The committee met at 2:01 p.m.

[B. D’Eith in the chair.]

B. D’Eith (Chair): Good afternoon, everyone. My name is Bob D’Eith. I’m the MLA for Maple Ridge–Mission and the Chair of the Select Standing Committee on Finance and Government Services, a committee of the Legislative Assembly that includes MLAs from government and opposition parties.

I’m grateful to be joining today’s meeting from the traditional territory of the Katzie and Kwantlen First Nations and want to acknowledge that members and presenters are on traditional territories throughout the province.

I’d like to welcome everyone listening and participating in this public hearing for the Budget 2021 consultation. We are already at the end of the…. Well, we’re getting close to the end of the first week of public hearings.

The committee typically visits communities around the province to hear from British Columbians about their priorities for the next provincial budget. Of course, due to the pandemic, all of our public hearings are being held virtually this year. We really appreciate everyone making the effort to come in, and in fact, we’re going to have a full roster of public presentations. We’re very pleased about that.

The consultation is actually based on the Minister of Finance budget consultation paper, which she delivered earlier this week and which is available at bcleg.ca/fgsbudget. We invite British Columbians to participate, as well, if they would like, with written submissions or by filling out an online survey. The details are at the same website at bcleg.ca/fgsbudget. The deadline for public input is 5 p.m. on Friday, June 26, 2020. We encourage everyone in British Columbia to please participate in this important process.

As a committee, we will carefully consider all of the input made by recommendations, and then we’ll make recommendations to the Legislative Assembly as to the Budget 2021. The public should be aware that the committee intends to release this report some time in August of this year.

As far as format, in addition to holding meetings virtually, we have also made a few changes from previous years in terms of meeting format. Presenters have been organized into small panels based on theme. For example, yesterday we met with resources and subthemes around agriculture and others. The panels will be small panels, and today we’re hearing about a number of economic development–related issues, including tourism.

Each presenter has five minutes for their presentation. We kindly ask the presenters to respect this time limit. Thank you.

Following the presentations from all of the panellists, there will be questions from the committee members.

At that time, Members, just raise your hands, and I will happily put you on the speakers list.

Also, we’d ask everyone to please put themselves on mute while people are talking until you are recognized to speak.

Today’s meeting is being recorded and transcribed. All audio from the meetings is broadcast live via our website, and a complete transcript will also be posted.

Now I’d like to introduce the members of the committee, or ask them to introduce themselves, starting with Donna.

Do you want to go ahead?

D. Barnett: Thank you, Bob. I’m Donna Barnett, the MLA for Cariboo-Chilcotin.

D. Clovechok (Deputy Chair): Hi. I’m Doug Clove­chok, MLA for Columbia River–Revelstoke.

[2:05 p.m.]

N. Simons: Hello. Nicholas Simons, Powell River–Sunshine Coast. Good to see you guys.

M. Dean: Hi. I’m Mitzi Dean. I’m the MLA for Esquimalt-Metchosin and the Parliamentary Secretary for Gender Equity.

R. Coleman: Rich Coleman. I’m the MLA for Langley East.

B. D’Eith (Chair): Thank you so much.

Also assisting the committee today are Susan Sourial and Stephanie Raymond from the Parliamentary Committees Office and Michael Baer and Billy Young from Hansard Services.

First up we have Adrian Scovell from the Automotive Retailers Association.

Adrian, please go ahead.

Budget Consultation Presentations
Panel 1 – Economic Development

AUTOMOTIVE RETAILERS ASSOCIATION

A. Scovell: Good afternoon. First of all, I’d like to thank you for your time. I’d also take a moment to thank government for its action and management of the COVID-19 crisis. There are undoubtedly lives that have been saved by the actions of government. I believe that it’s going to help business also, in the long run, by the actions that were taken and that have been taken by government.

I thank you for that on behalf of the industry and, also, personally. I’ve had a lot of contact with the COVID-19 crisis task force. I’ve found them to be listening, and I’ve found them to act and respond in a timely manner. So I think that’s a job well done. Thank you.

A little bit about the ARA. We serve the after-market industry. We’ve been doing so since 1951. We are the largest provincial auto association of our kind in Canada. We represent, directly, about 1,000 businesses across the province. Roughly one in seven British Columbians works in the automotive industry. It’s a very significant segment of the market.

I’d also note that as an essential service…. We realized very quickly that all essential services, no matter who they are, rely on us to get them to work and back. So we’re certainly a critical part of the economy.

The industry itself represents about $4 billion in gross domestic product. The Automotive Retailers Association represents, really, 99 percent of a vehicle’s lifecycle. For the time in which a vehicle is in circulation, we are, really, everything that happens to it after the point at which it’s sold initially. We tow them. We bang the dents out of them. We maintain them. We keep them going mechanically. We represent the towing industry. We represent the recycling industry, the automotive rental industry as well as power sports, motorcycles. Really everything that happens to a motor vehicle after the day it’s sold is us.

In addition to that, part of…. Our biggest drive is to build a solid economy in British Columbia. We see ourselves as a significant factor in that. That means that we have to have a strong and vibrant workforce and a healthy industry.

We don’t just represent our members in terms of supplying government and the general public with information. We also run a group benefits department. We have about 7,000 lives that are registered on our group benefits program. We supply medical, dental and life insurance to those people. The reason we think that’s very important is that we can do it at rates at which more employers can afford to offer group benefits to their employees. That improves the quality of life for our workforce and for British Columbians in general.

We also operate a foundation. We are a registered foundation set up to relieve poverty. We do that by offering scholarships and bursaries. We offer scholarships and bursaries to students, to adults, to various different specific segments. Last year we gave away about $28,000 in scholarships and bursaries. So that’s a big part of what we do. Those funds are all raised through our members and various different events that we do.

[2:10 p.m.]

The other thing that we have is an arm of our company called AutoCareersBC. That is set up to attract students and to promote our industry. We are very much interested in attracting people to our industry. Our big focus now is attracting women, minorities and large segments of the labour force which have not seen themselves as part of our industry. So we’re trying to adapt our industry to understand the importance of diversity, and that has been working very well for us.

Really, the Automotive Retailers Association and the people we represent…. The automotive industry is, actually, beyond the OEMs, the original manufacturers, primarily composed of entrepreneurs. Those entrepreneurs will invest if there’s a stable, fair and well-structured market. That’s the key.

Entrepreneurs built this entire business. When you go back to the original car, it was actually…. In 1908, the first gas station in Canada was in Vancouver, and it consisted of a massive wooden barrel with a hose hooked up to it. Maybe not the best plan. It was entrepreneurs that started it, and it’s entrepreneurs that are going to get us through COVID. There are entrepreneurs that are going to invest and bring us up with the latest in technology.

Some of the biggest challenges are technology. There’s an enormous requirement now for updating, training and skilled labour. That is one of the major challenges ahead, and it creates a tremendous amount of uncertainty. The reason that I say that, with regard to training and skilled labour, is that in British Columbia there is no requirement for certified training. So a mechanic, for instance, is not required to have professional training, which, when you consider your brakes on the Coquihalla at 110, is probably not a very good idea.

B. D’Eith (Chair): Adrian, sorry to interrupt. You’re out of time. I was wondering if you might be able to wrap up any recommendations.

A. Scovell: My apologies.

B. D’Eith (Chair): No, that’s fine.

A. Scovell: Basically, what we’re looking for here, as far as you’re concerned…. There has been a great demand for commuter vehicles. Those are commuter vehicles in the $5,000 to $15,000 range. We’re asking that you consider a PST exemption on that in order to encourage people to be able to buy those vehicles and get back to work. It’s the low-income people that need them.

The other thing is we do need compulsory trade certification so that our members can invest and know that they’re going to get a return on their investment.

That wraps it quickly. My apologies.

B. D’Eith (Chair): No problem.

Just a reminder to members, if they could put it on gallery view when they start. There’ll be a clock up on the left corner there. If they could keep their comments to five minutes, we’d appreciate it.

Next up we have David Adams from Global Automakers of Canada.

Please go ahead, David.

GLOBAL AUTOMAKERS OF CANADA

D. Adams: Thank you again, all, for inviting me to participate in the hearing today. Not being in British Columbia especially, I feel privileged to be amongst you and offering some evidence today. I do appreciate the time.

The Global Automakers of Canada has had the privilege of meeting with a number of you on a number of issues over the course of the last few years. Most of those issues have been related to the environment. We’re fully cognizant of the fact that B.C. has been a leader in environmental initiatives in the transportation field. In order for B.C. to continue to be a leader in the environmental field, I think we would offer up a couple of thoughts for you to consider as you go into Budget 2021.

I think, from our perspective, there’s a need to maintain the full funding for CleanBC’s Go Electric program. B.C. has been a leader in the adoption of electric vehicles, but I think it’s an open question in terms of when we’re going to reach price parity between internal combustion engines and electric vehicles. In the interim, I think it’s a real challenge for consumers to bridge that gap on their own if they desire to make the change to the purchase of an electric vehicle.

I need to say, though, that while incentives are important, they’re a necessary evil, because they also disrupt the marketplace. I think that becomes a challenge when you’re looking at different technologies all aimed at achieving the same goal, which, for us, is ultimately the reduction of greenhouse gas emissions.

In an ideal world, we would like to see incentives applied to any technology that reduces greenhouse gas emissions from vehicles, as opposed to specifying a particular technology. But we do appreciate the work that’s been done in terms of expanding incentives to include hydrogen vehicles as well. Given that one of our members — Mercedes-Benz, Daimler — has a hydrogen fuel cell facility out in Burnaby, I think it’s important to encourage that homegrown technology in B.C.

[2:15 p.m.]

The other thing that we would like to offer up — again, it’s in the same vein — is to encourage the continued support for B.C.’s other transport electrification programs, whether that be enabling infrastructure, looking at additional incentives to put charging stations in place or fuelling infrastructure. All of these things will encourage your average consumer to consider an electric vehicle where they might not have otherwise.

Additionally, I think Adrian referred to something that has been important to us as well, which is skills upgrading and technology. The vehicle itself has changed from, essentially, a mechanical device to a computer on wheels. As the technology changes, the skill set also needs to change to repair these vehicles. You basically need a diagnostician now, not a mechanical repair, if you will.

One of the challenges that we have currently is with ICBC, just in terms of how insurers actually pay out for these repairs. Yes, as we move further towards the automated vehicle, there will be fewer accidents, but in the interim period we’re in right now, the severity of those accidents that do occur is often greater simply because you’ve got a lot of this automated and high technology built into vehicles. So a bumper repair is no longer a $500 proposition; it’s a $2,500 proposition just because of the advanced technology that’s built into the bumper.

We’ve had ongoing dialogue with ICBC. We’re continuing to have dialogue, and we hope to continue that dialogue. I think we just need to ensure that when the vehicle is repaired, it’s repaired properly. There’s no point in putting a vehicle that has not been repaired properly back on the road. It could, actually, contribute to a subsequent accident if people are relying on the technology that’s built into the vehicle.

With that, I’ve offered up my three key points that I wanted to address. I’ll hopefully get some time back to the committee.

Thank you very much for your time. I appreciate it.

B. D’Eith (Chair): Thank you very much, David.

I just wanted to mention that Ronna-Rae has entered the building.

Did you want to just say hi?

R. Leonard: My apologies for being late. I’m Ronna-Rae Leonard, the MLA for Courtenay-Comox.

I’m happy to be here on the traditional lands of the K’ómoks First Nation.

B. D’Eith (Chair): Great. Thanks, Ronna-Rae.

Next up we have Blair Qualey from the New Car Dealers of B.C.

Welcome, Blair.

I’ll just remind members that there is a deck on their iPads.

NEW CAR DEALERS ASSOCIATION OF B.C.

B. Qualey: Thank you very much. It’s terrific to be back in front of the committee again, even though we’re in unique circumstances.

I want to echo earlier comments around our appreciation, from B.C.’s new car dealers, for the tremendous efforts of government and everybody in the Legislature, all working cooperatively together to protect British Columbians through this unprecedented pandemic, and, additionally, the efforts to support British Columbians from the economic and other impacts of having to stay at home and, perhaps, be out of work. A tremendous job by all. Everybody in our industry, I know, is very grateful for that.

Also, of course, I can’t not thank all of our health care workers and first responders and all the essential workers who kept British Columbia safe and going through this challenging time.

