Third Session, 41st Parliament (2018)
OFFICIAL REPORT
OF DEBATES
(HANSARD)
Tuesday, November 6, 2018
Afternoon Sitting
Issue No. 180
ISSN 1499-2175
The HTML transcript is provided for informational purposes only.
The PDF transcript remains the official digital version.
CONTENTS
Orders of the Day | |
On the amendment (continued) |
|
On the main motion |
|
Proceedings in the Douglas Fir Room | |
TUESDAY, NOVEMBER 6, 2018
The House met at 1:33 p.m.
[Mr. Speaker in the chair.]
Orders of the Day
Hon. M. Farnworth: I call continued second reading debate on Bill 53, Recall and Initiative Amendment Act, in this chamber. In section A, the Douglas Fir Room, I call continued committee stage on Bill 44, the Budget Measures Implementation Act, 2018.
[L. Reid in the chair.]
Second Reading of Bills
BILL 53 — RECALL AND INITIATIVE
AMENDMENT ACT, 2018
(continued)
On the amendment (continued) .
J. Isaacs: Hon. Speaker, thank you for the opportunity to continue debate on the amendment.
Every British Columbian should have the right to challenge an MLA and have them removed from office — the right to a process or a mechanism that should be available to citizens — when constituents feel that their MLA does not represent their views or is not acting in their best interests. The constituents of Vancouver–Point Grey are unhappy with their MLA and, therefore, should have every tool available to them to proceed with a recall, but clearly, the Attorney General isn’t going to take any chances of that actually happening. Today he doubled down even more.
It must have been difficult for the Attorney General to see so many signs in his neighbourhood where his constituents have made their disappointment known and have been actively promoting and engaging in a recall campaign. There is only one recall initiated in the entire province right now, and it is the Attorney General’s home riding of Vancouver–Point Grey.
It’s easy to draw a conclusion as to the urgency the Attorney General has in getting this bill through and what the underlying motivation may be. It’s sad to say that the underlying motivation to get this bill and amendment through so quickly, without proper debate time, is because the Attorney General wants to make sure that those voices who do not support him as MLA are shut down.
The Attorney General of British Columbia is shutting down debate, shutting down the voices who don’t support him and shutting down the resources that have been available to citizens to action a recall campaign. The Attorney General is the chief lawmaker in this province, and it is the Attorney General who is putting forward a bill that directly affects him and, currently, no one else in the province. If this isn’t self-serving enough to be in such a conflict, he has taken it a step further — to shut down the voices in the Legislature who may be opposed to this bill. This is why I support the amendment.
I would have expected the Attorney General to have a higher fiduciary duty to assure that citizens, particularly the citizens he represents in his riding, would have the legal right to initiate a recall process if they choose. I would have also expected the Attorney General to stand before his constituents to face their complaints in a fair and democratic way, but this Attorney General will not even hear the voices of his constituents, not alone the voices within the Legislature.
If this bill passes, MLAs will be subject to a single recall campaign. Once one recall is attempted, there can be no more during that term of office — just another insurance clause, put in by the Attorney General, to assure he remains unchallenged.
This government likes to shut down voices that don’t support them. By putting in this clause only allowing one single recall campaign per term, the voices of constituents who legitimately want to engage in a recall campaign — perhaps for different reasons — will be shut out. Their democratic right will be taken away. This is hardly democracy. It is an attempt to undermine democracy and silence the voices that, under the Recall and Initiative Act, citizens have every right to proceed with.
A CEO has one of the highest positions in a public company and must report to the officers and directors of the company as well as the public shareholders. The CEO is accountable to the officers and directors as well as public shareholders. But imagine if the CEO starts to sense some unrest, and that unrest starts to take shape. The CEO can clearly draw the conclusion that some kind of shareholder revolt is underway, and the shareholders are planning to remove the CEO.
It is the right of the officers and directors, as well as the public shareholders, to take action against a CEO if they feel that a CEO has not performed his or her duties or is not acting in the best interests of the company or its shareholders. That action would lead to the removal of a CEO, and the CEO would clearly knows this.
If a CEO concludes this action is coming and tries to slip in new company policies or tries to change the articles of the company just to protect his or her position, everyone would see that action would be a conflict of interest, a completely unethical and inappropriate action.
Yet that is exactly what this Attorney General has done. This bill also seeks to take six months off the window for recall, the six months before a scheduled general election. This, too, limits the tools currently available to citizens.
If that isn’t enough to deter citizens, there are restrictions to spending limits, donor caps and advertising rules, excessive rules for registration and disclosing funding sources, all in an attempt to undermine our democracy one step at a time and to shut out the citizens’ voices and their right to participate in democracy.
I wonder if the Attorney General even considered that in 26 tries, only a single recall has succeeded its goal. That’s not a high success rate. But it seems that the Attorney General isn’t going to take any chances in his riding and thus the urgency to get this bill passed, ending debate today at 6:30 p.m.
Well, we on this side will stand up for citizens regardless of past success rates for recall. Every citizen should have an opportunity for recall if they choose to move forward with that process. It is every citizen’s right to have the opportunity to recall an MLA. It is not the right of the Attorney General to limit the process, eroding citizens’ democratic right to recall an MLA.
This is a bait-and-switch program that is being pushed through by the Attorney General, the NDP and the Greens. It grinds away, step by step, the confidence citizens should have in our democracy. Every citizen should have a mechanism available to them to recall an MLA.
Clearly, the campaign to recall the MLA for Vancouver–Point Grey has got the Attorney General rattled, and he is taking action. Albeit totally self-serving and inappropriate action, he is taking action in an effort to preserve his position and status in Vancouver–Point Grey.
I, along with my colleagues, will always fight to maintain our democracy. This bill is absolutely self-serving and is just one more step the NDP and Greens are pushing that erodes our democracy. I speak today in support of the amendment.
[Mr. Speaker in the chair.]
Mr. Speaker: Members, we are considering a vote on an amendment put forward by the member for Peace River South. Specifically, the member has moved “that the motion for second reading of Bill (No. 53) intituled Recall and Initiative Amendment Act be amended by deleting all of the words after ‘that’ and substituting therefore the following: ‘Bill (No. 53) not be read a second time now but that the subject matter be referred to the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills.’”
Motion negatived on the following division:
YEAS — 39 |
||
Cadieux |
Bond |
Polak |
Wilkinson |
Lee |
Stone |
Coleman |
Wat |
Bernier |
Paton |
Ashton |
Barnett |
Yap |
Martin |
Davies |
Kyllo |
Sullivan |
Isaacs |
Morris |
Stilwell |
Ross |
Oakes |
Johal |
Redies |
Rustad |
Milobar |
Sturdy |
Clovechok |
Shypitka |
Hunt |
Throness |
Tegart |
Stewart |
Sultan |
Gibson |
Reid |
Thomson |
Larson |
Foster |
NAYS — 44 |
||
Chouhan |
Kahlon |
Begg |
Brar |
Heyman |
Donaldson |
Mungall |
Bains |
Beare |
Chen |
Popham |
Trevena |
Sims |
Chow |
Kang |
Simons |
D’Eith |
Routley |
Ma |
Elmore |
Dean |
Routledge |
Singh |
Leonard |
Darcy |
Simpson |
Robinson |
Farnworth |
Horgan |
James |
Eby |
Dix |
Ralston |
Mark |
Fleming |
Conroy |
Fraser |
Chandra Herbert |
Rice |
Krog |
Furstenau |
Weaver |
Olsen |
|
Glumac |
[L. Reid in the chair.]
M. Bernier: If it will indulge the House…. If we could just have a five-minute recess while we gather our notes to continue speaking on this bill.
Deputy Speaker: This House will reconvene in five minutes.
The House recessed from 1:54 p.m. to 1:58 p.m.
[L. Reid in the chair.]
Deputy Speaker: The House resumes on second reading debate of Bill 53.
On the main motion.
J. Yap: It’s an honour and privilege to take my place in the debate on Bill 53, the Recall and Initiative Amendment Act, 2018, a very important bill that seeks to make changes to the legislation governing recalls and initiatives in our province. We’ve heard a number of very impassioned speeches from colleagues on this side of the House over the last couple of days, and I’m honoured to have the opportunity to take my spot in the debate on this very critical juncture in our province’s history.
This bill seeks to make very significant changes to recall legislation at a very critical juncture in our province’s history. It think it is very unfortunate that the amendment, which my good friend and colleague from Peace River South had brought forward, was not successful. That was to try to have a committee of this Legislature review this legislation, and that is not to be.
It appears that the government is bound and determined to rush this legislation through as quickly as possible, and a dispassionate observer would be able to see the very obvious reasons why. Why is it so critical that this bill, this legislation, go through now? The government is in a mad rush to get this done as quickly as possible. Well, it’s all about timing. We all know that that is very much the reality of life in the universe we live in — that timing is everything.
We know that this is the week — specifically, this Friday, the ninth of November, at precisely 4:30 in the afternoon — when the deadline would be reached. The deadline would be reached when voters of British Columbia, following the passage of time past 4:30 on Friday, will have the opportunity on the following business day to initiate a recall effort against those members of this House that had the good fortune to be elected on May 9, 2017, last year.
As we have heard from my colleagues, there has been a lot of chatter in social media, in mainstream media and, indeed, in the neighbourhood. You just have to go through some of the main streets and sidestreets of the Point Grey area of Vancouver to see very clearly that there are many, many residents of that part of British Columbia who want to initiate a recall of their MLA, who happens to be the Attorney General.
For that member of government to introduce this legislation on the eve of the commencement of expected recall proceedings seems to me very problematic. On the surface…. I’m not a lawyer — I’ll admit that — but it seems to me to put this senior minister of the Crown in a very specific conflict. I know colleagues have asked the question, and I’ll ask it as well. Did the Attorney General seek advice from, at least, the Conflict of Interest Commissioner to find out if it would be a conflict? We don’t know the answer to that.
However, we do know that the Leader of Her Majesty’s Loyal Opposition has put forward a reference to the Conflict of Interest Commissioner to provide some guidance here. Is there a conflict of interest? On the surface, it would seem that there is one, where a powerful minister is using the tools available to him to create legislation to basically save his job.
That’s not right, if that is the case. It is the kind of behaviour that we would not expect in our democracy anywhere in Canada and certainly not here in British Columbia. We see ourselves here in British Columbia as Canadians who cherish the democracy that we’ve been entrusted with, who cherish integrity and honour in public life. I am sure that members on that side of the House have every same expectation as we do on this side of the House — that the honour and the ethics that all of us hold ourselves to are so important.
We have here, prima facie, on the surface, a conflict, yet the government is bound and determined to go rushing to push this legislation through, invoking — as we know, the vote has passed; it’s under public record now — time allocation so debate ends. Whatever happens this afternoon, debate ends later this afternoon, and this piece of legislation moves forward and becomes law, or will receive third reading.
This is very problematic. This is very disappointing. I am sure there are people who support that side of the House who probably will feel that. Why is this government doing this? Why is the minister doing this, when he could well be in a conflict of interest? Well, the irony of all of this is that it was an NDP government that brought in recall and initiative legislation, which this NDP government is seeking to drastically change.
The intent is very clear and honourable. If a member of this House, duly elected, should no longer have the confidence, the trust, of his or her constituents due to a breach in the behaviour expected and not lived up to by that member and if the member’s constituents feel sincerely that he or she is not representing them, they have the opportunity through recall legislation, through this law, to initiate a recall.
The standard is very high, as we all know. It is extremely high, as it should be. There have been, as has been noted, 26 different recall initiatives, recall efforts, against MLAs over the years. We have seen every single one of them fail, even the ones that seemed to have a huge amount of support.
Members of our previous government were the subject of recalls. Constituents in their ridings mounted very rigorous campaigns and efforts — town halls, grassroots campaigns, going to shopping malls, knocking on doors to sign up people who had signed the petition to recall members. Every single one of them failed. I would suspect that all of those efforts could have…. Some of them were very well-supported, with lots of people that wanted to see their MLA recalled. Fundraising happened.
Throughout the history of this piece of legislation, there has never been, not once, any allegation that somehow the process was corrupted by big money, by large corporations and large unions trying to dominate the recall process. That’s never been the case.
In every one of these 26 recall efforts that failed, ordinary citizens got together and got organized and went around their neighbourhoods, went around the ridings, seeking to get people to agree to sign a petition and say: “We need to have a new MLA.” Yet all of these were unsuccessful.
Here we are on the eve of the period of time when recalls can start. We know, through social media and mainstream media and just driving around neighbourhoods — we see the signs — that one particular MLA, one particular member of this House, is at risk of the beginning of a recall effort. He now has initiated and wants to rush through this legislation. Oh, it’s about keeping big money out of it.
Clearly, this member, this minister, is in a conflict. It is not right that the power of government exercised by that minister…. This member, who’s potentially at risk of the initiation of a recall effort, is misusing that power — dare I say abusing that power — by bringing this legislation forward and rushing it through the way that it’s being done. It’s not right.
I have a feeling a lot of people who support the NDP, who believe that they were an ethical party with high standards, are probably thinking: “What has happened to my party?”
Interjection.
J. Yap: Well, there might be some, yeah. There might be some, and I suspect that those folks are very disappointed with what is happening.
You know what? I’ve had the privilege of being in this House for a number of years, and I remember sitting on the other side and listening to this group who are now in charge when they were sitting on this side. They had so many occasions to wax eloquent about how ethical they were and how high a standard they represented in the way they would do things.
British Columbians, last year, by the slimmest of margins, said: “Okay, we’ll give you a try.” So the keys to government were handed to the NDP, who held themselves up to be paragons of ethics and integrity. And this is what we have.
Within 16 months, we have come to this stage where a minister is seeking to save his job. He actually…. The odds of a successful recall in Point Grey are probably very slim, but with this change that the government is seeking to push through tonight, it will reduce the odds to virtually impossible.
Interjections.
Deputy Speaker: Ministers.
J. Yap: You know what, Madame Speaker? It’s okay. The other side are chirping. It probably means that…. I’m glad they’re listening. It also means that maybe there’s a sliver of truth here that they are seeing, and they’re chirping. And you know what? They have the opportunity to be involved in the debate, too, and I welcome the Minister of Labour. I enjoy hearing the Minister of Labour from time to time. Maybe he would share with us his vision and his view of ethics and conflict of interest. I would welcome that.
Getting back to the bill, what we have here is an abuse of power. We had hoped that the government would see, from our reasoned amendment, which now has failed, that actually it would not have been a bad idea to have a bit of time to reconsider, to look at the ramifications of what was being proposed in this legislation.
One of the changes that we’ve heard about but is so egregious it’s worth repeating here to get it clearly on the record…. That is this. This bill will change the opportunity for citizens to initiate a recall if they’re not the first one.
We know that that change can and will lead to friendly recall efforts that will spring up, probably starting sometime Tuesday morning after the long weekend, when friends, friendlies of MLAs who might be at risk of a recall, including the member from Point Grey, could initiate a recall. That, if it’s accepted by Elections B.C., would be the only recall effort that would be allowed.
One can only imagine how that would play out, where the recall petition is approved and then nothing happens. There’s no door-knocking. There are no town halls. There’s no advertising. There’s no effort. Nothing happens, and after 60 days, it fails miserably, and oh, life goes on.
That is unacceptable. It is unacceptable, and this side of the House will make sure — through debates in this House for the rest of this afternoon, through talking to our constituents, through social media, through the mainstream media — that British Columbians understand what that side of the House, the NDP government, what the member from Point Grey is proposing to do here, which is to protect himself as the risk of a recall is about to commence.
I have a feeling that the people of British Columbia, when they understand what is happening, will be outraged. Maybe a recall effort will fail miserably, as all 26 of them have, but wait and see what happens at the next election. I think the people who want to do a recall, when they see that their opportunity has been stifled by that government, by that member from Point Grey, they’ll have a long memory. They will remember why they are proposing to do these recalls, especially with regard to that riding and that member.
The broken promises, the feeling that he’s not representing them, that he’s not listening to them — all of that is documented, when you do a brief survey of social media. The minister laughs, but I’m sure he’s one of the first to check social media, as he should. We know that for months now, ever since the government revealed its true nature of imposing taxes, of looking at making life less affordable for his constituents and then not listening to them, British Columbians know and the members of that riding know that it was time for a change.
The Recall and Initiative Act offered that opportunity, as slim as it was. But, sadly, the Attorney General, with the support of every member on that side and the three Third Party members, have decided to deprive those folks in Point Grey of the opportunity, the very slim opportunity, to initiate what could be a successful recall, and that’s not right.
I know, at the end of the day, they have the numbers. They like to gloat that they have the numbers, and that’s fine for now, and this egregious act will pass. This will pass into law. Any citizen’s right to a successful recall will be completely crushed by this bill, and that’s only because of what the member from Point Grey, the Attorney General, with the support of everyone on that side, is seeking to do.
That’s not right. And you know what, Madame Speaker? I’m going to say this: it’s not too late.
Members on that side — maybe not members of executive council — backbenchers: you can think for yourselves, and you can vote for yourselves. Show some backbone. Show some spine.
Members of the Third Party, the soon-to-be…. Well, he already is the mayor of Nanaimo. He’s not going to be in caucus anymore. Maybe he can change his vote. I would encourage members on that side to reconsider what you’re doing here. What you’re trying to do here is wrong. It’s antidemocratic. It’s filled with conflict of interest, and I am sure British Columbians expect much more from their government and from members in this House.
With that, I am opposed to this bill, and I will be voting against it. I urge all members to join me and this side of the House in voting against it.
Hon. A. Dix: Madame Speaker, I move second reading and close debate.
[Mr. Speaker in the chair.]
Second reading of Bill 53 approved on the following division:
YEAS — 44 |
||
Chouhan |
Kahlon |
Begg |
Brar |
Heyman |
Donaldson |
Mungall |
Bains |
Beare |
Chen |
Popham |
Trevena |
Sims |
Chow |
Kang |
Simons |
D’Eith |
Routley |
Ma |
Elmore |
Dean |
Routledge |
Singh |
Leonard |
Darcy |
Simpson |
Robinson |
Farnworth |
Horgan |
James |
Eby |
Dix |
Ralston |
Mark |
Fleming |
Conroy |
Fraser |
Chandra Herbert |
Rice |
Krog |
Furstenau |
Weaver |
Olsen |
|
Glumac |
NAYS — 39 |
||
Cadieux |
Bond |
Polak |
Wilkinson |
Lee |
Stone |
Coleman |
Wat |
Bernier |
Paton |
Ashton |
Barnett |
Yap |
Martin |
Davies |
Kyllo |
Sullivan |
Isaacs |
Morris |
Stilwell |
Ross |
Oakes |
Johal |
Redies |
Rustad |
Milobar |
Sturdy |
Clovechok |
Shypitka |
Hunt |
Throness |
Tegart |
Stewart |
Sultan |
Gibson |
Reid |
Thomson |
Larson |
Foster |
Hon. D. Eby: I move the bill be referred to a Committee of the Whole House to be considered forthwith.
Leave granted.
Bill 53, Recall and Initiative Amendment Act, 2018, read a second time and ordered to proceed to a Committee of the Whole House for consideration forthwith.
Hon. M. Farnworth: I call committee stage on Bill 53.
Committee of the Whole House
BILL 53 — RECALL AND INITIATIVE
AMENDMENT ACT,
2018
The House in Committee of the Whole (Section B) on Bill 53; R. Chouhan in the chair.
The committee met at 2:32 p.m.
On section 1.
Hon. D. Eby: I’m joined by two staff members from the Ministry of Attorney General. To my immediate left is Neil Reimer. He’s the director of policy and legislation in the Ministry of Attorney General. Alayna Van Leeuwen is senior policy analyst in the Ministry of Attorney General as well.
I look forward to my friends’ questions.
M. Lee: I appreciate that on short notice, effectively, we’ve had this opportunity now to bring it to committee stage — only under the premise, of course, I should note, that this government has decided to bring closure to this debate on Bill 53 and in a very unfortunate way for the province of British Columbia. Today what we have seen is a demonstration, of course, of the contempt that this government has for this province.
To invoke closure at this time, when we have not had the ability to debate this bill fully, when we had an amendment on the floor of this House, an amendment that would have sent this bill to committee….
I should add that in 1993, recall legislation and recall initiative was looked at by the same committee of this House, the same committee that could have given the input, but that we are now, as a legislative body, being given short shrift by this government, all in the interests of compressing this process just three days before the recall petition period can start in this province.
I stand here about to embark on this committee stage under great protest that what this government is doing is undermining our democratic process.
At the same time, what is ironic is that in this province, we’re being asked to hold a referendum, of course, on proportional representation, to change our voting system, to give further confidence to this government on a different form of voting system.
Yet they have the abuses of their power. They’re utilizing every single tool at their disposal procedurally in this House to effectively cut off the debate and review of representatives of British Columbians in this House on this bill.
I want to register again my objection to the stage that we’re at in the debate on this bill, on behalf of our entire B.C. Liberal caucus and the opposition side of this House.
Having said that, let me ask….
The Chair: Section 1.
M. Lee: In the first case, under section 1(b), can the Attorney General please provide the background and the reasoning behind striking “or recall advertising” in the definition of “contribution”?
Hon. D. Eby: This is to avoid confusion for people reading the bill. There’ll be a new definition for something called sponsorship contribution, which will be used to refer specifically to contributions related to recall advertising or recall as a process, and “contribution” will apply exclusively to initiative advertising, so that someone can draw a distinction between the roles on the two separate processes.
M. Lee: So in terms of the sponsorship advertising definition, then, that is actually sponsorship contribution. Is that correct?
Hon. D. Eby: In relation to recall, the answer is yes. And it’s referred to later in the bill.
M. Lee: So the cross-reference under 146.04 to 146.07 is the entire instance in the bill where “sponsorship contribution” as a term is utilized?
Hon. D. Eby: “Sponsorship contribution” is used throughout division 3.1, which is a new division that this bill would add, and then in division 4 as well. It’s used in there. That is in relation to reporting provisions under the act.
M. Lee: Then the way that I’m reading the definition, as the Attorney General has responded, recall advertising is removed from that definition on the basis that there’s a new division, of course, dealing with sponsorship contributions. So a sponsorship contribution, as it’s defined, then, only applies to recall. Is that correct?
Hon. D. Eby: That is correct.
M. Lee: The previous restrictions around third-party advertising for recall were under what section of the act?
Hon. D. Eby: Part 8 is the relevant section of the act dealing with recall petition communications, so this bill proposes to make amendments, particularly, to part 8 to add rules in relation to recall petition communications, registration, reporting and advertising.
M. Lee: The additional provisions, then, relating to sponsorship contribution — the reason for that. If the Attorney General could take us through the objective behind that.
Hon. D. Eby: The act contains two separate processes. One is recall, and the other is ballot initiative. In order to avoid confusion between the two separate processes, “sponsorship contribution,” that term, refers exclusively to recall advertising and recall. Contribution relates to initiative advertising. We hope that that distinction will assist people in distinguishing between the two processes and the two separate sets of rules.
M. Lee: I guess I’m curious, then, in terms of the need to further those rules when we had, under the Recall Act, provisions dealing with contribution. I appreciate that the government’s view is that there was a need to move forward, in light of campaign financing amendments that were made last fall, to make similar changes, let’s say, under this recall and initiative act.
I still would like clarity around the need to have additional restrictions around what effectively was formerly termed “recall advertising” and now “sponsorship contribution.” If the Attorney General could please take us through those additional items that are referred to in that definition under section 1.
Hon. D. Eby: I’d be glad to walk the member through, because we seem to have lost a little bit, the intent of the government, through the second reading speeches. It was a pretty explicit intent that was stated throughout the election campaign, as well as in the throne speech, in many venues and occasions since then, which was to get the big money out of politics — in particular, to ban union and corporate donations and limit individual donations to $1,200.
As the member knows, because he’s been through the bill — and I’m glad he took up the opportunity to be briefed on this — recall is distinct from a fixed-date election. There are issues around the pre-campaign period, but you don’t know what that pre-campaign period is because it depends on when someone actually files the paperwork.
Now, there are complications around…. If you have multiple recall campaigns running at the same time and each has a $1,200 limit, you could have someone donate $1,200 for each of the multiple recall campaigns running in a single constituency and avoiding the rules. And what do you do between a proponent of a recall campaign and an MLA that may be receiving donations up to the $1,200 limit? Does the MLA get to receive an additional $1,200 to defend against the recall campaign? The bill says no, yet the proponent is allowed to raise $1,200.
The goal is to get big money out of all aspects of our politics. We started with provincial elections. We’ve dealt with it in the referendum. Now we’re dealing with it in recall. That is the point of having these rules around what is called “sponsorship contribution” in the definition.
Now, the member asks what, in the definition, of the government’s purposes contained there…. It’s not in the definition. The definition sets out the term. Then as you go through the act, as the term shows up and as we work our way through, the member will see how these rules around getting the big money out of politics, including out of recall, will be applied.
M. Lee: If I can just ask for a clarification. Under the existing act, what is the overall limitation for a recall campaign from a monetary point of view?
Hon. D. Eby: I just noticed that we’re joined by a school group up in the gallery that may be wondering what we’re doing. We’re in a stage called committee stage. So there’s a proposal on the floor of a new bill that the government’s put forward. The critic for the Attorney General is asking me questions about what’s happening with the bill, and then I’m doing my best to answer so that everybody in the Legislature can understand the proposal that’s in front of us.
This particular bill is around ending certain types of donations in an election process called recall — union and corporate donations — and limiting donations from very rich individuals to just $1,200. You’ll hear me answering questions as he asks questions. Just so you know a little bit about what we’re doing down here today. Thanks for visiting.
The member asked about existing limits in recall campaigns. If you’re a sponsor of recall advertising, there are no limits. There are no limits on where you get donations from, how much money you can spend. There are no restrictions.
There are two authorized participants in a recall campaign. There’s the MLA who’s the target of the recall. Then there’s the proponent of the recall campaign — the person who files the paperwork with Elections B.C. They both have expense limits.
There’s a formula that the act sets out that is based on the number of registered voters. It is a dollar amount per voter. There’s sort of a base amount that the act sets out and then an additional provision per voter beyond a minimum amount that is permitted under the act.
M. Lee: I also wanted to join the Attorney General by saying hi. I’m the member for Vancouver-Langara. My role in this chamber is to be the opposite side critic of the Attorney General.
He just explained to you what we are debating. Let me just say that this is very important to our democratic process, where British Columbian voters have the ability, 18 months after an election, to recall. Basically, voters in a particular riding have the ability to mount a gathering and a campaign in order to recall that member so that member no longer will serve in this House. It’s the ultimate accountability.
