Orders of the Day

Hon. M. Farnworth: In this chamber, I call second reading of Bill 13, the Community Safety Amendment Act, 2019. In Section A, the Douglas Fir Room, I call debate on the estimates of the Ministry of Tourism. In Section C, the Birch Room, I call the estimates debate for the Ministry of Mental Health and Addictions.

[2:40 p.m.]

[J. Isaacs in the chair.]

Second Reading of Bills

BILL 13 — COMMUNITY SAFETY
AMENDMENT ACT, 2019

Hon. M. Farnworth: I move second reading of Bill 13, intituled the Community Safety Amendment Act. It’s my pleasure to rise today to speak about Bill 13.

In 2009, our colleague the Minister of Jobs, Trade and Technology introduced a private member’s bill, aimed at improving the safety of British Columbians, called the Safer Communities and Neighbourhoods Act. The bill was modelled on similar legislation in six other jurisdictions across Canada. While the bill was not passed, the concept was reintroduced and passed with unanimous support in 2013 as the Community Safety Act.

Since 2013, new public safety concerns have emerged in British Columbia. The amendments in this legislation will help to take action on gang and gun violence, provide support to police officers to disrupt the supply of deadly drugs and increase support for initiatives proven to prevent and reduce crime. In doing so, this legislation will help make this province a better, safer place to live and raise a family.

The Community Safety Act will allow members of the public to submit confidential complaints to a provincial authority, the director of community safety, about problem properties that represent a threat to the safety of the community. The director will investigate complaints and, where appropriate, take administrative action or apply for a court order to address activities on properties that are negatively impacting the safety of a community.

Nuisance or problem properties are a real issue to communities in this province. Issues caused by absentee or irresponsible landlords who habitually rent to problematic tenants, the use of short-term rentals as party houses, gang and organized crime clubhouses and associated properties, and drug use in parks and other public places all fall within the scope of this legislation.

[2:45 p.m.]

One recent example of this type of problem property is from September of last year. In Duncan, the RCMP executed a search warrant on a property and found a large amount of drugs, specifically, large quantities of fentanyl, crystal methamphetamine and cocaine. The police also discovered stolen property, including war medals, computer parts and high-end bicycles. This was the second time in a year that the property had been subject to a search warrant. The RCMP identified the property as a nuisance property and one that was well known in the community.

The proposed amendments will modernize the act to address the current community safety needs of British Columbians, enhance the administrative fairness of procedures and minimize the administrative burden of the act.

Specific activities are the grounds for submitting a complaint under this legislation. These amendments are adding two new specified activities to the act: (1) illegal gaming and gambling is being added, because this is a growing problem that is related to organized crimes and gangs, particularly in the Lower Mainland, and (2) the possession, sale and storage of property obtained by crime is being added, as this activity is associated with gang activity and drug trafficking.

I have another recent example of where the Community Safety Act would have been effective. In November, the RCMP raided a home in Nanaimo where people were trading stolen items for drugs. Inside, the RCMP discovered several thousands of dollars’ worth of stolen property. The same house had been previously raided by police and had been described as an ongoing problem and cause for concern in the neighbourhood.

Another amendment creates a requirement for the director of community safety to issue annual public reports providing information on the unit’s activities. This is one way that we will ensure transparency and accountability to the public.

The act is also being amended to establish that the legislation will not apply on First Nations lands unless prescribed by regulation. We’re committed to the principles established in the United Nations declaration on the rights of Indigenous peoples, and in keeping with this, it is our intention not to apply the act on First Nations land without support from those nations. Engagement with impacted First Nations is currently underway.

The amendments also set out a process for introducing previous criminal convictions as evidence in an application for a community safety order. This will reduce the administrative burden on the court and the director.

An additional amendment allows the director to enter into information-sharing agreements with other governments and law enforcement agencies in Canada. This will enable information-sharing with law enforcement agencies such as the RCMP. Other amendments clarify and enhance procedures to improve the administrative fairness of the act.

The proposed amendments should be seen as one of the many tools we are putting in place to make communities safer and to address gang activities. I’m pleased to open the debate on this important piece of legislation.

M. Morris: I’ve looked through the legislation. It’s one of these feel-good things when you look at it, particularly for a previous law enforcement officer and citizens in the community that are, rightfully, so concerned about these kinds of properties. It looks like it might be a bit of a utopian kind of solution here.

I applaud the minister and everybody for bringing these amendments forward. Of course, this bill was one that we introduced. The minister did recognize that it had been previously entered as a private member’s bill back in 2009 by the then government who was in opposition at the time.

This is a bill that’s supposed to address exactly what the minister was saying. It’s these properties that are used for drug houses, illegal activities, unlawful activities, loitering. There are probably addictions issues going on within some of these properties as well.

It’s a much greater problem than looking at it in isolation. Many of our communities out there that are suffering from…. Probably just about every community that we have in the province has a property that can be identified in this category here.

[2:50 p.m.]

A lot of the problems that we have with our communities are because they are under-resourced today. They’ve been under-resourced for the last ten, 20 or, in some cases, 40 years or more when it comes to law enforcement and enforcement officers in the communities to enforce any of the community statutes and whatnot that they have there as well. I do know this for a fact because when I was in the force, part of my area of responsibility was municipalities and detachments and the numbers of resources that they had in there. Some of them hadn’t changed since the early 1980s and late 1970s.

We had the Charter of Rights and Freedoms come in, in the early 1980s, which changed the dynamics and the complexities of policing to a significant degree. If we had a detachment that had 21 resources in 1980, and in 2019 it still has 21 resources, those resources are maxed out far and above what they’re capable of looking after in the communities. With the complexities associated to criminal investigations, their workload is focused on those high-priority cases that they can get to.

There’ll be a lot of criminal matters that they won’t be able to address. These kinds of nuisances that we see in the communities probably get overlooked until it gets to the magnitude where drug trafficking is taking place, where illegal gambling might be taking place, where prostitution might be taking place — and a plethora of other kinds of nefarious activities in the communities here.

Then the police have to turn their minds to trying to resolve those issues and go through the layers upon layers of investigative procedures in order to get a search warrant — gathering the evidence, getting the search warrant, going in and searching the place, arresting individuals involved, bringing them back into custody and going through the process to have them appear in court, either to get a conviction in court or to get it thrown out of court because they’ve made a mistake in the investigation. Or Crown counsel may not approve the charge. You know, a mistake might be recognized in court, and it’s tossed out at the end of the day. So there are a number of things that should be addressed in the communities.

This will make an excellent tool, but the resources have to be there, and we recognized that back in 2013 when we introduced the legislation ourselves. The requirements to investigate these kind of things could be labour-intensive and could be an added burden to already overworked resources in some of these smaller communities that we have. I think that’s something that really needs to be taken into consideration. Just the legislation alone might not be the magic bullet that we’re looking for. We need to pour those resources into this to make sure that that doesn’t happen.

Now, the minister did talk about, and the act does talk about, criminal organizations like the Hell’s Angels and like some of these other groups that have properties in some of these communities — the Hell’s Angels clubhouses and other entities like that. I think this is an excellent tool to address that. The enforcement side might be problematic, and I look forward to seeing how that exercise rolls out at the end of the day.

In looking through the legislation and how it’s structured, I do have a few concerns. Again, in my role as the critic — and I’ll be assisted by my colleague from Langley East — we’ll pop the hood open on this and have a real close look at it.

I’m concerned that we have a provincial entity, community safety, the director of community safety in an office tucked away in the great city of Victoria that we all enjoy so much — or some other central location in the province — where all the applications from around the province — the many, many communities that we have — will be directed to this one lonely little office in a beautiful part of the province. Then he and his staff will look through this, and they will come up with an administrative solution, sitting in their beautiful little office in Victoria with the cherry blossoms and the tourists.

Interjection.

M. Morris: Oh, Prince George? Well, I’m sure Prince George would love to have an office in Prince George.

What we have here is a central office administering this bill and looking after the administrative solutions that we might have here. It’s alluded to in here — and the minister alluded to it — that there’ll be that negotiation back and forth between the director and whoever the applicant might be for this.

[2:55 p.m.]

It’s to try and arrive at a solution where everybody is happy and, at the end of the day, the problem is solved. But I’m not sure how that works. Is it over the telephone? Do we use Skype to get hold of the person that might have this problem property? Or are we going to be relying on those already overextended resources in the communities that we have out there?

One of the things that the municipalities may be pushing back on is they might see this as a download in their communities. Great stuff in this statute, but it’s also got costs implicated in this.

So we then go where the director will make an application for a court order, and the order needs to be enforced in the community. Will the director have staff that can jump in the car and drive from Prince George to wherever the community is that requires that particular help and provide that solution for them and then drive back to their office in Prince George, a beautiful, central location for an office like this? Or how exactly will that work? So there will be some pretty significant resource implications to this particular statute at the end of the day.

Now, if this statute also includes…. And the director has the authority, when he’s administering a solution for this, to look to other agencies for help. We already have the health authorities. We have social services agencies. We have educational facilities. We have NGOs. We have a number of folks out there that are already trying to help the vulnerable people that these kinds of properties take advantage of — the people that are suffering from addictions, whether it’s drugs or alcohol. They get these drugs and alcohol from an establishment that this is targeted to, to address. People with mental illness that might be very vulnerable to the things that these properties provide.

The people that are involved in low-level crime — you know, breaking into homes, which is a terrible crime, or stealing whatever they can get their hands on in order to fund a habit that supports the addictions that they have, or maybe supports a combination of the addictions that are fuelled by mental illness in another way.

Now, perhaps a solution might be — and it might be one of the tools that they could use in there — to try and integrate those resources in all those communities to provide a wraparound service that would go in and clean that up, and then they can direct…. Of course, then the property owner won’t have any more reason to carry on in the manner he has, and he might have to move on.

There will be solutions here, and I just question, at the end of the day, the effectiveness of this particular statute and unit if the resources aren’t put into it right at the beginning to make it worthwhile and to make sure that, you know, the meat that’s in the statute is delivered to the people that are asking for the services out there.

The minister talked a little bit about illegal gaming and gambling. And that’s why, when we were in government, we put in the joint investigation team looking for illegal gaming and gambling, not only in the casinos that we have but throughout the province here. I’m hoping that any police agency that does get any information that these kinds of nefarious activities are happening within their community will contact JIGIT in the first place and get them involved, or CFSEU, and make sure that there’s a proper criminal investigation. Because this doesn’t replace a criminal investigation. If it intended to, it might taint whatever criminal investigation that might come afterwards, so I think we have to be very careful on how we proceed with this.

I see this as a legitimate tool to clean up a property that is catering to very vulnerable people and find some community solutions in order to make it work, but we certainly need to make sure that the resources are in there to make that happen.

Like I said, I look forward to taking this through the committee stage. We’ll pop the hood open and have a look at it section by section to make sure that it will meet the demands. And perhaps the minister’s got a big chequebook that goes with this particular statute so that we can make sure that the resources are in there.

[3:00 p.m.]

J. Brar: I’m really pleased to stand up in this House today to support this bill, the Community Safety Amendment Act, 2019, introduced in this House by our government.

Well, the key is that people deserve to feel safe in their communities. That’s the key part of this bill. Our children need to feel safe when they go out and play in parks. I see a number of children sitting there in the gallery, from a school, so they’re listening to this debate. It’s very important that our young people, particularly in school, feel safe whenever they go to any game or go to a playground to play.

I want to say that this is an issue which is being faced by the people of British Columbia but more so in the city where I come from. The city of Surrey has become a kind of ground zero for quite some time for gang and organized crime activities. We see drugs being supplied freely on streets, and I have heard that there’s home delivery available as well. That’s shocking to people when people hear that that’s available in this community.

We also see young people being killed on a regular basis in this city and around this city. We see gang members shooting at each other openly in public places without any fear. Street shooting has become a kind of norm in the city of Surrey.

The people of Surrey feel helpless. A lot of people talk to me, and they think that they can’t do anything. People certainly want safe streets for them and for their children. That has been going on for too long, for many, many, many years, to be very frank, and people want action.

So I think this bill particularly, introduced by the Minister of Public Safety, is a good bill, particularly to address the two key areas.

One of the complaints which I have heard since I was elected as a member of the Legislative Assembly in 2004…. People come to my office, and they tell me: “In our neighbourhood, we see some gang activity in a particular house.” That’s the complaint I hear quite regularly, on a regular basis, from people.

I listen to their complaint, and I say to them: “One of the things that you should do is you should send emails or you should talk to the confidential phone line of police and make a complaint.” They will hear and listen to what I say, but then the response will be: “You know, they are our neighbours. So we don’t want to cause any trouble. We don’t want to create any risk for us.”

That fear is there, and that’s a huge problem, because I think that any police, whether you talk about the city police or the RCMP or any police in the universe, can only be effective based on the information that people provide to them. But this fear has significantly blocked the information coming from people, and that has to change.

So we must do everything we can to address violence in our communities brought by gang and organized crime.

The Community Safety Act will allow people to feel safe about reporting in strict confidence — and that’s the key in this bill — about properties that have links to gangs and organized crime, which is infecting the neighbourhood where they live or work.

This is the key — that people can go out now and report about those activities without any fear, without any risk. I think that’s going to change…. Big-time, that’s going to make life safer in the streets in Surrey and also in the province.

Secondly, a provincial government unit will be established to enforce the act once it is brought into force. And that’s the other thing people usually make complaints about: “Yes, we can send an email, we can make a phone call to police, but nothing happens. We see no activity as a result of our complaint. Even if we send a petition, we don’t see any response from the police.”

[3:05 p.m.]

But this act allows enforcement, subsequent to a complaint made by people. So this act actually covers both key steps. It’s encouraging people to provide information, and subsequently, the enforcement unit is going to take action based on the information provided to them. So it will have the powers to intervene with those problem properties which have links to gangs and organized crime.

We are giving neighbours of places like drug labs and those communities linked to gun and gang activities a safe, effective, timely solution and giving authorities more powers to shut down those sites. That’s a big thing — a big thing for me and a big thing for the people of Surrey.

Five other provinces and one territory have had this legislation in place for years. Our information states that it works and it makes the community safer.

As the member, the critic from the other side, just said, it’s true that the Community Safety Act was passed back in 2013. I believe that there were, of course, good intentions behind that, but the reality is that it was never brought into force. That’s the reality. And many people and neighbourhoods have suffered because of that. I truly believe that if that bill would have been enforced at that time, probably that bill would have saved many lives and made the community safer. But that was not the case.

This is a good bill, and I think all members of this House should support this bill. It needs to be fair to the landlords who have become victims of dangerous and criminal tenants, and it needs to be efficient from an administrative point of view as well.

So we have made amendments, and we are working to get this law enforced this year. We want people living near dangerous criminals to provide information with regard to their criminal activities without any fear and without any risk. That’s the key in this bill, and I think that will help a lot for the police force and the enforcement unit to get control of those gang activities in the neighbourhood.

I would like to close by saying that this is a good step. I appreciate the minister for the hard work on this thing that will certainly help the people of Surrey, making the streets of Surrey safer once this bill becomes law.

Thank you for the chance.

R. Coleman: Thank you to the member who just made his comments. I will say one thing. This is not a panacea, and this act in place would have no effect whatsoever unless you have proper enforcement and information-sharing and people’s confidence. To articulate that some people would be alive if this act was in place would be, I think, unfair to anybody in law enforcement or any community in the province of British Columbia.

I rise to speak to Bill 13, the Community Safety Amendment Act. To start off, I want to recognize the member who is now the Minister of Jobs, Trade and Technology. I believe tools in law enforcement should be adapted, no matter where the idea comes from, and stolen if we can possibly plagiarize it, whatever, to make sure it’s effective for the people of British Columbia and their safety. He brought a private member’s bill that then led to this.

I remember the Community Safety Act at the time and some of the issues around it. It wasn’t as simple as just saying: “Why didn’t you do the Community Safety Act?” There were budgetary issues relative to it for communities, and UBCM had some issues with it, and others. Of course, time marched on, and we went through one of those famous election cycles.

I support the legislation, and I support it because we know that everyone in this House needs to work constantly together to ensure public safety. One of the challenges we face is that we forget, as we get into a political argument or try and take shots at each other, that the people we’re trying to serve are the people we’re trying to protect. So over the years, we’ve actually developed more and more tools and more and more effectiveness for policing in British Columbia.

[3:10 p.m.]

In 2001, we worked on starting to figure out how we could move to intelligence-based policing in the province of British Columbia and how we could actually, for the first time anywhere in the world, have an effective information-sharing platform in real time of what was going on in communities so we could follow and solve crime quicker. That led to PRIME, which is the police records information management environment. The only jurisdiction in North America today still, sadly, is British Columbia where every police officer in their car or in their office is on the same piece of in-real-time technology to be able to share information.

Now, that was driven out of a case that was coming out of the previous few years. We became government in 2001, and not to point fingers at anybody, but we had a number of people going missing in one area of British Columbia, in the Downtown Eastside — mainly women. We were trying to figure out what was going on. We felt that one of the weaknesses was how quickly information could be shared, and the advice was to take this bold step to sit down all law enforcement and put it on real-time information management.

If there is one thing I could say, I honestly believe that if that had been in place five or six years earlier, when we finally were able to put the system in place — and maybe the technology didn’t even exist — I think we would have found the Pickton investigation a lot quicker, simply because we would have had information that would’ve crossed borders electronically, rather than by fax and borders and by police departments.

We then moved to saying: “What other tools could we have?” Civil forfeiture for crime — we just improved on that act again recently with regards to another tool to improve it for police. We had JUSTIN, which had started to integrate with PRIME. That comes from our criminal justice side to actually help out with the intelligence-based policing.

All of these pieces come together, not just because we wanted to be fair for the people in our system and to protect them but because we have to have public confidence and sustainability in innovation and accountability. The reason for that sustainability and accountability is that we cannot keep saying that there’s an issue here and we can’t solve it. We should not also keep saying that it’s somebody else’s fault. We can also never say that one piece of legislation passed in a place like this is going to solve all the issues in and around crime and houses or whatever activity takes place our communities. We have to make sure those tools will work and that those tools will actually be effective as we go through it.

