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, April 1, 2010

Morning Sitting

Volume 13, Number 4

[ Page 4003 ]

THURSDAY, APRIL 1, 2010

The House met at 10:03 a.m.

[Mr. Speaker in the chair.]

Prayers.

Orders of the Day

Hon. M. de Jong: Good morning, Mr. Speaker. In Committee A, I call Committee of Supply — for the information of members, the estimates of the Ministry of Tourism, Culture and the Arts — and in this chamber, second reading on Bill 9.

Second Reading of Bills

Bill 9 — consumption tax rebate
and transition act

Hon. C. Hansen: It is my pleasure to move second reading of Bill 9, the Consumption Tax Rebate and Transition Act.

As I introduced this bill for third reading — or for first reading….

Interjections.

Hon. C. Hansen: But we will get there.

As I introduced this bill for first reading, I underscored at the outset that the primary objective of Bill 9 is to eliminate the provincial sales tax. That, of course, is a necessary step in us making this very important transition from the archaic provincial sales tax, with its cascading tile of tax structure, to a much more modern, much more efficient value-added tax system.

The introduction of the harmonized sales tax for the provinces of Ontario and British Columbia is not done as a result of enactments of the respective Legislatures of those provinces but rather pursuant to federal legislation, which has already been passed and is ready to proceed with implementation for July 1.

[1005]

[C. Trevena in the chair.]

The elimination of the provincial sales tax is one step that is very important in that process, because I don't think there's anybody in this chamber that would want to see the provincial 7 percent sales tax added on top of a 12 percent harmonized tax as it comes into effect July 1.

One of the things I want to talk about at the outset is why this shift to a value-added tax is so vitally important to our province and to our economy and to all British Columbians in terms of their opportunity to continue to enjoy a standard of living and a quality of life that we have enjoyed in British Columbia to date. It is actually a tax that is much more efficient. It is considered globally as being a tax….

A value-added tax is one that does not put the same kinds of constraints on the economy as the old style of provincial sales tax does. It's actually one of the reasons why over 130 countries around the world have already made that shift to a value-added-tax system. I think that as people have travelled the planet, they recognize that the value-added tax is used by most countries around the world. In fact, in many countries it's used as the primary vehicle for raising revenues that government depends on.

If you look at the European countries, for example, where…. To be a member of the European Union you have to have a value-added tax in place that is a minimum of 17 percent. In fact, they've just increased that by 2 percentage points as of January 1 of this year. Countries that have not embraced a value-added tax, countries that still have the old style of provincial sales tax, have higher domestic consumer prices at the consumption level. They also, I think equally as important, have higher export prices for the commodities and goods and services that they're trying to sell onto the world stage.

If we want to have a job-creating environment, if we want to be able to attract the investment to British Columbia that's going to allow us to take advantage of some of these tremendous opportunities that we have in this province for the years to come, we have to make sure that we have a tax structure that does not discourage that investment from coming to British Columbia.

You know, after we made our announcement last July that British Columbia was going to follow Ontario's lead of shifting to the harmonized sales tax, there were a lot of organizations that came out fully in support of this movement. I'll get to some examples of those a little later in my remarks.

There is a very good article that was written by Jock Finlayson and Ken Peacock of the B.C. Business Council. In it they basically said quite clearly that if B.C. did not adopt the harmonized sales tax on the same timeline as Ontario, we would be at a huge disadvantage when it came to attracting that investment that we need to create the jobs in this province.

You know, one of the things that I think was probably the most compelling for me was when you looked at the graphs that quantified the disadvantage that British Columbia had. What it was, was around the tax on investment, particularly at a time when we're coming through the global economic downturn and the world economy is starting to see some glimmers of hope. Also, at the same time, there is literally trillions of dollars globally of investment that is looking for a place to land, looking for those new opportunities for the years to come.
[ Page 4004 ]

These are investment dollars that are flowing, whether they're from China or the Middle East or from other countries, where they are shopping the planet to find the most promising opportunities. With those opportunities come jobs for the jurisdictions where they choose to invest.

This measure alone will result in the reduction of the tax burden on investment of about 40 percent. So at a time when those investors are looking for those opportunities, if Ontario is in a value-added-tax environment and British Columbia is not, where British Columbia's tax on investment is 40 percent higher than that of Ontario, you know where those investments are going to go. They're going to be attracted to the jurisdiction that has the most competitive tax regime, and we want to make sure that that jurisdiction is British Columbia.

[1010]

The value-added taxes in Canada are not a new thing. In fact, the federal government introduced the goods and services tax in 1991. That was at a time when many countries around the world were making similar transitions. What happened in Canada after 1991 is that we only got partway there, and it was just at the federal level that we wound up with the goods and services tax being brought in. At the provincial level there was still the old style of cascading tax that wound up with so much embedded cost in the cost of goods and services before they got to consumers.

Quebec was actually the next province to make a move. A few years after the GST was brought in, Quebec abandoned their old-style provincial sales tax in favour of a value-added tax system. It's not the harmonized sales tax, but it is one that is unique to Quebec. I think, as they found, it perhaps doesn't produce all of the benefits that the harmonization of the taxes yield. They still have two separate tax systems to administer in Quebec, and they have not fully realized the benefits and the streamlining that the harmonized sales tax brings with it.

Then in the mid-1990s the federal government of the day actively started to encourage provinces to sign on to the harmonized sales tax, to get rid of that old style of provincial sales tax and harmonize that tax with the federal GST to form one tax structure and one tax at the national level. In fact, in 1997 there were three Atlantic provinces that agreed to make that shift, so we had Nova Scotia, New Brunswick, Newfoundland that all harmonized their provincial sales tax with the federal GST to form the first harmonized sales tax.

I have no doubt that during those years the officials with the province of British Columbia, whether at the political level or at the public service level, looked at the implications of the harmonized sales tax for this province in the late 1990s. While I was not privy to any of those discussions, what was obvious is that those deliberations did not yield a favourable response.

The same was true after we formed government, because as government it was one of the issues that was sort of regularly on the agenda for discussions between Finance ministers and officials in the Ministry of Finance. In the times that I have served as Finance Minister in the province, going back to 2004-2005 and then more recently in the last two years, the subject of whether or not B.C. should consider the harmonized sales tax certainly came up.

One of the things we looked at was the fact that there was very little flexibility in the federal government's approach to the adoption of the harmonized sales tax. First of all, they said that the harmonized sales tax should be at one national rate, so 13 percent for all provinces, or previously, before the reduction of the federal rate from 7 percent to 5 percent, that was at a 14 percent rate for those provinces that had the HST. The federal government was looking for every other province to adopt exactly that same national rate from sea to sea to sea.

That was certainly something that was a factor for us because if we had at that time gone to the harmonized sales tax, it would have meant a 1 percent increase in the consumer tax burden that residents of British Columbia would be faced with. The other big issue was the lack of flexibility in terms of the basket of goods that would be subject to the harmonized sales tax. Again, the federal government wanted one structure that was common to all parts of Canada.

What happened this year changed that. As Ontario made the decision and announced in late March that they were going to make this shift to the harmonized sales tax effective July 1 of 2010, it became obvious to us, once we had the chance to examine that in more detail, that there had been some significant changes that had taken place as a result of the discussions with Ontario.

One of them was the fact that even though Ontario had decided to adopt the same 13 percent rate as the other HST provinces, what became apparent to us is that the federal government was prepared to entertain a rate of 12 percent, and that actually would allow British Columbia to have its own unique rate, which will be the lowest HST rate of any province in Canada.

The other thing that came to our attention as we started to examine it more closely is that there was more flexibility, and that became apparent when you look at the fact that Ontario is able to exempt some things from the provincial portion of the HST that are still subject to the goods and services tax. That also was a big factor for us.

[1015]

The other one that certainly wasn't the top of our priority list but was something that was important to us, nevertheless, is the fact that the federal government was offering $1.6 billion in transition payments to the province. It wasn't the motivating factor in the decision, but I can tell, as we come through a time that we're facing
[ Page 4005 ]
deficits in the province, that $1.6 billion certainly helps us fund education and health care services in this province at a pretty important time.

The other thing that comes up from time to time is…. I've heard members of the opposition and members of the press gallery make claims about the position that our government has taken that are blatantly false. I have heard members of the media and other critics say that, somehow, we as a government had promised that the HST would never be brought in. I can tell you that anyone who says that is not telling the truth, because that statement has never been made.

What was said during the election in response to a survey that was circulated by two organizations…. It was received by party headquarters like the other literally dozens and dozens of surveys that I'm sure all political parties received. The response was that the B.C. Liberal platform did not contemplate the HST, because it was, quite frankly, not on the radar at that time.

It was only after, when we started looking at some of the implications of Ontario's decision, that we made the realization that we had to get it on the radar screen, and we had to make sure that British Columbia's long-term interests were protected. But, you know, subsequent to our announcement, there have been numerous organizations and associations that have come out 100 percent in support of this shift to the harmonized sales tax.

When you think about the fact that our forest industry has been going through some very challenging times over the last number of years…. They've been looking for opportunities to trim costs, to make sure that they can employ the maximum number of workers in British Columbia. We've got workers throughout this province that have been laid off as a result of shifts being cut back on at mills in this province because of the lack of demand internationally for our lumber products.

This shift to the harmonized sales tax takes $140 million of costs out of the forest sector. That means more jobs. That means more job security for the existing workers in the forest sector.

Let me just share with you a quote from Rick Jeffery, who's the president and CEO of the Coast Forest Products Association. He said: "Those regions that have introduced a value-added tax — like the HST — see increases in productivity and investment, and for our industry that means levelling the playing field with our competitors and providing us with an opportunity to invest in and maintain wealth-creating, high-paying jobs." That is exactly what happens with the transition to a harmonized sales tax.

Let me share with you another perspective, from the mining sector. Again, we've got great opportunities to create literally thousands and thousands of jobs around British Columbia in the mining sector — great new opportunities as a result of the ten-fold increase in the amount of money that's spent annually on mining exploration in British Columbia.

Here's a quote from Ben Chalmers, vice-president of the Mining Association of British Columbia. The HST "will lower costs and, hopefully, create quite a few jobs, or at least hire back many of the workers laid off over the last year," he said. "Hopefully, this makes it more appealing for mining companies from all over the world to set up shop in British Columbia."

Let's look at some of the individuals and organizations that have endorsed the harmonized sales tax. You take one of Canada's most renowned economists, Don Drummond of the TD Bank Financial Group. David Baxter has done some very interesting work on the harmonized sales tax from the Urban Futures Institute. The Business Council of British Columbia. Individuals like Dr. Jack Mintz from the University of Calgary, who did a report that shows in British Columbia our shift to the harmonized sales tax — that one measure alone — will result in a net increase of $11.5 billion of investment and a net increase of 113,000 jobs in British Columbia.

You look at other leading economists, like Michael Smart from the University of Toronto, who did a very detailed analysis of the impact on the economy after the Atlantic provinces' shift to the harmonized sales tax in the late 1990s. What his work shows is that the vast majority of that embedded PST that's built into the cost of goods and services comes out of the consumer price of goods and services within the first 12 months.

[1020]

We know that that's exactly the same that'll happen in British Columbia because, if anything, we have a more competitive environment and a more competitive economy in British Columbia today than Atlantic Canada did in the late 1990s.

The list goes on — organizations like the Canada West Foundation, the Association for Mineral Exploration B.C.

The B.C. Agriculture Council fully endorses the shift to harmonized sales tax. You know why? Because it's good for farmers and ranchers in British Columbia. It allows them to remove costs from their cost of doing business so that they can actually provide prices to the consumers in British Columbia that are cheaper. That makes them more competitive. It means that there are going to be more British Columbians buying British Columbia agricultural products rather than imported agriculture products with which they're trying to compete.

The B.C. Chamber of Commerce, which is the voice of small business throughout British Columbia. Not only have they endorsed the harmonized sales tax since we announced it last July; they have been pushing for this move for over ten years now.

In fact, I was in my constituency office a few weeks ago, and I was cleaning out some old publications in my bookcase. I came across the 1998 B.C. Chamber of Commerce policy manual. In that policy manual was a policy resolution passed by the delegates to their annual
[ Page 4006 ]
convention urging the provincial government to harmonize the provincial sales tax with the federal goods and services tax.

Other organizations, like the B.C. Construction Association, the construction sector…. We're actually going to see about $880 million of costs that are going to be removed because of all of that embedded PST that's in there today.

You look at the pulp and paper sector — again, a job generator in British Columbia and an important employer in so many communities around the province. They will be more financially viable, even some of the mills that were looking to restart. The shift to the harmonized sales tax is a game changer for a lot of those companies, because it is going to make the difference as to whether those mills can start up again, re-employ those workers. For those mills that are still running, it means job retention for those employees.

The B.C. Trucking Association has fully endorsed it. The reason why is because it actually means, for the trucking sector, some of those costs come down, and it allows them to be more competitive.

I could run through the list. I'll just pick out a few examples here.

Initiatives Prince George Development Corp. It is looking for how it can make sure that the economy of the north is vibrant and dynamic and can attract new investment, making sure that we can retain the jobs and the industries that are there today as the backbone of the north. Initiatives Prince George fully endorses the harmonized sales tax.

You look at the motion picture industry — again, a big job generator in British Columbia and a very competitive industry. The shift to the harmonized sales tax will mean that there will be productions that will be done in British Columbia that otherwise would not be. It means that there are going to be jobs created, whether it's for the actors or for the technicians or for the key grips on the set. Those jobs will be there because of the fact that we are making this shift to the harmonized sales tax.