I see a few heads nodding. When you get in trouble, you know you’ve got to pay the penalty, right? That’s how you’re being held accountable either by your teacher or your parents. That’s what this ability ultimately gives to British Columbian voters.
Unfortunately, what’s happened today — and you’re here as a witness to this — is that we are being compressed in the ability to vote and debate on this bill. It’s what happens when someone says to you: “You know what? We don’t want to hear you anymore. We want to shut down this discussion.” That’s exactly what’s happened here today.
The Chair: Member. Member.
M. Lee: You’ll see, as we have this conversation, the critical elements that we have been given very little time, at this point, to actually go through. So thank you again for coming out today.
The Chair: Member. Member, as a caution. Please, all remarks must be through the Chair.
M. Lee: I’m just merely greeting our guests in the gallery.
The Chair: No. That’s understandable. No arguments. No arguments.
M. Lee: Let me just say, Mr. Chair….
The Chair: No. Through the Chair.
M. Lee: Just to say to you, then, if we have the…. The whole question, then, is this, around the definition of big money. The Attorney General just went through in good detail, in terms of the per-vote, registered-vote count, to get to the amount under the current act that we’re speaking to here, the amending of that act.
I just want to clarify, then. Typically speaking, on a basis of, say, 35,000 registered voters in a particular riding, what would be the total limit on spending for a recall campaign?
Hon. D. Eby: I regret very much opening that door. There you go. I thought I was doing something nice.
Let me run through a few examples of different constituencies. Oak Bay–Gordon Head, last time…. The issue, for the member, is just that the Chief Electoral Officer sets these limits, usually at the beginning of the period when it’s eligible for recall to happen. We’re not there yet. So it’s important to know that these numbers are just for illustration purposes, to assist the member. We haven’t received Elections B.C. numbers yet. It’s based on a formula, as I said.
For Oak Bay–Gordon Head — a proponent that is advocating recall in Oak Bay–Gordon Head, which is 38,000 voters — $35,938; Comox Valley, 48,000 voters, $39,000; Kamloops–North Thompson, 38,000 voters; $39,788; and Maple Ridge–Mission, 35,203 voters, $34,829 is the limit.
It’s important to recognize that this is just the proponent. This is the person who files the paperwork. Anyone else who wants to participate through recall advertising has absolutely no limits, no limits on donations…. Well, I was corrected by staff. There are actually two limits. There’s a limit on the number of anonymous contributions you can receive, and you can’t receive contributions from registered charities. Beyond that, you can take international donations, union donations, corporate donations, unlimited individual donations and spend as much money as you want. So there are two different groups.
It’s important to keep that in mind in terms of this, because I definitely take the member’s point that in terms of proponent spending, this kind of spending is very consistent with other goals around the Election Act. But in terms of when you’re looking at issues related to third parties’ spending, that’s when we start to run into trouble with the big money.
M. Lee: I just wanted that point of clarification. So when this government refers to big money being involved in recall, it’s not the proponent side. Quite clearly, in terms of the examples that the Attorney General was able to share with us, they’re in the $30,000 to $40,000 range.
If the concern, then, is around third-party advertising sponsorship, that brings me back to the definition here, when we’re referring to the levels in which sponsored contribution can be limited under recall. That was actually where I was trying to get to earlier, in the sense of identifying what we mean when the government says “big money.”
Really, when you think about it, the big money doesn’t have a lot of room to play in this — certainly not on the proponent side. When we’re talking about individual voters in a particular riding who want to mount a campaign, I don’t see where the big money concern is.
Perhaps we can come back to, again, the sponsorship contribution level. Under the particular division that’s cross-referenced in the definition, sections 146.04 to 146.07, is that the only area in the bill where there are additional third-party restrictions, as we are just discussing here?
Hon. D. Eby: I’m going to say and just note for the record that, to date, I don’t believe that the opposition has ever recognized an issue with big money in our politics. So to hear the member say that he doesn’t see a problem here is not a surprise to me, and it is not the standard by which the government measures its approach to big money in politics.
I will say, in terms of the member’s specific question, that sponsorship contribution…. The definition is: “means a sponsorship contribution within the meanings of section 146.04 to 146.07.” So the definition looks further into the act and pulls out those sections and says that a contribution that meets these requirements under the act — that’s what we’re calling a sponsorship contribution.
It’s not the only place it’s used. It’s just a definition that refers into the act. So someone who wants to know: “What is the sponsorship contribution…?” They’ll go to 146.04 to 146.07. They’ll read through. They’ll say: “Oh, okay. That’s the sponsorship contribution.” Anywhere else that term is used in the act, they’ll apply that standard to the term as it shows up in the act. It’s not meant to be read as far as that being the exclusive section where this term will show up. It’s the definition itself that’s contained in these sections.
M. Lee: Well, just in response, I think there’s been an acknowledgement by many members here of the importance of our democratic process. The $1,200 limit that has been brought forward is certainly an important limit that has been placed to ensure that we have a level playing field, because when we talk about getting rid of big money, as we will see when we get into later sections of the act, I question how that’s occurring here, particularly when some of the loopholes that we saw in the municipal election campaigns were still evident in the Local Government Act and are explicit here.
My purpose for talking about that definition in the first instance is to differentiate between the proponent limit — which, as we were just talking about, is in that $30,000 to $40,000 range — versus the restrictions on third parties. Just to go further, though, because we will have that discussion when we get to that part of the bill, in terms of the eligible individual definition, can I ask again, on that particular section, the purpose for imposing that definition with that formulation?
Hon. D. Eby: It’s the same answer — the third time the member has asked the question. The reason why we have this specific definition is to draw a distinction between the initiative section of the act and the recall section of the act, which has a different term that is used to assist people in understanding their obligations under the act.
M. Lee: In terms of non-petition period recall advertising, can I ask, under sub (d), in the formulation of that particular definition of “transmission by an individual on a non-commercial basis,” the purpose for saying “non-commercial”?
Hon. D. Eby: This section talks about what is not recall advertising. The “non-commercial” term refers to somebody posting something on social media — their opinion about a recall campaign, one side or the other. That would not be considered recall advertising. But if you wanted to spend money to promote that view, then you’re on a commercial basis, and then you’re into recall advertising.
That’s why it’s on a non-commercial basis. That’s just an example. The intention is to allow that free expression and to address the paid advertising, the commercial advertising, of particular perspectives.
M. Lee: Just in terms of freedom of expression, can I ask whether, in the nature of proposing these amendments, the November 22, 1993, report of the Select Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills — the nature of that report — was considered in the recommendations in the formulation of these amendments to this act?
Hon. D. Eby: If the member is looking for inspiration, where these amendments came from, he will find them in the amendments that were made to the Election Act to get big money out of politics for general elections. As much as possible, staff have tried to mirror those provisions.
The provision that he just asked me about, in relation to “non-commercial basis” — that set of definitions around recall advertising mirrors very closely what was in the elections act. The member will know, I suspect, that in 1993 and, in fact, in 2015, ’16, ’17, there were no restrictions in the Election Act in terms of union and corporate donations, limits on individual donations. There was a lot of big money in our politics.
That has all changed very significantly, so these provisions are meant to mirror those changes that have come in.
M. Lee: The reason why I point that out is that when I look at the last page of this report, section 5 of the review that was done by the committee that we had hoped to actually, of course, as you know, send this entire bill to…. But that debate was cut off, in effect. I see that, of course, a consideration by that committee at the time, when it was looking at recall…. The quote is: “We recognize that if not carefully drafted, such restrictions” — referring back to spending limits on recall and petition processes — “might be contrary to the Canadian Charter of Rights and Freedoms.”
Perhaps I could ask the Attorney General whether there’s been any consideration regarding the level of restriction for recall — as the committee identified back in 1993 and as I would have expected, if we were able to have further consideration of the amendment that was proposed by my friend from Peace River South — and whether any of these restrictions that we’re now getting into, non-petition period recall advertising, are at all contrary to our Canadian Charter of Rights and Freedoms.
Hon. D. Eby: The member, I hope, would know — if not, I’m glad to put it on the record — that I would never put forward legislation that was not compliant, or that I did not believe was compliant, with the Canadian Charter of Rights and Freedoms.
I can advise the member that the staff are certainly…. They didn’t need to read the 1993 report to be well aware of the jurisprudence, both predating 1993 and since then, in relation to various attempts by the previous administration and other administrations across Canada to limit, in various ways, the impact of big money on politics and the delicate balance between individual expressions of that most protected speech, political speech, and the recognition that there are groups with disproportionate influence because of the amount of money they can wield.
We need to look no further than the mid-term elections that are taking place right now in the United States to see what untrammelled, unrestricted election advertising and donations can result in. I think it’s a cautionary tale for all of us.
Staff are very aware of the jurisprudence. They have drafted this carefully to strike that balance, and I think they’ve done a wonderful job.
M. Lee: Can I ask: under the definition of “permissible loan,” should there not be a definition for “recall advertising sponsor?”
Hon. D. Eby: “Recall advertising sponsor” is defined in the new section, 134.01.
The member’s question is a good one. I’ll try to take a step further than his question, in an attempt to be complete in my answer. Why would you have “recall advertising sponsor” and “permissible loan” here, but not have the definition in this section, in the definition section? Well, the only area where permissible loans are discussed in relation to recall advertising sponsors is in this section that I just referred the member to. So it’s all contained right there. It’s a complete section related to permissible loans.
M. Lee: Thank you for that clarification. I guess, as I stitch that together, though, we’re talking about repealing section 134 and adding 134.01. I think I just heard that “permissible loan” is utilized only in that section — if that’s what I just heard. So I guess it just raises the question as to whether “permissible loan” itself should have a reference to that section.
Hon. D. Eby: I’d have to look at Hansard to look at what I said. Just to clarify, it’s in that part of the act. The act has different parts, and a part is bigger than an individual section, so if I said “section,” I apologize. I’d like to clarify that my intention was to say that it is contained in that part of the act exclusively.
M. Lee: Thank you for that clarification. That’s understood. I guess it just probably still continues to raise…. So we’re talking about…. It appears to be part 7. Is that correct?
Hon. D. Eby: It’s in part 8 of the act, which relates to recall petition communications.
M. Lee: I see, flipping the page here, that it’s the first section of part 8. Just back to my initial question then. If “permissible loan” is utilized only in this particular part, should the definition then cross-reference the reader to that part?
Hon. D. Eby: The drafting style is such that someone reviewing the section related to permissible loans who then flipped to the definition to wonder what a permissible loan is, would then read this definition, but they would have gotten there exclusively through the part that relates to permissible loans. So the drafting style is to consider that an individual would read it through, rather than read an act, essentially, from beginning to end.
In any event, if they did do so, they would come across “recall advertising sponsor,” and then, in that section, they would find that term fully defined.
M. Lee: I’m just looking at the definition of “petition period recall advertising.” Can the Attorney General walk myself through the particular use of the term “indirectly” in the third line of that definition? What is that intended to capture, with the list that’s not exhaustive — it’s inclusive — below, in sub (a) through (d)? Just to get a better clarity, understanding, of what’s intended to be captured within that term “petition period recall advertising.”
Hon. S. Fraser: I seek leave to make an introduction.
Leave granted.
Introductions by Members
Hon. S. Fraser: I met an incredibly nice group of kids and their teachers and chaperones on the stairway coming in here just moments ago. They are a class from Coghlan Elementary in Langley. Would my colleagues in the House here please make them feel very, very welcome.
Debate Continued
Hon. D. Eby: “Petition period recall advertising” is the definition that we’re looking at. It talks about directly or indirectly, essentially, promoting or opposing the recall of the member who’s the subject of the petition.
“Directly or indirectly” is a term that has been used for a long time in the Election Act, and it recognizes that you can achieve a message in a couple of different ways. You can say directly, “Recall John Smith” — there are no members in this House named John Smith — or indirectly: “Let’s get rid of John Smith.” Those would be similar. It would be indirectly saying the same thing that “recall John Smith” does and would be considered recall advertising.
I just wanted to note for the member, I know that he and his colleagues were sufficiently concerned about my introducing this bill that they had written to the Conflict of Interest Commissioner. I’m happy to advise the member that the Conflict of Interest Commissioner has dismissed both questions that the….
M. Lee: With that break in the act…. That letter, of course, came from the Leader of the Official Opposition to the Conflict of Interest Commissioner, so I don’t have the response in my hand. I have the actual original letter. I presume that the opposition side has received that response.
I should note, though, that regardless of the technical considerations that were referred to in that letter, the overall optics and the perception of what this government has done…. And further to when this letter was sent, on October 31 — today being November 6 — this is now, within the last few hours, a situation where the government has brought closure to the debate about this bill.
It again raises the question, at least for the members on this side of the House and members of the public in British Columbia, as to why this government has brought closure to this bill. When the government deemed it had in its hands — at least we were informed in this House — this response from the Conflict of Interest Commissioner that we have just got word of…. When the Government House Leader stood up in this House to effectively bring closure after question period this morning, we didn’t have that response yet.
In the face of the continued review by the commissioner and in the face of continued concerns and considerations, the reasonable amendment that was proposed by the member for Peace River South to send this bill to a committee, the government brought closure within what stands now to be about three hours. We have three hours left to consider this bill.
This has been the concern and the timing of this bill. So when the Attorney General raises and makes note of the response, I would like to take that opportunity to again raise great concern, on behalf of the members on this side of the House, as to the timing and the complete lack of respect to members of this House and to this province for cutting off the debate on this bill — under a cloud of considerations around the timing of introducing amendments to recall legislation three days before the petition period can start, where it’s not just the Attorney General but other members of this House that can be affected by this recall amendment.
Let me say this. If we go forward into petition period recall advertising, can the Attorney General please take us through the restrictions or removal of commercial value, in terms of each instance under sub (a), (b), (c) and (d) — where commercial value is taken out of that?
Hon. D. Eby: So (a), (b), (c) and (d) of this section cover things that are not considered recall advertising. Each one is a distinct and separate item.
I note the member’s impromptu speech, his chagrin at the questions that they raised having been dismissed and holding a letter that he had a copy of — which was, obviously, the complaint and which, of course, I never received, and just as well, because the commissioner didn’t need submissions from me to dismiss the complaint.
M. Lee: I just want to respond to that comment from the Attorney General. I have just been handed the letter from the commissioner. I would have thought that….
Just for clarity purposes, the Leader of the Official Opposition, when he sent in the letter, was requesting an opinion under section 18 of the Member’s Conflict of Interest Act. In so doing, the commissioner has the jurisdiction to provide an opinion back to any member of this House. I would have presumed that in ordinary course, if the commissioner saw fit, he would have informed and contacted the member in question here.
Let me say, when I look at this letter in response for the first time, that in part, the reason why the commissioner has decided that there hasn’t been a conflict at this time is that no recall application has actually been filed with Elections B.C. under the existing Recall and Initiative Act. While that may be factually true, this is the reason why the government is bringing closure today, right now, in a few hours, to this bill. Because it’s a few days before the petition period can start.
This is exactly what has provided a fact pattern, let’s say, for a technical response to be referred to. I’m not at all commenting on the conclusion of the commissioner when I say that. I’m just saying that this government has put itself in the opportunity and the ability to cut off debate at this time, when we know that technically, under the act, if the petition period had started, the member opposite would be in conflict. That is the concern.
This is the reason why we are standing here now with less than three hours to go, debating and walking through a bill that this government has cut off discussion and review of. I’m being handed letters, and the Attorney General is standing up utilizing that as a basis for defending government’s actions. I think that is just offensive to the members of this side of the House. All members of this House should be concerned about the way that this government is acting, because as much as it says it continues to act for the people, it acts out of power. That’s what this is about.
Let me come back, with the continued breaks in the action here, to ask the question, then, about the definition of “recall petition period.” That definition requires…. There has been a strike-out of “the day on which a recall petition application is approved in principle by the chief electoral officer” to replace that with now saying in that definition that it would substitute in “the day on which the chief electoral officer publishes notice under section 20 (1) (b) of approval in principle of the recall petition.”
Can I ask again, for the benefit of this side of the House, the reason for that change?
Hon. D. Eby: It’s very straightforward. It’s just to make it clear to the public about the time when a petition begins.
I’ll note that the member made another speech in which he made a number of remarks in relation to this letter and in which he complained that he didn’t get enough notice of a complaint that they filed and did not provide to me — a complaint that I never got a copy of and that the commissioner dismissed — without submissions to me that they didn’t get enough notice of it from me, which is particularly rich.
M. Lee: Well, I think that on the day that the Leader of the Opposition sent in the letter, it was also publicized. So I think that the Attorney had notice, in effect, of what was being reviewed by the commissioner.
Let me ask this question, though, because right now, in the “recall petition period” definition, it effectively goes to the same principle about notice. What is the reason for that change where under the old act — well, still the current act — it was sufficient for the commencement being on the day when the application was approved in principle by the Chief Electoral Officer?
Hon. D. Eby: It’s critical for members, for proponents and for third-party advertisers to know exactly the moment that a petition begins, because their obligations change. There are obligations related to reporting and spending limits and so on, so that timing is incredibly important.
M. Lee: The section of the act to which this amendment is being made is section 20(1)(b), which refers to issuing the petition “in the form set out in the regulations within 7 days after notice is given in accordance with paragraph (a).” I guess I’m just reading that against what’s in this definition. When we say “the day on which the Chief Electoral Officer publishes notice,” under that same section, are we suggesting that the notification of the proponent, under the cross-reference from (b) to (a) under 20(1), is that notification? Or is this a public notice that we’re referring to?
Hon. D. Eby: It’s a public notice that does not currently exist. Those other groups and individuals still need to be notified, but this is a new notice that didn’t previously exist.
M. Lee: Where is the provision for that notice to be provided? I don’t see it in the existing 20(1).
Hon. D. Eby: This amendment strikes from the existing subsection 20(1) “…and (b) issue the petition in the form set out in the regulations within 7 days after notice is given in accordance with paragraph (a).” It adds (b) and (c).
The member will see, under sub 20(1)(a), that the notification to “the proponent, the Member in relation to whom the petition is to be issued and the Speaker” is all contained there in sub 20(1)(a). The amendments proposed do not change that.
In addition to that…. So that continues. The existing (b) is struck and replaced with this new (b): “as soon as practicable after giving the notices under paragraph (a), publish notice of the approval in principle on an Elections BC authorized internet site.” That’s the public notice. The new (b) provides that public notice.
Then (c): “as soon as practicable after publishing the notice under paragraph (b), issue the petition in the form set out in the regulations.” That, I hope, addresses the member’s question about the connection between the amendments and the existing subsection 20(1).
M. Lee: Thank you for stitching together the amendment to that section.
I would move on to the definition of “registered sponsor.” In that definition, we’re striking out “…Division 3 of Part 8 in relation to recall advertising.” With respect, that leaves us with just “registered sponsor” as a term being used to initiative advertising. Can I just confirm that that is the case?
[L. Reid in the chair.]
Hon. D. Eby: Yes.
M. Lee: In the definition of “specified fundraising function,” sub (b) is only relating to recall petitions and not initiatives. Is that the intention?
Hon. D. Eby: Yes.
M. Lee: When we look at sub (i) of this section, we have, in the definition: “For the purposes of the definition of ‘non-petition period recall advertising’…a message that (a) names the Member, includes an image or likeness of the Member….” What are the other ways in which that member might be identified under sub (a) that might have been considered in this definition?
Hon. D. Eby: This definition is in relation to non-petition period recall advertising. The definition is sought to be broad in terms of identifying a member — so a message that “names the Member, includes an image or likeness of the Member or identifies the Member by voice, physical description or electoral district.”
If the member has other suggestions, I’d be glad to hear them.
M. Lee: When we look at voice or physical description or electoral district, I suppose there may well be other attributes that might describe that individual which go beyond just the image or likeness. So would it not be intended that, when we’re looking at the identification of the member for whom one is promoting or posing the recall of a member, that message might contain in words a written description of that member as opposed to an image or a likeness?
Hon. D. Eby: I’d like to draw a distinction here. It’s “…an image or likeness of the Member or identifies the Member by voice, physical description or electoral district.” Those could be audio or written or, I guess, a pictograph or who knows. In any event, it’s meant to be as broad as possible in order to capture the idea of something that identifies a specific member. I’m not sure how else I can say it.
M. Lee: Thank you for that clarification. I guess I’m just keying in on the words of physical description. I suppose another formulation of that would have been…. But let me ask the question. It would have been written description. Is that correct, or are we thinking that physical description goes beyond written description?
Hon. D. Eby: I hesitate to speculate. The idea here is that it could be written. It could be an image. It could be that someone is famous for a moustache — you know, a picture of their moustache. The idea here is to capture the identification of a member. This draws on Election Act language.
M. Lee: If we look at sub (4), then, and the purpose of carving out those particular sections — section 137, 138 and 161 — can I ask the Attorney General just to walk through the reasons why those particular sections are excluded from this provision?
Hon. D. Eby: Section 137 is about identifying the sponsor. There are other sections later in the act that deal with canvassing voters and mailing material that contains advertising messages, that talks about identifying the sponsor. So it’s dealt with differently later. That’s why it’s not part of this section.
Section 138 relates to the rates charged for advertising. Rates charged for advertising do not apply to either canvassing voters in person or by telephone or mailing material that contains advertising messages. It’s separate. And then 161 is a flow-through. It’s the offence provision for 137 and 138.
M. Lee: Under sub (4)(b), it’s mailing material. Would that include material that is not mailed — that is, material that is dropped on the doorstep by volunteers?
Hon. D. Eby: No. It must be mailed, and it’s on a commercial basis.
M. Lee: And the reason for that distinction…. I just ask for the reason for that distinction because material that contains advertising messages presumably would be captured here. Why the distinction regarding mailing?
Hon. D. Eby: This section is yet another example of the language paralleling the Election Act. The key for the member to keep in mind is the connection between commercial basis and mailing material. It’s aimed at direct mail campaigns, not an individual person on a volunteer basis dropping leaflets at doors — these kinds of things. It’s meant to be a commercial distribution through the paid mail services.
Sections 1 and 2 approved.
On section 3.
M. Lee: On section 3(a)(4)(b), this has the addition that: “No application for the issuance of a recall petition may be made…(b) during the 6 months before the applicable general voting day under section 23 (2) of the Constitution Act for the next general election.” First, to the Attorney General, could the Attorney General please explain the rationale for this additional six-month period being included to restrict when recall petitions can be made?
Hon. D. Eby: This came from a recommendation by the Chief Electoral Officer. What it relates to are the mechanics of the act, coupled up with the mechanics of the general election and the particular timelines. Working backwards from general voting day, a fixed voting day in a general election, there’s a one-month campaign period, and then there’s a two-month pre-campaign period for a general election. That brings you three months out from the general election day.
In order to complete a recall campaign, there are two months of gathering signatures and then 42 days for Elections B.C. to verify. That’s a three-month period.
When you’re looking at six months, you have six months before the general election. By the time you’ve gathered the signatures and Elections B.C. has verified the signatures, you’re already into the pre-campaign period for the general election. Elections B.C. then has six months to call the by-election, should the proponent have been able to gather enough signatures and they were verified.
It would be very unlikely that Elections B.C. would call a by-election, because within less than three months, there will be a general election. It’s just a reflection of the reality of the timelines of the act.
Now, I do want to draw to the member’s attention that it’s slightly different from what the Chief Electoral Officer had recommended. The previous Chief Electoral Officer proposed…. Currently it’s 18 months following an election before a recall campaign can start. He proposed reducing that to a year and then having a year before the general election when you couldn’t launch a recall. Having a year out from a fixed-date general election felt quite distant for us, but six months seemed to make a lot of sense, just given the overlapping dates and the fact that you’d be into a campaign period.
So it’s an adaptation, still allowing the same amount of time that the Chief Electoral Officer wanted available for a recall campaign to be launched.
M. Lee: I was actually going to refer to the difference. Thank you to the Attorney General for pointing that out.
When we look at that recommendation in the course of what is being implemented here, was there any consideration given as to — effectively, what is occurring under this new section — limiting the period of time under which British Columbians are able to launch recall petitions? Effectively, what this is doing, of course, is saying to British Columbians that under this act, it now will have only two out of the four years to launch a recall petition by reducing the period even further. Was there any consideration of that concern?
Hon. D. Eby: The same amount of time is available to British Columbians to launch a recall campaign as was recommended by the Chief Electoral Officer. We felt that that was a good guideline.
I do want to correct one aspect of my last answer. Of course, it’s government, not the Chief Electoral Officer, that sets the timing for a by-election. I believe I said that it was the Chief Electoral Officer that set the date for the by-election.
M. Lee: I appreciate that this was a recommendation from the Chief Electoral Officer, but it does still give the opportunity for some limited discussion here in this current context around the period that British Columbians would be able to bring forward a recall petition.
With that in mind, was there any consideration, though, to the Chief Electoral Officer’s point about starting recall petitions 12 months after the last general voting day for the last election of the member — starting it earlier? Then doing what, in the view of the government…. Impose a further restricted period, where recall petitions could not be brought forward in the six months before the next general voting day, and still, therefore, maintain the ability of British Columbians to bring forward recall petitions in the same 2½-year period — therefore not having to reduce that period to 24 months?
Was there any consideration to merely shifting the six months from the original 18 months so that you’d have the first 12-month period and then the last six months? Overall, you would still have the same 18-month period for which you would not be able to have a recall petition launched.
Hon. D. Eby: The intent behind the 18-month period was to allow new members to have time to come in and learn their new roles and get their feet as a new government before being subjected to a recall campaign. Certainly, the member raises a live question. Does it take 12 months to adequately understand your role and be subject to recall? Does it take 18 months? The bill that’s in front of us proposes 18 months.
M. Lee: I appreciate the response from the Attorney General. I just note the fact that as government is relying on the recommendation from the Chief Electoral Officer, the Chief Electoral Officer actually suggested, in that recommendation, that the period could be shortened to 12 months, as opposed to 18 months. Keeping in mind the points that the Attorney General just made, there was that part of the recommendation that this government could have accepted.
Again, I wonder. I ask the Attorney General the reason for which that 18-month period was not reduced to 12 months as the Chief Electoral Officer had recommended.
Hon. D. Eby: It’s the same answer.
M. Lee: I just would like to ask, under subsection (5), the meaning, just to confirm, of “Elections BC authorized internet site.” What would be captured within that term?
Hon. D. Eby: It simply means the Elections B.C. website. If they contracted with someone to provide the website to them and authorized it as the official Elections B.C. website, it would still be the Elections B.C. website. That’s what the section aims to accomplish. Simply because it’s not owned directly by Elections B.C., maybe by a contractor, as long as Elections B.C. authorizes it as the official website, then it is.
M. Lee: Keeping that in mind, the Attorney General earlier commented on the importance of notification. Is it clear, then, to the public where to look? Is there more than one “Elections BC authorized internet site”? Is that possible?
