Fourth Session, 41st Parliament (2019)
OFFICIAL REPORT
OF DEBATES
(HANSARD)
Thursday, May 9, 2019
Afternoon Sitting
Issue No. 253
ISSN 1499-2175
The HTML transcript is provided for informational purposes only.
The PDF transcript remains the official digital version.
THURSDAY, MAY 9, 2019
The House met at 1:31 p.m.
[Mr. Speaker in the chair.]
Orders of the Day
Hon. M. Farnworth: In this chamber, I call continued debate on the estimates of the Ministry of Finance. In Committee A, the Douglas Fir Room, I call continued debate on the estimates of Municipal Affairs and Housing. And in Committee C, the Birch Room, I call continued debate on the Ministry of Energy and Mines.
Committee of Supply
ESTIMATES: MINISTRY OF FINANCE
(continued)
The House in Committee of Supply (Section B); R. Chouhan in the chair.
The committee met at 1:35 p.m.
On Vote 25: ministry operations, $265,327,000 (continued).
S. Bond: Good afternoon to the minister and her staff. We’re going to talk about the carbon tax for a few minutes. We’re going to start with one of the things that we, certainly, heard a lot of concern about. We share that concern.
People, I think, would have a much better sense of the impacts of the carbon tax, what the revenue is being used for. The minister, obviously, and her government made the decision to remove the carbon tax transparency report. Can the minister explain why she got rid of it in the first place and whether she’s considering replacing it, returning it or at least providing some mechanism to be completely transparent with carbon tax revenue in the province?
Hon. C. James: The member first asked around government decisions on the carbon tax, so I’ll just start off with the three main areas that we’re focused on with carbon tax revenue. These were in the budget, so this is information that’s been out in the public. These were in the budget, in fact, in 2018.
The three main areas of focus are carbon tax relief for low- and moderate-income British Columbians, support for emission-intense industries to transition to the low-carbon economy, and the third one is new green initiatives to grow innovation and to be able to look at investments.
Again, as the member will know from the CleanBC plan and the discussion we’ve had previously, we are developing a new accountability framework so that people have all of the latest information that’s very clear. We’ll have comprehensive reports on our progress in those three particular areas and under the Climate Change Accountability Act.
S. Bond: Can the minister provide a timeline for when the accountability framework would be made public?
Hon. C. James: I can get back to the member. I’ll have to have that discussion with the Minister of Environment, who’s putting together the CleanBC accountability framework. I don’t have a timeline for the member, but I can get that back to her.
S. Bond: Well, let’s talk about the fiscal side of the equation then. The minister is going to collect about an additional $2.35 billion from the carbon tax increase. Can the minister articulate for us…? She named some broad categories. Can the minister provide us with a breakdown of how that $2.35 billion is going to be spent?
Hon. C. James: I identified the three areas, as the member knows, and a report will be coming with the details on the progress on each of those areas. It’s still to come.
S. Bond: I think it’s safe to say that most British Columbians believe that if they’re paying a carbon tax, they’re actually paying it — certainly, this government has said — to invest in green projects, CleanBC, etc. We know that is a very small portion of the funding that is being collected from the carbon tax.
Can the minister tell me, then, or give us some sense of what the amount of carbon tax revenue is that has been allocated to capital instead of offsetting other tax revenues, or as the minister pointed out, providing benefits to low-income British Columbians?
Hon. C. James: As I mentioned, that report around the accountability and the carbon tax revenue and the areas that we’ve done is still to come.
S. Bond: I appreciate that from the minister. I think the bottom line here is that that is a significant revenue generator for the government. It’s part of what’s causing people’s concern at the pumps across our province. I think it is essential, and certainly we on this side of the House think that transparency is absolutely paramount, so having a straightforward transparency report, which was in place with the previous government….
This minister and government decided that wasn’t going to be in place. To be told: “Well, we’ll get an accountability framework….” Will the minister today commit to putting back in place a straightforward public transparency report so people know…? They’re feeling pretty frustrated about the fact that the carbon tax continues to rise, and it’s impacting them. Frankly, it’s impacting this government’s affordability agenda.
I think it’s essential that when we’re talking about $2.35 billion of revenue, British Columbians deserve to know exactly where it’s going. Is the minister committing to that? An accountability framework — you know, that’s nice. Those are good words. What we want to know is: will there be a specific, publicly available transparency report?
Hon. C. James: As I said, through CleanBC, we’re developing that accountability framework. People have access. That will be a public report. It will be a comprehensive report on all of our actions, including the carbon tax revenue and the actions we’re taking, as I mentioned, around carbon tax relief for low- and moderate-income families, support for emission-intensive industries and new green initiatives to grow innovation and investment. That’s still to come, and it’s being worked on now by the Ministry of Environment.
T. Redies: I think the real question here, given that British Columbians are facing the highest gas prices in North America, with this government’s plan to raise the carbon tax 57 percent over its term, is that the government is going to be collecting about $2 billion plus in carbon tax. Yet the CleanBC program, so far, is only allocating $300 million a year for the next three years. So that’s a lot of money that is not going towards green energy.
Can the minister explain to British Columbians how that is reasonable when they’re having to pay the highest carbon tax and gas taxes at the pump, and the minister is categorizing this as a carbon tax for green initiatives, yet only $300 million a year is actually going into the three initiatives that the minister spoke to?
Hon. C. James: Again, as I said, we have an accountability framework being worked on. That will be coming forward, and it will focus, as I said, on the three areas: green initiatives — that’s obviously CleanBC — and other initiatives that have been undertaken in our time as government. That includes support for emissions-intensive industries and includes the carbon tax relief for low- and middle-income British Columbians.
S. Bond: Does the minister, at this point, anticipate that a significant portion of the carbon tax will end up in general revenue?
Hon. C. James: Again, it’s going to be the same response. The report is being worked on, and the report will be coming forward.
T. Redies: Well, that doesn’t sound like being terribly accountable to British Columbians who are paying through the nose at the pump because of this government’s voracious appetite for tax.
Again, a lot of British Columbians might even be comfortable with the carbon tax increases if they knew they were actually going into initiatives that were targeted at green technologies, rapid transit. But in fact, what is happening is that this is just another tax grab. It’s not revenue-neutral, and British Columbians are paying through the pump. The minister is just basically giving us — I don’t know what it is — blah, blah, blah, in terms of this accountability framework.
Where’s the accountability to British Columbians? How can this minister stand up in the House and talk about accountability frameworks when British Columbians are paying $1.78 at the pump, the highest gas taxes, and she can’t even articulate where this money’s going?
Hon. C. James: I would remind the member that the carbon tax is a one cent increase — certainly not what you’re seeing at the pump. I would agree that there are huge problems with the price of gas, but it is not linked to the carbon tax. The member mentioned, in fact, a number of those initiatives that are being undertaken, including rapid transit. The member is quite right. All of that will be included in a report, and all of that will come forward.
I would remind the member, as well, that a number of institutions, including the Fraser Institute, which I know the members like to quote quite often, pointed out the folly of the report that came forward from the previous government that, in fact, did not show revenue neutrality.
T. Redies: Well, I think that British Columbians will look forward to the transparency around this tax. I think, for right now, with the revenue neutrality removed completely and it just going into general revenues to feed this government’s spending program…. I think British Columbians definitely deserve an accounting as to where this money is going.
I’m going to move on to another tax issue. That’s to do with business property tax. We’ve heard numerous stories of businesses being driven off their properties by rapidly increasing property taxes related to highest and best use. Has the minister done any work to ease the impact of these property tax shocks?
Hon. C. James: Yes. This certainly has been an issue that has been raised. In fact, right now the Minister of Municipal Affairs and Housing has announced a review — that’s already been announced — of the highest and best use valuation. She’s actively consulting now with municipalities, with business groups and expects to report back in the fall. We’ll certainly then have some conversations about what the information is that came back through the consultations.
T. Redies: While we’re going through these consultations, meanwhile businesses like Interstyle Ceramic and Glass in Burnaby just saw a 250 percent increase that is actually threatening their ability to do business, but they’ve heard nothing in way of help from the province.
There is a sense of urgency. Again, I can speak even from my own riding, where we have seen businesses going out of business because they can’t afford their rent or the property tax increases, along with all of the other increases associated with being in business these days, whether it’s the minimum wage or other tax increases.
Again, is the minister concerned about the impact that these tax shocks are having to small business? What is she going to do about it in the meantime?
Hon. C. James: Yes. Government is concerned. That’s exactly why the Minister of Housing is doing the consultation — to hear the issues, to hear firsthand the concerns. Ideas are coming forward around how you reduce the impact on small businesses for transition until something happens. So the minister will be collecting all that information, and we’ll be having that conversation when the information comes in.
T. Redies: Again, I know the minister must be aware that many, many small businesses in our province are finding it very challenging to make ends meet, especially with the situation around triple-net lease costs. For those handful of viewers that are watching, a triple-net lease, as far as what it means…. Tenants basically pay the building’s property taxes, not the landlord. And they pay maintenance fees as well as rent to the landlord. So as property taxes are increasing, this is creating an undue burden on independent business owners leasing space.
My question to the minister, again: what is the minister doing other than the small business tax reduction, which, frankly, I think is only contributing a small amount of tax reduction to businesses? What are they doing to help businesses manage rising property taxes? Is there no relief in sight for these poor businesses?
Hon. C. James: As I said, part of the reason you see the Minister of Housing taking this issue on and doing the review of the highest and best use valuation is exactly for the reasons that the member outlines. There are issues that have been raised, concerns that have been raised. Ideas are coming forward around how to deal with the impact during the transition. Municipalities can certainly use assessment averaging. That’s been used by a number of municipalities to address some of the issue until the consultation is complete.
T. Redies: Meanwhile, businesses in North Vancouver have seen a 27 percent hike in their property taxes, but we’ve heard nothing from the NDP about this threat to local small business. I mean, there are things that the minister could do while this consultation goes on. Why can’t the minister enact some relief for these small businesses that are being driven out of their communities by property tax spikes?
Hon. C. James: I’ve answered the question.
S. Bond: Well, we know this. We know that the minister has heard from mayors. We certainly know some of them specifically. She’s heard about property tax spikes. Can the minister tell us whether she has responded directly to the concerns that have been expressed? And if so, what did she say to them?
Hon. C. James: Yes, of course, we’ve heard the concerns. That’s part of the reason, as I said, that the Minister of Municipal Affairs is doing this consultation — to be able to hear the issues firsthand. The municipalities have the authority, as the member knows well. But in fact, we have heard the concerns, and that’s why the Municipal Affairs Minister is taking this issue on as a consultation.
I think it’s just important to note again, as the previous member mentioned as well, that there has been a reduction in the small business tax rate. We have eliminated PST on electricity for businesses, and we’re partnering, in this budget, $800 million with the federal government around supports on investments for businesses as well. And I have to say, certainly from the calls and discussions I’ve had with business addressing the housing crisis, it is also an activity that supports businesses in their recruitment and retention challenges that they’re facing.
S. Bond: There are significant concerns in the small and medium-sized business world in British Columbia, and we’re going to talk about some of those in a minute. But we should be clear. It’s not just mayors. We saw the Vancouver city council recently express concerns that spiking property taxes are going to drive businesses out of communities.
Here we have a government that has an agenda related to affordability and also the environment. So let’s just follow that scenario for a moment. We drive businesses further away. People have to actually commute to get to them. So now we have people who are concerned about the impact on the environment and the cost of living.
From the minister’s perspective, does she have any concern? And obviously expressed by the Vancouver city council, there’s some concern about the spike in property taxes. That concern is driving businesses further away. Is the minister aware of that concern of Vancouver city council? Has she been engaged in any discussion with them? If she has, what is she prepared to do about that?