You look at others, like the Retail Council of Canada. Many of the small retail outlets in British Columbia, whether they're represented by the Retail Council or by Shelfspace B.C., are stores that have had to wrestle with the added cost of the PST tax system. It is cumbersome. It is difficult to administer, and it's expensive to administer for some of these small stores. I know, for example, that many of the retailers who sell clothing in both children's and adult sizes were cheering when this announcement was made, because it means that their compliance is going to be so much easier under the harmonized sales tax, as we go forward.

I could go on with the validators because there's a very, very long list. But I want to spend some time just talking about some of the impact on individual consumers with the shift to the harmonized sales tax.

Generally, in rough, rough figures, we collect about $5 billion a year in provincial sales tax. Under the harmonized sales tax system we'll collect about the same amount of money. Some people have said this is a windfall for governments. It's actually not. In fact, we'll collect slightly less in that first fiscal year under the harmonized sales tax than we would have collected.

[1025]

What's important about the PST today is that only 60 percent of it is charged at the consumer level, at the point where you're going in to pick up something off the shelf and you take it to the cash register. If it's a $10 item and you're going to pay 50 cents GST and 70 cents PST, most consumers think that that's it for the PST.

What they don't recognize is that that good has a lot more PST built into it, because 40 percent of the PST we collect is collected before it gets to the consumer. Those are costs that all get built into the price of goods and services before they hit the shelves in the stores.

Who pays that $2 billion? I've heard people say: "Well, you know, it's companies that pay that $2 billion." That is, at best, naive because….

Let me give you an example. Let's say that you are the owner of a nursery in British Columbia, and you have a customer that comes in to buy a new shrub to put in their front yard. You're going to meet that customer at the cash register, and you're going to charge them the price of the shrub, and you're going to charge them 7 percent PST and 5 percent GST. But built into the price of that shrub, which you have to charge the customer, are a whole bunch of other costs.

Let's say, for example, that a month earlier you had spent a thousand dollars on a new computerized cash register for your nursery. You're going to pay $50 GST, which you as the owner of that nursery get rebated when you file the GST return to the federal government in the following couple of days or weeks, but you're also going to pay $70 PST on that cash register. The question is: who covers the cost of that $70?

As the owner of that nursery, you might just go to Lillian and say: "Haul out the shoebox with our lifetime savings and give me $70 because I have to pay $70 on the cash register." But you know, that's not how it happens. That $70 charge gets built into the cost of all of those goods and services, and it is the consumer that ultimately pays for it.

That is why this shift to the harmonized sales tax takes those embedded costs out. The consumer only has to pay the consumption tax once, and that is only at the point of purchase, at the ultimate consumption level.

Let's look at an example to a consumer of a 2-by-4. Let's say that you're putting a new fence in your back yard this weekend. You're going to go down to your local lumber yard, and you're going to buy some 2-by-4s. Again, you're going to pay 5 percent GST and 7 percent PST. Well, no. Actually, you're paying a lot more
[ Page 4007 ]
PST than that, because think about the life cycle of that 2-by-4. The PST that gets built into the cost of the 2-by-4 starts even before the tree is cut down.

In fact, in 1972, when I was trying to put my way through university, I worked for a surveying company. Just think about the surveying companies of today that are going out to survey a road to take the logger into the forest so that the tree can be cut down to produce the 2-by-4.

That survey equipment will have PST on it that has to get built in to the cost of the survey. The truck that carries the logger into the woods with his chainsaw…. That logger and the company that employs him — they have to pay PST on the logging truck. They don't get that back unless they build it into the cost of their service.

Throughout the whole sawmilling cost…. Even down to the paper towels that the sawmill owner will supply in the lunchroom, that is PST on it that has to get built into the cost of the 2-by-4.

Even things like the machinery. Let's take, for example, a forklift that is used in the distribution side of the sawmill. That forklift has PST on it unless it's used exclusively in the manufacturing portion — even the lubricants, the grease, the cleaners, the distribution system. You wind up with the flatbed trucks that carry it from the sawmill down to the distribution yards in the Lower Mainland or in Victoria or wherever. Those all have PST costs that get built into the cost as we go through.

At the retailing level, whether it's the cost of building the store at the lumber yard; the cost of the blacktop, the asphalt, that's put down in the lumber yard where that 2-by-4 is sold; the signage and the banners; even the business cards, the flyers, the brochures, the advertising that the lumber yard engages in — all of that is subject to two consumption taxes: the GST, which that retailer can get rebated because of the value-added tax system, and the PST. That all gets passed on. It all gets built into the cost of those goods and services.

[1030]

Under a value-added tax system, all of those embedded costs come out, so there is only one application of that 7 percent. That is a savings to the consumer. That is a benefit. It actually results in more jobs at the end of the day.

Now, let's also look at another destination for a 2-by-4 that came out of that tree. That 2-by-4 may not be headed for a lumberyard in British Columbia. It may actually be headed to China. Now, think about the fact that the Chinese market has become very important for us for our lumber. It is the fastest-growing market for us for our lumber products in British Columbia. Our forest companies in British Columbia are having great success in China, but they could have even more success if it was not for the embedded provincial sales tax.

As we sell our lumber into China, we're trying to compete with the Scandinavian countries. Well, guess what. The Scandinavian countries have a 25 percent value-added tax, but there is not one euro of that tax that is embedded in the price of their exports to China, because of the way the value-added tax system works.

We're saying to our retailers, our lumber companies, that they have to compete with one hand tied behind their back on those international markets because of our archaic, old style of provincial sales tax.

I also want to talk a bit more about the impact on consumers. There's an e-mail going around — I think some would say that it's gone viral — talking about a senior couple earning $40,000 a year and how the harmonized sales tax will cost them an additional $2,100 per year. That is absolute nonsense. Just think about the arithmetic behind that. In order to pay that much harmonized sales tax, they would have to have $30,000 of their expenditures going to goods that are not currently subject to a provincial sales tax.

I think people that circulate those kinds of e-mails are fearmongering and, quite frankly, that it's just simply a disservice to the kind of conversation we should be having around the importance of a harmonized sales tax.

In fact, well over 80 percent of all goods and services will not be impacted at all, or if anything, they will wind up costing less as a result of this shift to a value-added tax. Less than 20 percent of goods and services that the average household consumes today are going to see some incremental cost after tax.

If you start looking at some specific examples of families…. You take a senior couple with $30,000 worth of income. If you look at the impact of the direct harmonized sales tax, it might be about a thousand dollars a year as compared to what they would currently be paying under provincial sales tax of about $756 a year. So that would be a net increase at the end of the year, not of $2,000 but maybe about $261. Well, guess what. That family would be receiving the HST tax credit that will more than offset all of the incremental HST that they would be paying.

Let's take another example of a single individual with $20,000 worth of income. Again, that HST tax credit will totally offset all of the incremental costs that they would be facing.

Take a family of four with $90,000 of income. You know, they're going to get the benefit of the income tax reductions that we brought into effect as of January. So the basic personal exemption, now going up from $9,300-some-odd a year to $11,000 a year, is going to mean that that family is going to benefit, and that is going to mean money in their pocket to offset some of those incremental costs.

A family of four with $90,000 income — they are going to see a little bit of a negative impact at face value, to the tune of about $178 a year. But when you think about the fact that four out of every ten cents that is collected today in PST is embedded, once all of that
[ Page 4008 ]
embedded cost comes out of goods and services, which it will, that family is actually going to wind up being better off at the end of the day, because prices will be less than they otherwise would be as a result of this shift.

I want to come back to the specific provisions that are in this legislation today. As I mentioned at the outset, Bill 9 provides for the winding down of the provincial sales tax system that we have in British Columbia today. That means that that 7 percent comes off.

[1035]

Unlike the claim that the member for Delta North makes in the pamphlet that he's circulating in his constituency, no, the HST is not added on top of the PST. That's the kind of misinformation that, I think, actually has got a lot of people concerned about the HST.

But also in this bill are mitigation measures that are going to be so important. I mentioned the HST credit that is going to be available to 1.1 million British Columbians. One in four British Columbians are going to benefit from a cheque in the mail once every three months, and the….

Interjection.

Deputy Speaker: Minister, one moment, please.

Point of Order

N. Simons: I believe the member opposite should withdraw his comment.

An Hon. Member: I withdraw my comment.

Deputy Speaker: Thank you, Member.

Proceed, Minister.

Debate Continued

Hon. C. Hansen: The other thing that's important in here is the point-of-purchase rebates that we're putting in place. This, again, is because of the flexibility that the federal government has provided. It allowed us to exempt all motor fuels in British Columbia. So that's quite different from the approach that's being taken in Ontario, where they will see an added 8 percent cost on the price of gasoline in Ontario as of July 1. That's not the case in British Columbia.

It also has allowed us to exempt books, children's-sized clothing and footwear, children's car seats and booster seats, children's diapers, feminine hygiene products. It also, in this legislation, provides for the point-of-purchase rebate for home energy costs, and again, that is unique to British Columbia. In all other HST provinces they actually have that additional provincial portion of the tax applied to home energy costs.

In British Columbia, because of the unique structures that we have, we actually have the ability to do a provincially administered rebate for that. To the consumer, it will seem like an exemption from that 7 percent portion of the HST.

There are many provisions in this that are of great benefit to the consumers. It provides for a rebate structure for our SUCH sectors, whether it's our schools, our not-for-profit organizations in British Columbia, the charities, for hospitals, for universities and colleges. These are all sectors that will get a rebate that will totally offset the incremental cost of what their HST would be, on average.

This move that we are making is one that is vitally important to the economy of British Columbia. It is one that will actually set the stage for economic growth for not just the next ten years but for decades to come. It is a move that will ensure that British Columbia is an attractive destination for businesses and investors who want to come in here and create jobs for British Columbians.

It does mean that industries around British Columbia that are coming through difficult times will be able to retain the employees they have, will be able to bring back laid-off workers that otherwise would have been unemployed. It means that new industries, whether it's the forest sector that's going to come back in different ways, whether it's the bioenergy sector or other areas of new opportunities, whether it's the mining sector that has great opportunities for growth, whether it's the film industry that is extremely competitive….

Look at the technology sector, which is growing in B.C., becoming one of the major leading employers in this province. This is huge for them in terms of their tax on investment and their ability to create jobs.

In closing, this is a bill that will provide for the elimination of the PST. It will also enable us to make sure that as the HST comes in on July 1 of this year, we'll be able to take full advantage of the great economic opportunities that will flow as a direct result.

B. Ralston: I rise to address Bill 9. It's very modestly entitled the Consumption Tax Rebate and Transition Act. There's no mention of the HST in the title, which is rather surprising.

It's a rather curious title for the bill. Everyone's aware that the provincial government made a deal with the federal government to implement the HST, and this bill is a part of the government's commitment made in that agreement to implement the HST here in British Columbia.

[1040]

I'm not quite sure why the government has chosen this rather modest title that only obliquely suggests that it has anything to do with the HST. It perhaps is an excess of modesty on the part of the minister or perhaps it's a
[ Page 4009 ]
realization that the words "HST," if it were to really identify the bill for what it was, might provoke even more public anger. But I have some alternate suggestions for the title, since it doesn't really mention the HST. Maybe I could make those suggestions, and perhaps they'll be the subject of amendments when we come to debate at the committee stage.

Perhaps it could be called the "Holding up B.C.'s end of the deal with the federal government to get $1.6 billion in swag and implement the HST" act. Or it could be perhaps entitled "The single best thing we can do for the B.C. economy but didn't want to tell you about before the last election" act. Or it could be called the "It wasn't on our radar before the election, and we're not going to explain what that means" act or "This tax is going to fund health care, but we didn't think of that explanation for eight months."

Now, those are some suggestions. I'm sure members of the public might have some other suggestions as to what a proper title for this act might be, but some people might say: "Well, with a bill that's given this kind of title, you know, there ought to be a law against this."

And you know, in fact, Madam Speaker, there is a law against this. It applies to consumers only, unfortunately, and not to citizens. It's called the Business Practices and Consumer Protection Act. In that act there's a definition of what a deceptive act or practice is, and it says: "means, in relation to a consumer transaction…an oral, written, visual, descriptive or other representation by a supplier…that has the capability, tendency or effect of deceiving or misleading a consumer or guarantor."

I say that this particular title of this particular bill falls squarely within that definition of a deceptive act or practice. It makes no reference to the HST. Everyone knows it's about the HST, but the government…. I don't know, maybe they thought they could sneak this through the Legislature and that people wouldn't notice that it was about the HST. Maybe that's why they chose this title.

Also in the act — again, regrettably, only for consumers and not for citizens; citizens don't have the same rights in relation to titles of bills as consumers do in relation to representations by a supplier — let's look at another definition that is a more specific definition of a deceptive act or practice: "A representation by a supplier…that uses exaggeration, innuendo or ambiguity about a material fact or that fails to state a material fact, if the effect is misleading."

I would submit — and I'm sure that members of the public will have their own view on this — that the title of this bill in its effect is misleading. It's about the HST. It's about the government's commitment as part of the deal that they made to take $1.6 billion in transition money and to implement the HST here in British Columbia, and they don't even have the jam to put it in the title of the bill.

