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 15, 2010

Morning Sitting

Volume 14, Number 4

[ Page 4347 ]

THURSDAY, APRIL 15, 2010

The House met at 10:02 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 ongoing estimates of the Ministry of Housing — and, in this chamber, continued second reading debate on Bill 9.

Second Reading of Bills

Bill 9 — CONSUMPTION TAX REBATE
AND TRANSITION ACT

(continued)

R. Austin: I'd like to continue where I left off yesterday evening on the debate on Bill 9, the Consumption Tax Rebate and Transition Act.

[C. Trevena in the chair.]

Yesterday I was going through some of the measures that the new HST will cover that weren't covered under the current PST regime that we have in place. Members on the other side have tried to argue that this new HST is going to be the lowest in the country and that it's pretty much the same as the GST and the current PST, but that's factually wrong because there are so many new items that are covered under the new HST regime.

Let's carry on with the list: haircuts and other personal care services; vitamins; dietary supplements; magazines; periodicals; bicycles, bike repairs and parts; wedding planners; caterers; and as we saw yesterday in question period, funerals; repairs to home appliances; energy-efficient home appliances; laundry and dry cleaning; car washes; basic residential telephone service; residential smoke and fire alarms; energy-saving building materials; automobile towing — just to name a few.

[1005]

What we have here is a new tax regime that is intrinsically regressive. Why is that? Because all of a sudden many basic items that people buy on an ongoing daily basis will suddenly have this new tax that they didn't have before. That's what makes this tax so regressive.

I was listening the other day to the banter back and forth between the Minister of Tourism, who was saying that this isn't a regressive tax, because those who earn more presumably spend more and, therefore, will pay more of it. But it is regressive, because this isn't a new tax on automobiles over $50,000. It's not a new tax on luxury holidays to the Caribbean. It's a new tax on basic items that everybody buys and cannot avoid buying. Whether you are of modest income or whether you have a high income, you still have to go and get your hair cut. Whether you are of modest income or high income, it may be nice to reduce your carbon footprint by going and buying a bicycle.

So there you have a regressive tax, because it is the same no matter what one's income level is, so you are forced to buy and pay for all kinds of things that weren't here before in the PST regime. That's what makes this tax an inherently regressive tax.

But I'd like to take a few minutes and discuss specifically a very important industry that is being hammered by this tax. It's an industry that I spent close to 20 years working in — namely, the restaurant and food service industry. Before I go into details, I'd like to just make a few comments about the restaurant and hotel industry and the food service industry.

It is a very large employer in this province. It is an industry where in many cases people find their first job — working in the restaurant industry. It's sort of an entry-level-position job, where anybody out of high school, never mind those who go and get specific training, can finally get some work experience. It's also an industry where…. A large number of people who are going through post-secondary education, who are going to college or going to university, help to pay their way through school by having jobs in the restaurant industry.

It is a very useful tool to enable people to better their lives, to go and get further education — the reason being, of course, that in the restaurant industry it's largely shift work. It's seven days a week; it's 365 days a year. It enables itself to work around other people's schedules who want to work part-time. It's a critical industry to this province. Yet they were never consulted about this tax.

In fact, during last year's election they actually wrote letters to the government of the day — during the election and prior to the election — asking specifically whether the B.C. Liberals were contemplating changing over to the HST regime. They were told in writing — not just verbally, in writing — that this was not on the radar, and why? Well, I'm just going to read out a couple of excerpts from this letter from the B.C. Liberals.

"It would extend the PST tax base to a broader range of goods and services that are presently exempt from provincial sales tax. This is a major concern." Just a few months ago, just a few short months ago, that was the position of the B.C. Liberals. The position that we are arguing today was their position just a few months ago when they were speaking to the restaurant industry.

I'll go on. "The B.C. Liberals are also mindful that a harmonized GST would reduce the provincial government's ability to unilaterally adjust sales tax rates."
[ Page 4348 ]
Another important argument that they argued for and that we are arguing for today — the inability of this province to use its provincial jurisdiction under our constitution to ensure that we have some tools, some measures in place to write our own tax policy.

Most tax policy comes directly from Ottawa and the federal government. That's where we pay the bulk of our income taxes. That's where the GST goes. But the PST enables individual provinces to craft a tax regime that helps our citizens and allows us in this chamber to vote on things that encourage our citizens in British Columbia to do some of the things that we see fit and to discourage things that we don't see fit. So let's take an example — a good example.

[1010]

My colleague sitting two seats to the right of me was very active in a campaign on bicycles and what the HST would do to bicycles. It has been common knowledge and common policy in this province under the Socreds, under the B.C. Liberals, under the NDP to always exempt the purchase of bicycles. Why? Because we want people to be engaged in a healthy activity, and we want people to get out of their cars and go onto bicycles. We are now losing this ability to do things like that, and that's just one measure.

Let's look at another one. The government, just a couple of years ago when it brought in their carbon tax and their carbon initiative, said: "We want to encourage people to go and buy new items in their household that use less energy." So they created a tax regime under the PST regime that stated: "If you go out and buy new washers and dryers that use less energy, less water, it's good for the environment. It's good for all of us. We will give you a tax rebate."

What's going to happen under the HST? All gone. So it takes away our ability in this Legislature to make decisions that help our environment.

But let's get back to the restaurant association. They were, naturally, extremely unhappy when the government a few weeks after the election suddenly foisted the HST upon the people here — double-crossed. So they immediately started to do some research amongst their members. They have hundreds of thousands of individual restaurant owners and those people who work in the industry, and they wanted to find out what it is that their members thought of it.

Well, 75 percent of respondents to their own research poll said that they opposed it, of which 63 percent strongly opposed it. And 64 percent of respondents want restaurant meals exempted from this tax; 67 percent are less likely to support a new meal tax to be applied to restaurants and coffee shops when told that the HST will raise more money from consumers to give tax breaks to businesses. That's the main reason why they don't want this.

It also causes a problem for those who are now competing with, say, a pizza bought in a grocery store as opposed to a pizza that's sold in a restaurant. It makes it much harder for them to compete.

So 59 percent are less likely to support a new meal tax when told that there are 173,000 jobs in B.C. coffee shops and restaurants at stake — 173,000 jobs in this industry alone. Here we have a new tax that's going to wallop it right onto them and make it very difficult for them to maintain staffing levels.

I'd also like to just mention that the restaurant industry is one that hoped to do better after the Olympics. They saw the Olympics as an opportunity to market this province and expected more people to come to this province. But here we have a tax that is not only going to hurt the restaurant industry; it's going to hurt the tourism industry.

Here we have this Olympic fiesta that the government goes on about as being the great way to give opportunities to new people to come to this province. The Olympics are just over a matter of weeks ago, and what are prospective new visitors who are looking at thinking of coming to British Columbia going to do?

Well, first of all, they've got to cope with a dollar that is now at par. It's not something that we control in this House, but it's a fact of life. When they look at coming to British Columbia, they're going to go: "Okay, so the dollar which only — what? — 18 months ago was at 70 cents is now at par with the U.S. dollar."

On top of that, come July 1, if this bill passes, we're going to see a new tax that's going to be added onto everything that they buy when they come here, including restaurant meals. So how does this new tax help us to encourage all the visitors to come here to take advantage of what was sold in the Olympics?

All in all, this new tax is going to devastate two of the largest industries in our province, and it's not a good thing. I just want to point out that within Canada the food service industry is a $60 billion industry. That's through Canada as a whole. But here in British Columbia it is a $10 billion industry in terms of its sales and represents 4 percent of the GDP of this province. That's a huge, huge amount to be affecting with this new tax.

[1015]

Now, we've heard that this is the single best thing. I've listened to the Finance Minister getting up and trying his best, with conviction, to convince all of us that this is the single best thing that the Liberals have ever thought about to help our economy. That's their main argument.

Well, you know what? They've been here for almost ten years. They're supposed to be the economic geniuses and managers. It took them ten years to come up with this policy that is supposedly going to help British Columbians — ten years — and they're supposed to be the smart ones? I don't think so. In fact, the citizens of this province are just in disbelief at these kinds of arguments.
[ Page 4349 ]

It's really funny how the Finance Minister, who has been in this House for in excess of three terms and sat next to the previous Finance Minister — who, by the way, condemned this tax and said that it would never be brought in under her watch…. So here we see the flip-flop happening within the B.C. Liberal Party.

That begs the question: if they think this is the best and smartest thing they could do for the economy, how come they didn't bring it in earlier? That goes to the very heart of why we are having this debate. We're having this debate because there was an election close to a year ago, and the state of the finances of this province was in free fall. The government decided, made a conscious political decision, to deny the full truth of this province's finances to the people of British Columbia.

After the election — when they did not have any of these debates back and forth during the election campaign on whether it would be a good thing to harmonize the sales tax or not, when they avoided all of that — they then found themselves, after they got re-elected on this deception, suddenly with a big, big problem. During that election, they had also made commitments, right out of the mouth of the Premier of the province, that the deficit for this province would not be one penny more than $495 million: "Not a penny more. You can take that to the bank." That's what he said time and time again.

But, of course, I think he knew, and I think most British Columbians have come to the conclusion that the B.C. government knew full well the state of the province's finances. They have an excellent public service in this province — very smart people who work diligently on all of our behalf every day.

Part of the job in the Finance department and the treasury is to let the government know what's happening with the finances of British Columbia, if not on a daily basis, certainly on a weekly basis. So they would have told this government what was going on. They made a conscious decision not to share those facts with the people of British Columbia.

After they got re-elected, they suddenly realized: "Oh my goodness, our half-a-billion-dollar deficit is now going to be in excess of $3 billion." What do they do with this problem? They decide to go crawling to Ottawa to get a $1.6 billion bulk of money to help them to reduce the deficit, which they had not been forthright about with the people of British Columbia.

Even with the HST coming in and the $1.6 billion coming from the federal government, we still had a budget deficit over five times greater than the one that was promised to all British Columbians during the election.

The member yesterday who was speaking had the gall to call this the honest sales tax. I tell you, Orwellian-speak if there is nothing else. It's just beyond belief that they could say that.

It's for those reasons that all of us on this side of the House are standing up on the side of British Columbians, standing up not just for those who voted for us in the election. I can tell you that the meetings that were held.… And there's been lots of talk in this House about the initiative that's taking place, the citizen initiative, led by the former Premier of this province. But you know what? At those meetings that were held in my communities, in Terrace and Kitimat, it was interesting to see the people who came out.

First of all, people came out who normally never get involved in any kind of public policy debate or involved in politics. It was drawing people who basically stay at home. Maybe they vote every now and again, but it drew out a whole bunch of people who don't normally get involved in a political debate. That's the first point. It also brought out people right across the political spectrum.

[1020]

When I stand up and speak against the HST in this House, I'm not speaking up just for those people who voted NDP in the last election. I'm speaking up for all the old Socreds who live in Skeena. I'm speaking out for many of those who voted B.C. Liberal in the last election, thinking that their government and the people they voted for were being forthright with them. They're upset, and it's those people who are coming out to these meetings.

Hon. Speaker, over 90 people signed up to be volunteers in my home community of Terrace. Over 40 people signed up 60 kilometres away in the community of Kitimat, which has been devastated and is going through all kinds of economic challenges. These are people who have never been involved in any kind of political campaign, saying: "Enough is enough." These are people who aren't just listening to the debate in this House. These are people who are thinking for themselves and coming to their own conclusions.

The government says that there's lots of misinformation out there. They should know. They're the ones who didn't tell the people of British Columbia the truth in the first place, so it's kind of rich for them to be suggesting that there's lots of misinformation out there. What happened during the election?

These are people who are coming out — senior citizens, young people, first time getting active in any kind of political campaign, people from all walks of life — who are saying: "I'm going to give up a few hours of my life to go and sit in a mall or sit at a table in Overwaitea in Kitimat or go door to door to try and get my neighbours to understand what's going on."

They understand that this is a regressive tax. They understand that those of us who live in Skeena don't have a lot of high-paid industrial jobs anymore. It's mostly people working in service industries who live in my region. They understand that this is a huge tax shift that is going to hurt them.

I've heard the Minister of Forests saying that this is going to help the forest industry. You know what, hon.
[ Page 4350 ]
Speaker? If it is going to help the forest industry, it's a little bit late for the people of Skeena. All of our mills have been shut down, some of them actually stripped apart and sent to other parts of the province or other parts of the world. Do they honestly think that the forestry mills in Skeena are going to get going again because of this new HST? I don't think so. All these facilities have been shut down.

Hon. K. Krueger: Under your watch.

R. Austin: Under your watch.

All these industries have been shut down. There is not one manufacturing plant left in my riding as a result of what has happened under this government's forest policy. It isn't enough to suggest that suddenly this is going to help us.

Let's just look for a second at what happened when the softwood lumber agreement was passed. The government argues that if we give big industry a tax break and move the tax over to consumers, all of a sudden these industries are going to reinvest and create jobs. Well, let's look at the softwood lumber tax.

During that argument between the province of B.C. and Canada with the United States, millions of dollars of taxes were collected at the border by the American government. Okay? Millions of dollars — taxes that were paid based on the backs of communities, corporations and workers.

What happened when the softwood lumber agreement was finally resolved? I'll tell you, hon. Speaker. Did the companies take that money and suddenly say: "Hey, let's go reopen all the mills in Skeena"? No. They took that money and bought mills in the southern United States.

Interjections.

Deputy Speaker: One moment.

Minister. Thank you.

R. Austin: They took that money and invested it in mills outside of British Columbia, outside of Quebec. Money that was paid for by British Columbians was spent to invest outside of the borders. Why? Because they could make a better return on investment down there.

So it's not enough for this government to say that if we do this tax shift, all of a sudden the corporations are going to take this wonderful free-fall money, $1.9 billion a year, and suddenly create a whole bunch of jobs. They will do what is in the best interests of their shareholders. It may well be that they'll simply pocket that money and send it down line to their shareholders as dividends. That may be the case.

Interjection.

R. Austin: Like they did during the softwood lumber. The member says that they'll invest in British Columbia. Well, that's not what we've seen in recent memory.

It's not enough to say that we're going to shift this tax. What are the conditions? Are corporations that get this $1.9 billion in any way being forced by government to make investment decisions that will create jobs here in British Columbia? No, of course not. They're just being told: "Hey, here's $1.9 billion. You guys get to keep it. Don't worry. The consumers of British Columbia will pay it for the next who knows how long." Okay. Thank you very much.

