2011 Legislative Session: Fourth 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)

Tuesday, May 29, 2012

Morning Sitting

Volume 39, Number 5

ISSN 0709-1281 (Print)
ISSN 1499-2175 (Online)

TUESDAY, MAY 29, 2012

The House met at 10:03 a.m.

[Mr. Speaker in the chair.]

Prayers.

Orders of the Day

Hon. R. Coleman: In this chamber this morning we will be doing committee stage of Bill 43, intituled FNCIDA Implementation Act; followed by second reading of the Family Day Act, Bill 53; then second reading of Bill 49, the Protected Areas of British Columbia Amendment Act, 2012; and then second reading of Bill 47, intituled the Coastal Ferry Amendment Act, 2012.

In Section A, in the Douglas Fir Committee Room, we will be doing Bill 54, committee stage, intituled Provincial Sales Tax Act, and in Section C, the Birch Committee Room, we'll be doing the Ministry of Energy and Mines estimates.

[1005]

Committee of the Whole House

BILL 43 — FNCIDA
IMPLEMENTATION ACT

The House in Committee of the Whole (Section B) on Bill 43; D. Black in the chair.

The committee met at 10:06 a.m.

On section 1.

S. Fraser: For clarification on the record, the FNCIDA — this is just the definitions section — refers to "'reserve lands' has the same meaning as in FNCIDA." It's at the end of section 1. I know I got some clarification of this during a briefing, but I just want clarification on the record at committee stage.

The reserve lands, as in the definition in the bill here…. If a nation that embarked on FNCIDA has an agreement — like the Squamish or the Haisla, in this case…. If they were to achieve treaty, the treaty lands would no longer be treaty lands or reserve lands. How does that affect the status of FNCIDA? Certainly, the definition would change from reserve lands to treaty lands. Reserve lands would no longer be reserve lands. How would that play out? What would take precedence?

Hon. M. Polak: I'll quickly introduce the staff who are with me: to my immediate right Mark Lofthouse, chief negotiator with the Ministry of Aboriginal Relations and Reconciliation; and beside him Keith Brown, legal counsel with the Ministry of Justice and Attorney General.

With respect to the member's question, FNCIDA only applies to reserve land. In the case of a treaty settlement, the transition of the land to treaty settlement lands would be negotiated within the treaty and dealt with in the language in the treaty, as are any other lands that would be brought in as treaty settlement lands.

Section 1 approved.

On section 2.

S. Fraser: So the authority to enter into agreement. This section gives a member of the provincial executive council the authority to enter into an FNCIDA agreement. I'm assuming presumably that would be the minister. Or would there be other examples that the minister could cite?

Hon. M. Polak: Yes, this section gives cabinet the authority to designate a member of executive council to sign the tripartite agreements. With respect to Haisla, it will likely be the Minister of Energy and Mines. With respect to Squamish, it would likely be myself.

[1010]

S. Fraser: Thanks to the minister for that clarification. Just further clarification, if I may. In future if a First Nation in British Columbia also wished to go down the road of FNCIDA, the minister may vary depending on the nature of the project that would be under consideration?

Hon. M. Polak: That's correct.

S. Fraser: Thanks to the minister for that. Further, the role of the federal government in a tripartite agreement — a similar situation? Is there a minister responsible at the federal level to sign off on behalf of the federal government?

Hon. M. Polak: I'm advised that in the case of the federal government, it would be the Minister of Aboriginal Affairs and Northern Development Canada.

Sections 2 and 3 approved.

On section 4.

S. Fraser: This section outlines how the registrar must accept the subdivision plan from the federal minister. It states that all of the FNCIDA subdivision plans must comply with the Land Title Act, except…. Now, there are a number of exceptions. Can the minister clarify? Like, there are sections 73, 75…. Well, there are quite a few sections, actually. Can the minister just clarify why
[ Page 12396 ]
the exceptions, for the record, so that people understand the nature of these exceptions and why they have been placed in the bill?

Hon. M. Polak: These exceptions are here because on reserve land, of course, there is no municipal authority. For example, an individual approving officer for a municipality would have no jurisdiction on these lands.

S. Fraser: Thanks to the minister for that clarification. Maybe this is obvious, but I just want to make sure I'm clear on this. All of the exceptions cited are exceptions listed within the Land Title Act? Is that where the exceptions are? It's not quite clear in the way I'm reading it, so if I could get clarification on that.

Hon. M. Polak: That's correct.

[1015]

I'll just introduce, to my left, Simon Coley, legal counsel and Ministry of Energy and Mines lead negotiator for the Haisla project.

V. Huntington: With your leave, Madam Chair, could I go back and refer to a question on section 3, just for clarity's sake?

The Chair: Is it the will of the committee?

Some Hon. Members: Aye.

The Chair: Proceed, Member.

V. Huntington: Thank you very much.

The last paragraph says: "that provincial official or provincial body has authority to exercise the power and perform the duty under the federal regulation to the extent provided for in the agreement."

Does that language enable the First Nation to cherry-pick which provincial authorities will apply in the agreement?

Hon. M. Polak: No. The provincial regulations that are stipulated in the agreement will apply, and there is no amending that once the agreement is in place.

Section 4 approved.

On section 5.

S. Fraser: So the Squamish Nation lands are cited specifically and repeatedly in section 5. I realize that the Squamish have been involved in negotiating this with the province and the federal government, I think for four years. So I understand that, and that's dealing with the condominium project. The Haisla have maybe for less time, but they've been engaged — and this act applies to both nations, I believe — on the LNG project in their territory, on reserve.

The Squamish First Nation are cited specifically; the Haisla are not. I'm just curious as to how that plays out. If there's a requirement at a future date with the completion of FNCIDA for the Haisla, will there have to be other legislation brought in that specifically cites the Haisla case?

Hon. M. Polak: There are no land title issues with respect to the Haisla project because the land is leased.

S. Fraser: Thanks to the minister for that answer. So do FNCIDA projects apply to the entire reserve or only the specific site of those developments mentioned in the FNCIDA? I'd like this for clarification for anyone that is watching because there have been concerns raised, public concerns raised to me, so I'd like to get the answer on record, please.

Hon. M. Polak: This only applies to the project lands, and they are specifically laid out within the federal act.

S. Fraser: Now, there's nothing in the actual bill that we're dealing with today in the House. I mean, there's a broad description of the lands involved, the actual territory that would be affected by FNCIDA, where FNCIDA would apply, but there's no map. There's no clear, detailed description of the actual borders of the land in question.

So I'm just curious. Why is that, and is it available, or is it only available federally? Maybe we can get some clarification on that.

[1020]

Hon. M. Polak: First, a correction. I misspoke. I should have said the federal regulation, as opposed to the federal act. Nevertheless, that's where the project boundaries are defined. Those will become public once the agreement is signed by all three parties.

S. Fraser: If additional developments or additions to projects are constructed, can the original FNCIDA be applied to these? Or must a new FNCIDA agreement be applied for and go through the process, a fairly lengthy process, again?

Hon. M. Polak: FNCIDA would only apply within the boundaries of the project lands as defined in the federal regulation. If they wished to engage in development on lands beyond that, they would have to begin the process of approaching the federal and provincial governments to negotiate a new agreement.

S. Fraser: Thanks to the minister for that.

I guess further clarification, though. If the project were to be modified, maybe at a later date — I don't really have
[ Page 12397 ]
an example — added onto, changed in some way…. At that point in time, with FNCIDA in place, assuming there would be requirements for maybe a development permit — since more regulations would apply provincially, and potentially, municipal regulations would apply if there were a further development to the existing project, or alteration or expansion….

How does that play out with FNCIDA? Does it require another negotiation, or can that be just covered under the same FNCIDA?

Hon. M. Polak: Just to clarify, there would be no circumstance within the project lands where municipal bylaws would apply. With respect to developments within those project lands, it would have to be a material change to the project. So for the sake of argument, if Squamish decided to put up a sawmill instead of condo developments, that would be a significant and material change, and there would have to be a negotiated amendment to the FNCIDA.

S. Fraser: Thanks to the minister for that. Further, who would make such a determination of "significant"? I mean, the example given is pretty graphic — the difference between a sawmill and a condominium complex — but there could be more subtle changes, I guess, at some point. Who adjudicates that?

Hon. M. Polak: There is provision for a management committee that is made up of the federal government, the provincial government and the First Nation. That committee would make a determination as to whether or not an amendment needs to be pursued.

[1025]

S. Fraser: Thanks to the minister for those answers.

Is there a public process that goes along…? I understand that this particular FNCIDA with the Squamish First Nation has been in the works for some four years. If that's wrong, I'd be happy to be corrected on the record.

Is there a public process that flows through this? I mean public, as in: is there an engagement of local residents, First Nations and non–First Nations local residents, that may have an impact or feel that there may be a potential impact, good or bad, with the FNCIDA?

Hon. M. Polak: The province and the federal government retain the discretion. In the case of a significant material change to the projects or in the case of additional lands being considered, we retain the discretion to engage in public consultation.

With respect to the projects as they are outlined in the regulation and inside the project lands, they are federal lands held in reserve for the First Nation. As such, there is no requirement for consultation, nor is there any influence that can be put forward on the First Nation as to what they develop on that land. There's no authority.

S. Fraser: Thanks to the minister for that, although I'd just like to probe a little deeper into that.

I get it that there's no requirement. But for instance, if you have local homeowners that are aware peripherally, maybe, of the FNCIDA being negotiated and if there are concerns, justified or not, that there might be some effect on their properties, whether they're adjoining or whether they're on reserve lands, is there no method for these individuals to get clarification?

[1030]

I'm not saying a seat at the negotiating table; I'm not referring to that. I mean public information, a discourse that can maybe alleviate some fears — that sort of thing.

Hon. M. Polak: FNCIDA does not address that. It doesn't change the current circumstance with respect to the requirement for First Nations to consult or seek input regarding development on First Nations reserve land. I would say, though, that in my experience, most First Nations who have significant developments on their lands are interested in engaging with the public in such a way that there's better understanding of what is taking place on reserves. But again, FNCIDA doesn't address that question.

S. Fraser: Fair enough. This is a small bill, but it is complicated in the sense it addresses…. It is tripartite. There's the federal FNCIDA. Now there's Bill 43, so we've got the provincial role. Of course, the role of the Squamish is fundamental in both cases. But there are also changes to other acts — the Land Title Act provincially. So there can be questions raised about what this means to people in the region, First Nations and not.

I don't know if the minister has received any concerns from local homeowners fearful, rightly or wrongly, that there might be an impact on their holdings — their property, their homes. Is there a mechanism to provide information if requested, if for no other reason than to alleviate some of those fears?

I have received concerns, and I don't know how to answer those concerns. I'm trying to do that to some extent in this process, which is why we're recorded on Hansard. But does the minister not foresee a need to at least be able to provide information or a mechanism to provide information to local residents or others that have concerns about FNCIDA as it may affect them personally?

V. Huntington: I seek leave to make an introduction, Madam Chair.

Leave granted.
[ Page 12398 ]

Introductions by Members

V. Huntington: I'm extremely pleased to be able to introduce a class of grade 5 students from Southpointe Academy in Tsawwassen who are visiting the Legislature today. They've been into my office and seen the Hansard offices, too, with their parents and teacher Mrs. Nancy Boettcher. I would like the House to join me in welcoming them to the chamber.

Debate Continued

Hon. M. Polak: Again, FNCIDA doesn't directly address that. If there were interests on the part of residents as to what the developments might look like, I understand that Squamish have had those publicly on their website for quite some time. It is my understanding that Squamish are quite happy to share what is already public if people wish to make inquiries.

As the agreements are signed, become public and the projects proceed, that will all be, of course, public information. But fundamentally, FNCIDA doesn't address the current situation on reserves.

[1035]

S. Fraser: I'm not trying to belabour the point. I might be a bit confused here. FNCIDA, amongst other things, enacts changes to amendments to the Land Title Act and to the Land Title and Survey Authority Act. There are changes that come through this, so maybe it's those changes that are causing concern too.

I wasn't specifically aiming at the First Nations project, just the role of moving provincial regulations onto federal land — what effects that might have. There may have been fears, without understanding from some, that this was project specific. Nonetheless, these are changes being made, and they might be perceived as having an effect on adjoining property owners or leaseholders.

Is there no recourse for members of the public wanting to know how a change to the Land Title Act might affect their property if it's nearby or if they are leaseholders?

Hon. M. Polak: To be clear, the cancellation of title is simply enabling the cancellation of title that is currently held in favour of the federal government such that the lands, the leases can be registered. It doesn't affect any third parties. It only affects the governments involved. We have had discussions with local government with respect to how that will unfold.

Section 5 approved.

On section 6.

S. Fraser: Thanks to the minister for that clarification. I'm hoping that if there are people who have concerns raised here, they'll be following this procedure and learning, as I am, about what this means or does not mean.

Section 6 — I guess a clarification. It allows the registrar to cancel the indefeasible title on a parcel of Indian reserve land — in this case directly for the project with the Squamish or, I guess, the same with the LNG project for the Haisla.

The cancellation of registration of indefeasible title — just clarification. The minister must submit an application. The parcel must be free of registered charges — understood. Then finally it says that the band council must consent to the removal.

I know the minister is aware of cases, too, where there are hereditary chiefs, and there are other traditional types of government in the province of British Columbia and certainly in Canada. Is there any consideration for their role?

I raise this because we have seen examples where sometimes, with all the best intentions, changes made can pit elected chiefs and councils against hereditary chiefs on decisions around different land uses or resource uses or projects on reserve land or in traditional territories. Was there any consideration that there would be a role for hereditary chiefs in some cases? It may not apply here, but potentially with FNCIDA.

[1040]

Hon. M. Polak: Perhaps to aid in understanding, Squamish is in a very unique circumstance in that you will not find other reserves where title is registered in favour of the federal government in the provincial land title registry. That is the Park Royal circumstance, but that is unique in the reserve system.

In terms of who makes the decision, it is the government that is recognized under the federal Indian Act.

S. Fraser: Thanks to the minister for that answer.

I guess a broader question on section 6. Actually, it would also apply to section 7, so I might be able to jump through that too. The amendments in the FNCIDA — in this case section 6 and section 7 — amend two different acts. Section 6 does an amendment to the Land Title Act, and section 7, the Land Title and Survey Authority Act. With the implementation of Bill 43, does that then automatically amend those bills? Do they have to come back in any way to this House? Is there an order-in-council required, or is it just done after the adoption of Bill 43?

Hon. M. Polak: This will occur, much like a miscellaneous statutes amendment bill, as consequential amendments.

V. Huntington: With reference to subparagraphs 373.92(2)(a) and (b)…. Subparagraph (a): "the parcel is free of registered charges or the holder of any registered charge has consented to the cancellation." Does this take
[ Page 12399 ]
into account the traditional ownerships of land, or is it only taking into account lands where there is a certificate of possession?

For instance, I personally have been involved in a family situation where a certificate of possession ended up trumping a long-held traditional ownership of land. It was a very difficult situation for these people. I just wondered whether that's been given any particular thought.

Hon. M. Polak: In the case of the sections that the member references, this only applies to reserve lands that are currently registered in the name of the federal Crown.

V. Huntington: That's a very good…. Excuse me. Are not all reserve lands registered in the federal Crown?

[1045]

Hon. M. Polak: Typically, reserves are federal Crown land which is registered in a federal system. In some unique circumstances there are lands, such as Squamish, where registration has taken place in the name of the federal Crown in the provincial registry. But for the most part, federal reserve lands would not be on the provincial land title registry.