You know, a lot of the government material refers somewhat breathlessly to point-of-sale rebates, and indeed the minister has talked about point-of-sale rebates here. I suppose that's the justification for the reference to "rebate" in the title of the bill, but other than the energy rebates, all the other rebates are long-existing exemptions from PST that have been in existence for many years, whether it's books, children's clothing and footwear, children's diapers, children's car seats and car booster seats, feminine hygiene products….

Those are all long-standing exemptions, so to suggest somehow — and I think there's a suggestion here — that, by entering into this agreement and by bringing this forward before the Legislature, somehow these items are newly exempt is simply not accurate. It does incorporate those longstanding ones.

[1045]

Of course, the flip side of that is the issue that we've canvassed here in the Legislature fairly recently: that the provincial government has given up a number of other rebates, whether they're on green products…. And there were a number of them in the 2008 bill.

When the minister was questioned about it in a radio show in Kamloops — about losing that provincial autonomy to give rebates based on policy reasons here in British Columbia, such as the longstanding one brought in by the Minister of Finance back in the Social Credit era in the '80s on bicycles — he kind of shrugged his shoulders and said: "Well, those were nice to have, but we don't have those anymore. That's part of the deal."

There's not even an effort to defend that. That's just something that's fallen by the wayside, fallen away with all the rhetoric that came with the so-called 2008 green budget.

I suppose that's the reason why there's a reference to "rebate" in this bill. That seems to be the only justification that I can find. But I'm sure everyone in British Columbia is well aware that this is a bill to implement the HST here in British Columbia. Why, for the life of me, the government didn't have the integrity on that issue — just to put it in the bill — is something that perhaps the minister will want to answer later on.

I think it's important to consider the economic context in which this bill comes and the economic environment that we're talking about here in British Columbia. Just today, just this morning, the RBC, or as they used to be called, the Royal Bank of Canada, released a report about people's views of their economic future, particularly their anxiety about jobs.

The March RBC Canadian consumer outlook index finds that job anxiety is higher in British Columbia than anywhere else in Canada. Nearly three in ten British Columbia residents, 29 percent, report job anxiety — significantly more than the national average of 22 percent. By "job anxiety," they mean people that have
[ Page 4010 ]
legitimate fears about the prospect of losing their job at some point in the future.

Again, according to the same RBC survey released this morning, B.C. residents are most likely to say that they're not confident about their financial situation — 39 percent, compared to the national average of 34 percent.

These are legitimate concerns by British Columbians. We've just been through a recession. The economy is showing some signs of recovery, but unemployment levels in the United States are unacceptably high, and there's a concern, a very serious concern, at the highest levels of the American administration that unemployment levels will remain very high in the United States for some time to come.

That's reflected in its impact on the B.C. economy — because, as everyone knows, they're still our largest customer, although there's been an effort or an effect of diversifying B.C.'s exports over the last many years under many governments. Still, we're most dependent on the United States and the American economy.

We'll talk a little more about this when we deal with some of the so-called expert reports, but it's also worth kind of placing in context some of the job numbers that the minister has talked about from the Mintz report.

The report itself doesn't place the job numbers in any kind of B.C. economic context. It's largely an unfootnoted study and an un-peer-reviewed study. For those who follow that sort of stuff, that means that other people in the same field look at the study and decide whether it passes those ordinary academic standards. That's not the kind of study it is.

In the B.C. Stats version of Statistics Canada's study of the labour force here in British Columbia as of the end of February this year there are 2,482,000 people in the labour force, and 2,290,000 are employed.

[1050]

When we look at the Mintz report — and I'll deal with this later — I think it's important to place it in a context. So 113,000 jobs over ten years, about 11,000 jobs a year versus an employment labour force of 2.29 million, I think provides a different context from the simple assertion of a number of jobs without placing it in any kind of economic context. I'm sure that people would appreciate and understand that that's important to do, to gauge the efficacy of this measure, if there is any efficacy to it.

Certainly, a time horizon of ten years…. The government and economists generally, prominent or not, were having great difficulty in predicting the economy one year forward not too long ago. So to make a study that predicts and looks forward ten years is of relatively limited value. Indeed, I think the minister himself or the Premier has said that some of their remarks prior to the election, and I'll get to those, should have been predicated on introducing or recognizing a note of uncertainty about any attempt at economic prediction.

Apparently, that's the mast to which the government has nailed its colours. Seven or eight months after they've announced their firm intention to proceed with an HST, this report pops up — brief, un-peer-reviewed. Placed in context it has some effect — if it's to be believed — or not, but certainly not the blockbuster that the minister would have us believe, certainly not in the way that he's set it out in his remarks that he just gave.

The other aspect of the economic environment that we find ourselves in is to want to look at the issues that the RBC identifies — consumer confidence, anxiety about job loss. Certainly, that's something that the Manitoba study about whether or not to proceed with an HST places a great deal of weight on. It's a very thoughtful study that I think is probably the most objective study. The ultimate decision is not to proceed with the HST in Manitoba at this time.

One of the key factors that they identify is the issue of consumer confidence and, particularly in Manitoba, resilient consumer confidence and what impact bringing in an HST would have upon consumer confidence. Their judgment — obviously different from the judgment that's been made here — is that the introduction of an HST would have a very negative impact on consumer confidence at a time when, as RBC…. I don't think that's particularly surprising information at a time when people are only beginning to regain confidence in the economy and their personal futures. It would damage consumer confidence.

Indeed, that's what a number of sectors have expressed, where they rely perhaps more on discretionary spending than on spending on necessities. They have also expressed that concern. The government has obviously decided to brush off those concerns of many sectors, and I'll get to that at some point in my remarks.

Madam Speaker, I'm the designated speaker, so I have a little bit more time than is usual to develop my remarks.

Again, looking at the economic context in which we find ourselves, I go again to the B.C. Progress Board, and that's a body that's appointed by the government. It's basically a think tank appointed by the government that assists the government in developing policy. They publish their reports, and they're part of the public debate.

Their Progress Board report published in December 2009 says some very significant things. Again, when we consider the economic context in which this measure is being brought forward, B.C.'s overall ranking on the social condition has dropped from six to eight. That was based largely on stats from 2007 and therefore doesn't really reflect the impact of the current downturn, so it might be worse. But within the social condition category, B.C. has the second-worst, the ninth-place ranking for people with low incomes and for crime rate.

[1055]

B.C.'s economic performance in 2008. B.C. placed ninth out of ten provinces for economic growth — it's
[ Page 4011 ]
rather a little bit contrary to some of the rhetoric we hear from the other side — third for personal income and fourth for jobs. B.C.'s real GDP per capita actually fell last year, and the export base of the province is still weak — still eighth out of ten, and weaker this year as exports per capita actually fell.

The Minister of Finance has mentioned Mr. Finlayson in a recent report. He used a measure called export intensity and compared all the provinces, one against the other. His conclusion was that B.C. has the lowest export intensity — that is, the worst record for exports of any province in the country. So some of the measures that are talked about, I think, are important to view in the overall economic context that we find ourselves in, and particularly as they may affect consumer confidence.

The other thing that I think is important to realize is when people react to the…. However the minister and however the public affairs bureau chooses to gild the lily on this, people have a real anxiety about having to pay more. The perception is the reality, indeed, that they will be paying more for many services that previously they have paid less for.

Just to give an illustration, perhaps I can just run through a bit of a list of some of the goods — and this is only a partial list — that British Columbians will pay 7 percent more for: restaurant meals and catered foods; snack food; prepared foods; salads, sandwiches and heated food; muffins and coffee; school supplies; taxi fares; movie and theatre tickets; amusement parks; accounting services; veterinary care; classes for yoga, dance, cooking and martial arts; membership fees for clubs, gyms and player fees for team sports; facility and ice rink rentals; acupuncture and alternative medicine; haircuts; repairs to home appliances; laundry and dry cleaning; carpet and upholstery cleaning; janitorial services; car washes; basic residential telephone service; basic cable TV service; vitamins, dietary supplements and other non-prescription medicinal products; residential smoke or fire alarms under $250; work-related safety equipment; magazines, periodicals, newspapers, newsletters and student yearbooks; energy savings items; appliances for home or for a vehicle; bicycles, bike repairs and parts; automobile towing and emergency roadside services; funerals.

That's just a very, very partial list to give a bit of a sense of how much the landscape will change and how much ordinary people are going to pay more. That's their concern and, certainly, that's the reality.

Let's look at perhaps why people might have some legitimate reasons to be concerned. Statistics Canada publishes a report on earnings, income and shelter costs. This is, again, research that's done by Statistics Canada. They talk about…. This is released back in May, 2008 based on the 2006 census, so this precedes the recession.

In the recession, obviously, there was job loss. I think the Canadian Imperial Bank of Commerce has a job quality index where they talk about what they call job quality. By that they mean not only just simply job loss but when full-time work becomes part-time, when people transition involuntarily from full-time work to self-employment or when people proceed from part-time work sometimes to term employment.

Their measure is job quality, and obviously, during the 2008-2009 period, that has declined very sharply, particularly in British Columbia, which has been hard hit by the recession, and according to the B.C. Progress report, is ninth out of ten provinces for economic growth.

[1100]

But this report from Statistics Canada…. These are the facts. This is something that they have devised based on the 2006 census. Median earnings — the title is "Little change in earnings during the past quarter century." "Median earnings of Canadians employed on a full-time basis for a full year changed little during the past quarter century, edging up from $41,348 in 1980 to $41,401 in 2005, in 2005 constant dollars." That's a change of $53 of the median earnings of Canadians over that extensive period. Median earnings are the earnings that are halfway between 50 percent above the bottom and 50 percent below the top — right in the middle.

"Earnings of full-time…earners rose for those at the top of the earning distribution, stagnated for those in the middle and declined for those in the bottom." That's a common perception, and yet here's the statistical support from Statistics Canada for that perception. It has been better for earners at the top.

"Between 1980 and 2005, median earnings among the top 20 percent of full-time…earners increased by 16.4 percent." Median earnings at the top went up, and then the contrast is: "Median earnings among those in the bottom 1/5 of the distribution fell 20.6 percent. Median earnings among those in the middle 20 percent stagnated, increasing by only 0.1 percent."

To look at those in the top portion: "In 1980, 3.4 percent of full-time…earners received $100,000 a year more in 2005 constant dollars. By 2005 this proportion had climbed, almost doubled to 6.5 percent." That's the context in which this tax is received, the HST tax. Median earnings have stagnated. For those in the bottom, their earnings have declined. There are a few, a fortunate few, whose earnings have increased over that period of time.

For most people, those below $100,000, particularly if you're in the middle, your earnings have stagnated, if you're fortunate enough to still be employed. If you're at the lower end, your earnings have declined. That's Statistics Canada. Obviously, there are regional variations, but that's the broad pattern for the country.

When the HST is put forward by the government as something that's good for everyone, it's easy to see why
[ Page 4012 ]
people quite rightly say: "Well, I'm going to be paying more, and the benefits…." We'll get to what the government says the benefits are. We'll have a more detailed look at that, because the benefits that are promised when you in fact look at the scanty, so-called expert opinion that the government marshals in support of its argument, beyond the faith-based assertions that it's good for you, really, in the objective studies don't really materialize.

The minister said just moments ago that prices will fall. That's not the experience indeed in one of the very studies that he cited, the Michael Smart study, which, in the budget of 2009 in the fall update, was the only study that was cited in support of the HST, and that's not what it said. Prices don't fall. The reduced cost is not passed on, and one doesn't have to be a cynic to see why this might be so.

If you're getting a certain price for a good, there's no obligation in a market society to reduce the price. If no one else does it, why would you do it just because you think it's a good idea? The theory of markets in classical economics and the rational market and all that sort of stuff has been very much, I think, under scrutiny.

[L. Reid in the chair.]

In 2008 and 2009 Paul Krugman, who's a noted American economist, basically said that the pure classical model is dead. They really weren't able to account for reality, and the closest thing to a working hypothesis for macroeconomics is Keynesian economics. That's the closest, with its imperfections, that one can get. A lot of the studies that are done are premised on an economic theoretical model that didn't test very well against reality in the recent downturn, and more thoughtful economists are revising their view of the world.

[1105]

That's not always the case in every part of the profession, but certainly, Paul Krugman…. I think he's won a Nobel Prize in economics, which I suppose is some measure that he might qualify as an eminent economist that the minister sometimes likes to refer to.

That's the economic context. When we come to evaluate the claims, we'll get to that — about some of the so-called benefits.

Certainly, Mr. Mintz talks about 11,000 jobs a year. He's done a number of studies. It's interesting, and what I'll do later on is contrast some of the conclusions he's drawn in perhaps more unguarded moments with his work where he's been commissioned directly by both the Ontario government and the B.C. government. We'll have a look at how that compares to what he did in the past.

Also, looking at the context in which this measure comes about, it's important to look at what the government did and the steps that were taken from 2008 on, because it's clear….

The minister, I think, made…. I've made a note of what he said. I don't have Hansard immediately available quite so quickly. The $1.6 billion, the transition money — some call it bribe money; this is in quotation marks in my notes — "wasn't the motivating factor in the decision."

Well, I beg to differ. It's clear that the $1.6 billion was a very key reason why the government decided to move as it did after the election. Why was that? The minister set a context. He said: "Well, you know, this idea has been around. I dug out an old chamber of commerce report from 1998. This idea has been floating around for a long time." If that's the case, why did it become so urgent? Why was it acted on so very quickly after the election if the idea had been around?