They could take that money just as easily and simply pass it on to shareholders. In fact….

Deputy Speaker: Thank you, Member.

[1025]

D. Hayer: As you have heard from the last member for Skeena, you can see there are two sides of the issue, the opposition side and the government side. At the end of the day, the voters will decide which is the right decision to make for the long term — the one that keeps the economy strong, keeps the jobs here, or one that takes away the economy down the hill and gets the jobs moving to Ontario or other parts.

Madam Speaker, thank you very much for allowing me the opportunity to speak today in support of Bill 9, the Consumption Tax Rebate and Transition Act.

What makes this bill so important to the future of British Columbia, to its growth and to its economy, is that it removes the provincial sales tax right across the board. That means an improved business economy, more jobs and, by definition, lower prices passed on to consumers because the cost of doing business in British Columbia will be lowered.

This bill also means British Columbia will remain competitive with other provinces. Jobs and investment will not be moving to Ontario or anywhere else. The new tax system will mean that businesses can compete with any business, any jurisdiction across the nation. There will be a level playing field with other jurisdictions as we seek export markets, as we expand our export markets and keep our current export market.

Under the current PST system, a piece of wood, for example, is taxed at the tree-cutting level, at the hauling level, at the mill level, at the manufacturing level, at the wholesale, at the retail and, eventually, at the point of purchase for the finished product. Bill 9 eliminates those extra tax steps and imposes a tax only at the point of sale, which means the final product should cost less. In other words, this bill and the subsequent introduction of the HST will actually save people money in the long term.

Speaking of wood and the forest industry, I think everybody knows that British Columbia's forest indus-
[ Page 4351 ]
try has been a driver of our economy for decades. But it is suffering right now, Madam Speaker. Currently, the pine beetle epidemic has enormous consequences — also the world economy — for the industry. For forestry to return to the dominant place in its industry, for it to return tax dollars to the government, for it to return to the way it used to be, because it was bringing positive tax flows to government, and to provide secure, long-term, well-paying jobs to its workers, it needs to be competitive to survive.

As the Minister of Forests so clearly stated during the contribution to this debate:

"We should all clearly understand that HST value-added tax is the right model for economic stimulus and for ensuring that we have the best possible opportunities for our export-based industries….

"The forest industry is what built this province, and it's been very challenging in the past few years in terms of trying to make sure that we have the most competitive industry around the world. Although the members opposite don't like to face the realities of the global downturn and particularly the U.S. housing market, if they would just take the time to look at British Columbia, they would know that we are a top…performer. This new element, this change is a real game-changer for our people.

"It makes sure that all our operations have the advantage, the opportunity to export their lumber around the world — to make sure they can compete with Norway, make sure they can compete with Chile, make sure they can compete with Argentina, with all the forest jurisdictions around the world."

Madam Speaker, I have mills in my riding. I can tell you they support the HST system, because they said that it's going to be good for them for the export market and allowing them to hire more people and create more high-paying jobs. In fact, the HST will eliminate an estimated $2 billion in PST currently hidden or embedded in our products and service costs, and those savings will be passed on to the consumers as they have done in other places.

British Columbia will also benefit from the lowest rate of 12 percent HST in the country. To be fair, almost no one likes paying taxes, but they are necessary to provide the social safety net that all of us hold so precious. Taxes build hospitals, pay for public safety, educate our children, construct our highways and transit system, care for our elderly, and support our children and families who otherwise would be unable to provide for themselves.

[1030]

Taxes come from workers, and taxes come from business, which is reflected in the price of items we purchase. If we can eliminate some of the cost of doing business, as Bill 9 sets out to do, business will flourish, jobs will be secure, more people will be finding work as more jobs will be created, and it will help British Columbia. It will help all of our constituents.

Elimination of the PST and adoption of the HST has found great support with most employers across the spectrum of employment, from B.C. Agriculture, B.C. Business Council, B.C. Chamber of Commerce, Chartered Accountants of B.C., Retail Council of B.C., B.C. Trucking Association, B.C. Road Builders, New Car Dealers, B.C. Construction Association, the Conference Board of Canada and many, many more of our prominent employer groups and associations.

In my own city of Surrey many members of the Surrey Board of Trade are on board with the implementation of the HST.

In fact, here are a few of those Surrey business people and companies that support what this government is doing and support the HST: Steels Industrial Products Limited, Kevin McKelvie of PricewaterhouseCoopers, Archie Johnston of KPMG, Fuller Metric Parts, Annette Conner, Prospera Credit Union, ABC Metals, Affinity Manufacturing, Cobra Electric, Patton and Cooke, Sunrise Kitchens, Nor-Van Cable and Marine Supplies, Eric Wilson of BDO Dunwoody, Teal Cedar Products, Teal-Jones Group and so on.

In other words, despite what the opposition would portray, this bill, this change to our taxation system is a good thing, supported by almost every major employment group. They know that eliminating a tax across the board lowers the cost of manufacturing and the cost of doing business. They also know that it will stimulate growth, encourage investment and, over time, create thousands of new jobs.

Jobs mean security for individuals and for families and opportunities for new immigrants. Jobs mean a great future, a chance to grow in a place where anybody can raise a family and create a lifestyle that is among the best in the world — a part of those facts, unlike what the opposition is trying to portray. Their fearmongering is misleading and scaring people.

When I talk to people, mostly explain to them, they might not be happy with HST, but they like it. They think it will be good for our economy in the long term, and they support it. They don't like any taxes, but on the other hand, they said this is probably the right thing to do, especially since Ontario implemented the HST.

Under the HST there will be no additional costs to heat your home, whether the supply be gas, oil, electricity or any other means; no additional costs for drug prescriptions; and no additional costs for fuel used in your car or truck. Home and apartment rents are not subject to HST. In fact, anyone who is not currently paying GST on something won't be paying HST either.

The truth is that the majority of our retail items will see no change at all. Everything that we now buy that is levied with the PST and GST will have the same amount of tax cost under the HST system, so there will be no increase at all for those items. In British Columbia, as I stated earlier, there will be specific exemptions for fuel for cars, trucks, trains, planes, boats and other forms of personal travel.

Residential electricity and home heating products are exempt from HST, as are residential rents — exempt from HST. Basic groceries are exempt from HST. Up to
[ Page 4352 ]
a $525,000 price of a new home is exempt. Used homes are exempt. Prescription drugs are exempt. Health care, medical and dental services are exempt. Bridge, road and ferry tolls are exempt. Child care, music lessons and legal aid services are exempt, and most goods and services provided by charities are exempt from the HST.

For more details on the HST, you can also go to my website, davehayermla.ca, or davehayermla.com, which has very detailed information and links that provide you with more detailed information on the HST and its effect.

We won't be paying more for car or home insurance either. On top of all that, under the new taxation system, people at the lower-income level, those earning $20,000 or less a year, will each receive a $230 HST credit, which will more than offset the potential extra costs they may or may not face with the HST.

[1035]

In fact, Madam Speaker, when you look across the board at costs that most families in lower-income brackets face — cable, hydro, restaurant visits, haircuts, phone and Internet — they will actually see, after the HST tax credit they receive, a drop in their annual cost by approximately $486. Those are real savings that can be applied to other necessities, saved or spent on small luxuries.

Will there be some additional costs for those on a moderate income? Perhaps, but it will be very minor. According to documentation I have seen, any increase in cost for that group of earners is in the range of approximately $13 a month, while those who can most afford it — people with higher incomes and higher expenditures — might see their costs rise by less than $70 a month.

Remember that across the province and across the earning spectrum, this government has lowered personal income taxes by more than 37 percent. We have eliminated the personal income taxes for 325,000 British Columbians who have low incomes. They now pay zero provincial income tax because of the changes our government has made since 2001.

We have reduced the small business corporate income tax rate by 44 percent and reduced the general corporate income tax rate by 39 percent, effective next year. These tax reductions will increase our competitiveness, encourage investments, create new jobs and keep our economy strong.

On the personal scale, with the tax reductions we began to initiate when our government was first elected in 2001, a person earning $30,000 a year now saves almost $1,000 in income-tax costs. A worker earning $60,000 now saves almost $2,500 a year. A worker earning $100,000 now saves more than $5,600 a year. A worker earning $150,000 a year now saves more than $8,000 a year.

Those dollars have been put back into the pockets of our taxpayers. Those are dollars that can be saved, can be spent in our economy or can be used for people and their families to provide extra for themselves or go on a vacation or whatever they like.

We have also cut costs for such things as Fair PharmaCare for 300,000 families. A senior couple earning $35,000 a year in income has seen their MSP premiums fall by more than $200 per year.

Let's face it. Our province and our economy will be better with this Bill 9 because it ensures long-term economic stability and competitiveness with other jurisdictions, encourages new investment and provides the groundwork for business expansion, which everyone knows means that more new jobs will be created. That's good for all British Columbians.

Almost all respected, independent, reputable leading economists in B.C. and in Canada, and some of the left-leaning economists, are supporting the HST system over the PST system. There's a long list of independent economists saying the HST system will be good for British Columbia.

In fact, one of the leading economists, Dr. Jack Mintz from the University of Calgary, clearly states:

"Harmonization of the British Columbia sales tax with the federal goods and services tax, GST, will result in a giant leap in the province's competitiveness, both domestically and internationally.

"By 2020 the combined effect of federal and provincial corporate tax cuts and sales tax harmonization is expected to increase the province's capital stock by more than $14.4 billion and add 141,000 new jobs. Sales tax harmonization alone will account for an increase of $11.5 billion in capital investment and a net increase of 113,000 new jobs by the end of the coming decade.

"British Columbia's tax reform, especially its adoption of the harmonized sales tax, also will reduce the marginal effective tax rate" — in other words, called METR — "on capital for all industrial sectors and all sizes of businesses. Even though selected exemptions were provided to relieve some capital goods from the existing retail sales tax, sales tax harmonization will remove most taxes on capital purchases after July 1, 2010.

"Sales tax harmonization will reduce the marginal effective tax rate on capital for large- and medium-sized companies from 29.5 percent in 2009 to 21.6 percent in 2010, while additional corporate tax reductions will further reduce the marginal effective tax rate to 20.5 percent in 2010 and to 17.9 percent by 2018.

[1040]

"For small business the marginal effective tax rate will decline sharply from 24.7 percent in 2009 to 11.5 percent in 2010, primarily due to the sales tax harmonization. With the reduction of the small business tax rate to zero in 2012, the marginal effective tax rate on small business investment will decline further to 9.9 percent.

"By 2018 British Columbia's marginal effective tax rate on capital will be internationally competitive, lower than the current rates in Australia, France, Germany, Italy, Japan, South Korea, the United Kingdom and the United States; about the same as in New Zealand; and only slightly above that of the Netherlands and China. It will also be lower than most of the other provinces."

Those statements from Dr. Mintz clearly define the advantages to eliminating PST, the provincial sales tax, and adopting the HST. Dr. Mintz is highly recognized throughout North America and around the world for his authoritative paper on the economy. He did not arrive at
[ Page 4353 ]
this position of support for HST lightly, nor did he do it without a vast amount of understanding and expertise.

I would also like to read into the record this from Dr. Mintz:

"By harmonizing the 7 percent provincial sales tax with the 5 percent federal GST — except for some differences, as explained below — British Columbia will receive $1.9 billion in provincial sales tax from business intermediate and capital goods services.

"As with the GST, the resulting 12 percent HST will not apply to certain products and services, such as qualifying foods, medical supplies and exports. Also, point-of-sale rebates of the HST, similar to PST exemptions, will be provided for books, motor fuels, children's clothing and some other items. Rebates will also be provided for new housing and to municipalities, schools, universities, colleges, hospitals, charities and non-profit organizations.

"British Columbians will receive additional tax relief through the HST low-income tax credit, an increase to $11,000 in the basic personal amount tax credit under the personal income tax and a rebate of HST paid on residential energy costs.

"Similar to the Ontario HST scheme, the British Columbia HST will have restrictions on certain input tax credits for specific inputs during the transition period. For example, for large businesses, those with sales in excess of $10 million, and financial institutions…the restrictions will apply for five years and then be phased out over the following three years, although the government has indicated that full input tax credit will be phased in more quickly if the fiscal situation permits.

"Most PST on the capital goods will be relieved with the introduction of the HST on July 1, 2010. The existing PST on machinery will decline from the existing current rate of 3.7 percent to 0.4 percent and will be removed entirely by 2018, while the current 3.3 percent PST on structures will be eliminated.

"A significant one-time benefit to the province will be $1.6 billion in federal transition payments, which help fund public services such as health care and education" — for the government — "of about $400 for each British Columbian resident.

"Initially, the sales tax reform will mean some reduction in revenues for the provincial government, since increases in sales taxes paid on services sold directly to consumers will be slightly more than offset by restrictions in the sales tax on business inputs and the other HST rebates and tax reductions outlined above.

"Since the taxes on business inputs are shifted onto consumers, the removal of the embedded PST will mean that some products, such as automobiles and computers, actually will be taxed less under the HST. At the same time, some previously untaxed services, such as haircuts, will be taxed more.

"The key reform, however, is that sales taxes on capital goods will be shifted to other products and services, which will strengthen the British Columbian investment climate, thereby raising capital investment and creating jobs. In addition to sales tax harmonization, which will reduce taxes on capital, the British Columbia government plans to introduce further tax reductions which will make the province more tax-competitive.

[1045]

"As part of a package related to the adoption of its carbon tax, British Columbia's corporate income tax rate was reduced to 10.5 percent, effective January 1, 2010. The rate will be reduced further to 10 percent, effective January 1, 2011.

"In addition, the federal corporate income tax rate, which was 19 percent in 2009, will decline to 15 percent by 2012, although the federal government will be phasing out certain tax preferences as it reduces the tax rate during this time. These reductions in corporate income tax will further enhance British Columbia's investment climate."

Enhancing British Columbia's investment climate is the key to our future. It means that businesses will continue to stay here, businesses will continue to locate here, and businesses will continue to invest here. It will create more and more jobs that will be sustainable for our families, and it will create more money for our taxpayers and our constituents. It will sustain our economy and continue to build our province.

Dr. Mintz also said this about enhancing the investment climate in British Columbia:

"One way to measure the impact of taxes on investment decisions is to look at marginal effective tax rate on capital. In deciding how much capital investment to undertake, a business will choose to invest in project in which after-tax rate of return on capital is high enough to attract financing from international markets. When maximizing the value of their shareholders' equity, businesses will invest in capital until the marginal return on it is equal to its cost.