Hon. D. Eby: There’s only one Elections B.C. website that we’re aware of, which is elections.bc.ca.
M. Lee: I wonder, then, why the wording is “an Elections BC authorized internet site.” That’s not meaning to suggest that there is more than one. If that’s the case, then would it be appropriate to have that more clearly defined in the bill itself?
Hon. D. Eby: This is simply a drafting choice to keep the act relevant. If Elections B.C. decided to set up a separate authorized website that dealt exclusively with recall campaigns, they could certainly make that decision under this provision. But it’s meant to apply to the Elections B.C. website that’s authorized currently.
Section 3 approved.
On section 4.
M. Lee: In terms of the mechanics, and this was referred to earlier when we were looking at the related definition, the new provision that’s being amended here for subsection 20(1) provides that there would be publication of the “notice of the approval in principle on” — again, that same term — “an Elections BC authorized internet site.”
In terms of the notice of the approval in principle, what steps are necessary for the Chief Electoral Officer to take in order to get to that stage of that approval in principle, first of all, and secondly, the publication of the notice?
Hon. D. Eby: The member’s answer is contained directly in subsection 20(1): if the Chief Electoral Officer is “satisfied that the requirements of section 19 have been met.”
The requirements set out in section 19 include such things as that the application must be made to the Chief Electoral Officer and contain: “(a) the name of the Member, (b) the name and residential address of the applicant; (c) a statement, not exceeding 200 words, setting out why, in the opinion of the applicant, the recall of the Member is warranted; (d) a signed statement of the applicant that he or she is not disqualified under this Act from making the application; (e) any other information that may be prescribed in the regulations.”
There’s a processing fee of $50, and then the timeline of provisions that we talked about, it has to be compliant with those.
M. Lee: As we refer to section 20, then, with the words “if satisfied that the requirements of section 19 have been met,” what is the test for which the Chief Electoral Officer must be satisfied about the requirements that are set out under section 19(2)? Meaning: what level of satisfaction is required, for example, for the 200-word statement under 19(2)(c)?
Hon. D. Eby: It’s a pretty binary requirement. Either you have the name of the member or you don’t. You have the name and residential address of the applicant or you don’t. You have a statement or you don’t. The application is accompanied by the processing fee of $50 or it’s not. And it’s within the timeline set out under the act or it’s not.
The test is whether or not the requirement has been met, and the sole judge of that is the Chief Electoral Officer, though I suppose someone could judicially review that decision, although it would be very strange.
M. Lee: As the Attorney General just described, when you look at the factors or the elements for which an application, under section 19(2), for which the Chief Electoral Officer would be satisfied, it sounds as if there’s no judgment applied to that. Is that correct?
Hon. D. Eby: As usual, I should turn to the staff before I pop to my feet. The staff have pointed out that 19(2)(c) would require some level of judgment to be applied by the Chief Electoral Officer. This is the section relating to the requirement for “a statement not exceeding 200 words, setting out why, in the opinion of the applicant, the recall of the Member is warranted.” So if there was a bunch of gibberish or if it applied to a different member, then some level of judgment on the part of the CEO would be required.
M. Lee: In terms of that statement…. Thank you for that clarification. What the Attorney General just mentioned is if the statement was not relevant, wasn’t relevant to the member in question, was “gibberish” — the term that the Attorney General just referred to — or the applicant got the wrong member. Is that the bar in which that statement is to be judged? I would just like to confirm for the purpose of this bill that that is the bar that the Chief Electoral Officer is reviewing.
Hon. D. Eby: None of this is part of the bill. None of this is changed by the bill that’s in front of the House. The statement…. The test is: does the CEO believe that the CEO has a statement not exceeding 200 words, setting out why, in the opinion of the applicant, the recall of the member is warranted? If, in the opinion of the CEO, yes, they’ve received such a statement, then that requirement will be met. If the opinion is no, that the statement requirement has not been met, then the answer will be no.
M. Lee: Thank you for that further clarification. Just again, if I heard that correctly, it is the mere receipt or an inclusion of a 200-word statement or less in the application, applying for recall. That would be sufficient. As I look at that further, it says, of course: “…setting out why, in the opinion of the applicant the recall of the Member is warranted.”
Is there any judgment employed by the Chief Electoral Officer, as to looking at the reasons for which the recall of the member is warranted, that that is the description that the applicant is including? Is there any judgment, any review of that statement by the Chief Electoral Officer, in terms of the content of the statement, other than to confirm that it is the correct member and that it’s relevant to that member?
Hon. D. Eby: I, perhaps mistakenly, attempted to provide examples to the member of section 2(c) when the CEO might feel that the CEO has not received a statement. This is something that is in the judgment of the CEO — whether or not they’ve received a statement not exceeding 200 words, setting out why, in the opinion of the applicant, the recall of the member is warranted.
This is a judgment call on the part of the CEO. I don’t imagine that they would spend a lot of time, lying awake wondering about whether or not they’ve received a statement. It would be fairly apparent. In any event, that’s why we employ the Chief Electoral Officers, to make judgment calls like this.
Just again, to the member, the bill does not propose to change any aspect of this particular section.
M. Lee: I’d just like to…. I appreciate what the Attorney General has said, but there are ways in which this section is being referred to in this bill.
Let me just ask, though, in terms of subsection 19(2)(d), that particular requirement that there be “a signed statement of the applicant that he or she is not disqualified under this Act from making the application,” is there a prescribed form of that statement?
Hon. D. Eby: Again, another section not part of this bill, I’ll point out to the member, but I will do my best. I’ve asked staff, if the member is interested, to try to get a copy of the form that Elections B.C. uses for recall. It is our guess, although it is just that, that at the bottom of the form, there’s a declaration that somebody fills out with all this information, and then they sign the declaration on the form. But we don’t have one with us because the bill does not relate to this section.
M. Lee: I appreciate that the specific section 19 is not being amended by this bill, but as we continue to consider sections of this bill coming up, it is included by reference. That’s the reason why I’m asking these questions, to get an understanding. The alternative, of course, would be to proceed to those sections and come back to this section. We could do it that way too, but since we’re here, let me just ask one further question, at least, at this juncture.
I appreciate that the form is not here, but perhaps I could ask the question, with staff present, if I could get a sense of this. What, to the Attorney General, is the understanding of the kinds of aspects and factors that would go to disqualification of the applicant under this act that might be referenced in that prescribed form? Are there particular factors that the Attorney General and staff are aware of that would factor into that disqualification? It may well be that it’s spoken to in the act itself, but I would appreciate if they could assist me in referring to those applicable sections.
Hon. D. Eby: You have to be a registered voter in the district that you’re applying for the recall to be initiated in. That’s one prerequisite in order to be able to sign that declaration. Another is if you’ve filed a previous recall application and you have not filed a report following the conclusion of the recall period, then you would also similarly be disqualified. Those are a couple of examples for the member of people who may be disqualified from initiating a recall campaign.
M. Lee: In terms of sub (c) of that section, it refers to the words “issue the petition in the form set out in the regulations.” Appreciating that there is much to be determined by way of regulation, I’m interested to know at this juncture what kinds of content would be in that petition, if the Attorney General can share at this point a sense of what that petition form would look like.
Hon. D. Eby: Identical to the existing form.
M. Lee: And the existing form, though, is what?
Hon. D. Eby: It’s set out in the regulations.
Section 4 approved.
On section 5.
M. Lee: Can I first ask the rationale for the inclusion of this new section?
Hon. D. Eby: The bill proposes strict limits on third-party advertisers, spending limits and source-of-donation limits. They’re all defined in terms of petitions. So it’s a spending limit of X per petition.
If you have multiple petitions started at the same time, what you have, in effect, is the ability to circumvent the limits by starting multiple petitions that run at the same time, because they each have their own spending limit and donation limit. This is an aim to address that particular mischief.
M. Lee: I’m just trying to walk through the explanation that was just given. If there are multiple recall petitions that are brought forward, which the current act permits, each of those recall petitions still needs to meet the requirements under section 23, which includes the 40 percent of total number of individuals who are entitled to sign the recall petition and submitting that within the 60 days.
Each of these multiple petition campaigns, if they’re operating, has to meet the same test. I don’t understand, then, why the funding requirements are specific or would be somehow prejudicial in terms of the overall, because each of these campaigns needs to meet the same threshold. They’re separate campaigns. So to what degree is the Attorney General seeing these campaigns as being tied together in some way?
Hon. D. Eby: It’s not me. It’s the Chief Electoral Officer.
In the 2003 report by the Chief Electoral Officer, recommendation 13 is “prohibit concurrent recall petitions in an electoral district.”
“The act does not limit the number of recall petitions that may be issued in an electoral district. There may be numerous concurrent petitions against one MLA.
“Since each recall petition has a separate expense limit, concurrent petitions could be used to effectively increase the expense limits for proponents or MLAs.
“Though recall expenses, including advertising, related to the second recall campaign would be subject to the expense limit for the second petition, the initial campaign may benefit from the expenditures, allowing the participants of the two campaigns to strategically direct their expenditures.
“Recommendation: prohibit concurrent recall petitions in an electoral district.”
That’s the mischief that it’s aimed at.
M. Lee: Is there any specific example of this mischief in the 27 recall campaigns that have been done in the history of this legislation?
Hon. D. Eby: There was an example of this in a case related to an MLA in the 1990s where an individual who was believed to be sympathetic to that MLA started a concurrent recall petition. That had the effect of increasing the MLA’s spending limit, essentially doubling it. The individual initiated the petition and then did not collect signatures. That had the effect of increasing the MLA’s spending limit while not increasing the spending limit of the proponent.
I imagine that that formed the basis of the Chief Electoral Officer’s recommendation to government in 2003, which then formed the basis of this particular provision.
M. Lee: Coming back to that example, as I just heard, where a second recall campaign was started by an individual, presumably someone who is resident in the electoral district of that MLA and who was sympathetic to that MLA. In the case of the current legislation, as we took some time to review, under section 19 of the act, there is no current ability of the Chief Electoral Officer to deal with that mischief.
That is, as we walk through the various elements of an application for which a Chief Electoral Officer would be satisfied under section 20…. Again, there’s the name of the member, the name and residential address of the applicant and a statement not exceeding 200 words, which, as we were talking about earlier, just goes through the reasons for the recall of the member. There seems to be a pretty low threshold of review by the Chief Electoral Officer, at least in the discussion we were just having in the compressed time period that we have here.
And the signed statement that that individual is not disqualified under the act, meaning that person is a registered voter in that electoral district, and some other specific information relating to that recall campaign. There is other information that may be prescribed, but currently, there is nothing under this act which deals with that mischief.
To the Attorney General: is the Attorney General concerned about a campaign that might be started which has no bona fide basis? That is, it’s not really a true recall campaign. It’s started by an individual who is trying to, in the words of the Attorney General, be sympathetic to the member in that instance.
Hon. D. Eby: That is an issue under the current act. I agree that, from the member’s perspective, the same issue continues under the proposed amendment.
I will note for the member that, if that was attempted, I suspect it would backfire. It would become quite apparent that an individual had filed a recall campaign and was taking those steps to advance it.
The concern that the Chief Electoral Officer directed government to look at was the fact that multiple recall petitions could be filed to escalate spending limits and to undermine the intention of the act in having spending limits, something that — there were credible allegations that had been made — had happened before. Certainly, that is something that we took seriously and included in these provisions.
M. Lee: When I look at the proposed amendment under section 5 here and look back at the relevant sections of sections 19, 20, 21 and 23 of the act, I don’t see anywhere there that the Chief Electoral Officer is required to monitor the steps taken by the successful applicant.
I see requirements at the end, under section 23. They are that “60 days after the date on which the petition was issued under section 20,” which starts the process, the petitioner must come back and demonstrate that the petition has now been “signed by more than 40% of the total number of individuals who are entitled to sign the recall petition under section 21.”
The way I’m reading this, and I’d like the Attorney General to confirm this, there are no interim steps where there’s an interim report, for example, that the Chief Electoral Officer needs to monitor the progress during the 60-day period. That it is…. Well, let me just stop there. Are there any interim steps or any monitoring going on by the Chief Electoral Officer as to the progress of the petition during that 60-day period?
Hon. D. Eby: The accountability for this process comes after the 60-day period. Somebody brings in their final report to the Chief Electoral Officer. During the process of collecting signatures, maybe the Chief Electoral Officer would get a complaint from someone that somebody was acting as a canvasser and they weren’t registered. During that period, the Chief Electoral Officer will be certifying, potentially, additional canvassers.
If the member is picturing day-to-day oversight or report-back requirements on the part of a proponent, there are no such requirements. There have not been, and there are none in this bill that relate to that kind of oversight. But there are definitely oversight provisions in this bill now related to donations and reporting of the source of funds that are used in a recall campaign.
M. Lee: This is, I think, a very important section of the bill to be reviewing here in detail. As the Attorney General just responded, there is no…. Let me just ask the Attorney General. In terms of the statement he made earlier in response to the concern about having a second recall petition being launched, in the example that he gave, that second petitioner wouldn’t get very far through the process if he or she is shown not to be taking steps to advance it. Can I ask the Attorney General, again, to explain what he meant by that, then?
Hon. D. Eby: The issue is when you fill out the form to initiate a recall campaign, and then you just don’t do anything. As soon as you fill out that recall campaign and formally file it as a second or a third or a fourth or a fifth recall campaign against a member, each time the spending limit adds and adds and adds. The third-party advertisers or the MLA can spend more and more money, and it defeats the purpose of the spending limits that are contained in the bill. The whole purpose of the bill was to get the big money out of politics.
M. Lee: I don’t hear in the response any clarification by which…. The Attorney General said earlier, from what I heard when we asked the question the first time, that it is the consideration by the Chief Electoral Officer to not let a second or third or fourth petition campaign get away with, so to speak, a bogus referendum petition campaign — that, as the Attorney General said earlier, if that second, third or fourth campaign took no steps to advance it, that campaign wouldn’t be able to continue. Those words he did not say, but that’s what I’m wondering. Is there anything here, that says in the act, that monitors the progress of which those petitioners run through their process for a recall?
Hon. D. Eby: What the member…. I’m trying to read between the lines and understand what the member is asking. I think that he’s asking: why isn’t there a provision here that allows the Chief Electoral Officer the discretion to assess whether a proponent is making a meaningful, good-faith effort to recall a member? I think that’s what he’s asking — and then, presumably, power to discontinue a recall petition and then to prohibit an individual from filing again. Because they didn’t make a good effort the first time, they shouldn’t be required to file it.
That is not something that we’ve seen come forward in terms of an issue that’s been identified for us by the Chief Electoral Officer.
What has come forward to us from the Chief Electoral Officer is to prohibit concurrent recall petitions in an electoral district. I heard all the members’ speeches on the other side during second reading in which they explained in great detail how this was all part of my plan. This is a 2003 report from Elections B.C., from the Chief Electoral Officer, saying that the act “does not limit the number of recall petitions that may be issued in an electoral district. There may be numerous, concurrent petitions against one MLA. Since each recall petition has a separate expense limit, concurrent petitions could be used to effectively increase the expense limits for proponents or MLAs.”
That was the issue that was identified for us by the Chief Electoral Officer, and it’s the issue that is addressed in this particular section. It has particular bite because now we’re not just talking about spending limits for an MLA who’s subject to a proponent, subject to a recall petition, but spending limits for third-party advertisers that previously did not have restrictions. So there’s even more reason for us to take this recommendation very seriously from the Chief Electoral Officer.
M. Lee: Well, let me just say that I’ve been…. Earlier in this compressed and limited committee session, I referred to the 1993 report of the parliamentary committee, the Standing Committee on Parliamentary Reform, Ethical Conduct, Standing Orders and Private Bills, which I’m a member of. Their report back in 1993 also dealt with this. I would suggest, as we talk about spending, that there are an additional 40 pages of this bill that deal with limitations — reporting limits, as the Attorney General has referred to them.
We won’t go through those sections, but the section of this report says this: “The committee recommends that there be no limit on the number of opportunities available to a member’s constituents to initiate a recall. Any set of disgruntled constituents should be permitted to initiate the recall procedures on any basis. The committee recommends that there be no limit on the number of concurrent recall proceedings to which a member would be subject.”
Obviously, I’m not going to read the whole entirety of the report into the record here, but there are reasons for which this committee reviewed recall when it was first coming about, back in 1993 for 1995 being put into force.
This is an example of the level of thinking around alternative proposals. So I would suggest to the Attorney General that there is definite thinking around why it’s important to ensure that voters in a particular electoral district be given the full opportunity to initiate recall campaigns.
Let me say this. Because there are no requirements under the act for review of progress against a recall petition, that means what the Chief Electoral Officer was trying to address by way of expenditures is being addressed in a different way. It has a different meaning in the context which we are dealing with.
Perhaps I can ask the Attorney General if there’s been any advice or any recommendation that the Chief Electoral Officer would have spoken to, in reviewing this legislation, regarding the concern of — under the current section, section 20.01 of the bill — proposing this new section to the act, where the Chief Electoral Officer, once he or she issues a recall petition, shall not introduce any further recall petitions once that first one has been accepted?
Has the Chief Electoral Officer made any comment on concerns regarding what happens when the first applicant turns out to be bogus?
Hon. D. Eby: I’ll just walk the member through. He’s got a report from 1993.
If we had no experience of history, and this was a brand-new act that was just showing up in the House, I think many of us that were sitting on that committee might nod our heads at that sentiment — start as many recall petitions as you want. I can understand how the members in 1993 got to that place.
In fact, the act that passed contained that exact provision. You can start as many as you want. You can have as many concurrent petitions as you want.
Then there was experience between that 1993 report that the member has and today. That experience was that there was mischief, and particularly, the mischief was that in filing concurrent reports, you can game the spending limits.
Then in 2003, a decade later, after a decade of experience with the act, the Chief Electoral Officer provided recommendations. Recommendation 13: “Prohibit concurrent recall petitions in an electoral district.” A very straightforward recommendation based on this issue that had been experienced over the decade following the report that the member read a bit of into the record. Based on that experience over a decade, here is the recommendation about making sure that the intent around the spending limits is achieved.
Now we’ve got this bill in front of the House. It actually adds another set of spending limits — our government argues, a very important set of spending limits — related to third-party advertisers. In the United States, they call them super PACs.
We believe that the issue that the Chief Electoral Officer identified in 2003 is even more germane now. It’s even more relevant, because there’s a second set of spending limits in this bill. While the issue was important in 2003 with the spending limits for proponents and MLAs, it’s now even more important, because you’ve got these third-party restrictions, as well, in this bill.
Now, I also want the member to take a step back and evaluate how he…. He wonders how the Chief Electoral Officer will evaluate whether the Chief Electoral Officer got a 200-word statement outlining whether or not an MLA should be recalled. How are they going to make this difficult decision?
Well, how are they going to make the decision about whether someone is a bogus applicant or a legitimate applicant if someone who is disgruntled and angry with an MLA shows up and files a recall petition but they have limited ability or limited means or limited time and they only collect a few signatures but they are super angry with the MLA?
Would the member suggest that the Chief Electoral Officer should apply a per signature…? “You didn’t get enough signatures, so therefore, you’re bogus.” Or maybe you sit down for an interview with the Chief Electoral Officer. You’re not sufficiently angry with the MLA, so you’re a bogus applicant.
[R. Chouhan in the chair.]
I think that what happened previously, the public concern and derision around somebody sympathetic to an MLA filing a concurrent petition, is a caution to all members that that is bad news. That is not helpful. That is a very good restriction on members’ activities to address the concern that the member is talking about.
Also, I hope that the member understands why the Chief Electoral Officer got to this place, even following the 1993 recommendations, because there was a decade of experience there, a decade of actual experience, of seeing how things played out. Now it would be even more acute, with our interest in restricting the activities related to third-party advertisers.
M. Lee: Well, I understand what the Attorney General is suggesting, but I still come back to the concern which the Attorney General has acknowledged around that one example. We’re talking about one example out of 27 recall campaigns, one example that occurred, which has focused, supposedly, the basis for which this amendment is being included in this bill.
Nothing in what the Attorney General is saying have I heard as to preventing or dealing with an individual, sympathetic to the MLA, coming forward and starting a petition and how the Chief Electoral Officer will deal with that. That means that that sympathetic individual can run out the course of the 60 days. There are no interim steps. There is no interim monitoring. There’s nothing at the front end, as we’ve been talking about, vis-à-vis section 19. There’s nothing in the interim period.
That means that the applicant can get to the end of this period in 60 days and say: “Well, I didn’t get 40 percent. I came up short.” Of course, as the Attorney General indicated in his previous response, nothing prevents a second sympathetic individual, who may be related to that first sympathetic individual, from immediately launching another recall petition, which will have the effect, under section 20.01, of blocking other bona fide recall petitioners.
The spending limits are clearly set out in this bill around third party and the like. We will go through those. In my view, that’s a separate issue. It’s a separate issue of concern because, effectively, this provision of the bill can block out any other set of individuals who have a reasonable basis to bring forward a recall petition — not so-called friends of the MLA or those who are sympathetic to the MLA.
Again, I ask the Attorney General: what response does he have to this possibility, which he has acknowledged is a possibility? Is that not a concern to the effect of recall campaigns in this province?
Hon. D. Eby: The member said that this section is not related to the spending limits. It’s totally related to the spending limits. That’s why it’s here. It’s not me making the connection. It’s the Chief Electoral Officer.
I just challenge the member. I do understand the concern that he’s raising. I totally get it. But how do you make it work? How would you…? What bill would you write? What test would you put in place for the Chief Electoral Officer to say that someone did not make reasonable efforts? What kind of criteria, what kind of interview process or assessment?
For the member to spend so much time quizzing me about how the Chief Electoral Officer would know whether or not the Chief Electoral Officer got a 200-word statement that was adequate, how this same member now believes that the Chief Electoral Officer could administer a standard of adequate efforts of recall or sufficient good intent for recall….
What has happened in the past — I told the member — is that this issue was identified, and it became notorious. There was a report done on it. There were recommendations for reform that came out of it. It was a subject of public concern. I think that should be a caution to any member that was contemplating either tolerating or soliciting or allowing supporters to behave in the manner proposed by the member, which is a pretty good caution, I think, to all members.
I just say to the member: “Okay, it sounds fine, in theory. But how do you actually work it out?” I am not sure what he has in mind exactly.
M. Lee: Well, again, let me be clear. My concern is that under the guise of dealing with spending in a recall campaign where, as we said from the outset, the proponent has $30,000 or $40,000 to spend over top, in total…. So $30,000 or $40,000 — that’s what we’re talking about.
Then we have third-party advertising sponsors who are now limited, under this bill, at the $5,000 level — less than what a third-party can spend in a by-election in a 28-day campaign. But we will get to that point.
We are dealing with what is addressing an issue around spending, which seems to miss the point. The point being that it has the real potential…. Because of the lack of ability to provide oversight under the current act, the lack of opportunity to review whether the initial application is bona fide in the first instance, we have a potential loophole, as one might describe it, for this whole recall process to be circumvented. That is the concern.
The Attorney General asks — well, attempts to shift the onus on myself and other members of this House: “How would you fix it?” Well, I’ll tell you this. It is a concern that we’ve been saying, from the first time I stood up in this House when this bill was introduced, on second reading and every other speaker on this side of the House who followed. We’ve been saying this since the beginning of the introduction of this act when we had this bill, when we had the opportunity to speak to it.
Today this government cut off this process. They cut off the ability, without notice, to provide any discussion or to propose any amendments to this bill. So I think…. This is not a word I usually use, but I hear it a lot from government: rich. It’s rich, whatever that’s supposed to mean. It’s not my colleague from Langley East. My point being whatever that’s supposed to mean…. It’s nonsensical. It is really…. To say to me right now: “What suggestions would you have…?” Well, I can go into those. But the fact of the matter is we’re not being put in a position to actually effect and propose any amendments to this bill because the debate has been cut off.
Let me say this. I think that what should’ve been considered here is more detail in the initial application, more detail to determine whether this applicant for a recall petition is a true bona fide applicant. The additional test and the measures of penalties around what happens if that applicant proves not to be bona fide, to the point again where the Attorney General said earlier: “Well, if that applicant doesn’t take steps, it’ll be known.” There’s no penalty to that right now. There are no ramifications for that sympathetic person who’s sympathetic to the MLA.
I would have thought the government, in considering that whole solution — the solution that they’re putting in this section of the bill — would have considered: “Well, why don’t we deal with the other part of it, not just the spending part? Why don’t we deal with the fact that that person was doing it for ill intent and wasn’t doing it for a bona fide reason?”
Why didn’t this government deal with that? There should be penalties for that. Why aren’t there penalties for that? If that applicant makes no progress, doesn’t demonstrate the steps, as the Attorney General talked about, takes no steps to advance it, there should be ramifications for that. There should be monitoring around how that applicant team is progressing with the petition.
I ask: what, if any, steps or considerations were taken to consider how to deal with a sympathetic proponent who turns out to be someone who’s not doing this with any appropriate intention?
Hon. D. Eby: I try to imagine, flipping through the second reading speeches, how the member and his colleagues would have reacted had there been a section in this act saying: “If you are found to have been filing a recall campaign petition with bad intent, according to the government, then you will be punished. You will face penalties.” I wonder what they would have thought about that.
I wonder what they would be standing up and asking me about right now. “How dare this government intimidate British Columbians out of filing petitions — that some arbitrary person that they handpicked will determine that they had bad intent? How dare you?” Now the member stands up and says: “How dare you not try to determine people’s intent on recall campaigns?”
The defence, the explanation, the whole justification for this section comes from the Chief Electoral Officer’s recommendation in 2003 to government about changes that needed to be made to the act. Prohibit concurrent recall petitions in an electoral district. This section does that.
M. Lee: I think, obviously, we don’t have the full opportunity to consider all of the different ways to deal with this consideration, in terms of whether this hole in the act, in the bill itself, can be rectified. I dare say that right now the Attorney General recognizes it’s an issue, yet he has no solution for how to deal with it or how to address it. The Chief Electoral Officer has, under section 19, an oversight role, a role where he or she must be satisfied with what’s been filed.
The requirements of a recall petition can be set out more clearly in this bill. It is entirely possible, and this government…. For a government that likes to add regulation on top of regulation on top of regulation, with the bills that we’re seeing on the floor of this House this week and last week, why is it that there’s no provision for the Chief Electoral Officer to deal with whether this recall petition is genuine, authentic, appropriate, whether this recall petition is just being done to game the system?
They’ve set it up where…. Again, it’s entirely possible, as the Attorney General said, for a recall petition to come forward by an individual who’s sympathetic to the MLA. Once that occurs, no other petitions can go forward.