Ontario, particularly — again, the claim is that the motivation was that we've got to match Ontario — had begun that process of announcing it in January and putting it in their budget in March, well in advance of the election in May. Then all of a sudden we hear — we get an announcement in July of 2009 — that this is going to happen.

It's my view, when you look at…. We'll go through, in some detail, the shifting sand of the ministerial position on what the anticipated deficit was and what was necessary to correct it after the election and just why he was so eager to grasp the poisoned chalice of the $1.6 billion.

He needed it to help cover up for some of the representations that had been made during the campaign about what the budget deficit was going to be. We'll go through some of these in some detail, but they start out with an absolute rejection by the Premier of any contemplated deficit. "Deficits are terribly bad," although in 2003, under his leadership, the government had the biggest deficit in the history of the province — it's something that he likes to skate over and brush aside — and the second-biggest deficit to that date in 2004.

It was only with the B.C. Rail deal in 2005 and the approaching election that the province's finances were returned at least to the appearance of something approaching a balanced budget. That deal was necessary to balance the budget, just as the $1.6 billion was necessary to reduce the deficit down to something that was a bit more politically palatable, given the very emphatic representations that had been made by the Premier and the Minister of Finance before the election.

What's useful to look at is…. I have a series of quotations here. It may be a bit unfair to quote the Minister of Finance and the Premier against themselves, but I'm prepared to take that risk.

[1110]

I want to just assure members that these are quotations. I'll identify the source and the date so that if anyone should doubt or any of the eager beavers in the public affairs bureau have any spare time, they can go
[ Page 4013 ]
back and look these up and see and make sure that I've quoted them exactly.

In the fall of 2008, as people will recall, with the collapse of the Lehman Brothers bank, the American economy — and, indeed, the global economy — began to cascade downwards very rapidly. Prior to that, there was certainly a conviction among the B.C. Liberal leadership that things were doing fine in British Columbia and that that wasn't really going to happen.

In July 2008 the Finance Minister said: "I think B.C. is weathering some of those challenges better than most other jurisdictions." That's a quote from the Minister of Finance, Nanaimo Daily News, July 8, 2008.

July 22, 2008, in a meeting with the Vancouver Sun editorial board, the minister was quoted as saying: "B.C., although still highly dependent on the U.S. for markets for our goods, although much more economically diversified than we used to be, is holding up better than most other provinces." That was July 2008.

Let me just move here. After the Lehman Brothers collapse in September, then in October there began to be some concession that maybe something was happening economically, and its impact on British Columbia, any negative impact, was firmly denied at that point.

The Premier, quoted in Jonathan Fowlie's Capital Diary blog on January 28, 2009…. But this is what he said on October 22, 2008, meeting with reporters after the October economic update:

"Let me be very clear. We are not going to run a deficit in the province of British Columbia. When you talk about a deficit or anyone talks about a deficit, they're talking about turning their back on the next generation, and they're sending our problems forward to them. I do not accept that we should have deficits. We don't need to run deficits. We actually need to run a strong, healthy economy. The government should always live within its means."

That was in October. Of course, that changes very rapidly — well, maybe not very rapidly. There's a stubborn reluctance to acknowledge reality which continues for some time. That's October 2008.

Then on December 6, 2008, the Finance Minister said: "I think in difficult economic times, it is not the time to be running significant surpluses. In British Columbia there is legislation that says deficits are illegal, so I will be bringing down on February 17 a balanced budget." That's quoted from the Vancouver Sun, December 6, 2008, page G3.

Let me just have a look here. Into January the Minister of Finance was quoted by Tom Fletcher in the Abbotsford News, January 28, 2009: "He is 'still working towards' a balanced budget to be presented February 17."

CKNW World Today, January 27, 2009. This is the Premier this time. Asked directly if he will be running a deficit budget: "I think we'll have to see where we are. We've actually gone through for the last month and a half…. We've been, well, for more than that, three months now, we've been looking every place we can save so we can protect health care and education. I can't come down on the deficit question yet." And "the deficit question" is in brackets there, so I think it's "on that question yet."

By the three months reference, he's obviously referring at least back to October. The budget would be very much in its late stages of preparation by the end of January, given that it was only about two weeks before it was to be introduced. But even then, at least in that answer, he was equivocating as to whether there would even be a deficit, which is a bit surprising given the shift in economic circumstances that was apparent to everyone.

[1115]

Even the day before the budget there is a series of interviews, naturally, with the Premier and the Minister of Finance. The budget was introduced on February 17, 2009. The Premier is quoted on A News at five, February 16, 2009, at ten minutes after 5 p.m. The Premier — his name is mentioned, but I'm not permitted to mention his name here in the chamber — insists: "Tomorrow's budget will neither be 'sugar coated' nor of the 'bait-and-switch' variety, ensuring that what gets tabled will be the budget for the entire year."

The day before the budget is introduced, the Premier is saying publicly: "I'm going to introduce a budget tomorrow, and it's going to be the budget for not just the election period, not just until May 12; it's going to be the budget for the whole year."

Don't forget that the Premier and the Minister of Finance and indeed the cabinet have access to the very skilled work of the Treasury Board with all their contacts — their contacts with credit-rating agencies in New York, the bond-rating agencies, the senior economists that work for the Treasury Board — and the ability to make economic forecasts, the economic data that they have about tax revenue from every source of the British Columbia economy. So they're pretty much in possession of as complete information as anyone — indeed, probably the most complete information of anyone — and that's the representation that was made publicly by the Premier the day before the budget.

There's a further quote that also was replayed on A News — from the same interview but replayed 5:05 p.m. on July 9, 2009. Obviously, this became an issue after the election. The Premier is quoted as saying: "No, you're going to get the budget tomorrow that we expect to put in place and that we will operate on as we go through the next two to three years." Same sentiment the day before the budget in February. The same pre-election positioning, if one can put it charitably — that this budget was the genuine article. It was going to govern the province's finances for the next two to three years.

It's not me making this up. I'm quoting the Premier here, from a public broadcast of his views — his statement.
[ Page 4014 ]

Now, this changes a bit after the budget comes out and we move more expressly into the election period. The now infamous quote made on April 23 after the radio leadership debate. I'd like to quote this just so that it's crystal-clear. It's a kind of read-my-lips moment from the Premier. "I can tell you this. The deficit for 2009-10 will be $495 million maximum." So $495 million maximum — that's not something that is very open to interpretation. That's pretty clear. That's very precise — $495 million maximum. I don't think there's any danger of misinterpreting that. But events don't bear that out, oddly enough.

The Premier is also interviewed on April 24 by the radio station CKNW. "For '09-10, I am confident that the budget will be a $495 million deficit. I think we may be able to outperform that, but I don't want anyone to be under any illusions."

So not only was the $495 million a maximum; the Premier was holding out the possibility — not a strong possibility here, by the way he's qualified it — that it might even be better than that. There's no ambiguity expressed on the possibility of running over the $495 million. There is certainly some ambiguity expressed about: "Well, maybe we'll do better than that." That's, again, part of the public debate that took place during the election campaign.

[1120]

These are important representations. These are representations by the Premier of the province during the election campaign, where those issues were obviously important issues. The budget is the single most important document that the government produces. Indeed, all the historic tradition of the House heading back 800 years is about the control of supply — in other words, the money that the government spends on behalf of the Sovereign during the course of a year. And that's essentially what parliament and the Legislature are all about.

So the budget is the most important process that the government engages in, and when the Premier of the province, who is the head of the executive council, the elected leader of the government, makes some representations about the budget — this most important document, this most important process — the public has the right, and certainly should expect, that that will be accurate.

This is the Premier making a very clear and emphatic statement on April 23, after the radio leadership debate, and the following day saying: "Not only was it $495 million maximum; you know, we might even do just a little bit better than that. That's how great we are as economic managers." I'm sure that's the impression that the Premier wanted to create and leave. That's what he said.

Now, events unfortunately, or fortunately, for the Premier, don't bear that out — maybe, unfortunately, for the rest of us. This $495 million, as we'll see and I think as people know, melted away. I think it's important to look at just what the government said about the fiscal position of the province, because after the election it finally became revealed publicly that this fiscal position wasn't one that had any substance in fact and that the deficit was going to be much greater.

I'm convinced, when you look at the sequence of events, that this was the motivation, the strong motivation, for the Premier sending the Minister of Finance out to bring home the booty, to get the $1.6 billion and to use that to begin to repair some of the deficit damage that had been done by his representations during the course of the election campaign.

What's striking, though, is that even after the election the Finance Minister persists in this position. Now, he has an explanation that he brings out a bit later on. But early on, in May and June, he still persisted in what I would say by that point was clearly a fiction — that the deficit was going to be $495 million or less.

This is a quotation from the Minister of Finance from the Vancouver Sun, June 11, 2009: "In late May some economic forecasters were predicting the 2009…deficit could be up to four times larger than the government had stated." His name is used here but I'm going to refer to him as the Minister of Finance just in case the public affairs bureau is checking on the accuracy of my quotation of these things: "…has wavered on the issue recently and appeared to dismiss the idea of a much deeper deficit on Wednesday. 'If I were in a position to table a budget today, it would be a deficit of $495 million or less,' the Minister of Finance said."

And "If I were in a position" to "$495 million or less" is in quotation marks. That's a direct quote from the Vancouver Sun on June 11. So not only is the Premier making a representation before the election; the Minister of Finance, in this particular quotation on June 11, continues with that representation.

This is a further quote on the same day from the CKNW radio station: "The Minister of Finance" — again his name is used, but the rules prohibit me from giving his name — "still claims the government can meet its forecast of $495 million deficit this year." The minister is quoted: "If I were in a position to table a budget today, it would be a deficit of $495 million or less. I'm still confident that come September 1, we will be able to deliver on that. But we have to recognize that as much as the volatility appears to be diminishing, there are still challenges, and there are still risks to those forecasts." That's what he says on June 11.

[1125]

It's interesting when you begin to compare those kinds of public quotations to what the Minister of Finance says later about his backroom manoeuvring on the HST, which he claims begins at the end of May at the coffee machine at a federal-provincial meeting of Finance
[ Page 4015 ]
Ministers, where he says he engages federal Finance Minister Flaherty in the discussion of the HST.

The Premier has a somewhat different version of what's taking place around the same time. He's quoted in the Canadian Press, June 8, 2009, a couple of days before:

"During last month's election campaign" — his name is quoted but I'm going to refer to him as the Premier — "the Premier was firm that the government would keep the deficit at $495 million, leading to public speculation that public sector job and service cuts were on the way.

"He was less adamant on Monday. 'Anyone that thinks they're going to rely on economic forecasts to determine what they're going to do, I think, is going to look back at last year and say: "That doesn't make much sense,"' he said."

So not something that appears to apply to the Jack Mintz report, for example, about the unreliability of economic forecasts, but at this point, for his purposes here on June 8, the Premier is casting some doubt on the reliability of economic forecasts. For Mr. Mintz to predict out ten years, that's good enough for the Finance Minister, but for the Premier to make a prediction in June of what might happen in September was too long a distance to bridge reliably.

Three months versus ten years. There's a certain flexible standard, it would seem, in the evaluation of the reliability and the efficacy of economic forecasts, but I think I'm pointing out the obvious there when I say that.

But let's continue. The Minister of Finance slowly begins to shift his position. Again, at this point, he hasn't revealed publicly what he's been doing with the HST. And he uses this in later explanations as an explanation for what would appear to be public statements that really do fly in the face of reality and what the economic situation is there.

On July 2, on radio station CHNL — 7 a.m. newscast — he's quoted as saying this. He's asked about the deficit and where it's going, and he says this:

"Over this period of time there have been some weeks you get good news and some weeks you get bad news, and, you know, just even in the last week we've received some of the numbers from Ottawa that I think were certainly more disappointing than we had expected. My hope is that next week will be a better week for us."

Now, that's a little bit ambiguous, a little bit Delphic in the way that Finance ministers sometimes are and sometimes have to be. But what I think any reasonable person listening to that would suggest is that maybe something is happening here. Maybe he's less confident than he has been up until that point about the $495 million.

There's another quotation from…. I'm not sure if it's the same interview, but it's an interview with Jim Harrison, who is the noted veteran reporter with radio station NL in Kamloops. The question is: "Would you bet the mortgage on that $495 million?" — which is a good question — and the minister's answer is: "No. You know, even a couple of weeks ago I thought it was a very doable objective. I am less confident today. Maybe we will get some good news between now and September 1."

So maybe he's very subtly foreshadowing what he knows is going on, but he hasn't told the public, about the HST deal. Not very clear that that's what's in his mind. But there is, I suppose, what they call in Greek tragedy…. Deus ex machina may be coming. Not very clear, but there is certainly some foreshadowing here.

[1130]

I don't think any member of the public and certainly even any member of the opposition or anyone else, maybe even members of his own caucus, would understand what was being meant by "good news" between now and September 1 other than looking at it in hindsight after the announcement on July 23 that we were going to bring in the Consumption Tax Rebate and Transition Act. I mean, the HST act. Sorry, I fell back into parliamentary tradition here. The public accounts were released a few days after that. That's an occasion that took place in early July.

Once again the shifting sands underneath the Minister of Finance's feet seemed to shift. He's quoted on July 9, BCTV at 6, Global news: "As of the third week of June, I was still optimistic that we would be able to bring in a budget that would reflect a deficit in the range of $495 million. The news we got from the federal Department of Finance on June 24, which I was briefed on, on the morning of June 25…. I can no longer say I'm that optimistic."

