DEBATES OF THE LEGISLATIVE ASSEMBLY(Hansard)
TUESDAY, MAY 6, 1997
Morning
Volume 4, Number 16
[ Page 3105 ]
The House met at 10:05 a.m.
Prayers.
I. Chong: Visiting today in the gallery -- or I believe they are in the gallery -- are about 56 young students from Willows Elementary School; actually, about 25 of them are from the school, and 27 students are visiting from Outremont, Quebec. They will be touring the Legislature today. I understand they're here with Mr. Barrie Hughes, a teacher from Willows, and Ms. Ruth Frigon from Quebec. I would ask the House to please make them welcome.
BUDGET MEASURES
IMPLEMENTATION ACT, 1997
(continued)
On section 18 (continued).
K. Krueger: As I understand it we're discussing sections 18 through 22 at the same time. My concerns continue to centre on the taxation of auto-fuel propane, and that's principally what I'd like to speak about.
Mr. Minister, we've heard the several arguments you've been putting forward on this issue for the past couple of days, and we've been speaking about it. The first one seems to be that this is really other legislation that we're dealing with, legislation that has been in place for some time and which was amended a couple of times. Now, according to that previous legislation, the sunset clause is being allowed to kick in on propane but is being held off on the other fuels by Bill 2. This argument almost seems to suggest that the tax coming into effect on propane is an inadvertent event. If that's so, let's fix it.
I have to tell you, Mr. Minister, that this is really bugging people. This is a major issue to a lot of people. As I mentioned yesterday, it's considered a betrayal and a reversal by government, and a matter of government having tricked people. So if there's anything at all inadvertent about this tax being applied to auto-fuel propane, let's fix it. It's easier to do it right now than it will ever be. People really can't afford any more taxes. People voted in the May 1996 election believing that they weren't going to be facing more taxes. As I know you're aware from the correspondence I've forwarded to you, let alone what my colleagues have forwarded and what you've probably received on your own, this is a major issue to people out there.
With all due respect, taxpayers did not hear the New Democratic Party saying that this was going to happen to them. It wasn't a factor as they made their voting decisions. To say that taxpayers were aware because five years ago the government of the day implemented this sunset provision is really not a fair argument. For example, people have seen commitments made to municipalities and enshrined in law in 1994 reversed by the changes that we debated earlier in this bill. Obviously municipalities can't even rely on an accord that was signed last fall at the UBCM convention. It's hardly fair to say that taxpayers ought to have known this was coming because five years ago the government put the sunset clause in. The same taxpayers also believed the New Democratic Party's commitment that it was delivering its second balanced budget at the time of the 1996 election. It is not fair to say that when they were making their decisions to do conversions to propane, these propane users knew, or in any way accepted, that a tax would be coming into effect on their auto-fuel propane in 1997.
Another argument we've heard the Finance minister voice repeatedly is that this exemption is no longer needed because the infrastructure is now in place. I have to tell the minister that this is a tremendously offensive argument for people. It sounds really cynical. From the way they hear it, it's an argument: now that we've conned you into putting the infrastructure in place and conned your customers into using this fuel, we're going to pull the rug out from under you, because we've got you where we want you. With regard to the other alternative fuels, it will make people wonder whether the same thing will happen to them. Presumably it will, if that's the way this government thinks. Once you get a lot of taxpayers out there relying on a certain fuel and you've built up an infrastructure to service it, then it's okay, in the NDP view, to suddenly change the rules and leave people high and dry, paying taxes on a fuel that they've spent money to convert to, believing that they were being encouraged to do so by the things that government is doing.
I know that the minister said there had been discussion from user groups and that the user groups' input was heard. At this moment my question for the minister is: what discussion came back from the users? Surely they didn't embrace this idea. I know there has been some statement that people in Victoria thought it was a more modest tax -- I think that's what the Finance minister said -- than what they might have been expecting. But can we hear what the discussion was -- a synopsis of the input from the constituents from where a lot of us come: the interior of B.C., the North Peace River, the South Peace River, Kamloops-North Thompson, Kamloops, Yale-Lillooet, Cariboo South and Cariboo North, all through the interior, and the Okanagan and the Kootenays? What do the user groups say to the Finance minister about this change?
[10:15]
Hon. A. Petter: The member raised a number of matters. I'll try to be responsive to them as best I can, although much of this territory was covered yesterday.First of all, the point is not that the propane tax is inadvertent. The point is that it was advertently decided in other legislation at the time that legislation was passed some five years ago. The advertent decision in this legislation is to deal with some collateral issues so as to protect propane users from unintended consequences of that advertent decision, and also to advertently decide to continue an exemption for fuels that otherwise wouldn't be exempt: methanol, ethanol and natural gas. So the point is not one of advertence; it's a question of what was decided, when it was decided and through what instrument it was decided. The decision to have a sunset clause was taken at another time in other legislation, and it is that decision that results in the imposition of what is a modest tax on propane. That's point number one.
Now, point number two. The member suggests that this comes as some great shock and surprise to users. I think the evidence speaks strongly to the contrary. I gave some
[ Page 3106 ]
of that evidence yesterday, but let me add a little bit to it. Yesterday I indicated that through various news releases the government had indicated it was reviewing the propane issue because of the legislation and had engaged in consultations as a consequence of that over the past number of months. Having made a decision, we decided to further delay the imposition of the tax in order to afford people an opportunity to accommodate themselves to the tax becoming imposed on propane.
So it was certainly something that people were well aware of in the last six months or so, but they ought to have been -- and I suggest that they were in fact -- aware of it because of the previous legislation. The indications concerning propane conversions in the last number of years bears that out. While propane conversions were at a rate of around 4,000 to 6,000 a year in the period 1991 to 1995, in 1996 -- the year preceding the December news release -- they dropped substantially to 1,300, which suggests to me that the market was aware the tax was coming or at least was aware of the uncertainty around the possibility of the tax coming. I suggest to you that the uncertainty was augmented by the fact that some people believed, incorrectly as it turns out, that the tax that was coming was an equivalent tax to the motor fuel tax. For that reason, they may well have held off on a conversion until they had some certainty. The indication on conversion rates certainly suggests that the market was well aware that something was going to happen at the end of 1996. Indeed, they should have been aware because of the legislation that provided for the imposition of a tax.
It was for that reason that we undertook the consultation process. As a result of that consultation process, we decided that it would be inappropriate to move to an equivalent level of taxation for propane to that which applies to other motor fuels. Instead we decided to allow the legislation to provide for a default to the social service tax so a much lower rate would apply, and that would continue to provide an incentive for propane users and an incentive for people to convert to propane. I expect, now that we've established that certainty and that certainty is in place for a period of at least three years
Just to give the member some sense
So by comparison with other provinces, by comparison in terms of the tax rate for other motor fuels, propane remains a clearly preferred fuel in this province from a tax point of view. And now we have provided some stability and certainty concerning the preferential tax rate. I expect that the rate of conversions, which dropped off precipitously in 1996 -- which belies the member's suggestion that people were unaware that something was happening -- will once again start to climb as propane distributors and others start to encourage people to convert, based on the certainty that came out of the decision following the consultation process to not make a change and to allow the legislation to simply come into effect at the social service tax rate, not at the motor fuel tax rate.
F. Gingell: I wasn't going to stand and thank the Minister of Finance for this tax cut, but I accept it as one. I am standing to seek leave of the House to make an introduction.
Leave granted.
F. Gingell: In the gallery is Bruce Davie, a citizen of sunny Tsawwassen spending the day in Victoria. I ask all members of the House to make him welcome.
K. Krueger: The minister reaches out for kudos for delaying the change from this tax exemption. We gladly give them to him. We simply ask that those decisions, which he's looking for some congratulations for, be extended -- that the same benefit be given indefinitely to propane consumers and the industry that services them, along with the exemptions for the other auto fuels.
To cite the way that the conversions have dropped off over the last while seems to me to argue in favour of what I'm saying -- that it'd be a good idea to continue to extend the exemption on auto-fuel propane. Three years go by very quickly. Three years from now we'll probably have had a Liberal government in place in British Columbia for some time. People, when they make these conversions, expect to be using the vehicle on propane for a long, long time, not just for three years. That goes by very quickly. I doubt very much that it'll encourage a lot of consumers to make the decision now to do a propane conversion.
But the fact that the Finance minister has documented that conversions have tapered off dramatically -- which he believes was as a result of the consumer and the industry knowing that these changes were coming -- seems to me to be a warning to the Finance minister, depending on what the goals are. If the goals here are simply to try and raise money to cover off the deficits and make up for the shoddy budgeting of the last six years in office and reach out for another $8 million any which way the government can grab it, well, that's one thing. But if the government still accepts, as we believe and as many people believe, that it's smart to encourage British Columbia consumers to use propane in their automobiles because it's environmentally friendly, because it's produced domestically, because we have an abundance of natural gas in British Columbia -- when natural gas is processed, propane is a by-product -- and because we can use it so that people aren't burning gasoline and diesel fuel and polluting the environment by doing that
Certainly that's what the taxpayer wants. I don't think there's any outcry from the non-propane-using motoring public about these alternative fuels getting a break in taxation. As I said before, the taxpayers who are using propane -- and they did go to the expense of a conversion -- feel tricked and betrayed. I don't think any government wants that. Certainly we in the official opposition don't want that at all.
The minister has talked about the concessions that have been made in the past. I'd like him to seriously consider a concession now: a three-word amendment to this act. It's something that would make a great deal of difference to a lot of people in British Columbia. I'm going to make a motion to amend this bill -- just three words. This will not involve an expenditure by the Crown; rather, it'll involve letting the
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taxpayers keep their money in their own pockets. These aren't government funds to be expended; these are people's own funds. Up until now, they've been allowed to retain at least this much in their pockets, and they want to keep it that way. It's our duty to try and bring that about for them.
I propose an amendment to section 19 by adding the three words highlighted in underline, so that section 3.1(2) will read:
[3.1(2) Fuel described in subsection (1), and propane, are exempt from tax payable under this Act when purchased to propel a motor vehicle.]I respectfully submit that, and I ask that the Finance minister allow it. Certainly I'll be documenting his response to the many people who've written about this issue.
The Chair: Hon. member, do you have a copy of that for the table, please? Sergeant-at-Arms staff will bring it forward.
Hon. A. Petter: I think the hon. member can anticipate, based on the rules of this House, what my response would be. The member's amendment, as I understand it, is an attempt to introduce into this legislation a new tax exemption that would indeed jeopardize revenues that are due under other legislation to the Crown. For that reason, it is wholly out of order and inappropriate.
The Chair: Hon. members, the Table is waiting to receive a copy of the amendment.
Hon. members, having read the amendment and listened to the argument, I have to rule that the amendment is out of order under section 84(7) because it does indeed extend the object and purpose of the section.
Hon. A. Petter: Now, in addition to the member's attempt to creatively breach the rules of the House, there were some substantive points that I want to respond to.
If the intention here were to simply raise revenue for the government, hon. member, then the simplest thing in the world would have been to subject propane to the same tax structure as other motor fuels, or alternatively, to simply bring the level of taxation on propane up to that of neighbouring provinces like Alberta -- 6.5 cents a litre.