I’m here to speak on behalf of British Columbia’s just over 390 franchised new car dealers who do business in about 55 communities around the province. They sell new and used vehicles and repair them as well, along with a variety of other services that they provide. They generate about $16 billion in economic activity every year, at least before COVID, with about $2.9 billion of GDP and some $675 million of tax revenue for the various levels of government. Importantly, they support about 30,000 family-supporting jobs around the province, directly and indirectly, through all of their work.

[2:20 p.m.]

B.C.’s dealers continue to be an economic engine. I guess that’s sort of what I wanted to talk about today in some of our recommendations, as we’re looking to slowly and carefully come out of what has been going on with COVID. As we move forward, there’s an opportunity to sort of rev up the economic engine that British Columbia’s new car dealers, in cooperation and working with their customers and suppliers and partners, can be. We know that if we take the foot off the brake and put the pedal to the metal, we can generate a lot of economic activity, and the dealers are anxious to do so, as are their employees around the province.

I’ll sound like a bit of a broken record on one of the first issues that I want to bring up. Again, it’s the luxury tax. At this point in particular, we need to do all we can to try and, as I said earlier, take our foot off the brake. The luxury tax, as we’ve outlined on many occasions, is challenging for many, many of our dealers — including the super taxes that were added in 2018 on higher-end luxury vehicles, which unfortunately, had the unintended consequence of actually a reduction of the luxury tax coming in to the province, as a result of folks looking to other jurisdictions to make their purchases.

In particular, as I’ve raised in the past with you folks, luxury tax gets applied to pickup trucks. At a time that we’re looking to set everybody loose to generate economic activity…. You know, you can go out and buy an $80,000 Rolex watch and not pay luxury tax, but if you want to go somewhere in the Kootenays and buy a pickup truck that your family needs and that you need for your work and your job, you have to pay luxury tax on it, likely.

We think now…. At any time in history, it’s the time now to have a serious look at quickly taking the luxury tax off of trucks and raising the threshold from where it is, at $55,000.

Also, we want to encourage government to continue its leadership, for many, many years, around electric vehicles and the electrification of the province. You know, last year, 2019, British Columbia led pretty much North America in the adoption, on a per-capita basis, of electric vehicles. We strongly encourage the government to continue that important work as well as to continue investments in the charging infrastructure — not only the charging infrastructure but incentives for folks who purchase vehicles, given the low gas prices these days. Going back up to the $5,000 incentive level would be a good start there as well.

Finally, on the training issue, as my other colleagues mentioned, skills training with complex vehicles and having the best training possible and making sure that we have people fixing vehicles properly, as complex as they are, is really very important.

I will leave it there. Thank you very much for the time.

B. D’Eith (Chair): Thank you very much, Blair. We missed having you — all of you — out at the Legislature with the very cool vehicles that we get to look at. It’s great to hear what you’re saying. I appreciate the fact that we’re in challenging times, and obviously, car dealerships have had to weather the storm like everyone else. We appreciate the kind words but also looking at the challenges, moving forward.

Comments from members, or questions?

R. Coleman: I guess this is for all of you. I’ve heard in previous presentations, the question in and around training and people with trades, what have you, in this industry. The complexities, as you say, are changing. The electric car has different components to repair than others. Basic fundamentals, drivetrain and what have you, have changed somewhat. And the other part is the plug-and-play pieces of the components.

I’m curious as to how you’re working with the institutions that actually do training in this province. I’ve got a son who’s a red seal mechanic. But unless you’re tied into a dealership or a chain that does ongoing training, how are you getting the students coming through BCIT with a red seal to be up to speed on that technology? And how are you keeping people up to speed going forward on technology?

[2:25 p.m.]

A. Scovell: Blair, I’ll jump in, if you don’t mind. I know that you know this.

We work directly hand in hand with a number of the institutions, particularly BCIT, where we’ve been working recently in order to develop the curriculum for ZEVs and a lot of the electric vehicles that are now coming into the market, which require a whole new focus on training. So primarily, I think it’s to address that issue.

There are currently, really, no trained people, on the servicing of ZEVs, and there is no curriculum yet. That is to say that it’s just coming out this year. We have got them in touch with our members, some of our leading members that are experimenting in the after-market electric vehicle market, and they’ve been helping develop that curriculum. In addition to that, of course, we have our services where we’re trying to reach out to the public and have them come in and consider the automotive trades.

I think that, Blair, I’ll let you speak.

That’s what I have to say on that topic. I know, with regard to the OEs, that, of course, is a major challenge for you as well.

B. Qualey: I’ll jump in here. Of course, you know, our dealers are the folks that sell EVs and are trained by the vehicle manufacturers, to huge extent, on how they work and what to do and, most importantly, how to be safe while you’re repairing them. Those battery packs come with a pretty good charge that can do some significant damage.

We’re working closely, of course, with…. The partnership that the dealers have with the vehicle manufacturers is very important here. But also working with the educational institutions in British Columbia. Like the ARA, we have a foundation that works closely in providing scholarships and other things to support people who are expanding, wanting to improve their careers.

I’ll maybe let Dave just talk about the direction that comes from the vehicle manufacturers around the actual certification of fixing vehicles, including EVs.

D. Adams: Thanks, Blair. I think it’s a good point that you raised.

The issue is really that it’s not just electric vehicles, as I mentioned in my remarks. It’s vehicles generally. You’re moving more and more precursors of fully automated vehicles being built into vehicles with each new model year that comes out. That presents a significant challenge, I think, to the educational system, because the curriculum development really can’t keep up with the changing technologies. So somebody might come through the red seal program, as you say, Rich, and end up thinking they’re state of the art, and they’re really not.

I think that’s where it’s contingent on the OEMs that I represent, the vehicle manufacturers and distributors, to go out and actually work with the educational institutions, which they do, and also, beyond that, actually forging partnerships and collaborative relationships with the public insurers, especially in the provinces where there’s public insurance, like B.C.

We’ve offered to come out and talk with ICBC and say: “Okay. Here’s what we’re putting into the vehicles. Here’s the technology that you need to be aware of. Here’s why it costs what it costs to repair vehicles and why it’s maybe penny-wise and pound-foolish to recommend things like recycled parts or not repairing things according to the manufacturers’ specification.” There’s a reason that vehicles have been designed the way that they’re designed and repair processes put in place the way that they have been. So there is that collaborative relationship that has been developed.

I know we have a collision committee within both our association and the Canadian Vehicle Manufacturers’ Association. It’s a joint committee that actually has gone out to the various provinces to work with the insurers and some of the educational institutes to try and keep them at least apprised of what’s going on with modern technology.

B. D’Eith (Chair): Thank you.

I just had a quick question about zero-emission vehicles and incentives. I know….

R. Coleman: I wasn’t quite finished, Bob. Sorry.

B. D’Eith (Chair): Oh sorry there, Rich.

R. Coleman: Somehow I got muted out here for a second.

The biggest question I have with these guys is: have you ever thought of deinstitutionalizing some of the training away from a place like BCIT?

The reason that I say that is that, for instance, somebody that’s a heavy-duty mechanic is not working on equipment that is actually being used in the oil sands or in a mine today. It’s 20 years older. And a lot of the equipment these guys are getting trained on, even on cars, are not the technology. So the manufacturer or the dealer has got to upgrade the training of these guys, and they’re not getting, as a red seal mechanic, the experience going through their apprenticeship the same way as they used to. They need to be able to get some credit for the stuff they’re working on in the field.

D. Adams: Fair point. I think the reality is — you’re right, Rich — that there was a time when a car was a car was a car. That was sort of the way that it was for about 40 years or so.

[2:30 p.m.]

There’s been more change, I think, in the modern automobile over the last five years than there has been in the last….

R. Coleman: I’ll leave it at that. I’ll let Bob step in. But I think that you get my point.

D. Adams: Yeah, for sure. Thanks.

B. D’Eith (Chair): In regards to the incentive, I appreciate the idea of putting it up again. But I guess part of the problem, of course, is the uptake on it. It’s so popular a program that so many people wanted to be able to take advantage of it. I guess that’s the challenge of trying to make sure that the federal and provincial incentives get taken advantage of and allow more people to be able to access that.

I’m wondering if you have some ideas about strategy to make sure that it’s fair to everybody. It seems that as soon as it’s announced, like the SCRAP-IT program — boom. It’s gone.

B. Qualey: If I might respond, Bob. I’ve had the privilege of helping to administer the program since 2010. We found, last year, as I mentioned in my remarks, that we were hitting record levels. As you might suspect, with COVID, that’s dropped off. But it was starting to drop off earlier with the drop in the gas price.

To get people’s attention now around making the decision to purchase an electric vehicle, which will be more expensive than the gas equivalent, we’re going to have to work extra hard now, with the lower gas price, to get their attention. Everybody wants to make a difference in the environment, but often the decisions are ruled by the wallet. With the gas price as low as it is and economic challenges coming from this COVID situation, I think it’s going to take a lot of extra work and added incentives to get people’s attention again on the advantages of EVs.

D. Adams: If I could just add, as well, government has limited resources. I think you folks know better than I do just what that situation is. We start looking at things through the lens of where you can get the most bang for the buck as well. There are a lot of arguments to be made for looking at fleets of vehicles as opposed to, necessarily, the consumer realm, to really capitalize on the strengths of electric vehicles, for instance.

If you’re looking at fleets, they’re all coming back, or at least in a lot of cases, to the same area to either recharge or refuel at night. A lot of them have set routes and that kind of thing. When you think about it, if the consumer…. Not to take anything away from the consumer program. It’s important. But with most consumers…. You have a lot of consumers that are exchanging, in most cases, probably — at least, with what’s on the road or available right now — a fairly efficient, usually smaller ICE vehicle for a really efficient, zero-emission vehicle now.

The margin of improvement maybe isn’t that great, plus the fact that that same consumer vehicle is still going to sit in the driveway or parking lot for 95 percent of the time, as opposed to actually being used, whereas the situation is a little bit opposite with fleets. When you have EV fleets deployed, those vehicles are in much more regular use than a consumer vehicle as well. If you’re really looking at getting bang for the buck, maybe you focus more of the incentive activity towards fleets.

I know there’s a lot of push on the automotive industry to do more. But I think, you know, governments across the country have made commitments in terms of electrifying their own fleets. We would encourage the governments to ensure that they’re adhering to their own guidelines for electrified vehicles as well.

B. D’Eith (Chair): Great. Well, we’re a little bit over time, everyone. But I really appreciate the presentations and the answers to the questions. I wish you all the best of luck. Stay safe, everyone.

We won’t be taking any break. We’ll be moving right into the next one. Thanks, gentlemen.

[2:35 p.m.]

Hi, everyone. Welcome to the Select Standing Committee on Finance and Government Services. Just a couple of reminders to people. Please, if you could keep your comments to five minutes. What we will do is go to each presenter right away, and then at the end we’ll do questions as a panel. And as long as everyone can do that, that’s great.

First up we have Chris Atchison from the B.C. Construction Association.

Chris, please go ahead.

Budget Consultation Presentations
Panel 2 – Economic Development

B.C. CONSTRUCTION ASSOCIATION

C. Atchison: Good afternoon. My name is Chris Atchison, and I am the president of the B.C. Construction Association. Thank you for allowing me this opportunity to speak to you today.

The BCCA is a non-profit association serving employers in B.C.’s industrial, commercial and institutional, or ICI construction sector. We represent the whole of industry, regardless of labour affiliation and regardless of membership status. We are non-partisan.

We operate a number of no-fee workforce development programs as well as BidCentral, B.C.’s largest source of construction project opportunities. Our industry, as you know, was declared an essential service by B.C.’s government at the beginning of our provincial state of emergency. Our sector has been operating during this pandemic. Our workforce was at the front lines of our economy and at some risk, while we worked during the period, all struggling to understand coronavirus, all striving to create and adopt effective safety protocols and all learning as we went.

I mention this to acknowledge this government’s leadership and foresight in declaring construction as an essential service, and also to make the point that as an industry we united to ensure the safety of our workers in a way that has made us proud. In the midst of this uncertainty and risk, we came together. To date, there have been zero COVID-19 outbreaks or clusters on B.C. jobsites. To convey the significance of this achievement, I would like to share a few key statistics that demonstrate the magnitude and importance of B.C.’s ICI sector.

We represent roughly 8.9 percent of the GDP. We employ 242,000 workers, and 183,000 of those are skilled workers on the tools on construction sites. This is nearly 10 percent of the entire provincial workforce. And there are also more than 25,000 employers in our sector. Clearly, our scale is such that a successful economy in B.C. relies on a successful construction industry, which brings me to my point. I do not stand before you today to ask for infrastructure spending or for additional supports for construction businesses and workers, not because they’re not important or necessary. But today I must focus on one industry priority: prompt payment legislation.