V. Huntington: I understand that. What I'm more concerned about here is that you're transferring the registration of a piece of land that basically is being transferred only with the consent of the band council, not with the consent of the band members, and that that piece of land could be held in a traditional ownership scenario. I'm just trying to find out whether there is any opportunity for the members of the band to have the option to vote — as they would under a treaty, for instance.

If the band council had treaty lands — and that's what the equivalent of these federal lands would be — held by the band, the members of the band would have to vote for them to lease out this land for any particular lengthy period of time. There doesn't seem to be that provision here.

Hon. M. Polak: Here we stray into some of the differences that occur when we are dealing with treaty land versus reserve lands. First, just to address the issue of who makes the decisions — the band and council. It would be, again, going back to what is the recognized government, and that is determined between the federal government and the First Nation. In the case of a treaty First Nation, there is no longer a band. It would be a treaty First Nation.

With respect to the decision-making on reserve lands, that is governed by the Indian Act. FNCIDA does nothing to change that. The decisions as to what's taking place on reserve land are governed strictly by the Indian Act, and the province has no authority.

With respect to treaty lands, there is one of the advantages to having First Nations in treaty, which is that they then operate like another government where there are rules around the capacity for their members to then vote on different initiatives that take place. That doesn't necessarily exist on reserve land. Although a band themselves may decide to take that step, they are not required to. Again, they are governed by the Indian Act.

V. Huntington: That's helpful. Just for clarity, will Canada then have worked through an agreement with the band on how this land is to be used and what it's going to be…? It's not being taken out of the federal system but registered within the provincial system. Has the federal government then participated in a lengthy series of discussions with the band in order to come to an agreement and an understanding of how that land is being transferred?

[1050]

Hon. M. Polak: With respect to usage, that would go back to some of what I discussed with the other member around decisions if the projects were to take on any significant change and how the management committee would deal with that.

With respect to the land and its registration, to be clear, the ownership of the land is not being transferred. The federal government will still own the land. What is changing is where the land is registered. It will no longer be registered under our existing land title framework. Instead, it will be registered under the special First Nations Commercial and Industrial Development Act framework.

The ownership of the land doesn't change, but the place where it is registered…. Of course, we're talking about registering the leases, not registering ownership on the land for those who would reside in the developments.

Sections 6 and 7 approved.

On section 8.

S. Fraser: In this section it's amended to allow the registrar to act "to manage, operate and maintain a land title system for a first nation under an FNCIDA agreement." This is a section that I'm going to ask a few questions on.

Owners of just over a hundred homes occupied by non-aboriginal residents on Indian Reserve No. 5 in West Van have raised concerns that their lands are not registered by either the federal or provincial governments. These non-aboriginal residents are unsure of how or if Bill 43 will affect their land title.

I guess the question I have is: how will Bill 43 affect residents who do not have ministerial lease, as in the case of some parts of Indian Reserve No. 5 in West Vancouver?

Hon. M. Polak: Those would remain exactly as they are. FNCIDA does not address that.
[ Page 12400 ]

S. Fraser: Thanks to the minister for that clarification. Just further, what authority will hold the land title of non-aboriginal property owners currently residing on lands destined to come under FNCIDA agreement? Or are there any lands that would fit into that?

Hon. M. Polak: There are none. This is bare land.

Sections 8 and 9 approved.

On section 10.

S. Fraser: As we're closing this out here…. Dealing with the commencement. My understanding is that this goes back to…. Does this go back to the federal government after being, presumably, ratified in this House as Bill 43? If we get through to voting on final reading of this, what plays out next? Is there an anticipated timeline for commencement?

[L. Reid in the chair.]

Hon. M. Polak: With some differences, understandably, between the two — Haisla and Squamish — we think you would see this being applied by the end of the year.

[1055]

Section 10 approved.

Title approved.

Hon. M. Polak: I move the committee rise and report the bill complete without amendment.

Motion approved.

The committee rose at 10:56 a.m.

The House resumed; Mr. Speaker in the chair.

Report and
Third Reading of Bills

BILL 43 — FNCIDA
IMPLEMENTATION ACT

Bill 43, FNCIDA Implementation Act, reported complete without amendment, read a third time and passed.

Hon. I. Chong: I now call second reading of Bill 53, intituled the Family Day Act. Should we conclude that, we will move on to second reading of Bill 49, the Protected Areas of British Columbia Amendment Act, 2012.

Second Reading of Bills

BILL 53 — FAMILY DAY ACT

Hon. M. MacDiarmid: I move that Bill 53 now be read a second time.

Bill 53 creates a public holiday in British Columbia called Family Day, a day set aside so that families can celebrate together and that will be recognized as a statutory holiday under the Employment Standards Act.

[L. Reid in the chair.]

Beginning in 2013, this holiday will take place annually on the second Monday in February. By implementing Family Day, we are acknowledging the importance of families in British Columbia, supporting B.C. families as an absolute priority for our government.

One of the key pillars of our families-first agenda is to keep B.C. families strong, and that is accomplished in part by spending quality time together. In 2012 families had a long stretch between New Year's Day and the Easter break without a long weekend. It was almost a hundred days. An extra day off every February will be a great chance for all of us to recharge and for families to really focus on each other and what matters to them.

Of course, we strongly encourage families to try to get out, be active and spend as much quality time with each other as they possibly can every day. But a special day set aside especially for families will be a great reminder for all of us about the importance of our families. It's just another example of how our government is helping grow stronger families and communities all across this province.

We recognized that getting the timing of the new holiday right is very important. We wanted to ensure that we made the best choice for British Columbians, so we undertook an engagement and consultation process and asked B.C. families what their preference was — what day would work best for them.

People's opinions count, and I'm pleased that so many British Columbians took the time to make their voices heard. Through our web-based consultation, we heard from over 31,000 British Columbians in a two-week period. Because we realized and recognized that a new holiday will have an impact on our economy, we consulted with representatives from tourism and the broader business sector. We also spoke with educators. We've given business time to plan and prepare by waiting to implement the holiday until 2013. In that way we're helping to keep the economy strong and protecting jobs in the province.

All of the input we gathered from the public and private sectors was compiled into a report that helped us to make the final decision. It was important to us to make sure we got the date right, and this process helped us
[ Page 12401 ]
to do that. It's another great example of how we're governing differently in the province.

So why did we choose the second Monday in February? Well, we heard that by having our own unique date for Family Day, on a different long weekend than other provinces and neighbouring states, there were excellent opportunities for British Columbians. For example, families looking to enjoy local attractions won't have to compete with visitors from other provinces and the U.S.

[1100]

It also means B.C. businesses have a unique opportunity to capitalize on increased traffic over two holiday weekends. But the most important point is this new statutory holiday gives families an extra day every year to spend with each other, and that's something that is invaluable.

With the passing of this bill, British Columbians will have ten statutory holidays, including Family Day, beginning in 2013. I look forward to hearing the contributions to the debate from other hon. members on both sides of the House.

R. Chouhan: I rise to support the bill, Bill 53. Although all of us are celebrating that families will have an extra day — more time to celebrate and spend quality time with each other — at the same time, when it was announced a few weeks ago, the government said that Family Day will occur on the third Monday of February. Obviously, there were some concerns. As a result of that, the government decided to put some brakes on it and decided to consult with the public, which is a good thing. Out of that process, the government decided that instead of doing it on the third Monday, they will be doing it on the second Monday.

Now, that consultation process is absolutely essential. But it makes me wonder why the government can't apply the same process for other bills as well. As of today we have 20 pieces of legislation in front of this House which are yet to be concluded.

I was wondering. If the government had listened to the public, who have been raising their concerns and asking for some time to consult with the government, the government probably would have made those legislations into a better and different piece of legislation than what we have in front of us now.

You know, the stakeholders, the public, have been saying that the government should not rush through all these bills we have. For example, we have Bill 37, which was not consulted with….

Deputy Speaker: Member, we're debating Bill 53.

R. Chouhan: I totally agree with you, Madam Speaker. I'm talking about the consultation that the government has done on Bill 53, which was very essential. I was just saying I hope the government would do the same kind of consultation about other pieces of legislation, which would help the public to provide their feedback and their input so we have better laws in British Columbia. That's all I was trying to say.

Family Day, which we are going to have in British Columbia…. B.C. is not the only province that will have it. Other province already have…. Alberta, Saskatchewan and Ontario all have some kind of statutory holiday. Manitoba and P.E.I. also have another statutory holiday, which allows families to spend time together, go out and spend their time in the community.

As a result of that, they may be able to spend some money and help the local businesses in their community. Concern was raised that it would not help small businesses. But I think, if you look at the history of the other provinces, it should not be that negative. I'm just hoping that the government will listen to the public about other pieces of legislation, as well, and take the same process, the same approach, so we can have a meaningful discussion and debate about all the laws.

In conclusion, I want to say that I'm very happy and pleased that finally we have a Family Day in British Columbia, and we support that.

R. Lee: I'm very pleased to rise in the House today to support Bill 53, Family Day Act. As MLA for Burnaby North and Parliamentary Secretary for the Asia-Pacific Initiative, I have the opportunity to meet many British Columbians in the community, students in schools as well as workers in factories and businesses.

[1105]

Many members of the families in British Columbia work very hard every day. Sometimes family members can see each other only for a short time every week, or not at all in some families, because of their working schedules.

Over the last few years I have received many requests to have a holiday in between New Year's Day and Easter, especially from the Asian communities. A lot of countries in the Asia-Pacific — Korea, mainland China, Taiwan, Hong Kong, Singapore, as well as Malaysia, Indonesia, the Philippines and some other ASEAN countries — celebrate the spring festival, called the lunar new year or Chinese New Year. It's usually in February, but they move from the end of, say, January to sometimes the end of February. That's not a good day for a fixed holiday.

So I think having a fixed day is important. Establishing one of these days, I understand, is our Premier's priority, so this is a commitment fulfilled. The announcement, also, was before the consultation. The consultation process is very interesting, as government advocated for engagement and open government. I think this process is good — to hear these comments.

My understanding is that we have over 30,000 votes on the Internet and over 3,000 comments received during this process. With this kind of consultation, I think
[ Page 12402 ]
it's a good process to engage the community to get their opinions — from businesses, labour, as well as the tourism sector. I think that's a good way to do that.

The spring festival is also a holiday in many countries for not only one day. They have in some countries almost two weeks, ten working days of celebration. I understand next year, by chance, the second Monday of February is the second day of the Chinese New Year. This is well within the spring festival celebrations.

The decision to have this holiday will help families to get together and also help business to have more business during those days.

The advantage of having a different day from other provinces is that the tourists from those provinces can come to our province to have their holiday, while we have the more regular business in our province conducted. When we have our own holiday, families can also go to other provinces and have the regular services. The airlines will be less busy as well — so less waiting time, shorter waiting time.

I think it is good to have ten statutory holidays, including the Family Day for B.C., allowing more families to have time to get together. I hope the other members of the House also support this act.

J. van Dongen: I'm pleased to present to this House on Bill 53, the Family Day Act. Before I do so, however, I want to underline the importance of my family in my life. I rise to speak on this bill as a person who comes from a large immigrant family. I have five brothers and one sister, all of whom have been contributors in their own way, and all of whom have had families of their own, both large families and small ones.

We had a wonderful celebration of my father's 90th birthday recently, and many of his 37 grandchildren and 16 great-grandchildren were there.

I'm very proud of my two sons, Stephen and Peter. Stephen is our international man. He lives and works in Redmond, Washington, and is now engaged to a wonderful young woman, who was born in China and lives and works in Japan. Peter, my second son, is married to Clarice and has two beautiful children, Janel and Troy. They live in Nanoose Bay on Vancouver Island.

[1110]

We make a point of seeing each other on all of the big days of the year — Christmas, Easter, anniversaries, birthdays — and we have a lot of fun when we get together.

Like many families, my own family situation has evolved to include a second significant person in my life, Sherri, and her son, Lukas. I enjoy their company immensely, and I appreciate their support.

I feel it is important to underline that our families are the foundations of our lives and our society. The importance of our families is not dependent on a designated day on the calendar. During the Liberal leadership race this initiative was brought forward. It was brought forward as a leadership promise with no discussion, no consultation and no reference to the current state of the economy and small businesses' ability to cope with the extra costs.

Adding a new statutory holiday is a feel-good idea that is strictly politically motivated. The notion of an extra day off work to spend with family certainly has appeal. But what about the 6.2 percent of British Columbians who don't actually have a job? This does nothing to help them. What about small business owners? An additional statutory holiday has an average labour cost of $1,135 for every small business with five employees or less.

What about taxpayers? The cost to the provincial government is estimated at $28 million per year. Hon. Speaker, $28 million is almost half of the budget of a small ministry. For example, $28 million could fund about 350 additional nurses, teachers, social workers or police officers. If you really think about it, there are many other important needs that the provincial government could fund with $28 million every year. For example, I know that the University of the Fraser Valley desperately needs eight million capital dollars to meet the current classroom needs for students at their Abbotsford campus.

In the current economic climate, with global uncertainty and high unemployment rates, this is not a time to create another financial burden for small business owners. Small business has been faced with three increases in the last 12 months — in the minimum wage; in the transition to PST, which will cost the average business over $3,000; and now an over $1,100 cost impact for Family Day.

Many businesses, including those in my constituency, have also faced significant loss of activity due to the stronger Canadian dollar, cross-border shopping and on-line shopping. In the midst of current global economic uncertainty, the government needs to do everything in its power to facilitate a business climate for creating new jobs and keeping existing jobs.

A new staff holiday will be another overhead cost for the business community, in particular small businesses that are already struggling. The new statutory holiday will also result in a significant cost increase to the taxpayer to operate the provincial government. As I've said, an estimated $28 million annually in increased costs, with not one new person hired. This should be a concern in today's slower economy. And our province is also still in a deficit position.

Families play an important role in our society. However, Family Day isn't about families. It's about politics. If government really cares about families, then government will do everything possible to ensure that they can provide for themselves, which means keeping the economy strong and unemployment levels low.

Unfortunately, in announcing another statutory holiday, the government creates the false expectation that you can get something for nothing. A responsible gov-
[ Page 12403 ]
ernment would focus on getting better value for all tax dollars, walk the talk of supporting small business and prioritize helping unemployed persons find meaningful work.

[1115]

I would like to take a few minutes to highlight some of the feedback and commentary I have received from a variety of sources.

The Canadian Federation of Independent Business, representing 10,000 small and medium-sized businesses in B.C., is certainly concerned over the substantial financial impacts they will face as a result of Family Day. Ninety-eight percent of B.C. businesses have fewer than 50 employees, and they account for 57 percent of private sector employment in B.C.

According to their calculations, the average cost of Family Day for a small business owner with fewer than five employees is conservatively estimated by CFIB at $1,135. In total they estimate that small and medium-sized businesses will spend $42 million on wages alone to pay for another holiday.

Economist Jock Finlayson, who works for the B.C. Business Council, stated that Family Day "in and of itself is not a game changer" but added that each time government makes a move that adds to business costs, it hurts the bottom line. This is as reported in the Province newspaper, October 3, 2011.

"'We're not opposed to it, but employers have to pay their workers for not working,' he said…. 'If you have to pay people for not showing up, your labour cost goes up.' Finlayson's message to government: think twice before adding to costs again. 'This will hurt. It costs all employers, big and small,' he said.

"Philip Hochstein, president of the Independent Contractors and Businesses Association of B.C., questioned the timing of adding to labour costs during a worldwide economic downturn. 'Everyone likes an extra day off, but what this means is the private sector and taxpayers are on the hook for the extra costs, paying people not to work,' said Hochstein.

"'In a fragile global economy, imposing new costs on business will do little to boost productivity and job creation. 'I'm not sure the message I would want to take to global investors looking for a safe haven for their money is that we're adding to the business costs in an economic downturn.'"