Hon. C. James: As the member knows, this is a municipality’s responsibility and authority. That’s why the Minister of Municipal Affairs has taken this issue on, because yes, the concerns have come forward. Yes, people have raised the issues. That’s why the minister responsible is having that discussion.
She’s already announced the review of the highest and best use valuation. She is actively consulting with other municipalities, with business groups. All of government will hear her report when it comes back.
S. Bond: Thank you to the minister. Yet again, we have a situation that’s developed. Now we’re going to consult after the fact and try to figure out what…. And it’s because people stood up and said: “This isn’t acceptable, and it’s having an impact.”
Let’s talk about another area where there’s been an impact, and that’s the Vancouver school tax. Did the minister consider the impact on municipal decision-making on its tax base prior to imposing another tax, the additional school tax?
Hon. C. James: Yes, we did a thorough analysis, as we do with all of our measures that we bring forward — looked at all the issues and moved ahead, felt comfortable moving ahead with this tax.
S. Bond: Well, let’s take a look at what a recent city of Vancouver report said about the additional school tax. “Implementation of the additional school tax in 2019 on residential properties…would add $100.7 million, or 12 percent, to the overall tax levy for the residential property class. This represents a 30 percent increase in the provincial school tax and 12 percent to the overall tax levy for residential properties, a significant, year-over-year increase….”
Can the minister comment as to whether or not she was aware of the impacts of the additional school tax that she levied?
Hon. C. James: As I said earlier, yes, we did an analysis and looked at all of the issues. I think I just want to make sure that it’s on the record, again, that this additional tax is on the value above $3 million. That’s less than 2 percent of properties. Yes, we took a look at all the issues.
S. Bond: Well, thank you very much. It is just the continuous pattern. “Yes, we assessed the impacts. Yes, we thought about what it might mean, but we plowed ahead anyway.”
Nineteen new and increased taxes under this minister’s watch. To suggest or to even contemplate that that doesn’t have an impact on small business growth, on people’s ability to…. The minister constantly talks about affordability yet keeps downloading costs. Eventually, they end up in one place, and that is taxpayers’ pockets. It doesn’t matter what you call it — which tax it is, which increase, which new one. We’ve seen 19 new and increased taxes under this minister’s watch.
My last question on this section is: can the minister tell us…? There is an intergovernmental working group on split assessments. What is her role in the working group, if any?
Hon. C. James: As the member knows, this is the responsibility of the Minister of Municipal Affairs, but yes, we have staff at that table.
T. Redies: We’re going to turn now to the employers health tax. Minister, we’ve been speaking about the challenges that small businesses are feeling because of property tax increases. The reality is that the half-baked employer health tax is also contributing here.
This is actually something that the minister has within her purview to do something about, in that the employee health tax has been put onto municipalities, and that burden is then being transferred onto property owners, including businesses. So not only are businesses getting hit twice, with the MSP and the EHT, this year. As we all know, the minister is double-dipping on these taxes. Businesses are also getting hit with increased property taxes because of the EHT. It’s a triple whammy.
How can the minister defend downloading these costs to municipalities, which she used to be so critical of and she knows are going to be passed on to businesses and property owners?
Hon. C. James: I think it’s important just, once again, to talk about why we are looking at the employer health tax and why we are moving ahead on that. As the last province left with MSP premiums…. Every other province eliminated MSP premiums, and the majority of provinces moved to an employers health tax as a more fair way of approaching the costs to manage. In our province, we have not done that.
Yes, we are moving to an employer health tax, away from a regressive tax where, whether you made $50,000 or whether you made $500,000, you were paying the same amount in medical service premiums.
I think the piece that is important to remind the member, as well, is that municipalities pay medical service premiums for their employees. They, in fact, saved 50 percent on their costs for medical service premiums last year — 50 percent again this year. So, yes, while there is an additional cost until MSP premiums are eliminated, January 1, 2020, they in fact have savings from the medical services premiums being reduced by 50 percent. Those savings were not clawed back. Those are savings that municipalities have.
The member mentions the cost to municipalities. In fact, UBCM did a report that identified some of the costs, and we did an analysis of that report. In fact, if you took a look at the cost to individual municipalities when you took into account the net costs, after you take off the savings for municipalities, if all of those costs were put on homeowners…. Again, most municipalities share their costs of their taxes with homeowners and businesses. Even if you took the worst-case scenario and all of those costs were downloaded onto homeowners, it ranged. In some municipalities, the homeowner would be ahead because of the additional costs, and it went all the way up to about $54 per household.
In the savings for medical services premiums, individuals will be saving $900 a year, and it’s $1,800 a year for families. So the savings far outweigh the costs.
Then the last piece I just remind the member of, as well, is that businesses with a payroll of under $500,000 are not paying the employer health tax, and businesses with a payroll of between $500,000 and $1.5 million are paying a graduated rate on the employer health tax, again to support small businesses.
T. Redies: Thank you, Minister, for that answer. I have 19 municipalities here with a list of known property tax increases, and the EHT is basically contributing to about a third of the property tax increases that are being put in place by these municipalities. So if the EHT was so much better than the MSP and they were saving so much money, why would they be increasing their property taxes?
In fact, Saanich — here’s a good case in point. Percentage tax increase, 5.37 percent; tied to the EHT, 3.87 percent. New Westminster: 5.28 percent increase; 1.8 percent tied to the EHT. The implication, I think, from the minister was that it was somehow neutral to the municipalities.
Why are property taxes going up, and why are municipalities making it very clear that a significant reason for that is because of the EHT?
Hon. C. James: Obviously, it’s the municipalities’ information, but I’ll just give some of the analysis, including Saanich. I think what the member is quoting is a number for the cost of the employer health tax without taking in the net savings that are already there for the municipalities and the money that they already have.
Just to give you an idea on Saanich…. The need to recoup the net costs in Saanich would have been 1.22 percent, which, if the total amount, as I said earlier, was put on all residential property — it often isn’t; often it’s shared — would be a total of $35.60.
S. Bond: We fundamentally disagree with this approach. So did the experts the minister asked. She actually put together an advisory panel of experts and, in fact, told them that competitiveness had to be one of the factors that would be considered. And the very advice that she was given, she ignored.
To suggest that the numbers provided by municipalities, where they identify that the percentage of increase tied to the EHT somehow doesn’t net out their savings…. Well, it’s just not accurate. These municipalities have pointed out that the percentage of increase compared to their overall tax increase is tied to the EHT.
I guess the other question we need to ask the minister, when she’s busy touting her affordability mandate and how much the removal of the MSP premiums is going to save British Columbians, is: did she take into account that it’s being actually downloaded to those same British Columbians through increased property taxes and more pain at the pump and all of the other expenses? There is only one taxpayer in British Columbia.
It’s fine. We can all deal with the tax policy. To be clear, every party in this House said they were going to eliminate the MSP. What this side said was we would eliminate the MSP completely when we could afford to pay for it instead of downloading it to municipalities, who then download it to British Columbians. So you bet there’s a difference in policy approach here.
I just want to give the minister one example, and there are dozens and hundreds of small businesses who feel this way. We received a letter from an oil and gas operator in the northeast of British Columbia. Here’s what he said. I think the minister needs to hear this. It’s easy to sit in Victoria and write up tax policy, but here’s what it’s doing on the ground.
“I was frustrated two years ago. Now I am deeply angry, and with the combination of the election of the UCP in Alberta and the new taxes under the NDP, I am ready to take action. I am resolved to move my business operations to a lower tax jurisdiction and one that recognizes and encourages the oil and gas industry.
“I have now found a way to minimize my EHT payable, at very little cost to me, by establishing a permanent operation in Alberta. I’m also working to more accurately allocate our income earned in Alberta versus B.C. to take advantage of the coming lower Alberta corporate tax rate.”
That’s something we haven’t even talked about yet. That is going to have an enormous impact on British Columbians. I can hardly wait to see the work that this government is doing when Alberta continues to lower its corporate tax rates. But I digress.
Here’s the last paragraph:
“Please take every opportunity” — for us, that’s today — “to impress upon your NDP colleagues that their new tax rules will not net more revenue from me. It will be a net financial loss to the B.C. government. The B.C. tax rules must be changed to level the playing field with our Alberta competitors. You cannot overemphasize the importance and urgency of this point.”
To be clear, British Columbia is becoming an island unto itself. In the U.S., we’re seeing reduced taxes. There is a focus on driving down tax rates. Guess what. Our next door neighbour, our primary competitor, is going to do exactly the same thing. What are we doing? We’re driving ’em up, and we’re driving ’em out, which is exactly what this and other businesses are planning to do.
Can the minister provide some comfort or comment or something to this particular business owner, who has decided that he’s leaving British Columbia because of her tax policies, resulting in a drop in revenue? It’s exactly the opposite of what this minister is telling British Columbians.
Hon. C. James: I think the member is pointing out — I know we had some of this debate last estimates; I expect to have it again in the next estimates — the differences that we have in approach. The member is quite right. There is a difference in our approaches between the past government and the new government.
There is a difference in approach in that we recognize that, yes, we need to remain competitive as a province. We need to remain competitive when it comes to taxes. We need to remain competitive in our environment. But there are also other areas that are important to businesses, important to a healthy province and to the people of this province and that businesses also care about.
When I go out and talk to businesses, whether I’m talking with a chamber of commerce, the board of trade, whether I’m talking with individual small businesses, they will talk about the importance of trained workers — making sure that they have the skills and abilities that they need to be able to keep their businesses growing. They will talk about the need for a quality health care system and that, in fact, when people look at coming to their businesses when they are recruiting and retaining more workers, they will take a look at the importance of a quality health care system.
They care about child care. I can’t tell the member the number of businesses who have approached me and talked about the importance of recruiting and retaining workers and the difference child care will make. In fact, businesses are approaching us to talk about how they can expand child care within their businesses. It’s a critical piece when we look at women’s participation in the workforce.
Again, we have the lowest unemployment rate in the country and have had that for 22 months. If we are going to be able to keep workers and keep our economy growing, we will need to have workers in our workplaces. Quality child care is one of those critical pieces in being able to recruit and retain workers — women, in particular — and to assist them in getting back in the workforce. It is a critical piece, just as critical in balancing along with taxation, housing and the environment. Those are important pieces.
The member talks about us being isolated. Well, I suppose she could use the term isolated — isolated in that we’re going to have the top growth across the country for the next two years, isolated in that we have the lowest unemployment rate. So I suppose the member could qualify it in those terms.
I would suggest that we have a balance. We have a balance economically, and we have a balance in our approach. That’s what the people of British Columbia are looking for.
S. Bond: Well, I’m sure the minister knows that I’m not going to sit on this side of the House and let that go without notice.
The trend that’s been developed on the other side of the House…. If there’s a problem too big to fix, the answer of this minister is: “We’ve only been here 20 months.” On the other hand, when we celebrate the economic successes of British Columbia, the minister stands there and takes credit, when she knows full well that it took years of hard work and concentrated effort to return British Columbia from worst in the country to first in the country from the last time that this government was in place. So to suggest that we’re isolated because of 20 months of this government is absolutely ridiculous.
The past government handed over to this government the top-performing economy in the country, the number one job creator in the country. Conveniently, the minister refers to the last 20 months. I would suggest she should go look at Stats Canada numbers for the last number of years that it took for us to dig British Columbia out of the hole that this minister and her government put it in.
We should be clear. We are passionate about these issues because this minister is layering on ongoing tax increases, increases to the minimum wage.
Of course employers want trained workers. That’s why we spent years creating a jobs plan, a skills-training plan. And what have we heard from the minister opposite? Nothing. They don’t have a jobs plan. The only revenue generation plan that this minister has is taxpayers’ back pockets.