"The marginal investment decision, therefore, is a project that earns an after-tax rate of return on capital that is just equal to the cost of raising capital from financial markets…. Thus, any reduction in the marginal effective tax rate…on capital will make more projects attractive for business investments….

"For international competitiveness, most of the focus is on medium-sized and large companies that raise capital from international markets, but the analysis also considers the impact of British Columbia's sales tax harmonization on small, Canadian, privately owned companies that are eligible for small business treatment — basically, companies with an asset size less than $15 million."

What Dr. Mintz also said is that because of Bill 9 eliminating the PST and because of subsequent introduction of the HST in B.C., the investment climate in British Columbia will be enhanced, and our province's competitiveness will be significantly greater than other jurisdictions.

On competitiveness, Dr. Mintz states that:

"The adoption of the HST, along with the federal and provincial corporate tax rate reductions, will have a dramatic effect on British Columbia's competitiveness…. Indeed, by 2018 British Columbia's marginal effective tax rate on capital will be lower than that of all provinces except Newfoundland and Labrador, Nova Scotia and New Brunswick, the three Atlantic provinces that have already harmonized their sales taxes with the federal tax and are eliminating their capital taxes applying to non-financial investment.

"Notably, British Columbia's marginal effective tax rate on capital will be lower than Alberta's by 2018, even though Alberta has no sales tax or capital tax and similar corporate income tax rates to that of British Columbia.

"A major reason is that forestry and manufacturing industries receive preferential treatment with respect to capital cost deductions under the corporate income tax than do other industries. Forestry and manufacturing is a larger share of capital investment in British Columbia when compared to Alberta.

"While one cannot presume that other provinces and countries will not alter their corporate sales tax over the next ten years…at the current rates British Columbia will be more than competitive not only in Canada but…internationally."

Dr. Mintz states:

"Without a doubt, British Columbia's sales tax harmonization will be a game changer, promoting capital investment in the province and providing an opportunity for the private sector to create jobs and pay higher wages to their workers.

"The reduction in taxes on business capital inputs ultimately will benefit employees as businesses invest in capital and new technologies. Businesses, in any event, do not pay taxes, but pass the tax burden to consumers through higher prices — thus reducing
[ Page 4354 ]
the purchasing power of household income — and to investors and employees.

"In a small open economy such as British Columbia's" — says Dr. Mintz — "investors do not pay taxes on capital investment, since owners of the capital can choose to invest in jurisdictions with a higher net-of-corporate tax return on capital.

[1050]

"Costs cannot be passed on to export markets, since prices and most goods and services are determined by international markets. Therefore, any taxes on business costs must ultimately be borne by fixed factors in British Columbia through higher domestic prices or lower real wage paid to workers.

"To attract financing from investors, British Columbia's businesses must offer an after-tax rate of return on capital that is at least as favourable as can be obtained in other jurisdictions. Moreover, since the owners of capital are not affected by taxes on capital investment, it is employees who largely bear the burden of such taxes. Further, taxes on investment impede the adoption of machinery and structure that improve incomes paid to workers, who are able to produce more products with the same hours of work.

"Recent economic studies" — continues Dr. Mintz — "suggest that taxes on investments by larger companies tend to fall on workers, who are either paid less compensation or face higher domestic prices on consumer goods they purchase.

"It has been suggested that British Columbia's adoption of the HST will raise product prices for consumers, but this is far from clear. Clearly, the prices that that consumers pay incorporate various hidden and embedded retail taxes on business inputs that will be removed once the HST is implemented. Although it takes time for the elimination of taxes on capital goods to result in a decline in the price charged to consumers, past tax reductions by the provincial government…are reducing the prices businesses charges today."

Dr. Mintz notes that when the Atlantic provinces that eliminated the retail sales tax on business input harmonized their sales tax with the federal GST, consumer prices fell. Dr. Mintz concluded his report with the following information — that Bill 9 proposes that what the HST will do for British Columbia is the way of the future for this province. He states:

"As a result of British Columbia's harmonization of its retail sales tax with the federal GST and the other tax reforms, by 2020 the province's capital stock is expected to increase by $14.4 billion, and 141,000 net new jobs will be created."

Sales tax harmonization will reduce the marginal effective tax rate on capital for large and medium companies by 8 percent this year over the last year. For small business, sales tax harmonization will reduce marginal effective tax rate on capital investment by more than 13 percent this year over 2009.

"By 2018 British Columbia's marginal effective tax rate on capital will be lower than the current average in 20 major industrial and emerging economies and lower than other provinces, except three Atlantic provinces….

"In summary, the tax reforms about to be implemented in British Columbia will have a profound effect on capital investment, jobs and incomes in the province, representing a giant leap toward its becoming one of the most competitive economies in the world."

Based on Dr. Mintz's conclusions and his economic expertise, I have no hesitation in supporting this bill. I believe it is the proper decision for the future. It is a correct choice to ensure jobs, and it will create new jobs and keep the jobs we currently have. It is good for the prosperity of British Columbia families and everybody else who has chosen British Columbia to be their home. Bill 9 states that if everything is done, it's going to be good for British Columbia.

At this time I also want to say that I used to be on the Select Standing Committee on Finance. I'm looking at the report of the select standing committee on the budget of 2009 consultation, which was November 2008. It had members from the government side and also members from the NDP. The Deputy Chair was from Surrey-Whalley and the NDP members from Skeena, Malahat–Juan de Fuca and Coquitlam-Maillardville.

One of the recommendations of the committee at that time, which is on page 63 of the report, under "Tax policy," is recommendation 7: "Conducting a cost-benefit analysis on the harmonization of the provincial sales tax and the federal goods and services tax."

This report was entered into the Hansard on Wednesday, November 26, 2008, in afternoon sitting. It was supported by everybody, including all the members on the committee and all the members of the NDP.

It seems like if we hadn't implemented the HST, if the economy had gone downhill, if the jobs had moved to Ontario, it would be the members from here who would be stating that actually the government should be thrown out because they did not do the right thing. They would be stating the Finance Committee, including the NDP in 2008, recommended we should harmonize both taxes.

[1055]

I think this is the right thing to do, and if somebody wants, they can go to the report themselves and read it in Hansard.

Interjections.

Deputy Speaker: The member for Victoria–Swan Lake.

Interjections.

Deputy Speaker: One moment, Member.

Members. Members. Order.

The member for Victoria–Swan Lake has the floor.

R. Fleming: I don't want to spend a lot of time responding to the member who has just spoken, but I think I should on a couple of points from the outset, before I make my remarks and contribute to the debate on Bill 9 this morning.

The member concluded by reading a recommendation from a report from the Standing Committee on Finance. He implied that the motion that he read was an endorsement of the HST. As a member of that committee who voted for it, he should absolutely know better.
[ Page 4355 ]
The motion is no such thing — not at all. To continue in this chamber and in the media to suggest otherwise is completely disingenuous, and the member should be ashamed of that.

Deputy Speaker: Member. Member, will you withdraw?

R. Fleming: I withdraw, Madam Speaker, and suggest that the member should discontinue doing that.

Deputy Speaker: Member.

R. Fleming: I withdraw the remark to the member on that point, Madam Speaker.

Another point. I don't have time to respond to all of the inconsistencies in his remarks, but there is one that comes from his own back yard that really does need to be aired. To suggest that the Surrey Board of Trade unconditionally supports the HST and the means of its implementation as this government has gone about it is completely false.

The real number that is important out of the Surrey Board of Trade is the survey they conducted among their own members. This member should be aware of that survey. It was delivered to his office, and 59 percent of members of the Surrey Board of Trade oppose the HST. That's the real number that matters. So to suggest that the Surrey Board of Trade unanimously endorses this government's single biggest tax betrayal in the history, perhaps, of the province of British Columbia is ridiculous.

I think one of the most interesting points about this debate on the bill, perhaps, is that outside of these chambers the public really doesn't need to be persuaded about their feelings and their opinions on the bill. Already, I think, the latest poll shows that 84 percent of British Columbians are against the harmonized sales tax. So the debate in these chambers isn't about swaying public opinion outside of these walls. People have made up their minds. They're frustrated. They're angry. They're talking to MLAs on both sides of the House to express their opinions.

In my constituency I'm hearing from an incredible cross-section of people who are salaried employees, who are small business owners, who own restaurants, who are retailers, who own manufacturing companies. All of them are surprised, angered, disappointed, upset at the control of information from this government, looking at their bottom line, knowing that it will be bad for them and their families.

They're unanimous against this government for implementing the HST, united against this government for the way in which they've done it, having only ten months ago.… It was only ten months ago this government categorically rejected the harmonized sales tax.

[1100]

The previous Minister of Finance said: "Never under my watch would that happen." Here we are ten months later, and people are looking at July 1, when this tax will be implemented if the government secures passage of this bill. That's still an if. I want to appeal to members, perhaps newer members in particular, on the other side who may not have made up their mind yet on how they will vote on this legislation, that we look at the option of defeating it here, because they will stand up for their constituents, as I am standing up for my constituents, and be applauded for it.

They'll be applauded for it because they didn't get elected with a mandate to bring in this tax, and now that they've pulled it and foisted it on people, they're obligated to listen to the feedback that they're getting in their constituencies.

People are looking at their bottom lines. They're looking at their family budgets. They're looking at the bills that come in the door for utilities and for other monthly charges that they have to sit down as a family and figure out how to pay. They're adding 7 percent to virtually every bill that comes in the door. They're looking at their family budgets on a monthly basis and how much income is coming through the door, and they're wondering how they're going to make things balance.

It is a difficult thing that people are trying to adjust to, and it is something that I know many of my constituents and many British Columbians don't know how they will manage. They're looking at, for those with young children, reducing their child's involvement in preschools and other things where they can. Really, the only way they can…. They're looking at reducing their housing costs by moving into unsuitable accommodations for their families.

There are only a few certain things where you can control the cost of living to meet the onslaught of a new tax that is going to make a 7 percent bite on virtually all items that people consume in their daily lives — the 25 percent of the economy that will now be subject to a 7 percent higher tax in people's daily lives, the 25 percent that the TD Bank studied and discusses about the situation in B.C.

B.C. has the largest number of exemptions in the construction of our autonomous, provincially guided sales tax with over 30 years of public policy decisions about how to shape it, what incentives we wish to provide people, what public goods we recognize and give a discount on. All of that is being abandoned by surrendering control to Ottawa, which is something, interestingly enough, that the former Revenue Minister of this government didn't equivocate on.

I can remember Rick Thorpe, only a year ago, a year and a half ago, saying uncategorically in budget debate that B.C. would never surrender our sales tax system in British Columbia. We would never surrender the flexibility that provides to our province, the autonomy from
[ Page 4356 ]
Ottawa's direction that we enjoy, and it would never be done. I believe he even said to the member who was asking questions about it at the time: "You can take that to the bank."

Well, Rick Thorpe is no longer a part of this government, but his government that he was formerly a part of has taken British Columbians to the cleaners on that point. That's what happened. That's what his word and the word of this government counted for in the end.

Let's look at where the deception begins, because most people view this legislation as illegitimate, something that the government simply doesn't have a mandate to do because they emphatically campaigned against ever doing such a thing. I mentioned the former Finance Minister. I mentioned the former Revenue Minister. They spoke for this government, particularly on fiscal policy, before the election. They rejected the HST.

Even as Ontario was announcing in January of 2009 that they would be pursuing it, B.C. maintained what turns out to have been a facade — that we were not interested in the HST, that we would not go down that road, and that fiction held up during the election.

[1105]

The B.C. Liberals were pinned down and made a campaign commitment to business organizations and to voters that under no circumstances would they implement the HST. Again, there was no equivocation in the context of an election campaign for the B.C. Liberal campaign to reject it.

It's interesting that now that we are debating this bill and the HST is being put through despite nearly 85 percent of British Columbians being opposed to it, despite having no mandate from the election to do it…. Looking back, why would they do that? Why would they so calculatingly, in such black and white, stark terms, make a promise and then break it six weeks after the election? Well, there are a couple of theories there.

The first is that it was completely premeditated, that the Premier and probably the Finance Minister had it in their minds well before the election that after the election they would follow the course of action that they have, in fact, taken to date.

The secondary part of that point is that I think the B.C. Liberal Party and many of the members who were elected on the opposite side understood well enough that being truthful with voters about their intentions to impose an HST would be something that they would have to defend in the context of a 30-day campaign out there on the hustings, that they would have to defend in the context of their Finance Minister — their former Finance Minister — and other leading members of the government saying that they would never do.

It would be something that voters would get to actually look at, and maybe the government would have made the claim back then that it was the single biggest thing they could do for the economy. But voters would get to decide if they thought it was the right decision for the province, if they thought it was the right decision for them. I think the B.C. Liberal Party understood well enough that if they had put that to the voters there isn't a chance that they would be in power today.

That's what it's about. That's what makes this bill even more odious — the political trickery and deceit that was pulled on the voters of British Columbia. We're not talking about the rocks of time. We're talking about ten months ago, in the context of a fixed-date election that was known four years in advance — what the date would be. That is really the point that sticks with British Columbians in the worst sort of way.

[L. Reid in the chair.]

It really is something that, especially when one looks at the appallingly low voter turnout in the last election, erodes the faith in our democratic institutions and breeds cynicism about politics in general — when governments do that sort of thing to their citizens. It won't be the first time, but it could be one of the worst examples in B.C. history upon which it happened.

I'm sure that to hold caucus solidarity together, or whatever the meetings are like on the other side, one of the major things that the Premier and others keep insisting, especially to backbench members who are hearing it every day from their constituents — how outraged they are…. They're saying: "Don't worry about it. In three years voters won't remember."

That's what cynical political operators say. That's how they view the public. I'm sure that those conversations are happening and are being reinforced as the pressure mounts on members to actually stand up and listen to their constituents and vote their conscience on this legislation, to really look at themselves and see if they have a mandate to vote for this bill. They're being held by that kind of political message within their party.

I think after the election, when we knew the true intentions of the Premier and the Finance Minister to impose the HST, it was very interesting because….

[1110]

The Finance Minister and the Premier — to hold their story that it just dawned upon them sometime between May 13 and June 23, when they did a complete reversal on the HST, and that is the window in which the idea to impose the tax emerged…. They had to hold that story, because they don't want to be ridiculed as liars and have that accusation stick — that they were thinking of it before and during the election.

