board, and we have our representatives who sit on the finance committee to make sure that the interests of the B.C. taxpayers are protected. That is exactly what is happening. [DRAFT TRANSCRIPT ONLY]
H. Bains: Let me quickly move over to some of the other areas again. I want to talk about the venue construction. Are all the contracts finalized? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: In the interest of time…. This may take us a moment to dig out that exact number for the member. [DRAFT TRANSCRIPT ONLY]
The short answer is that not all of the venue contracts are in place. Some of them actually will flow from…. Well, I guess in terms of a time line, in some of the venues there is a point in the time line at which the contracts would be put in place for elements of the construction, and we're not yet at that point in time. [DRAFT TRANSCRIPT ONLY]
I think this was in the business plan, because I know I've read so much of the stuff in the last little while. But there is a percentage number that VANOC has indicated recently of the percentage of their contract budget — the percentage of the $580 million — that is under contract at this point. We will endeavour to find that, but in the meantime, that's the high-level answer at least. [DRAFT TRANSCRIPT ONLY]
H. Bains: I would appreciate getting that information. Perhaps you can provide that to us later. Let me ask you this question: What type of contracts are they? Are they cost-plus or fixed-price? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: For the vast majority of the contracts, there are fixed obligations to VANOC so that they can budget those numbers with a high level of certainty. That's the vast majority of the $580 million budget. There are venues that VANOC is managing itself. So within that venue construction, they will engage in contracts which are fixed-price, but that would be for a certain element of the construction. VANOC, as the overall contractor for the province, has to take responsibility for allocating those contracts as we go forward. It's some of those contracts that still have to be let, because in the time line for the construction of those venues, they have not yet got to the point where some of those contracts would be let. [DRAFT TRANSCRIPT ONLY]
There would still be some risk to VANOC. I think the estimate is that the level of risk is very low, and as we discussed earlier in these proceedings, within the construction budget of $580 million there is still a $55 million contingency. That $55 million contingency is against the untendered portions that VANOC still has the responsibility for. [DRAFT TRANSCRIPT ONLY]
It's not a $55 million contingency on the total construction of $355 million that's estimated. It's actually an amount much less than that which is the amount that is still not subject to specific fixed-price contracts. [DRAFT TRANSCRIPT ONLY]
H. Bains: The financial update that came out, I believe, in March reflects certain venues' costs going higher. I guess in total it was to the tune of about $11 million or $12 million, and that was between the previous interim report, the previous quote, which was in December. So between December and March that cost went up by $11 million. [DRAFT TRANSCRIPT ONLY]
Are those venues being managed by VANOC directly? That's one question. Perhaps the minister could answer the same question. What percentage of the total $580 million is VANOC actually directly managing? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The increase in cost that the member referenced is actually what the drawdown of the venue construction contingency reflects. So as we discussed earlier, the contingency that was put in place as of September of '06 was $66.8 million — or whatever that was — and we had a schedule at which VANOC could draw against that contingency. They have currently drawn down the $11 million to $12 million that the member referenced, which actually brings them to about $55 million, which is still higher than had been anticipated for the contingency at this point in time. [DRAFT TRANSCRIPT ONLY]
In terms of the amount of venue construction that's not yet subject to contract, it would amount to about $120 million. So roughly, if you look at the remaining $55 million contingency, I think that by any construction manager's estimate, having a $55 million contingency against a $120 million capital budget is actually a very, very healthy contingency. [DRAFT TRANSCRIPT ONLY]
H. Bains: Thank you for that information. But actually my question was the venue construction costs that ran up from the previous quote to the tune of a little over $11 million. Are those venues or those contracts or the projects directly managed by VANOC? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: When we talk about increase in cost — I know the member knows this, but I just want to make sure it's reflected in Hansard — what we're talking about is the pressure against the contingency. We're not talking about a cost pressure over and above the $580 million. This is all within the $580 million, and it's a charge against the remaining contingency that's there. I know the member is aware of that. [DRAFT TRANSCRIPT ONLY]
The short answer to his question is that the increase in the construction cost of $11 million to $12 million is in fact both projects managed by VANOC itself, as well as projects that are being undertaken by outside parties. [DRAFT TRANSCRIPT ONLY]
H. Bains: If they are managed by outside parties, that portion of those projects, what would be the reason for a cost increase if they were fixed-price contracts? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: As I understand it, some of those costs pertain to the projects managed by VANOC, which would include, for example, Hillcrest and the sliding centre, including the Nordic centre. When it comes to the projects that are being managed by or being undertaken by third parties, there are some additional costs that reflect the project management costs that would be incurred by VANOC. [DRAFT TRANSCRIPT ONLY]
[B. Lekstrom in the chair.]