Some comments from a construction industry employer in an e-mail I received.

"I have 67 employees. This just cost me $10,720, and in a short month to boot. The rent is higher per day, taxes are higher per day, and now we are going to increase the payroll in this month with no return.

"That is a 4 percent increase for all business payroll, except leap year. This is going to make the month of February a charitable event in most organizations. Anything construction-related is already slow in February. This sure won't help.

"Thanks for picking my pocket three times: once to switch the computers over to accommodate HST, $3,500; then we have to switch it back, another $3,500; and now the new stat day, where employers get the privilege of paying their workforce to stay home, $10,700."

Another small business owner states:

"Small business owners can't afford another statutory holiday. This will cost me $4,000 in lost income, because I have to pay seven staffers to not work. I will try to ensure this comes off any future raises so that the cost of the day is shared by all."

Some interesting comments in the Times Colonist, May 11, 2012: "Family Holiday Comes at a Cost."

"Who wouldn't like a long weekend in February to relieve the long, grey gap between New Year's Day and Good Friday? But it comes at a cost.

"It's not a bad political move, with the first Family Day arriving three months before the provincial election."

It also points out:

"While not all federal employees will be affected by the holiday, provincial and municipal employees will either get the day off or be paid overtime. Police, fire departments and hospitals still need to operate that day, so their costs will rise — another hit on taxpayers' pockets."

[1120]

In my constituency the Pacific Agri Show and the successful operations of Tradex are directly impacted by Family Day. There is a significant negative impact of a new stat holiday in February, which is prime time for the conventions and conference season. The Pacific Agri Show has been built up by two conference organizers over the last ten years. It is the largest agricultural equipment trade show and conference in the Pacific Northwest, including Alberta and Washington State. The Pacific Agri Show is one of the reasons that the city of Abbotsford has been so successful at turning around the economics of Tradex.

I want to quote from a recent e-mail by Tourism Abbotsford.

"In our specific case this holiday — in particular, its timing in February — creates a tremendous hardship. One of the business functions of the Tourism Abbotsford Society is the operation of one of western Canada's premiere public assembly venues, Tradex.

"The public assembly business is very challenging due to its thin margins and seasonal nature. We already face limited demand during July, August and December. Over the years we have noted that even in our primary spring and fall show seasons, long weekends are almost impossible to sell, as vendors and guests are focused on other opportunities.

"A February date for Family Day will, in the very short term, take a viable event weekend and render it virtually unsellable. It is likely that one of our major events will no longer be able to operate as no viable weekend dates will exist for them to host their event. This will result in layoffs of Tradex employees, a significant reduction in the number of annual commercial transactions at the venue, and it represents a significant challenge in realizing our goal of operating Tradex without a subsidy from any level of government.

"The Tourism Abbotsford Society believes it is vitally important that the provincial government realize that the implementation of Family Day has a very real and very significant negative impact on our workforce and our economic viability."

In summary, I am concerned about the impact of a new stat holiday on our small family businesses, and in fact, on all employers, both in the private sector and in government. Family Day would be nice to have, but it is not free. It will cost $28 million more for the provincial government alone, it will cost business employers over $62 million, and it will cost the overall economy by a multiplier amount.

I think it is unfortunate that Family Day is simply a political ploy that once again is being used to distract from the real and serious issues faced by the provin-
[ Page 12404 ]
cial government. From the time it was announced I disagreed with another statutory holiday, and I disagree with it today.

So for all of the reasons mentioned, I will be voting against the bill.

B. Simpson: I thank the member for Abbotsford South for his comments on this bill. Like him, it's been a bit of a struggle to look at this bill through the context of anything but populist politics. I wanted to spend a few minutes to speak to it and then cede the floor for the other independent member to speak as well.

This is, quite frankly, simply populist politics. It came out of the leadership event. It was a kind of knee-jerk response to a question that was asked. We're now wrapping it up in the cloak of families and quality time for families, etc. But the reality is that the general population has not, I believe, been fully informed about the range of costs and the implications of an additional statutory holiday.

It is a gimme. If you go out and say to people, "Would you like another holiday in February?" I don't think many people would say no to that. That's a gimme. If you polled it, you'd probably poll quite high. But we have an obligation in this House to make sure that what we get is informed consent and that people are actually fully informed about what the implications are of adding a statutory holiday, not just for businesses but for households, for the taxpayer and for the economy in general.

[1125]

I want to spend a few moments and walk through that, but before I go there, I want to say that it was interesting yesterday when the member for Abbotsford South issued a press release. There was a blogger in the Georgia Straight that jumped all over him and said that he was anti-family and that he was fearmongering because he was saying that this would have implications for some businesses, where for some of those businesses it might be the last dollars. It might be the last insult that might end up closing their doors. I think that's tragic.

I think it's tragic that we can't question things like this without people resorting to the kind of language, all of a sudden, that you're anti-family because you're questioning the public policy and fiscal implications of a populist move by the Premier. I think it's tragic that someone is labelled as a fearmonger because they're raising legitimate questions.

Anybody who disagrees with those of us who are going to stand and disagree with this bill — I ask them to think about what it means to live in a democracy where freedom of expression is one of the basic foundational tenets. Our inability to freely express that without people labelling us in such an idiotic way, I think, is a tragic abuse of the democratic process. I hope people take what we have to say at face value, as opposed to the labelling that has gone on thus far, at least in that one incident.

My struggle with this is threefold. One, the costs associated with it. This has costs to businesses, as the member for Abbotsford South pointed out. It has costs to taxpayers, and it has costs to households. It's not a given that households will benefit from this. In fact, lower-income households may actually net out negative as a result of this. It may actually cost their households, as a consequence of this stat holiday.

Secondly, the timing of this is questionable given the state of our economy, given whether or not the work has been done to prepare for the supports needed to take advantage of this, given the state of the cost burdens this government has passed on to small and medium-sized businesses with the HST, with the minimum wage increases, etc. It is a question of whether or not it's appropriate, given the immediacy of passing those costs onto small businesses, whether it's now time to pass another additional cost burden on to them.

Then thirdly, whether or not this is a priority for government or for taxpayers. Given, again, the fiscal state of government, I do not believe for one second that this government will balance the budget in 2013 without some really interesting bookkeeping and accounting or without significant cuts to programs. To assign taxpayer money to a statutory holiday I don't think is an appropriate priority at this time.

So the cost implications, the timing of it and whether or not it's a priority.

The minister introduced it and talked about the consultation around this. If a package had been put together that went out to the public and informed them that this was going to cost taxpayers $28 million per year, that it was going to cost businesses $62 million in total per year — that they most likely would still have to work that statutory holiday, if they're in the lower-income brackets, and would have to go and find daycare because the schools are closed and would have to pay for that daycare and probably net out at a loss — would they still want a statutory holiday in February? Would it still be a priority for them?

I think that if this government actually went out and informed the public about the costs associated with the statutory holiday, you may not have gotten the automatic gut reaction of: "Of course, I'll take a holiday in February." Who wouldn't? Who in their right mind wouldn't say yes to that? It's not informed consent. That's my concern about a lot of what is going on in this House these days with a number of the bills we have in front of us.

Now, it's interesting. I asked my staff to look, because in reading about Europe, etc., I had heard that one of things going on in Europe is pulling back of statutory holidays. My researcher informed me that Portugal has actually pulled four statutory holidays, two of them with the consent of Rome because two of them are religious holidays. They matched those two religious holidays with two civic holidays. They've gone now from 13 statutory holidays down to nine statutory holidays.
[ Page 12405 ]

[1130]

Other jurisdictions are also looking at pulling back because of the correlation between mandatory state-dictated holidays and what happens with the GDP and the overall health of the economy. Portugal is hoping that over the next five years, by pulling those four statutory holidays back, those 20 days will assist with some of the issues they've got around their economic engine.

It is not a gimme that GDP and productivity are correlated with statutory holidays. To be fair, if you look at Germany, Germany has 20 statutory holidays and very high productivity, etc. That's not an issue, in my estimation. I think it's a wash around GDP, productivity and statutory holidays.

What I struggle with is whether or not B.C. needs to be the leader in Canada in statutory holidays. The addition of Family Day makes us have ten statutory holidays, more than any other province, particularly at a time when we do have a low productivity rating, according to the B.C. Progress Board.

But the real issue for me is what the public policy is here. The public policy, as articulated by the Premier, and by the minister as she introduced this bill, is the importance of families — making sure families can spend quality time together in February, time to recharge themselves in that dreary month, the fact that they went through an engagement and consultation process and all of that.

Well, if we're going to social-engineer quality family time, then I would suggest the government should do what some jurisdictions have done and ban Sunday shopping. Just shut the economy down on Sunday, and give everybody a day away where you know everybody has got the day off, except people working in emergency and various other places that would have to work.

Shut her down and allow people to go back on a different schedule for Sundays, where Sundays become a permanent family day every week. Would there be costs to that? Absolutely. Would people be in an uproar around that? Absolutely. But that is a better way to get Family Day than another statutory holiday where, quite frankly, a lion's share of the economy still goes to work.

They still get up in the morning, and they still go to work. But what is going to happen, particularly for low-income earners in the services sector, is that they're going to have to now scramble, because schools are closed, to find daycare and alternate transportation and all kinds of things that are going to add stress to that family, not quality family time. Statutory holidays are not a gimme that what you get out of them is quality family time.

The cost to the taxpayer here is $28 million. As the member for Abbotsford South pointed out, there are a lot of other priorities that we could put that $28 million to. He pointed some of them out. I would add to that.

The B.C. chamber came out today and said that unless we get more affordable housing closer to their places of business — particularly downtown core, where low-income service earners live and work — then they're going to struggle to keep a workforce. Affordable housing is a priority that it could be used for.

We could use it to increase income assistance and disability rates, which immediately, then, would go into the local economy. We could fix DriveABLE, which would allow seniors to get their testing closer to home.

In fact, one of the major things we could do to make sure that the economy is actually going to continue to tick along here is take some of that money and put it into re-inventorying our forests, which we also need to do. So $28 million could be better spent than a questionable social-engineering move on the part of the Premier.

The cost to small and medium-sized enterprises, as the member for Abbotsford South pointed out, is in addition to the costs of going back to the PST, in addition to the costs of three lifts to minimum wage. I'm all for the lift of minimum wage, but again, in the context of adding those costs to small and medium-sized enterprises, which are the real engine of our economy, I think that this is a final insult to them. I've already spoken about the households.

In order to make space for some time for the other independent MLA here, let me just say that I am not opposed to us having more family time. I'm not opposed to us looking sometime in the future to the possibility of adding a holiday in February. It has been long talked about.

What I am opposed to is the fact I don't believe that this is informed consent on the part of the public. I don't believe we've done a good job of telling them: "This is your cake, but in order to eat it, here are the costs associated with it."

[1135]

I think if we went out to the public and said, "What would you like to do with $28 million in taxpayer money that we're just going to evaporate here by giving a statutory holiday? Where would you like that money spent?" I think we would get feedback from the public about seniors care issues, about child care issues, universal daycare — various things like that.

So I don't believe this is informed. The benefits to that sector of resorts, restaurants, etc. — there may be some, for sure. But what we're looking at, most likely, is higher-income earners who already have agreements that give them significant vacation time. I know that when I worked for Weldwood of Canada, one of our biggest bugbears was a senior group of employees that had too much vacation time as a result of their collective agreements. Holiday management was a significant sore point.

For that lower-income group of people working in the service sector, there is no quality family time associated with this day. It puts costs onto the economy, costs onto the taxpayers. I just say wait. Let's see if you've really got a balanced budget in 2013. Let's see what the state of the economy is through 2013-2014.
[ Page 12406 ]

If we have rebounded — if we have things in place like daycare, if seniors are being taken care of, if that minimum wage is up to an actual living wage — then we can talk about the luxury of a statutory holiday in February, because that's what it is. It's a luxury at a time when I don't think we can afford more luxuries.

V. Huntington: I'm pleased to speak to the second reading of Bill 53, the Family Day Act.

Like all reasonable people, I too enjoy my statutory holidays. They do allow us more time with family and friends. They allow us to relax and engage in hobbies and for me to sleep in, to take extended weekend holidays in the mountains and on the water. We love our statutory holidays in British Columbia.

But these holidays can also cause hardship, especially in our present economic climate. We forget, obviously, too easily the costs associated with another statutory holiday — costs for both government and business.

This new holiday adds to difficult pressures already being felt by small business, pressures which lead to ever-smaller margins, ever more difficult opportunities for success. Sixty-two percent of the small business community does not want this new statutory holiday — 62 percent. Why?

The Canadian Federation of Independent Business has calculated that the Family Day will cost the average small business $1,135 in wages alone. Add that to the present fiscal climate small business is working in. Add to that the transition to the HST of approximately $3,000 and to that the transition back to the PST, another $3,000 and three minimum-wage increases in one year.

For some businesses, it's high property taxes. For all of them, it's the failure to eliminate the long-awaited small business corporate tax, an average to small business of $1,250 a year. They have increasing MSP premiums, and the cost of energy, fuel and insurance are rising exponentially. These small businesses are struggling.

All of this is at a time when margins are already slim, if not downright thin. These numbers no doubt seem meaningless to a government that engages primarily with big business. But when the real entrepreneurs of this land…. The small and medium business owners — the men and women who risk everything to build an enterprise, who mortgage their homes and even their lives to create jobs and services and products — are the people who need to be listened to.

These risk-takers employ 57 percent of the people in this province. They are the highest generators of new jobs. Yet we burden them with another play day. We don't compensate them or recognize them, even as they provide the backbone of this province.

An estimated $42 million in costs to that small and medium business sector alone, twice as much as the $20 million cost to big business. And the costs to business are joined by costs to government — costs of $28 million that could have gone to other priorities.

We needed to follow through on the promise to eliminate the small business corporate tax rate, not add to the real and negative burden already being shouldered by the entrepreneurs of this province.

While Family Day for some is an opportunity to rest and play, for others it is a worry. It whittles away at already pressured bottom lines.

[1140]

I do not think the economic climate of our day warrants this new statutory holiday. If our world was strong, stable and economically healthy, I could support it. But that is not the case at this point in history. Right now my support must necessarily lean to the small and medium-sized businesses of my community. I will be voting against Bill 53.

Hon. I. Chong: I wanted to rise and just add a few comments to the debate this morning, because I think it is important to put on the record some of the issues that I heard. While I appreciate the spirit with which a number of members said that they have no objection to Family Day, I think it's important, as well, to talk about exactly the reasons why we are having this debate now and perhaps to put some facts back onto the table.

Certainly, this was announced well over a year and a bit ago. It was again reiterated in the throne speech with mention of a family day. So it comes as no surprise that this was an initiative that we were going to proceed with.

Also, the concerns some members raised with respect to small businesses…. Of course, I come from the small business world in my previous life as a professional accountant and did books for many, many small businesses. I do understand the implications that a new statutory holiday can bring.

At the same time, what I've also seen over the course of a number of years is that where a holiday is placed can have impacts on productivity. I say that with the greatest respect in terms of the small businesses. If their employees feel that over the course of a long period of time they don't have an opportunity to refresh or recharge themselves, there can be an indirect drain on that business. Therefore, I do believe that placing a holiday in a time where there is a long period between statutory days can be of benefit to small businesses as well.

In addition, when the Premier made this announcement back in January of 2011, I think there was an expectation that this would come into place very quickly. In fact, I think they expected Family Day to be introduced in 2012.