Again, does the Attorney General have no concern at all regarding that possibility, which basically shuts out any other British Columbian from filing a recall petition?
Hon. D. Eby: I have the member’s point. He has my answer, now repeatedly, on this topic. I’m not sure I have anything else to add, except that I disagree with the member. I’m grateful to the Chief Electoral Officer for providing recommendations which are incorporated into this bill.
J. Rustad: Listening with great intent to section 5 with regards to this, I just want to clarify for the record on this…. If the minister could clarify this, with regards to any application that comes forward to the electoral officer for a recall, what is the priority in terms of the determination of an application that comes to an electoral officer?
Hon. D. Eby: The act does not direct the CEO in that respect. So it would be a matter of policy set by the Chief Electoral Officer.
J. Rustad: Through the discussion that’s happened, there is the potential of a frivolous campaign being started by somebody sympathetic to a particular individual who might be subject to a recall campaign. The challenge will be, if it is first-come, first-served, that then somebody could, potentially, put an application in to block somebody else from putting in an application. Could the minister please confirm whether that scenario could potentially play out?
Hon. D. Eby: I don’t spend a lot of time in hypotheticals. I think the issue that the members have raised of a potential supporter of an MLA filing a recall petition to game the system has actually happened under the old act. We don’t have to talk about hypotheticals. That actually happened. It was the subject of much public comment and concern. It backfired in a significant way, resulted in the recommendations that came forward to us. I imagine the exact same thing would happen with any attempt to game the system by an MLA or their supporters.
J. Rustad: I’m simply trying to point out that this particular section creates a flaw in the Recall Act. In the past, the Recall Act…. Multiple applications could come forward. Multiple applications could proceed. A legitimate application could not be blocked by somebody trying to game the system.
This particular section creates a hole that could, in effect, make a sham of the recall application. That’s why this is such an important section, because it could be gamed out. It doesn’t matter who’s being recalled. It could potentially be gamed out. You don’t have a legitimate process.
I understand the point that the minister is trying to make with regards to financing and having multiple applications come forward to try to game the system on either side to fund particular campaigns. There’s an easy answer to this thing, which is simply….
It doesn’t matter how many applications come forward over a particular period of time. There is a spending limit in total, not per application. By applying something like that, it would eliminate this loophole.
So the question to the minister is: is this something that the minister has considered in order to prevent the creation of this loophole that could, in effect, eliminate the intent of the recall legislation?
Hon. D. Eby: The member proposes what he calls a simple solution to the problem. You just make a defined spending limit over a time period rather than per petition. The exact same issue arises.
You file. You’re a proponent of a recall campaign. You’re very excited to recall the MLA. You go to Elections B.C., and you file. Then a couple of days later, you get a call from Elections B.C. “I’ve got news for you. Someone has filed a second recall campaign against this MLA, so your spending limit has just been cut in half. So they get half, and you get half.”
Then, like a week later — oh, another petition filed in the same time period. “We’ve prorated it over the days, so your spending limit has just changed again because there are now three petitions over this time period and some of them overlap with yours. Some of them don’t.” It is an unworkable proposal. The member calls it simple. It is not simple.
What is straightforward is the Chief Electoral Officer’s recommendation to government in 2003, which is implemented in this bill — someone who spends a lot of time thinking about elections, about the systems that we have in place and how to make them workable. His recommendations, the previous Chief Electoral Officer, in that report are incorporated in this section.
J. Rustad: I very much appreciate, to the minister, that he does seem to like to engage in hypothetical scenarios, as he just happened to use one with regards to his response. Interesting how he chooses one over another.
Regardless of that, the reality is quite simple. A recall campaign is not determined based on a $5,000 spending limit for advertising. A recall campaign is based on how many signatures you get in a riding to recall an individual that is the subject of a recall campaign. That’s what a recall campaign is all about.
Spending is part of it, and part of it is advertising and those sorts of things. Clearly, the minister seems to think that $5,000 is going to go an awful long way. Whether it’s $1,000, $2,000 or $5,000, quite frankly, is somewhat irrelevant. The fact of the matter is that you need the signatures in order to recall an individual, and this particular section creates a loophole.
The minister has already admitted that a sympathetic application could come forward. Essentially, now this has created the opportunity for a block. To my opinion, what you’re looking at here is a piece of legislation that is being rammed through, that is not being given proper consideration and that has not had the opportunity to explore these and to play these things out.
I know that my colleague has many more questions on other sections, so I don’t want to take up more time with regard to this, but this is a loophole that has been created. The fact that the minister seems to be reluctant to even identify or to recognize that this loophole has been created is very disturbing. The fact that there are other ways it could be done, other options that could be looked at to deal with the financing side, and that have been ignored is very disturbing.
Quite frankly, I would love to use words that are unparliamentary in terms of the definition of it, but it speaks to something that clearly shows a lack of what I would call integrity in terms of the way that this bill should have been put together and brought forward.
Interjections.
J. Rustad: I appreciate the fact that there are members from opposite heckling — that’s being allowed in the Legislature at this point — but the reality is very simple with regard to this being brought forward.
There are ways that these things could have been dealt with and that should have been dealt with, to be able to be done independently, impartially and to deal with these loopholes. It could very easily have been carried forward. This is a recommendation that comes from 15 years ago by the electoral officer coming forward.
In this particular section it’s very apparent that there is a loophole that is being created. The simple fact that we’re not able to solve this for the betterment of democracy is very, very sad. It’s very sad for this Legislature. It’s a very sad mark on this government, in terms of their reluctance to plug a loophole that could, obviously, create this sort of a challenge.
With that, I would ask one last time for the minister to recognize the fact that there is a loophole that is being created here and that it potentially will run amok with the recall legislation. I’d ask the minister to consider potentially standing down this section of the bill so that, in some way, we could work out a solution that would help to avoid this particular loophole that’s been created.
Hon. D. Eby: I can only assume that the member did not receive the letter, dated November 6, from the Conflict of Interest Commissioner. It includes, among other things: “The questions you pose do not give rise to a live issue, or controversy, for opinion from me.” That conflict complaint was dismissed without submissions to me and without the need to provide me with a copy of the complaint in the first place, which was the decision of the members on the other side.
Can I just raise that issue in terms of the tone and tenor of the discussion here? This is a recommendation from the Chief Electoral Officer, in 2003, which has been incorporated into the bill. To have the member stand up and make the kinds of accusations that he has…. I mean, that’s his choice, about how he wishes to conduct himself in this place. I just disagree with him. I disagree with him that it’s a loophole. It’s not. It’s by design, by the Chief Electoral Officer. We may have to agree to disagree on this point, although I do note his earlier comments as well.
M. Lee: I wanted to just follow on from my colleague the member for Nechako Lakes.
I just wanted to say that, in reference to the letter that came back from the commissioner, that is the review for those particular provisions of the conflict-of-interest act for the members of this House.
Overall, when the government has the opportunity to look at what it’s doing in the context of the timing that they’re bringing this forward, I would urge this government to consider what the member for Nechako Lakes just proposed, which is that you’re about to bring closure to this debate in about an hour’s time, at this point. You’re leaving what is, in our view certainly, a loophole in this act. As this loophole has the potential to be exploited, the government must consider, in the context of what might occur in the span of a week, meaning that the 18-month period is about to expire in a few days.
When a petition comes forward and is accepted by the Chief Electoral Officer on the basis of the lack of oversight that’s provided in this act, under the current act, we’ll see what confidence British Columbians would have in this government. I certainly would urge the government to consider standing down this section of the bill and not proceeding, on this basis.
The way and the manner in which this government has approached what was a recommendation from the Chief Electoral Officer, back in 2003, was to deal with one issue of consideration around spending, which we do understand. But to do it in a way that would present another loophole to be exploited, which effectively guts the ability of voters to come forward….
Again, with that in mind, I would ask the Attorney General, through you, Mr. Chair, what my colleague from Nechako Lakes just proposed — consideration of other ways in which this issue or this concern could be dealt with. In the interests of fairness, the overall spending limit could be considered for multiple recall campaigns. In fact, when you look at what’s being brought forward, with the existing spending limits that are being proposed in this bill, there already are limitations on the expenditures for recall campaigns that are being proposed in this bill in other ways, which would address most of those considerations.
Let me ask this question this way, then. What specific item around expenditure is dealt with here, under this provision of this bill, that is not dealt with by the spending limits imposed in the other sections of the bill?
Hon. D. Eby: This section deals with a concern around a multiplication of petitions resulting in a multiplication of spending limits, defeating the spending limit provisions of the bill. The reason why this answer sounds familiar is that I’ve given it a number of times now.
M. Lee: Well, again, I appreciate that the answer from the Attorney General refers to multiplication, but the fact of the matter is it’s the overall impact of spending in a recall campaign that the Chief Electoral Officer was going at in his recommendation. Multiplication is maybe one aspect of it, but it’s the overall expenditure that may put the proponent group in favour of recall or the opponent group that’s fighting against that recall…. It’s the overall expenditure that should be the concern. Isn’t that the case?
Hon. D. Eby: The same answer to the member’s question applies. When you have multiple petitions running at the same time, you run into the situation of multiple spending limits running at the same time, you run into the situation of multiple donation limits running at the same time, circumventing the intention of the act, which is to limit both.
I understand the member thinks that he has a different proposal. It sounds very similar to the member for Nechako Lakes, who stood up and said that it’s the overall spend. How do you prorate it? How do you as a proponent conduct yourself, knowing that at any point, your spending limit could be cut in half and shared with a second proponent that then files because there’s a fixed spending limit for proponents over the period?
You can’t do it. It’s an unpredictable spending limit. You can’t plan your campaign accordingly. You can’t have a moving target for proponents. That is why I suspect the Chief Electoral Officer recommended the approach that he did in 2003, which we have adopted.
M. Lee: Again, this comes back to the challenge of working through this in the very compressed time we have here. If we go to that, right now under this provision, the Attorney General suggests that if there was an overall spending limit, there would be some challenge with prorating. That might be something to consider, but at least that second campaign could come forward — an alternative campaign, let’s say. Right now, the way this section is written, no second campaign can come forward. It’s only one, which speaks to our concern.
Given the alternative, if we had the alternatives in front of us to look at with the frameworks that we’re trying to frame up on the fly here with the very little time that we have, I would suggest that the Attorney General consider what he’s saying. Isn’t the case…? Would the Attorney General agree, though…? That second campaign that had a prorated lesser amount would at least be able to participate in this recall campaign activity. Is that not more fair than being cut off by the first in line?
Hon. D. Eby: The member presents different proposals that he thinks are workable. I can only imagine, if we had pursued one of the proposals that wasn’t recommended by the Chief Electoral Officer, what the member would be saying about that, but I’ll put that aside.
We adopted the Chief Electoral Officer’s recommendation. The recommendation is clearly based on the principle that the proponent should have access to the full spending limit in relation to conducting their recall campaign and that it should not be fragmented into multiple prorated expense limits that change over time depending on how many people have filed and at what point they’ve also filed a recall.
M. Lee: Well, I’ll only say that it is a recommendation that came forward by the Chief Electoral Officer, but government has the role to play in determining what best way to come forward with this. All we have been doing, for the last few hours that we have, is expressing the concern and working through the various considerations about how this particular section is a loophole — a weakness and a flaw in this bill, one that effectively guts the validity of recall petition activity in this province — yet this government is proceeding with it.
In the context of the timing of this and in the context of their conduct to cut off debate in this manner — which is, as I understand, unprecedented…. To be able to do that in a way, despite the technical review by the commissioner at this time, that analysis, I dare say, would change if it was a few days from now. It’s only timing here, which goes back to the point as to why this debate is being cut off.
With that comment, though, I will just say that British Columbians ought to be very concerned about the way this debate is being cut off, the way this section is being left in this bill, the way in which this government is responding to the very strong concerns we’ve been raising in this House both in second reading and this committee stage.
With that, I will reluctantly move on to the next section of the bill that’s being proposed here.
Section 5 approved.
On section 6.
M. Lee: In terms of not meeting the requirements of section 23 and part 7…. Here, under this new provision, under 24.01 of the bill, there are additional requirements now which are in compliance with part 7. When the Chief Electoral Officer is being asked to determine compliance on part 7…. Could I ask the Attorney General to outline the way in which a proponent will demonstrate compliance with part 7?
Hon. D. Eby: The proponent will file a petition financing report, which the Chief Electoral Officer will evaluate to determine whether or not they’ve complied with part 7.
M. Lee: In terms of the extent of that petition financing report, can the Attorney General please walk through the key components of that report?
Hon. D. Eby: Section 20 of the bill amends section 125 of the act, which is the section that sets out the components of a recall financing report. It requires: “Within 28 days after the end of the recall petition period, the financial agent of an authorized participant must file with the chief electoral officer a financing report in accordance with this section.”
The member will find, in section 20 of the bill, a list, subsection (2), “A financing report must include the following,” and (a) and (b) are kept intact from the existing bill. Section (c) is struck and is replaced with “any loans or guarantees received by the authorized participant for recall expenses and any conditions attached to them…” and then it lists the conditions. (d.01) also relates to section 115.02(3), “applies in relation to the authorized participant, the information provided under that subsection to the financial agent of the authorized participant,” and I’ll come back to that.
“(d.02) any sponsorship contributions (i) received by the proponent…used to sponsor non-petition period recall advertising; (d.03) for an authorized participant who is a Member, (i) any amounts transferred to the Member” — any amounts by the political party under section 120.01 — “(ii) any of the amounts referred to in subparagraph (i) that were used for expenditures by the Member in relation to the recall petition, and (iii) any of the amounts referred to in subparagraph (i) that were transferred back to their source under section 120.01…” that section referring to transfers to and from a political party.
Subsections (e) and (f) are kept the same under the existing act. Subsection (3) deals with a supplementary report, which “must be filed with the chief electoral officer as follows.” That section is similarly unamended from the existing act. Subsections (4) through (6) remain consistent.
Subsection (6.01) notes that “the information available for public inspection” and “must not include the address of a contributor.” That’s new. Section (7) remains unchanged.
The member can see that this outlines a number of different financial reporting requirements for different participants in a recall campaign. Those we will, I’m sure, be delving into in some detail. But I wanted to go through them so the member had an idea what was in the report.
M. Lee: Thank you for that response and outline from the Attorney General.
I’d like to ask, in terms of the reporting of an unsuccessful recall petition, this reporting is different in terms of notification, public notification, from the acceptance of a petition in the first instance. I’d like to ask the Attorney General: why the difference?
Hon. D. Eby: It’s been the practice of the Chief Electoral Officer to publish reports on the Chief Electoral Officer’s website, elections.bc.ca. In addition, the Chief Electoral Officer reports to the member, proponent and the Speaker of the Legislative Assembly, who typically tables it in the Legislative Assembly, by which manner it becomes public.
M. Lee: The difference that we’re referring to…. We went through this at the initial stages of this very short period of time to go through this in committee is that there’d be…. I guess it’s the amendments to section 20(1)(b). It’s under section 4 of the bill, where we say: “…as soon as practicable after giving notices under paragraph (a), publish notice of the approval in principle on an Elections BC authorized internet site.” The Attorney General, I believe, just referred to a similar way of practice.
In the first instance, when a petition or application is approved in principle, there is notification published on the Elections B.C. authorized Internet site, yet when there is a determination by the Chief Electoral Officer that the recall petition does not meet the requirements of section 23, or comply with Part 7, as we just discussed under this section, there’s a difference. There’s a difference in terms of the form in which the Chief Electoral Officer must report that determination.
Although the Attorney General indicates that, by practice, that might mean publication in some manner, it doesn’t actually say that in this bill. As we talked about at the outset, the Attorney General did indicate earlier the importance of publication in the first instance, when we have an approval in principle.
I question, again, why this isn’t the case when a petition is unsuccessful. There should be a similar matter of importance to ensure that the public is fully notified that a petition is not successful. I’d ask the Attorney General to consider the reason for that difference. Should this section not be amended to reflect that?
Hon. D. Eby: The distinction, for the member’s benefit, is that on the official receipt of the petition, it begins the initiation of a number of significant spending limits and restrictions, regulations and reporting requirements that bind the public general — require them to comply with them. We wanted to make it absolutely clear that publication needed to happen, because otherwise, you are essentially creating a situation where members of the public may not be aware that they have obligations, if it’s not published.
That’s the difference between here and there. It is the practice of the Chief Electoral Officer to publicize these things when they’re received and to determine that it doesn’t meet the requirements of section 23. There’s no great conspiracy here, and there’s no need for an amendment. It’s a practice to publish.
M. Lee: Let me ask this, then. When I look at the section of the bill that we have just been going through, of course, it says that the Chief Electoral Officer “must not issue any further recall petition” if the Chief Electoral Officer issues a recall petition under section 20.
Perhaps I should ask the question in the context of an unsuccessful recall petition. When the Chief Electoral Officer determines that a petition is unsuccessful for recall, when can another recall petition be launched?
Hon. D. Eby: Section 6 relates to the report of the unsuccessful petition that the member’s question relates to. When can the Chief Electoral Officer…? I’m going to say CEO from now on…. When can the CEO issue a recall petition? That was in section 5, which we just passed.
The Chief Electoral Officer…. There is no restriction on accepting applications for recall in the act, but there is a restriction saying that they can’t approve or issue any of the recall petitions until one of two things happens.
Section 5 said (a) there’s a determination that the petition “is not submitted in accordance with…23 (1) (a), 60 days after the date on which the petition was issued under section 20, or (b) the date on which the chief electoral officer concludes that a determination under section 25 cannot be made.”
M. Lee: I’m just looking at the subsections there. But just to respond to the first part of what I heard in the Attorney General’s response, there is nothing that prohibits the Chief Electoral Officer, the CEO, from receiving applications.
Is that clear, though, in what’s been set out here — that multiple applications can be made? Where is that clear in the act, compared to the amendments under the bill?
Hon. D. Eby: Section 5 says that the Chief Electoral Officer must not issue any further recall petition until…. Then section 5 goes through it. This is the section that we have, of course, passed.
The key is that it does not say that the Chief Electoral Officer must not receive applications for a recall petition. Our expectation is that the Chief Electoral Officer will set out a policy around receiving applications for recall, around making determinations about priority in relation to recall petition applications, day-to-day administration within the office. The recommendation to us from the Chief Electoral Officer was to not permit concurrent petitions, but we have left it so that the CEO can make determinations about receiving petition applications.
M. Lee: Thanks for that response, but I just wanted to ask: under what section of the bill or the act are we referring to where the CEO will be able to set down policy for the receipt of applications for recall and also the determination of priority between those multiple applications?
Hon. D. Eby: The act doesn’t direct the CEO in that regard. The CEO’s — and most statutory officers’ — practice is to establish policy to govern the day-to-day administration of an office. This is no different.
M. Lee: When I look back at section 5, I understand that the section doesn’t say that the CEO cannot accept further applications. It says what it says. It shall not issue further recall petitions. But I would suggest that it would have been better for this bill to actually set out that during the time, for example, when a recall petition has been agreed to in principle, further recall petition applications could be provided or submitted to the CEO. Does the Attorney General not agree that that clarification would have been helpful to others who are dealing with this particular provision?
Hon. D. Eby: It would be in the act. I have no doubt that the member can think up all kinds of things that he would elaborate on and provide additional detail on. Typically, when sections are drafted, what is drafted is what is necessary for the officers to make an understanding and determination about what their roles are and for the public to make an understanding and determination of what their roles are and for the gaps in the day-to-day administration of the office to be filled in with policy to bring to life the provisions of an act.
Where there are additional powers sought to be granted, sometimes there will be an enabling provision that allows for the creation of regulation by the Lieutenant-Governor-in-Council. That is not the case here. This is quite a straightforward provision in section 5 — although we’re on section 6, in any event — that says: “Here is when you are not permitted to issue a recall petition in accordance and keeping with the Chief Electoral Officer’s and previous CEOs’ recommendations in 2003.”
M. Lee: Well, the reason why we need to discuss section 6 in light of section 5 is because, of course, section 5, as we have been discussing, is a prohibition on further recall petitions from being issued when the first one has been accepted in principle. So it is very material for the public to understand when the first recall petition, if it proves to be the case, is not successful. Without clarity in section 5, or anywhere else in this act or bill, you can continue to lodge applications while a recall petition has been accepted in principle — as notified to the public, as soon as practicable, on the Internet. That’s not clear.
How are British Columbians in any given electoral district going to know that they can submit an application? This bill, with this provision that is highly prohibitive — taking away the rights of British Columbians, arguably, from launching a recall petition in the way that it’s been expressed — should be explicit on guiding other proponents who might want to consider petitions.
In my view, this provision under section 6, when you look at it against section 5, is highly unfair and unclear. Does the Attorney General not see that there should be greater clarity around the ability of voters to continue to launch applications for recall petitions while that first one has been accepted in principle?
Hon. D. Eby: We have total confidence in the Chief Electoral Officer to be able to give life to this statute through appropriate policy. The CEO is not prohibited from accepting additional recall petition applications while a petition is underway.
The CEO has a statutory duty and obligation to assist members of the public in understanding electoral law. They issue reports. They issue information on their website. They issue policy and guidance to the public on various electoral provisions so that people can keep themselves in compliance with the law. This is no different, and I don’t understand why the member doesn’t understand that.
M. Lee: Well, it just puts a great reliance right now on the policies of the CEO that we have not seen yet. I will also say this. Given the time and attention that was put to section 4 in having, under (b), the Elections B.C. authorized Internet site notice, I’m still unclear as to why that level of detail was not put in section 6. The effect of which….
In the absence of that policy where applications can still be accepted and some sort of prioritization — which the Attorney General is indicating, even though we haven’t seen the policy by the CEO; it hasn’t been developed — this seems highly prejudicial to those initial applicants who were blocked from having a recall petition come forward and being accepted in principle from going forward. How will they know when it’s not published in the same manner that an approval in principle is published?
Again, I ask the Attorney General: why is it the case that this is not spelled out in the same way that it’s set in section 4(b)?
Hon. D. Eby: I’ve answered this question several times, Mr. Chair. The answer stands.
Section 6 approved.
On section 7.
M. Lee: Here we have another provision, under section 7(a)(1), where the Chief Electoral Officer is to notify the proponent and the affected member under section 20(1)(a). Let me ask: how will that notification take place?
Hon. D. Eby: The bill does not specify a particular means of communication. The member will recall that on the recall application the member has to provide contact information to Elections B.C., and Elections B.C. does certainly have the ability to contact MLAs without difficulty.
M. Lee: Is there a meaning to the punctuation, with the full stop, the comma and the “and”? Is there a meaning to having that full stop and a comma in that order?
[L. Reid in the chair.]
Hon. D. Eby: The member will note the bolded text, “Section 107 is amended (a) by repealing” blah, blah, blah, to the colon. The “, and” are part of that bolded text — that is, the text of the bill. It outlines for the member what is being done here — that subsection (1) will be repealed and something will be substituted “, and” something else will be added. Then the unbolded text reflects what will be substituted or what will be added.
It’s a drafting convention. It does look unusual — I’ll certainly acknowledge that — with the “. , and.” It’s just to flag for the member what is being added and what is being substituted.
M. Lee: When we look at subsection (b)(4), and the requirement for an authorized participant as including someone who “becomes an authorized participant or was an authorized participant,” can I ask — the inclusion of the previous reference to authorized participant in the past reference — the reason for that inclusion?
Hon. D. Eby: It’s a similar provision that exists in the Election Act respecting candidates who aren’t yet candidates but who may be collecting donations so that once they become candidates, the Election Act provisions apply to them. So defining authorized participants to include individuals before or after they become authorized participants for the purpose of financing provisions ensures that those provisions apply to their fundraising and similar activities, if they’re undertaken before they’re formally authorized participants.
Sections 7 and 8 approved.
On section 9.
M. Lee: I appreciate that in the context of this section of the bill, it is intended to carry over from the equivalent section under the Election Act. In terms of the use of the term “recall petition” versus “recall contribution” under subsection 112(1) versus 112(2), can the Attorney General explain the difference of the use of the terms there and what is intended? In the first case, it’s recall contribution. In the second case, it’s in relation to the recall petition.
Hon. D. Eby: Subsection (1) is a definition subsection. It defines what a permissible loan is and is not. Subsection (2) is a provision that regulates an activity rather than provides a definition. So it explains how a permissible loan must or must not be used.
In this case, it deals with the fact that an authorized participant must not accept or use a loan other than a permissible loan. In other words, only permissible loans are permitted to be used in relation to the recall petition. The first one, subsection (1), is a definition about what a permissible loan is.
Section 9 approved.
On section 10.
M. Lee: In this section relating to debt and the use of the term “recall expense” in this instance: is the category of expense any different when it relates to debt than how it’s utilized in other sections of this bill?
Hon. D. Eby: The short answer: no, it’s not. The recall expense is not any different here than it is in any other provisions.
M. Lee: Under this section, if the debt doesn’t become repaid, and it becomes a recall contribution, but that isn’t known for some time after…. If there’s a shift in the way that the debt is characterized — meaning that under sub (2)(a), it becomes a recall contribution if the debt remains unpaid six months after becoming due and payable — does that in any way invalidate the results of that recall petition?
Hon. D. Eby: There are two components to this: “if (a) the debt remains unpaid 6 months after becoming due and payable, and (b) the creditor does not make commercially reasonable efforts to collect…the debt,” then it is deemed a recall contribution. The impact of it would be that the penalty provisions in the act would potentially be used by the Chief Electoral Officer, but it would not invalidate the petition itself.
M. Lee: The determination of that being six months…. The time period of six months after that debt is “becoming due and payable” may well, of course, be some months after the recall petition, and that 60-day period has expired. So the timing of that will not delay the results of any recall petition confirmation as being something that has been successful. Is that the case?
Hon. D. Eby: That’s right. It wouldn’t affect the petition. It goes to whether or not a penalty would be imposed by the Chief Electoral Officer.
Section 10 approved.
On section 11.
M. Lee: Can I ask the Attorney General…? In terms of the levels that are set here in terms of the dollar expenditures, does this track the equivalent provisions in the Election Act? Or is that $50 expenditure, for example, under (2.01) a different level being set?
Hon. D. Eby: It’s the same.
M. Lee: When we talk about “the value of property or services” being sold, this cross-references, under the Election Act, to subsection 182(4)(b). What is that amount?
Hon. D. Eby: It’s $250.
M. Lee: In the context of dealing with recall campaigns and the ability of individual voters to fundraise, these levels were seen to be equivalent for a recall campaign versus a typical election campaign. Was there any consideration for these dollar amounts as being something that should be at a different level of expenditure — i.e., a higher level of expenditure? What’s the rationale for this level being set this way?