The areas where there are fixed agreements, in terms of what costs VANOC would be subject to, those are fixed, and these are areas that would be reflected as increased costs to VANOC because of project management costs. [DRAFT TRANSCRIPT ONLY]
H. Bains: Thank you, Minister. Because of the time, I'm going to move over to some of the other areas. [DRAFT TRANSCRIPT ONLY]
I'd like to draw your attention to three agreements that were put together. One was B.C. Place. Another one is the Pacific Coliseum. The third one is GM Place. [DRAFT TRANSCRIPT ONLY]
With GM Place, as I understand, there's a total of $18½ million to use the facility and $110 million plus inflation — we don't know what the final numbers are going to be — based on the information that VANOC has provided. If the minister could give us the numbers, what is the anticipated total cost to use GM Place for part of hosting the games? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: I think one thing that is important to differentiate at this stage in the discussion is that the cost for the rental of GM Place is not a cost to the province. We don't pick up any of that cost at all. That is 100-percent funded out of VANOC's operation budget. It is not part of the capital budget at all. There is no provincial government money that goes into the rental agreement that they have struck with GM Place. [DRAFT TRANSCRIPT ONLY]
As I understand it, it is based on $18½ million, plus $110,000 a day. I think the member said $110 million a day, which would be unrealistic for sure. It's $110,000 a day. There are some variables in there that are yet to be determined in terms of the number of days that it takes to set up. [DRAFT TRANSCRIPT ONLY]
I think that as VANOC has pointed out, GM Place is going to result in unprecedented ticket revenues to VANOC. They estimate in the neighbourhood of $70 million, so it is actually a huge net contributor to VANOC's operating budget. [DRAFT TRANSCRIPT ONLY]
H. Bains: Maybe we are using the right numbers. The minister used $70 billion revenue. Perhaps $110 million per day is the rate. [DRAFT TRANSCRIPT ONLY]
But my question is this. B.C. Place, a publicly owned facility, is for all intents and purposes given free, except for the revenue from concessions. On the other hand, GM Place is given $18½ million, plus $110,000 per day plus inflation. [DRAFT TRANSCRIPT ONLY]
My question to the minister is that when you compare…. Again there's a third one, which is a publicly owned facility — the Pacific Coliseum. When you look at the Pacific Coliseum, there is about $23 million being spent because it needs upgrading in order to host an Olympic level of sports. So it can be justified that there is the money needed to upgrade that facility. What is the $18½ million being spent on, on GM Place? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: It's not possible to compare these deals, if you want to call them deals. They're the arrangements that VANOC has entered into for the use of GM Place or B.C. Place or the coliseum. But in terms of B.C. Place and the coliseum, we wind up with a significant retrofit that is being done to those buildings, so it is an ongoing benefit to the public, going forward. [DRAFT TRANSCRIPT ONLY]
Those costs, of course, are reflected in part of our $600 million envelope, but in addition, the province gets the benefit of the concession revenues from both of those facilities. We know that those would be significant. [DRAFT TRANSCRIPT ONLY]
We also have to look at the opportunity costs of those facilities. We know that the concession revenue that we will derive is actually going to be pretty considerable and a big, positive contribution to the province that we may not otherwise have seen. [DRAFT TRANSCRIPT ONLY]H. Bains: The minister can spin as much as he would like to do. There is no comparison between the B.C. Place deal and the GM Place deal — no comparison whatsoever — when it comes to the money being paid to use those facilities. [DRAFT TRANSCRIPT ONLY]
My question was…. There is a justification for the Pacific Coliseum to spend $23 million because seats need to be replaced and other upgrading needs to be done. What is the reason for giving $18½ million to GM Place when the regular rent, as it is listed here, the daily rent, is also payable in addition to the inflation? I should say the inflation is included. What is the purpose of the $18½ million to be given to GM Place? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I want to reiterate what I said earlier. The arrangement with GM Place was negotiated by VANOC. We were not party to that negotiation. We were not at the table for that negotiation, and I don't know the dynamic that went into it or how they arrived at those particular numbers. [DRAFT TRANSCRIPT ONLY]
As I mentioned earlier, there is not one dime of the dollars that flow from VANOC to Orca Bay that is coming from the province of British Columbia. It is coming out of their operating budget, and the only involvement that the province has with the operating budget of VANOC is $20 million that goes to the Paralympic Games. [DRAFT TRANSCRIPT ONLY]
H. Bains: The secretariat sits on the board. Three members of this government sit on the VANOC board. Weren't they justified — this $18.5 million expenditure by VANOC? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Just for clarification, there is nobody from the Olympic secretariat that sits on the VANOC board. There are three provincial government representatives as part of a 20-member board — three provincial representatives. [DRAFT TRANSCRIPT ONLY]