Again, acknowledging the state of the economy, acknowledging that we were still on somewhat shaky ground…. We were going to work towards moving our province forward by having a jobs plan, to go after some major industries and to look at investments to be able to put us in a place where the economic situation would
[ Page 12407 ]
be much more stable. It certainly allowed us to consider moving it forward to 2013, thereby ensuring that the business community in particular had much more time to consider what this would do to their businesses.

I think it is important to recognize that while businesses may feel an impact — and I acknowledge fully that the B.C. chamber has also indicated there could be an impact — it is a very small impact in the context of the GDP overall. In addition, the chamber…. They always do provide good advice. They've provided advice on things like keeping a one-tax system as opposed to a two-tax system, but we know where we're going with that. Again, I think the chamber is representing the businesses by raising some concerns.

At the same time, if we take a look at some of the facts and at how we have evolved over the years with the statutory holidays we have in place, I do believe the time is right for our province to join a number of other provinces across Canada in instituting a statutory day such as this. Again, with the fact that we considered the state of the economy and where we were headed, 2013 certainly makes absolute sense and will allow for a number of businesses to consider that.

With that, I appreciate the time I've had to put some facts back on the table. I certainly will be supporting this legislation.

Deputy Speaker: Seeing no further speakers, the minister closes debate.

Hon. M. MacDiarmid: Thank you to members on both sides of the House for their contributions to the debate this morning. Certainly, I'm delighted to hear the support and endorsement from my colleague the MLA for Burnaby-Edmonds. I'm especially pleased to hear the support for the direction our government has taken by engaging and consulting with the public about this decision. So thank you for that.

[1145]

We've heard debate about this bill, about the impact of this bill. Certainly, something that the consultation suggests is that British Columbians are very much in support of this bill, including some members of the business community, while we do acknowledge the challenges that they face. With the passing of this bill, British Columbians will celebrate their first Family Day next February, 2013. It will be February 11 of 2013.

[Mr. Speaker in the chair.]

Again, I'd like to thank members on both sides of the House for their contributions. With that, I would like to move second reading of Bill 53.

[1150]

Second reading of Bill 53 approved on the following division:

Hon. M. MacDiarmid: I move that the bill be considered by the Committee of the Whole House at the next sitting after today.

Bill 53, Family Day Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

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

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

Hon. I. Chong: With leave, Mr. Speaker, I'd like to make an introduction.

Mr. Speaker: Proceed.

Introductions by Members

Hon. I. Chong: In the gallery there were — perhaps
[ Page 12408 ]
they're still in the precinct — ten adult students from the University of Victoria. They are part of the English Language Centre at the University of Victoria. They're at an extremely advanced level of English and were interested in learning about the Canadian and B.C. governmental system. I think they did stop in and listen, and they are probably still in the precinct, so I would ask the House to make them welcome.

Hon. I. Chong moved adjournment of the House.

Motion approved.

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

The House adjourned at 11:54 a.m.

PROCEEDINGS IN THE
DOUGLAS FIR ROOM

Committee of the Whole House

BILL 54 — PROVINCIAL SALES TAX ACT

The House in Committee of the Whole (Section A) on Bill 54; L. Reid in the chair.

The committee met at 10:06 a.m.

On section 1.

B. Ralston: This is the definitions section. There are a number of new definitions relative to the old act and some that have been changed. So "accommodation" is added, I take it, because the hotel tax is now rolled into this statute. Is that correct?

Hon. K. Falcon: That is correct. The provisions under division 1 here are more or less consistent with similar provisions that were in the old Hotel Room Tax Act and also the old Social Service Tax Act. They're largely similar. They've now been put together in one place here. As part of this effort, we have now combined the two pieces of prior legislation.

B. Ralston: The next definition is "affixed machinery." In the old act there was a definition of "fixture," which was considerably briefer but referred to "(a) a fixture at common law, and (b) used directly in the manufacture, production, processing...or in the provision of a service."

Can the minister explain the purpose for a new and what appears to be a much more extended definition of affixed machinery, as opposed to "fixture" in the previous act?

Hon. K. Falcon: This is a good example of one of the areas where some significant improvement has been made for the benefit of the public. One of the great and very legitimate criticisms of the old Social Service Tax Act and the Hotel Room Tax Act was the complexity in finding definitions and understanding what applied to what.

The member, when he refers to the "fixture" definition under the old act, is quite correct that it is not as fulsome as the definition under "affixed machinery." The reason is that only part of the definition was to be found under the "fixture" definition. You had to go to the regs to get the balance of the definition. Under the new Provincial Sales Tax Act, that's all now in one place, under the definition of "affixed machinery."

B. Ralston: The definition has a number of exclusions beginning with (a). At least as I recall the law of fixtures, these would, in the common law, be considered fixtures. Can the minister explain the exceptions for (a)?

[1010]

I suppose we can begin with (a). I think the "elevator or escalator" may be self-evident, but explain the exceptions there. Then we'll move to the next section.

Hon. K. Falcon: This may be an appropriate time to suggest the viewing audience puff up their pillows and get themselves nice and comfortable for the duration of this discussion, because I know it will be of intense fascination. This is very helpful, by the way, for those that are sleeping impaired and have difficulty falling asleep. I am quite certain that this is going to — wake up there, Mike — be very, very helpful.

All joking aside, I think what's important to know is that only some fixtures were considered goods. For the benefit of the member opposite, what you will find is that under the Social Service Tax Act, if you went to the regs, under regulation 2.52, it listed out fixtures that are not included in tangible personal property.

What we have done is taken those and incorporated them into the definition here. So it now lists…. The fixtures not included in tangible personal property that were previously found in the regulations under the old Social Service Tax Act are now combined and put into the Provincial Sales Tax Act.

B. Ralston: I'll move to the definition of "tangible personal property" at some point. I was interested in an explanation of why (a) and (b) were excluded from the definition of "affixed machinery." Clearly, by ordinary legal terms, they would fit into that category.

Hon. K. Falcon: First of all, those exclusions have been a longstanding part of exclusions under the Social Service Tax Act — the previous PST act, for those that are following this.

The items that the member sees there are, I think, very
[ Page 12409 ]
appropriately excluded. For example, if you're buying a building, the heating, the air-conditioning, the elevators are part of the building itself. They are not goods that you are going to be moving around, that would be thus taxable. So the exclusions here are exclusions that had been in place under the old act and will continue to be in place under the new act.

[1015]

B. Ralston: Just to pursue that, then, a heating system, a furnace, is surely something that can be replaced. Or in the case of a building, a building owner may choose to remove conventional heating systems and go to a central community heating system. Or in the case of Vancouver there's a central steam plant. People opt into that. It does seem to fall into a different definition.

I appreciate that if heating ducts are integrated structurally into the building, then they're probably best not classified as tangible personal property that can be moved away. But it would seem to me that a heating system, for example, or individual air conditioners or those sorts of things are things that can be replaced and moved at the will of the owner.

Hon. K. Falcon: The great thing about having this discussion is that it will bring to light all the joy of having a separate provincial sales tax and the enjoyment that we no doubt will have for years to come in determining what it applies to and what it doesn't apply to.

The issue that the member raised. He's correct in the sense that when you are purchasing heating ducts or the air-conditioning systems, as a contractor you will be paying PST on those items. Once they are affixed to a structure and are part of that structure, they become real property.

As the member knows, the PST only applies to goods and not real property. Therefore, you have to have some definition that determines what is real property and what are goods. So this is actually reflecting what was in place in the past. It is putting it back to what was in place in the past.

No doubt, as we go through this, we will be shaking our heads, I'm sure, many times over interpretations of why something's in and why something's out, etc. That is indeed the benefit, if you will — or the joy or the downside, depending on which side you come from — of the provincial retail sales tax.

B. Ralston: Perhaps with legal training, I adopt a little bit more of a benign view of the issue of definition. I think that's just inherent in any tax statute.

For the purposes of purchasing a building, you wouldn't pay separate PST on heating or air-conditioning systems, but when you came to replace them, if that was the decision, then at that point a new system would attract PST, I'm taking. Or at least it would be eligible, unless it's under the machinery and equipment exemption for the PST, which will be brought back. But I'm sure we can discuss that later.

Hon. K. Falcon: That is correct.

[1020]

B. Ralston: Definition (b). This appears to be directed towards machinery that is, I would say…. Really big machines, perhaps, might be the legal definition. It would seem to be describing machinery that's installed on an industrial site or, for example, a minesite or something like that, which would be integrated into the operations of the mine to such a degree that it really is the site and couldn't be moved without dismantling the whole building surrounding it.

Can the minister perhaps give an example that either confirms or not, if I'm on the wrong track here, as to what that exemption might mean?

Hon. K. Falcon: The member is right in his characterization. These would be goods that once constructed are so large they're not capable of being moved around.

I don't have a real good example because it is apparently rare that we come across this. It could be something like — and I'm not real familiar with the forestry industry…. In one of the large forestry structures they have some large blades or something that are part of these large structures. Once they're in place, they're not things that would be moved around.

I think it is worth pointing out that today most large equipment that's used in the production of industrial goods of whatever sort is typically exempt under our production and machinery equipment exemption.

B. Ralston: Moving to the definition of a B.C. resident. I notice that, at least in the definition section of the previous statute, that wasn't included. I take it that was perhaps in a regulation, because it would be intrinsic to the assessment of any tax.

In (b) it says: "enters British Columbia with the intention of residing or carrying on business in British Columbia." The minister may recall that in the discussion about the carbon tax, there was an issue, for example, of international airlines — whether the circumstances in which carbon tax had to be paid on domestic flights but not on international flights. That involved the definition of residency for the purpose of the carbon tax.

Can the minister explain the application of subsection (b)? Does it really reside with the intention — although that sometimes is difficult to assess what one's intention is, particularly if the goal is to pay less tax rather than more?

[1025]

Hon. K. Falcon: In the previous act, this definition was
[ Page 12410 ]
repeated in various places in the act. So now what we're doing is just having it defined in one area so that you don't have to have the multiple repeating of the definition.

Effectively, what it's trying to say is it's not just people that are here doing business, it also covers those situations where a business may be coming into British Columbia to set up business where the PST would apply.

Also, with respect to the carbon tax, staff advise that carbon tax is different because it's where the fuel is being used not who is using it that differentiates it a little bit from the application of the PST.

B. Ralston: Just for clarity. "'BC resident' means a person...." By "person" it's meant a legal person in the sense of a corporation as well as the ordinary meaning of a person, I take it. Perhaps that could just be confirmed at the outset.

Hon. K. Falcon: The member is correct. It's consistent with the definition that can be found in the Interpretation Act.

B. Ralston: If a person, under (b), "enters British Columbia with the intention of residing or carrying on business in British Columbia," does that mean that, for example, goods purchased outside the province attract a PST when they're brought into the province under certain circumstances, and if so, can the minister specify?

[1030]

Hon. K. Falcon: In certain circumstances the answer is yes, but not if it's what they consider settler's effects. These are the goods that you've probably owned for years, so when you come into British Columbia you're not going to be paying the PST on that. The provision generally for personal effects is that if you've owned them for more than 30 days, then it will not attract PST.

But if you, for example, two days before moving to British Columbia purchase a car and then bring that car into British Columbia, then it would attract PST.

B. Ralston: Giving a more practical example, say you live in Dawson Creek and you go to Grande Prairie across the line in Alberta, where there is no provincial sales tax, given that they have vast reservoirs of oil that we don't have here in British Columbia — at least, not discovered yet. So you go there. You purchase a car. You're a B.C. resident, and you bring it back. Under the statute this may pose certain practical problems, but in the theory of this law, would you be obliged to pay PST?

Hon. K. Falcon: The answer is yes. It would apply as it did before. Immediately upon registering your vehicle with your local insurance agency office, you would be required to pay your PST, and that's as it was before.

B. Ralston: Another example. If you live in the Lower Mainland and you cross the international boundary and go into the States, go to Bellis Fair and buy a number of goods and bring them back into British Columbia, assuming that you've complied with the customs regime, does that attract, in theory, any PST?

Hon. K. Falcon: Indeed, that would apply similar to as it did in the past. So if you drive down to the United States, in coming back to the border the usual exemptions will apply. They've got thresholds in which you can bring things back without attracting tax. But if you're over those thresholds, then the PST would apply. The Canada Border Services Agency collects that on behalf of the province, as they did in the past.

B. Ralston: Is the definition of "Canadian resident" for the purposes of collecting the GST the same as the definition of "BC resident" for collecting the PST?

Hon. K. Falcon: I'm advised that it's similar in terms of how they collect the GST. The tax would be collected on individual B.C. residents that are coming through the border with goods purchased in the United States that exceed the thresholds laid out.

B. Ralston: My question was a little bit different. Is the definition of "Canadian resident" for the purposes of assessing the GST and "BC resident" for the purpose of PST the same?

[1035]

Hon. K. Falcon: I'm advised that we based it on the same basis that we did in the past.

Further along there's a definition of "resident taxpayer" in the definitions, which the member will come across, meaning an individual who…. It goes on in (a) and (b) to define that more clearly: "(a) resides, ordinarily resides or carries on business in British Columbia, and (b) brings or sends into British Columbia, or receives delivery of in British Columbia, tangible personal property for use or consumption." Then it goes on to say by the individual or at the individual's expense, etc.

It is the same definition that existed prior to the introduction of the HST.

B. Ralston: I'm looking at the definition of "collector," and (a) says "registrant." I think that's fairly straightforward, and there are provisions in the act about registration.

I'm looking to (b), which refers to section 169, which is requiring vendors and lessors to be registered. I'm not quite sure how this would apply to, say, a private sale or a very limited business where there might be occasional sales. Is it the requirement that you have to register under section 168 but you're not otherwise registered?
[ Page 12411 ]

Perhaps the minister could explain that exception there. Then we can go on to (c), which seems to have a similar exemption, but for someone who's not a registrant.

Hon. K. Falcon: The collector refers to the individuals that have responsibilities and obligations to collect and remit the tax. There is a definition coming up in the future, as we come to the defined small sellers, which are those that are under, typically, $10,000 a year in revenues.

Subsection (c) that the member refers to is really a transitional provision that says that you may start out being a small seller, so to speak, but you may be transitioning or your sales are such that you're now over $10,000. This is, I think, clarifying the fact that that person would then become a vendor, with the obligations to collect and remit as defined under "collector."

B. Ralston: Just looking at (b), it refers to section 169 and sub 169(3), just to take an example. "A vendor must not sell software in British Columbia at a retail sale unless the vendor (a) is registered…." This designates that person a collector even if they're not registered.

What would be the circumstances in which that would apply? Is simply volume of sales the only test? I presume that the definition of a retail sale is that it has to be a new item and not something that's secondhand. There is a definition of "retail sale," which we'll get to. Perhaps the minister could clarify that.

[1040]

Hon. K. Falcon: Essentially, I'm advised that anyone that is selling taxable goods or services in the ordinary course of their business and is not a small seller, which is a definition coming up later, has that obligation. So even if they don't register, they cannot avoid the obligation to levy and remit tax if they are, again, selling taxable goods or services in the ordinary course of doing business.

Just to correct something the member said at the end, the act applies equally to new and used goods if they are sold in the ordinary course of business and they are not excluded elsewhere in the act. That is as it was before, and that's how it will be again going forward. So if in the ordinary course of doing business, you are selling used goods, then those will attract taxation.

B. Ralston: Just since the minister has touched on it, I'm going to skip ahead — it's in the same section, so I think I can do that with impunity — to the definition of "small seller," since the minister has raised that in relation to this issue of "collector."

It seems to be self-evident, but perhaps the minister can just explain the purpose of the definition of "small seller," in addition to the comments he's already made. Just looking here in my previous act, this would appear to be, at least in the definitions section, an addition from the previous act.

[1045]

Hon. K. Falcon: This is very similar in nature to the old rules that existed, "small seller" meaning that we're trying to exempt individuals that are involved in a very low level of commercial activity.