To this business owner, will the minister stand up and at least acknowledge, instead of simply saying, “Oh, it’s going to be okay”…? This company is leaving British Columbia because of her tax policy, and they are not alone. We have heard from dozens of companies who are under siege because of the tax policies of this minister.
Let’s try it again. We are an island. We are turning into an uncompetitive island. Our neighbours to the south and our neighbours to the east are concentrating on tax reduction, making it more competitive for businesses.
Is the minister aware…? Has she heard from and is she paying attention to companies like this owner of an oil and gas company who’s leaving British Columbia?
Hon. C. James: I think it’s important to put the facts on the table. I think it’s important to talk about the reality of British Columbia, British Columbia’s economy and investments that are being made in British Columbia’s economy.
I know the member doesn’t have faith in the people of British Columbia and the investments in British Columbia, but I do. In fact, we’re seeing it when we see the kinds of investments that are occurring. For example, in the past year, B.C. has added 79,400 jobs. That’s happened in the last year. And 68,500 are in the private sector.
I mentioned the lowest unemployment rate for the last 20 months. We’re seeing growth in manufacturing. Factory sales grew by 2.4 percent, and shipment growth grew by 6.3 percent year over year. That’s in January. We’ve seen the highest wage growth in a decade. Retail sales are up. The value of exports is up.
Then let’s take a look at businesses that are investing. The member mentioned businesses. I think it’s important, again, to take a look at the facts. I can mention LNG, to begin with. The largest private sector investment in Canadian history — $40 billion for Canada, $24 billion right here in British Columbia. That will mean 10,000 construction jobs, 950 permanent jobs and $23 billion in government revenues.
Kalesnikoff Lumber announced a massive $35 million expansion following our government’s changes that we made to allow for 12-storey wood buildings. Again, a major investment in our communities in the area of forestry and in the area of utilizing B.C. wood.
Vancouver. Now the world’s top 50 container ports and global container terminals has just invested $300 million in their Deltaport terminal, $160 million in their Vancouver terminal…. Again, showing strong growth in the province and showing an interest in investing.
SAP Labs, another example, one of the world’s largest companies, unveiled a 70,000-square-foot expansion of the Vancouver offices to attract and retain the best and the brightest.
Environmental assessment certificates have been approved for a Red Mountain gold and silver mine near Stewart. Again, 103 local jobs, and more again during the initial investment.
And $450,000 — the member would be interested in this — for further development for a beef-packing plant in Prince George. Again, it’s going to build 80 direct and 620 indirect jobs.
A Japanese retailer, Muji, opened three stores, including their largest store outside of Asia, on Robson Street — 150 jobs and, again, doubling the size of their Metrotown headquarters.
Amazon, another company, again, showing support for British Columbia, expanded its B.C. footprint by adding 4,000 new jobs, e-commercial tech and other skilled jobs that are going to be added by 2022.
Stemcell is another example, creating 675 jobs in Burnaby by the time they complete their expansion in 2022. I could continue on. Silicon Valley company Workday opened a 17,000-square-foot office — again, saying that they had confidence — and continued job growth in the Victoria tech sector. As a Victorian, I didn’t think I’d see the day when, in fact, tech is surpassing tourism when it comes to investment in Victoria, but that’s what you’re seeing. The AltaGas export terminal at Kitimat — again, a further expansion. And the mining sector continues to grow.
That’s just a short list. I could read more, but that shows the kind of support and the kind of optimism and the kind of confidence that people have in British Columbia.
T. Redies: Well, I’d just like to correct the record. This side of the House has complete faith in British Columbians. What we don’t have is faith in this government, based on all of their practices.
[J. Isaacs in the chair.]
The minister was quoting job stats. Well, I have the stats from June 2017 to March 2019 in front of me: manufacturing, 13,900 job losses; retail trade, 8,500 job losses; real estate, rental and leasing, 7,400 job losses; transportation and warehousing, 7,300 job losses; construction, 5,900 job losses; forestry, 5,700 job losses; mining, quarrying and oil and gas extraction, 3,800 job losses; accommodation and food services, 5,600 job losses.
Minister, if things are going so well in the province of British Columbia, why has business confidence dropped 14 points under your government’s reign?
Hon. C. James: Again, just putting the facts on the table. If you look at the first three months of 2018 and compare that to the first three months of 2019, which is obviously the comparison you want to be looking for, the trend that’s happened year over year…. Employment is up 2.8 percent. There are 70,167 jobs that have been created — 61,600 of those in the private sector. If we look at the last five months, we’ve continued to see employment increase over the last five months.
T. Redies: Well, that was just really interesting. I just gave the minister job numbers from June 2017, when they took office, to March 2019. These are from Stats Canada. I mean, you can pick two or three months here and there, but I’m talking about the record of this government, which isn’t that great.
In fact, I just looked at the total numbers here. Out of 51 categories, there are only 19 sectors where jobs actually have increased. Two of those, coincidentally, happen to be in provincial and territorial public administration and regional government, which have increased about 5,000, almost 6,000 jobs.
Minister, the problem is…. The minister talked about meeting with businesses who want child care and affordable housing for their workers. I get that. But I think if the minister had told those businesses that she was going to hammer them with about $8 billion or $9 billion of increased taxes over the next few years, they might have had a different take on things.
In fact, part of the government’s responsibility is to increase the overall pie and not just transfer taxation from one group to the other, particularly the job creators.
My colleague from Prince George–Valemount talked about the challenges of competitiveness that British Columbia is facing on multiple fronts. Some are due to actions taken by the United States, but we’ve now seen the results of the Alberta election., and B.C. is going to face increased competition for investment. I remind the minister that Alberta doesn’t have a PST. It doesn’t have EHT. It doesn’t have the carbon tax yet. It’s planning to lower its corporate tax rate, over the next four or five years, to 8 percent from our 12 percent.
Again, I guess, on this side of the House, we’re very concerned about this. The reason why British Columbia has been able to put itself on the map is because they had a very competitive economic environment, with a past government that was pro making sure that there was investment and business creation to create and improve that economic pie.
What actions are this government thinking about at all? Name one to improve British Columbia’s competitiveness in Canada and with the United States.
Hon. C. James: We’ve gone through this, but I’m happy to go through it again if the member feels the need to talk about the investments that we have put into business and the support we are providing to business and to small business to remain competitive, as I’ve talked about. I’ve talked about cutting the small business tax rate from 2.5 to 2 percent; eliminating the provincial sales tax on electricity for businesses, a critical piece again; and investments in housing and child care.
I know the members don’t like to see those as business and economic investments, but in fact, they are key economic investments. The best investments we can make in our province to keep our economy growing are people. That is our best investment, because people are the ones who keep the economy growing. In fact, because of our tight labour market, because of our good employment numbers, we face challenges when it comes to recruitment and retention.
The investments we make in education; the investments we make in post-secondary education; the $800 million investment we’re making in corporate income tax reductions, over the fiscal plan for investments — again, to have businesses invest….
We have continued and will continue to be both focused on our competitiveness as well as focused on our support for businesses. You’re seeing that in the kind of employment that we’re seeing and investments we’re seeing, as I read into the record, in British Columbia.
T. Redies: Well, let me read into the record something for the handful of British Columbians that are watching this. Under the NDP, B.C. has lost 36,400 jobs in the goods sector but has gained 33,300 in the service sector. Jobs in the service sector typically pay much lower money than jobs in the goods and manufacturing sector. Coincidentally, British Columbians are now working multiple jobs at a high — now 168,500 people in British Columbia. It’s the highest number of British Columbians working at multiple jobs. So much for the affordability factor.
This government, again, tries to pretend that everything they’re doing is fantastic, but the minister has failed to answer my previous question. If things were so great for business, why has business confidence fallen 14 points since they took power?
Hon. C. James: The member is talking about business confidence. And I think, as I read into the record already, the strongest voice of business confidence are the investments that are coming to our province and continuing to come to our province, giving us, as I said, the expected highest growth rate and the lowest unemployment rate across the country for the next two years.
The member mentioned the CFIB survey, which is based on responses. It is people who want to put their information in — a very small sample. I take the member’s point. I think it’s also important to take a look at the trends across the country. Once again, we are consistently, in British Columbia, above the national average.
There is no question that things like trade disputes are causing some uncertainty for businesses across our country. There is no question about that. It’s part of the reason that we continue to build on the diversification of our economy. It’s why we continue to ensure that we’re making investments to be able to recruit and retain employees to help businesses with investments like child care, like housing, like training for employees.
T. Redies: Let’s go back to the Alberta situation. Does the minister expect any businesses to move from B.C. to Alberta as a result of the combined tax differences that I mentioned earlier and that are going to be continuing to reduce in Alberta over the next few years?
Hon. C. James: This comes back to our earlier conversation about business investment and the fact that businesses…. Perhaps this is one of those differences between the other side and our government. We recognize that businesses look at a number of areas and a number of factors when they’re looking at investments. Yes, taxation, and competitiveness, is one of those, but there are a number of other pieces that businesses look at.
I think the example that I would point to, of course, is the film industry. As we saw, provinces play off each other with tax breaks. What we hear from the film industry constantly is that one of the reasons they pick British Columbia is that they can hit the ground running because of the well-trained workforce here. They know they have stability because they know that that’s there. So labour is a key piece and, again, it’s why we’re putting our resources into apprenticeship and trades training, why we’re putting our support not only into employees for today but employees for the future, for future employment. That will provide the stability, again, that businesses need.
They take a look at education. They take a look at the resources being put into education. They look for stability in the province. They look at lifestyle. I have to tell you, from the businesses that I meet, particularly in the tech industry, their employees work very long hours on the days they work, and then they look at providing opportunities for quality life outside of work. Again, British Columbia is one of those places because of the supports we’ve put in place in protecting our environment.
Transportation is a key. Again, major investments we’re making in transportation, particularly in the Lower Mainland. Forty percent of the mayor’s plan on transportation will be funded by the provincial government, because we recognize how critical that is. So I think…. While the member may believe that simply looking at a tax rate in Alberta is going to make all the difference, we believe that, in fact, looking at all of the factors that make our province a fantastic place to invest but also a fantastic place for families to live and to work is a critical piece.
T. Redies: The Premier of Alberta has said that his tax plan will create 50,000 jobs. Has the minister done any modelling or analysis on how many businesses could leave B.C. for Alberta? Frankly, most of us in this room are old enough to remember the 1990s, when there were billboards at the border between B.C. and Alberta saying: “Would the last British Columbian to leave British Columbia please turn out the lights.” Hopefully, the ministry is doing some work in advance of this to make sure that doesn’t happen again.
I guess what I’m asking is: what modelling have they done, given the Alberta tax intentions, to determine whether or not we are going to be losing some businesses to Alberta?
Hon. C. James: I think the first piece to note is that there is no budget from Alberta yet. As the budget comes out…. We obviously analyze and take a look at budgets from across the country, and we will do that with Alberta as well. But there is no budget at this point that has come down from Alberta.
As I mentioned earlier, we, in fact, are actively recruiting people to come to British Columbia for the kinds of jobs and vacancies and, as I talked about, our low unemployment number — to encourage people to look at British Columbia. Competitiveness is always part of our analysis of everything we do as a government.
S. Bond: I certainly hope that the minister and her team are taking a pretty serious look at what Alberta is going to do, because the more competitive they make themselves, the risks increase exponentially for British Columbia. And it is about job creation. It is about people who create those jobs leaving British Columbia. They’ve done it in the past, and they’ll do it again. Capital is mobile. I know the minister knows that. People get to choose where they have their head offices.