I think VANOC has publicly explained the arrangement that they have with Orca Bay. I've certainly read all of the news coverage, and I'm sure the member has, on the explanations that VANOC has provided with regard to the justification for that particular arrangement. [DRAFT TRANSCRIPT ONLY]
H. Bains: So there is no justification coming from the minister for that $18½ million. Let me move on, since we're not going to get any answers, because we're short of time. [DRAFT TRANSCRIPT ONLY]
The International Broadcast Centre will be actually located in the new convention centre. Can I ask the minister if he could tell this House how much VANOC will be paying to this new convention centre for use of that facility to host the International Broadcast Centre? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: It's my understanding that VANOC will be paying about $13 million for the use of the trade and convention centre for the International Broadcast Centre. I think the other benefit that comes to the province out of that is really that the eyes of the world are going to be on this fabulous new convention centre at a time when we will be setting out quite aggressively to market the convention centre to the world. [DRAFT TRANSCRIPT ONLY]
So we get the benefit of $13 million in direct revenues plus some fabulous marketing opportunities. [DRAFT TRANSCRIPT ONLY]
H. Bains: Where does that item of $13 million show on the business plan? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: That would be in the line item for the cost of the Olympic Broadcast Service, as they are referred to. [DRAFT TRANSCRIPT ONLY]
H. Bains: I'm trying to locate that item. I tried, and I couldn't figure out where that $13 million would fit. So perhaps the minister could help me locate that line item. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Actually, just two references for the member: in the Auditor General's report on page 47 there is reference to the $13 million commitment that VANOC has agreed to pay for the rent for that facility. He will find the cost of providing the Olympic Broadcast Service is on page 74 of the business plan. [DRAFT TRANSCRIPT ONLY]
H. Bains: Also in the business plan, the IOC net contribution is listed as $401,700,000. It also shows a line item as "Other IOC revenue" in the amount of $35 million. Can you explain what this other $35 million is? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: It may take us a bit to find the detail on that. I don't have it readily at my fingertips. If we can find it before we adjourn, I will give it to the member. Otherwise, I will provide it to him at a later date. [DRAFT TRANSCRIPT ONLY]
H. Bains: Also, it reflects, as the minister had mentioned earlier, the percentage of certain revenue, largely from the domestic sponsorship and VIK revenue and other cash revenue that VANOC would be generating. A percentage of that goes to COC, I believe, and to IOC. Can the minister explain if this revenue actually is net of those percentages that are to be paid? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: Again on page 74 of the business plan there is a line item that refers to…. It shows the revenues, and then it shows total revenue. Then right under it is "Less: marketing rights royalties," which is $197 million. The payments that would go to the COC and the IOC as their particular share of domestic sponsorship revenues would be included in that line item. [DRAFT TRANSCRIPT ONLY]
H. Bains: Can the minister perhaps tell this House: what is the total value of the VIK so far? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: With the volumes of information…. It's a reference that I know that I have read. I believe it's in the business plan, because I think that's the only place I would have seen it. But what I recall is that the value-in-kind is about 35 percent or 40 percent of the total sponsorship dollars that come in. As I say, I'm just going from memory on that. I can't find the exact reference at this time. [DRAFT TRANSCRIPT ONLY]
H. Bains: That was part of the reason why I asked that question, because I cannot see that line item as revenue anywhere in this business plan. If you could show me where that is so that we know what the VIK revenue forecast is and so that we know how that does fit in. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: On the revenue side, it would actually be reflected in the $760 million that VANOC is projecting as sponsorship revenue. Then the actual cost of that value-in-kind…. Just to give you an example, if RONA, which is one of the corporate sponsors, provides product that is being used by VANOC, then that is reflected in the revenue side as a sponsorship revenue. It is also reflected in the expenditure side to the same value. [DRAFT TRANSCRIPT ONLY]
Another example that comes to mind is the contribution of communications equipment from Bell. We had a briefing from Bell of just the phenomenal work that they're going to do, and the thousands of cell phones that they are going to be providing for the athletes, officials, volunteers and those that are coordinating the actual games. They will be providing those cell phones, so the value of that is reflected on the revenue side and the equivalent cost of that is reflected on the expenditure side. [DRAFT TRANSCRIPT ONLY]
H. Bains: So VIK contributions are part of the $670 million. That's a domestic sponsorship. Fair enough. [DRAFT TRANSCRIPT ONLY]
The minister said that the International Broadcast Centre's cost of $13 million being paid to the new convention centre shows on page 74 of the business plan. We can't locate it. Can the minister just walk us through. Where is it? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: So this goes back to the earlier discussion that we had around…. We had the discussion about the difference in the $200 million between the Auditor General's report and VANOC. What it is, is it's the fact that the cost of the Olympic Broadcast Service — the IOC contribution — is reflected net of the cost of providing the official broadcast services. [DRAFT TRANSCRIPT ONLY]