We must ensure that the billions of taxpayer dollars budgeted for construction services and the additional billions in funding for infrastructure that is coming from the federal government gets to the British Columbians who have earned it. I urge you to follow the leads of the federal government, the provinces of Ontario, Saskatchewan and Nova Scotia, to pass prompt payment legislation in B.C. and ensure that the billions of dollars spent on publicly-funded infrastructure projects make it into the bank accounts and the pockets of the tradespeople and the small contractors who have earned it.

Especially now, as we face economic challenges on a scale not known in our lifetimes, there is no more essential contribution that our government can make to B.C.’s construction industry or to B.C.’s economy than ensuring a smooth payment pipeline through our industry, from owners to general contractors, from generals to trades and sub-trades, to manufacturers and suppliers to architects and engineers.

When Prime Minister Trudeau announced the acceleration of $2.2 billion in infrastructure funding to Canadian cities earlier this week, I assure you that there were those in B.C.’s industry who wondered just how far the acceleration would travel. Would it travel to their own small businesses, to their own kitchen table?

We estimate that lack of prompt payment costs the B.C. government in excess of $3 billion per year. For too long, contractors have been treated as de facto banks by bad actors who take advantage of a complex system that does not compel the release of funds for work substantially completed.

[2:40 p.m.]

Rather than risk reputation or further expenses by starting a legal process, employers are often forced into further debt in order to pay their bills, their payroll, and their future pursuit costs. Unwarranted and unjustified bankruptcies occur as a result of this flawed system.

Last year this committee officially recommended that the B.C. government look at prompt payment legislation. I stand before you today asking that more be done at this time. There is no better time, no better reason and no better opportunity to make this a key priority for our government’s post-COVID response for B.C.’s restart plan. There has never been a greater urgency to offer legislative leadership towards the essential industry that has demonstrated such commitment to this province at this critical juncture.

Government and industry have a shared responsibility and desire to make sure that every dollar spent is well spent. Prompt payment legislation will positively impact every business, every project and every worker, relieving a layer of financial stress for many B.C. families who are experiencing severe hardship. We’re essential, but so is getting paid for the work we do.

Thank you for your consideration.

B. D’Eith (Chair): Thank you very much, Chris.

Next up we have Andrew Mercier from B.C. Building Trades.

Please go ahead.

B.C. BUILDING TRADES

A. Mercier: Thank you very much. Before I start, I just want to take a minute. I want to thank all the members of this committee for the important work you do as MLAs and on the committee. I know that the kind of controversy and the disagreement of the Legislature is what bubbles up to the surface in the media and in the public consciousness.

We at the building trades know that where you disagree, including where you disagree with us, you disagree for the right reasons, which is because you’re looking after the interests of the people of B.C., even though we might disagree on the best way to realize those interests. So before I get started, I just want to say thank you to all of you for the work you do.

I should say that I’m Andrew Mercier, the executive director of the B.C. Building Trades council. We represent 25 affiliated construction unions, representing 35,000 skilled tradespeople in the province of British Columbia.

There are really two things I want to touch on. They are the need to expand infrastructure projects under community benefits agreements in the B.C. capital plan and the need to target stimulus money, public money, that’s spent in a manner that fosters private sector development in the British Columbia economy.

Before I get into those two points, I would also like to credit the government — in particular, Minister Harry Bains — and WorkSafeBC, as well as the entire team, with the quick, decisive action that was taken in the construction sector. There was a lot of controversy in Ontario and Quebec about shutting the construction industry down. But as Chris noted, the government was out quickly with a declaration of essential service, and then WorkSafeBC was out very quickly with an inspection initiative for sites and a series of other tools. I have no doubt that if all of those things hadn’t happened, we’d be in a much different situation than we are right now.

On the first point, expanding the development of major infrastructure projects under community benefits agreements, I just want to say that community benefits agreements are a progressive tool for economic recovery. They allow local communities to recapture the value of the public money spent on projects through skills training opportunities, local hire provisions and union wages and benefits.

In particular, in this moment, it’s a very important tool for addressing what some economists are calling the she-cession, which is that the current economic downturn is disproportionately affecting women in the labour market. The jobs that are being lost are in restaurants and hotels, service sector jobs that are predominantly done by women.

The community benefits agreements have a female hiring component to them. They offer a tool to coordinate labour market recovery for female workers by giving them access to the building trades training system — we spend $21 million annually on skills training — and by helping assess, train and place tradeswomen on infrastructure projects and set them up for success.

We commissioned a recent poll by Mario Canseco and Research Co. that found, despite the kind of controversy around community benefits driven by stakeholders and the media, that, really, with the electorate and with the general public, there’s cross-party support. People understand what community benefits are, and they support them.

The second point that I’d like to make is the need to target public dollars to foster private sector investment.

[2:45 p.m.]

There is no amount of public capital spending that will replace private sector capital investment in this province in the construction industry or any industry. That’s just a fact. So the money that is spent needs to be targeted to civil infrastructure that will promote private development. In the Lower Mainland, what you see is a need for transportation infrastructure — generally the Massey crossing, the Surrey to Langley SkyTrain and the extension of the Broadway corridor to UBC — and then the plans on B.C. Hydro’s books.

Now, these are beleaguered Crown corps right now. We understand there are scarce resources, and there are all kinds of trade-offs and priorities that the government needs to make and that this committee needs to make in terms of its recommendations. But what I would say is that this is about the economic vision for this province for the next 40 years.

As a part of that, the transportation infrastructure in the Lower Mainland and the hydroelectric infrastructure across this province are critical, especially if we’re going to have a successful liquid natural gas export industry in this province, which I think we can all agree that we want. It would generate myriads of tax revenue to pay for new schools and all kinds of public programs down the line. So we need to find a way to make that work.

That’s my submission. Thank you very much for your time.

B. D’Eith (Chair): Thank you very much, Andrew.

Next up we have Anne Kothawala from the Convenience Industry Council of Canada.

Anne, please go ahead. Can you hear me, Anne?

Stephanie, could you contact Anne and see what’s going on?

I’ll move on to the next presenter, who is Jim Goetz from the Canadian Beverage Association.

CANADIAN BEVERAGE ASSOCIATION

J. Goetz: My name is Jim Goetz, president of the Canadian Beverage Association. We’re the national association and represent the vast majority of non-alcoholic beverage companies here in Canada. Thank you very much for inviting me once again to present.

In these challenging times, the Canadian Beverage Association and our entire board of directors would like to say thank you to all of the elected representatives, government officials, first responders and front-line health care professionals who have worked so hard to protect Canadians.

Thank you, as well, to all the front-line workers in the beverage sector, who have continued to work hard to keep store shelves stocked. The beverage industry was deemed a critical part of Canadian essential services during this global crisis, and we’ve taken that responsibility seriously. I am proud that our sector has maintained the confidence of Canadians in the safety of our products, which, among other things, include water, juice and sparkling beverages.

Our members have worked hard to support their employees and customers in these challenging times. They have put the health and safety of their teams at the forefront of all of their work by making the investment required to meet and exceed the high standards of production and strict regulatory requirements set out by federal and provincial regulators.

Canadian Beverage Association members directly employ over 1,200 British Columbians in production facilities, offices and distribution centres. The sales of our members’ products also support tens of thousands of independent businesses and hundreds of thousands of jobs. The beverage industry contributes more than $100 million annually to the government in tax revenues. Beverage industry salaries are, on average, 26 to 38 percent higher than the average of all industries across the country, and many of those jobs here in British Columbia are unionized.

Our members are proud to support the communities where they operate. During COVID-19, our members have stepped up to contribute to charities and organizations across the province with both financial contributions and product donations that provide assistance to the most vulnerable families in our communities.

[2:50 p.m.]

However, our industry, like many others, has not been immune to the impacts of COVID-19. We understand that COVID has changed how many businesses operate, and we are seeing that negative impact throughout our supply chain — in particular, restaurants and retail.

The beverage sector shares the government’s vision of working together to stimulate economic growth and benefits in British Columbia. We know that this will require a careful and measured approach, guided by the health and safety of British Columbians.

We understand that this global health crisis resulted in a decision by the government of British Columbia to pause the implementation of the removal of the PST exemption on carbonated soft drinks. We remain concerned by the uneven application of this change in tax treatment, which took place without industry consultation, and we ask that the government explore options that are broader-based and equitable — in particular, when it has possible negative implications on small businesses, retail and restaurants.

We are also concerned to hear suggestions that that exemption removal would have an impact on health outcomes, by positioning this as a health policy measure instead of a new revenue tool. The evidence available, which I’d be happy to provide, shows that sugar-sweetened-beverage taxes do not result in better health outcomes. In fact, we also know that Canadians are consuming less calories from our beverages. These calories dropped by 20 percent between 2004 and 2014, and the Conference Board of Canada will soon release a report showing a further 16 percent reduction over those last five years, all without punitive tax measures.

This reflects increased consumption of no- and low-calorie beverages, coupled with decreases in full-sugar-beverage consumption. Despite such shifts and without taxation measures, our sector, however, has continued to experience modest growth, growing our businesses overall during this period. The CBA and our members stand ready to continue to work with the government to develop measures that will make a safe transition to the new normal, directly in the food and beverage sector and across our supply chain.

Thank you for your time.

B. D’Eith (Chair): Thank you, Jim.

Anne, you’re up — Anne Kothawala from the Convenience Industry Council of Canada. Please go ahead.

CONVENIENCE INDUSTRY
COUNCIL OF CANADA

A. Kothawala: Mr. Chair and committee members, thank you for the opportunity to present the views of the convenience industry to this committee. My name is Anne Kothawala, and I’m the president and CEO of the Convenience Industry Council of Canada.

The CICC is a national association that represents the interests of more than 2,500 convenience and gas retailers across the province and the wholesalers, distributors and manufacturers that comprise the entire convenience store supply chain. The retailers we represent are major contributors to the economy of B.C. These retailers employ more than 21,000 British Columbians, generate more than $5.9 billion in sales and collect hundreds of millions of dollars in sales, fuel, tobacco and lottery taxes for the government of British Columbia.

Like all businesses in the province, convenience retailers are facing unprecedented hardships due to the COVID-19 crisis. Despite B.C.’s success in limiting the spread of COVID-19, our retailers are dealing with the combined challenges of significant decreases in revenues, anywhere from 30 to 50 percent, coupled with increases in the cost of doing business. Since the beginning of the pandemic, convenience retailers in the province have seen dramatic decreases in daily customer counts. We have also been unable to sell certain high-touch products, like coffee and prepared foods.

At the same time, convenience stores have seen increased costs, including the hiring of additional staff, including security personnel required to maintain physical distancing and loss prevention, increased cleaning and sanitization expenses, PPE costs and the installation of physical barriers. Based on member surveys, the monthly cost of PPE and cleaning products is close to $1,000 per store. In addition, one-time investments for signage, barriers and other fixtures is, on average, an additional expense of $2,000.

To address these challenges and avoid more serious repercussions for small business owners that could include layoffs and store closures, businesses and governments will need to find ways to support small business owners and job creators in the province without adding to the fiscal pressures that are being faced by the province.

[2:55 p.m.]

Given the amount of time provided today and the fact that you will have heard similar submissions from other industry associations, I will refrain from speaking today about the impact of increased taxation and the regulatory burden faced by small business owners. However, our written submission will contain a detailed analysis of the impacts that these issues have on our sector, and we look forward to presenting those to the committee in the coming weeks.

In the interim, I would like to ask you to consider the following: the need for the province to maintain its enforcement efforts against contraband tobacco to avoid a negative impact to the tax revenue I referred to earlier; the need to ensure that any tax changes you may be considering treat all retail channels similarly and do not disadvantage convenience stores; the possibility of allowing convenience stores to sell beverage alcohol, which would offset our industry’s current financial pressures while maintaining government licensing and taxation revenues; and the ability of the province to open up new revenue streams for our industry, such as the emerging market in CBD products or increased lottery commissions.

Thank you again for the opportunity to appear before you today. I now welcome any questions you may have.

B. D’Eith (Chair): Great. Thanks very much, Anne.

We have quite a diverse group today in this panel, so I appreciate that questions may go all over the place a little bit.

Jim, just for my own comment, in regards to the sugary drink tax that went ahead, this committee had actually unanimously endorsed that for many years, based on recommendations from a number of health care associations, including the diabetes association. I do appreciate what you’re saying and the impact, but certainly, this is something that was asked for, for a very long time from the health associations. Anyway, I just wanted to comment on that.