Let’s talk a little bit about competitiveness. The minister has talked about how rosy things are. Let’s talk a little bit about how the small business sector is feeling. I know the minister knows as well as I do…. I have spent many years of my career dealing with the jobs and training and small business files. We know that small business is actually the heart of British Columbia. The vast majority of businesses in B.C. would be considered small or medium.
There is a Small Business Task Force. They in fact reviewed the cost of doing business in British Columbia. Here’s what they had to say. The minister can quote a bunch of statistics; let’s actually talk to the people who run small businesses in British Columbia. Here’s what they said:
“Participants told us the emerging tax on payroll will drive up their cost of doing business and may result in job reductions, the reduction or elimination of employee benefit packages or bonus structures, and price increases.
“Participants suggested reducing the EHT, postponing its implementation to 2020 to coincide with the removal of the medical services…premiums” — which, I digress, is exactly what experts on the minister’s very own panel suggested that she do, and she ignored — “increasing the $500,000 threshold to $1.25 million, implementing graduated threshold tiers, increasing thresholds in the future based on inflation, and examining alternative best practices for paying the MSP premiums, such as amending the EHT to a more even split between employers and individuals.”
The minister is, I’m sure, well aware of that feedback. What is her response to the Small Business Task Force?
Hon. C. James: I think, just to start off with some general stats. Then I’ll talk about some of the work from the task force. Again, we’re tied for the second-lowest small business corporate income tax rate among the provinces and the third-lowest general corporate income tax rate — again, competitive when we look across the country.
I just want to talk about a few of those pieces that were in the task force and the work that we’re actually doing right now.
There were a number of areas the task force pointed to that it was interested in having work done: areas of procurement; areas of Internet connectivity; work with businesses to look at access, as I talked about earlier, with a skilled workforce; and engaging businesses. That’s part of the work that we’ve already started through the Minister of Jobs. It’s part of a renewed framework that we’re really looking at to make sure that businesses have the opportunity to be able to bring their issues forward.
Affordability. I’ve talked about the investments in child care and the investments in housing. Again, affordable child care has been something that has been called for by the B.C. Business Council, chambers of commerce, the board of trade, municipalities and small businesses across this province for years. They are seeing record investments, they are seeing action on the issue of child care, they are seeing action on the issue of housing, and they’re seeing action on the issue of transportation — all areas that they identified as critical.
Connectivity. Another piece that came forward from the task force and, again, another piece where we’ve made major investments. Since July, when we came into government, you now see connectivity projects underway or completed for 43,000 households in 417 communities. That includes 74 Indigenous communities — again, an issue that wanted to be worked on with the task force and a piece that we’re very proud that we’ve moved on. For businesses but also for communities, it makes a huge difference when it comes to investment coming in for those communities, particularly rural communities.
Export navigator. We extended the pilot to help small businesses and entrepreneurs in rural regions to get their goods to market — again, a piece that was called for.
Then procurement. There’s been a lot of discussion with businesses, small businesses in particular, around government procurement. It is, as we know, a powerful tool to be able to deliver services that people depend on and provide investments for small businesses.
We have been hearing, for a number of years, the challenges that small businesses face when it comes to procurement that focuses on large businesses only and doesn’t provide opportunities for small businesses to both access new opportunities to scale up and to partner with other small businesses to be able to bid in on government procurement. The CEO of the chamber of commerce said that this could be game-changing for many small businesses, another opportunity to be able to do the work. Then annual funding, of course, for Small Business B.C. — $686,000 to support this resource centre for business information, products and services.
Those are just a few of the pieces focused on the task force report that we’re already doing work on and are already supporting businesses with.
S. Bond: There’s no doubt that there were items on that list that have merit. In fact, there are some items on that list that, when this side of the House was in government, they’d actually started those initiatives. Export navigator would be a perfect example of just one of those on that list. So there’s no doubt that there are issues that have merit that are benefiting British Columbians.
But we’re talking today about the impacts of the employer health tax on businesses that are, at the moment, contemplating their future in British Columbia. We’ve heard of the oil and gas company, but there’s more. Let me just go to one additional quote from the Small Business Task Force. These are people who actually run businesses that create jobs. The vast majority of businesses in British Columbia are categorized as small or medium.
Here is their recommendation: “Revisit the MSP Task Force recommendations to consider a combination of measures to address those impacts, such as increasing the payroll exemption threshold, exempting employers from paying EHT for youth under 19 years of age covered under their parents’ MSP, and removing the MSP/EHT overlap” — now known as the double-dip year — “in 2019 so that proactive companies are not also charged the EHT in the short term.”
Has the minister considered any of these measures to ease the impact of the EHT on small businesses in British Columbia?
Hon. C. James: I’ll again remind the member that the formation of the EHT was to replace the medical services premiums. We were the only province left that didn’t move to a payroll tax. B.C. now, finally, will be matched up with the other provinces when it comes to providing those payroll taxes and getting rid of medical services premiums — saving, again, $900 for individuals, and families, $1,800.
The tax is designed, again, for businesses under $500,000. They don’t pay. That’s 85 percent of businesses in this province that do not pay the employer health tax. Businesses that have payrolls between $500,000 and $1.5 million will pay a graduated rate. It’s only businesses above $1.5 million that pay the full rate of the employers health tax.
S. Bond: The bottom line is that the minister and her government ended the MSP premiums. As I said, every party in this House had a plan to do that in a different sort of progression, but the minister, in doing that — against the advice of the panel that she created — decided that they would do it and double-dip. They would have employers pay both the MSP — half of it, granted — and the EHT. It’s having an impact. The minister can keep saying the same words, but we know that small businesses across British Columbia are being impacted.
Let me just reference a survey. I’m sure the minister is aware of this — or, at least, her staff. I won’t go through the survey in its entirety, but the minister has been happy to reference the chambers of commerce. Well, here’s what the Prince George Chamber of Commerce did. They initiated a survey of their members, beginning in April of 2019, “to better understand the impacts and outcomes of the EHT on business in our community.”
Lo and behold, the three issues they identified were (1) moving operations, payroll and head office to Alberta; (2) reducing staff, wages or locations, which results in less money entering the economy and increased unemployment; and (3) less funding available for non-profits, as corporate donors are saddled with new taxes. Let’s look at the responses at a glance. These are not just two people sitting in the coffee shop talking. These are dozens of businesses that are being asked about the impact of this minister’s EHT.
Here’s what they had to say: “Will your business be impacted by the EHT?” Seventy percent said yes. “Will you need to reduce staffing levels to accommodate this fee?” Thirty-six percent of businesses said yes. That means job numbers are going down. “Will your service or product costs increase as a result of this fee?” Sixty-two percent of them said yes. The last time I checked, the only place that those fees and those extra costs are going to hit are taxpayers’ pockets.
Let’s do the math. The minister is the Minister of Finance. Let’s take her affordability argument that getting rid of MSP premiums will save taxpayers a certain amount of money. Let’s start by deducting. I’m wondering how much the minister has reduced the amount of savings. The fact that costs are going up…. Fees and services and products are going up. When this minister downloads a new tax on employers, who does she think is going to pay for it? Taxpayers.
I would suggest the ministry might want to start doing the math that takes the gross savings that have been articulated by this government and start subtracting. We could start with paying at the pumps, and then we can add all of the other taxes that have been downloaded — 19 new or increased taxes. Those have to come from somewhere, and that is taxpayers’ pockets.
To the last point that was canvassed, “Are you considering changes to your structure,” 23 percent responded yes. Here’s what was said: “We are challenged to see businesses exploring options to relocate all or a portion of their operations to a neighbouring province.”
Can the minister stand up today and tell us what advice she has to chambers of commerce, to small businesses in British Columbia? This was released not months ago, not weeks ago, but on May 2. These are small business owners sending a message to this minister and this government, in big numbers, that her employer health tax is impacting them as employers. Can the minister stand up, take responsibility for her tax download, and tell small business owners in my community and region what they’re supposed to do about this download?
Hon. C. James: I think there are a number of pieces to put on the table, to put the facts on the table — and listed in the budget as well. If the member wants to look at the appendix in the budget, it’s listed there around the tax bite for families. The member talks about life being more expensive. In fact, it’s just the opposite — page 117 in the budget, if the member wants to refer to it. For a family of $60,000, the member says that costs are going to be pushed down and it’s going to be more expensive.
In fact, if you are a family with a net income of $60,000, in 2016, you were paying $4,238 in taxes. When policies are fully implemented — that includes, of course, the elimination of the medical service premiums and with the child family bonus — you will, in fact, be paying $1,653. If you have a net income of $80,000, in 2016, you were paying $5,637. Again, you will pay $3,239 when the policies are implemented. And a family with a $100,000 income was paying, in 2016, $7,473 and will be paying, when the policies are implemented, $5,860. So that’s completely contrary to the member’s allegations.
On the employers health tax, let’s remember the businesses that were paying medical service premiums saved 50 percent last year and 50 percent this year. That is a fact.
The member talks about job losses. In fact, we have the lowest unemployment rate in the country, and we have had that for the last 20 plus months. And again on the employers health tax, 85 percent of businesses are exempt.
I understand the members may not like the facts, but it’s important to put them on the table.
S. Bond: To the minister, it’s not about this side not liking the facts. These are comments from business owners in British Columbia who asked us to convey a message to this minister. I will be happy to share a copy of the entire survey, because she should spend some time listening to the comments of business owners in British Columbia. There are pages of them.
They don’t quote any of the numbers in the minister’s budget, but they talk about things like…. There are some that I can’t repeat. “This is a ridiculous and unnecessary tax.” “When you look at it, this new tax will affect our ability to hire more staff.” “How did they pass this without involving the very businesses that will provide the money?” “We are being triple-dipped.” The list goes on.
The minister wants to be dismissive. That’s entirely up to her. But these are the voices of small business owners in British Columbia who have spoken out in strong numbers through a chamber of commerce. Two questions ago the minister was busy congratulating the chamber of commerce. They have a different message for the minister today on this file, on the EHT.
Let’s talk about another concern of the chamber of commerce. In fact, what we know is that there is significant concern. They have a request, actually, for the Minister of Finance. What they’re asking is for the minister to consider making an adjustment to the EHT. They represent businesses all across British Columbia. And the minister has quoted how they celebrate some of the initiatives. They’re not celebrating this one, and the minister well knows it.
The B.C. Chamber of Commerce is advocating that this minister raise the employer health tax threshold to $1.5 million, which would give more small businesses a chance to scale and grow the economic pie for everyone. And I really appreciated my co-critic’s comments earlier. It’s about growing the pie, not transferring the tax burden from one person to another, one organization, from business to individuals. It’s about growing the economic pie.
What the chamber of commerce is asking this minister to do…. Thousands of businesses across British Columbia…. You know, the minister wants to ignore the Prince George Chamber of Commerce. I would love for her to come on up and sit down at a round table with the very, very engaged employers who have some messages for her. Welcome to attend. I will share the report with her. Hopefully, her ministry staff already has it.
Here’s the rationale from the chamber of commerce: “Such a reprieve would also reduce the burden for smaller companies and start-ups who are already struggling under the carbon tax increase, rising federal and municipal taxes and the ongoing minimum wage increases,” which, by the way, the chamber did support.
What they don’t support is the employer health tax being downloaded on small and start-up companies. To the minister — straight-up question, coming from the B.C. Chamber of Commerce, representing thousands of small businesses: will she consider raising the EHT threshold to $1.5 million?
Hon. C. James: In fact, not only did I have the report, but I met with the chamber to discuss the report. We had a very good meeting and a very good discussion. I’ll continue my discussions. I recognize that they would like some adjustments in the employers health tax, and I’m always willing to listen to their ideas.
S. Bond: Fantastic. Is the minister, then, prepared, specifically, to consider raising the EHT threshold to $1.5 million?
