2010 Legislative Session: Second Session, 39th Parliament
HANSARD
The following electronic version is for informational purposes only.
The printed version remains the official version.
official report of
Debates of the Legislative Assembly
(hansard)
Thursday, March 25, 2010
Morning Sitting
Volume 12, Number 4
CONTENTS |
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Page |
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Orders of the Day |
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Committee of the Whole House |
3675 |
Bill 4 — Miscellaneous Statutes Amendment Act, 2010 |
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R. Sultan |
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M. Farnworth |
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L. Krog |
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Hon. M. Stilwell |
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Hon. M. Polak |
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Hon. M. MacDiarmid |
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Hon. B. Penner |
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M. Sather |
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Proceedings in the Douglas Fir Room |
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Committee of Supply |
3687 |
Estimates: Ministry of Small Business, Technology and Economic Development |
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Hon. I. Black |
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J. Kwan |
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THURSDAY, MARCH 25, 2010
The House met at 10:03 a.m.
[Mr. Speaker in the chair.]
Prayers.
Orders of the Day
Hon. M. de Jong: In Committee A, I call Committee of Supply — for the information of members, we'll be discussing the estimates of the Ministry of Small Business, Technology and Economic Development — and in this chamber, committee stage debate on Bill 4.
Committee of the Whole House
BIll 4 — MISCELLANEOUS STATUTES
AMENDMENT ACT, 2010
The House in Committee of the Whole (Section B) on Bill 4; C. Trevena in the chair.
The committee met at 10:07 a.m.
Section 1 approved.
On section 2.
R. Sultan: Bill 4 in this section proposes to amend sections 2 and 3 of the Engineers and Geoscientists Act, section 10, as I interpret the numerology here. The essence is an amendment which changes the council's bylaw-making authority in respect of annual fees. The council referred to is the democratically elected council of the Association of Professional Engineers and Geoscientists of British Columbia, otherwise known as APEGBC.
I oppose this amendment as presented. I urge my colleagues in the Legislature to oppose it as well. Since I'm registered as a professional engineer with APEGBC under the act, I have consulted the Conflict-of-Interest Commissioner, who has cleared me to engage in this debate.
While I respect the noble objectives of this legislation — giving greater fiscal capacity to our self-governing profession of engineers and geoscientists so as to deliver enhanced services to the profession — there may be better ways to balance this goal with a greater respect for the wishes of our engineers and geoscientists.
What is the thrust of this legislation?
The Chair: Member, might I interrupt a moment? We're talking about section 2 here. Are you wishing to talk about section 2 or the amendment in section 3? Just to clarify whether you wanted to talk about the amendment on section 2 or the amendment to section 3.
R. Sultan: I'm speaking to sections 2 and 3, because it seems to me that that is the gist of the amendment proposed by the government, if I understand.
The Chair: Thank you for the clarification. I wanted to make sure that you're talking about both sections, then. Please continue, Member.
R. Sultan: As I was saying, there may be a better way to achieve the legislative goals with greater respect for the engineers and geoscientists.
What is the thrust of the legislation? The proposed legislation removes from the membership of APEGBC the right to vote on their own annual fees and transfers that right to their elected council, as advised by the hired administrators of the association.
In this grand scheme of big issues which occupy this Legislature, you might conclude that this is a small thing. Who cares how the engineers set their own fees, and why are we debating it this morning? Well, I beg to differ.
The guiding executive of APEGBC are seeking to strip from the general membership of APEGBC the power to approve their own fees because APEGBC tried twice before to raise annual fees and twice had their proposal voted down by their membership.
Note, however, that when APEGBC has given the membership compelling enough arguments and reasons, it has, in recent years, been able to get fee increases passed, even with the currently required two-thirds voting threshold. So the current general membership approval threshold has not proven to be an impossible barrier but rather a screen to filter out revenue schemes which members clearly believed lacked merit.
Blocked on that route, APEGBC executive then asked its membership to transfer the right to set fees from themselves to their elected council, subject to the same two-thirds majority within council. That measure, too, was turned down by the membership.
What has now been rejected by that referendum is exactly what is now proposed in law. We now propose to legislate via the back door what they have failed to accomplish by the front door. I don't like it, and I expect many, many of the members of APEGBC — 26,000 strong across the province — won't like it much either.
Let's consider the core arguments of the APEGBC executive as repeated to me after the fact. The first reason given for fee increases being turned down in the past is because the retirees voted against it. Well, that's an interesting line of argument. How do they know it was the retirees who voted against it in a secret ballot?
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Also, many retirees are awarded life member status and don't pay fees in the first place.
A second reason for the fee increase rejection…. Well, the flaw of the fee increase rejection…. It was argued in these halls that the current fees are ridiculously low. That's an interesting line of argument as well, since APEGBC's fees are actually in the middle of the pack amongst provincial engineering organizations across Canada.
Let's be clear what these fees are. You might consider them a form of tax on professional practice. You can't call yourself a P.Eng., as I do, if you don't pay the tax. From a richer perspective, the fees may seem low.
However, engineers earn less — a lot less — than lawyers and doctors. Many of them are new to Canada and are only now beginning to get their personal finances in order. A hundred dollars is a fair amount of money. Hence, I would say interprofession comparisons don't count for much without some consideration of income, at least. I would add that it should not be our "government of 120 tax cuts," which argues that anyone's taxes are too low.
That reminds me that I should mention, also, that the fees that professional engineers and geoscientists charge, given the expertise and impact of these professional judgments on virtually everything in the modern world, are in fact much too low when compared with those of the other professions. Raising the pay of engineers and geoscientists would attract more young people to the profession. But that's an aside.
A third and perhaps the weakest argument made by APEGBC officials on their visits over here in Victoria is that they don't have enough money to enforce the act.
So that everybody understands, a key function of APEGBC — which in fact functions as a college, terminology that might be more clearly understood in other professions — is to ensure that incompetent people do not carry the title of "P.Eng." or have the ability to affix their seal to drawings of bridges or buildings or dams that are likely to fall down, with catastrophic consequences for public safety. APEGBC does a superb job of policing the profession in this regard, but it's largely done by peer groups on an unpaid, voluntary basis. Not much of a budgetary drain there.
Some members have told me that APEGBC might better focus its available funds in areas of greater public safety risk, such as slope stability and improved design of structures in earthquake zones, especially for sole practitioners who may not benefit from the expertise of colleagues.
The issue here is not necessarily the size of the pie but rather how it is divided. We see here a manifestation of the great public service obligation that I think most professional engineers and geoscientists feel.
APEGBC membership is well aware that there's another alternative that could have been pursued, and that is to lower the threshold for fee increases approval by the general membership from the current two-thirds to something lower. Recent fee increase requests have, in fact, had a yes response of between 62 and 65 percent — oh so close. Those engineers and geoscientists are not automatic naysayers.
If it really wants to ease the approval process, APEGBC management doesn't have to strip decision-making authority from members. They could simply lower the threshold, seek the lowering of the threshold by legislation. This option could be especially easy to implement, given APEGBC's admirable system of electronic voting among its computer-savvy membership — done in an instant.
That brings me to another argument, which is, if members don't like council's fee decisions, then they can vote them out of office. Easier said than done. Councillors are in for two years. Issues become forgotten. Members won't know who is on what side in any vote, since council votes are recorded on a pass-fail basis, not councillor by councillor. Councillors standing for election offer diverse policy platforms for consideration. Finally and astonishingly, I am told that councillors have been virtually sworn to secrecy — hardly transparent.
The final argument which is made in favour of this proposed amendment by the government is that the currently elected president and council of APEGBC supports it, and I'm sure they do. However, I would juxtapose their support against my own informal canvass of eight — eight, count them — former presidents of APEGBC who support the opposite position.
Let me conclude by reminding this House that the 26,000 professionals of APEGBC are the highly trained experts which this province depends upon to deliver our clean drinking water; run our transportation systems; design and launch our satellites into outer space; decipher our geology; run our four cyclotrons at UBC; build our highways and bridges; protect our homes from geotechnical catastrophe; find our ore bodies; export our engineering consulting services to five continents; invent our BlackBerrys, such as my colleague here is fiddling with as usual; design software; construct our harbours; and all the rest that is the daily menu of engineering and scientific practice — not to mention community leadership, in so many ways.
They don't expect — and they don't get — a lot of publicity for what they do, but they deserve our respect and consideration. What they do not deserve is to be disenfranchised by our government on fee issues, especially when there are simple alternatives, such as lowered threshold of an electronic voting by all members, a minor tweaking of the current process.
When these 26,000 highly educated British Columbians decide to vote down something two times in a row, they probably had good personal reason to do so. When they rejected, as another option, the transfer
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of their voting rights to their own council, they probably had good personal reason to do so.
Three decisive votes. I don't think this Legislature should override their clearly expressed wishes, and I invite members to defeat this section of Bill 4.
M. Farnworth: There are a couple of sections on the bill that I'm going to be speaking on, but the member's remarks caught my attention on a number of points. I think it's worth sort of just asking some questions or getting a sense of whether or not the member intends to move a motion, because I think it would probably get some significant support, and I think it's worth exploring.
One of the beauties about this chamber is the ability of members to raise issues with which they have direct experience and the ability for us as legislators to take that into consideration and reflect upon that experience and that wisdom and that point of view and to either make a piece of legislation better or prevent a particular clause or section of a piece of legislation from proceeding if it is perceived that it would have a negative impact on either the province or a group of individuals in this province.
I listened with interest to what the member had to say, not least of which because, if not for a chance of fate, I may well have been a member of his organization, as I almost became a geologist when I was much younger. The member, I know, is aware of that.
I think the member raises a very important issue that we should probably take into some consideration; that is, when a professional body and its membership have said on at least two occasions, "We don't like the changes that are being proposed," there's a clear message in there. Then we as a province are being asked by a smaller clique, if you like, a smaller body, to say: "Well, we think we know best." That's starting to walk down a slippery path.
In governments, whether federal or provincial or local, whenever councils or legislatures or parliaments start to adopt that attitude, they start finding themselves on the end of the voters' wrath. It's called arrogance, and I think that that is one of the worst labels that can be stuck to anybody in public life — in a council or a legislature or a parliament.
The funny thing is that it can happen not just to governments but to governing bodies as well. They start to see themselves as being somewhat aloof from the members that they are supposed to be a part of or represent.
I think my colleague's words are worth listening to and paying attention to, particularly when there are other alternatives as opposed to disenfranchising people, particularly when there are other methods. Especially when you're dealing — for example, in this case — with a body which, by the very nature of their education and the very nature of the work that they're engaged in is to deal with…. A large part of the profession deals with technology.
The idea of being able to vote electronically on bylaws or on…. I think it's a very interesting idea. In fact, it's something which we as legislators may want to encourage, because it's often been said that one of the ways in which we could improve our democracy, whether at the provincial or the federal level, is to look at electronic voting.
We already have the discussions in terms of how over the next 20 years or so…. What is the potential for voting electronically? Is there a potential for voting electronically? That may well be considered.
When you have people engaged in that technology in an association or an organization where that may well be an option, I think we should encourage that, because there may well be lessons that we as legislators can learn on how something like that can apply in a whole host of different ways. That's what technology is about, and that's how applications are developed. Even in this place we can learn from that.
I think the member raises some really good points, and I think they're worth exploring. I think that if he were to move his amendment, he would find that there is some considerable support and, I think, an opportunity for some interesting debate on the particular issue.
He also makes some points around associations and issues around fees and fee increases. Again, I think that's something that is important.
Too often, small groups seem to feel in the guise that they know best. Quite often they are the more established and longer in the profession or in service, and they forget what it's like to be young and entering a profession and having to establish a practice or establish a career, and the costs that that entails.
Those costs can be considerable, and a hundred dollars here and a hundred dollars there add up. So the idea that we will set the fees and the idea of transferring of voting rights and enfranchisements…. It's something that we should be very cautious about changing.
I don't want to belabour the point, but I did feel it's important to get up and make a few comments on this particular section, particularly because I know that the hon. member across the way has a lot of experience in this particular area. I look forward to the further discussion on this particular section before it's dealt with, and I would encourage the member to move his amendment.
L. Krog: Hon. Chair, it's not November 5, but I think I smell the stench of gunpowder in the chamber somewhere. No, perhaps it's not gunpowder I smell. It's not a plot. It's the smell of Earl Grey tea in bone china cups being shattered by silverware in West Vancouver–Capilano. The Tea Party movement has come north.