But that was not done. What was done instead was to allow the social service tax to apply, as was previously decided to occur by this House some five years ago, with a further two-month grace period. On an energy-equivalent basis, that leaves propane at one-quarter of the rate of taxation for conventional motor fuels and therefore continues the public policy of favouring propane.
It also, though, creates a further advantage, or continues it. This legislation will enable an even greater advantage for other fuels that have not been as fully utilized as they might be and that have greater environmental potential. I guess natural gas is chief among them and has the highest use, but we also discussed other fuels yesterday -- ethanol and methanol -- that have had very little penetration of the marketplace but, hopefully, will have greater penetration as a result of the legislation we're debating today. This legislation, if passed, will continue the full exemption from taxation for those fuels, and that will hopefully encourage residents to look more at natural gas particularly, but also ethanol and methanol, in the future.
So this is not about raising revenues; this is about providing a fair and equitable tax structure. The decisions around propane were not taken in this budget. They were taken in association with decisions made by this House some five years ago. The tax advantage for propane is still huge in relation to other fuels, and the tax advantage for natural gas, ethanol and methanol -- which are environmentally preferable, even to propane -- reflects the need to encourage their greater use. So from all those points of view, this is simply good public policy. The fact that it does raise some revenue for the Crown is an additional benefit that will assist in meeting priorities such as health care and education.
[10:30]
R. Neufeld: I think the points the member for Kamloops-North Thompson put forward are excellent. I just want to tell the minister that when he talks about B.C. having a lower tax rate on propane than our neighbouring province, Alberta, that is in fact quite true, and I appreciate that. But the fact that all our other taxesI'd like to ask the minister what the expected revenue is from the tax on propane. What is the expected dollar revenue for British Columbia?
Hon. A. Petter: As I indicated yesterday, the annual tax from propane will be in the range of $8 million. In this fiscal year, it will be somewhat less than that -- something in the neighbourhood of $7 million -- because the tax is not becoming effective until June 1.
R. Neufeld: I apologize for not being here to receive that number. Would the minister say that the $8 million or $7 million expected revenue is a new tax or not a new tax? He referred to it as taxation.
Hon. A. Petter: I think it was a tax that was authorized some five years ago to come in on April 1. The only thing new about it, therefore, is that it's not coming in until June 1. So the tax is not new, no. It's an old tax, one that was authorized and due to come into force. The only thing new is that we've delayed it coming into force for some two months. That's the only new aspect to this tax.
R. Neufeld: Well, only a socialist would come through with that kind of an argument and try to expect the people of British Columbia to believe it. You know, it's sad that we use these kinds of words. It's sad that the government of British Columbia uses this kind of rationale to tell people, "No, no new taxes," then turns around and says: "This is going to raise $7 million, but really, this was a tax that was authorized five years ago." I mean, that is so absolutely unbelievable. It's difficult
Interjection.
R. Neufeld: If the Minister of Human Resources would just listen, maybe he'd learn a few things about taxation. It might be a little bit difficult.
It is so far from the average person's mind to think that a piece of legislation that was brought into this House five years
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ago would authorize a tax five years hence. To suggest today that people knew about it five years ago, so it's really not a new tax, is trickery. It's
An Hon. Member: It's a sham.
R. Neufeld: It's a sham, exactly.
I can't use the words -- because they're really not parliamentary -- to explain the process that this minister is using to initiate a tax on propane. It is absolutely unconscionable for the Minister of Finance to stand up in front of the people of British Columbia and say: "No, this is not a new tax, because we passed legislation five years ago that said we were going to do this." You could do that with almost anything. Telling people that for three years you're not going to have any tax increases is nothing but a lie. I'm sorry, I guess I shouldn't use that word. It's not the truth; it's absolutely not the truth. I don't know how people
For those folks that are paying this tax on this propane as of June 1, it's a new tax. It's a brand-new tax, regardless of how you word it, regardless of how the legislation was put forward and regardless of what happened five years ago. To think it's anything different is absolutely silly. And for $8 million
I asked two questions yesterday that I never really got an answer to. One was: did the minister consider what was going to happen to education because the tax is now on propane and most school buses run on propane? Did the minister consider the effect that would have on school district budgets and relate to the Minister of Education that he should put through an increase for those school districts that use a lot of propane?
Secondly, I want to know
But I would like to know: how much investment has gone into infrastructure around the province -- as the minister talks about, again some kind of a socialist form of looking at financing -- to dispense propane fuels that would be directly associated with no tax on propane?
Hon. A. Petter: Well, I thank the member for his rant. Let me start with the question of this being a new tax or not.
R. Neufeld: Let's hear your rant.
Hon. A. Petter: I will give you my answer. The member suggests that this legislation or this government has initiated this tax at this time. That's simply not true. The only thing that's been initiated here is to defer the application of the tax for two months, through an order that was done, and to initiate a further exemption for fuels other than propane. The decision to impose the tax was taken in previous legislation, as the member well knows.
Let me quote from the Tax and Consumer Rate Freeze Act that was passed by this House last year: "
So if the member doesn't accept my definition of new taxes, if he doesn't accept the logic of new taxes, can he not accept what is a new tax? He can certainly accept the definition of a new tax under the legislation that imposed the tax rate freeze, on which the government based its commitments to freeze taxes. That legislation very clearly says that new taxes do not include those taxes that were previously authorized -- and in this case, they were more than authorized; they were imposed -- albeit five years hence under that legislation.
On the other questions the member asks, yes, the propane exemption has been in place for some time, although the sunset provision that I referred to was introduced for the first time, as I understand it, some five years ago. Prior to that, the exemption was one that did not sunset. In that period of time, there has been a development of a distribution network. As I understand it, the decision some five years ago to continue the exemption, albeit for only five years, and to have the tax come into force at this time was one that was designed to encourage consumers to make conversions but also to encourage industry to continue to expand its distribution network and to thereby provide access to propane for consumers.
The member doesn't like that explanation. I'm sorry. That was the rationale, as I understand it. Hopefully, the evidence would bear out that it has occurred, because, as I indicated yesterday, the price differential at the pump does not fully reflect the benefit of the tax compared to other provinces, which suggests that the industry has taken advantage of some of that tax break. Hopefully, the advantage that they've taken has been reinvested in the distribution network in incentives to consumers, other than price incentives, to make these conversions.
So there you have it. That was part of the rationale: to encourage a broadening of the distribution network, which had been building up since 1982 as a result of this incentive, and to encourage consumers to make conversions as well. There is still a strong incentive in the previous legislation by virtue and as a result of the fact that the tax is still one-quarter of other fuels on an energy-equivalent basis. Therefore industry and consumers continue to enjoy benefits from using propane in terms of the tax structure.
The other point I make, however, is that the tax here is a relatively small factor compared to other considerations -- namely, the price differential of propane itself as a commodity. That obviously has a major impact, as well.
R. Neufeld: I appreciate the minister's explanation of how he thinks this is not really a new tax and also of the
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incentive that was given for industry to invest in infrastructure around the province. I guess we could beat this around for days. But I suggest to the minister that using the rationale you've used on those two points only demonstrates further to me why 61 percent of the people do not believe in socialism in British Columbia. Because they just don't accept that kind of rationale. It's a new tax; it's an absolute new tax.
In my constituency I received hundreds and hundreds of letters, cards, all saying: "Do not tax my propane." I wish I had one here, but I sent them all to the minister's office. I'm sure that each member in the House received probably hundreds of those letters and petitions from different people: "Please do not tax my propane." When you looked at those kinds of cards that were signed by people, when you looked at the petitions about taxing propane, it must have become very obvious to the minister that people felt it was a new tax. They didn't think it was some magical thing that happened five years ago. They were under the impression it was a new tax. As I remember, they always said: "Please do not tax my propane." I got hundreds of them.
So I assume, going back to my old argument, that it is a new tax. We do have a difference of opinion there. I think most of the people out there that use propane feel it is a new tax too, simply by the form of the letter they wrote to the minister. Could the minister tell me how many letters and how many petitions he received in his office or through the Minister of Environment's office in regards to "Please do not tax my propane"? Did you receive 100, 1,000, 2,000 or what? What relationship is that in percentage terms to the number of people that use propane as a motor fuel in the province?
[10:45]
Hon. A. Petter: I don't know the number, but clearly there were a great number, particularly of the little cards or petitions that were circulated at the pump by propane dealers to customers, saying: "Do you want your propane taxed?" A lot of people signed those and sent them in. I'm not surprised. If I were a propane user, I might have signed one myself.But that's not really the point. The point is whether this results in a fair decision. I think most of the people who signed those cards were under the impression -- as many in the industry were, as I found out throughout consultation -- that what was going to happen as a result of the legislation was that the motor fuel tax would be applied to propane. There was a large degree of concern circulating around the industry -- and no doubt through the industry to customers, who were told they should sign these petitions and did -- that what was going to happen was that they were going to be taxed for propane in the same way they would be taxed for gasoline.
That's why, when we went through the consultation process and it became clear that that was the concern and that the government was prepared to consider having the tax come in at the social service tax rate, there was, in my judgment, a high degree of relief from the industry, certainly, and from consumers, I suspect. In fact, the leader of the third party, who spoke yesterday, indicated -- in a rather disparaging way, I thought, but nonetheless indicated -- that there had been considerable relief among people in his constituency and among propane users that the tax rate was one that was seen as a reasonable level compared to what people had feared.
I think a lot of the excitement around this issue was motivated by uncertainty and incorrect expectations concerning what the government's intentions might be. When people were reassured that the government's intention was not to do anything other than to allow the legislation to come into force, which would in turn result in the social service tax rate, then we heard reactions like the one I quoted yesterday. The president of the Capital Region Taxi Owners Association said that with propane back to 29 cents per litre, a 2.2 cent tax doesn't look too horrendous. He thinks it's a pretty fair deal.
Interjection.
Hon. A. Petter: That's not an editorial. That's a direct quote.
I guess the other factor that the quote points to is that a lot of the excitement that was motivating people at the pump to sign these petitions -- and other members referred to this yesterday -- was the unusual fluctuation that occurred in prices over the winter period. Propane prices suddenly shot up to levels that were very high indeed -- 49 cents or 50 cents a litre. It was in that environment, with that uncertainty, that a lot of the petitions were signed.
Most of the reaction I have received, certainly from industry representatives and from those who have been following this issue -- consumer advocates and the like -- is that while everyone would prefer there to be no tax whatsoever, once they understand that all that's happened here is that the previously authorized tax is being imposed at a social service tax rate, once they understand that this leaves B.C. as the lowest-taxed province in terms of propane, once they understand that propane enjoys a fourfold advantage in terms of tax structure over other motor fuels, and once they understand that there is an intention on the part of this government to continue to provide a full exemption for other motor fuels that haven't got a fully developed distribution network like propane does, then a lot of the excitement and concern gives way to the kind of comment I just quoted from the representative of the Capital Region Taxi Owners Association.