Hon. C. James: The chamber has ideas. Others have ideas. I’ll be reviewing all those ideas, as I do. The employers health tax applies as designed — to protect 85 percent of the businesses — but in the future, they are welcome to bring forward their ideas to make adjustments, as others do.
S. Bond: Well, I would suggest that the minister move that item right up to the top of her priority list, because we’ve already heard, from chambers across the province, that there is a risk of companies moving their operations and payroll head offices to Alberta. Believe me, when Alberta decides to make their tax regime significantly more competitive than British Columbia, we’re going to see capital move where it is appreciated and encouraged.
Secondly, we’re going to see businesses over the next period of time reduce staff, wages, locations — less money entering the economy.
Will the minister expedite her consideration of a request from the B.C. Chamber of Commerce to increase the threshold of the EHT to $1.5 million?
Hon. C. James: I’ve already answered that question.
T. Redies: Just to be a bit more specific, if the chamber of commerce can demonstrate that there are job losses happening as a result of the EHT, will the minister seriously consider — not just consultations — raising the threshold of the EHT to $1½ million?
Hon. C. James: I’ve already answered that question.
T. Redies: Well, in fact, she didn’t.
The Chair: Do you want to rephrase the question?
T. Redies: The minister did not answer the question. If the chamber can demonstrate that significant job losses are happening in small business, will she reconsider the $1½ million threshold — increasing the threshold to $1½ million?
Hon. C. James: I’ll just repeat my answer for the member. During budget process and during the year, I receive ideas, approaches and analysis from a number of different groups and organizations, including businesses and including the chamber. I always take that information into account before we determine the budget.
T. Redies: Well, I put the probability of that, probably, somewhere between zero and zero.
My next question is with respect to the Montney basin. We have cases in the basin where drill sites are considered workplaces for the purposes of this tax. What steps is the minister taking to avoid having the tax discrepancy between B.C. and Alberta negatively impact oil and gas exploration in B.C.?
Hon. C. James: I think, as the member knows well, differences in taxes is not a new issue, certainly not a new issue between B.C. and Alberta but not a new issue across the country. I mentioned film tax credits earlier. That’s one of the bigger issues, where provinces were playing off each other around taxes to try and encourage business investment and, in fact, saw that it was a no-sum game and wasn’t helpful to the industry.
Building up things like opportunities for training, opportunities for apprenticeship and supports in place for a well-trained workforce provided the tools to be able to attract investment to British Columbia. We have companies — including, of course, LNG — that have invested and are about to invest millions and millions of dollars in our province and have determined to do that over this last while, when they know the structures that we have in British Columbia. So as I said, I think that the realities speak for themselves when it comes to the kinds of investments we see.
T. Redies: I’m glad the minister raised the situation with respect to the film industry and provinces undercutting each other, because that raises a question that we had. Since we last discussed the employer health tax, Minister, has the minister negotiated any memoranda of understanding regarding the prorating of EHT with other provinces? If so, which province?
Hon. C. James: No.
T. Redies: Alberta, as we know, does not have an employer health tax, yet they are geographically the closest province. What is the minister doing to prevent businesses from simply moving their head offices to Calgary?
Hon. C. James: This is not unique to the northeast, as we’ve talked about. The areas that we’re working on, obviously, to both attract and keep investment, to bring new investment to British Columbia, are not unique to the northeast. These are issues that are important across the province.
A well-trained workforce is critical. When we talk to people who are looking at investments, that’s one of the pieces they talk to us about. The PST on electricity, transportation infrastructure — again, a critical piece that is talked about. These are pieces I know we’ve canvassed already. I’m happy to canvass them more, but these are pieces that, again, are critical to making sure that we keep investment in British Columbia and are not unique to simply the northeast.
T. Redies: Again, we’ve been talking mostly about the EHT, but as we’ve said many times with this minister, it’s not one tax; it’s the plethora of increased taxes that this government has levied on businesses and property owners. In fact, of the $13 billion or $14 billion in increased taxes that this government will levy over its plan and since it came to power, about $8 billion or $9 billion of that is hitting businesses.
The minister talks about the PST off of electricity and the small business tax cut. Between the two of them, they’re only about $80 million a year. So we have $8 billion or $9 billion, and then we have maybe $700 million in savings over the time this government has been in office. So businesses are going to be really hurt by this.
The government may not believe us, but we have, again, heard from lots of businesses where they’re going to be taking action, whether they’re going to be reducing wages, cutting jobs, moving head offices to Alberta. I guess the minister is just going to wait to see it happen.
Here’s another issue. The tech sector oftentimes has remote and mobile workers. In this case, it would be simply a matter of moving one’s head office to a different province or south of the border, to Seattle, for example. So what’s stopping that?
Hon. C. James: I think the response I gave for the last few questions certainly stands for this one as well. It is rare for a business to simply use one factor to be able to make a change in their investment or to be able to jump to another province.
[R. Chouhan in the chair.]
Most businesses will take into account a number of factors, including the competitiveness in the province — again, remember, tied for second-lowest small business tax rate. They will be looking at well-trained employees. They will be looking at the opportunity for recruitment and retention. They’ll be looking at their own lifestyle issues and the lifestyle issues of their employees.
That happens particularly in the tech industry. If you talk to tech companies that have moved to Vancouver or Victoria, often it is lifestyle issues that help them attract employees. The opportunity, as an employee told me in Victoria, to be able to finish work at the end of a long day and take five minutes to take your kayak down to the Inner Harbour and be able to kayak is worth more, from their company’s perspective in recruiting people into the tech industry, than almost any other opportunity that’s there.
The member mentioned moving head offices. There’s nothing in the EHT that incents someone to move their head office. If employees work in British Columbia, they pay the employers health tax in British Columbia. The EHT does not, from that perspective, incent people.
I think it is important to note that businesses take into account a variety of factors when they’re looking at investment.
T. Redies: Thank you, Minister, for that answer, but unfortunately, I don’t think it holds water. Again, taxation is creeping up to a level that is making it very uncompetitive to be in B.C. The EHT, of course, is the big contributor to that, as we know.
I’d like to read into the record a number of comments from businesses about what the consequences of this tax are on B.C. businesses and employees and, ultimately, consumers. I’d like to read one quote from a business in northern B.C.
“I believe this will impact small businesses negatively, as our profits are smaller than bigger business, but in some cases, our payrolls reach the threshold, especially being in northern B.C. where, generally, for trained staff in certain areas, we have to pay more in hourly wages to attract qualified applicants. I can’t say I’m for this.”
Another business:
“This new tax will affect our ability to hire more staff, which we actually need, but we have decided to wait, probably for one more year, before doing so. It will also affect the raises we were hoping to give to our existing staff. We are receiving notifications from our suppliers and shippers of increases due to this tax and the additional taxes on fuel. Our fuel surcharge for shipping is now 30 percent on top of our freight charges. We have to cover all these costs, as our profit margins are not substantial enough to absorb them. We will be forced to raise our prices.”
Finally, another quote:
“We are a business that has staff in four other provincial jurisdictions that all cover health care costs through each individual’s own taxes. The EHT creates an uneven playing field for our employees, as the employer will be paying in B.C. but not in the other jurisdictions. That is why we are going to be reducing wage increases in B.C. to be in line with the new cost of the EHT, but we will be doing raises as usual — i.e., no reduction — in our other operations outside of B.C.”
Minister, there are a lot of unintended consequences. I’m sure the minister did not want to see higher consumer prices, lower wage increases. But can she not understand that this tax, along with the plethora of other taxes that this government has levied on businesses, is going to have far-reaching consequences on employees, on consumers and on businesses and jobs in this province?
Again, with the evidence, is there no opportunity here to really kind of rethink this tax and at least increase the threshold, as the chamber of commerce has asked the ministry to do, to lessen the impact on consumers and businesses in the province — businesses that are already feeling the impacts of a lot of other taxes that this government has placed on their shoulders?
Hon. C. James: We’ve answered this question a number of times, but if the member wants to the opportunity to hear the answer again, I’ll take the opportunity to answer again.
What is bad for business and what is bad for investments is a speculative real estate market full of money laundering and illegal activity that was ignored by the other side. What is bad for business is a lack of affordable, quality child care to help women get back into the workforce to be able to address the job shortages that we have right now because we have such a strong economy and a good employment number. What is bad for business are challenges when employees can’t find housing — to be able to find employees in their area.
I think, for the member to suggest that a tax is the only factor that’s taken into account…. In fact, businesses take into account, as I’ve listed, a variety of factors when they make their decisions. We are continuing to make sure that we remain competitive. We are continuing to make investments that support businesses. We are investing in the people who build those businesses and who help those businesses expand in our province. That’s good for the economy, and that’s good for the people of British Columbia.
T. Redies: Well, with all due respect, Minister, what’s bad for business in this province is the NDP government. When you levy $8 billion or $9 billion onto businesses, in terms of taxation, that doesn’t help them be competitive. That’s why the Greater Vancouver Board of Trade indicated last year that Vancouver had fallen to the 14th spot in terms of marginal effective corporate tax rates. Again, we have businesses all over the province who are feeling very punished under this government.
I’m going to move to the SUCH sector. That’s another area that we would like to get a bit more information on. In a July 4, 2018, news release, the minister stated that net costs will be fully funded in the fiscal plan. Can the minister tell us what net costs mean?
Hon. C. James: The net costs would be the difference between the medical services premiums they’ve been paying and the employer health tax.
T. Redies: Can the minister confirm if this is net of 50 percent MSP or 100 percent MSP?
Hon. C. James: It’s 50 percent until the elimination on January 1, and then 100 percent.
T. Redies: This fiscal year the net cost to the public sector was estimated at $192 million. How much of that was the SUCH sector?
Hon. C. James: For the SUCH sector, $84.5 million.
T. Redies: Could the minister please break that down? How much is going to school districts? How much is going to post-secondary institutions? How much to health authorities, and how much to other institutions?
Hon. C. James: To the member, $26.1 million for schools, $19 million for health, $39.4 million for universities and colleges.
T. Redies: Thank you to the minister for the answer. Could the minister confirm that basically all of the costs relating to the EHT are actually going to be covered by government?
Hon. C. James: Yes.
T. Redies: I’d just like to move now to the cost and administration of the EHT. Can the minister explain in detail and itemize all of the costs associated with the implementation of the EHT tax?
Hon. C. James: Chair, could I suggest a five-minute recess while we change staff?
The Chair: This House will be in recess for ten minutes.
The committee recessed from 3:47 p.m. to 4:01 p.m.
[R. Chouhan in the chair.]
The Chair: Estimates for the Ministry of Finance will continue.
Hon. C. James: For ’19-20, $1.57 million is the cost for the EHT. In ’20-21, it will go up to $2.6 million. The breakdown for ’19-20: staffing is $460,000; operational training systems is $1.1 million.
T. Redies: That’s a substantial increase, from $1.75 million to $2.6 million. Could the minister explain why that’s happening?
Hon. C. James: The additional cost for the ’20-21 year would be…. After a year that the tax is in place, then you have appeals, you have audits and you have collections, so that’s the additional cost that comes in the second year.
T. Redies: Minister, could you explain to us how the tax is being administered? Has the government hired any third parties to deal with the questions and the registration of British Columbia businesses?
Hon. C. James: No, it’s all internal. That’s the additional staff that is referred to.
T. Redies: Could the minister confirm how many people in government are actually working on the tax?
Hon. C. James: For the ’19-20 year, there is a total of 12 FTEs, and for the ’20-21 year, a total of 22 FTEs.
S. Bond: I want to move to another area, a change of direction here.
I’m going to start with asking the minister to confirm that the new Crown, called B.C. infrastructure benefits Inc., comes under the portfolio of this minister.
Hon. C. James: That’s correct.