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We are sensing rebellion in the government ranks. I swear that there's probably a secret portrait of Sarah Palin hiding over there in the back bench of the Liberal caucus. I sense the disintegration of government before our very eyes as the senior member of this chamber stands up to defend the rights of the little guy.
You know, it was only last year I swear I heard him speaking up for big oil against consumers while we stood up for consumers, and this year he's switched over. He's on the side of the little engineer. God bless the little engineer. I'm delighted. I am delighted to hear the member stand up and speak up for his profession, to stand up for those members who, day in and day out, work hard for British Columbians. I am simply fascinated to be here in this debate this morning — fascinated.
But I do wish to conclude my remarks on this particular section with a question. To the minister: was this a request of the association, or is this something that government developed all on its own without consultation with the member for West Vancouver–Capilano?
Hon. M. Stilwell: First of all, I want to say to my colleague that I do appreciate his comments and believe it demonstrates a healthy and open process, both inside the caucus and within this Legislature. We are a group of members who have divergent backgrounds and experiences, and we bring those to this chamber and this debate in a constructive and positive dialogue. I want to respond to a couple of issues that have also been brought up.
First of all, absolutely it was a request of APEG. Obviously, there are a number of ways to solve their issues. I'll talk a little bit about why we chose the way we did.
First of all, I want to start by reminding everyone that 22 years ago there was a major engineering catastrophe, the collapse of the roof of Station Square on opening day. Hundreds of people were in the store at the time, and it was a miracle that no one was killed. There was a public inquiry following that event, and a number of recommendations were made by the commissioner and adopted by APEGBC to improve the practice of professional engineering and safeguard human life.
One of those recommendations was the development of a practice audit program. When APEGBC not only cannot afford to implement enhancements to its regulatory programs but has to cut its practice audit program by one-third, the government cannot ignore that situation.
In response to the right to set fees by the elected council, nearly all professions in B.C. enable the elected and appointed members of its council to set fees. It is impossible for APEG to implement modernization of professional renewal programs without a long-term source of funding. Two nominal fee increases in 15 years does not maintain an innovative regulatory leader.
In 2008 the bylaw to give APEG council the power to set the annual membership fee received over 65 percent support, failing by a narrow margin of approximately 1 percent. The pattern of the membership's voting on annual fees over the last several years has shown that most of the people who vote — in fact, the vast majority — do support an increase in fees.
Other professions have not permitted members to decide their own annual fees, and this is because a self-regulating professional association is not an advocacy group for members but fundamentally charged with public protection. Although I am not an engineer, I am an active member of a professional college.
As one member has said, some of the members had good personal reasons not to vote for the fees, and indeed, they are good personal reasons. One does not normally enjoy fee increases. However, there is a public interest here that must be served, and the fact that APEGBC has recently reduced the number of practice reviews or audits by 33 percent because of inadequate resources is simply not reasonable.
Section 2 approved on division.
On section 3.
L. Krog: I presume the member for West Vancouver–Capilano is going to be moving his motion shortly.
With respect to this section, two-thirds of council, I wonder if the minister can just tell us: how many members of council are there, and how are they elected?
Hon. M. Stilwell: Ten council members. They are all elected.
L. Krog: Is that by general ballot, or are they elected in various areas? For instance, in the law society you elect benchers on the basis of a geographical designation. Is it a provincewide vote? Is it a vote that incorporates anyone who belongs to the professional engineers association of British Columbia, whether they live in B.C. or not? Or does it involve, as I say, geographic designations?
Hon. M. Stilwell: My understanding is that it's an open vote, not regional. You simply have to be a member.
L. Krog: Again, I also asked the minister — perhaps she wasn't hearing me: does that include engineers who live outside the province of British Columbia who belong to the association, or is it only engineers who live and practise in British Columbia?
Hon. M. Stilwell: My understanding is that the requirement is simply to be a member. There is no speci-
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fication of where the member lives and no description of that in the bylaws.
L. Krog: I take it that, in theory, then, people who live outside British Columbia who are members could be voting on this fee?
Hon. M. Stilwell: Yes, in theory, that is true.
Section 3 approved on division.
On section 4.
L. Krog: I'm just wondering. What's the purpose of section 4?
Hon. M. Stilwell: Section 4 of this bill removes the requirements for bylaws of the provincial council of the British Columbia Registered Music Teachers Association to be approved by the Lieutenant-Governor-in-Council to be valid.
The requirement that bylaw amendments be approved by the Lieutenant-Governor-in-Council has proven, as you can understand, to be cumbersome and time-consuming, and it does not seem justified, given the objects and purposes of the association. Repealing this provision will allow BCRMTA to regulate their own affairs under the act and reduce the government's administrative duties to BCRMTA.
L. Krog: Is this one of the last registered associations that has this kind of requirement that it go before cabinet?
Hon. M. Stilwell: Yes, it is.
Sections 4 to 6 inclusive approved.
On section 7.
L. Krog: I note that the section refers to retroactivity back to January 1, 1966. One can understand the government wishing to correct a taxation issue where millions of dollars have been collected and why they want to make that pitch, but by my math, that is 44-plus years. I'm just wondering why it has to be retroactively changed so far back.
Hon. M. Stilwell: In 1967 the members delegated to the council the authority to set membership fees in those categories. In fact, that wasn't valid under the act. What we're trying to do is ensure that the annual fees paid by these categories of members over a period of approximately 43 years cannot be challenged on the basis that the delegation of setting these categories of fees was unauthorized.
L. Krog: My hearing being what it is, I just want to confirm. What the minister said was that in fact the engineers have been collecting fees since 1966 through a process that was in breach of the act?
Hon. M. Stilwell: Yes, that is so for certain categories — for example, including retired members. Not all membership fees, but for certain categories.
L. Krog: I just wondered: does the minister have any idea how much money we're talking about in total?
Hon. M. Stilwell: No.
L. Krog: Can the minister advise whether this matter has ever been put to a vote of the association generally?
Hon. M. Stilwell: I'm not sure exactly what you're asking except to say that in 1967 the members did indeed delegate this to the council.
L. Krog: I appreciate the minister's answer, but I'm wondering — as we're passing this legislation, presumably, at the request of the association's executive — whether in fact the membership have ever been consulted, either through a newsletter or an opportunity to vote on this particular issue, which has some substantial financial implications. And the minister can't answer the question; I understand that.
Hon. M. Stilwell: The fact that this would be considered ultra vires was really discovered by legislative counsel as we were working on this amendment in general. It was something that government identified that needed to be aligned.
L. Krog: I very much appreciate the minister's disclosure. Legislative counsel generally doesn't make very many mistakes. But the question then, of course, that follows from that is: when exactly was the mistake discovered, and was that mistake relayed to the association for their comment or vote or by way of information to their members?
Hon. M. Stilwell: Apparently, it was discovered in January. It was drawn to the attention of APEGBC. My understanding is that until then they were unaware of it.
L. Krog: Just to be clear then, did they request that this section then be proposed, or was this the government's response only? And again, having had it brought to their attention, was the general membership informed in any way, shape or form?
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Hon. M. Stilwell: Yes, this section was and is on the recommendation of government to APEGBC.
L. Krog: Again, I come back to the question. Can the minister tell the House: apart from APEG's executive being aware of it, was the general membership of the association informed in any way of this issue, and if so, was their input sought?
Hon. M. Stilwell: Not to my knowledge.
Sections 7 and 8 approved on division.
On section 9.
L. Krog: I simply couldn't let a matter of such history pass without some question in this chamber. I note the Columbian Methodist College Act, which is going to be repealed, 1893; Congregational College of British Columbia Act, 1914; Life Bible College Act; Ryerson College; Vancouver Bible Institute, etc.
I take it that all of these institutions are now defunct and have been for some time and that their assets have been dispersed in accordance with appropriate legislation. If the minister could answer, I'd be appreciative.
Hon. M. Stilwell: The answer is yes.
Section 9 approved.
On section 10.
L. Krog: With respect to section 10, just from a drafting perspective, I perused the existing sections 97(1) and (2), and the only change I can see here is sort of an addition. I'm just wondering why we're repealing the whole section and bringing in an entirely new section.
The Chair: We'll just pause while staff come.
If you could repeat the question, Member, for the staff. Thank you.
L. Krog: I took a quick review of the existing sections 97(1) and (2). From a drafting perspective, it appears to me that the sections are identical except for the addition. I'm just wondering: why was the drafting done in this particular manner as opposed to a simple section that was added or deleted?
Hon. M. Polak: There really was no policy reason in particular for doing that. It was the decision of leg. counsel as to how best they saw fit to incorporate the amendment.
L. Krog: I'm just wondering: was this in response to court decisions that required this provision to be made, or was there some uncertainty around whether these moneys were collectible given the existing nature of the statute?
Hon. M. Polak: We are expanding the use of section 8 agreements which are currently in place and used in cases where there are child protection concerns. We want to be able to provide that same kind of support to families in cases where they are in the care of a relative or close friend and yet are not the subject of a child protection concern. So this expands our opportunity to utilize section 8 agreements beyond those which are currently used.
L. Krog: Just so I'm clear: this will apply only to children who are placed in care through the ministry in some form or another, so that support can actually be paid by the parent to the ministry, who will then in turn pay it to the family members who are providing care? Or how will this actually work in a practical way?
Hon. M. Polak: Currently this is the practice for sections (a) to (c) in the current legislation. What we are doing is adding children who would be under a section 8 agreement. Therefore, they are not in the care of the ministry. They're not subject to a continuing custody order. They're not subject to a temporary custody order. The parents have entered into a voluntary agreement with the ministry.
L. Krog: My question to the minister is: will this give an independent right for them to then go to court on their own, or will the ministry be undertaking that and collecting, or attempting to collect, the moneys and then transmitting them?
Hon. M. Polak: Hopefully, nobody ends up in court. We would not ordinarily entertain an agreement unless we could come to an agreement about support and maintenance for the child.
L. Krog: Just to be clear, what would be the practical effect of that? Is it contemplated the agreements will provide that the money be paid to the ministry to compensate it for the moneys that it's paying to the people who are looking after the child, or will the money be paid to the people who are actually caring for the child?
Hon. M. Polak: The money would be paid to the ministry. The ministry provides, then, funding support to the caregivers. But we don't anticipate…. I should back up. This is discretionary, so it really depends on the individual circumstances whether or not we even pursue agreement on maintenance.
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L. Krog: I just want to throw this out as an example, because the presumption always is, and it's a terrible presumption, that parents who lose their children are often poor, and that's not always the case.
In a situation where the ministry allowance is being paid…. The minister can enlighten the chamber, I'm sure, on what maximum amount you would pay. If in fact in the normal circumstance the amount of support that would be payable between parties in an ordinary custodial fight would be higher than what the ministry has paid, is the ministry going to be in a position to limit, in a sense, or would the ministry limit the amount that is being paid?
Let's say, for instance, that the child support guidelines provided that $1,000 a month was appropriate, and the ministry is paying $800. What happens to the $200 — if anything?
Hon. M. Polak: The case that the member describes just would not occur. We use the federal maintenance guidelines, and we don't seek anything beyond what we would ordinarily be providing to the caregivers.
Section 10 approved.
On section 11.
L. Krog: I wonder if the minister could just explain the effect of section 11.
Hon. M. MacDiarmid: With me are Rick Davis from the Ministry of Education, superintendent of achievement; and Mary Shaw, manager of governance and legislation.
To the member's question, the purpose of this legislation is to make a change so that current members of the College of Teachers and former members are treated the same under legislation.
L. Krog: Was this legislative proposal requested by the college itself, or is this a government initiative?
Hon. M. MacDiarmid: Yes, this was requested by the College of Teachers.
L. Krog: I presume that they have had a chance to review proposed section 11 and that they're satisfied that it's appropriate and corresponds to the need they've recognized?
Hon. M. MacDiarmid: Yes, that's the case.
Section 11 approved.
On section 12.
L. Krog: I wonder if she could explain to the House exactly what the impact of this is in a practical way and what it will mean in terms of a change of practice with respect to the discipline committee.
Hon. M. MacDiarmid: Currently, for teachers who are currently members of the college, the discipline committee is able to both consider the matter before them and assign a penalty where there's a penalty, but for former teachers this is not the case. So this changes it so that it will be the same for both.
If you're a former teacher, the discipline committee can be tasked with both looking at the matter and then providing the disciplinary measures, so it makes it the same for both former teachers and current teachers.
L. Krog: If I can just wrap my head around this, is the minister saying that right now…? The explanatory note talks about removing "limits on delegating powers of the council to the discipline committee."