For example, you'll see where it states that these are individuals, obviously, located in B.C. They may be selling tangible, personal property in the province, but they do not regularly, for example, make sales from an established commercial premises. They may be, for example, doing garage sales or involved in craft sales, etc. So we are excluding them.

These are individuals whose gross revenue in the previous 12 months from all of their retail sales of eligible, tangible, personal property and software is $10,000 or less. We're not attempting to capture those people that are operating, seemingly, on a part-time basis or infrequent basis.

It just sort of lays out in one place the definition so that people can better understand what rules apply to and don't apply to small sellers.

B. Ralston: As a practical matter, what's the method by which this is regulated or monitored, if it is, beyond self-declaration? Is there any linkage between Canada Revenue Agency and filings for small business income or anything like that, or does it simply rely on self-declaration or occasional inspections?

[R. Sultan in the chair.]

Hon. K. Falcon: It is on a self-declaration basis, and we do have the ability to audit in those cases. There's no direct linkage to the CRA, except that we regularly, as I understand, share information with the CRA to ensure that taxpayers are meeting their obligations as set out under the Provincial Sales Tax Act.

[1050]

B. Ralston: Obviously, this poses certain practical problems, but if a small seller crosses the threshold of $10,000, is there any triggering mechanism, or is that just simply…? I think it's a reasonable exemption. Obviously, it's not worth wasting enforcement or collection resources on a relatively small amount of tax. How is that brought into effect in a practical way?

Hon. K. Falcon: Consistent with the longstanding principle that all taxes are based on voluntary compliance, the previous discussion we had under the "collector" definition had that transition provision that stated that once you…. If you are a vendor that is in the small seller category now — over a 12-month period, because it doesn't happen the moment you hit $10,000 — you exceed the
[ Page 12412 ]
$10,000 exemption amount, then you have an obligation to become a collector and to begin to remit and fulfil your obligations as a collector in the province.

Of course, that is done on a voluntary compliance basis. But again, with information-sharing with the Canada Revenue Agency, with our own auditing and with the outreach that we generally provide to ensure tax-filers are aware of their responsibilities — typically, the combination of all of that is relatively effective in ensuring that people are aware of what their roles and responsibilities are.

B. Ralston: Looking at the two definitions, "dedicated telecommunication service" and "dedicated telecommunication system" — at least in my reading of them, and this may be imperfect — there's no change from the definition in the previous act. I just wanted to confirm that.

Hon. K. Falcon: That is correct.

B. Ralston: The next definition I want to look at is the definition of a "direct seller." This has some similarities to the small seller in the sense that it's someone who doesn't make regular retail sales from established commercial premises, but it doesn't seem to have the same limitations on the dollar value of sales.

It seems to be someone who's more in a warehousing or intermediary role to sales agents. Perhaps the minister can confirm the purpose of that definition.

[1055]

Hon. K. Falcon: Under the old Social Service Tax Act, the ministry allowed a special collection method for taxes with respect to multilevel marketing firms. These would be the Avons, Amways, Mary Kays, Tupperware, etc.

[D. Black in the chair.]

By administrative practice, what we used to do is allow the tax to be remitted by the organization itself on behalf of all of their small, independent contractors out there — similar to the GST rules that apply. It was an administrative practice, but what we're doing now, through this definition and other things that will come up, is codifying that and making it a permanent feature of the act.

This is a real administrative benefit for those that are involved in multilevel marketing — the smaller contractors that are out there selling the Avon, the Tupperware, etc. So we think that's something that will be positively received.

B. Ralston: Then I'm looking at the definition of "eligible entity," and that appears to set out a number of definitions which would appear to be for the purpose of the new folded-in hotel tax. These are entities that can collect or receive benefits related to the hotel tax. Perhaps the minister could just confirm that?

Hon. K. Falcon: This "eligible entity" could be found under a reg under the old Hotel Room Tax Act. So we've taken it, moved that from the regulation of the old Hotel Room Tax Act and moved that into the definitions of the new Provincial Sales Tax Act. I understand, I'm advised, that it's the same as it was in the old regulation.

B. Ralston: "Eligible tangible personal property" is the next definition. But it really defines exclusions to the definition of "tangible personal property" and lists "(a) a vehicle; (b) an aircraft; (c) a boat; (d) liquor; (e) other prescribed tangible personal property."

Presumably, these are given separate treatment in the assessment of the tax. Can the minister confirm that? I presume that we will deal with these in separate sections — as I think I recall from reading the act, perhaps not as thoroughly as I could have — but later in the act itself.

Hon. K. Falcon: This provision relates to small sellers only, and it is referenced under the "small seller" definition that we talked about earlier. Essentially, what we're saying is that when these items are sold by small sellers, the person buying them must pay the PST.

[1100]

So these are not the usual sorts of crafts and garage sale items that might typically be sold by a small seller. If they sort of venture into this territory with these kinds of items, then the purchaser will have an obligation to pay the PST.

B. Ralston: I thank the minister for that explanation. Looking at the definition of "small seller," though, in a quick read I don't see that reservation there. Is that contained in the individual sections about the sale of these particular items? Vehicles…. I believe there are separate sections that deal with each one.

Hon. K. Falcon: That would be (b). If you look under "small seller," it says: "who sells eligible tangible personal property or software or provides taxable services at a sale in British Columbia."

B. Ralston: The next definition is "energy product." As the minister well knows from some of the earlier debates we've had about revisions to the carbon tax, there are fairly extensive definitions of energy, depending on their carbon content.

Obviously, this is directed to a different purpose. I appreciate that these definitions are a bit simpler, but do they differ in any substantial way from the definitions in the Carbon Tax Act?

Hon. K. Falcon: These relate to the innovative clean
[ Page 12413 ]
energy fund, which was a fund that was in place prior to the introduction of the HST. It was eliminated when the HST was brought in and now will be reinstated under the PST as it was before. This just IDs or identifies which products are captured under the innovative clean energy fund.

B. Ralston: The next definition I think I want to look at is "exclusive product," and that appears to refer back to the direct seller. These would be branded products by the multilevel marketer that the minister referred to in the definition of the "direct seller," I take it.

Hon. K. Falcon: Yes.

B. Ralston: Looking at the definition of "fair market value," obviously this is a fairly crucial and key definition for the purposes of assessing any tax. The exemptions, though — or the modifications — refer to sections 10(2)(e) and (f). I'm looking at those, and those appear to consider transportation costs — they have to be included — and the costs for goods that are brought or sent into or received in British Columbia from outside of British Columbia.

Can the minister explain how that definition in 10(2)(e) and (f) modifies the definition of "fair market value"?

Hon. K. Falcon: I'm happy to again go through definitions to this sort of extent, if that's how the member opposite chooses to spend his time.

I think it's important to point out that this is the same definition as before. It just is defining fair market value, ensuring we capture the full market value of products. It is a similar definition to what was there in the past, as are the overwhelming majority of these things, reflecting the same definitions that were there in the past — in some cases, now just much simpler, in that they're all here in one place.

[1105]

B. Ralston: Yes. Well, I do choose to spend my time on the definition of "fair market value," and it is different from the definition that is in the previous act. I would think it's fairly vital as a basis for assessing tax, so I don't think it's unreasonable to ask questions about it.

I want to pursue what I regarded as modifications to that value, which are included by those provisions that are set out in sections (2)(e) and (f). So if the minister could turn his mind to that, please.

Hon. K. Falcon: Again, if the member wishes to spend time on fair market value, I'm happy to do that. It is the same, though. I want to correct the member. I'm advised by staff that it is the same. In fact, if you look at the old act under section (b), you will see there that it goes on to say: "…and must be determined in a manner that includes any charges, costs or expenses referred to in paragraph (a) (i) or (ii) of the definition of 'purchase price'…."

Under the new act, the member will see that it says, under subsection (i), "in a manner that includes any charges, costs or expenses referred to in section 10 (2) (e) and (f)...." Again, it's replicating what was under the old act.

The point here, though, of course, is that we want to have a fulsome definition of "fair market value" to ensure that it's properly defined so that the taxpayers can receive the appropriate tax payable.

B. Ralston: In the previous definition of "fair market value" there was no (b) and (c) in reference to software and to a taxable service. Can the minister explain why that has been added? The wording appears to be slightly different. Software is in a special category, yet I presume it's tangible personal property for most purposes.

[1110]

Hon. K. Falcon: Software was deemed to be tangible personal property under the old act. There were provisions in the old act that assumed you knew that software and certain services were included under the definition of tangible personal property.

What we are doing now is to speak separately to identify each of those items in the definition that are covered, to create more clarity. One of the problems was…. This is a good example of an area where there was eminent confusion.

The members opposite may recall that in their days in government when they added legal services to be covered by the PST, what they did was add, under the act, under section 52, that "the provision of legal services for consideration is deemed to be a sale of tangible personal property at a retail sale."

This was effectively sort of a shortcut to just deem legal services to be a tangible personal property — a retail sale — so that you didn't have to go through all of the other amendments that would have to be made. The problem was that it made the act even more confusing.

What is being done here to create a much greater clarity, just under the definition of market value, is very specifically laying out and making it clear that software, which is defined in subsection (b) and taxable service, which is also defined in subsection (c), is included in the definition of fair market value — as was the case before, but again, in a very confusing, complex manner that made it very difficult for people to understand the nature of what was covered and what wasn't.

[1115]

B. Ralston: I'm looking at the definition of "lease," and there's an exception beginning at the outset of the definition, subsection 33(2). There's a bracket that says: "...when consideration becomes due...." That's contained in a more expansive definition in subsection 33(2). Can the
[ Page 12414 ]
minister explain the purpose of that exception or exemption from the definition of lease?

Hon. K. Falcon: This provision was incorporated into the Social Service Tax Act when we transitioned out of the PST. As we transition back into the PST, we include a similar provision — the words that the member mentioned there, "when consideration becomes due."

The reason we do that is because the definition of "lease" that we have here is narrower than the definition under "When consideration becomes due." That's integral to having that there. Just as we had it in transitioning out of PST, you need to have it in transitioning back into PST to ensure that there is a smooth transition.

B. Ralston: Looking at the definition of "legal services" — the minister made reference to that earlier — this appears to be unchanged from the definition in the previous act. Can the minister confirm that?

Hon. K. Falcon: I can confirm that.

B. Ralston: There are definitions that follow for "manufactured mobile home" and "manufactured modular home." There's reference to Canadian Standards Association standards. Can the minister briefly explain the difference between the two?

Hon. K. Falcon: These are the same definitions as before, but they were in different locations. They're now together.

The definitions the member refers to — the member would have to look those up. They're the standard definitions under the Canadian Standards Association as to what is considered a manufactured mobile home and what is considered a manufactured modular home.

B. Ralston: I'm looking at the definition of "multijurisdictional vehicle," and there's an extended definition in section 69. I take it that applies to vehicles that travel interprovincially, typically in a trucking fleet. Is that correct?

Hon. K. Falcon: The answer is yes. These are the large trucks that travel interprovincially and are registered under the international registration plan.

[1120]

B. Ralston: I'm looking at the definition of "promotional distribution." It appears to have changed somewhat in the rewriting. Can the minister explain the system of sales or distribution that "promotional distribution" applies to?

Hon. K. Falcon: These are, again, similar to previous definitions dealing with promotional giveaways. These are the kinds of things that the public would identify as, you know, small shampoo bottles that might be given away to promote a shampoo, or a catalogue, like the old Eaton's catalogues or Sears catalogues, or what have you.

The idea here is that the business…. Using the example of the catalogue, the business would be responsible for paying the PST on the catalogues that are produced. But they would then be able to distribute those at no cost — to promote, hopefully, the future sales of some of their products — and the tax would not be payable by the people that are receiving those promotional gifts.

B. Ralston: The definition of "purchaser" is where I want to turn my attention next.

The minister has made reference to consolidating in one definition section rules or definitions related to software and to services and to accommodation. It appears to do that in this definition of "purchaser."

There's a specific reference to software. Can the minister explain, just as a matter of curiosity, why there's such a focus on software? Have there been difficulties in applying the tax or gaining acceptance among vendors as to when the tax is due on the sale of software? It seems to be…. As the minister has said, it's selected out for special description in a number of places, so perhaps that would be worth answering.

[1125]

Hon. K. Falcon: The reason there are the continued references is because in the area of software, this was one area where we received lots of complaints from industry. Treating software as a tangible good may have made sense ten years ago or 15 years ago, when you would go to the store and buy your Microsoft Office package, for example, and bring it back. It's a tangible good; pretty easy to understand.

The problem is, it's difficult to continue to have that sort of view of software when it has changed so dramatically. Nowadays people are likely to just download it directly onto their computer without having to go out to a store to make the purchase, etc. So this was to respond to the fact that we were using a very outmoded definition, which created a lot of frustration and confusion in the world of software.

B. Ralston: Just, then, following that up. In the case that the minister described, of downloaded software, is there a tax due, and how is that assessed?

[1130]

Hon. K. Falcon: This is…. Well, it's exciting, isn't it? I'm charged up by this discussion.

This is something, actually, that was a problem in the past. What would happen is, if you're a purchaser, and you're purchasing tangible personal property, of course, you would under the old act be expected to be knowing
[ Page 12415 ]
and reading in that it would include software, as an example, or those certain legal services we've discussed in the past.

To get to the gist of the member's question, there's no change on the ground in terms of how it applies to people in British Columbia from what it did in the past. If you're downloading software…. If the member opposite is downloading software onto his computer at home, nothing changes. The collector which you're buying it from would charge the tax. They would remit the tax. There would be no change for the individual British Columbian.

For businesses who use one software program but in multiple jurisdictions, what we did in the past and will continue to do — although we did it in the past by administrative practice, whereas now it will be clearly laid out as part of the law and how it works — is we had a proration rule that was essentially based on what percentage of the use was taking place in B.C.

This will be, we understand, a significant benefit to the business community in particular, because all of the rules now are laid out much more clearly. People will have a very clear understanding, whereas before it was murky and confusing, to say the least.

B. Ralston: The issue of software piracy is something that arises. There is a campaign. I'm sure the minister may have heard some of the ads on the radio about people being incented to report software that's not authorized for use. Is there any arrangement with those software sellers, in a subsidiary or concomitant way, to collect tax that may be due as a result of someone not using software in an authorized way?

Hon. K. Falcon: It's not part of the tax program that we are involved in anything to do with the industry, or what have you, to try and deal with these issues. I think probably the Ministry of Justice or the Solicitor General's ministry probably has more direct involvement there.

The issue for us is that if it is a taxable good, you have an obligation to pay taxes. If you're illegally downloading software that is not from a collector, then you have an obligation to self-declare the tax. Obviously, I think, many don't and aren't.

The tax system, again, operates on the basis that it's one of voluntary compliance, so there is…. Granted, this is a very difficult area to police. I'm not even sure there would be a way, which I'm not certain of. I think all jurisdictions struggle with this — over the fact that there is probably an enormous amount of piracy and illegal downloading, etc., that takes place that is depriving states and provinces of tax due. I just don't have a simple answer for that.

[1135]

All I know is that we operate the system. Whether it's software or whether you're selling clothing, and whether it's new or used clothing, if you're in the business of selling a tangible good, you are required to remit and pay taxes in accordance with the rules under "collector" and "small seller," etc.

B. Ralston: No. I raise the issue only because the industry appears to have some programs to incent reporting with rewards. One might see an opportunity to perhaps work with the industry in that regard. But I'll leave that for another day.

In relation to "legal services," there are, as the minister will know, multi-jurisdictional firms that operate in provinces and indeed internationally. The rule that he spoke of in relation to software use. For multi-jurisdictional use by businesses of software, does the same rule of apportionment of the tax apply?