He's also quoted the following day in the Province newspaper: "Given what I know today, I am not optimistic at all that a $495 million number is anywhere near possible." That's the Province, July 10, 2009.

Although later events and later explanation show that these comments were made in a context where the minister knew by that point that the $1.6 billion was on its way, riding to the rescue, somewhat, of the minister's deficit number…. Although the budget that was tabled in September has a much-expanded deficit number, it certainly would have been far greater had not the $1.6 billion been available to him.

But this begins to shift. Of course, on July 23 we hear the announcement of the single best thing that could be done for British Columbia according to the Minister of Finance. This, of course, was not mentioned in the election, and the Minister of Finance has offered a very…. I'm a bit surprised by the explanation and a bit disappointed. His explanation of the response to the restaurant survey is…. I just find it a bit disappointing, frankly.

He said: "Well, we answered a survey. It wasn't in our platform, but we didn't say we would never do it." I'm sure what most people would expect — and they had the right to expect — is that when you say in an election campaign that it's not in our platform — "We think it's a bad idea" — and when you give reasons in writing why it's a bad idea, that would lead most reasonable people to the conclusion that you aren't going to do it. But the Minister of Finance wants to qualify this.

As I say, I'm just disappointed in the way in which he's chosen to dig himself out of this very obvious hole he's
[ Page 4016 ]
in by saying that the Liberal platform did not contemplate this. There's a certain slipperiness to that. I want to be mindful of parliamentary procedure here. I don't want to cast aspersions here in the chamber on the integrity of the minister.

But I'm sure the public will be disappointed by the minister's explanation. It just seems a little bit too…. I don't know quite how to say it. Speaking as a former practising lawyer, there are ways in which sometimes evidence is characterized. I don't think I'll use any of those terms here.

[1135]

In any event, there's an effort by the minister to back off, to qualify what I'm sure most people — if not everyone who read that and certainly the people in the restaurant industry who heard that and asked for that — thought for sure was a firm commitment by the B.C. Liberals that they would not institute an HST after the election. Of course, they did exactly the opposite.

The minister then resorts to, in his explanation here today…. I'm not sure where he got this line from. He goes back to: "It wasn't on our radar screen." Now, that explanation — who knows what that means? It's a comment without content. It's not clear what it means. Does it mean we knew about it, but it wasn't prominent? We knew about it and chose not to talk about it? We knew about it, but we didn't know the full extent of the deficit and whether we needed the $1.6 billion?

"It wasn't on our radar screen" is really not an explanation. It's certainly words that are meant to be an explanation, but I don't think anyone really accepts that as an explanation. What does it mean? That's why I thought maybe a good title for the bill was the "It wasn't on our radar screen, but we won't explain what that means" act. It's an explanation that the minister has offered a number of times but is no explanation at all.

I'm a bit disappointed with the minister's attempt to slide away from the commitment that was made in the election. Certainly, when you look at what was said to the restaurant association, there was one thing that was also clear in that — that if we were to do it, we would consult.

That was very important to the restaurant association, because they've been engaged in running after the minister, trying to get his attention and trying to get some recognition of the impact that this will have on their sector ever since July 23. The commitment was made not only that they wouldn't do it but that if we were ever to consider doing it at some point in the future, we would certainly consult.

They said they wouldn't do it. They said that should they ever change their mind — which was certainly not something they set forward; their commitment to not do it was very emphatic — of course they would consult before they would ever embark upon something like that. They hadn't consulted before the election — confirmation, therefore, that they weren't going to do it. If they were going to do it, they would have consulted.

Mr. McGuinty, the Premier of Ontario, at least had the jam to announce that he was thinking about it and engage in a consultation. He announced it in January and decided to move forward with it in his budget in March. Many of the same objections were made, but at least there was some semblance of public consultation rather than a decision that came after a firm commitment in the election not to do it and then a startling reversal on July 23, 2009.

How did this come about? This is important to why we get to this point, why we get to Bill 9, why we get to this debate, why we're here today and why we're discussing this piece of legislation. It's because as the budget numbers cascaded away, as the minister with knowledge of all this began to shift his public position, he was also engaging in some diplomacy, if I can put it that way, or discussions with the federal Minister of Finance.

There are various versions of this, but the details seem to be…. At least there are some elements that are in common with most of the explanations. This is from an interview in the Globe and Mail on August 22, 2009, with the minister explaining how the HST first came up, according to him. They "were standing by the coffee machine during a break at the federal-provincial Finance Ministers meeting on May 25, two weeks after" — and it says the Premier's name, and I'm going to call him the Premier just so that I don't violate the rules here in the House — "was re-elected in B.C."

[1140]

The name of the Finance Minister, and he's referred to, understandably, as B.C.'s Finance Minister….

"He was chatting with federal Finance Minister Jim Flaherty. He advised Mr. Flaherty that B.C. was re-evaluating its opposition to blending the provincial sales tax and the federal GST into a harmonized tax.

"It was the first time he had spoken to the federal government about the seismic shift in B.C. policy. His staff had told him a few days earlier that Ottawa was showing more flexibility in offering cash incentive to encourage provinces to jump aboard. Ontario had started negotiating with Ottawa on a package of incentives at the beginning of the year, leading to an agreement in March. The same deal would be available to B.C.

"With the provincial treasury starved for funds, an offer of cash was pretty attractive."

That's an article written by Robert Matas, a distinguished senior journalist with the Globe and Mail, August 22, 2009.

So there you have it, according to the Finance Minister. He said very clearly that although the Ontario budget came down in March, he didn't pay much attention to the Ontario budget. I think he was quoted as saying that he didn't even have time to go onto the website of the Ontario government and look at the details of the budget, notwithstanding that he stands at the head of a ministry with a number of people who could give him
[ Page 4017 ]
a quick summary of that at any point, notwithstanding that the Ontario position was the motivating factor.

We've heard him repeat it again today here, for one of many further times, that the comparison with Ontario was a very important comparison. Yet at the time that Ontario moved in that direction — clearly that was a change in position for Ontario; clearly there had to be something motivating it — his position is, and of course I accept it, that he didn't have any interest in finding out what was motivating Ontario. He didn't talk to the Ontario Finance Minister, no communications either at the ministerial level or at the deputy minister level or at the official level.

It was a cone of silence over both provincial Finance ministries, a cordon sanitaire — no communication whatsoever on this important issue of national tax policy. Nothing took place. It was only after the election…. Of course, I accept, as I must, that that's what the Finance Minister did. It's then clear, according to the Finance Minister, that there was a desperate need for cash. The phrasing that Mr. Matas has used: "The provincial treasury starved for funds, an offer of cash was pretty attractive." At that point the wheels start in motion.

Mind you, this is while he's still saying publicly that he can attain the $495 million deficit. He hasn't told the public that this deal is cranking up. But according to him, that's when it begins. The treasury needs cash. He needs to try and balance his budget, and the federal government has some money that they're willing to give to motivate that change, so he says he's interested.

It's then, only later, after July 23, that the two streams of public representations begin to become integrated and put the two stories together. There are some obvious questions that arise as a result of that.

In September the budget is tabled, and the deficit is not $495 million maximum. Lo and behold, it's $2.8 billion, a long way from $495 million. One of the factors reducing that deficit is an accounting entry that's made for part of the $1.6 billion — $750 million of the $1.6 billion is, for the purposes of the September update, put as revenue against the budget back then. That changes the budget that we hear in the spring, but that's a different question, and I'll deal with that when we get to it.

That's what happens at that point. The budget is tabled. Of the $1.6 billion, $750 million is tabled with it. Clearly, if that $750 million wasn't available, obviously you'd have to add that very same amount to the deficit. It would be well over $3 billion and well on the way to $4 billion.

[1145]

Perhaps that was a factor. Maybe there's a psychological threshold there. Maybe there is, in the mind of the Premier or in the mind of the Finance Minister. That part of it is not explained.

The Minister of Finance is then subject to some questions, obviously, about how this came about. That $495 million maximum, even as late as June or even in some versions in a tentative way in early July, is all of a sudden — boom — $2.8 billion, with $750 million chalked up on the plus side coming directly from the federal government.

The Minister of Finance was on the Bill Good Show on September 2, 2009. He was asked some questions by Mr. Good, and I want to quote, just so that we're clear what the minister's answer is, because I want to be fair to him and the answers that he gave.

Mr. Good says:

"You told me a few minutes ago that in your first post-election briefing on the budget you were told the revenue problem had grown to $1 billion."

The Minister of Finance:

"Yeah, it was a bit over $1 billion. I think, if my memory serves me right, it was about $1.1 billion at that point."

Mr. Good continues:

"But when you were reappointed Finance Minister on June 10, you told reporters, 'If I were in position to table a budget today, it would be a deficit of $495 million or less. I am still confident that come September 1, we will be able to deliver on that.'"

The Minister of Finance responds:

"Yes, and as I indicated, around the end of May, as we started to talk to the federal government about the HST, was when we became aware of the $1.6 billion in transition money. Actually, our understanding was that we were going to have to take that all in one year, and it was actually only through subsequent discussions that the federal government indicated that we'd actually flow that amount over a number of years as we saw fit. So even as of the middle of May and the second half of May, I would not have been optimistic around the $495 million, given what I had learned, but by June 10, I was once again optimistic."

So there was an interval where he wasn't optimistic, but that didn't become part of the public debate, and he returned to a happy state of optimism by June 10. It seems to be very much a fluctuating state of optimism, although some is below water and some is above water, if I can put it that way. Some is revealed to the public and some not.

Literally, it was the 24th. These dates are embedded in my brain, I can tell you. June 24 was when the minister got news from the federal Department of Finance that based on the actual numbers coming out of income tax, personal and corporate income tax revenues, we were going to take another significant reduction in our revenues.

The minister seems to put some weight on federal government reports of corporate income tax for the preceding year, but surely — given the array of opinion, the expert opinion, the predictive powers of Treasury Board — one would have well expected that in a year where business and the economy and all the rest of us took a hammering, business income would fall and, as a result, corporate income tax would fall.

For him to suggest that somehow this comes as a surprise is in itself a bit surprising and, frankly, a bit difficult to accept. Surely if you look back at 2009…. A major financial institution, Lehman Brothers in New York —
[ Page 4018 ]
been in existence for, I think, almost a hundred years — collapses. The financial world is in a tailspin.

To think that corporate profits weren't going to fall and corporate income tax, which is based directly on that corporate revenue, wasn't going to fall seems a little hard to accept and perhaps a failure of not only the predictive powers of Treasury Board but just of what common sense might dictate. Nonetheless, that's his position — that things had fallen away.

[Mr. Speaker in the chair.]

I want to continue, then. Perhaps we can, if I might, begin to at least recapitulate some of the position that's been taken here by the government.

[1150]

It's clear that in the fall of 2008, the Premier and the Minister of Finance steadfastly affirmed their belief — and I think it's fair to describe it as a belief — that it would be possible to deliver a budget that was at least, if not a surplus, balanced in February 2009. As the financial world and the economic world began to change, that belief was steadfastly maintained.

Then in early February there was a concession, I suppose, that a deficit would be necessary, but nothing on the scale that later emerged in September of 2009.

In February 2009 it was going to be a deficit, predicted in the budget, of $495 million. The Premier was very firm in saying that that document would guide the government not just for the next couple of months, not just through the election period, but for two or three years to come. He reiterated that on April 23. The reference was made to $495 million, maximum. The election came and went. Then we got a very different explanation.

Ultimately, the impact of the reality of the province's financial situation…. Some say that this might well have been known and predicted before the election. I think the public really has to make that judgment.

Certainly, the slide that went from $495 million in April to what the Minister of Finance said he was briefed on in the post-election, which would be in mid-May…. So from April 23, $495 million maximum, to the Minister of Finance being briefed in his first briefing…. He's quoted as saying…. "In your first post-election briefing of the budget" — this is Mr. Good who's quoting — "you were told that the revenue problem had grown to a billion."

So from April 23 to the third or fourth week of May, from $495 million to a billion. It doubled in basically four weeks, according to that sequence of explanations.

I'll leave others to judge whether that is in fact something that they can accept. Some have said that it might well have been more, and that was known earlier. That is something that the opposition has tried, through freedom-of-information requests, to get access to government documents….

That attempt, which after nine months of delay…. Finally some documents were coughed up, but all of those documents were redacted. That's the jargon term. Basically, a sheaf of blank documents was produced. So as a member of the opposition and a member of the public, we're no wiser on what might have been said internally prior to the election. Certainly, some people have a view on that, but that's where we're at, at this particular point.

I notice Mr. Speaker is in the chair. I'm at your direction, should you wish me to adjourn debate. I'm only just beginning. I feel that I've just got warmed up.

I always feel a certain invigorating quality come over me when I examine the statements of the Minister of Finance and the Premier. It does require, as you can imagine, some intellectual effort to keep up with the shifting positions there.

It really does require my full attention, and I hope I'm explaining this somewhat complicated tale carefully and comprehensively, because it's very important to understanding just why we're here today with the HST bill — although it very modestly and nondescriptly avoids mentioning HST in the title, as I've referred to earlier.

That was the situation we came to. The government then decided to embark upon the HST.

[1155]

It's clear that the budget deception that the government engaged in led the government to the decision to enter the HST — although, as the minister said, the HST offer, the HST debate, had been simmering along in the background, he says, all the way back to the mid-'90s. But the decision to move forward on it on his timetable was made because he really…. It looks like he even thought that he could plunk the $1.6 billion down against the deficit, maybe even come out with a surplus if the numbers hadn't eroded so badly, and save face all around.