Is it the situation right now that they have no jurisdiction over a former teacher? The minister can nod and give me a hint here. In other words, if I'm no longer a member of the college, the discipline committee of the college has no jurisdiction over me. Is that the case?
Hon. M. MacDiarmid: The case now is that the disciplinary committee can look at the former teacher, but when it comes to what the actual discipline, the penalty, will be, it has to go back to the college. So the body that has looked at the matter and is understanding the matter fully is not the body that actually assigns the penalty. This would change, and it would delegate both of those things to the disciplinary committee on behalf of the college.
Section 12 approved.
On section 13.
L. Krog: The explanatory note says that it repeals a redundant provision. I'm just wondering: how is it redundant? Is there a piece of the act that does exactly the same thing?
Hon. B. Penner: Yes, the member is essentially correct. Section 17 of the bill will essentially do what this section would have done, and I note that this section had not been brought into force — the one that's now being repealed.
Section 13 approved.
On section 14.
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M. Sather: These following sections are on amendments to the Water Act that, as I mentioned earlier, have some considerable public interest.
Section 14 amends section 8(1) of the Water Act by striking out "If diversion or use of water is required for a term not exceeding 12 months, the comptroller or a regional water manager may, without issuing a licence," and substituting "If diversion or use of water is required for a term not exceeding 24 months, the comptroller or a regional water manager may, on application, without issuing a licence."
This is the use of diverting water without a water licence. I want to ask the minister. Currently that's permitted for up to 12 months. Now it will be extended for another year that an approval can be granted without a licence. Why does the government see fit to extend the no-licence-required period by 12 months?
Hon. B. Penner: We're doing this as an administrative reduction, because there was a burden placed on the ministry by people seeking to roll over their one-year, short-term-use approvals. Our feeling is that the time that ministry staff were spending considering extending the one-year, short-term approvals would be better spent focusing on the longer-term water licence applications, which is a thorough and time-consuming process.
I just want to make it clear that the government is not relinquishing authority or control by way of this measure, because of course in order to get the short-term authorization, you still have to get approval from the ministry. I'm told that the requirements to obtain such a short-term-use approval under section 8 include demonstrating where the source of the water is, the quantity that is sought, the location and type of works that would be used and the purpose for which the water will be used.
Some examples can be people building homes and requiring water for domestic purposes. We find that quite often the one-year authorization is not enough time for the people to complete the construction of their house. Another type of use is for watering roads to keep the dust down. Those types of authorizations often end up being requested year after year.
We're hoping that with this process, instead of being on the treadmill of extending the one-year authorizations, we can go to two years, which will hopefully be enough time for the ministry to process longer-term licences and do that kind of more detailed evaluation.
M. Sather: I want to ask the minister, then: are these short-term authorizations also on occasion issued for larger diversions, such as the issue we have of water being diverted on the North Alouette River in Pitt Meadows? That's a fairly large diversion. Are these types of diversions also sometimes approved on these short-term authorizations?
Hon. B. Penner: It is conceivable that someone could apply for short-term-use authorization for agricultural purposes. I'm not aware if the particular company to which the member is referring did.
I note that that matter, in terms of that water withdrawal, was investigated by the conservation officer service, which is part of the Ministry of Environment. They have completed their investigation and submitted a report to Crown counsel, and like the member, we are awaiting word from Crown counsel as to their conclusions after reviewing our investigation.
M. Sather: Well, I'm assuming that since that particular case has gone to Crown counsel, as the minister said, they would not have had a short-term authorization to remove that water. It's troubling, though, to think that they could have had or that another, similar kind of diversion of that magnitude…. It may not be troubling that they could get a short-term authorization if in fact the requirements….
Well, they can't be as stringent as those that are required to get a licence. But nonetheless, if they're adequate for a short period of time…. But now we're talking about extending it for another whole year. In other words, in a case like the North Alouette, but not that case, the individual could divert a large amount of water for up to two years from a public river or stream — or a lake, I presume — and not have a licence to do so.
The minister mentioned that one of the reasons they're moving to the two years is that it's difficult for staff to process the shorter one-year applications for authorization.
[L. Reid in the chair.]
Now, we know that the ministry has been cut back considerably in its capacities to manage fieldwork. I would like to know from the minister if that in fact is a factor in extending this to two years. Is it that the ministry is finding itself without the capacity to manage these short-term water diversion authorizations within 12 months?
Hon. B. Penner: We have the capacity to process applications. We'd rather use that capacity to process the water licence applications, which are a longer-term approval and often involve larger types of projects.
The short-term approval, just to caution the member, does have legal restrictions or requirements to it. If you are issued a short-term approval, it has limits, and there are legal consequences, potentially, if you don't live
[ Page 3683 ]
within that short-term approval and the requirements established by that. One of the issues that the ministry would consider before issuing a short-term approval is the quantity being sought and the source, etc., and the type of work or use that someone wants to make with that water.
M. Sather: Is it the case, then, that the ministry — because the minister did mention capacity — does not have the capacity on an ongoing, regular basis to issue a water licence within one year of an application?
Hon. B. Penner: It has always been the case, at least in my 14 years of legislative experience, that water licence applications take, potentially, a considerable amount of time. The more complex the application or the proposed project, the more thorough the work that's done in terms of considering whether or not to issue a water licence and, if so, with what conditions.
It's true that obtaining a water licence can take a period of time. That is why, for several decades, the Water Act has contained the provision in section 8 to allow for a short-term approval pending the outcome of a longer-term water licence application. We're not 100 percent sure, but we believe that this provision originated in 1979 and has been used since that time.
M. Sather: I heard the minister say that a water application could take several months to approve, so I'm a little mystified. Several months, to me, doesn't necessarily mean over one year. Can the minister be more specific? Would it take more than a year currently for ministry staff to be able to do the work that needs to be done to issue a water licence?
Hon. B. Penner: I am advised by staff who work in the ministry that the range could be anywhere from six months to several years for a more detailed water licence application that might be associated with power generation purposes. As I said in my last answer, a more complex, larger proposal will attract a greater level of scrutiny and rigour and require more studies to be done. That's why it takes longer.
That was the case for the last couple of decades. It has always been the case in British Columbia that to obtain your full-blown water licence, it can take a significant period of time. That's why the Legislature, several decades ago, saw fit to introduce the concept of a short-term authorization, which has been utilized by various governments since that time.
Again, taking a look at how many of these were being rolled over and people applying to have them extended while they're completing work on their home or whatever else they're doing, we felt it would be better to acknowledge the reality that the short-term authorizations were being extended, start with a two-year approval and focus our resources on the longer-term water licence applications, which can be a protracted process.
We'd rather put our resources into that and make sure that we're providing the safeguards that people are looking for in terms of water.
M. Sather: All right. The minister said that a project such as a power generation project could take several years of work to issue a water licence.
I'd like, though, to return to water diversions such as happened on the North Alouette River. I only use this as an example, because I'm sure there are many other similar ones. Does it take the ministry over one year to issue a water licence for that type of water diversion?
It's a big pipe like this. I don't have the exact amount of water that was diverted, but a considerable amount. I know that the minister is familiar with that particular issue. Does it take the ministry over one year to issue a water licence for those types of water diversions?
Hon. B. Penner: It's conceivable that it could take that long, particularly if there are additional applications that have come in just before that one, because the ministry processes applications at the time that they're received. So if you submit your application just after somebody else has, the ministry will look first at the one that we received first in time.
In addition, if there's a watercourse that we've received a water licence application for that has already been allocated to other water licence holders, the ministry has to be very careful about whether or not to approve further water withdrawals if, as I've said, that watercourse has already had a number of water licences granted in relation to it for other licence holders.
One of the things we look at is whether the water is fully allocated. The technical term is "recorded." It depends on the nature of the application, whether there are other applications that were received just before it, what the nature of the application is all about and what the stream flow conditions are like in terms of whether other people have already been given rights to remove water from that particular watercourse that someone might now be applying for.
M. Sather: The minister said that it's conceivable that such an application could take over a year. I'm sure ministry staff are familiar with these applications and the processing thereof. Can the minister tell this House: have there been any such applications of the type I've previously described during the past, let's say, two years that have taken more than one year to issue the licence for?
Hon. B. Penner: I strongly suspect the answer is yes. I don't have a detailed list here with me, but yes, it does
[ Page 3684 ]
take time to process water licence applications. I suspect, if our answer was that we issued those within the same day they were issued, the member would rightly complain that we're not giving those application requests sufficient scrutiny.
We have made an effort to try and reduce the backlog and reduce the turnaround time. It's less today than it was in the 1990s, so people can receive word about their water licence applications sooner than used to be the case, but it does take time to grant a water licence. I think that's the way it should be.
If the member's got a different view about that, I'd be interested to hear it.
M. Sather: Well, my interest is that these applications be completed efficiently and as quickly as is possible regarding due diligence.
Now, the minister has mentioned that one of the reasons — maybe the reason — that they're moving to a two-year, licence-free period is that the one-year, short-term applications, a number of them, are being rolled over. In other words, the ministry can't complete the water licence application within a year. In the last year, then, how many of these applications have been rolled over — i.e., have been unable to be completed within the current legislated period of one year?
Hon. B. Penner: I just want to clarify. When I used the term "rolled over," it was a casual reference. In fact, what people need to do is reapply. If they meet the standards, they will be reissued a short-term approval. That's why it puts a significant workload on the ministry — because at the end of that one year, if they have not yet completed their home, in the case of domestic water requirements, then they must resubmit their application.
That's more work for the applicant, but it's also more work for the ministry to once again review this application to renew, in effect, the one-year authorization. In a given year the Ministry of Environment may receive and process approximately 150 short-term water use authorizations.
M. Sather: Whether you call it rolled over or another term, the fact of the matter is that they're not being completed within the year. Some of those, an unknown number, are for larger water diversions, such as happened in Pitt Meadows.
My concern — and I'm not assured by what the minister has said to date — is that a considerable reason why this legislation is coming into effect is that the ministry has simply lost capacity to be able to do the work that needs to be done.
If the minister can stand in the House and tell us today that that is absolutely not the case, that they have just as many staff in the field doing this work as they had several years ago, I'd be pleased to hear that. But with all the cutbacks we hear about, I have concerns that the ministry is unable to do the work, that the minister is unable to do the work or have the work done with the staff he currently has.
Hon. B. Penner: Again, as I said earlier, it's a question of where you want to put your resources and your capacity. Would you rather have it focusing on one-year water authorizations for a short term, which we then frequently get applications to renew, or would you rather spend the majority of your time on water licence applications, which typically are for more significant projects?
By making this change, we will move to a two-year, short-term authorization. I should note that many people who apply for the short-term authorization have no interest in a longer-term water licence application. The one-year or two-year licence, or short-term approval, will be sufficient for the work that they're doing. In some cases people are applying for the longer-term licence. In many cases they're not.
One other point I'd like to stress. The member hasn't asked the question, but he may be wondering about it because I had the question too. Would people proposing to build hydroelectric facilities be seeking a short-term authorization or make use of this provision? The answer I was given was no.
People are not about to embark on a major project and investment of capital of that nature with the uncertainty of just a two-year authorization. They would wait until they would get a longer-term water licence approval before taking that kind of risk.
L. Krog: Just so I can understand. At the present time, then, if I'm applying for a short-term approval for the 12 months, is there any requirement for publication of that in a local paper, anything of that nature, so that the public is aware that I'm making that application?
Hon. B. Penner: I'm advised that ministry staff may require a notification where it's believed to be a sensitive issue and requires consultation with First Nations where First Nations interests are believed to be potentially affected.
L. Krog: As I understand it from the minister, presently if I do apply for this short-term use diversion, then there is no mandatory requirement for publication of notice. The decision whether or not to require someone to publicize the fact that they are applying for a diversion is entirely up to the ministry.
Hon. B. Penner: It is the discretion of the statutory officials that would be making the decision about a short-term authorization.
[ Page 3685 ]
L. Krog: So if I'm applying for what I will call a full licence, then I'm looking at mandatory publication in every circumstance?
Hon. B. Penner: I'll just refer the member to section 10(1)(b) of the existing Water Act. "Subject to subsection (2), a person who applies for a licence must, within the time prescribed by regulation…(b) comply with the directions of the comptroller or the regional water manager with respect to filing the application, giving notice of it by posting, service or publication and paying the prescribed fees." And it goes on to the other subsections.
L. Krog: I'm just wondering: has the minister contemplated any policy with respect to this as we're extending it from 12 to 24 months? Obviously, the public may not be concerned with a 12-month temporary diversion, but they may have concerns around 24 months. Is there any contemplated policy with respect to this — whether or not there will in fact be more requests or requirements for publication and notice?