J. Goetz: Sorry, Mr. Chair. Am I allowed to comment on it?

B. D’Eith (Chair): Yes, of course.

J. Goetz: Look, the PST applies to our products in other provinces. We do not have an opposition to that, as long as that PST expansion — Saskatchewan, for example, did that several years ago — is applied in an equitable manner and is done after an actual thorough review.

This was not. The committee may have endorsed it. We also put submissions in about our position about how taxation needs to be equitable and applied after a thorough review of how the PST is expanded. Again, there is extremely little evidence, when this is talked about as a health measure, that this will have any impact on health outcomes in British Columbia.

I would ask the committee, perhaps, since they’ve endorsed it: are there data points set up to measure any potential positive health outcomes?

B. D’Eith (Chair): Questions from committee members?

D. Barnett: Thank you, everyone, for your presentation.

I would just like to ask the convenience beverage group or the convenience stores group: what kind of extra costs do you foresee? Not just because of COVID. COVID is something that is unique. But what extra costs came before COVID?

A. Kothawala: Well, that’s a very good question. We had already noticed that we needed to increase…. There were costs related to labour, obviously. Obviously, the minimum wage just went up, and we expect those increased labour costs to continue. That is something that we have seen, not just since the beginning of COVID but over time. There are, again, particular issues related to COVID that are going to change fundamentally the way that we have to do business.

For example, loss prevention in cities like Vancouver. Because of reduced resources for police forces, we are seeing that there’s a higher incidence of theft and break and enters. Those are now costs that are going to have to be borne by the retailer.

B. D’Eith (Chair): I have a quick question for Andrew.

[3:00 p.m.]

Could you elaborate a little bit on how you feel that investment in public infrastructure is fostering private sector investment? Could you maybe elaborate a little bit on that and how you see that stimulating private investment?

A. Mercier: I think there’s an incontrovertible link between development and land use and the transit planning that occurs around it. In fact, even in places or jurisdictions where you don’t have urban planning per se, or zoning, you can still see the development form that predominates. I’m thinking of Austin, Texas, where there’s no zoning legislation. They zone by building. They’ll build their rapid transit line; development crops up around it.

The ability of the government to influence and to create an investment climate around land use through making decisions on transportation is incredible. It’s a very powerful tool, and it’s one that can set us up for success in the Lower Mainland for decades to come.

B.C. Hydro. I mean, the entire development of this province and the economic engine of this province has been B.C. Hydro since W.A.C. Bennett created it in the 1960s, driving the industries that really underpin most government revenues, like hydro-intensive forestry, Alcan, LNG. When we’re talking about leveraging public dollars, I’m really thinking there in terms of what is really necessary to form the backbone of private development in years to come.

B. D’Eith (Chair): Great. Thank you very much, Andrew.

Questions from members?

M. Dean: Thanks to everyone for your presentations.

Andrew, you kind of alluded to this a bit in your presentation, but I’m concerned that if we simply invest in building infrastructure as we move forward in the recovery, we’re creating opportunities for those kinds of areas of work that traditionally have been dominated by men. The virus impacts all of our communities very differently, especially marginalized groups. We had been working to try and increase representation of women in trades and to make sure that construction sites have really safe and supportive cultures as well.

Chris, you might want to say something here as well.

As we create our COVID recovery plan and make decisions around our investment, how can we use this as an opportunity to actually accelerate that work and close this gap even further?

A. Mercier: That’s a great question. I’ll give a quick answer. I won’t take up too much space in the conversation so that Chris can hop in there too. I’d say just a couple of things right off the cuff. You’re absolutely right. In many ways, we understand it’s going to be a service-based recovery.

That being said, community benefits create a demand for female tradespeople and help bolster that, creating the incentive to train women as well. But there’s also an opportunity to invest in increased skills training and workforce development courses around preparing new entrants into this labour market to be skills-ready and to make sure that women have the support they need.

C. Atchison: From my perspective on that question, and thank you very much for this question, I do think we’re looking at a number of initiatives that were underway prior to COVID-19 and that were aimed at changing the culture in an industry that was traditionally male-dominated. A number of those programs and initiatives supported by B.C. Building Trades and the B.C. Construction Association alike were having a positive impact on the employer community to help break the systemic barriers that were in place for decades.

COVID-19 is readjusting the workforce, as we know, but it shouldn’t delay the culture change that is more important than ever. It’s not just the construction industry that needs to undergo this, but we’re happy to lean in with things like our skilled trades employment program, with our relationships with ITA, with Builders Code and with the Be More than a Bystander program to make sure that we’re doing our part to make worksites acceptable for everybody on them.

[3:05 p.m.]

R. Leonard: I’d like to follow up on that a little bit. One of the things I’ve heard in terms of skills training, in particular in post-secondary, is that it would be beneficial to have some sensitivity training in the course, in the curriculum. I’m wondering if that is something that’s on the radar for supporting and seeing move forward.

A. Mercier: I think Chris kind of touched on that with the Be More than a Bystander program and the services that are being provided right now by the B.C. Centre for Women in the Trades, which is really focused on making sure there is support for tradeswomen who are going through trades training or in the profession and also, to Chris’s point, in terms of changing the culture in the industry to make it more hospitable to tradeswomen.

B. D’Eith (Chair): I just had a quick question, Chris, about the prompt payment legislation. I’m curious. I assume that you were talking to different ministers about this, and I’m not actually sure which ministry, whether it’s Labour or Jobs. I certainly get what you’re saying — how important this is to the industry about getting paid quickly, and that delay. Because we have been talking about this with you and other people for a while, I’m wondering how far along you are in that dialogue with the ministers.

C. Atchison: A number of ministers have been introduced to this, but where it will lie is with the Attorney General’s office. That’s where we need to make the most headway. They are aware of what is happening in other jurisdictions. They’re monitoring that. In our mind, there is enough real estate that has been covered by other jurisdictions that we fear British Columbia may be lagging behind.

There’s no more critical time that we’ve ever experienced in our lifetimes than now to not hesitate on something that is very unfavourable for the economic development and for the impact of vulnerable tradespeople and the employers who are responsible for their paycheques. It starts with the Attorney General’s office. They’re aware and monitoring what’s going on.

I would say there is a direction that can be provided from this group, from this committee, to make sure that we do more than just monitor, that we actually take a vested interest in seeing this legislation and start to draft it with some sincerity based on what we see working and rolling out in other areas.

We need to make it our own, but, as we’ve seen ourselves come together for COVID-19, there is that willingness within our industry to come together with government to put something meaningful forward for British Columbia now and for the future.

B. D’Eith (Chair): Thanks, Chris.

Anne, did you have any final comments at all or thoughts before we break?

I’ll give you, Jim, a last opportunity too.

Anne, did you have anything else to add?

A. Kothawala: No, thank you very much. As I said, we’ll follow up with a more comprehensive brief. Recognizing the time, we just wanted to flag a few critical issues for us.

B. D’Eith (Chair): Great, thanks.

Jim, did you have any final thoughts at all?

J. Goetz: No. Just thank you for the opportunity to appear in front of the committee today in this unique format. It seems to have worked out quite well. Congratulations, everyone.

I think “Unmute it” is now the most popular saying on the globe. “You’re still on mute. You’re still on mute.”

Thank you, everyone, for the opportunity.

B. D’Eith (Chair): Wonderful. Thanks. We, of course, wish we could meet with you in person, but we do appreciate you taking the time to present to us. We will deliberate on everything you said. Thanks so much.

We’ll take a recess until 3:15 p.m.

The committee recessed from 3:08 p.m. to 3:15 p.m.

[B. D’Eith in the chair.]

B. D’Eith (Chair): Welcome to the new presenters. What we’ll do is go to each presenter for five minutes each, and then there’ll be time at the end for questions. Then the members will ask questions.

First up we have Henry Han from the Canadian Credit Union Association.

Henry, please go ahead.

Budget Consultation Presentations
Panel 3 – Economic Development

CANADIAN CREDIT UNION ASSOCIATION

H. Han: Good afternoon. Thanks for the opportunity to speak with you today on budget consultations for 2021. I’d be remiss…. I am working with a fellow member, our president and CEO of Salmon Arm Credit Union, Barry Delaney. We’re presenting together as a team here.

CCUA is the national trade association for 236 credit unions and caisses populaires outside Quebec. We provide deposit, loan and wealth management services to 5.8 million Canadians. Along with Central 1, our credit unions here in British Columbia all have their head offices in the province and are important partners to small business in every corner of British Columbia.

The credit union sector in B.C. includes 41 financial institutions in 379 locations across the province with more than 8,500 employees. We are focused on serving small and medium-sized businesses that offer essential services in their communities. Credit unions are focused on local communities and regions across the province where every customer, as I think many of you know, is also a member and owner. Approximately 40 percent of British Columbians are, in fact, credit union member-owners.

Credit unions serve smaller communities and hold deep member and community relationships. They are in a unique position to understand the impact COVID-19 has had on local businesses and local economies through their various lending portfolios. In fact, across the province, our members have seen that average loan deferrals provincewide are at 18 percent of total value, with between 8 and 16 percent of residential mortgage deferrals and between 18 and 30 percent of their commercial portfolios deferred.

Our association was critical in advocating to the Ministry of Finance and EDC to allow all credit unions access to the Canada emergency business account, providing much-needed liquidity to our small business members in a timely fashion. The maximum of $40,000 will provide immediate relief on favourable terms for many small businesses.

However, we should note that not all businesses in all sectors will be able to take full advantage of the provisions allowing businesses the opportunity for 25 percent loan forgiveness. In that case, the loan then becomes another burden of debt on the business as it converts to a three-year term loan at 5 percent interest. Under these terms, a $40,000 loan would require the small business owner to pay another $1,200 a month over three years.

It is our understanding that for these reasons, the CEBA applications, while robust amongst our credit unions, did not meet our members’ initial forecast on takeup. Across the province, 110,890 small and medium-size enterprises registered with our credit unions were eligible to receive CEBA funding. Of that amount, 43 percent, or 47,685, were expected to apply. Now, it’s still early and our data is evolving, but some of our aggregate numbers indicate that there was much lower than expected uptake, with approximately 15 to 20 percent of eligible small business owners applying.

We also see that…. Over the last few weeks, we’ve seen applications slowly trickle in. Anecdotally, one of our larger credit unions, which processed well over 400 applications, commented that they’re only receiving one a week. The vast majority of applications, well over 90 percent, were accepted.

[3:20 p.m.]

We know that there are still gaps not filled by the existing government programs, and there are disproportionately impacted sectors that require solutions that enable companies to manage for a much more extended period of time. We find that the CEBA program is really designed for businesses of a certain size that are likely not as significantly impacted beyond this calendar year, can adjust their business model and pivot to an online or digital presence or can see some return to normal this calendar year.

Some sectors which may not be able to make those digital adjustments and are disproportionately impacted will need relief and support measures that extend well into 2021, specifically tailored for their sectors’ return to normal. To that end, we’re proposing a loan program tailored for B.C. sectors such as hospitality and tourism of a value that will generally provide enough of a runway for these owner-operators to continue their business until their return to normal comes.

With that, I will pass it on to Barry Delaney over at Salmon Arm Credit Union.

B. D’Eith (Chair): Thanks.

Barry, please go ahead.

SASCU CREDIT UNION

B. Delaney: Welcome to the committee members. I just want to thank the committee members and government of the day for all of the good work that the government has done to support British Columbians during this COVID crisis. I must say that it doesn’t matter what your political leanings are, everybody has turned their attention to British Columbians and how to help them, and it’s been just terrific to see.

I want to speak to the hospitality and tourism sector on the ground here in the North Okanagan. I have the privilege of being the CEO of this credit union. We have five locations, 150 employees. We have our head office in Salmon Arm, but we serve the North Okanagan through five locations.

This part of the province is heavy in hospitality and restaurants. This is what drives our local economy. We have in Salmon Arm, as an example, 11 hotels serving a population of 20,000 people. Clearly, that’s a tourist community. We have mortgages on nine of those hotels, and we have the banking relationships of 90 percent of the businesses in this area. All five banks are in this area, but together, if you add up their market share, we’re double the banks’. In this sector, in this region, we are the go-to business provider for hospitality and retail.

