1998/99 Legislative Session: 3rd Session, 36th Parliament
The following electronic version is for informational purposes only.
The printed version remains the official version.
No. 158
OF THE
Monday, April 19, 1999
Two o'clock p.m.
Prayers by Mr. Randall.
The Hon. J. MacPhail (Minister of Finance and Corporate Relations) presented to the Speaker a Message from His Honour the Administrator, which read as follows:
Alan Mcfarlane Administrator
The Administrator transmits herewith Bill (No. 55) intituled Probate Fee Act and recommends the same to the Legislative Assembly.
Government House,
April 19, 1999
Bill introduced and read a first time.
Bill Ordered to be placed on the Orders of the Day for second reading at the next sitting after today.
Order called for "Oral Questions by Members."
The Hon. U. Dosanjh (Attorney General and Minister Responsible for Multiculturalism and Human Rights) tabled the Children's Commission Annual Report, 1998, and accompanying summary document entitled Recommendations and Responses.
The Hon. S. Hammell (Minister of Women's Equality) made a ministerial statement regarding Prevention of Violence Against Women Week.
Ms. Stephens made a statement.
The House proceeded to "Orders of the Day."
Bill (No. 51) intituled Nisga'a Final Agreement Act was again committed.
The Committee rose, reported progress and asked leave to sit again.
Bill to be considered at the next sitting.
The Speaker delivered her reserved decision as follows:
Honourable Members:
The Chair is now in a position to render a decision relating to the several matters of privilege raised on March 29, 1999.
Firstly, the Chair wishes to thank the Honourable Members raising the matters of privilege for their careful and well-researched presentations. In the same vein, the replies to the matters of privilege tabled by the Government House Leader have been of assistance to the Chair in arriving at its conclusions.
The Chair has examined carefully the important issues raised and, apart from the material tabled by both sides of the House, the Chair has carefully considered the Auditor General's Report of February, 1999, dealing with the review of the estimate process in British Columbia, and earlier decisions of the Speaker of the House delivered on July 15, 1996, and April 3, 1997.
The constituent elements of privilege have been described many times in this House, and for purposes of these decisions today, I refer Honourable Members to Erskine May's Parliamentary Practice, 22nd edition, at page 65, and Parliamentary Practice in British Columbia, 3rd edition, at page 47. It is important to remember that in this context the impropriety alleged must be established in the parliamentary sense, in that to establish a breach of privilege, it must be demonstrated that the person or persons named deliberately misled the House.
The decision of July 15, 1996, dealt with substantially the same matters of privilege we are dealing with today, and that decision examined the budgetary circumstances in detail and, based on the evidence presented at that time, concluded that the matter raised at that time did not fulfil the conditions of parliamentary privilege.
In the decision of the Chair on April 3, 1997, substantially the same matter was raised, firstly, by the Member for Delta South, and, secondly, by the Member for Matsqui. In both of these cases, the Members raising the matter of privilege stated that new material, which had recently become available, substantially affected the matter of privilege and, therefore, the matter could be raised anew. In those two decisions the new material was considered by the Chair in each case and the question was whether the new material, as tendered, supported the allegation that the Minister of the day, and the former Minister of Finance and Corporate Relations, had deliberately misled the House. In each case, at that time, the Chair ruled that the applications did not qualify, notwithstanding new evidence which was presented in each case.
So what is the new evidence or new factor the Honourable Members rely upon today to revitalize the matter of privilege and establish a prima facie case that the current Member for Saanich South, the former Member for Oak Bay-Gordon Head, and the Premier (albeit on a slightly different ground) are guilty of a breach of the ancient privileges of Parliament, and in contempt of this House? It is clear that the Report from the Office of the Auditor General of British Columbia of February, 1999, intituled "A Review of the Estimates Process in British Columbia" is the foundation document. This Report is hereinafter referred to as the "Morfitt Report".
The Chair has also examined the parliamentary authorities quoted in both the presentations on the matters of privilege, and the replies thereto. The paramount question which the Chair must focus on is whether or not the Morfitt Report provides sufficient evidence that one or more of the accused Members, deliberately misled the House by tabling documents which they knew to be "forged, falsified or fabricated with intent to deceive the House" (Erskine May, 21st edition, page 118).