S. Bond: We’re going to spend a little bit of time this afternoon talking about the community benefits agreement. Certainly, my colleague and I want to better understand the administration and management. I think that the minister knows — I know it’s been a long four days; I think it’s been respectful and thoughtful for the very most part — that we fundamentally disagree with this approach.
We are very concerned about the fact that workers in British Columbia will be required to join a particular union, a government-approved union, to work on some major infrastructure projects in British Columbia. We fundamentally disagree with that approach. We certainly believe in the right for people to choose to belong to a union. Many of us, myself included, have lived in families where we benefited from unions in our family’s case. So it’s not about, from our perspective, union membership. It’s about being forced to join a union that you may not want to join.
Again, really clever title — community benefits agreement. It’s pretty hard to argue with something called a community benefits agreement, but when you dig down, that’s when the concern arises. We see that with the speculation tax as well. It’s a speculation tax in name only, and in fact, the chance of it ending significant and legitimate speculation is questionable.
I believe there are two components to the way this is going to be managed. I believe there is the Crown — for this afternoon, we’ll call it BCIB — which the minister now has in her portfolio. There is also the community benefits office. Can the minister describe for us the two different pieces — the CBO and the BCIB?
Hon. C. James: BCIB is the Crown, and it’s the operational vehicle. That’s basically how I would identify it. It’s responsible for implementing the community benefits agreement. The flip side of that…. The community benefits office is responsible for the policy. It’s responsible to make sure that the policy is in place and that it’s evaluated and it’s measured. So BCIB would be the employer, for example, for community benefit agreement projects that are going ahead.
There are three key pillars for their work. One is the project stability agreement, which ensures transparent wages regardless of gender. Their second pillar would be developing and maintaining skills for B.C. That would be the apprenticeships, the training programs, as the second pillar. And the third pillar would be priority hiring. Indigenous communities and women are the two areas that are being focused on. And then, as I said, the community benefits office is ensuring that the policy is in place and that it’s measured so that the accountability framework is in place for all the projects that move ahead.
S. Bond: Let’s start with the Crown side of this. Is there a board in place? Were the members of the board selected through the regular board resourcing process? Let’s start with that.
Is there a board in place, are the names public, and were they chosen through the regular board resourcing process?
Hon. C. James: There are seven members on the board. Yes, it’s public, and yes, they were selected through the usual selection process.
S. Bond: Thank you very much to the minister. How many employees currently are involved on the BCIB side, and what is the budget for operating the Crown?
Hon. C. James: The budget for ’19-20 is $8 million. The number of FTEs — I think the member asked for the number of FTEs as well — is 27.
S. Bond: What kind of accountability measures will be in place? Will they be similar to the ones for other Crowns? Is there a mandate letter? Is there a service plan, all of those kinds of accountability pieces?
Hon. C. James: Again, this is all public information, just so the member knows.
There is a mandate letter. It’s on line, along with the board. The service plan will be developed as soon as the transition is completed, so there will be a service plan as well. But the key accountability, or the key deliverables, will be, again, related to the three pillars that I talked about: delivering labour to the projects; delivering apprenticeship targets that are determined; and priority hiring. Those pieces will be the deliverables.
Again, the mandate letter is there. It’s public, and the service plan will be developed as soon as the transition is completed.
S. Bond: Can the minister now provide for us how many staff are in the community benefits office and confirm that at least one of them, I’m assuming, is…. If she could indicate how many people and what type of appointment they are.
[J. Isaacs in the chair.]
Hon. C. James: The community benefits office currently has three FTEs. They’re just beginning to staff up, so they expect it’ll be four to six months to move to a full staffing component. They anticipate 11 staff, and those are public service appointments.
S. Bond: Perhaps the minister could spend a few minutes explaining how we need 11 staff in a community benefits office when we have a Crown corporation that’s responsible for overseeing this process — 11 staff in a policy shop which a Crown is going to run. I compare that to other Crowns in British Columbia. I don’t think we have 11 public servants that are backing up some of those Crowns. So can the minister articulate what on earth 11 people are going to do in the community benefits office and what the budget is going to be for that office?
Hon. C. James: Three particular areas that the community benefits office has focused on, as I talked about: policy coordination, communications and performance measurements. As the work goes on, staff will obviously be hired and assigned to those particular areas. I think, perhaps, the important piece to note is that while the community benefits agreements are in place, they only apply to designated projects — a project has to be designated as a community benefits agreement.
The principles of more apprentices, of opportunities for local workers, of opportunities for underserved groups — women and Indigenous communities — are principles that we believe and that we believe that British Columbians want to see incorporated into all projects. So that’s part of the work, again, of the community benefits office — to look at that policy coordination and to look at performance measurement on those pieces as well.
S. Bond: Aren’t those things already key principles of, for example, the Minister of Advanced Education and the Minister of Jobs? Wouldn’t all of those important policy principles be part of the work that’s already being done? And now we see a policy shop of 11 people that are basically being introduced in government, related to a specific way of hiring workers for major projects in British Columbia. Why is that necessary when in fact…?
I can certainly recall from my time in those ministries that of course those were important priorities — making sure that people who are currently underrepresented in the workforce are included, that we have a skills and apprenticeship agenda. We had a significant one.
You know, I’m not sure that’s a fulsome answer. Those principles already exist across ministries in their particular portfolios. What portion of the time and the allocation of staff is related to communications?
Hon. C. James: The member is quite correct that there are various policies in various ministries related to apprentices or related to underserved or opportunities for local workers. But that’s exactly the point — that those policies have been different in different ministries, and there hasn’t been coordination. In fact, there hasn’t been consistency across ministries.
Part of the work of this office is to, in fact, look at that policy coordination, work with those ministries, ensure that we have, for example, a procurement document that’s consistent, that’s coordinated, that ensures efficiencies. Rather than every individual ministry taking on those responsibilities, it can be much more efficient by being coordinated. And we’ll make sure that we achieve what we aim to. Again, I think with a lack of policy coordination, it’s very easy for the outcomes not to be achieved, and we want to make sure that those outcomes are achieved. So that’s part of the work of the office.
The member asked about communications and how many staff would be in communications. It’s expected at start-up, because there’ll be a lot of stakeholder engagement and other work, that there’ll be three communications staff of the total staff. But again, that’s expected to shift after the first year, once the office is up and running and once some of that coordination work has been done.
S. Bond: I am very cognizant of the time, and there are a ton of questions about this that those comments generate. So three communications officers. How many communication officers will the Crown have?
Hon. C. James: One.
S. Bond: This is bringing back a lot of memories about Highway Construction Ltd. Let me just be clear for the record, then, that BCIB will actually be the employer of workers for the projects that are designated under CBAs. Is that correct?
Hon. C. James: Yes, that’s correct.
S. Bond: Can the minister describe how many of the employees in a CBO will be OIC appointments?
Hon. C. James: The three communications positions.
S. Bond: How will the CBO relate to the Crown corporation? How does that relationship work?
Hon. C. James: I think, as the member would expect, the relationship is very close. They have to be closely linked, because one organization is developing the framework, the policy, and the other organization operationalizes that framework. So they are very closely linked and, in fact, share space as well.
They have to be linked, because they share the goals of making sure that the benefits that I talked about, the Apprenticeships, the opportunity for local workers to be hired, the opportunity to look at underserved groups to be able to have these kinds of jobs — women, Indigenous communities…. Those are common goals and shared goals between the two organizations, so very closely linked.
S. Bond: We’re aware that a working group was created across ministries. It lists the very kinds of ministries that the minister was talking about. Interestingly enough, the key principles of that working group are exactly what the minister outlined — apprenticeship, Indigenous people, improved access for local workers.
There was a working group of key ministries that were discussing exactly the same items for achieved outcomes that the minister just talked about. There is a working group. I’m quite familiar with how they get formed, cross-ministry working groups across government. Apparently there was a working group doing that work.
Why does the minister now need 11 people and a community benefits office to do the work that, in fact, a cross-ministry working group…? I can list the ministries for the minister, with mandates or program objectives that align with key principles or responsibilities for infrastructure delivery. There was a significant working group created by the government. Now we’re going to pay 11 people. Can the minister explain why that was necessary?
Hon. C. James: Obviously, I don’t know specifically which group the member is talking about. There was a working group, through Transportation, with other ministries that carry out projects.
Yes, they were talking about the work that they do in their individual ministries. I would describe it as basically the consultation group for the CBO that then has the opportunity to create the policy. So that group would work on what kinds of things need to be in the policy, what the recommendations are for individual ministries based on their own work they do. Then the CBO creates that, basically does the work. It’s a consultation group that provides the feedback, as I mentioned. CBO is going to be doing that consultation. That working group provides the vehicle for them to be able to get that consultation from various ministries. Then they carry out developing the policy and developing that common procurement across government.
S. Bond: Thank you, Minister, for that answer. The bottom line is we have exceptional public servants. We had a working group. Now we have an office that has 11 people in it, including three communications officers. I think that speaks for itself, and we will certainly be watching how the CBO relates to the Crown. It’s a lot of bureaucracy to make a change.
I want to talk about one case related to this, but I want to ask one question. Is one of the policy pieces that the CBO will be looking at across government…? The critical element of the community benefits agreement is requiring people to join government-approved unions. Is part of the role of the CBO to look across government and see where that can be applied in other ministries?
Hon. C. James: The answer is no.
S. Bond: I guess we can suggest this side of the House is relieved to hear that.
I want to walk through just one case before my colleague moves on to another important topic. Perhaps this precursor question: how many contracts have been executed under the framework to date?
Hon. C. James: None.
S. Bond: Is the minister, then, aware of a tender process that took place recently on a portion of the Trans-Canada Highway? In fact, one of the things that is extremely concerning about the tender is the fact that there were only four bidders. On a project of this magnitude — and I have some experience with this, from my past world — normally, it would be 12 to 15 bidders. There were four.
As I understand it, for this project, the anticipated costs may have been in the $35 million range. We look at the low bid in this process being now $51 million. Is the minister aware of this particular file? Is she aware of the gap between what the anticipated costs were going to be and what the low bid was?
Hon. C. James: Yes, I’m certainly aware of the project, aware that it had been tendered. It has not been awarded yet, so I’m not going to speak to the specifics.
S. Bond: The minister may not want to speak to it, but I think it’s pretty indicative of where we’re headed. Where we’re headed is a lack of bidders on major projects in British Columbia. Part of that is the requirement for the workforce to join a union that they may not want to join.
We’ve heard over and over that everyone can bid. Everyone can bid. Well, guess what? Four people bid, and the first time that this process is put in place, it is significantly over the cost expectations of this government. And the minister knows it. My guess is that right now, there’s a whole lot of anxiety working around how they’re going to close the gap to pay for this one project. That’s just the first one.
Is the minister aware of any other projects that are in the tender stage that are in this similar position?
Hon. C. James: No.
T. Redies: I’d like to now turn to something that has really disturbed this side of the House. It’s disturbed me personally because I certainly don’t believe in any form of wage or job discrimination. This is to do with the low-wage redress issues with the social services.
The minister has almost bragged, over the last couple of days, about having $2.6 billion, I believe it is, in contingency prudence built into the plan. When we look at the situation with the non-union side of the social services…. They are only getting a 2 percent wage increase, where unionized workers are getting 4 percent, or getting a funded 4 percent additional wage increase on top of that 2 percent.
My question to the minister: with $2.6 billion of largesse there, why would the minister discriminate against some of the lowest-paid people in the social services sector? Why would the government think that was even remotely the right thing to do?
Hon. C. James: I think it’s important, first, to recognize the work done by the community social services sector and, in fact, the work that we’ve been doing with the community social services sector, not only to provide support to them so they can support the people that they serve but, more importantly, to provide resources to them so they can provide support to the people that they serve.