R. Neufeld: Like I said, we could debate this issue for days and really not get anywhere with the minister. He seems to be determined. I just want to put on the record that people are, of course, going to be relieved and are going to write you a letter after assuming that they were going to get hit with 10 cents a litre and really only got hit with, depending if the price of propane stays stable, 2.5 cents a litre. Obviously, everyone's happy.
It's the same with personal taxation. If you went out to people and said, "Hey, we're going to raise your personal taxes by 10 percent," and then six months later you say, "Oh, my goodness, we're only doing it by 2 percent," people are obviously going to be happy. They were really going to take a hit in the first place, so a smaller hit is a little bit better. That's human nature.
The fact remains that those people who use propane feel that this is a new tax, and your letter from the taxi association, as you read it into the record, very much indicates that this is a new tax that they had no thought of having to pay before, even though it was lower than what was first suggested by the minister or by the government of the day when they flew their trial balloon.
That, in fact, is how people feel across the province. You can talk about what happened five years ago until you're blue in the face. To the person who pays at the pumps, when they now see a 7 percent sales tax on their bill, that's a new tax. It's an absolutely new tax to them, and it will always be a new tax. You can try all the trickery you want. You can try all the nice words and all the nice paragraphs to say how it really isn't a new tax. People will remember the issue around the Premier
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standing up and saying, "No new taxes," and you come along as the Finance minister and initiate new taxes. That's exactly how they feel, and that's exactly what the public is going to assume this to be: another broken promise by a government that just can't seem to handle the financial situation in British Columbia.
Hon. A. Petter: I just have to correct the record, member. I did not initiate this tax. If there had been no reference in this legislation to propane, the only thing that would have happened is that people who use coloured fuels would have been disadvantaged in reference to propane. If the Minister of Finance had said nothing about propane, all that would have happened is that the other legislation would have come into force. There was no initiation of anything in this year's budget or budget legislation with reference to propane, except to relieve propane users from unintended consequences that result from legislation passed five years ago. I can't change the facts on that, but I can correct the record. The member continues to insist that something was initiated either in this legislation or by me as Finance minister, and that's simply not the case.
I. Waddell: I'm interested in this energy area, and I'd like to ask the minister some questions on it, as well, and to discuss it just very briefly. I find the debate that's going on -- like, it's a new tax; no, it's not a new tax; new tax; not a new tax -- pretty sterile. I mean, you just sit there and yell at each other over whether it's a new tax or not a new tax.
Interjections.
I. Waddell: Now they've all perked up, Madam Chair. They have all perked up, and instead of yelling at each other
Well, on our Aboriginal Affairs Committee, some of the members across were members. I see the member right next to him; I don't know if it's Reform or Liberal there. The member from the Okanagan is sitting next to him, but I don't know if that's his seat. Is that his seat, or is that for the TV cameras? Anyway, he was with us, and the member for Matsqui and seven members from our caucus. We went up to the Peace River. It's a wonderful area. As a matter of fact, the member welcomed us, and I think we had dinner with him up there. It's a wonderful area, and he's got an impressive office up there, I might say.
Having said that, I nevertheless understand that this is an area very close to Alberta. The border is just down the way, and you hear constant refrains about us being overtaxed in B.C. versus them being undertaxed in Alberta. I don't know if I heard the minister right, and I'll ask him to repeat it again for the House. Is it 2.2 cents a litre in B.C. and 6.5 cents a litre in Alberta?
He also said, as I understand it
Interjection.
I. Waddell: The member yells that it's socialists there. I don't know what this has to do with socialism. I mean, we're talking about government policy. We're talking about trying to get people
An Hon. Member: Oh, Liberals.
I. Waddell: It was the Liberals who started all this taxation -- and using the taxation, actually, as a social tool. That was kind of federal Trudeau liberalism. That wasn't
So we've got a lower bite for taxes on alternative fuels. Propane is a better alternative fuel than using oil, because we thought -- at least we thought it in the eighties -- that we'd run out of oil. We still know that we will run out of oil. We will run out of those fuels, and Canada has a plentiful supply of natural gas. Of course, up in the Peace River area there's lots of gas, and it's very helpful for our province.
I heard the member up there say that there should be more money. I've heard him say in the House that we take that resource and use it for the benefit of all people in the province, providing good health care and good education and encouragement for our young people in job creation, and so on. We use some of that money, and some of that benefit should go back to his area. I listened to him carefully when he talked the other day in this House about the bumpy roads, and I agree with him on some of those matters.
But I can't agree with him on his position on this matter, and I'll tell you why. I think the industry has a different position. What I gathered when I was the Energy critic for my party in the federal Parliament
Interjections.
I. Waddell: No, they want certainty. Now, this bill was put in, as I
Interjections.
I. Waddell: Stability, certainty and
Interjections.
I. Waddell: Well, you know, the members opposite
This raises $7 million. The federal Liberals cut $400 million from B.C.'s moneys last year and $200 million this year: $600 million. There's the Minister of Finance, who has to make all this system -- this good society in British Columbia -- happy. The people opposite are saying: "Balance the budget, balance the budget." He's got $7 million here and the shortfall
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because of their federal colleagues, and now they're giving him a rough time. I don't understand that. I'd like the minister to comment.
So I will just end by saying that I'd like the minister to comment on the notion of the other provinces: the notion of certainty and the notion of the transfers in the budget.
Hon. A. Petter: Let me say that it's refreshing to hear from a member who has obviously benefited from some of the preceding debate, as opposed to those who continue to persist in misinformation.
In answer to the three issues raised by the member: yes, indeed, the tax rate in Alberta is 6.5 cents a litre. Ours is about 2.2 cents a litre based on firm prices, and elsewhere it is higher. In fact, in New Brunswick it's slightly higher than the member indicated; it's 6.7 cents a litre. I'd be happy to provide him with the rate structures across the country. But the point is this: B.C.'s propane tax is the lowest in the country. The only jurisdiction that ties it is Quebec, and I understand they introduced an extraordinary reduction in their propane tax as a result of an economic development strategy in that province.
[11:00]
Secondly, on the issue of certainty, the decision that was made to allow the social service tax to come into effect brings that tax into the tax freeze and means that for the next three years, this tax rate remains stable. Members opposite have suggested that perhaps we should provide an assurance on this particular tax that goes beyond three years, in order to encourage conversions. I've said I'll look into that and take it under advisement. But there is no doubt that some of the concerns that encouraged some of the debate around this issue some months ago had more to do with uncertainty than anything else. My perception -- and the members across the House sort of confirm it when they respond -- is that a lot of that excitement has died down now that the government has established that it will not vary the legislation, that the tax rate will be the social service tax rate and that that tax rate will not vary for the next three years.Finally, while this is not being pursued as a revenue measure -- as I say, as a revenue measure we could have sought a rate of taxation equivalent to other motor fuels -- there is no doubt that the $7 million this year and $8 million of annual contribution will assist us in funding health care and education and other services that have been jeopardized by cutbacks in transfer payments from the federal government, and in the need to maintain those vital services, notwithstanding the failure of the federal government to play its part in continuing support for health care and education.
R. Neufeld: We certainly got into some wide-ranging debate with the member for Vancouver-Fraserview.
Again, talking about how this is the lowest tax in Canada other than Quebec
But we talk about a lousy 2.5 cents a litre on propane, and you'd think that you guys had accomplished building the Eiffel Tower in British Columbia or something. It's just absolutely amazing how you can use it back and forth, when in fact it means nothing.
When you talked about education and health care and you said that it really wasn't a revenue measure
Hon. A. Petter: I think we dealt with all these matters yesterday and today, and there's really not much new I can add. The legislation we're debating here
It's also a tax that was authorized not in this legislative session but previously. There is really not much I can add to that. I don't believe that the imposition of this tax is one that is going to be burdensome on any particular users, particularly since, as I said, some of the benefit of the tax relief in the past was absorbed in the distribution channel, not necessarily passed through to consumers. Furthermore, of course the price of propane has now been restored to its more normal and historic differential with other motor fuels, which I think is perhaps a more significant factor in terms of relieving burdens from school districts and others.
B. Barisoff: The member for Peace River North asked whether the minister would relieve the taxation on the school districts, which would have to come out of the classrooms, because they have set budgets. The question he asked was: will he give that money back to the school districts? I've been waiting for an answer to the question that the member for Peace River North asked.
Hon. A. Petter: I did provide an answer. This tax is applied to the use of propane, but not under this legislation, which relieves people from some of the implications of other legislation that does that. It will be paid by all users, but I don't expect it's going to be particularly burdensome. It continues to provide a strong incentive and reward to any users, including school districts, who prefer to use propane over other motor fuels -- a 4-to-1 reward in terms of energy equivalence.
Sections 18 to 22 inclusive approved.
On section 23.
F. Gingell: Hon. Chair, is the Minister of Finance going to deal with this issue?
[ Page 3112 ]
The Chair: Perhaps we should hear from the Minister of Finance at this time, with his amendment.
Hon. A. Petter: I move the amendment to section 23 standing in my name in Orders of the Day.
[SECTION 23,Amendment approved.(a) in the proposed section 339(1)(q) of the Municipal Act, by deleting "section 339(1)(q) as it read before its replacement by this paragraph," and substituting "a pollution abatement provision,",
(b) in the proposed section 339(3)(b) of the Municipal Act, by deleting "under subsection (1)(q)" and substituting "for pollution abatement purposes", and
(c) in the proposed section 339(4) of the Municipal Act, by adding the following definition:
"pollution abatement provision" means section 339(1)(q) of this act, section 15(1)(s) of the Taxation (Rural Area) Act or section 396(1)(e.01) of the Vancouver Charter, as those provisions read before their repeal and replacement by the Budget Measures Implementation Act, 1997.]
On section 23 as amended.
F. Gingell: Hon. Chair, I have worked quite hard in the last three weeks to try and convince the Ministry of Finance and the Ministry of Municipal Affairs to consider pulling this particular amendment to the Municipal Act, reconsidering all of the issues and finding out if there is a better solution. My reasons for doing that could in no way be considered partisan; they're simply involved in public policy issues.
What this amendment does is this: back many, many years ago there were provisions passed in the Municipal Act that allowed exemption from assessment for the purposes of calculating property taxes. The cost and value of equipment was added to a plant for the purpose of reducing pollution.
This particular section, over the years, has been used in some rather inventive and clever ways that provided for, or allowed, the cost of pollution abatement equipment that would be a normal part of a plant's -- a pulp mill, a mill or an oil refinery -- equipment to be dealt with separately, so that the pollution abatement equipment could be clearly identified.
As environmental standards have changed, and regulations have come in reducing the amount of polluting emissions from these various industrial plants, this issue has become of greater importance to municipalities. The opposition is aware that UBCM has asked for this issue to be revisited.
What has brought this particular amendment on at this time, to an extent -- and I appreciate there may be other issues -- was the result of a court case in 1995, Assessor of Area No. 08 v. International Paper Industries Ltd., that dramatically widened and expanded the accepted interpretation of pollution abatement equipment and facilities.
What this amendment does is grandfather all those properties which had obtained an exemption for the 1996 taxation year and allow them to forever -- as long as the property is still used in the manner for which the assessment was obtained -- have an exemption, and for those properties that were doing exactly the same thing, performing exactly the same function, which had not obtained that exemption but had applied for it for 1997, to be excluded.