I think it important here to provide Members with two material quotations from the Morfitt Report appearing at page 139 as follows:
"In our review, we have given consideration to circumstances that existed when Budget '96 was being developed. We believe no analysis of issues surrounding a budget is complete without a consideration of the important circumstances existing, because they could cause the government to act or make decisions, at least in part, on the basis of political imperatives. Such decisions may not necessarily be inappropriate, and many such decisions could simultaneously serve the public good and the political agenda of the government.
Although the circumstances referred to in this report could have led to decisions being made, in whole or in part, on the basis of political imperatives, we have not attempted to determine motivation, or intent, regarding any budget decisions. We believe such determination is outside the scope of our review."
Further, on the same page (139) the Auditor General states:
"In our opinion, information provided by government when these budgets were presented did not make full and fair disclosure of the extent of the business risk being assumed and the government's plan to address it. In that sense, crucial information was missing, and consequently the prudence and appropriateness of budget decisions could not be properly examined by the Legislative Assembly and the public."
Later on the same page, the Auditor General examines whether the actions taken and decisions made with respect to Budget '96 conformed with existing legislation governing the estimate process. At page 140, the Auditor General notes that the interim financial statements were not tabled in the House when the Minister of Finance and Corporate Relations presented the Estimates for the Fiscal Year Ending March 31, 1997, and expresses the view that the legislation in this regard is unclear as to whether the statements had to be provided. He goes on to conclude at page 141 as follows:
"The government appears to have acted in reliance on legal advice suggesting it was not necessary to do so. Consequently, information on revenue and expenditure of the government from the beginning of the 1995/96 fiscal year `to the most recent date practicable' was not made available when the Estimates were tabled on June 26, 1996."
Dealing with the concept which is sometimes referred to as "due diligence", the Morfitt Report states at page 140 " . . . we found no action taken or decision made by senior people in government, elected or appointed, that was not permitted by such legislation and other authorities."
The Chair does not intend to examine the broad question of budgetary forecasting as this was fully canvassed in the decision of July 15, 1996, and further examined in the decisions of April 3, 1997. Based on those decisions, the Chair concluded that the process is an inexact science which present multiple options, described in the Morfitt Report as a range including three scenarios, namely, "optimistic", "most likely" and "conservative". The Auditor General in his exhaustive Report points out hazards of this process and states at page 152:
"The uncertainties inherent in estimating revenue are many. That is why it is necessary to build into the forecasting process as many checks and balances as possible, and to subject the outcome of each state of the process to rigorous challenges. It is important to note that the final outcome each year is what the Minister of Finance and Corporate Relations ultimately considers to be reasonable based on existing information."
Bearing in mind these general remarks, I now turn to the specifics of the matters of privilege raised.
The Leader of the Official Opposition bases his matter of privilege on two alleged improprieties:
1. That the Minister did not provide the House with a statement of revenue and expenditures required by section 11 of the Financial Administration Act.
In response, the Minister states that the obligation under the Act only arises where the statement referred to is prepared and submitted to the Minister, which was not the case here. It is further argued that the decision of the Comptroller General not to prepare such a statement, was based on legal advice obtained by finance staff, and this appears to be confirmed by the findings of the Morfitt Report at page 141.
2. The Leader of the Official Opposition states that the Minister "misled this House with respect to the results of the 1995/96 fiscal year, and with respect to the estimates of the 1996/97 fiscal year".
The Morfitt report in this regard, states at page 143:
"The recommendation made to the Minister by his Deputy Minister to re-introduce the April budget was based on the Deputy's conclusion that the revenue forecast was still `plausible and attainable.'"
Dealing with this same point, the Minister states:
"It is important to recall that a budget is a plan, based on forecast revenues and projected expenditures. In deciding to re-table the April 1996 budget, I was satisfied that the plan was both plausible and attainable, and had I not believed that to be the case, I would not have proceeded with its reintroduction."
While subsequent events confirm that the projections were "overly optimistic", the Chair notes that immediately upon the Minister receiving a detailed review of the Public Accounts indicating that a surplus was no longer possible, the Minister immediately tabled the revised forecast in the House. (See Morfitt Report at pages 122, 161 and 172.)