Now, one of the things I will ask about in this bill as we go into committee stage is the issue in and around the First Nations lands. It’s not that I have an issue with the fact that that wouldn’t be included in this legislation, but things have changed on First Nations lands, even since we first looked at this bill in 2013, in that there is large subdivisions and developments now in British Columbia on 99-year leases on First Nations lands, and they actually try and manage those, sometimes in cooperation with the same police force that’s policing the rest of the community. How we will look at this act and how we could actually make it effective on those particular properties will be important because the activity doesn’t know borders when it comes to those types of situations.

The other thing we learned as we came through in tools was that we needed to integrate things — you know, organized crime, CFSEU, issues in and around how we had JIGIT put together, how we learn as we go. People like to judge, particularly the political people, what’s going on out there, when the political people’s job is actually to create the tools and get out of the way and never influence an investigation, never talk about the details of an investigation, even though they may be briefed on them.

The last thing we ever want to have happen is to have a politician open their mouth and talk about what’s going on in illegal activity and saying the wrong thing that leads to somebody in organized crime or some other criminal organization to pick up enough that they can actually put two and two together and wreck an investigation.

It’s an interesting dance, and I know the Solicitor General has danced it already, because whenever there’s a major case, the first thing the minister is asked is: “What do you know?” The minister’s pat answer is, and will continue to be whether he’s the minister today or if he’s not the minister five years ago and is asked about an investigation: “I do not comment on ongoing police investigations.” He knows the reason for that is important.

[3:15 p.m.]

In spite of all of the tools we have and all of the things we keep putting in place — including the hundreds of millions of dollars that’s been spent on the gang task force to try and get communities educated to come forward with information, to have tools for police and now this tool here for communities, for people, to be able to talk about something that they thought might be investigated relative to a house that has a lot of criminal activity in it or whatever — it’s important to know that the people that actually report it need to be protected. The minute…. The first time it happens that somebody gets some retribution because they reported a home with a lot of criminal activity in a community, the effectiveness of the law will disappear because people will become afraid to report it.

I lived with that. I had a crack house down the street from me for a few years when I lived out in Aldergrove, and nothing that wasn’t nailed down would remain more than 24 to 48 hours. Of course, we tried bylaw enforcement back then, with regards to trying to help with that issue, and, obviously, a number of calls to the house. We didn’t have civil forfeiture to go after the activity back in those days. Those tools all sort of came to mind as we came through that and I actually got into government.

The challenge was, and is, that the complainants in the neighbourhood actually had retribution on them — cars scratched, damaged windows, those sort of things — from the people who figured out which house in the neighbourhood had actually complained about the activity of, in this case, a meth house, cooking meth, and the activity of people coming in and the noise and damage to the neighbourhood. So it’s always very important, as we take a piece of legislation, to make sure that we have…. We talked earlier, yesterday, with the Witness Security Act, about how important it is for confidentiality and the protection of the people — to have confidence that they can talk about these things.

We get spikes. It’s an unfortunate thing. Oftentimes peo­ple, when there are spikes in crime, like to blame somebody. Usually it’s law enforcement at the front end, the government right beside them and the community sometimes that is affected, less so. But you can actually go back over crime stats and find out that a few years ago, we had a spike in homicides. In 2017, there were 118 homicides in B.C. It was up by 30 from the year before. Of those 118 homicides, 53 percent included firearms, a trend that we’ve actually seen over the last number of years with regards to that. And 68 percent were known to be gang-related.

If you went back and you looked at the money invested back in ’04-05 and you saw the downturn in the gang situation because you had some effectiveness and arrests and activity…. Then the next gang comes along and starts to take the territory. Then you have another spike. I believe this is another spike, and it’s a spike relative to the fact that we have people that are effective in law enforcement, but sometimes effectiveness also brings a new generation. We have to always be diligent about that, and this is why you need tools like this.

It does show the overwhelming problem, the perception sometimes, of what gangs mean to communities. If you look at some of the other crime stats that are existing in our society, they’re down in a lot of places. There’s been a spike in violent crime in a couple of communities, but it’s down in most of the rest of the province of British Columbia. And people will actually jump to the conclusion that it’s something to do with policing, just by itself. It isn’t.

It’s about whether the community is going to work together on community safety, whether they’re going to have the programs in place for people to buy into, and whether we can work together to push back on the education, understanding why we don’t get people, for instance, in gangs in the first place — issues that have been going on for a long time and have been effective but then sometimes, because of a spike in activity and pressure, changes a neighbourhood or changes a group of people in a specific group, who are then sort of dragged into this lifestyle.

The amendment that’s put forward in front of us today will provide an extra tool for police and public officials on this. One of the things I would probably discuss in committee with the minister will be how we make it effective provincewide. My colleague talked about an office in Victoria and: how are you going to get that complaint process to work when people are used to actually communicating through their non-emergency line at a police department to bring concerns with regards to an activity or a house or whatever in their neighbourhood, and get them educated that they need to go to Victoria on a line. So we will discuss how that should be handled, how maybe we could have better integration there, like we have in the rest of policing.

[3:20 p.m.]

Maybe we can add some function into PRIME that would allow us to track activities and complaints so that we could actually target the hot spots, which I call intelligent place policing. Can we use some of the resources that are out there in addition to the police, like bylaw enforcement officers, who can build files, and have them come through here to get, effectively, so that we would be able to move on a particular establishment or house? That’s important, because this bill builds on the initial bill in many ways and a couple of those, two nuances, will actually affect this.

There have been other community safety acts introduced, even in the Parliament of Canada. Sometimes they feel good, but I think the devil is often in the details relative to how effective we can make them and actually make this tool work. I’m a big fan of tools for police and communities. I think it’s important that we have a conversation about effectiveness, how we deliver it, and how we improve the service. I want to make sure that we’re aware of that as we go through this. I did talk to some people in a couple of the provinces that have had this piece of legislation, and its usage has not been as high as they originally had hoped.

Now, I know about legislation that doesn’t get used. My first bill that I actually brought to this House — it was in the 90-day plan of my government in 2001 — was the Parental Responsibility Act, which did exist in some other jurisdictions in Canada. It was really an act about parents being responsible for their juvenile and younger children who did damage and committed crimes in neighbourhoods. It was to actually bring responsibility for the costs to the parent. To my knowledge, it has never been used in British Columbia, and I know that it has never been used in a couple of the other jurisdictions that it had. It was a good idea at the time; it sounded good. This has a bit more teeth than that did, so that’s encouraging.

I also think it comes out of our successes that I think we’ve had in this province with regard to, particularly, the Civil Forfeiture Act, which we have now improved three times, after the improvements the minister brought forward in this Legislature. That is important, because you need to have the tools as the evolution of crime takes place.

When we first looked at this act, probably back in about 2012, when the member from Surrey brought it as a private member’s bill, we were talking about things called grow ops, for most part. We’d have these people swoop in when the crop is ready, and they’d hit the grow op — there was danger of guns and what have you — stealing the actual product. Well, today we have legal marijuana in this country. Ironically, I don’t think grow ops have gone down yet. They will, hopefully, over time. But then you’ll have a discussion about the crop that can now be grown legally in a house, and that’s a whole different issue for us down the road.

As we go through this, we want to make sure that we give the tools so that we can make sure that we protect communities. As we put the file together, we use people like bylaw enforcement and complaints and intelligence-based policing so that we can actually investigate and collaborate with the homeowners. In some cases, that will be necessary. In some cases, the homeowner will not be the person involved in the criminal activity.

However, I have told people for years, particularly those who complain about illegal activity in their property that they’re renting out, that they have the right, under the Residential Tenancy Act, to inspect their property on 24 hours’ notice. So if you haven’t looked at it for a year, whose fault is it really that you’re now paying the price for criminal activity on the property that you own? I think they have to look in the mirror, because you can’t ignore this and then say that something else is going on here.

I think the biggest step…. The member for Surrey-Fleetwood was talking earlier about neighbours feeling like they can now have a place to go. They’re probably the least likely, living next door to an activity like this, to want to go, unless they know they’re actually safe. Their retribution or the comeback on them could be tougher than on anybody else if they’re identified as the person who actually made the complaint.

It’s about building files. You’ll build a file not just on one complaint. You’ll build it, and can get to where, as we get into discussions, we can explore those issues in committee stage and move forward with how we can make this effective and continue to work on it — just like we did with civil forfeiture and other activities we put into things like property condition disclosure statements over the years, stuff with regard to residential tenancy, illegal activity and all of those things.

[3:25 p.m.]

I want people to realize that every day, still, there are a number of thousands of people who go out and try to protect their community every night. They make snap decisions on a second’s notice to protect the people in our communities. That’s our law enforcement community.

We get the luxury, if it doesn’t go well, to second-guess them for the next year or two while we put them through hearings and judgments or whatever. They had to make the decision in a split second to protect our communities. The only thing I have to say about that is: understand how important these people are to your community and how much they care about your community. If you can give them another tool to protect you better, it’s the best thing you can do.

At the same time, sometimes it would be nice if you just walked up to them and said: “Thank you.” That’s because while you’re sleeping, they’re on shift. They’re dealing with a bar fight. They’re dealing with a fatal motor vehicle accident. They’re dealing with, sometimes, incidents involving firearms. They’re dealing with people who need Narcan in order to live. And they do it every day.

Let’s remember how important law enforcement is. That’s important to recognize as we go through how important the tools we give them are. To the minister, to the government, congratulations on another tool. If we can always keep the tools we need for law enforcement and the protection of our community as being non-partisan, it would be the best thing we could do for the future of our province with regard to protecting our communities.

J. Brar: I seek leave to make an introduction.

Leave granted.

Introductions by Members

J. Brar: I’m very pleased to welcome the students up there. They are from Archbishop Carney Secondary School in Richmond. There are 40 people, 36 students in grade 10. They’re all here to witness today the activity in the House.

Right now there’s a debate on a bill. Students, the minister is sitting on this side. He introduced the bill. The opposition on the other side have been debating the bill. The minister is going to close debate on the bill now. Thanks for coming today.

I ask the House members to make them feel welcome.

Debate Continued

Hon. M. Farnworth: It’s my pleasure to close debate. I want to thank those who have participated. I want to thank them for their comments. The previous speaker — I want to share many of his sentiments, the member for Langley East. He is absolutely correct when he says that this is about creating tools to help us maintain safe communities and give the police and communities the tools they need to deal with the challenges and the problems that they face.

We know that crime and criminal activity evolves over time and that legislation needs to keep up with that. The legislation that we’ve been bringing forward has been a response to what we have seen evolving in this province. It’s part of, I think, a comprehensive, multifaceted approach to put in place legislation that we believe will help to deal with the serious challenges and criminality that we’ve been facing, particularly around gang violence and gun violence but also the criminal nuisance properties, for example, that occur in many parts of British Columbia.

What’s critical for people to realize, of course, is that no one piece of legislation is a silver bullet. No one piece of legislation is going to solve all the problems or the criminal problems that we face. What a piece of legislation does, as has been stated by, I think, everybody who has spoken, is that it is a tool. It is a tool that allows us to attack a particular kind of crime, a particular new type of crime or activity that may have started to emerge.

It allows the police to do their job. It allows the minister, at a level, to perhaps do enforcement in a different way that will free up resources from the police that they can apply to other areas. Ideally, in many cases — and with this legislation — it may well, in fact, take some out of the court system and allow an administrative penalty process to be able to deal with some of the issues that are being faced.

[3:30 p.m.]

The point is that it’s important legislation. I look forward to the questions that the members have raised, on both sides, in the committee stage of the legislation. We can have a good discussion on that, and when that is done, I look forward to the passage of the bill.

With that, I move second reading.

Motion approved.

Hon. M. Farnworth: I move that the bill be referred to a Committee of the Whole House to be considered at the next sitting after today.

Bill 13, Community Safety Amendment Act, 2019, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. M. Farnworth: I call continued second reading debate on Bill 23, the Land Owner Transparency Act.

BILL 23 — LAND OWNER
TRANSPARENCY ACT

(continued)

R. Sultan: Thank you for the opportunity to comment on Bill 23, the Land Owner Transparency Act, which I support and which probably has particular significance for the riding of West Vancouver–Capilano, which I represent.

[R. Chouhan in the chair.]

Who can argue against transparency? It’s the motto of the hour, whether we are talking about the disclosure of your still unpaid student loans all the way to the size of the tip you left on that last cup of coffee you had at Starbucks — while on legislative duty of course. Our Legislature will even let you examine a scan of the original receipt. Disclosure and transparency are viewed today as next to godliness, and all of us are becoming used to the inevitability of less and less privacy in our lives.

Transparency can serve noble public policy ends. We should certainty applaud Vivian Krause when she renders transparent all that American money pouring into Canada to influence our affairs, whether pipelines or salmon farming — or the election of Canadian governments, even. So three cheers for transparency.

That brings us to the world of real estate. It has proven very difficult for monetary authorities to deal with the consequences of all that liquidity created by governments running deficits around the world and by central banks expanding their money supply and the considerable concentrations of capital accumulated in regimes more hostile to private capital than our own, whether through suspicious activities or not, and anxious to relocate.

In face of such pressures, British Columbia became the destination of considerable flows of money, both legitimate and some not so legitimate. We would be naive to ignore its considerable magnitude. It became a public policy issue when the deployment of all that money helped inflate British Columbia property values inordinately, with side effects on everyone’s cost of living, and also when our taxman could not easily capture government’s legal share of the gains.

That’s the backdrop and one of the motivations for Bill 23 today, but not the only one. Governments, particularly this NDP government, never saw a source of possible tax revenue they didn’t love. And governments, particularly this NDP government, can be quite creative in figuring out ways to grab a chunk of it.

[3:35 p.m.]

One marketing ploy is to use mislabelling. They announce a tax on speculation which has nothing to do, really, with speculation. They announce a tax favouring education where none of the proceeds actually go to education. They announce a vacancy tax which is really a tax on vacation homes or a tax on anybody who purchased a second home, even if it’s merely a cabin in the woods.

Truth in labelling is not this government’s strong suit. Such mislabelling allows them to claim virtue and goodness, all the while growing government itself at a rate which will see a doubling every 15 years at the present pace. It’s unsustainable growth, I believe, unless some spectacular new sources of revenue can be found. That, those of a suspicious nature may be tempted to believe — and perhaps, occasionally, I could be included in that category — brings us to Bill 23.

Bill 23 doesn’t create any new taxes so far, but it should improve the collection of both avoided and evaded taxes, and that’s a good thing. It will also, however, be a goldmine of future taxation opportunities. Increased taxes can be used for additional staff, higher wages, better pensions beyond imagining, and the friends of the government would tend to be the beneficiaries, on a differential basis at least.

Therefore, a responsible and cautious reaction to Bill 23, I believe, could be reasonably something like this statement. “We welcome real measures aimed at halting tax evasion and tackling money laundering in British Columbia. But we do get exceedingly nervous about complex, perhaps unintended or as yet unimagined, tax consequences.” And let’s just skip over the huge privacy issues, which will probably give our Privacy Commissioner pause and merit serious attention. That’s not really the focus of my remarks.

If Bill 23 passes, the identity of the real owners of real property will no longer be able to be shielded by numbered companies, offshore and domestic trusts and corporations. A new, large and undoubtedly complex database will be created and maintained, requiring extra information when title is registered in the name of a corporation, a trust or a partnership. I would be curious, during committee stage, if any credible estimates have been made of the magnitude that the database creation and maintenance may turn out to be, because my hunch is that it’s a major, major effort.

If such a registration does take place under Bill 23, a declaration will be required to name the beneficial owner behind the entity. But a note of caution: how that provision can be enforced will be a challenge. As a group of real estate agents visiting with MLAs yesterday in these precincts pointed out, expecting real estate agents to de facto serve as private investigators simply doesn’t work very well.

Each individual interest holder will have to provide detailed information, including date of birth, social insurance number, individual tax number and whether or not the individual is resident in Canada. All of this is to be accomplished outside the proven and trusted domain of B.C.’s land title office. I was privately curious as to: why not employ the existing demonstrated competence of the land title office structure, to graft onto it these new responsibilities? But apparently, a new parallel agency will be created. I think it would be helpful if the minister explained, eventually, the reasons and arguments in favour of going that route.

[3:40 p.m.]

To cap all of this, the list of beneficial owners will become available and searchable on line in the same way the public can currently access the land title registry. Again, how Fortune 500 lists of shareholders would be dealt with is unclear to me, because, again, this could turn out to be quite an undertaking.

Bill 23 will also create sweeping new powers for inspections by enforcement officers, ministry officials, tax authorities, law enforcement and regulators. All of them will have the ability to share — subject to limitations, of course — information across Canada and with agencies abroad, creating a broad field of fire for privacy lawyers, I would anticipate. So while acknowledging such challenges, we should vigorously support transparency in property ownership and the determination of taxability, and I’m glad to do so.

However, this activity will have to be implemented with extreme care, and I say that giving regard to the NDP style, values and track record. For let us be under no illusions. This NDP government regards anything with the title “corporation” attached to it with a degree of suspicion, I’ve noticed. It also seems to me they have a tendency to dislike the notion of private property, all other things being equal. Furthermore, I also sense that the accumulation of capital is something they view with suspicion, since it almost always involves a history of earning profits, and profits are inherently suspicious, too.

By nature, by creed, by ideology, our friends across the aisle are much more comfortable with entities which earn no profits at all. They are perhaps owned by governments — not by individuals, not by corporations — which are regulated by commissioners and appointees and not by the rudeness and rough-and-tumble of the marketplace, which can be a rather difficult and unpredictable place, but by people this government would be assured by, drawn from agencies and institutions of higher learning and the non-profit sector, as well as the civil service — the public service itself. These are more reliable, predictable — indeed, controllable — entities than that dastardly, unruly marketplace out there.