I think that it's simply bad public policy for the government to bring in legislation that grandfathers an advantage to a certain number of businesses and excludes it for other businesses that do exactly the same thing -- that were doing exactly the same thing at the same time -- but just happened to have a different lawyer, perhaps, or were waiting for the result of the court case, Assessor of Area No. 08, North Shore-Squamish Valley v. International Paper Industries Ltd., before they applied for the exemption.
My understanding is that in fact these exemptions were granted in the original assessments for 1997. The assessors subsequently went back and appealed their own assessments on the basis that if you hadn't had the exemption in 1996, you were not going to get it in 1997.
I just think the government is rushing at this; they're doing the wrong thing. There are better solutions. I appreciate the problem of defining equipment clearly so that it meets the original intention of the act, but I think they're sticking a thorn in their own flesh that will fester and cause a bigger and bigger problem as the years go by.
My quiet words in the ear of the policy people -- the Minister of Municipal Affairs and the Minister of Finance -- didn't work; they've decided to proceed. But I really am interested in hearing why the minister believes that this is a better solution than other solutions that may be available to him.
Hon. A. Petter: I appreciate both the member's interest in this issue and his approach to the issue, based as it is upon public policy. I think this really is a question of: what is the best possible public policy under the circumstances? As is so often the case when one has to draw lines, there are always going to be anomalies or concerns about where one draws those lines. One can always argue that for some case, the line should have been drawn here or there. But at the end of the day, you have to make your best decision.
So let me start from the public policy rationale that drives this: that is, first of all, that the exemption being provided here is one that may have made sense in the past, when the major way in which industry was being encouraged to deal with pollution was to abate pre-existing facilities. But at a time when we're trying to encourage industries that are investing in plant to invest in such a way that their primary facilities do not pollute -- because their basic infrastructure is environmentally friendly -- to focus on abatement measures as attracting tax exemption is not good public policy. It rewards those that have a more polluting plant and then abate the pollution over those whose original plant is one that is more environmentally friendly. So the starting point I make is that we should change that public policy framework.
[11:15]
Then the question is: how do we do it, given that there's a bunch of people out there who've invested based on a certain set of assumptions and whose rights, as they see them, would be prejudiced by changes that did not take account of the decisions they made? That's where you get into the difficult choices.The other factor preying upon this is that there have been some decisions made by appeal bodies that place at risk a considerable amount of revenues -- $2 million of lost revenues that would result from reclassifying properties because of those decisions, based on a policy that is, as I've indicated, not good public policy to begin with.
I want the member to hear this, hon. Chair, because this goes right to his point. If we leave this problem to fester, it's
[ Page 3113 ]
only going to get worse. We see a $2 million vulnerability rising from reclassifications that would come this year as a result of appeal decisions -- not just the one the member mentioned, but others. Therefore time is our enemy here, not our friend.
We need, if we're going to change this policy, to do it sooner rather than later. How do we do that? In an imperfect world, you make your best choices. What we've done with this legislation is say that those people who have, up until this past year, made these decisions and been acknowledged as having a tax exemption based upon those decisions
And why do it sooner rather than later? Do it sooner rather than later so you don't exacerbate the problem. You start to move to the new public policy framework as quickly as possible, and you don't enlarge the category of exemptions that you're trying to eliminate by holding off and allowing these new decisions to then bring $2 million of additional exemption into the mix.
The member will recall that one of my favourite quotations in dealing with public policy issues is that of Voltaire, who said: "The best is the enemy of the good." The member seems to think there is some best solution that solves all these problems. I don't know what it is. If the member has it, I haven't been convinced that it exists.
I think this is a good solution. I think there are no better solutions that are practicable that I'm aware of. That doesn't mean it's perfect. It doesn't mean that on the margins, as there are on any margins, there are not anomalies; there will be. But I think we've done our best to minimize those anomalies, to make a clean and clear public policy decision to try to save from being prejudiced those who might otherwise be prejudiced, while at the same time moving as quickly as possible to adopt the new public policy framework without allowing additional prejudice to the public interest to occur by further delay.
F. Gingell: One of the problems, of course, in being in opposition is that you don't have any idea of the calendar. We are only in the early days of May. I was hoping and suggesting that the opposition would be helpful and constructive if the minister wanted to withdraw these sections of the act and come in with some revision before the end of this session -- I don't know when the session's going to end, but clearly we have a couple of months -- so that we don't get a set of circumstances where people A are being treated differently than people B.
I think you've got to make your mind up about who's going to have the exemption. The minister used the words "draw the line." You need to draw that line to determine what gets exempted, not when -- what, not when.
What you have now is a problem that's going to go on. You have a whole series of businesses that are not getting the exemption, compared to a smaller number of businesses that do get the exemption because their lawyer happened to be party to this lawsuit, and they got their exemption in 1996. Maybe the proper solution, a better solution, is to amend the act so it's not those whose pollution abatement equipment was exempted in 1996, but those whose pollution abatement equipment qualified to be exempted in 1996. I appreciate, then, that you've opened the door a little wider, but you've let in only those people who are entitled, and you've drawn the line, I believe, in a more satisfactory place.
Hon. A. Petter: Well, if I found that there was a better criterion for drawing the line than a win criterion, I guess I would agree with the member. But it seems to me that the member's suggestion creates more anomalies than it solves.
Whenever one makes a change -- whatever it is -- in legislation, in tax policy or whatever, there will be some people who acted prior to the change who will be in a different situation than those who are subject to the legislation, the tax policy -- what have you -- after the change. That's inherent in making a change. Then one has to decide what is the best line to draw. The line here is based upon time, it's true. The member is saying that maybe there's a better line.
Well, I'm not sure there is a better line. In fact, I'm reasonably convinced, having heard the member's arguments previously and heard staff's response, that there isn't a better line -- which isn't to say this line is perfect, but it's better than the alternatives. In terms of time pressures, the tax notices go out in late May, so I think increasing uncertainty around this issue won't necessarily be helpful in and of itself.
But in terms of the line the member proposes, if we're at a point where there have been, as the member puts it, doors open to possible new categories of exemption, and if the member's proposal is that you allow those few people who open those doors and were ready to rush through them to enjoy the exemption, and perhaps those many others who weren't aware that the door was even being pressed upon to be in a disadvantaged position, I think you create a worse playing field. I think you create a more uneven playing field.
If you allow those people who are ready to take advantage of some new innovation that has broadened the exemption, but then say to all of their competitors who aren't at the same starting line because they didn't see the opportunity to shove that door open, "Sorry, you're out of luck," then I think you create a more unlevel playing field.
At least what we're doing here is trying to draw the line at a place which was conventionally understood as the bound of the exemption, up until some of these more creative arguments were mooted and found favour in the appeal boards, and to do it in a way that categorizes the more conventional set of exemptions, grandparents them and says, for all new exemptions including the innovative ones, if I can categorize them that way, that they will not be subject to this tax exemption.
F. Gingell: I'm a little confused by the minister's response, because my understanding is that those that got through the door will be allowed to stay there. So there will always be
I'm wondering if the minister could advise the committee on whether or not the decisions in Assessor of Area No. 08, North Shore-Squamish Valley, v. International Paper Industries Ltd. and any other similar cases are being appealed to the courts, and what the current status is on those appeals.
Hon. A. Petter: No, there is no further appeal of which I'm aware.
F. Gingell: Is there any appeal available to the province, or have they passed or been heard?
[ Page 3114 ]
Hon. A. Petter: The case in question went to the B.C. Court of Appeal, as I understand it, so the likelihood of the Supreme Court of Canada entertaining an appeal is remote at best.
F. Gingell: Occasionally, when switching through the TV channels, one comes to cases being heard by the Supreme Court of Canada. This would have been a much more interesting case than many of the ones that do get there.
This government, in moving through programs, projects and initiatives to reduce the volume of materials going into landfills, is widening the range of drink containers that will be subject to return and a deposit. That will, of course, get a lot of people into providing that service, some of whom will probably be exempt from property tax on a portion of that, because I believe this decision may well impact those kinds of organizations. They will perhaps be competing with non-profit organizations that are part of municipal governments, like Delta Recycling, which won't be paying property taxes. I wonder how the minister sees these inequalities affecting future initiatives by this government to reduce containers and other materials going to landfills.
Hon. A. Petter: I don't think it will have a huge impact. Until this decision, the policy as I understand it was that these were not tax-exempt. The anomaly that results from this decision is relatively small, and that's my point. The anomaly would just get greater if we were to hold off and not draw a clear and definitive line prospectively for further abatement. The more we allow this expectation to build, the more anomalous this issue will become -- unless we're not going to do anything, and I suggest that that is bad public policy for the reasons I outlined at the very beginning. So it's best to draw the line early and draw it effectively than to hesitate and allow the anomalous situations to build and allow bad public policy to become more deeply entrenched.
F. Gingell: The correspondence I have received relative to this issue deals with the question of the expansion of bottle returns and the competitive disadvantage that for-profit organizations will be in compared to (1) those that got through the gate while it was partially ajar and (2) municipal organizations that are not subject to the payment of property taxes.
I'm wondering if the Minister of Finance has talked to the Minister of Environment or officials in that department relative to those issues presently on the government's agenda of encouraging the return of these containers.
[11:30]
Hon. A. Petter: As I understand it, the initiative regarding recycling is not one that was predicated upon the granting of this exemption. I don't believe anything turns on this exemption being provided. In fact, the assumption was that that exemption was not available. I guess another point I draw to the member's attention, given all the earlier debate -- and I hesitate to refer to this -- regarding municipal revenues that we've had in reference to this bill is that the major loser is not the province, although the province would certainly be one of the losers if this exemption were to be broadened. The major loser would be municipalities.Municipalities also have a role, of course, in recycling programs and the like. If $165 million of new exemptions were provided, resulting in a reduction of substantial revenues, that would mean a loss of revenue to the municipalities. I know how deeply the members opposite at least purport to care about municipal revenues. I would have thought that perhaps that would help them in drawing an early and effective line with respect to this matter.
F. Gingell: Just one final word, hon. Chair, before you call the question. I have at no time suggested that the result of the particular case was in line with the original intent of the legislation. As the minister well knows, the intention originally was to encourage the abatement of pre-existing facilities. My thought on exemptions was that the better level playing field was to ensure that it met those kinds of conditions.
G. Abbott: I have a couple of quick questions with respect to section 23. Like our Finance critic, I have some concerns that this may not be the best way of dealing with it. The minister has responded to that, I guess, as thoroughly as is possible. One issue remains in my mind, and perhaps it only remains in my mind because I wasn't listening closely enough and don't understand why this is not an issue. The concern I have is with those enterprises that have enjoyed the exemption that was in place between 1969 and 1996. For example, a mill may have introduced scrubbers or some other pollution-abatement equipment into their operation during that period of time, and it has subsequently enjoyed the exemption as a product of that.
My question to the minister is: how can he satisfy my concern that what is proposed here in section 23 will not become a disincentive to those enterprises that enjoy this exemption? How will it not become a disincentive for them to upgrade their equipment -- their scrubbers or whatever it may happen to be -- in the future?