While the Morfitt Report makes the point that insufficient information was provided by Government when the budgets were presented, (in particular, in relation to the business risks being assumed), the Minister says (and Morfitt confirms) the extent of the disclosure was consistent with the statutory requirements practised in British Columbia and other Canadian jurisdictions. It is one thing to urge statutory reforms surrounding the budget process, but quite another to suggest that budgetary documents filed in accordance with existing statutory requirements can be characterized as a deliberately misleading document or a document which can be described as "forged, falsified or fabricated." This, of course, the Morfitt Report does not pretend to do.
Turning again to the passage in Maingot's book which the Leader of the Official Opposition relies upon in his presentation, on examining that authority at page 233 and 234, the Chair finds the Federal 1978 case referred to is distinguishable from the matter before this House today. Indeed Maingot, in commenting on the case, states that before the Speaker could find a prima facie case and permit a motion to be moved, there must be an admission by someone in authority that a Member of the House of Commons was intentionally misled or an admission of facts that leads naturally to the conclusion that a Member was intentionally misled. No such admissions can be found in the material filed or, in the Chair's opinion, can be extrapolated from the Morfitt Report.
There is another long established rule which binds not only the Chair, but binds all Members of this House, and that is the rule that requires all of us, in the absence of incontrovertible evidence, to accept the word of another Honourable Member. While it would clearly not be the sole determining factor in this matter, the Chair notes that the Minister states in his reply to the matters raised:
"In deciding to re-table the April 1996 budget, I was satisfied that the plan was both plausible and attainable, and had I not believed that to be the case, I would not have proceeded with its reintroduction."
The Chair has carefully considered the decisions of this House of July 15, 1996, and April 3, 1997, the submission made by the Honourable Leader of the Official Opposition and the reply thereto, together with the Morfitt Report and the parliamentary authorities applicable. I have also had the opportunity to discuss with Mr. Joseph Maingot, Q.C., his text on Parliamentary Privilege in Canada.
In conclusion, it is the Chair's view that a prima facie case has not been established to permit the Member to move the tendered motion. In coming to this conclusion, the Chair is fully respectful of the overall conclusions of the Morfitt Report and its recommendation for statutory enactments to overcome the deficiencies in the budgetary process.
Gretchen Mann Brewin, Speaker
The Speaker delivered her reserved decision as follows:
Honourable Members:
I now wish to deal with the statement of privilege presented by the Opposition House Leader relating to the former Member for Oak Bay-Gordon Head in her capacity as Minister of Finance and Corporate Relations. I note that the Honourable Member in his submission suggested that the budget in question was delivered to the House on April 28, 1996. The Journals of the House indicate the budget was delivered on April 30, 1996, and in subsequent references I have used that date.
In this matter of privilege, as in the previous one, I have carefully considered the submission by the Honourable Member and the reply as submitted by the Government House Leader. I have also examined the decisions of 1996 and 1997 relating to the same incident, together with the Morfitt Report, the parliamentary authorities as quoted, as well as other parliamentary authorities.
While the budget document presented by the then Minister Cull on April 30, 1996, was identical to the one presented by Minister Petter, one must examine the circumstances surrounding the tabling at that time.
The matter of privilege raised on March 25, 1997, by the Honourable Member for Matsqui, and the decision of April 3, 1997, examined those circumstances and, at that time, the Chair ruled that a prima facie case of privilege had not been established. What new circumstances intervened between then and now requiring the Chair to re-examine the matter? The answer seems to be the Morfitt Report which the Opposition House Leader urges contains evidence that the former Member for Oak Bay-Gordon Head had, on April 30, 1996, breached the privileges of the House. Bearing in mind the general tenor of the Report and its conceded aims and limitations, the Chair again must attempt to determine what new evidence, if any, can be found in the Report to warrant the conclusion that the former Minister of Finance and Corporate Relations deliberately misled the House. In this case, as in the previous case, the Chair must direct its attention to evidence of an impropriety in the parliamentary sense -- that is -- a deliberate attempt to mislead the House.
It should be noted that Parliament retains the right to punish offences which may have occurred in an earlier Parliament. (Erskine May, 19th edition, page 161. See also House of Commons Journals, November 9, 1978 and B.C. Journals, March 1, 1987, page 191.)