This sector, as you well know, has been devastated. We do not want, at the end of this COVID crisis, to have people turning in the keys of their local hotel that’s family run or their local restaurant. We don’t want a recurrence of what happened in the 1980s. We want to see that these businesses can have some hope and confidence to get through to the next tourism season. Typically, the hotels in this area in June would be in the 85 percent occupancy level and at 100 percent as of Canada Day weekend. Across the board, they’re at around 5 percent. All of them have laid off staff. All of them are barely holding on.

Now, the CEBA loans that we’ve processed…. We’ve processed 312 $40,000 loans. That’s typically one month’s operation budget for a family-run hotel. We’re doing a lot that is trying to give them creative financing, but they don’t need more debt. Even if they were to open in phase 3, we’re not sure that British Columbians are ready to stay in a hotel and travel through the province. The hoteliers that we deal with are fearful that people will stay close to home all summer and that they won’t see their revenues and occupancy pick up until 2021. That’s where the fear of them turning in the keys to their local financial institution comes — that they’ve just plain run out of money.

If we could use a portion of that $1.5 billion that is talked about to give businesses in this sector — or any sector that is hard hit, that needs to hang on by their fingernails till next season — a way forward…. That would be some sizeable kind of grant/loan that they could carry on their operations to next season — a big part of that grant/loan being forgivable. Then it would turn into something favourable in terms of interest.

It would cause those families, we think, to say: “You know what? I don’t need to hand over the keys to this business to the financial institution. We can live through this and then gear up for next season and get back on track.”

[3:25 p.m.]

That’s what we’re thinking would be a credible idea to be considered through the budgeting process that your committee goes through and some advice to our provincial government. We are fearful in the credit union system, in the hospitality and retail sector, that there will be failures of these family businesses across the province. We don’t want to own those businesses, and those families don’t want them to fail.

The CEBA program is just not enough. Some hope or some path to get them to next year’s season is something that is needed.

B. D’Eith (Chair): Thank you very much.

Next up we have Alain Leclerc from Intellectual Property Institute of Canada.

Please go ahead.

INTELLECTUAL PROPERTY INSTITUTE
OF CANADA

A. Leclerc: I’m the president of the Intellectual Property Institute of Canada, IPIC. I would like to begin by thanking this committee for the opportunity to speak before you and to answer any questions that you may have.

IPIC is the largest professional association in Canada of patent agents, trademark agents, lawyers and other professionals practising intellectual property law, basically. It was founded nearly 100 years ago, and we carry, all of us, a message of hope and economic recovery through science, creativity, harnessing of human innovation and the smart deployment of IP assets in Canada.

Now, I’ll cut right to the chase by telling you that I have just one message today, and the message is to the government of B.C.: to think about perhaps earmarking some funds for future recovery in relation to the costs of securing intellectual property rights. I’ll justify this recommendation with a few things.

First of all, we know that before this horrible pandemic, start-up companies and small businesses in B.C. and elsewhere in Canada were some of the fastest-growing and job-creating contributors to the growth of provincial economies. So we know that. And we think that this will also continue in a recovery phase. According to Business Development Canada, small businesses employ around 70 percent of private sector workers in Canada and generate more than half of the economic output of the business sector. So SMEs are very, very important to growth.

The other thing that we know, and this is based on a study by the Canadian Intellectual Property Office, is that there’s a strong correlation between small and medium-sized companies that own IP rights and growth and commercial success. So we know that IP is good.

When I talk about intellectual property, I’m talking about patent rights, trademark registrations, industrial design registrations on the look and shape of articles being sold, copyrights, trade secrets.

We’re in a new economy. We’re all talking today on Zoom. The other thing we know is that a lot of major players in technology and innovation that are around now started off very small, and a lot of them started off after a recession or after a downturn in the economy.

Necessity is sort of the mother of invention. That’s the saying. We think that we should be securing IP rights or helping small and medium-sized enterprises to secure their IP rights. To quickly recover from the COVID-19 pandemic and return the economy to growth levels, we are urging this committee to consider earmarking some funds towards the businesses that want to secure intellectual property rights.

[3:30 p.m.]

By the way, just to have a quick geographical view of what is going on in the rest of Canada, we’re looking at…. IPIC was pleased to see that Ontario launched a COVID-19 Rapid Research Fund that was earmarking some funds towards intellectual property rights for businesses that create solutions to the pandemic. Quebec has a first patent program, which is now replaced by a multiple patent program, helping smaller businesses towards securing funds for intellectual property protection.

We think that intellectual property should include not just patents but also trademarks. A lot of the smaller companies are not really comfortable with the IP systems and how to use them. So we think they need help financially to get comfortable with using the IP system to leverage their creativity, to secure more rights and to actually deploy a great business success and perhaps some exports as well.

As we move towards a greener, cleaner and more creative economy, we think that we should earmark some specific funds towards intellectual property protection in the province of British Columbia.

Thank you very much for your attention. I see that I have already run over time. But it’s a nice format. I thank you for your attention and for the opportunity to appear before this committee.

B. D’Eith (Chair): Great. Thank you very much.

I just had a quick comment or a thought in regards to the tourism industry, and particularly, in regards to what could or should be done over the coming months, and potentially years, but certainly in the months. One thing to note is that this committee is looking at the budget for 2021. The $1.5 billion that you were talking to is in this cycle.

I would certainly encourage you to make any presentations that you want, as well, to the Minister of Finance right now, because those considerations are being made right now, while we’ll be making help for the medium term. I think it’s important to make sure that the same message is given to the Minister of Finance as well.

I’d like to know a little bit more about specifically what you would like to see in terms of supports for the tourist industry.

H. Han: Barry, maybe you can respond. But maybe I could just clarify. Our select CEOs did have a round table with Minister James just a week ago. We will be putting forward a formal submission to the minister for consideration to be put forward to the economic recovery task force.

From our understanding, though, our perspective is that at best, if our submission is successful, it’s a finite amount of funds. Whatever that allocation, it may not be sufficient. We would ask this committee to consider potentially earmarking some funds in Budget 2021 to potentially augment whatever, if we were successful in our submission to the minister for allocating a portion of the $1.5 billion to our suggestion.

B. D’Eith (Chair): Excellent. Thanks, Henry. I appreciate that.

Questions from members.

D. Barnett: Thank you very much. To the members of the credit union, I really and sincerely appreciate your credit unions. Where I come from, small-town, rural British Columbia, you certainly are very welcome. Our communities would not make it without you. What you do for our volunteer organizations, for people… It just really is a great big family.

I know your concerns. I’ve been through this in the ’80s, in the ’90s, 2008. I know the difficult times for these small businesses. Many of these tourism operators, due to other issues before COVID, had issues. I sincerely hope that somehow, the government will come and help these businesses with some kind of a short-term or long-term program, because they can’t afford any more debt. They need two things. They need customers and cash.

A Voice: Thank you for those comments.

R. Leonard: Thank you, everyone, for your presentations. Actually, my question is a sort of follow-up to what Donna was asking.

[3:35 p.m.]

Mr. Delaney, you mentioned you don’t want to see what happened in the ’80s. I’m assuming that it was mostly credit unions who were mortgage holders back then and when people were losing businesses.

I’m curious about what the recovery at that time looked like, or any subsequent one. Did families end up just moving away? Did other families come in? Was it taken over by bigger corporations who had, maybe, deeper pockets to survive? I’m just curious about what it looked like, what we might be able to anticipate coming down the pipe with this pandemic and the crisis that we’re in economically.

B. Delaney: Yeah, thank you for the question. I mean, it was devastating, in the ’80s, to the communities, but in a very different way. It was due to high interest rates and other factors. Also, the laws have subsequently changed so that it’s not as easy to walk into a bank or credit union and drop off the keys to your business and walk away from your indebtedness. That’s not the way the laws are structured today.

It resulted in financial devastation for those families. There was a lot of consolidation in the industries that were impacted. It was mostly the housing market and families, but businesses struggled too, even here in this community with our shopping mall and others, where they were paying 21 percent and couldn’t make the payments. It wasn’t based on a health crisis, but the financial crisis was similar.

M. Dean: Thanks for your presentations. I’m interested…. From a financial perspective, we know that women are more risk-averse. What would you advocate as programs and support that would be more accessible to women-led businesses?

H. Han: Maybe I can kick this off.

Barry, I don’t know if you have anything from your end.

In fact, we have been meeting with a number of our credit CEOs, and we did present this to the Minister of Finance — the desire for our sector to do a better job of tracking loans provided to women entrepreneurs, women in the workforce and minorities.

A lot of the aggregate data that we’ve seen pre-COVID shows that women and minorities have a greater refusal rate on loans from financial institutions. Potentially, with COVID-19, where certainly we see women and minorities are disproportionately affected, it’s something that we’re tracking.

I know that there are specific members that have programs available for providing accessibility for loans specifically for women entrepreneurs and minority entrepreneurs. I don’t have those programs available to me, but I know many of our credit unions do have those special programs in place.

B. Delaney: I’ll make a quick comment. Thank you for the question. It’s a great question.

I’ll just say that with the financial impact of this pandemic, it doesn’t matter what the gender is of the business owner. If you’re a family-run hotel, you’re going to be devastated. It doesn’t matter how risk-averse you are. It’s because of the sector that the business is in that it’s devastated. But we do have programs for women entrepreneurs, and I do agree that they are more risk-averse.

B. D’Eith (Chair): Rich, go ahead. Last question on this.

R. Coleman: To the credit union guys, you actually were better in the ’80s during the 21 percent interest rate. I saw a number of businesses actually get saved because they were dealing with a credit union versus a chartered bank. I thought you were more flexible.

I also have to tell you that today, I think, the credit union is the place…. If I was actually recommending for somebody to start a banking procedure, if they were a new business, I would be sending them to my credit union locally way before I’d send them to a chartered bank. You’re much more community minded, and you have a better idea of the community risk in the market these guys are playing in.

B. Delaney: Thank you for that comment. I know you’re a longtime credit union supporter.

R. Coleman: Longtime.

H. Han: Thank you for that. I think the only thing I want to reference is the CEOs, the executive team of our credit unions, they live and breathe in the communities. They’re members of the communities. They’re not in Toronto or some other jurisdiction around the globe. I think that’s a huge difference-maker for our members.

[3:40 p.m.]

B. D’Eith (Chair): Alain, I didn’t want to leave you out. We got into this discussion about credit unions. On behalf of the committee, it would be great to hear a little bit more, probably in writing, about specifically what you would like to see in terms of incentive or program.

I know, having worked in intellectual property for most of my legal career, how time-consuming, expensive and complex intellectual property can be for people. Anybody I know who has dealt with patents or trademarks…. It’s a complex and difficult area of the law to get into for people, and it can be daunting.

I’d be interested in maybe getting some specifics in writing, if that’s all right, as to what you propose.

A. Leclerc: Yes, absolutely. Thank you, Mr. Chair. We will. We will let you know, also, what’s being done in other provinces, to give you ideas as to current trends.

I just wanted to close off by saying that IP is open to everyone, large and small businesses. It knows no gender. It knows no race. It’s really human creativity at its best, and I hope that our submissions will be implemented in the future.

Thank you so much for your attention and interest.

B. D’Eith (Chair): Thank you so much. Merci.

That’s it. We’re over time a little bit on this one. We’re going recess.

Thank you so much to all the presenters. I wish you all the best. Stay safe. Stay well.

We’ll go into recess now. We start again at 3:50.

The committee recessed from 3:41 p.m. to 3:51 p.m.

[B. D’Eith in the chair.]

B. D’Eith (Chair): Welcome, everyone. Thank you for taking the time to present to the Select Standing Committee on Finance and Government Services. We really appreciate it. Obviously, we’d much prefer to be there in person with you, but given the circumstances, we really appreciate you taking the time to come on Zoom.

If you could please keep your comments to five minutes. Then everyone will have a chance to speak. After all the panelists have gone, then we’ll ask questions. We’ll just go from presenter to presenter.

First up we have Walt Judas from the Tourism Industry Association of British Columbia.

Walt, please go ahead.

Budget Consultation Presentations
Panel 4 – Tourism

TOURISM INDUSTRY ASSOCIATION OF B.C.

W. Judas: First of all, thank you for the opportunity to speak with you again today.

As you’re aware, British Columbia’s $20.4 billion visitor economy was the first and hardest hit of the major business sectors that drive the province’s economy. Unfortunately, it will likely be one of the last to recover, as a consequence of this pandemic. Given the current travel restrictions in place, including closed borders, tourism revenues are anticipated to be only a third of what they were in 2019.