Hon. A. Petter: In the situation the member is positing, as I understand it, new equipment that was installed in an existing plant would not be available for the exemption. It's only the existing equipment that continues to enjoy the exemption. So, for example, the incentive as current plants and chlorine-abatement equipment deteriorate is to try to move toward originating equipment, if I can put it that way -- basic equipment -- that is more effective in terms of its results, not just to encourage more pollution abatement add-on.
G. Abbott: I think this is exactly why I have this concern. If you have a plant with equipment that enjoyed the exemption, I would think that built into this model is a disincentive to upgrade it. Because immediately upon upgrading, they would lose the exemption that they had enjoyed -- plus, of course, the new equipment they put in place would be subject to taxation. Again, maybe this is inevitable and maybe it's not a wrong thing, but it still appears to me that it's a disincentive to any plant to upgrade its equipment.
Hon. A. Petter: Well, I guess one can always imagine examples on the margins that are perverse or that don't go the way one intends them to.
The benefit of the incentive on existing plants starts to diminish as the plant deteriorates and the value of the plant therefore depreciates. That then, I suppose, posits to the plant this question: as their equipment deteriorates and becomes less effective, what do they then do to meet the environmental standards that are required of them? Do they go out and buy a new set of scrubbers? Or do they perhaps look at going back to their basic plant and investing in upgrading the basic plans so it is not a polluting plant to begin with and therefore the need for abating equipment is less necessary?
[ Page 3115 ]
The hope and intention in this kind of circumstance is that a plant, as it starts to lose its tax advantage and requires new equipment, will be more inclined to look at its basic technology and equipment rather than simply at prophylactic solutions involving add-ons and the like. Certainly with a wholly new plant, that's where the issue becomes a little bit easier. With a wholly new plant, the incentives that are provided here are to achieve the economies of scale and the environmental objectives by buying the most cost-effective and pollution-effective equipment from the start, not by trying to create more pollution-effective equipment by adding on abatement equipment to an ineffective plant.
G. Abbott: I think our whole drift in this section -- particularly here -- is to try to be useful. The minister probably considers that a rare event. But we're trying to be useful here and trying to understand how this can be structured in a way that it's not -- as, again, the member for Delta South pointed out -- going to have a variety of consequences that we later come to regret.
Just so I'm sure I've got it right, let's take the example of the scrubber in an industrial operation. The existing scrubber loses its effectiveness. If that plant that enjoys the exemption of '69 to '96 is replacing an existing piece of their operation, does the new piece that's added in to replace the old scrubber enjoy the exemption, as well?
Hon. A. Petter: No, it does not.
G. Abbott: I'll leave that point for now. I don't know whether any of my other colleagues will want to speak on it. I don't know how much further we can really go with it here apart from observing that I think that this approach may, on experience, reveal some problems. The minister doesn't anticipate that at this point in time, and that's fair enough. I suspect, in fact, that it won't work quite as well as he anticipates.
The other area I just want to briefly explore
Hon. A. Petter: As I understand it, under the legislation as it was originally conceived, the example given by the member was not one that was seen as a situation in which the tax exemption would apply. In other words, the notion of pollution abatement was seen in more conventional terms as equipment added to an industrial-type plant.
It is possible, I'm told by staff, because of some of the more broad and problematical interpretations of this provision, that had this section continued, someone could have argued for an exemption. But I think that would have spoken to the difficulty with the section more than to the rationale for such tax exemption.
The answer is that if a private company were to build a sewer service and provide it to a municipality, it would be subject to taxation -- subject to one thing I'm going to say in a second. Whether that would have been the case under this legislation is an open question. It wasn't the intention. Originally the legislation was to provide an exemption in those kinds of circumstances, but some of the more creative arguments around pollution abatement might have allowed that argument to have been made had this legislation continued or were it to continue.
I do want to say, though, just in general terms, there is an issue that I think government has to address, and maybe it's one we should consider in estimates or outside. I'd be interested in the opposition's view on this, and that is: how, as we move towards public-private partnerships, do we structure a level playing field in terms of tax treatment? If we want to encourage the private sector to invest in providing public amenities, how do we provide a level playing field?
The Vancouver Airport Authority is an example. The Vancouver Airport Authority, when it was created, would have been subject to provincial property tax had it not been for the fact that the province decided to continue a tax exemption because it continued to provide a public amenity. For policy reasons it was therefore seen as desirable to continue that exemption.
A similar issue arises if we want to encourage the private sector to start building and owning and operating services that provide services to the public on a competitive basis with the public sector. To what extent should the tax treatment be that of a public sector entity or that of a private sector entity? It's an interesting and difficult issue. It's not one that I think we can resolve in the context of this section. But it's an issue that I think arises, whether you have exemptions or not, right throughout our entire tax structure and is worthy of some consideration.
G. Abbott: I share the view that it does merit further consideration; it's an important issue. I would expect that more and more we will be looking at those kinds of solutions to meet the problem of new infrastructure on an already overloaded tax system. I wasn't looking for something exotic in terms of the application of this section. I think that, for example, the operator or the owner of a private sewer system would look very quickly and very early for the kind of exemption that had been offered.
Before I sit down, I just want to make one observation, and I think it's an important one. There may or may not be very good arguments for the direction on pollution abatement equipment contained in this section. Nevertheless, I think it's important for this government to weigh the result of what's being proposed here in the context of the forest industry and other industries in this province.
[11:45]
I understand that the province has a review underway with respect to trying to make the forest industry in British Columbia more sustainable, more viable and healthier economically -- good. I think the government needs to weigh the fact that the impact of this is going to be additional taxation on industry in the province. They need to weigh that fact in the context of the corporation capital tax and the whole range of other tax measures that are already in existence in the province as well. While it may not be a huge factor, say, in comparison to the corporation capital tax, it will nevertheless be another small factor which makes it difficult for enterprises to survive and thrive in the province. So I strongly encourage the province to look at this in the context of general tax policy in British Columbia. And I suspect I speak for my colleagues on this side of the House in saying that we look forward to[ Page 3116 ]
talking with the minister about ways in which P3s -- public-private partnerships -- can be encouraged in this province rather than structurally discouraging them in some ways.
With those points, unless the minister wants to comment, I'll take my place and offer the floor to other colleagues.
M. de Jong: I don't purport to be an expert on the application of section 339 of the Municipal Act, so the minister may be able to tell me, in very short shrift, that my questioning isn't applicable. We've heard questions about commercial enterprise and industrial enterprise. The first question I'll ask: quite simply, do the exemptions contemplated under the sections being amended here have any application to agricultural properties?
Hon. A. Petter: I'm informed that they have almost none. There may be some exceptions, but virtually none.
M. de Jong: As I was listening to the debate, it occurred to me that perhaps one of the scenarios where this might be applicable is where agricultural property had, for example, fish-bearing streams and was obliged, or voluntarily made the decision, not to engage in any agricultural-related activities within a certain setback area. Under these provisions, would that qualify for the type of exemption originally contemplated, insofar as the land is no longer available for use?
Hon. A. Petter: Up until now, the section has provided for an exemption for pollution abatement equipment. So a failure to use one's land or irrigation systems -- those kinds of things -- are not things that would have attracted an exemption in any event under the legislation that is being amended.
M. de Jong: I don't think this is the place to debate the section itself and whether it should be applicable to those circumstances. From a farmer's perspective, I would say only that their use of that land in a way that was deemed by people not to contribute to a pollution problem, be it runoff into a stream
Hon. A. Petter: That kind of example is not one that, even creatively, has been suggested as falling within the ambit of the exemption that has previously been provided. Or as my colleague the Minister of Agriculture says: "Not on your life."
M. de Jong: I can certainly contemplate how in this day and age there have been steps taken for abating pollution that is generally associated with agricultural endeavours. Had the minister originally said that he is aware of no circumstances in which these provisions have been utilized to decrease the tax burden felt by farmers, I wouldn't have had a line of questioning to pursue. He suggested that there are some circumstances. I am interested to know what those are, because obviously these amendments are going to impact on those individuals as well, or on others who may wish to follow them.
Hon. A. Petter: I never like to say never, because there are always exceptions, but staff have been able to locate a very small number -- something in the order of $25,000 provincewide -- of exemptions related to farming that they can identify. I don't know what those are specifically, but conceivably they might be where you have some kind of quasi-industrial operation on farmland related to the farm or something like that. But in the context of normal farmland use, this exemption is not one that has been viewed as applicable, and that's why I gave the answer to the member that I did.
M. de Jong: Maybe I can ask this: based on what the minister has said, is he saying that the ruling or his ministry's policy -- the government's approach -- is that it is not applicable? Or has the agricultural sector simply not availed itself of the provision?
Hon. A. Petter: It's the application of the act according to its original intent and within the bounds of rulings that have been made, based upon its interpretations throughout the years.
M. de Jong: So I take it from that response that application has been made along the lines of some of the scenarios and others that I've suggested, and that the ministry's decision has been that these provisions apply only to industrial-related activities.
Hon. A. Petter: I'm not aware, through staff, of any examples that come close to the ones that the member has posited even having been put forward in argument through the appeal system or the like. Maybe that's because there hasn't been creative minds at work of the kind that the member is bringing to bear on this. But I think the real answer is that this was never seen as a purpose of this section. This section had to do with trying to provide some incentive to abate polluting equipment in the past, just as now the purpose is to try to encourage those who have a plant that could pollute to make sure that the plant, as originally constructed, pollutes a minimum amount, which is why this change is being made.
M. de Jong: I understand what the minister is saying. Maybe I could say this in reply: I'm intrigued. I note that later on in the bill a similar provision dealing with rural lands will be discussed. I would like to say to the minister that in the intervening time, I'm going to
Hon. A. Petter: Very briefly, I think I can be persuasive in this sense: the purpose of this act is to take away this argument so we won't have to pursue it in the future. It seems to me that the member's concern is whether this change is prejudicial to the farming community. The answer -- based on years of interpretation of this section, its application, its purposes, its intent -- is no. This has not been a section that has ever been seen or used in a way that the member suggests it might be. So if we're really concerned about what this change might do in a particular sector, I think it's pretty persuasive to say that its impact on the sector the member is concerned about has been minimal at best, it does not apply to the examples he gives, and therefore the changes are not prejudicial. And if that ain't persuasive, I don't know what is.
Section 23 as amended approved.
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Hon. A. Petter: Hon. Chair, given the time, I think it's probably an appropriate time for me to move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The House resumed; the Speaker in the chair.
The committee, having reported progress, was granted leave to sit again.
Committee of Supply A, having reported progress, was granted leave to sit again.
Hon. A. Petter moved adjournment of the House.
Motion approved.
The House adjourned at 11:56 a.m.
The House in Committee of Supply A; W. Hartley in the chair.
The committee met at 10:14 a.m.
ESTIMATES: MINISTRY OF LABOUR
(continued)
J. Dalton: I'll just map out, at least from my perspective, what I intend to be covering in the next while, and some of my colleagues will sooner or later be joining me. I feel a bit lonely over here.
