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)

Tuesday, February 26, 2013

Afternoon Sitting

Volume 42, Number 6

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

TUESDAY, FEBRUARY 26, 2013

The House met at 1:36 p.m.

[Mr. Speaker in the chair.]

Routine Business

Introductions by Members

L. Krog: It's not often I get to introduce anyone in the chamber, so I'm delighted today to welcome to the chamber a former Member of the Legislative Assembly, a now active professor of political science at Vancouver Island University just a few months or weeks short of retirement. I'd ask the House to welcome my friend Allan Warnke.

Hon. B. Stewart: I'm pleased to acknowledge and welcome to the Legislature today John and Maria Byland, who are constituents of mine. Also, more importantly, Maria Byland is being recognized today to receive a Queen's Diamond Jubilee Medal.

Certainly, the Bylands have contributed immensely, over the many decades that they've been in the riding of Westside-Kelowna, to the development and improvement of the community. I have to acknowledge the fact that they were recognized as the international nursery of the year last year in China, beating out entries from around the world. Please welcome John and Maria Byland.

C. James: I have two individuals who are here in the gallery with me today. The first is an individual who I believe keeps Victoria's volunteer sector running single-handedly. After 30 years as a special education teacher, she now has taken that time and energy and commitment into the volunteer sector. Just to name a few: president of the Black History Society; president of the Inter-Cultural Association; volunteers for the James Bay Community project, Glengarry care home, Global Village; and teaches citizenship students. She has also been my best role model and support.

I'd like to introduce my mother, Mavis DeGirolamo, who is here in the gallery today. With her is a very special family friend, who was a friend in the 1960s, who has come back into our lives, much to the joy of my mother and the joy of our family. With her is her very good friend Bill Corbin. Would the House please make them very welcome.

Tributes

DICK ROSS

Hon. T. Lake: Communities like Barriere are built on the backs of men like Dick Ross. That's how friends describe the tireless volunteer who was instrumental to the success of the North Thompson Fall Fair and Rodeo and also spearheaded the town's first baseball park. When it came to the fall fair and rodeo grounds, Dick loved the people who worked there and was always present.

Jill Hayward, who is president of the Fall Fair and Rodeo Association, says: "We likely never would have had a rodeo or the fall fair if it wasn't for Dick Ross." Dick died earlier this week from post–heart surgery complications at the age of 82. A former military man and railroader, Ross was also a member of the Royal Canadian Legion, the first president of the B.C. Little Britches Rodeo Association, a charter member of the Barriere Lions Club, an ambulance driver and of course so many more things in a small community.

He loved his community. He loved baseball. Bill Kershaw, a longtime politician in Barriere, said that Ross didn't do what he did for any other reason than he loved Barriere. It was his home; he wanted the best for it. Barriere and the entire North Thompson Valley will gather this Saturday to pay tribute to Dick, who exemplified service to a small community.

Introductions by Members

Hon. C. Clark: It's truly an honour to rise today and introduce 68 B.C. Liberal constituency assistants from all across this great province. I know all members will agree that our constituency assistants work tirelessly. They not only make a difference in their communities; they make a very real, tangible difference in improving people's lives, one by one, every single day. They have a very tough job. They do it with determination. They do it with professionalism, and they do it, most often, with grace.

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I want to thank all of them for everything that they do. None of us could do our jobs in serving the people of British Columbia without them on the front lines. I would like to ask all members of the House to please make them very, very welcome today.

J. Horgan: Today at a ceremony hosted by my colleague from Oak Bay–Gordon Head, I had two very distinguished constituents here — the Chief of Scia'new Nation, Russell Chipps, and the Chief of the T'Sou-ke First Nation, Gordon Planes.

It was an outstanding presentation by the member for Oak Bay–Gordon Head. It was a real thrill to be part of that, to see aboriginal leaders coming to Victoria. Coming to the traditional territory of the Esquimalt and Songhees people to celebrate a positive outcome was a great thing. I want to thank the member from Oak Bay for inviting me today.

L. Reid: Mr. Speaker, on your behalf, I have the absolute pleasure today to introduce John and Katie Unger, visiting from Oliver, British Columbia. On behalf of
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Mrs. Barisoff, as well, I'd like the House to please make them welcome.

And receiving a Queen's Diamond Jubilee Medal today, Dustine Rodier, on behalf of the Richmond RCMP detachment. She is joined today by her husband, Pascal Rodier, and I'd like the House to please make them very welcome.

K. Corrigan: It gives me a great deal of pleasure to introduce members of the executive of the B.C. Police Association that represents more than 2,500 front-line municipal and police officers in this province. I'll be making an oral statement in a few minutes, talking about the work that they do. In the meantime, I hope you will make members of their executive most welcome — president Tom Stamatakis; Doug Sage from Abbotsford; Sean Plater from Victoria; and Don Bland, who is the Police Association chief liaison officer. I hope you will all make them very welcome.

K. Conroy: I'd like to introduce a group of people that are here with the B.C. Alzheimer Society group. They hosted a lovely lunch today. There are quite a number of them, so bear with me: Harry Diemer, Mark Zuberbuhler, Dan Levitt, Jim Mann, Sandy Riley, Jeff Woodburn, Patrick Tham, Vicki Costas, Tony Yue, Constanta Jarvis, Barbara Lindsay, Jean Blake, Flora Gordon, Ruby Ng, June Hope, Lauren Weisler, Geri Hinton and Susan Wetmore. Will the House please join me in making them all very welcome.

Tributes

TED MOFFAT

Hon. S. Bond: I'm sorry to have to share some sad news with the House today. Prince George this morning lost a pillar of our community. Ted Moffat passed away this morning. He was the president of Northern Hardware. He was a third-generation store owner. Northern Hardware is 93 years old.

I can assure you that Ted was known for his love of his family, for his community, and he was always willing to help with local initiatives, many of them aimed at improving our downtown. He will be deeply missed by his wife, Gloria; his son, Dan; his daughter, Kelly; and a very large and extended family.

I know that I certainly want to send our regrets on behalf of the members for Prince George–Mackenzie and Nechako Lakes. It's an enormous loss for our community, and I would ask, Mr. Speaker, that you would share the condolences of this House with Ted's family.

Introductions by Members

B. Routley: It's good to be here. In fact, it's good to be anywhere today. [Applause.] Thank you.

We have two groups of students here from Cobble Hill Elementary School. They are somewhere in the precinct. I haven't seen them arrive here yet. But I wanted to acknowledge that they're here on a student tour — both the grade 3s and grade 4s.

I've heard other MLAs talk about their best school. I want to talk about some of the best teachers in British Columbia, and they are right there from Cobble Hill School. Mrs. Hayley Henderson is along with the group, and there's a group of parents along as well. Please join me in making these students and the teacher and their family members welcome.

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Introduction and
First Reading of Bills

BILL 15 — JUSTICE REFORM AND
TRANSPARENCY ACT

Hon. S. Bond presented a message from His Honour the Administrator: a bill intituled Justice Reform and Transparency Act.

Hon. S. Bond: I move that Bill 15 be introduced and read a first time now.

Motion approved.

Hon. S. Bond: I am very pleased today to introduce the new Justice Reform and Transparency Act. The new legislation is a foundational component of the government's justice reform initiative.

Last spring we asked Geoffrey Cowper to undertake a critical review of B.C.'s justice system and provide recommendations for change. In response to those recommendations, our white paper on justice reform outlined government's vision and plan for creating a timely, transparent and balanced justice system. The Justice Reform and Transparency Act is a key step in implementing this vision.

The proposed legislation establishes a planning and accountability framework for the justice system, as well as amendments to support court reform and open data. As recommended in the Cowper report, the proposed legislation will establish a justice and public safety council to provide a focal point for justice system strategy, reform, performance planning and reporting.

The council will be responsible for setting the strategic direction for the justice system, developing an annual plan with performance measures and reporting out on progress each year. The legislation will require a justice summit be held at least once a year to encourage innovation and facilitate collaboration across the sector.

Finally, amendments to the Provincial Court Act and
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Supreme Court Act will allow for more effective judicial administration of the courts in British Columbia. This bill supports our focus on outcomes and evidence-based approaches for creating a justice system that meets the needs of British Columbians.

I move the bill be placed on the orders of the day for second reading at the next sitting of the House after today.

Bill 15, Justice Reform and Transparency Act, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

BILL M203 — WORKPLACE BULLYING
PREVENTION ACT, 2013

R. Chouhan presented a bill intituled Workplace Bullying Prevention Act, 2013.

R. Chouhan: I move that a bill intituled Workplace Bullying Prevention Act, 2013, be introduced and read for a first time now.

Motion approved.

R. Chouhan: I'm very pleased to introduce the Workplace Bullying Prevention Act, 2013. Tomorrow is Pink Shirt Day. Evidence shows that bullying impacts victims psychologically and physically. We have also heard that in some cases severe trauma caused by harassment has led people to commit suicide.

Bullying comes in many forms. Bullying affects young, old, men, women — everyone. Bullying does not limit itself to school playgrounds. It also happens at the workplace. It includes willful acts or patterns of behaviour and ignoring and isolating people.

Bullying and harassment go beyond the personal level. There is also an economic factor at play. When victims of bullying are not able to work to their full capacity, their productivity is impacted, which could result in a financial loss for the worker and the business owners alike.

This bill carefully defines harassment and provides measures and procedures for workers to report incidents of workplace harassment. It provides sound policy for investigating incidents and making workers accountable for acts of harassment. Similar laws exist in other provinces, such as Quebec, Ontario and Manitoba.

I move that the bill be placed on the orders of the day for second reading at the next sitting of the House after today.

Bill M203, Workplace Bullying Prevention Act, 2013, introduced, read a first time and ordered to be placed on orders of the day for second reading at the next sitting of the House after today.

Statements
(Standing Order 25B)

ALZHEIMER'S DISEASE AND
WORK OF ALZHEIMER SOCIETY OF B.C.

K. Conroy: More than 70,000 British Columbians are currently living with Alzheimer's disease or another form of dementia. Nearly 10,000 of these individuals are under the age of 65. Hundreds of thousands of wives, husbands, sons and daughters are also affected, many serving as primary caregivers. Alzheimer's disease, the most common form of dementia, accounts for approximately 64 percent of all dementias in Canada and is the second most feared disease for all Canadians as they age.

There is no cure. The Alzheimer Society of B.C. is the only provincewide non-profit organization dedicated to helping people concerned with or facing dementia have the confidence and skills to maintain a quality of life.

The society is an amazing group of people who I have come to know and respect for the work they do, providing support and numerous services such as educational programs across the province — services like First Link, an early-intervention service designed to connect individuals and families with services and support as soon as possible after diagnosis; or Minds in Motion, a fitness and social program for people experiencing an early-stage memory loss.

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The latest initiative is Jim's Push for a Plan. Jim Mann, who was diagnosed with Alzheimer's disease in 2007 at age 58, is campaigning for a comprehensive, funded dementia action plan to address the rising tide of dementia in our province. He is travelling around the province, meeting with people to spread his message of making sure B.C. is prepared to meet the dementia-related health care crisis that will peak during the next four years.

Jim is here today, and I want to thank him and his wife, Alice, for their commitment to helping others in this province in spite of their own challenges. To learn more about Jim and his journey, or for more for information on the services provided through the Alzheimer Society, go to their website at www.alzheimerbc.org.

To all of you who are here today with the Alzheimer Society — either in your role as a volunteer or staff member — on behalf of all families who have loved ones affected by Alzheimer's, a heartfelt thank-you for everything you do.

R. Hawes: You've just received the diagnosis from your doctor. You have Alzheimer's. You think: "Why me? Is there a cure? Is life over? Who can help?"

Well, here's the bad news: ten percent of all people 65 and over suffer from Alzheimer's or dementia, and there is no cure. The good news? The B.C. Alzheimer Society is there to assist.
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For early-stage Alzheimer's, there are three different medications. While there is no known cure, they may slow the progression of the disease in some people by targeting some of the mental function deterioration and behavioural symptoms.

The B.C. Alzheimer Society's First Link program will be advised of your diagnosis and will contact you within a few weeks of your diagnosis. You will learn about all of the supports available for you and your family and will be connected to support groups. The society will follow up every three or four months to ensure you have all of the information you need and will provide tips and services as needed.

The Minds in Motion program, offered by the society at various recreation centres throughout B.C., provides fitness and activity programs in a social atmosphere.

The society's education program will provide all of the knowledge needed for the journey ahead. You will learn to plan for the future and how to maximize your quality of life. You will meet others who share the journey.

Early diagnosis and early contact with the B.C. Alzheimer Society can be critical in managing the impact of this disease. Everyone is encouraged to learn the ten warning signs and discuss your concerns with your doctor if you notice any of them.

Lastly, the B.C. Alzheimer Society is a non-profit agency doing great work for all of us. Watch for their fundraising activities in your community, and give generously. All of the information is at www.alzheimerbc.org. It could be your life that is helped next.

B.C. POLICE ASSOCIATION AND
WORK OF POLICE OFFICERS

K. Corrigan: It gives me a great deal of pleasure to recognize the work of police officers in British Columbia and, in particular, the work of the B.C. Police Association.

The association represents the members of the province's 11 municipal police services and the south coast B.C. transit association police service as well. That is more than 2,500 front-line police officers in British Columbia. They are ably represented by their executive, including the president, Tom Stamatakis, who is in the precinct today and will be meeting with MLAs.

I have to say, the quality of their representation became very clear to me — it has been in the past — most recently in a very well-thought-out and high-quality submission to a legislative committee that conducted a random audit of the police complaints process. A very professional representation of police officers and the difficult, often stressful work that they do.

This is also a good opportunity to thank all police officers for keeping us safe in our communities. You are our protection from violent offenders, from those that would be violent to their partners or children, from those that would break into our homes or our vehicles or that would defraud us.

Your jobs have become increasingly complex. You are not only there in volatile and violent situations, but you are also part social and health care worker. As well, you deal with many mentally ill, who are on the streets of our communities. You are there to teach trust to newcomers, who sometimes come from countries where the police or armed forces are the source of violence or corruption, not protection from it. You not only serve and protect, solve crimes, get criminals off the street; you are ambassadors in our community as well.

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To the association: thank you to your members for keeping us safe, and thank you for working on behalf of your members to keep them safe.

HEART MONTH

C. Hansen: February is Heart Month, a nationwide campaign to rally Canadians together to combat heart disease.

Spearheaded by the Heart and Stroke Foundation, Heart Month promotes awareness while raising funds for critical life-saving research. This month is all about having a frank discussion. Heart disease takes the life of a Canadian every seven minutes and does not discriminate between sexes. It is the No. 1 killer of women, taking more lives than all cancers combined.

These are statistics we can change. All it takes is education and adopting healthier lifestyle choices. Ninety percent of all Canadians have at least one risk factor — be it smoking, high blood pressure, high cholesterol or diabetes. Simple changes, such as increased physical activity, eating more fruits and vegetables, limiting salt intake and managing stress can help address these risk factors and reduce the probability of heart disease.