Thousands of businesses across multiple sectors are closed. Many are unlikely to reopen this year or even at all, especially if the current situation continues for another month or more. No business can sustain months of virtually zero revenue. We’re now about 11 weeks into a period where travel has been actively discouraged if not banned outright.

The primary issue that businesses face is cash flow. Without visitors and revenues, compounded by monthly fixed-cost expenses, tourism operators simply cannot make ends meet. The situation is dire now but will get even worse when the Canada emergency wage subsidy ends in August and once the 16-week temporary layoff period concludes and closed or only partially reopened businesses will be forced to sever and pay out employees.

Finally, the consequences of permanently closed businesses on the tourism sector are numerous and immense. For example, lack of supply translates into a less-than-stellar experience and will force guests to choose another destination that meets their needs and expectations.

[3:55 p.m.]

While programs introduced to date have been somewhat helpful, they don’t go so far as addressing liquidity issues that many businesses face. With recovery anticipated to be well into 2021 or even beyond, government could assist by providing businesses with working capital grants or consider backstopping loans at below-market rates, with an extended payback period. Not only is it necessary this year, but it will be important next year, as well, given that many businesses will not open at all in 2020.

On a separate but related topic, Destination B.C. — in partnership with the Ministry of Tourism, Arts and Culture; Indigenous Tourism B.C.; and the regional destination management organizations — has completed an extensive destination development planning process that I talked to you about last year.

As you know, destination development focused solely on the supply side of the visitor economy by providing compelling experiences, quality infrastructure and remarkable service to entice repeat visitation. To support this work and to help the tourism industry recover, it behooves the province to provide stimulus funding that focuses on product development, transportation infrastructure, events and other initiatives that help generate tourism demand and revenues for B.C. In particular, rural and Indigenous communities would benefit by this investment.

Finally, the resort municipality initiative program, which is managed by the Ministry of Tourism, Arts and Culture, is intended to support small tourism-based communities to build and diversify their tourism infrastructure, deliver exceptional visitor experiences and incorporate sustainable tourism practices and products.

In 2019, the province committed to providing $39 million over three years for the RMI program to fund infrastructure projects that will create jobs and build a strong economy in tourism-oriented communities. RMI funding is now part of the core budget for the Ministry of Tourism, Arts and Culture, providing communities with the certainty they need to plan over the long term.

While leaving the core RMI funding in place for the original 14 communities, we are petitioning government again to create a parallel program for tourism development in communities that need resources for similar purposes. While not necessarily resorts, these smaller communities rely on tourism as their primary industry but do not have the tax base to support new infrastructure or amenities they need for both residents and visitors. So again, we think a new or a separate or an adjunct program to RMI would be worthwhile, especially at this time, for the visitor economy.

B. D’Eith (Chair): Thank you very much, Walt. We appreciate your comments.

Glenn Mandziuk from British Columbia Regional Tourism Secretariat.

Please go ahead, Glenn.

B.C. REGIONAL TOURISM SECRETARIAT

G. Mandziuk: Thank you very much, Chair and MLAs, for this opportunity today.

Thank you, Walt, for your presentation.

Walt is a great advocate for the sector, as you can see.

My name is Glenn Mandziuk, and I’m the chair of the B.C. Regional Tourism Secretariat. We’re made up of the five regional destination management organizations in the Cariboo Chilcotin, Kootenay Rockies, northern B.C., Thompson-Okanagan and Vancouver Island. Essentially, we represent 8,000 businesses and organizations and 60,000 permanent tourism jobs outside the Lower Mainland and Whistler, and I’m the CEO of the Thompson-Okanagan tourism region.

I wanted to give you a quick understanding of our primary role as an organization for context. As Walt has said, think of tourism as a balancing act between supply and demand. Demand is primarily on the marketing side, with creating marketing campaigns led by Destination B.C. and communities and others.

We work primarily on the supply side. We work to create authentic, memorable visitor experiences across our regions. In order to make this happen, our regions must be equipped with products to sell and have a desire to have people there. Ultimately, hosting the right people, the right visitors, at the right time to the right location. We work to ensure that industry has what it needs to provide quality experience and that tourism has social licence in our communities — that it’s sustainable, diverse and equitable. In fact, we’ve won many international awards for our work in this area.

We’ve been recognized as leaders in another area: emergency management. This is based on our work during floods and wildfires, by coordinating responses to ensure both visitors and businesses are taken care of during and after emergencies. Our skills in the last area are particularly required right now. One of the first things we did in response to the COVID pandemic outbreak was to collect information weekly to determine the state of tourism in each of our five regions.

[4:00 p.m.]

As Walt has referenced, there are some very sobering statistics. As of May 15, it should be noted that there are over 78,000 people who have been laid off or not hired for the upcoming season in our regions. Fifty-one percent of the businesses are not open, 26 percent cannot operate under current physical distancing measures, and 21 percent have told us they are facing bankruptcy. Another 37 percent have, sadly, said that they’re unsure if they can continue.

After creating a process to assess the extent of this problem, we developed a resiliency program, pivoting our organizations and staff towards helping businesses and organizations navigate the emergency support programs on a one-on-one basis and providing expertise to solve problems. To date, over a thousand businesses have taken advantage of this program, and much has been talked about in terms of marketing.

We’re encouraged by the funding being directed on the demand side. If it’s done right and carefully, it should provide some businesses, this summer, some business activity.

If tourism is to survive this pandemic and become resilient, the businesses and communities need three things.

The first thing is businesses need access to non-traditional financing and cash injections at the right time — much like Walt has just said — to help address the real liquidity and solvency problems. If these businesses are to go away, there’s nothing for people to visit and, thus, no need to market.

Second, we need a fund to develop tourism capacity in communities, infrastructure projects and other developments. Each region has a plan in place — as Walt has also said, correctly — that has been approved by the communities and the province and is ready to go, but we need this supply-side investment.

Lastly, we need to change how we measure tourism, how we measure success. It has historically been measured by economics and jobs, but the metrics need to include health, safety, cultural, environmental and social considerations. Changing how we measure tourism will increase tourism’s social licence and enable communities to welcome tourists back.

We, as the B.C. regions, are at the ready. We’re ready to support business. We are the conduit for government and industry right now. We’re ready to develop those solutions. As you can tell, we’re very passionate about tourism, and we hope you are too.

Thank you very much.

B. D’Eith (Chair): Thank you very much, Glenn.

Next up we have Dianna Ducs from Nelson Kootenay Lake Tourism.

Dianna, please go ahead.

NELSON KOOTENAY LAKE TOURISM

D. Ducs: Hi. Thank you for this opportunity, everybody.

I’m going to start with the comment that we are a sustainable destination. We are a four-season destination. I represent Nelson, Kootenay Bay, [audio interrupted]. So those small rural communities that reside around Kootenay Lake. We’ve been in operations now for…. It’s our 11th year as a destination marketing organization.

One of our biggest concerns is trying to get infrastructure funding. Now, Walt touched on it a little bit.

Thank you, Walt, for addressing that.

That is the RMI. The RMI is a great fund to help infrastructure. It’s been focused on resorts. What we’re looking for is for that RMI to be changed to a rural municipality initiative to support these small communities, both physically and digitally.

Our communities are isolated. We’re kind of like many larger resorts, I guess, in some aspects, but we want to access all travellers. The resorts are focusing on a specific kind of traveller. We want to go outside of that and bring families, couples, cultural people, adventure and chill-and-relax people, and low- and middle-income travellers, but we don’t have the infrastructure in place to do that.

The physical aspect of that is a lack of signage when you enter into any of these small communities. They look old and ratty. “Old” not in a heritage way. We do really value that sort of heritage-as-hip old. They’re just not keeping up to the pace of some of these other destinations that are getting funding.

Another physical aspect is trail signage, attraction signage, lookouts, parking access information. Also, on our beautiful lake, which is pristine and glacial-fed, we need to give signage for better access points for people — and for the marinas, pump-out stations and even gas stations — so that we can have the boats moving about on the lake without there being a crisis and people having to be called in to assist people. Pump-outs, again, as I just said, are a very important thing that we need to get some physical infrastructure for.

[4:05 p.m.]

On the digital side of supporting the rural communities…. There are many small mom-and-pop shops that just don’t have the time to learn and take on that huge task of social media and, also, online web stores. What we’re asking for is for digital support. Not just a video that says this is how you do it, and they do it between eight and midnight when they get home and they’re done with everything else, but it’s to actually hire someone to be hands-on helping them — encouraging them but also, perhaps, doing a lot of the work for them.

I know there are people out there that have those skills, but the small people don’t have the time to find the resources or work with them specifically to make it all happen.

Also, another aspect of digital is Wi-Fi. Having Wi-Fi across our province for all travellers would be so great. We have limited Wi-Fi in our rural communities. Some communities don’t want it, and that’s absolutely fine. But in areas where we do want it, we find that people that can afford the data are being able to access the information better. If we can provide a Wi-Fi that’s across rural communities, that would be very beneficial.

Another area that I want to talk about is the current situation with COVID. The Alberta-B.C. tensions have caused us a lot of challenges, not just financial but social challenges also. I would love for the B.C. government — it might not be the Finance Committee’s position here, or ability — to open up the borders within Canada. It’s devastating to the small communities in southeastern British Columbia that are having to tell Albertans to stay away. We need to have leaders across B.C. speak to this issue — maybe you are them — and address it with an open mind and understand the repercussions of the choice to say that Alberta can’t travel here.

What we’re working on is an education-based travel message, which is SMART travel. It’s an acronym for safe, measurable, appropriate, responsible and thoughtful travel. Education-based is really beneficial for simulating the economy rather than shutting the province borders and creating tension between the provinces.

I’m going to give an analogy of why SMART works. It’s kind of like safe sex education. What works better? Tell the youth don’t do it? Or is it better to educate them about the necessary precautions and how to do it safely? I think we need to start educating travellers about how to travel safely, rather than say do or don’t.

I have 27 seconds. I would like to just add in that we welcome the MRDT tax. Thank you very much for supporting it. If we could get better measurables with it, that would be so beneficial, so we can track tourism better. There are all sorts of concerns with the MRDT and the lack of information that’s provided to the DMOs.

Thank you very much.

B. D’Eith (Chair): Thank you very much, Dianna. We appreciate it.

If I could open the floor to questions.

D. Barnett: Thank you very much for your presentations. I live in rural British Columbia, and I understand completely the issues.

Walt, I have a question for you. The program you just described here, what you’re looking for. Would that fall under rural development, the portfolio that I used to have? I also would like to know if there were any projects left on the table in the tourism industry when rural development was parted.

W. Judas: Donna, a very good question. It could fall within rural development, to be sure. It also could have room within the Ministry of Tourism, Arts and Culture, considering RMI is long-established and is now housed there and is being funded out of that ministry. As I say, we’re kind of looking at an adjunct program, something similar without touching RMI. Where it’s housed is a decision for government.

To answer your second question, there were a lot of projects left on the table. I know that immediately after the rural dividend fund was moved over to those hard-hit forest communities, many people in our industry said we had things that we had in the hopper. There were projects in Williams Lake. There were projects around fishing, etc. So yes, I think that caused great consternation, at least for the short-term, but I think there’s some hope that those communities will receive that funding once again.

D. Clovechok (Deputy Chair): Thank you, Walt, for that. Maybe expand a little bit more on what that funding…. Are you talking about expanding the RMI program to include other communities now? This would be the best time to think about that, would be my guess.

W. Judas: Yeah. As I say, the RMI program is really good. It has really benefited those resort communities.

[4:10 p.m.]

Whether it’s an expansion, Doug, to the existing RMI programs or one that’s similar that speaks to some other communities that may fall outside of that immediate criteria of being a resort…. I’m thinking of, for example, Dianna’s community or Parksville-Qualicum. That’s also very much a tourism-based economy there in Parksville-Qualicum.

Whether it’s within RMI or an addition to RMI — I don’t want to dilute what’s presently there — I think there is room for movement and to expand that program.

D. Clovechok (Deputy Chair): Thank you for that.

Well, Dianna, I’ve got a question and a comment for you around the Alberta issue. Seven weeks ago we didn’t know what this was all about, really. Governments on both sides of the border encouraged people not to travel unless it was essential travel. I know what your statistics in your region look like, and I know how they look in mine. I know that the issue is there between Alberta and B.C., and we direly need them.

We’ve been pushing really hard to start that education program. If you look at the…. I don’t know about your region, but where I am, we went through two long weekends without any additional COVID issues or cases. I think people from other provinces are doing what we’re doing as well.