Deputy Speaker: Member, I would caution you on the use of your language.

R. Fleming: Thank you, Madam Speaker.
[ Page 4357 ]

They don't want those kinds of accusations to stick, so they need to hold the story airtight that they were not considering it. Well, it's interesting.

Once the freedom-of-information request came in, the Minister of Finance said: "I had no conversations with my deputies about the finances of the province during the election, or the state of the deficit. I was too busy out on the campaign trail. And besides, it's inappropriate" — I'm paraphrasing him — "for me to have such conversations."

Well, lo and behold, it came out that such conversations did exist. The Finance Minister knew the budget was careening off course by hundreds of millions of dollars, and it was only the beginning of the first quarter of the fiscal year and would likely get a hell of a lot worse, which it did.

Deputy Speaker: Member.

R. Fleming: Heck of a lot worse. Sorry, Madam Speaker.

Deputy Speaker: I'll bring you back to consideration of Bill 9.

R. Fleming: Thank you very much.

Then the freedom-of-information requests showed that not only were conversations with deputies held about the state of the finances in the context and during the election, but there had been a number of meetings arranged with the federal Finance Minister, Mr. Flaherty. We're told that in these several diary entries, where we know meetings occurred between the federal Finance Minister and the provincial Finance Minister, that the HST was never discussed.

But then, when pressed on a radio program on CKNW, the Finance Minister let this out. "Well, it didn't occur, except once when we were at the coffee machine taking a break during the meetings, when the federal minister and I…." The story gets more and more ludicrous, and this is the one that the credibility of this government hangs on.

The legitimacy, which this tax doesn't have, of this bill hangs on this story holding. It doesn't hold, and this government looks more and more desperate as they appeal to people to believe them. They look for this massive distraction show.

They have one single economist, who's been hired by government, on which they hang the economic message of this bill — Mr. Mintz. Jack Mintz is an interesting character and an accomplished economist. But his report isn't very persuasive that this is a great thing and will lead to the kinds of incremental direct new investment in jobs that he suggests.

First of all, he doesn't even address the concerns being expressed by the restaurant and hotel associations about job losses. They and the tourism industry are projecting between 10,000 and 40,000 jobs to be lost.

Well, in my city that means my neighbours and friends who work in those industries are going to lose their jobs. That's a significant amount of employment. It's also employment that in many cases, as the member for Skeena mentioned previously, supports people getting through university to get skills to pursue other jobs or create businesses upon their graduation. That was not included in Mr. Mintz's analysis. That's one of the first strikes against him.

There's an old saying that if you get 12 economists in a room together and have them solve one problem, you can be pretty sure you'll get them to reach at least 15 different conclusions. Dr. Mintz is a great example of this principle or this old joke, because he was hired by the province of Ontario and organizations in Ontario to render an opinion on what the HST would mean for Ontario. Same topic, same focus of study — the HST and what it would do for Ontario's economy. Guess what, Madam Speaker.

[1115]

One guy — one economist — reached two different conclusions. His first report said that the HST would be a disaster, would slow the rate of growth in the province and cost jobs. His second report, the one commissioned by Premier McGuinty after he'd introduced his HST legislation, said it would be a fantastic thing and would lead to all kinds of investment and create jobs in the province of Ontario.

One professor, one economist — two different opinions in the space of about six months between the reports. We're expected to believe that this gentleman, this learned individual, is the basis for the message of the B.C. Liberal government as to why we should trust them and believe their wildly overexaggerated economic claims about the benefits of this tax? I don't think so.

Look, there are some other things that interest me greatly, in the work I do as an MLA on this side, about this tax. One of them is the impact on our ability, by eliminating the flexibility that provincial sales tax regime gives us, to create incentives that in particular help the environment. That's something this government claimed it was interested in, too, way back in 2008 when they created a number of provincial sales tax exemptions for goods and services that were deemed to be environmentally responsible.

This was part of the great green budget that the Premier motivated after a conversion on issues around climate change. This was supposed to put some meat on the bone, if you will, around climate action that government would take to reduce carbon emissions in the province.

It was argued that we needed to influence consumer behaviour to buy green goods and services, to retrofit their homes and their businesses, to conserve energy, to
[ Page 4358 ]
look at new renewable sources — solar PV and those kinds of things. All of them were given a combination of tax incentives, the waiver of the provincial sales tax and in some cases rebates.

That was the framework for the climate action plan. You know, quite a large section of the document outlines the sales tax exemptions that were brought into place. Would it surprise anyone to know, now that the HST has been laid bare, that every single one of those green sales tax exemptions that were brought in, in 2008 has been unceremoniously dumped?

The HST, once it's in place on July 1, will take away any ability of this province to exempt what we consider good behaviours, which are in the interest of the environment, by waiving sales taxes. It's incredible, but consumers last year could take advantage of PST exemptions to insulate their homes, buy high-efficiency furnaces, heat pump systems, green windows and doors, Energy Star appliances. All of those things were a modest nod to…. Many of these goods cost more than conventional energy-inefficient goods. That's the whole reason to give the sales tax exemption. None of that exists anymore.

None of that exists, and you know what's even worse? The HST has many components to it that support the conventional high-carbon economy. It's interesting, but they've slapped a new tax on used vehicles. They've eliminated sales tax breaks that hybrid cars used to get.

Electric vehicles get no break. That's interesting, because some of the leading climate scientists in British Columbia are saying that one of the ways to achieve the 33 percent greenhouse gas reduction by 2020 is to look at electric vehicles very seriously. So they're taxed at the full rate now.

Bicycles, as has been mentioned over and over again — something that this province first waived 30 years ago — will be taxed for the first time in three decades.

All of those environmentally low-emission, low-impact modes of transport are going to be taxed more under the HST. But guess who gets a break, Madam Speaker.

[1120]

Cars valued at more than $55,000 that used to be touched by luxury vehicle surtax — that comes off. I can save money after July 1 of this year buying — I don't know — a large SUV with a huge engine and incredibly low fuel standards. I can save thousands of dollars on that, which I would have paid a year prior.

Everybody else in the economy who is trying to do the right thing by the environment gets to pay more for every type of environmentally efficient vehicle. That's absurd, but that's what the HST is going to do. People know that now.

I want to go back to another point about Mr. Mintz, or just his study — the conclusions that the government calls their own now. Here we are in a province where the cost of living for all goods and services, relative to income, is high. One of the things that economists like Jock Finlayson and the B.C. Business Council stress is the prosperity gap that British Columbia suffers from.

Real income, real household disposable income in B.C., is well below the Canadian average. It's actually grown. The disparity between our standard of living and other parts of Canada has grown more severe in the decade that this government has been in power. That's not me saying that. That's Jock Finlayson. You can go on the B.C. Business Council website and download the slides.

Less income in the household — disposable…. A lot of it is to do with factors like retirements and things like that. Some of it is to do with real wages, which have fallen in a number of sectors, and a loss of good-paying jobs under this government, particularly in the resource economy. But the point is less household…. We're at a disadvantage in B.C. on the amount of money that we're free to spend.

We're also the most besieged consumers when it comes to our housing costs. British Columbians pay disproportionately way more of their income to put a roof over their heads. What does the HST do to those two problems in our economy in the context of a recession that we're still emerging from, where low consumer confidence is one of the critical barriers to a speedy recovery? They bring in a new sales tax. Isn't that brilliant?

You know, I haven't seen a single member of the European Union or the United States — U.S. jurisdictions — look at raising sales taxes as part of their economic stimulus and recovery packages. I haven't seen that. In fact, I've seen the opposite in France. They've actually reduced their value-added tax across a number of sectors so that they can stimulate employment, basically recognizing that it is a job killer.

Now, the point I was making is this. British Columbians already are starting at a baseline where they have less disposable income than their Canadian counterparts. They have higher housing costs every month in their lives to pay, and more of their disposable income goes to that. The HST specifically targets goods and services that people need in their daily lives.

It targets exactly the area where British Columbians need a break in their lives. It targets specifically the housing costs that we have to endure here in British Columbia by raising taxes on them. There's more tax on houses. You can see it in the market right now. There's a bit of an interesting panicked buy as people anticipate July 1 and literally tens of thousands of dollars being added to the closing costs on purchasing a new home. You can see it in the decline in housing starts as the market chills in reception to the implementation of the HST.

We already had a problem in the construction sector in particular, after the 2008 financial meltdown and job loss. We saw tremendous job loss amongst skilled occupations in construction. Government tried to respond
[ Page 4359 ]
in this and that way, not very effectively, and now here they are putting a new tax on units of housing — homes built in British Columbia. It's unbelievable. It's unbelievable that that's how they would bring to the table for that economic sector….

Now, the other thing the B.C. Liberals say, in having no mandate to implement this tax: "Well, it's forced upon us. We have no choice. Everybody else has one."

[1125]

They point to various corners of the world where there is a value-added tax and there has been for decades. We live in the Pacific Northwest. We're surrounded…. Our major trade partners include jurisdictions like Alberta, Saskatchewan, Manitoba, Oregon, Washington and California, the fifth-largest economy in the world.

Those are our competitors for investment. They have similar economies to us in terms of resources, in many cases. We can think of the western states and their forest industries. We can think of the energy industries in a number of those jurisdictions that I've mentioned. Many of us have very strong clusters of a high-tech economy and knowledge-based economy.

Deputy Speaker: Thank you, Member. Thank you, Member.

R. Fleming: Madam Speaker, I thank you for the opportunity to make the point, and the real point that I want to conclude on is that all of those jurisdictions have a sales tax regime that we currently have today.

Hon. G. Abbott: I want to begin by thanking the electors of Shuswap for providing me with an opportunity to be a part of this very important and historic debate that is occurring in this chamber. I do very much appreciate that, and notwithstanding now 13 years in this chamber, it's an honour that I will never take for granted, and I don't take it for granted in this case, because the debate is an important one, and one that I think will be attributed much attention in the years ahead.

I've had the opportunity to be an elected representative from the Shuswap area for some 31 years. I was, for a time, a regional district director and chair of the Columbia-Shuswap regional district, a councillor at the district of Sicamous and, as I noted, for the last 13 years an MLA for Shuswap. I've had an exceptional opportunity to represent the people of the Shuswap, and I appreciate that.

Over those many years…. I was remarkably young when I started. That's why I retain this modicum of youthfulness in the current years. Over those 31 years I've seen many, many difficult decisions that had to be made at the political level.

One thing or one principle that has always guided me in terms of those difficult decisions was, in the final analysis, to do what I thought was right — not what was most popular, not what was most expedient, but to do what was right, what was in the long-term interest of the constituents that I represented.

There are many decisions that are remarkably difficult for politicians, whether they are at a local government level or at the provincial level. There is a range of interests that exist in our society. They don't always align, and sometimes it is necessary, when interests and viewpoints don't align, to make a decision notwithstanding that. I have, over those 31 years, seen many, many instances where well-intentioned and often well-informed people can disagree on what an appropriate decision is that needs to be made.

I've had the pleasure — not always a pleasure — of chairing many rezoning hearings where, again, one can hear a startling collision of interests and viewpoints on a subject. Often those differences appear when we're debating, whether it's locally or provincially, new facilities or new programs. There'll be lots of debate around that.

Of course, there can be lots of debate on what the municipal tax requisition should be, or there can be spirited debates about what the form of a tax measure should be, which is part of what we are discussing here today. There are lots of difficult, often heart-wrenching decisions that need to be made in politics.

[1130]

I must confess at the start that this has not been one for me. I do not find the decision around harmonizing federal and provincial sales taxes a difficult one. It may be a very controversial one. That it is, without question. It has been a very controversial issue, remains a controversial issue and is apt to remain a controversial issue for, I'm sure, many weeks and months ahead.

But to me, this debate is tough only from the politics of the issue. It is not a difficult issue, from my perspective, from a public policy perspective. This proposal to eliminate the provincial sales tax and to merge the provincial sales tax with the federal goods and services tax is good public policy. I strongly support the harmonization of sales taxes because it is good public policy, and I will continue to support it for that reason.

Again, that's not to diminish how difficult it is from a political perspective. There is undoubtedly considerable opposition to this in the province. Nevertheless, there is support for it as well. I think we have a responsibility as legislators, the 85 of us who have the remarkable honour of sitting in this chamber debating this issue and making some decisions about this.

I think it is good public policy, and I want to take some time today to talk about why it is good public policy, why it is important to my constituents in the Shuswap and why it is important to all British Columbians, because I think that's very important. I want to devote most of my remarks today to how the HST will impact the businesses and the public in the Shuswap — so looking at this from a constituency perspective.
[ Page 4360 ]

But it is important to set the context. I know there has been much disparaging of economists and economics, particularly from the opposition side of the chamber, and I can appreciate why they would wish to do that. Most economists in Canada and most economists in British Columbia are strongly supportive of a value-added consumption tax versus a retail sales tax.

Most economists support that and support it strongly. They have many and diverse economic models to support that. But the opposition would want to diminish and disparage economists in that work, because that is where they are residing politically at the current time. If one hopes to disparage a consumption-based, value-added tax, then one diminishes and disparages those who support it, and that certainly includes economists.

I would observe at this point that one couldn't imagine in British Columbia or Canada two groups who are principally economics-based and who are more ideologically opposed than the Canadian Centre for Policy Alternatives and the Fraser Institute.

The Canadian Centre for Policy Alternatives typically is a group that one might more readily associate with the New Democratic Party, both provincially and federally. The Fraser Institute resides on the conservative side of the spectrum. I'm not sure who one would associate politically with that, but they certainly reside on the conservative side of the political spectrum.

It's interesting that groups as diverse as the Canadian Centre for Policy Alternatives and the Fraser Institute both support the harmonization of sales taxes in this province and in this country.

[1135]

So again, I appreciate that the short-term politics may be wonderful and opportunistic for the opposition, but there is a great range of support for harmonization of sales taxes.

Interjection.

Hon. G. Abbott: The member is asking many important questions, and I'll look forward to, I'm sure, answering many of those questions as we move through. The point I am making at this point in time, which apparently he takes exception to, is that groups as diverse as the Canadian Centre for Policy Alternatives and the Fraser Institute can support…. So the member may wish to….

Interjections.

Deputy Speaker: Members. Member.