I want to thank the Heart and Stroke Foundation, its 140,000 dedicated volunteers and two million blood donors across Canada. The foundation continues to make a real difference in reducing death and disability from heart disease. Now it's time for us to do our part. Knowledge is part of the cure, and I encourage all members to educate themselves, to speak to friends, loved ones and constituents and to help make healthy living a priority.

NISGA'A NEW YEAR CELEBRATION

R. Austin: Mr. Speaker, last Friday and Saturday I had the privilege of attending the Nisga'a new year celebration, or Hobiyee, as it is known in the spectacular Nass Valley.

The hoobix, or spoon, refers to the last crescent of the moon and is normally held in different weeks of February, depending on the phases of the moon in a particular year. The event signals the beginning of the food-harvesting
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year and the forthcoming arrival of the oolichan, a small fish about the size of a sardine that is a rich source of protein and oil or oolichan grease, which has sustained First Nations of the northwest for thousands of years.

This year's celebrations were held in Gitwinksihlkw, but of course, people travel from all over the Nass and the northwest to witness the drumming and singing that is an important part of Hobiyee. The highlight on Friday was the grand entrance when all the dancers who attend the weekend come together to dance and drum.

Aside from representation of the four Nisga'a communities, there were also dancers from other nations in the northwest, such as the Tsimshian and the Haisla. It's a celebration of community that has to be experienced to see the impact and joy on the faces of the dancers, as well as the spectators.

It isn't only First Nations who participate. There are even a few k'amksiwah. Most notable this year were members of the local RCMP and our very own colleague the MLA for North Coast.

One of the highlights for me was the Gathering Strength dance group, led by Gerald Robinson, as well as the Gitmaxmak'ay Dancers from Prince Rupert. I hope that any British Columbian who wishes to see Hobiyee will decide to make the journey up north in person, as listening to huge numbers of drummers and singers in the hall is, frankly, a spiritual experience.

For those who would like to get a taste of this incredible celebration, I encourage them in the future to visit the CFNR First Nations Radio webcast, which gives people an opportunity to see an example of the aboriginal culture up close.

There were hundreds who attended over the two days, and the food was fantastic, although I still have to get used to eating sea lion soup. The atmosphere, as always, was jubilant and raucous, and I want to thank all the organizers in Gitwinksihlkw for a job well done. All that remains is for me to wish everyone here a happy Nisga'a new year. Hobiyee.

HOOPS 4 HOPE SPORTS PROGRAM
FOR CHILDREN AND YOUTH

G. Hogg: Rick Gill taught in the Surrey school system. He was one of the original coaches in a social program for behaviourally at-risk youth entitled Night Hoops, and he has helped to develop Hoops 4 Hope and its sister program Soccer 4 Hope. These are committed to providing children and young adults in challenged environments with a safe, nurturing place where they can develop not just skills for the playing field, but they can develop skills for life and grow up to be healthy, influential, committed, contributing members of their communities.

The H4H Skills for Life program focuses on dealing with gender issues, violence, drugs, alcohol, suicide prevention and building leadership. Hoops 4 Hope is an ongoing, life-changing experience. Developing life-shaping habits does not emerge from one-time classroom experiences. That's why the educational and athletic programs are designed to be cyclical and persistent. Most children grow up to stay involved in the programs and give back to their communities by becoming trained coaches themselves.

Hoops 4 Hope provides long-lasting community benefits. It provides skills and support for young people's need to participate in team sports and to face the challenges of growing up in communities plagued with poverty, crime, drugs and alcohol.

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A dedicated team of people on the ground help them to achieve long-lasting community benefits such as organizing teams and tournaments, training coaches to deliver Skills for Life, successfully partnering with social development organizations, contributing athletic equipment, facilitating exchanges and collaborations, creating job opportunities and increasing employability of young people through community service.

Hoops 4 Hope partnered with local schools and community organizations in Nunavut to offer the young development services to improve children's lives in a holistic, safe environment. This has a ripple effect, and many positive changes help to influence friends, families and communities.

Hoops 4 Hope is planning to expand their programs into B.C. and to introduce their programs to First Nations communities. It is an innovative program that uses the power of sport to effect meaningful social change. Our congratulations and thanks to Rick and to Hoops 4 Hope.

Oral Questions

GOVERNMENT RESPONSE TO ALLEGATIONS
REGARDING WOOD INNOVATION CENTRE
BIDDING PROCESS

A. Dix: The wood innovation and design centre was first announced by the Liberal government in a pre-election throne speech in February of 2009. Last fall serious allegations and complaints were made about the bidding process by Mr. Dan McLaren, a person who the Minister of Justice and Attorney General will be familiar with.

The fairness commissioner concluded that these serious allegations were beyond the scope of her review and therefore did not address those allegations in her review. What steps has the government taken since the allegations were made to assess and respond to those allegations independently?

Hon. S. Bond: There is a lot of interest and enthusiasm in seeing a world-class structure like the wood innovation and design centre being built in the heart of down-
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town Prince George. As has been made clear, there was a fairness adviser. The process has been looked at by the fairness adviser, and there will be further information on that in the days ahead. But in fact, there has been no reference of any information or any other materials to the office of the Attorney General.

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

A. Dix: The letter from Mr. McLaren was copied to the Premier, to the legal services branch and to Ms. Dana Hayden, the deputy minister in question. Those were the allegations. The fairness commissioner reviewed that those allegations and concerns were beyond her scope, which was her position. So I guess the question is: what action did the Premier take, having received this letter in November, to review these very serious allegations?

Hon. C. Clark: As the Attorney has said, the fairness adviser has made her judgment about this, looked at the procurement process and determined that the process was fair. It was clear, and the process was properly followed by some non-partisan, highly regarded civil servants.

The Attorney General, who also represents Prince George, is quite right. It will be a much-welcomed change in downtown Prince George for the wood innovation centre to finally come to life. It is part of a long-term plan that this government has delivered on to make sure that we are growing our forest industry here in British Columbia.

We are growing this forest industry — 3,000 new jobs added in forestry over the last year. The wood innovation centre, when it finally comes to life, is going to be part of helping us continue to make that case, the case for wood.

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

A. Dix: I think a fair person would have to conclude that this process has been a shambles. I mean, in February 2009 they announced this project. It's a pre-election commitment in Prince George. It's a pre-election commitment by the Liberal Party in a throne speech in advance of an election.

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In September of 2011 the Premier goes to Prince George — as one of four announcements they've made of this project — and says that shovels will be in the ground in 2012. There are very serious allegations brought to the attention of the government. Apparently, they took no action on them — at least, that appears to be their position — in November of 2012. In December of 2012 even the successful bidders forced changes in the bidding procedures, forced the government to make changes, given their concerns with the bidding procedures.

Can the Premier say that any action was taken with respect to very serious allegations made by some of the unsuccessful bidders in this case? Is it not a reasonable thing, if it's beyond the scope of the fairness commissioner, for the Premier to act on serious allegations that are brought to her attention?

Hon. C. Clark: The fairness adviser has looked at the complaint, and she has advised that the procurement process was done absolutely properly. It was conducted by highly regarded, non-partisan civil servants. The process was clear, it was fair, and it was done properly. If the member has other allegations that he would like to introduce, he should introduce those allegations, but the fairness commissioner has had a look at that and determined that the process was fair.

L. Krog: With the greatest respect to the Premier and the Attorney General, the fairness commissioner hasn't made any findings of fact in relation to the serious allegations that have been made both to the Premier and to the Attorney General. One would have thought it would be incumbent upon the Premier, when an allegation is made about the conduct of a minister of the Crown, to seriously investigate it.

My question is to the Premier. What steps, if any, has she taken, given the months that have passed since this first arose, to investigate thoroughly this matter?

Hon. S. Bond: To the member opposite, the Premier and I have been very clear with the answer. The complaint was provided to the fairness adviser. One has a fairness adviser so that that person can actually look at the process and determine whether or not, indeed, the process was fair.

That's exactly what the letter of concern expressed. In fact, the ministry did ask the fairness adviser to review the procurement process, and indeed, the procurement was actually temporarily suspended to allow time for this review. That's exactly what should have happened, and that's exactly what did happen.

Mr. Speaker: The member has a supplemental.

L. Krog: There are two separate allegations to be investigated. The first is that the minister was not upfront about the procurement process. The second is that the minister was willing to manipulate the process in favour of the Liberal donor and fundraiser. The fairness adviser has made it perfectly clear that this falls outside her authority, but the questions, clearly, remain.

Will the Attorney General accept that these allegations need to be answered, and what is she going to do about it?

Hon. S. Bond: Exactly what British Columbians would
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expect to happen, happened. Concerns were raised about the procurement process. That's why this government actually involves a fairness adviser — to take a look at the comments that have been made by proponents. They were taken seriously. The fairness adviser actually did the work that she was asked to do.

To the member opposite, it is very easy to stand in this House and insinuate that there are other implications. I would urge the member opposite to step outside the doors of this chamber and bring forward any allegations that he may want to make.

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J. Kwan: The fairness adviser had said that the matter was outside of her scope. The Attorney General was aware of these allegations two months ago. So my question to the Attorney General is this. What action did she take to address those issues?

Hon. S. Bond: Let me be perfectly clear. There was no formal reference of any other allegations to my office or to the Ministry of Attorney General. All of the concerns expressed by the proponents regarding the procurement process were thoroughly investigated, and the fairness adviser made it clear that the process was fair. In fact, more information about the project will be announced in the days ahead.

Mr. Speaker: The member has a supplemental.

GOVERNMENT ROLE IN LOAN PROCESS
FOR WOOD INNOVATION CENTRE

J. Kwan: The wood innovation and design centre was announced many times, and yet today it remains a hole in the ground. What seems strange is that the Northern Development Initiative Trust was eager to move forward on the project even before the government was ready to commit to the centre. In fact, it was June 2009 that work began on the loan that we have heard this week is now in default.

In 2011 the Premier reannounced the project and promised money. So my question is to the Premier. Who in government encouraged the trust to enter into this loan before the government had committed money to the project?

Hon. P. Bell: The member opposite will know that the Northern Development Initiative Trust, along with the two other regional trusts in this province, are independent organizations. They're not controlled by the province of British Columbia or any minister within that Crown.

N. Macdonald: The Minister of Jobs has claimed that he had no role, either direct or indirect, in influencing the Northern Development Initiative Trust's decision to award Commonwealth this loan. Can the minister explain why the NDIT would approve such a significant loan?

Hon. P. Bell: The answer is identical to the previous question. Northern Development Initiative Trust, along with the two other regional trusts in this province, are independent, arms-length organizations. The province of British Columbia or any of the members of cabinet do not have any control. In fact, the member opposite, I believe, actually maybe sits on one of the advisory committees of one of the trusts and should know that.

Mr. Speaker: The member has a supplemental.

GOVERNMENT HANDLING OF
WOOD INNOVATION CENTRE PROJECT

N. Macdonald: Here's what we know. We know that there is a hole in the ground in Prince George where we were assured there would be a wood innovation centre. That's what we know. And we know that this is one more piece of evidence of the incompetence of this B.C. Liberal government. We know that. We know that this is another failure that impacts negatively the forest sector — one more failure on a long list of failures with this government.

The question for this minister is: how did this government so bungle a project that was supposed to be an iconic wood structure but instead sits as a symbol of this government's failure and incompetence?

Hon. P. Bell: The dialogue I just heard, the diatribe I just heard, from that member opposite is identical to what he used to say every time we went over to China to try and build the forest industry. And, Mr. Speaker, you know what? During that period of time that that member was complaining about the work that we were doing…. He said that it was taking too long, that we weren't getting sufficient results, that we weren't able to achieve what we were hoping to achieve. Today we have a billion-dollar industry.

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The wood innovation design centre has been a very complex project. There actually is no building code for this particular type of building. That takes a long time to make sure that the building code is in place, that you have the authority to actually build the building. It took longer than we anticipated to do that.

But you know what? As positive a result as we've had from wood going into the China market, the wood innovation design centre will have…. Ten years from now people will look back at this as a turning point for the forest industry in British Columbia.

J. Horgan: I can appreciate that the minister's line of
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defence there is that the building code is complicated. We had a minister of building codes, but we did away with that. I also understand that the Premier, two years ago, said that there would be progress on this initiative. I'm assuming that when she made that comment, she had some understanding of the building code challenges.

My question is to the Premier. What happened? Two years gone by, no progress.

Hon. P. Bell: The member opposite, obviously, is having trouble grappling with economic concepts and understanding that sometimes it takes time to make investments in a way that will yield a long-term return. That's exactly what we did in the Chinese market. That's exactly what we've done in the mining industry to build new innovations and new opportunities. It's what we're doing in liquefied natural gas. It's what we're doing in international education. It's exactly what we're doing with the wood innovation and design centre.

Originally, our objective was to get it under construction in 2012. We're expecting it to start construction in the next six to eight weeks. We missed our mark by four months, but ten years from now that four months isn't going to matter, because this is going to revolutionize B.C.'s forest products industry.

HEALTH AUTHORITIES' ROLE IN PROCESS
FOR LABOUR AGREEMENT WITH NURSES

M. Farnworth: For the Minister of Education, it's stage 1.

Health care authorities in this province deliver billions of dollars of health care around the province every year. So when there's something impacting how those dollars are going to be spent or negotiations taking place, one would expect the health authorities to be kept in the loop.

Well, judging from a letter sent by the six health authorities in the province of British Columbia to the Health Employers Association of British Columbia, they have clearly not been kept in the loop.

I'd like to quote from the letter. The health authorities cosigned a letter saying that they have primary responsibility for managing nursing care in the province, but they "do not have any direct knowledge of the content of any proposed agreement." And the proposed agreement, hon. Speaker, is a potential ten-year deal.

Can the Minister of Health please explain to this House and the province why her government, or this government she's a part of, is engaged in negotiations behind the back of the health authorities who are delivering the service?

Hon. M. MacDiarmid: Thank you to the member opposite for the question. The Ministry of Health, HEABC and PSAC have been holding some informal discussions with the BCNU. There have been no negotiations. But what has been happening is looking to gauge interest, to think about whether there could be, possibly, a long-term collective agreement. I really don't understand why the member opposite would object to a long-term agreement, if there was one to be had, that would be beneficial for the employer as well as the worker.

Mr. Speaker: The member has a supplemental.

M. Farnworth: The question isn't the length of an agreement. It's the process. Informal discussions or formal discussions…. One would think that you would have all the parties involved in an informal discussion. Clearly, that's not been the case, because they felt so concerned about what they were hearing, what they had not been part of, that all six health authorities had to write a letter saying how concerned they were about what was taking place.

Again to the minister: if there are no formal discussions, then why weren't the health authorities involved in the informal discussions? Clearly, they felt they weren't.