Hon. K. Falcon: If I understood the question correctly…. If law firms with multiple offices, perhaps globally or across the country, have a particular software that is purchased here in British Columbia but is going to be used by all their law offices, then yes, the same rule of proration would apply.

B. Ralston: Perhaps my question wasn't clear. I'm thinking of the legal services themselves.

I was just arguing by analogy that…. Is there the same assessment if you have, say, a pan-Canadian law firm and you do some work on a project in Toronto and some in Vancouver in some kind of national sale of a company or something like that? Is it apportioned? I assume it would be, but given that this is the section referring to purchaser, I wanted to ask that question.

Hon. K. Falcon: Coming up, once we get through these sections, we will come to division 4, "Legal Services," which talks about the tax on legal services that are provided in British Columbia and the tax if the legal services are purchased by a British Columbia resident but may be for services outside of the province.

It is exactly as it was in the past under the old PST. It will be the same in the new PST. Perhaps when we come to that section, we could explore it more fulsomely.

B. Ralston: I'm looking at the definition of "related service." There are two exceptions, (a) and (b).

A service "(a) provided to install tangible personal property" — I take it this would be a home renovation exception. If you, say, purchase roofing products and then, in addition to that, you have the roof installed, I would take it that that would be an exception. Or maybe not. I'm not sure. And (b) would be: "...provided by a person to the person's employer…." Obviously, that's internal to a business or a company. I think I understand that one.

Perhaps there could be a little bit more of an explanation of the exception described in (a).

[1140]

Hon. K. Falcon: This is saying it excludes any service that…. The member mentioned some examples correctly — whether you're having a roof installed or windows installed, etc., on your real property. So for improvements to real property, the labour component would not have PST applicable to it. Of course, you would still have PST applicable to the roofing materials, etc., but not to the labour component of the service provided.

B. Ralston: I'm looking at the definition of "resident taxpayer." I know we've dealt with this in earlier examples in the definitions section. I think that the advantage of dealing fairly extensively with this section is that it will make our subsequent work perhaps a little bit easier.

The definition in (b) includes a number of clarifications — or perhaps elaborations would be a better word. Can the minister explain the purpose of (i) through (iv) and why they are necessary? I think I understand "by the individual," but perhaps (ii), (iii) and (iv) — a brief explanation as to the purpose of those subsections.

Hon. K. Falcon: This will be repeated throughout the act. It's quite common. It's the same as it was before. Effectively, it's just saying: "Look, if you are bringing goods, or tangible personal property, for use or consumption either by yourself…. Or if you're having others bring it in on your behalf, whether it's your brother or an agent or what have you, then you will still have the obligation to have the PST apply."

Apparently, we will see this throughout the act. It is just to ensure that people don't try and be cute about saying, "Well, I had my brother bring this in, and therefore, I shouldn't have to pay tax," etc. It is the same as it was before, and it continues under the new PST.

B. Ralston: Looking at the definition of "sale," which is very broadly defined, but focusing on (d) "barter," I'm presuming that the definition of "fair market value" applies to barter as well — notwithstanding, I suppose, the reporting and regulating challenges there. That would be a sale that would be subject to the definition of fair market value. Is that correct?

Hon. K. Falcon: The definition of "sale" is essentially the same as it was under the old act. I'm looking at the old act now. It also makes reference to "barter," as the member points out. Effectively, in the case of barter, it's really just a question of determining what the fair market value of the exchange is. That does not change under the new PST. It will be the same treatment of barter as it was under the old PST. The definition itself is really the same definition that was there before, just laid out slightly differently under the new act.

[1145]

B. Ralston: In the definition there is a series of three exceptions set out in (k), (l) and (m). Can the minister give an example of…? In (k) it's "the provision of tangible personal property, software or a telecommunications…is merely incidental to a contract for the provision of services…." Perhaps sometimes these points are best illustrated by an example.

[The bells were rung.]

The Chair: Noting the hour, Minister. Division has been called.

Hon. K. Falcon: I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:46 a.m.

PROCEEDINGS IN THE
BIRCH ROOM

Committee of Supply

ESTIMATES: MINISTRY OF
ENERGY AND MINES

(continued)

The House in Committee of Supply (Section C); P. Pimm in the chair.

The committee met at 10:09 a.m.

On Vote 19: ministry operations, $50,234,000 (continued).

Hon. R. Coleman: I have a number of people with me here today I'll introduce before we get started. Starting out, on my left is Graeme McLaren, who's the assistant deputy minister responsible for Ministry of Energy and Mines, oil and gas division. Of course, Steve Carr is my deputy minister, to my right. Laurel Nash, who I introduced last night, is the executive lead….

[1010]

Actually, I didn't introduce Laurel last night. I introduced somebody else last night. But hi, Laurel. She's the executive lead for Energy and Mines, titles and corporate relations division.

I also have Ken Paulson, who's with the operations division of the B.C. Oil and Gas. He's the chief operating officer. We have the commissioner and CEO of the B.C. Oil and Gas Commission, Paul Jeakins, joining us, as well as Randall Smith, chief financial officer of the B.C. Oil and Gas Commission.
[ Page 12417 ]

J. Horgan: I thank the minister on this fresh May morning. To begin my participation in the estimates debates for the Ministry of Energy, Mines and petroleum resources, just for staff benefit, we will be discussing this morning — and for those in the House who want to be here for these sections — natural gas, Oil and Gas Commission, LNG, leases, fracking, electricity requirements and then in the afternoon moving to B.C. Hydro.

I do want to just put the minister on notice that I have couple of issues around the Boss Power issue that I wanted to raise last night, but in the interest of time I thought we would leave that to the end, and we could have a more full discussion of that issue. Then we'll move into what the deputy referred to as the social side of your portfolio, Minister, and my colleague from Vancouver-Hastings will come in to take that on.

I enjoyed very much the dialogue yesterday between the associate Mines critic from Stikine and the minister and his staff. We got through a lot of material, and I think it was in the interest of the Legislature as well as the people of B.C. that we have a frank and candid discussion about an area of revenue generation that I think we all agree is absolutely vital to present-day British Columbia and also the future.

With that, I'd like to start generally by looking at the budget and fiscal plan documents, appendices, page 137, which outlines natural gas price forecasts for 2012-2013 through to 2014-2015. Now, there's a wide range of forecasts for the price of natural gas, and the minister and colleagues will know that volatility of the natural gas price has a direct impact on revenues, has a direct impact on our ability to provide resources for social programs.

Could the minister advise, as I look at the 2012 forecast, how close to the mark the government has been and what his concerns may well be for that forecast throughout the rest of the fiscal year?

Hon. R. Coleman: The way we choose our markers is built around the professional forecasters, and we go slightly below average when we do our forecast. Right now we are actually below that forecast average since it trended down. However, the NYMEX, which is the futures piece, is actually trending up at this point in time.

J. Horgan: Of course, one of the challenges with measurement is that different units of measurement are used by different analysts, by different jurisdictions. Alberta uses one form of measurement; B.C. uses another.

[1015]

Could the minister outline for my colleagues and those watching what the primary unit of measurement is for our forecasts and what the price today is for natural gas? And what was the price on budget day?

Hon. R. Coleman: The unit of measurement is the Canadian dollar per gigajoule at the plant inlet, and that's the price that we work from. The price in the budget was $2.52 per gigajoule, and we think today's price is around $1.60, but we'll get you the actual number because I haven't checked the price today.

J. Horgan: Okay. So that's a GJ, as they say — a gigajoule, as opposed to other units. I know that the Alberta government uses a different unit of measurement when they're budgeting their forecast, so it makes it difficult to compare two jurisdictions that have similar geology, similar interests in natural gas — a little bit more solids, I suspect, in Alberta plays than there are in British Columbia or some of the plays in B.C.

That's a startling drop to $1.60 from $2.52. When I look at the forecasts, we have forecasts with the price point of $3.50 by 2014.

Aside from obviously taking the best advice you can get from the private sector, how is the ministry reviewing this in terms of offering information to the Ministry of Finance so that they can forecast revenues into the future? It strikes me that every forecaster that I review has a negative outlook for gas prices as a result of the proliferation of shale plays across North America.

Can the minister explain how his ministry staff are advising Ministry of Finance officials so that we can plan budgets for next year and the year after?

[1020]

Hon. R. Coleman: The way we do it, of course, as I mentioned earlier, is that we go below the average of all the forecasters, which is what we did for December 31 when we locked in the numbers for the budget, which is when we try and lock those numbers in every year, fiscally. We do a monthly update to the Ministry of Finance, and then we do a quarterly major review with the Ministry of Finance on this stuff.

J. Horgan: In those monthly updates, could the minister provide those figures for the three months we're through? That would be when those quarterly numbers are provided for the Minister of Finance's quarterly updates, I assume?

Hon. R. Coleman: The first three months of this fiscal would be April, May, June, so we don't have the first quarter. We just have the month of April and, shortly, the month of May. They always take this in, and they do their quarterly reviews with the revenue forecasts and what have you. They take this into account, and then they adjust accordingly on their quarterly reviews, as I understand it. That's what Finance would be doing.

What we're seeing right now is a trending upward in the futures market. But this gap…. As the member knows — he's described it pretty well — there's a large amount of natural gas available in North America. That's why we've sort of focused our sights on also doing LNG.
[ Page 12418 ]

Some of our plays are better than others because they have more liquids in them than others. So they can actually make it work because they have the liquids on the natural gas side, which makes the value of the gas coming out of it higher, because they can get other products out of it.

What we do is that we will give them a quarterly update. When they need it, they get a monthly update, and then…. I know that the Ministry of Finance would probably do their first quarterly update somewhere…. I think they do it in September. I'm not sure. It's August or September. Usually the public accounts get done at the end of June, early July. Then you'd have the quarterly update either at that time or September. I can't remember the exact timing, but they would take these numbers into consideration.

J. Horgan: I appreciate that it's early in the year, but as we look toward an election year and commitments that government has made in its fiscal plan going forward in its three-year budget plan, it's heavily dependent on natural gas revenues. The minister knows that, and certainly, I know his staff….

In my time in government there was no one that was more anxious than the Treasury Board secretary when they got a call from the Ministry of Energy and Mines, because if revenues were off just a tick, it would have a profound impact on budgeting.

Can the minister advise if…? As we go into a pre-election budget, what level of certainty can the public have that the revenue projections based on the forecasts that the experts are providing and the analysis that his staff does are going to be clear and transparent?

Hon. R. Coleman: It'll be clear and transparent. It can't be anything else but, because we have to take the price when we get to the inlet. That's the price we'll give in the quarterly review. Each month we give them an update. We'll give them the quarterly update. They would have to put those numbers into their budgets for transparency or into their quarterly update for transparency.

I don't know how it affects the overall fiscal plan by itself, because there could be a higher increase in PST. There could be an increase in other taxes across the board which we don't have an effect on. But we certainly — the member is right — would much rather make the call to the Ministry of Finance and say we're at $3 versus $1.60-ish. But those are the facts, and those are the facts that would have to be reported in the quarterly update.

J. Horgan: I take from the minister's comments that, in preparing forecasts and doing the material assumptions for next year's budget, they will lowball, as they have in the past, and that the public can have some confidence that through the wide range of private sector analysis the governments reviews that the low end of that spectrum will be used for budget-making.

[1025]

I want to move to the solids question — wet gas versus dry gas. It's interesting to have the Chair know as much about this, I think, as the minister and the critic, which makes for an interesting discussion today. I hope there won't be too many interventions to correct either one of us.

Interjection.

J. Horgan: Yeah, he's all mine. Okay, good enough.

We know that the value of a play depends on what else you can get out of it, and the minister said that we have a good distribution of wet versus dry gas plays. Could the minister provide a breakdown? Whether it be through the Montney, the Horn or other plays in British Columbia, the delineation between those that are wet and those that are dry — percentages.

Hon. R. Coleman: First of all, to the member's previous question with regards to the budget-making process. We actually thought we lowballed this year with all the projections. All the experts were telling us where they thought natural gas would be coming into the first quarter of this year, into the budget-making process. We would have to go through the same process again this year. I'm sure the average across…. Looking at the futures, we would come up with what we thought the number was going to be.

The Horn River is dry. It's a lot of dry gas. The Cordova and Liard are also dry. The only one that has some liquid is the Montney, which is making it the stronger of the plays right now. But that's not all wet. Some of it's wet, and some of it's dry, so there's a mix.

J. Horgan: With respect to bonus bids…. I look at a breakdown of revenues to the Crown and the success or lack of success of bonus bids over the period of the documents that I have. They're not government documents, but they're based on government numbers.

The bonus bids from April 2007 to April 2012…. If we go back to some of the spikes — January '08 was a good month, July '08. Then of course catastrophe in international markets, and we drop down to next to zero from most of 2009, with a little bit of a spike in the summer, and then another spike in July 2010 and then virtually flat from that point on in terms of revenues.

It is a complicated formula, and I think it would be useful for all of us — with the benefit of the staff experts available today — if the minister could explain how we spread those bonus bids out for the budgeting cycle, and how we determine what we're going to do when we've had virtually nothing coming in over the past number of years because of the low price — I think also because of the amount of land that was leased during the boom
[ Page 12419 ]
period that's not yet in operation.

As we've already discussed, most of it's dry. Therefore, there's not a lot of value beyond the natural gas to be extracted from the various wells.

Hon. R. Coleman: The accounting piece is that it's averaged over eight years. It's not taken in any given fiscal year. It's averaged over an eight-year period, and that's how Finance does that. Obviously, we did have a period when the gas prices were high, and we got larger bonus bids, largely in the Horn River. That was mainly where most of the bonus bids were coming in at the time because the Montney was a little bit ahead of its time there.

[1030]

We have lots of gas still, we believe, in the Horn and Liard and what have you, but obviously, that's going to be dictated by how successful we are in some other fields and by the price in the future.

J. Horgan: I thank the minister. Well, if you look at bonus bids over the past two years, they've averaged about $26 million a month. In the early part of this century we were into the hundreds of millions of dollars per month. I appreciate the rolling formula, but does the ministry have an assessment of what the falldown — if I could use a forestry term — is going to be? At what year can we start to predict that we're going to have virtually no revenues budgeted for land leases? Is it eight years out? Is it seven?

Hon. R. Coleman: The pricing, as the member knows, has been pretty cyclical, so the cycle affects the bids. I think it's a bit hard to predict just on that flat of a question, the reason being that we have liquefied natural gas that we're working very aggressively on, which would change the game as far as the amount of gas that we would need and also the opportunities and the pricing, because we'd be into the Asian market.

As that growth takes place and as the drilling takes place there, we would have more economic reserves, frankly. Some of the reserves in Liard are a little bit less economic because of distance. But if they're going to a different marketplace…. It'll also depend on what the future price of natural gas is. It's one of those ones that I don't think you can actually predict precisely.

We would hope that we will have the success on the LNG file, given the players that we have, and that we would have some positive results going forward as we see who comes in and buys. Right now we're seeing some pretty significant investments in buying pieces of some of the plays, which means those guys are getting serious about where they're going. If that happens with regard to the LNG piece, it'll change the pricing, and the calculations will be completely different than what they would have been in the domestic market for the last 30 or 40 years.

J. Horgan: I don't disagree with the minister that pricing is cyclical on all commodities, but the advent of shale gas right across North America — in fact, perhaps even below this building if we were so inclined — leads to a genuine game changer North America–wide — and, in fact, perhaps worldwide. So I appreciate…. I want to get to LNG in a moment. But if I could just stick to domestic supply, let's talk about what we know, what exists today and the market that we're operating in.