In support of the Honourable Member's submission, he quotes from page 140 of the Morfitt Report, as follows:
"If either the optimistic or most-likely projections had been used for both revenue and expenditure, and if further revenue had not been included and expenditure not reduced, the result would have been a projected deficit of up to $256 million.
Considering the information available to her, Minister Cull's decision to include in the revised forecast a revenue projection that was $156 million over and above the Secretariat's optimistic forecast seems inappropriate."
The Chair notes that the Morfitt Report makes a further comment on this transaction, as follows:
"The Revised Forecast for 1995/96 reflected the Treasury Board Secretariat's `optimistic' projection of revenue, plus a further $156 million over and above the optimistic revenue forecast by the Secretariat, an inclusion that was within the Minister's prerogative."
Summarizing the above quotes, it would appear that the Auditor General characterized the projection of an additional $156 million as "inappropriate, but within the Minister's prerogative". Such a characterization hardly qualifies as "forged, falsified or fabricated" as described in Erskine May and quoted by Maingot.
With regard to Minister Cull's budget, as well as Minister Petter's budget, the Chair notes the overall conclusion in the Morfitt Report " . . . we found no action taken or decision made by senior people in government, elected or appointed, that was not permitted by such legislation and other authorities."
In this case, as in the Petter case, the Chair finds that the 1978 case involving a Federal Minister of the Crown is distinguishable from the case under consideration. In the 1978 case admittedly misleading information was given to the Minister and that information found its way into the House. No such parallel admission exists in the present case.
Speaking again in general terms in relation to the Morfitt Report, while certain actions are described as "inappropriate" and that the information provided did not make full and fair disclosure of the extent of business risked being assumed, this must be read in the context of the overall conclusion at page 140 of the Morfitt Report which states as follows:
"We believe serious inadequacies in the governance of the Estimates process, as explained in Chapter 2 of this report -- specifically relating to the attributes of accountability and openness -- has permitted Budget '96 to be presented with crucial information missing. This clearly demonstrates the need for the reform we are recommending in Chapter 2 of this report."
While the need for reform is emphasized, compliance with existing law is also conceded.
It is, therefore, the Chair's conclusion that the Honourable House Leader's statement on the matter of privilege contains a complaint, but falls short of meeting the standards as outlined in the authorities which describe a deliberate misleading of the House with documents that may have been "forged, falsified or fabricated". Consequently, this matter of privilege cannot succeed.
Gretchen Mann Brewin, Speaker
The Speaker delivered her reserved decision as follows:
Honourable Members:
I now wish to examine the matter of privilege raised by the Honourable Member for Oak Bay-Gordon Head. In the Member's statement of the matter as filed, she alleges that the Member for Saanich South stated that the former Minister of Finance and Corporate Relations chose an intermediate path in relation to estimating forestry revenues and, further, in response to a question from the Member for Vancouver Little-Mountain along the same vein, stated "I don't have that information precisely, but my information is that the Minister chose a mid-range option."
The Member for Oak Bay-Gordon Head suggests the Morfitt Report contradicts this statement and concludes the Member for Saanich South has deliberately misled the House.
In his reply to this allegation, the Minister states that in his view the quotations from Hansard of the particular day deals with forecasts of forest revenue, and not total revenues. The Minister states he did not have any direct knowledge of Ms. Cull's decisions, but was in effect "conveying my understanding of her decisions based on the information provided to me by ministry officials who accompanied me in the Assembly".
From the documents tabled, and the understanding of the Member for Saanich South at the time in question, it would appear that the advice he received from Ministry officials indicated that, indeed, Minister Cull (as she then was) did pick a mid-range option in forecasting forest revenues. I refer all Honourable Members to the document described as "Table 4 -- Comparison of Actual Forests".
Based on the material before me, it seems that the Honourable Member for Oak Bay-Gordon Head was relying on quotes from the Morfitt Report relating to total revenues whereas the remarks attributed to the Honourable Member for Saanich South related to forest revenues only. This is clearly a disagreement as to facts.
Under these circumstances, and in light of the documentation filed, the Honourable Member's matter of privilege is based on a misconception and cannot succeed.