Hon. M. MacDiarmid: Again to stress to the member opposite that there were some conversations that happened that were of an informal nature, looking to explore the possibilities. Could there be something that would be beneficial for both sides that could turn into a longer-term agreement?

[1420]

There has been no formal mandate. There have been no formal negotiations happening at all. Very clearly, were there to be negotiations, there could not possibly be any kind of agreement that could be reached without the support of the health employers. They clearly would have to ratify it. We're a long way away from that, and informal discussions do sometimes happen.

S. Simpson: Labour negotiations require all parties to be at the table if they're going to be meaningful and if they're going to be successful. The minister can call them formal or informal. However, just like the failed ten-year effort with teachers that we know the government failed on…. That failed largely because neither the teachers nor the employers were part of that framework, and they heard about it at the end of the process.

In this case, we know in this deal the health authorities have been left out of this conversation entirely. Clearly, this is about politics. It has little to do with labour relations. It is about a scramble before May 14.

Will the minister kill this misguided exercise today and allow the existing agreement with nurses to be fulfilled?

Hon. M. MacDiarmid: I have to make sure that I have this clearly. Here we are having a discussion with a very important group of workers in the health care system — one of many, but certainly very important. We are talking
[ Page 13095 ]
about something that could possibly lead to long-term labour peace with benefits on both sides, and those conversations are happening in an informal way.

It's really difficult for me to understand how that could possibly be a bad thing. How would it be a bad thing? In a health care system that the opposition continually complains about being under-resourced, here we are trying to do something that would be positive on both sides. Mr. Speaker, how can that be negative?

Mr. Speaker: The member has a supplemental.

S. Simpson: No one is opposed to long-term agreements that make sense. But you don't write a ten-year deal in a couple of weeks on the eve of an election, particularly when you are already a discredited government. This is especially true when you leave one of the critical parties — in this case, the health authority — out of the mix. And we know from comments today from the president of the B.C. Nurses Union that they say they have no interest in a ten-year deal.

What we have is a health authority that's left out of the mix and a nurses union that isn't interested. So what we have is a government grasping to try to find some good news where none exists because of your failures and your position in the polls. That's the reality today.

Will the minister admit this is another ill-conceived Liberal effort that has gone wrong, put this thing in the trash where it belongs and have some meaningful discussion after May 14 with a new government?

Interjections.

Mr. Speaker: Take your seat, Minister.

Minister.

Hon. M. MacDiarmid: The really great thing about being the Minister of Health in this province is that there is good news every single day. So while we do know the plan that the NDP has for health care in the province…. We heard this from the Leader of the Opposition back when he was the Health critic. Their plan would be to be among the highest in Canada in terms of per-capita support for health care. "That would be a high priority for us." That's what he said.

[1425]

Here we are. We are the second-lowest spender on health care in Canada. We have the best mortality. We have the best cancer outcomes, the best cardiac outcomes. So there's good news every day. If through some informal discussions we could reach a labour agreement that was a good agreement, that was good for British Columbians, that was good for patients, that was good for taxpayers, that was good for nurses and that was good for government, why would we not do that?

GOVERNMENT MANAGEMENT
OF FERRY SERVICES

M. Karagianis: B.C. Ferries released the results of the third quarter yesterday, and they're reporting a net loss of $17.2 million — this on top of continued downward spiraling of revenues. B.C. Ferries' debt has tripled since 2004. It was $437 million. It's now $1.3 billion — tripled at the hands of this government.

We're waiting for the release right now of a consultation report with coastal communities.

Interjections.

Mr. Speaker: Members.

M. Karagianis: As flawed as that process is, we're expecting that, hopefully, sometime this month. In the meantime, ridership is down, fares are up, and communities are facing cuts in services.

My question is to the minister responsible. Does she have any plan, any plan whatsoever, to fix this colossal mess that this B.C. Liberal government has made out of B.C. Ferries?

Hon. M. Polak: While no one is ever happy to see losses happening at B.C. Ferries, I am encouraged that we are seeing an increase in the net earnings and the total revenues.

There's something else I'm encouraged about. We're all familiar with the fact that back in the '90s, the government experienced successive downgrades in their credit rating. There was another part of government specifically that experienced a downgrade, and that was B.C. Ferries. I am proud to report that as of this month Standard and Poor's has upgraded B.C. Ferries from negative to stable, and they have affirmed its A-plus, long-term and senior unsecured debt rating.

Interjections.

Mr. Speaker: Members.

The member has a supplemental.

M. Karagianis: Ridership is down. Tourism is down. Coastal communities' economies are suffering as a result. And the minister is proud of that? That's what she's proud of? That's a record of this government?

The Ferry Commission report sat on the minister's desk forever and ever and was finally released to the public. Since that time, many months have passed. The government has taken absolutely no steps on those recommendations. Now we're waiting for the results of this propaganda exercise that they did with a full consultation with ferry communities.

At the end of the day, British Columbians want to
[ Page 13096 ]
know: what is the plan? What, if any, plan does this government have to fix the B.C. Ferry Corporation that they have run into the rocks here in British Columbia?

Hon. M. Polak: Indeed, I'm quite certain that the public would love to know what the opposition's plan would be for B.C. Ferries.

The member opposite is quite proud of the work of the commissioner and seems to endorse what the commissioner has recommended. It may surprise the member opposite to know that it was the commissioner who recommended that we engage in the consultation with communities, and engage in that consultation on vision.

[1430]

It's the very actions of this government that have achieved this upgrading of the rating of B.C. Ferries. In fact, it is the actions we took with respect to the Coastal Ferry Act…. I can quote here from Standard and Poor's, saying that as a result of that, the outlook revision reflects what we view as an improvement in the regulatory certainty.

We're doing the work with B.C. Ferries to make sure it stays sustainable for generations to come in British Columbia.

SALE OF GOVERNMENT ASSETS AND
BRILLIANT DAM POWER SALES AGREEMENT

K. Conroy: Yesterday I asked the minister if the Brilliant dam and the related power sales agreement were on the list of assets for sale. The minister referred to the dam, but not to the power sales agreement.

So again to the minister: is the power sales agreement on the list of assets this government is selling off?

Hon. R. Coleman: No, it's not, hon. Member. The only time anybody has looked at selling a major Hydro asset in British Columbia was at the very end of the NDP era. In desperation, they actually had a memo that said they might consider selling B.C. Hydro.

[End of question period.]

A. Dix: I seek leave to table a document.

Mr. Speaker: Proceed.

Tabling Documents

A. Dix: I'm tabling a document from Mr. McLaren of Commonwealth Campus Corp. addressed to the fairness adviser and copied to the Premier, to Ms. Dana Hayden and to the legal services branch of the government.

Hon. R. Sultan: I would like to submit a petition.

Mr. Speaker: Proceed.

Petitions

Hon. R. Sultan: I am pleased to submit a petition signed by 31 students of Capilano Elementary School, grade 5, division 6, in my riding, requesting this Legislature to ban plastic bags. The individual letters accompanying this petition are very eloquent.

Motions Without Notice

MEMBERSHIP AND POWERS OF
PARLIAMENTARY REFORM COMMITTEE

Hon. M. de Jong: By leave, I propose to move a motion that would create the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills. I think my friend the Opposition House Leader has a copy. It would also charge the committee with examining, inquiring into and making recommendations on the matter of the Members' Conflict of Interest Act. This is work that the committee has undertaken through the last session and would propose to continue with. The usual powers are included in the motion, and the obligation to report to the House.

By leave, I move:

[That the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills examine, inquire into and make recommendations on the matter of the Members' Conflict of Interest Act (RSBC 1996 c.287).

In addition to the powers previously conferred upon the said Committee by the House, the Committee is empowered:

a) to appoint of their number, one or more subcommittees and to refer to such subcommittees any of the matters referred to the Committee;

b) to sit during a period in which the House is adjourned, during the recess after prorogation until the next following Session and during any sitting of the House;

c) to adjourn from place to place as may be convenient; and

d) to retain such personnel as required to assist the Committee;

and shall report to the House as soon as possible, or following any adjournment, or at the next following Session, as the case may be; to deposit the original of its reports with the Clerk of the Legislative Assembly during a period of adjournment and upon resumption of the sittings of the House, the Chair shall present all reports to the Legislative Assembly.

The said Select Standing Committee is to be composed of Colin Hansen (Convener), Harry Lali, Donna Barnett, Jagrup Brar, Murray Coell, Mike Farnworth, Randy Hawes, Jenny Wai Ching Kwan, Mary McNeil, and Jane Thornthwaite.]

Leave granted.

Motion approved.

Orders of the Day

Hon. M. de Jong: Continued committee stage debate on Bill 2.

[1435]

Committee of the Whole House

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

(continued)

The House in Committee of the Whole on Bill 2; D. Black in the chair.

The committee met at 2:37 p.m.

On section 186 (continued).

B. Ralston: Before we turn to that section, I just wanted to raise an issue that was stood down yesterday afternoon and that I understood the minister was going to respond to. That was a question about section 85 in the bill, which included some proposed amendments to sections 9(2) through (6).

There was reference to a stationary internal combustion engine which used natural gas. I asked a question about how that might pertain to proposed LNG plants in the northwest.

I understand that the minister may not have had time to fashion a response or get advice on an appropriate response, but I just wanted to have that noted for the record. Before we conclude, I'd appreciate an answer on the record.

Hon. M. de Jong: What I've ascertained to this point — and I'm not certain this will change over the course of the next dozen hours or so — is that ultimately, the determination of that important point will depend upon the configuration of the process and the actual process that is followed. At this point, in the absence of an example of what that looks like, it isn't possible to prejudge what that determination is.

The best thing I can say, though, is that it is a pertinent and relevant question. A determination will have to be made, but ultimately, the decision will revolve around the actual configuration at the conversion facility.

I'm not certain to what extent that may vary. I just don't have the technical background at this point to offer an informed opinion on the degree to which the conversion or configuration process at one plant might differ from another and whether or not a determination made with respect to one plant would automatically apply to others.

[1440]

B. Ralston: Just continuing on that point, would the minister then give an undertaking to advise the House…? Obviously, the tax environment in which these proposed facilities might operate is of some interest and understandably part of the calculation that those companies may be making.

Given that this appears to be not determined, at least as far as this section is concerned at this point, I think it might be advisable, at least, to advise publicly what the prospective ruling of the ministry might be.

Section 186 approved.

On section 187.

B. Ralston: This is a proposed amendment to section 69 of the Provincial Sales Tax Act. When we last debated section 69 in the spring, on May 30 we spoke on, I think, all of the subsections but particularly subsection (3). I understand that in this amendment there's a proposed repeal of the ratio that's set out in subsection (2). There was no suggestion back in May when we debated it that this formula or this calculation was in any way defective.

Can the minister explain why, from May until now, there's been a proposed change in this formula, as there have been in many other aspects of the bill we debated in May?

Hon. M. de Jong: It relates to something we discussed this morning with respect to previous sections dealing with related issues, and it's simply this. What has been done is that instead of relying upon a complex partial refund formula, the act simply adds a reduced tax rate for multi-jurisdictional buses.

The tax rate is lower, thus precluding the need to calculate the rebate, which was part of the previous methodology. The result is intended to be the same.

B. Ralston: In section 69 as it was debated in the spring, there was a formula set out in subsection (3). This now proposes to add a new (3.1), where the tax rate in respect of a bus is now amended.

Can the minister explain why that was necessary, or is that rate different from the rate for a vehicle? It appears that the numbers are slightly different between section 69(3) as debated in May and the proposed section 69(3.1) being debated today.

Hon. M. de Jong: The table in subsection (3) relates to vehicles other than a bus and in (3.1) to the lower rate for multi-jurisdictional buses.

B. Ralston: Can the minister explain why the rate appears to be lower for one as opposed to the other?

Hon. M. de Jong: The short answer is that there was, under the previous regime, a lower tax payable for buses that was achieved through this more elaborate rebate system. Re-creating that model via the lower tax rate is how we achieve the same end result.

[1445]

B. Ralston: I understood from previous debate in the spring that this applied to what's called a prorating, which is a voluntary procedure entered into by an operator. Can the minister confirm that that remains the same and that the assurance provided by the minister then applies to the same regime now?

Hon. M. de Jong: I'm advised yes.

Sections 187 and 188 approved.

On section 189.

B. Ralston: It's proposed that section 72 as it exists in the existing act be repealed and a new section 72 be substituted. The reference here is to a tax if the "vehicle ceases to be multijurisdictional." Can the minister explain why the section which was passed in May is now being repealed and a new section being substituted for it?

Hon. M. de Jong: When the bill was originally considered by the member and this House and the committee in the spring, the intention was the same as it is today, which was to try to statutorily re-create the administrative practice that governed affairs under the old PST regime. The assessment that was done in the intervening months concluded that the language contained in the new sub 72(1) and (2) better achieved the codification of that previous administrative practice.

B. Ralston: In the act as it is now under sub 72(3) there's reference to a credit under subsection (2) must be calculated and provided in accordance with the regulations. The new proposed subsection 72(6) repeats those words but adds a subsection (b) and (c): "(b) must be applied against the tax payable under subsection (3) by the person in respect of the vehicle, and (c) must not be provided to the person in any other manner." I take it that the previous subsection (3) was viewed as being potentially unclear and these amendments are required to make the intention of the Legislature clear?

Hon. M. de Jong: That's correct.

Section 189 approved.

On section 190.

B. Ralston: This proposed amendment adds an entirely new section, section 72.1, which recites a number of sections relating to a vehicle that ceases to be licensed under an agreement to which a prorating agreement applies. Given that there was no indication of any lack of clarity when we dealt with it in the spring, this appears to be a substantial addition to this section by way of an intermediate section, section 72.1. Can the minister explain why this section is deemed necessary?

[1450]

Hon. M. de Jong: The member is right with respect to characterizing it as an addition. These provisions are being added to specifically legislate how the exit tax was administered under the previous taxation regime, specifically where ICBC recognized a transfer for licensing purposes only. It is that unique circumstance that is purported to be dealt with in this addition.

Section 190 approved.

On section 191.

B. Ralston: This is a proposed amendment to section 74 of the legislation passed in the spring and adds some new subsections. I gather that the purpose of the…. Looking back at the transcript of what took place in the spring, section 74 refers to a change in fleet licensing. The minister who I think is responsible said: "This is a situation where a person has more than one fleet and vehicles may be moving back and forth between fleets, but ownership itself does not change."

It was viewed as sufficient to capture that in the spring, so I'm wondering what lack of clarity might be being addressed by these amendments.

Hon. M. de Jong: This flows from a similar realization of the need to clarify when the refund or credit applies and to actually codify or legislate it — make it consistent with how it was administered previously again. This is the unique circumstance where ICBC recognized a transfer for licensing purposes only, so that same circumstance triggers the need for these amendments.

Section 191 approved.

On section 192.

B. Ralston: This proposed section adds another section or another dimension to section 74. It's referred to in the proposed amendment as section 74.1. It's entitled "Refund if not entitled to credit under section 72 or 72.1." Once again, this appears to be a further rethink of the clarity of the section. Can the minister then explain why this was necessary?

