2013 Legislative Session: Fifth 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)

Monday, February 25, 2013

Afternoon Sitting

Volume 42, Number 4

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

MONDAY, FEBRUARY 25, 2013

The House met at 1:33 p.m.

[Mr. Speaker in the chair.]

Routine Business

Introductions by Members

Hon. M. Polak: I have the privilege of introducing to the House today three very deserving recipients of the Queen's jubilee medal from the Ministry of Transportation. They are Dirk Nyland, Grant Lachmuth and Sharlie Huffman. Would the House please make them very welcome.

L. Reid: I have the absolute pleasure this afternoon of introducing a large group of legislative interns visiting us from Washington State. They've been part of an annual internship exchange between Washington State and British Columbia. The exchange is an opportunity to share, learn, observe and compare our two systems of governance. We share a border and many natural resources and often work together to achieve mutual goals. This exchange is a valued part of our own B.C. legislative internship program.

They are accompanied by the Senate civic education intern coordinator Judi Best and the House civic education intern coordinator Paula Rehwaldt. I can tell you that I enjoyed so much speaking to them this morning.

Thank you so very much for joining us. Would the House join me in making them welcome.

E. Foster: Joining us in the House today are three very special ladies. We have two international students who are in Lumby and will be there for the next couple of years going to school. Accompanying them is my wife, who is involved with the international program. They're here for a day or two to see how the House works and visit Victoria. I would like the House to make them very welcome.

D. Horne: Given that today is my 18th anniversary, I felt it was important to introduce my wife, Larissa Horne. Although she's not physically here, I'm sure she's here in heart and thoughts. I hope that everyone else feels that as well.

M. Farnworth: In the precinct and in the gallery today we have two tour groups from a Catholic high school in my constituency, Archbishop Carney. They are accompanied by their teacher, Ms. Brygida Reis. There are 30 grade 11 students and five adults. Would the House please make their visit to our precinct a memorable one.

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Tributes

QUEEN'S DIAMOND JUBILEE
MEDAL RECIPIENTS

Hon. T. Lake: This morning I had the privilege to present Queen's Diamond Jubilee Medals to three deserving British Columbians — Ron Quilter, Paul Kariya and Andrew Weaver — in recognition of their significant achievements and their commitment to the environment.

Ron Quilter is a public servant and has made a tremendous contribution to B.C. Parks. His vision to re-create the 1910 expedition by Price Ellison's expedition that led to the designation of B.C.'s first provincial park was the first major event to celebrate the parks centennial.

Paul Kariya is the executive director of the Clean Energy Association of B.C., and he's committed his life to making public policy changes. He engages stakeholders and the public on clean energy, serves on a number of environmental boards and commissions and has been working on solutions to public policy issues for the last three decades.

Andrew Weaver is a professor in the School of Earth and Ocean Sciences at the University of Victoria. He is part of the climate modelling group at UVic, a published author, of course, and a member of the intergovernmental commission on climate change. He won a Nobel Peace Prize for his efforts in that regard.

By sharing their passion for the environment and the knowledge they possess individually, they are helping to create a better future for British Columbians. I'd like the House to join me in congratulating these three individuals.

Introductions by Members

C. Trevena: I see in the gallery today some of my constituents. They've been down here to speak about tourism, talk to people about the importance of tourism. Craig and Deborah Murray have been the proud owners and operators of the wonderful Nimmo Bay Resort. They're down here with their son Fraser, who took over operations of the resort last summer. And I believe that their daughter Georgia — whom some may know better as Georgia Murray, the singer — is also here with them.

I know that Craig and Deborah are very proud parents. Their other son, Clifton, is one of the Canadian Tenors, or the Tenors. They're very proud parents and would very much boast more about their children than their resort at times.

I also notice that Brian Gunn from the Wilderness Tourism Association and Strathcona Lodge is also in the gallery. I know that they've all been here talking about the importance of tourism in the B.C. economy and on the north Island. I hope the House will make them welcome.
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S. Chandra Herbert: Joining with the group who are here to talk about tourism, of course, is Myrna Boulding, who, along with Brian Gunn manages Stanley Park…. Sorry, not Stanley Park — you can tell where I'm from, hon. Speaker — but Strathcona Park Lodge, where I learned how to mountaineer many years ago — not so many, many, as some members in this House use that phrase.

Also joining with the group to discuss tourism, of course, is a friend of this House — or a good friend of mine, anyways — Rod Harris with Royal Roads University and with Tourism B.C. before that.

Don Monsour is the president and chair of the B.C. Culinary Tourism Society. Jim DeHart and his wife, Darlene, are here. Jim is the new president of the Wilderness Tourism Association of B.C. Sinclair Philip is with the wonderful Sooke Harbour House. Evan Loveless is the executive director of the Wilderness Tourism Association. John Caton and his wife, Adele, run the Clayoquot Wilderness Resort.

I think that's pretty much everybody that was here today. It was a very good meeting, and welcome to the Legislature.

Hon. S. Bond: Today I'm very delighted to be able to introduce to the Legislature Prince George's Citizen of the Year. She is here also to receive a Queen's medal, but Monica Peacock is very well known for organizing the Evening of Pink in Prince George. It is a fundraiser for breast cancer. It's taught young people awareness and education. It's just a fantastic event. She started with a very small event, and now literally hundreds of people come together.

She also organizes the Festival of Trees and a number of other things. We're very delighted to have a guest all the way from Prince George today, and I would ask that you please help me make her very welcome.

Hon. D. McRae: As has been noted, there's a cornucopia of students in the precincts today, the students from G.P. Vanier. There are 48 students involved in the Explore program who wished to come to question period today but got the second-best thing. I want to thank you, Mr. Speaker, for allowing them to use the Ned DeBeck Lounge to watch it on teleprompter, which is almost as good as being here in real life, in person.

I'd like to send a welcome to the 48 students from G.P. Vanier and their teachers Dave Neill, Grayson Pettigrew and Ilene Yeomans. Would the House please make them welcome.

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G. Hogg: At lunch today I had the pleasure of being entertained, educated and even humoured by four White Rock youth ambassadors, five pithy opposition members and the inimitable waiter Mur. I ask the House to please join me in welcoming the ambassadors, Sunny Shih, Alison Nichol, Elaine Lin and Paige Glazier and their shepherd, Donna Beaudry.

Hon. M. MacDiarmid: I have a very special guest here today. My brother Don MacDiarmid is visiting from Calgary, and I ask the House to make him welcome.

D. Routley: I'd like the House to help me make welcome a young man from Nanaimo. He attends Cedar Community School, which just won the Duke of Edinburgh's Award. The young man is Jacob Derksen, in grade 10 at Cedar. He's an avid reader and a historian. He's an active air cadet.

He was born here in Victoria, but his family moved to Nanaimo ten years ago. He is very interested in international development, and he is also experienced in question period matters, having visited Ottawa and experienced their question period. His cousin, Ben Johnson, works in the opposition caucus staff.

I would like the House to help me make him welcome. I would say to young Jacob Derksen and to our visitors from Washington State and to everyone else, in fact, the words of the former Clerk of the House in preparation for question period — that there's passion and heat in this chamber so that there isn't blood on the streets. That was his explanation for the dynamic of question period. Can the House please make young Jacob Derksen welcome to the B.C. Legislature.

Statements
(Standing Order 25B)

VOLUNTEERISM IN SURREY

D. Hayer: Volunteerism is very important to our province. Without volunteers, government would spend millions of dollars doing things that are otherwise impossible without the heart and soul of the volunteer. Without those volunteers, elders would not be well cared for, pioneers would not be remembered and heroes would not be honoured. The value of volunteers and board members of non-profit organizations is worth more than gold.

Organizations such as the Fleetwood Seniors Planning Committee, Progressive Intercultural Community Services Society, Surrey Crime Prevention Society, B.C. Crime Prevention Association, Tynehead Hatchery, Tynehead Women's Auxiliary, the Royal Canadian Legion in Whalley and Cloverdale, Indian Ex-servicemen Society, Indo-Canadian Seniors Society, Surrey Board of Trade, Cloverdale District Chamber of Commerce, Cloverdale Business Improvement Association, Downtown Surrey Business Improvement Association, Indo-Canadian Business Association and South Asian Business Association perform tremendous work in our community.
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I doubt our economy could ever generate enough funding to pay for services that volunteers give so freely from the heart. Over the past 12 years as an MLA, I have worked with many great organizations driven by the contributions of volunteers.

We have hundreds of volunteer groups, including the community associations of Fraser Heights, Port Kells, Tynehead and Fleetwood; Guildford Community Partners Society; Rotary Clubs of Surrey, Fraser Heights, Guildford, Cloverdale and Newton; Lions Clubs of North Surrey and Guildford; Surrey Canadian Baseball Association; Whalley Little League.

I feel very fortunate that our organizations and individuals who help others as devoted volunteers are almost endless in my community and in every region of our province. Without volunteerism, we would not be able to have the best place to live in.

Please join me in thanking the hundreds of thousands of British Columbians who generously donate their time, skills and money and who help us make this the best place on earth to live in.

DOROTHY BEACH

D. Black: Today I'm pleased to speak about Dorothy Beach, who was born in New Westminster over 99 years ago. She lives in the same home today where she was born, on an acreage overlooking the Fraser River. She remembers a time when the shoreline was surrounded by bushes and greenery. It's far different there today.

Being raised in a beautiful and natural setting, it's no surprise that young Dorothy developed a love of the environment.

Interjections.

Mr. Speaker: Members.

Continue, Member.

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D. Black: But it was the negative health effects from pesticides that led to her becoming an environmental activist. Dorothy's son was a student at UBC's school of agriculture when he was poisoned by exposure to experimental pesticides and was treated at Royal Columbian Hospital. While doctors did not come up with a firm diagnosis, Dorothy made the link to pesticide exposure. This prompted her to research their effects and speak out on this issue for the next 30 years.

She became active in the Health Action Network Society and has served on their board for 22 years. She also served as a national environmental chair for the federal Council of Women and was active in the Fraser River Coalition. Dorothy chaired the national Council of Women meeting at the UN Habitat conference in 1976.

She's received many awards over the years, including the Life Achievement Award from the B.C. provincial Council of Women, the Burns Bog Spirit of the Crane award and recently the Queen's Diamond Jubilee Medal. She was also profiled in a book about women from New Westminster who have made significant contributions to our communities.

Dorothy will turn 100 years old on May 16 and continues to serve as an inspiration to me and to New Westminster residents and to many others. I know that members of this House will join me in sending congratulations to Dorothy Beach for a long life which continues to be very well lived. Happy 100th birthday, Dorothy.

COWBOY HERITAGE WEEK

D. Barnett: March 3 to 10, 2013, marks the first Cowboy Heritage Week in British Columbia. I want to thank Mark McMillan, president of the B.C. Cowboy Heritage Society, who first suggested the idea of making a proclamation on cowboy heritage. This is a great way of recognizing the contributions that both the ranching industry and cowboy heritage have made to the economic and cultural development of B.C.

The ranching and cattle industry in our province has existed for over 200 years and plays an important part in our provincial economy. None of this would be possible without our cowboys, who have been raising and herding cattle for generations.

This industry is important not only to my riding of Cariboo-Chilcotin but to all of British Columbia, so I decided to work on having a proclamation made. I am pleased to say that on February 1, 2013, Cowboy Heritage Week was proclaimed in British Columbia.

The B.C. Cowboy Heritage Society also plays an important role in preserving cowboy heritage in B.C. This organization was incorporated in 1996 and continues to promote events and activities that preserve the cowboy and ranching cultures. The society holds many events, including the annual 100 Mile House Cowboy Concert and the Kamloops Cowboy Festival. Events raise funds for scholarships for graduating seniors or college students and also for the Cowboy Hall of Fame in the Williams Lake Museum. The hall of fame honours cowboys and ranchers who have positively contributed to B.C.'s cowboy heritage.

Our cowboy heritage is very important to our province, and I am honoured to have this opportunity to acknowledge Cowboy Heritage Week.

SOCIAL-EMOTIONAL LEARNING
AND PREVENTION OF BULLYING

N. Simons: Social-emotional learning, or SEL, is something we'll be hearing a lot about in the next few years. What is it exactly, and what has it got to do with bullying prevention? What's the buzz about social-
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emotional learning on the Sunshine Coast?

Well, bullying is a pervasive problem in many schools, and unfortunately, attempts to reduce the problem have not been effective or are unlikely to have lasting impact.

Social-emotional learning involves the process of developing social and emotional competencies in children. These skills are critical to students' success and happiness and to them becoming contributing members of society.

At the student level, schools are using the social-emotional learning framework to teach skills in the area of self-awareness, self-management, responsible decision-making, relationship skills and social awareness. These core skills are the foundational competencies that students need in order to deal with bullying.

To effectively reduce bullying behaviour, schools need to provide students with instruction and practice in applying those skills to a variety of bullying situations. The research tells us that when schools embed bullying-prevention efforts within a social-emotional learning framework, these efforts become a natural extension of the underlying principles and practices in those schools.

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Students with greater social and emotional competencies are less likely to be aggressors, targets of bullying or even passive bystanders. On the Sunshine Coast our community schools are leading the way in the implementation of social-emotional learning by delivering evidence-based programming, such as Roots of Empathy and, in the high schools, mindfulness education.

Just as bullying involves the entire school community, bullying prevention, likewise, requires the school community as a whole to get involved. Community schools, with their integrated focus on academics, supports and services and partnerships, are a good model for bringing social-emotional learning to our school communities.

SIMON JOHNSTON

L. Reid: It is my pleasure today to talk about an extraordinary playwright in our community. The gentleman is Simon Johnston. He has had an amazing run as artistic and executive director of the Gateway Theatre in Richmond. He is elegant in his interactions with the community. He stood down as artistic director to write.

Simon was born and raised in Hong Kong and immigrated to Canada in 1968. He studied in Ontario before heading to New York for postgraduate theatre studies.