[10:15]
As we agreed upon yesterday, workers' compensation will be on the agenda for tomorrow afternoon as the specific topic. So from my perspective -- and I see one of my colleagues has just joined me -- I want to deal with some more employment standards issues, and I still have a few points on fair wage to canvass. Then my colleagues and I will be getting into apprenticeship. We don't know how far that's going to take us, because apprenticeship is a cross-ministry thing with Education, Employment and Investment and others -- just to give the minister and his officials some sense of the next two days as far as how we progress.At least unofficially, we've agreed that at 4 p.m., or thereabouts, we'll take the now long tradition of a tea or other break, if we so agree. It's nice to be in here, because we can sort of push things a little bit, whereas down in the big House we don't have that luxury.
I've had the opportunity to look at some of the questions and answers that my colleague from Quilchena raised while I was off playing bridge at 3:30 yesterday. It's not often that you get to play bridge during the afternoon when the House is in session, but I did for half an hour. It was an interesting bridge game, too. I learned some intriguing things about the landscape.
If the minister will forgive me
There were a couple of things that caught my eye. One was part of the discussion that the minister and I had later yesterday afternoon, dealing with the mandate of the employment standards office -- the director and the tribunal. In response to a question that the member for Vancouver-Quilchena had with regard to the way Employment Standards is operating, I think he got into some discussion of their mandate. Just as an aside, after I get through this line of questioning I think I'd like to get some further information on the number of complaints that are registered in a year and the types of complaints -- that sort of mechanical stuff as well.
In response to the question that the member from Quilchena raised about the mandate and some other discussion that led up to this, the minister was commenting about the old legislation. I didn't even bring the act with me; I don't need it -- prior to the 1995 bill that we brought in, which, of course, brought in the new legislation. The minister said: "The improvement of the new legislation is that there is now recourse to apply to the Employment Standards Tribunal. So in that way I think we've seen what has been a very positive development."
I would say, given the line of questioning and the responses that we had later yesterday -- and this is the point I would like to make -- I would agree that, potentially, there was a very positive development coming out of the creation of the tribunal. The point that I made to the minister yesterday, through a lawyer who had raised this concern, was that a determination had been made by the director of employment standards. Then it was set down for hearings, submissions were made to the tribunal and then, according to section 86, I presume the director got some further information on the issue that she had already dealt with. She, in effect, pulled the rug from under the jurisdiction of the tribunal and made her own determination, which prevented the tribunal from rendering a decision on the matter.
So I am wondering if the minister feels that that's an improvement, and whether that's a positive development, whereby
Hon. J. Cashore: For the record, I just want to say that the term "pulled the rug" is a matter of opinion. In my view, it doesn't describe the circumstances. As I said yesterday -- and I think we canvassed this extensively yesterday -- in my view, the director carried out her duties according to the effective management that she brings to her role.
J. Dalton: I can understand that response. I guess maybe the issue that we're debating is one we can't deal with here,
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because from my interpretation, at least the way the act is being applied, I don't think that that's the intended authority that was given to the director, even though the act apparently is being applied that way. I really do -- and this is the last comment I'll make about this -- have a major concern about the jurisdiction of the tribunal in any issue.
In effect, I think we've gutted the authority of the tribunal by saying that a single official -- the director -- can come along at any time before that tribunal actually makes a decision
There is also a provision in the act for a judicial review, if warranted. That's a stepping-stone process. I liken that to a case where somebody is charged with impaired driving; they go to Provincial Court, they're convicted -- let's say, in a hypothetical example -- and that can be appealed to the Supreme Court of B.C. If either party, Crown or accused, is not happy with what the Supreme Court of B.C. does, they can take it to the Court of Appeal of B.C. Then they go through the process and theoretically might end up in the Supreme Court of Canada, if it's important enough.
But there's no authority in the court structure whereby a court down the line can have its jurisdiction taken away from it because somebody lower on the ladder has changed their mind and said: "By the way, this is coming back." And I don't think that it was the intention of the Legislature in '95 that the act be applied that way, even though it may be a possible interpretation. So that's the point that I want to put on the record, which I have done.
I think that at some point we're going to have to revisit the act from the point of view that either the problem is in the drafting and the wording of the statute or the problem is in the administration of the statute, or maybe it's a combination. Of course I should add that very often the problem with any law, whether statutory or common law, is the question of interpretation about how something is applied. But I do have a concern with that.
There are some other things of a more mechanical nature that I would like to ask. Again, forgive me if some of these were directly or indirectly dealt with yesterday in my absence. I would like to know, for example, if the ministry has a record of the number of complaints -- or inquiries, if you wish -- that Employment Standards receives on an annual basis. Could we also have a breakdown, if that's available -- and if it's not available now, of course, we can get it later -- as to the source of these complaints? Are they mainly generated by employees who are looking for wages, for example, which is a very common concern in my office when I get complaints? Or are they concerns from employers who are worried about the way the act is administered or interpreted? Are they general calls from the public asking: "What are my rights if I get into an employment situation?" That's the sort of thing that I think would be helpful for us to have.
Hon. J. Cashore: The representations from employers would generally be under the calls that we receive on the toll-free line for telephone inquiries. It's a 1-800 line in the lower mainland. It wouldn't only be employers, but a significant number of them would be. Between the 1-800 line and the direct-dial lower mainland line, there were 500,000 inquiries in 1996-97. On the area where branch assignments are received, generally from employees under the Employment Standards Act, there were 23,300; the Labour Relations Board, 1,500; the Fair Wage Act, 500; and the collective agreement arbitration bureau, 315.
I also have the projections for 1997-98. Again in that first category, the lower mainland direct-dialling line and the toll-free line, it would total about 500,000. The estimated and projected amounts would actually be the same as the figures that I've just quoted, except we think that the number may be a bit more for the collective agreement arbitration bureau: possibly as many as 400.
J. Dalton: I must say that's the sort of information I think estimates is intended for. That's great; hopefully, this great response came from sort of tipping off that this is coming down, but I'm sure that the officials anticipated this type of question. As I commented yesterday, I think if we were able to set the agenda for every ministry's estimates in advance in some meaningful way, we could probably accomplish twice as much in half the time.
I'm a bit surprised at some of these figures. I'm wondering about the 500,000 annual inquiries, as that seems overwhelming to me. Is this caused by, as we hear, obviously, the unanswered telephone or the delay in response to that? I don't know that we can decrease the number, because there's something out there driving this, economic or otherwise. But are there any ways that the ministry is looking at to improve the service so that customers are happier? They're not happy people anyway, for the most part, when they're calling. They're not calling to ask: "What's the price of bread in Saskatchewan?" They want to get some solution to a particular problem they have.
Very often in my private capacity, I get quite frustrated when, for example, I even phone my own school board or district hall and get the unanswered telephone. I think customer relations is vital to the exercise of any government service, particularly when the government service gets 500,000 inquiries. Perhaps we could have some discussion around addressing the volume of complaints and improving the service.
Hon. J. Cashore: I think the hon. member makes a very good point. It is an issue that very much needs to be corrected. We are reviewing ways, including ways of using new technology, to address the issue. We had considered a 1-900 line, which would be U-pay, and we rejected that because we don't think that's satisfactory. But there are technological devices available that would enable people, through the use of touch dialling and that sort of thing
J. Dalton: I'll have several other questions coming out of this, as we won't necessarily resolve the problem. Obviously, the volume is the problem.
This ministry won't be able to help me, but I'd just like to think out loud for a moment, which is always dangerous. I'm wondering, for example, how many complaints the residential tenancy branch gets, from a comparison point of view. Maybe somebody over there
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certainly one of the major ones that precipitates calls, complaints and therefore people inviting solutions
Can the minister's officials assist us in any way to get some sense of this volume of calls coming in, in comparison to other provincial government services such as I've mentioned, so that we can get some understanding not only of what's out there but maybe of other ways to look at it?
[10:30]
I appreciate, by the way, the minister's comment about the frustration even using the new technology. You get on the phone and it says: "Push 7 to reach this, and if you know the guy's last name and birthdate, you can do thisSo if we could have some assistance, if available, as to whether this is very unusual
Hon. J. Cashore: The trend has been towards increasing. Also, with regard to the question about comparing with other provinces, we don't have that information. We will get it, but obviously we won't be able to get it by the time estimates are finished. For the record, I will state that when we get that information, I will forward it to the hon. member.
One of the points that's just been described to me is that a number of people have these dial-again systems on their phones and they activate them and then that has a tendency to plug the lines. So it's another technological part that needs to be fixed. But the fact is, as the member has asked, that there's a trend towards the volume increasing.
J. Dalton: I appreciate the minister's response. I asked a number of my colleagues and, naturally, we don't expect instant answers for everything. I know that the minister is more than cooperative in getting that information back to us. It's certainly useful. In fact, I guess in the ideal world that we're all searching for, many of these questions could be set in an agenda, as I said earlier on, and put in advance and we wouldn't even have to talk about them in the committee process. Those could be dealt with
I'm wondering if the minister can assist us with: what is the annual cost for operating this service? That is, whether the service be good, bad or indifferent, do we have figures for the annual cost of keeping the telephone service going -- all of the offices that the employment standards branch has?
Hon. J. Cashore: We don't have that figure with us, but we will try to get it by this afternoon.
J. Dalton: Good. Thank you. Don't feel that you're pressed to the wall; I don't need it for estimates. We've made a record, of course, of both sides of the question, and I have every confidence that we'll certainly get the answer in due course.
When these complaints come in
Hon. J. Cashore: Referring back to my earlier listings, which would be the way in which we receive calls from employers, among others, the 500,000 calls
J. Dalton: So we can review that as we proceed.
I believe the figure that the minister gave was 23,300 employee inquiries, complaints, whatever. Do we know how many of those generate files? And more importantly, given that many of these are driven by the problem that employees have -- that they have wages outstanding and they want to get their money -- do we know how many files there are on an annual basis, and the time factor? What is the average time frame to close a file?
Hon. J. Cashore: Those are the numbers of files opened: that list that started with 23,300 and ended with the collective agreement arbitration bureau at 315 -- that list of four numbers is files opened. With regard to the length of time, we're looking for that.
J. Dalton: Now, just on that point
Let's face it: we know that in this world there are employers who don't comply with the law, just as there are landlords who don't comply with the law. Of course, there's also the other side of the fence; sometimes there are employees who don't necessarily do what
But certainly it is a major concern. I'm sure the minister would agree that this volume
Just to make a long story short, we all have to be searching for ways to improve the system. I suppose the ultimate solution, of course, is full employment, and we wouldn't have to worry about all of this; but we'll never find that. Maybe all
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the federal candidates are out there making rash promises that we'll find it, but after June 2 we'll see whether there's any measurable improvement in that regard.
It's been helpful to get some sense, again, of what's happening out there and on the ground. Certainly, as I say, the first figure that the minister quoted -- 500,000 -- looked very overwhelming.
I see my colleague the Housing critic is with us. Maybe he can assist the committee if he knows
R. Coleman: Less.
J. Dalton: Did you want to go on record? Perhaps I'll sit down and see what happens.
The Chair: Well, members, we're dealing with the Ministry of Labour estimates here, and I think we should stay relevant to that.