But that wasn't possible, and I think the government has a different strategy about how they're going to use that $1.6 billion. They've used it in September to the tune of $750 million. They shifted some of it forward in the budget that they've just delivered this year for perhaps some political advantage later on.

I'm at a natural break point in my remarks, because I want to…. Perhaps I can just give a sneak preview for those who are interested.

When I continue, I want to look at some of what is called, I suppose — I want to be fair about this — the expert opinion that claims to support the HST. I'll go into some of those things. I think what's been missing here is an accurate and full look at some of those reports, because they don't really say what some people claim they say. I also want to look at Mr. Mintz's representations, because unfortunately his report is a bit deficient in some areas as well.

B. Ralston moved adjournment of debate.
[ Page 4019 ]

Mr. Speaker: I would gather, Member, you're reserving your right to continue afterwards.

B. Ralston: I hope I made that clear, Mr. Speaker. Thank you.

Motion approved.

Committee of Supply (Section A), having reported progress, was granted leave to sit again.

Hon. I. Chong moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 1:30 this afternoon.

The House adjourned at 11:58 a.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
TOURISM, CULTURE AND THE ARTS

(continued)

The House in Committee of Supply (Section A); H. Bloy in the chair.

The committee met at 10:09 a.m.

On Vote 44: ministry operations, $113,617,000 (continued).

S. Chandra Herbert: Thank you to the staff of PavCo for spending the night in the province's capital. I hope it treated you well.

To wrap up some business that we were discussing yesterday before we move into some more discussion around this current budget, I wanted to ask if there had been any further information provided about those meetings that Mr. Turner organized — any more idea on the content, who was there and the dates.

[1010]

Hon. K. Krueger: As I mentioned yesterday, Mr. Buckley, the CEO, is injured, having a back problem. We have not had any further word about that subject.

The Chair: If I could remind the member to direct his questions relevant to the budget estimates Vote 44.

S. Chandra Herbert: Well, I guess I'm hoping that we might be able to get that information as soon as it's available. That would be really appreciated. Is a week or two weeks' time doable?

Hon. K. Krueger: PavCo will write a letter to the member, and he'll have that within two weeks.

S. Chandra Herbert: I was going through estimates from last year about the '09-10 budget. I saw in the documents that I had requested a quarterly report that's provided to the stakeholder from PavCo.

I remember at the time the minister and PavCo committing that this was something that could be done as long as it might come a little bit later than it goes to the stakeholder, which I completely understand, because there are concerns. It could be privacy. It could be other issues — advice to cabinet, whatever. But that commitment was made.

I haven't seen those documents, and I know that we've had a number of quarters pass since then. I'm just curious if I can get the backlog of those quarterly reports and whether or not that commitment can happen for this upcoming year.

Hon. K. Krueger: PavCo believes that they have been sending them. Perhaps they get lost in the pile of bathtub reading that the critic has. I know I get a volume of mail that's hard to keep up with. But we will try to find a way that they're flagged to the member's attention. If he wants to have them sent to a particular staff member, we can do that. I'll try to make sure that he's on the Christmas card list as well.

S. Chandra Herbert: Thanks to the minister for that answer. I guess, too, that my constituency office is probably the easiest way to get them to me, 923 Denman Street. But I'm sure that PavCo and the minister have that information. That would be great. I look forward, hopefully, to organizing a meeting with the staff of PavCo in the next couple of weeks to get a fuller briefing than we're able to get in this estimates process — maybe down at the B.C. Place site so that I can get a fuller understanding of that project as well.

I turn to PavCo, I guess, a report they provided through this budget. I compared it to the February report last year of what assumptions were made of revenues. I noticed that in the '09-10 year that there's been approximately $3 million less than was predicted. In fiscal 2010-2011 it's looking like $5 million less than was predicted; in 2011-2012, $3 million less than was predicted.

I guess that I'm curious if the minister may be able to share with me the reasons behind that, because that's a lot of money. I know that there have been challenging times, but those challenging times were evident, I thought, last
[ Page 4020 ]
February as well, and certainly last September, and it has also seen a decline since last September.

[1015]

Hon. K. Krueger: PavCo had budgeted for a full springtime trade and consumer show season now, in 2010. A decision was ultimately made that we should proceed with the roof replacement more quickly than we had originally thought. The plan had been that B.C. Place would shut down for the roof replacement on July 1, 2010, but the decision was made to shut it down as of today, April 1, 2010. So the anticipated revenues embraced that longer season.

S. Chandra Herbert: I guess I'm to understand that the '09-10 year reduction in revenues, which was about $3 million lost in that year, was just because there wasn't enough business coming in the door. Is that the reason?

I hear some confusion on that side around where I'm getting my numbers. The numbers are from…. In this case it's comparing the September financial outlook that was put out, which said that in '09-10 there would be about $50 million in sales, and then comparing to the 2010-2011 outlook, which came out with the most recent budget, it said that in '09-10 there would be about $47 million in sales. So we lost about $3 million in six months.

[1020]

Hon. K. Krueger: Sorry, that took a little while. It's a combination of things. Certainly, the recession has had an effect on the revenues of PavCo. This has been the first year of operation of the new convention centre, so predictions were made. We have been going through the whole startup phase, and perhaps they were a little high.

We also had to close the Convention Centre East, Canada Place, for renovations, and that made a hit on revenues as well. I should probably mention that we'll be closing it again, because the federal government is providing the funding to replace the sails. That's a good development, but it's also going to have an effect on revenues, obviously.

They've been very accommodating. We explained to them that we had a number of conventions booked, and there would be damage to the reputation of the convention centre as well as to revenues, and we didn't want to cancel those. So they're going to be on an accelerated construction schedule. I believe they're going to begin that replacement of the sails in July.

S. Chandra Herbert: It does surprise me though — $3 million lost in '09-10, and it looks like $5 million lost in 2010-2011, when you compare it to the previous budgets. To go from that September budget, which was six months….

At least I thought we were aware that there were going to be challenges with the Convention Centre East. I believe that we even talked about that in this place. If not, we talked about it in the hallways of this place around that period, especially when the new convention centre, despite the $480 million, $450 million cost overruns, had been touted as something that's going to instantly bring in new business right away. To lose $3 million and have it be blamed on the fact that it was a new centre which we have also been told is going to generate even more business is just a little bit confusing and concerning to me.

We're going to get to a couple of questions. I want to know about future business, but for now I just want to ask about the other years. In 2010-2011 in terms of sales, it looks like we're losing about $5 million. Maybe that can be explained. That's comparing the February budget, 2010-2011, going from about $40.5 million, to this current budget going to about $35.5 million. That's about a $5 million loss.

Then in 2011-2012 we've gone from about $49 million…. Okay, so that one is not as concerning in that sense. It's still about a $3 million loss from the September budget, which put it at $56 million, and it's dropped down to $53 million.

Consistently we're seeing $5 million lost, $3 million lost, in the 2010-11, 2011-2012 budget years in terms of sales. I'm concerned about that and wondering whether or not the minister can tell me why we have seen a decline, in that instance, for those out-years for PavCo.

[1025]

Maybe it's the convention centre, maybe it's B.C. Place, and maybe it's a combination of both. But I'd be interested in hearing those numbers and why.

Hon. K. Krueger: I just talked about the fact that the Convention Centre East has to be closed again for a while to replace the sails. Buildings age, like people do. In buildings cases, we can shut them down for a while and replace what's ailing on them, and that's what's going to happen with the sails. That will have an effect on our revenues.

The fact that B.C. Place will be closed for all of fiscal 2010-2011 will certainly have an effect on revenues for B.C. Place. I shouldn't say it will be closed for all of it. It looks like it will be, but if they get done faster, that will be great.

These numbers that the member is referring to for what he has correctly called the out-years are predictions; they're forecasts. The responsible thing to do with forecasts, when an organization realizes that there are reasons they can no longer expect to achieve what they predicted, is to change the number to the one that they now believe is accurate. That is what's happening here. But the CFO has just committed to me that they'll write a further letter to the member and work through
[ Page 4021 ]
what he's just asked and flesh out the answers that I've given.

S. Chandra Herbert: Thanks to the minister for that answer. I think it's always good to be positive and hopeful, as the minister has said on a number of occasions, but I also think it's important to look at the numbers and see that sometimes we have to temper the optimism by looking at the realistic challenges.

Certainly, I'm hopeful for the future of the province and hopeful for the possibilities at these places. But I think what we've seen consistently is a bit of an overreach, saying that this is what's going to happen, and then we see a decline in numbers year after year after year, in this case in terms of what's actually coming through the doors. That is concerning, and I wonder about that.

To get to the expenses side of the operation, one thing that jumped out at me is in the 2011-2012 year. Maybe it's too far to discuss, but I think it's important. We're seeing from the February budget that there was a cost of about $63 million put in under operating costs. That's the 2011-2012 year, in the February budget. Then we go to the 2011-2012 budget operating costs in this current budget, and it has jumped to almost $72 million.

So operating costs have gone up by about $9 million, yet in that year we've seen about a $3 million loss in revenue, according to the forecast. I'm just curious why operating costs would shoot up so high when we're seeing revenue plunge.

[1030]

Hon. K. Krueger: Now instead of actually debating the 2010-11 fiscal, we're talking about forecasts for the 2011-12 fiscal. You know, these are called forecasts for a reason. We do know that we're incurring an expense from June 1, 2010, to November 30, 2011, for the temporary stadium in which the sports teams will operate. The B.C. Lions will have their season, and so on. Some of that, obviously, is in this fiscal year, some in the next fiscal year, and that's rent we have to pay.

I want to go back to…. I really don't like to have to challenge the member all the time, but sometimes he stands up and makes comments and then asks a question on a different matter. But when people talk about the cost of the convention centre and the alleged overruns, I don't think they understand the engineering feat that was accomplished in the construction of that facility.

It was a rare situation for us that we couldn't get a public-private partnership. Obviously, the opposition knows that we think P3s are a very successful way to go. Every one of them that we have done has come in on time or ahead of time and on budget. But the private sector wasn't willing to enter into a public-private partnership because of the unknowns there, including putting in the pilings and getting the basic infrastructure done. Nobody knew for sure how difficult that would be. It proved very difficult. But the result was well worth the cost.

People could only estimate at the beginning what that cost would be. It ended up costing not that much more than the fast ferries cost and less than the Prince Rupert pulp mill cost. Yet instead of ferries that had to be hauled away on a barge to Arabian countries…. Presumably, they couldn't perform any worse on sand than they did on water. They're gone, but the convention centre is there for this generation and the next generation and the next generation after that. We had rave reviews from around the world about the convention centre. We're very proud of it.

It has the highest environmental certification that a building can possibly attain — platinum LEED certification — and it has close to $3 billion of convention centre activity booked already. It was used to showcase British Columbia to the world by NBC and CTV. When I toured with an NBC executive through the convention centre while they were using it, he said: "We just love this building. We've never had anything like it. It's our second-largest production facility in the world right now. We wish that we could stay forever."

With the flak that we have taken from the opposition and some other folks about that convention centre, you wonder what they would have done to host the media and showcase British Columbia to the world — a barge with some lawn chairs? What would their plan have been? We do not regret the convention centre at all. We're delighted with it, with the revenues that it's bringing to British Columbians and that it will be for a long, long time.

I think that as many times as I hear the member criticize the convention centre, I feel compelled to stand up and make those points. They're pretty obvious to most people, obvious to British Columbians, but apparently not to the opposition. But let the record show that I, for one, am very pleased that we've built the convention centre. I think it was worth every dime, and it will prove that for many decades to come.

S. Chandra Herbert: I don't understand how the minister could ever say with a straight face "alleged overruns." The Auditor General's recognized that. The media recognized that. The members of the minister's own party recognized that.

[1035]

It was scandalous. Then to suggest that nobody knew that this would be difficult and that this couldn't happen….

Hon. K. Krueger: I said that everybody knew it would be difficult.
[ Page 4022 ]

S. Chandra Herbert: "Everybody knew that it was difficult," the minister says, but that nobody quite could predict that it was going to be so difficult to do the engineering, and they wouldn't have an understanding…. Well, it's interesting. I've got a report which George Puil — the minister might know — and Gary Bannerman and a number of other business folks put forward to government in 2003. They prepared it, and they sent it forward to government because they were concerned.

One of their concerns at the time was that neither the budget forecasting nor, they said, future market projections were realistic. They went on to predict…. It's interesting that the minister decided to talk about the fast ferries. They wrote: "Several observers predicted that this project would become the new B.C. government's fast ferry project. The proposed budget of $495 million is now projected to be $550 million, and elements are already being cut from the design."

They then go on to say…. And this is really interesting, and the minister might be interested in this, since he has concerns and decided to talk about the 1990s, as he does when he gets into hot water. They write in this: "Comprehensive engineering and design has only just begun. As a design-build proposal, true costs may not be known until the final stages, a process that contributed to the fast ferry nightmare." So they raise the issue.

Then they go on to talk about how even though press releases were claiming that it would only cost $495 million, already the hon. Herb Dhaliwal was questioning that and saying that the number would be higher. This is 2003. So for the minister to say, "alleged overruns" and "No, no, it was all fine," doesn't make any sense, and I don't think that anybody in B.C. would buy it or believe it.