In 1997 he founded the writers workshop in London. He has been resident director at the Banff Centre and staff director at the Toronto arts productions on the Canadian Stage. He has directed over 150 professional productions at the National Arts Centre, the Stratford Festival, the Young People's Theatre, the Gateway Theatre and numerous other theatres. He has taught theatre and drama at the University of Western Ontario, the University of Toronto, the University of Waterloo, Ryerson and Dalhousie.

Simon has been writer-in-residence at the Shakespearian festival while working on his new play, Kingsclare.

His work is acknowledged with a number of awards. Simon won Theatre B.C.'s National Playwrights Award for Running Dog, Paper Tiger. His play Sisters was recently performed on stage at the Gateway Theatre to tremendous acclaim. The audience was spellbound, me included, by the complexity and interconnections which abound in complicated relationships. It was a glorious production.

His plays include Rice Rockets & Yacht People, Wildcat, Gold Mountain, Kaleidoscope, The Giveaways, Tales from the Arabian Knights, A Nightingale Sang, The Steamer Atlantic, and more. He has written plays for CBC's Morningside and CBC radio drama, and documentaries for History television and Man Alive.

His contributions to theatre have been recognized. In 1999 he was nominated for the prestigious W.O. Mitchell literary prize. He has been inducted into numerous alumni and into the McMaster Alumni Gallery for his work as a writer, director and teacher.

Simon makes his home in Richmond, and we're uplifted by his presence. We are a better community for his many contributions.

Simon, thank you.

AFFORDABLE HOUSING INITIATIVES
IN QUESNEL

B. Simpson: Like most communities in B.C., Quesnel desperately needs more affordable housing units for working families, for adults with disabilities, for single parents and for seniors.

Over the past few years the Quesnel community has been given additional and welcomed resources to address homelessness. However, those resources have simply grown the need for the next stage of housing — affordable transition housing for people recovering from mental illness and addictions.

In 2010 the city of Quesnel commissioned an affordable housing needs assessment that identified an affordable housing deficit of 947 units. In response to this assessment, the city of Quesnel developed an affordable housing strategy, which was released in late 2012. The objective is to establish a diverse range of safe, attractive and affordable housing options in existing neighbourhoods.

An affordable housing action group has also been meeting over the last four years, and with the assistance of the city of Quesnel, they are developing a proposal for a new affordable housing complex. I want to thank Maureen Trotter, Jean Birch, Ellen Facey, Alan MacDonald, David Sutton, Coun. Mike Cave and Jillian Stockburger for the leadership they've shown on this issue.

In 2011 the Lions Club of Quesnel decided to take on a major project and conducted a survey to identify the
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community's priorities. The results clearly showed that more affordable housing was needed for seniors. Acting on the survey results, the Lions Club purchased a downtown lot for a new seniors housing project, and they hope to build a 20- to 40-unit building and have that building up and running within two years.

In Quesnel there's been a strong community response to addressing the need for more affordable housing. The leadership shown by the action group, city council and Lions Club must now be matched by a similarly strong and supportive response from both the federal and provincial governments so that we can actually turn project plans into real housing units.

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Oral Questions

GOVERNMENT ADVERTISING CAMPAIGN AND
POST-SECONDARY EDUCATION FUNDING

A. Dix: My question is to the Minister of Advanced Education. Today the government is going to launch the latest volley, phase 4, in its $17 million partisan ad campaign before the election. Today we'll be hearing three new radio ads. Tomorrow the minister's department will see a new television ad about the government's new RESP program — a program, I suppose, that is intended to address the skills gap in 2025.

This budget — the minister will know this — cut supports for post-secondary education. Doesn't the minister think that this money, the money that he and his colleagues are spending on advertising, would be better spent addressing skills training today?

Hon. J. Yap: I thank the member for the question. Last week this government introduced balanced budget 2013, a budget which respects the taxpayers' funds that they send to the province to look after the services that are needed, a budget which continues to invest in the key areas that are important to British Columbians, including post-secondary education. We continue to invest record dollars in our post-secondary education system, $1.9 billion. That's $5 million each and every single day.

Now, that is our plan, Budget 2013. We haven't heard from the Leader of the Opposition and the NDP what their plan is. What is their plan?

Mr. Speaker: The Leader of the Opposition has a supplemental.

A. Dix: The minister is responsible for a budget that was cut by $46 million last Tuesday. I think when you say that you're increasing funding and you're cutting it by $46 million in the budget document, it's not a really strong defence.

I would say this: these are difficult fiscal times. How can the minister or anyone on that side defend such a waste of government dollars? I mean, this is a change in the government's position.

Interjections.

Mr. Speaker: Members.

A. Dix: The minister was responsible there. The minister was, I believe, a parliamentary secretary at the time. He'll remember the directive when Premier Gordon Campbell was Premier of British Columbia and the member for Vancouver-Quilchena was Minister of Finance. The directive was: "Ban all non-essential government advertising in the four-month period prior to the fixed election date to prevent any opportunity for partisan abuse of taxpayer-funded advertising."

There is one innovation in the Liberal Party budget. Their position now is to enable any opportunity for partisan abuse of taxpayer-funded advertising. In a budget that cuts support for skills training, how can the minister justify spending money on advertising that should be going to help people get the skills they need for the jobs of the future?

Hon. J. Yap: Budget 2013 continues to invest in public post-secondary education. What we are also doing is respecting the taxpayers of British Columbia. As the member knows, we have been working collaboratively with the leaders of the post-secondary education system looking for administrative savings, cost-efficiencies, finding ways for the whole system to work together to reduce costs without affecting the learning experience for our students.

I get it that the NDP way is to just keep throwing money at whatever issue they may face. Our plan respects the taxpayers of British Columbia. We are moving forward with an administrative savings program that will continue to see record dollars invested in post-secondary education but respecting the taxpayers of British Columbia. That's our plan. What is their plan?

[1400]

Mr. Speaker: The Leader of the Opposition has a further supplemental.

A. Dix: I think the people of B.C. agree with former Premier Gordon Campbell. They agree with his former chief of staff, Martyn Brown, that this kind of partisan abuse of advertising is a waste of money. How can the government justify this?

Interjections.

Mr. Speaker: Members.
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A. Dix: If the government wants to know my position, it's contained in the bill that I presented to the Legislature in this session.

Specifically to the minister, how can the minister claim that they're defending the public purse when they're wasting money on government-funded advertising?

Hon. J. Yap: I would suggest that the Leader of the Opposition talk to the member for Fraser-Nicola and ask him about partisan advertising.

This side of the House doesn't need to take advice from the NDP on post-secondary education. Let's review the NDP record — the Vancouver Province in June 2001, reflecting on the record of the NDP in post-secondary education: "Nowhere in Canada is university entry more difficult than here in B.C." Another quote, again from the same article in the Vancouver Province: "The major universities have faced a virtual freeze in new building over the 1997 to 2001 years."

That's the record of the NDP. Our record is one of significant investment in post-secondary education — over $2 billion in 1,100 projects all around the province of British Columbia. It's a great post-secondary education system, one that all British Columbians can be proud of.

M. Mungall: This government's own labour market outlook makes it clear that access to higher education is more important than ever, with 80 percent of new jobs requiring some level of post-secondary education. We know that the skills gap will be a skills crisis by 2020, and the only program that this government is offering students to make education more affordable won't take effect until 2025. Yet we know that advertisements for the RESP program are going to start tomorrow.

My question is to the Minister of Advanced Education. When will this government get that spending millions on ads isn't good enough? To be credible, you actually have to take action on the issue.

Hon. J. Yap: To the member, I am grateful that she's raised the issue of unemployment. Let's go back and have a look at…. What was the unemployment situation in the 1990s? In 1998 it was 11.9 percent; in 1999, 9.3 percent; in 2000, 10 percent.

What is it today? It's 7.8 percent. Thanks to the prudent fiscal policies and the economic policies of this government, we have seen our economy grow, even through difficult, uncertain financial times globally. And we've seen that our job creation record is second to none in the country.

Unlike the 1990s, when people were looking for jobs, today jobs are looking for people. It's a record we're proud of, one which Budget 2013 will continue to foster — a prudent budget, a budget that respects taxpayers. That's our plan. What is the NDP's plan?

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Interjections.

Mr. Speaker: Members.

The member has a supplemental.

M. Mungall: I did note our plan last week to the minister. He might want to review that in Hansard, when I said: "…$100 million in financial needs-based grants." That's what we plan to do.

Interjections.

Mr. Speaker: Continue, Member.

M. Mungall: The minister knows that the president of every single public post-secondary institution in this province has warned this government that those cuts will impact students negatively. Regardless, this Liberal government brought in a budget again cutting post-secondary education. Last year they said $50 million; this year it's $46 million.

Between 2010 and 2020 we'll need at least 61,000 more skilled workers, and we know that affordability is a key issue for young people and workers looking to improve their skills. Yet all this government has done is offer a program that won't be in effect until 2025 and more advertising at taxpayers' expense.

When will the Minister of Advanced Education demand that this government stop advertising and start acting on the issue?

Hon. J. Yap: The member is wrong. What we're doing is working with the sector, working with post-secondary institution leaders to find administrative savings, to find ways, as colleges and universities working as a sector, to improve their efficiency and achieve cost savings that will lead to a more efficient system and one that will maintain the high level of investment that we're making for students.

I'm glad that the critic, the member for Nelson-Creston, has raised the issue. Let me just share a quote from, actually, today.

Members on this side of the House have been asking: "Where's the plan? What is the NDP's plan?" British Columbians want to know. So the member for Nelson-Creston, in a radio interview this morning, was asked. Obviously, to the journalist, it was not a satisfactory answer.

Here's a quote from the reporter. "It's all very well to stand on the sidelines and be an armchair critic. Here you are criticizing the government. Well, what's the NDP going to do? British Columbians want to know that."
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HOSTING OF INDIAN FILM AWARDS EVENT
AND SPENDING PRIORITIES

S. Chandra Herbert: Not only are taxpayers being asked to fund $17 million in Liberal-promoting advertisements, they're also being asked to foot an $11 million bill so the government can host a Bollywood awards show pre-election. We know the Liberals went after the International Indian Film Academy awards, a well-established event that many consider to be the Bollywood Oscars, but talks fell apart when the organizers wouldn't move their date to happen right before the election, as the Liberals demanded.

If this event is not just pre-election advertising funded by the public, why did this government pass over India's most established Indian awards show in favour of a brand-new one that they could host right before the election?

Hon. M. de Jong: I remember a day about 12 years ago when we started talking about creating new markets for B.C. products in China. I remember comments of the sort we're hearing from the opposition about how there was no culture for the use of wood products in China and "Why on earth are you using taxpayers' money?" — as we did, in partnership with business, to build Dream Home Canada and begin to create that demand for B.C. wood products in a new market. Mr. Speaker, it worked.

Today B.C. wood products have captured a market in China, and that's because of the work this government did in partnership with business.

[1410]

To hear this member…. At a time when our movie industry is in need of attracting new production not just from one source but from all over the world, he castigates the government for again taking the initiative, again creating a marketing partnership with a leading agency in India. If he thinks that anyone on this side of the House is going to apologize for taking the initiative, he's in the wrong movie.

Mr. Speaker: The member has a supplemental.

S. Chandra Herbert: Well, with that kind of performance, we can see that this minister will not be getting any work in the film industry.

Mr. Speaker, $11 million for a manufactured awards show; $17 million on a partisan ad campaign — just imagine what kind of work could be created in British Columbia's film industry if the government wasn't so busy looking after their own jobs and were more interested in looking after B.C. film workers' jobs.

Taxpayers in this province deserve to know what their money is buying. Eleven million bucks — how many limousines, hon. Minister? How many luxury hotel rooms? How many international flights? And how many self-congratulatory ads is this government going to foist onto the public of British Columbia?

B.C. taxpayers deserve to know whether this government is simply writing a blank cheque for their own political benefit, or is this about something greater? Right now this government has not shared the hosting agreement for the Indian film awards.

Now, this minister could stand today and share with the House the hosting agreement. He could share what dates he was going after, as he claims it was actually pre-election, post-election. He claims it was cheaper.

Share the information, hon. Minister. Give the public what they deserve.

Hon. M. de Jong: Look, I respect the right of the member opposite to take umbrage and be opposed to the government, in partnership with others, creating a presence for British Columbia and western Canada in India. I accept that that's something that he dismisses as insignificant.

Interjection.

Hon. M. de Jong: Well, he wants to rewrite the script now that he's…. That's his right. And it is his right to dismiss as inconsequential a partnership that will achieve for British Columbia a presence that is conservatively estimated at 200 million to 250 million viewers who will have an opportunity to learn more about British Columbia.

He can dismiss as inconsequential the fact that, as part of the agreement, movie productions will actually come to British Columbia from somewhere other than Hollywood. He can dismiss that as inconsequential, but for the life of me, I can't understand why he would not assign, and his colleagues would not assign, the same measure of importance to productions in the film and television sector that come from India as those that come from the United States. This government does.

R. Chouhan: We have heard from the minister that he has claimed that negotiations with IIFA broke down over money. But a representative from the International Indian Film Academy has said that the government bid a lowball price once they knew they could not get an April awards show.

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He said that the price tag for the manufactured awards show is in fact higher than what they were asking. According to him, this had little to do with money and everything to do with timing.

He described negotiations like this: "We explained that the IIFA Awards are always held in June or July, and we could not change that. They were not happy at all."

Will the minister tell us how much the government bid to host this well-established awards show and show us a detailed budget for the pre-election pageant so that the
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public can see if they chose the better event for B.C. or whether all we are getting is an $11 million pre-election Liberal photo op.

Hon. P. Bell: My colleague the Minister of Finance already tried to explain to members opposite that expanding global market opportunities for industries in B.C. is critical. That's exactly what we did with China for tourism, for forestry, for mineral products, for education products. As a result, our economy has grown.