In this world — the world they tend to favour, in my observation — numbered companies, corporations, offshore entities, strangers from abroad or, heaven forbid, persons singularly interested in earning profits, are really not to be trusted too much. That’s the current institutional framework and the cultural setting in which this bill will be implemented.

To sum up, we acknowledge the public policy necessity — I certainly do, at least — and can salute the government’s willingness to grasp a prickly thistle. But we dread the longer-term innovations in taxation, pain and obstacles which are probably inevitable in the field of property and real estate under Bill 23.

I’m sure my colleagues will be raising a number of questions at committee stage aimed at ensuring that a proper balance is promised between private property rights, transparency, taxation and, most importantly, privacy. While I have not really addressed it, except in passing in these short remarks, the privacy issues are serious indeed, can potentially be highly abused, and warrant fuller explanation at committee stage. I look forward to that.

[3:45 p.m.]

Hon. G. Heyman: Thank you to my colleague for his willingness to wait a few more minutes to speak.

It’s important to speak to all of the measures that this government is taking to deal with what has become a housing crisis in British Columbia and an acute housing crisis in Metro Vancouver, particularly Vancouver and environs.

I grew up in Vancouver. I grew up in a comfortable neighbourhood, a mix of middle-class and working-class families. It just seemed normal that young parents would make a down payment, purchase a home, make payments on that home and, with some luck and steady work in industry, pay down their mortgage and pay off the house during their working lives — perhaps leave the home to their children or be able to take some of the income they were no longer putting toward their mortgage and give some assistance to their children to also have the ability to find a home and sometimes, often, in the same neighbourhood where those kids grew up.

In my childhood and my youth, that was normal. That’s no longer normal. It’s no longer normal in Vancouver. It’s no longer normal in much of Metro Vancouver. Unfortunately, increasingly in many parts of British Columbia, it’s ceased to be normal.

When I was first elected in 2013 and started knocking on doors in my constituency and talking to neighbours and potential constituents, I just heard repeatedly about housing, even from people who owned their homes, who considered themselves fortunate enough to own their homes but were disturbed by what they saw happening around them — the changing nature of the neighbourhood, the inability of their children or their friends’ children to even contemplate buying a home in the neighbourhood.

I remember distinctly talking to a couple in their 30s who are renting a home very close to the home that one of them had grown up in, and he just said: “It’s inconceivable to me. When I was a child, I always wanted to stay in this neighbourhood. I love the neighbourhood. I love the shops. I love the streets. I love the trees. I love the parks. But it’s inconceivable to me that I will ever be able to do anything but rent in this neighbourhood, and I’m not even sure I will continue to be able to rent.” I heard that story repeatedly.

I heard the story from young couples, who would say: “When we decide to have kids, or as we’re deciding to expand our family and we’re looking at space that could house our growing family, we cannot afford it here, and we’re not sure where we can afford it.”

As housing becomes more pricey and is priced out of reach, renters face the same problem, because owners are seeking greater return on their rental property, especially if they’re new owners. So the housing crisis escalates, and it includes both people wishing to own and renters who are increasingly facing unaffordable rents. As people are scrabbling to come up with the cash necessary to pay high rents, of course, that’s less money that they have to put away for a down payment.

In many cases, people felt that something was wrong. They didn’t understand what was driving up the price of housing. Obviously, in the heart of Vancouver, everybody knows what a desirable place it is to live from the perspective of people who live elsewhere — other parts of Canada that are colder, other parts of the world where the political climate is challenging, I may say, euphemistically, and sometimes threatening. They’re looking for a better place to live.

[3:50 p.m.]

It’s not that simple, and it’s not just about that. People had a feeling that something was going on, but they didn’t know what was going on. The reason they didn’t know what was going on was because nobody knew what was going on. We weren’t keeping a record — a record that would allow us to know whether people were resident, whether they were truly the owners, who the beneficial owner was, where the money was coming from.

In the midst of what really became a crisis of awareness or consciousness of British Columbians in the last four, five, six, seven years, trying to track down what’s really at the high costs of housing — and spiralling, out-of-control costs in the Lower Mainland in particular, spreading to the rest of B.C. — it was almost impossible to get accurate data. We didn’t have, as the member for West Vancouver–Capilano so aptly put it, the transparency necessary to have that knowledge.

When our government took office, the Housing Minister, the Finance Minister and our government as a whole adopted a comprehensive plan to try to deal with the housing crisis. Whether it’s ownership, rental or just the supply of housing in British Columbia, it was so, so challenging for people. That was such an important issue in the last election. In the last two elections — which are the two I ran in — it by far exceeded the list of concerns of anybody I talked to — whether on the doorstep during the election campaign, coming to my constituency office, meeting at events, running into in the street, or talking to at the market.

It continues to be a concern. The 30-point plan, of which this bill is a part, is attempting and succeeding in trying to bring prices under control and also dealing with the rental crisis in British Columbia. The truth is that things got so out of control because of neglect. Because of a lack of desire by the previous government to actually get a handle on what was happening or to get the data needed to decide what measures would be appropriate or could be taken, it got worse and worse and worse.

When I listen to the member for West Vancouver–Capilano say on the one hand that he believes in transparency, that he can support the general intent of the bill but is concerned about privacy concerns or the threat that it somehow poses to the rights of people to invest in British Columbia, to prosper or to make a profit in British Columbia, what he is missing is the fact that for the average British Columbian struggling to get housing security or hoping against hope that their children will be able to have housing security, whether it is ownership or rental, what people really want to know is that they have a government that isn’t putting the rights of investors who wish to hide their identity and their true intent ahead of the interests of people who simply want a right to safe and secure housing.

It’s important to have perspective, it’s important to have priorities, and of course it’s important to ensure that legitimate and legal privacy issues are dealt with, but not at the expense of being unable to control rampant speculation, money laundering or any other either illegal or unethical activities in our housing market. People often say that housing is a right. It’s not a privilege; it’s both a right and a necessity. I’m proud of the fact that our government has taken a suite of measures to try to bring the housing crisis under control, to address the issues of transparency in land-ownership. It’s critical that we do that.

[3:55 p.m.]

It’s critical that we do that, so that we can find out all the measures we need to take to combat all of the causes of out-of-control housing price increases and to make a determination about whether those are legitimate market forces or manipulated market forces, whether there are measures we should take or measures we need to take, or whether there are questions of legality that should be addressed and should have been addressed many years ago.

We allowed, for far too many years, shell companies, trusts and partnerships to hide who really owns property in B.C. As a result of that, we faced tax evasion, we faced fraud, and we faced money laundering. We know, through reports and research, that now many of the most high-valued homes in Vancouver were, or are, owned by shell companies. This Land Owner Transparency Act will end hidden ownership by creating a publicly accessible registry on beneficial ownership in real estate.

This is one of a suite of measures to ensure that homes in B.C. are used for people. For people. Not for speculation or, even worse, for money laundering of illegal activity, with all of the knock-on effects that have made housing affordability out of reach for so many British Columbians or taken way, way, way too much out of people’s paycheques, making them vulnerable to shifts in employment or other forms of impact, like rising interest rates.

This transparency registry will be a first of its kind in Canada. It will help tax authorities crack down on tax evasion. It will help law enforcement identify tax fraud and money laundering. We are working hard to bring transparency to British Columbia, to our real estate market. We want to ensure that everyone is paying their fair share. We want to ensure that people are not manipulating the laws of British Columbia and Canada in a way that takes housing availability away from hard-working British Columbians.

I’ve listened all week to members of the opposition talk about affordability on an incredibly narrow band. An important band. Any place people spend money in British Columbia is important, and anything we can do to increase affordability is important. But when you look at the perspective of the incredible bite that housing takes out of the paycheques, the pocketbooks and the bank accounts of all British Columbians, even on a good day, even in a good market, we need to take action.

We heard that loud and clear as we ran in 2017, and we have responded by taking action. I’m pleased to support this Land Owner Transparency Act as an important measure to ensure that British Columbians can have faith that the laws are being upheld, that speculation is not distorting the market and that money laundering is not grossly distorting our application of laws, fairness and the market.

This is an important tool. This is an important tool in our suite of housing affordability bills, and it’s an honour to stand here and support it.

S. Bond: I am pleased to be able to rise and make some additional comments. The minister has already heard remarks from my co-critic, and my comments will not, obviously, vary significantly from those.

I did want to start with a thank-you to the minister. I very much appreciate the fact that she is very helpful when it comes to arranging briefings and making sure that staff provides information to the opposition. And that is appreciated.

I should note that there was a new approach in this briefing, which I very much appreciated. The staff actually brought a PowerPoint, and we walked through the steps. I know that those things matter to public servants, that they do a good job, and I know the minister will go back and express to her staff our appreciation for the information provided. Not just about this bill. As the speaker previous to me noted, the minister is looking at a series of initiatives. And I have a very strong sense that this is only the beginning of the work that she intends to do.

We’re going to work our way through a number of bills this afternoon. But I think it is important to recognize that this is a complex policy area. The minister and I work our way, along with my co-critic, through long, complicated bills. I think that’s an important part of this process.

[4:00 p.m.]

I begin my remarks by reflecting on the fact that, as one of my colleagues earlier said, it’s pretty hard to argue with transparency. I think that we have signalled very clearly that we support initiatives that look at how we crack down on money laundering and how we deal with loopholes that exist in tax policy. I think most members of this House, if not all of them, would agree that that is an absolutely important thing. But to use a fairly common phrase, the devil is in the details.

I was interested yesterday when the leader of the Green Party waxed on eloquently about the bill, almost implying perfection. There are always matters to discuss and look at in terms of how we move forward with things that include, for example, the collection of personal information. That is very sensitive, and it’s important to British Columbians that we make sure that the proper framework is in place for that information. I know the minister knows that we’ve indicated we are notionally supportive of this bill, and we will work our way through another two this afternoon.

Again, I wanted to reflect on a process that the government put in place, because people may not know, as they speak to this bill in the House, that the bill didn’t appear out of nowhere. In fact, the ministry released a white paper, and it was a white paper with annotations. I have to say that many of the people that participated in the consultation process had complimentary things to say about the government. I know the minister will appreciate hearing that.

The white paper was released in June of 2018, and it actually encouraged people to participate in this process. I actually think that is a process that has merit. It allows for people to provide input to government. In fact, when you look at how the draft legislation was shared, it was very thoughtfully done. There were key questions that were highlighted throughout, text-boxed throughout the draft legislation. I appreciate that, because I’m sure the minister would agree with me that neither she nor I are experts in these subject areas. We learn because we have to, but I think asking people for information is absolutely essential when it comes to these kinds of changes.

One of the things we will…. I want to walk through a few of the responses that were provided to the minister through this process. I think that’s important, because what gives this process credibility in the longer term, should government continue to use the process of a white paper, is whether or not people actually were listened to, and we then see that information and those ideas translate into the actual piece of legislation. So I think the process has merit, and the test is whether or not government actually will listen to the input that’s been received. I’m certainly not implying it didn’t, but I think what we need to do is walk through some of those challenges that were presented by some respondents in the process.

Again, the government has pointed out that this is the first registry of its kind of in Canada. That’s why I think that it is incumbent upon the opposition to actually ask questions about what the model looks like. How will there be protection of information, and exactly how will it be implemented? The registry will hold public records on the individuals behind numbered companies, offshore and domestic trusts, and corporations. As a result of that — which we, again, have a notional support for — the registry will be a tool. It will give tax auditors and law enforcement agencies, federal and provincial regulators, the information they need to conduct their investigations.

On the surface, I don’t think there’s anyone in this House that’s going to argue with the fact that giving those particular agencies and regulators more tools is incredibly important. I think, from our perspective, this also allows the government agencies to crack down on tax fraud. Again, I don’t think there’s anyone in this House that’s going to be opposed to cracking down on tax fraud and people who decide they’re going to be engaged in money laundering. Those are important public policy issues and certainly something that I think there’s multiparty support for. Again, we want to make sure that when we look at how it’s going to be done, we have a sense of confidence about what that will look like.

[4:05 p.m.]

In essence, this bill will tackle hidden ownership. That’s certainly been a topic of discussion for many, many British Columbians and, in fact, Canadians over the last period of time. People want there to be transparency. They want to know what transactions are taking place. And from our perspective, the question is simply: how? What are the details that are associated with implementing this bill?

If you’re a layperson, believe me, you’re probably not going to be reading through the dozens of pages that are outlined in many bills, although some are shorter. Rarely are our finance bills short, apparently. But what matters to the layperson is that this is about shining a light on who owns real estate in British Columbia. It will mean that individuals who are currently masked or protected behind numbered companies, offshore domestic trusts, corporations, will now be captured in a registry. As I said, that is an important tool, and it will aid in investigations and looking at the whole issue of tax fraud.

When I sort of scanned through some of the feedback that had been received by the minister and by government, it’s fair to say there was lots of support. I think that’s reflected by the challenges that we’ve seen in our province, in our country. I think most of the organizations were very supportive. But there were some questions that were raised that I think it’s important that…. As we explore through committee stage, we’ll be looking for some answers to those questions.

For example, when we look at the bill, one of the things that will be essential is the balance between the protection of privacy and the whole issue of transparency. Are there protections in place, and are they strong enough? The bill implements what will be called a transparency report, and important information will be collected. We have to admit that as we’ve looked at a number of bills and policy decisions that have been made by the government, many of them include collection of data. In fact, one could potentially suggest that this government has an insatiable appetite for collecting information and data.

Let me give you a sense of what some of the information that will be collected here is, and is similar. As you’ve noted, we’ve raised this issue related to other bills, including with the speculation tax, and by the way, we continue to receive phone calls about people having to provide their social insurance numbers and their email addresses. But here’s the list of information that’s going to be collected, to be captured in a transparency report.

Again, we’re not questioning, necessarily, the validity and the importance of having the report. The question is: what’s the information that’s going to be collected? Is it going to be protected, and are there going to be provisions for sensitive information? For example, the individual’s primary identification information — the date of birth, the last known address, the social insurance number, the individual tax number, whether or not the individual is a resident in Canada for the purposes of the Income Tax Act, the date on which the individual became or ceased to be an interest holder…. And there are a number of other pieces of information that are going to be collected.

Now, to be fair, if you want to be transparent and understand who owns real estate in British Columbia, some of those things are pretty essential. Our concern is: is that information protected? Is there a balance when it comes to the protection of privacy? In fact, other respondents to the request for response that the minister used in her process around the draft paper — others referred to that as well.

One of the concerns that was expressed is the need for verification of information and what the reasonable steps are that someone has to take to verify information. One of the things that was noted by organizations that responded to the minister is the fact that there are very complex structures of some reporting bodies. One section of this act, section 21, prescribes that a reporting body must take “reasonable steps to obtain and confirm the accuracy” of the information it provides in a transparency declaration. Well, what we need to be sure of is: what does the word reasonable mean? As you can imagine, that is open to significant interpretation.

[4:10 p.m.]

Certainly, one of the observations that was fed back to the government was the issue of how you define reasonable. What are the expectations for a reporting body? Have they made all of the effort that’s required to actually confirm that information?

We also need to recognize that even if the prescribed information can’t be obtained, the reporting body still has to fill out a transparency report outlining the information it was able to obtain, what information it was unable to obtain and what steps were taken to confirm the information. Again, the definition of “reasonable” there makes a difference. That is important. That is incredibly important because you don’t simply get a reminder that, oops, you should have fixed that.

In the event that a reporting body fails to file a transparency declaration or, heaven forbid, provides false or misleading information, there are fines. An enforcement officer may choose to impose an administrative penalty. In the case of an individual, the penalty would be the greater of $25,000 and 5 percent of the assessed value of the property. And in all other cases, it’s the greater of $50,000 and 5 percent of the assessed value of the property. So again, there is a monetary penalty that could be imposed, and the test uses the word “reasonable.” I think it’s important that…. We need some clarity about the definition of reasonable, and that was one of the concerns that was expressed.

We have to remember that basic identification information that’s disclosed under the act will be made public and a member of the public may search the publicly accessible information for a prescribed fee. Again, in numerous submissions, the key point that was made was the need to balance transparency and the protection of privacy. Certainly, it is important to note that there are ways to have your information…. There are circumstances under which your information would be omitted from the bill. From that perspective, there are some specific cases where information that would be sensitive in nature will not be made public.

Again, we want to look at the scope of that and take a look at the balance between the protection of privacy and, also, the importance of transparency. Considering it’s called a transparency registry, I’m assuming we’d want it to be as transparent as possible but with proper security in place.

It was interesting to note that the Union of B.C. Municipalities actually provided a response, a submission to the ministry — again, very much supportive. They noted, certainly, circumstances related to speculation and residential real estate in the Metro Vancouver area. Generally, the issue that they highlighted was information-sharing and the use of data. In fact, the UBCM noted: “We would encourage the province to take further steps to ensure that the data are effectively used for enforcing tax law with due consideration to potential privacy issues.” So again, while a positive response, there were certainly some questions that at least the UBCM encouraged the minister to consider.

The bill allows, also, for the sharing of information with agencies outside of Canada. There are parameters, again — the types of relationships and agreements that have been signed before that information is shared. But again, are there strong enough protections? In committee stage, we will, obviously, work our way through some of those critical issues.

The B.C. Real Estate Association also provided a response to the white paper. It was an interesting perspective that they took. While they welcomed transparency and looked at the importance of moving forward with an initiative like this and they were clear in their…. Certainly, they were a bit qualified in their support saying that at a high level, they support measures that improve transparency. But one of the things that they wanted to highlight was that at least in their initial look at the Land Owner Transparency Act, there was a concern that it would require the time and, therefore, the cost of real estate conveyance for transactions involving, in particular, applicable trusts and corporations.

[4:15 p.m.]

Again, this is another submission that highlighted the question of reasonable efforts and how you define the word “reasonable” — very, very important. There needs to be clear guidance, and that’s what we’re going to be asking the minister about. Are there going to be clear guidelines for reporting bodies and agencies? In an attempt to meet those requirements, they need to be able to understand exactly what they are.