So if you go up to the very top of page 74, it says "IOC contribution of $580 million," and then it says "less the cost of providing the Olympic broadcast service," and that's $178 million. So the $13 million for the cost of renting the convention centre is included in that $178 million. [DRAFT TRANSCRIPT ONLY]
H. Bains: We'd like to move to the inner-city inclusive commitment statement that was signed. On page 3 under "Housing," it clearly shows the commitment made to the people of Vancouver. This is what comes directly out of that statement: "(a) protect rental housing stock; (b) provide as many alternative forms of temporary accommodation for winter games visitors and workers; (c) ensure people are not made homeless as a result of the winter games; (d) ensure residents are not involuntarily displaced, evicted or face unreasonable increases in rent due to winter games; (e) provide an affordable housing legacy and start planning now." [DRAFT TRANSCRIPT ONLY]
My question to the minister is: what plans are in place to achieve this commitment? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: When it comes to the ICI commitments that were made, I think it's important to remember that there were four parties to that commitment. Each of those parties has to play a role in making sure that those commitments are lived up to. [DRAFT TRANSCRIPT ONLY]
If you look at the various initiatives, whether it's the percentage of social housing that is included in the Olympic village, and whether you look at the provincial homelessness initiative that was launched by the minister responsible for B.C. Housing in the province…. Those are all initiatives that will take us towards our share of delivering on the responsibilities and obligations that were made as part of the ICI agreement. [DRAFT TRANSCRIPT ONLY]
H. Bains: Let's deal with each of the commitments that are there. It says "protect rental housing stock." Has any work been done to identify what that stock is and how to protect that? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: The lead responsibility for the province's response when it comes to the housing strategy is the minister responsible for B.C. Housing, and those estimates have not yet happened. I think the member would have an opportunity to ask those detailed questions directly of that minister, because it is that ministry that has taken responsibility for ensuring that we live up to our obligations as a province. [DRAFT TRANSCRIPT ONLY]
H. Bains: So the answer is that this is not the responsibility — all these commitments in here — of this ministry? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: This ministry has responsibility for coordinating the provincial government response to our various obligations, but we look to other ministries that have the staff and the expertise to deliver on those. In this case, it is B.C. Housing that has taken on responsibility for delivering the provincial government's housing and homelessness strategies. [DRAFT TRANSCRIPT ONLY]
H. Bains: Has the minister sent any directive, any request — any initiative taken by the minister — to relay his concern to all of those other ministries he mentioned here that are responsible for taking care of this commitment? Has the minister done any of that? If so, where is a written request or any written documentation to show that the minister has actually taken the initiative to make sure that those who are responsible for fulfilling this commitment actually are on this and that they will do it in a timely fashion? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I don't issue directives to my colleagues. I've had many conversations with my colleague, the minister responsible on this specific subject, and I have full confidence that that ministry under his leadership will deliver on our obligations. [DRAFT TRANSCRIPT ONLY]
H. Bains: So let me ask this direct question. Whose responsibility is it, then, to fulfil these commitments that were made by getting all the parties together? Who is responsible to make sure that these commitments are carried out? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: That is a shared obligation that has been taken on by the parties to the ICI agreement. The lead from the provincial government's perspective is B.C. Housing under the leadership of the minister responsible for B.C. Housing. [DRAFT TRANSCRIPT ONLY]
H. Bains: Again the time constraints. I have a few more questions on some of the other areas. There is a question about Legacies Now. I believe we last learned that their total budget was about $130 million. Can the minister tell us how much of those funds actually have been allocated and how much of those funds, of the total budget, are used on administration? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Legacies Now is independent of government. They don't report to the province, but their relationship with the province is through the Minister of Tourism, Sport and the Arts, who liaises with them on an ongoing basis. I know that that subject was canvassed thoroughly in the estimates of the Minister of Tourism, Sports and the Arts, and I would refer the member to that Hansard. [DRAFT TRANSCRIPT ONLY]