They have been very vocal about the challenges that they have faced in the previous number of years when it comes to providing supports to, often, the most vulnerable people. They play a huge role in our province when it comes to providing services and supports, a role that we value. We’ve shown that value with supports, as I said, in many programs and services that have been expanded over the last two years. I think that’s a critical piece and a critical piece of work that we’ve been doing.
That’s why, as the member will know, funding to support wages…. Increases for agencies with non-unionized employees are the same as the general increases that happen across the public sector, so 2, 2 and 2. That wage increase goes forward for everybody, whether union or non-union.
Yes, the low-wage redress is available to agencies covered by collective agreements. That’s something that they bargained, as unions do, and has happened with this government and previous governments. But we also appreciate that there are recruitment and retention challenges in the non-union sector as well. That’s why the minister is engaging with the non-union sector. In fact, I think tomorrow those discussions and that engagement begin, to talk about the kinds of areas where we can support them.
They are looking forward to the conversation, because there are a number of issues that they’ve really been wanting to work on with government and haven’t had an opportunity with the past government. That engagement began with the past government and fell apart, so they’re really looking forward to sitting down and having that engagement around all the kinds of ways we can support the not-for-profit sector and recognize the incredible work they do in B.C.
T. Redies: Thank you, Minister, for that answer. I imagine they’re happy to consult, but I guess the question still remains: why would this government discriminate against non-union workers right off the bat? It’s a 4 percent difference. I mean, is it this government’s desire to unionize the province so much that they would actually put people who are, you know, at the low end of the social services sector in such a differential?
I just don’t understand it. This is a government that I thought was supposed to support the social services sector, yet here, right off the bat, they immediately discriminate against the non-union social services sector to the tune of 4 percent.
Why? Why do that? Why not just…? I mean, there’s clearly room within the government’s budget — $2.6 billion in fiscal prudence we’ve been hearing about. If that’s the case, why not do the right thing and give the entire social services sector, union and non-union alike, the same wage increase?
Hon. C. James: They are getting the same wage increase. I think that’s the important first piece to note, that 2, 2 and 2 is going to the union sector and the non-union sector. Then, as happens in negotiations, as happened with the previous government as well…. When the previous government, for example, brought forward the economic stability dividend, that was something separate and apart that was negotiated by the unions. Those dollars were provided to the unions, not to the non-union sector. So in fact, that was exactly the same kind of model where the unions and labour will negotiate something very specific to their sector.
The previous government did that through the economic stability dividend, which has been paid for the last number of years through contracts to the unionized sector and not the non-unionized sector. But we recognize that there are challenges and different kinds of challenges in the non-union sector, and that’s why we’re sitting down and discussing and having conversations about how we support them in that way, whether it’s through procurement, whether it’s through services, whether it’s through making sure they can better support the individuals that they serve.
Those are the discussions and the conversation and the partnership that we want to build with the not-for-profit sector because we recognize that it’s critical. Governments of all stripes have utilized the not-for-profit sector because of the expertise they have, and we want to make sure that we’re respecting that. That’s why we’re having the engagement with them around how we address the challenges that they face.
T. Redies: Well, it’s hardly a partnership when you discriminate against 50 percent of the workers in the sector. I don’t think those workers, really, right now…. They’re not looking for more support from the government to support others. They’re looking for support from the government to support themselves. It is absolutely atrocious that this government would put in place a situation where you have workers side by side, union and non-union, one getting a 2 percent wage increase and one getting a 6 percent. It’s not fair. It’s a discriminatory practice, and it shows that this government cares more about unions than it does, actually, about working people.
Now, Minister, a number of questions were punted over from the Minister of Social Development and Poverty Reduction to your area, so I’m going to go through some of them. We might not get through all of them, but these are questions that the industry is asking, and I think they deserve a response.
First, why has the government not developed a plan to address the low-wage redress for non-union employees when organizations with non-union employees have been completing comprehensive wage and benefit surveys and submitting them to the CSSEA for three years?
Hon. C. James: As I said, we are, in fact, sitting down with the not-for-profit sector. We are, in fact, looking at working in partnership with them to look at all of the challenges. I’m sure these issues will be raised through that process.
The minister is meeting with them tomorrow. Just as past governments, as I said, have agreements in place with union and non-union around the wages but additional or other kinds of agreements, as happened with the economic stability dividend with the past government, unions will negotiate for the pieces that are important to them. We will sit down and have a partnership and a discussion with the not-for-profit sector to look at how we can support their good work.
T. Redies: Well, the minister and the Minister of Social Development and Poverty Reduction have had 20 months to look at this issue, and they’re only now talking to the sector. They’ve already put in this discriminatory wage practice right from the get-go. So I’m not quite sure why they haven’t been able to look at it for the last 20 months.
When was the decision made not to fund low-wage redress for non-union workers? Why were service providers only informed just ten days before the wage increase was implemented?
Hon. C. James: Just to be clear about the process, as happens in negotiations, we negotiate with the unions that go through that process. The agreement, as the member knows, is 2, 2 and 2, and that was an agreement that was reached. There is an agreement with the not-for-profit sector that they will get that wage increase, and they receive the 2, 2 and 2, the same as the union sector.
But if the unions come forward with a different negotiating piece, as they did with the previous government with the economic stability dividend — they brought that to the table — that’s a decision that is decided at the table during negotiations between the employer and the employees. They make that decision.
Then we have also, as I’ve said, determined that it’s important to sit down with the not-for-profit sector. We’ve been working with them, as I said, around program service increases, providing opportunities so they can better serve their members, but we recognize that they are also having recruitment and retention issues as well. So now we’re sitting down with them to talk about their recruitment and retention issues.
T. Redies: Can the minister tell us when the additional 4 percent with the union sector was agreed to?
Hon. C. James: That happened during the negotiations. So it would’ve been last June.
T. Redies: Last June. We now have this contract…. This situation has been known — that it was going to be a discriminatory situation — since last June, and the ministry is only now starting to speak to the non-union workers? I mean, that doesn’t even make any sense. Clearly, there was going to be a problem here.
Is the ministry honestly saying that they sat on this since last June and went barreling ahead April 1, implemented a terribly discriminatory practice and are now just starting to think that they should be talking to the social services sector about this?
Interjections.
The Chair: Member. Members.
Hon. C. James: Perhaps the member doesn’t recognize how collective bargaining works or the process that we go through. We sit down, as the previous government did, with the public sector to be able to negotiate. They bring issues to the table. We bring our mandate to the table around wages. It’s determined that that mandate, the 2, 2 and 2, is also the same mandate that is given to the non-union sector. That is in place. The non-union sector knows that, and the union sector knows that. Just as the not-for-profit sector may bring their issues forward, the unions at the bargaining table bring forward their issues, and that happens at the bargaining table.
As I said, I know the member is ignoring the issue around the previous government, but let’s remember that’s exactly the same process that the previous government followed. They determined an economic stability dividend was important to be able to get a collective agreement in place. They signed, with the unions, an economic stability dividend. That was given to the union sector, not the non-union sector, by the previous government, because it was part of negotiations with the unions.
We have gone through the same process. We are now engaging. We’re collecting information. We’re working together in partnership with the not-for-profit sector, and we’ll be having those conversations.
T. Redies: Why weren’t service providers consulted before the low-wage redress decision was made? At least in every conversation we’ve had with them, they were blindsided by this.
Hon. C. James: Again, just to be clear about the collective bargaining process, you sit down at the table, you bargain with the union that is at the table, you determine what the agreement is, and the agreement is signed. That’s the process that followed.
T. Redies: In what ways did the government consider microboards and their workers when the low-wage redress decision was made?
Hon. C. James: Just as with the non-union sector, microboards are also going to be part of that discussion and part of the work in partnership that Minister Simpson is beginning tomorrow.
T. Redies: I think I know what the answer is going to be to this. In what ways did the government consider the Aboriginal world view and the Aboriginal workers when making the low-wage redress decision?
Hon. C. James: There are some Indigenous workers who are union. There are some Indigenous workers who are non-union. Again, if they were union, they would be part of the bargaining sector with unions. If they were non-union, they’re part of the consultation process and the discussion occurring.
S. Bond: Perhaps the minister…. We want to just make sure that there’s clarity here. The 2, 2 and 2 mandate was provided, which meant that all workers received a 2 percent increase. The unions came in and negotiated a low-wage redress, which now gives a significant increase to union workers. The government consciously decided that because the union had negotiated an increase, they would get it and non-union workers would not. Is that correct?
Hon. C. James: Well, I’ll repeat it again, but I know the member knows this. She was part of a government that negotiated it. She was part of a government that negotiated with the union sector and negotiated the wage increase.
That wage increase is provided to the union and non-union sector, and then issues come to the bargaining table by the union sector. Just as they did with the previous government, they brought the economic stability dividend forward. That was part of the discussion at the union table, and it was determined that that was part of their bargaining, agreed at the bargaining table, and the union workers got the economic stability dividend.
That’s the same kind of process that occurs. Bargaining has not changed in that respect. And now, as I said, because we value the workers in the not-for-profit sector, we are ensuring that we are having those discussions with them to understand the challenges they face around recruitment and retention.
S. Bond: We have spent four days hearing about the significant, record-setting prudence that this minister has put in her budget.
I do understand the bargaining process. But what I understand here is that unions negotiated a significant low-wage redress, and this government said, “Yes, work through that process,” and non-union workers are not receiving equitable pay for equitable work.
Does the minister recognize that these workers work literally beside one another and care for families and that one wage earner is receiving significantly more than one who may be working right beside them?
Hon. C. James: The minister will be meeting with the not-for-profit sector tomorrow, engaging in those discussions. In fact, the kind of support that we have provided for the not-for-profit sector is support that they have not seen in a great number of years when it comes to support for programs and services and the people they serve. I look forward to that partnership continuing.
S. Bond: I appreciate my colleague raising the question of microboards. Does the Minister realize that many families have spent a good part of their lives putting together microboards to care for their children, not only now but in the future, and that they are exceedingly concerned about losing their team of workers because they can get paid more somewhere else? Has the minister heard those stories? Does she understand those stories? Does she realize that families are extremely concerned about the direct impact of service to their children?
Hon. C. James: Yes, we recognize that there are critical recruitment and retention issues. In fact, this is a field that is close to me personally, because this was an area that I worked in. As the member knows, I provided support for adults with disabilities for many years. So yes, I’ve heard the recruitment and retention challenges. It’s exactly the reason we are coming together with the sector tomorrow.
T. Redies: In what ways did the government consider or consult with the families of people with disabilities affected by this decision?
Hon. C. James: Well, I’ve run through the collective bargaining process. I could run through it again for the member. But the process that occurs is that bargaining happens at the bargaining table. The 2, 2 and 2, the wage mandate, goes to both union and non-union, and then negotiations occur with the unions. They will bring other issues forward, just as they did with the past government when they brought forward the economic stability dividend. That is determined then and decided at the bargaining table and then provided to the union.
T. Redies: As a former employer, I can’t imagine having workers who are doing the same job and getting paid differently. In fact, I think there are some laws against that. Will the minister commit to addressing this situation? Now that it has happened, will the minister commit the additional $40 million to fix this?
Hon. C. James: Again, the Minister of Social Development is going to be meeting with the sector tomorrow. They’re going to be talking about a whole range of issues that the sector is looking forward to discussing and looking at how we can work together in partnership to be able to address these services that need to be provided for often the most vulnerable in our province.
T. Redies: Well, it would seem to me that the minister has two choices: either give the dollars to the non-union to match the unionized workers or allow them to reduce service levels to make up the difference in the budget. I mean, those would seem to be the two choices, and one seems a lot more palatable than the other.