Hon. M. de Jong: A rethink, to this extent — a belief that it is preferable to replace a refund that previously was provided in the regulations under the old PST and to codify it in the act itself.

Section 192 approved.

On section 193.
[ Page 13099 ]

B. Ralston: This is a proposed amendment to section 75, which is entitled in the legislation "Credit if tax previously paid." Can the minister explain the relationship of this section to the previous one and the necessity for these amendments — in particular, a new section (c)(1.1), which appears to be fairly extensive?

Hon. M. de Jong: I can advise the member and the committee that the breadth of the proposed amendments does not propose any substantive change.

[1455]

They do include the addition of the refund for owner-operator situations and legislate how that partial credit was administered under the previous act — again, where ICBC recognized the transfer for licensing purposes only; again, an example of codifying in the act itself a previous administrative practice.

Section 193 approved.

On section 194.

B. Ralston: This section creates a proposed new section 75.1, again related to the previous section, pertaining to credit if tax previously paid. Can the minister explain why this is necessary? It makes reference to the Insurance Corporation of British Columbia, but so does the original section 75(1) in the act passed in May of last year.

The Chair: The member seeks leave.

C. Hansen: Hon. Chair, I need to make an introduction.

The Chair: Please proceed.

Introductions by Members

C. Hansen: We are joined today by 40 grade 9 students from Magee Secondary School in my riding of Vancouver-Quilchena. They are here with their teacher, Mr. Brian Latimer, and five volunteer parents who have come along to enjoy the trip. We had a great conversation earlier, and I wish them a great trip back home later today.

Thank you for coming.

Debate Continued

Hon. M. de Jong: On section 194 and the member's question. The inclusion of this section is intended to address a situation where the partial credit that is provided under section 75 may relate to a transaction — and because there is a five-year period within which an application can be made — that either predates July 1, 2010, or occurred thereafter. Ensuring that the legal authority for addressing that entitlement exists is what gives rise to its inclusion in this bill.

Section 194 approved.

On section 195.

B. Ralston: The section in the Provincial Sales Tax Act is entitled "Refund or credit for trade-in vehicles." This repeals section 5, which is relatively straightforward in the act now: "A credit under subsection (2) or a refund…must be calculated and provided in accordance with the regulations." This appears to add a little bit more nuance to it, but I'm not sure why it was felt necessary.

Hon. M. de Jong: The intention here was to include language that renders the section consistent with other similar provisions.

Section 195 approved.

On section 196.

B. Ralston: This is a proposed amendment to section 78, which is entitled "Refund for short term rental vehicles." A phrase is struck out, "to another person," substituting "primarily to other persons." I'm wondering what the importance of that is in this legislative scheme.

Hon. M. de Jong: The amendment to this section is designed to ensure that the refund referred to in this section is available in precisely the same circumstances as was available under the old PST. The original provision which has been amended here, I am advised, inadvertently narrowed the refund.

[1500]

Sections 196 and 197 approved.

On section 198.

B. Ralston: The reference here is to amendments to section 80, "Tax on tangible personal property used to improve real property." These appear to be adding…. The explanatory note says that they're being added for consistency and, I think, clarity.

[H. Bloy in the chair.]

In section (b) can the minister explain what's being done here? There's a striking out of a phrase, and the explanation offered is a condition for the application of this section. Can the minister explain why that's necessary?

Hon. M. de Jong: The re-examination of the legislation that occurred over the past number of months determined that in sub (b), because of the manner in which
[ Page 13100 ]
section 37 operates, the reference to those words simply was not necessary to give effect to the provision in the way intended. I can further advise the member and the committee that, again, the amendments do not result in any substantive changes to the provisions.

Section 198 approved.

On section 199.

B. Ralston: Yes. This section initiates a series of additions to section 80, beginning with sections 80.1, 80.2. I think it goes all the way to 80.8, if I'm correct. Yes, that's right.

That's a substantial addition to section 80. It's entitled, in the first one — perhaps we can deal with them individually — section 80.1, "Contractor exempt from tax under section 37 or 49 if other person would be exempt." Can the minister explain the reason for this particular amendment, 80.1?

Hon. M. de Jong: The section is included to ensure that there is an exemption provided to contractors who enter into written contracts with a person who would has been exempt from the PST if that person had purchased the tangible personal property themselves — for example, the government of Canada, a First Nations person exempt under the Indian Act or a person exempt under the Provincial Sales Tax Act. So the section is there to continue an exemption that was provided under the old PST.

B. Ralston: Then, dealing with section 80.2. It's entitled "Refund of tax paid by contractor under Division 5." This is yet another addition to the general proposition here, set out in section 80. Can the minister explain the purpose of that?

Hon. M. de Jong: In 80.2 we are codifying the ability to provide a refund to a contractor who has paid PST at the border on tangible personal property in circumstances where the contractor would have been exempt if the tangible personal property had been purchased in B.C. or brought into B.C. from within Canada — again, rendering it consistent with pre–July 2010 practice.

[1505]

B. Ralston: I'm now moving to proposed section 80.3. It's entitled "Tax on tangible personal property used to improve real property if contractor obtained refund." It's somewhat arcane, but perhaps the minister can explain it.

Hon. M. de Jong: Hon. Chair, 80.3 is the companion provision to 80.2 and is similar to section 80, imposing tax on the contractor's customer where there is a specific agreement transferring liability for the PST from the contractor to the customer.

B. Ralston: I'm moving now to section 80.4. Perhaps we can deal with 80.5 at the same time, and 80.6. They all involve improvements to real property in different circumstances. Perhaps the minister can just explain the principle that's at play in these three proposed new sections.

Hon. M. de Jong: So 80.4 refers to circumstances in which there is a change in use. It is a change-in-use provision similar to provisions in division 9, part 3. What it does is creates the legal mechanism by which tax is imposed on a person where they benefited from an exemption based on their use of the tangible personal property for an exempt use and they subsequently used that tangible personal property for a taxable use.

Then 80.5 imposes PST on tangible personal property acquired by a contractor before April 1, 2013, that is used for the purpose of fulfilling a contract to improve real property on or after April 1, 2013, unless a specific exemption applies. The intention there is to provide consistent tax treatment for goods used to improve real property on or after April 1, regardless of who is doing the improvement.

B. Ralston: I believe I intended to include 80.6 in the recitation, because it is directed to improve real property. Can the minister address that? Then I'll move on to the other two.

Hon. M. de Jong: Hon. Chair, 80.6, again a companion section to 80.5, is similar to sections 80 and 80.3. It imposes tax on the contractor's customer where there is a specific agreement transferring liability for the PST from the contractor to the customer.

B. Ralston: Now, 80.7 refers to a transitional tax on tangible personal property incorporated into property subject to tax under the New Housing Transition Tax and Rebate Act. This would be a relatively time-limited application, but can the minister explain the necessity for adding this provision, particularly at this juncture?

Hon. M. de Jong: Thanks to the member for recognizing the time-limited effect of this. In short, it's to ensure that there is no double taxation in circumstances where this tangible personal property is incorporated into real property.

[1510]

B. Ralston: Section 80.8 refers to a transitional tax on mobile homes affixed to land in British Columbia. This is, similarly, a new provision to section 80 that is directed to mobile homes.

There's a reference in subsection (4) to tax payable under a variety of sections in the act. Subsection (3) refers to: "A person to whom this section applies must pay
[ Page 13101 ]
to the government tax on the mobile home at the rate of 7% of the amount equal to 50% of the purchase price of the mobile home."

Can the minister explain subsections (3) and (4)?

Hon. M. de Jong: I want to clarify a remark I made a moment ago about 80.7. When I referred to the tax and rebate scheme, that is the tax and rebate scheme that is provided for under the New Housing Transition Tax and Rebate Act. So if I left any uncertainty around that, hopefully I've clarified it.

With respect to 80.8, this provision is being proposed for addition to the legislation to prevent a gap in taxation, because mobile homes covered by this provision will not be subject to the New Housing Transition Tax and Rebate Act, unlike other mobile homes which are affixed to land before April 1, 2013. The rate of tax will be the same reduced rate of tax of 7 percent of 50 percent of the purchase price, as are other mobile homes that will be subject to the PST.

Section 199 approved.

On section 200.

B. Ralston: This is the time-limited nature of the two sections we just discussed — 80.7 and 80.8. They're to be repealed, effective April 1, 2015. I think that's self-evident but probably worth noting on the record.

Hon. M. de Jong: That's correct.

Section 200 approved.

On section 201.

B. Ralston: This is an amendment to section 81 of Provincial Sales Tax Act that we dealt with and debated in May of last year. The proposal involves a number of amendments, but in particular, the most significant seems to be adding a new subsection (1.1). The others appear to be minor language changes. Can the minister explain the purpose of adding a new section (1.1) to section 81?

[1515]

Hon. M. de Jong: This also relates to circumstances in which there is a change of use of tangible personal property. The difference here is…. What is sought to be achieved is to clarify that the relevant provision does not apply if the subsequent use of the tangible personal property would have been exempt when the tangible personal property was purchased or entered British Columbia.

Section 201 approved.

On section 202.

B. Ralston: As I recall the debate that took place on this proposed amendment to section 82, section 82 deals with the relatively limited circumstance where property is acquired for a new purpose and the company then may rent the property out for another purpose for a short period of time, according to my Hansard reference that I have here and the comments of the minister at the time.

That seemed to be straightforward then. I'm wondering why these amendments are necessary now.

Hon. M. de Jong: With respect to (1), the change being articulated here and, hopefully, made clear is that the relevant provisions do not apply if the subsequent use of the tangible personal property is, in fact, another exempt use. That would appear to be self-evident, but this will ensure that that is so.

With respect to subsection (2), I'm advised that is simply correcting a section reference.

Section 202 approved.

On section 203.

B. Ralston: This proposed section initiates a series of, I suppose, qualifications or modifications to section 82 that we've just discussed — 82.1, 82.2 and 82.3.

Dealing first with 82.1, "Tax on parts or material if property containing parts or material used for new purpose," can the minister explain the reason for this and how it might modify the general intent of section 82?

Hon. M. de Jong: What is being proposed here are additions to take account of circumstances that could arise that, in fairness, weren't contemplated at the time the initial discussion took place around this last spring.

By way of example, a situation in which…. The general rule is that parts and materials are exempt if they are to be used with exempt tangible personal property. If the tangible personal property is exempt because it is to be used for an exempt use and subsequently that property is used for a taxable use, tax becomes payable on the parts and materials as well.

That's the kind of scenario that these specific provisions take account of, and that wasn't included in the initial spring version.

Section 203 approved.

On section 204.

[1520]

B. Ralston: This is an amendment to proposed section 83. Section 83 in the act is entitled "Tax if change in use of property acquired for lease."
[ Page 13102 ]

Again, the discussion in the spring was the situation where tangible personal property…. It's where what's taken out of the lease inventory is for a longer term than the short-term use that was referred to in section 82. At least, that was the explanation agreed to in the spring. So I'm wondering why these changes were necessary if it was clear back then.

Hon. M. de Jong: Thanks to the member for noticing the difference, which is designed not to alter in any substantive way what is being provided for in section 83 but rather to clarify that the provision applies to tangible personal property purchased in British Columbia but also brought, sent or delivered into British Columbia — therefore, that language that appears in other parts of the bill.

Sections 204 and 205 approved.

On section 206.

B. Ralston: This adds to section 84, which in the act is entitled "Tax if change in use of resulting tangible personal property." This proposed section 84.1 is entitled "Tax if dealer or manufacturer changes use of motor vehicle."

There are a number of subsections here which are to be added to the general provisions of section 84. Can the minister explain why this particular focus on the change of use of a motor vehicle is required?

Hon. M. de Jong: The dealer-use formula that gives rise to certain calculations under the old PST regime relied exclusively on a regulatory authority. The inclusion of it in this bill and these sets of amendments is designed to codify and give that practice and that dealer-use formula the full force of the statutory provisions.

Sections 206 to 209 inclusive approved.

On section 210.

B. Ralston: This is a proposed amendment to…. No, pardon me. I was thinking of section 211. I'm prepared to agree with section 210.

Section 210 approved.

On section 211.

B. Ralston: This is a proposed amendment to section 89. Section 89 is entitled "Tax on acquisition of eligible tangible personal property." This introduces the small seller that had been spoken of yesterday in some sections. That's a defined term.

[1525]

The explanation offered in the spring was that the section required the small seller to pay the tax because someone who purchased from a small seller wasn't required to pay PST. I'm wondering what the effect of these apparently minor changes is here.

Hon. M. de Jong: The short answer that the belief is that in applying the legislation, "purchase" is a more precise term than "acquisition." The member will see the changes reflect that. And then in sub (2), section references are corrected.

Sections 211 and 212 approved.

On section 213.

B. Ralston: Section 213 proposes amendments to existing section 90, which refers to eligible tangible personal property brought into British Columbia. The reference is to a small seller. There's a new subsection (4) that's being added. Perhaps the minister can explain why that was added, as contrasted with the reading of the section as it was in the spring.

Hon. M. de Jong: The provision that appears in section 90, the member may recall, appeared in section 89. For the sake of consistency and to ensure that small sellers have the same tax treatment whether they purchase eligible tangible personal property in B.C. or bring, send or receive delivery of same into British Columbia, it was thought wise to ensure consistency of language between sections 89 and 90.

Sections 213 and 214 approved.

On section 215.

B. Ralston: This amendment, section 215, begins to deal with a new division in the act — division 11, "Energy Products," section 92. There's a proposed amendment which renumbers a section and then adds an additional subsection. Can the minister explain the reason for adding the proposed subsection (2) into section 92?

Hon. M. de Jong: The short answer is that it was deemed appropriate and important to amend section 92 to ensure that it read consistently with section 37.

Section 215 approved.

On section 216.

[1530]

B. Ralston: This proposed amendment is to section 93, which is entitled "Tax if energy product brought into British Columbia for use." It adds a new subsection (4), which appears to mirror in some ways the amendment to section 92 that we've just dealt with. Can the minister
[ Page 13103 ]
explain the reason for adding it at this time?

Hon. M. de Jong: In this case the consistency being sought is between section 93 and section 49. These amendments clarify the documentation which must be provided to the seller and, as I say, are intended to be consistent with the earlier section 49.

Sections 216 and 217 approved.

On section 218.

B. Ralston: This refers to liquor sold under a special occasion licence. The section in the spring consisted of five sections, and there's a proposed amendment substituting, as the minister explained earlier, "purchased" for "acquired". I think no further explanation is necessary there. But there is a repeal of the subsection (5) as it exists, and this substitutes a new subsection (5). Can the minister explain why that subsection (5) is being substituted?

Hon. M. de Jong: In short, the amendment here is to ensure that the refund available, in the event where actual sales are less than estimated at the time the licence is issued, doesn't result in an excess refund. The previous language led to some concern that the calculation could result in the possibility of a refund in excess of what the entitlement would be.