Hon. G. Abbott: Thank you, Madam Speaker, for retaining order in such an effective manner in this chamber. I know I'm given to being a provocative speaker and inciting the kind of excitement on the opposition benches that we're seeing here, but I do appreciate your managing to retain order through the provocative speech that I'm delivering here.

The member, I know, is well-read. I know, actually, that the member tries to look at all sides of an issue before forming a conclusion. That's why I'm just recommending some reading for the member. The member may wish to look at this article, which I'm sure he would find useful, from the Fraser Institute of July 28, 2009, entitled: "Harmonizing Sales Taxes is Smart Thinking." That's in the Vancouver Sun.

I won't quote from it, but the member may find it useful to read that in terms of developing an understanding of consumption-based, value-added taxes versus retail sales taxes, because I'm sure he is fascinated by the economics of that debate.

The member may also wish to look — again, to get a different perspective, yet a perspective that arrives at the same conclusion…. He will want to look, undoubtedly — because he is well-read and, I'm sure, well-rounded in his own way — at a publication by the Canadian Centre for Policy Alternatives from December of 2009 entitled, delightfully, "Not a Tax Grab After All: A Second Look at Ontario's HST."

I'm sure that the member would want to look at that, because again, what one gets by reviewing materials like this is a sense of how, whether from a socialist perspective or from a conservative perspective, harmonized sales taxes make sense and, therefore, deserve our support.

Again, I know that I'm being very provocative in my statements, and inspiring. But I also wanted to point to a third document. This is a group which I have enormous respect for, and I hope that all members of this House would have enormous respect for, and that's the Conference Board of Canada.

The Conference Board of Canada has produced what I think is a very useful document in terms of politicians and the public understanding these issues. It is entitled "Harmonize Consumption Taxes to Improve Economic Efficiency" — a very sexy title, unquestionably. The title alone, I think, would pull the member into reading this document, because it is very provocatively titled.

I'll just quote briefly from this one, because I have enormous respect for the Conference Board of Canada, and I think they very succinctly lay out some of the benefits of harmonized sales taxes in this.

[1140]

"The benefits of adopting a harmonized value-added tax in lieu of retail sales tax are manifold. Harmonization of all remaining taxes into a single value-added tax system would improve economic efficiency across the Canadian economy. It would" — and it goes on to list — "simplify tax administration, minimize the potential for tax evasion, eliminate distortions caused by the absence of a sales tax rebate on business inputs, promote increased domestic investment by Canadian firms, reduce compliance costs for business and increase the competitiveness of Canadian exports."
[ Page 4361 ]

That is, I think, a very succinct summary of what an esteemed group of economists, the Conference Board of Canada, believes are the benefits of a value-added tax for British Columbia and Canada.

I share that view. I believe, notwithstanding the short-term politics around this, that this is good long-term public policy, and I believe it is good long-term public policy which will be of enormous benefit to my constituents. I want to explore that a little bit more now.

One of the things that I was able to do in earlier years in my life, for about 20 years, was be a farmer in the Shuswap area on my farm at Sicamous, where I grew lots of strawberries and blueberries and the like. One of the things I learned over those years as a real farmer….

Interjection.

Hon. G. Abbott: I'm only a pretend farmer now. The member's right.

But I was a real farmer for years, and one of the things that I learned through long experience in farming was just how critical the relationship between costs and pricing is in agriculture. The difference between costs and pricing often….

Interjection.

Hon. G. Abbott: I know the member across the way is speaking up to support me in my analysis, and I support her supporting me. I think that's good as, I think, someone who's involved in the agricultural enterprise. I'm sure she is undoubtedly aware of the critical importance of costs versus pricing as well, because often farmers don't have a great deal of control over pricing.

I believe the member opposite is not involved in a market-controlled product, just as I was not involved in a market board–controlled product, so she obviously knows that pricing is something that the farmer doesn't have a lot of control over. Often it feels like you don't have an enormous amount of control over costs either.

I'll use the example of a tractor, because I'm sure the member can relate to that one. A tractor can cost a lot of money, Madam Speaker. I know you know that. I don't know when the last time you priced a tractor out was, but it's been awhile since I did. I'm just going to guess hypothetically that we could get a tractor for $20,000.

Interjection.

Hon. G. Abbott: That's a very cheap tractor — yeah.

I'm sure tractors….

Interjections.

Hon. G. Abbott: Now I've really got everyone going in the House, I know. This has prompted quite a spirited debate about the price of tractors.

But let's say, just for the sake of argument, that it's $20,000. That is a very cheap tractor in today's market. No question about that. That $20,000 tractor today would cost $1,000 in GST over and above the $20,000 and $1,400 in provincial sales tax over and above the $20,000.

Interjection.

Hon. G. Abbott: The member from Lillooet is amazed that things could add up like that, and that's true.

Today, pre–harmonized sales taxes, that GST of $1,000 becomes an input tax credit, and it will be claimed and returned to the farmer in three months after the purchase, more or less — sometimes a little bit less than that. In three months that $1,000 will come back to the farmer.

In the case of the PST today, the $1,400 does not come back to the farmer. It is a bottom-line expense to the farmer. That's $1,400 that certainly will not be profit to the farmer. It will not be money that could be utilized for additional employees. That could not be used for other purposes on the farm.

[1145]

This is the fundamental difference, using the $20,000 tractor example, between the GST, which is an input tax credit, which the HST will also be — an input tax credit which will be returned to the farmer — versus a bottom-line expense for the farmer on his annual budget.

Tractors are one of the big items that farmers purchase, but the members opposite who may have been involved in farming enterprises know that there are many expenses annually which incur PST costs. It will be an opportunity, whether it's irrigation equipment or other input costs, for the farmer to get those retail sales taxes converted to input tax credits. It will be enormously important to the farmers of the Shuswap, as it will be enormously important to the farmers across British Columbia, to have that conversion from retail sales tax to input tax credit which doesn't go against their bottom line.

In many cases it will mean the difference between survivability or non-survivability, profitability, the ability to employ more people to work in the farming enterprise, to expand the farming enterprise. These are enormously important for farmers, and I'm very pleased to support harmonized sales taxes for that reason. It will make our farmers more competitive, more profitable into the future.

I want to talk about another example. In Sicamous I have a farm. Immediately next door to my farm is an industrial property that manufactures, among other things, houseboats and worksite accommodation, much
[ Page 4362 ]
of which is sold in Alberta in the oilfields, but it's sold in different places in Canada and, I'm sure, in the United States and elsewhere in the world.

This is a substantial manufacturing enterprise. When times are good, which they are not now, they may employ up to 90 people or thereabouts — currently much less than that but still a very substantial employer.

[Mr. Speaker in the chair.]

Every time, Madam Speaker — now becoming Mr. Speaker, in the conversion that so magically occurs at this time of day — the manufacturer buys a new forklift, buys a new photocopier or anything in between those two items, what one has, again, is the GST, which becomes an input tax credit and which is returned to the manufacturer, versus the retail sales tax, the PST. That becomes an expense against the bottom line of that manufacturer.

The same situation exists in the manufacturing enterprises that are in operation in Salmon Arm, in Spallumcheen and many other places in the Shuswap constituency. If we do not have harmonization of the sales tax, it will be a penalty against our manufacturers in relation to Ontario.

Now, the previous speaker suggested that somehow our manufacturers don't compete with Ontario manufacturers. That is not the case. If we see Ontario move on July 1 away from a provincial sales tax to a harmonized sales tax and we do not give our manufacturers that same opportunity, that same benefit, we will be immediately rendered 7 percent less competitive than Ontario, and we will see huge consequences from that.

I've heard some of the rhetoric around capitalists and corporations and so on at various points in this debate, and it's fascinating to hear the rhetoric of class warfare appear in a tax measure debate. Nevertheless, it's good to hear these things. I'm sure it's very good for the public to hear a range of rhetoric, which they may have thought was abandoned back in the 1960s but which still can be uttered in this House. So that's good.

[1150]

We do need to think not only about the people who own the businesses but, more importantly, about the many employees of those businesses and what the impact will be on them. Further, if a manufacturer in Sicamous or Salmon Arm either goes out of business because of lack of competitiveness or, worse, moves to Ontario to conduct a business there, it has a huge impact not only on employment, but it has a fundamental impact on our municipal and provincial tax base.

If we lose people from B.C. to any other jurisdiction, we lose that tax base. As a consequence of losing that tax base, we lose the ability as municipalities, regional districts and as a province to maintain the critical programs and facilities that all require tax dollars to operate. So that's very important.

I think I have a few minutes yet, Mr. Speaker. I know you probably were watching this on television, were enjoying the provocative nature of the debate and wanted to join it briefly before we adjourned.

I do want to say a little bit about the forest industry, because the forest industry is huge for the Shuswap constituency. It is huge for many other constituencies.

Interjections.

Hon. G. Abbott: The member for Yale-Lillooet reminds me how important it is to his constituency too. And the member for Powell River. I know he's a keen supporter of the forest industry as well. So I know we have a receptive audience to this, because it is important, probably to the great majority of the 85 constituencies in our province.

The forest industry in the Shuswap without question is struggling. There have been mills closed for, in some cases, quite long periods of time now, with the collapse of the American housing market and demand for lumber. It's had very adverse consequences on the forest industry in the Shuswap. Nevertheless, despite that struggle — and this, to me, is very interesting — Federated Co-op in Canoe, Interfor at Adams Lake, Tolko at Armstrong and Spallumcheen have made huge investments in their mill and forest infrastructure over the past few years. They've made huge investments in those.

Not surprisingly, all of those firms are strong supporters of harmonized sales tax, even though they have made huge investments under the current form of taxation, which is a retail sales tax that goes against their bottom line.

The reason why they support it is that those investments won't be the last investments they'll make. They'll be investing millions of dollars every year into the future. Particularly as we see the forest industry recover in Shuswap, in British Columbia, in Canada, we will see a lot of investment in the forest sector, and we will see our forest industry become more competitive as a consequence of the shift from retail sales taxes to a harmonized sales tax. So that's important.

But again, if the members must deplore the capitalist, the corporate barons who lead the forest industry, they must at least be sympathetic to the other people who work in the business, and there are many.

Forest contractors, the folks who work in the community forest licences. I'm sure the members must have embraced that as one of sympathy towards them. The woodlot licensees, the small-scale producers. For them, again, an investment in a $100,000 skidder is huge, and it represents, from the PST perspective, a $7,000 cost on a $100,000 skidder against their bottom line. Again, there are countless ways in which they're affected, whether it's purchasing something larger like a logging truck or a power saw that can cost a couple thousand bucks, which is typically an annual or more expense.
[ Page 4363 ]

These are huge issues for the Shuswap. These are huge issues for British Columbia. For me, I believe that British Columbia has a powerful, awesome future.

[1155]

We have an opportunity to see economic expansion and diversification in this province over the next decade, probably like we've never seen before. We have an opportunity to see many more British Columbians employed. We have the opportunity through that expansion to see more First Nations, more new Canadians — immigrants to Canada — having a role in our economy.

We have a bright future. The last thing we need to do is undermine the productivity of our province, undermine the competitiveness of our province in relation to other jurisdictions. If we don't do this, we'll see investment bleeding away, employment bleeding away, the diminution of municipal and provincial taxes and the consequences there. But that's not what's going to happen. We are going to see, through harmonized sales tax, a stronger province with a great future.

Given that now it is five minutes before the hour, I think it might be appropriate that I move adjournment of debate.

Hon. G. Abbott moved adjournment of debate.

Motion approved.

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

Hon. B. Penner moved adjournment of the House.

Motion approved.

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

The House adjourned at 11:57 a.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of Supply

ESTIMATES: MINISTRY OF HOUSING
AND SOCIAL DEVELOPMENT

(continued)

The House in Committee of Supply (Section A); J. Thornthwaite in the chair.

The committee met at 10:07 a.m.

On Vote 39: ministry operations, $2,719,996,000 (continued).

The Chair: Good morning, everyone. Welcome to the Douglas Fir Committee Room, Committee of Supply, Section A. We're here for the budget estimates for the Ministry of Housing and Social Development.

S. Simpson: Yesterday when we finished up, the minister had just responded to the question about the housing endowment fund, that it's a $250 million fund. I wonder if the minister could tell us the dollars, the interest, the investment income that comes off that — what the value of that has been in the last couple of years — and where those dollars have been allocated.

Hon. R. Coleman: The housing endowment fund was initially $250 million. Its current value today is $283.2 million. It has $12 million in outstanding commitments and to date has done 50 projects for a total of $25.4 million.

S. Simpson: I don't need it right now, but could we get a list of the projects that have been supported by the fund? Just get that later. We don't need to have that take up our time right now.

Hon. R. Coleman: Maybe we'll just save the paper. All the projects that have been announced are on the B.C. Housing website.

[1010]

K. Corrigan: I have a couple of questions about the women's transition housing and supports program. My first question is: I just wanted to confirm what the budget is for 2010-2011. It looks to me like it's $31.8 million, but perhaps I could just get confirmation that it's a $15.9 million lift in 2009-2010 and then a further $15.9 million lift in 2010-2011.

Hon. R. Coleman: The member is right. B.C. Housing has allocated $31 million in 2010-2011 for the transition house program.

K. Corrigan: So $31 million. It looks to me from looking at the B.C. Housing service plan on page 35 that there was $15.9 million, not that there has been a $31 million lift but simply that this is the completion of the transfer of the program into B.C. Housing. Half of that was done in 2009-2010 — the $15. 9 million — and then the B.C. Housing service plan says another $15.9 million added in 2010-2011.

That, to me, adds up to $31.8 million, but the minister just said that it was $31 million, so I'm trying to understand the discrepancy there as opposed to $31.8 million.
[ Page 4364 ]

Hon. R. Coleman: I apologize, Member. I was just rounding — okay? So it is $31.8 million. What it was is that half the transfer took place last year, and the balance took place in this fiscal year.

K. Corrigan: I'm wondering, because I don't have the numbers in front of me for 2009-2010 for the first half of the year, would the minister confirm how the funding for 2010-2011 compares to the overall funding, including the funding that wasn't transferred in but was in the previous ministry. What was the total for that program in 2009-2010?

Hon. R. Coleman: There's been no change to the budgets.

K. Corrigan: There had been discussion heard in the community, various documents and releases and so on, suggesting that there would be a $1.2 million cut to transition house funding this year. So the minister is confirming that there will be no such cut?