Gretchen Mann Brewin, Speaker
The Speaker delivered her reserved decision as follows:
Honourable Members:
I now wish to deal with the statement of privilege raised in the House by the Honourable Member for Chilliwack. The exchange to which the Member refers appears in the Hansard debates of the Legislative Assembly of August 13, 1996, at page 1923.
I think it important in this matter to quote here the question and answer which form the foundation for the Member's matter of privilege:
"The question is: would Mr. Gunton have ever been authorized by the Premier to go to officials in the Ministry of Finance and have them change revenue projections in the budget planning process?
Hon. G. Clark: Of course not. The Minister of Finance makes the appropriate determination as to the various revenues that go in the budget -- the forecasts -- and that information, which the Minister of Finance makes, is based on a range of forecasts prepared by various arms of government. The minister makes a judgment, puts it in the budget and is then held accountable in this chamber."
The Chair must now consider the context of the Morfitt Report as it bears on this question. It appears that in February, 1996, a small and informal working group was formed which was named the "Fiscal Budget Steering Committee" composed of the Deputy Minister to the Premier, Mr. McArthur, Deputy Minister of Finance and Corporate Relations, Ms. Eaton, and the Deputy Minister of Environment, Lands and Parks, Mr. Gunton. It further appears that a briefing note was prepared in late February by the Treasury Board Secretariat, calculating the impact that various large commodity price increases would have on provincial revenues. According to the Report, these calculations did not take into consideration the potential changes, if any, in volume of exports occurring as a result of price increases.
Quoting from page 174 of the Morfitt Report:
"Ms. Eaton was then asked by Mr. Gunton to have staff prepare additional revenue estimates, based on the view that discussion then taking place around the U.S. countervail duty would result in substantially higher lumber prices."
Again, at page 182 of the Report, Mr. Morfitt notes:
"Mr. Gunton requested that Ms. Eaton also have her staff prepare additional revenue estimates based on greater commodity price impacts than had been incorporated into these four earlier scenarios."
The Auditor General at page 182 comments as follows:
"These analyses were performed by Ms. Eaton's staff as requested. According to Ms. Eaton, both Mr. McArthur and Mr. Gunton were much closer to events relating to the commodity price for lumber than she was."
Further, at page 182, the Auditor General makes comment on this process:
"Developing scenarios to examine various `what-if' questions is a normal, acceptable procedure used by budget forecasters, though the expectation is that the basic assumptions used in each scenario will fall within a range of possibilities. In the analyses that Ms. Eaton was asked to prepare, many assumptions were used. The main ones, however -- those relating to the GDP and commodity prices -- were discussed often between the two active members of the Fiscal Budget Steering Committee, Ms. Eaton and Mr. Gunton, both of whom are economists and had similar involvement in the Treasury Board Secretariat and budget preparation, at different times."
The overall conclusion that can be reasonably drawn is that Mr. Gunton, as one of three members of the Fiscal Budget Steering Committee, requested one or more additional revenue estimates be prepared by staff based on differing expectations of commodity prices, and this is certainly confirmed in the Morfitt Report. The question then arises: was this process being done by Mr. Gunton on his own initiative, or was it being done at the request of the Premier?
The Morfitt Report does not suggest at any point that Mr. Gunton was, in the words of the Member for Chilliwack, "acting under the authorization of the Premier to go to officials in the Ministry of Finance and Corporate Relations and have them change revenue projections."
In another part of his statement, the Honourable Member states as follows: "Mr. Gunton was involved, yet the Member says he wasn't."
If that were the full case of the Honourable Member, suggesting that the Premier denied Mr. Gunton's involvement, he would indeed have a strong case -- for Mr. Gunton was very much involved in the process. However, the Member goes much further and is taking exception to the Premier's denial that he (the Premier) authorized Mr. Gunton to "change revenue projections in the budget planning process". Nothing in the Morfitt Report contravenes the Premier's denial.
The Chair cannot find that the question and answer contained in the ably presented statement of privilege qualifies as a prima facie case.
Gretchen Mann Brewin, Speaker
And then the House adjourned at 5.59 p.m.
GRETCHEN MANN BREWIN, Speaker
NOTICE OF MOTIONS
Tuesday, April 20
Wednesday, April 21
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