Section 218 approved.

On section 219.

B. Ralston: This is a wholesale repeal of section 99 in the act and a substitution of an entirely new section 99. The section is described as "Tax on acquisition of exclusive product by independent sales contractor." As I recall, the reference to exclusive product was a reference to what might be called multilevel marketing schemes, and I think the minister made reference to some of the well-known companies that operate in this field.

As I understood it, the purpose was to make the seller or the independent sales contractor liable for the tax. Individual sellers that might go door-to-door out in the community would not have to collect a tax on each sale. Is that the purpose of this? I'm wondering how the new proposed section 99 might modify that purpose.

[1535]

Hon. M. de Jong: The member has correctly highlighted the fact that we're talking about the multilevel marketing activities that he alluded to and that the provisions collectively allow for an alternative collection scheme with respect to applicable PST.

What this is intended to do, and the reason or the need for the amendment, is to ensure that the alternative collection scheme applies to exclusive products brought, sent or delivered into British Columbia, as well as exclusive products purchased in B.C. That was the missing part of the piece.

Section 219 approved.

On section 220.

B. Ralston: Section 220 is the section that we spoke of briefly, earlier, in anticipation. This is the section in the act which refers to the tax on the gift of a vehicle, boat or aircraft given in British Columbia.

The minister previous to this one, in the debate in the spring, identified what some might view as a public policy concern where the number of people using the exemptions provided under the gift exemption dramatically increased. There were, in fact, gifts by unrelated parties, one to the other, who may even have been unknown to each other. Certainly, that was the suggestion. I think, frankly, there was a suggestion that this particular provision might not be being used for the purpose for which it was intended.

No one would, I think, want to bar the legitimate use of this section, but I'm wondering how these amendments might begin to change or restrict the objectionable use, if I can put it that way, of this section.

Hon. M. de Jong: I suspect part of this conversation was had…. The change here, of course, relates to the presumption in favour of tax. It creates the obligation in these gift circumstances that the tax is applicable and then lays out the specific circumstances in which an exemption is granted.

I think the member's question is, in part: does that automatically translate into fewer circumstances of tax avoidance? I'm not sure I'm in a position to offer that assurance. The construct is different, and the presumption is in favour of tax being applicable. But I think it would be unfair of me to try and assure the member that automatically, as a result of that, there will be fewer instances of tax avoidance, though one lives in perpetual hope.

B. Ralston: In the spring the minister said — and I'm going to quote here from Hansard:

"The real issue here is that you know you've got a problem when over one-third of all private transfers of vehicles are being reported as gifts as opposed to sales, particularly when almost half of those are people that are unrelated to each other.

[1540]

"So that is obviously a problem. The member is correct that this will ensure that we protect against legitimate cases of gifting between family members or to registered charities, etc., as set out but that we stop the abuse that is clearly taking place."

Clearly, the minister identified a problem and cited a rather surprising fact of one-third of all transfers being categorized as gifts, even between unrelated parties.
[ Page 13104 ]

Can the minister explain, then, in detail…? He said there's a presumption in favour of tax. Can he explain how this repeal of subsection (5) and substituting…? I take it these are the relevant provisions, although they may be contained in section 221.

Can the minister explain how these provisions will reduce the opportunity to engage in this practice, which I think many people rightly suspect are circumstances where the gift is not genuine? It's simply a declaration made to avoid paying tax that would otherwise be due.

Hon. M. de Jong: I want to be forthright, as always. I think a case can be made that the new construct employed by the act, where it is no longer sufficient merely to claim the gift but that the gift must have occurred in specific circumstances, logically, it seems to me, over time should reduce the incidence of tax avoidance.

The member's question, I think, was to what extent the amendments proposed here will contribute to a more robust record of collection. I'm not sure they do and wouldn't want to suggest otherwise. These are technical in nature. I wouldn't want to try and leave the impression that somehow this represents an amplification or an enhanced ability to collect, because I don't think that's the case.

B. Ralston: I appreciate the minister's response. I suppose the question that arises, then…. Given that the act is open and we're dealing with it, a problem has been identified, spoken of in fairly strong terms by the previous minister. I don't sense this minister is resiling from that comment. Why wouldn't this opportunity be used here to create the legislative means to shut down that avenue of potential tax avoidance?

If it's a third of the vehicles…. I'm not sure what the estimate might be, but given fiscal constraints and scarce revenue, this might be an opportunity to at least, even if it were only partially closed, generate additional legitimate revenue for the Crown.

Hon. M. de Jong: I don't think I'm quarrelling with the hypothesis. Where I might want to make this point to the member is the problem that I think he is referring to, and that was discussed previously, we believe is addressed — if not entirely, in part and in large measure — by the significant shift that this section, as originally passed in the spring, represents.

[1545]

It is no longer sufficient simply to claim a gift as justification for an exemption. The gift must occur in very specific circumstances. It will be interesting to see going forward to what extent that reduces the number of times or the incidents where people are claiming the exemption, given that they now must provide far more detailed information.

B. Ralston: I thank the minister for that response. The new subsection (5)(c) refers to "the donor who gave the gift acquired the vehicle, boat or aircraft in prescribed circumstances." Then moving ahead, because similar language is repeated in proposed section 221, "the donor who gave…." Is it intended that by prescribed circumstances there would be regulation?

Notwithstanding the very generous gift of the regulations yesterday by the minister, I haven't had an opportunity to locate what regulations may pertain to this section in the draft regulations. Perhaps the minister can explain. Is that the avenue by which he says that this legislative scheme will reduce the opportunity to take that particular liberty with the tax statute?

Hon. M. de Jong: I'll do this in reverse order to how the questions were asked. The reason the hon. member didn't find any regulations in the package I provided to them yesterday is because there are none, and at the moment there are none contemplated as it relates to, in this case, the tax rates that might be applicable in different circumstances.

With respect to the first question, I fear I'm clumsily trying to make this point. The proposition that I would make to the member is that by the very construct of the new act whereby the tax is presumed applicable and the exemption is only available in specific circumstances — i.e., gifts between related individuals — and, therefore, the requirement by prospective payers of the tax to set out in more detail the nature of the gift, in my view, may not represent an entirely successful means of addressing the challenge that the member has described, but it will be of significant assistance.

Is it a guarantee that every transaction for which tax is legally bound to be paid will be paid? No. I think that would be a stretch. But I do think the significant change in construct should go some distance to reducing the number of transactions where tax avoidance has become an issue.

B. Ralston: I thank the minister for his answer. I'm just looking to understand the specific subsection that the minister is referring to that would make this change. Clearly, subsection (5)(a), a taxable supply by a registrant, is a fairly limited circumstance, and an exempt supply by a registrant that is a charity, again, is a fairly….

[1550]

It would seem the weight of this change would fall upon subsection (c): "the donor who gave the gift acquired the vehicle, boat or aircraft in prescribed circumstances." I believe in subsection 221 the proposed further amendment to section 100 uses the same language. So is that the section that the minister points to as likely changing the practice here? Am I understanding that correctly?
[ Page 13105 ]

Hon. M. de Jong: I guess the point I would want to make to the member…. I don't want to leave the impression that sub (c) represents some major point of departure, because in fact, as has been pointed out to me, it existed in the previous subsection (5) under sub (b).

But I think the key part of the member's question is: to what extent does the government — and I, as the Finance Minister — make the statement that the construct here is different in a way that will enhance the collection of applicable taxes?

That actually exists not in any of the amendments that we are proposing here today, but in the original sub 100(1) that the member discussed in the spring, which is the major point of departure and which says the tax is payable as it relates to gifts. That is different insofar as it creates that presumption of tax being payable.

B. Ralston: Well, I appreciate the explanation and the shift in presumption. But is it not still possible to claim an exemption? It's fairly broadly written. That's why I referred to…. In addition to the taxable supply by a registrant and a charity, there is a broad category there that would appear to be still open.

So I guess my question is: if the minister is confident that this loophole — if I can call it that, this escape of potential revenue — is there, why is he confident? What leads him to have confidence that if the language is the same as previously?

I did canvass with the minister in the spring, the previous Finance Minister, the examples of enforcement and the difficulties of enforcement under the present scheme, including even contacting separately both sides of the transaction. Short of, I suppose, an acknowledgment that it was not a genuine gift, there was really no way to enforce it.

I guess I'm looking to the minister to explain why he has enhanced confidence that a simple shift in the presumption and section 100.1 will lead to the result that he speaks of.

Hon. M. de Jong: Two things. It was not my intention, nor do I wish to leave the impression, that the amendments being proposed in the section we're dealing with today will lead to any more robust collection, or reliable collection, activity. In fact, I hope…. I think I said the opposite — that specifically, these amendments do not seek to achieve that end.

[1555]

Why is it that I believe the general shift here may be productive from a reliability and enforcement point of view? Well, to begin with, I'm not in any way suggesting that the shift contained here in sub 100(1) will result in 100 percent effectiveness. But I do think there is a difference for consumers when there is a provision that says, "If your transaction is a gift, you don't pay the tax," versus a provision that says: "You are obliged to pay the tax, except in circumstances where a gift occurs in very limited circumstances." First and foremost, it requires providing additional information and specific information.

I don't think I'm being naive in suggesting that the vast majority of citizens are law-abiding and do not wish to provide, and will not provide, false information, particularly information that would be subject to audit. So I don't want to wear rose-coloured glasses here. But I think at a practical level there is a difference between saying to a citizen, "If a transaction is a gift, the tax doesn't apply," and a situation where the law says: "The tax applies, unless there is a gift in very limited circumstances."

B. Ralston: I don't want to belabour this point much longer, but I do have one further, perhaps concluding question, then. The limited circumstance that the minister refers to — can he point in the legislation to where those limited circumstances exist? Even if the presumption is reversed, and one can assert that there's an opportunity here…. That's how I read, potentially, section 5(c): "the donor who gave the gift acquired the vehicle in prescribed circumstances." If there's simply an opportunity, notwithstanding the presumption, to assert that it is a gift, I'm not sure that that really changes anything.

So what way in the legislation or any proposed regulations does this reduce the possibility for this claim to be made, given that the view of the previous minister was that one-third of the transactions were gifts that were dubiously described that way?

[1600]

[L. Reid in the chair.]

Hon. M. de Jong: In fact — and forgive me if I stated this incorrectly some time ago in the exchange — in the material I gave the member yesterday, there is the gift exemption material, which actually sets out a summary of gifts between family members and gifts to registered charities. So the authority for enumerating who qualifies or which gift transfers qualify will be set out in the reg. I'm told there is a summary of that somewhere in the material I provided to the member last day.

B. Ralston: Given that, in my view, this is an important enough point to be referred to the precise page of the regulations, could the minister ask the staff to refer to the page of the regulations that this is included on?

Hon. M. de Jong: Section 18 is the section in the regs. It's on page 22.

B. Ralston: Quickly looking at this regulation, I wasn't aware that it was set out in the regulations until the minister mentioned it. There's a reference to gifts between family members. I appreciate that the regulations are not before us, but is that a fair summary — that the ap-
[ Page 13106 ]
plication of this would be limited to gifts between family members?

Hon. M. de Jong: I am advised, and can advise the member, that the draft regulation, section 18, "Gifts between family members," would be applicable. Section 19, "Gifts to registered charities," would be applicable; section 20, "Prizes, draws and awards"; and section 21, "Inheritance of tangible personal property." So the tax would apply in all circumstances, except where one of the applicable exemptions applies.

B. Ralston: It took a while, but I think that answer is clear. I appreciate that. I think, based on the explanation that's offered, that will remedy the problem — at least, substantially remedy the problem.

Section 220 approved.

On section 221.

B. Ralston: This is a further amendment to section 100 that we were speaking of. I had intended to ask a question on this, but I'm not sure that there's anything in addition to the issue about the gift and the treatment of gifts — if there is anything further in that proposed amendment. If the minister could, perhaps, confirm that, I'd be obliged.

[1605]

Hon. M. de Jong: What this would propose to do is ensure that effective May 1, 2013, the tax on gifts of vehicles, boats or aircraft received on or after July 1, 2010, and before April 1, 2013, and registered on or after May 1, 2013…. For gift transactions that occurred during that period, there would be the expectation that they're registered before May 1, 2013.

Sections 221 to 226 inclusive approved.

On section 227.

B. Ralston: This deals with section 109. It's entitled in the act now: "Tax if use of software changes." This is a proposed repeal of all of section 109 that was passed in the spring and forms part of the statute.

Can the minister explain why this change is necessary? There appears to be an addition of some additional sections. Can the minister explain why these changes are necessary?

Hon. M. de Jong: In a number of circumstances the member will know that in areas where we're dealing with change-of-use provisions, the drafters — but ultimately the government and, I suppose, the minister — have settled on a particular form of language to deal with change-of-use provisions of the act. This is intended to bring the change-of-use provisions as it relates to software and make it consistent with other change-of-use provisions in the act.

Section 227 approved.

On section 228.

B. Ralston: This proposed section adds section 109.1, which is a qualification of what we've just debated in the changes to the existing section 109. The explanatory note makes reference to an exemption.

Can the minister explain the purpose of this addition, essentially, to section 109?

Hon. M. de Jong: The intention here is to ensure consistency between the language as it relates to exemptions applicable for software and exemptions applicable for tangible personal property. I'm advised that for transfers of software between related parties to be exempt — and when I say "related parties," I'm further advised that we're talking now mostly about corporate-level transactions — the related parties must remain related for eight months. If those parties do not remain related for eight months, tax is payable on the transfer of the software.

Section 228 approved.

On section 229.

[1610]

B. Ralston: This proposed amendment is to section 110, which is entitled "Tax if change in use of resulting software or tangible personal property." There's a wholesale repeal of subsection (2), which talks about the date at which tax must be paid. I think that was considered to be relatively straightforward previously. Can the minister explain why this clarification is necessary?

Hon. M. de Jong: The rationale for this relates to the fact that earlier in section 110 there is reference made to software and software that gets incorporated into tangible personal property. The notion was to clarify when tax is payable and in what circumstances that the new subsection (2) should refer to both software and the user of the tangible personal property.

Section 229 approved.

On section 230.

B. Ralston: This is an amendment to section 111, which refers to a tax if change in use of software for which a refund was received under taxation agreement. There's no change in the references to the taxation agreements. They're under sections 155 and 156, which are "in
[ Page 13107 ]
accordance with Nisga'a Nation taxation agreement" or 156, "Refund in accordance with treaty first nation tax treatment agreement."

There were previous amendments, minor amendments, relating to the expression of those agreements. Can the minister explain the purposes of these particular amendments in this context?

Hon. M. de Jong: The substantive provision here was intended to make clear that the relevant provision does not apply if the subsequent use of the software is an exempt use, and it was thought appropriate to make that explicit.

Sections 230 to 234 inclusive approved.

On section 235.