That's exactly what we're doing with India. The first-ever trade mission by our Premier into India, the largest trade mission by any Premier in Canada, went right across India and had a dramatic impact in terms of the initial reception that we had.

We've opened two new trade offices in India in the last three months. We're hosting a B.C.-India global economic forum. The Times of India film festival here in Vancouver is going to put everything over the top in terms of the trade relationship that we have in India. That's the type of business that this government does.

What's their idea? How are they going to build revenues? How are they going to pay for the promises that they need to make?

Mr. Speaker: The member has a supplemental.

R. Chouhan: My question was about timing. I guess the minister can't answer that.

However, as the government tabled its pre-election bogus budget, it asked British Columbians to tighten their belts. What else could have been done with the $11 million being spent on this pre-election pageant? We could have seen support for adults with developmental disabilities or far fewer seats cut for young people looking for post-secondary education.

Will the minister responsible tell us how he justifies spending $11 million on a pre-election award show when this bogus budget cuts funding from crucial social services?

Hon. P. Bell: I have heard over and over again members from the opposite side tell us how they want to spend money. I've not one single time heard, from members on the opposite side, how they're going to generate new revenues for British Columbia to pay for the social services that are so important to all of us.

This province has a long heritage of a strong economy. It's been built on natural resources. Members on the opposite side call it Dutch disease. We call it growing the economy. It's how you pay for the social services that we all need in this province.

SALE OF GOVERNMENT ASSETS AND
STATUS OF BRILLIANT DAM

K. Conroy: There's an increasing concern in the Kootenays that the Brilliant dam may be part of this government's sale of assets. Can the Minister of Finance confirm yes or no? Is the Brilliant dam or the accompanying power-sale agreement on the list of public assets for sale?

Hon. R. Coleman: All the assets of government were looked at, but at no time was there any decision, going down the road, to sell the dam.

WORKER RECRUITMENT FOR HD MINING
PROJECT AND GOVERNMENT RESPONSE

D. Donaldson: Recently we have learned that HD Mining's exploration permit to the province in July 2011 included a commonly used room-and-pillar technique to extract a bulk sample of coal from their Murray River project.

[1420]

A few months later, in November 2011, the Minister of Jobs signed an investment agreement with HD Mining in China based on a longwall mining technique that the Jobs Minister himself maintains that no B.C. workers are trained for. The result is that we see HD Mining bringing temporary workers to its Murray River project — up to 200.

Why would the Jobs Minister facilitate the loss of hundreds of jobs in this province by agreeing to this change in mining technique over a matter of months when he says that natural resources should be used for B.C.? Why is he making these kinds of decisions?

Hon. P. Bell: I'm curious. I suspect the member opposite, if he's afforded the opportunity to provide a supplemental, will show us his credentials in mining engineering when he gets up next time. Politicians have no role in determining the techniques that are used in mining in this province.

The company that originally applied for the permit that the member refers to is Canadian Kailuan Dehua. They since sold the project to HD Mining. HD Mining has far more expertise in this area. They applied for the longwall technique, and that's the permit that the engineers from British Columbia determined was appropriate for this project — not the ministers in this government.

Mr. Speaker: The member has a supplemental.

D. Donaldson: I'm glad the Jobs Minister is recognizing my future potential with that comment.

I would like to say that I'm quite taken aback, actually, by the ineffectual responses of this minister on this issue. The minister loses credibility every time he speaks on this
[ Page 13051 ]
topic, and his position is ever changing.

I'd like to know what kind of analysis was done regarding the impact to workers on this change of mining technique. Did the minister not know it would lead to a loss of B.C. jobs? Why doesn't he stand up for B.C. jobs in this case? He is, after all, the Jobs Minister.

Hon. P. Bell: Miners go upwards of 500 metres underground in some of these operations, some of the most complex engineering environments anywhere in the world. They are highly dangerous. British Columbia has the best record of safety for miners anywhere in the world. It's the safest heavy industry in British Columbia.

The reason why it's the safest industry is because politicians don't make decisions about how mining projects go forward. Engineers do that. That's exactly what's happened in this circumstance. If the member opposite is questioning the capability of engineers to determine what the right approach is, I'd like to hear that from him.

GOVERNMENT PARTICIPATION IN
FOREIGN WORKER PROGRAM REVIEW

S. Simpson: The federal government has said that they'll be reviewing the temporary foreign worker program, but we've heard nothing about the status of that review. We know that B.C. needs to have a strong voice at that table for the review. We need to protect the interests of both B.C. workers and the foreign workers who are here in British Columbia.

The minister said on February 18 that he was going to talk to Ottawa, yet we've heard nothing about those conversations or B.C.'s position. Will the minister release details of B.C.'s position, what he said to Ottawa and who he's consulted in B.C. to develop our position?

Hon. P. Bell: I'm sure the members opposite's research department must be getting a little bit thin. If they had been checking their newspaper clippings and their audio clippings, they'd know that I have, in fact, spoken most recently with Minister Diane Finley just last week. They embraced the opportunity for us to engage with them, because it is important that people have confidence in the temporary foreign worker program.

I sat in a very interesting forum a few weeks ago and heard from the member opposite as he made commitments to labour groups that they wanted to remove the ability of workers seeking unionization to have a secret ballot. I'm shocked by that.

[1425]

What I'd really be interested in knowing…. I'm pretty sure the member opposite is going to have an opportunity for a supplemental. What I'd like to see is to have him say right here in the Legislature that they oppose the notion of a secret ballot for people seeking certification.

[End of question period.]

Orders of the Day

Hon. M. de Jong: Mr. Speaker, it's committee on Bill 2 this afternoon.

Committee of the Whole House

BILL 2 — PROVINCIAL SALES TAX
TRANSITIONAL PROVISIONS AND
AMENDMENTS ACT, 2013

The House in Committee of the Whole on Bill 2; L. Reid in the chair.

The committee met at 2:29 p.m.

On section 1.

B. Ralston: Section 1 simply refers to the definitions in the Provincial Sales Tax Act. Not included in that definition section is a definition of "exemption." Can the minister clarify where in the legislative scheme the exemptions occur? I understand that they are going to be promulgated by regulation and that they're not in the act. Obviously, there is considerable public interest in the exemptions.

In addition to that, if that is correct, can you tell the House when the regulations would be promulgated?

[1430]

Hon. M. de Jong: First, may I introduce to the member and to the committee the very able senior officials who are assisting us — and I do say "us" — in the committee as we move through this today. To my right is Anne Foy, a strategic adviser, tax policy branch. To my immediate left is Jordan Goss, executive director, consumer taxation programs, revenue division. Further to the left is Sabine Feulgen, ADM, Treasury Board staff. At some point we may be joined, as well, by Peter Milburn, the deputy minister.

The short answer to the member's question is yes, the exemptions are contained within the regulations. Happily, I'm able to say to the member that I have — again through the able assistance of staff — a copy of the regulations that I am able to provide to the member. It's a draft copy. They obviously do not have the force of law at this point and will not until the act passes and they are given effect by OIC. But I do have that draft material for the member, which I can table here and then ensure that the member also has access to.

Section 1 approved.

On section 2.
[ Page 13052 ]

B. Ralston: Section 2 speaks of two sections of the Provincial Sales Tax Act. Can the minister explain why these sections apply for the purposes of this part and not others?

Hon. M. de Jong: Like many but not all of the provisions in here, this falls into the technical category. Subsection 28(9) of the Provincial Sales Tax Act provides that deposit is not consideration until it is applied by the seller. Section 33 of the Provincial Sales Tax Act provides when consideration becomes due. Of course, all revolves around the general transitional rule, which turns on whether consideration is due or paid before or after the April 1 transition date.

B. Ralston: Since these are transitional provisions and are designed to assist and regulate the transition from one regime to another around the April 1, 2013, date, can the minister then advise what the effect of this is?

Let me just pose it as a question. If signing a lease prior to April 1 yet the lease does not begin for premises, say, until April 1 forward, would the deposit then be considered in the PST regime as opposed to the previous HST regime?

Hon. M. de Jong: With respect to the lease portion of the member's question, the determination is when consideration is due and payable. If it's after April 1, then the PST rules would apply.

B. Ralston: I just couldn't hear. There was some background noise. I wonder if the minister could repeat that.

[1435]

The Chair: Members.

Hon. M. de Jong: The determining characteristic with respect to the lease is when the consideration is due and payable. If after April 1, then the rules under the PST would apply.

B. Ralston: Then this deems the deposit not to be consideration unless it is applied as consideration. It seems to me to be a circular argument. It's more or less what you say it is. It's either consideration or it's not, but I'm not quite sure how that rule makes it any clearer.

Hon. M. de Jong: I am advised that what has been incorporated into these provisions is a similar approach as the federal rules, which take the deposit and deal with it on the basis of when it is accepted as payment consideration by the seller — to take account of circumstances where there might be, for example, a refundable deposit. So the rule in the regime that has been enshrined in the legislation is meant to replicate the approach taken under the federal regime.

B. Ralston: Does this change ordinary commercial practice, or does this confirm it?

Hon. M. de Jong: I'm advised that these are the rules that apply under the GST regime today.

Section 2 approved.

On section 3.

B. Ralston: This is the beginning of a series of sections about purchases of tangible personal property. I'm looking at subsection (4), which qualifies subsection (3), which I think is reasonably straightforward. But it says it "does not apply in respect of a purchase of tangible personal property if the tangible personal property is delivered or made available to the purchaser on a continuous basis by means of a wire, pipeline or other conduit and the seller invoices the purchaser in respect of that purchase on a regular or periodic basis."

I think this section suggests some of the transactions that this might apply to. But perhaps the minister could explain: what is the effect of subsection (4)?

Hon. M. de Jong: Hopefully, this will be helpful to the member. The general rule is set out in subsection 3(2). Subsection 3(3) sets out an exception where that rule would not apply. The example that I'm going to offer to the member would be something like a continuous supply of electricity. Subsection (4) makes clear that it is dealt with as per the general rule under 3(2).

[1440]

B. Ralston: I'm looking at subsection 3(5) where it refers to "if all or any portion of the consideration for the purchase of the tangible personal property is not ascertainable before April 1, 2013." Can the minister give an example of the situation where all or any of the consideration for purchase would not be ascertainable?

Hon. M. de Jong: So the scenario that this would apply to is if someone purchased goods on a layaway plan, and at the time they entered into that agreement, of course, the layaway plan…. The final consideration payable may change depending on whether payments were made in a timely way, as per that layaway agreement. So that, generally speaking, is the circumstance that would attract, on a transitional basis, this section and subsection.

B. Ralston: Looking at subsection (6), there is a further qualification respecting "if the purchaser of the tangible personal property retains, under (a) a law of Canada or another province," and then (b), somewhat specifically focused: "an agreement in writing for the construction, renovation, alteration or repair of any real property or any ship or other marine vessel."
[ Page 13053 ]

Then it goes on to talk about "a portion of the consideration…pending full and satisfactory performance." Is this something that is intended to apply to what might be called a builder's lien, where the payment or the triggering event is the satisfactory completion of some work on property, which may follow beyond the date that is otherwise set?

Hon. M. de Jong: I am advised yes.

Section 3 approved.

On section 4.

B. Ralston: This section deals with the imposition of taxes in relation to leases that are entered into prior to the division date of April 1, 2013. This may be of some interest to many people, I would think. I'm looking at subsection (3). This is leased property used in British Columbia. It applies if it's…. There are a number of stipulations there. Can the minister explain the purpose of subsection 4(3) and perhaps give an example of what this might apply to?

[1445]

Hon. M. de Jong: Here's the scenario. We're now talking about leased property that is brought into the province. The lease was entered into, and the property brought into B.C., before April 1, 2013, but the rental period ends after April 1 and the PST would apply to any consideration that comes due after April 1 and is not paid prior to April 1.

B. Ralston: In that event, there may be an agreement which stipulates payment of the HST prior to April 1, 2013, and there's no particular provision made for the changeover, so this legislation would apply. So I suppose, as a practical matter — since it is a system based on self-assessment and disclosure and subject to audit — how would that be treated, then? The person or the holder of the tangible personal property, by this lease arrangement, would pay HST prior to April 1 and then PST after. Is that what's being spoken of here?

Hon. M. de Jong: I'm not sure what I can add with respect to the operation of 4(3). But I think, if I understand the member's question correctly, coupled with the operation of the other subsections in this section, the intent is to ensure that the legal mechanism exists to ensure that no one in any of these transitional circumstances is subject to double taxation.

B. Ralston: I'm looking at subsection (5). This appears to refer to a breach of a lease where the lease is breached prior to April 1 and the payment becomes due after April 1. So the section that's referred to here would necessitate the payment of the PST. Is that the effect of this subsection?

Hon. M. de Jong: Yes, I think that's correct.

B. Ralston: Looking at subsection (7), "additional tax on lease of passenger vehicle" — again, this refers specifically to being due before April 1 and is not paid until after. In that circumstance, I'm assuming that PST would not be payable. Is that correct?

Hon. M. de Jong: In the circumstance covered by sub 4(7), the short answer is that if there are moneys that are owing and become due and owing after April 1, 2013, that have not been paid before April 1, 2013, then it is the PST regime that would apply.

Section 4 approved.

On section 5.

[1450]

B. Ralston: This section talks about property that's purchased elsewhere in Canada and brought into British Columbia where the delivery takes place before April 1, 2013. Usually, the more difficult to understand provisions relate to the exceptions. So I'm interested in subsection (3), which appears to create an exception for the general rule that's set out in subsection (1). Can the minister explain what the basis of the exception is that's set out in subsection (3)?

Hon. M. de Jong: I think the best way I can explain this to the committee is to observe that for property brought into B.C., which section 5 covers, the rules are the same as laid out in the previous section, sub 4(3), and are intended to ensure that where the PST applies, the HST will not.