Their submission goes on, again, to consider the issue of privacy and making sure that there is careful thought and consideration to those issues.

Another interesting issue, from our perspective, is the issue of capacity. This is a significant undertaking — again, always being careful to note that we support the concept of transparency and making sure we can eliminate tax fraud and loopholes wherever possible. But this is about capacity as well. The agency that will be looking after the registry will be the Land Title and Survey Authority. We want to be sure, as do many other agencies, that there is capacity in that organization to actually process the volume of declarations. So important and pragmatic questions about how one implements something of this nature, and I think that’s very important.

We do want to, again, highlight the fact that this will likely cause increased time and costs. As a result of that, one of the comments made by the BCREA was that they want to see government get the most value out of this data. Certainly, we do too. To that end, they asked for information about how these measures will be coordinated and the data aggregated, and looking at a comprehensive approach that includes a public evaluation component to actually look at whether or not the measures have been effective.

When it comes to the additional costs and fees, that was also reflected in the response to the minister by the Urban Development Institute. They actually did a fantastic job of laying out a series of questions and provided some really, I think, pragmatic suggestions to the government about how this might work. That was sent to the minister in September, so hopefully in time in terms of the shaping of this legislation.

Again, I want to just quote from their presentation to the minister, which says:

“Even though the proposed measures will add substantial administrative costs, fees and delays to real estate transactions and development projects, UDI is supportive of this” — LOTA, it’s called — “in principle. However, UDI is significantly concerned at the prospect of unfettered public access to a beneficial ownership registry that includes personal information of parties who are not beneficial owners, as that term is legally recognized, of real property or who have no ability to control or even influence decisions that could result in their identification in a public registry.”

Again, they take no issue with the registry information being available to the federal and provincial governments’ respective relative agencies and authorities, including law enforcement, but there is some concern about general overall public availability. Again, thoughtful input that I think needs to be considered, and we will be pursuing some of those items as we move forward.

We also have heard concerns about harmonization with other existing regulations and privacy issues. We want to ensure that as the model is developed and implemented, the cross-jurisdictional issues, regulations that already exist and privacy issues are concerned from a broader perspective. It needs to work in harmony with other relevant legislation.

That’s an important thing. When you think about what is being asked of a reporting body, we want to make sure that it’s effective, that it’s coordinated and that it’s appropriate.

I guess one of the things, although it’s been scoffed at by others who have spoken on the government side of the House, is it’s not just members of the opposition who are concerned about potential other uses of this information.

[4:20 p.m.]

In fact, we know that there have been submissions made and commentary about the fact that: does this model set up…? Is it a first step toward possible future amendments to other taxation or new taxation models? We know that this does allow the government a model on which they could develop new taxation models in the future. As such, it could well lead to an amendment of the property transfer tax — to make property transfer tax payable, for example, on beneficial transfers.

Government, apparently, has made some comment about that. We’ll be very interested to hear what the minister’s views on that are. As has been mentioned to us, certainly, the timing of that remains uncertain, and even the consideration of that remains unclear. That’s the point of a debate about legislation. Certainly, when you look from an overall policy perspective, again, we have an interest in seeing some of those more technical questions answered.

I think the other issue that we do need to look at in the bill is the fact that there are significant powers for inspection in this bill. It allows for inspection by enforcement officers, ministry officials, tax authorities, law enforcement and regulators. It’s obviously necessary, if you’re looking at cracking down on money laundering and closing tax loopholes and tax fraud. So from our perspective, again, necessary tools. Are they measured? Are they appropriate? Those are the kinds of questions that we’re going to be asking about.

Our job is actually to ask about the critical details that relate to the implementation. We think that the process, as I said…. I thought, and many participants felt, that having a chance to look at a white paper, to review it, to be thoughtful about that input, was very helpful. What we’re going to be looking at is the test. Did the government take the advice of people who would be impacted by this legislation? Did they make those changes? Did they put those protections in place? In a nutshell, have they been addressed?

With those comments, I will end my remarks. I certainly, once again, want to thank the minister and her staff for the briefing opportunities, for the information provided. We, as the opposition, look forward to asking some very specific questions during committee stage.

M. Dean: I am very honoured to rise today to speak to Bill 23, the Land Owner Transparency Act. This act is a really important element in our 30-point housing plan that’s designed to tackle the housing crisis across our province. It’s really important to all British Columbians.

I’m especially proud to speak in support of this bill today as the representative for the constituency of Esquimalt-Metchosin, because lack of affordable housing is one of the highest priorities in my community. So many families who live in my community are working really, really hard, but with the cost of owning or renting a home, they are struggling to make ends meet. They are at risk of having to make choices between shelter, food or heat.

For too long, the previous government let the cost of housing skyrocket. Our homes were allowed to become commodities. For years, the previous government didn’t take any action while the B.C. real estate market was taken advantage of by people using shell companies, trusts and partnerships to treat our homes as market commodities. It was hidden from the public who was really owning property in British Columbia — our home, our province. The decisions of the previous government left the real estate sector open to tax evasion, fraud and money laundering. The results of all of this led to an uncontained escalation of prices.

[4:25 p.m.]

I come back to my community. As a result, local residents in Esquimalt-Metchosin struggle to find homes for themselves and their families that they can afford. Families are left in situations of housing that is inadequate. It may not be safe. It may not be stable. It might not be healthy. Many family members have had to either leave our community or consider leaving our community.

I can tell you about a young mom in my community. She has three part-time jobs, and she still struggles to get by. She has to defer some payments to be able to make sure she can prioritize paying her mortgage, keep a roof over her head and continue looking after her grade 5 daughter.

When we know the true owners who control private companies in B.C., tax authorities, law enforcement and regulators can crack down on tax evasion and money laundering and other criminal activities. Having this act as part of our 30-point plan will actually help to moderate the market and ultimately ensure that families can afford to live and work in their own communities.

The impact of the housing crisis also has a ripple effect through the renting community. A single mom with three kids in my community was told that her lease on her rental property wasn’t going to be renewed. So she went around the community, viewing and having a look at other properties that might be available.

She went to one. There were 17 other prospective renters having a look at that property. She knew she wouldn’t have a chance of securing that property. She knew there would be a bidding war that would lead to exceptionally high rents. It was unattainable for her. She lived with that anxiety of where they were going to live for weeks. Then eventually, she found somewhere. It was a smaller house, and it was in a neighbourhood farther away from the school of her children.

In the past, people were able to obscure the ownership of property, making it easier to launder money and contributing to the skyrocketing price of homes. A 2016 report by Transparency International Canada indicated that nearly one-third of the 100 most valuable residential properties in greater Vancouver were owned by shell companies.

The escalating price of homes in greater Vancouver came over here, leading to skyrocketing prices of homes in greater Victoria. My community attracted many new residents from Vancouver, who sold property over there to a really high bidder and came to Victoria, bringing extra purchasing power and creating bidding wars here on the Island as well. At the height of the problem, bidding wars were common, and houses were being sold with unconditional offers, and often within 24 hours.

I’m really proud that we’re bringing in the Land Owner Transparency Act, because this will end hidden ownership of real estate by creating a publicly accessible registry on beneficial ownership. Beneficial ownership is an indirect form of ownership. It’s someone who enjoys the benefit of ownership even though the title to a property is in another name.

This is the first time a measure like this is being taken in all of Canada, and it’s the broadest legislation of its kind in the world. This legislation will reveal the true owners behind complex corporate structures, offshore or domestic trusts and partnerships.

The act is going to require disclosure for all new real estate transactions or changes in title, plus all existing property owners with beneficial ownership, within a certain time of the act coming into force — and any time there’s a change of interest holders or beneficial owners, even if it doesn’t result in the transfer of legal title to the land.

What this will do is remove the ability of owners to conceal their identity, for whatever reason that is happening. It will prevent them from using their funds to escalate the prices of real estate in my community, homes for families who live in Esquimalt-Metchosin and across the province of British Columbia.

We’ve heard from British Columbians. We’ve heard from experts. We’ve heard from municipalities that they want the government to end hidden ownership, and that is just what we’re doing.

[4:30 p.m.]

To conclude, our government has taken a number of actions that are providing a clearer picture of the true ownership in the province, closing loopholes in B.C.’s real estate market and giving tax authorities, law enforcement and regulators the information and tools that they need to crack down on money laundering and address fraud. By bringing transparency to B.C.’s real estate market, we’ll make sure everyone is paying their fair share.

J. Brar: I’m very, very, very pleased to speak to Bill 23, the Land Owner Transparency Act.

[J. Isaacs in the chair.]

It’s much needed, and it’s timely, because in B.C., you know, the housing has become almost unaffordable for many, many people, as said by the previous member. The problem here in B.C. is that for many years, the previous government did not take any action while people used shell companies, trusts and partnerships to hide who really owns property in B.C., and that’s a huge problem. If you tell that to many people in other countries, they don’t even believe that that’s happening in Canada or in B.C.

The decision of these people left the real estate sector open to tax evasion, fraud and money laundering. Reports have shown that many of the most highly valued homes in Vancouver are owned by shell companies. Those are the reports, and those are shocking reports when you hear them. We live in the most beautiful province that we call British Columbia; the province that truly believes in justice, equality, fairness and equal opportunities for all British Columbians; the province built by the people who came before us on the fundamental values of democracy, human rights and peace; a province with tremendous resources for all of us.

It’s very hard to believe right now that the hard-working people of British Columbia now cannot actually afford to buy a home. Anyone — our second generation or the next generation and newcomers coming to this country…. If I can say one dream that every British Columbian has, that is a dream to own a house. And that dream was killed by the previous administration by not taking timely action when the real estate industry…. The prices of homes were going up every day.

I have seen a lot of questions from the other side about the pain at the pump, but there was no question about the pain of the affordability of homes in B.C. That’s way bigger than the pain at the pump. The solution is the Land Owner Transparency Act. This act will end hidden ownership by creating a publicly accessible registry. That’s what this act is going to do. We are taking action to ensure homes in B.C. are used for people, not speculators, investment or money laundering. This transparency registry will be the first of its kind in Canada, and that’s a good thing. This will change the game — the way it’s going on in B.C.

The registry will help tax authorities and law enforcement agencies crack down on tax evasion, identity, tax fraud and money laundering. We are working to bring transparency to B.C.’s real estate industry, and that’s very important to make sure everyone is paying their fair share.

[4:35 p.m.]

We have heard from British Columbians, experts and municipalities that they want the government to end hidden ownership, and that’s very important. We are doing just that, because this is a big problem.

Even in the face of international criticism, the previous government ignored the proliferation of hidden ownership in our real estate market. They allowed property owners to obscure ownership of property, making it easier for criminals to evade taxes and to launder money in B.C. That’s very unfortunate. This inaction means that we don’t have accurate data on the size of the problem at this point in time. That’s why we need the registry.

We know the shocking numbers, all the data that one-third of the top 100 most valued residential properties in greater Vancouver in 2016 were owned by shell companies. They were owned by shell companies — one-third of the 100 top properties. Data leaks such as the Panama Papers and the Paradise Papers have provided examples of Canada’s reputation as an attractive place for setting up anonymous companies and hiding wealth. This was a free road to make more money in B.C., and this registry will reveal the true ownership of real estate in B.C.

With this, I will just close by saying that I support the bill, because this bill is very important.

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

Hon. C. James: Thank you to all the members who spoke on the bill, and thank you for the strong support for transparency. I think this is a critical piece in bringing this bill forward. There was a lot of discussion and questions, certainly. Good discussion, I hope, will occur at committee stage to talk about the balance that’s necessary in looking at transparency.

The balance of privacy was raised, and certainly a key issue for us in developing this legislation was to ensure that you did find that balance, that we were able to be transparent. But we also took into account the concerns that have been raised and the very good suggestions around how to approach those when we took a look at putting this registry together — for example, not including individuals under the age of 19, under the age of majority, and not including vulnerable people.

There were obvious issues raised for people who may, for example, be fleeing domestic abuse. There’s a good rationale for making sure that their information is not included. They may have a trust for a very specific reason so that they can ensure their safety. Those were taken into account in looking at how we put the registry together. People talked about efficiency. I know we’ll have some discussion about that, through the land ownership, and how the registry is put together.

I want to thank the member across the way, one of my critics, who raised the issue around the white paper. Certainly, it’s something, from my perspective, when there are opportunities — when we’re able, legally, to put something out in a draft form and be able to give people an opportunity…. I certainly believe that that is one of the strongest ways that we can engage people involved in the sector. You don’t often get the public, necessarily, taking a look at a very detailed piece of legislation, but you certainly get the stakeholders, people on the ground who can give you very good advice around what you’re looking at.

It’s not possible, often, in Finance, because of tax reasons. You can’t, with tax bills, put the information out ahead of time, because someone may use that information for bad purposes or for their own personal benefit. So it’s not always possible. I think it’s tougher, probably, in this ministry than it is in other ministries, but certainly, the opportunity to table legislation, to allow the chance for that discussion to occur and then to bring the legislation back for debate is something that I’m a strong believer in. Certainly across government, we look for those opportunities when it’s possible to be able to do that.

I look forward to the discussion on committee stage. I appreciate, as I said, the discussion we’ve had from members on all sides, and the support for the bill.

[4:40 p.m.]

With that, Madam Speaker, I move second reading.

Motion approved.

Hon. C. James: I move that the bill be referred to a Committee of the Whole House to be considered at the next sitting of the House after today.

Bill 23, Land Owner Transparency Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. C. James: I call second reading of Bill 24, the Business Corporations Amendment Act.

Deputy Speaker: Proceed, Minister.

BILL 24 — BUSINESS CORPORATIONS
AMENDMENT ACT, 2019

Hon. C. James: I move that Bill 24 now be read a second time.

The amendments in the Business Corporations Amendment Act will improve transparency regarding ownership of B.C. companies to reduce the risk of them being misused in criminal activity. Because we’ve just finished debate on Bill 23, I think it’s just important to talk about the fact that these two bills do, in some ways, mirror some of the same kinds of principles that were in Bill 23.

Bill 23, the Land Owner Transparency Act, focused on real estate, on the ownership of land in British Columbia, and on ensuring the same transparent process for land ownership by people who have corporations, trusts or partnerships as we do with individuals. If you’re an individual in British Columbia and you own a piece of land, you go on the land registry, and your basic information is provided. Bill 23 provides that same opportunity for transparency for corporations, trusts and partnerships.

This bill focuses on the ownership of companies — who is behind those companies, who is behind those corporations. Currently the true owners of companies are hidden. They’re hidden behind the corporate veil. They’re hidden behind the corporation — which again, similarly to real estate, provides a loophole. It leaves open a loophole that can make B.C. companies susceptible to being used for criminal activity, such as money laundering, such as tax evasion.

Very similar to Bill 23, this is also prevention work. It’s not simply making sure…. Yes, we want to make sure that the people existing are paying their taxes and are following the law, but it’s also prevention work, because transparency, as groups and organizations that work particularly in this field will tell you, transparency is one of the best ways to be able to cut down on loopholes and cut down on the opportunity for illegal activity, because once you make it transparent, it’s pretty tough for people to hide behind it. So it is, in that respect, similar to the previous bill, also a prevention bill.

This bill will increase corporate transparency by requiring companies to identify and to maintain up-to-date information about their true owners in a new record which will be called a transparency register. Companies will be required to collect information about both the registered owner of a significant number of their shares and the beneficial owner of those shares. As well, individuals who are able to control the company’s board of directors or who in fact exercise indirect control or influence over the company must also be included in this transparency register.

This bill and accompanying regulations are going to set out the criteria to help companies determine who must be included in the transparency register. The information in the transparency register must include the individual’s name, date of birth, last known address, citizenship and residential status.

Police officers, tax authorities and specified regulators will be able to access this information for their investigations. So it’s different than the previous bill, Bill 23, the Land Owner Transparency Act, where that information, the basic information, will be public. This transparency register will be kept in the company’s register offices. It will not be public but will be accessible, as I mentioned, to police officers, tax authorities and any specified regulators who are looking at investigations and need basic information.

In addition, the bill will also address bearer shares, which can be used to be able to conceal the real owner’s identity. People might ask why we’re dealing with this, because bearer shares haven’t been issued for over 50 years. Amendments will ensure that any pre-existing bearer shares that may be out there will in fact have to be replaced with share certificates that set out the name of the shareholder.

[4:45 p.m.]

It ensures that if there are any of those bearer certificates still out there, we’ll be able to take care of those and ensure, again, that there’s transparency — which will, as I mentioned earlier, prevent the potential misuse of bearer shares in criminal activity.

This bill will also create offences, just as the previous bill. We take this issue very seriously. We take the transparency very seriously. So there will be offences for people who don’t comply with the transparency registry requirements. For example, it will be an offence for a company not to maintain or to update its transparency register with current and accurate information.

Again, if we’re really looking at transparency, you want to make sure — as there are changes around the company, who controls the company and who holds those shares — that they update their information so that it’s the most accurate information they have. It will also be an offence for an individual to not take reasonable steps to provide a company with the information it requests and it needs for its transparency register. If found guilty, a corporation will be liable to a fine of $100,000, and an individual will be liable to a fine of $50,000.

Through this bill, we are meeting, as government, two of our commitments: first, our commitment, as we did with the previous bill, as outlined in our 30-point housing plan for housing affordability. That commitment was to require companies to collect and hold accurate and up-to-date information about the beneficial owners of their shares.

There’s a second piece that we’re also following through on and meeting as a commitment, which is our commitment to the federal-provincial-territorial initiative to improve beneficial ownership transparency across Canada. This was an agreement made by the previous government, in discussions with the federal government and other provinces, an issue brought forward by the federal government to require all provinces to move in this direction, to be able to ensure that that transparency was there. I’m very pleased that we’re taking action now to be able to do our part, in British Columbia, to say we’ve met our commitment, as well, to the federal-provincial-territorial partnership.