B. Ralston: This is an amendment of section 117, and there's a wholesale repeal of subsection (1) and new definitions that are substituted, including one that I don't see in the existing legislation. The tax is referred to as a "tax rate value." Can the minister then explain why that's necessary in this context?

[1615]

This section appears to deal with, I believe, modified vehicles, or at least passenger vehicles. Can the minister explain the purpose of this amendment?

Hon. M. de Jong: No change, again, substantively or practically. What has been done here is to import into the legislation the tax rate reduction for modified business vehicles, moving those provisions from the regulations under the old act into the Provincial Sales Tax Act.

Section 235 approved.

On section 236.

B. Ralston: This proposed amendment adds a new section 117.1 and a new section 118.1, although it seems to be slightly out of order in terms of dealing with section 118.1 now. Given the explanation that's just been offered in relation to section 117, can the minister explain the purpose of this new proposed section 117.1?

Hon. M. de Jong: So 117.1 was thought necessary and is added to ensure that it was clear there is authority to impose the applicable tax if the resulting tangible personal property is used for a taxable use.

B. Ralston: I think I understood the minister correctly. Can the minister explain the proposed section 118.1?

Hon. M. de Jong: The new 118.1 takes a refund provision that was previously under 116 and provides separate authority for refunding of a tax paid if the director is satisfied that the purchaser did not intend to enter into the contract to convert tangible personal property at the time the tangible personal property was initially purchased.

Sections 236 to 238 inclusive approved.

On section 239.

B. Ralston: This proposed amendment adds a new section, 120.1. There are some amendments that have just passed in relation to section 120. This adds a further new section that relates to section 120. Can the minister explain why that might be necessary?

[1620]

Hon. M. de Jong: What was not included in the initial version of the act that the member discussed in the spring of last year were change-of-use provisions relating to taxable services. That gives rise to the inclusion of section 120.1.

I am advised that a possible example would be a person who purchases a maintenance service contract for services to exempt tangible personal property and then has services provided under the contract to taxable tangible personal property.

Sections 239 to 242 inclusive approved.

On section 243.

B. Ralston: This is an addition of a new section, 123.1, to the section 123 where there has been a repeal of at least one subsection, 123(3). It adds a new section, 123.1. This section relates to tax on accommodation in a designated accommodation area. Can the minister explain the reference to accommodation purchased for resale, which this appears to be directed at?

Hon. M. de Jong: The nexus of this is a desire to ensure that it is clear and enunciated in the Provincial Sales Tax Act that a person who is alleging that they are purchasing accommodation for resale must at or before the time of the sale provide documentation to substantiate the non-payment of PST. Then there are the provisions that flow from that. It is a desire to make these sections related to accommodation consistent with the similar provisions in the act. That had not been done in the original version.

B. Ralston: I'm not sure if the minister's comments applied to all of the proposed amendments, section 123.2 and section 123.3, and I think that there's a new section, 124.1. These all relate to the first one — "Tax if change in use of accommodation purchased for resale" and "Tax if accommodation used for new purpose." Can the minis-
[ Page 13108 ]
ter give an example of the circumstances in which this situation might arise, thereby triggering these particular new sections?

Hon. M. de Jong: Here's an example where this would be applicable. The company, an employer, purchases accommodation initially for resale, but, as I think we talked about last day, then decides to make that accommodation available to employees. In those circumstances, the exemption would not apply, and the relevant section would operate to guide the determination of the applicable tax.

[1625]

B. Ralston: There are two sections. One refers to accommodation purchased for resale, and then another is for accommodation used for a new purpose. Can the minister explain the distinction between the two? A purpose, I suppose, could include a resale, given that it is, in itself, a new purpose. Yet there are two separate sections proposed, so can the minister explain the distinction that's drawn here?

[H. Bloy in the chair.]

Hon. M. de Jong: The member is correct. There are two scenarios contemplated here. An industrial camp situation, where an employer purchases accommodation for use by employees in an exempt circumstance and then decides to take all or a portion of that accommodation and make it available commercially in circumstances that are not exempt — that would be an example that would be captured by 123.3.

Sections 243 and 244 approved.

On section 245.

B. Ralston: This begins a series of amendments in what's described as division 5 of the act, "Telecommunication Services." This is an amendment to section 130, which is described as "Tax on purchase of telecommunication service." As I recall, I believe "telecommunication service" is a defined term in the act.

There's the addition of a new (1.1) and a new (2.1) and then what appear to be some language changes. Can the minister explain the reason for adding the new (1.1) and the new (2.1)?

Hon. M. de Jong: There seems to be a belief that perhaps the member's question relates to 246 as opposed to 245.

[1630]

B. Ralston: Well, what I'm working off is Bill 54, because when I went to the Hansard website to print out the act, those sections such as this one were described as not enforced, and they weren't provided. What I'm relying on is section 130 in the bill, and if that's been renumbered, that may explain the difference.

Hon. M. de Jong: I think we're literally on the same page now. My fault.

So two changes, two amendments. One is designed to ensure with clarity that someone paying tax under 130.1 is spared double taxation — that is included as (1.1) — and then the second added provision there, (2.1), is to make a specific reference to the documentation that must be provided to substantiate the non-payment of tax in the circumstances contemplated by the section.

Section 245 approved.

On section 246.

B. Ralston: Section 246 contains new proposed sections 130.1, 130.2 and 130.3, all of which are, I suppose, extensions or elaborations of section 130. There are some explanatory notes on the opposite side of the bill. But perhaps, beginning with the new proposed section 130.1, the minister could explain why these are added at this time.

Hon. M. de Jong: The insertion of 130.1 and 130.3, I am reminded, is specifically designed to give legislative effect to administrative practices that were in place under the PST, which are designed to provide small telecommunication service providers who purchase telecommunication services substantially for resale…. So it is a practice that was undertaken previously without explicit statutory authority for which there would, going forward, be explicit statutory authority.

Hon. S. Bond: I seek leave to make an introduction.

The Chair: Proceed.

Introductions by Members

Hon. S. Bond: We're joined in the gallery today by a very special young man and his parents. I know that they are in Victoria today because the mayor of Burns Lake, Luke Strimbold, was honoured with a Queen's Diamond Jubilee Medal.

I can't think of anyone more deserving. He has done an exceptional job leading his community through very difficult circumstances with the mill explosion. He's just a fantastic example of youth and leadership. I believe he's still the youngest mayor in British Columbia.

[1635]

I want to ask the members who are in the House today to recognize Luke Strimbold and his parents, who are in the gallery after receiving much-deserved recognition
[ Page 13109 ]
this afternoon. Welcome.

Debate Continued

B. Ralston: The minister referred to, I believe, small telecommunications resellers. Can the minister give an example? I mean, obviously, most people would be familiar with larger telecommunications companies, but can the minister give an example where this might be applicable?

Hon. M. de Jong: The best example I can convey would be the number of small Internet providers that exist, particularly in some of the more outlying areas.

Sections 246 to 248 inclusive approved.

On section 249.

B. Ralston: These are proposed additional sections to section 134.1. They refer to exemptions for activities outside British Columbia in relation to telecommunication. The original section 134 refers to exemptions if telecommunication services are purchased for resale. Given that both this proposed new section, and there's a subsequent one in this proposed amendment, section 134.2…. Can the minister explain the reason for adding these further definitions of exemptions in relation to this section?

Hon. M. de Jong: Dealing firstly with 134.1, the intention here is to provide a specific exemption if an electronic device ordinarily situated in B.C. is used to send and receive telecommunications outside of B.C. and any charges for that are segregated on the invoice. That's not always the case, but sometimes it is. So an example: a B.C. resident takes their smartphone to Ontario, makes calls within Ontario and is charged separately for those calls. I'm told that this specific exemption replicates something called the two-out-of-three rule that existed under the old PST — so a codification of a previous practice and exemption.

And 134.2 is intended to, again, specifically provide an exemption for an audiobook, audio program, music, ringtone, television program, motion picture or other video purchased utilizing a telecommunication system that is downloaded for specific purposes. What we're trying to ensure is comparable tax treatment to audiobook, audio program, music, ringtone, television program, motion picture or other video in digital form, as in the tangible medium.

B. Ralston: Mr. Chair, I wonder if the Chair might declare a brief recess.

The Chair: The House will recess for five minutes.

The committee recessed from 4:40 p.m. to 4:54 p.m.

[H. Bloy in the chair.]

Sections 249 to 253 inclusive approved.

On section 254.

B. Ralston: This deals with a number of what are described in section 141 in the present act as exemptions "in relation to industry and commerce." I think the substance of most of these changes appears to be adding a reference to being "purchased in British Columbia, brought or sent into British Columbia or delivered in British Columbia." I take it that these are all by way of further clarity and defining the ambit of the exemptions that are proposed. Can the minister perhaps confirm that?

[1655]

Hon. M. de Jong: That is correct.

Sections 254 and 255 approved.

On section 256.

B. Ralston: This is a proposed amendment to section 143. Again, it again refers to an exemption, and this is an exemption in relation to the recording of a motion picture or audio production. I'm not entirely clear, from the way in which the amendment is worded, what its intended purpose is. It makes reference to a number of other sections and divisions. Perhaps the minister could just clarify what these proposed amendments to section 143 are directed to.

Hon. M. de Jong: There are the updated cross-references, but the nexus of this is to clarify that the exemptions referred to apply in this case to recording in tangible form as opposed to exemptions that would apply for recording in digital form, which are now dealt with in section 134.2. So that is the substantive distinction.

Section 256 approved.

On section 257.

B. Ralston: This section proposes an amendment to section 145 in the existing Provincial Sales Tax Act, and the title of that section is "Evidence required to claim certain exemptions." Given a general interest in exemptions, this repeals the existing subsection (1) and adds a new (1.1). This appears to be a fairly broad section relating to the circumstances or the evidence required to claim exemptions. Can the minister explain what necessary modification to the existing section 145 this proposed amendment brings?
[ Page 13110 ]

Hon. M. de Jong: The drafting construct that is being followed here is to attempt to import into the specific sections dealing with the specific exemptions what the documentation requirements are so the language — or the construct more so than the language — is present here to be consistent with the approach taken elsewhere in the act in terms of enumerating specifically what must be provided to substantiate the non-payment of tax.

B. Ralston: Since this is the last section on exemptions in the amendments brought under this division and the next part relates to refunds…. The minister has mentioned, and provided me with, the proposed regulations. Obviously, contained in those regulations are a number of the more specific exemptions that have been discussed and expected.

Can the minister just advise, before we close on this section, when he would expect that the draft regulations would be proclaimed? Would it be immediately upon the passage of the bill in the House, assuming that will take place in fairly short order, or does he propose to wait to a period closer to April 1, 2013?

[1700]

The Chair: Can members keep their sidebar conversations a little quieter, please.

Hon. M. de Jong: The objective would be — dependent, of course, on the will of the assembly and this committee — once the committee has completed its work and the bill passes third reading, to seek proclamation quickly, within a matter of days, and then enact the regulations by OIC. The objective is to have — and I say this not to be presumptuous of this chamber — the proclaimed regulations available for the entire month of March.

Section 257 approved.

On section 258.

B. Ralston: This amendment initiates a new section, part 7, "Refunds." Division 1 is "Refunds from Collectors." It looks as though these are very minor language changes and a continuing wish to remove any references to rental period from the text. Other than that, perhaps the minister can just confirm that that's the purpose that's being applied, or that's the purpose of these amendments.

Hon. M. de Jong: I'm advised that that's correct.

Sections 258 to 262 inclusive approved.

On section 263.

B. Ralston: This is a reference to section 153 in the existing act, which is entitled "Refund if person fails to provide evidence at time of sale or lease." The new proposed section 153.1 makes reference to section 153, obviously, and is entitled "Refund if person fails to provide evidence at time of vehicle registration."

I'm assuming by the specific way in which that's written and the reference to the Insurance Corporation of British Columbia that this is simply a clarification and a slightly sharper focus on what's required at the time of registration of a vehicle within the province.

[1705]

Hon. M. de Jong: The new provision included here is designed to take account of a circumstance where a person is required to provide ICBC with required documentation to substantiate non-payment. They can't, and then they are obliged to pay the tax to ICBC.

This provides the director…. I note it is the director, not ICBC, who would possess the authority, upon receipt of the required documentation to substantiate the non-payment, to provide that refund. In the past there has sometimes been an issue around having specific legislative authority. This section, 153.1, will ensure that that authority exists.

Sections 263 to 266 inclusive approved.

On section 267.

B. Ralston: The existing section 161 refers to a refund to a small seller. What's proposed is a complete repeal of existing paragraph (a), passed in the spring, and a new paragraph (a) with references to a number of different sections. The explanatory note appears to suggest that they are simply consequential amendments and renumbering rather than any substantive change. Could the minister confirm that that view is a correct one?

Hon. M. de Jong: That's correct — no substantive change and simply an intention to properly reference the specific tax that may have been levied.

Section 267 approved.

On section 268.

B. Ralston: This section makes reference in its existing form to refunds authorized or required under regulations. The proposed amendment would add new subsections (c) and (d), and there's a reference to a refund to an eligible charity that applies for a refund. Can the minister explain why it was felt necessary to specifically add an eligible charity as a listed entity in this section, given that it's the only specific reference? The general reference is simply to an applicant for a refund.

Hon. M. de Jong: Again, an example of a desire to
[ Page 13111 ]
give statutory authority to a practice that previously took place. The example that I would offer is ensuring that there is sufficient authority to pay a refund of PST paid on medical equipment purchased with funds provided by an eligible charity — a charity that raises money and turns those funds over to a health authority, for example, who then purchases the medical equipment. This would provide the statutory authority necessary to deal with that circumstance.

[1710]

B. Ralston: I appreciate the minister's explanation, but why would it specifically be included in this statute, given that the reference is to an applicant for a refund and a proper applicant could be defined by regulation?

I'm just wondering why an eligible charity, in this particular section devoted to refunds generally, is specifically set out and all other potential applicants for refunds would be just subject to the general provision. I'm wondering: what was the legal necessity that required the specific division or a specific description of an eligible charity?

Hon. M. de Jong: The rationale for the distinction that the member has highlighted relates to that fact that in virtually, I think, all other cases, the agency making application for the refund is the agency that has paid the tax. In the case of eligible charities and the scenario that I've described earlier, there is a distinction between who paid the tax and who raised the money. That's why eligible charities are specifically enumerated here.

Section 268 approved.

On section 269.

B. Ralston: In section 269 there's an amendment proposed to section 165, but there is an added reference in the proposed amendment to a claim by an eligible charity, and similarly in proposed subsection (1.1).

I'm taking it that the reasoning that the minister just outlined in relation to specific legislative authority being required for an eligible charity to make a legally valid claim is required here as well.

Hon. M. de Jong: I'm advised that's correct also.

Sections 269 and 270 approved.

On section 271.