H. Bains: A few questions on security, as we said that we would talk about security. Does the minister still believe that $175 million is sufficient? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: As recently as just a few weeks ago, I had advice from the Deputy Solicitor General that, to date, there is no indication that $175 million will not be adequate. [DRAFT TRANSCRIPT ONLY]
H. Bains: So what does the minister say to those folks such as the president of IOC, who said in 2003 that $175 million is not sufficient? Senator Kenny also said he's concerned, as late as about three weeks ago. He was publicly stating that he's concerned with the $175 million budget that is put together. [DRAFT TRANSCRIPT ONLY]Then two high-level officials from Salt Lake City were here when everybody was invited to town to learn from their experiences. They also said $175 million was not sufficient. [DRAFT TRANSCRIPT ONLY]
As late as just a few months ago a high-ranking general made this statement: "The Olympics could offer opportunities for terrorists — international and domestic — and extremists to further their agenda at the high-profile event, either against Canada or another participating nation." [DRAFT TRANSCRIPT ONLY]
Knowing all these concerns from all these high-level officials, those folks who happen to know and actually worked in this area of delivering security arrangements in different Olympics, what does the minister say to them — that they are all wrong? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I welcome the member's question because I think it gives an opportunity to clarify the misinformation that is being circulated with regard to security costs. It is important to understand what it is that the $175 million is supposed to cover. [DRAFT TRANSCRIPT ONLY]
I think that's probably best explained by telling the member what it does not include. It does not include any cost of managing any kind of a terrorist threat. That is a 100-percent cost to the federal government. It is not a cost that comes out of this budget of $175 million, which is 50-50 shared by the province and the federal government. [DRAFT TRANSCRIPT ONLY]
It does not cover the cost of border security, which again is 100 percent the cost of the federal government, and they have to look after those obligations. And it does not cover the cost of the protection of internationally important people. I think the designation is basically the VIPs and the heads of state that are travelling to British Columbia. That is separate from the $175 million budget. [DRAFT TRANSCRIPT ONLY]
If you think of this as a spectrum in the context of sort of local policing costs versus those high-level military or quasi-military/terrorism costs at the other end of the spectrum…. So on one end we've got those high-level threats that may or may not materialize. That's the federal government. [DRAFT TRANSCRIPT ONLY]
At the other end of that spectrum the local policing costs are the normal responsibility of local police forces. That doesn't matter whether it's a Stanley Cup playoff game or whether it's Expo 86 or any other big major event that's taking place in any of our communities. It is the local policing budget that is expected to cover off what would be the normal policing cost for that municipality. [DRAFT TRANSCRIPT ONLY]
In the middle is the cost that the security budget has to be responsible for out of the $175 million. That involves the security of the venues themselves and the security of the Olympic athletes and Olympic officials. So we have a team that's working on that now, managed by the RCMP. They are looking at exactly what their obligations are going to be. But as I indicated, to date no one has indicated to me that the $175 million will not be adequate. [DRAFT TRANSCRIPT ONLY]
H. Bains: Thank you for the clarification, Minister. [DRAFT TRANSCRIPT ONLY]
So $175 million is just in and around the venues and the Vancouver-Whistler corridor. Anything outside of that is the responsibility of the federal government, as the minister stated. If it's an air threat, water threat, terrorist threat, border security, immigration — all of that will be outside of the $175 million. Is that correct? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: That's correct. [DRAFT TRANSCRIPT ONLY]
H. Bains: Who actually is dealing with that particular area of security in the budget? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: The plans for the security requirements as provided for by that $175 million are being led by the RCMP. Our Deputy Solicitor General is working closely with them and is part of that team. [DRAFT TRANSCRIPT ONLY]
H. Bains: I understand that part, that the RCMP is dealing with $175 million and providing that part of the security. But I'm talking about all other security arrangements that might be needed, whether it's a terrorist — internal or external — border security, immigration, air, water — whatever threat comes. Who is actually dealing with that security arrangement? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The federal government is the short answer. They would look at those kinds of threats on an ongoing basis, I'm sure. I'm certainly not privy to the activities of the RCMP in that regard or CSIS or the Canadian military, but I'm sure they are constantly monitoring that ongoing threat. [DRAFT TRANSCRIPT ONLY]
The fact that we are hosting the Olympics in 2010 would be just one of those events that they would have to do threat assessments on. But I know they do that on an ongoing basis for all kinds of activities and events that take place. The Olympics are just one of those. [DRAFT TRANSCRIPT ONLY]