J. Dalton: Okay, fair enough. I can talk to my colleague later; I just didn't know whether it might be helpful to get it on the record.
We've got half a million calls on employment standards; I've heard unofficially that it is less for residential tenancy. But we know there are big problems out there, and we all have to massage the system to improve it.
At one point, in a response, I believe the minister said they were contemplating a 1-900 service, which of course would be user-pay. It reminds me of the furore that broke out when the government announced it might take away Enquiry B.C. Of course, they backed off from that one, because naturally that is a well-proven and much-needed government service, particularly for the rural communities. So we happily avoided that.
All right, I'll go into some other employment standards concerns. Now, I know my colleague from Quilchena touched upon some of these in one way or another, but I'd like to revisit a few of them. If it turns out that the answer is in the Blues, then I have that with me and can read those on my own.
One of the issues, in a more general sense, that becomes a real problem for everyone in this province in one way or another -- certainly for the small business employer
It is a very important issue. It's an important issue, of course, in the taxi industry, in the courier industry, in the oil industry, in the logging industry
To determine whether somebody is or is not an employee, we have to consider: control -- that is, the control exercised by the "employer," for want of a better term now, because that's the issue; ownership of tools -- they say tools, but that's a bit archaic because "tools" could be a taxi cab, it could be a wrench or it could be a computer, I suppose; chance of profits; and the risk of loss. If the minister can assist, are these the factors that Employment Standards would take into account when it is asked to rule on a variance in an industry, or does the statute
Of course I'm talking, basically, in my discussion, about the common-law approach. The Employment Standards Act, being a statute, would override the common law if there's something that says that it's to do so, or that's an interpretation
Hon. J. Cashore: Yes, those are the tests that are used to determine if an individual is an employee, but they are not what determines the variance issue.
J. Dalton: If we've agreed to determine an employee's status from that approach, but the ministry then says -- I don't know whether it is fair to put it this way -- that it won't assist with a variance order, what factors are taken into account when a variance issue is brought before the employment standards people?
[10:45]
Hon. J. Cashore: Variance has to be agreed to by the employer and the majority of the workers, and it cannot violate the principles of the act.J. Dalton: At this point I'm at a bit of a disadvantage. As I said earlier, I didn't bring the act with me and, of course, I don't have time to cruise through it while I'm on my feet asking questions. It's certainly quite true, as I also said earlier, that if there's a statute that has some bearing on the common law, then the statute prevails. Otherwise, we in this House and other legislatures would probably have nothing to do -- which might make some people happy.
Maybe I can get some assistance from the minister here. If a variance is put forward and the employer and the majority agree, then that's what negotiation and things are all about. Everyone's happy and away we go. What happens, then, when you have a dispute on the variance?
This is just one example. I know my colleague asked about this yesterday, but let's come back to the oil and gas industry. There's been an ongoing discussion on variance, on whether the employees in that industry, given the hours of work and the different conditions
Hon. J. Cashore: I just want to clarify that you don't apply variances to whether you're an employee or not. That's
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not the purpose of variances. With regard to what the test is, it is the common-law test that the hon. member just outlined. The question was also asked, in view of the fact that the hon. member doesn't have the act with him: what are those principles to which I referred earlier? They're in section 2. The purposes of the act are:
"The Chair: Member, can I just interject. We seem to be spending some time dealing with legislation, and that is not the purpose of estimates. I can refer you to the third edition of Erskine May, if you wish to refresh your memory on that subject.. . . (a) to ensure that employees in British Columbia receive at least basic standards of compensation and conditions of employment; (b) to promote the fair treatment of employees and employers; (c) to encourage open communication between employers and employees; (d) to provide fair and efficient procedures for resolving disputes over the application and interpretation of this Act; (e) to foster the development of a productive and efficient labour force that can contribute fully to the prosperity of British Columbia; (f) to contribute in assisting employees to meet work and family responsibilities."
J. Dalton: I appreciate the Chair's ruling, because where we're trying to come from here is not the act. Well, we could spend forever discussing interpretations of the act, but we did that two years ago. What we're trying to do is see how it's applied. I think that's obviously there, because it costs money to apply the act -- it sometimes costs people headaches when the act isn't properly applied. We seem to be getting into unfair interpretations, so that's where I'm trying to come from, hon. Chair.
The last point I would like to make here -- then I believe my colleague for Cariboo North has a particular on-site example of an employment standards problem -- is that I agree with what the minister said, that the variance isn't going to deal with who is or who is not an employee as such. But indirectly it is, because we're getting into issues of overtime and whether the traditional eight-hour day and 40-hour week applies to somebody who's working out in the bush drilling for oil or cutting down a tree or whatever it may be. So these issues are not isolated from each other; they are obviously interconnected.
That's the point I was making, and I think the minister's responses have been helpful. However, I would say just as one last comment -- if I dare do this, hon. Chair -- that I think the general principles that he's cited in section 2 are nice flowery stuff, but when you really get down to the ground, principles
J. Wilson: We have had some numbers thrown around here, and the minister came up with the number of 315 that were in arbitration. Is that the number that are being brought to the tribunal, or is it the number that have gone beyond the tribunal and through the appeal process?
Hon. J. Cashore: These are referrals from the collective agreement arbitration bureau, and 315 refers to the caseload of settlement officers who are assigned to those particular files.
J. Wilson: What I was looking for here is the number of cases at present that are up for examination by the tribunal and the number that have been processed in the past year.
Hon. J. Cashore: In 1997 the number is 195. Just to give a little more perspective on it, if we look at it since the inception -- November 1, 1995, to March 31, 1997 -- the total number during that period of time was 998.
J. Wilson: These are basically employee-employer disputes, I presume. Do you have a breakdown as to whether they are large companies, small companies, partnerships or small business enterprises?
Hon. J. Cashore: The breakdown that we have was done by industry, not by large and small
J. Wilson: Does this also give the decision of the tribunal as to which way they lean?
Hon. J. Cashore: We do have some information on that, which we'll also provide.
J. Wilson: I would appreciate that; it would be helpful. I had the opportunity a few months ago to sit in as an observer at one of these tribunal hearings. What I observed was that the decision that was rendered pretty well followed the four guidelines that you set out: conditions of employment, tools, risk of loss, and chance of profit. There were a lot of other very pertinent facts and information, to my mind, provided in this case. In every instance, that information was totally and completely ignored. What it ended up being, in my opinion, was nothing short of a kangaroo court.
I have all this; if the minister would like me to bring it to him, we can go through it. I won't bring up any names at this time, but I will set out what I've seen here as a huge flaw in this process that we have. The individual in question was in the cement-finishing business -- a little company, a family company. It was a subcontract agreement. They hired a subcontractor who, by his own admission, had for that year been contracting at various places around the province. He went to work as a contractor for this individual, and in his initial interview he said that he wanted to work as a contractor because he didn't want any payroll deductions, and they agreed to that.
The only way that you can avoid payroll deductions, unless you make the employer break the law, is to be hired as a contractor. This contractor who was hired had no T-4 slips for the previous year. His income tax had been filed as a contractor. He had no record of T-4s anywhere, and he admitted that at the hearing. The fact that he had tools
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One of the rulings[ Page 3122 ]
that you have to follow rigidly. Cement starts to set within so many minutes of the time that it's poured, and you have to be on site within a very short window. The time is very critical. The board took that and said that the fact that the hours of employment were dictated by the contractor pointed to the fact that the individual was not a contractor, but an employee. Then it went on. There were things like the wage initially agreed to by both parties being above the regular rate that anyone in that business received. The explanation was that because of varying working hours within the day, any overtime was factored in and it became a base rate for this contractor. The tribunal did not consider the fact that this subcontractor was paid above and beyond the rate of anyone in the industry.
The decision that was rendered came down. This individual had worked for 15 days, and in those 15 days he made $5,000, which was a reasonable wage for that time frame. This was an individual who was struggling to make ends meet on his own. The decision that came down gave the subcontractor an additional $5,000 for that time period, which came to $10,000 for 15 days' employment, and in effect it has broken this family-owned company.
Now, if you stick by the rules and go strictly with your guidelines and your policy here, then, yes, the decision would be correct. The other, extenuating circumstances in these cases are not considered. My question to the minister is: is he willing to examine these things and maybe change some of the criteria that are in place at the moment that are not fair, in my estimation, and are not working?
Hon. J. Cashore: I want to commend the hon. member for taking the time to sit in on a hearing and observe it and carry out what is his role as an MLA.
I think it's a bit difficult that information like this is brought into these proceedings, because, obviously, one perspective is being told for the record, but there are other perspectives out there where there is due process available -- and obviously, that's not the role of this committee. Also, as minister, it is not my role to enter into a specific case. But I do recognize that the member wasn't asking me to do that, but was basically using that as an example of why he thinks that things might be done differently.
I just want to say that I don't think that one can categorically say that information that is brought before a hearing is ignored. I think that that is a matter that is maybe speculation but cannot be stated as fact.
So, basically, from time to time I do hear concerns people have about a number of the administrative processes that I have responsibility for. I take that into advisement with regard to my evaluation of how well things are working. I still have to say that generally I think they're working very well.
J. Dalton: Well, certainly from my perspective, and I believe from what I've heard from the minister in his response, it was certainly very helpful for a colleague and someone actually in his role as an MLA to take the time and the concern to sit in on a tribunal. I haven't had that opportunity, but I can certainly tell you that I've heard the horror stories and the aftermath of what my colleague has just described. I think we're all now very vividly aware that there are some big problems out there. It's not just the problems of the volume of calls and concerns and, of course, unpaid wages and all these other things that impact on people's day-to-day lives and their families.
But quite frankly, I think there is too much evidence that this act is not being administered as the minister might think -- in a fair and objective manner. I mean, I agree that who's going to squawk depends on whose ox is being gored. Obviously, in any controversial issue, whether it be in the court or a tribunal or whatever, there are going to be winners and losers. I don't know many losers who happily stand up and say: "Gee, I'm sure glad I lost." I can even think of some politicians who certainly don't say: "I'm glad I lost."
But the fact is that there's a lot of evidence from the offices we operate in our constituencies of the very thing that my colleague has just cited to this committee. This is not an unusual case. Now, whether we want to call it a kangaroo court or just a bunch of people squawking because they're losers -- and I don't think that's the case
Again, one last time on that, I would add that there are problems in the way this act is being interpreted. I don't think the Legislature in 1995 intended to create a monster, but it seems that maybe inadvertently we have done so. It's only fair for all parties concerned
So the theme that I think we've made quite clear is that this act is not perfect. I don't know of any act that is. I think this act therefore
Well, now I would make a request to this minister. I think a section 3 review of the Employment Standards Act is overdue. We should have one, because it is not working. It is not doing anyone any service other than frustrating people and maybe making a few lawyers happy -- if, indeed, any of them are. Certainly the lawyers I heard from aren't happy, but I guess they're getting paid. It's not the way to stimulate and allow the economy of this province to flourish. I think that's a fair comment.