B. Ralston: This is something in the administrative sections about requiring registration. The existing section 170 refers to how a contractor must be registered if claiming exemption, but the new section appears to be somewhat more lengthy and drops a reference to exemptions, at least in the title of this proposed section. Can the minister explain why it was felt necessary to make this amendment to section 170 of the Provincial Sales Tax Act?

Hon. M. de Jong: The intention here is to endeavour to make the registration requirement for contractors more generally consistent with the registration requirements for vendors or lessors.

[1715]

It's also to ensure the registration requirements themselves work as intended with the provisions that require documentation to substantiate the non-payment of tax at or before sale. So a consistency of approach and construct is at the root of this amendment.

B. Ralston: The minister spoke earlier of the regulations and the exemptions. I think, generally speaking, one of the more difficult areas in which to deal with the PST is in the general contracting field and particularly in construction. Is this a recommendation to this proposed amendment? Is this something that came forth from the industry, or is this something that was identified internally during the review by the Ministry of Finance?

Hon. M. de Jong: Without sort of disputing the characterization of the complexity, this particular change derived not from a specific external request but from the review that was undertaken shortly after the initial package was passed by the House.

Sections 271 to 273 inclusive approved.

On section 274.

B. Ralston: This is a proposed amendment to section 179 in division 2, which is entitled "Collection and Remittance of Tax." This is a collection or remittance of tax by the collector. There are what are described as words added "for consistency," but there is a substantial provision that's struck out and a new one added.

Then continuing on in subsection (b), there are some further amendments — new proposed (1.1), (1.2), (1.3). Can the minister explain why those amendments were deemed necessary in order to, I suppose, advance the clarity of the act?

Hon. M. de Jong: The additions are deemed necessary as a result of the review that occurred and consideration given for some of the unique and specific circumstances that can characterize transactions that may or may not attract a tax liability.

Examples are clarifying the obligation of a collector to levy and remit tax
[ Page 13112 ]
imposed on a gift of a vehicle, boat or aircraft in B.C. if the collector gives the gift and clarifying the obligation of a direct seller to levy and remit tax on exclusive products brought, sent or delivered into B.C. that were acquired by an independent sales contractor from another independent sales contractor — very specific transactional scenarios for which it was thought important to specify the obligations that accrue.

Sections 274 and 275 approved.

On section 276.

[1720]

B. Ralston: This section in the existing act is entitled "Collection of tax on liquor sold under special occasion licence." These changes appear to be minor, but perhaps there is one fairly dramatic one. It refers to striking out the reference to "tax." Can the minister explain the purpose of that amendment?

Hon. M. de Jong: Yes, it's a technical amendment takes into account the fact that under the relevant section there may be amounts other than tax that are payable — therefore the deletion of that word and a replacement with the phrase "all amounts payable."

B. Ralston: Just so I'm clear, then, is it intended that any tax due would be included in the broader category "all amounts payable"? Or is "all amounts payable by the holder" a term that's articulated or developed in distinction to the payment of tax?

Hon. M. de Jong: I'm advised that that phrase would include any tax obligations.

B. Ralston: Just given the precision that's needed in a tax statute, is the minister confident that by eliminating the word "tax" and substituting an arguably vaguer term that doesn't refer specifically to tax payable, that that will withstand possible scrutiny, should it come in the future?

Hon. M. de Jong: The advice I received in unison was: yes.

Section 276 approved.

On section 277.

B. Ralston: This again refers to collection of tax on liquor sold under special occasion licence. This is referred to as a transition, where a licence is issued before April 1, 2013, and then on or after April 2013 the holder of the licence sells the liquor. It seems to be designed uniquely to bridge the situation where one event of purchase occurs before the relevant date and another, the actual event, takes place after. Other than that, it would seem relatively straightforward.

Can the minister just confirm that that's the purpose of what's referred to as a transition provision?

Hon. M. de Jong: I think that's substantially correct. These provisions — 182.1 — impose the obligation on the holder of a special occasion licence to levy tax on sales of liquor on or after April 1, 2013, under a special occasion licence issued before April 1, 2013.

Sections 277 and 278 approved.

On section 279.

B. Ralston: This again is a proposed…. Well, it's rather a repeal of subsection 185(1), which is in the section entitled "Allowance for collection of tax."

[1725]

I believe this is what has been referred to sometimes as a commission, whereby if you're a registered collector and you're obliged to remit tax, you would receive what's described as a prescribed allowance. I just want to confirm that that's what this is referring to.

I'm sure this is accurate, but just to confirm for those merchants and others who are in that position that the commission that was payable upon the collection of PST on behalf of the ministry will once again be paid on a scale that is roughly similar to what was paid before.

Perhaps the minister could just confirm that I'm on the right track here and then answer the more specific question about a commission.

Hon. M. de Jong: I think that's correct. The inclusion of this additional amendment ensures that registrants who don't remit taxes required on time and in the correct manner aren't eligible for that allowance. The maximum allowance for registration is up to $198 a month, which is the same amount, I believe, as existed under the previous PST.

Sections 279 to 281 inclusive approved.

On section 282.

B. Ralston: This refers to section 192. It's described as "When a person must file a taxpayer return." In the statute as it exists now, there's reference to a number of sections. Would the minister just confirm that the only intention here is to update the section references to those amendments that have previously taken place in our proceeding here?

I suppose the only other question is: is there any additional ingredient that's added by subsection (d), which did not exist. It adds a new section (3), which does not exist in the present section 192. Perhaps you could explain what additional ingredient might be added there.

Hon. M. de Jong: I think that most of what the mem-
[ Page 13113 ]
ber said is applicable and correct. I'll simply add that the intentions here with these amendments are to clarify that the obligation to file a taxpayer return does not apply to a registrant within the defined meaning of that term — they pay with their collector returns; to clarify the provisions under which a person must file a taxpayer return; and also to confirm the sections that I think the member referred to in sub (3) give greater clarity to the necessity to ensure that taxpayer returns are filed as required.

Sub (a) and sub (b) in sub (3) previously existed in the earlier subsection and have been moved into their own subsection for clarity's sake.

[1730]

Sections 282 to 284 inclusive approved.

On section 285.

B. Ralston: This section refers to inspection and audit powers. There's, I suppose, an amendment that's proposed in section 285 that would…. Just for purposes of clarity, but the broad powers of inspection, in terms of locations, appear to be expanded in an amended subsection: a repeal of section (2)(b) and (c) and a new sub (b) giving expanded powers to inspect a number of areas, whether it's software or accommodation-related services. Another on volume, value and use appears to be very, I suppose, enabling language to a potential inspection.

Can the minister explain how this suggestion of broader powers came about? Did it come as a result of any court challenge or any administrative practice or simply internal advice from the Ministry of Finance that these broad powers might be helpful for inspectors to carry out their duty on behalf of the Crown in the future?

Hon. M. de Jong: The intention here is not to acquire any broader powers than were being exercised previously under the former PST. Nor is there a belief that the amendments here accomplish that. There is a belief and a hope that by enumerating in greater detail what the entitlements are with respect to audit and inspection, that would preclude any doubt or any challenge. But there is no purposeful intention here to expand upon the practices that previously took place.

[L. Reid in the chair.]

B. Ralston: Well, I appreciate the minister's interpretation of the additional detail here. But if there's no…. I suppose perhaps a different way would be more certain and specific powers. Is that the purpose of the amendments? Otherwise, I don't see a reason to do it. If the power to inspect is the same and the ambit is the same, then, this is not adding any additional ingredient or scope. Why enact it?

[1735]

Hon. M. de Jong: I think part of the answer to this relates to clarity in drafting. The original sub (b) and sub (c) lumped a lot of the circumstances together. The new (b) through (j) are an attempt to articulate in detail, and specifically, how the audit and inspection authority can be exercised with respect to different circumstances, different types of property. That's what has given rise to the amendment in subsection (2).

B. Ralston: The existing subsection (2) refers to "a specified location, occupied by a person." In this proposed amendment that reference to "occupied by a person" is dropped. Section (j) simply refers to inspecting "the specified location and any activities carried out at the specified location."

Would the minister not agree that that deletion of "occupied by a person" potentially broadens the ambit and a search could be conducted at a location where it was unclear if it were actually occupied by a person?

Hon. M. de Jong: I hope I haven't misunderstood. I am looking at 194(2) and the amendment just above (2)(a), which incorporates the phrase "at the specified location." I may have misunderstood the member if his concern was the deletion of the phrase in the provisions. If that was the concern, then I would draw to his attention the incorporation of the phrase in subparagraph (2).

B. Ralston: I think I was wrong in suggesting it was deleted in the first part, because it's an amendment to sub (b) and (c), but in a proposed new subsection (b), it simply says: "inspect the specified location…." Is it the position of the minister, then, that the reference there is to a specified location occupied by a person? That is included at the outset of subsection (2). I would think from what he said that that is his position, but perhaps he can confirm it.

Hon. M. de Jong: That is correct.

Sections 285 to 287 inclusive approved.

On section 288.

B. Ralston: This section refers to an assessment if tax is not made or remitted or if there is an excess refund. A new subsection (3.1) is added after the existing section (3). It makes reference, in the explanatory note, to the assessment of an amount of a refund that is required to be repaid.

I'm at a loss to see why that is necessary, given the language of the existing subsection (3). I suppose it seems unnecessary, but perhaps the minister can explain why, in his view, it is necessary.

[1740]

Hon. M. de Jong: There is, I am reminded, a refund available. The example would be farmers or fishers who are in the startup mode and purchase tangible personal property prior to commencing operations. They're then entitled to seek a refund once the property is being used for the refundable purpose.

If they subsequently begin using the tangible personal property for a…. If it is not being used for one of those purposes for which the refund qualifies, then this provides the authority to require that refund to be repaid.

Sections 288 and 289 approved.

On section 290.

B. Ralston: This section is entitled "Failure to collect tax." An amendment is proposed that adds new sections (1.1), (2.1) and (2.2). This gives powers to the director where a designated "collector," which is a defined term, has not levied tax as required. Given that this is a relatively basic provision of the act, passed only in May, can the minister explain the circumstances that give rise to the necessity of this particular amendment?

Hon. M. de Jong: This contemplates the possibility of the director assessing a penalty if a collector has not levied tax in circumstances where the collector was required to obtain documentation to substantiate nonpayment of the tax and the collector has reason to believe that the person was not entitled to the claim which would allow for nonpayment.

So what's an example of this? And this is a discretionary penalty that's intended to ensure that collectors exercise reasonable care in obtaining the documentation they require to substantiate the nonpayment of tax.

A collector theoretically would not have fulfilled their obligation to obtain an exemption certificate if the certificate is not completed or if the certificate on its face has incorrect information. An exemption certificate signed "Mickey Mouse" is probably an indication that sufficient due diligence hasn't been exercised. That apparently is not a fanciful example but a real one.

Section 290 approved.

On section 291.

[1745]

B. Ralston: This section is referred to in the text of the existing bill as "Incorrect information." This would appear to follow from the minister's comments. It gives the director the power to impose a penalty.

It appears that there must be, or there is felt to be, some lack of clarity in existing subsection (1), because it's repealed in a new subsection, as is suggested. Can the minister explain what the purpose is, or what lack of clarity is there in the existing subsection (1) that required this proposed amendment?

Hon. M. de Jong: No change in the relevant or applicable circumstances in which the penalty here must be imposed. The amendment relates, I'm advised, exclusively to updating the sectional references that derive from some of the other changes that we've made.

Sections 291 and 292 approved.

On section 293.

B. Ralston: In the existing act, it refers to "Interest on amount payable." It's a relatively straightforward, single sentence. What is proposed is a fairly lengthy substitution of some definition amounts and a number of sections. It's entitled "Interest until notice of assessment issued." But there are a number of further sections. Is this a case where — I'm speculating, perhaps — the regulations that might have applied to the calculation of interest are now included in the act, and that explains this rather lengthy amendment when compared to the existing section?

Hon. M. de Jong: Yes, the authority for the interest calculating…. Well, calculating interest due was contained previously in regulation. This is a purposeful decision to incorporate and codify in the act the authority for the calculation of the interest in the various ways that are contemplated here.

Section 293 approved.

On section 294.

B. Ralston: This section refers to a board member's liability, and it's a board member of a corporation. I think liability, if a tax was not remitted, was imposed upon directors jointly and severally before. I'm wondering what additional ingredient this amendment adds.

Hon. M. de Jong: These are intended to reflect amendments to the federal Bankruptcy and Insolvency Act.

Sections 294 to 297 inclusive approved.

On section 298.

[1750]

B. Ralston: Section 298 amends section 221, which is simply entitled "Lien." Those are the powers given to the ministry and the director to, I think, collect tax that may be owing, but perhaps the minister can explain the amendments. In particular, there is a repeal of subsections (8) and (9), and entirely new sections (8) and (9) are added. So perhaps the minister can explain what's
[ Page 13115 ]
going on here.

Hon. M. de Jong: The single largest component of these amendments, as the member points out, appears at (8), (8.1) and (8.2). Broadly speaking, they are intended to clarify the ability that exists to correct the amount in a lien and ensure that in correcting that amount, the lien maintains the same priority as the existing lien did.

Section 298 approved.

On section 299.

B. Ralston: Section 299 is a proposed amendment to section 224, which refers to the Limitation Act. It proposes to repeal the entirety of existing subsection (4), which is relatively straightforward. Section 5 of the Limitation Act applies to the limitation period set by this section. It's a much more lengthy section, including some additional sections that appear to concern acknowledging when a limitation period may have arisen and some other provisions. Can the minister explain why, given the relative simplicity of section (4) previously, these more detailed sections are required at this time?

Hon. M. de Jong: The amendments to subs (4), (5), (6), (7) and (8) are intended collectively to provide clarity with respect to the impact of an acknowledgment of a debt on the limitation period and the calculation of the limitation period, and the application of section 24, which the member sees referred to in sub (7). In short, the intention is to create a circumstance in which proceedings in progress at the time the limitation period expires may be continued, but no new proceedings may be commenced.

B. Ralston: In the new subsection, proposed subsection (5), it refers to the form that an acknowledgment might take in notice of an obligation owing, I take it. It also says that the date on which the acknowledgment is made is deemed to be the date of the notice of assessment. Is that then for purposes of calculating interest that may be owing as of the date of assessment? Is that the reason why that's phrased that way?

[1755]

Hon. M. de Jong: I am advised that the dates that are referred to here are relevant to the determination of the application of limitation periods and are not relevant to any calculation, or the commencement of calculations, relevant to interest or interest obligations.

Sections 299 to 305 inclusive approved.

On section 306.

B. Ralston: These are proposed amendments to section 242. We dealt with refunds earlier. These are the powers that would appear to make refunds possible. There's a specific reference to an eligible charity once again. Other than making available general powers to provide refunds, is there anything else that this section does?

Hon. M. de Jong: This relates to circumstances in which refunds are available or have been claimed. What is being sought to achieve here is to add the authority to make regulations that require a person to repay a refund in certain circumstances and to set conditions or limitations on the requirement to pay a refund. Some of those sections we canvassed not so long ago.