I think the other thing that is important is people jump to the conclusion that somehow the Olympic Games are a heightened threat for international incidents or international terrorism. I challenge that, because the Olympics actually have a pretty proud reputation of driving a peace agenda. There have been peace treaties that have been signed internationally to stand down any kind of aggressive activities around the world at the time the Olympic Games are underway. [DRAFT TRANSCRIPT ONLY]
That is something that is signed on to and acknowledged by countries of very different backgrounds. I think often when we think of terrorism threats, we think of threats against one or two countries in the world. But this is an event that takes place that actually welcomes all of the world to come together in peace and celebration. [DRAFT TRANSCRIPT ONLY]
So I don't believe there is any reason to assume that somehow the Olympics are a higher security threat than other international events that take place. [DRAFT TRANSCRIPT ONLY]
H. Bains: My question is: none of the $175 million will go towards that part of the security? If there is a…. The minister is nodding. That means the answer is yes. [DRAFT TRANSCRIPT ONLY]
Let me ask you another question on the secretariat office, since they've been sitting here all this time. It won't be fair not to ask any questions about their office. Can the minister give us a breakdown on the secretariat office budget, starting with 2007-2008, 2009-2010 and 2011? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: The budget for '07-08 is $7.877 million. The budget for '08-09 is $8.895 million. The budget for 2009-2010 is $9.077 million. [DRAFT TRANSCRIPT ONLY]
J. Kwan: I'm going to ask some questions relating to the Olympics, but more particularly as it impacts my riding of Vancouver–Mount Pleasant. [DRAFT TRANSCRIPT ONLY]
First, let me ask a question around the development of a native youth centre in the downtown east side. I know the government is looking at developing some sort of aboriginal centre related to the Olympics as part of a legacy project. After the Olympics they would actually move that legacy project outside of the downtown east side to another venue. [DRAFT TRANSCRIPT ONLY]
Right now there is a proposal at work in the community around the native youth centre to which I think the government can actually partner those two things together to really build that legacy as a long-term return for the downtown east side. [DRAFT TRANSCRIPT ONLY]
Has the minister contemplated that? Has he seen that proposal, and would he be willing to consider that as a collective venture, if you will, in terms of an aboriginal legacy in the community? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: There is a proposal that's coming together for an aboriginal pavilion. This would be sponsored by the four host first nations, and it would become a showcase for our first nations peoples at the time of the games. It's to be located somewhere in Vancouver. It's not necessarily in the downtown east side. The exact location has not yet been finalized. They are working with the city to try to determine where that might be. [DRAFT TRANSCRIPT ONLY]
In terms of the post-Olympic use of that structure, I don't believe they have made any decisions yet on how that structure might be used after the games are over. The member's suggestion, I think, would certainly be welcome. I know the representatives of the four host first nations would be very open to suggestions around how that could be used post-Olympics. [DRAFT TRANSCRIPT ONLY]
J. Kwan: I'm just wondering whether or not there's an opportunity here for economies of scale, if you will. A pavilion is going to be built at the same time. There is an initiative in my community where the idea is to build an aboriginal youth centre, and I think those two things can go hand in hand. [DRAFT TRANSCRIPT ONLY]
A site has not been determined. They already have a site in terms of this proposal in the community. So maybe there are some opportunities here to do something that is actually a lasting legacy in the community. I think one of the social impacts and mitigating issues for the community would include such legacy projects for the downtown east side. [DRAFT TRANSCRIPT ONLY]
Maybe what I can do, and I'm mindful of the time here, is advance a copy of that proposal to the minister. And if I could ask the minister to endeavour to perhaps assign it to staff to follow it up with the folks who are involved with the aboriginal pavilion initiative, to see how those things could be married together in terms of a lasting legacy. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I'd be pleased to do that. [DRAFT TRANSCRIPT ONLY]
J. Kwan: Could the minister please tell us what the training plan is for the downtown east side residents in terms of training opportunities and job opportunities? Would there be investments that would go into construction training for the downtown east side residents so that they can benefit from the games economically? Also, would there be support for security training for the downtown east side community? Again, so they could benefit from the potential economic spinoff from the games. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: With regard to the construction side, I know that VANOC in their construction has tried to reach out to communities that perhaps have not had opportunities to be actively involved in the workforce. I know the member is very familiar with BladeRunners, which is a very successful program that I think started when she was a member of government and continues to be very successful program. I believe that BladeRunners has been involved in some of the construction projects, whether they've been directly administered by VANOC or by third parties. [DRAFT TRANSCRIPT ONLY]