Hon. B. Penner: If this section passes and is brought into force, the regional managers, who are the statutory decision-makers, and the water managers will have to do a policy review and update, given that the legislation has changed. This would be one of the issues that would be considered as part of that policy review.
Section 14 approved.
On section 15.
M. Sather: This is a section that amends 12.1(8) by striking out "A decision under this section, or under a section referred to in subsection (6)," and substituting "Despite section 92 (1), a decision under this section or under a section referred to in subsection (6) of this section." I'm wondering if the minister could explain what the effect is of that change.
The Chair: For clarification, Member, which section are you addressing?
M. Sather: Section 16 — referring to an amendment to section 12.1(8).
The Chair: With your indulgence, we will pass section 15.
M. Sather: Oh, I'm sorry. I made a mistake.
On section 15, this section strikes out "regional manager" and substitutes "regional water manager." I just wanted to ask: what's the difference between a regional manager and a regional water manager?
Hon. B. Penner: The term "regional water manager" is the defined term in the Water Act, whereas "regional manager" isn't. For the sake of clarity and certainty, we felt it's better to be very specific that what we're referring to in the sections in the act is the regional water manager, because then that relates more directly back to the definition, which uses the phrase "regional water manager."
I think it's been assumed that that's what was meant in the act previously — that when it said "regional manager," it meant the "regional water manager" because that was defined earlier on in the act. But for greater certainty we thought we'd take this opportunity to do a bit of housekeeping.
Section 15 approved.
On section 16.
M. Sather: As I mentioned, it amends section 12.1(8) of the Water Act by striking out one section, which I've already mentioned, and substituting another. Can the minister just tell the House: what's the effect of that shift?
Hon. B. Penner: This is, in essence, a bit more housekeeping, correcting a cross-referencing error that referred to a section that's no longer there and will now correctly refer to a section that is there.
M. Sather: In section 12.1(8)(b) of the act that's being amended, what is struck out is "is not appealable under section 40" — and section 40 was repealed, I believe, in the Water Act, but anyway — and substituting "may not be appealed."
It goes from "is not appealable under section 40" to "may not be appealed." I'm just a little bit confused. If the minister could explain the housekeeping — because it looks to me like section 40 was already repealed.
Hon. B. Penner: The member is correct that the section 40 that was referred to had already been removed, but some references to section 40 had not been. So that's the housekeeping there.
Then, while they were at it, the legislative drafters thought they would rephrase the provision so that it was consistent with some other phrases used elsewhere in the act. So instead of saying "is not appealable," it's been changed to "may not be appealed." It's just a change in phraseology.
Sections 16 and 17 approved.
On section 18.
[ Page 3686 ]
M. Sather: Section 18 amends section 23 of the Water Act in subsection (4) by striking out "if the land comprises more than 20 parcels," and substituting "if the land comprises more than 6 parcels." It seems to me like that's a good thing.
Essentially, what it looks like to me is that…. This is under the "Suspension and cancellation of rights and licences" section. So it seems to me that now those provisions apply to smaller landowners — which they, I'm sure, might have some issue with.
Maybe the minister could just tell the House a little bit more about why they made this change. I'll wait for the minister's response on that.
Hon. B. Penner: The reason for this change is that staff felt we should make this section and the threshold consistent with what appears in section 51 of the act, where the threshold is that six or more licensees are required in order to form a water users' community. So it's to bring the two sections into alignment.
M. Sather: Just to clarify, with regard to the parcels that are referred to, each parcel is an individual landowner, then? Is that correct?
Hon. B. Penner: The determining factor is not the number of individual landowners but the number of individual parcels. Conceivably, you could have one owner and still trigger the requirement for the notification by way of mail if that one owner owns more than the requisite number of parcels. The trigger is the number of parcels, not the number of owners.
M. Sather: On section 18(b), this says that they're striking out, in subsection (7), "If the engineer reports in writing" and substituting "If an engineer or an officer reports in writing" and adding "in accordance with the licence" after "beneficial use of water." That is in section 23(7). Why is it required to say "in accordance with the licence" after "beneficial use of water" when it previously wasn't there?
Hon. B. Penner: What this change does is make it clear, when an officer or an engineer is reporting on whether or not the licence or the works are in compliance, that they're checking to see if it's in compliance with the licence.
The new phrase that's being inserted further down here is: "in accordance with the licence." That follows the existing phrase that's still there: "recent beneficial use of water." Just for greater specificity, the "in accordance with the licence" phrase is being added to make it clear that what they have to do is comply with the licence.
Section 18 approved.
On section 19.
M. Sather: In section 65(2) of the act, it says: "(b) the Forest Act or the Range Act, respecting an authorization or the exercise of a power under those Acts," if the forest act "or the standards or regulations under the act apply in relation to the activity authorized or the power…." It appears to me that that part — "relation to the activity authorized or the power" — is deleted.
I expect it's another housekeeping amendment. If the minister could just tell us why that's deleted.
Hon. B. Penner: This amendment brings the Water Act into synchronization, into sync, with the changes that have happened to forestry legislation over the last few years. The Forest and Range Practices Act was introduced and passed a number of years ago. Certain elements of the Forest Practices Code still remain, but to make sure that the Water Act had the proper references, this amendment is being made.
Section 19 approved.
On section 20.
M. Sather: This is part 5 under "Wells and Ground Water Protection." Section 73(3) of the act says: "A person who is required to comply with subsection (1) or (2) must…." Then it substitutes: "A person who is required to comply with a regulation under subsection (1) or is required to comply with subsection (2) must."
I'm just wondering about that phrase "with a regulation." There was no reference there to a regulation previously. Why is that phrase brought in — "with a regulation"?
Hon. B. Penner: This change is being made — and it will be through regulation, I believe — so that we can determine who else can be responsible for taking this water sample for testing.
As the act is currently drafted, I believe we're limited to having the well driller take the actual sample and take it in for testing. The well driller may not be the person best placed to take the water sample, because the water, quite expectedly, would be likely to be dirty or muddy immediately following the drilling activity. So it would not necessarily be a representative sample of the water quality if the driller were to take that water sample right after drilling.
What we're contemplating is allowing, perhaps, the pump installer, a qualified professional or a geoscientist who conducts a flow test after the drilling to take the water sample, so that we get a more representative sample of what that water is actually like once the sediment has settled out following the drilling.
[ Page 3687 ]
The key point here is that the water sample and testing will still be required. It's just a matter of the well driller perhaps not being the best person to be taking that sample.
M. Sather: The minister said that he wanted the sediment to settle out of the water before the sample is taken. As it currently stands, as I understand it, if you have a driller, a person responsible for the pump and so on, and the well, there would have to be a period of time, I assume, before the water would settle, as you will. So is it the case now that there's a period of time that has to elapse before the water sample is taken, or not?
Hon. B. Penner: It may not be a matter of simply a period of time but rather pumping in order to purge the well of the sediment or debris that's remaining following the drilling activity. Again, that's why we're contemplating allowing the pump installer or the qualified professional, such as a geoscientist who is conducting the flow test, to take the water sample — because that would be at the time when the well has been purged.
M. Sather: In section 20, under current regulations, then, it says must "take or cause to be taken a sample" in accordance with the regulations. Just so that I'm clear, under current regulations, either the driller or the person who installs the pumps is required to take a sample of the water at the appropriate time, I guess, and submit that, I assume.
Hon. B. Penner: The member is a bit mistaken. The current wording of the act before it's amended, which I hope it will be shortly, states, "A person responsible for drilling a well or making prescribed alterations to a well must" — and then it says, among other things — "take or cause to be taken" a sample to be analyzed.
That constrains us. That prohibits us from allowing a pump installer or a qualified professional, such as a geoscientist who is conducting the flow test, from taking the water sample. As I've already explained, there are some good reasons why it might make more sense to have the pump installer or the geoscientist conduct the water sample test rather than the well driller. Again, the key point here, which I hope the member is not missing, is that water testing will still be required.
I know we're running short on time. I don't know if the member has more questions. Are we able to pass this section?
M. Sather: I do have another question or two, Madam Speaker, but noting the hour, I call adjournment of debate.
Motion approved.
The committee rose at 11:54 a.m.
The House resumed; Mr. Speaker in the chair.
Committee of the Whole (Section B), having reported progress, was granted leave to sit again.
Committee of Supply (Section A), having reported progress, was granted leave to sit again.
Hon. B. Penner moved adjournment of the House.
Motion approved.
Mr. Speaker: This House stands adjourned until 1:30 this afternoon.
The House adjourned at 11:55 a.m.
PROCEEDINGS IN THE
DOUGLAS FIR ROOM
Committee of Supply
ESTIMATES: MINISTRY OF
SMALL BUSINESS, TECHNOLOGY
AND ECONOMIC DEVELOPMENT
The House in Committee of Supply (Section A); H. Bloy in the chair.
The committee met at 10:09 a.m.
The Chair: Good morning, everybody, and welcome to the Douglas Fir Room. We're doing the budget estimates for the Ministry of Small Business, Technology and Economic Development.
I remind everybody that electronic devices cannot be used in an audio form, and electronic devices cannot be used by members when they're standing and speaking.
On Vote 43: ministry operations, $47,426,000.
Hon. I. Black: Good morning. I would like to welcome, obviously, members opposite and those viewing at home.
Before I get started, I'd like to introduce the staff that I have with me. Starting on my immediate right, I've got our deputy minister, Don Fast. We also have with me Marcus Ewert-Johns, who is the executive director of the international business development in the ministry; Jim Soles, who's our ADM of small business, research and competition; Terry Gelinas, who is our chief financial officer; and Barb Searle, who is the director of
[ Page 3688 ]
financial planning systems and reporting. I'll have other staff coming and going through the course of our estimates, and I'll introduce them as they arrive.
They are part of a team of about 200 public servants who deliver services every day on behalf of the people of British Columbia within our ministry. It's been about a year now that I've had the privilege of serving as the minister of this ministry and coming to understand the crucial nature of the work that they do at a conceptual level but also at an individual level. I've come to know many of the staff and appreciate them for their daily contributions.
Just in making some opening remarks, it's true that we have just come away from what is likely the greatest economic development opportunity of a generation — arguably, the greatest one that our cities of Vancouver, Whistler, Richmond and, in the broader sense, the province of British Columbia are likely to see in this century. It really changed the way that the world sees us and, I think, in many ways, the way we see ourselves.
With this change comes opportunity, an opportunity to tell the world that we're open for business and we're open for investment. I think that we had the opportunity, through the Olympic Games, to probably perform the largest trade show that we've ever seen.
But rather than us, as our ministry does, travelling to other parts of the world to tell the rest of the world why British Columbia is such a great place to invest, to bring up families, to grow jobs, to create businesses and to support communities…. Rather than us going to these trade shows all over the world, the largest trade show in the world actually came to us. So it was really an opportunity that presented itself, and it's one that we've capitalized on in every sense of the phrase.
We delivered a very, very clear message to the many, many people whom we had contact with during our business hosting program, and their response was very clear — that they're ready to invest and they're ready to do business in British Columbia because they liked what they saw. They liked our business advantages. They liked our geographic advantages, our expanding transportation infrastructure. Most importantly, they were impressed by the people here.
I mention the Olympics because the bulk of the work that we do in our ministry — and, frankly, the bulk of the work associated with the Olympic Games for our ministry — lies ahead. The Olympics represent, as has been said, a launching pad, not a landing pad. For us, that term directly relates to the work that we have to do. For us, the launching pad truly is now. This is where we put our shoulders to the wheel. We take advantage of the visitors that we had, of the hosting programs that took place, and we focus on the future.
We took the resources of this ministry, which for a good part of last year were focused inwardly as we threw out the welcome mat, and we now resume what this ministry has been doing for many, many years, which is focusing its programs on driving the economy of British Columbia and making sure the rest of the world knows, on a proactive and outbound basis, what it is we do and why it represents such a remarkable place to invest and to raise families.
Part of the title of this ministry is "Small Business." Those are the first two words within it, and the small business community drives a great deal of the activity that we do in this ministry, frankly, because they drive a great deal of the activity that takes place within the province of B.C. So I want to make one or two quick remarks on our small business community.
For the benefit of those watching at home and for the members opposite, 98 percent of all the businesses in B.C. are small businesses. There are 384,000 plus small businesses here in British Columbia, and we depend on them greatly. We depend on them because, unlike any other province in the country, we have over a third of our GDP that comes from our small business community.