B. Ralston: Just to return to subsection 5(3), there's a detail of an exception. I'm wondering how that works in law. It says that all or any proportion of the consideration has not been paid or become due on or before the last day of the month following the first day of the month in which…. Then there are subsections (i) and (ii), in relation to a "tangible personal property by way of...other than a purchase described in subparagraph (ii)," the ownership is transferred to the purchaser, and so on.

I'm interested in how that actually operates, legally, and what the legislative intent is in bringing this section into the act.

Hon. M. de Jong: I'm advised that, once again, the genesis of the section derives from the rules that exist federally as relating to the GST and, specifically, relates to something that the federal government refers to as com-
[ Page 13054 ]
pleted supply. I think the member mentioned this, and if he did, he is correct. It does represent an exception to the general rule around the passing of a consideration.

B. Ralston: As a point, then, of general reference, is the legislative effort here to…? The minister has made reference to the rules in terms of the operation of the application of GST. Is the legislative intent here — and elsewhere, as we go through a number of sections — to make the new PST legislation consistent with the GST calculation so that the same transaction would trigger both GST and PST, if it were required, in the same way, at the same time, in the same manner?

[1455]

Hon. M. de Jong: I think the most succinct and accurate answer I could give the member and the committee is that what we have tried to do with respect to these transitional measures, because that's what we are dealing with, is to align the transition that is taking place between the provincial tax structure and the federal GST transition.

Section 5 approved.

On section 6.

B. Ralston: This section refers to sections 49 and 52 of the Provincial Sales Tax Act in relation to property brought into and delivered in British Columbia from outside Canada. It refers to April 1, 2013. What would be the effective date? Would it be the date of customs clearance or delivery to a location in British Columbia? How does one determine what the effective date is in relation to April 1, 2013?

Hon. M. de Jong: I'm advised that the determinative date, which I think is what the member is driving at, is the release of the goods by customs Canada.

B. Ralston: The release from customs Canada. So if, for example, one is purchasing, say, I suppose, a car in the United States, and you are bringing it across the border, the effective date would be…. It would be deemed to be released when the customs officer clears it and you've paid whatever duty is required and you're free to bring it into the country. Is that the date at which, in relation to April 1, 2013, this would be triggered?

Hon. M. de Jong: Yes, release under the Customs Act. I think the member has given a plausible description that would apply in the example that he has provided.

Section 6 approved.

On section 7.

B. Ralston: This refers to, as opposed to the previous section, section 55(1) of the Provincial Sales Tax Act. Both refer to property brought into British Columbia from outside Canada. Can the minister explain the difference between the two sections and their application to this kind of transaction?

Hon. M. de Jong: The relevant difference here relates, in section 55 of the act and section 7 of these transitional proceedings, to circumstances in which customs Canada actually collects the PST on the provincial Crown's behalf.

B. Ralston: And can the minister just enumerate briefly what those circumstances would be, as opposed to section 6?

[1500]

Hon. M. de Jong: Hopefully, this is helpful to the member and the committee. In the previous section, we were dealing with the goods that were being imported for commercial use — motor vehicles and trailers required to be registered under the Motor Vehicle Act. In the section we're dealing with now, we're dealing with importation by a resident taxpayer. In those circumstances, Canada Customs will collect on behalf of the provincial Crown. In the former circumstance, they will not.

Section 7 approved.

On section 8.

B. Ralston: This section refers to a taxable conveyance. In the definition section it says: "'conveyance' does not include a vehicle." There's no definition of "taxable conveyance." Can the minister advise what's being referred to here?

Hon. M. de Jong: The conveyance of peoples and/or goods. A taxable conveyance, by way of example, would include an interjurisdictional aircraft, an aircraft part, interjurisdictional railway rolling stock. Those are specific examples of an interjurisdictional conveyance.

B. Ralston: I don't see "interjurisdictional conveyance" in the definition section, and there's no reference to that. I'm wondering where the ambit of this reference resides in the act or how it's arrived at given that it's not in the definition section. Usually the first place the reader would start would be with the definition section. It may be due to my unfamiliarity with this particular form of legal description, but I think a reader would probably typically go to the definition section in order to decide what's being referred to.

Hon. M. de Jong: A keen observation by the member. These definitions are contained in section 59 of the
[ Page 13055 ]
Provincial Sales Tax Act and apply specifically to this division, which is why they are not found in the more general definition section.

B. Ralston: I've now located those in division 6 of what was called Bill 54. Is there any…? I mean, I suppose it's just a decision of the drafter, but why would this be not included in the general definition section and perhaps repeated in the division? It does seem to be unduly unhelpful not to repeat it in the general definition section. Is there any particular reason why that choice was made?

Hon. M. de Jong: Candidly, I'm not sure I can help, because I think the member in the preface to his question probably put his finger on the answer, which was in the decision of the drafter and the desire to ensure that the definition arrived at for these terms applied specifically with respect to their use in their division as opposed to anywhere else in the legislation.

[1505]

I'm not sure the terms appear anywhere else in the legislation, but the definitions would only apply with respect to their use in this division. That's a matter that I probably would have to take up with the drafters.

B. Ralston: Although, I suppose, ultimately, the decision is the Legislature's, not that of the drafters. That's only a recommendation. But having said that, I suppose we don't expect it to be rewritten to include that. I just think it would, perhaps, be more convenient.

Is there any…? Given that this refers to a relatively small number of items in the definition section…. It refers to, for example, eligible flights. This is a transitional provision to allocate tax, and it refers specifically to section 60 of the former Bill 54, now Provincial Sales Tax Act. Can the minister explain how the allocation of tax around the date of April 1 applies to eligible flights?

The definition is "flights originating or terminating in British Columbia or connecting 2 or more points within British Columbia." I take it that it refers to an interjurisdictional aircraft but flying a flight solely in British Columbia. Other than, I suppose, specifying it, is there any particular difference between the application of tax in this case or in any other case where the flight is within British Columbia?

Hon. M. de Jong: I don't think the member meant to leave this impression, but may have, inadvertently, with the manner in which he posed the question. We're not talking about tax payable on tickets that people purchase for flights. We're actually talking about the aircraft and the aircraft parts that engage in that kind of transport.

The formula that may be a little bit helpful in determining what is applicable is contained in section 60(2) of the Provincial Sales Tax Act, which has the amount being equal to 7 percent of the purchase price times the calculation between B.C. usage as a subset of total usage. Again, for the purposes of transition, determining which tax regime is applicable relates to a formula that determines B.C. usage as a percentage or as a portion of total usage.

B. Ralston: I am referring to section 60(2), which contains the formula. And I gather the purpose is to calculate the tax owing, where the other aircraft or railway rolling stock is used not only in British Columbia but elsewhere in Canada, so the effort is to focus on the usage within British Columbia for the purpose of calculating the tax for that period of time. I gather, then, that if any of this takes place before April 1, 2013, the tax doesn't apply, and it does apply after April 1, 2013. Is that a fair summary, then?

[1510]

Hon. M. de Jong: It also relates to when consideration is due and payable. Prior to April 1 the regime in place prior to that takes effect. The formula is applied if consideration becomes due and payable post–April 1, during that transitional period.

Section 8 approved.

On section 9.

B. Ralston: I'm looking at this section, which refers to section 61, 61.1 and 62 of the Provincial Sales Tax Act. I have a copy of the bill here. I'm not sure that 61.1 is actually….

In the copy of the Provincial Sales Tax Act, which is on the Queen's Printer legislative website, those sections are described as not in force, and they're not included. I've gone back to the bill to get sections 61 and 62, but there is no section 61.1.

Perhaps the minister can briefly describe what additional qualification to this topic section 61.1 makes.

Hon. M. de Jong: The bulk of what we've been talking about deals with the transition between the HST regime and the PST that'll be in effect after April 1 of this year. I'm advised that 61.1 is added, or would be added pursuant to these provisions, to take into account the fact that there may still be lingering examples of sales that occurred prior to July 1, 2010, under the social service tax regime, and that has necessitated the addition of 61.1.

Section 9 approved.

On section 10.

B. Ralston: This transitional provision makes reference to section 63 "in relation to a taxable conveyance that is purchased outside British Columbia but in Canada" and for which delivery is received in British Columbia
[ Page 13056 ]
before April 1, 2013.

It appears to duplicate language that we've spoken of earlier, but the same principles then would apply as to calculating when the tax was owing, which would be due only in the exceptions relating to subsection (3) and subsection (4), relating to when consideration is due. Is that a reasonable summary of the section?

Hon. M. de Jong: It is.

Section 10 approved.

On section 11.

B. Ralston: Section 11 again refers to section 63 of the Provincial Sales Tax Act, which speaks of a taxable conveyance that comes into British Columbia from outside Canada before April 1, 2013, so the similar language that we've seen in previous sections relating to the operation of the Customs Act.

[1515]

Is this a situation, which the minister described earlier, where Revenue Canada or Border Services would not collect duty payable on behalf of the province in this circumstance, or is it the opposite?

Hon. M. de Jong: In the cases we're dealing with here, in the examples we've been talking about, those would be generally self-assessed transactions. I'm advised that given the nature of the goods, Canada Customs generally would not collect on behalf of the provincial Crown.

Section 11 approved.

On section 12.

B. Ralston: This section speaks of a change of use of the conveyance and the application of section 64. Section 64 of the Provincial Sales Tax Act refers to the tax that would be oweable if there is a change in use of a conveyance acquired for resale and generally sets out a similar formula that we spoke of earlier, relating to the period of time that the conveyance — either the rolling stock or the aircraft or the vessel — is used within British Columbia.

Can the minister explain the rule that results here? When is the relevant time, for the purpose of the payment of PST?

Hon. M. de Jong: The member will know that there are circumstances in which people or agencies purchase property or products for resale. That attracts a certain treatment under the act, under the legislation. This section is designed to address circumstances in which a product is originally purchased for resale and then, subsequently, that purchaser, instead of reselling the product, becomes the user of the product and therefore attracts a taxation obligation.

Section 12 approved.

On section 13.

B. Ralston: Looking at section 13, it refers to the imposition of tax to section 80 of the Provincial Sales Tax Act. Section 80 is entitled "Tax on tangible personal property used to improve real property." It also refers to "affixed machinery," which is a definition set out in some detail in the definition section in section 1 of the act.

Can the minister explain what the purpose of this section is?

[1520]

Hon. M. de Jong: I'm told that this is one of those provisions that likely will not apply frequently. I am also advised that there are circumstances in which…. Well, it's to govern circumstances in which section 80 under the Provincial Sales Tax Act would apply where there is a contract with a contractor and a special agreement that transfers liability for the PST to customers, and the circumstances in which and how that will be dealt with and calculated — the tax liability as it relates to a consideration becoming due in those circumstances where an agreement exists between an individual agency and a contractor that transfers liability for PST to that contractor's customer.

B. Ralston: I thank the minister for that clarification.

I see reference in section 80 to a contractor who is exempt, under section 49, from tax imposed under section 37 or tax on purchase or, section 49, tax of personal property brought into British Columbia for use. In what circumstances could a contractor render himself or herself exempt in this manner? The minister said that this would be an unusual circumstance, but since we are dealing with this section — it does permit or makes reference to an exemption — perhaps he could clarify that.

Hon. M. de Jong: The member is correct in again emphasizing the relatively unique circumstances. The criteria that must be met are set out in sub 79(1) and particularly sub (1)(b) and (c) of the Provincial Sales Tax Act. It enumerates the requirements that must be met by a contractor before they can become exempt from tax imposed under section 37. Unless those specific conditions are met, these provisions would not apply transitionally.

B. Ralston: Just as a matter of practice or administration, is this something where an application is required to be made in order to receive that designation? Or is that a self-designation that a contractor could engage in and, subject to audit, just carry that forward?
[ Page 13057 ]

Hon. M. de Jong: It would fall into the latter category.

Section 13 approved.

On section 14.

B. Ralston: Section 14 refers to section 81 of the Provincial Sales Tax Act, which speaks of tax if there is a change in use of property acquired for resale. The minister made reference a little while ago to a situation where initially property might be purchased for resale and then a person decided to use that property for some period of time. That would trigger a tax. Is this a similar provision and an allocation of PST around the date of April 1 in those circumstances?

Hon. M. de Jong: Yes.

Section 14 approved.

On section 15.

[1525]

B. Ralston: This section refers to a dealer or manufacturer changing use of a motor vehicle. There is a reference to sub 84.1(2) where there is a circumstance where a dealer purchases a vehicle. It's in relation to a vehicle "purchased in British Columbia, brought or sent into British Columbia or for which delivery is received in British Columbia by the dealer before April 1, 2013."

Then the second subsection refers to a manufacturer. I'm not sure that a manufacturer of motor vehicles is quite as relevant here, but can the minister explain what the circumstance that's referred to in sub 15(1) deals with?

Hon. M. de Jong: I'm told that there are circumstances — and this has been a common business practice — when dealers import vehicles, for example, for something called the dealer-use formula. They can use a vehicle without attracting the taxation obligation. The section is being added to give legal effect to that practice — statutory effect to that very common, I am told, taxation practice.

B. Ralston: That would be the circumstance where dealers get a certain leeway if you roll up a couple of hundred kilometres in terms of test-driving or demonstrating the vehicle prior to its purchase by the ultimate…. It's more likely the minister than me, given his pay grade, although I know he takes pride in having a secondhand car. I think I saw that in some interview.

Perhaps he could just confirm that that's what's being referred to and that this will codify a practice, an administrative practice, and thereby give greater clarity to motor dealers in the province.

Hon. M. de Jong: The short answer is yes. There was, I'm reminded, de facto legal authority for the dealer-use formula. This is more complete, more comprehensive, and speaks to the kinds of circumstances that the member has described.

As my odometer rolls past 400,000 kilometres next week, I will be thinking on this conversation.

Section 15 approved.

On section 16.

B. Ralston: This refers to section 88. This appears to be a circumstance…. It's described as "leased tangible personal property that becomes part of real property." Is that a reference to a manufacturing process where one ingredient or a part is added to another piece of property, and then in combination, they're sold together as a finished product? Is that what this is referring to?