Hon. D. Eby: The $250 level has not changed from the existing act. For a long time, that’s been considered the threshold for reporting related to the Election Act and also for a recall.
The $50 contribution is generally considered the breaking point between an event that’s covering expenses and an event raising funds, mirroring, as much as possible, certainly Election Act provisions but, in the example here, identical to the existing provision.
Section 11 approved.
On section 12.
M. Lee: I appreciate that this section parallels or is intended to parallel equivalent provisions in the Election Act, but I wanted to ask, again…. The specific restriction around the charging of individuals when you’re holding a fundraising function in your own private residence — the level being restricted to $100. Was there any consideration in terms of the appropriateness of that level being included for the purpose of a recall campaign under this bill?
Hon. D. Eby: This mirrors provisions under the Election Act. The goal of the provision is, obviously, transparency in terms of the raising of funds related to recall or elections generally.
Section 12 approved.
On section 13.
M. Lee: In terms of the use of “eligible individual,” that requirement comes from the equivalent definition under the Election Act. When we look at anonymous recall contributions, what is the requirement for that when it’s being done at a function where moneys are being raised? With the level of reporting that’s required under the previous section 12 of this bill, what restrictions are there around anonymous recall contributions?
Hon. D. Eby: There are two requirements in order to make an anonymous recall contribution that is considered to be legitimate. The first is that it “(i) is provided in response to a general solicitation for funds at a function held on behalf of or in relation to the affairs of the authorized participant to whom the contribution is provided, and (ii) has a value of less than the applicable amount under section 186 (1) (f) (ii) of the Election Act.” That amount is $50. You’ve got to meet both of those requirements — the general solicitation for funds and the value of less than $50.
M. Lee: Just to understand that. In terms of the exceptions that are stated in this section to subsections 116(2)(d) and (e), the purpose for which those exceptions are provided — if the Attorney General could just walk through the purposes of those particular exceptions to those provisions.
Hon. D. Eby: Both of these provisions deal with indirect donations, so you can’t conceal the source of the donation by giving money to one person and then having that person make a donation on your behalf. Section (3) relates to exceptions. These mirror again the Election Act.
Subsection (a) talks about where you may pay someone to provide a service to a campaign, and that service would be considered a recall contribution as long as the person providing that compensation to the service provider is eligible and that it’s reported.
Then (b), you can also make a recall contribution with the money of someone else if the other person is an eligible person to make a donation — that is, they’re a British Columbia resident and so on — but must disclose to the individual required to record the contribution the full name and address of the eligible individual whose money is being used. So I’ve received money from one person, and I’m passing on that donation to the campaign. I’ve got to tell the campaign the full name and address of the person who provided the money.
Section 13 approved.
On section 14.
M. Lee: This section applies to sponsorship contributions that are received before the start of a recall petition period, and recall petition period is tied to the application, when it’s received and approved in principle.
For those proponents that do not have a recall petition application that’s approved in principle by the Chief Electoral Officer, those expenditures or contributions would not be caught within this section. Is that correct?
Hon. D. Eby: In the period before the application for petition is accepted by the Chief Electoral Officer, an individual may be out fundraising to run non–petition period advertising. They may have money left over at the start of the petition period.
This section saves them from having to go back to the donors and say: “Okay. You gave me a sponsorship contribution for a recall petition period. Is it okay now if I use this money for the recall advertising as well?” This section says: “You don’t have to do that. They’re deemed to be contributions for the recall period as well, and you can use them for recall-related expenses.”
M. Lee: I know that this is dealt with in subsequent sections as we get there. But just in the interest of what’s raised in this section, as we were discussing section 5 of this bill and talking about multiple recall campaigns and concerns around that, is there any similar concern regarding expenditures in the non-petition period for recall advertising?
Hon. D. Eby: There are no non–petition period spending limits, so this section does not relate to that.
M. Lee: In the context of consideration around spending, which underlay his recommendations relating to section 5 of this bill — as we heard in this process that we’re going through here — did the Chief Electoral Officer make any comment about concerns around spending in the non-petition period?
Hon. D. Eby: If the CEO comments on policy, it’s usually through a report with recommendations. I can advise the member that I’m not aware, though staff are having a look, of any recommendations relating to that from the CEO.
M. Lee: I appreciate that response. Given the level of discussion we’ve been having around the purpose of section 5, it’s curious to me to know how this is all being looked at, in terms of the non-petition period. As staff are looking for any reference to that, perhaps I could ask another question which they might be able to shed some light on.
Has there been any review, when we look at the number of recall campaigns that have occurred — 27, as we’ve talked about, in the history of this province — between the level of expenditure, which would have occurred in those recall campaigns, in the non-petition period versus in the petition period? Just in terms of even percentage expenditures, whether the Attorney General can tell us whether there’s been any assessment of that percentage of non-petition expenditures versus petition period expenditures.
Hon. D. Eby: Because, to date, there’s been no restriction or regulation of third-party advertising spending in relation to recall, there is no data which the member is seeking in relation to that type of expenditure, either before or during recall. The effect of the bill will be that this will be tracked and will be information available to the CEO for future recommendations.
The new provisions here, of this bill, may be…. The effect may be that people front-end-load their third-party advertising spending. We’ll see. But there are no limits on pre-petition spending by third parties.
M. Lee: I understand the response and relationship to the current recall act as it is still today, but in terms of the future, if this bill passes in its entirety, is there tracking, though, of non–petition period recall advertising?
Hon. D. Eby: The bill aims at transparency in non-petition periods, so third-party election advertisers will be required to report their advertising activity to the Chief Electoral Officer, and it will provide the information the member is seeking.
M. Lee: Again, when we stand back and look at this bill in the opportunity that we’ve had, limited such as it is, to have this debate and discussion at committee stage….
There is a difference, though, between the intent of section 5, meaning there can be only one petition campaign going forward. Yet in the non-petition period before that approval in principle by the CEO, Chief Electoral Officer, there can be multiple groups in the non-petition period. As the Attorney General just indicated, in that non-petition period, they will need to report their expenditures. And of course, they’re limited, as a third-party advertising sponsor, by the nature of this bill.
Yet the concern around expenditure by multiple recall campaigns is really not dealt with by section 5 of this bill, because clearly, as we were just discussing, there can be multiple efforts going on in a particular electoral district before that agreement-in-principle is the case.
Again, to the Attorney General: why is it that this government is not concerned about multiple campaigns going on in the non-petition period?
Hon. D. Eby: The analogy for the member is the pre-campaign period for an election. Why is it that we treat spending differently in the pre-campaign period for an election than we do during the campaign period? Why do we treat third-party advertising differently in the petition period versus the pre-petition period?
The answer is, for the election, that there’s no election happening, so it’s different. It’s trying to balance free speech and the ability of people to bring their ideas forward, with, as you get closer to an election date, balancing out the undue influence that powerful interests can have on that system.
It’s the exact same here, in this bill related to recall. Trying to balance out the free speech interests by bringing transparency around who is spending money so that people know and can make decisions about how they feel about who is spending the money and what they’re saying. But as you get a petition in place and there is something that might actually recall an MLA, this is where the spending limit provisions kick in. It’s a parallel to the Election Act.
M. Lee: Just one quick response to that. The difference, of course, is there is no prohibition in an election as to how many candidates can run in an election. But in a recall, once the agreement in principle is in place, there can only be one recall campaign brought forward.
Here we have a situation where it’s not a level playing field. There is considerational expenditure on recalls that’s coming forward. That’s the whole juncture of this, the whole notion of this. Yet we’re not so concerned about what happens pre-petition. I think that that reasoning is flawed.
I understand my time is up, regrettably, and as I say, we only got through, unfortunately, 14 sections of this bill. We still have about 36 pages to go in this bill.
It’s regrettable, as I’ve said through the course of this very limited time, that members on this side of the House have not had the opportunity to even go through this bill in its entirety at the committee stage. We’ve identified the flaws and the holes in section 5, specifically, in this bill to date.
Deputy Speaker: Hon. Members, with respect to a motion put before this House earlier today, at 6 p.m., the Speaker and Chair of the Committee of the Whole will forthwith put all the necessary questions for the disposal of all remaining stages of this bill without amendment or debate.
Sections 14 to 58 inclusive approved.
Title approved on division.
Hon. D. Eby: I move the committee rise and report the bill complete without amendment.
Motion approved on division.
The committee rose at 6:02 p.m.
The House resumed; Mr. Speaker in the chair.
Report and
Third Reading of Bills
BILL 53 — RECALL AND INITIATIVE
AMENDMENT ACT,
2018
Bill 53, Recall and Initiative Amendment Act, 2018, reported complete without amendment, read a third time and passed on the following division:
YEAS — 44 |
||
Chouhan |
Kahlon |
Begg |
Brar |
Heyman |
Donaldson |
Mungall |
Bains |
Beare |
Chen |
Popham |
Trevena |
Sims |
Chow |
Kang |
Simons |
D’Eith |
Routley |
Ma |
Elmore |
Dean |
Routledge |
Singh |
Leonard |
Darcy |
Simpson |
Robinson |
Farnworth |
Horgan |
James |
Eby |
Dix |
Ralston |
Mark |
Fleming |
Conroy |
Fraser |
Chandra Herbert |
Rice |
Krog |
Furstenau |
Weaver |
Olsen |
|
Glumac |
NAYS — 38 |
||
Cadieux |
Bond |
Polak |
Wilkinson |
Lee |
Stone |
Coleman |
Wat |
Bernier |
Thornthwaite |
Paton |
Ashton |
Barnett |
Yap |
Martin |
Davies |
Kyllo |
Sullivan |
Isaacs |
Morris |
Ross |
Oakes |
Johal |
Redies |
Rustad |
Milobar |
Sturdy |
Clovechok |
Shypitka |
Hunt |
Throness |
Tegart |
Stewart |
Sultan |
Gibson |
Reid |
Thomson |
|
Foster |
BILL 44 — BUDGET MEASURES
IMPLEMENTATION (EMPLOYER
HEALTH TAX) ACT, 2018
S. Chandra Herbert: Committee A reports Bill 44 complete and seeks leave to sit again.
Mr. Speaker: When shall the committee sit again?
Hon. M. Farnworth: Next sitting.
Bill 44, Budget Measures Implementation (Employer Health Tax) Act, 2018, read a third time and passed on the following division:
YEAS — 44 |
||
Chouhan |
Kahlon |
Begg |
Brar |
Heyman |
Donaldson |
Mungall |
Bains |
Beare |
Chen |
Popham |
Trevena |
Sims |
Chow |
Kang |
Simons |
D’Eith |
Routley |
Ma |
Elmore |
Dean |
Routledge |
Singh |
Leonard |
Darcy |
Simpson |
Robinson |
Farnworth |
Horgan |
James |
Eby |
Dix |
Ralston |
Mark |
Fleming |
Conroy |
Fraser |
Chandra Herbert |
Rice |
Krog |
Furstenau |
Weaver |
Olsen |
|
Glumac |
NAYS — 38 |
||
Cadieux |
Bond |
Polak |
Wilkinson |
Lee |
Stone |
Coleman |
Wat |
Bernier |
Thornthwaite |
Paton |
Ashton |
Barnett |
Yap |
Martin |
Davies |
Kyllo |
Sullivan |
Isaacs |
Morris |
Ross |
Oakes |
Johal |
Redies |
Rustad |
Milobar |
Sturdy |
Clovechok |
Shypitka |
Hunt |
Throness |
Tegart |
Stewart |
Sultan |
Gibson |
Reid |
Thomson |
|
Foster |
Hon. M. Farnworth moved adjournment of the House.
Motion approved.
Mr. Speaker: This House stands adjourned until Wednesday, November 7, at 1:30 in the afternoon.
The House adjourned at 6:19 p.m.
PROCEEDINGS IN THE
DOUGLAS FIR ROOM
Committee of the Whole House
BILL 44 — BUDGET MEASURES
IMPLEMENTATION (EMPLOYER
HEALTH TAX) ACT,
2018
(continued)
The House in Committee of the Whole (Section A) on Bill 44; J. Rice in the chair.
The committee met at 1:36 p.m.
On section 8 (continued) .
T. Redies: I just want to pick up on some of the issues that were raised by the member from Saanich and the Gulf Islands earlier today, some very salient points, and I wanted to clarify some of the answers provided by the minister for the record.
The member raised the very issue of competitiveness, which businesses across the province are facing with this payroll tax, along with the other 17 new or expanded taxes that this government introduced. He put it in the context of what was happening south of the border, with taxes actually being reduced substantially and many incentives being offered businesses, Canadian businesses, to move their operations to the U.S.
I think this is one of the challenges and, perhaps, unintended consequences of some of the government’s tax policies — that B.C. businesses are no longer as competitive as they used to be. In fact, B.C. is now actually the worst of 14 jurisdictions in terms of its marginal effective corporate tax rate. This is a problem, because that’s a leading indicator of the climate for business investment in the province.
The minister also made a number of statements about the shift of MSP from individuals and households to businesses. I think this is the first time I’ve actually heard the minister talk about it as a shift, as opposed to a complete elimination. I think that is a good thing.
However, I just want to clarify that the statement that the government is adding $800 million to the economy, I think, is not quite correct. It was the previous government that lowered the MSP burden by 50 percent in the February 2017 budget. That meant that the tax burden of the MSP was lowered from $2.6 billion to $1.3 billion.
In Budget 2018, the current government introduced the EHT, which, as the minister has correctly pointed out, will be a tax of $1.8 billion on the business sector. Essentially, instead of taxing the business sector by $1.3 billion, which was what was needed to eliminate the MSP, the Finance Minister has actually increased the taxation by 40 percent over what was needed to completely eliminate the MSP.
The previous government put $1.3 billion back into the economy. This government has taken that back by $500 million. I just wanted to get that on the record, because I think it is important for people watching this to understand that this is actually quite important.
My question to the minister is: why did the government feel it was necessary to increase the EHT to a level of $1.8 billion, when they only needed $1.3 billion to eliminate the tax burden of the MSP?
Hon. C. James: I know the member wants to continue to put the numbers forward. It was a February budget by the previous government that did not pass. We went into an election. An election occurred. The new government came in, made the decisions. The new government made a decision to be able to cut MSP and to eliminate it completely, and the numbers are clear. They’re in the budget. The member knows that.
So $2.6 billion is the total amount coming in on MSP. The total cost coming in on the employers health tax is $1.85 billion. We’ve talked already about the amount of money that will be saved and go back into the economy in British Columbia.
T. Redies: Well, I guess the minister wants to take that position. I guess I would take the position that if the previous government actually had continued in government, it would have been $1.3 billion back into the economy, not $800 million.
Just moving on, though. My colleague from Prince George–Valemount and, actually, many colleagues on the opposition side and I have raised many times that it’s not just the one tax but the plethora of taxes that are concerning businesses in the province. As a symptom of this — the EHT and the other tax and regulatory burdens being introduced by this government — the CFIB has noticed that business confidence, a leading indicator of the willingness to invest and create jobs in a jurisdiction, has fallen in B.C., from being the top in Canada to the second lowest.
That brings me back to my other question for section 8, Minister. Given that the government only needed to replace $1.3 billion in lost revenue with a shift of the MSP tax burden to businesses, why has the government not listened to the CFIB and increased the threshold at which this tax kicks in to their recommended threshold of $1.25 million? Why is this government taking more money from businesses in this province to shift the tax burden from individuals to businesses in the province?
Hon. C. James: The budget is very clear. The member has the numbers in front of her — $2.6 billion for the total MSP, $1.85 billion for the employers health tax, which is a savings to the economy.
T. Redies: That’s just not patently correct. I asked the minister: why, if they only needed to replace $1.3 billion of the remaining MSP costs to individuals, is this government taxing businesses by $1.8 billion? That’s 40 percent more than what is needed to eliminate the MSP.
Hon. C. James: The member can talk about a previous budget that was not passed. My job as Finance Minister is to deal with the budget that I have in place. Those are the numbers that are there.
S. Bond: Good afternoon, Madam Chair.
I want to go back and spend a few minutes with the minister, basically better understanding how she came to determine that this government would impose a tax on businesses in British Columbia. I want to do that because I think this is really the section that is, ultimately, the meat and potatoes. This is where it says: “We are going to tax businesses in this province.”
[The bells were rung.]
S. Bond: Is that a vote?
The Chair: Division has been called. We can resume this after…. We’ll recess until after the division.
The committee recessed from 1:44 p.m. to 1:55 p.m.
[J. Rice in the chair.]
T. Redies: Before lunch, we were speaking about the SUCH sector, so I’d like to continue that line of questioning. Can the minister please take us through, again, the $192 million, I believe it was, in the news release with respect to the SUCH sector that had to be covered off — how that was arrived at as the amount? I think it was referred to as the net funding cost for the SUCH sector that was going to be affected by the payroll tax.
Hon. C. James: The number is $90 million for the public sector. That’s the net cost. So you take into account the amount they were already paying for MSP premiums, and the net amount is $90 million.
T. Redies: Thank you to the minister for the answer. Can the minister tell us what the gross cost was?
Hon. C. James: I can get that information for the member. We’ve been working with the net cost. That’s the cost to the sector, because they’ve already been paying the MSP premiums.
T. Redies: If the minister is funding the net cost, can she confirm that the SUCH sector will be funded whatever the costs are above their old MSP costs?
Hon. C. James: Yes. We’ve gone over this, but I can go over it again. That is a process. We announced that it would be the net cost that would be going. Again, there are savings from getting rid of the medical services premiums. There are cost savings around the structure of the tax. We’ll save $65 million by getting rid of that. There’ll be $2 million for the cost of the employer health tax, so the additional costs will be covered.
T. Redies: Just to confirm, that means that going forward, as it increases, the funding costs from the government will continue to increase.
Hon. C. James: Yes, it will be a part. As I mentioned earlier, Treasury Board is working with ministries to determine the best process that will occur. But the net cost will be covered.
S. Bond: That’ll be good news, because there certainly were concerns when the amount was announced that there wasn’t…. School boards, for example, expressed concerns that the pot that was announced at the initial announcement was actually not necessarily going to be big enough. The press release reads: “After full implementation, the net funding required for the public sector is estimated to be no more than $90 million annually.”
If it’s more than $90 million, will all of the incremental costs be provided to the SUCH sector?
Hon. C. James: The net funding will be covered.
S. Bond: I want to go back to the initial thinking about this tax. I think what was a concern to most businesses in British Columbia was that it came as a complete surprise to them. As we’ve said on numerous occasions, all three parties in the House actually made the decision to deal with MSP premiums, obviously choosing a very different path.
I’m wondering if the minister could walk through her rationale for making an ultimate decision that required businesses to shoulder the entire task of filling the gap for the forgone revenue from MSP premiums.
All of the advice that the minister received, at least from the task force that she set up, from the input that was received…. The minister did…. As I’ve said on numerous occasions, I appreciated the fact that she actually went out and asked people what they wanted to do. “The most striking theme” — I quote from the initial letter from the task force — “that arose from consultations was the strong expectation that the MSP revenue would be replaced with a combination of personal income tax and payroll tax, similar to the approach taken by Ontario.”
I’m certainly not going to stand here and be an advocate for increasing other taxes. I’m in my fifth term now, and I’ve been an advocate for seeing taxes move in the opposite direction.
What ultimately convinced the minister that she should ignore all the advice she was given, which was, basically: “Don’t do this with a payroll tax alone”?
Hon. C. James: Again, we’ve canvassed this, but I’m happy to canvass it again with the member if that’s what she desires. Again, the elimination of MSP was included in our platform. That’s part of our mandate. As I’ve said already, I began that work after we became government. We did that work, heard from a number of people — including the MSP Task Force, who reported back out in January — and took all of the information and all of the consultation into account.
There were views on all kinds of different options that were available. We had the discussion around what option we were going to look at and made the decision for the February budget. I think it’s important to note that we’d already increased the personal income tax for the top 2 percent — we did that in the September update — so we felt we had worked on that piece. We followed through on the employers health tax.
S. Bond: The minister ignored the input regarding, first of all, creating a payroll tax, which would then provide all of the revenue that was necessary. There was another very significant piece of advice that was provided to the minister. This is one of the things that has caused the most reaction to the minister’s tax. That’s what we fondly call the double-dip approach.
The minister was advised…. I quote again from her very own task force: “We feel strongly that there should not be any phase-in of the new measures and phase-out of MSP. Rather, we suggest that MSP be eliminated at a specific date and that the new revenue measures take effect fully at the same time.” The minister rejected that information, rejected that advice. In fact, what she did was make the transfer — we’ve seen her recognize, as she called it today, that it was actually a transfer — of funding requirements from individuals to businesses.
Can the minister explain when she made a decision to actually double-dip, when in fact her own task force said she should not do that?
Hon. C. James: Thank you to the member. I think I’ve run through, already, the timelines. Again, we gathered the information, received the report from the task force, looked at all of the consultation, looked at all of the issues — and, obviously, took a look at balancing the fiscal responsibility in the budget as well — and then made the decision for February.
S. Bond: I appreciate the minister’s answer, but the minister’s answer is, actually: “I got advice from the handpicked group of people that I chose, ignored it, and made a decision to implement a payroll tax.” Not only that, to do it in a way that…. The story continues to be: “Well, they’re going to have half a year’s savings.” Yes, but they’re going to be paying MSP premiums and a new employer health tax for a year. That has been one of the most significant reactions that we’ve heard. We, as you can see from our files, have been inundated with concerns from across British Columbia.
The third element of rejected advice — that’s sort of the category we would call it — was that this group of individuals, which the minister selected herself, said: “A payroll tax would reduce the competitiveness of B.C. businesses at a time when they are facing…competitiveness challenges, including expected increases to the minimum wage, CPP increases and recent tax reform in the U.S.,” which would improve their competitive position.
How on earth can the minister stand in this committee room today and say that she…? Earlier today she talked about how important it was, as a Finance Minister, to pay attention to the issue of competitiveness. Direct advice. We’ve also heard from businesses right across the spectrum. This is an issue for them. Competitiveness matters. And the minister, on her third piece of advice, rejected that as well.
Can the minister explain whether or not she’s had time or has actually had a conversation with B.C. businesses about their concerns around a lack of competitiveness?
Hon. C. James: Again, I think we’ve canvassed a number of these pieces, but I’ll chat again about the perspective of looking at an employers health tax.
Other provinces have already moved to employers health tax. Let’s remember, we were the last province left with medical service premiums — a regressive tax. As individuals know, whether you earned $50,000 or you earned $500,000, you paid the full amount and the same amount on the medical service premiums. I’ve run through the timeline already for the member.
On competitiveness. Again, I think we’ve answered that question with a few different members, but happy to run through it again. We certainly looked at competitiveness. Have I had conversations with businesses? Many conversations, including speeches to the chamber of commerce, to the board of trade, to the B.C. Business Council.
We have talked about competitiveness. It’s part of the reason that we, as a government, set housing and child care as our two main priorities in the February budget — because those were issues raised continuously and, in fact, almost always as first and second pressures, by businesses to address competitiveness. I’m very proud of the work we’ve done to do with that.
S. Bond: I think that the minister can continue to say she’s answered the questions. The fact of the matter is that in her platform, or at least in government’s decision-making, they said they were going to eliminate MSP premiums. They just didn’t tell the rest of the story: someone has to pay for that.
We have seen, right across British Columbia, a variety of organizations which have simply said: “We are opposed to this. It is going to have detrimental impacts on our small businesses. It’s going to have detrimental impacts on taxpayers, ultimately.”
Perhaps the minister can explain to us…. Certainly, the tax group that the…. Well, let me start with this. The working group, the task force the minister put together. Has the minister reviewed their final report?
Hon. C. James: Yes.
S. Bond: Can the minister tell me if she intends to take the advice that’s been provided about other potential tax changes as the report has laid out?
Hon. C. James: As we do every year, we take into account all the advice that people have given, whether it’s the task force, whether it’s the Select Standing Committee on Finance and the work that the members do there and the report that they give. All of those issues are reviewed at each budget time.
S. Bond: I’m going to ask one last question before my colleague takes another line of questioning, and then I’m going to come back and ask the minister some questions about municipalities.
One of the recommendations in the MSP Task Force report, the final report, is actually that this minister consider eliminating the homeowner grant. Can the minister assure British Columbians today that that is not her next plan?
Hon. C. James: As I said, we take into account all decisions. The budget will come forward in February. But no, it is not in the plan.
T. Redies: I just want to follow up with a previous question I asked the minister. I don’t think her answer was quite correct.
We were talking about the net cost to the SUCH sector. The minister referred to the net costs being $90 million. Well, that’s actually as of 2020-21. I was correct on my original request, which was that the net costs are actually $192 million in 2019-20.
My question to the minister is: how are those net costs in 2019-2020, which are higher because of the double-dipping, being funded by government?
Hon. C. James: Those will be included in their budget. As I said, there will be no net cost to the school districts or hospitals or the SUCH sector.
T. Redies: Could the minister also clarify if the net amount is net of the 50 percent MSP or the full MSP?
Hon. C. James: It’s any net costs based on the employer health tax, so that would be the full amount.
S. Bond: One of the things that my colleague and I are working to ascertain is, first of all, assurance for the SUCH sector that, in fact, they are not going to be negatively impacted. We’ve been somewhat relieved to hear those answers today, and we appreciate that.
One group of people which is certainly not relieved…. The minister has basically said: “Nope, sorry. Not for you.” We have seen, across British Columbia, municipalities stand up and say: “This is going to have a direct impact on our constituents, our taxpayers.”
One of the things I think we need to recognize is when we talk about the issue of affordability and how we’re going to save taxpayers’ dollars, we also have to recognize that those very same taxpayers…. The downloaded costs of this tax on municipalities will impact those taxpayers.
In the minister’s press release in July…. And let’s face it; there was a whole bunch of tweaking that took place after the minister announced this. People across the province got upset, particularly charities and non-profits.
Thankfully, as we work our way through the bill, we’ll see that the majority of non-profits, we believe, will be given some relief, if not total relief, and we are grateful for that. Our offices were literally inundated with non-profits. I know that my colleague from Prince George–Mackenzie and I met with literally dozens of them who came to us with incredible concerns.
After deciding, “Well, okay, I’ve laid this out here, and now I’ve got to start fixing it,” on July 4 there was a list of people that the minister was going to ensure would not be impacted. Ironically, they were all public services. They are colleges, teaching universities, research universities, community health and social service providers, school districts and health authorities.
Missing, in a glaring kind of way, from that list are municipalities. We certainly know business is going to carry the brunt of this. But municipalities came to the minister, they came to the Union of B.C. Municipalities, and they said: “We can’t do this. We need some help here.”
Can the minister explain to us today why municipalities were not included in the list of exemptions in her July press release?