I look at bonus bids in Alberta over the past number of years since the downturn, and they've continued to trend upward, primarily because of wetter plays than in B.C. The industry goes where they can make the most money in each quarter or each cycle. The fact that the bulk of our plays are dry means that the industry…. As you know, it goes back and forth across the administrative line between B.C. and Alberta to where it can make money. We've seen rigs moving out, going to Alberta, because they can get more money today.

Putting aside LNG — we can have a longer discussion about that as the morning rolls along — and based on the continent being awash in gas, what are the plans to manage this from a budgetary perspective when we have more attractive plays just across the border in Alberta than we do in British Columbia?

[1035]

Hon. R. Coleman: We're still getting bonus bids, but the member is right. It's not just because there might be a little more liquids in some of the Alberta plays. It's price. It's people deciding when they want to move.

We still have a lot of drilling going on in the Horn, proving out reserves, because of the opportunities that they think are out there. Obviously, demand actually drives price. I mean, if the price moves up over time, then your bonus bids would move up over time as well. That's the trend we're expecting to see. We don't know whether it's going to go up and when, but obviously, the other play is what happens with the price when we get into the Asian market.

We still have a lot of activity in the patch. It's just that on our bonus bids, they're down simply because people have actually bid on land leases up there. They're doing the drilling to prove out those reserves and bring some of it on line. The other ones are being…. Obviously, they'll hold the reserve until the price gets to where they think it makes sense for them.

J. Horgan: Well, the information demonstrates that the price per hectare in Alberta is going up and the price per hectare in B.C. is going down. That's been consistent since 2009. The overall quantum of revenues in Alberta has been going up, and in B.C. it's going down. I would say, if I were working at Treasury Board…. I know that they're beavering away, as they always do, every day into the wee hours, burning very small candles to make sure
[ Page 12420 ]
that they're not wasting any of the public's resources. They are concerned about this sector, and rightly so.

I appreciate that the minister wants to be bullish on expectation, and the LNG file gives us that opportunity. I think there's almost uniform support for that position here in the Legislature and, in fact, in most parts of B.C. But the trend is disturbing, and I wanted to flag that for the minister.

I also want to talk for a moment about what are characterized as deferral account balances. Not the Hydro deferral account balances, which I'm very much looking forward to talking about this afternoon, but the deferral account balances within the oil and gas bonus bids. Can the minister explain that to me? It's still not quite clear to me. I appreciate it's…. I think it's part of the rolling average, but if someone could open a binder and get to that page.

Hon. R. Coleman: This is basically getting back to what I'd said earlier was eight years, but it's actually, I'm told, nine. It's based on a recommendation of the Auditor General to be consistent with generally accepted accounting principles.

[1040]

The bonus bid revenue recognition reflects the nine-year deferral of cash receipts on the sale of Crown land tenures, and basically, that's to average it across. So we don't book it into one year. We defer it and book it over a nine-year period.

J. Horgan: Could the minister advise when this process was instituted? I hope it wasn't in 1998 or 1999.

Hon. R. Coleman: I'm guessing 1992 or 1993, Member. We will get that information for you. We'll find out when the accounting change was changed. There's obviously some advice that came. I know it's been standing for some time, because having sat on Treasury Board, I know that it's been around for a while. I don't think I ever asked if there was a policy change that brought it there, but we're going to get that information for you.

J. Horgan: I was just looking over at my favourite person from the ministry who's really on the electricity side and who could have maybe had the answer to that, but he's not paying attention, so I'll leave him be.

Interjection.

J. Horgan: "My favourite person," I said.

My reason for raising it, Minister, is that if it is a recent phenomenon, and I believe it is…. The Auditor raised the question when there was an enormous increase in activity, I think it was. I know someone at the ministry is working right now to get that answer for us.

My concern, again, is from a budget perspective. If we are going to spread this revenue out over a number of years, I'm concerned about the falldown. Should we not see a spike or an increase in land leases in the future, in the recent future and then the distant future, then at what point do these deferral accounts drop off completely?

From a budgeting perspective, the opposition has some concern as we look to election cycles to better understand how this very important piece of revenue to the province is going to be managed. I don't have a clear understanding of it. That's the reason for these debates. That's the reason I bring it up.

I'll move off this point and allow the ministry to maybe get me that information or perhaps even provide a briefing on how we got there and when we expect it to drop away.

I'd like to move now to a question of royalties and how royalties are deployed here in British Columbia. Are they uniform across uses? Someone said to me the other day that there are different royalties for different activities, and maybe the minister could enlighten us all on what those are.

Hon. R. Coleman: We have a number of royalty programs, hon. Member. We have the low-productivity royalty program, which was introduced in 2001. The low-productivity royalty program is intended to prevent premature shutting of wells when production has declined.

We have a marginal royalty program as well, which was instituted in June 2003 and made permanent in 2006. It encourages development of gas reserves that are marginally economic because of depth and flow rates. Then we have the ultramarginal royalty program, which obviously goes along with the other one. I could tell you about that.

[1045]

In 2003 we put in place a summer royalty credit program, and that was made permanent in 2006. It proved to be very successful. The role of that particular royalty program was to encourage summer drilling so that we'd have year-round activity for people, so that the jobs would be year-round versus seasonal.

The deep well, deep well re-entry and deep discovery well royalty credit program, which was introduced in June 2003, is actually one of the royalty programs that really made a big difference with regards to shale and the larger finds that we found, basically, because it encouraged people to go deeper and to horizontal wells. That program was very successful.

We have an infrastructure royalty program which works with industry when they build infrastructure in the area. We get about a 7-to-1 payback on that program. Basically, about $120 million a year goes into that program, and we get a 7-to-1 return on the infrastructure that comes out of that.

We have the net profit royalty program, which was approved in May 2008. That encourages the development of resources that are technically complex, such as enhanced
[ Page 12421 ]
oil recovery, shale gas, tight gas or coal bed methane. We do have a coal bed gas royalty program, introduced in March 2002, and we have a Sierra-Yoyo-Desan road royalty credit program, which has to do with the 168-kilometre road that goes up through the Horn and up into the Cordova area. That's a relationship with industry to build some infrastructure so we can get better access to the resource.

J. Horgan: That's a whole lot of royalty programs. I appreciate that the industry is complex. Certainly, your staff are aware of that better than anyone around this table.

But for regular folks in Juan de Fuca and around the province that seems to me to be a whole lot of different programs for what, in essence, is one activity. You find a resource, you drill a hole in the ground, you extract it, and you get it to market — absolutely simplifying that. I appreciate it, and you don't need to swing at me with that one.

In reality, most of us base our understanding — my generation, anyway — on the Beverly Hillbillies, "And up through the ground came a bubbling crude," and everybody's getting rich. It's not that simple, but for most people, that's how they view this sector.

When we talk about royalty programs, we talk about credits for activity so that we can encourage activity and realize revenues to the Crown. There is oftentimes confusion, and that's why I raise this issue. The minister, I think, highlighted for me very ably the confusion that multiple programs would leave the public with. That confusion needs to be addressed.

I'm wondering if the minister could break down, in terms of the overall take to the Crown from natural gas royalties, what wriggle room does the ministry have — or the Minister of Finance, probably — to tweak those? When the Alberta government did that, of course, there was an exodus across the border into British Columbia. We have to remain competitive with our number one competitor in this area.

But how much room does the minister have? Is there a number he could set or advise us that we may well see in the year or years ahead that will realize more revenue through royalty programs?

[1050]

Hon. R. Coleman: I'll try and answer the member's question. Basically, we're constantly redoing the competitiveness of our royalty programs. He's right. It's not about just drilling a hole and having the bubbling crude come up through…. Unfortunately, we don't have bubbling crude to begin with. It's not oil.

I know that when we started some of these royalty programs back in the early 2000s, particularly the deep-well program in that particular package, there wasn't the drilling taking place. So the discoveries weren't taking place. This program encouraged them to go down greater than 2,300 metres. They did the horizontal wells. We found a massive amount of gas, which has now changed our outcomes, frankly, for probably the next generation, at least. Simply because we have….

I remember when we came here in 2001, because we were dealing with the conventional stuff only, which was what was known to the industry at the time. We didn't have a whole lot of gas reserves in B.C., in our minds, because we hadn't discovered this. So that particular program, it actually started…. Encouraging the deepening of existing wells and encouraging incremental production actually proved to be very successful.

So what we do, Member, is we try and stay completely competitive. The one royalty program that is in place that isn't used, because we don't have any coal bed gas going on in B.C., is the coal bed gas royalty program which is in place. It's been in place since March 2002. All the other ones have some activity, but there's no real coal bed activity right now.

D. Donaldson: On the topic of coal bed methane. The government issued a tenure to Royal Dutch Shell — it might have been Shell Canada at that point, but it's now Royal Dutch Shell — in 2004 for the exploration and development of coal bed methane on a 412,000 hectare piece of property that's become known as the Sacred Headwaters. It's the birthplace of the Stikine, the Skeena and the Nass rivers in northwest B.C. — a very ecologically intact and important ecosystem for the people living in the province and the people downstream, too, that depend on the clear, cold and pristine waters for a number of reasons — fisheries and salmon habitat being one of them.

There was quite a widespread reaction. Tahltan communities, ranchers, farmers, sport fishermen — right across the spectrum — expressed their displeasure at the possibility of Shell developing coal bed methane in this very ecologically sensitive area.

In 2008 the government, through an order-in-council, issued a moratorium on the exploration and development of coal bed methane under this tenure on a two-year moratorium. At the news release at the time the government said it was a break to have more discussions with Tahltan and local communities about Shell's activities.

I questioned the then Minister of Energy in 2009 during budget estimates regarding how those discussions were proceeding. He said at that time that they were proceeding. He had nothing to report, but with the two-year time frame coming up, he expected to have an announcement regarding those discussions. That would have been in 2010.

Subsequently, the government took advantage of the fact that the order-in-council said that there was an ability to extend that moratorium to four years. So now we have the moratorium that is in place under the order-in-
[ Page 12422 ]
council expiring December 5 of 2012, this year, approximately six months from now.

My question under these budget estimates is: when are we going to get the government's decision on whether to allow coal bed methane exploration and development in the area known as the Sacred Headwaters? What have the results been of the discussions with the Tahltan and communities and other stakeholders in that area? It's been 3½ years. Surely, there are some results.

[1055]

Hon. R. Coleman: I'm familiar with the issue, and I'm familiar with the file. Right now MARR has a mandate to be in discussions with the Tahltan and the company. MARR is the Ministry of Aboriginal Relations and Reconciliation.

I haven't had a recent update on those discussions, but that's taking place with the Tahltan and Shell. They have a mandate to go have the conversations. Shell has agreed, as you said — you're correct — that the period of activity is to the end of December 2012. That could be dealt with in another cabinet order, if necessary, as we go through this.

My understanding is that discussions are taking place. I don't know at what level. I just know that they're taking place and that the Minister of Aboriginal Relations is leading that file for us.

J. Horgan: I'd like to now move toward hydraulic fracturing and its role and effects in the Peace country — the region that, of course, is providing us so much opportunity for revenue generation but also with some interesting environmental and health risks.

I know that the Minister of Health has said that the regional health authority is doing a review of the potential health impacts of hydraulic fracturing. Is that something that the ministry is participating in? Is the Oil and Gas Commission playing a vital role in that, and could the minister potentially give us an update?

Hon. R. Coleman: Yeah, we're involved. The phase 1 health study is just about complete. I think it will be released shortly by the Ministry of Health. They're leading the file with the health study, which would then move on to a phase 2 implementation process. We're involved. We'll be involved in the air and water quality and monitoring piece that we'll do with the industry, the Oil and Gas Commission, us, Ministry of Environment, Ministry of Health, Ministry of Agriculture. All the ministries are involved in the health phase studies of this, but it is being led by the Ministry of Health.

J. Horgan: With respect to the fracking, I've been to the Peace. I've been to frac sites. I've talked to workers, and I've talked to residents. One of the concerns, certainly, that people have is not just produced water but the volumes of fresh water being used to produce these revenues.

Recently, a water licence was granted to an oil and gas interest that will be using water from the Williston reservoir. I'm wondering…. I've never had a complete answer from anyone on just what analysis went into the issuing of that water licence. I understand it was the Oil and Gas Commission that did so.

Does the minister believe…? Having held a number of portfolios, he will know that water use is spread over many, many entities within government, agencies and ministries. Can the minister explain what the role of the Oil and Gas Commission is in issuing water licences?

[1100]

Hon. R. Coleman: Forests, Lands and Natural Resources Operations does the licensing, and the Oil and Gas Commission deals with the pipe.

J. Horgan: Well, would the ministry…? Certainly, I'm sure the Oil and Gas Commission would have information on the volume of water used in a calendar year or a fiscal year or a month. Pick whatever time period you have information for, and provide it, please — the volume of water used and the benefit to British Columbia from that usage.

Hon. R. Coleman: This is one time, given the size of the font, I have to use the glasses.

There's an approved amount, and then there's an actual amount. The approved amount, total volume of water that would be allowed on an annual basis, is 31.6 million cubic metres. The total volume that's actually used in the oil and gas area is 3.6 million — so a big gap, but that's what's actually used.

On top of that, we've also used a total of 3.6 million of total saline water. And out of the water we use, that total of 3.6 million, 40 percent of that is recycled.

J. Horgan: Keep the glasses out.

Approved use — so licences issued? Is that what approved use means? So 31.6 million cubic metres, actual use 3.6 million. Was that in the past year, the past six months, the past…? When was that?

Hon. R. Coleman: That 3.6 million is for the year 2011.

J. Horgan: So total use 3.6 million. The minister was giving me a breakdown of what was recycled versus fresh — and I didn't get that — of the 3.6 million. Could he break that down for me?

[1105]

Hon. R. Coleman: Yes, I can. Forty percent of that is recycled, and then there's 3.6 million total saline water that's used. It's not fresh water. It comes from deep in the ground. Then some of these numbers will change in the
[ Page 12423 ]
next year as we bring on the grey-water project that's being done with Dawson Creek's wastewater. It will be used instead of fresh water. So that will change.

J. Horgan: I had the mayor of Dawson Creek and Shell tour me around that project. The grey-water project in Dawson Creek is a great innovation — good for the community, good for the industry. I'm happy to see that. We need to see more of it.

There is, again, a significant concern. That 3.6 million cubic metres is a lot of water, but if 40 percent of that is recycled, I'm a bit more comforted than I was before I asked the question.

Again, one of the values for those who lament all of the work that goes into creating the massive amounts of binders that ministries go through is to try and tease some of this information out so that that work is worthwhile and the public has a better understanding of what government does and why they do it.

One of our interns, Ella Rebalski, has been working with me on some questions. I've characterized them as the Ella Rebalski memorial questions. The one at the top of that list is about domestic water well-testing. The Ministry of Energy and Mines has been working with CAPP and others to put in place operating procedures. We have voluntary or mandatory — I'm looking for a head nod on that — disclosure of fracking material, fracking fluids.

But before I get to that, I'd like to know…. There's been a distance set — 250 metres from the wellhead — to test domestic water wells. I'm wondering if the minister or his staff could tell me why we set on the figure of 250 metres from a wellhead to a domestic water well, and why only one test per well after drilling begins.

Hon. R. Coleman: First of all, the well goes to the Ministry of Environment when it goes off lease, so the distance, I would imagine — we can check that out — has been established by them as their standards. We've never found any trace of any fracking fluid in a well anywhere in British Columbia. We are working, as we go through this health study, at looking at whether we need to have more requirements and how many times we would test a well.

J. Horgan: So the 250-metre requirement is set by the Ministry of Environment, and the singular test is subject to debate, and there's movement on that. Okay.