In meeting both of these commitments, we are once again, in B.C., leading the way when it comes to greater corporate transparency — in fact, leading the way across the country. Our province is closing the loopholes that can be a safe haven for criminals who hide behind corporate structures. With these new transparency requirements, the public can trust that we’re closing a loophole that left the door open.

As I said, prevention work is critical. I think the basic principle for the public is that they’re paying their fair share. They’re following the law. We expect that everyone in our province will do that. This bill brings forward prevention techniques, through the registry, to be able to look at how we ensure that everyone in our province really is following the law and paying their fair share.

I look forward to the discussion, and I look forward to B.C. once again making sure that we’ve done everything we can and that we as government have done everything we can to cut out those loopholes that leave the potential for money laundering and tax evasion.

S. Bond: I appreciate the minister’s comments. As she noted, we are working our way through a series of bills. Ironically, my first comments were almost virtually the same as hers, when it comes to the fact that the principles behind this are virtually the same as in Bill 23. I don’t intend to make lengthy remarks, but I think it is important. Obviously, my co-critic will bring her perspective as well. Again, we want to thank the minister and her staff for the briefing that was provided. Those are always appreciated, and I must say that this minister has been very helpful in arranging those for the opposition.

The minister has described Bills 23 and 24 as a package, so while the principles are the same, obviously the concerns would then be relatively similar. Those will relate to the issue of data collection. Again, I think members of this House support the move toward greater transparency. When the government described its intentions, it actually announced these bills — both Bills 23 and 24 — at the same time, and talked about what exactly the intentions were for both of those bills.

[4:50 p.m.]

When we look at the Business Corporations Act, this has in common with Bill 23 an intent to crack down on tax evasion and also look at money laundering. Again, it’s about collecting information. It’s about making sure that we bring an end to hidden ownership in British Columbia. So private companies — again, I think it’s important to note that it’s private companies — will be required to keep accurate and up-to-date information about the true owners of their shares.

The other part of the bill…. I have to be careful to say “bearer” shares because it sounds like bear shares. I’m sure that people are not quite sure about that. I think the minister laid out the reasons for that. But in essence, they are unregistered shares that are owned by a certificate holder, so you’re able to transfer those to a variety of people without registering them in a person’s name.

When you look at what exactly will be expected of companies — again, that’s what we’re going to be asking questions about. Notionally, we support the concept, but we want to be sure that the information is protected and properly registered. Those are the kinds of things we’ll be asking about, the implementation side.

When we look at what a private company is going to be asked to do, as the minister pointed out, they’re going to be asked to create a transparency register. As was pointed out, it differs from Bill 23 in that when we talk about transparency there, it means full, public transparency. A person will be able to literally go and do a search and look at landowners of property.

In this case, it is the company’s responsibility to collect this data. It will be kept in their own offices. The information it will include — and, in fact, must include, as the minister pointed out — is registered owners, beneficial owners and owners that have indirect control such as through an intermediary corporation, tax authorities, police and certain regulators.

I think herein lies the significant difference. This is still going to be used as a tool — in this case, looking, I think, most particularly at white-collar crime. But in essence, it is another tool that the government is providing to those authorities, the police and others, and in fact, the company’s register will be part of the work that helps those investigations.

It is about the collection of data. When you think about what will be captured — and as I referenced in Bill 23 — this just adds to the collection of data. You know, the government continues to collect information, and it is personal information, and at times, people are very, very sensitive about that.

Again, we come back to the question of the balance between transparency, which is a critical and important step to be taken…. But it’s also about the protection of personal privacy. So how do you find that balance? Those are the things that we’re going to be canvassing.

Again, the minister pointed out there is restricted access. That’s obviously important. It is not a public register. But B.C. companies will have an internal transparency register, and they list the following information of the beneficial owner of the company. So you are an owner of the company deemed to be beneficial. You will have your name, your date of birth, your last known address, your citizenship or immigration status and whether or not the person is a resident in Canada for the purposes of the Income Tax Act. All of those things will be captured.

We want to ensure that we’re…. First of all, this is a very significant process. When you look at the combination of this act and Bill 23, we’re going to have a lot of information being collected, and we’re going to want to know what the Privacy Commissioner’s response was. Are there proper measures in place to protect that information?

There are also requirements to update the information. So the private company has a responsibility not just to do it once and forever; but every time that there’s a change in that critical information, there are timelines associated with when those changes have to be made, and there are penalties if the company does not follow through on those important requirements.

I think the minister certainly outlined that the bill also deals with bearer shares, and as she pointed out, they’ve actually been prohibited in British Columbia since 1973. So it’s not like they’re being produced now. This is about pre-existing and invalidly issued bearer shares.

[4:55 p.m.]

What will happen as a result of this legislation is that those shares will have to be converted into registered shares. Otherwise, the rights that are associated with them will not come into effect. So in essence, it’s tidying up something that basically was outlawed in 1973, but because there are still some in existence, I think this is a fairly prudent and measured approach to dealing with that.

Again, the whole point is transparency. Whose name should be on those certificates? Those are the kinds of issues that that will deal with. Companies, again, will have to make adjustments. That’s the other thing we’ll be talking about: how we work with companies, and in the case of Bill 23, individuals. These are significant changes. They will involve new ways of practising, and as we pointed out earlier, there will be costs and time associated with both of these bills. In fact, we want to make sure that we understand how they’ll be implemented and what exactly the expectations are for companies.

As the minister knows, we’ll work our way through this and eventually — hopefully, I know, from her perspective — the bills will receive royal assent. At that point, there’s going to need to be, from our perspective, a pretty significant education campaign about how this takes effect. We’ll be asking the minister what her plans are in terms of that particular aspect.

The final piece I did want to touch on was something that the minister referenced in the latter part of her comments. I think it does need to be made clear that British Columbia is not doing this in isolation — the business corporation changes. In fact, the federal government made changes. They made changes to the Canada Business Corporations Act that will affect many Canadian accountants and others who now need to maintain information on beneficial ownership. In fact, that begins in June. The way it’s been characterized there is that if they do not do that, they will face stiff penalties.

It’s important to note, as the minister did, that British Columbia’s decision to move forward was also built on the agreement that was made at a federal-provincial-territorial meeting where there was an agreement that they needed to deal with this across the country as the result of federal changes as well. As I said, the beneficial ownership information requirements for federally incorporated companies were passed into law in December 2018. In fact, they become effective June 13, 2019. As the federal government pointed out, the provinces are expected to enact similar requirements for corporations formed under provincial statutes. So what we see today is the province following through on that important cross-jurisdictional approach to this issue.

I think it’s an important perspective, because it means British Columbia is not standing by itself. In fact, other jurisdictions, including the federal government, recognize that having more transparency when we’re dealing with issues like money laundering and tax evasion…. All of those kinds of things are not simply a B.C. issue. They are a Canadian problem that we need to deal with. The federal government has noted that British Columbia was the first province to initiate their legislation. I’m sure the minister feels very positive about being recognized for that. But obviously, there are some things that I think that causes us to think about.

One of the concerns is that while there are many organizations that support corporate information requirements that improve transparency and consistency across jurisdictions, you can imagine that there needs to be a coordinated approach to this. All of these new legislative changes at the federal level — Bill 23, Bill 24…. We’re going to continue to see those changes. All of them have a very practical impact. Somebody has to collect that information. They have to look after it. They have to make those necessary adjustments. There are significant changes here. One of the things…. The caution that’s been raised is: please, let’s look at getting rid of duplication wherever that is possible, looking at confusing and especially where….

[5:00 p.m.]

Today already we have two significant bills that are talking about collecting information. The feedback that we’re receiving is: “For heaven’s sake, make sure it is not duplicated.” If it’s available in some other parts of the system — for example, through the tax system — we need to figure out how all of that information gets coordinated and aggregated.

You know, there are cautions here. I think it is important that we stand up…. All of us in this House are going to support and applaud the effort to move toward more transparency, but there are some practical things we need to think about here.

We’re going to have more data than we know what to do with. We’re going to have to recognize that that is time-consuming, and when it’s time-consuming in reporting bodies, guess who ultimately pays for that: the consumer, the client, whoever is dealing with that.

It’s just a caution, and again, I did want to be sure that we have on the record the federal, provincial and territorial perspective, that this is part of a suite of actions that are taking place across jurisdictions, not just in British Columbia. I think that’s a good thing. I think that when we look at the issues that have certainly been in the media and elsewhere, B.C. is not alone in facing those challenges. I’m encouraged to see that kind of cross-jurisdictional best practice being initiated. I think that’s helpful.

I guess my final comments. Again, as in Bill 23, we see in Bill 24 that there is some generally very positive feedback for the government related to moving towards these more transparent processes. I think the Law Society described it well in their comments about this particular piece of legislation. They described it as: “Requiring companies, trusts and partnerships to disclose their controlling shareholders, beneficial owners and partners protects the public by letting everyone know who they are dealing with in B.C.’s real estate market.”

When you think about the positive feedback that’s been received, I think that’s a very strong starting point. But as I have said and will continue to say, when it comes to bills of this nature, where much of the detail is determined through regulation, the devil is in the details. We’re going to work our way through committee stage, through each of the pieces of legislation, asking those very specific technical questions, but it won’t end there.

There is much more work that will be done after the fact. Our job — and those on behalf of stakeholders, many of whom have provided commentary and feedback — is to make sure that when it’s implemented, it is done as effectively as possible, minimizing increased costs and loss of time and all of those things, while protecting the important value that’s reflected in this bill, which is transparency.

With those comments, I very much appreciate the opportunity to comment, and we look forward to continuing our discussion in committee stage.

N. Letnick: Thank you to the minister for introducing the legislation and to my colleagues for speaking to it.

I rise to speak to the Business Corporations Amendment Act, Bill 24. The Business Corporations Amendment Act, 2019, prohibits bearer bonds which are deemed owned by the physical holder of said bond. The act also creates the requirement for corporations to keep a register of individuals who control or own more than 25 percent of a company. The private company’s transparency register must also include registered owners, beneficial owners and owners that have indirect control. The company must maintain this register for inspection by government officials.

There are some important sections of the bill — I’m sure my colleagues will be covering this in the committee stage — in particular section 3, which requires that bearer bonds must be replaced by named share certificates; section 5, which adds the transparency registry requirement, with added sections 119.7 to 119.8, which relate to inspection for tax law and regulatory purposes; and also section 6, the commencement section, which provides the transparency registry come into force by regulation and the bearer bond elimination by royal assent.

I intend to support the bill. I just want to make that clear up front. I welcome this new tool in helping combat money laundering through the prohibition of bearer bonds, and I welcome increased transparency around corporate ownership.

[5:05 p.m.]

It is important that we have access to these important tools when it comes to tackling money laundering in British Columbia. As financial instruments, bearer bonds can be a tool for criminals to use to launder their ill-gotten cash. Cash has no links to personal information, and neither do bearer bonds.

Removing this financial instrument of obfuscation will take one more path away from money launderers. It continues on the good work made by the previous government in addressing the problem of money laundering in British Columbia. In fact, the highest-profile case so far was conducted under the watch of the previous government. Unfortunately, that case fell apart, but we always have hope for the future on future cases.

I will also welcome this legislation’s increased transparency measures when it comes to corporations. It’s a reasonable step requiring corporations to keep a register of individuals who control or own more than 25 percent of a company. We also welcome the requirement that a private company’s transparency registry includes registered owners, beneficial owners and owners that have indirect control. All of this serves to shine a light, the kind of light that can make money laundering more difficult.

But this is simply legislation. What we look forward to is the action that is going to come as well. The true test of a government’s commitment to fighting money laundering goes well beyond press conferences, bold statements and legislation. It requires action. We look forward to seeing the arrests and convictions as a true measurement of the government’s seriousness in tackling money laundering.

T. Redies: I rise to speak in second reading on Bill 24, the Business Corporations Amendment Act, 2019. As we’ve been discussing, the primary intention of this bill is to address concerns over tax evasion and money laundering by requiring private companies to maintain accurate and up-to-date information about the true owners of the shares of those companies.

This bill has, primarily, two functions. The first is to prohibit bearer bonds which are deemed owned by the physical holder of that bond. The second function of the bill is to require corporations to keep a register of individuals who control or own companies.

Turning first to the issue of bearer bonds. This is a very old concept that’s been around for a long time. As the member for Prince George–Valemount mentioned, they essentially haven’t been used in B.C. since 1973, but there’s still some cleanup. The owner of the bearer share is the person who has, of course, the physical possession of the share certificates and is therefore entitled to the corporation’s underlying assets. Names of the owners are actually not recorded in the company’s share register or on the certificate.

While this legislation changed in 1973 to prohibit these kinds of share certificates from being issued, not all such share certificates have since been collected and amended to reflect the actual holder of the certificate. Bill 24 would require bearer share certificates to be replaced with named share certificates. Companies would be prohibited from providing any special rights to holders of bearer bonds or certificates until they were replaced.

Why is this important? Well, around the world, bearer shares, as we have since learned over the last number of years, have been the preferred instrument for tax evasion and money laundering. The challenge of bearer bonds or shares is that they allow for anonymity. It does allow the holder of the share to be anonymous, and, therefore, it can be used as a tool for money laundering.

The infamous 2016 Panama Papers leak of 11.5 million documents from the law firm of Mossack Fonseca revealed that high-net-worth taxpayers and others were using bearer shares to hide and move moneys and, in some cases, to evade taxes and to launder money. This is a loophole that needs to be fully closed in British Columbia, and I commend the Finance Minister for bringing it to the House as legislation.

Bill 24 would also amend the current Business Corporations Act by requiring every private company to maintain a registry known as a transparency registry of all shareholders who own more than 25 percent of the shares of the company. It also requires the registry to identify those shares that carry 25 percent or more of the rights to vote at a general meeting, whether the owners of those shares hold their interests as a registered owner or a beneficial owner. Further, if the shareholder is a company or trust or other non-individual entity, then the registry will be required to also disclose any significant individual who controls, directly or indirectly, the entity.

[5:10 p.m.]

A significant individual is denoted as a person who has the right to directly or indirectly elect, appoint or remove one or more of the company’s directors or someone who has the ability to exert influence over an individual who has the right or ability to elect.

The transparency register must also include a list of all registered owners, beneficial owners and owners that have indirect control. Companies are required to maintain this register for inspection by government officials at any time. According to the bill, the transparency registry will include the following information: the shareholder’s full name, date of birth and last known address; whether or not the shareholder is a Canadian citizen or permanent resident of Canada; and, if not, every country or state of which such shareholder is a citizen.

It will also require the registry to hold information as to whether or not the shareholder is a resident in Canada and pays Canadian income taxes, the date on which the shareholder became a shareholder or ceased to be a shareholder of the company and, again, a description of how a significant individual is deemed to be a significant individual. As such, this bill will require comprehensive as well as transparent disclosure as to who owns and controls private companies, trusts and partnerships in our province.

Overall, I am in support of this bill. It is in response to a need to improve the transparency of ownership of corporations and trusts to prevent the use of these vehicles to avoid taxes or launder money in our province. It also follows on a lot of work that has been done by many jurisdictions and organizations to promote greater transparency in these areas.

This includes the G20, which issued its high-level principles of beneficial ownership in 2014, which underlined the need for transparency and minimizing tax evasion and money laundering in the global financial system. In addition, in 2016, the European Commission required its 27 countries to collect and publish information on corporate beneficial owners registered within the European block.

Further, in December 2017, Canadian federal and provincial Finance Ministers announced an agreement to strengthen beneficial ownership transparency. One of the major commitments of this agreement was to pursue legislative amendments that would “eliminate the use of bearer shares and bearer share warrants or options and to replace existing ones with registered instruments.”

So as we can see, many jurisdictions around the world are recognizing the need for greater transparency around corporate and trust ownerships and the prevention of using things like bearer bonds as instruments of tax evasion and money laundering. Canada, frankly, has been a bit late to the table.

I was actually speaking to a former colleague the other day who is on the board of an Argentinian bank. Somewhat surprisingly, he advised me that even in Argentina, this type of transparency already exists. So Canada and British Columbia have to get on board with this.

I again applaud the Finance Minister for bringing in this legislation, because as more countries and jurisdictions around the world shore up their practices to prevent corruption and tax evasion and money laundering, the individuals who perpetuate these crimes will move to weaker jurisdictions. This is how the criminal mind works. It seeks to find the cheapest and most efficient way to undertake its criminal activity, not unlike a legal business seeking to optimize profit.

These crime syndicates are global in nature. They know where to make the most of their illegal activities, and they definitely move to weaker jurisdictions when others shore up. B.C. and Canada remain vulnerable to criminal activity in this regard if we don’t concurrently shore up our practices. So it’s integral that B.C. removes the loopholes which help enable those seeking to evade taxes or launder money in our province.

Today British Columbian companies and trusts are vulnerable to being exploited for these purposes, as beneficial owners can remain completely anonymous. Actual ownerships of trusts and corporations can be completely hidden from government and police agencies that have to enforce the laws.

Eliminating the use of bearer bonds and requiring them to be placed by named-share certificates as well as requiring complete transparency around corporate and trust ownership will help in this regard. It’s not a panacea, but it’s a step in the right direction. It will definitely provide government agencies and police with more tools to stop and prosecute tax evasion and money laundering.

The act will also require corporations, trusts and partnerships which currently own or buy land to disclose their beneficial ownership in the registry. Finally, any corporation, trust or partnership failing to disclose could be liable for fines up to $100,000 or 15 percent of the assessed property value, whichever is greater.

In conclusion, I believe this legislation is necessary and timely. It’s important for the reputation of the province to ensure that corruption, illegal activities, tax evasion and money laundering are not tolerated in B.C. But as I said, it’s not a panacea, and we on this side of the House remain a bit concerned that there are still areas that need to be shored up immediately to prevent money laundering in this province.

[5:15 p.m.]