Hon. C. James: We have had this conversation as well. The local governments have the ability to be able to manage their budgets. Many of the public sectors rely on, obviously, public sector…. For example, as the member knows well, we both had this duty in our past lives on school board. You do not have the right to tax, and you do not have the ability to be able to determine all of the costs of your own budget. Municipalities do, and therefore they were not exempt.
Again, I think it’s important to note that, similarly with charities and not-for-profits, this is a general application tax around employer tax, and then there are built-in exemptions and supports for those organizations that rely on government and public funding. Municipalities have the ability to manage their budgets.
S. Bond: Well, I guess there’s the fundamental difference between the government the minister is a part of and the one I was a part of. To stand in this House and suggest that municipalities have a way to manage their budgets…. Does the minister have one…? Ultimately, that is managed through taxpayers.
There is one taxpayer in British Columbia. Whether it’s filling the provincial coffers or the municipal coffers, it’s not some magical organization that can drum up money. It is coming out of the pockets of taxpayers.
Municipalities have made it clear to this minister that there is one very likely way that they are going to recoup the downloaded costs of the EHT, and that is through property tax increases. That’s not them managing their budget. That is this minister downloading this cost and expecting taxpayers, not the municipalities, to pay for it.
The UBCM did a survey. It’s called the employer health tax impact on local governments. Not just: “Let’s have a chat over the coffee pot.” It was: “Let’s talk to our members and see what it means.” Now, we’re just getting started, because this is the municipalities. This doesn’t even begin to address the small businesses in every one of our constituencies who are concerned about this.
Here’s what the survey said: “The survey responses demonstrate that the provincial government decision to reduce MSP premiums by 50 percent effective 2018 provided significant cost savings for local governments” — that’s the part the minister talks about — “that paid some portion of the employee MSP premiums.” Here’s the part she doesn’t mention: “This relief was effectively eliminated by the introduction of the EHT.”
Any suggestion that somehow they’re getting a bonus and only paying 50 percent of MSP premiums is simply not correct. Here’s what the UBCM report went on to say: “The transition year of 2019, in which MSP premiums are retained while the EHT is phased in, will also create an extraordinary single-year increase in which MSP-related costs will more than quadruple for the respondents.”
More than quadruple. How on earth does this minister expect municipalities to go and recoup those costs from taxpayers? Could the minister stand today and tell us how she expects municipalities to generate the revenue that her EHT is going to cost them?
The Chair: Before we continue, I’d like to remind the committee that we are focused on section 8. Questions should be relevant to the clause that we’re discussing.
S. Bond: Section 8 is about the tax that has been created in British Columbia. The tax that has been created, as I just reminded the minister, downloads a cost to municipalities.
I would say it is incredibly fundamental and relevant to the bill, and I would ask that the minister respond to the question.
Hon. C. James: I think it’s important to note that not only have I met with a number of mayors, I also attended the Union of B.C. Municipalities, where they had a debate around the issue, listened to the debate and to the discussion around this as well and certainly read the report. In fact, we did our analysis of the UBCM report.
We took a look using their figures, the UBCM figures, based on the employer health tax and based on net cost. Municipalities pay medical service premiums for their employees, so you have to net those costs off when you’re taking a look at that. We took a look at that since, as the member has said, there were some municipalities who said they may have to put the entire amount onto property taxes.
That was the net cost for them of the employer health tax. So we looked at what that would be. Most municipalities would not put the entire cost on residential properties. Most would look at a range, as they do with their other costs that they have in municipalities.
If you took the worst-case scenario, and if you looked at the entire full-net cost on residential property taxes…. I’ll give the member a few examples that are here. If you take a look at Invermere, for example, a year would be 14 cents. If you took a look at Fort St. John, the total cost to a household would be $8.33 per year.
If you took a look at Harrison Hot Springs, they actually come out ahead. They’re ahead. It would be a net savings for individual households when you took into account that cost. If you took a look at McBride, McBride actually comes out ahead $17.22. So they’re actually further ahead when you net off the costs of the employer health tax.
I could read the others, but I think it’s clear that, when you take a look at savings for individuals of $900 and savings for families of $1,800, if a municipality took the worst-case scenario, which I don’t expect they will, you could be looking at a $20-a-year additional cost. Again, people would be looking at a much larger savings.
S. Bond: Well, I’m sure we could trade example for example. In fact, in the report written by the UBCM, it actually says that the majority of respondents have indicated that these options involve some form of property tax increase, with 15 percent indicating that such increases are likely in the range of 1 to 2 percent.
Now, I can speak pretty personally for my own community, and I know exactly how hard they’ve worked to try to minimize those tax increases.
[The bells were rung.]
S. Bond: I’ll continue when we get back again.
The Chair: We will recess until after the division in the larger House, the big House.
The committee recessed from 2:20 p.m. to 2:33 p.m.
[J. Rice in the chair.]
The Chair: I have to call the committee back to order. I’ve called the committee back to order.
Member, please go ahead.
S. Bond: Thank you very much. We do need those technical pieces in place.
Before the vote, we were talking about the fact that there’s one taxpayer and that when a government assumes that one other level of government can just sort of absorb that and make it work…. The Union of B.C. Municipalities pointed out, with a very detailed report to the minister, that that’s simply not an easy thing to do.
I was in the middle of quoting the report when the bells last rang. The respondents to the survey that UBCM did indicated that 15 percent, at least, saw that their increases to property taxes would be, potentially, 1 to 2 percent.
I wanted to take a moment just to reflect on the case study that was included in that report. It was related to the district of Saanich. I think the reason that it’s important to actually bring some concrete examples to the House, it’s easy…. Well, it’s not easy; I’ll grant the minister that. It’s complicated enough to design tax policy, but it’s also important to hear what it means to people on the ground.
The minister heard the concerns, exempted the SUCH sector, made sure they were going to be made whole. We saw a reaction for charities and non-profits, but municipalities, no. The same response was not given.
Let’s look at the district of Saanich. The estimated cost for Saanich in 2019 during the transitional year of the EHT implementation is $1.78 million for the new tax, plus $209,000 for the employee MSP premiums. So here’s what Saanich is going to have to do. It’s not the Minister of Finance doing it now. She has downloaded that cost. Now the newly elected council of Saanich will have to….
At least, this is what the past council was considering. “These costs will be distributed between the general fund — property taxation — and the sewer and water utilities, user fees. The general fund portion equates to a 1.3 percent property tax increase. In subsequent years, the tax will rise in step with collective agreement settlements that are currently 2 to 2.5 percent. Saanich council will be faced with the choice of increasing taxes, reducing services or a combination of the two.”
They go on to talk about potential staffing implications. Has the minister looked at the potential loss of jobs across the municipalities and also at any of the small business information that she has, to look to see how damaging the EHT will be in terms of job positions in the province?
Hon. C. James: I think just a couple of things on the UBCM report. We have had our discussions with UCBM. We appreciated the information that was provided. A couple of things: (1) many of the figures were not net of the existing costs that they were paying on medical services premiums already; and (2) again, it was not the wide survey of all of the municipalities.
In looking at that analysis, again using UCBM figures, to use the example of Saanich, as the member has done, at net, when we come to the elimination of the medical services premiums, the total cost — if, again, Saanich did what most municipalities do not do, which is to put all of the cost on residential property — would be $35.60.
Families will be saving, again, remember, $1,800 and individuals saving $900. So even if that worst case came forward, then you still would be looking at significant savings for individuals and families, addressing the affordability piece.
On the jobs, again, we’ve talked a lot about competitiveness and the employment numbers in British Columbia and the growth of our economy, and we modelled all of that before looking at this tax.
S. Bond: In fact, the case study of Saanich goes on to suggest that, as the minister says, they may not choose to use all of property taxes. However, this minister was given advice that she shouldn’t use a single payroll tax to actually generate all of the revenue required, but she chose to do that anyway.
If you look further at the case study, if the assumption is that the increase should be managed through operating budget reductions, the impact translates into a reduction of at least 15 positions and impacts reductions in service levels.
I guess, in a nutshell, this minister has downloaded these costs to municipalities without any reaction to the concerns that they’ve expressed. I’m sure that she has actually looked at the same chart that I have, because there is even a more disturbing fact to the details that have been provided with the survey.
Let’s just pick, for example, Burnaby. A chart has been prepared by the Union of B.C. Municipalities. What it does is it has columns that look at the 2017 MSP premium costs, the 2018 MSP premium costs, then the 2019 double-dip year and then what goes on to happen to that community after the employer health tax goes on by itself.
Well, let’s just take a look at Burnaby, for example. In 2017, Burnaby paid $2.3 million, roughly, for their MSP premiums and in 2018, $1.86 million. In 2019, when you add together the MSP premiums and the employer health tax, it is $4.4 million.
Now, I don’t know how the minister can possibly suggest that those municipalities are just expected to manage that, but here’s the more disturbing trend. In 2020, when it’s the employer health tax alone, Burnaby, at least in the survey through UBCM, says that their employer health tax costs will be $3.3 million. May I remind the minister that in 2017, at the peak of their MSP premium payments, it was $2.3 million.
At the end of the day, while the minister is busy touting the reduction of MSP premiums, municipalities like Burnaby…. And there is an entire list of them. Granted, some of the incremental costs are not as great. But there is a long list of communities that are going to be faced with very difficult choices about how they pay for this tax.
They weren’t consulted. It was a surprise, and they were not exempt. Can the minister give us an update on the conversations that she’s having with municipalities across the province who are going to be saddled with the downloading of this tax?
Hon. C. James: To the member, as I said earlier, when you take a look at the UBCM numbers, most of the numbers do not take into account the net costs. So they have not taken off the amount of money that they’ve been paying on medical service premiums.
Let’s remember that this tax was phased in, so people have saved 50 percent in 2018 on their medical service premiums. That was not money that was clawed back from municipalities. That’s money that municipalities have saved in the 2018 year. In the 2019 year, yes, they have the employers health tax. But again, they have the 50 percent savings from the medical service premiums. Then they have a total savings in 2020.
For Burnaby, for example, if they took the worst-case scenario and put all of those additional costs onto property, individual properties, it will be a total each year of $13.44.
S. Bond: Is the minister, then, rejecting the information provided by UBCM, which says that when communities were paying MSP premiums, there is a particular financial impact? Municipalities are telling this minister that after her employer health tax, there are many municipalities in British Columbia that will pay more, on an ongoing basis, than they paid for MSP premiums. Is the minister saying that’s incorrect?
Hon. C. James: To the member, depending on the medical service premiums that they were paying, some will pay more, and some will pay less. I think I’ve already outlined the numbers here of the total cost if they looked at, as I said, the worst-case scenario in individual properties.
T. Redies: To the minister, I actually have a direct quote here from the former mayor of the city that I represent, which is the city of White Rock. He said that from a financial perspective, it is estimated that the new payroll tax will amount to $268,000 annually on city employee payroll. Previously the city was paying about $132,000 annually in MSP premiums.
After 2019, when the remaining 50 percent MSP premium cost is phased out, the net annual impact is estimated to be $136,000, which is more than double what they were paying under the MSP. Now, this represents, according to the former mayor, about a 0.64 percent increase in property taxes. But the impact of doubling up in 2019, when both the new payroll tax as well as remaining 50 percent MSP premiums are in effect, will be an additional cost of $66,000 in 2019 again.
The minister is saying that some cities are paying more. In the case of the city that I represent, it’s more than double. And she says that some are less. Can she actually specify which cities are paying less?
Hon. C. James: I can run through the list. But again, I’ve gone through the examples.
I can go through the examples of those that will save: Ashcroft, Belcarra, Anmore, Harrison Hot Springs, Kaslo, Keremeos. Again, based on the data that came from UBCM. Lytton, McBride, Nakusp, New Hazelton. These are net costs after the elimination of medical service premiums. Port Alice, Radium Hot Springs, Trail.
To remind the member, as I said, if you’re looking at a municipality taking all of that and putting it on property, you’re looking at anywhere from, as I’ve said, a few cents up to the largest municipalities looking at about $30 per household.
T. Redies: I should have been clearer to the minister. Could the minister tell us exactly what the dollar value of savings is for those communities?
Hon. C. James: I have the figures divided up under residential property. That’s how our analysis was done. Those are the residential property costs. Some of those municipalities would actually have savings, based on the amount, if they put it on residential properties.
S. Bond: To further the point that my colleague is making, I guess the frustration we feel is that the minister tries to trivialize the impact by looking at cents here and cents there.
The Union of B.C. Municipalities came with a report that pointed out that there are significant impacts for a large number of communities across British Columbia. The thing that I think we’ve been very concerned about is the layering-on impact. I know that we’re going to have the pleasure, in a few days, of debating another bill that’s going to download costs to British Columbians.
When you look at the case of Saanich, the minister says: “Well, they wouldn’t likely put it all on property tax. But if they did, here’s what it would be, and it would be manageable.”
“The impact on Saanich property owners could be compounded” — this is from the report, not my words — “with increased levies for the capital regional district and the hospital district, B.C. Assessment and B.C. Transit, which would also be subject to the employer health tax and facing the same challenges to fund it.”
What modelling did the minister do to actually take all of the layers of taxation that have been downloaded since she became the Finance Minister…? It’s fine to pick this one out and say it’s 18 cents or $25. What about all the other taxes that have been layered on? Was that considered before this tax was determined to be the way, the sole way, of funding the forgone revenue for MSP premiums?
Hon. C. James: I think I’ve described the kind of modelling that we did on the taxes — on this tax and the tax coming in. For individual municipalities, they obviously have the ability to manage their own budget. Many of the costs that the member pointed out are not provincial costs but in fact are costs that are municipal or regional. Those aren’t costs that we as a province look at, but we took a look at the net savings and, again, took a look at the $800 million that is in fact going back into the economy and is not being taken in, in the switchover from medical service premiums to employers health tax.
S. Bond: I want to reference just the conclusion of the report from UBCM. Then I know my colleague has a series of questions that will follow these.
Here’s the conclusion. The minister references, particularly, small local governments — there may well be some savings there — but let’s see how UBCM, the Union of B.C. Municipalities, can characterize the impacts of the EHT for municipalities: “While a small portion of local governments will see reduced MSP-related costs once the EHT is implemented, the savings for most of these communities are negligible.”
I think that’s a pretty accurate description of the kinds of answers the minister has given us today. Basically, the impacts will be negligible, so they’ll just be able to manage it. In fact, the minister was quoted in an article in the Vancouver Sun . When the municipalities came to UBCM, they were loaded with a number of resolutions.
The Lower Mainland Local Government Association certainly brought their concerns and, in fact, said that they “would like the province to design a better transition.” That association represents local governments in Metro Van, Fraser Valley and Squamish-Lillooet regional districts. They said, in a resolution that will be heard at this year’s Union of B.C. Municipalities: “In the absence of tax breaks provided to other sectors, the province should design the transition to the new tax to be cost-neutral.”
That was one organization. But it went on. The Association of Vancouver Island and Coastal Communities asked to meet with the minister to talk about the taxes. The list goes on, including Fort St. John, Vernon. Here’s what the minister had to say…. I think that’s the part that we find most difficult. In many ways, it’s just characteristic of being able to set up a new tax and just assume somebody else is going to pay for it.
Here’s what the minister said in July: “They’ll be able to absorb most of those costs.” Well, the fact of the matter is they’re not able to absorb them. They don’t just disappear. They get transferred to taxpayers. There is one taxpayer in British Columbia.
Could the minister tell us whether she has had any meetings following the Union of B.C. Municipalities with the municipalities and organizations that expressed such significant concern about the EHT?
Hon. C. James: In fact, most of the time I spent at UBCM was in meetings with individual municipalities. Many of them raised their issues, and some of those issues included the employer health tax. I listened to their issues, and I think that’s important. I think that’s important to continue to do, as I said, when taxes come forward.
T. Redies: Can the government confirm that Crown Corporations are also going to be expected to pay the EHT?
Hon. C. James: Yes.
T. Redies: B.C. infrastructure benefits will be the Crown employer facilitating the union benefits agreement. Is the BCIB going to be paying all of the EHT, or will that fall on to the contractors who win bids?
Hon. C. James: As the member knows, B.C. infrastructure benefits is being put together. That’s a structure that is being created. They’ll be looking at…. As I think the member knows from the bill, the issue is the employer-employee relationship, so that’ll be a piece that they’ll be reviewing.
T. Redies: I would have thought that with the announcement of this BCIB Crown employer and the EHT having been worked on by this government for many months now that we’d have a bit more fulsome answer than that.
Is the BCIB…? If they’re employing the labour under these union benefit agreements, are they going to shoulder the payroll tax or not?
Hon. C. James: Again, it will be depend on the relationship. I expect that that’s the process, but it will depend on who is the employer and who is the employee, with the contractors and with the infrastructure benefits. That will be determined.
T. Redies: Now, this just seems to be layering on another level of uncertainty in the province with respect to these public infrastructure contracts. So maybe just an example: in terms of companies that bid for contracts with government, does the minister expect contractors to increase prices, or will employers exposed to this tax simply not be able to win as many contracts? Obviously, both results increase prices, and they result in fewer bids, so that comes at an increased cost to government.
Can the minister, again, just provide us any insight here as opposed to just saying they have to go away and look at it?
Hon. C. James: I think, similar to responses to other questions, this is a tax of general application. Obviously, the employers health tax will be paid in contracts or relationships that are there. It will depend, again, on the employer-employee relationship and who is deemed the employer. The employer will then pay the tax.
Again, back to the economic modelling that was done, the work that was done around the employers health tax, the strength that we see in the economy and the $800 million, again, that goes back into the economy…. We feel this is the right direction to go.
T. Redies: Just to confirm, from what I am hearing…. At least, I think I’m hearing that if BCIB is the employer, they would pay the payroll tax.
Hon. C. James: The employer will pay the tax on behalf of the employee. Again, it will depend on what the contract looks like and who is the employer and who is the employee. But the rule, according to the bill, as the member knows, in the sections that we’re looking at: the employer will pay the tax on behalf of their employees.
T. Redies: I think I’ll just move on. It’s still not very clear to me.
Just, again, talking about the Crown corporations and the impact on them, last night in a bit of a spirited discussion, the minister indicated that she expects even businesses that are losing money to pay the tax.
ICBC, of course, is a Crown corporation that we know is losing $1 billion a year. Does the minister expect ICBC to pay payroll tax on its 5,200 employees? If that is the case, is the expectation that…? That $7 million or $8 million, depending on what the average salary is at ICBC — is that expected to have any impact on drivers’ rate premiums going forward?
Hon. C. James: As I mentioned, Crown corporations will pay. I think it’s a little rich for the members to raise the issue around costs for drivers at ICBC, given the mess that was left, but I think that can be stayed for another day. Crown corporations will pay.
T. Redies: I know the government on the other side likes to talk about the mess they say they inherited from ICBC. Of course, the minister presided over a budget that indicated that ICBC would lose $225 million, and then, within four months, it was $1.2 billion. That was under her watch.
My question is simple. ICBC is currently forecasting, under this government, an increase in rates of 28 percent over the next three years. Is this $7 million or $8 million, depending on the average salaries at ICBC, included in that forecast?
Hon. C. James: ICBC will do their budget. They know their costs. They know the employer health tax is part of their costs.
S. Bond: I want to return, with the minister, to the issue of BCIB, which is a new Crown. I want to have her, please, for the record, clarify the relationship that is going to exist between BCIB and the employees.
[D. Routley in the chair.]
We went through a long discussion about the employer-employee relationship — where they report, who pays them. We should be clear. This government created a new Crown corporation to actually act as a hiring hall. When you’re going to build a public infrastructure project in British Columbia, workers have been told they have to go to BCIB, which will be the hiring hall.
Are they not deemed to be the employer, and why on earth would costs be transferred to the contractor?
Hon. C. James: I think we’ve given lots of latitude in this discussion, outside the sections. I think we’ve been very open in answering all the questions, but a discussion and a debate around BCIB is not part of this bill. It’s not part of this legislation. As I said, this legislation relates to who pays the employer health tax. BCIB, which is the employer, will pay the health tax. Whether that’s the individual organization or whether that’s contractors and related to how BCIB does their business is a debate for, I’m guessing, estimates.
The Chair: The member on section 8 and the employer paying to government.
S. Bond: Thank you. This question is entirely related to section 8 and to the point the minister just made: who will pay the employer health tax. The question is: will BCIB pay the employer health tax?
Hon. C. James: As the section says, the employers health tax will be paid in the calendar year. And again, if BCIB is determined to be the employer, then they will pay the employers health tax.
S. Bond: I think that provides some clarity. It looks very much to us…. When we look at the definition of employer and when we look at the definitions provided previously about permanent establishment — all of those kinds of things — it looks quite clear to me that BCIB would be deemed to be the employer.
I would just remind the minister that the government has already filed for a corporation at BCIB. In fact, the Minister’s deputy minister is on that board. So I’m assuming that the implications of the employer health tax, which are pretty significant if BCIB is going to be an employer….
When will the minister be able to confirm for us and for British Columbians whether or not, indeed, BCIB will be deemed to be the employer and will be forced to pay the EHT?
Hon. C. James: As the ICBC question, it’s another Crown corporation. Crown corporations will be paying the employer health tax. They will create their budgets. They will come forward in the budget process, and the opportunity for members to ask questions about individual ministries and individual Crown corporations happens during estimates.
T. Redies: In the session before lunch, the member from Saanich and the Gulf Islands raised a very good point, in that employers who have union agreements with their employees are not only having to continue to pay MSP and EHT in 2019 and 2020. There’s a very high likelihood they’ll have to continue to pay the equivalent of the MSP under their union contracts, while now paying the EHT until those agreements can be renegotiated.
Did the government think about exempting businesses like that, which were already paying the MSP for employees under union contracts, from paying the EHT until their new union agreements were in place?
Hon. C. James: Every individual union and employer may have a different kind of contract, a different kind of employer relationship, a different kind of determination around what benefits they’re paying and what they aren’t, what salary they’re paying and what they aren’t. That’s up to those individual businesses.
T. Redies: In their ratified 18th public service agreement with the BCGEU, the 50 percent reduction in MSP premiums is a savings to government of, I understand, $13.8 million for this year alone.
Can the minister confirm how the government is handling the savings in this particular year?
Hon. C. James: Those would be individual discussions between labour and the union. I’m sure they’re having those discussions.
The Chair: Before we continue, I’d like to remind the committee that we’re focused on section 8. Questions should be relevant to the clause under consideration.
Please proceed.
T. Redies: Thank you, Mr. Chair. These are very relevant questions, because they speak to, as I will demonstrate, the government picking some winners and some losers with this particular tax.
I’ll just let the minister know, if she isn’t aware of it, that apparently regular full-time employees of the BCGEU, which, of course, is a union that gave the NDP $2.7 million in campaign financing…. Those employees, the full-time employees, got a one-time payment of $588.50, and part-time employees got a one-time payment of $262.50, on October 5, 2018.
Can the minister confirm that that is correct?
Hon. C. James: This isn’t related to this section. This is obviously related to bargaining. I’m happy to have a bargaining conversation, separate and apart, but not related to this section.
The Chair: Member, if it’s related to section 8.
T. Redies: It is quite related to section 8, Mr. Chair. One of our concerns, as we’ve been saying for hours now, is about the impact of this tax to businesses, which the minister seems to have very little empathy for. Yet her government has passed on savings of $13 million to the BCGEU, as of October 5, giving them almost $600 in one-time payments for full-time members and $267 for part-time members.
I guess my question to the minister is, does the minister not think it’s a little unfair that the NDP government is making compensatory payments to the unions, which have heavily supported their campaigns in the past, while at the same time offering no relief to B.C. businesses, which are paying both MSP and EHT, in 2019, and may have to do so for a number of years until they can renegotiate contracts?
Hon. C. James: I’ve had the discussion about the areas where we are supporting businesses in British Columbia. We believe the employers health tax, in fact, provides that support — $800 million that goes back into the economy, lowering the small business tax rate, supporting businesses by eliminating the PST on electricity, a number of tax measures that have continued to be in there. We believe this is a balanced approach.
T. Redies: Before I allow my colleague from West Kelowna to ask a few questions, I want to go on the record that this government has actually done very little for small business that was not already planned by the previous government.
The PST removal on electricity payments was planned by the previous government. The reduction in the small business tax was planned by the previous government. So to stand up and say that they’re benefiting small business is, really, quite rich. Now I’ll turn it over to my colleague.
B. Stewart: Well, I hope I’m speaking on the right section here. Because of the fact that it’s Agriculture Day here at the Legislature, I know that many of the people that are visiting with your colleagues in government are raising concerns about a tax which many in the British Columbia farm industry and agriculture weren’t previously subject to having to pay, unless it was an optional choice that they made to pay the medical services premium.
I think probably one of the things I wanted to raise is the question about the double taxation of employer health tax on some of the people that are here in the province working seasonally. Now, I don’t know how much thought or relevance has been put into the fact that the employer health tax…. They understand that there is this accepted cost which they are going to have to pass on to the people that are purchasing their goods, whether it’s dairy, fruit or other agricultural products.
However, with the seasonal workers…. There are about 7,000 currently, on an annualized basis, coming into the province. Those workers…. The requirements by the federal government require that the employer, such as Bylands Nurseries in my riding, pay an additional insurance for these people to come into Canada. That’s part of the requirement.
I guess they’re questioning why they would have to pay on top of the over $100,000 that they’re going to be paying in employer health tax for all of the employees. That’s regular and seasonal. They will have an additional cost of some $240 for each employee that comes into the country, which is about $1.7 million for the workers here that are in agriculture.
Hon. C. James: Thank you to the member for the question. We canvassed this yesterday, but happy to raise the issue. It was an issue that came forward in the area of agriculture as well.
Just to be clear, there is not a connection between the employers health tax and health insurance, per se. Whether it’s foreign workers or seasonal workers, if there were requirements around health insurance, it wouldn’t have anything to do with the employers health tax. That’s not related. There isn’t a direct correlation between the MSP and the employers health tax in that respect. So if there’s an obligation on Canada’s part, or otherwise, for someone to require health insurance, that doesn’t change with the employers health tax.
B. Stewart: I guess the part about it is…. There is no correlation, maybe, in terms of their different types of insurance; however, when these seasonal workers are here in Canada, they’re not eligible to use any of the services that are provided either through MSP or through the employer health tax — the type of insurance. The insurance company is directly responsible, as the employer makes certain that they’re insured and all the other responsibilities.
I think the question really is that they’re paying for something and…. You know, I haven’t done the math to figure out how many employees exist in agriculture that are now getting the benefit of having employer health tax paid by the employer. The fact is that this 7,000 block of workers is being paid for by agricultural employers here in the province, and they are basically paying for two sets of insurance. That’s really what I’m trying to….