Hon. M. de Jong: For those that are involved in taxation law and practise in that area, there are unique and interesting circumstances that arise. In this case, ensuring that there are transitional rules in place to take account of a circumstance….

[1530]

Here's the example I can offer the member that is more than abstract. It apparently occurred where pipe was sold and purchased and subsequently buried, as you might expect pipe to be. Having a clear set of rules around property like that, that subsequently became a part of real property, is what this is designed to address and provide clarity around.

Section 16 approved.

On section 17.

B. Ralston: This refers to what's called a small seller. The "small seller" is a defined term in the definitions section. Can the minister explain this? It's entitled "Acquisition of eligible tangible personal property by small seller." Can the minister explain what the purpose of this section is and its specific reference to a small seller?

Hon. M. de Jong: Small sellers are persons who sell eligible tangible personal property, software or taxable services but who do not regularly make sales from established commercial premises and who do not maintain business premises. To be a small seller, the person's gross revenue from all retail sales must be $10,000 or less per year. This is designed to provide some transitional guidance around those who fall into this category.

B. Ralston: Just as a matter of curiosity, then, can the
[ Page 13058 ]
minister give an estimate, from the staff, of approximately how many individuals that exist in the province who would fall into this definition of small seller?

I'm presuming, given the lower volumes, that the time at which property might be acquired and the property might be sold would be longer than, say, in a high-volume retail operation. Can the minister direct me to any specific provisions in this section that recognize that aspect of their commercial life?

[D. Black in the chair.]

Hon. M. de Jong: I think there were two parts to the member's question. On the first part, I don't think I can say with certainty the number of people that this would apply to in any given year. There's no requirement to register. Absent some other means of collecting that data, I'm not sure that I can offer an accurate estimate.

I think the answer to the second part of the member's question in part lies around the operation of section 161 of the Provincial Sales Tax Act and the abilities to offer refunds to a small seller where their circumstances change. But if I'm mistaken in that respect, I'm sure the member will alert me.

[1535]

B. Ralston: Since I think that small seller recurs in a number…. Is it, then, a matter of self-declaration to describe oneself as a small seller — again, subject to audit, I suppose, and enforcement? As the minister points out, in the definition, it's gross revenue "from all retail sales of eligible tangible personal property and software and all provisions of a taxable service is $10 000 or less." So that is something that's left to an individual — to make that personal assessment. That's not required in order to be a collector?

Hon. M. de Jong: There is no obligation to register until the individual hits the threshold. At that point, it is a requirement that accrues to the individual — self-regulated, subject to audit.

B. Ralston: But the minister said that there was no mechanism for capturing the number of people who would fall into that category. I suppose, given that there is a definition, there must have been some sense that there are a number of people out there. Yet there doesn't appear to be any way to get a firm handle on the size of that sector.

More as a matter of, I suppose, curiosity…. Sometimes it is an index of economic growth. If people begin at home in a small way and don't have a regular premiseand their sales begin to accelerate, then they move into another category. It might be a useful measure of economic activity that others might be interested in. I suppose in that, it's not strictly a question relating to the section, but I think it does arise out of this reference to a small seller.

Hon. M. de Jong: An interesting observation. I guess the reality in practice is that there is no obligation to register until you hit a particular threshold in terms of financial activity. At that point, the obligation begins. So it's difficult to count the number of people captured in an area where there is no obligation to register. At that point, they are dealt with as any other purchaser under the applicable legislation.

The incentive, if you will, for registering relates to the fact that there are certain benefits, one of them being the fact that, once registered, the purchase of goods for resale would preclude the individual from having to provide tax. So the benefits that are associated with registering kick in at the point that that threshold is surpassed also.

Sections 17 to 19 inclusive approved.

On section 20.

[1540]

B. Ralston: This relates to the purchase of an energy product, so described. "Energy product," I think, is a defined term — natural gas, fuel oil, propane by public utility, by pipe or by purchasers. In this section it refers to section 92 of the Provincial Sales Tax Act and its application to any product purchased before April 2013. The general rule is set out in the first two sections, I believe. But there's an exception, and this would appear, again, in similar language to relate to the nature of the contract leading up to April 1.

If the minister could briefly describe what the exception is to the general rule that's set out in subsection (3) and subsection (4).

Hon. M. de Jong: Sub (3) and sub (4) are dealing with two specific scenarios. One is relating to, for example, fuel oil in sub (3) that has been delivered before April 1 and the taxation regime that applies in those circumstances. The second, sub 20(4), is referring to something like electricity, which is provided on a continuous supply basis where the determination relates, again, to when consideration is due and payable with respect to that continuous supply.

Section 20 approved.

On section 21.

B. Ralston: This describes a situation referring to energy products purchased in Canada and brought into British Columbia for use. It sets out at which point section 93 — which is the application of the tax — applies. It appears to be straightforward. Subsection (1) applies if the delivery of the product is received in British
[ Page 13059 ]
Columbia before April 1 and sets out some exceptions. Those would appear to be identical language to the section that we just spoke of, section 20.

Unless there are any other comments the minister wishes to make, perhaps he can just confirm that it applies in the same circumstances and in the same way as the previous section.

Hon. M. de Jong: Yes.

Sections 21 and 22 approved.

On section 23.

B. Ralston: This describes a relatively unique set of circumstances. It's what is described as "liquor sold under special occasion licence," and that refers to section 98 of the Provincial Sales Tax Act. It appears to apply to liquor that's purchased before April 1 for sale and even if, I suppose, the sale takes place after April 1. So sub 98(1) applies.

[1545]

So even if it were purchased for sale before April 1, 2013, the PST would still apply. At least that's how I read it. Perhaps the minister can confirm that.

Hon. M. de Jong: In one of those circumstances, transitionally, where someone has made a purchase of liquor under the licence regime that the member has alluded to and the consideration becomes due and payable sometime after April 1, then the transitional rules that are set out in section 37 that we referred to earlier would apply here as well.

Section 23 approved.

On section 24.

B. Ralston: This section refers to subsections 99(1) and (2) of the Provincial Sales Tax Act, and it's described as "acquisition of exclusive product by independent sales contractor." This appears to set the base or the price on which the tax will be assessed. In section 99(1) it refers to paying tax at the rate "as if the direct seller's suggested retail price for the exclusive product were the purchase price of the exclusive product."

I take it that "exclusive product" is meant to be a proprietary product that's unique to the firm or the commission salesperson in a sales network. I gather from that that if it's purchased prior to April 1 but is intended for resale afterwards, PST would apply.

Hon. M. de Jong: That's correct. Without being seen to endorse any of these products, it might be helpful for me to point out that this is the kind of provision that was necessary or deemed necessary to deal with the Avon, Tupperware and Mary Kay type of situations.

Sections 24 to 26 inclusive approved.

On section 27.

B. Ralston: This refers to subsection 101(1) of the Provincial Sales Tax Act, which is a tax on reusable containers and describes the timing of when the tax would become due. Section 101 says that "a person who purchases a reusable container at a sale in British Columbia must pay to the government tax at the rate of 7% of the purchase price of the reusable container."

There are some further qualifications on that. I take it that it applies to a reusable container purchased prior to April 1, 2013, with, I suppose, the implicit understanding that it could be reusable after April 1, 2013. Is that essentially the gist of the section?

[1550]

Hon. M. de Jong: I think the member summarized it correctly. We're dealing now with these reusable container products, but the rule, I think, is similar in the event where purchase has taken place but there is money, a consideration, owed. Following April 1, it will attract the PST.

Sections 27 to 29 inclusive approved.

On section 30.

B. Ralston: This division that we're about to enter into relates to taxes in relation to software, which, I'm sure, is of some public interest.

Can the minister explain what section 30 does? It uses or recites the language that's in other sections, and it makes reference to section 105, which just refers to paying to the government "tax at the rate of 7% of the purchase price of the software" and describes some exemptions. Can the minister just explain, briefly, what the meaning of the two provisions is here, the two subsections in this section 30?

Hon. M. de Jong: A specific reference to specific products is now defined. The rule, though, would be similar to the general transitions rule for tangible personal property. If you have purchased prior to but moneys remain owing after April 1, they will attract application of the PST.

Section 30 approved.

On section 31.

B. Ralston: This refers to section 106 of the Provincial Sales Tax Act, which is the use of software on a device in British Columbia. The "software" is a defined term, but "device" is not. But I think people would have a notion
[ Page 13060 ]
of what that might refer to, and this section does refer to an electronic device.

Can the minister explain the purpose of this section? It appears to divide at April 1 in a fairly straightforward way, although there is a reference in subsection (b) to a person referred to in section 106, which is a person carrying on business in British Columbia or who acquires software in the course of his business ordinarily located in British Columbia.

Can the minister explain subsection 31(1)(b)?

[1555]

Hon. M. de Jong: These are designed to deal with some very specific circumstances. If I get this incorrect, I'll be sure to alert the committee and the member to this. As set out in the subsection, software purchased before April 1 by someone outside of British Columbia which is then used in B.C. prior to April 1, 2013, but for which there is an amount owing after April 1, 2013, will attract the application of the PST.

Section 31 approved.

On section 32.

B. Ralston: This is entitled "Business use of software on devices" and makes reference specifically to section 107. I'm wondering. Can the minister explain how that might be different from section 31, which we've just discussed? It appears to apply the same principles. I'm not entirely clear why there's the need for a second section, other than to mirror section 106 and section 107 in the Sales Tax Act.

Hon. M. de Jong: A similar principle is applicable here but in a further refined scenario, where a business has purchased software and that software is being utilized both inside and outside of British Columbia. Section 107 provides one of those remarkable formulas by which the applicable tax would be calculated relating to the portion of usage taking place within the province.

Sections 32 and 33 approved.

On section 34.

B. Ralston: This initiates a new division and refers to services related to purchase. I'm looking at section 116 of the Provincial Sales Tax Act, which is entitled "Tax if contract for property conversion related to purchase." This appears to be a reference to earlier sections where there's a contract for the purpose of tangible personal property. But there's some additional element that involves some service that's related to the acquisition of the property, and this defines the point at which the PST would apply in relation to April 1, or not.

Perhaps the minister can offer a clearer explanation than the one I've just offered of what the purpose of this section is.

[1600]

Hon. M. de Jong: These are some provisions relating to 116 and 117 — anti-avoidance provisions. The best way I might be able to assist the committee is to point out one of the circumstances in which this might kick in — that is, the anti-avoidance provisions.

An example of when the rule would apply is when a person purchases all of the materials for a boat and then within 180 days has the seller of those materials build the boat to avoid paying tax on the full purchase price of the boat. In this case, going forward and also on a transitional basis, that would not be a legal option for avoiding the payment of the tax that would otherwise be due.

Section 34 approved.

On section 35.

B. Ralston: This refers to section 119, "purchase of related service provided in British Columbia." A "related service" is a defined term in the definition act: "any service provided in relation to tangible personal property," but it excludes a service provided to install tangible personal property that would be an improvement to real property on installation. It also appears to exclude a service "provided by a person to the person's employer in the course of employment." That's the definition of a related service.

This sets out the transitional period for that, so it does apply, I suppose, to any related service purchased before April 2013, but section 119 doesn't apply — that is, tax wouldn't be due — in respect of any consideration for a purchase price that, before April 1, became due or is paid without having become due. So it appears to offer an exception to the general rule.

Is there anything further that the minister wishes to add to those observations? It would appear to be relatively straightforward. And then it appears to repeat similar language about the purchase of a related service provided outside of British Columbia in the next section. Perhaps I'll leave it to the minister to comment, should he choose.

Hon. M. de Jong: Insofar as, I think, the member has confirmed that the transitional rules for unrelated services are the same as for the purchase of tangible goods, that is what the section is intended to ensure.

Sections 35 and 36 approved.

On section 37.

B. Ralston: This refers to a headline, "Tax on accom-
[ Page 13061 ]
modation," and the reference is to sections 122 and 123 of the Provincial Sales Tax Act.

[1605]

Section 122 reads, "A purchaser of accommodation must pay to the government tax at the rate of 8% of the purchase price of the accommodation," which would appear to be straightforward. In subsection 37(2) it says that that section doesn't apply to "any consideration for a purchase of accommodation that…becomes due or is paid without having become due."

I think this would be an area that would be of some general interest, but unless the minister has anything further, it seems to be relatively straightforward.

Hon. M. de Jong: No, I think that's fine. The incorporation of the hotel room tax into the provincial sales tax regime is accomplished also via these sections.

Section 37 approved.

On section 38.

B. Ralston: This section refers to section 123.2, entitled "Change in use of accommodation acquired for resale." Can the minister briefly explain what that refers to and how the tax might be calculated in that circumstance? The definition perhaps requires some further explanation.

Hon. M. de Jong: So 123.2 becomes a new provision under the act where accommodation is purchased initially for resale but then subsequently is utilized by the purchaser. I think the period of time…. Sorry. At any time after the purchase they become the user.

The example that I have been provided with would speak to a tourism operator, for example, that purchases a block of rooms for resale but then subsequently makes them available to employees of the tourism operator. They would attract the application of the tax in those circumstances.

Section 38 approved.

On section 39.

B. Ralston: Section 39 refers to section 124 of the act, and that makes reference to a new designated accommodation area. A "designated accommodation area" is a defined term in the act, and it refers to "an area designated by regulation under section 240 (1) (b)." I have been unable to trace that in the bill or the act.

Perhaps the minister can just briefly explain what a designated accommodation area is and how a refund might work in relation to that. What would be the timing of an obligation to pay PST in such a transaction?

[1610]

Hon. M. de Jong: The short answer is that those designated accommodation areas refer to the approximately 50 participating communities in the municipal and regional district tax program on March 31, 2013 — otherwise perhaps more commonly known as those communities with the 2 percent tax.