We have taken many, many steps since 2001 to prioritize the small business community within the economic framework and to send very clear messages to the men and women who are willing to take the risks to start small businesses, to walk away from great jobs that they may have, to put their house on the line in many, many cases — in fact, in most cases — and to pursue their dreams.
What we did for the small business community to encourage them to take those types of risks number in many, many policies, such as when we've reduced the tax rate for small business by 44 percent since we took government. When we arrived in government and had the responsibilities of governing this great province, the small business tax rate was about 4½ percent. We cut it to 2½ percent, and within the next year and a half it's actually going to go to zero.
The small business tax threshold is a very important number as well. It sounds like a kind of boring accounting term, I realize, but that's the number at which a small business, once it becomes profitable, starts paying tax.
When you're in that crucial small business phase of your business, when you're in the early years and desperately trying to pay the bills and facing the anxiety of meeting payroll and paying suppliers and all the things that small businesses have to wrestle with on a daily basis, cash flow and keeping as much money as you can to reinvest into your business, into your people and hiring more people to grow your business is a very, very important element.
By setting a threshold at which income tax starts becoming due and payable, we send a very clear message to our small business community. When we took government, the small business tax threshold was $200,000. We decided it should be higher, that they should be al-
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lowed to keep more of that money and reinvest and grow their businesses before starting to pay income tax, so we raised that to $400,000 at first. Now we've raised it to $500,000, and indeed, it is the highest in Canada.
One of the clear messages we get from our small business community is: "Make it easier for us to do business, please. Get government out of our way as much as possible so that we're focusing on serving our customers, hiring more people and growing our businesses." In that respect we focused on regulatory count. When we formed government in 2001 we focused on regulations and were able to eliminate over 152,000 of them, about 42 percent of the regulation count on the books that were unnecessary got in the way of businesses. We eliminated them.
However, there is no finish line to that exercise. We continue to have deregulation as a primary focus of our Small Business Roundtable, and we continue to canvass our small business community as we tour the province, engage with them one-on-one in every geography of the country, and consistently the message comes through that we must continue to focus on that crucial area.
I'll turn briefly to the Asia-Pacific. If small business is the economy's backbone, then truly trade is the lifeblood. It's why it's so important to make sure that our companies and exports can access markets both at home and around the world. Now, we all know about the geographic positioning of British Columbia, but it's increasingly becoming the key gateway to the established and growing markets in Asia. We export a higher percentage of our total exports than any other province in Canada.
Now, our greatest friends, our greatest allies and our greatest trading partner continues to be the United States of America, but we have very deliberately focused our economic development away from the reliance that exists on the U.S. Most other provinces have an export reliance on the U.S. that's at least 80 percent and, in many cases, can be as high as 90 percent. We have, through deliberate focus, managed to navigate that number down to where our reliance on our partners and friends to the south of us is actually in around the 50 percent number and typically doesn't get above 60 percent in a given year.
About 37 percent of our trade now is done with Asia, about $9.4 billion. Since 1999 our exports to this all-important region have grown by about 31 percent, notwithstanding the global recession that we're just coming through at the moment, and we clearly know that Asia is key to the future. It's one of the reasons why we have established a network of half a dozen trade and investment representative offices in Asia, located in China, India, Japan and Korea.
These offices, plus the Asia-Pacific Business Centre at Robson Square and the rest of the ministry's Asia-Pacific trade and investment division help British Columbia–based companies connect to help promote B.C. as a destination for trade and foreign investment. They help our B.C.-based companies to do business overseas, but they also help the inbound investors connect to opportunities right here at home.
I want to talk briefly about the ICE fund and our green economy, because that's clearly an area where we're going. We have got a very progressive approach to the environment here in British Columbia, and we're very proud of that. One of this ministry's responsibilities is to help lead the way in creating a low-carbon economy, and one of the successes in the goal is the innovative clean energy fund, known as the ICE fund.
The purpose of the ICE fund is to accelerate the development of new energy technologies. In addition to creating socioeconomic benefits for British Columbians, the ICE fund helps solve real-life energy and environmental issues. Currently the ICE fund is investing $53 million towards 39 clean energy projects with a total project value of almost $200 million.
There's little doubt that British Columbia is poised to become a leading player and benefit financially from the emerging green economy. We have, as some know, the third-largest cluster in the world of green energy and green economy talent and businesses focused here in B.C. right now. We're seen as one of the key hubs on the planet, and we wish to secure our position and grow it.
Last week the GLOBE Foundation released a study forecasting that British Columbia's green economy could hit $27 billion by 2020 and account for over 165,000 full-time jobs.
I'll just talk briefly on innovation, research and development. Our ministry is also the lead for innovation and, naturally, technology, as that also features in the name of the ministry. Many of the jobs of tomorrow will be in an economy that is supportive of research and development. That is why our government has invested about $1.8 billion over the past number of years to support innovation and research, as well as putting more than $56 million into the leading-edge endowment fund, which is attracting the world's top scientists to British Columbia.
This ministry is also responsible for trade interprovincially, as well as internationally insofar as B.C.'s impact is concerned. Economies prosper when there is free movement of goods and trade and people, and you can't create economic opportunities by closing the borders, closing the doors and erecting barriers to trade.
Last year we saw the full implementation of the Trade, Investment and Labour Mobility Agreement, known as TILMA, with the province of Alberta. This has created the second-largest economy in Canada, 30 percent larger than Quebec's. Thanks to this agreement, TILMA, we've managed to streamline business registration and
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reporting requirements so that businesses registering in one province will automatically be recognized by the other.
The credentials of skilled workers are now recognized in both provinces, eliminating the needless agony of recertification and allowing people to move seamlessly where they see fit. This new partnership will make our province more attractive to international investors, leading to jobs and overseas opportunities for our companies.
Let me wrap up in terms of my opening remarks by talking about where we see the future of British Columbia. There are many, many reasons to be bullish on British Columbia's future economic prospects.
The Canada Mortgage and Housing Corporation forecasts that new-housing starts in B.C., one the key measurements of economic health, will rise by 37 percent in 2010, leading Canada in this crucial job-creating category.
Meanwhile, the Conference Board of Canada forecasts that B.C. will record 3.7 percent real GDP growth in 2010 — again, the highest rate in all of Canada. The board also predicts Vancouver's economy to grow by 4½ percent this year, faster than any other Canadian city, while Abbotsford, just down the road, will actually grow by more than 3 percent.
Finally, the Canadian Federation of Independent Business reports that the confidence of B.C.'s small and medium businesses is 25 points higher than it was just a year ago.
The list goes on from there. The Royal Bank, Scotiabank, Desjardins — all of them are looking to B.C. to lead in job creation in 2010 as well. In fact, our nation's leading banks and financial institutions say that we will either lead Canada or be in the top three with respect to GDP growth this year.
This is a testament to a couple of things. It's a testament to Canada's strong and stable banking sector and our positive economic foundation, which has allowed us to weather this economic storm better than anywhere else on the planet. These advantages, combined with the proposed federal changes, will see B.C. being one of the first places that venture capitalists look in order to invest their money and, yes, create jobs.
So make no mistake. B.C. is very, very well positioned as the world gains its economic strength.
We look forward to questions on our 2010 and 2011 budget from the members opposite.
J. Kwan: Thank you to the minister for his opening statements and to all the staff for being present here today.
Let me first say this right off the top. I'm sort of struggling with a bit of a cold, so from time to time I may go into a coughing fit of sorts. I'll try to prevent that as best as I can, but if I do, I apologize in advance.
For the purposes of today's discussion, just to let the minister know…. I think I've communicated this to the minister's staff earlier as well — his ministerial assistant, I think, or executive assistant or an assistant of sorts. I'm not sure what the title is because they keep changing.
Hon. I. Black: He's my EA.
J. Kwan: He's your EA? Executive assistant. Okay, there we go.
About the order of things. I'll just highlight this for people's information.
Following from the estimates debate of November 2009, there were a number of outstanding questions to which we have yet to receive the answers, so I'm going to go back to that and ask some of those questions and hopefully get some of the answers resulting from it.
We'll then move on to the small business sector, particularly as it relates to the HST. Then we're going to move on to discretionary spending within the ministry and, after that, to venture capital funds, the ICE fund. Then we're going to move on to the Olympic-related matters in this ministry, particularly hosting activities, spending and so on.
After that, I'd like to talk a little bit about this advertising budget within the ministry and its spending related to that and then, last but not least, go into the trade issues within the ministry. I should also add technology as the last piece. Then there'll be a category of what we call "others," I guess, which don't necessarily neatly fit into any of these types of categories or got missed along the way. We'll sort of add that in.
Finally, there are some MLAs who have expressed an interest in participating in the estimates debate as well. We'll insert them, hopefully in the appropriate areas that they've expressed interest. As is the case with this place, sometimes that schedule doesn't necessarily work out, but we'll endeavour to do our very best. I want to make sure that MLAs also get a chance to ask questions that are relevant to their ridings related to the ministry.
So let the fun begin, shall we?
November 3, 2009 — and this is just going back in Hansard — there was a series of materials that I had requested which the minister committed to providing. That material, I think, was supposed to be received before the session ended. The session has ended and come and gone. The new one began. We have yet to receive the information, so let me just go back and canvass these materials one by one with the minister.
At that time I had asked the minister for the minutes of the round-table meetings, and the minister had committed that he would go back and ask the participants about that and get back to me accordingly. He said that he was in fact meeting the round-table folks the following week, so that would be the following week of
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November 9. It's been many moons, I guess, since then, and I wonder if the minister could tell me what the outcome of that is.
Hon. I. Black: Sorry, I missed the first part of what you said.
J. Kwan: The round-table minutes. The minister was wondering about….
Interjection.
J. Kwan: I had asked for the minutes of the round-table meetings, and the minister had said that he would endeavour to go and seek and speak with the round-table participants the following week around this request and get back to me about it.
It's been months now, so I'm sure the minister has had that meeting. I wonder if the minister can tell me what the outcome of that request is. Further to that, how many more round-table meetings has the minister had, and if he could tell us about some of the discussions that took place.
Hon. I. Black: Actually, the executive director of our small business secretariat is just arriving shortly. If I can just defer the question for a second, we'll come back to it once she arrives, if that's okay with the member opposite.
J. Kwan: Sure. We will defer that, then.
Let me go on to ask about another area which we canvassed last time. I asked the minister for a master list of all the initiatives that the $11.9 million supported — that was in the context of trade missions, which we talked about last time — and for the minister to provide an itemized list of the initiatives with this $11.9 million and what it supported — the detailed information on who, when, what and what was accomplished, along with the individual expenditures.
We haven't received that information. The minister committed that they would provide that information once it was compiled. Perhaps the minister can then tell me about this $11.9 million expenditure at this point.
Hon. I. Black: I'm advised, actually, that the letter was sent with the information, as best as can be gathered by our team, to address the member's question. However, I've asked my staff to look into it, because I'm advised that, actually, that information was sent.
J. Kwan: If it was, I haven't received it, either here in Victoria or in Vancouver in my constituency office. So maybe it's somewhere in transit, in the mailroom or something. I guess we'll wait, then, to see if we can track it down. If we can track it down, then I can certainly take a look at that, and that will perhaps save us a whole lot of time related to that.
Maybe I can ask this question. The package that was sent, then, if there was a package that was sent…. Did it include all the information that I requested? I didn't receive anything arising from the estimates debate on the commitment on the request for information.
Hon. I. Black: Once again, my understanding is that it was a very comprehensive package. I don't have the package in front of me, but my understanding is that it was a very comprehensive package that was sent. At this moment we have staff running just to find out where we might get a copy of that and furnish it to the member.
J. Kwan: Then presumably the comprehensive package that was sent would have answered all the questions that were asked and requests for information out of that set of estimates. Am I correct in making that assumption?
Hon. I. Black: Again, I don't have the benefit of having the package in front of me, but my understanding is it was a very thorough answer to the question that was asked by the member. Again, I don't have the benefit of having it in front of me, so we'll look into it. We'll find another copy of that and have it furnished to the member as soon as possible.
J. Kwan: In that case, I'll dispense with asking the questions that were already asked and aim for the material to, hopefully, arrive. If it arrives before lunch, over the lunch hour, I can certainly take a look at it, and then we will take it from there. If not, then I guess we'll come back to have more questions related to that.
All right, then. Let's move on to another area. I'd like to get into some questions with the minister around the HST as it relates to the small business sector. First of all, could the minister tell me how many — or does he have a sense of how many? — of the businesses within the small business sector are service-oriented?
Hon. I. Black: As was my stream of answers last we got together, the subject of tax policy specifically pertaining, in this case, to the HST is 100 percent within the purview of the Ministry of Finance. So I won't be commenting on the HST-related elements of the member's question, because that is the purview of a different minister.