With regard to security, there is going to be a process that VANOC will be involved in, to identify individuals and ensure that they get the proper training necessary. I know that VANOC has a commitment to engaging first nations with those opportunities. They've got a great track record of that to date through the Four Host First Nations Secretariat. I'm sure that when it comes to the security side of it, the same track record they have to date would extend in that regard as well. I know from some of the individuals who are heading up the Four Host First Nations Secretariat that they will be there making sure those opportunities are there for aboriginal youth. [DRAFT TRANSCRIPT ONLY]J. Kwan: I am noting the time. We won't have time to get into all the details around this and the proposal and the plans that VANOC and perhaps the minister and ministry have in place with regards to these issues. [DRAFT TRANSCRIPT ONLY]
I wonder whether or not the minister could provide me with those plans at a later date so that I can go through them — on the training issue, on whether it's construction or security and so on — so that I can take that back to my community to inform them how they could ensure that their input is there and is considered in terms of their participation. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: Rather than my getting that information and passing it on thirdhand, I think I can offer one better. I'll put the member in touch with the appropriate person at VANOC, who could provide her with that information. [DRAFT TRANSCRIPT ONLY]
J. Kwan: Excellent. I would appreciate that. I can ask, I guess, to my heart's content the questions that I have and see how we can bring the two sides together. [DRAFT TRANSCRIPT ONLY]
I'm going to move on to the arts and culture component related to the Olympics impacting, again, my community. Arts Now is now in place, as I understand. I'm wondering: in that initiative are they consulting with B.C. Arts Council in the grant-making process? This is a component, I believe, under Legacies Now. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: That is correct. It is an initiative of Legacies Now, and as I mentioned earlier, the relationship of Legacies Now with the provincial government is through the Minister of Tourism, Sport and the Arts. To be honest, I don't know who they are consulting with, but I'm sure that information could be obtained through the office of the Minister of Tourism, Sport and the Arts. [DRAFT TRANSCRIPT ONLY]
J. Kwan: I do have a list of questions related to that, and maybe I can just put them on record. I will certainly endeavour to try and connect with the minister to see if I can find the answers. Failing that, I know that the minister earlier agreed that he would pass on my questions to his counterpart. I wonder if he would do that just to make sure that I do get the answers. [DRAFT TRANSCRIPT ONLY]
I'm just going to read off the questions and put them on the record. The other question I have is: is the arts sector beyond the B.C. Arts Council being consulted with respect to the Arts Now initiative? Can the minister ensure that the small arts and cultural institutions can have access to the funding as well? [DRAFT TRANSCRIPT ONLY]
Is the minister aware that the commercial leases right now in the community are hurting the non-profit art and cultural organizations quite significantly? In fact, the cost of the leases have shot up significantly, and some of these non-profits are really struggling. I'm not sure if they can survive it. So that's another issue. I'm wondering what plan the minister has to address this, to assist the non-profits to get through this. [DRAFT TRANSCRIPT ONLY]
Will there be funding pockets created for established organizations to purchase space as an investment, as a legacy in the arts and culture community into the long term? Ultimately, what arts and culture infrastructure legacy would there be in the community post the Olympics? [DRAFT TRANSCRIPT ONLY]
I'm wondering also about infrastructure funding for artist-run centres so that they can invest in a long-term presence in the downtown east side neighbourhood as part of a broad art and culture legacy. [DRAFT TRANSCRIPT ONLY]
These are some of the questions that I have related to the arts component. I would appreciate if the minister can pass those on to his counterpart and endeavour to get the answers related to them. [DRAFT TRANSCRIPT ONLY]
I'm going to move on to another area, which is the housing area related to this. I note that when I spoke with the minister on the helijet and asked him to see whether or not these are the kinds of questions — around the housing in the community — that should be brought to the minister in this set of estimates or if they should be brought to the Minister of Housing, he said they have joint responsibility. [DRAFT TRANSCRIPT ONLY]
I'm not quite sure where to go. I'm going to give it a try, and I'm sure the minister will tell me, if he's the wrong guy, that I should go to some other guy. [DRAFT TRANSCRIPT ONLY]
First of all, in terms of the impacts of the inner-city commitment statement that has been made by all levels of government related to the housing situation in the community, one of the issues ties into the SRO hotels, the single-room-occupancy hotels. I'm wondering: does the minister support a rent freeze in the SRO hotels in this period leading up to the Olympics? [DRAFT TRANSCRIPT ONLY]Hon. C. Hansen: That is a question that should be directed to the minister responsible for B.C. Housing. His estimates are still to come, so that opportunity should present itself. [DRAFT TRANSCRIPT ONLY]