[1015]

Hon. R. Coleman: I don't know whether we're…. There's been no change in the funding to the transition housing program. Now, there are programs that stayed with PSSG, the Solicitor General. We're not aware of and don't know whether they've made any changes. You might want to canvass that with the Solicitor General at the time of his estimates, because they haven't been done yet. But we're not aware of any other changes. We know that our money hasn't changed.

K. Corrigan: Just for clarification on that, it's my understanding that the $31.8 million is simply to cover the cost of housing and does not include the counselling programs, and so on, that are attached to many of the transition houses. That's what the minister is probably referring to in terms of going to the other ministry.

Hon. R. Coleman: Yeah. That's correct. I'll read into the record what it does cover.

"The $31.8 million covers temporary housing that does not exceed 30 days and provides people with housing, food and crisis intervention and referrals. There are 63 transition houses providing 664 beds in 57 communities.

"It also provides safe homes, which is temporary housing where transition homes do not exist, and does not usually exceed five days. That includes private homes, hotel units or rental apartments. There are 25 safe-home programs providing 25,564 service hours in 26 communities today.

"It also provides for second-stage housing, long-term housing following a stay in transition houses for safe homes for up to 18 months. There are nine second-stage housing services providing 89 housing units in six communities across B.C."

K. Corrigan: I notice that the total number of spaces that are mentioned in the 2010-2011 B.C. Housing service plan is 730 spaces to serve women and children fleeing violence. I assume that is the total that you reach in the various categories that the minister has mentioned. I'd like a confirmation of that.

Then I notice that in the 2009-2010 service plan for B.C. Housing there were 780 spaces to serve women and children fleeing violence. I'm wondering if the minister could explain the drop of 50 spaces.

Hon. R. Coleman: I suspect it's how they compile the numbers in each year in the service plan, because if you add up all the numbers I read, the number of beds — 664, 27, 89 — comes to 780. So I suspect it's how they were actually stated in whatever plans you're referring to. They haven't changed. I know that we have the same budget, and we're basically dealing with the same numbers, transition houses, that we were before.

K. Corrigan: I was just wondering if the minister would like to make a general comment on the split between counselling and housing being in two different ministries and if the minister could confirm whether or not from the minister's perspective that is working.

I certainly know from talking to various people involved with the transition houses that it's a concern to some of them to have those two functions split. I'm wondering if the minister could confirm how that's working out from the minister's perspective.

[1020]

Hon. R. Coleman: B.C.-Yukon Transition House Society and us and other providers are in, basically, a consultation about doing a review of the transition house program in B.C. now. B.C. Housing had managed a number of these particular projects for years — actually decades, in some cases.

They've actually had the responsibility for a lot of the transition houses — not all, but some — and it seemed to make a lot of sense to have them in one place for a number of reasons. We're not the programmers, and we find that we can bring programming into the housing — whether it's mental health, addictions, whatever the case may be — with another ministry or Health, whatever the case, depending on the file.

The biggest advantage of having this integrated into one place, though, is that we gain additional advantage for the people coming out of the transition houses to be able to find quicker second-stage housing for them. We don't just have to manage second-stage housing that we have identified. In some communities we can actually tie it into portfolios and non-profit scenarios, so the integration piece is pretty good.

It's been a pretty seamless transfer. I haven't had any transition house societies that I know — and I meet with some in my area of the province on a pretty regular basis — that have said that this has been a problem. The pro-
[ Page 4365 ]
gramming side really does belong more with, I think, PSSG and victim service–type relationships.

But the management of housing stock over the decades has oftentimes…. When it sat in a ministry that didn't actually have the capacity to know and understand how to maintain a building and what have you, it actually wasn't advantageous for the stock. So I think that it's a pretty good relationship because B.C. Housing is a pretty good integrator, and so they integrate with the other services pretty well.

K. Corrigan: Just one more comment. I won't have any more questions, because I know that we're pressed for time, but just following up on what the minister said.

One of the concerns that many people do have, though, unfortunately, is that…. While the minister is talking about a seamless operation and progressing from one type of housing to the other, what we have found — tragically, in some cases — is that the social housing that is needed there for people who have been in transition houses is not available.

We certainly had one case in Burnaby, I understand, where somebody had been in a transition house, was waiting to get into social housing and lost their life when that happened.

So while I appreciate what the minister says, I think that in the long run what we do need is more social housing so that there is some place for women to go — women and children, sometimes — when they have finished with the transition housing and need more long-term housing — that they are not being forced to go back to abusive spouses.

V. Huntington: Unfortunately, I wasn't able to be here all day yesterday, so I hope I'm not repeating the issue that I'd like to ask the minister. I would just like to tell the minister a bit of a story.

I know a man, Minister, who tomorrow morning will roll off his mat and, if possible, wash his face and then has to leave his place for the day. He will walk to the areas of town he knows best, and he will try to find something to eat. He will search the bins, if they aren't already owned by somebody else, and he will search the garbage pails, and he'll go into the alleys behind the restaurants.

He may approach you with his hand out, and he may thank you for the loonie and the quarter that he's offered. He's afraid to lie down and rest because old people and sick people are being attacked by young hoods looking for money and drugs. So he'll wander throughout the day in his underworld.

He'll urinate in an entryway, and he will defecate behind a bush. As the day ends, he'll make his way back to that mat. He does this day after day. He looks forward to going back to that mat because it's the limited security that he has when he sleeps.

Only this day he comes back to that mat and the door is shut, and he has no mat to roll off and no sense of peace, and he goes back to a slot in the ground underneath a tree or underneath an overpass or underneath a pile of waste. And it's your door that's shut, Minister.

[1025]

Now, I've been in estimates this fall and in the last few days, and I know that this minister cares about his ministry and cares about the effects his ministry has on the people of this province. I'm not going to ask the minister why he shut the door, but I would like to ask the minister why he and his staff cannot find a way within this budget to keep this door open for my friend.

Hon. R. Coleman: Maybe the member could tell me where this is, what community, what the name of the facility is and that sort….

V. Huntington: I don't know the name of the facility. It is in Vancouver, and I think it's one of those facilities that are about to close.

Hon. R. Coleman: Well, we did canvass this issue yesterday, but if you have a person's name, we can connect them to an outreach worker, and we can deal with it.

In addition to that, as I told the critic yesterday, we're going to make an announcement probably within the next day or so on what we're going to do with what you would refer to as the HEAT shelters in Vancouver.

There are three or four of them that are definitely going to close. They were put in neighbourhoods by arrangement and agreement by neighbourhoods that they would only be open to April 30. That was a commitment that was made by both the city and us to those neighbourhoods because of some of the difficulties they bring as the weather changes and the fact that we've already identified additional shelter space and housing for the people that are there.

They're still open until the end of the month, but we've actually been working with the people that are in them to make sure that they're open. We're the only jurisdiction in Canada that actually operates our shelters 24-7. Our permanent shelters — and we have three times as many of those just in Vancouver today as we had six years ago — are up 24-7, and they offer meals and that sort of thing.

We connect people with outreach workers, and so it's a challenge…. If we could find out who and where, you can rest assured that we'll get an outreach worker in contact with the individual. It's a little tough to deal with otherwise.

We know that we have made significant strides, but there's still work to be done. But we don't have any shelters today that are closing tonight that weren't open yesterday, and so I don't…. The shelter may have been for one of the cold weather shelters that was open, but
[ Page 4366 ]
that would have been closed in January because they're only activated during severe weather. Then we have that protocol across the entire province for that type of climate activity and stuff like that.

There are four levels of shelters. There are the permanent 24-7 shelters. There are the temporary shelters that we've put in place through different periods of the year. There are the cold weather shelters, which are open during the wintertime in communities across B.C.

Then there's the severe cold weather strategy, which is activated by community organizations that have the ability to decide at any time, because of the local weather conditions, to open additional shelter space, which we pay for. But they actually get to make that call, because they're in those communities.

Other than that, I can only say that I think we've actually found a pretty solid solution to some of the issues that are in the media today. But we're making our decisions based on what we can accomplish, because we don't have a partner in the city that wishes to put any money into operation. When we made the offer to them to share that, they didn't want to share on their shelters, and so that leaves us with the economic challenge of doing everything.

We have great partnerships elsewhere where we do have communities that step up. We're working through those issues. I think you'll find by the next day or so that that issue will be dealt with, but I can tell you that we made the commitment, and so did the mayor of Vancouver. That city made the commitment to those four HEAT shelters — that they'd only be open to the end of April. And that's because of the neighbourhoods they were in.

As I said to the critic yesterday, one of the things we can't do is break that relationship with communities when we say that something will stay open to a certain period of time and close, because there may be a day where we actually want to put a permanent building for people with mental health and addictions who need supports like that in the community that they want to build in.

We want them to believe us that we would actually give the services and the supports to the community when we do it, so we can't break our word on the temporary stuff, because it could affect what we do permanently.

I'm also not concerned about it from the standpoint of the fact that we had the same situation last year. We did find housing for all the people in those shelters. We did connect them into shelters that had space in them. That work is ongoing and has been going on for a couple of weeks, and we're in pretty good shape.

[1030]

V. Huntington: I thank the minister. It is some comfort that those four shelters that are closing, then…. You feel that the individuals in them will be accommodated. I understand the difficulties they pose for some neighbourhoods. I know my family's company has had one beside it, and it can be difficult, even in an industrial area. But you feel that staff and the outreach services are able to accommodate those individuals, especially if we ensure that the names are provided?

Hon. R. Coleman: Yeah, we do. Since 2006, when we formalized the outreach program in B.C., we've housed 8,700 people that were previously homeless in B.C. into housing with mental health and supports for their addictions and whatever. We've managed to do that because we work very well with our partners, including the cities and our non-profit sector.

The biggest challenge with any individual is their acceptance of accommodation. We do have people that, even when we do have accommodation for them, choose to not take it, and that's something we can't do — force them to take it. If we get the information on the individual and find out where they might be, we'll send an outreach worker to find them and sit down with them and see if we can find a solution for their particular issues.

S. Simpson: I understand and appreciate that there were rent increases in B.C. Housing developments for people on shelter allowance. I believe they took effect in January of this year. My understanding of the calculation that's used is to take the shelter portion, reduce the shelter portion amount by a calculation to deal with utility costs, and then that becomes the rental charge. Can the minister confirm that, and then could he tell us what's included in that piece that's hived off for utilities — phones, those things — which is set aside?

Hon. R. Coleman: I will try and walk the member through this. The tenant actually doesn't receive more or less out of their social assistance. The tenant gets up to $375, I think it is, a month for housing. Basically, the rent increases are to a flat scale for income assistance recipients living in social housing.

Basically, it will have no financial impact on the tenants because the shelter portion of their income assistance gets adjusted to reflect the increase. But what it allows us to do is that it allows us to harmonize our expenses relative to the money that we're spending on social assistance in our social housing projects, which then allows us to have rental revenues that we can use to provide supports to people that are vulnerable tenants to help to ensure they have successful tenancies, as well as support and maintenance and improvement programs for the province's social housing stock.

[1035]

For instance, basically, if you were getting…. A single person's rent is $296. It is increasing to $320, which is an increase, but it's also still within the allowance of
[ Page 4367 ]
the $375 a month and so on. I'll wait for any additional questions the member might have with regards to it.

It was really us harmonizing our business within the revenues from one portion of the ministry to another. Because if they pay less rent, we pay them less. Quite frankly, they only get whatever they're paying in rent or up to the maximum of their rental supplement, so their lives on their rental income don't change.

S. Simpson: I appreciate that in terms of the rent portion that's paid. The piece here where it's a little bit less clear is that, as I understand it…. For example, a family of three that would have been, in 2008, paying $390 will now be paying $595 — about a 3½ percent increase overall, percent change.

Now, my understanding here as to what happens, though, is that B.C. Housing takes a portion and says that this will cover costs of heat, electricity, telephone, a variety of things that are in a package that B.C. Housing says are legitimate costs around the shelter portion. They exclude that amount of money that normally would be in shelter costs, leave that with the tenant to pay those bills and charge them the rest.

The questions I have are about that portion. What's included in that, and how is the determination of the value of those done?

Hon. R. Coleman: The member is correct. What we do is that we have heat allowances and those sorts of things, and what's covered are hydro, heat and telephone. It's the basic telephone. The heat allowance is based, for instance as an example, on location, unit size and heat source. Tenants who are responsible for paying their own heat costs also receive a heat allowance, which is deducted from the flat rent amount in order to offset some of the heating costs.

S. Simpson: The last question in relation to this is: how do those reviews get done to make sure that information on the costs of those things stays pretty current so that folks can reasonably expect that the amount of money that's allocated there is enough to pay those bills in an average or reasonable situation?

Hon. R. Coleman: We track this. We have annual reviews of all our stock. People actually do annual personal reviews in order to maintain the fact that they're in social housing and what their rents would be. In addition to that, we track it all through our social housing stock. We have heat allowance tables, and we update them on an annual basis, and if we have an anomaly, which can happen from time to time, we deal with them on a case-by-case basis.

S. Simpson: In the case of the anomalies, if somebody has that situation, I'm assuming they can contact B.C. Housing — the building manager, whatever — make the case for why they think the allocation is out of whack for their circumstances, and then B.C. Housing has the capacity under the regulations to be able to adjust that rental portion if they concur that there's an anomaly?

Hon. R. Coleman: Yeah, that's true. Obviously, if it was a huge anomaly, there would be questions about: what other things are you running that are electrical that would cause you to be different than the other 50 tenants in the same project that you're in? Or whatever the case may be. We'd probably ask questions, but there is, on a case-by-case basis, the ability to adjust for anyone. We do have within our system the ability to do that for someone.

S. Simpson: None of us here are talking about other anomalies that are maybe over and above just bad insulation in the building that causes the heat to go up.

Moving to a slightly different question, I'm looking here at a piece that came out from ROMA-BC, the rental owners and managers folks.

[1040]

I'll just read a little piece here. This is something, a piece that they sent out to their members, I guess. It involves what they call rent controls.

"Rent controls aren't going away. Given that, we've made a submission to the minister advocating an increase in the base of the rent control formula and the ability to pass through operating costs, the same as the manufactured home park industry in B.C. The minister has indicated he is prepared to recommend fundamental changes to the rent control formula. However, these changes must be approved by the government caucus. He can't achieve this by himself."

Then it encourages their members to go and lobby the minister's colleagues in the government caucus.