I'd like to go back, then, if I could…. If I understood, Natural Resource Operations provides licences through the Oil and Gas Commission to operators for fracturing. The issue around what the value of that water is…. With respect to Williston, you've got an electricity value to that water.

[1110]

I'm wondering, at what stage and which department — whether it's your ministry, the Oil and Gas Commission, or the Ministry of Environment or B.C. Hydro — puts a value on that water that would have been foregone water for electricity that's now being used for fracking.

Hon. R. Coleman: They do pay a water licence fee. We're going to get some more information from FLNRO for the member, if possible, before these estimates are done. We'll get you some information from them about that.

I can give you the example of the Williston one, though, where we have two. Talisman and Canbriam Energy have it. Basically, they pay annual water rental fees to the province for each licence of $4,015 a year. In addition, B.C. Hydro gets compensated for the loss of energy at $129.50 per megawatt hour plus inflation. The maximum would be $225,000 a year.

J. Horgan: Well, $129.50 a megawatt hour is certainly higher than the spot market price. Anyway, that's for later on in the afternoon. I look forward to that. That's great.

The two companies that have been issued a water licence are paying a nominal fee for the water, $4,000, and then a megawatt-hour price — to B.C. Hydro or to the Crown?

Hon. R. Coleman: That's to B.C. Hydro.

The Chair: Member.

J. Horgan: Great. Thank you very much, hon. Speaker. Hon. Chair — sorry. You're getting promoted. Must be the haircut.

Going back to the Canadian Association of Petroleum Producers' voluntary disclosure with respect to contents of fracking material — fracking fluid, mud, the various names that are given to the process — where is the province and where is the ministry on making those, which are currently voluntary rules at CAPP, mandatory in British Columbia? How extensive are they in terms of…?

I understand the industry's concern — not about an inventory of all products used, but it was characterized to me, in the Kentucky Fried Chicken analogy of the 11 herbs and spices, how much of every substance they use for their fracking soup. Shell may use one configuration; EnCana uses another. So the proprietary information.

At first blush one thinks that that's an argument to deflect attention away from the substances. I have to say candidly that in my discussions with industry leaders I don't sense a desire to subvert transparency. It is actually a proprietary issue, and perhaps the minister, when he's commenting on what the B.C. rules are, can maybe make a statement on that point I just raised.

[1115]

Hon. R. Coleman: I actually thought this was a pretty
[ Page 12424 ]
good news story when I became the minister. I sat down with the Canadian Association of Petroleum Producers, and I went through all the industry meetings in Calgary with folks in different portions of the industry. We talked about the fracking fluids, and I asked the question: "Would you voluntarily disclose that?" The answer was yes, so it didn't require any legislation.

The fracking fluids are mandatory, and they all came on line on January 1 of this year. The mud is actually voluntary. Today we have 160 mud, so they are disclosing their mud mix as well.

There are some ingredients…. They do disclose all the ingredients. There are between 5 and 3 percent or less that are basically ingredients that we don't have the actual percentages of, but it's a very small percentage within the fluid. That's governed by federal legislation.

Those ingredients…. Because of the proprietary piece, they're not required to put in that small percentage of what their mix is. They do, though, have to disclose the ingredients. In addition to that, they have to have a handling-of-the-materials and a delivery-to-site plan. They've actually had to keep track of it — how the materials, if they're hazardous, would be handled at the site, stored, etc.

J. Horgan: The minister said a number, 160. I wrote it down, and I don't know what it was. You said the fracking fluids disclosure was mandatory, and you said — I think it was with respect to mud — that there were 160. Was it companies? Out of a total of what?

Hon. R. Coleman: Sometimes I think that's why we need people talking across the table.

Basically, all the fracking fluids have been disclosed to date out of the 51 companies that do the fracking in the patch. The mud is being worked on now as a voluntary compliance as well. It's not that the mud has the fluids in it. It's the other stuff that does. We will be working on the mud next as a voluntary….

Basically, they're being cooperative. We're going to come up with a way that they can disclose that as well, but everybody is disclosing their fracking fluids.

J. Horgan: What's this 160 number, though?

Hon. R. Coleman: That's just the number of disclosures to date from 51 companies.

J. Horgan: I wasn't clear, Minister. You said 51 companies in your second answer. Then the 160 didn't make sense to me, but if that's the number of disclosures, I understand that now.

[1120]

I'd like to carry on in this vein. The Oil and Gas Commission monitors and regulates. I'm wondering if you could advise how many staff are monitoring the disposal of fracking material once a well has been exhausted or once the recycling of the produced water has reached its ultimate end.

You can't reuse and reuse and reuse. At least, that's what I'm advised. If that's not the case, I'd be happy to be corrected.

How many ministry or Oil and Gas Commission staff are monitoring this activity?

Hon. R. Coleman: We have ten reservoir engineer staff who do the testing and the monitoring, and we have 14 inspection staff who do the enforcement piece.

J. Horgan: And how many active wells in the Peace country?

Hon. R. Coleman: We have 10,805 producing wells. We drill about 600 per year, and we do 5,000 inspections based on a risk-based assessment.

J. Horgan: During those assessments — again, with produced water…. With that many — 10,800 active wells, 600 rigs — going at one time…. When we're dealing with processed water, quite often the solution is drilling deeper and burying it in a deep-water aquifer or capping for all time — so the principle goes, in any event.

Can you give me a bit of an assessment on how that's going in terms of produced water disposal?

[1125]

Hon. R. Coleman: We don't have the total injection numbers, but we're on it, and we'll try and get you the numbers.

J. Horgan: Just on one last issue, and I think that actually the Chair gave me an answer, and that's the Farmers Advocacy Office in Dawson Creek. They had been seeking another year of funding. I'm wondering if the minister or staff could give me an update on the status of the Farmers Advocacy Office. Did they receive the operating moneys they were looking for? What's the minister's view of the long-term future for that organization?

Hon. R. Coleman: The Farmers Advocacy Office was established as an 18-month pilot project in March of 2010. We're supporting the work of the Farmers Advocacy Office for another year with $100,000 to extend the contract. We do this in partnership with the Peace River regional district, which is also a funder with regards to this. The whole idea was to get to where we'd have a model that would work for the long term for the communities.

By the end of this particular year we should be in a position to know whether this model is the right model or one that should be adapted or changed or whatever. But there needs to be a relationship — no question — be-
[ Page 12425 ]
tween the land base and all across with regards to oil and gas activities. Whether it would be exactly in this form, I can't say today, but I know that we're definitely committed to making sure that we find a way to make this office work in a way that the whole pilot was supposed to start to come up with solutions for.

J. Horgan: I think the Chair will agree with me, and I know the member for Peace River South will as well, on the value of the office.

The minister is right. You can work on configuration, but the need is to have a place where landowners can go when 51 companies — the minister used that number earlier on — are looking to utilize the land base that many of these people have lived on for generations. The deals that get done for compensation, whether it be for pipe, whether it be for pads, are different right across the Peace. To have a place where landowners can go and have some confidence that it's not a government agency per se and it's not industry I think is vitally important to the continued success in the area.

I know the Chair won't nod, but I think he probably agrees with that sentiment. I know the Minister of Transportation does. I'm pleased that the government has that firmly in their sights — the importance of an independent, arm's-length or community-focused entity to deal with landowner rights issues. I'm pleased to hear that.

We've only got a few more minutes this morning to deal with natural gas and the oil and gas elements of the ministry, so I wanted to move to liquefied natural gas and the opportunities that all of us have been talking about but, I think, sometimes a little bit too hastily. The minister will know from his time in the private sector and his time as a minister and a member of the Legislature that "show me the money" is pretty important.

[1130]

I've been meeting with industry representatives, and the minister, I know, meets with industry representatives. Those that were enthusiastic 12 months ago are finding challenges — regulatory challenges, capital challenges, geological challenges, market challenges. The list is as long as your arm. I don't want to be the guy that rains on the parade, because I do support the thrust of the government policy in this area. But there needs to be, I think, some sober reflection on market realities.

I'm wondering if the minister…. In the government's zeal to get out a document last fall, it was talking about potentially five LNG facilities. The market is already being served — the Asian market — by Qatar, by Australia and by other jurisdictions. What's the minister's take on just how many LNG facilities are practical in today's world economy?

A secondary question to that: what is our ability to meet that market with existing infrastructure in place in the Peace to produce that volume of natural gas to meet our domestic markets as well as these emerging international markets?

Hon. R. Coleman: I'm still pretty bullish on this, given the conversations I've just had with the companies in the last 30 to 60 days. I think the game changes relatively regularly, but there was a recent partnership announced by Shell, Mitsubishi, PetroChina and Korea Gas to pursue LNG in a group, as a partnership, in British Columbia. Those are all major world players. In Shell's case, quite frankly, it's not a case of having to find a market for the LNG. They have the customers that need the LNG.

We have the Apache-EnCana project, which is proceeding along its processes. There seems to be some very good relationships along the route to one of the pipelines with regards to First Nations.

We also have a very major company, British Gas, who are into a relationship in the Prince Rupert port and who are also looking at how they would do it. They have significant partners as well, though they don't really need partners. They're doing some work. We have people working on pipeline routes with regards to that particular proposal and discussions taking place as to how we would get the gas to these locations.

This has been a huge, huge body of work led by my deputy minister and the deputies in government to make sure that we're coordinating all of this and staying in contact with the companies as we go through it.

The member is correct. We are in a competitive market. However, at this point I'm told that we're looked at as being very favourable for all these opportunities and that they're going to need our gas as well as other people's gas in the long term. It's still a lot of work to do, but certainly liquefied natural gas is very important to the future of our oil and gas industry.

J. Horgan: One of the key components of success on this front is an ability to actually liquefy the gas, and that is very electricity-intensive or energy-intensive. You've gotta squeeze and you've gotta freeze, as they say. You've got to get the gas through the pipe, and then you've got to freeze it at the other end.

[1135]

I know we'll be discussing B.C. Hydro this afternoon. I'm quite happy to defer some of these questions to later in the afternoon, but I'm fairly confident, with your deputy at your side, that you'll be able to at least explore in principle some of these issues.

Our big concern on this side of the House, and I think right across the province, is that residential ratepayers are going to be subsidizing the development of this industry, whether that be through increases in rates for residential users, existing industrial users, commercial users of B.C. Hydro.

I know that in my discussions with industry, they talk to me about the 93-7 issues — 93 percent clean, green
[ Page 12426 ]
energy versus 7 percent non in the Clean Energy Act. Have you had any direct requests to amend the Clean Energy Act so that natural gas could be used to squeeze through compression and natural gas could be used for electricity generation to make these projects more viable?

Hon. R. Coleman: I apologize, Member. I have to be very delicate in how I answer this question, because there are some very sensitive negotiations going on right now that are subject to non-disclosure agreements that I'm party to. I'll have to check and see if we could do a confidentiality agreement and have some discussion about those things off line. I wouldn't be able to have them here because I would then be breaking the non-disclosure agreement and also putting some people in a situation where their competitive discussions are being impacted.

We are in discussions to make sure that the rates we do get will not impact ratepayers today. We have had discussions. It's actually in the LNG strategy that we may have to shape some of the power with natural gas. We may have to decide whether we power some of the plants in the refrigeration process with natural gas.

The 93 percent versus 7 percent hasn't come up yet. I suspect as we go through and see the actual impact and what power we may need as we go through these discussions, that may or may not come to the table with regards to some discussions. Certainly, one of our largest proponents is most interested in actually having clean energy as the power they would use to make the LNG, and they think it's a market advantage for them. They have some different thoughts about how much power and how they would blend it with regards to that.

I probably have gone about as far as I can go with regards to some of the solutions that are being determined, simply because of the non-disclosure agreements and the confidentiality.

J. Horgan: I guess we'll now know whether the press gallery is watching our estimates or not. I think that discussions of non-disclosure agreements are going to lead to some questions in the corridors afterwards — or maybe not. Who knows.

I respect the minister's position, and I won't belabour that point. But I will say, and it's not a surprise to anyone who follows this, that in discussions I've had with the business community and with the sector, particularly those companies that are proceeding towards construction and providing product to market, there are challenges around electricity.

[1140]

Again, it's unfortunate that we're going to have to take a break for the lunch hour before the B.C. Hydro people come, because there's a whole host of other issues around the northwest transmission line. How are we paying for that? We can discuss that this afternoon, but all of the industrial activity that the jobs plan is predicated upon requires access to low-cost energy, whether it's low-cost clean energy or whether we, in our wisdom, decide to take advantage of our natural gas resources to power some of the activities we're talking about — mining, LNG, fracking sites, and so on.

These are discussions that are sometimes uncomfortable. I don't mean uncomfortable between you and me, but uncomfortable broadly for community when we talk about climate action and the impacts. When my colleague from Victoria–Swan Lake and I were issuing statements about the opposition's position on some of these issues, we acknowledged up front that delivery of a plan that would lead to one or two or additional multiples of LNG facilities is going to have an impact on our climate action plans, plans that were passed by this Legislature and that are law in B.C.

With that in mind, again, not wanting to put the minister in an uncomfortable position with respect to non-disclosure agreements that he's privy to or a party to, at what point will we have that honest discussion about what the growth of this sector will do to our climate action plans, goals and objectives?

Hon. R. Coleman: I think we can have those discussions today through the afternoon. I don't have a problem with that. Some of the commercial relationships with regards to capacities of power and those sorts of things that are being discussed are actually the confidential piece that can't be….

Philosophically, the discussion around natural gas being used to create electricity in some areas of the province to offset so that we can do enough power for other things, how we would balance that, whether we would look at some changes as necessary as we go through — I think those are all open for discussion.

J. Horgan: Specifically with respect to our climate action targets, our greenhouse gas targets, has the ministry…? What entity in government is doing the analysis of what the impact of an increase in emissions in this sector will have on other sectors — transportation, housing and so on?

Hon. R. Coleman: The Ministry of Environment is doing that work now.

J. Horgan: Is the Oil and Gas Commission or the oil and gas branch of the ministry providing information or data on potential increases in GHG emissions to that entity? Is there a cross-government committee, or do we just ask for information when it's convenient for the Ministry of Environment?

Hon. R. Coleman: In government they're all involved. All the ministries are involved in that discussion. They're leading it, but all the agencies are involved, including
[ Page 12427 ]
Transportation; Energy and Mines; Forests, Lands and Natural Resource Operations; Agriculture; Ministry of Environment; Ministry of Aboriginal Relations and Reconciliation. All of them are involved in forming those discussions. Obviously, that will form back into discussions with regards to the other issues the member has brought up.

J. Horgan: I guess what I want to get at with the minister is that it's a government initiative, an integral part of…. I would say in some instances that the foundation of the jobs plan is to see industrial activity in the north, in the northwest particularly, whether it be mining or the development of LNG facilities.

All of those are energy-intensive. All of those will lead to an increase in overall emissions from those sectors. That's going to have an impact on how we deal with other elements. The two main elements, of course, are transportation and housing.

As the ministry responsible and the minister responsible for this sector, what advice are you giving to the Premier and cabinet about what direct impact the jobs plan will have on those targets that were legislated by all of us that were elected between 2005 and 2009?

As House Leader, I know this isn't part of the estimates process, but have you got any plans for amending that act? I'll ask it because I can, I suppose.

[1145]

Hon. R. Coleman: Noting the hour, since we have to run and vote, I will just say that our intent on the first piece is that the Douglas Channel and the Kitimat KLNG will be powered from existing resources. We're working on the power needs and what have you of B.C. Hydro pretty extensively for this particular industry. I think we'll probably just wait until after lunch to continue that piece of the discussion.

I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 11:47 a.m.

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