I think we need to congratulate and thank them and welcome them back that way. So I think it’s a huge issue. I agree with you 100 percent. We’ve got to really work hard to kind of mend that fence a little bit.

N. Simons: My question is to Dianna. Can you tell us what the SMART acronym is for again?

D. Ducs: Oh, it is how we’re going to be communicating out for travellers. Again, it sort of leans toward educating them about how to behave in our area.

Be safe when you’re travelling. Be measurable. Measure your distance, where you are from people. Appropriate kinds of activities. Wash your hands. Take responsibility for yourself. If someone is too close to you, move away if you’re not comfortable in a situation. Take responsibility for yourself. The final one is thoughtful. That follows along with Bonnie Henry’s “Be kind, be thoughtful, and be considerate” to others that are travelling.

Does that answer your question?

N. Simons: Yeah. Actually, Doug and I had a conversation about this. You have the issue of travellers from Alberta. We have the Lower Mainland coming to the Sunshine Coast — all by ferry. Our community became quite sensitive to the fact that there seemed to be a lot of travel. We saw them on the B.C. Ferries webcam, ready to come over. We sensed it, and we were worried, as Doug mentioned.

We then thought, you know, it’s a harm reduction approach, really. We’re trying to make sure people are safe. If you know how to travel safely — you stay in your car when you’re on the ferry, and you’ve done your grocery shopping before you come over, and all those kinds of things — I like that.

I’m wondering if anyone in government has taken that up and thought we need to maybe pursue that. But that’s why you’re here. To tell us to….

D. Ducs: Yeah. I’m not sure if anyone else has taken it up. Sorry if my analogy was distasteful, but it seemed appropriate and seemed to be most understood, from what we know in our education system.

You triggered one that I didn’t talk about, which is the ferry system. I’m sorry I didn’t add it earlier. We have limited ferry service on the Kootenay Lake ferry right now. It’s harming a lot of the travellers, as well as the locals. I’m just going to throw that in there. If we can get full service back somehow, that would be fantastic.

N. Simons: Yeah. You are an interior ferry person talking to a coastal ferry person. We have lots of similarities, but we have some…. But I hear you. Our ferry service has been limited significantly as well, and we don’t have an alternative.

B. D’Eith (Chair): I just had a quick comment in regards to what I’ve seen recently in terms of advertising, basically encouraging B.C. residents to staycation and to use the province. I’m wondering if you could comment on how you see encouraging B.C.ers to be tourists in British Columbia will maybe help to mitigate some of this, or is it not enough? If you wouldn’t mind commenting on that.

D. Ducs: Was that for Glenn or for me?

B. D’Eith (Chair): Maybe Walt or Glenn.

[4:15 p.m.]

G. Mandziuk: Yeah. There’s no question that the tourism economy of British Columbia has been…. About 60 percent of our economy was based on residents experiencing British Columbia. The goal here, obviously, is to ensure that we get those numbers and achieve those numbers this year. It should work. It should help a great deal. We’ve lost, though, a tremendous portion of the season.

The problem we talked about earlier is stability. The businesses just don’t know, and having such uncertainty in the marketplace is causing a lot of challenges for industry. We’re talking with business every single day and asking about that, and the uncertainty is what’s killing them. While business is never certain — it’s a bit of a roll of the dice — these factors have just become so difficult for them to plan for the future and know if they can actually generate enough wealth this summer to actually carry them through the winter.

To our point earlier about liquidity, the liquidity issue is not…. There is a liquidity issue happening right now, but where it’s going to happen is in the fall-winter season. That’s when it’s really going to come to roost. When we talk about the 20 percent of our businesses, in our region particularly, that are in the insolvency situation right now, that number is going to be substantially higher come the fall if there is not an injection at some time.

There’s no question that B.C. residents will travel in the province, but is it enough?

W. Judas: To add to that, Glenn, I think the one consideration is: will B.C. residents be willing to part with their money, and where are they going to spend that money? If a lot of businesses are still closed, clearly that money is either being kept in people’s wallets or it’s being re-directed somewhere else. But you really need the bulk of tourism businesses open and people willing to frequent those businesses and spend the money.

Are they going to want to stay in a hotel? Will they go into a restaurant or a winery or an attraction? It’s typically the international visitors that spend the most money in our community over the course of the summer, the peak season. They’re the high-yield travellers. I don’t think we’ll be able to capture that same level of revenue, over a short period of time, from B.C. residents. On the other hand, we’re really looking for the borders to be opened at some point, if only between regions — then, ultimately, domestically, and eventually, internationally — to salvage at least part of the season and generate the revenues.

Right now those businesses that are open are barely breaking even, if they’re making any money at all. So that will be critical.

G. Mandziuk: If I could add to that, Walt, the other thing is: are the businesses ready? What we’re seeing is that they had to turn the switch off on their businesses, and by so doing, they had to lay off a lot of staff and a whole bunch of things that go with that. Are they ready for the influx of even B.C. residents to their business? That’s a big challenge right now — just achieving the guidelines that are slowly coming out. That is a big challenge for them right now.

D. Ducs: To add on to that, Glenn, in a small community, it’s a little bit easier to turn the on switch. Right? A lot of them are mom and pop shops, and no longer are they managing in the back end; they’re wearing the aprons in the front end right now. They are doing it.

Also, I want to say that the hyper-local campaign idea…. I think it’s a good theory. However, when you live in a community of 900 people, you can only walk around the block so many times. And 500,000 people or million-dollar populations — you’ve got lots of places to go and lots of things to do and lots of money possibilities. For us, we need to open up and expand beyond hyper-local. With Alberta being so close, we need to start bringing them back in and welcoming them.

B. D’Eith (Chair): Great.

Doug, we’re already at 4:19.

D. Clovechok (Deputy Chair): It’s all good. We could go on forever. That’s fine. I just agree 100 percent with you, Dianna.

D. Ducs: Thanks, Doug.

B. D’Eith (Chair): Thank you so much, everybody.

My apologies to the committee. We’ll have to roll into the next one again. My sincere apologies to everyone. A very important discussion around tourism that will continue in the next panel. Please stick around. We’re going to go straight in.

[4:20 p.m.]

Hi, Shiera. How are you? I just wanted to say welcome. If you wouldn’t mind going ahead, we’d love to hear what you have to say.

Budget Consultation Presentations
Panel 5 – Tourism

B.C. GAMING INDUSTRY ASSOCIATION

S. Stuart: Thank you. Hello, everybody. It’s very nice to see all of you on Zoom. I hope everyone is doing well. Thanks for having me speak today.

Just a little bit of background on the B.C. Gaming Industry Association. Hopefully, you guys all have the PowerPoint that was sent over. The BCGIA was formed in 2015 to help coordinate and represent the interests of gaming operators everywhere. The members range from large, multi-property, multi-jurisdictional operators to small, family-owned, single-property businesses. I’m pleased to say that we are all over the four corners of British Columbia, so there are many in small communities, large communities, etc.

There are nearly 37,000 employed through B.C.’s gaming, entertainment, leisure and hospitality sector, including over 10,000 people directly employed by the gaming operators. I’m not going to go through the membership, because that will take time, so you guys can see the slides. There are quite a few members. We’re only missing three companies that are not members of the BCGIA, so 11 operators are.

Moving to the revenue-sharing slide. In 2018-2019, B.C. Lottery Corp. delivered $1.415 billion in net income to the province. And $982 million of that was produced by casino and community gaming centres, which I’m representing. For each year of the province’s fiscal plan, government will distribute approximately $249 million of that gaming revenue to charities and local governments to provide services across the province that people depend on.

Charities rely on the gaming grants. There have been lots of stories in the newspapers lately about people wondering what’s going to happen with that, in light of the casinos being closed. Gaming revenues are also a long-term source of revenue for B.C. First Nations. The provincial government provides First Nations with 7 percent of BCLC’s net income for the next 23 years.

I’d be remiss if I did not mention COVID, seeing that that’s what we’re all dealing with right now. The impact of COVID, obviously, has been far-reaching across the world and British Columbia as well and really has had an impact on B.C.’s gaming, entertainment and hospitality sector.

Through a mandate, the B.C. casinos had to shut their doors on March 16, and this includes all the hotels, restaurants and entertainment centres that are affiliated with those hotels. What this really means is that as of March 16 of this year, there has not been a dollar of income that has been brought into any of the casino operators in the province of British Columbia, which is basically almost three months now.

The vast majority of workers in all of these casinos and establishments have been laid off. I don’t have an exact number, but it’s probably 90 to 95 percent. Not only has the industry, obviously, been hit hard, but there is a domino effect to this, because the revenues now to the B.C. government as well as the host municipalities will be significantly impacted. We’re not quite sure how much yet.

However, I’m pleased to say that we are in the process of talking about a reopening strategy. The one thing I do want to get across is that the collaboration between the provincial health officer, B.C. Lottery Corp., various ministries, all the operators and WorkSafeBC has been tremendous. Many of us operate in other jurisdictions across Canada, and I haven’t seen collaboration like this anywhere better than in British Columbia. That’s a really good tell to show how everybody wants to open safely and when it’s the right time. Worker and customer safety is our top priority, and WorkSafeBC has been really helpful in making sure that when we are ready to open, we will do what’s best for our employees, our staff and, of course, our customers.

[4:25 p.m.]

Finally, in conclusion, just to remind everybody, the members of the BCGIA are proud to support and be an active, integral part of the local communities where we all live and work. We are proud to provide socially responsible gaming, entertainment and non-gaming amenities that provide good jobs and contribute to the B.C. economy. We’ve also been operating successfully for well over 20 years in B.C., and we look forward to the next 20 years of creating, hopefully, more jobs and economic growth.

Finally, we believe we will continue to be an integral source of revenue for the province as the economy recovers post-COVID-19. I think it’ll be very helpful to get people back to work and to contribute again to the host local government municipalities and to the province of British Columbia. So 23 seconds to go — done.

B. D’Eith (Chair): Very good. Excellent. Thank you.

Next up we have Paul Nursey from Destination Greater Victoria.

Paul, welcome. We look forward to hearing what you have to say.

DESTINATION GREATER VICTORIA

P. Nursey: I’ll be very quick with my initial remarks. Much like the previous guest, our sector has absolutely been devastated, but we want to focus on positive responses.

Again, very quickly, who we are. We’re the official not-for-profit destination management organization for greater Victoria, with 1,000 businesses. We’re really focused on coordinating and creating platforms for our industry for working very well with governments and civil society as a whole to maximize the visitor economy.

I’ll quickly go through the topics. I won’t go through the agenda I’ve presented in the deck. I’ll really speak to the COVID-19 pandemic.

We really have seen about 22,000 of the 23,000 workers in the greater Victoria visitor economy laid off. Regrettably, some are moving into permanent severance deci­sions at this point in time. So we’ve created a task force to seek policy initiatives to ensure the rescue and survival of the tourism industry through the pandemic and then to position ourselves for any kind of recovery, with a focus on a realistic 18-month survival.

I’ve spoken with Minister Beare on several occasions. She has been very receptive. I want to thank her for that. It’s a very dire situation. I think the key here — I’m now on slide 5 — is that we haven’t seen much that’s kind of tourism-specific other than marketing. Of course, it’s been something for organizations like ours now. I’ll express my gratitude later on in this deck, but the unique piece around our type of business is it’s highly seasonal.

As we look forward into 2021 and the next budget, I think the key strategic priority is to keep viable those businesses that were the vessels that created work for employers, and which actually are the product, into next summer. I think this summer we might have a little bit of a travel season. You know we’re focused on local travel.

Regrettably, a U.S. traveller will spend twice as much as a Canadian, and an international traveller will spend three times as much. So even if we replace person for person, the revenue isn’t going to be there. I don’t mean to be the bearer of bad news or to not be optimistic. I think we just need to build a realistic strategy going forward.

On slide 7…. I want to thank the province of British Columbia that announced a $10 million grant for community destination marketing organizations like our­selves. The MRDT was frozen, along with the PST, so we’re grateful for that and hope that the MRDT comes back on line in the fall. It’s vital. Our hotels generally want it. It’s a tool for them, and it’s been very helpful for many years — a bit of a competitive advantage.

Finally, I just want to speak to the work. Obviously, this is Minister Trevena’s area, but Minister Fleming is working within Victoria to really align the stakeholders around a model for the Belleville terminal. It’s been a project that’s been ongoing for about 25 to 30 years. It’s deep into its design phase now and discussions with the federal government. There are new regulations and new requirements around preclearance, and we want to make sure that we’re compliant and that we can keep that vital point of entry open.