Could the minister tell us whether he is considering, as it suggests here…? I certainly wouldn't suggest that this necessarily reflects what the minister will say, because he didn't write it. Is the minister going to be recommending fundamental changes around the current rent policy?

Hon. R. Coleman: Of course I didn't write that article, so I won't allude to whether it's totally correct. But I did mention to the member for Vancouver–West End yesterday that one of the issues that's in front of us is the fact that apartment owners would like us to look at whether we could possibly see how we could work a flow-through that would be better for them relative to the similar issues in and around manufactured home parks.

I did also say to him at the same time yesterday that really what it is, is that each year these organizations, both the tenant groups and the landlord groups, bring their issues to us, and we agree to work on them and look at them and see what the possibility is. There are
[ Page 4368 ]
all kinds of discussions in and around whether there should be rent controls, what percentage they should be, whether there should be none and to let the market actually dictate rents — you know, all of those things. Those have always been swirling around in this particular file since I got it in 2001.

We've always managed to work through these people's issues, on both sides of the fence, over time. There's no particular initiative today, other than that we're looking at all the things that we've been asked to look at by these various organizations with regards to some of their costs and their ability to do their business — and, also, like when I had the discussion yesterday about how we can streamline processes for dispute resolution and those sorts of things. That work goes on all the time.

Certainly this particular organization has been very clear that it would like to have some stuff. I think there's some merit in having a look at it, so we're having a look at it.

S. Simpson: We've been back and forth through this in the big House and in question period. One of the areas the minister will know. The apartment owners association has calculated that the HST will cost them, depending on size of building, in the 3 percent range. That's the number they're putting on the table in what they believe will be their increased costs for building maintenance, upkeep, etc.

I know that they have certainly indicated their desire to be able to pass that along, in addition to the cost-of-living increases that they would usually move forward to attempt to pass along. The messages from the Finance Minister, who has responded to most of these questions when they've been raised in question period and elsewhere, have been not entirely clear about where the government's position is on that.

Could the minister responsible for this here tell us whether he is considering allowing the HST costs, whatever they are, to be passed along to renters?

[1045]

Hon. R. Coleman: I understand that we have a bit of work going on, on this. I haven't seen any quantifiable numbers from this organization with regards to it, so it would be inappropriate for me to comment on it. I do know that in the early stages I did some calculations, and like I think the minister said, it was a pretty minimal impact.

At this stage I would just agree with that. I haven't seen anything that would have me disagree with that at this stage. As we work through the other stuff we've been asked to look at, we'll look at that at the same time.

I have not received any submission at this stage that I would say gives me any definitive number one way or the other. And I haven't seen Finance's numbers with regards to it, so it would be inappropriate for me to form an opinion on that, because it really isn't in the bailiwick of the residential tenancy branch. Really, what their job is, is basic landlord-and-tenant relations. We do get submissions from these groups from time to time. I suspect they're probably sending me one, and we'll look at it at the time.

S. Simpson: I appreciate that what the number might be — whether it's 1 percent, 2, 3, 4 or 5 or whatever it is — is not at all clear, and there hasn't been definitive information provided to the minister that tells him what that number is. So I don't want to suggest for a minute what it might be.

But the question of the principle that says that if there are increased costs incurred here because of this tax — the additional tax costs related to the HST on a certain number of products or services that a landlord or a building owner might purchase — they have the ability to pass those costs through as part of their rental charges. Is that a principle that the minister is supportive of?

Hon. R. Coleman: Not necessarily. The reason I say that is because it depends how they structure their business. If they have a large apartment block with a maintenance person who's on salary, they could be doing the painting, the landscaping and all of that stuff and there would be no HST paid to some contractor. Each business model is going to be different.

My understanding is that they have sent something. They think it's between 1 percent and 3 percent, but they haven't quantified it any further than that. I understand they're going to be sending us more information on that, which is fine.

You know, it really depends. I know people who do all their own maintenance in their apartment buildings with their own staff, and it has absolutely no impact on them whatsoever, because they're still paying PST on all their materials — for the price of the paint and any gasoline they're putting into their lawn mowers and changing and those sorts of things. I don't think it's one that we could quantify here today.

I do know that each operation is different, and each operation has a different form of staffing and how they do their contractors. It may mean that as time progresses, as they get used to it, they will look at their business models. I guess that'll be how they have to deal with it, because that's what they'll have to deal with.

I'm incorrect. It was Finance that has the 1.5 percent to 3 percent impact. I haven't got anything from BCAOMA, other than that they think it might be higher. We haven't received any quantifying numbers.

S. Simpson: I would just say to the minister now that I think, in lieu of time constraints, we're done with housing matters, and we'll be on to income assistance matters.

[1050]
[ Page 4369 ]

M. Sather: I just wanted to ask the minister a question about income assistance in Maple Ridge, our office. What I'm hearing from constituents is that the office has gotten a lot busier in the past year, so I wanted to ask the minister: what was the total caseload in the office in Maple Ridge a year ago, and what is it today?

Hon. R. Coleman: We don't have those numbers here today. We do know that our caseload across the province is up, because that's pretty much been stated. That's why we have a $120 million pressure on the budget, because we're at high numbers.

But on an office-by-office basis, we don't have that data here because…. It's also because we have cost data. Because we do a lot of telephone stuff and on-line stuff now, people would not necessarily go to the Maple Ridge office, but they could be from Maple Ridge and are doing their consults on line or on the telephone.

We will get that information for the member and tell him what they are, but we just don't have it here. We've pulled it out for other communities when they've asked for it in the last year. We just have to pull it out. We may get it before the end of the day. It's not that we're not going to get it for you; it's just that we don't have it here.

M. Sather: Could he provide that information to me in a written form?

S. Simpson: A more general follow-up question to those of my colleague. As the minister has said, there have been significant caseload increases across the province, primarily from employables who now find themselves on income assistance. Could the minister tell us what additional resources have been applied, not just to pay income assistance to those folks but additional resources in the offices overall to be able to meet the increased caseload demands?

Hon. R. Coleman: First of all, we haven't cut any front-line services to any of our offices in B.C., in spite of the fact that we have a $1.7 billion deficit. We've found any efficiencies we had to find for finance in other areas of the ministry. At the same time, we've changed our operation over the last couple of years to be much more efficient on a number of areas.

First of all, we have more phone service so that people can just phone in and do their service. They don't have to go to an office.

[1055]

We now do group intakes, where you don't have to be in a line. You can actually come in with a group and do your forms and do your intakes. We have much more on-line self-service which has helped it, and our folks seem to be handling it. Of course, I think they're probably working harder, but they're doing a pretty good job out there.

Just to give the member sort of a tenor of the numbers, on social assistance, in December 2008 in B.C. we had 149,864 people. In December 2009 we had 174,830. That grew by about 3,000 from November 2009, when we had 171,453. The expected-to-work category has actually been about, since November, 40 percent of that growth, because it's gone from 52,000 to 54,000 over that period of time. It has grown since 2008, of course.

Basically, the rest of it, the other growth…. We've seen fairly consistent growth in disability assistance. It went up from 81,000 in December 2008 to 85,800 in 2009 in November and then to 86,207. It actually dropped between November and December in 2009.

Our expectation, given the trends and information that we know, is that we will probably flatten out on our numbers sometime this year, probably by June. Then we will start to see, as the economy changes, a steady decline, because we do lag behind the economy on our numbers, usually because we trend slower because, particularly, small business leaves their new hires or their additional hires to the last and tries to hold on without having to add more people at the slowest pace.

That trend has always sort of been the same way over the years during different cycles. So we have pretty good data to watch the cycle.

S. Simpson: The minister is saying, and I believe — the minister could confirm this — that the folks who are doing the intake, largely, and dealing…. We largely have the intake workers — financial aid workers, largely — who are doing that work on behalf of the ministry for people who are coming in the door.

Is the minister confirming that over the last couple years there have been no reductions in the number of financial aid workers or intake workers in the offices in British Columbia?

Hon. R. Coleman: That is correct.

S. Simpson: We know that there are mixed reviews about the systems, the intake systems. The ministry moved a number of years ago from caseloads to this system of kind of one-stop shopping and first-come, first-served, as you call and you get whatever worker is the next one in the rotation or however that works. But it's a case of workers not having caseloads, dedicated caseloads, per se.

Has the ministry done any assessment of how that system is working, not just in terms of the efficiency for the ministry, but any assessment of how that system is working in terms of how it works for the recipients?

[1100]

Hon. R. Coleman: We get feedback from our clients, but our service standards are monitored. We're meeting
[ Page 4370 ]
our service standards that we've set and will be monitored. We do still have personalized services with one worker for clients who can't manage in any of the models that we have, particularly those who can't do well standing in a line and need to have personalized service. We still provide that.

S. Simpson: I understand that there are standards. When you change the system, you probably look at the standards. The question I'm asking is a slightly different one. It's: has there been any analysis done that quantifies or gives some determination of what the benefits and challenges are for that system change that moves from a system of caseloads to this sort of first-come, first-served system for the vast majority of people? I know that there are always unique circumstances where you have individuals who require unique services, and I appreciate that — but generally this shift in how the department operates here.

I'm just trying to determine whether anybody has taken a look and prepared any reports or analysis that says: "Here's what we gain, and here's what we lose by doing this in terms of efficiencies for us as a ministry — and what we gain and what we lose in terms of how services are delivered to the people who come through the door."

[H. Bloy in the chair.]

Hon. R. Coleman: I don't know what the member is looking for. I mean, I guess he could go study stuff to death and go do a whole bunch of reports. We establish standards for service — how long a client is on the phone and how their services are delivered or how they're dealt with in the office.

We set those standards of service, and we have people on the front line who are meeting that standard of service. Then we have supervisory people who monitor whether they're accomplishing the services there are, all within the envelope of….

For instance, our expected-to-work caseload is usually with us, on average, no more than five months. They cycle through pretty quick on average. We have an active engagement system with legal advocates to ensure that we hear our clients' concerns, so that can be basically put back into our standards of service. Then we continue to monitor the service standards so that we're delivering the most efficient and the best service we can.

S. Simpson: This minister, hon. Chair, I would expect, more so than many…. The minister always talks about the need to look at the individual and how individuals are affected by what the government does and how the government delivers its service and how those individuals are treated and what the results are for them. This can't be just….

If the minister embraces that view for things like housing for the homeless, and then if he is to embrace that view when it comes to how we meet the needs of vulnerable people who are on income assistance, it would seem that an important piece of this is: how are the services meeting the needs of those people in ways that may be deeper than just a statistical analysis?

I'm not sure whether the minister is saying that there is no such analysis done for how people get their services met. If there is, I'm wondering whether that's documented.

[1105]

Hon. R. Coleman: I hope the member is not implying that my folks don't give services to people on the basis of their needs. I have thousands of people, professional staff in offices around the province, working in social service offices, and service standards do include people's individual needs. They meet service standards.

Now, if you want to have a caseload analysis of each individual's outcome with something, I guess that maybe I don't have that today. But I do know that these guys do one phenomenal job. I don't know how many social service offices the member opposite has gone through or talked to people or dealt with people with regards to how they deal with the clients, but the service standards are basically built around the services to our clients. They're not service standards that are anything else but.

Our folks meet those service standards on a regular basis. We actually analyze data to make sure that we're achieving that. We actually talk to the legal advocates and other people who are working with people who are most vulnerable to make sure that we are meeting our clients' concerns. Quite frankly, I have to admit that, having been the minister for two years, I'm very impressed with the people that work in this ministry in social services and the commitment that they have to our clients.

S. Simpson: I know that the minister likes to make those kinds of statements, and this has nothing to do with the people who work in the ministry. They work very hard. The line workers work very hard. They do the best with what they've got, and they do the best with the system that the minister gives them.

The question here is not whether they work hard, not whether they care, not whether they're doing the best job they can do in the interests of the folks who come to see them and to seek their help. The question is whether the structures and the systems afford them the best opportunity to do the best job they can. That's what the discussion is around, and just what level of analysis….

The problem with this ministry, like this government, is that it makes change after change with no thought. It's not very thoughtful on these things, and we'll talk about that in a minute when we get to the $25
[ Page 4371 ]
million of cuts that the minister announced earlier in this session. That's the problem that we have here. I'm assuming from what the minister said that that analysis has not been done, and if I'm wrong, I'm sure he'll correct me.

I want to move on. I'm sure that the minister will respond to that latest comment of mine, so I won't worry about giving him the opportunity. He'll take it.

Could the minister tell us: in the cuts, the recent income assistance changes that were announced — cuts to dental services, medical equipment and supplies, nutritional supplements, diet supplements, funeral supplements and minimum shelter allowances…? Could the minister tell us what consultations were done and with whom before the decisions were made to put those cuts in place?

[1110]

Hon. R. Coleman: I'm not going to rise to the bait to the closing comments of a few minutes ago. I'm satisfied that we have worked to have…. We couldn't have handled, first of all, the increases we have if we hadn't worked for continuous productivity in the services for our folks.

Our folks do a great job out there. That's why we changed, so they could have computer access, phone services, group intakes, individual intakes for people with difficulty. That's why we measure our services.

I think that the member and I will just decide to disagree on this one.

Basically, we didn't do a lot of consultation on the changes we made. We compared interjurisdictionally to other provinces, to what was being offered with regards to the services in British Columbia. We talked to the Ministry of Health and spent some time with regards to medical supplements, and we worked with the dental association on the dental side.

Mr. Chair, I'd like a five-minute recess, please.

The Chair: Committee A will recess for five minutes.

The committee recessed from 11:11 a.m. to 11:19 a.m.

[H. Bloy in the chair.]

S. Simpson: The minister, in his response to the question related to cuts, said that there was some but not a great amount of consultation. The minister did talk about consulting, I believe, with the dental association. Could the minister tell us whether the dental association supported in that consultation the changes to dental services and, in particular, the changes that related to the number of visits that would be allowed for dental services, a change that cut to once per year from every six months for young people?

Hon. R. Coleman: I've spoken to them. They weren't overly enthralled with it, but they weren't actually totally negative on it either. They felt that the one a year was a standard that was in a lot of families, and they felt that with the changes in different toothpastes and stuff and water systems over the years, that it was something that could be managed.

Their bigger concern was that we do what we did with the $700 a year and allow it to be $1,400 over two years, because they felt that was the big change that was very important for the health of the children and for the families with regards to dental arrangements.