As we’ve recently learned, there are zero federal RCMP resources, for example, actually working on investigating and prosecuting money laundering in this province. It’s very surprising that the Attorney General, the person responsible for the file, didn’t even know that none of the RCMP officers in B.C. were actually responsible for fighting money laundering — that they are actually doing this type of activity.

While we plug holes such as bearer bonds and corporate and trust ownership transparency, if we don’t have an adequately staffed police force of people who are experts in identifying, tracking and prosecuting money laundering and tax evasion, I worry that much of this legislation will be for naught. One thing that we do know for sure is that criminals spend 150 percent of their time figuring out how to get around legislation, regulations and control. So if we don’t have the resources dedicated to fighting these criminals, then I think we’ll be limited in our ability to actually stop money laundering and tax evasion in our province.

In summary, I would like to thank the minister for bringing forward this legislation, which I think is timely and appropriate. And I look forward to being able to discuss more of the specifics at the committee stage.

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

Hon. C. James: Thank you for the comments from the members who spoke to the bill. As we’ve talked about, it’s kind of a mirroring — with some changes — to the previous bill that we’ve introduced.

I just want to speak to the member who mentioned the provincial-territorial-federal, as I did in my opening remarks — that this bill reacts to the work that was done at the federal-provincial-territorial. That’s this bill, not the previous bill, just to be clear. Bill 23, in fact, takes that extra step that we certainly hope — to add to the members’ comments — other provinces will mirror. It is very clear that money launderers do not stop at a provincial border. People who are not paying their taxes and people who look at assets as an opportunity to launder money do not stop at a provincial border.

The ultimate goal and, I think, the ideal situation would be that this is a Canadian initiative — this does happen across provinces and territories — and that it isn’t simply British Columbia leading the way. But having said that, I also think it’s important that we do take a leadership role. British Columbia, in fact, has a bad reputation when it comes to money laundering. We have a bad reputation out there for the kinds of opportunities and loopholes that have been in place.

So for us to be a leader, for us to say: “Yes, we are going to step up to the plate….” Yes, the provinces and the territories and the federal government have said: “Let’s move on this.” We are the first province to actually bring the legislation in. That hasn’t occurred until now. Bill 23, the Land Owner Transparency Act, will be the first transparency registry of landownership in the country. That, again, is a critical piece to be able to bring forward and to show our leadership.

While I agree that it’s good that this is a discussion that’s occurred, we have to get past the discussion. We have to get to the place of action. We have to get to the place of doing something, of bringing in action, of ensuring that we close that loophole. And the member who mentioned the need for action…. This legislation is, in fact, action. It’s taking action on the existing structures that are in place. But it’s also closing a loophole that provides the potential for money laundering, that provides the potential for illegal activity and for avoiding paying taxes.

Again, I’m very proud of these two pieces of legislation. I think we, once again, as a government, are leading the way when it comes to the work we’re doing around closing loopholes.

With that, I move second reading.

Motion approved.

Hon. C. James: I move that the bill be referred to a Committee of the Whole House to be considered at the next sitting of the House after today.

Bill 24, Business Corporations Amendment Act, 2019, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. C. James: With that, I will call second reading of Bill 26, the Financial Services Authority Act.

Deputy Speaker: Please proceed.

BILL 26 — FINANCIAL SERVICES
AUTHORITY ACT, 2019

Hon. C. James: It’s a busy day for Finance this afternoon in the Legislature.

I’m very pleased to move that Bill 26 be read a second time now.

[5:20 p.m.]

This is a different direction than the previous two bills that we’ve talked about, that mirror each other. But this also looks at how we strengthen our institutions that relate to finances in British Columbia.

The new Financial Services Authority Act provides the framework for the establishment of a new financial services regulatory authority. It will be called the B.C. Financial Services Authority, to replace the existing Financial Institutions Commission, otherwise known as FICOM. Most British Columbians, certainly people who work in the field, will know it as FICOM.

That current structure for FICOM was put in place in the early 1990s. As we all know, the financial sector has changed a great deal since the 1990s — significant changes in the decade since the creation of FICOM. Its structure has not kept pace with the kinds of changes that have occurred. That’s made it harder for the regulator to adapt to a rapidly changing financial marketplace.

I think it’s important to note, as well, that the current structure of FICOM is also inconsistent with international standards. It’s important, again, that we take a look at international standards that are in place for strong financial accountability, and the need for financial independence is stressed in all of those standards. It talks clearly about the need for financial independence.

That doesn’t occur with FICOM. FICOM’s dollars come back. The end of their budget comes back. They don’t have the authority to be able to determine how they manage that budget, which, again, is part of that financial independence.

Many of these challenges have been documented. This is not unique to recognize the challenges. There have been a number of reviews that have occurred over those decades, and certainly, they’ve pointed to the challenges and the need for FICOM to modernize and to be able to meet those international standards.

To address those challenges, this legislation brings forward changes to modernize the services regulator in order that it’s prepared to be able to meet those regulatory challenges of the future.

The legislation establishes the B.C. Financial Services Authority as an independent, self-funded Crown agency that is operationally independent yet accountable to the Legislature, to all of us, through the Minister of Finance. The mandate of the authority will also be expanded to include the pension and mortgage broker sector, ensuring that the authority is a fully integrated regulator. This new structure would then align with international best practices for financial regulators.

The province has been working with stakeholders over the past year. This has been, again, a long process. We have talked about previous legislation where legislation has been out there. We’ve had discussions with stakeholders. This has been a very intensive process, over this past year in particular, with legislative consultation, with direct meetings, with stakeholders.

All of the groups and organizations that are covered by FICOM have been part of this dialogue and discussion, because we want to ensure that it’s a smooth transition, that obviously it works for the sector but also that it works for the public in being a true independent regulator.

This legislation will ensure that the new B.C. financial sector regulator is more able to effectively regulate the pension, mortgage broker and financial services sectors, which will help protect consumers from undue loss and unfair market conduct. Having all of those under the umbrella provides that kind of support.

It also helps, as I mentioned, meet the regulatory challenges of the future. Although we think that things have changed a lot in the last while, I think the pace of change is increasing, and today’s financial markets may be completely different than what we see in another five years, in another ten years. So these changes, in fact, will provide that forward-looking, that agility that is going to be critical to be able to adapt and address the risks before they arrive.

Again, back to the proactive work that needs to occur. If you put together that kind of agility, the independence and the ability to be able to act, then, hopefully, you’re able to foresee some of the risks that may be coming and prepare for them.

The authority will have the independence and flexibility it needs to be able to regulate a dynamic market, and it’s going to be able to deliver on its mandate to protect consumers, which is a large portion of the mandate.

[5:25 p.m.]

We certainly believe — through this legislation, through the consultation with the groups and organizations impacted, through the strong work that was done in preparing this legislation — that establishing a new B.C. Financial Services Authority really is the best way to be able to continue to ensure that British Columbians’ financial interests are protected.

I look forward to the discussion on this bill and, most importantly, look forward to doing everything we can together as legislators to be able to ensure we have strong regulation in our market, and that trust is there for investors and others in our province because that benefits all British Columbians.

T. Redies: I’m actually very pleased to rise to speak with respect to this second reading of the Financial Services Authority Act. You know, before I got into politics, my passion was banking and financial services. This is an area that I spent 25 years of my career in, so I actually feel I can come to the House with some degree of understanding of what is happening here. And I hope that I can help add to the debate. Again, as someone who spent 25 years of my life in the financial services arena, I know the importance of having a strong, independent, regulatory authority staffed with people who understand the businesses that they’re regulating.

One of the reasons Canada was able to manoeuvre its way through the 2008 financial crisis without undo difficulty was because of the strong regulatory management of the Office of the Superintendent of Financial Institutions — or OSFI, as it is known, which is our federal regulator. The U.S., with its myriad of regulators, and other countries did not fare so well. The result was the destruction of $34.4 trillion U.S. of wealth by March 2009, and it’s taken almost ten years for some economies to come back to pre-2008 economic growth levels. So the importance of having strong regulation is absolutely an unequivocal situation.

I’m very much a believer in strong regulation, but I’m also a believer in balanced financial regulations so that we ensure the health of the sector as well as ensuring that consumers are protected with safe, affordable financial services products. Regulation must be smart, and it must be risk-based. That is, it must be flexible enough to recognize and accommodate the different risk factors of different institutions. It cannot be a one-size-fits-all approach. In the aftermath of the 2008 financial crisis, when the financial services sector was laden with more and more stringent regulations, many of my colleagues bemoaned the increased regulatory burden. My response was always that the tougher regulation was actually a reflection on us.

Many financial services professionals did not do their jobs very well and, most importantly, lost sight of the customer. Financial services is about balancing the customer experience and the business of banking with risk management. Unfortunately, in the years leading up to the 2008 crash, globally, many banks were too busy peddling lending and primarily mortgage products that their customers couldn’t afford, and then they packaged up the risk and sold it in the wholesale markets to get the risk off their books — much like flinging hot potatoes out of their hands.

Of course, they made a ton of money doing this. When the music stopped, millions of people lost their savings, their homes and ultimately their jobs. It was accurately detailed in the movie The Big Short, which forecast most of the people who ended up paying were the Main Street folks, not the Wall Street folks. That can’t happen again.

Again, the need for strong, flexible regulation is paramount, but the only thing worse than strong regulation is ill-conceived or bad regulation that either under-regulates or overregulates the industry. That’s why the need for a regulatory authority that understands the industries it is regulating, appreciates the different levels of risk posed by different institutions and regulates in a way that protects the customer while concurrently supporting the health of the industry is of paramount importance.

In B.C., it’s even more important, because the province provides 100 percent deposit insurance coverage to the credit unions, so it’s about protecting the taxpayers as well. It is ultimately not so much about strong regulations but smart regulations. Sometimes regulators get this right, but sometimes they get it wrong. The consequences for the industry and the consumer can be far-reaching. Arguably, the 2008 financial crisis was about multiple failures of public and regulatory policies and the complete failure to properly understand what was happening in the markets and put brakes on the players.

[5:30 p.m.]

I’ve also seen situations where regulations are overly convoluted, difficult to administer and ultimately result in higher regulatory costs with no conceivable improvement in consumer protection. Of course, in due course, these higher regulatory burdens are borne by consumers, in the form of higher fees, poor customer experiences and reduced products and services. Therefore, having the right talent in the regulatory authority is extremely important.

As a former CEO of one of the largest credit unions in the country, I saw the challenges faced by FICOM navigating its way through the 2008 financial crisis and its aftermath. It is difficult for the financial services, let alone the regulators, to find top financial service professionals to act as relationship managers and auditors, as this talent is actually quite a scarce resource. For FICOM and the precursor to this proposed new entity, it was even more challenging to find the appropriate talent given the wage restrictions under the PSA act. I think this is actually one of the underlying issues that Bill 26 is trying to deal with.

In the past, because of the challenge of finding talent, oftentimes the financial institutions were training the regulators and the auditors with respect to how things actually worked in financial services. That’s not appropriate.

It has often created unnecessary tensions as both FICOM and the industry struggle to relate the new international regulations to the credit union sector in a way that made sense for members, credit unions, the regulator and the province. We managed through it, and I’m particularly proud of the credit unions, who have continued to grow customers and strong businesses and give back millions and millions of dollars to their communities while at the same time meeting increased regulatory standards and a variety of industry challenges.

So here we are today where the government is putting forth new legislation which establishes the Financial Services Authority, or FSA, as the successor regulatory organization to FICOM. This new authority will have the responsibility for provincially based credit unions, financial institutions, insurance agencies, mortgage brokers and pensions. This is also an extension of responsibilities for the new authority with respect to the pensions and mortgages.

Under this new legislation, the cabinet will appoint the board, and the board will appoint the CEO. The authority will be independent, which is, again, a very important aspect of creating a strong regulator that can provide value-added regulation to the industry.

The powers of administering the acts overseen by the FSA will be vested in the CEO but may be delegated to subdepartments within the FSA. The new Financial Services Authority, as we said, will operate outside the Public Service Act, meaning it will be able to pay the higher salaries it needs in order to be able to compete for the talent to regulate the sector. This should help address what has been high turnover and stubborn vacancy rates, particularly in the upper echelon of the management ranks of FICOM.

As mentioned, the new regulator will be regulating an expanded number of highly complicated businesses. I’ve been speaking about the credit unions mostly to now, but it’s worth noting that both the mortgage broker and pension sectors are equally complicated and also going through a lot of changes, and they do need smart regulation as well.

In the mortgage broker sector right now, just as an example, many companies and, more importantly, their clients are reeling from the multiple policy decisions of the three levels of governments, who have all been intervening in the housing market in, I would say, an uncoordinated way. We know that sales of homes in the greater Vancouver housing market have more or less dried up. They’re down about 40 percent year over year to the lowest levels since 1986. In some areas, sale prices are down 25 to 30 percent below the peak. And while most of the declines are in the higher-end real estate, we’re starting to see that also in the townhomes and the condos.

I remind the Legislature that a 25 percent drop or more in the condo or townhouse markets would put one in four British Columbians underwater in their mortgage, which makes it very difficult to refinance. Likewise, the new B-20 rules have made it very hard for people to qualify for mortgages or even refinance their mortgages.

The mortgage brokers are at the heart of this. They support people searching for mortgages, and they have seen many of their clients not be able to get mortgages through their regular financial institutions and, instead, be forced more and more to secondary, expensive lenders.

I raise this because it is important that this new regulatory agency has the staff that fully understands what is happening in the industries it regulates and can take a balanced approach that protects consumers while ensuring the health of the businesses it operates. With the market downturn in B-20, we are seeing a pullback in credit from the financial institutions, which in turn is resulting in, perhaps not so surprisingly, a big drop in the number of people employed in the broader financial service sector as well as the realty sector.

[5:35 p.m.]

Finance, insurance and real estate jobs fell from their peak of 156,200 jobs in 2017 to 150,800 jobs in 2018, a loss of 5,400 jobs in one year. I suspect that that fall may be even higher in 2019. While some may not care that insurance, financial service and mortgage broker professionals are losing their jobs, these are good-paying, private sector, tax-generating positions. More importantly, they’re the canary in the coal mine about a housing sector that may not be very healthy going forward. Again, the regulator…. I raise this because the regulator does need to understand these trends and ensure that the regulations they bring in are smart, and they can only do this if they’re able to hire people that understand the business.

The credit union and insurance sectors are also experiencing other challenges in their industries. The downturn in the mortgage market is affecting credit unions and their ability to grow, because even though they’re not regulated by OSFI and subject to B-20 rules, many of the credit unions across the country have implemented a B-20 or similar stress test to manage risk in their mortgage portfolios.

The industry is experiencing pressures on all fronts. Ongoing low-interest-rate environments mean that costs must be managed very closely. At the same time, credit unions have to respond to changing consumer preferences through expensive technology investments. All this is to say that if the credit union system is to remain healthy, it is important that the regulator have the skills and the ability to find the right balance between imposing the standards to mitigate risks and adding to the cost pressures that credit unions are already struggling with. It’s also imperative that the regulator understand that the risk profiles of credit unions are typically lower than the Canadian banks, and not apply similar risk standards.

[R. Chouhan in the chair.]

My worry, when I hear some of the language with respect to the release from the Finance Ministry on the establishment of this new Financial Services Authority, is their implied desire to go to international standards. I think that has to be done very, very carefully. The credit unions have a much lower risk profile in general than the Canadian banks. To apply the same international regulatory standards to those financial institutions could put those businesses in jeopardy, in terms of being able to be viable going forward.

The reason why that’s important, of course, as I think many people know, is that in many communities in our province, credit unions and insurance brokers are often the only financial institutions in those communities. We have to be very, very careful with the application of risk standards to these financial institutions — again, finding that right balance between protecting consumers but making sure that the health of the industry going forward is also maintained.

Now, I recognize that this bill is primarily about the establishment of the authority, not so much about the financial services regulations themselves. I guess there will be more of that, which will be dealt with in the financial services act, which I believe the government is looking to bring forward in the fall. I raise these issues because it is really important for the government to understand the overall context of the environment that the credit unions, mortgage brokers and the pension, insurance and other financial sectors are operating in when structuring the new Financial Services Authority.

Coming back to the specifics of the legislation, under Bill 26, any financial surpluses of the new Financial Services Authority will be rolled over year to year within the entity and not return to general revenue as per previous practice. Further, as previously mentioned, the new authority will no longer be under the Public Service Act, meaning they can increase salaries and wages to levels, as we said, where they can attract the appropriate talent.

Now, while this is a good thing, on the flip side, there appears to be little in the legislation, if I may say so respectfully, to manage the potential increase in cost, to ensure that it doesn’t go up to a level beyond that which is reasonable. Increased costs could mean increased fees to the regulated stakeholders and ultimately to the consumers that buy the services and products. While some fees have not been increased in a long while, we do have some concerns about how the ministry is going to manage this to prevent excessive cost escalation, especially in a down market for many of the regulated stakeholders that this authority is going to be overseeing.

[5:40 p.m.]

We also note that there will be a plan to rebalance fees across the sectors that are being regulated, to cancel out or mitigate any cross-sector subsidization, but again, any fee increase or rebalancing of fees must be done very carefully, particularly given some of the challenges that these industries are facing as they strive to compete, maintain good and affordable services and manage the risk in their industries.

In addition, I see little with respect to the composition and intended skill sets of the board, which, frankly, are as important as the skill sets of the CEO. Again, these are highly complicated, fast-moving industries, and if they are to be regulated effectively, the board must be made up of people who are very familiar with these industries.

Further, there should be a cross-section of people from different sectors that the FSA is going to be regulating. I see little in the legislation articulating this, and that worries me. If I were a credit union, a pension entity, a mortgage broker or an insurance business, I would want to see greater clarity with respect to the composition of the board to ensure it represents my industry. The legislation appears to be light on this, and I think that could be a mistake.

Strong, capable board governance is absolutely essential to a safely run and healthy financial institution of any type. And like the CEO, it’s integral that the board of directors understand not just the respective businesses of those entities but also the role they play in the economy and the communities they serve.