B. Ralston: It appears to adopt slightly different language as to when the triggering event is, because it refers to…. It wouldn't apply if "(a) the confirmation was received, the contract was entered into or the deposit was made before April 1, 2013." That language appears to be different than language that has been used in a number of other sections. Is that correct, and if so, why?

Hon. M. de Jong: We've got two sets of communities in this case. Those communities that were participating in the program, those 50-some-odd communities — there's no need for any refund provisions to apply for them. Section 124 applies in the case of those communities who choose to join the program subsequently, for which there needs to be a mechanism by which there can be a calculation of the refund that they would be entitled to under the transitional provisions only.

Section 39 approved.

On section 40.

B. Ralston: These two…. This section applies to what's described as legal services provided in British Columbia or to a British Columbia resident. It makes reference to tax of legal services provided in British Columbia. The recipient of legal services, the purchaser, must pay to the government tax on the provision of legal services at the rate of 7 percent of the purchase price of legal services.

So this essentially reinstates the previous practice of an application of the PST to the provision of legal services. For the purposes of those, I guess, engaged in ongoing provision of services over the transition date of April 1, 2013, can the minister explain how tax would apply?

[1615]

Hon. M. de Jong: Once again, the general rule as it relates to…. As I think the member alluded to, it is re-created and reapplied to the provision of legal services.

The member may, though, also be interested to know that the ministry accepted the assertion from the legal community that they wouldn't necessarily know whether a contract for legal services was 90 percent or more complete before July 1, 2010, until that contract for service was fully completed.

Where contracts were 90 percent or more complete before July 1, 2010, tax under the Social Service Tax Act applied on 100 percent of that — of the purchase price of those legal services. That acceptance was made with
[ Page 13062 ]
respect to legal services that straddled the July 1, 2010, date and now the April 1, 2013, date.

Section 40 approved.

On section 41.

B. Ralston: This refers to sections 130 and 130.1. It's a tax on a purchase of a telecommunications service. Section 130(1) refers to tax of 7 percent. Then there appears to be some apportionment between use or purchase within British Columbia or outside British Columbia.

Can the minister explain the reference to subsection (2), which appears to qualify subsection (1) in some way, making reference to April 1, 2013?

Hon. M. de Jong: I'm advised and can advise the committee that, once again, the general rule would be applicable as it relates to the provision and purchase — purchase and sale — of telecommunications services. To the extent….

I'm not sure I heard this, but I may have. The member may have alluded to a pro-ration of telecommunication services inside and outside B.C. That's not the case here — or at least not in the case that I think he may have been alluding to. Section 130.1 has been added to take account of situations in which telecommunication services may be purchased substantially for resale, to ensure that there is a mechanism to take account of that circumstance as well.

Section 41 approved.

On section 42.

B. Ralston: I think the minister is right. I think that I was premature in speaking about…. I meant to speak on section 131, not section 130.1. This is the section in the Provincial Sales Tax Act that apportions what's described…. It's a defined term, a "dedicated telecommunication service." From my reading of it, it looks largely like telephone service, but maybe that could be confirmed.

[1620]

It adopts the same language as other sections about when, in relation to April 1, 2013, tax is due. Perhaps, other than just confirming that the most likely application of this will be to telephone service, that looks to be the case judging from the definition.

Hon. M. de Jong: I believe I can confirm, in the manner described by the member, the applicability of the general rule. With respect to the inquiry around dedicated telecommunication services, I am told that they are increasingly rare but would exist — for example, the secured telecommunication services that the Canadian Armed Forces would have in place or the internal telecommunication services of a large bank network.

Section 42 approved.

On section 43.

B. Ralston: This section initiates a new division, which is entitled "Collection and Remittance of Tax." It's a reference to section 179 of the Provincial Sales Tax Act and, I think, applies to the obligation to levy and collect the tax by a collector, and that's a defined term.

Can the minister explain, briefly, the purpose of this section as it relates to the transition taking place on April 1, 2013?

Hon. M. de Jong: I'm advised that this amounts to the statutory reminder to collectors that their obligation to collect and remit the tax exists as per these transitional rules. So notwithstanding the fact that a transaction may have occurred prior to April 1, 2013, if there is tax payable for any of the myriad of reasons that we have canvassed in our discussions so far, they are obliged to collect as per the act.

Section 43 approved.

On section 44.

B. Ralston: This section makes reference to regulations in relation to accommodation. There's a provision for a power to make regulations. Indeed, that's what section 140 refers to. Can the minister explain what this particular section enables?

Hon. M. de Jong: This is the mechanism by which it becomes clear that the regulations that exist under the hotel room tax will continue in a seamless way and apply under the provincial sales tax regime.

Section 44 approved.

On section 45.

[1625]

B. Ralston: Section 45 similarly makes reference to regulations made under the Hotel Room Tax Act. Subsection (1) makes reference to them as deemed to have been in force under the Provincial Sales Tax Act. So I take it that it's, as the minister spoke of in relation to the previous section, to facilitate a seamless transition — that is, one without a break or legal interruption from one regime to the other.

Hon. M. de Jong: That is correct.

Section 45 approved.
[ Page 13063 ]

On section 46.

B. Ralston: This refers to the retroactive effect of this part, the act and the regulations and its retroactive power. Ordinarily, statutes are prospective rather than retroactive, and there's some good reason for resistance to retroactive effects. But can the minister explain the purpose in this context?

Hon. M. de Jong: The member is correct in highlighting the fact that one is always reluctant to introduce or pass legislative provisions that apply retroactively.

I think he will accept that in this circumstance, particularly on a transitional basis…. We have talked about circumstances in which a transaction may have begun some time ago, some months ago, and will complete at a time that it is captured by provisions of this act — which we hope to see proclaimed in short order — but for which it would be relevant and necessary to look back at the initial stages of that transaction. The relevant provisions would apply on that basis.

Section 46 approved.

On section 47.

B. Ralston: This section is entitled "Transition — regulations" and appears to give the Lieutenant-Governor-in-Council — that's cabinet — fairly sweeping power to pass regulations that might be necessary to clear up any problems that may result from bringing the new act into operation.

A couple of questions. One, does the list of exemptions that the minister referred to in draft regulation at the outset of these proceedings…? Are they enabled by the powers conferred on the Lieutenant-Governor-in-Council by this section — yes or no?

Secondly, are there any other regulations at this early stage that are contemplated under this section to avoid or obviate any problems that may have been identified thus far?

Hon. M. de Jong: This might be as good a time as any for me to plop these regs in the magical box here so that the member can get at them — just there.

[1630]

The significance…. First of all, regs passed under this provision of transitional provisions, the member will know, in a circumstance like this, providing the ability to correct any…. It's a temporary power to correct any error or resolve issues that relate specifically to the transition to the Provincial Sales Tax Act. For a correction to become permanent, it must be ratified in the chamber by a legislative amendment.

As well, I'm sure the member saw subsection (4), which makes those kinds of provisions time limited and deemed to be repealed on April 1, 2016. It is, admittedly, something of a corrective mechanism by which to address technical problems that arise, but it does operate subject to oversight by the chamber.

B. Ralston: I thank the minister for that response. Further to the second part of my question, are there any regulations other than the ones that he's tabled, which I understood related to exemptions, that are contemplated at this relatively early stage but that he is advised may be necessary?

Hon. M. de Jong: None contemplated under section 47 at this point.

J. Brar: I have a couple of questions on section 47. Before I ask the question, I would like to seek clarification from the minister. I know this particular section deals with the transitional difficulties and is to address those difficulties during the process. Is this also involved in the implementation process of the transition? Does this section deal with that too?

Hon. M. de Jong: I apologize. I was momentarily distracted, and I may not have properly understood the member's question.

J. Brar: I'm happy to clarify the question. My understanding is that this section deals with the transitional difficulties as they occur in the future, and it allows us to address or deal with those difficulties as we see them or as we identify them.

My question is…. There are difficulties a lot of small businesses are going to face during the implementation process, whether it's registration or seeking the right information — all those kinds of things. Is that part of this section? If that is part of this section, then I can ask those questions. Otherwise, I can move on to the next section.

Hon. M. de Jong: As I understand the question, this provision, section 47, would not have application in those circumstances — would not.

Section 47 approved.

On section 48.

B. Ralston: This section makes reference to point-of-sale rebates which were under the Consumption Tax Rebate and Transition Act, which I think most people would recognize — or perhaps not recognize — as the act that brought in the HST in the Legislature here in British Columbia.

The provision is to continue the application of the point-of-sale rebate provisions. There are some, I think, for children's clothing, and there are several others.
[ Page 13064 ]

[1635]

Perhaps the minister could briefly confirm that that's the intention of this section and briefly enumerate the point-of-sale rebate provisions that will be continuing.

Hon. M. de Jong: Under the HST, as I think the member knows, B.C. was able to designate a limited number of items for point-of-sale rebate. Of course, we were able to coordinate with the federal government to ensure that that happened in an appropriate way.

These provisions will ensure that the ability to provide point-of-sale rebates continues. Whether it was motor fuels, children-sized clothing and footwear, diapers, children's car seats…. We start to get into the list of point-of-sale rebates, but ensuring that there is an appropriate legislative authority for that is part and parcel of this.

While I'm on my feet, I am reminded…. Forgive me. The practice here is not to table documents in committee. Perhaps to alleviate the grievous indiscretion that I have perpetrated on the committee, I might just give those to the member, and he will have them to peruse and work through.

Section 48 approved.

On section 49.

B. Ralston: This section refers to what's described as residential energy credit and rebate reimbursement limits. There's a reference that — and I'm looking here to follow the language, which is a bit torturous, with all due apologies to the drafters — "a reimbursement must not be made under section 13…." Under the provincial HST act there was a provision for reimbursements of energy credits. It prescribes a time limit beyond which applications for reimbursements couldn't be made of September 30, 2013.

Can the minister just briefly describe when a legitimate application for reimbursement of an energy credit could be made?

Hon. M. de Jong: I'm advised that there are currently about 106 energy suppliers registered for reimbursements and that almost all apply for reimbursement within a month of providing credits to customers, and all are reimbursed within six months. So the shortening of the application period to September 30, 2013, should not have any impact on energy suppliers in that sense.

B. Ralston: Just so it's clear to those who may be following this — that vast audience out there — this is a case where the energy supplier pays the tax on behalf of the consumer and then applies for a rebate, and it's furnished by the revenue branch of the provincial government. Is that correct?

[1640]

Hon. M. de Jong: If I understood the question correctly — just at a practical level, how this was working — that would be that the energy supplier would provide the credit to their customer but would still be responsible for remitting the full federal and provincial portion to the federal government. The provincial government then provided a reimbursement to the energy supplier upon production of the proper accounting records to confirm what had been remitted. So that was the practical means by which the rebate occurred.

Section 49 approved.

On section 50.

B. Ralston: This is a tax in relation of a vehicle deemed to be tax under the Provincial Sales Tax Act. There is a reference to a date of May 1, 2013, on registering a vehicle under the Commercial Transport Act, the Motor Vehicle Act or the Motor Vehicle (All Terrain) Act. Can the minister explain the choice of that particular date and how the transition, in the case of the sale of motor vehicles, would work from the HST to the PST?

Hon. M. de Jong: This is largely an administrative matter that relates to the relationship and the role that the Insurance Corporation of British Columbia plays with respect to the registration of vehicles and the collection of tax owing. I think the member is aware that there is a general provision which requires the registration of sales within ten to 14 days.

For certain transactions for which the previous tax regime will apply, that will continue to be the case. But the decision was made that for transactions on or after May 1, 2013, vehicles registered after that date will be treated as being subject to the PST under the Provincial Sales Tax Act.

It is, admittedly, to create some administrative certainty around the systems that are being employed or are utilized by ICBC. People will continue to have the period between April 1 and May 1. But thereafter, the vehicles registered will be treated as being subject to the PST rules.

B. Ralston: Thank you, Minister, for that explanation.

[1645]

I understand the delay, but rather than just oblige people to complete the transaction before April 1, 2013 — even though there is, I think, a ten-day or a 15-day period in which to register — I'm wondering why the date of May 1, 2013, was chosen when in most other circumstances the relevant date is April 1, 2013, but not in this case. I'm just wondering why this apparent exception, if I can refer to it that way, was chosen.

Hon. M. de Jong: I think the short answer is trying to give recognition to the fact that someone could pur-
[ Page 13065 ]
chase a vehicle on March 30, March 31. The obligation to register requires them to attend at ICBC. Their capacity to do that immediately may be limited. But on the other hand, we didn't want this lingering in perpetuity, so creating what was…. I'm not sure there's any magic in the date beyond that, beyond trying to find a reasonable period of time within which people are expected to effect their registration.

R. Lee: May I seek leave to make an introduction?

The Chair: Please proceed.

Introductions by Members

R. Lee: I am very pleased to be here today to introduce five members of the Educational Quest Society of Canada. They are here meeting with the Minister of Education to discuss examinations as well as the level of achievement of our students here in high schools and universities. May I ask the House to make them welcome.

Probably I should read the names into the record as well: Sharon Shen, Lucy Jin, Bill Wu, Yi Yuan, as well as Johnson Zhai.

Thank you very much for coming. Welcome again.

Debate Continued

Section 50 approved.

On section 51.

B. Ralston: This makes reference to appropriations in section 52 of the Consumption Tax Rebate and Transition Act. I'm looking at that, and it appears to be a trifle Delphic. Perhaps the minister could explain the purpose of this section.

Hon. M. de Jong: Unless I am mistaken, and I hope I am not, this is a mechanism by which the Crown, in the right of the province of British Columbia via the Minister of Finance or the government itself, maintains the ability to pay from the consolidated revenue fund any amount payable by the government under the sales tax agreement with the federal government. The continuation of that statutory appropriation is necessary to ensure that the government continues to be able to pay the amounts from the CRF to meet its legal obligations under that agreement — reciprocal taxation agreements.

[1650]

Section 51 approved.