Whether it’s been canvassed or not, I think it’s an oversight to think that they should…. The requirement should be removed by Canada, which I doubt is going to happen, because that’s a requirement under the seasonal agricultural workers program. So how do we exempt and not further increase the cost of food on the kitchen table?
Hon. C. James: Thank you to the member. I appreciate you raising the issue. I know you’re passionate about the issue of agriculture, and I appreciate you raising the views that you have. But I think it’s important to note, again, that the employers health tax is not paying for health care. Much more, our general revenue pays for health care.
Everybody contributes to health care, including people who work in agriculture and including all of us as individuals, including people in this province, including businesses, etc. If someone is a foreign worker or a seasonal worker and they require additional health insurance, the employers health tax doesn’t impact that and doesn’t make a difference there. So yes, they will be required — if it’s required by Canada or required for the workers — to continue to pay whatever they pay in that area. It doesn’t relate to the employers health tax.
B. Stewart: Well, I guess I just would like to make the point that…. I hope she understands that not only is the obligation of the new employer health tax increasing that cost to agriculturally produced products, but this is an extra burden over and above that. I understand that the employer health tax doesn’t cover the vast cost of the health care costs in the province.
I guess what I’m just saying is…. Does she at least acknowledge the fact there may be an unfair burden on agricultural employers that are using seasonal agricultural workers?
Now, there’s a second set. There are another 16,865 temporary foreign workers that are also in the province, and those are working in more year-round operations. They also have that same obligation.
We have nearly 24,000 workers that are coming here to help make certain…. I mean, it would be great if the labour supply was there so that we wouldn’t have to use this, because we fly them, we insure them, we house them, and we provide vehicles for them. So it’s not a less expensive option. It is an option that we have to resort to, to maintain the supply and the growing interest in British Columbia food products.
I guess what I’m really saying is that it seems to me that there is an imbalance — not that there aren’t imbalances in other places but in agriculture alone — where we didn’t have, typically, a medical services plan for most of the hourly employees in that sector. We now have the new employer health tax, plus we have the burden of the other insurance we had.
I’m really just asking: do you understand and accept the fact that maybe this is something where this inequity could be either reconsidered as an exemption or that there could be some sort of offset compensation for agricultural producers in the province of British Columbia?
Hon. C. James: I certainly appreciate the comments from the member. What I do acknowledge is that our government is continuing to look at support for the agriculture industry. I think we’ve done exceptional work and the minister has done exceptional work over this last year when it comes to support for the agriculture industry, and we’ll continue do to that.
But the employers health tax has no bearing on the kinds of responsibilities or requirements that are there for businesses that bring in temporary foreign workers or that need seasonal workers to provide support. Those requirements are not changed or impacted by this government or by the changes that we’re making in this bill.
I appreciate the member’s points that the agriculture industry needs support and that any additional costs have an impact on them and that we should continue to look at that. That’s certainly something that I think the minister has been doing very well.
S. Bond: It’s probably a really good place to segue into some concerns that have been expressed to us by a number of employers across British Columbia. I’m sure the minister has heard from them as well. But I think it would be good for us hear her answers on the record.
I want to quote from a business owner in the natural food sector from Vernon. The reason we include that in this section is because this is the section that actually brings the tax to life.
“In January, we launched an expanded benefits program for our employees, including extended health, dental, life insurance, critical illness benefits and a health and wellness spending account. This program has a significant cost. We may have to greatly reduce employees’ coverage to pay the EHT. This means our employees will no longer have access to prescription drug coverage, dental coverage, paramedicals or insurance that gives them and their families peace of mind.
“We were very proud to be able to offer the expanded benefits program to our 450 employees. If this tax is passed, then we will seriously have to cut back the benefit package.”
Have the minister and her staff done any work to look at the kinds of adjustments that business owners, like this business owner in Vernon, are concerned about? With the additional cost of the EHT, if they’re not going pass it on to consumers, one of the things that they will look at is a reduction in benefit plans. Has any modelling been done to look at that potential?
Hon. C. James: Thank you very much to the member. I think we have talked a fair bit about the modelling and the work that was done in taking a look at economic indicators and taking a look at changes in the tax system. Whether it’s federal or provincial or whether it was competitive issues, all of those issues were taken into account.
Each individual business obviously has their own circumstances, so I’m not going to second-guess individual businesses and the challenges that they identify or the issues that they raise. We recognize that this is a transition, but I think it’s also important to note that the vast majority of employers across this country — and the largest provinces, Ontario and Quebec — already have a payroll tax in place. They have managed to get through that transition many, many years ago and were able to move to this direction.
We think that the benefits of getting rid of a regressive tax, the benefits of eliminating a tax that is very difficult to administer, both for employees and employers, the $800 million savings to everyone in our province when it comes to money that’s going back into the economy — and the savings for individuals and families, $900 and $1,800 — take a balanced approach to this.
S. Bond: Well, I think one of the things we’ve been learning over the last two days now is that in the minister’s discussion about affordability, we’re continuing to whittle away at the amount that, she continues to contend, people will save. We’ve already discovered that municipalities will be transferring costs to taxpayers, whether it’s through a property tax increase or, as it could well be, user fees. Here, we’re talking about employees who would have to use their own personal funds, potentially, to look at some of the benefits provided.
Our point is that in creating a new tax — obviously, section 8 creates this new tax — somebody has to pay for it. It’s not fair to simply say: “Well, it’s going to save people money — period.” We’ve demonstrated over the last two days that there are a whole bunch of people that are going to be impacted as that impact is downloaded to businesses and other organizations.
I want to just continue on. The same writer also said to us: “The proposed tax assumes that the higher a company’s wages, the more tax it can afford to pay. It does not consider the profitability of the company.” I think that’s an important thing. My colleague referenced that earlier in talking about one of the Crowns.
Has the minister looked at the skewed impacts that will happen for small and medium-sized businesses? They really have not a comfortable profit margin, in lots of cases. So they are in the position of having to find a way to cover these costs that is probably quite a bit different than a larger enterprise. When it comes to small and medium-sized enterprises, has the minister looked at the impact being that much more significant on those smaller businesses?
Hon. C. James: The member raises the issue of fairness. I think that’s exactly the reason that we felt it was so important and so critical to eliminate the medical services premiums. They were not fair, they were regressive, and they had increased over 16 years — in fact, more than doubled.
In doing the design of this tax and taking a look at the design of the employer health tax, we took a look at exactly that — how we could ensure it was fair, how we could ensure that small businesses were exempt, how we could look at a phase-in for businesses between $500,000 and $1.5 million. Again, it’s to recognize the differences in the payroll and then the full rate at 1.5 percent, which is about 5 percent of businesses and 90 percent of the tax at that top rate.
I think it’s just important to note that the phase-in was designed to provide exactly that kind of support to businesses of varying sizes and various payrolls, obviously.
T. Redies: That’s interesting. I have a situation here where it seems quite punitive. This is a company that operates up in the Okanagan. It’s a company in the forestry sector that is currently facing devastating softwood lumber import duty taxes, as we are all aware. This company has about 1,000-plus employees. Currently they are paying $900,000 in MSP, and they’re going to have to pay $1.6 million in EHT, for a total of $2.5 million in 2019 and 2020 because of the double-dipping.
I guess my question to the minister…. Has the government thought about what they are going to do to help companies like this that are experiencing hardship in sectors that are very important and that are important employers in the province? What is the plan? They seem to be a little bit less empathetic to a lot of businesses that are now having to pay a lot more money in payroll tax.
Hon. C. James: I think the work that we will do to continue to grow our economy is the kind of work that we set as a government when we came in, which was focused on three very clear priorities: affordability for individuals and families in our province; improving services; and building a strong, competitive, sustainable economy in British Columbia.
When it comes to, certainly, forestry and the work that we are doing in the area of forestry, the work we are doing in the area of softwood, that’s work we’re going to continue to do, as a government, to support those industries. We will continue to do that.
T. Redies: It just seems to be adding insult to injury, for forestry companies that are experiencing these punitive softwood lumber taxes, that the Finance Ministry wouldn’t take that into consideration when they implemented this tax. I’m going to move on, though, in the interests of time. I know we’re still on section 8. You’ll be glad that we don’t have too many more questions, I think, on section 8.
I just want to talk about a business owner in Delta who wrote to us and said: “For our employees to get the same coverage and benefits that they already had will cost us $30,000 more or three times as much as previously. In addition, we also have a profit-sharing plan, and this additional cost comes right out of our bottom line. Our employees will now have a reduced profit-sharing pool and will receive the exact same coverage as before, and we’re out an additional $30,000.”
Can the minister…? Was any thought given to this? I mean, part of the opportunity, of course, when businesses are successful is to share their profits with their employees. It now seems that they will be sharing more of their profits with the government. Perhaps the minister can tell us: how many companies in B.C. use profit-sharing? Did they think about the unintended consequences of this tax on things like profit-sharing in companies?
Hon. C. James: I think every individual business has their own relationship with their employees. Each business does their business in the way that they want to and they need to. That could have a whole variety of methods. The member mentions one. There are a whole number of other measures that employers do to provide support to their employees, and I expect that that will continue.
I think I’ve already talked about the modelling we did around the economic impact, the impact on British Columbia, the strength of providing those resources to individuals and families that would then go back into the province and, most importantly, the $800 million that is a savings to the economy for everyone in British Columbia.
T. Redies: Thank you to the minister for that answer, but it does seem to be a bit of a fallacy. The minister has been talking about these moneys that are going back into the economy, yet we see that retail sales are lagging behind previous years. In 2017, retail sales went up almost 10 percent. They’re now tracking at 1.2 percent year over year. Clearly, the impact of the projection of the EHT, additional taxes, is creating tons of uncertainty out there. That, I think, is already being felt in a lack of spending in this economy.
What we’re seeing here are issues stemming from the fact that this is a pre-profit tax on small business. Again, can the minister not understand that this tax is going to have a negative impact by reducing profitability? That will mean less spending in local communities by employees of small businesses as a result of this tax.
Hon. C. James: We’re going to agree to disagree on this piece. We have done, as I said, modelling on the impacts. We believe that providing the support to individuals and to families is a support to businesses, and $800 million is certainly a support to everyone in British Columbia, to have resources going back into the economy. That’s in addition to the supports that we’re putting in place for business. We will continue to work with business to look at further supports to ensure that we remain competitive, to ensure that we keep our economy growing.
T. Redies: Well, I would remind the minister that if the previous government had been in government, it would have been a $1.3 billion positive impact to the economy, not $800 million. Also, I’m not sure if the minister remembers this, but her government actually forecast that retail sales would increase by 4.3 percent this year. That is not what it’s tracking to.
I guess my question…. The minister talks a lot about talking with people, municipalities, having meetings, businesses, etc. If the minister sees that this tax is having a substantially negative impact on small businesses in our economy, is she prepared to walk back the tax or to at least increase thresholds so that this tax does not create the unintended consequences that we’re already hearing about on this side?
Hon. C. James: I think we’ve already canvassed this as well. I was asked by a member: would there ever be reviews of taxes as they go in? Each year, as Finance Minister, we do a review of the range of taxes, the range of supports we provide to business and the range of programs and services we provide to British Columbians. We will continue to do that.
S. Bond: I guess on the theme of unintended consequences, we’ve had a government that’s talked about affordability. As we’ve discussed this for two days, we’ve actually seen the amount of benefit to individuals being whittled away at because the costs are being transferred back to them from a mechanism other than this government directly.
The other theme that’s been important — everyone in the House would agree — is that we do need to deal with the housing issue. We have heard from the residential construction sector that, in order to pay the EHT, they will likely transfer those costs onto the prices of their homes.
Can the minister tell the House — and us, obviously — what modelling was done to look at the impacts on the housing sector? Again, it’s just a list of things that apparently weren’t thought of or were simply ignored when it comes to what are the unintended consequences of the EHT. We would like to hear what the minister has looked at in terms of the housing sector.
Hon. C. James: Again, I think we’ve run through the analysis. I can talk again about the factors that were taken into account when it comes to housing in particular. As the member knows, we are making major investments in the area of housing both on the supply and the demand side.
We are working very hard with our 30-point plan and with the Minister of Housing as well. There are factors outside, obviously, of government’s control — things like interest rates, which were, again, taken into account as part of the analysis in looking at this tax. We are moving ahead in a balanced approach.
T. Redies: I just want to pick up from where my colleague was speaking with respect to the housing industry and, again, unintended consequences or maybe intended. I don’t know.
A very large construction company that actually builds residential projects in the Lower Mainland has indicated that they are going to be paying an additional $1 million in tax because of the EHT. They have indicated that all of these taxes will be passed on in the costs. I’m quoting from them. They are saying that all of the costs of these taxes are going to be passed on in costs to condos, in terms of the purchase price. From their perspective and what they say, the whole point of making things more affordable is not going to happen.
I mean, clearly — and I actually support this — the government wants to create more affordable housing. The government has announced — well, has announced in their amendments with the spec tax — that the spec tax is going to be removed off of developments.
Given that property developers have, really, no alternative other than to pass on their costs to condo purchasers, if the government is really serious about making housing more affordable, why would they not exempt property developers from the EHT through this building process? Surely that would make more sense than taxing these companies more and then forcing them to increase the costs of housing to end purchasers.
Hon. C. James: As I have said in other questions, this is a tax of general application. It goes across the board. There are exemptions for groups and organizations that don’t have the ability to be able to manage their own costs.
Again, certainly in the modelling and the analysis we did when it comes to this tax, when it comes to the benefits of this tax, when it comes to getting rid of the medical service premiums, when it comes to the benefits that go to families and individuals and when it comes to the benefits of $800 million going back into the economy, we feel that on balance, this is a strong direction for all of British Columbia, including businesses, including individuals and including the people of our province.
T. Redies: Thank you, Minister, for that answer. It’s just curious, to me because, again, we know that, particularly in the Lower Mainland, developments take a long period of time, up to five years, to get a building permit. One developer gave me an example that the EHT and the spec tax, if the normal five-year situation happened, would add an additional $30,000 per unit onto the condos that he was selling.
I appreciate that the minister wants to talk about the $1,800 in MSP savings, but when her tax policies are actually costing end buyers $30,000, doesn’t that just seem to fly in face of this whole government moniker around making life more affordable for British Columbians? In effect, this taxation is actually making life less affordable and certainly making housing less affordable for British Columbians.
How can the minister reconcile that between what she’s saying around the $1,800, yet costing British Columbians tens of thousands of dollars more for their properties?
Hon. C. James: Chair, I’m happy to debate housing if the member wants to debate housing. I have to say that I have restrained myself from talking about affordable housing with this member on the opposition because of the challenges. The reason we are investing is because of the mess that was left when it came to a crisis around affordability, not simply in housing but in a whole number of areas.
To come back to the employers health tax, which is what we’re here to talk about, I think it’s important to note, again…. I’ll repeat, again, that the modelling and analysis that was done looked at all of the economic pieces in British Columbia and believes this is a balanced approach — as other provinces have done across this country.
The Chair: I would remind members to focus their remarks on section 8 of the act.
S. Bond: Thank you, hon. Chair. I will certainly do that.
I want to talk a little bit about chambers of commerce and boards of trade. We’ve talked about the SUCH sector. We’ve talked about charities. We’ve talked about municipalities. We talked about some of the businesses, the Crowns.
There has been pretty much a universal reaction across British Columbia by chambers of commerce, which represent hard-working men and women in businesses across the province. I was particularly struck by some recommendations, from the Burnaby Board of Trade, related to the tax that is in section 8, which we are debating. I’m wondering if the minister would be prepared to entertain the comments of the Burnaby Board of Trade. They provided, in a very constructive way, four fixes to mitigate the impact on business. I’m wondering if the minister has considered the recommendations related to the tax that we’re debating.
The first suggestion from the Burnaby Board of Trade is a recommendation to postpone implementing the tax until 2020 so that it coincides with the removal of MSP premiums, or allow a process for businesses and non-profit organizations — we know that non-profits have been taken care of — to apply for an exemption. Non-profits were given an exemption.
Did the minister consider the recommendation of the Burnaby Board of Trade, on behalf of its members and its community organizations, to postpone this and to sort out the MSP premium issue before she implemented the tax?
Hon. C. James: I think the member has already mentioned the exemption issue and the fact that that was part of the discussion. The “how” was what we worked on after the budget came out: how those exemptions would occur. Different provinces do it differently. That’s the work that we did around that.
On the issue of postponing the tax: no, the member can see that the bill is here. The bill moves ahead with the employers health tax if it passes. I think it’s important to note again that with that transition, we ensured that we cut the MSP by 50 percent. So those employers that are paying MSP have a 50 percent savings in 2018 and a 50 percent savings in 2019, which assists with the transition to 2020, when we get rid of the medical service premiums.
T. Redies: I think the minister has said multiple times that they consulted with other provinces who have put this payroll tax in place and that informed their forecast going forward, or their models, as to what would happen.
Just noting here, in Ontario they put the tax, I believe, in place in 1990. Their change in GDP relative to the rest of Canada…. It wasn’t a great time in 1990-1991 for Canada, but in Ontario, after it brought in the payroll tax, the GDP fell 3.932 percent. For Canada, over the same period of time, the GDP fell 2.092 percent.
Interestingly enough, in Manitoba when they brought in the tax, which was 1982, their GDP rose by 0.712 percent. But in Canada over the same period, the average GDP increase was 2.718 percent.
In Newfoundland-Labrador, they brought the tax in, in 1990 to 1991. In 1991, they had, actually, a positive increase of 0.4 percent. But in 1991 to 1992, their economy fell by 1.5 percent. Over the same period, the Canadian economy grew.
Based on that evidence, is the minister not concerned that this tax could have a severe impact on the GDP growth or even cause a negative, as history has shown? What modelling has the government done based on this evidence? Do they think that somehow this is not going to happen to B.C. for some reason? If they could maybe justify why B.C. is not going to have a negative impact.
Hon. C. James: Again, to the member, I think we’ve canvassed this probably a dozen times, but I’m happy to go over it again. We have modelled the employers health tax when it comes to our economy. We have, as I mentioned before — I think yesterday in our debate — experts in the ministry who are responsible for economic forecasting.
They consider the impact of all new taxes on the economy. They have considered the impact of this tax. They’ve also considered outside factors, external and internal factors. They’ve included commodity prices, population, economic growth, migration levels, risks that are out there in the economy. All of those factors were considered.
Again, we believe the employers health tax is a balanced approach for B.C.’s economy.
S. Bond: The tax that is being introduced through this section is having a significant impact on employers across British Columbia. We have heard, and I know the minister has, from the Vancouver Board of Trade, chambers of commerce right across the province, the Retail Council. All of them are saying….
There’s an interesting article from Val Litwin, who is the head of the B.C. chamber of commerce, talking about the shift in taxes. I think the important thing to recognize here is that it is a shift. It is not simply the MSP premiums that are being eliminated. There is a part 2 to that.
I think one of the things that we’ve been deeply concerned about is…. We’ve heard there’s modelling, and we’ve heard there’s been consultation, yet the minister and the government moved ahead and, frankly, downloaded the entire forgone revenue costs to businesses in British Columbia.
Thankfully to goodness, there was a fix for non-profits and for charities in the province, because that would have been even more disastrous. So we have significant concerns.
Whether it’s the Prince George chamber or you name it, chambers across the province, all of them have expressed their concern, have asked the minister to fix the double-dip, in particular, to perhaps delay and sort it all out. And apparently, the answer, after two days of questions at this point in the bill is: “No, I won’t do that.”
Before we move on to the next section, I want to leave at least one example for the minister. There are book-loads of them, companies like this one across British Columbia, who are saying no to section 8, no to this tax.
This is a company called Monster Industries. It’s a medium-sized employer in British Columbia. It has operations in places that really need people to have jobs, not that they don’t everywhere — Houston, Mackenzie, Williams Lake and Terrace. This medium-sized enterprise employs 120 people, and they pay out close to $7 million in payroll to their employees.
I want to read this quote:
“As an employer, I’ve prided myself in treating my employees well. As such, we have covered their MSP premiums over the past few years. I find that this is a good added benefit to our employees and increases retention and morale.
“The cost associated with this is close to $50,000 per year that we take as a direct cost to our bottom line and does not reflect back to our customers. Now that this new payroll tax is being implemented, the cost to our company will be closer to $136,500.
“This is close to three times the cost of us paying for our MSP to our employees. As an added bonus, the government is deciding to make us pay MSP for a one-year overlap while the new tax is being implemented. This will cost Monster $186,500 next year, if we decide to be an employer that is not willing to take a stand. But my name is Kyle, I am 36, and I am a stubborn individual who enjoys fighting for things that I know are not fair.”
Minister, section 8 is unfair to businesses in British Columbia. Will she take the opportunity to stop the double-dip, to reconsider, to delay the implementation of the employer health tax, to continue to look for ways that may not solely rely on a payroll tax? Will the minister reconsider on behalf of companies and individuals like Kyle?
The Chair: Minister, and for the information of members, we’ll be taking a short recess after the minister answers. We’ll take a ten-minute break after this.
Hon. C. James: Thank you very much, Chair.
Thank you for the letter and the comments from Kyle, the individual business owner that the member raised.
I just want to correct a couple things that the member said. In fact, it’s not bringing in all of the revenue from medical service premiums. Medical service premiums bring in $2.6 billion. The employer health tax brings in $1.85 billion, which in fact means an $800 million savings, tax savings across the board.
I also think that it’s important to recognize that Kyle’s business, as well as other businesses that have been paying medical service premiums, saved 50 percent on their medical service premiums in 2018. Those were dollars that those businesses saved, that we cut, so they kept those savings. And there are 50 percent savings in medical service premiums in 2019 as well.
I recognize that this is a transition, and that we are moving in a transition. But again, when we take a look at those savings, when we take a look at the $800 million, when we take a look at the support for getting rid of a very difficult system to administer for both businesses and employers, we believe this is the right direction to go.
Section 8 approved.
The Chair: On that note, we will take a ten-minute break and reconvene at 4:10. Thank you.
The committee recessed from 3:58 p.m. to 4:10 p.m.
[D. Routley in the chair.]
Section 9 approved.
On section 10.
T. Redies: Last night the minister indicated again, when asked, that she felt businesses should pay, regardless of whether or not they were making money. Now, the CFIB indicates that two-thirds of Canadian businesses make under $73,000 a year in profit. The CFIB also says that the EHT is going to cost those small businesses roughly $15,400 in payroll tax annually.
My question is to the minister in terms of this commentary she has around fairness for businesses. Does the minister think it’s okay that these businesses should suddenly pay an additional 21 percent of their earnings to the government? If the minister was, as an individual, suddenly told that she would have to pay another 21 percent tax on her take-home earnings, would she think that that was actually fair?
Hon. C. James: As we’ve talked about, this tax is based on the payroll of the employer. The majority of businesses won’t pay this payroll tax. Only 5 percent pay the top rate. And that brings in 90 percent of the resources that come in on the payroll tax.
Again, we’ve ensured, through the phasing-in approach, that it is treated fairly to businesses depending on their payroll. And it is competitive across Canada with other payroll taxes.
T. Redies: I guess where we’re going is this whole fairness around the threshold of $500,000. As I mentioned earlier, the CFIB indicated that in order to make it more fair for the smaller businesses in our province, the threshold should be increased to $1.25 million.
I guess my question, again to the minister, is: if her small business reports that come out suggest that this is actually being quite punitive to small businesses, is she willing to raise the threshold, as per the CFIB recommendation, to $1.25 million?
Hon. C. James: I think it’s important to state again that as I do every budget, we review all of the taxes, we review all of the measures, we review the impact of those, and if changes need to be made, we’ll be looking at changes.
That’s part of, I believe, being a responsive government. It’s to ensure that you take a look at measures that are in place, whether they’ve been in place for a long time or whether they’re new measures, and you do a review of them. We’ll be doing that with all of our budget measures.
S. Bond: That would be, I think, helpful, because the minister’s colleague who is the Minister of Jobs, Trades and Technology launched a Small Business Task Force. In fact, they did a paper, and it’s called an engagement summary. They went out and actually heard feedback from a number of participants, and they made some suggestions, or at least they outlined some initial thinking about how the minister might want to think about the employer health tax. And believe me…. I’m assuming that she’s either seen this or had this discussion with her colleague.
Challenge No. 1, as expressed in the paper, was the cost of doing business in B.C. The first heading is “Cumulative tax burden,” which we’ve talked about over and over again in the last two days. They have an interesting suggestion, and it lines up precisely with the comments of my colleague from the CFIB, as she has just mentioned.
The reason we’re talking about this, in section 10, is this is all about thresholds. This is the minister having made a decision that $500,000 was a threshold. As we discussed previously, the definition of “small business” in British Columbia is actually 50 or fewer employees. It doesn’t take a lot to get to a $500,000 threshold in the employer health tax.
The participants in this study suggested, first of all, reducing the EHT — which, of course, we would certainly agree with; postponing its implementation, which we’ve asked the minister to consider, to basically remove the double-dip year; and, more relevant to the conversation we’re having, increasing the $500,000 threshold to $1.25 million.
Here’s another aspect. They would like to know if the minister has considered implementing graduated threshold tiers.
Hon. C. James: I’m not sure whether the member has a different thinking in mind when she says graduated rate, but in fact, the tax rate is phased in between $500,000 and $1.5 million. It is phased in for businesses, so there is a graduated rate, a phased-in rate that occurs for businesses, and I think that’s important, again, to be able to address the challenge that the member identifies. It gives a fairness for businesses between $500,000 and $1.5 million. People with more than a $1.5 million payroll pay the full amount. People between a $500,000 and $1.5 million are phased in on that rate.
S. Bond: Would the minister consider increasing thresholds in the future, based on inflation?
Hon. C. James: As I said, I am looking at each and every measure that we do in every budget. I think that’s important. Whether a measure has been put in place for the year or whether a measure has been put in place for 20 years, I think that’s the job of a government and the job of Finance Minister — to review the measures that are put in place and to look at where improvements can be made.
S. Bond: Well, the final suggestion, and perhaps the minister can let us know if she’s considering this, is looking at alternative best practices for paying the MSP premiums, such as amending the employer health tax to a more even split between employers or individuals or, perhaps, taking the advice of the task force that the minister created and looking at not solely a payroll tax.
Is the minister, in her thinking over the next number of months, going to consider a more even split of the forgone revenue?
Hon. C. James: I think the principles that are important in taking a look at designing this tax and, in fact, other taxes that we’re taking a look at are that it’s straightforward, that it is easy to administer — I think when we saw the MSP, we know the challenges there — and that it’s fair. If people want to put proposals forward that fit those principles, of course I’d be happy to look at them.
Section 10 approved.