Sections 306 to 308 inclusive approved.

Title approved.

Hon. M. de Jong: Just before we complete, I might thank the hon. member for his significant contribution to the debate, and Anne Foy and Jordan Goss for their invaluable assistance.

[1800]

I think the member knows there is a small army of very talented taxation experts, located in a room just off site here, who have been instrumental in working through what I think any reasonable person would accept is a vast amount of work and have managed to present a statutory instrument that I hope, in the circumstances, will serve British Columbians well. Thanks also to the deputy, Peter Milburn, for helping to coordinate the entire effort.

I move the committee rise and report the bill complete without amendment.

Motion approved.

The committee rose at 6:01 p.m.

The House resumed; Mr. Speaker in the chair.

Report and
Third Reading of Bills

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

Bill 2, Provincial Sales Tax Transitional Provisions and Amendments Act, 2013, reported complete without amendment, read a third time and passed.

Hon. M. de Jong: As they say at the golf course, polite applause from the always appreciative gallery.

I call continued debate on the budget.
[ Page 13116 ]

Budget Debate

(continued)

Hon. I. Chong: I am pleased to rise to offer my comments on balanced budget 2013. In responding to that, I would like to begin by saying that, obviously, I'm very supportive of balanced budget 2013. It was a promise government made that we would quickly return to a balanced budget and that 2013 would be the year that it would be done. Now we've done it, not without some difficult decisions and difficult choices, but indeed, that is what has occurred.

[L. Reid in the chair.]

I am surprised indeed when I hear members opposite, the NDP opposition in particular, scoff at it and obviously indicate that they are not supporting a balanced budget. I find it even more reprehensible that the Leader of the Official Opposition is intending to repeal balanced-budget legislation because, I guess, he doesn't believe in balanced budgets — unless he changes his mind. I guess we'll find out in due course, because he's not revealing to us exactly how he intends to pay for all the things that he wants to spend.

The reason why I am supportive of balanced budget 2013, in large part, is because it is a credible budget, it is a realistic budget, it is a truthful budget, and it is one that has received the endorsement of just about every reasonable, credible analyst, I would say, who looks at budgets such as this. If it were not, I suspect we would have had a downgrade of our credit rating, but that has not occurred. In fact, our credit rating is still very much intact — our triple-A credit rating.

It's something I know the opposition doesn't understand. They spent their ten years in government from 1991 to 2001 finding ways to produce budgets that would only seem to get downgrades — because we had successive downgrades. It was very sad, I would say, when I was here in opposition from 1996 to 2001, watching those downgrades occur, waiting for the Moody's bond rating agency, Standard and Poor's, to come out and say: "No. No upgrade, but definitely it's going to be a downgrade." A failing grade. A failing grade, as that's what was occurring for the NDP at the time.

They thought they would be imaginative. They thought they would be innovative. They thought — they being the NDP at the time in government — they would be imaginative by bringing in what we called a debt management fund. You would think at least a debt management plan would be something that the bond rating agencies would be supportive of. Strangely enough, they were. However, immediately after having introduced it — for those members in the NDP ranks who will remember the debt management plan — the target was very quickly missed.

[1805]

So they renamed it. I think they called it the debt…. It wasn't management; it was another debt-named plan. But it also missed its target the following year. All I recall at the time was that it achieved its goal of getting downgrades, not the goal of reducing debt.

What we saw back then was the cost of the debt to taxpayers in British Columbia. And the cost? If it was about a $33 billion debt, I believe the interest costs per year were about $2.6 billion or $2.7 billion. Now, it's hard to fathom what that is, because of all the zeros, but roughly, a debt of about $33 billion, with $2.6 billion to $2.7 billion, amounts to over $7 million a day in interest. That's every single day, 365. Perhaps in a leap year it might be a bit less.

Today our debt — which, I will say and did say earlier, is larger — is $56 billion. Do you know what our interest cost is? It's $2.4 billion. It is lower than the debt…. And the reason why it's lower than the debt interest payments of the NDP days is in part because of our triple-A credit rating.

If we were to have the same credit rating as other provinces that are not in the position we are, we would be looking at adding an additional $2 billion of interest costs. If you want to take a look at comparative rates and amounts, you know, the members opposite should take a look at what it would cost us if we got a credit downgrade.

Obviously, the question is: why is the NDP intent on introducing deficit budgets, not balancing the budget and not finding a way to bring in balanced-budget legislation? That is, clearly, a difference between that side of the House and this side of the House. We believe in balanced budgets. They say they do, but we know that they don't.

I've heard, as well, that the opposition wants to make other changes, other tax changes. And I'm very concerned about one in particular, but it doesn't surprise me. They campaigned against it in 2009, so it's not a surprise that they're going to come after it again. And that is the carbon tax.

In 2009 they said they couldn't support the carbon tax. Well, I guess it's because they had people who were in their ranks who believed that the carbon neutrality of the carbon tax, that the reductions of the GHGs were important, but there were some there who just couldn't get their heads around it. They waffled on it; some agreed and some didn’t. But lo and behold, now that the election was over in 2009, they've come on board, and they said yes, they will support it.

Now I hear that they're going to get rid of the carbon tax or use the money that was the carbon tax neutrality in that sense, the revenue neutrality, and use it for other measures, which is, basically, a tax increase. What they fail to tell taxpayers is that the carbon tax has not come into treasury, into the general revenue. The carbon tax has been returned in the way of tax cuts. I know they know that.

Are they planning on removing those tax breaks that
[ Page 13117 ]
all taxpayers receive? If they are, I would like to hear about that, because they're keeping that part of their plan a bit of a secret. That's what they're planning on doing: getting rid of the carbon tax revenue neutrality. And I think people would be quite concerned about that.

I think it's important for people to understand how a budget is comprised. I know there are some on the opposite ranks who know that budgets are based on revenue and expenditures. When you start out, you actually do have to determine what your expenditures are. Whether you're in business or you have a household budget, you need to know what your expenses are going to be, and you either shave them down as best you can or you make sure you have the revenue sources that are going to be able to cover off those expenses.

It may mean, if you're in a household, that you have to give up some of your vacation. It may mean that you may not get that second or third car in the family if you have a large family. It may mean that you make other choices about your entertainment value. If your revenues decrease, you're going to have to make sure that if you have those fixed costs, those fixed expenses, that you can cover that off.

[1810]

You do have to start off understanding what your expenses are. Our government successively, each and every year, has taken a look. We have found savings where we have had our budgets. We have, in all ways, every year managed to stay within our ministerial budget targets.

Yes, there have been revenue fluctuations. Those are, at times, uncontrollable, but the controllable part is the spending. We have controlled spending. Every minister has controlled spending within their budget, and that is very different than what the NDP used to do. They would always be missing their ministers' budget targets.

I know there are some on the other side of the benches, the NDP benches, who aren't aware of that, because they weren't here. I will grant them that. But they should check the record. It was standard procedure that ministers could miss their budget targets, then go and ask for warrants — spending by warrants — and increase the deficit. There was never any accountability when it came to controlling spending, but that is an important and integral part of making sure you have a balanced budget.

Then what you have to do in presenting a balanced budget…. You do have to take a look at the revenue side. It has not been easy, I will say, because of the massive financial crisis the entire world went through in 2008-2009. It is still unstable.

There are still fluctuations occurring in Europe, in Greece, even in the United States. When you hear that they've got literally hours before they make a decision on whether or not they're going to go bankrupt, that's incredible. Who ever thought that could happen in this 21st century? But that is what has happened. So you do your best to determine where your revenue streams are, and if your revenue streams are not there, then you go back, and you start reducing your expenditures again.

I'm proud that we have never reduced the spending that we have committed to in two of some of the highest and most important areas. Those are health care and education. Yes, we are managing to keep the spending curve, I guess, and not have it grow as fast as it has, but it's still growing.

There is still $2.4 billion cumulatively over the next three years being added to the health care budget. There are still dollars going into education, even though we have fewer students in the K-to-12 education system, even though we've added things like all-day kindergarten.

We are controlling spending. We're taking a look at revenues where we can, and we're taking a look, as well, at where the opportunities lie in terms of revenues. If we were going to do everything the same as has been done for the last 20 or 30 years — not diversifying our markets, not diversifying our products — we would be in a very, very serious financial situation.

But we started on a track years ago, diversifying our products, diversifying our markets, so much so that we no longer have as much dependency for exports going to the United States. Much of the credit goes to the Ministry of Forests, all the Forests Ministers. There are several who have had that hat. But it did start off in 2001 with the current Minister of Finance.

I remember Dream Home China. I remember the thought of Dream Home China was: "Really? Is that where we're going to go?" But he started that, and successively, every minister has made it a priority of ensuring that people knew that British Columbia was open for business, that British Columbia would like to export there. Again, I don't have the exact figures, but I know that China is indeed one of our best markets that we can go with our wood products, as opposed to being entirely dependent on the United States.

The reason why you don't want to be entirely dependent on the United States is because of what they went through. They don't need any more wood when they're not building any more houses, when their economy is still in the tank. We had to diversify our products. We had to diversify our markets. That's what we're doing. That's what we will continue to do.

[1815]

This year in the throne speech it was laid out. For the opposition to then immediately, obviously, criticize that…. We had a generational opportunity to take advantage of an abundance of a natural resource that we have here. That is our natural gas, which we could liquefy, export to China and therefore, again, not be dependent on one sole-source-revenue location, being the United States.

The amount of activity that could be generated and the amount of incremental tax dollars that would come in would be such that we can even consider having a fund
[ Page 13118 ]
called the B.C. prosperity fund. I don't know what the NDP have against a prosperity fund. I don't know why they don't want to see the debt be eliminated, because that is a basic, I think, right that we want to have for all our children and grandchildren.

You know, I do hear the NDP being skeptical. I have no idea other than the fact that they have no other thought behind their plan. They have no way of determining where the revenue should be coming from. But I have heard them pay lip service to it. I know that there are people who do support it and who support them, who want them to support this liquefied natural gas, so they're paying lip service to it.

However, what they're now saying is that we need to do some more work and study this and delay this and delay this and delay this. Well, you're going to delay that opportunity, hon. Members. You're going to delay the opportunity that exists there.

I don't know why they don't want to look their children and grandchildren in the eye and say: "We are not going to saddle you with more debt. We are not going to be irresponsible. We are going to get rid of the debt so that you can start fresh." I don't know why they don't want to look at the children in their eyes to do that.

Now, I've read some articles, and it's in the newspaper. Apparently, the NDP have some plans, they said, to change the economy. We don't know what those plans are. We're still waiting for those plans.

They have some plans to change health services. Again, I wonder what that is. Again, I recall that at a time when the NDP were in government, their measure of health services was how much you could spend, not what the outcome was. I do recall at one time we were the highest health care per-capita spending here in British Columbia, but our outcomes were near the bottom.

They were near the bottom. You can look at the magazine articles that were written about it. The Economist wrote about it, as well, saying: "They're spending all this money, but the outcomes are not that good."

Here we are now. We are still spending much more than we were in 2001, but our outcomes are far better, our mortality rates. People have said consistently that if you were to be dealing with cancer, the place to be is in British Columbia, because your survival rates are much higher, much better. I'm very proud of that, because I know — and I think on this front we would all agree — that every one of us in this House has been affected by cancer, either by a loved one, by friends, by co-workers. We have all been affected by cancer.

The kind of research that we have put into that and the supports we have provided…. I am appreciative when the opposition does support that initiative that that is a good way to spend dollars and that we all care about the same thing.

But I've also heard that they're going to make some proposed changes to how, I guess, they spend money in education, to propose how they're going to spend moneys on the environment. But again, we don't know where the revenues are going to be coming for that.

So far, the only thing that would happen, if they were to keep things relatively the same, is to take the tax reductions we made in terms of the carbon tax. That's where they would get the extra money to spend on all the other things they want to spend it on. That is, as I say, very, very worrisome as well.

I just want to say that balanced budget 2013 is important for us at this critical time. It is about belt-tightening. It is about maintaining our core values of our government, making a commitment that we are not planning on spending any more than we receive.

[1820]

Now, I have not met Dr. Tim O'Neill, the economist who provided the Minister of Finance and his team of people with information, but I do understand he is well respected and well-regarded.

In that vein, then, I would say the input that he provided and his endorsement of the figures that we have put forward stand miles ahead of what the NDP have to say. Here is an economist who has gone through the numbers and who did indicate that he thought they were more favourable than they should have been. So we adjusted that, and he said, then, those figures were fine.

I have to contrast that to what the NDP did in 1996, when there were no economists that they depended upon, where they unilaterally decided to make the changes to their budget to produce a so-called balanced budget. There were no persons that they could call upon that they relied on, an independent person that could come in and take a look at those numbers.

That's one of the reasons why the Minister of Finance decided that this year it was very important. We understand. The public is very critical of all government, of all politicians. So we brought in an individual who has credibility, an individual who has the ability to provide sound, independent advice. That's what he did.

We were able to, on that basis, make the corrections that needed to be done to reduce the revenue side. We're already dealing with the spending side. We're intending to only spend those amounts that are presented. It is the revenue side which causes the problems. It's the revenue side that has to be believable. This economist, Dr. Tim O'Neill, did that.

It's been said that this is not an election year budget. It is an election year but not an election year budget. It's a budget that puts principles before politics. It does take strong leadership to do that, because it requires us to, as I say, make those tough decisions about how we are going to spend, how we are going to control our spending.

It's important, because, as has already been indicated, the bond-rating agencies, which we do have to pay some attention to, have already indicated that they do feel that we would be able to meet the targets in terms
[ Page 13119 ]
of our spending and, of course, with the revenue, having had the independent Dr. Tim O'Neill provide that for us.

Our focus is not about growing government. Our focus, indeed, is about growing the economy. Growing the economy does depend upon us looking at this new opportunity, this generational opportunity in terms of liquefied natural gas.

[Mr. Speaker in the chair.]

I would ask members of the opposition. I would ask them to reconsider their position, not to have any further thoughts of delay. Because those delays could cost us dearly. It could cost the future generation dearly. I would hope that they would believe that those who have spent many days looking over the figures know that this is an important time, that the budget that brings in these extra revenues that allow us to establish a B.C. prosperity fund is a good decision that we can make for our children and grandchildren.

I will wait to hear whatever other news they have to share with us. I certainly am looking forward to their budget, what there might possibly be. All I'm hearing right now is an awful lot of spending, very little in terms of where they're going to see revenues.

I have heard of the tax on the financial institutions, primarily credit unions, but I wonder whether we're going to see our personal income taxes skyrocket back to where they were in the 2001 years. It was pretty substantial. In the absence of any information being provided, that's what we have to presume is going to take place.

Hon. I. Chong moved adjournment of debate.

Motion approved.

Hon. I. Chong moved adjournment of the House.

Motion approved.

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

The House adjourned at 6:25 p.m.

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