To the extent, however, that I can answer one part of the question, which is…. I'm advised that normally about 75 percent of the businesses within British Columbia are of a service nature, and if you extrapolate that across the 98 percent of the businesses within British Columbia which are small business, you can probably reasonably use that. But without access to a StatsCan database, it
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would be difficult for me to give a more specific answer than that.
J. Kwan: So about 75 percent of the small business sector is service-oriented in terms of the businesses that they engage in, and within that context, 98 percent of the businesses in B.C. are from the small business community. So it's a significant number, suffice it to say.
Does the minister have an actual figure of how many businesses that might be — 75 percent?
Hon. I. Black: We have approximately 384,000 small businesses in British Columbia, so if you were to take 75 percent of that number, presuming…. And I must disclaim, both for the member and anyone watching at home, that we're using a generally accepted estimate. That's not an estimate that I've pulled off a StatsCan database or something that is a province-of-B.C.-registered or -monitored statistic. But for conversational purposes, one could probably assume that three-quarters of the 384,000 small businesses have some element of their business which is involved in delivering service.
J. Kwan: So that's a significant number. It's close to 300,000 by my estimation.
All right. In terms of the small business sector, I wonder if the minister could tell me…. In the small business sector that is in the service-oriented businesses, can he outline for me the cost of doing business? What is the major cost of doing business for this service sector?
Hon. I. Black: There really isn't one answer you can give to that question, unfortunately, because it will dramatically differ. Having run businesses myself, there were some businesses where labour was the overwhelming cost of doing business, and in others the overwhelming cost would be your inventory that you carry in the backroom or have to order, as it were.
If you're in the large equipment sales end of the business, selling large pieces of forestry equipment, for example, then your cost of goods sold is going to be predominantly your number one cost — if you're selling a multi-million-dollar piece of equipment for the forestry or mining sector.
So you're going to see a radical difference across the different types of small businesses. I don't think there actually is one cost item that you could point to as a weather vane indicator for the entire 384,000 small businesses in the province.
J. Kwan: Which is why I asked the question — so that we can get a baseline for discussion here, which is the general estimation of the number of small businesses that are in the predominantly service-oriented sector. The minister gave me the answer of about 75 percent of 384,000. So a significant number of that — about 300,000 or so — are in that sector.
When you're dealing with a service-oriented sector of business, then the major cost of doing business would not be inventory, because your business is service — right? It's providing service. This is what the small business community themselves tell me — that that is their major cost. Labour in that sense, then, is their major cost of doing business. Would the minister agree with that? For service-oriented businesses, would labour be the major cost to doing business?
Hon. I. Black: Actually, no, I can't confirm that. There are a great number of businesses that would classify themselves as service-oriented businesses that spend an awful lot of money on things other than just labour. I know that from personal experience, and I know that from the extensive involvement I've had with the small business community.
A simple example may be something like an auto mechanic. An auto mechanic is going to go through — yes, even if it's a one-person operation — a tremendous amount of supplies, whether it's oil filters or oil or whether it's the large pieces of engines that have to be replaced or maintained or serviced. There's a definite cost in there, as well as real estate and a lot of the elements of running an operation like that. So I would not agree with the member that you can generalize to the extent that I think she would like me to do.
J. Kwan: Interesting, because the small business community themselves say that when their services are service-oriented, the major cost to them of doing business is, in fact, labour. I'm going to go with what the small business community tells me.
The small business sector that is service-oriented has a wide-ranging area, and they go from the restaurant businesses to physiotherapists to massage therapists to hairdressers and even to health club memberships and the like. For them, the impact of a policy change in taxation is a huge hit. It's a huge hit.
Not all businesses, of course, I do recognize, have the same costs of doing business. Some do require a lot of things which they have to purchase and that they have had to pay the PST on. But others who provide mostly a service-oriented type of business have not had to pay the tax. So with a change in taxation policy with the HST, there would be huge implications for these businesses. That is to say that the input tax credit would not apply to them, because there's no PST charged.
Can the minister tell me, for the small business sector, of which 75 percent of the 384,000 — approximately 300,000 — are service-oriented…? Would they benefit from the input tax credit?
Hon. I. Black: I think that one of the clear statistics in the small business community that is relevant to the member opposite is that we rely on our small business community, when you speak of labour, for about 54 percent of the employment in British Columbia — higher than any other province in the country, actually, when it comes to the dependency we have on our small business community for creating jobs.
Frankly, when you look back over the last number of years, it was our small business community on whose shoulders we stood to get us out of the very difficult situation we were in, in 2001. They are accountable for much of the job creation, the hundreds of thousands of jobs, so that to this day, despite the terrible recession we have just came through, we're still ahead in our job count by, I believe, well over 200,000 jobs relative to where we were in 2001.
Frankly, it's the small business community to whom we turn to provide those jobs, and it'll be on their shoulders that we stand as we come through this current difficult economic time that we're in at the moment.
Insofar as the HST is seen to be the key driver of job opportunities in this province going forward, I would suggest that this is on the long list of benefits that the small business community will enjoy from this.
I would remind the member and refer the member to the Minister of Finance for any tax policy–related questions surrounding the HST.
J. Kwan: I'm particularly interested in the minister's response related to this matter, as in his own ministry the first two words say "small business." Government policies across the board, whatever they may be — whether it's HST or otherwise — would have implications for the small business sector.
To that end, I'm particularly interested in getting information and understanding from the minister and his ministry's work related to government policy implications for the small business sector. This is why I'm going down this road. HST happens to be the one issue that the small business sector has raised as a concern for them, to be sure, and particularly for the service-oriented small businesses.
The service-oriented small businesses, generally speaking, will not see much of the input tax credit going back to them. The HST will increase the after-tax price of some goods that were previously exempt from the PST, such as prepared foods and restaurant foods, taxis, movies, tickets, massage therapy, yoga classes and so on.
The HST is also supposed to save businesses money through the input tax credit. If businesses pass this onto the customers, this would theoretically lead to a decrease in prices. But as established earlier, not all businesses have the same costs of doing business. Some businesses require a lot of things for which they have to pay the PST but will now receive input tax credits, so that will benefit them.
For others, where labour is their major cost of doing business — such as perhaps physiotherapy; massage therapy; the food and restaurant businesses and the tourism-oriented businesses, for sure — they won't get any of the input tax credits for that. So different types of businesses have different cost structures, which will make it that the HST either helps them out more, or less.
The small business sector, in particular the service-oriented sector — many of which are small businesses for which this minister is responsible — tends to have costs that are weighted towards labour and other goods that were previously exempt from the PST.
Maybe we can sort of go down this road for these small businesses. The goods that were exempt from the PST. Can the minister provide me with a list of the goods that were exempt from the PST arising from the small business sector?
Hon. I. Black: The debate around the HST is a really important one. It is one in which I'm reasonably well versed. I've spent a great number of the last number of months engaging our small business community and hearing from them and sharing with them and seeing their understanding of the benefits associated with this crucial move in tax policy.
It's an important debate. However, this is not the forum for that debate. I am the Minister of Small Business, Technology and Economic Development; I am not the Minister of Finance. It is in his purview that the discussion around the HST remains.
If the member would like to engage me in debate on the topic, I would be delighted. I could point out many shortcomings in her remarks, but this is not the forum for me to do that.
This forum is to focus on the financial expenditures of this ministry for 2010-2011, and if there's anything pertaining to the small business community and our work with them to ensure their ongoing prosperity and ongoing growth and the policies that we are enacting and have enacted in that regard, I'd be delighted to do so.
J. Kwan: One would have assumed that the minister who is responsible for small businesses and presumably wanting to create an economic climate that's good for the small business community…. He claims in his opening statements that that's what they try to do.
Around taxation policies. The minister in his own opening statements talked about taxation policies. When it's convenient for him to talk about it, he'll talk about it, but when it's not convenient for him, then he'll say: "Oh, but it's not me; go and talk to someone else."
Surely, Mr. Chair, the minister, with his work within the ministry, would have done some analysis, I would assume, around taxation policies, as they impact a major
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key sector of the small business community for which this minister is responsible. I think it's reasonable to ask those questions, and it's reasonable to expect an answer, more to the point, from the minister on these questions. Otherwise, why have "small business" as the leading title in your ministry title? Why sit there and claim that this is what you will try to do to capitalize on economic opportunities for the small business sector?
It cuts both ways, because all these things have implications. It comes with the turf. There's not just sort of the one-side analysis. If you want to do a fulsome analysis and understanding of the small business sector and the environment in which it operates, then you better actually look at all the issues related to it.
Stakeholders. The minister talked about…. So he won't answer the question. I find it interesting. The minister won't answer the question on whether or not small businesses that are mostly service-oriented would get an input tax credit. He won't answer that question. He won't answer the question on what small businesses, for which he is responsible, are exempt from the PST. I find that strange. One should be able to list that off fairly easily, to have an understanding of what this sector is dealing with. So the minister won't answer that question.
From the small business sector themselves, they say that where their businesses are primarily service-oriented, their major cost to doing business is the cost of labour, and that is not eligible for an input tax credit. Talking to the stakeholders, and they themselves have put out information, here's what they had to say.
After the HST was announced on July 23, 2009, the BCRFA was understandably outraged. The president, Ian Tostenson, wrote an open letter to his members, saying that the HST was a complete surprise to him. Restaurant meals will now be charging an additional 7 percent tax.
In the letter he said: "Last week the Minister of Small Business" — and he names the minister — "told me that all impacts of harmonization would have to be considered before any implementation would be contemplated. What a difference seven days make. In my opinion, this was a Ministry of Finance decision based on the billions of dollars of incentives that the federal government grants to participating provinces."
The president of BCRFA was then invited to meet with the Finance Minister and the Premier to find ways to minimize the impacts that this decision will have on their membership and the industry as a whole. Despite that, no additional exemptions have been offered to help the restaurant industry. This is what they have put out.
The Restaurant and Foodservices Association has begun a campaign they call "No meal tax," to oppose the HST and get their members involved in it. They encouraged people to write letters to the government, to put the campaign materials in their restaurants, to build an opposition amongst the public on this. As of January 6, 2010, they say that they have over 100,000 names on their petition.
More to the point, on the impact, because that's what I'm interested in, in terms of the impact for the small business sector, the Canadian Restaurant and Foodservices Association has provided an estimation of the impacts on the industry and the customers. They say that the HST will add a 7 percent tax to all restaurant meals, which were previously PST-exempt. So can I just ask this question to the minister: is that statement correct?
Hon. I. Black: Hon. Chair, the member opposite has been here 14 years. The rules of this House and the purpose of the estimates process, to my knowledge, have not changed in that time.
I have made extensive remarks on the records. I've actually answered many of the member's erroneous statements and facts that she's presented — and, frankly, the outdated nature as well. I've addressed many of those publicly. I've spoken on the record on this matter many, many times. I think that my count of GST-related or HST-related speeches is approaching 20 out across the province, so there's no secret as to where I stand on the matter and my understanding of it and how it benefits the small business community.
I am not going to be goaded into a conversation on the HST during the estimates process that's focused on the $60 million-odd of the taxpayers' money in British Columbia that we're spending in this ministry trying to drive the economy forward in a lot of key areas. If the member opposite would like to ask me questions on any of that, I'd be delighted.
The Chair: Member, if I could just suggest you take the question back to Vote 43.
J. Kwan: Well, I'm more than happy to, Mr. Chair, as you know. The minister is right. I've been here for a long, long time, and I do know the rules of the House very, very well. I also know the players of the House and how they try to fob off questions that actually are relevant to the ministry. I think I've established the link on how this is relevant in terms of analysis and work that the ministry might have done and that the minister might be interested in — one would have thought — because a major sector of the small business community is in his area of responsibility.
When policies come about impacting them, it impacts this ministry in a significant way, in that those are the stakeholders that the minister is supposed to represent. Now, I used the word "supposed," because that's in theory. Perhaps in practice it's an entirely different story. We're seeing that demonstration right now, because in practice it is an entirely different story.
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I asked a simple question of the minister. Surely to goodness, I guess, the minister would know whether or not the small business sector in the food and restaurant area — their services provided to customers — is currently exempt from paying PST. That's the statement that has been made from the Canadian Restaurant and Foodservices Association — that after the HST there will be an increase of a 7 percent tax. Is that a correct statement or not?
Hon. I. Black: For the purpose of the estimates process, questions on tax policy specifically pertaining to the HST fall within the purview of the Ministry of Finance.