Those are my initial remarks. I’m happy to take any questions at the appropriate time.

B. D’Eith (Chair): Thank you very much, Paul and Shiera. We appreciate the presentations.

[4:30 p.m.]

I’m just curious what your thoughts are on the cruise ship business generally, Paul. Of course, this is probably looking difficult. Many of the outbreaks happened on cruise ships, or there were a number of international stories around that. I’m just wondering what your thoughts are on that, given wanting to expand the terminal or do work on the terminal, given the state of the cruise ship industry.

P. Nursey: I’ll be clear. The Belleville terminal is actually for the ferries Victoria Clipper and the MV Coho. It’s not Ogden Point. There is also an idea for a cruise ship terminal. But this is for the vital private sector ferries that connect Seattle and Port Angeles.

B. D’Eith (Chair): Yes, of course.

P. Nursey: But that’s a good catch. I will answer cruises as well, very quickly.

That absolutely is the case. The cruise sector has been working to clean up its act for a few years anyway. There’s a project here in Victoria around shore power, and others. We’re finding, believe it or not, even though the PR hit has been massive, that cruisers are incredibly loyal. They’re rebooking into next year, even more so than I would have expected.

Now, it requires the whole system to be working, including flights and motor coaches and hotels. It’s all very ambiguous at this point in time. But I do think that will be a viable segment in two to three years, because there’s a certain slice of the population that actually prefers a cruise holiday to other types of holidays.

B. D’Eith (Chair): Questions from members.

I have a question for Shiera. I guess with music and hospitality and other issues, part of the issue around the casinos is that often the demographic of people going to casinos is sort of in the higher-risk area for COVID-19 and just the nature of congregating.

I’m just wondering what measures…. Obviously, you’ve been working very hard to try to figure out a pathway back. I’m just wondering how you’re doing with that and what you need to help in terms of the Finance Committee.

S. Stuart: That’s a great question. As I mentioned, we have some great partners we’re working with. B.C. Lottery Corp. helped. WorkSafeBC has been terrific, as well as the office of the provincial health officer, as well as our Ministry of the Attorney General. We work really well.

We believe that there’s a very safe way to open casinos. Once again, it’s going to look different. It’s not going to be a full opening whereby every machine is working, the tables are full, and the restaurants are full. That’s not how it’s going to look. We are looking to other jurisdictions where things are happening, like New Zealand and Las Vegas and other places in the U.S. right now and taking the good and the bad from all of those as well.

We’re also looking at things like player cards for tracing, where we can actually track people who come in. Yes, there is an older population. I forgive everybody who’s going into a casino who’s not older, but that’s usually, kind of, the average age. We are really focusing on the health and safety and the cleaning. We’re hiring third-party cleaning crews. We would never open if we didn’t.

We really believe that there is a very safe way to do this, by monitoring numbers of people that come in as well as social distancing. We’re even having discussions right now — forgive me; I don’t have all the details — on plexiglass and barriers as well, to make sure that people are not too close together. Masks and various forms of PPE will be mandatory for every employee and staff person on the entire property.

I’m not the expert. I’m not the health and safety person. But I can assure you that there’s a team of very, very smart people who are actively working on this. They’re working in conjunction with WorkSafe and the provincial health officer. So far, everybody seems to be on the same page, which is looking really good.

B. D’Eith (Chair): Thank you very much, Shiera.

R. Leonard: I just want to say thank you very much. I appreciate your comments around the collaboration amongst all of the players to make sure that as you open, you open safely and cautiously and that you make sure your customers not only will be safe but that they’ll want to come in and be a part of that sector again.

I wanted to just put on the record that it’s an important aspect of how we open up in this phase 2 restart, so thank you.

S. Stuart: Thank you. We couldn’t agree more. Health and safety is our number one priority.

[4:35 p.m.]

D. Barnett: Shiera, we’re doing the 2021 budget process. I’m sure you’re like the rest of the tourism industry, which has taken a massive, massive hit. Listening to the credit unions today and what their fear is and how many keys they may get back in the devastation….

Do you feel that all the casinos will be able to reopen, or are there a few that need some financial assistance, either through taxation relief or whatever? Is there any massive help going to be needed in 2021 for your industry?

S. Stuart: You know what? That’s a really great question. Thank you for that.

Once again, I don’t want to speak on behalf of all the various CEOs who will know more than I will, but what I can tell you is that a lot of the properties and the casinos have taken advantage of various of the federal and provincial subsidies that have happened, whether it was the wage subsides or anything to do with the rent stuff that has come out. There have been some programs in place, which have come both from the B.C. provincial government and the federal government, that I know various operators have used to help them get through this.

I also want to do another shout out to B.C. Lottery Corp., who have done a very good job of working with us on other aspects to make sure that we can remain viable to open when it’s safe to do so. As I mentioned before, we haven’t made a dollar since March 16.

The other thing I will say is that there are some restaurants and hotels throughout the province now that are affiliated with casinos that are going to start to open in June. These are the ones that have separate entrances, obviously, where you don’t have to go through a casino to get in. They’re going to start to open, which means we can actually bring people back, which we’re really excited about. In all the different casinos, there’s a few of them opening their restaurants.

To answer your question about will all of them be able to open, our hope is that the answer is yes. As of right now, we haven’t heard any specific property or property owner state that they will not be able to reopen in the coming months. However, as to what the uptake is going to be, looking at the rest of Q3,

Q4, with the parameters that are in place in regards to the social distancing parameters and not every machine being used, I can’t really answer that question yet. But I can say that we’re hopeful, and I think that we’re working with some really terrific people in all those areas I had mentioned collaboratively, who all want us to be successful. I think that that’s going to take us a long way.

So far, fingers crossed, but I think we will get through this.

B. D’Eith (Chair): Wonderful. Any more questions from members? Okay.

Well, seeing none, I wanted to thank both Paul and Shiera for their presentations. I know it’s obviously a very, very difficult time for both the tourism sector and the gaming industry. We certainly thank you for everything that you’ve done during the crisis and also preparing for recovery. What I do like to see is how resilient everyone is and how everyone is working so well together.

I think you’ll get that same spirit from this committee, as well, moving forward. Thanks again.

S. Stuart: Thank you.

B. D’Eith (Chair): If we could take a short recess until 4:50. We will do our last presentation for the day.

The committee recessed from 4:38 p.m. to 4:50 p.m.

[B. D’Eith in the chair.]

B. D’Eith (Chair): Scott, if you could please limit your comments to five minutes, that would be wonderful. Please go ahead, Scott.

Budget Consultation Presentations

SCOTT HARRISON

S. Harrison: Thank you very much. It’s lovely to talk to you all this evening, coming from the traditional territory of the Coast Salish people.

I’m on council in Qualicum Beach, but I’m just sort of speaking more for myself here and more broadly going over economic development in smaller communities.

Firstly, of course, we live in very interesting times right now, as the old phrase goes. A lot of changes are happening. One of the biggest changes is looking at the change in how people are going to work. A recent study was done by Stats Canada which showed that, I think, over two-thirds of workers would prefer to work more from home.

As we move more to a hub-and-spoke model, as opposed to a centralized model for how an office functions, one of the things I just wanted to highlight — and I’m not sure exactly how it impacts, but looking at how to potentially invest in the diversification of smaller communities’ economies…. If that hub-and-spoke is not determined on a specific postal code, where could the spoke end up?

If it’s not necessarily in the suburbs or the Greater Vancouver metropolitan area, you can then look at other communities in British Columbia. For younger working families, especially if they’re in professional services, they can work pretty much from anywhere if they have strong Internet connectivity. That’s one of the things I just wanted to highlight as an opportunity as we get back to whatever the new normal is going to be. There is going to be some change in how offices function. Looking, then, at how to seamlessly transition people to areas which have lower home prices, while also relieving pressure in housing markets in larger metropolitan centres, might be a benefit to the province as a whole.

I also want to highlight the benefits of the community health centres the province is unveiling. That’s great to see. One thing, too, particularly for smaller communities, is if you can get better primary care, you can reduce the demand on urgent care subsequently. For example, the cost of a knee replacement, I believe, in Canada is roughly $140,000 or $150,000. That’s equivalent to the annual salary of a nurse practitioner. So if we can have a 10 to 15 percent reduction in some surgeries which are brought about by poor habits, poor dietary habits, lack of exercise, lack of recreational infrastructure, there could be significant cost savings to the provincial budget.

Grants. As we start looking at how to get back to normal, a big question for a lot of local governments will be: what will the grants look like? One thing I would want to highlight…. We’re actually not in this position, but other municipalities are. They might have a lot of cash flow issues right now. They might be burning through a lot of cash for operational costs. You might want to look at moving away from a more traditional model for how the funds are allocated and either putting up more money at the provincial-federal contribution or having a long-term loan as part of that contribution.

Say you’re doing a 50-50 split. Do 80 percent up front for the provincial portion, and 30 percent is paid over ten years, with an interest rate of zero to 1 percent. That way, communities who have very little cash to apply for a grant right now won’t be locked out, and you won’t have the problem of wealthy communities who have strong cash flow balance or a lot of reserves getting a disproportionate amount of the grant funding.

Rural dividend fund. I would like to highlight that that was $25 million for smaller communities, economic development and also First Nations. There were some unintended consequences to that being cut. I would also highlight — and I’m not trying to be too elbows out — that it was the only resolution from the floor at the 2019 UBCM convention, and it was supported unanimously.

Finally, before that, there have been one or two interesting decisions in our community, and that’s maybe for a conversation later on. I know I reached out to John Rustad and FLNRORD about some things, just about an opportunity for some value-added wood manufacturing.

Overall, there are a lot of changes going on. I see I’m running out of time relatively soon. You guys have probably put in a very long day. That pretty much covers the big points, looking at how rural communities can help larger metropolitan centres as we transition out of this and some of the opportunities that exist to both benefit larger municipalities and smaller communities as well.

B. D’Eith (Chair): Thank you very much, Scott. One of the things that seems to be echoing every day we meet is the need for access to broadband Internet in rural and remote British Columbia. What you’re talking about in terms of decentralizing some elements of the workforce…. That would allow people to move in to live in, potentially, areas where housing costs are lower, which is great for them.

[4:55 p.m.]

I guess the challenge, of course, then, is it gives a disproportionate advantage to communities that have the high-speed Internet versus those that don’t, and could further create more divides.

I appreciate exactly what you’re saying. But it also…. We’ve seen, with the pandemic, that it’s shone a light on a few things that are deficient, like people who have to go to school remotely or work remotely. All of a sudden, well, you don’t have high-band Internet, and Zoom doesn’t work properly.

S. Harrison: Yeah, that’s an excellent point.

B. D’Eith (Chair): Thanks for that, Scott, and thank you for your other comments.

Any other questions from members?

M. Dean: Thanks, Scott. Yeah, working remotely is really beneficial for my community. It has really cut down the congestion, which goes from my west end to my east end. But I have a couple of concerns about it.

Firstly, I worry about us all having good protocols about working at home and making sure that we’re doing it and taking care of ourselves well. Secondly is the burden disproportionately on women for anything else. If they’re working from home, then they’re doing everything else, and just all of those levels of demands. I just wondered if you had any tips for us on those dimensions.

S. Harrison: Good question. I also want to highlight that there’s a lot of good work with the provincial-federal partnership on enhancing rural broadband. I just wanted to flag that. That’s a good partnership that I think the government should be proud of.

For working from home, I think you are correct that you’re seeing a disproportionate amount of women doing more work. Also, when you’re looking at the sectors that are disproportionately impacted, at the early stages of the pandemic, it was women who were disproportionately impacted over men.

I don’t have a good tip on how to fix that beyond looking at continual investments in child care. The other thing with COVID-19 is: what does child care look like? Where does it happen? How do schools function? All these things start piling on top of each other.

I do think highlighting how you ensure, when you’re at home, that you can actually focus on the work and maintain the productivity levels you would have otherwise, without being pulled in ten different directions simultaneously, is a great one. I wish I had an answer, and I honestly don’t.

B. D’Eith (Chair): Yeah, it’s about adapting to a new environment. I know my children had to do that for university and for school, maintaining some sense of focus when the TV is there and the distractions or all the video games and all that’s there.

Were there any other comments from members?

Seeing none, I wanted to thank you very much, Scott, for your thoughts. I appreciate you making the presentation and wish you the best of luck. Stay well. Stay safe.

With that, if I could have a motion to adjourn for the day.

Motion approved.

The committee adjourned at 4:58 p.m.