The minister also raised questions, said: "Oh, this one could not be built as" — the B.C. Liberals' favourite kind of project — "a public-private partnership." This report prepared by these folks says:

"The Bentall Corp. was the successful participant in a request for proposal, making a submission based upon operational and market criteria put forward by the task force and the B.C. government. After due diligence, Bentall abruptly withdrew. While detailed reasons for this cancellation were not made public, we understand that Bentall had little faith in the future convention trade show projections and could not secure from government guarantees that these data were accurate."

So it's just a bit rich that the minister would claim that there were not overruns, that it was alleged, that nobody has been able to prove that there were overruns, when it's very clear from what successive ministers in the B.C. Liberals have done…. They've said, "This is the final budget," and then, "Oh, actually, this is the final budget," and so on, which is pretty consistent with how a number of their P3 projects have been financed, where they say, "This is on time and on budget," happily ignoring the fact that they changed the budget and they changed the time.

I guess everybody can be on time if you change the time on your calendar to be whenever it is that you show up, or everybody can be on budget if you change the budget to reflect what actually happened in the end.

That's what happened here. So I just think that's an interesting thing for the minister to try and dig into, when all the facts really demolish his argument that it was an alleged overrun.

Moving back into questions of the current budget. I know that the minister wasn't the minister at that time yet seems to be trying to defend the work of previous ministers and his government. I'm curious. In the service plan for the Ministry of Tourism, Culture and the Arts it talks about the B.C. Place Stadium program, and it talks about the province currently assessing project budget risks and possible mitigation strategies.

I'm just curious. What are those budget risks? Is there a potential that the budget could increase for that project beyond the $563 million? What attempts at mitigation are going on?

[1040]

Hon. K. Krueger: As the member was talking about the convention centre and relating our performance in delivering a convention centre that British Columbia is very proud of to the NDP's performance in the billion-dollar expenditure I referred to and a defunct pulp mill that never opened and three boats that didn't work….

I was thinking of what people frequently say about any such comparisons between the convention centre and the fast ferries. The only similarity is that they both used to be on the water. Apparently, the fast ferries aren't anymore, but they used to be right across the inlet, both on the water, and neither of them move. Of course, the boats were meant to move, but it didn't work out that way.

With regard to the member's question about our major construction project at B.C. Place, we have a fixed contract with the company that is doing the work. There is a significant contingency built into that. We have every expectation that the project will be done on time, and the budget is contracted. On time means an opening of July 1, 2011. We've committed to host the Grey Cup in 2011 in that facility, and we certainly expect that we'll be enjoying doing that. I hope that the member is there to take part in it.

S. Chandra Herbert: Well, that didn't quite answer the question I had. In the service plan it's pretty clear that the province is assessing the project budget risks and mitigation strategies. It says that for further detail of the revitalization project, go to bcpavco.com/pdf/capproj.pdf. So I went there to try and get more detail, and it's quite funny, actually.

It takes you back to the days when the roof project and the interior refurbishments, etc. — the whole deal
[ Page 4023 ]
is what it says in the document — was only going to cost $365 million and not the $563 million that it now costs. So it was kind of funny to be sent back to those days when the government made that prediction or that suggestion that that's what it would cost.

But there is no information in that form that you get sent to about those budget risks that are talked about that the minister signed off on in his own document. So what are the budget risks? Because if it's a signed-off flat deal, no budget risks, that wouldn't be in the document.

[1045]

Hon. K. Krueger: Major capital projects require public disclosure. It is standard on any major construction project to consider predictable risks. An example is delivery of materials. We have parts of the roof being constructed around the world in various locations. We expect them to arrive on time. All indications are that they will, and we'll all be seeing those shortly begin to be delivered.

Weather is one of the risks. From time to time we get a surprise, even in Vancouver, with nasty weather. I recall a Stanley Park blowdown — driving around and looking at the magnificent trees that had just become logs, to everyone's horror. We don't expect that those things are going to happen, but they're risks that have to be considered and that are being reported on and monitored carefully. We're very optimistic that this is all going to go as planned.

The member touched on the other aspects of the refurbishment of B.C. Place. All of those were completed on time and on budget.

S. Chandra Herbert: There's just a quick question: is the province indemnified from those risks if those things happen? Will we have to possibly open the piggy bank a little further, or are we indemnified?

Hon. K. Krueger: As I said, it is a fixed-price contract. It's a firm contract; it's been signed. The intent of things like public-private partnerships and things like fixed-price contracts is that risks are transferred from the public to private entities, which assume those risks on the basis of their expertise and their experience. We're very pleased to have a fixed-price contract, and we anticipate success.

S. Chandra Herbert: I guess just a return to a question that I didn't quite get an answer on yesterday. I asked this in the previous estimates. I know the minister sent me a letter saying that contained in the documents attached to the letter…. The letter answered the year B.C. Place, the whole project, would be paid off. That answer wasn't included in the letter, although it said that it was.

My question is: what year — given the economic activity, etc., that the minister has talked about — will B.C. Place, that project, be paid off?

[1050]

Hon. K. Krueger: The stadium, the convention centre — public buildings of this nature — deliver value to the jurisdiction by virtue of the economic activity that happens as a result of their presence. I mentioned the other day, for example, that the statistics I have are that 40 percent of convention attendees, delegates, come back to the jurisdiction where they enjoyed the convention — if they enjoyed the convention.

We anticipate that B.C. Place will bring $100 million in economic activity to Vancouver, to British Columbia every year when these renovations are completed. It's a lot of money. That's economic activity. It puts food on the table for workers and their families. They buy things; they pay sales tax. They garner income; they pay income tax. And it all fuels the economy.

The contract that we just signed with Paragon means another $450 million in economic activity. We're going to have 3,000 people employed by the roof project — 3,000 person-years of employment, that is. We're going to have 8,500 jobs, as I put on the record the other day, with regard to the Paragon project. There'll be another development on the east lands that will add activity. We'll have revenues from naming the stadium.

I don't think it's possible for anybody to pick an exact date when the building will be, as the member puts it, paid off. The building is backed by the resources of the Crown corporation and the government. It's British Columbians' building, and it'll generate revenues for a very long time, as it has in the past.

I look back at the records of the day when B.C. Place was planned and built by the Social Credit government of the day. The NDP leader of the day, the Leader of the Opposition, said scornfully that it was going to be 5,000 jobs that…. He referred to serving popcorn and essentially denigrated the project, suggesting it wasn't a good idea.

It was a good idea then; it's a good idea now. It's going to generate economic activity that will enrich all British Columbians. I saw that the member was talking in the media about adopting children. It'll benefit those children and their children.

It's something that jurisdictions decide to do or not to do. We're glad that the Social Credit government of those days decided to proceed. It was a smart decision. It was a decision that has paid off in many ways, including in us having a facility in which to host the most successful Winter Games in history.

It's a decision we made — that we're going to refurbish that building. We've already thoroughly canvassed the decision to replace the roof and why we went the way that we did. It'll more than pay for itself over time, over and over again.

[1055]

S. Chandra Herbert: It's a funny science, I guess, or a funny accounting practice, to have to try and figure out what year, given all the various variables.
[ Page 4024 ]

I know one thing that's sometimes not taken into account is displacement. What kind of economic activity would have happened if we'd done something else? What is that displacing?

I guess one of the issues that some have raised with me is the casino that's put in there, should the city of Vancouver approve that. It could be taking activity away from the River Rock, for example, given their proximity. I guess you look at one and compare it to another. "Who knows?" is kind of the answer that I got — and that it looks like it could be good, given the amount of money being put into it.

I was disappointed to hear in the minister's answer that B.C. Place itself will be renamed — sold off to, I guess, the highest bidder. As I understand it, it's British Columbians that have put $563 million into this project. I understand somebody may come in with some money, but I would think that those that put in the majority of the dollars should be the ones to name it.

Now, maybe the minister can provide me with some clarity. Is somebody else coming to swoop in and put in the majority of dollars, thus being able to name it?

Hon. K. Krueger: PavCo has not yet put out the question for expressions of interest, but it's pretty common policy in many places around the world. It's been successful here in British Columbia with a number of stadiums, university buildings.

Naming rights are good generators of hard cash to help governments and entities like the ones I just mentioned defray the costs of providing the infrastructure that British Columbians enjoy. So it's certainly something that is being contemplated. The wheels have not yet been put in motion for it.

S. Chandra Herbert: The minister, I remember, in this place last year seemed to agree with me, anyway, of a concern about the loss of that B.C. Place name and about the loss of British Columbians' ownership of that name. It just surprises me that now the minister seems to be suggesting that it's going in a different direction. But I guess things change, as we saw in the election with the HST, etc.

A question about the Lions and the Whitecaps. I tried to get answers last year. I wasn't successful. I'll try again. As we've seen in Abbotsford, there's been quite a bit of concern about their stadium and what their city council has done around contracts with the Abbotsford Heat and should revenues not be quite what they are, etc.

I'm curious what the rent revenues and what the length of contract are with both the B.C. Lions and the Whitecaps. As the minister knows, the Whitecaps have continued to express an interest in having their own facility.

[1100]

Hon. K. Krueger: As with a lot of business dealings, it's not considered wise, and it's just not done, to disclose terms such as the dollar amount or the length of the term, because it then affects what people are willing to bid for similar opportunities. There are always people considering doing business at B.C. Place, and it isn't a wise business move to disclose those sorts of facts about your contracts — the length of the term or the amount — for the benefit of other people who will be competing for the space and bidding on opportunities in the future, both near and far.

S. Chandra Herbert: Well, I asked the question because I'm concerned for British Columbia taxpayers that we're not going to be spending a whole bunch of money on this stadium. Then the government will have done a contract with folks which is maybe a short-term contract, and we could potentially lose one of the teams to somewhere else or to another stadium in this city.

Something like that could happen. We've seen this happen in numerous cities across North America — in fact, across the world — where a municipality or a government will invest money in a stadium, only to then lose the team and then be stuck with a stadium without the team. That's a concern that I raise.

I've worked in municipal governments where…. For example, in my own constituency recently the municipal government signed a contract with a restaurant to operate in a public facility. They were very upfront, open. They said: "This is the term. This is the amount of revenue. This is what the whole package looks like." Yes, it could affect their business dealings with other restaurateurs in other public facilities, but they felt it was necessary, I believe, to be open, upfront with the public and show the public that they were getting a good deal out of this proposal.

I don't know how many other professional CFL teams or how many other MLS soccer franchises are in Vancouver that I might not be aware of that are trying to negotiate a contract with B.C. Place to move in there and that thus would be enriched by whatever deal was given to the Lions or the Whitecaps. Maybe the minister is aware of some of these that I'm not, but if a contract is signed for a long enough term, there shouldn't be any concern about that, because it's going to be renegotiated anyway in the future if it's a successful contract.

Again, the concern comes back to…. Even though the Whitecaps have said that they will be in B.C. Place, that they like the venue and so on, they have also said very strongly that they're still pining for their own stadium and will do what they can to find their own stadium when that's possible.

I don't know if the minister is able to at least talk about the length of term, maybe the renewal periods and so on, because I would hate to see that we spend all this money and have a team stay there for five years and then leave. It's an important question, because if we're going to get
[ Page 4025 ]
the most economic bang for our buck, we've got to be watching for taxpayers' interests.

[1105]

Hon. K. Krueger: At the beginning of those remarks the critic was speaking as if a new stadium had been constructed to accommodate these teams. The member is shaking his head, but when he checks the record, that is what he said.

There are examples of stadia being built because of anticipation by the host jurisdiction that there was going to be a long-term relationship with teams. Well, this stadium has been there for a long time already. The Lions have been playing in this stadium since 1983. I don't think there's a single British Columbian that has any expectation at all that the Lions would suddenly leave because we refurbished the stadium. B.C. Place is a valuable asset that's been in place for over a quarter-century now and is generating a lot of economic activity for British Columbians.

In assessing the question of whether or not B.C. Place should have the refurbishment that has gone on, PavCo looked for alternate sites. There is no alternate site on the Vancouver side of the Fraser River.

To go to the other side of the Fraser River somewhere — and there are sites — would of course remove all of that economic activity from the heart of Vancouver. A lot of people probably wouldn't travel that far to go to events. None of those sites already have public transit, road infrastructure and all of those things, and that would have involved the demolition of B.C. Place and all of those physical resources that are tied up in it becoming rubble, which would be a very environmentally unfriendly thing to do.

PavCo made that assessment. The government made the decision that we certainly weren't going to be replacing B.C. Place. Any private sector operator considering the questions that the member just raised — whether they would build their own stadium or not — would be faced with that same situation.

[C. Trevena in the chair.]

There is no site like the one that B.C. Place has. Everything the Whitecaps have said to the government and everything they've said publicly indicates jubilation on their part that we've made the decision to go ahead. By the public response to their offering of season's tickets, apparently the public is very enthused as well, so I think they're committed for the very long term, but I haven't asked the length of term of the contract.

Just as the member said that he's really interested in the financial interests of British Columbians being protected, I want to tell him that I certainly share that commitment that we're going to protect those interests. If I were to disclose the things that the member is asking, even if I knew them, I would be undermining PavCo's business dealings with its tenants. That wouldn't be a good thing for taxpayers' interests.

S. Chandra Herbert: Hon. Chair, welcome.

Okay, so it seems to me, when I ask a question, that the minister likes to talk about things that were not in the question, to talk about another proposal — as if to suggest that I'm suggesting that we should demolish the thing and turn it into rubble. Or maybe he just likes going back to speaking notes.