J. Kwan: I'm sure the small business sector would be very happy to know that they don't have an advocate at the cabinet table for them. That's clear as day.
The minister says he actually doesn't have an answer on this and that it is the Minister of Finance's responsibility to say whether or not, to the obvious question, restaurant meals that are currently exempt from paying PST would now face a 7 percent tax increase by way of a thing called the HST after the government implements the HST. The minister refuses to answer that question.
[J. McIntyre in the chair.]
One can only assume that the minister doesn't want to answer that question because he knows what the answer is, and that is that the small business sector in the food and restaurant businesses would actually see a 7 percent tax increase after the HST comes in. That's a 7 percent cost to the businesses, which will be passed on to the consumers. One would wonder whether or not, by that very act, it would impact the businesses themselves and therefore the number of businesses that exist in British Columbia.
The minister touted earlier, and rightfully so, that the small business sector is the economic engine of British Columbia. Some 98 percent of the businesses in B.C. are from the small business sector. One would assume that the Minister of Small Business would be very concerned around any policies and policy changes that take place within government impacting the economic engine of British Columbia.
Of that economic engine, some 75 percent of those businesses are going to be hit with a new tax, and that's a huge hit. To think that the Minister of Small Business and the Ministry of Small Business would not have done any analysis on that…. I mean, that's incredible. I find it absolutely incredible that the ministry did not do any of that work.
Let me try again to ask whether or not there are any existing studies that have been done on the small business sector and particularly the restaurant sector in the service-oriented small businesses. Were there not any studies done to determine what the impact is for those small businesses with the implementation of the HST?
Hon. I. Black: There are a variety of forums where I could point out the flaws in the logic and the error in the information of the member opposite; this is not the forum. I would invite the member to participate in some of the Small Business Roundtables as we go around the province, where these type of things are discussed at length and the facts are laid out and the small business community is made aware of the true facts, not some of the nonsense that's been floated out on these different topics, and all the benefits of it.
I could go into a 30-minute dissertation without notes on this topic. However, this is not the forum for doing so.
I appreciate the fact that microphones are a terrible thing to waste, but in this particular case, the focus of this discussion is the $60 million of taxpayer money that our ministry is going to be spending in '10-11 and the technical elements of tax policy, the studies that may or may not have been done around it and the specific framework of taxes and how the tax is to be deployed within a small business or big business or non-profit environment.
All of those are really important questions, very legitimate questions. However, this is not the ministry to whom those questions should be focused, and this is not the forum in which they should be asked.
J. Kwan: The minister didn't have any trouble whatsoever talking about taxation policies related to small business in his opening statements. If he was concerned about talking about taxation policies and thought that it belonged to the Ministry of Finance — which the bills that reduced the small business taxes came from, the Ministry of Finance — then why the heck did the minister actually talk about it in his opening statements?
When it suits him to talk about it, he'll talk about it. But when it's a tax increase that this government has brought on for the small business sector, lo and behold, oh no, this is not the forum to talk about it.
Well, then let me ask this question. The $60 million that was spent, which was allocated for this ministry — did any money, one cent of that money, go into doing a study related to the impacts of any government taxation policies related to the small business sector? Did any money get spent in that area at all, from this ministry, to understand the impacts of taxation policies and shifts in taxation policies impacting the small business sector?
Hon. I. Black: To be clear, we're talking about the year coming up, the 2010-2011 year. For the benefit of
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the members opposite, it's not so much what money has been spent. The focus of this discussion is how we are planning to spend the money under question, of the 2010-2011 budget.
The question as I understand it was whether there is any anticipated expenditure with respect to impacts of different tax policies, etc., in the 2010-2011 budget year. The answer to that question is no. The tax policy analysis is done in partnership and by the Ministry of Finance, and I would suggest that that's an appropriate question to ask the Minister of Finance when he's in this estimates process.
J. Kwan: Interesting. So not a cent was spent. The minister would like to say: "Oh well, that's forward-going." As far as I could tell, a budget is actually ongoing, and when you spend money in the previous fiscal year — and by the way, we have not completed the previous fiscal year just yet, for the minister's information — a lot of those expenditures carry on.
It's not like the way the minister would like to portray it — to say that it sort of ends and that it doesn't continue somehow, as though it goes into these neat little boxes. They don't. Impacts and ramifications and issues impacting the small business community are ongoing, and they go from year to year to year, and a study that was done before has ongoing implications. So what the minister just said is that they have done no study whatsoever with the HST as it relates to the small business sector. I actually find that, frankly, shocking.
It is shocking to me that the minister who calls himself the Minister of Small Business would not have had any work done from his ministry on this major taxation policy that impacts the small business community significantly. You know, the minister says: "Well, gee, you know, I don't deal with HST at all. It's all the Minister of Finance's responsibility."
Then let me ask this question. Why on earth did he say this to the president, Ian Tostenson? He said: "Last week the Minister of Small Business told me that all impacts of harmonization would have to be considered before any implementation would be contemplated. What a difference seven days make. In my opinion, this was a Ministry of Finance decision based on the billions of dollars of incentives that the federal government grants to the participating provinces."
Why did the minister say to the president of the BCRFA that all impacts of harmonization would have been considered before any implementation would be contemplated, when in fact his own ministry didn't even do any of the studies on its impacts for the small business community?
Hon. I. Black: Madam Chair, I spent my entire career in the business community prior to the honour of being elected. I recognize that the member opposite has not spent any time in the business community. I think it's important, however, to identify that in that context. The reason I mention that is that when you're dealing with a fiscal year-end, to use the member's phrase of "a small little box," in actual fact, the budget cycle does exist in small little boxes.
The small little box we're talking about here starts on April 1. What happened on March 31 is not included in the binders of information that surround me here. What starts on April 1 through to March 31, 2011, is indeed the topic of these estimates, and to that extent it is in a small little box or at least in a couple of very large binders.
I do want to correct the member on one very important point. To suggest that no studies were done is not at all what I said. What I said was that the Ministry of Small Business, Technology and Economic Development is not responsible for doing such studies. It is the Ministry of Finance that is responsible for doing such studies. They are the tax policy experts. They have all the analysts. They produce these reports and have done extensive work on the impact of the HST.
I would refer the member to the Ministry of Finance to ask any questions about what work was done, how it was done, when it was done, etc., whether that falls within the purview of this estimates process or not.
J. Kwan: The minister knows very well that budgets and the ongoing expenditures and the work arising from those ministries have an ongoing impact that carries on to the next fiscal budget. He knows very well about that. And to try to sort of avoid questions, to say, "Strictly speaking, only questions related to the expenditures of this year are applicable," is nonsense. It's absolute nonsense, Madam Chair.
The minister claims that there were studies done. Well, okay, then. If there were studies done, tell us. Tell the public what studies were done. What studies were done around impacts of the HST related to the small business sector? What studies were done, and would the minister care to table them for the public's review?
Hon. I. Black: The one comment I want to make…. The member is correct inasmuch as expenditures which straddle a couple of years are absolutely appropriate questions to ask in this context. If there is something that was started in one year and is continuing in the next, to ask questions about the 2010-2011 expenditures on a given project that perhaps started in the previous year….
Absolutely, I would be delighted to speak on any such topic like that, particularly and specifically pertaining to the '10-11 element of that. But if the member has questions about the tax policy analysis done by the Ministry of Finance, I would refer her to the Ministry of Finance to get those answers.
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J. Kwan: No, I'm not asking for tax policies done from the Ministry of Finance. I'm talking about studies done by the Ministry of Small Business on tax policies. If the minister would like to suggest, which he did minutes ago, that studies were done from this ministry, then would he care to table them and tell this House and tell the public what studies, exactly, were done?
Hon. I. Black: If my words weren't clear, I apologize to the member if that's the case — if my words weren't clear. What I believe I said, and what I certainly tried to say, was that studies around the HST most certainly will have been done, and they will have been done by the Ministry of Finance. And to the extent that those studies would involve the small business community, they would still be done by the Ministry of Finance.
If the member took away the suggestion that an analysis of the HST has been done within the Ministry of Small Business, Technology and Economic Development, I certainly did not mean to leave that impression, because that is not the case. Such work is done by the experts who we depend upon in the Ministry of Finance.
The Chair: Member, we clearly have been canvassing this back and forth, and I think the minister has now made it clear five or six times that that policy is being conducted in the Ministry of Finance.
H. Lali: Ask him to answer the question. He hasn't answered a single question.
Hon. I. Black: Just because you don't like the answer doesn't….
Interjection.
The Chair: Order, please. Member.
Interjection.
The Chair: Excuse me, Member. Excuse me. I'd like to have you withdraw that comment, please, and please come to order.
H. Lali: I withdraw my comments.
The Chair: Thank you.
J. Kwan: So we've got that established — that the Ministry of Small Business, Technology and Economic Development did not do any analysis on the impacts of the HST as it relates to the small business sector. That's what I heard the minister say, and that's what he has just put on the record. He's nodding in the affirmative and is somehow proud of it.
It's a weird world that we live in, Madam Chair.
Interjections.
The Chair: Excuse me. I'd like to bring this meeting to order. The member has the floor right now.
J. Kwan: Then let me just put this on the record, because clearly the minister doesn't care to put this information on the public record here for the small business sector. We are debating the estimates for the small business community, and therefore impacts of all government policies as they relate to the small business sector would be important discussion.
They say that when you add it all up, an additional 7 percent tax on meals would cost the industry $750 million each year in lost sales. According to the CRFA's econometric model, that's an annual loss of 7.5 percent or nearly $50,000 for the average restaurant in the province, which is more than the average annual pre-tax profit of $29,000 per establishment. This information, I want to point out, came not from me but from the Canadian Restaurant and Foodservices Association themselves.
I find it incredible that the minister responsible for small business would not have undertaken to get some work done within the ministry to get an understanding of the impacts of this major taxation policy change on the small business sector. After all, the small business sector, in the minister's own words, is the economic engine of B.C., and 98 percent of the businesses in British Columbia come from the small business sector. That is pretty significant.
I would have thought that the minister would have been a champion for the small business sector, if nothing else but for the sheer volume of the impact that they would have in our economy.
They go on to say: "More than 173,000 people, representing 7.5 percent of the workforce, are employed in B.C.'s restaurant industry." So 173,000 people. When the GST was introduced, real service industry sales dropped by 10.6 percent, and average unit volume declined by 22.7 percent — not insignificant.
An Ernst and Young report attributed 75 percent of the sales decline to the impact of the GST, and by way of contrast, the GDP the same year fell by 2 percent. That year the food services industry was forced to lay off 42,000 people in Canada.
I have to say that if you understood the implication of the GST in that sector, one could extrapolate the implications of the HST that's coming down the pike in British Columbia and what that means for our small business sector and therefore B.C.'s economy.
I would have thought that the minister — when he claims that he's the champion of things and this and that
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and has a full understanding of the small business world — would have actually lifted his pinky and said: "Wait a minute, ministry staff people, could you please go and do some analysis on this, because I really want to know what is the score here."
It's true that the Ministry of Finance wants to push this ahead, and they do. Sometimes government, between ministries, could have conflicting policy decisions that impact other ministries. I've been there. I've seen it. It happens. Sometimes it takes a minister for that particular ministry to stand up and say, "Wait a minute. Sorry. I want to challenge your studies with my own ministry's specific focus in the small business sector on the impacts of that," and then go and have a debate around that.
But we found out from the minister himself moments ago that he was proud that this ministry did no such analysis. He didn't request it, and no analysis was done. Somehow he's proud of that fact, and I find that, frankly, shocking.
The restaurant and food services industry has met with the minister. I know that the minister…. Well, I can only assume. I shouldn't say that I know. I can only assume that the minister is aware of this information.
So let me ask the minister this question. Has the minister met with the restaurant association and its representatives? And when presented with the information around the impacts of the HST that they are fearful of for their industry, what response did the minister give to the restaurant association people?
Hon. I. Black: Again, the member went to great lengths to describe a situation which, I am advised, is just simply not correct. My understanding is that there are extensive studies that have been done, and the analysis is enormous with respect to the harmonizing of the taxes and all the many benefits it brings to our small business community, not the least of which is the duplication of administration — about $140 million worth a year — that disappears.
There are many, many studies that have been done, contained within the Ministry of Finance. I don't want to leave the impression, for those viewing at home, that somehow that work has not been done with the small business community in mind, because that's simply not accurate.
The point I was making is simply that that work is not done within the Ministry of Small Business, Technology and Economic Development. We don't have tax policy as a focus. It's not inherent in our mandate. It is absolutely inherent, and appropriately so, within the mandate of the Ministry of Finance.