Another area that we are a bit concerned about is the lack of an articulated appeals process for those being regulated. This may be addressed in the changes to the financial services act, but it seems to be absent in this legislation, and that warrants the question. As I mentioned, regulators can get it wrong, and it’s important that various entities regulated under this authority have some type of appeals process, whether they’re insurance companies, mortgage brokers or credit unions.

The legislation, on face value, seems to give the FSA broad rule-making authority, and without some type of check or balance in place, I worry that there may be more of a top-down approach rather than a more balanced, consultative approach. The legislation applying to this new agency should ensure that there are checks and balances to ensure thoughtful and measured approaches versus knee-jerk reactions that don’t particularly help the consumer or the industry.

So while there are some very good aspects about this legislation, we do have some questions on this side of the House. The wide-ranging and comprehensive financial services regulator will have broad, sweeping authority, and it’s important that the legislation ensures balance. As I said, many communities in our province rely on these services, and there are no alternatives, so it’s very important that the government puts in place a regulatory authority that understands this and is as predisposed to supporting the industry as it is to protecting the consumer.

With that, I will end my comments. I am very glad to see this legislation come forward. I look forward to having more specific discussions at committee stage, and I’d like to thank the minister for bringing it forward.

S. Bond: I appreciate the opportunity. As you can imagine, the need for lengthy comments from me would be fairly unnecessary at this point. My co-critic, as she pointed out, has extensive experience in her previous career and, I think, has pointed out some of the concerns that we have as members of the opposition. However, I do want to highlight a couple of the, I think, critical things. If you’re sitting at home and wondering about the series of bills we’ve been dealing with this afternoon, it’s finance day at the Legislature, as the minister pointed out.

People who work in the financial world will recognize that the minister is creating a new Crown agency here. That’s an important thing for us to understand, because the way that the administration, the governance — all of those things will now change fairly significantly. Although the minister was careful to point out that while it will be arm’s-length from government, it does report to the Legislature through the Minister of Finance. But that’s not unlike other Crown corporations.

There are advantages to being arm’s-length, and sometimes — I know the minister would know this, and I certainly experienced it in my time as a minister — there are challenges when the organization is at arm’s length as well. But there are clearly laid-out expectations when that happens.

[5:45 p.m.]

What’s really happening here is that we are moving from what was known as FICOM, the Financial Institutions Commission, and we’re actually going to replace that now with a Crown agency. So when we’re thinking in terms of acronyms, we are moving from FICOM to FSA. And in fact, as we do that, it’s not merely a transfer of responsibilities. There are actually some expanded responsibilities that will move forward if this bill is passed.

Again, as my colleague pointed out, we’re pleased to see some of the initiatives that are contained in this bill, as we were in Bills 23 and 24. But the job of this Crown agency, to put it in a more simplistic way…. They’re going to oversee the financial services and regulate credit unions, financial institutions, insurance agencies, mortgage brokers and pensions. It is a significant shift, particularly from the governance perspective. Obviously the expansion of responsibilities is focused on pensions and mortgages.

I was interested, again, in the briefing that we were very much appreciative of receiving…. The minister’s staff walked through the sort of rationale for change. I think that’s an important thing. Certainly, in my long career in the Legislature, I’m not a fan of introducing legislation for the sake of introducing it. I think there need to be very good reasons, remembering that when you put something in legislation, it requires you to come back to the Legislature to actually change it. So I think it needs to be taken very seriously and very thoughtfully.

The government, in its thinking about why there needed to be some change…. Obviously the financial services sector, and my colleague referred to it, has certainly seen change. What hasn’t, when you think about the period of time that has elapsed before we’ve looked at, sort of, a modernization and a bit of a different approach? My colleague referenced our concern, or at least caution, about international standards and what the implications of that are. So I think it is a legitimate question to ask: is the current structure working?

I think — I could be wrong, but I’m sure the minister will know — FICOM was probably created around 1990, or sometime like that. It has been in existence for literally decades. Looking at change and whether or not FICOM as an entity has kept pace, I think is an important consideration. I know that over time, there have been reviews that have pointed out the need to look at change. I think the minister and the government are responding to that. There are some critical things, though, that I think we need to look at when it comes to the creation of a Crown corporation. Again, my colleague has already referenced what some of the concerns might be around that governance model.

We note that when we look at a Crown agency, that means that the act will be structured so that cabinet appoints the board, and the board appoints the CEO. That’s the practice when you move to a Crown agency. The powers of administering the act that are overseen by the FSA are vested in the CEO, but they may be delegated to subdepartments.

One of the critical concerns that we have about this bill…. It’s in the context of understanding that there have been challenges in terms of staffing and making sure there is organizational stability at FICOM. That’s been a documented challenge. If you look back to when the Auditor General did a report, I think that the staffing numbers…. The vacancy rates were as high, at times, as 35 percent in the organization. You can imagine what a challenge that creates when you’re trying to operate effectively and do your job.

Undoubtedly there have been challenges with staffing. There has been — I think it could be described as — extremely high staff turnover. I believe the number is lower now, but I think there is still a double-digit staffing challenge at FICOM. You simply can’t continue that practice. So one of the things this bill does is actually, as a result of being a Crown agency and looking at how on earth you are going to solve that ongoing and continuous staffing challenge…. This bill deals with the issue of how wages are going to be set.

[5:50 p.m.]

I think every member of this House knows that there are very clear guidelines about how the public service is actually compensated. What happens in this bill and with this organization is that the decisions around how to pay individuals in order to deal with the issue of recruitment are outside of the PSA, the public service.

What we need to do is…. We certainly would recognize that probably the compensation is one of the key issues when it comes to recruiting the kind of staff that are going to be necessary in the FSA. But I think there’s also an important role for monitoring what that compensation package looks like. Ultimately, we need to make sure that those costs are reasonable and appropriate. We agree that we need to fix the issue related to organizational stability, but at what cost, and what will that look like from a fiscal perspective?

Hard to recruit. We understand. It’s very difficult to attract the kind of people that we’re going to require. We understand the need to look at the fiscal compensation. Again, we need to be cautious about that. We’re certainly thinking about that in every other area of government.

I think that another critical feature that the staff…. We asked some questions about it when we were briefed — the whole issue of finances for the organization and how it is managed. One of the things that this does is by moving the organization to a Crown, there will not be the requirement to turn over year-end funds to the government, to the ministry.

That’s an important thing, and I think it actually influences how people manage and how they’re able to reinvest in the very organization that they’re committed to. Again, looking at the ability to reinvest those dollars, to roll them over — those are going to be important principles of this new organization.

We are going to want to pay attention to the fact that they can approve fee increases. Again, those costs are translated. They eventually end up impacting people. We want to make sure…. Especially when they’re going to be looked at across sectors — how is that done fairly and appropriately?

As the government considered its move to establish a Crown, they did look at the issue of governance and funding, making sure that the new Crown would be able to retain those year-end savings, should there be any, and organizational stability.

The other thing that I must confess I do appreciate about the bill is the accountability framework that’s built in when you become a Crown. The minister would know, certainly in her portfolio and others, as ministers, you have a responsibility to provide mandate letters. There’s an expectation of a service plan and a service plan report-back — all of those things. So there are mechanisms built into the concept of moving to a Crown that do help increase accountability, from my perspective, and I think that’s an incredibly important part of moving to a Crown.

It’ll be interesting to see. I think I recall that, in the briefing, it was pointed out that other jurisdictions are looking at a similar approach. I think Ontario was the province that was cited. So again, British Columbia isn’t doing this independently or uniquely.

You look at the move to the Crown and how the word “transparency” emerges again. When you look at things like a three-year service plan, an annual service plan report-out, dealing with the Auditor General, all of those things, that does increase transparency and accountability. There are also enhanced reporting requirements — all of those things.

I think it’s safe to say…. As I noted, the co-critic laid out our case, the things that we’re concerned about. Certainly, I appreciate her expertise considering the decades of experience she has with some of these organizations.

Our job is to make sure that this is solid and practical public policy. We need to make sure we’re taking care of taxpayers and British Columbia’s interests. When we look at things like fee increases to specific financial sectors, we want to make sure that they’re fair, and we’re going to be asking those questions.

[5:55 p.m.]

I think one of the things that is very, very critical…. The minister and members on our side of the House have had a lot of discussion about the superintendent of real estate and the fact that, when we look at who will govern, who will be appointed to these boards, who is actually going to be part of the decision-making process…. I think there is a real concern in the financial sector that whoever is appointed to this board and whatever those numbers look like…. We want to make sure that people who actually understand this sector are part of that board.

We had the discussion previously, in previous years’ estimates, about a feeling, for example in the real estate sector, that that didn’t happen — that practical advice from people who are involved in the sector was not possible because they were simply not included in the process. So we’re going to urge the minister, as this new Crown is established, that when we look at who’s going to govern, we have people there with the proper credentials, with the experience, to be able to manage what will be a very challenging transition.

I think, with those brief comments, I’ll end my remarks there. I know that the minister…. We will spend a lot of time together over the next number of weeks as we deal with estimates and also committee stage. Again, we appreciate her earlier comments, and we look forward to discussing these in more depth at the committee stage.

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

Hon. C. James: Thank you for the discussion on the second reading of this bill. I just want to touch on a few of the comments that were made, because I think it’s important to recognize that we will have some of this discussion at committee stage. There will be opportunities for some of these issues, certainly, to be canvassed.

I think there’s been a theme in the bills that we’ve brought forward in the area of finance, over this afternoon, around transparency and accountability. That really is the critical piece in this bill as well. It will be important for the stakeholders, as others have said — credit unions, financial services, mortgage brokers, pension and insurance sectors, all of those sectors — to feel confident about the change, to know that the transition will go well. Because again, transition and change is always a challenge. So it will be critical as we go through this.

The member mentioned change. That really drove the work that was done in coming up with this legislation and coming up with this structure. It was the need to look at: why are we looking at change? Change for change’s sake is the worst thing to do, from my perspective. You need to ask those questions, to look at the research, to look at the changes that have occurred.

We talked about some of the reports that have come forward. It was very clear that some changes needed to occur. The structure wasn’t keeping up with the challenges that were out there. So really, that’s what drove this — the work of looking at what is change that will meet the goal of managing strong financial accountability, transparency, meeting the needs of the stakeholders, as I listed them, and then also meeting the needs of the public. It’s critical.

Although we talk about this bill being important for the financial sector or the insurance sector or pensions, in fact all of those touch people every single day. If we don’t have trust, if the public doesn’t have trust in the regulation of those institutions that have such a clear part in their lives, then we aren’t doing our work. So from my perspective, it will be critical. I believe this legislation and this structure meet those goals of making sure that we’re protecting and supporting the structure with good, smart regulations, as the member across mentioned, but also that we’re putting in place the accountability for the public.

There was a little bit of discussion around the international standards. Again, we’ll have a bit more of a discussion. When we refer to international standards, we’re really talking about the principles —not “this is exactly how you have to do it” but “what are the principles of international standards, the principles of accountability, the principles of transparency, the principles of financial independence?” Those are really what we’re talking about.

Then to meet our unique needs. As the member has mentioned — I know she spent some of her career in this area — we have a very unique province when it comes to the credit union sector, for example. It’s something that we, certainly…. On this side of the House, one of our first moves was to make changes in supporting the credit union sector. We know that in many communities, they are the only financial institution. They provide support for families, for small businesses and for the economy in British Columbia, so it’s important for us to make sure that we’re looking at a structure that brings in those principles of international standards but also recognizes the uniqueness of British Columbia.

[6:00 p.m.]

On the issue of governance and the board, I think it’s important to note that we have a very clear mandate around agencies and boards and commissions and ensuring that people have the credentials and the expertise that’s needed. I would agree with the members that there are specific, unique skills.

Sector representation is going to be critical as we look at this, to make sure that we have people who understand those sectors, who have experience, who have the expertise that’s going to be needed. I think that’s going to be a critical piece, and it’s already there, as I said, through the agencies, boards and commissions mandate. But I think it’s important to emphasize it as well.

The issue of costs. Again, we’ll have some discussion, I know, at committee stage, but certainly I think the Crown corporation will recognize that it’s going to need to find that balance. It’s going to need to find that balance of fiscal independence and the ability to manage with fees that are going to bring in the revenue that they’re going to need for the kinds of jobs.

Again, having that fiscal independence gives them a chance to do the longer-term planning, rather than simply looking year to year at their budget and having to give government what’s left at the end of the year. It doesn’t provide the ability to be able to meet some of those needs — and the nimbleness, quite frankly, that is needed to be able to address some of the challenges in the financial sector.

So I think it’s, as I said, the right direction to go. I believe it meets those principles, and I know we’ll have some good discussion at committee stage.

With that, I move second reading.

Motion approved.

Hon. C. James: I move that the bill be referred to a Committee of the Whole House to be considered at the next sitting of the House after today.

Bill 26, Financial Services Authority Act, 2019, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. C. James: I call second reading of Bill 22, the Forest Amendment Act.

BILL 22 — FOREST AMENDMENT ACT, 2019

Hon. D. Donaldson: I move that Bill 22, the Forest Amendment Act, 2019, be read a second time.

The government of B.C. has a responsibility to ensure that the forests of B.C. are managed in the best interests of the people of B.C. and to consult with First Nations on their Indigenous interests. This means the B.C. government must review tenure transfers to ensure that the concentration of tenures will not impact B.C.’s goals for a resilient, complete and diverse forest sector and Indigenous interests are understood and considered.

Changes by the previous government in 2003, under what was called the forestry revitalization plan, artificially constructed an asset for companies, that being forest tenure, that they can and have traded. To be generous, this may not have been the intended outcome, but nonetheless, that is what has transpired, to the detriment of the economy, community resiliency and efforts towards achieving reconciliation with First Nations.

For the first time since 2003, the first time in 16 years, these amendments will mean the provincial government will have an important say over tenure resources after issuing them, in how they are used, transferred and applied. At the basis of this is: what is forest tenure? It is tenure granted over a publicly owned natural asset, our forests. We grant that tenure to companies to harvest, under the Forest and Range Practices Act, to return a public good on behalf of all people in B.C., rural and urban, First Nations and non–First Nations.

Therefore, when forest tenures issued by the government on behalf of the people of B.C. are acquired, traded or amalgamated by private companies, the government of B.C. must have a larger say over those acquisitions, trades or amalgamations, more than what was previously provided in the Forest Act after the changes implemented 16 years ago, in 2003, by the previous government.

[6:05 p.m.]

An example of the outcome of those changes from 2003 happened in October 2013. There was a licence swap between Canfor and West Fraser, in the northwest part of the province. It gave Canfor increased timber supply in the Morice timber supply area in exchange for Canfor’s forest licence in the Quesnel and Lakes timber supply areas. That was made possible through the forestry revitalization plan. In exchange for West Fraser’s, that is.

What happened in this licence swap was there was no community involvement. I know that my critic knows this well. It was in his constituency. It’s the constituency next to mine. There was no community involvement in the decision. They found out afterwards. There was no First Nations involvement in the decision. Hundreds of direct and indirect jobs were lost, and two mills were closed.

The proposed amendments to the Forest Act under this bill will help to achieve government’s agenda for forest revitalization by giving government more oversight over the forest sector. For too long, through the disposition and transfer of tenures under the previous legislation, forest companies experienced limited government influence on their activities. As a result, they now control the market in the forest sector to the extent that smaller operators, like communities and First Nations, cannot compete.

This is a result of changes from the other side, made while they were in government in 2003. I described that under what was then called the forest revitalization plan. We now have a forest sector dominated by a handful of major players who can set terms with smaller companies who, in a more competitive market, would be business partners. Our major industry players are world leaders, without a doubt. Our dimensional lumber is a significant component of the U.S. housing market and is sought after around the world for its quality. But the concentrated industry we have does not lend itself well to competitiveness or to innovation.

The results speak for themselves. We have seen tens of thousands of jobs lost in the forest industry. On the coast alone, between 2003 and 2017, direct jobs fell by 17,800 people — 41 percent. Between 2003 and 2017, harvest on Crown land on the coast fell by 5.1 million cubic metres. Between 2003 and 2017, lumber production fell by 1.1 billion board feet or 44 percent. Pulp production fell by 51 percent. Log exports increased 63 percent. It went from 6 percent to 23 percent on Crown land.

The log profile during that time, during 2003 to 2017, what was harvested: 17 percent of the coast inventory harvested in 2003 was cedar. In 2017, it was 28 percent of the harvest volume.

Waste levels in that period. Waste levels in 2003 represented less than 5 percent of the harvest volume. By 2017, it was greater than 16 percent of the harvest volume — avoidable waste. That’s two million cubic metres.

Obviously, this is unsustainable. Unless we take action, we will have more concentration, more job loss and, ultimately, less production. Frankly, this is work that needed to be done a decade ago. With the changes to the act, government will have more of a say on how forest tenures are transferred between parties. Companies will now require ministerial approval before they transfer a timber licence. If government is to approve that transfer, we will first want to understand how the transfer will help the people of B.C. and that First Nations’ interests are understood and considered.

Under changes to this legislation, we will be able to make sure that the public interest is considered in the disposition of Forest Act agreements. We will want to make sure that dispositions, transfers and changes of control do not result in further concentration with the forestry sector by a few major companies. Market concentration of milling and forest tenure holdings is often increased through changes in corporate control or amalgamations with other companies. Industry has taken advantage of affiliate transfers and corporate changes of control to minimize consultation requirements and government oversight.

[6:10 p.m.]

Now all agreement holders will be required to seek government approval of dispositions, as opposed to providing notice of an intended disposition to government. Preventing corporations that already hold a significant proportion of harvesting rights from obtaining more will enable new opportunities for small industry players.

In addition, by ensuring that all dispositions require a statutory decision, First Nations consultation will be required. This provides an opportunity for First Nations’ concerns to be voiced, and the new public interest test will provide government with the ability to ensure that these concerns can be put into action. Again, 2014 was when the Tsilhqot’in decision came down, and again, that has to impact how forest tenures are acquired, traded and amalgamated.