The small business operator in particular, the one that my colleague cited as a typical example
Maybe I can just ask a couple more questions on particular concerns. We talked a bit about variance. Can the minister advise us on the current status of the independent logging contractors, the couriers and the other people who've made applications on almost an ongoing basis -- as to their status under the Employment Standards Act?
Hon. J. Cashore: With regard to the question about the logging truck operators, the government has accepted the tribunal's recommendation that certain hours-of-work provi-
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sions of the act not apply to logging truck drivers and logging equipment operators who work in the interior and that these workers must be paid double their regular wage for any time worked over 120 hours in two weeks. The temporary exemption was extended to August 31, 1997, to allow industry time to adjust. Ministry staff have held meetings with the employer groups to assist them in complying with the act.
Just to go back to some of the comments coming out of the previous line of questioning, I'm sure that the expectation was not implicit in any of the comments that any of the members of the opposition have made that they would expect the tribunal to condone avoidance of paying income tax or avoidance of paying for WCB coverage. I'm sure that wasn't the intent.
I'd also point out that out of a period of time in which there were probably 40,000 complaints, there were only 998 appeals during that period of time, which is an appeal rate of less than 1 percent. When you're dealing with that kind of volume in what is quite an extensive arena, I would think that is quite a positive indicator.
In my responding to the other point that obviously we always need to be diligent about trying to make the act the best act that can possibly be, I think the factor
J. Dalton: All right, that's fair enough. The minister's in charge, and I'm just pointing out that certainly from our perspective, this act needs a bit of massaging and revisiting.
One thing the minister just said, dealing with the appeal rate, which he described as low
I want to touch upon just a couple of other things as well about employment standards. My colleague for Cariboo North just had to leave. He is a veterinarian and a rancher and my in-laws and wife are also ranchers, so I have some working knowledge of that industry and some of the difficulties. In the agriculture industry itself, naturally, with regard to employment standards, there's the question of contract work versus whatever other status there may be. So my colleague points out that people who may be hired to do some fence-building, for example, and whatever other types of contracting
[11:15]
Hon. J. Cashore: After all that time I took consulting, I think the answer is that if what a person is doing is a contract, if he's a true contractor, then he's not an employee. If he's building the fence as a contractor, then that's the category it falls into.J. Dalton: I quite agree. But, of course, as my colleague from Cariboo North shared with us and from what he described, there was
Again, it's not fair to comment on something when we don't have all the information in front of us. It's not in this committee's function to act as an appeal board and start interfering with something that's none of our business. But it is cited as an example that there are things out there of a troubling nature, in particular to the small business operator. Indirectly, it has an impact on the employee or the ex-employee, because when you start having employment and economic difficulties everyone gets dragged into it. Of course, then it may lead to such things as another phone call to Employment Standards, saying: "By the way, I haven't received my wages yet." So away we go on a never-ending circle.
Yesterday the minister and his federal counterpart -- I guess the Human Resources Development minister -- issued a joint statement. As I just said to my colleague for Abbotsford, who is far more knowledgable in this area than I will ever be, I'm sure this has nothing to do with the federal election. We're going to have proactive enforcement of provincial employment standards in the agriculture industry. Firstly, can the minister assist us with identifying what the function of the federal government will be in this area, given that most of this two-page announcement deals with the Employment Standards Act?
Hon. J. Cashore: One of the federal government's concerns is that they don't unwillingly, in the present circumstance, participate in attempts to get around employment insurance payments. They will be involved in conducting payroll audits to ensure that employees are paid and that the farm labour contractors don't trade off pay for employment insurance.
J. Dalton: Has this release of yesterday been a long time in the discussion process? I'm not suspicious, of course, in any way, shape or form of the minister's announcement. That's great. He's doing what he as a minister is supposed to be doing on a provincial level. But as a somewhat cynical person, I guess, when elections are taking place at whatever level
Hon. J. Cashore: The provincial government initiated it. The work on this initiative has been going on for two months. It's borne out of a genuine concern, I believe, of both governments, with regard to the issue of the exploitation of farmworkers, who are citizens who provide a very important service that all of us benefit from every day of the year, year in
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and year out -- as indeed we do with the farmers, the contractors or the owners of the farms. But the fact is that it's very important that there be a very diligent approach to ensure that justice prevails with regard to the working conditions of these people who provide our food and who tend to be at the low end of the income scale.
J. Dalton: Yesterday the minister informed us that, with regard to fair-wage enforcement, he's put a team together that is going out into the field soon to deal with enforcement issues. This directive of yesterday is, of course, dealing with the same general issue of enforcement -- it's called proactive enforcement -- of both provincial employment standards and the Employment Insurance Act in the agriculture industry. That's fine, and again, I applaud the minister for taking an initiative within his portfolio to quite rightly address the agriculture industry.
As I've already told this committee, I have some working knowledge of this, given that I've married into a ranching family. I can tell you that the ranchers of the Chilcotin have as many difficulties -- in fact more -- than probably anybody else in the agriculture field. Maybe my colleague will disagree with that. But I know. I go up there in the summers and talk to the people up there and, boy, life is not easy. You just hope the weather cooperates so that at least the hay will grow and you don't have to buy it from the Peace River at some undue rate that will probably bury you.
Coming back to the creation of other teams of an investigative nature, are the two ministries, federal and provincial, cooperating in an investigative process? Who's doing the work? I'm thinking, for example, if the federal people find that somebody's not in compliance, are they going to blow the whistle and phone up the director of employment standards and say: "By the way, I think you better have a look at this outfit, because they're not acting properly"? Is that the sort of function that we're looking at?
Hon. J. Cashore: We will enforce employment standards; the federal government will enforce EI. The audits will be conducted jointly.
J. Dalton: Do I take that, then, to mean that we'll have a provincial team looking at provincial things, we'll have a federal team looking at federal things, and then at some point they're going to shuffle the deck and get together? Is that what we're dealing with?
Hon. J. Cashore: No. They will work together. They will investigate together, and in the course of their work, they will then send these issues into the two separate streams, working as a team.
J. Dalton: And the cost factor, because everything has a cost
Hon. J. Cashore: It's about 50-50, and it's handled under existing budgets, so it's no additional allocation.
J. Dalton: Perhaps just one or two other points. The director of employment standards says in this announcement that the goal is not to hand out penalties. Of course, the idea is to make sure that compliance with the provincial statute, as we've been discussing this morning, is the issue. I certainly agree with the comment that farmworkers, like other workers in B.C., must be paid at least twice a month; that's fair enough. Of course, it may bring in other problems of who is or who is not an employee, as we've discussed earlier, versus other issues. But that's not what this is about.
I guess the other thing I'll just make a comment on -- I don't need a response -- but I'm hopeful that the spirit of cooperation the feds and the province seem to have found these days
It will be interesting to track the experience of this cooperative effort a year from now -- or whenever we next come back to deal with the Labour estimates. We'll have to see what the outcomes are. I think that's probably enough said on that, unless my colleague the Agriculture critic wants to jump in. I see the minister wants to respond.
Hon. J. Cashore: I just want to emphasize that there has been a good working relationship for many years between the staff of Labour in British Columbia and those responsible for labour in the federal government. These are professional people who see that they do have a responsibility and a role in trying to ensure that the system is administered fairly. Obviously there are issues that interface, and this is ongoing work. I daresay that it has been part of the ethic of those departments, no matter which parties happen to be in power at any given time.
J. Dalton: My comments about politics weren't necessarily even party-driven. We on this side speak for British Columbia, and I'm sure the minister obviously does likewise. What the feds do hopefully speaks for both the country which they represent and also the provinces that make up this country. I guess maybe what we're dealing with here, indirectly at least, is the whole question of Confederation and how we cooperate between the various jurisdictions.
One other item I want to raise on employment standards is specific but not exclusive. I guess in one sense it's probably a contradiction or an oxymoron or something, but the Restaurant and Foodservices Association is certainly on record as having some major concerns with employment standards issues and, I guess, labour issues in general.
Yesterday we touched upon sectoral certification, and I told
One thing that I remembered when I went to this conference, the first thing that the moderator
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there from all over the province from pubs and restaurants and you name it, any small-type operation in the food service business. The first thing he said was: "Well, we've been told by the minister that we have to comply with his act. Everyone's supposed to display posters and all sorts of notices and information, and they are supplied." The whole association
Has that issue been addressed? Can I go into any restaurant in this province as an employee -- maybe that's not a bad idea, because sometimes politics doesn't seem to have a future in it; maybe for some it does -- with the assurance that that kind of information is available in any food service operation in this province?
Hon. J. Cashore: Yes, these posters are readily available from the employment standards branch.
J. Dalton: Do I take that as meaning, then, that employers have to specifically request the information to be posted? Or is it sent to them as part of the function of the ministry?
[11:30]
Hon. J. Cashore: Staff, as they travel around, do distribute posters, but obviously it's not the type of thing where you go around and deliver to virtually everybody. So there's also a certain amount of onus on employers to ask for posters so that they can be posted as they are required to.J. Dalton: The irony of this meeting
It was a pretty poor start, I would suggest -- not that this minister was responsible for that. But it was a pretty rocky start for a new, important piece of legislation to be introduced to a very important food sector and tourism sector in this province. That's just an editorial comment; it doesn't need a response.
But certainly when anything of a significant change is brought in, in particular to the small and medium-sized businesses -- people that don't necessarily have access to instant lawyers and other advice
The other concerns that the food services people certainly addressed then and are still struggling with are all of the regulations, the compliances -- the attempt, if need be, to get a variance, if that's justified. All of these are very much real day-to-day, ongoing issues, and ones that
So I think the bottom line here in our discussion is that the economic factors and the impact on the tourism industry, on the food services industry, on all the other things that are maybe going to be the future lifeblood of this province -- because we know the primary industries are under major attack, in part because of the same general difficulties of complying with onerous regulations
We're almost getting to the morning adjournment, but other things that this industry is certainly on record
For example, one thing that the restaurant people would like to see -- and I don't know whether it's something that maybe the minister would like to comment on
Hon. J. Cashore: That has been considered, and we've rejected it.
J. Dalton: May we know on what basis it was rejected? Does it fly in the face of the minimum wage, or is it the wrong approach to the entry-level worker? I'm sorry; I'm just not quite sure what rejection means.
Hon. J. Cashore: There are a number of factors to consider -- I recognize that. But basically one of the major issues is the revolving door, where that particular so-called training wage is used as a means of hiring somebody at a lower wage, purportedly as training, and then recycling people through it.
J. Dalton: I guess that's fair comment. I'm certainly not meaning to suggest just by raising this issue -- not from my perspective, but from the perspective of that industry
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But I want to go on record: these are some things that are very important -- that industry in this province is struggling with. Another one not relevant here, but I would like to see the province get into, is the smoking issue. In fact, I just heard today that White Rock is putting a resolution forward for the next UBCM convention and is being endorsed by Burnaby. They want a total provincial ban on smoking, which will have an impact, of course, on this industry in particular. Now, I don't want the minister to comment on smoking; that's not his function -- and I'm sure he doesn't smoke, either. But that's the sort of concern that many industries out there are voicing these days.
With those comments, I ask that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 11:40 a.m.