Government works as a team, and they are the team member of ours that does that kind of analysis on behalf of the people of British Columbia and, in this particular case, on behalf of the small business community of British Columbia.
I do think it's important to correct the notion that somehow that work and that analysis and the consideration of the needs of the small business community and the many, many benefits that come from something like the HST have not been analyzed and taken into account.
The member concluded her remarks by asking a question around my relationship, or my ministry's relationship, with the restaurant associations of British Columbia and of Canada. I can confirm with the member that I do have relationships with those associations. They go back well before the HST.
We spent many, many meetings discussing their angst around proposals to raise their labour costs by 25 percent when a raise to the minimum wage was being proposed by the NDP. Many, many hours and angst were spent on that and their concerns about the devastation that would have in their industry — the 55,000 jobs, they figured, that would be lost right away, as one simple example. They were very, very concerned about that.
So yes, I can confirm to the member that I do have a relationship with that association. I would be pleased to discuss at length, frankly, the conversations I've had with them and their views, evolving as they are, on the topic of the HST.
But as I've mentioned, the focus of this discussion is the numbers. It's the numbers of 2010 and 2011 contained within my budget. I have a team of people here who are ready to answer specific questions about how we plan to spend $60 million, and I'd be delighted to answer any questions in that regard in the time we have here today.
J. Kwan: I didn't actually ask about the minister's relationship. I asked a very specific question of the minister about what his response was when the BCRFA put to him the impacts of the HST on the small business sector. That's a very specific question.
I know that the minister would like to say that it's not his responsibility and that he shouldn't talk about it and that it's the Minister of Finance's responsibility, and so on and so forth. But it leaves you wondering: why on earth would the minister have a title called small business in his ministry, when in fact he doesn't want to deal with any of the issues related to the small business sector when it comes to government policies impacting them?
It's a weird world we live in, I have to say. More to the point, it's a weird world that the minister lives in, when you take that perspective. It's strange, I have to say. It's nothing short of strange, with the many attempts of the minister to pass the buck and try to hide under technicalities.
Of course, in the world in which we operate, it doesn't work that way. For most people, it doesn't work that way. I suppose it only works that way for the minister and his colleagues.
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I was talking about the impacts on the small business sector and what it means for them. I know that many tout the input tax credit as an upside to tax harmonization, but food service operators will not benefit from the input tax credits in the same way as other businesses. The largest costs for food service operators are labour and food, and those are not eligible for tax credits.
The restaurant and food service industry makes a significant contribution to the economy. Canada's $60 billion food industry, of which $10 billion is within B.C., represents 4 percent of our GDP. The diverse nature of the industry means that its employment spinoffs and economic benefits are felt in every community, not just in major centres. Every dollar spent in the food service industry generates $1.85 in the rest of the economy, which is well above the average of other industries.
With one million employees, food service operators employ more people in Canada than agriculture, forestry, automotive, manufacturing, mining, and oil and gas extraction combined. They do so without government handouts, bailouts or subsidies. That's what they do, and yes, they are the backbone of our industry, of our economy. Make no mistake about it. The sector works hard to generate profits for themselves but also to generate activity in the economy.
There was, in fact, a poll that was done, and presumably, this would have been known to the minister as well. The poll that was done showed that 91 percent believed that the HST would have a negative impact on the food services industry, and 85 percent said that it would have a significantly negative impact.
Among those who believe that there would be a negative impact, 90 percent believe, "Customers will decrease their spending at my restaurant;" 71 percent, "I will cut back on staff and staff hours;" 36 percent, "I will not expand my business or open new restaurants;" 21 percent, "I will reduce my hours of operation;" and 7 percent said: "Other." Six percent will shut down their business. Those are the impacts that the restaurant owners themselves — from the businesses themselves — say that they would face.
Let me ask the minister this question. If these statistics prove to be correct, what would the impact be to the total number that he gave me earlier — the 384,000 that I believe he said are the number of small businesses in B.C., of which 75 percent are from the service sector? Will the minister be looking into that if these numbers prove to be correct on the impacts on the small business community and, therefore, on B.C.'s economy?
The Chair: Minister, just before you respond, I just would like to remind the committee that the HST is actually not before the House, and some of this comment is hypothetical. So I'm just encouraging everybody to focus back on the debate on Vote 43, which is talking about funding for the ministry for the 2010-11 fiscal year.
Hon. I. Black: Thank you, Madam Chair, and I'll take that guidance.
The member, in her preamble, was commenting about the technicalities which preclude me from answering certain questions. I refer to them as the rules of the House, actually. But in doing so, she has extensively quoted and referenced a gentleman by the name of Ian Tostenson with the British Columbia food and restaurant association.
I think that it's important to advise those viewing at home, and for the benefit of the member, that he remains a very active member of our Small Business Roundtable and very, very supportive of the tax policy decisions of our government versus those being proposed by the members opposite.
I should, and if one were to…. I would encourage the member opposite to perhaps call him and see what his view is on the HST these days. Nonetheless, I'll leave that to the member opposite.
The question that I would put to the member, however, is that…. Not the question, but rather, the member has made much of wanting to understand analyses of the HST pertaining to the small business community. As I've suggested, the member is best asking the Minister of Finance about those questions.
However, insofar as the small business community has a very strong reliance on the CGA community in British Columbia…. Many small businesses use CGAs to help them run their businesses, file their taxes and complete their bookkeeping, to the extent that the CGA community is very, very actively involved and consider themselves small business owners, in many cases.
I would refer the member to a report done by the CGAs, which is focused very much on the harmonization of the sales tax. If she's interested in that, I actually have a copy here. I'd be pleased to leave a copy with the member if she would like.
The last part of the member's question had to do with questions about employment impacts. While the member's question is speculative in nature — what will I do if such and such happens — obviously, it's difficult for me to answer on a speculative basis.
All I can do at this stage, at this point in history in which we find ourselves, is turn to our leading economists, who indicate that that forecast will not happen, that indeed, this is one of the most important elements around job creation — Jack Mintz, in particular, who I believe came up with the number 141,000 net new jobs. People who have jobs are in a position to go to restaurants.
J. Kwan: Finally we got a statement from the minister relating to HST, when it suits him — interesting, of
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course. We also got a statement from the minister to say that there are going to be these jobs that are going to yield as a result of the HST. More to the point, he also said that the impacts for the small business community, particularly in the food and restaurant business sector, in terms of job loss and so on…. He said it won't happen. Well, that's on Hansard. All of that is on Hansard, and the minister will be held to account on all of this.
Now, I have to say this. I hope that I'm wrong. I hope that the industry is wrong in their projections. I hope that the anticipated negative impacts won't come to fruition, because that won't be good for our economy, and it won't be good for any one of us. I hope that it is the case. But it remains to be seen, doesn't it?
The minister says that it won't happen. Well, we shall see. With those words on Hansard, we'll come back to it and see what the reality is. Or is it the bubble in which we live in, that the minister chooses to live in, that is the reality? We shall see.
With respect to comments about the B.C. Restaurant and Foodservices Association representatives, the minister says that they are now in support of the HST. Really? It's a funny universe that we live in, because last I checked there was a huge campaign going on from them against the HST. As recent as December of 2009 they sent a letter to a variety of political leaders, against the HST, and they urged the political leaders to withhold their support for the HST.
I suppose since December — it is now March — in three months time, there's a major seismic shift in the position. Maybe in the minister's bubble in which he lives in, but not in the universe in which I live in, and most certainly not with the business owners that I talk to who are concerned about it every day.
Just the other day, as it is often the case, when it's my turn to bring dinner home — I haven't arrived home early enough to have prepared the meals for the family — I then go to a restaurant near my home to buy takeout food so that there's a meal on the table for the kids.
Interjection.
J. Kwan: My colleague says I'm lazy.
Well, not withstanding, I'm not very good at it either. I'll admit that up front. Most of the time I make the meals, people stare at it, and they don't really want to eat it. It causes me distress with growing children. It makes me wonder: are they growing or are they shrinking, when it's my turn to feed them? I do what I try to do best to improvise, so I go to the restaurant near my house, and I go to buy takeout food.
The owner actually said: "Hey, what's going on these days?" I tell him that the House is sitting, that we're running around like crazy, and I need a meal quick for my kids, so I place my order.
Behind him, in the backdrop, is a sticker that says: "No HST." It's one of those big round sort of stop sign–type things with a red cross around it, and it has the black letters of HST, with the red circle and the cross down that says: "No HST." He asks me: "What's going on there?"
I told him a little bit about the situation, and he said: "You know, it's going to kill my restaurant here. It's going to hurt this business a lot." He then proceeded to tell me some of the impacts for him that he thinks this tax will have on his business. Then he asks: "What could I do to try to send a message through to stop this tax?" And there was that discussion that went on.
This is a restaurant that I buy food from. I certainly wasn't there for a political reason at all, but it was top of mind for the business owner. He fears the implications of HST for his business, for his employees and for his family — and rightfully so.
That's one example. There are many other examples of restaurants that I visit, because aside from my requirement of needing to bring meals home, I also attend a lot of functions in the community as well, and oftentimes those are held in restaurants. Inevitably, when I'm there, the business owner or the manager would come up and raise this issue — unsolicited, on their own.
I was out in Crystal Mall, a popular mall in the community of Burnaby. Okay, I admit it. I was buying takeout food again, bringing it home for lunch this time. The mall there and the food outlets there — they, too, raised the issue. Many of them actually had the "No HST" sticker at their business as well.
So it's not just limited to a geographic location. I'm sure that there are restaurants in the minister's own riding where they have those concerns as well. But in the minister's bubble, I suppose, those don't exist.
The restaurant and food services sector is not the only business sector that will be impacted by this. The tourism sector will be extensively impacted as well. The increase of the 7 percent tax will increase the average price of tourism-related products and services by 4.66 percent. It will lower tourism industry revenue by $363 million to $545 million per year, and it will cause jobs to be lost to the tune of 3,446 to 5,176 direct jobs, or 6,997 to 10,505 direct and indirect jobs.
It would reduce government tax revenues by $104.9 million to $157.5 million for all three levels. Many of these jobs from the tourism sector will also fall in the small business sector.
The implications are far-reaching, no matter how the minister wants to deny that and keep a blind eye to the reality. No matter how the minister wants to spin the situation, the public is not going to be fooled. They are not going to be fooled by this, and they will know. And the business sector, the small business sector more particularly, will know.
I'm wondering: in terms of tracking of businesses, will the ministry be tracking the small business community's numbers as the implementation of HST takes effect? That is to say, in the upcoming year, in years ahead — for this is a three-year budget time frame — will any of that expenditure be put towards tracking businesses that might have shut down as a result of this tax policy? Or will the ministry be tracking employment numbers and changes as a result of this tax policy?
Hon. I. Black: Well, despite our partisan differences, I've had the pleasure — and I do mean that sincerely — of sitting on one of our travelling committees with the member who was just asking the questions, and one of the things that we share is, perhaps, our culinary limitations. I can only profess that I actually do make a very mean Kraft Dinner, and I'd be pleased to share the secret to that success if the member is so inclined.
The member made a variety of statements and ended with a question. I just want to ensure a couple of things. I want to make sure that the comments that I made…. To repeat them for the appropriate characterization, I made reference to the speculative nature of the previous question. I was not dismissing anything. I was simply noting that it was speculative.
I also encouraged the member to speak with Mr. Tostenson. I did not profess to speak for him. I just want to repeat that. She's welcome to speak with him. I'm suspecting — and I may be proven wrong — that you'll find that he would take the tax policy direction and history of our government over that proposed by others any day of the week. That was the intent of my comment there. So I repeat it here for the record. Nonetheless, I encourage her to speak with him.
The member ended her series of remarks by asking questions about the tracking of small business numbers and small business employees. I can confirm for the member that we do, as part of our ongoing efforts in this ministry, take information from B.C. Stats, both with respect to the number of small businesses — I've made reference to the number of 384,000; that comes from B.C. Stats — and the fact that 54 percent of our employment comes from the small business community. That also comes from B.C. Stats.
So I can confirm that our efforts with respect to tracking those numbers, and whether they go up and whether they go down, will continue, aided by the very capable folks over at B.C. Stats.
The Chair: Excuse me, Minister. I was expecting you to make a motion.
Hon. I. Black: My apologies, Madam Chair. I don't have the 14 years of experience of the member opposite on that one. My apologies for that administrative slip.
Noting the hour, I move that the committee report progress and seek leave to sit again.
Motion approved.
The committee rose at 11:50 a.m.
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