A corporation will now be required to provide the minister written notice of a change in control or amalgamation with another agreement holder within 30 days. Upon notice, in response to a request for change of control, the minister will be able to immediately suspend the rights under the agreement and will be required to consider the public interest and market concentration.

As a result of the review, and after an opportunity to be heard has been provided, the minister can take further action, including continuing or varying the suspension, requiring the disposition of an agreement within a specified time frame to an arm’s-length person, accepting a proposal from the affected tenure holder to dispose of agreements to an arm’s-length person or to address minister concerns, imposing additional requirements or cancelling the agreement.

In addition, the forest sector in B.C. is experiencing significant changes as it contends with declines in timber supply, softwood lumber litigation, evolving market conditions and demands for new industries and products. That’s one of the reasons why we want to ensure government has the information needed from companies when it is needed, to inform policy and legislative changes to address emerging forestry issues.

Changes to information requirements under these amendments will ensure that government has the information to determine whether additional policy and legislative changes are needed to address emerging forestry issues. Taken together, the changes being introduced today will restore public trust in how our forests are managed on behalf of the people who own B.C.’s forests, the people of British Columbia.

We want to enhance public trust, support reconciliation with First Nations and improve public confidence in forest management.

The forest sector is a key component of B.C.’s economy. These amendments will help to support a vibrant and diverse forest sector. There will be more opportunities for participation of First Nations and others by preventing the further concentration of harvesting rights by a few major industrial players. We want all British Columbians to benefit from the forest industry, not just a few major companies.

With that, I’ll conclude my remarks for second reading. I look forward to hearing other perspectives and the views of others in this chamber. I will now take my seat.

D. Barnett: Forest workers in this province continue to face greater uncertainty every day. Bill 22, the Forest Amendment Act, only adds to the anxiety that already hangs over the industry. Some of the factors we are already aware of: the highest productive costs in North America, continued impacts of the mountain pine beetle, wildfires, a housing market slowdown and the ongoing softwood lumber dispute. With all of these factors converging on British Columbia’s forest industry, I find it difficult to understand why the provincial government would throw even more uncertainty into the mix.

Bill 22 arbitrarily takes tenure away from current holders, effectively ripping up existing contracts and risking further mill closures. This will result in even more job losses and legal disputes with forest companies.

[6:15 p.m.]

The NDP have essentially drafted a law that creates division within forestry-dependent communities, companies, workers and First Nations at a time when we need to be working together to find real solutions to the challenges the industry faces. As the member representing Cariboo-Chilcotin, I can assure you, Mr. Speaker, that this does not widen the rural and urban split in our province. The fact is that 40 percent of the 90,000 forestry jobs, both direct and indirect, are located in the Lower Mainland. This is an issue that affects all British Columbians.

Only a few weeks ago the Premier appeared before the annual convention of the Council of Forest Industries. It would have been the perfect opportunity to provide a little reassurance to all the communities who rely on the forest industry that their provincial government would do all it could to help.

Instead, the Premier quashed any promise of help for a vital sector of our economy that’s facing serious threats and devastating consequences. People attending the B.C. Council of Forest Industries annual meeting last week were really hoping for any indication that the government would finally act. With profound disappointment, they walked away with nothing.

The Premier presented his grand vision of pulling lumber companies together with First Nations, mayors and unions in one giant group huddle. But instead of taking an active role, the provincial government would stay out of the way and leave it up to companies and the local population to resolve problems on their own.

Sorry, Premier, but that’s not good enough, not by a long shot. In times of crisis, people need strong leadership.

By exiting the stage and forcing industry to struggle on its own, the provincial government is shrugging its responsibilities to all British Columbians. The only tangible item the Premier did bring to the table was a suggestion that the government use its buying power to use more lumber in public works projects. Well, that’s great, but solely relying on a few government construction projects will not save an industry that primarily relies on exports.

I can assure you that the previous government did everything possible to diversify our market for lumber, especially in view of what seems to be a never-ending softwood lumber dispute with our neighbours south of the border. China has especially become a valued customer for B.C. lumber, but the troubled trade relationships between Canada and China could spill over to our forest industries. None of this is good news for hard-working British Columbians working in the industry and the communities that rely on those jobs. The measures in this bill will devalue existing tenures.

I understand what the government is trying to do here. The NDP wants to return to appurtenancy. This is a policy that would compel companies harvesting timber from public land to mill it near where they harvested it. On the face of it, it sounds like a great, appealing idea. Local communities would benefit from local lumber. But as we know, this is another market intervention where the NDP always knows best.

Well, I’m sorry. Government does not always know best. Look no further than the case of the Carrier Lumber mill in the 1990s, when the NDP government suspended 2.5 million cubic metres of unharvested lumber. The Carrier Lumber mill case went to court, and the NDP government lost. The communities in the Chilcotin, the Ulkatcho First Nation, the community of Anahim Lake were left devastated without their major employer. They have never recovered.

It also left British Columbia’s reputation as a place to do business in tatters. Investors looked at how the NDP was willing to manipulate and unfairly cancel contracts. Another fine example of the NDP market intervention was the closure of the Cowichan lumber mill in Youbou. That was a plant that operated for 72 years before the NDP got hold of it, and 220 jobs were needlessly lost.

[6:20 p.m.]

Let’s fast-forward to today. Since the NDP took office in 2017, the forest industry has lost the equivalent of five direct jobs a day. When you factor in indirect jobs that generate economic activity in smaller communities, that number grows to ten to 15 indirect jobs every single day. That’s why I, a member of the official opposition, do not support Bill 22.

The measures contained in this bill will devalue existing tenures. This will result in further job losses that forest-dependent communities can ill afford. Look at the mess the government created in the northeastern part of the province with their caribou conservation debacle.

People are up in arms because the government doesn’t have a clue how to manage rural economies. Everyone from guide-outfitters to snowmobilers are worried that access to the back country will be locked. Up to 500 forestry workers in the Chetwynd region may lose their jobs.

The fact is the forest industry is facing severe headwinds, and this legislation does nothing to reconnect communities with the forest. I can assure you, Mr. Speaker, that we as the official opposition will fight this divisive policy agenda. We will stand up for hard-working British Columbians and the jobs their families depend on. In the Cariboo-Chilcotin, forestry is our economic engine, and we cannot allow policies such as this to interfere with our communities, our economy and our way of life.

C. Oakes: I stand in this House today to offer my comments on Bill 22, the Forest Amendment Act, 2019. The lens that I have applied to the review of this legislation being brought forward in this House is the impact that it will have on hard-working men and women in my constituency.

What will the impact be on jobs? Life is certainly not more affordable when one does not have a job. A myriad of policy changes, including Bill 22, will have a direct impact on industry competitiveness and the ability to compete in the global marketplace. Between government-led legislation, policy and regulation changes, significant increased costs passed on to the sector, government approaches taken to issues such as the caribou plan, contrary to approaches taken by other jurisdictions, the general approach to the natural resource sector, in general, is impacting British Columbians’ competitiveness.

The result of creating an uncompetitive environment for business in British Columbia means a direct impact on jobs. It makes it more difficult to provide security to communities depending on the forest sector, which results in significant consequences on small and medium-sized businesses dependent on the sector and ultimately impacts families in British Columbia.

This erosion of confidence created by this government, the increase in administrative burden that Bill 22 creates, with significant new requirements around recordkeeping so wide-reaching, will impact the entire supply chain. New extraordinary powers that the minister will now have…. For example: make regulations on persons who even transport timber, wood residue or products manufactured for timber or wood residue, operators that produce bioenergy, and the list goes on and on. Ambiguities, from who is a prescribed person with far-reaching social engineering and far-reaching powers into broad-range information extraction….

Today under this government, British Columbia has the highest cost producers in North America.

[6:25 p.m.]

What does this mean for British Columbia? Let us look at Alberta. Alberta has a cost-effective timber base. They support industry competition and competitiveness. They have taken an approach on issues such as the caribou plan that has found a balanced approach on science and socioeconomic impacts. We are in a position where we have to compete with other jurisdictions, and under this government, we will fail.

My riding is home to one of the most integrated and diverse concentrations of wood product manufacturing facilities in the world.

Fourteen years ago, I made the decision to run for political office, understanding the significant challenges that my communities would face because of the mountain pine beetle epidemic presented in our region. Over the years, I have witnessed significant investment, research, businesses both large and small investing hundreds of millions of dollars in our forest sector to ensure competitiveness, to ensure the protection of jobs. Innovation has occurred. New value-added and renewable products have been developed, and more are on their way. Investments made to improve fibre optimization. The private sector has found innovative ways to utilize the available fibre, and types of manufacturing potential is already in our area.

Work is also being done on how we must refresh our approach to ecological resilience and restoration. I have spoken multiple times in this House on the devastation of the wildfires and floods over the past two years. What I’ve not done is talk in the House about the opportunities and the lessons we have learned and the work that is being done on the ground at all levels to understand the changes that we need to make. Private industry, government, local governments are all at the table to ensure that that change is happening.

Work is also being done on exploring opportunities for the forest sector. I would like to recognize and thank the work that is being done by the city of Quesnel and the forest initiatives program. I want to thank the members who are participating in this forestry think tank, from First Nations representatives, professional foresters from each of our industries, staff from the Ministry of Forests, Lands, Natural Resources and rural economic development, and important community members and stewardship groups.

I look forward to the recommendations that they bring forward. They have been working on this initiative for almost a year now. I think it is important to understand what their findings will be. I think it is important for us to listen to the recommendations, and passing Bill 22 before this information and recommendations come forward is premature.

I had the opportunity from a young age, growing up, to understand very clearly the opportunities of the forest sector. In fact, I, myself, like probably many members in this House, have multiple family members for generations that have worked in the forest sector. It has provided a good living, a good family-supporting living, for men and women in my community.

I think of the logging contractor that is up at…. My dad would leave at three in the morning to go out into the bush and look at the cutblocks and work with the logging contractors and the entire supply chain from the welding shop that’s on Two Mile Flat to the tire shop on Two Mile Flat. I look at Campbell Crescent, and I see the hard-working contractors that are out there that support the forest sector. I know the impacts, and I know the changes that happen when you have a government that tries to come forward and look at market intervention, and the impacts it has on small and medium-sized businesses in our communities.

[6:30 p.m.]

These small and medium-sized businesses are the men and women that support our hockey teams; that make sure that they’re coaching our soccer teams; that when there are groups and organizations that have fundraisers, they knock on the doors of our small businesses. Our small businesses answer the call, because that is what it means to live in strong and vibrant communities.

[J. Isaacs in the chair.]

In our communities, we have used opportunities and challenges, as I’ve said, presented by issues such as the mountain pine beetle to look at how we can better fully integrate the fibre supply chain. The member opposite talked about the impacts of the caribou plan, what it’ll do to the community of Chetwynd and their mill, while Chetwynd supplies the chips for two of our pulp mills in Quesnel. When I look at…. Whether it’s an MDF plant or whether it’s a pellet plant or whether it is the plywood plant in our communities, we have learned through innovation and investment and incredible resources to ensure that we have a fully integrated forest sector economy.

At one time, our community looked at having 70 percent of our businesses directly or indirectly impacted by the forest economy. That is why I speak so passionately about the challenges that this government is presenting to our forest-based communities and the impacts it will have on hard-working men and women in my constituency. Bill 22 is a move away from market-based economy and free enterprise to one that is socially engineered, focused on centralized planning, in an attempt to manage and regulate.

I adamantly oppose the idea that government is a better market intervention operator or job creator than the private sector. I believe in private sector. I believe in free enterprise. I believe that the investments that we require to ensure that our communities are strong and are resilient will depend on making sure that we have strong, positive relationships with the private sector. This bill is an attack on the sector, and it will have direct impact on jobs.

Affordability in my riding means having a job. This bill, coupled with recent administrative, policy and legislative changes introduced by this government, puts family-supporting jobs at risk. I ask that the government support jobs in British Columbia. I ask the government to look at B.C.’s competitiveness and value that, because we need to do better. I expect a better job from this government.

S. Thomson: I look forward to taking my place and the opportunity to provide my comments and perspective on Bill 22, the Forest Amendment Act, 2019. As I noted, I’m pleased to rise and speak about this very important and far-reaching legislation, because it is critical with respect to the industry, but it also, in its construction of the legislation and its intent, has very, very far-reaching impacts. As is the case with all Forest Act amendments and legislation, it’s always very, very complex.

[6:35 p.m.]

The details and implications of what’s contained in the legislation or the amendments to the Forest Act really, in many respects, lend themselves to the detailed, section-by-section debate in committee stage to determine the full intent and to determine how the provisions are going to be managed and implemented. I know that the committee stage debate in this process will be critical to determining the full intent and the process around how the government and the minister intend to actually implement this.

As you know, the Forest Act, the history, the structures that we have in place with the tenure system have been developed over a long period of time with a lot of very significant work and investment by all components of the industry in terms of their participation in the sector.

I want to take this opportunity to provide, as I pointed out, some overview comments and to raise some concerns and questions that I know, as I said, will become part of that extensive process in committee stage. Its heart and intent, when you look through the bill, is to address the apparent concerns by this government on the apparent concentration in the forest sector by licensees and agreement holders and a view that current processes with respect to competition review on transactions by both provincial and federal governments — both through the review process that’s currently in place within the provincial purview and the federal Competition Bureau — are not, in the government’s view, sufficient to address the concerns when transactions take place, and the apparent view that the programs that are currently in place in the industry are not sufficient to address the diversity of operations.

It’s very clear in the government’s perspective on this, because you just have to look at their release when the bill was introduced. They said very clearly in the news release, you know, that the intent is to prevent further concentration of harvesting rights. That’s the starting point that they have brought to this legislation: to prevent any further concentration of harvesting rights, which means intervention in those decisions and processes, because their view is that any further concentration is not what they would view as being in the public interest or in the processes around the marketing of fibre.

They made that fundamental decision up front in bringing this legislation forward. That will be the case, even though — because it says right in the release to prevent “further concentration” — there may be and there will be circumstances where it will make business and operational sense in order to do that, in order to preserve viability of companies and operations within our forest-dependent communities across the province.

The real concern is that this bill allows the minister to unilaterally approve or disapprove of transactions, of forestry agreements, on the basis of public interest and the marketing of fibre, both of which are not defined in the legislation. It leaves very broad powers, very sweeping powers, in the hands of the minister, in the minister’s office, in determining what that public interest may be and what those marketing of fibre implications may be.

[6:40 p.m.]

In fact, the minister has recently just enacted, by regulation, the establishment of fibre distribution zones, presumably in anticipation of the passage of this legislation, because that becomes the basis of how the marketing of fibre aspects may get determined by the minister in exercising those provisions within the legislation.

This bill also brings in very extensive reporting processes and additional regulatory requirements on licensees and agreement holders, an intrusion into the management and governance of the companies and the agreement holders. It’s a whole set of reporting requirements that are going to be established by regulation, right down into regulations around the governance side of it, the board side of it, where there are changes in board representation within the companies. So all of those to be determined by regulation — those reporting processes, those additional regulatory requirements.

So not only is the government proposing to step in and intrude on the transaction process but also all the way down to how reporting gets done and how the structure of companies may work or may impact those decisions.

This is really about these timber harvesters, buyers, right down to the sellers of timber. The processing facility operators are really going to be busy in a forest of forms and reports. Maybe this is one of their indirect ways in helping achieve the support for the sector, because there’s going to be a lot of paper, a lot of paperwork and a lot of reporting that has to be done. Then when you couple that with the new regulations and prescriptive process under some of the other legislation that we’re looking at, it’s just going to add additional cost and process to companies at a time when they’re very, very challenging.

The power to determine the substance and the rules and the recordkeeping is all vested in the minister’s office, so really, this is all about a Victoria-knows-best world — a focus on control. The sweeping powers that have been granted to the minister to override market transactions in the name of public interest open up the opportunity for the government to pick and choose winners and losers in the industry.

What is most important is that the public interest, the conditions that can be set out, are not defined. They’re not laid out in the legislation. It’s simply an overarching ability to set what conditions the minister might deem to be appropriate and determine what is in the public interest or not. Also concerning is the fact that all of this legislation was developed and brought forward without consultation with the sector.

To be fair, the staff provided us a briefing on it, and our appreciation to the minister for making staff available to go through this. But they confirmed that there was no consultation on bringing this forward. Their rationale for this, they said, was because if they had hinted or had gone out with the fact that they were going to look at this kind of process and intervention, it could impact market behaviour. This is just an indication of how significant this legislation could be, because the government and the minister determined that it needed to be brought forward without any consultation or process with the sector in terms of bringing it forward.

[6:45 p.m.]

In fact, the minister was at the Council of Forest Industries annual general meeting where there was the broad representation of people involved in the sector there — all the way from all the people that are impacted by this through the process and associated industry association and representation — the Thursday before the legislation was introduced in the early days of the following week. No reference was made to this, on something that was so critical to the sector in relation to the future of their businesses, the future of their operations, at a time that they are facing very, very significant challenges.

This process, this lack of consultation, is really becoming a bit of a pattern. We’ve seen the whole process through the caribou recovery strategy, where the consultation process went behind closed doors, with only a portion of the impacted people at the table, in doing that.

With concerns raised by citizens, by local governments and by others, the process has moved to some consultation, but that should have been the way that it was started. That should have been the way that it was done from the beginning — not after the fact and not with the shortened timeline and process that has created very, very significant concerns from the sector about the economic impact and the possible loss of jobs.

Madam Chair, noting the hour, I reserve my right to continue and adjourn the debate.

S. Thomson moved adjournment of debate.

Motion approved.

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

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

Hon. S. Simpson moved adjournment of the House.

Motion approved.

Deputy Speaker: The House is adjourned till ten o’clock tomorrow morning.

The House adjourned at 6:48 p.m.