On section 11.
T. Redies: According to this section, the tax is calculated at 2.925 percent of the payroll up to $1½ million. Is that correct?
Hon. C. James: The first, straightforward answer is no. The 2.95 percent is not the tax rate. The 2.95 percent is a percentage in the formula that’s used to determine the phase-in calculation. So it’s not the tax rate. It’s actually the part of the formula that provides the opportunity to phase in the tax rate between that $500,000 and the $1.5 million.
T. Redies: Can the minister explain why it was set up this way?
Hon. C. James: The reason it was set up this way was to provide that gradual rise for businesses so you didn’t see the jump from 500 to 1.5.
Just to give an example, if you had a payroll of $750,000, your effective tax rate would be 0.98. If you had a payroll of $1 million, your effective tax rate would be 1.46. If your payroll is $1.25 million, 1.76.
The formula utilized provides the opportunity for this gradual phase-in of the payroll tax, which, again, provides a more fair process for businesses, depending on the size of their payroll.
T. Redies: Again — just trying to explore this a little bit more — if a payroll exceeds the $1.5 million threshold by a single dollar, does the full amount get calculated at 1.95 percent, or does the payroll above 1.95 percent get calculated at the lower rate and the rest calculated at the higher rate of 2.925 percent?
Hon. C. James: The tax, the 1.95 percent, applies to the full payroll. The tax rate always applies to the full payroll. That’s the graduated rates that I mentioned. That would apply to the full payroll. So $1 million would be 1.46 percent. It is the rate that would apply to the full payroll.
T. Redies: Does that mean there’s actually no threshold, essentially, of $500,000, and in effect, actually, as soon as a company goes $1 over $500,000, they’re being taxed on the whole amount of the payroll? In other words, they don’t get an exemption of $500,000?
Hon. C. James: I was just trying to make sure we had enough examples to be able to identify it. Basically, the tax rate starts at zero. So it starts at zero for a $500,000 payroll. Anybody below that has a tax rate of zero. Then, effectively, it gradually climbs, based on the increases. So a payroll of $500,001, as the member described, would still effectively be zero, because the percentage is still small.
I’ll use the example of $600,000. If you moved up to a $600,000 payroll, it would be 0.48 and then, again, gradually go up, as I identified — $750,000, 0.98, etc. It climbs from there.
T. Redies: Thank you for that, Minister. I recognize these are kind of challenging examples. I guess what I’m trying to get at is that as soon as a business goes $1 over $500,000, the payroll tax is going to be applied to all of the payroll.
Hon. C. James: Correct.
T. Redies: Again, interestingly to me, as I was doing some research on this, I actually came across an article from a very well known law firm in the city that I won’t name. I was a bit surprised at the advice that they were giving their clients. Basically, the comment was that in order to manage the new EHT, the advice was to keep your payroll under $500,000.
Minister, isn’t that a little bit of an odd thing to set something like that in place, where the government is actually discouraging businesses to grow and build their business, build their payroll and make more investments? Doesn’t it seem a little bit odd that the government should be putting in place something that is actually going to discourage businesses from growing?
Hon. C. James: I think if you’d look at other taxes, obviously other taxes have thresholds. The small business tax rate, for example, has thresholds. So it’s certainly not unusual to set thresholds and to set those opportunities in place.
Certainly, there has not been an indication that it has had an impact on behavior when it comes to businesses. I think that’s exactly the reason we looked at the kind of rate that we did and the phase-in that we did. It was to be able to address just the kinds of questions that the member is raising, because if you look at the gradual phase-in, it in fact provides an opportunity.
There isn’t a definite divide where there are challenges in between the $500,000 and the $1.5 million. As I said, you’re looking at gradual tax rates. The member mentioned $500,001. What tax rate would be paid on that? As I mentioned, it’s zero when you look at the formula. It would be 3 cents. That’s how much the business would pay. It would be 3 cents.
Again, if you look at that gradual phase-in, it’s to address exactly, as the member raises, those kinds of issues.
T. Redies: Thank you, Minister, for that answer. It’s not just us that are a little, I guess, confused about the government’s action.
I have here KPMG’s TaxNewsFlash on the B.C. EHT. They make the comment at the end that “although British Columbia previously indicated that ‘medium’-sized employers with payroll between $500,000 and $1.5 million would be subject to a lower EHT rate, the draft legislation does not provide relief for these employers. Instead, these employers will be subject to a higher 2.925 percent tax rate on the $1 million over $500,000, such that” — and this is important — “once their payroll is $1.5 million, they are effectively paying a 1.95 percent tax rate on the entire $1.5 million.”
Would the minister like to comment on KPMG’s observation?
Hon. C. James: The part that is correct is the $1.5 million, as I’ve said all along. If you have a payroll larger than $1.5 million, you pay 1.95 percent. You pay the full rate on your full payroll. But the phase-in is there.
I’ll go back to the 2.95 percent. I know the member raised it earlier. But no one pays a 2.95 percent tax rate. That’s part of the formula that is used to phase in the tax rate for the people between $500,000 and $1.5 million. So you have that ability to have the phase-in approach, which we’ve talked about.
T. Redies: The challenge is, of course, that if this is confusing for KPMG, I can’t imagine what it must be like for these poor small businesses out there who are trying to figure out what they have to pay. I think the point that KPMG is making is that there isn’t any relief for businesses with payrolls once they hit $1.5 million. The reality is, they’re going to be paying 1.95 percent on their total $1.5 million payroll. So it’s not really a relief once an entity hits that $1.5 million.
I think what this is, is a notch rate. I think I understand the math, so I understand what the minister is trying to get at. But I guess my question is: how did the minister decide upon a notch rate of nearly 3 percent? Why was this higher rate chosen instead of a notch rate of, for example, 1.95 percent?
Hon. C. James: We’ve talked about the percentage of businesses that are not going to pay the payroll tax. So once you set, as we did, the $500,000, we wanted to make sure there was an opportunity for phase-in. That’s the formula that we looked at to provide a gradual phase-in. That’s what we wanted to provide. And the formula that we worked out, that the member is talking about, gives us that kind of phase-in that we believe is fair.
T. Redies: Thank you, Minister, for your answer. I just want to kind of go back to where this notch rate is and some of the earlier comments from the minister as to how many businesses are going to be impacted by the different thresholds. Does the minister know how many businesses will pay the notch rate?
Hon. C. James: I think we talked yesterday about the numbers of businesses in each of the categories. It’s approximately 40,000 businesses that are in that $500,000 to $1.5 million.
T. Redies: Thank you, Minister. I just wanted to confirm that that got carried all the way through.
Does the minister know the average tax payable for companies paying the notch rate?
Hon. C. James: Again, this is a rough average. Obviously, everybody’s payroll is different in that phase-in between $500,000 and $1.5 million. But our calculations look at about $3,500.
T. Redies: Does the minister know the average tax payable for those above the notch rate?
Hon. C. James: I’ll have to get the specifics, because the challenge with the category above $1.5 million is that there are some businesses in the $1.5 million and $2 million, but there are also 350 companies that have at least 500 employees. So that, obviously, skews your average. If you’re looking at bringing an average forward, that skews the average around what an average business would pay.
We can do some further analysis and further breakdown and get it back to the member. Happy to do that.
T. Redies: I’m going to probably make the big mistake of trying to do math in my head a little bit. But I think, from what the minister said, that there are 40,000 companies, on average, paying about $3,500. So I think that would be about, roughly, $140 million in tax. Am I right? Okay. So does that mean the balance of the companies are paying $1.8 billion minus $140 million?
Hon. C. James: As I’ve just talked about, 90 percent of the tax will come in on the largest businesses.
T. Redies: I’m glad to know I can still do math in my head, to some extent. I guess just a question. When this tax first came out, the minister did talk about the graduated rates up to 1.95 percent. And the notch rate is, of course, quite confusing. I guess I’m interested. Why was the legislation written this way, and why weren’t the graduated rates actually put in the legislation?
Hon. C. James: The difference between a fixed rate that changes is that this rate actually changes for every cent of payroll. That’s why we use the formula, so that it gives an opportunity for that. That’s why we’ve got the formula in here. It’s why on the website, the formula is there, and it’s why in the calculations, when people file electronically, they’ll actually have the formula, and the formula will give them the rate that they have to pay.
Obviously, to include that with every cent in a bill doesn’t make sense, which is why is why we’ve included the formula — to be transparent. As I said, that’s up on the website. It’s up there for ease for people who are managing their payroll.
Section 11 approved.
On section 12.
S. Bond: This formula looks fairly reminiscent of the Droop formula that people are trying to deal with, with proportional representation. I’m sure it’s not the same. But could the minister, in just a few sentences…? This is about proration of a part-time permanent establishment. We’ve worked our way through all of the definitions, but perhaps she can just give us a layman’s version of what the formula does.
Hon. C. James: In simple terms, you, basically, will pay for the part of the year that you have a permanent establishment in British Columbia. That’s what the formula does. It provides that opportunity to prorate the exemption amounts and the threshold amounts so that if you have a presence in B.C. for part of the year, you’ll pay it for part of the year, and it does the calculation.
Section 12 approved.
On section 13.
S. Bond: Can the minister define “associated employer,” please?
Hon. C. James: I think that the important piece about this section is that it parallels the federal Income Tax Act. Employers are very comfortable with this. This is a definition that is in the federal act. They already use it. It basically defines “associated employers” as an employer and a group of employers associated with that employer. As I said, this is a common usage for employers in the federal Income Tax Act.
T. Redies: The B.C. government has a more extensive definition on line. It defines “associated employers” as: “Associated employers are a group of employers connected with each other by ownership or by a combination of ownership and relationships between individuals. Individuals are related through blood, marriage or adoption.”
Is this the definition that the government is using, even though it’s not in the legislation?
Hon. C. James: The description on the website is basically a plain-language description — tried to be plain language — of the federal Income Tax Act and what it describes.
T. Redies: Okay. Well, it’s good to know that we’re trying to put everything into plain language for…. “Trying” is the operative word, I think.
Does the minister interpret associated employers as franchises of a company, such as the local Canadian Tire? I guess…. Well, to make it easier, what about restaurants that have the same owner but have different names?
Hon. C. James: One owner, two different restaurants, two different names. The one owner pays, obviously. Those are associated businesses. With franchises, it’s a different situation. If there are two different owners — two different Tim Hortons, two different Starbucks, two different McDonald’s, two different franchise owners — the individual owners are not associated. That’s the way it divides.
T. Redies: Thank you for that answer, Minister. Again, I’m just trying to kind of get a little bit more of the specifics, so hopefully, the minister will bear with me. What if those franchises or businesses are owned by holding companies?
Hon. C. James: For holding companies, section 15…. We’ll get to section 15, but section 15 has a look-through rule which allows us…. This parallels, again, the federal Income Tax Act, so we’re using the same kinds of rules that are there. It allows us to collapse the holding company to determine who the true owner is and therefore who pays the payroll tax.
T. Redies: I can see businesses getting a real headache as they try and figure all of this out. But anyhow…. The on-line definition also includes blood relationships. Does this mean if two siblings own two different but similar businesses, they will be considered associated employers?
Hon. C. James: If they’re two siblings and they own two different businesses and they don’t own a percentage of each of the businesses — they each individually own those businesses — they are not associated. They each individually would pay the payroll tax for their individual businesses.
The member mentioned the challenges for businesses. I think it’s just important to note that all of these rules are already in the federal Income Tax Act, and businesses already have to use these rules for their federal income tax. So these are rules that they’re used to, that are common practice. They will be familiar with these rules in being able to work through this.
[S. Chandra Herbert in the chair.]
S. Bond: Perhaps, then, that would apply to the question that I have. This is a very technical part of the bill. So does that mean that subsidiaries will have their payrolls collected, calculated, in one amount, not divvied up by each subcompany?
Hon. C. James: This works exactly the same as the small business deduction. It’s exactly the same process. So subsidiaries and a parent company get to choose how they use the $500,000 deductible. They could split it. They could each use it. One of them could use it once. That’s their determination, just as they do with the small business deductible.
S. Bond: As we move into the sections around non-profits, the minister is treating non-profits differently in terms of payroll and separated by location. Was there any contemplation of treating businesses in a similar way? Where businesses have more than one location, did she consider them being treated in a similar fashion to non-profits?
Hon. C. James: We did look at all options, including businesses and the location issue. We talked to other provinces who have gone through this process and have looked at those options.
The challenge is it really leaves open avoidance and the opportunity for avoidance, particularly for businesses. Why would businesses be treated differently if they had two businesses in two separate locations? One business that was the same size but in one location — why was there preferential treatment given to that business?
In the end, as I said, we used the phase-in approach to provide opportunities for businesses of different size, feeling it was a fairer option.
S. Bond: Thank you for that response, Minister.
If two businesses are co-located and they share the same permanent establishment but are, in effect, not related in any way, would they still be deemed to be associated employers?
Hon. C. James: No, they wouldn’t. We care about the ownership. That’s the piece that the bill pays attention to, not the location. So if they’re two completely separate businesses, if they’re in the same location, they will claim as individual separate businesses.
S. Bond: I’m sure the minister is aware of…. I certainly have some of these in my constituency. There are businesses that rent office space and provide services to sole proprietors that run their own business, but an office is shared. There is flex space. No individual has exclusive jurisdiction over a specific space. Are they deemed to be associated employers?
Hon. C. James: I think it’s important, again, to say that there is nothing about the location that would cause them to be associated. It really is the ownership. That’s the piece that links to the associated businesses, not the location itself.
In the example the members use, there may be reasons that they’re associated. I’m not saying they wouldn’t be, because there may be businesses that are associated. But the location wouldn’t cause that association.
Sections 13 to 20 inclusive approved.
On section 21.
T. Redies: Again, just to get some clarity here, why is the notch rate for charities used for amounts up to $4½ million?
Hon. C. James: I think this is very similar to the other discussions. We wanted to ensure the phase-in. It has a higher threshold, therefore you create a new formula. That’s the basics.
T. Redies: Okay, I won’t put us through the pain of going through that again then.
The minister has said that because of the changes she has made to how the health tax will be charged to charities, few will pay. Could she table the information that led them to determine this and actually provide the number of charities that will actually have to pay payroll tax under the changes that she made?
Hon. C. James: I think part of the challenge here is that this is taxpayer data. We can’t release taxpayer data. Obviously, that’s confidential to the tax department.
We’ll take a look at the breakdown. We’ll take a look at the information we can release around numbers, around charities and not-for-profits, and we’ll get that to the member.
T. Redies: Is it also possible to get an understanding of actually how much payroll tax will be paid by those charities that are not exempt from the payroll tax?
Hon. C. James: We’ll look and see what’s possible within the parameters of protecting taxpayer data. Some of these numbers are obviously small sets, so you have to be careful about releasing taxpayer information. But we’ll take a look at what’s possible and provide that to the member.
Section 21 approved.
On section 22.
S. Bond: We should probably have prefaced our comments on these sections with a recognition that we are incredibly relieved that there have been changes made to deal with charities and non-profits. It was really difficult, and I’m sure the minister felt it too, to listen to organizations come and be concerned about their inability to provide services for their clients. It was not about them. It was about: we are going to have to make adjustments. So we’re grateful that there have been some changes made, and we will wait to see what the impacts are of the numbers that my colleague has requested.
Section 22 is a reprise of the Droop formula, but if the minister could just explain. This is about a permanent establishment in order to prorate the costs. How many charities or non-profits would the minister anticipate are not established in British Columbia year-round?
Hon. C. James: This is very similar to the businesses piece. This isn’t expected — that charities will be somewhere else and then come into B.C. It’s for charities and not-for-profits that may move to British Columbia partway through the year, for example, and this would prorate their year. Or they may leave partway through the year and go somewhere else, and this would prorate it. So it’s very similar to the business section as well.
Section 22 approved
On section 23.
T. Redies: On section 23, why do charities or non-profits have to have exclusive right to occupy the land or premises for it to count as a qualifying location?
Hon. C. James: Just as we’ve done with looking at locations and defining locations, there is also a need for a definition around locations for charities and not-for-profits. We looked at other jurisdictions and best practice, and this was the rule that we adopted to provide some accountability around the location — so rental agreement, something to show that they have accountability. That’s what this section refers to.
S. Bond: I want to clarify…. I’m sure this is correct. Obviously, if a charity or non-profit rents office space from another organization — their payrolls will still be accounted for separately.
Hon. C. James: Yes.
T. Redies: If a charity shares space with a different charity to reduce costs and improve benefits for those they serve, will they be considered one entity for calculating that location’s payroll?
Hon. C. James: Similar to the businesses that we talked about — two different organizations but they share a space, are sharing the office space, sharing the building — two separate charities or two separate not-for-profits pay their separate payroll tax.
T. Redies: Finally, in this section, do the rules change at all if the non-profit is subletting space from a for-profit business?
Hon. C. James: No.
Sections 23 and 24 approved.
On section 25.
S. Bond: Just one question on subsection (b). If the minister could explain: how does the subsection work if the location the employee primarily reports to is a location that is shared with another charity or non-profit?
Hon. C. James: Section 25(b) speaks to an employee who reports for work at more than one qualifying location. So the charity has two locations, for example. They report for work at two of those locations, but the employee’s entire payroll is to be allocated to the qualifying location that the employee reports to the most. That’s how it would be determined. That’s how the charity would determine the division of their time.
Sections 25 to 27 inclusive approved.
On section 28.
T. Redies: The upper limit of $4½ million — does this apply individually to each location or to the entirety of the non-profit or charity?
Hon. C. James: It applies to each qualifying location.
T. Redies: Does the minister have any numbers of charities that have locations that would exceed the $4½ million threshold?
Hon. C. James: We certainly know that there are charities that have a large payroll, but whether they have multiple locations, one location…. That data isn’t there, but I expect there may be a few. Most of the consultations and most of the work we have done and most of the research we have done show that most charities of this size will have more than one location.
T. Redies: I guess, just again, a bit of a qualifying question. Is it correct that if a location has a payroll $1 above the $4½ million threshold, they would pay $87,750, but if they were at the threshold, they’d pay only $58,500? If that is the case, why would the government implement a system with such a quick increase on charities and non-profits?
Hon. C. James: It’s very similar to the phase-in of the employer health tax. The tax phases in here as well. Each additional dollar above the $4.5 million is two cents. Again, that formula, the formula that’s here, is utilized in the same way it’s utilized in the employers and will phase up.
Sections 28 to 30 inclusive approved.
On section 31.
S. Bond: This is the section of the bill called “Administration and Enforcement.” We were talking at the beginning of this discussion about registration. Could the minister clarify whether or not the government is creating a new office or a commissioner to administer the tax?
Hon. C. James: The Commissioner of Income Tax will be the commissioner for this act. It will not be a new commissioner.
S. Bond: The minister has talked a little bit — well, a fair bit, actually — about the savings that are generated by the transition to this tax and a move away from the MSP. Can the minister provide the specifics around the cost of administering the program?
Hon. C. James: The estimated cost is $2 million to administer the employers health tax and a one-time system cost of $4 million to create the system. That’s one time. That’s compared to $65 million to administer the MSP.
T. Redies: Could the minister speak to the amount of process and burden for the companies and the charities that have to file the EHT, just in terms of what that looks like and whether or not it’s going to put an additional burden on businesses or charities?
Hon. C. James: I think we worked very hard in making sure that this was as easy a process as possible, that it was not administratively burdensome. I think that was important to us, certainly when we were looking at designing it, and particularly important given the MSP and the challenges the MSP creates for employers and employees, but employers in particular.
I think, whether you are a charity, a not-for-profit or a business, if you do not have to pay the tax — you’re below the $500,000 deductible or the $1.5 million for charities — you don’t have to file — period. If you don’t pay tax, you don’t file.
If you have to file, if you’re required to pay tax, it will be done electronically. It’ll be a straightforward system, and you’ll have quarterly payments, with the final payment March 31, at the end of the fiscal year.
Section 31 approved.
On section 32.
S. Bond: In subsection 32(2), it says that charities with multiple locations that don’t have payrolls over $1.5 million don’t have to file. Is this the only group or entity that has an exception to file an annual return?
Hon. C. James: Businesses, as well, that are under the $500,000 also don’t have to file.
S. Bond: So will charities with one location and a payroll less than $1.5 million be required to submit a tax assessment?
Hon. C. James: No.
Sections 32 to 40 inclusive approved.
On section 41.
T. Redies: We’ve had a little bit of conversation about this, but just to kind of pursue it a little more, the government has said they’ll be covering the net costs of the EHT for the SUCH sector. Will this coverage be in the form of annual operating grants, or will it come in installments parallel to the payment requirements?
Hon. C. James: I think we canvassed this earlier, but those are still discussions going on with the sectors and with their Treasury Board analysts with each of the individual ministries. So we’ll be taking a look again at the ease of what makes sense.
T. Redies: We’re pursuing this a little bit further. Will there be a minimum threshold for collection, or will the government be collecting from employers for small amounts — for example, $10 or less?
Hon. C. James: I think the first statement is if you owe tax, you owe tax. That’s very clear in every tax act — that if you owe tax, you owe tax. But I think that is also administratively determined. As the member points out, if it’s a very small amount, that is administratively determined. But the rule is: if you owe tax to the tax people, you have to pay your tax.
Sections 41 to 53 inclusive approved.
On section 54.
S. Bond: Part of the reason we’re moving through these sections is that many of them are repetitive, and we’ve gone through them in terms of the basics. We do want to ask a question about administrative penalties in section 54. Obviously, the ministry would have history in terms of who fails to file tax returns and be forced to pay penalties, those kinds of things. Has there been any modelling done about this sort of behaviour pattern that’s expected in terms of compliance?
Hon. C. James: I think it’s important just to note — and the member is quite right — the next majority of sections are related to administrative rules, and the administrative rules are very similar to the administrative rules in other tax acts. So they’re not unusual for this tax act. They’re common in other tax acts.
Similarly, with the penalties, the penalties are mirrored on the federal act as well. Again, they’re not created; they mirror what’s there.
On compliance, Canada generally has a fairly high compliance when it comes to paying taxes. We expect that to be the compliance rate in this tax as well.
Sections 54 to 117 inclusive approved.
On section 118.
T. Redies: I want to, first, start my closing comments by thanking the minister for her time, and her staff. I know we got into some detail on some questions, and we appreciate the talent that the minister has in her office and working with us on some of our more specific questions.
I would say, in closing, that we on this side remain extremely concerned about the overall impact of this EHT and the double-dipping next year. I mean, in total, the MSP and the EHT taken in 2019 is going to be about $2.6 billion, and thereafter, it’ll go down to $1.8 billion. But that’s a tremendous amount of money, particularly taken out of businesses at a time when there’s a lot of uncertainty out there.
There is a lot of uncertainty. We’ve made this comment many, many times. It’s not just the one tax; it’s the plethora of taxes and additional regulations and challenges and changing legislation that are causing the business community a lot of uncertainty. Our real worry, of course, is the knock-on impacts. What does this do to business investment? What does this do to job creation? What does this do for wage increases?
Essentially, what the government is doing is saying to the business sector: “We want $1.8 billion that you’re not going to have to invest in your business, in jobs, in increasing wages.” The government is saying that the government knows better how to spend this, and I think that’s a very, very dangerous message.
I do want to read into my remarks…. We just were contacted by the president of Western Stevedoring in North Vancouver. He said that the EHT is going to cost the port industry an extra $13 million. That’s a huge amount of money. Western Stevedoring alone is going to pay $1.8 million in extra costs.
Again, these are not insignificant amounts. It means the money is not going to be invested in the businesses, in job creation, in wage increases. We also are very concerned about the impact that this is going to have, the knock-on impacts, to the housing market as well. The government has made a lot of remarks about improving affordability, but in fact, when government costs at all levels are 30 percent of the cost of housing, and the government is increasing taxes on the developers who build these houses, it’s not going to make it any more affordable for the end buyers.
We remain extremely concerned about this tax and what it’s going to do to the business climate here in B.C. With that, I will conclude my remarks.
Section 118 approved.
Preamble approved.
The Chair: Shall the title pass?
So ordered.
Some Voices: Division.
The Chair: Division noted, on the bill. We’ll go to the minister first, and then we’ll deal with that side.
Hon. C. James: Thank you to the members. I expected that they would come with many questions and some very probing questions, and I think that’s exactly the kind of discussion we’ve had. I appreciate that, and I appreciate the opportunity to be able to have that dialogue on what is a new approach for British Columbia.
I also want to express my appreciation to the staff, particularly the staff in the tax department. I think this has been a large workload over this year. We have another bill coming up, still to debate. I want to express my huge appreciation. I think the province of British Columbia is very well served by the people who work in the Ministry of Finance and the people who work in the tax department. I want to express my appreciation to all of them for the work they’ve done.
I just want to speak to the bill itself. I appreciate, as the member has done, her expressing her disagreement and lack of support for the bill, but I want to express appreciation for the direction that we’re taking and the difference I believe it will make for British Columbia and for British Columbians, whether you’re businesses or individuals, to finally see that we will not be the last province left with medical service premiums, that we’ll be able to move, as other provinces have done, to an approach that is much more efficient to be able to administer. We are able to see families and individuals in this province receive savings — $900 for individuals, $1,800 for a family. That’s huge. That’s huge savings for individuals and families.
I think that’s a critical piece — $800 million. That is a tax break that basically goes back into the B.C. economy because we are not bringing in all of the resources that were collected from the MSP, but in fact, we are providing support to the economy of British Columbia by ensuring that $800 million goes back in, which, again, makes a huge difference.
I believe this is a positive step forward. We will continue to pay attention — as we should, as government — to competitiveness for businesses, to ensuring that we are addressing the challenges that they face, both internal and external. I think that’s a critical piece, and that’s a piece we are certainly going to continue to pay attention to, because a strong economy benefits all British Columbians. I’ve been very proud that we continue to see the kind of strong economic growth in British Columbia that we’ve seen.
The Chair: We’ll do the title once more to just make sure we get this right. I think in the whole time I’ve been here, this place has never had a recorded vote. We’ve had two in two days, so it’s great.
Title approved.
Hon. C. James: The committee on Bill 44 reports the bill complete without amendments.
The Chair: The question is that the committee rise and report Bill 44 complete without amendment.
Motion approved on the following division:
YEAS — 9 |
||
Heyman |
Mungall |
Chow |
Routledge |
Leonard |
Simpson |
James |
Mark |
Furstenau |
NAYS — 8 |
||
Wat |
Thornthwaite |
Isaacs |
Morris |
Ross |
Oakes |
Milobar |
|
Gibson |
The Chair: Thank you, everybody, for being here to vote.
The committee now stands adjourned until we are asked to meet again.
The committee rose at 5:50 p.m.
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