On section 52.

B. Ralston: This refers to the application of a section of the Interpretation Act. Can the minister explain why that's necessary?

Hon. M. de Jong: My recollection is that section 36 of the Interpretation Act, if it applied, would operate in a way that would limit the ability to continue the remaining work necessary under the Consumption Tax Rebate and Transition Act. By including this section 52 and disapplying section 36, we are ensuring that the procedures, the rules, under the Provincial Sales Tax Act don't apply to any outstanding accounts — audits, assessments, appeals, collections, actions — that have been commenced under the Consumption Tax Rebate and Transition Act.

Sections 52 to 55 inclusive approved.

On section 56.

B. Ralston: This is a new division referring to the Motor Fuel Tax Act. There are some sections of the Provincial Sales Tax Act that apply for the purposes of this division — subsection 28(9) and section 33. Can the minister explain why those apply to the Motor Fuel Tax Act?

Hon. M. de Jong: It's the technical means of ensuring that going forward the applicable taxes on propane will be dealt with via the Motor Fuel Tax Act, as opposed to any other taxation provision, including the PST Act. So it is bringing the applicable taxes on propane to be captured and administered and applied via the Motor Fuel Tax Act.

Section 56 approved.

On section 57.

[1655]

B. Ralston: This refers to section 10.3 of the Motor Fuel Tax Act, I believe. It refers to a purchase of propane not imported from outside Canada.

I'm sure that those in the propane distribution business will be interested in the application of the tax, so can the minister briefly explain the import of this section? There is a formula that appears to facilitate the calculation of the tax pre–April 1, 2013. But perhaps the minister can explain in a little more detail how this will work.

[H. Bloy in the chair.]

Hon. M. de Jong: The provisions, I am reminded, are the same. The provisions around transition and containment within the Motor Fuel Tax Act are the same as was previously the case. They're the same as with the transitional rules for the Provincial Sales Tax Act. The one significant difference here relates to the fact that the tax on propane is not a tax on the percentage of the purchase
[ Page 13066 ]
price but a volume-based tax of 2.7 cents per litre, and it shows up with that noticeable difference.

B. Ralston: Can the minister explain, in subsection (5), the application of the formula?

Hon. M. de Jong: This might be the easiest way to convey this. I am advised that if 50 percent of the consideration is due after April 1, then the tax would apply to 50 percent of the volume.

Section 57 approved.

On section 58.

B. Ralston: This refers to propane imported from outside Canada, in distinction to the previous section, which is propane not imported from outside Canada. Is the method of calculation the same?

There's a reference here to accounted for under the Customs Act, but we've made reference to that in earlier sections. If there is any difference in that, perhaps the minister could indicate. Otherwise, it would appear to follow the same formulation as other sections relating to recognition of the entry into Canada under the Customs Act.

[1700]

Hon. M. de Jong: No differences around calculation — triggering date being, as I think the member mentioned, entry. Well, release by customs upon entry into Canada.

Section 58 approved.

On section 59.

B. Ralston: This refers to section 10.3, use of propane. There are a number of definitions here, including "amount of energy allowance received" and "amount of excise tax paid." Can the minister point to any changes in definition that are noteworthy or worthy of comment?

Hon. M. de Jong: I was careful…. I was listening to the member's question. I don't know that these specific definitions would have occurred or existed under previous legislation, so I didn't want to leave the impression that they are the same as something that didn't necessarily exist.

They are transitional measures, and the definitions are applicable to this section. The section is intended to operate in a way to ensure that the total tax payable on use of the product is the same as total tax payable on the purchase. The definitions are relevant for use in the section to achieve the same objective. I didn't want to leave the impression that this same terminology and these same defined terms exist or did exist in precisely the same way in previous legislation.

Section 59 approved.

On section 60.

B. Ralston: This section makes reference to the requirement imposed upon deputy collectors and retail dealers to provide an inventory of propane and to pay security on the propane included in the inventory. Then there appears to be a method by which there would be calculation of tax paid upon the propane included in the inventory. Can the minister explain what is meant by security on the propane included in the inventory and how that's relevant to the date of April 1, 2013?

[1705]

Hon. M. de Jong: The act and the provisions create a taxation regime and a tax collection regime going forward from April 1. These provisions require the deputy collector or retailer to do an inventory as at April 1 so that there is some basis upon which to carry out that collection and calculation going forward from that date.

B. Ralston: I thank the minister for that answer. That's, I think, fairly straightforward.

On the reference to paying security, I'm not sure what that means in this context. I think there's a reference, specifically, in subsection 60(5): "A deputy collector or retail dealer" who is required to provide the inventory that the minister referred to must pay to the director "the amount of security on propane included in the inventory equal to the tax that would be collectable if the propane were sold to a purchaser on April 1, 2013."

I'm having difficulty understanding the use of the term "security" in this context. Perhaps that could be explained.

Hon. M. de Jong: Once that inventory has been done, the 2.7 cents per litre applies under the terms of these transitional provisions. That deputy collector or retail dealer would be obliged to pay that amount to the Crown by April 15 of 2013.

Section 60 approved.

On section 61.

B. Ralston: This section refers to tax on heating oil or non–motor fuel oil used for unauthorized purposes.

I believe that this is where certain industries, such as the agricultural industry, get some kind of a rebate of tax that might otherwise be due on fuel oil or heating oil. I'm not sure. Perhaps if it's then used in a way that's not authorized, it would attract tax, and this would describe the events that would trigger that payment of tax in the transition.
[ Page 13067 ]

Unless I'm mistaken, that would appear to be the purpose, but perhaps the minister could either confirm that or further elucidate.

[1710]

Hon. M. de Jong: I am reminded that some of these fuels have a number of different purposes. What is considered diesel for the operation of a motor vehicle may be heating oil if used differently. The transitional provisions are designed to take account of a situation where, as we dealt with earlier, a fuel is purchased for one purpose prior to April 1 and then used for a different purpose after April 1, which would attract — would have and now will, with these provisions — the application of the applicable taxation provisions where the use is different than what the original purchase was intended for.

B. Ralston: Is it possible for the minister, then, just for the purposes of illustration, to give an example of a fuel purchased for one purpose and used for another?

Hon. M. de Jong: The general example is where you've purchased a fuel for heating purposes, and then you use it to operate your vehicle. I'm told there are other products that can be utilized in the mineral and energy exploration sector but could also be used in a vehicle. Again, if you purchase it for that one reason and end up using it for another, it will attract the application of the appropriate rate of tax.

Sections 61 and 62 approved.

On section 63.

B. Ralston: This is a power to enact regulations that is very similar, if not identical, to one we discussed earlier, at section 47. At this point, are there any regulations that have specifically been written — in draft and not yet proclaimed in force, or intended to be proclaimed in force upon this act passing in the Legislature?

Hon. M. de Jong: There are no regulations pursuant to section 3, nor are there any contemplated at this point. There will be regulations pertaining to fuel and matters related to fuel, but not under section 63 — at least, not presently contemplated.

Sections 63 and 64 approved.

On section 65.

B. Ralston: I haven't quite got to the last section. I still have a few more questions. We're dealing with section 65. Can the minister explain the purpose for a transitional provision in relation to what is described as "contingent fee agreement or extraordinary circumstances"? Extraordinary circumstances could include a vast number of circumstances, so I'd be interested in hearing a little bit more about what's intended here.

[1715]

Hon. M. de Jong: I am reminded that some of the contingency fee agreements would have been entered into before July 1, 2010. The member will have no difficulty accepting that fact. Because the provisions of the Social Service Tax Act will no longer be applicable, ensuring that there is a mechanism by which the tax can be collected on amounts that arise with respect to contingency fee agreements that predate July 1, 2010, is what this section is intended to capture.

B. Ralston: The reference to what are called extraordinary circumstances — is that simply a catch-all? Perhaps the minister could explain.

Hon. M. de Jong: That provision is there to provide a legal mechanism by which a vendor can advise the director that due to extraordinary circumstances, they were unable to ascertain, prior to January 1, 2011, the purchase price of a product. Now, this will be pretty limited and would be dealt with on a case-by-case basis.

The magic behind the January 1, 2011, date is that's when they were obligated to provide that advice, effective of.

Sections 65 to 67 inclusive approved.

On section 68.

B. Ralston: This is a reference to and an amendment to the Carbon Tax Act. There's an amendment to the definition of "imported fuel." It appears to delete propane. I take it that may be because propane is dealt with in the Motor Fuel Tax Act, but I'm only speculating there. Perhaps the minister can confirm that, or not.

[1720]

Hon. M. de Jong: Before I provide an answer completely off the mark…. I'm not sure I properly understood the member's question. Maybe he could just give it to me one more time.

B. Ralston: Well, perhaps I'll make it a bit briefer, then. I'm just wondering why the necessity for this change in definition, which appears to delete the two words "and propane" from the definition of "imported fuel."

Hon. M. de Jong: Thank you to the member for clarifying the question. This is consequential to making propane subject to the security scheme under both the Motor Fuel Tax Act and the carbon tax. That accounts for the definition that the member correctly identified under
[ Page 13068 ]
imported fuel.

I wonder, hon. Chair, with the members and the committee's indulgence, if this might be an appropriate time for the committee to recess for a couple of minutes.

The Chair: The House will recess for five minutes.

The committee recessed from 5:23 p.m. to 5:37 p.m.

[H. Bloy in the chair.]

B. Ralston: I think I've exhausted my questions on section 68.

Sections 68 to 70 inclusive approved.

On section 71.

B. Ralston: This section simply repeals the Consumption Tax Rebate and Transition Act, which is the HST act. I'm a little surprised that it's buried so deep in the bill. I would have thought that it might have been up front, given that that's the whole purpose by which we are engaged in this exercise — that that act is being repealed and the other one is going forward. I wanted to make that comment since I think it's a relatively important and momentous part of the whole process.

Sections 71 to 73 inclusive approved.

On section 74.

B. Ralston: There's an amendment to section 88 of the Financial Administration Act. I'm wondering if the minister could explain why there's an addition of a subsection. Can the minister explain why that's being added?

Hon. M. de Jong: I just want to confirm that we are dealing with section 74.

B. Ralston: I understood we were dealing with section 75.

Section 74 approved.

On section 75.

[1740]

B. Ralston: Perhaps I could put my question once again. It amends section 88 of the Financial Administration Act by adding another subsection that relates to the rate of interest. I'm not sure how this is a subsequent amendment, but perhaps the minister can clarify.

Hon. M. de Jong: The advice I have received and have been reminded of is that when the Provincial Sales Tax Act was passed last spring, there were very specific provisions included for calculating interest that were more particular and more specific than that which heretofore had existed in the Financial Administration Act. The advice was, to avoid any confusion or complication, to take similarly specific provisions and include them in the Financial Administration Act. So it's to bring consistency between the two acts.

Sections 75 to 78 inclusive approved.

On section 79.

D. Donaldson: This section deals with the Mineral Land Tax Act and an amendment or a replacement of a definition to do with a taxation agreement that's embedded in the Mineral Land Tax Act in regards to the Nisga'a final agreement. I would ask the minister if he could shed some light on the remedy that this replacement definition is attempting to address.

Hon. M. de Jong: The member will know that previously the act referred to the Nisga'a Final Agreement Act. What was unclear was whether or not that definition was sufficient to capture subsequent amendments to the Nisga'a Nation taxation agreement that flowed from that. The amendment here is to ensure that it is clear that the provisions apply to not just the Nisga'a Nation taxation agreement but any amendments that may occur in the future.

D. Donaldson: I want to make sure that I get this clear then. Is the minister saying that in the previous act it was unclear whether the definition of taxation agreement and the provisions actually applied to the Nisga'a Final Agreement Act?

[1745]

Hon. M. de Jong: No, and I wouldn't want to leave that impression. Clearly, the act operated with the Nisga'a Final Agreement Act in mind and contemplating that.

The specific ambiguity that was identified related not to the Nisga'a Nation taxation agreement, to which application did exist. But there was, we were advised by drafters, ambiguity whether or not subsequent amendments to the Nisga'a Nation taxation agreement would also be captured.

I can also tell the member that the consequential amendment here was the product of consultations, I am advised, with the Nisga'a Nation, and they are content with what is proposed here.

Section 79 approved.

On section 80.
[ Page 13069 ]

D. Donaldson: This is section 80 and the Mineral Tax Act and, again, the definition of "Taxation Agreement" as it relates to the Nisga'a final agreement. My question would be the same. What is the situation that this amendment is attempting to remedy? Is it similar to what was addressed in the previous section?

Hon. M. de Jong: The rationale is the same as the one I offered for the previous section. I'm reminded that there are, I think, seven or eight sections that would follow a similar exchange.

Section 80 approved.

On section 81.

B. Ralston: This section refers to the Motor Fuel Tax Act and deals with a number of definitions. The first one is repealing the definitions of "authorization" and "authorized person." The act refers to section 14, which is "Authority to colour fuel," and the definition, It appears to be related to section (b) in the sense that there's a similar reference to coloured fuel.

Can the minister explain the purpose of repealing the definitions?

Hon. M. de Jong: With respect to the defined terms authorization and authorized person, those definitions are simply being moved from section 1 to part 3 of the act. The definition of coloured fuel is being altered to exclude propane and simply clarify the existing definition, recognizing that it excludes propane.

B. Ralston: I'm looking at the definition of coloured fuel as it exists now. The new definition does appear to exclude propane. Other than that, are there any other changes?

It does, I think, change the wording in relationship to "fuel dyed" and calls it fuel coloured. I think that's just a term of art, in accordance with section 14. So other than the exclusion of propane, is there any other change to the definition of coloured fuel? It would appear that there isn't, but I just wanted to confirm that.

Hon. M. de Jong: No.

[1750]

D. Donaldson: My question on section 81 is in regards to (e), the definition of "heating oil" — something, actually, I'm quite familiar with. I haul a couple of 45-gallon drums of heating oil up to a ski cabin every fall in order to heat my ski cabin, so I take interest in this section 81(e).