J. Kwan: Does the minister support the 3,200 units of new social housing, as VANOC's own inner-city inclusive-housing round table has recommended? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I think as we discussed earlier, the province was one of the parties to the ICI commitments, and we are anxious to live up to our obligations to ensure that those obligations are delivered on. But when it comes down to the specifics as to how the province would respond to that, that again is a question for the minister responsible for B.C. Housing. [DRAFT TRANSCRIPT ONLY]
J. Kwan: How does the minister define his obligations then? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I think as I mentioned earlier, when it comes to activities directly related to the Olympic and Paralympic Games, this ministry has a responsibility for overall coordination and oversight. But we recognize that there are other line ministries that have better expertise in certain aspects of that, and we will work with those other ministries and defer to those other ministries to allow them to provide the leadership role when that's appropriate. [DRAFT TRANSCRIPT ONLY]
J. Kwan: Would Legacies Now be allocating any of its funds towards the development of a social housing legacy? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I'm not familiar with how Legacies Now allocates their dollars. I'm not even sure that the minister to whom they relate — the Minister of Tourism, Sport and the Arts — would have that information. That may be a question properly directed to Legacies Now. I know that they have a very receptive open-door policy to all MLAs, and I'm sure they would try to provide that information. [DRAFT TRANSCRIPT ONLY]
J. Kwan: Who in government…? Or is anybody in government developing a social impacts assessment of the Olympics in the downtown east side community? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I know that the parties to the ICI agreement are looking at impacts, and I know that there has been TV coverage of events that have taken place that people have tried to — if I can use the term — "blame" on the Olympics, which I would take issue with. But I think that it is the member, signator parties to the ICI agreement that would have responsibility for monitoring and evaluating those impacts. The province is one of those parties. [DRAFT TRANSCRIPT ONLY]
J. Kwan: That brings us to the critical question with respect to the ICI recommendations. They have done the assessment, then, and have come up with recommendations, but they don't have the wherewithal to realize those recommendations. That depends on the government's action. [DRAFT TRANSCRIPT ONLY]
It would be critical for the government to actually support the recommendations from the ICI so that you can mitigate the social implications of the Olympics in the downtown east side community and in the neighbouring communities as well. So I would urge the minister to engage in that dialogue with his colleagues and to ensure that those recommendations are in fact implemented, because I think it would be crucial to the success of the Olympic Games. [DRAFT TRANSCRIPT ONLY]
It's something that we all want to celebrate in British Columbia. I think if the social impacts are not addressed adequately, the black eye would be a lasting one, and it would also be most unfortunate. I would urge the minister to engage in that dialogue, I'm sure, with his cabinet colleagues and the Premier as well. [DRAFT TRANSCRIPT ONLY]I have just been told that I have to note the time. In this regard, I'll ask one last question of the minister. On the issue around accountability, the minister earlier, in question period on some other day, had said that the accountability measures of VANOC and Legacies Now — with respect to the Financial Disclosure Act, the FOI Act, and so on — was subject to the federal government's decision on whether or not those accountability measures would apply to VANOC and Legacies Now. The minister's shaking his head, so I'm going to let him respond first. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: What I have said is that VANOC is a federally incorporated not-for-profit corporation, so I would have difficulty making an argument that VANOC — it's totally independent of the province; it's not an entity of the provincial government in any way, shape or form — should be subject to the provincial government's FOI. The question would be the same as: "On what basis should it be made federal to the federal freedom of information act?" Basically, VANOC, as an independent organization, has to develop their policies for disclosure in accordance with their governance obligations. [DRAFT TRANSCRIPT ONLY]
J. Kwan: Then, on that basis, would the minister at least commit to talking to his federal counterpart to ensure that VANOC and Legacies Now have an open and transparent process in place in which at minimum the standards that apply would be equal to the various acts that we have in British Columbia? [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I think we canvassed this quite thoroughly. I noted earlier that VANOC today has come out with additional transparency measures that have been approved by their board of directors at today's VANOC board meeting. The decisions as to what kind of policies to engage in are in fact decisions that VANOC themselves have to make. [DRAFT TRANSCRIPT ONLY]
Vote 24: ministry operations, $265,742,000 — approved. [DRAFT TRANSCRIPT ONLY]
Hon. C. Hansen: I move that the committee rise and report resolution of the estimates of the Ministry of Economic Development, and ask leave to sit again. [DRAFT TRANSCRIPT ONLY]
Motion approved. [DRAFT TRANSCRIPT ONLY]
The committee rose at 6:28 p.m. [DRAFT TRANSCRIPT ONLY]
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