The question was the length of term for the Whitecaps and the length of term for the Lions. Earlier I'd asked about the rent. Neither of those was answered.

The other thing that happened is that the minister was suggesting that I had said there was another stadium built. No, what I was talking about was that we're spending $563 million on B.C. Place. The minister is well aware of that. Other communities have spent similar amounts of money either upgrading their facilities or retrofitting or renovating or building their own new stadiums. Maybe that's where the minister got confused.

[1110]

What they've done in other municipalities in other provinces, other states and other countries, unfortunately in some cases, is that they'll have built the thing, and because they don't have a long-term contract, they lose the tenant to either another city, another state or, potentially, another country. We've seen that. It happens a number of times.

Maybe the market conditions were not quite what were expected. Maybe there's a really hot deal being offered in another place to entice a team away. I think about the Winnipeg Jets, for example, or the Quebec Nordiques, going back to the days of when I had enough time to watch hockey, which was a while ago.

It's a concern that I have because…. What's concerning even more, I think, on behalf of British Columbians, is that the minister has said very publicly here that he hasn't even asked about the length of contract. He hasn't even asked about that, which is fundamental, at least according to the minister, to the success of this facility — the relationship with the Whitecaps and the relationship with the Lions. He hasn't even asked how long the contract is to know if in five years we're at risk or if in ten years we're at risk, because this is a long-term project — or at least the ministry and the staff, the minister in particular and the Premier, have suggested.

The minister can't tell me when he believes the facility will be paid off, although it's sometime in the future. If you take that $563 million price tag and you divide it by the $6 million lease payment — although it's not quite exact — that would suggest 93 years. Of course, it will be less, given the escalator and that kind of thing, in the contract that the minister mentioned, but you can't do good business for British Columbians if you
[ Page 4026 ]
don't even ask the question: are we protected for the long term?

It just doesn't make sense to have the minister say, "I haven't asked about a contract," which affects the very viability of the project under his watch. I don't know of another minister — and I'm sure that maybe if we looked through the history, the annals of history in the B.C. Legislature — who would admit such a thing that is so vital for this project.

The minister has talked again and again about how, for the Whitecaps, the retractable roof was necessary. I've said that as well, because of their MLS franchise. But then to not be able to know if we're protected for a longer period…. The minister may know that the Whitecaps have also said that they're jubilant about the facility, but they also want their own. They have been looking very closely at those port lands — that they would try to develop that section.

There are possibilities, and as the minister well knows, things change. Just because he didn't see something last week, last month, last year that would qualify doesn't mean that it won't be there in five or ten years. You also have to look at other jurisdictions, which as we've seen, I guess, didn't concern the minister.

Maybe I'll give the minister one more chance to tell me that we're protected in terms of a long-term contract with renewable terms. I know that other municipalities, other places, when they do that, will also plan for if a team goes out of business. Maybe there's a financial problem. You have to protect yourself for all of these eventualities.

If we the taxpayers are putting up this amount of money with the idea that we're going to be providing a home for these teams, which are much-loved, we need to know that we are secure for the long term. So maybe the minister has another answer, different from the one of saying: "I haven't even asked."

Hon. K. Krueger: PavCo is professionally managed by very competent people who are doing a great job. I don't do anything to undermine their business or to presume that I know better than them about how to operate a stadium or how to operate a convention centre.

They're measured on the basis of their results, and their results are excellent. I have every expectation that that will continue, and the things that are private between PavCo and its tenants will remain private, as far as I'm concerned.

S. Chandra Herbert: I guess we're not going to get an answer, since the minister hasn't asked the question. I think a job of a minister — since they are, in the end, the ones accountable — is to inquire about such things. I guess that's a difference between me and the minister.

[1115]

I'd like to ask about the convention centre in terms of the direct delegate-days from outside the province, because I understand that that's one of the measurements. I'm curious — I'm hoping that the minister will restrain the urge to just throw out billions and trillions and off into the future and will go year by year — what the actual direct delegate-days are for each of the years compared to, I guess, the KPMG report and what would be necessary in order for this thing to pay for itself, as the minister has stated in the past.

Hon. K. Krueger: The member has said he doesn't want to look too far ahead. We'll deal with 2011-2012, which are going to be, we expect, the biggest years we've ever seen for conventions in British Columbia.

[1120]

The industry refers to the statistic that the member asked about as NRDDs, non-resident delegate-days. We value our British Columbian convention business as well, but non-resident delegates spend something in the order of, well, more than triple what British Columbian residents spend when they come to conventions. It is a key measurement.

The target that PavCo has for 2011 for the Vancouver Convention Centre is 451,799 delegates, and they have already achieved commitments to 98.8 percent of that. In 2012 the target is 522,000, and they've already achieved 92.65 percent of that.

PavCo is on track to triple its NRDDs, non-resident delegate-days, by 2015. As of February 15 of this year there were 439,871 confirmed NRDDs on the convention centre's books for fiscal 2011 and 473,507 for 2012.

The convention centre is at 45 percent of target for confirmed NRDDs for the fiscal years 2013 through 2015. The convention centre has booked 280 events since the April 2009 opening of the new convention centre, and they're expected to generate more than $2.78 billion in economic activity. As I've said previously, more than 80 of those events could not have been accommodated in British Columbia without the new convention centre. There are 205 confirmed major events booked for the period past today. It's a stellar success, and it will continue being that.

S. Chandra Herbert: It wasn't that I didn't want to look too far ahead. I just wanted it broken down by year. Sometimes politicians can have a habit of grouping big numbers together so they look even bigger, and it doesn't actually tell the full story. I guess I'm just trying to understand how that squares with the $3 million in reduced business that we addressed earlier for 2011-2012.

Just so I can clarify, that's from the PavCo February 2009 report. I'm comparing the February report to this March's report in terms of sales. I think that's page 24 in this current report, and the February report also, coincidentally, was on page 24.
[ Page 4027 ]

Hon. K. Krueger: The member is talking about two different things, and this is a difficulty that we've had from time to time in the course of this debate over the last several days. The numbers that the member had asked me for, the NRDDs, are confirmed bookings. They're considered very solid.

[1125]

We just talked a few minutes ago about what targets are and forecasts and the fact that the responsible thing to do is alter the forecast when an organization has reason to do so. Because we forecast something some months ago doesn't mean that we shouldn't change it if events give us strong indications that our forecast is too low or too high.

So there's quite a difference between the two, but to be able to say today that for 2011 we already have contracts that are firm and that we believe deliver 98.8 percent of our target for 2011 in non-resident delegate-days is something to be celebrated — 92.625 percent for 2012.

S. Chandra Herbert: It was a question because it was confusing to me. If these are confirmed numbers, why, in the document which was released, signed under the minister's hand…? All that showed that we were having that reduction of about $3 million between September and this March, a six-month period. Maybe all that business was done in that period. That's a potential. But I would have expected to see that in the budget that came in March.

That was the question. Why such a difference between the non-resident delegate-days number — which seems solid, according to the minister — compared to the numbers here, which seem not so solid and, in fact, a reduction of $3 million?

Hon. K. Krueger: Non-resident delegate-days are a portion of the revenue generators for PavCo. Of course, the revenues that are predicted are the global revenues, so that includes business from within the province.

When I talk to the ski industry, they tell me that presently, with the worldwide recession, the guests that are coming and skiing in British Columbia are not spending as much per day as they typically have in the past. Even if people are booking a vacation, they are perhaps being a little more careful with what they put on their Visa card.

That wasn't our experience during the Olympics. I remember the merchants saying that the Winter Games brought such a volume of business that the merchants in downtown Vancouver said that every day was Boxing Day.

So when we see reason to change forecasts, we change forecasts, but these revenues include all the streams of revenue — who is committing to pay how much rent, what beverage and food sales are delivering, and all of those things. We've already committed that PavCo will provide the member with written details about revenues. I think that pretty much answers the question.

[1130]

S. Chandra Herbert: I guess that people were predicting we'll be having fewer martinis or fewer hot dogs or whatever you'd buy at the convention centre — probably the martinis, less so on the hot dogs. But maybe I'm wrong, confusing B.C. Place and the convention centre.

Just for the minister's information, in my constituency of the West End, which is seen to be part of downtown, it wasn't Boxing Day for the merchants there. I certainly heard that for the other sections of downtown closer to the venues. In fact, merchants in my area told me that their business actually was worse than normal at this period, which is just something I think we should all reflect on a little bit — on how the economic benefit or boom was spread throughout.

I'm done for now on PavCo. I've got a couple more questions that we're going to get to on tourism and then a couple of the other areas. I'd like to thank the staff from PavCo for sharing what they can or what they would with me, and the minister for sharing what he would with me. Obviously, there are things that I would think should be shared that the minister refused to. But thanks to the staff for committing today to sharing a letter and for having that meeting with me.

Hon. K. Krueger: All of the people who are with me to respond to questions on tourism have already been introduced, except the young lady to my right, Colleen McCormick, who is the acting manager for sector strategy in Tourism.

S. Chandra Herbert: I asked a question the other day around the "You gotta be here" campaign. It was relating to the yougottabehere.ca website. In particular: how many views from within B.C. did that website get? It's fairly standard for a Web company to provide that information. I'm just curious, given the amount of time that's passed since that question, if the minister could share that number with me.

[1135]

Hon. K. Krueger: There were more than 104,000 visits to the "You gotta be here" site over the 17 days of the Winter Games. The 120 videos were viewed nearly 600,000 times on the government YouTube channel. Most focused on B.C. communities and residents celebrating the spirit of the 2010 Winter Games.

There are 7,100 fans on our Facebook page. There are 2,000 followers on Twitter with 14,722 click-throughs from the day the Olympic flame returned to B.C. until the end of the Winter Games; 3,500 photos on our Flickr site; 17,000 views of our Google free attraction map.
[ Page 4028 ]

S. Chandra Herbert: Are there any plans to spend the same amount of money on a website this year around another event, perhaps in a similar relation to the yougottabehere.ca website? And if so, what was the cost to create that website and maintain that website, create the content for that website, in an approximate manner, so that I can know in terms of other web services that may come up in this year?

Hon. K. Krueger: There are no plans to develop any new website.

S. Chandra Herbert: So I guess the question of cost won't be coming out, no matter how hard I press, until public accounts. The ministry will keep that information.

It surprises me — 100,000 or so views of the yougottabehere.ca website from within B.C. That was the total, I understand. Other websites which had maps, had pictures, had those kinds of things promoting the Winter Olympics within B.C. had much higher viewing rates and didn't have any advertising budgets behind them, as the yougottabehere.ca website did. I guess once we see the cost of that and so on, we'll see down the road what that looks like.

I'm assuming, given that response, that I'm not going to be able to get approximate costs for the billboards, bus shelters, radio ads, television within B.C., web ads, social media costs — that kind of thing.

Question: how many promo parties were done with the yougottabehere.ca theme within B.C. during that period and what were they?

Hon. K. Krueger: Nobody over here knows what the member means by a "promo party," so perhaps he could define that for us.

Also, I understood his previous question to be: "Were there going to be any new websites, and if so, what was the anticipated cost?" My answer was that we do not plan any new websites, so I thought it was obvious that we don't anticipate any costs. We're certainly aren't budgeting for something we're not going to do. But if I didn't answer the member's question, I'd ask him to put it again.

Maybe he could also define promo party for us.

[1140]

S. Chandra Herbert: Okay, so I guess that's an opening. I wanted to know what the cost was for the creation of that website, the content being updated on the website, the staffing required for that website and, if possible, the approximate number of how much the ads cost to direct people to that website.

A promo party, I guess, would be a party using the theme of "You gotta be here," maybe targeted at media or other stakeholder groups. I understand that there were some where free booze was served. A number of Liberal MLAs attended, the Premier himself, within…. I think there was… There may even have been a "You gotta be here" ice bar. It's a possibility. So I'm just curious if those events happened and what the costs approximately were associated with those.

Hon. K. Krueger: Tourism, Culture and the Arts did not pay a nickel for parties. I don't know anything about an ice bar. I don't even know what that is, and sadly, I wasn't invited if any such party happened. But I don't think it did.

S. Chandra Herbert: The minister had requested a description of a promo party but also had put a statement forward around the website. So I'm just curious if I could get those costs on the website.

Hon. K. Krueger: Those costs will be clearly laid out in the public accounts.

S. Chandra Herbert: The reason that I wanted to know about those costs was that…. I know that the minister was forthcoming in the costs of the employees — I guess, seconded or volunteered or whatever for a number of those programs that were there with the Olympics — and put forward the costs associated with those. So it was curious to me, about the web costs in particular and the costs of driving the people to that website.

I'm hoping, as the minister was forthcoming with those other costs, which I would think might be more complex to put together than the costs of a website, since that should be a particular line item — since it was a project the ministry put together — what that would be…. Is it possible, if not today, to get it in the next couple of days? I completely understand that it would be an approximate number.

Hon. K. Krueger: Those costs will be reported in public accounts.

Noting the hour, I move that the committee rise, report…. Well, I think, though, that the opposition wants to conclude these estimates.

S. Chandra Herbert: We're not quite there yet, as we lost an hour last night. I do have a few more questions on the tourism side, but they will wrap up very quickly. Actually, I can't say very quickly, because I still have some around the hotel room tax, etc. So we'll have to come back.

Hon. K. Krueger: Sorry. We didn't have an understanding that we thought we did, so I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:44 a.m.

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