[1120]

S. Simpson: I guess that we'll all get mixed messages from what different people tell us.

What other consultation did the minister do — consultation particularly with people in the medical community since a significant amount of these cuts, the discussion around them…? The public discussion has been whether cuts around some of the equipment and supplies and the nutritional supplements and that are cuts that are eroding what might be preventative services or preventative programs, and there is concern about what the impacts are down the road.

Could the minister tell us what consultation he did with the medical community before advancing these cuts?

Hon. R. Coleman: This was a review of our services, done internally by us as a ministry, looking at all the literature available with regards to what services were available elsewhere, across governments and in the public — a comparison to what services were provided in other jurisdictions in Canada and a look at what the Medical Services Plan and PharmaCare provided and what we thought, at the end of the day, was necessary for our clients with regards to services we could give, given the fact they do get MSP and PharmaCare. We felt that these changes could be managed.

We did them in the light, quite frankly — as the member well knows — of a $1.7 billion deficit and in the vein of the fact that we had a significant financial pressure on the ministry with regards to a growing income assistance caseload at the time and felt that we should…. In many cases, we found duplication where we felt that services were already available by a prescription from a doctor or whatever the case is.

So it was probably a healthy exercise for the ministry to go through and look at what was service to be delivered by income assistance. In many instances, changes are bringing policies into regulation that already existed that hadn't been brought into place and that sort of thing. So it was a review of the operational side. We made the changes based on a whole number of factors, and those factors were mainly internal with regards to the review of the ministry.
[ Page 4372 ]

S. Simpson: These cuts do have a medical impact. It's unfortunate that the decision was made not to have a significant consultation with the medical community. I know that in a piece that was prepared in the Times Colonist in mid-March, comments were made by Dr. Danica Gleave, a physician at a health centre here in Victoria, who said when asked about who was consulted: "Certainly not a doctor I could ever imagine." Dr. Gleave goes on to predict dire repercussions from the health cuts to people on income assistance. "It just baffles me," she said. "These are people who have no backup, no other resources."

In a somewhat similar vein, Dr. Perry Kendall, the chief medical officer here in the province, also commented on this and inquired about whether there had been a cost-benefit analysis done of these cuts. His quote was: "The impact should be monitored, as this may turn out to be counterproductive to health and budgets in the longer run."

[1125]

Considering that, what analysis was done? Other than the financial savings, what assessments were done within the ministry, if not with external forces, and were there assessments done? Was there an analysis or a report written to suggest what the impacts might be on this? What longer-term analysis is going to be done as to whether the costs of this will be greater long term, as people like Dr. Kendall have raised concerns about?

Hon. R. Coleman: It always amazes me how everybody else wants to spend everybody else's money with some comment they make about something they may read in a newspaper and not actually have done the work themselves. Let's try and deal with this from the standpoint of where a person on assistance is today versus where they were ten years ago.

Let's remember, first of all, that they get MSP. MSP allows them to get a prescription for almost everything that we decide to deal with in any of these changes. If they get something from a doctor, they've got PharmaCare, so they can go get this stuff. We were actually doing things that were a duplication to the health system that made absolutely no sense whatsoever.

The budget for disability assistance has increased from $307 million in the last ten years to $771 million, which is an increase of 150 percent in funding for persons with disabilities. The rate for a person with PWD single has increased from $771 a month to $906 a month, and the earnings exemption has increased to $500 a month.

Just for the record, the earning exemption was not allowed during the previous ten years, and there had not been an increase in any form of social assistance in 15 years. So not only have we increased the amount of money we give to our clients; we've also given them an opportunity to earn more so they can actually help themselves in their own lives.

In eliminating what we did in changes for a number of things, including the money that we make — investment in disabilities, for example — we eliminated duplication in the health care system when we have other sources of supply. There was no point in us supplying something that was already supplied.

There's new efficiency, including purchases of least-cost items and reuse of basic equipment when a client no longer needs it. We had people that were actually not wanting to take a particular model of a scooter because they wanted more options like on a car, and we said, "No, we will provide the basic item of the scooter rather than the difference," which saves money.

Just to correct one thing. There were small earning allowances allowed in the 1990s but not at the level they are today.

Consistent use of income testing to ensure services are provided to those who need them the most. We ensured programs are consistent with other jurisdictions and ensured regulations are consistent with policies and are ensuring clients with other resources are accessing those resources prior to ministry resources.

For instance, if they had a pension, a small pension and were still receiving assistance from us for something like, for instance, Veterans Affairs, we would say no. We would try to work with Veterans Affairs for the services first. These programs included dental, diet, medical equipment and supplies, monthly nutritional supplements, medical services and life-threatening health needs.

We've worked with this package to make sure it's balanced off for what we think the services are available. And yes, some of them were services that were over and above what would be normally provided. We did cut some of those in order to find some savings so we can sustain the system so we can make sure that we provide income assistance to people in British Columbia when they need it.

S. Simpson: I always feel good when the minister gives one of his longer answers, particularly when he focuses the answer around what happened ten years ago instead of what's happening to people today who are facing this situation, most of whom, I'm sure, aren't terribly concerned about ten years ago. They're concerned about their lives today. But it always tells me that clearly the work wasn't done. This was an accounting measure, and people were not a consideration.

As we've seen throughout this budget process, the only people who seem to fall through the cracks are vulnerable British Columbians. Everybody else seems to be getting taken care of in some way.

Because we're on a tight timeline, I'm going to defer to my colleague over here, who has a couple of questions.
[ Page 4373 ]

C. Trevena: Because of the tight timeline, I will keep it to one question. I think it's following on a bit from what my colleague was asking.

I have a constituent, Mark Kiefer, who is on disability. He comes to my office very regularly. He's written to the minister, and he has written to the minister's predecessor, Claude Richmond. He's written to the Premier. His line always, when he comes to my office and what he's stated in his letters to government ministers, is: "I can't live. I can't afford to live. When am I going to get some more money?"

[1130]

Mark is a person on disability. He's got physical disabilities. He's got mental challenges, but he's bright enough to know how poor he is and the fact that he just cannot afford to live.

As I mentioned to the minister, Mark has written many letters to him and to the minister's predecessor and to the Premier. Mark has never been graced with a response. I'd like to ask the minister on Mark's behalf, because I had promised to ask this on Mark's behalf: when will Mark get more money? If Mark won't get more money, will the minister please write to him — he has had the letters and will have the address on file — to explain to him why he won't get some more money?

Hon. R. Coleman: I have a very long summary of different rates we've raised since 2001, but I won't waste the time reading it all into the record. I can tell you that if this person is on disability, they have received a $70 increase or 15 percent in 2007. They also received a $50 across-the-board increase to shelter allowances in all client groups, the first increase since 1992. That also took place in 2007.

When we review rates, the ministry takes into consideration the cost-of-living studies, inflation, welfare rates in other provinces, the dietitians report on the cost of eating and recommendations by the B.C. Progress Board and others. We recognize that we are the payer of last resort and that we have changed a number of things for people with disabilities. They can actually go make more money than they were ever allowed to make, if they want to get some extra dollars.

Now that you have given the name on the record, I know that we track all correspondence coming into the ministry, and if it was written directly to me in the minister's office, then I would have a record of it. If not, then it may have been sent to the ministry itself, but we will track down the name and the letters and see if we've received them, and then we will actually send a response to your constituent.

S. Simpson: I want to move a little bit to a discussion around the community volunteer supplement. This is a program the ministry has that allows people on assistance to be able to earn, as a volunteer, honoraria up to $100 a month for volunteer time that they might put in at an agency.

Could the minister tell us what the amount of the budget for the supplement is, and how many people are enrolled or taking advantage of that supplement?

Hon. R. Coleman: The community volunteer supplement budget is $5.3 million, and there are 6,449 people, to date, on the program.

S. Simpson: Could the minister tell us what the waiting list is for people who are hoping to get on the program? I know there are a number of people that are looking to get on the program.

[1135]

Hon. R. Coleman: There are about 5,000 people who would like to come onto the program.

S. Simpson: Could the minister tell us whether there's been any assessment of that program and the value of it? I would think it would be valuable not only because it gives people who are on a modest income an extra $100, but also it's a very good encouragement to get people into volunteer activity and that, which might help lead them to getting off of assistance at some point, if that's a possibility.

Has the ministry looked at this as a tool of that kind and given any consideration to looking at ways to get some of those 5,000 people into the program so it may help them to achieve that?

Hon. R. Coleman: I'm a fan of this program, and that's why we didn't cut it. That's why we made other choices within the ministry, so we could maintain this program. Over time we'd love to be able to add to it as the economy allows us to or budgets allow us to.

It really isn't about the fact that people get back into the workforce on this. Most people that do get the volunteer supplement are actually at a level where their employability is very difficult. But it does get them community participation, and it does get them socialization. We think it's an important cog.

It has grown substantially over the last few years, and so have the people on the list grown substantially, I think probably it's because of the large uptake in the number of people with disabilities that we are seeing coming onto our system.

Obviously, in the future as we see changes, as we come forward…. We've actually almost doubled this budget in the last few years to the level that it's at today and would like to be able to increase it in the future when the economic circumstances and the budgetary operations allow.

You have to make choices on all your overall budgets. We just talked about some cuts the ministry made to
[ Page 4374 ]
allow it to keep programs like this intact. We do have fiscal challenges in every ministry, and we have to meet our responsibilities to government. Would I like to do more? Absolutely. In the future when I get the opportunity to go back to Finance with my budget, I will obviously highlight this as one of the programs I'd like to enhance.

S. Simpson: I would certainly encourage the minister, if he has the opportunity, to do that.

The minister may know this; I'm sure his staff do. I can recall, back in the late '70s, early '80s, I guess it would have been, the Vancouver opportunities program, which was a program set up by the predecessor, the minister of whatever it was at that time. I do remember that program and many, many people taking advantage, very similar: $100 for volunteer activity through the non-profit sector.

I know there was some analysis done in those days. I'm sure the ministry has that. It was a program that was very successful in a whole array of ways in getting people who are on assistance and marginalized in some ways engaged again.

I think my colleague has a question or two.

H. Bains: I have a constituent. We have written to the minister on his behalf. His name is Mr. Ramandeep Singh Lali. He came to our office and felt that he was a victim of a fraud marriage. He sponsored his wife from India. They lived there as husband and wife for four weeks, and then he sponsored her.

As she arrived at the airport, she decided to go her own way. She didn't even spend a minute with him. He was worried and contacted our office, and we contacted the previous minister's office, advising them of what had happened and of his application and complaint to Immigration Canada and the RCMP.

We were assured by the previous minister by letter…. As you know, they sign a three-year commitment. If they go for government assistance, the sponsor is responsible. He was worried that that could happen. He is already a victim, but now he could be victimized twice by being held for the income assistance that is being paid to them.

[1140]

As a result, we got the assurance from the minister's office in writing, saying that if Mrs. Lali applied for income assistance in the future, your constituent, Mr. Lali, will be notified by the ministry." Then he thought that would be good enough.

Well, when he applied for his second wife, he was denied the right to sponsor, because now he's told that he is in default as a result of this previous situation. When we contacted the ministry office, first they said: "Well, we don't know what happened. We feel bad about it."

What had happened now is that not only was his application rejected, which means delayed…. He had to reapply and pay the default money that he owed, which means additional fees. They're not cheap anymore. I think it costs $1,400 or $1,500 or maybe more, and now the delay of six or seven months further.

I think this is something that he felt that he was victimized by the ministry as well — not only by his wife and the system, but now by the minister. The minister said that he would let him know if she applied. Had they done what he was promised, he would have paid or he would have made the arrangement. He wouldn't have incurred the extra costs for the second application or the delays.

So my question to the minister is: how is this possible? You assure the constituents that "This is what we will do," and then you don't do it, and it cost the constituent a delay, and it cost money.

Hon. R. Coleman: I can't comment on what a previous minister said or did not say or do. I know that there are issues sometimes around the sponsorship program, and I'm happy, if the member gives me the details, to have a look at it. But I don't recall the specific file coming to me. It may have. But given the number of files that do come across my desk, I may not have had it, or I'm just not familiar with it off the top of my head. If you want to give me the documentation, I'll look into it over lunch.

I note the time, Mr. Chair, but I will answer the member for North Island's question.

They asked when the person might expect a response to their correspondence. The individual has written to the ministry 72 times in the last two years, so is a frequent writer to the ministry. I responded to Mr. Kiefer, to answer his questions, on November 28, 2008. He has received a response from me. We don't respond to all 72 letters, obviously, because they are basically asking the same questions that were answered to him already.

Noting the time, hon. Chair, I move that the committee rise, report progress and seek leave to sit again.

The Chair: Under agreement, we're going to allow one or two more questions, until ten to today.

H. Bains: For the minister's information, we did write to your ministry, as well, on January 14, advising you of what had occurred and the dilemma that the person was put into.

I think that in this particular case the damage is already done. His application was denied. The ministry actually advised Immigration Canada that he is paid up, and there shouldn't be any issue with it. But the question remains, when the minister advised in writing that "we will advise you…." That had been the practice previously when we were dealing with these issues before. The ministry always insists that we advise people who are in that situation before they approve income assistance.
[ Page 4375 ]

Then the response to that letter came: "Oh, well, because she complained, a threat of violence." I mean, there's no record of that. No one did any investigation, and he is left simply in this situation, delayed for his second wife to come, and extra costs.

I think that someone failed here, Minister, and perhaps that's what you need to look at. I'll provide you the information.

[1145]

Hon. R. Coleman: There's no need to provide the information. This letter was sent to you at your constituency office in the last few days. "I'm responding to your February 23, 2010, letter regarding the sponsorship agreement of your constituent, Mr. Singh Gill. This ministry has established procedures to take all reasonable steps to notify a sponsor that their sponsored relative is applying for income assistance."

Interjection.

Hon. R. Coleman: This is the wrong one. I got this one sent in to me, and I assumed, when they sent it to me, that it was with regards to that file.

We'll get the information. We'll dig it up. I guess they've dug up the wrong thing, so let's get the right thing dug up and deal with it — okay?

S. Simpson: Noting the hour, I just would tell the minister and his staff — and we will step down here in a second — that I have one more area related to income assistance for us to deal with post-lunch, and then we'll get to lottery business after that. But I've got one more area to deal with before we get there.

Hon. R. Coleman: I move the committee rise, report progress and seek leave to sit again.

Motion approved.

The committee rose at 11:47 a.m.

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