Would the minister be able to explain why this new definition is required and what it's addressing compared to the previous definition?

Hon. M. de Jong: If you look at the former definition of heating oil, it referred to "light fuel oil, as defined in Schedule 1 of the Carbon Tax Act." You'll notice that there is now a definition of "light fuel oil" contained within the section itself. That just makes it easier to know what's being referred to without having to cross-reference another act. It's defined within the section, although the effect is the same.

The other change that the member would have noticed is the inclusion of the phrase "marketed or sold." That means that the product we're talking about, as the member has used an example, had to be sold for that purpose — as a heating fuel and not a fuel that may have been marketed for some other purpose. Hopefully, that assists.

B. Ralston: Continuing on section 81, can the minister, then, explain why propane has been excluded from the definition of coloured fuel? I'm sure there's an easy answer to that, but I don't know it.

Hon. M. de Jong: Two reasons come to mind. I'm told that propane is not generally considered coloured fuel, and the rate of tax on coloured fuel is very slightly higher than it is on propane.

B. Ralston: In the definition of "gasoline," which is fairly extensive, "liquefied petroleum gas" is struck out, and "propane" is substituted there. Is that a similar change in the thinking about propane or recognizing what the reality of propane is?

Hon. M. de Jong: I'm told — and I certainly did not know this — that liquefied petroleum gas is a term used formally in legal documents to describe propane.

Section 81 approved.

On section 82.

B. Ralston: This similarly relates to propane, where propane is being deleted from its inclusion with hydrogen and natural gas. Is there a similar argument that's being agreed to by changing this definition?

[1755]

Hon. M. de Jong: I think the answer would be similar to the one when we dealt with the questions earlier. The definition is altered because propane is now captured within the definition of imported fuels for the reasons we alluded to earlier.

Sections 82 to 84 inclusive approved.

On section 85.

B. Ralston: This section repeals a section. The explana-
[ Page 13070 ]
tory note says it "repeals the provisions imposing tax on the purchase of natural gas for use in a stationary internal combustion engine, consequential to the application of the Provincial Sales Tax Act to natural gas, and clarifies the provisions relating to taxation on the use of natural gas in a stationary internal combustion engine."

Can the minister explain what the purpose of making this change is? I have a few questions about the definition of a stationary internal combustion engine, but perhaps you could just explain the purpose first.

Hon. M. de Jong: The problem being dealt with or the practical difficulty related to the fact that for sellers of natural gas there are a range of different applicable tax rates that depend upon the use for which the natural gas is being used, which type of stationary internal combustion engine. The concern was that would again prove to be challenging for the sellers of the fuel.

What has been opted for here is that the tax at purchase will be calculated on the basis of the PST-applicable rates. Whether or not that leads to an entitlement to a rebate or an obligation to remit more will be calculated on the basis of the Motor Fuel Tax Act. That's the construct that's being applied to spare the sellers of the fuel the difficulty of determining usage and applicable tax rate.

[1800]

[L. Reid in the chair.]

B. Ralston: In subsection 3(a) and (b) the rate of tax is actually prescribed in the statute. Is the minister not concerned that prescribing it in the statute makes a change of that rate more cumbersome, should it be contemplated to be necessary either to reduce it further or to increase it, in that a statutory amendment would be required?

Hon. M. de Jong: Yeah, it's an interesting observation, because the trend legislatively and statutorily seems to have gravitated over the years in the opposite direction. But I am reminded that in most instances where there are specific tax rates provided for and prescribed, in B.C., in most instances, they continue to appear in statute and require amendments to take place statutorily, which historically, I think, has tended to take place around budget and through budgetary instruments.

B. Ralston: Does the definition of "stationary internal combustion engine" in this context apply to what's contemplated in the proposed LNG plants which would compress the natural gas and reduce its temperature to make liquefied natural gas? Is that procedure or practice included in this definition?

Hon. M. de Jong: The short answer is that I don't know, and that's a significant enough question and decision that I wouldn't want to venture to guess. I can endeavour to make some inquiries, but I wouldn't want to venture a guess on something as significant as that.

B. Ralston: Well, perhaps then, we could at least note that. When we return, if it's tomorrow or…. I'm not sure, although perhaps the minister knows uniquely, since he's also the House Leader, whether we'll be back at this tomorrow or not. But perhaps I could get an answer then. I agree with him that it is a reasonable question.

Looking to subsection (4), which sets out some exemptions, these appear to be…. One refers to "not marketable gas," another to "waste gas" and a reference to injecting waste gas. So this is gas without any continuing commercial value. Is that the reason for the exemption that's contemplated here?

Hon. M. de Jong: I'm reminded and will pass on to the committee and the member that these are the exemptions that previously existed. They've merely been replicated here for consistency.

B. Ralston: In subsection (5) there's a rate of tax on "natural gas that is used in a stationary internal combustion engine that pumps oil." That would be, I think, relatively common as a way of internally sourcing in the oilfield.

Are these rates of taxation…? They seem to be the same as in subsection (3), but perhaps the minister can confirm that. Secondly, are these rates the existing rates, or are they new rates, either lower or higher?

Hon. M. de Jong: I am advised they are the same rates.

B. Ralston: Subsection (6) appears to make an exception of the rate of tax payable under subsection (2).

[1805]

Is this simply, I suppose, a minimum tax, if I can put it that way? If there's no specific reference in any of the other sections or it's for any other purpose that's not specified, that would be the rate? Is that the purpose of subsection (6)?

Hon. M. de Jong: I think the hon. member correctly described the "any other" section, and it replicates what is presently in the Motor Fuel Tax Act.

Section 85 approved.

On section 86.

B. Ralston: This refers to the provincial sales tax and tax paid on natural gas used in what we've just been talking about: the stationary internal combustion engine. I'm looking here where there's a reference to the director and some decisions that the director has to make. Can the minister explain what the purpose of this sec-
[ Page 13071 ]
tion is? It says it's "consequential to the application of the Provincial Sales Tax Act," but perhaps the minister can provide a little bit more detail as to how it's contemplated it would work.

Hon. M. de Jong: So 9.1 that's been added to the Motor Fuel Tax Act is to ensure that a person who purchases natural gas which is used in a stationary internal combustion engine will pay the same overall as a person who uses natural gas in a stationary internal combustion engine without actually having purchased that gas.

The amendments, ultimately, are necessary because the existing provisions relating to the purchase of natural gas for use in a stationary internal combustion engine can't be administered or enforced as drafted, because fuel sellers themselves have no way — as I talked about earlier — of applying the correct tax rate because they don't have any way of knowing with certainty how the natural gas will be used and the tax rates tend to vary by use.

B. Ralston: Just so I'm clear, then, is the intention of this section to collect tax where the natural gas is supplied internally by the same company that's operating the stationary internal combustion engine, as in an integrated natural gas producer that might provide natural gas from its own sources to power stationary internal combustion engines?

Hon. M. de Jong: In fact, I think what the member has described is what's captured by section 9, and then this captures the alternative — where someone has, from outside of the internal supply chain, purchased the gas. So the member is right. I just think his scenario is probably more accurately captured under section 9.

Sections 86 to 88 inclusive approved.

On section 89.

[1810]

B. Ralston: This refers to the tax on propane. There's a rate set of 2.7 per litre, and it prescribes when it must be paid. Is that a change in the rate, either raising it or lowering it? I just wanted a confirmation on the rate of 2.7 cents per litre.

Hon. M. de Jong: That's the pre–July 1, 2010, rate.

B. Ralston: Given what the federal government has said about the use of the penny, will the minister be rounding up to five cents per litre?

Perhaps I should just clarify that for the record. That was a weak attempt at humour. I had to have one spot of humour in this whole process.

Sections 89 to 91 inclusive approved.

On section 92.

B. Ralston: This is the reference to coloured fuel that we spoke of. The previous section repealed it, and this is where it will be located in the new arrangement. Is that correct?

Hon. M. de Jong: Yes.

Sections 92 to 94 inclusive approved.

On section 95.

B. Ralston: This part refers to heating oil and non–motor fuel oil and refers, in section 16.1, to "colour." Can the minister briefly explain, for those who might not know what this means, what the reference to colour is and its purpose?

Hon. M. de Jong: This is a longstanding practice where a particular dye is added at a particular concentration. It is, quite simply, a means of distinguishing the different tax rates that would apply. In the case of coloured fuels, the applicable tax rate is generally much lower than for equivalent fuels that are clear.

B. Ralston: It's my sense that this has traditionally been applied in relation to use for agricultural purposes of certain fuels. Is this a growing area of use of fuel? Are the number of people who are authorized to colour fuel a growing number, or is this a relatively stable group of the economy and there's not much change?

Hon. M. de Jong: There were two questions, I think, the member asked. The numbers of people authorized to coloured heating oil and non–motor fuel oils is not undergoing any sort of rapid expansion.

[1815]

I think the other part of the member's question related, again, to this general notion of coloured fuel being used for agricultural purposes. There's certainly an element of truth to that. This section doesn't apply to that kind of fuel. This isn't your tractor and farm pickup-truck fuel. This is a different type of fuel.

B. Ralston: I guess my question is, just in a general sense: how widespread is this? I mean, it does seem to be…. Obviously, you're trying…. It's an enforcement mechanism. You authorize people to colour the fuel so that, presumably, if it's used in a prohibited way, it's easier to identify if it's subject to enforcement.

I know it's something that's been around for many years. I'm just wondering whether it's something that is still required or serves a purpose for enforcement. Or is there another way to achieve the same effect?
[ Page 13072 ]

Hon. M. de Jong: The best advice I have is that in the category we're dealing with it is still used. It is an important and, in many ways the only, way to be able to distinguish and enforce the application of appropriate tax levels.

I'm not in a position to set out, with respect to agricultural usages, whether volumes are up or down. I suppose I can find that out.

B. Ralston: Again, looking at heating oil, there's a reference here, in section 16.7, to unauthorized uses. There appears to be some provision of penalty in section 16.7(5). I take it it's an elevated tax on the fuel that has not been used in the prescribed way. Is that the mechanism for enforcement, then? If the person is discovered in that way, there's a calculation made of the fuel that's been used in some way and they're obliged to pay a penalty by way of higher taxation per litre. Is that the mechanism of enforcement?

Hon. M. de Jong: I think I understand the member's question. That is certainly one of the sanctions. I'm reminded that we will, just a little bit further on, come upon some other sanctions that would befall someone found to be improperly using the fuel, and those sanctions also exist under the Motor Fuel Tax Act.

B. Ralston: These subsections make reference to heating oil and non–motor fuel oil. Are those the two? Other than those, are there any others? These are subject to being coloured, I take it. It follows in the sequence. Is that an exhaustive list, then, of the fuels that can be coloured?

Hon. M. de Jong: The only other ones would be coloured motor fuel — this being heating oil and non-motor fuel — and this is where you get into the tractor and the pickup truck.

Sections 95 and 96 approved.

On section 97.

B. Ralston: This, perhaps, is one of the sections that the minister was referring to in terms of enforcement. There's a reference to "security on a substance bought as a fuel."

[1820]

If it was sold in accordance with the act, in the prescribed way, then there's some recovery. Is the posting of a security of some kind a further precaution to ensure, I suppose, the proper use of coloured fuel?

Hon. M. de Jong: This is the circumstance where someone has purchased diesel, coloured it and converted it in that way and then subsequently sold it for an approved process and otherwise complied with all of the requirements, and in that case would be entitled to a rebate.

Section 97 approved.

On section 98.

B. Ralston: The form that's required is a form that contemplates making the application for a refund. Is that something that can be filed electronically, or is it something that is…? It says a written application. How would that be done?

Hon. M. de Jong: I'm advised that as yet the capacity to electronically file the refund application doesn't exist, so it would require a mailed-in application or a dropped-off application form.

Sections 98 to 101 inclusive approved.

On section 102.

B. Ralston: This is again, perhaps, a further reference that the minister was alluding to: penalties for unauthorized uses of heating oil or non–motor fuel oil. It appears to be a penalty in terms of multiples of the tax that would have otherwise been imposed if there was an unauthorized use. Is this a change in the level of penalty, either bringing it up or bringing it down? Or is it simply reinstating the penalties as they previously existed?

Hon. M. de Jong: Previously, and again now, there were penalties for unauthorized use of coloured fuel. There were not these additional penalties for the unauthorized use of heating oil and non-motor fuel. These are created to ensure that there is consistency between the two.

B. Ralston: In the previous provisions that the minister spoke of, as a practical matter, how frequently was there any successful enforcement action? Is the minister able to give a sense of that?

[1825]

Hon. M. de Jong: I'm advised that there are enforcement proceedings and people are caught from time to time. I don't want to suggest that the coloured-fuel cops are out there on a daily basis uncovering the surreptitious use of the wrong fuel, but I'm told that they are caught from time to time. I don't have statistics at my fingertips for the member.

Sections 103 and 104 approved.

On section 105.

B. Ralston: This appears to be a further instance in the
[ Page 13073 ]
regulatory scheme in terms of dealing with illicit use. The appeal to the minister — I gather from the way in which these amendments are drafted that there wasn't a procedure of this type previously. There's a provision for cancellation of an authorization, but this appeal mechanism didn't previously exist. Is that correct or not?

The Chair: Minister of Finance, noting the hour.

Hon. M. de Jong: Oh, thanks, hon. Chair. It seems like time has stood still.

To answer the member's question — similar to the last question — there were appeal provisions. Upon doing the work, it was discovered that they didn't exist specifically with reference to heating oil and non-motor fuel. This imports that measure of consistency in the act.

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

Motion approved.

The committee rose at 6:27 p.m.

The House resumed; Mr. Speaker in the chair.

The Committee of the Whole, having reported progress, was granted leave to sit again.

Hon. M. de Jong moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 10 a.m. tomorrow morning.

The House adjourned at 6:29 p.m.

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