Again, the industry is really just asking for fairness in this. Frankly, I’m surprised that the minister can’t even commit to addressing this. It’s $40 million. It’s not like it’s not a lot of money. It is a lot of money. However, it’s already being given to people in the union sector for the same work. To do anything else is, really, just to discriminate against these workers, and that’s unconscionable.
We’ll wrap with that, but my colleague is now going to go on to another section.
S. Bond: Thank you to the minister. I would certainly hope, just to conclude on the previous topic, that one of the options the minister is contemplating tomorrow in his meeting is fixing the problem.
[R. Chouhan in the chair.]
It has been weeks of uncertainty and difficulty for families. Many of us on this side of the House have met with families who are feeling unbelievably distressed, because it is about recruitment and retention. It’s about caring for their children in a way that they believe they can continue to do in a sustainable fashion. That is at risk.
We will absolutely be looking forward to the outcome of the minister responsible at his meeting tomorrow, and we’re going to be hoping he does the right thing, which is to actually fix the problem.
I’m wondering if the minister can explain. When this government ran, one of their showpieces in their platform was $10-a-day child care. Can the minister explain why she only provided or there is only enough money for pilot projects in communities across the province, where many families feel like there are winners or losers? In terms of the amount of money invested in the pilot projects, why are we at the pilot project stage? How much money would it cost to implement the $10-a-day daycare program?
Hon. C. James: I think the member knows full well that the minister responsible for Child Care is responsible for the operation of that program. I’m responsible for the number in the budget, and the minister’s responsible for how that is determined and developing the programs. The member should ask the minister those questions.
S. Bond: This minister is responsible for the budget of British Columbia, and in it, there is not the $10-a-day daycare program that was promised by this government. Put in the window on the campaign trail: “We’re going to have $10-a-day daycare.” Can the minister tell us what period of time she anticipates it will take for the government to deliver on its promise?
Hon. C. James: Those are questions for the minister responsible for Child Care.
T. Redies: The NDP are nowhere close to their promise to eliminate portables in Surrey within four years and even further away from their promise to eliminate half of those portables in two years. Is the minister planning any additional spending or taxes to keep that promise?
Hon. C. James: The member knows well that they can ask those questions in the Ministry of Education.
Interjections.
T. Redies: That’s why we’re coming to the minister who has the budget.
I mean, are these wild promises? Ultimately, it all comes down to the Minister of Finance and the cabinet to make these decisions. Are Surrey portables going to be eliminated or not?
Hon. C. James: I’ve answered that question.
S. Bond: Let’s try this one, one of the other showcase promises.
One of the things we have spent a lot of time talking about over the last four days is risks to this budget. We’ve demonstrated that there are a lot of them. There are a lot of risks to the sustainability of this budget. We’ve walked through a range of them: forecasts we’re not sure about, debt that’s climbing, spending that continues to grow at an unprecedented rate. On top of that, we have showpiece promises, big spending promises that have been made by this government.
Our concern is that they’re not reflected in this budget. They’re certainly in the memories of British Columbians. So we want to be sure that the record is clear that there are a whole bunch of risks.
The $10-a-day daycare disappeared, other than if you’re lucky enough to be in one of the pilot projects — basically, winners or losers. We happen to have a situation where we know neighbours…. One neighbour has children in the pilot project. The other one is paying full freight in that circumstance.
Let’s try this one: the renters rebate. Can the minister tell us when she’s planning to include the renters rebate in her budget?
Hon. C. James: The member knows well that the budget process means that you go through consulting. You listen to all the presentations that come forward. You have opportunities to hear from your colleagues who bring issues forward, including ministers. That’s a budget process we will go through this fall.
S. Bond: Well, I would remind the minister that she’s actually been here for two years, and these promises were made in an election campaign two years ago. I’m assuming that those ministers have brought those issues before this minister before.
When we look at the costing, can the minister tell us what the costing was for the $400 renters rebate?
Hon. C. James: When those proposals come forward, they go through the process, everything is reviewed, and priorities are set.
T. Redies: I believe that the government also promised post-secondary completion grants. Is that now off the table, since there isn’t any money in the budget with respect to it?
Hon. C. James: It’s a four-year mandate, I would remind the members. But again, we go through a budget process. Priorities will come forward, and we make a determination. Programs and services that support our three priorities as a government, obviously, are the top of mind — which include affordability, building a long-term sustainable economy and improving services for people. We will continue our focus in that way.
S. Bond: Let’s just review that list. The renters rebate — promised but not captured in the budget. Post-secondary completion grants — promised but not captured in the budget. The $10-a-day daycare — pilot projects, no complete project. Surrey portables. We’re still having a big challenge there.
The point of raising these issues is to remind British Columbians that despite the unbelievable spending that this government is taking part in at the moment — we continue to see that projection heading skyward; we see tax increases, including 19 new or increased ones — the platform that this government took before British Columbians and laid out is not captured in these budget numbers. That causes a great deal of concern for my colleague and me as we look to the sustainability of this budget.
Let’s talk about the property tax and transfer tax revenue. In the 2018 budget, the minister was very public about how much revenue was going to be raised by the property tax measures raised by the NDP. Will she make public the actual figures today?
Hon. C. James: The member asked about the revenue on property transfer tax. In ’17-18, the revenue was $2.1 billion. In ’18-19, the revenue was $1.91 billion. Then it’s $1.91 billion flat across the board.
T. Redies: Minister, we’re going to try and canvass just one or two questions around the real estate dual-agency issue.
Since the implementation of dual agency, we’ve continued to hear concerns about access to real estate services in rural and northern B.C. The MLA for Prince George–Mackenzie wrote the minister on August 27, 2018, regarding the impact of the dual-agency ban in Mackenzie.
So far in Mackenzie, three major impacts have transpired. With one agency having most of the listings, buyers are unable to find representation. The aforementioned agency there is losing clients and failing to sustain itself, and sellers are being gouged by fees from the only other agency in town due to its de facto monopoly created by this decision.
To date, the minister has not responded to this letter. Will she, and when?
Hon. C. James: I’m happy to take the letter if there hasn’t been a response. I’m happy to do a follow-up on the letter to find out why there hasn’t been a response yet, if there’s an issue there. So I’m happy to do that follow-up.
On the issue of dual agency — we canvassed this last year — there’s no question there have been challenges with the implementation of that rule. I think the Real Estate Council just did a review of their own implementation of the rule. So they’ll be looking at any actions that are needed coming out of that.
I think it’s important to note, as well, that people can call on the Real Estate Council to provide support, if they’re there. There is a rural exemption, but I recognize that not everyone is clear on how that rural exemption is utilized.
The superintendent’s office, as well, is in very close contact with real estate boards. They’re doing an analysis, as well, on sales data, again to see the impact of the rule so that review can happen.
There are a number of different opportunities for this to be reviewed and for the challenges that people have raised to be addressed.
T. Redies: Can the minister just share with us what type of data and feedback she’s actually received from the rural and northern realtors to date on this subject?
Hon. C. James: I’m sure the concerns are the same as other members have been hearing in this House, which is confusion around when the rural exemption takes effect. Would they be considered rural? Are there exemptions for them? When can they use that exemption, and how do they access that exemption?
Those are the concerns that I’ve been hearing. It’s a lack of clarity around that and the need for the information to be there, which is part of the reason, as I said, that the Real Estate Council is doing their analysis around implementation. The superintendent’s office is also looking at collecting data and meeting with boards to be able to review that as well.
T. Redies: Can the minister share with us what the timeline is for these consultations and when there might be some expected resolution of these issues that are facing northern communities?
Hon. C. James: The superintendent’s office has been attending board meetings. They’ve been attending AGMs for the real estate board. They’ve been providing that information as they go along around the rural exemption, around the fact that it’s to be used, that it’s not there not to be used. They’re just gathering the data, as I said, to do a further analysis around that. This is an ongoing process, and they’re more than happy to talk to anyone who is in that situation.
S. Bond: I want to, on behalf of my colleague and I, express our thanks to the minister and to her staff. We’re under no illusions. We know that an army of incredible public servants are working behind the scenes, including through this estimates process, to make sure that there is accurate information. The questions may be tough. That’s not their issue. They are there to carry out the policy directions of government.
This is the place where we get to ask those tough questions. Throughout these last days, there have been some members of this House who take umbrage at that. Well, that’s the way this place operates. We have governments and oppositions that have different views about policy issues. We have some very significantly different views about spending and taxation, about people’s privacy rights, about the right to join a union.
There are a lot of differences, and this is the place we get to ask those questions. So I do want to thank the minister. We’re very grateful for the approach that she’s taken, sharing information, facing tough questions and providing answers. We’re going to agree to disagree in some of those areas, and we’ll certainly be watching the outcome.
With that, we want to thank the minister and her staff. I certainly want to thank my co-critic and colleague for the great partnership we have in working through these issues.
Vote 25, ministry operations, $265,327,000 — approved.
Hon. C. James: As I move into the vote, I want to also express my appreciation to the staff in the Ministry of Finance and the other areas that are covered by our ministry — the large area.
I think the people of British Columbia, regardless of which government is in place, are well served by the people who work for us each and every day.
Vote 26, government communications and public engagement, $37,805,000 — approved.
Vote 27, B.C. Public Service Agency, $56,541,000 — approved.
Vote 28, benefits, $1,000 — approved.
ESTIMATES:
OTHER APPROPRIATIONS
Vote 44, management of public funds and debt, $1,277,920,000 — approved.
Vote 45, contingencies (all ministries) and new programs, $1,303,500,000 — approved.
Vote 46, capital funding, $2,134,111,000 — approved.
Vote 47, commissions on collection of public funds, $1,000 — approved.
Vote 48, allowances for doubtful revenue accounts, $1,000 — approved.
Vote 49, tax transfers, $1,489,000,000 — approved.
Hon. C. James: I move that the committee rise, report resolutions and completion of the estimates of the Ministry of Finance.
Motion approved.
The committee rose at 5:54 p.m.
The House resumed; Mr. Speaker in the chair.
Committee of Supply (Section B), having reported resolutions, was granted leave to sit again.
Committee of Supply (Section A), having reported resolutions, was granted leave to sit again.
Committee of Supply (Section C), having reported progress, was granted leave to sit again.
Hon. M. Farnworth moved adjournment of the House.
Motion approved.
Mr. Speaker: This House stands adjourned until 10 a.m. Monday morning.
The House adjourned at 5:55 p.m.
PROCEEDINGS IN THE
DOUGLAS FIR ROOM
Committee of Supply
ESTIMATES: MINISTRY OF
MUNICIPAL
AFFAIRS AND HOUSING
(continued)
The House in Committee of Supply (Section A); D. Routley in the chair.
The committee met at 1:39 p.m.
On Vote 37: ministry operations, $318,559,000 (continued).
S. Sullivan: We have a number of questions from different MLAs. The first issue I did want to bring up is not so much a question. I will deal with this a little bit later. It’s more of an appeal.
It gives an example of something I’m going to be talking about a little later. This is regarding the residential tenancy board and the residential tenancy arbitration process.
We just had an urgent request from a woman whose mother is 100 years old. Her son is an Afghan war veteran and has a house that he rents out across from his house. The grandmother is now very frail, so they were going to ask that the tenants leave after three months of notice. They gave two months and also an extra month’s payment. Just three days before the mother and grandmother were going to move in, the residential tenancy arbitration accepted a late filing from the resident. As a result, there’s quite a lot of suffering that’s happening to this family.
I will give you this letter. Perhaps the minister would pass this along and have this looked at. This will be something I’ll be covering a little bit later today as well.
One question that I wanted to put to the minister right away, before I ask some of the other MLAs to speak, comes from Brenda Ilic, who is the head of an organization for manufactured home parks. As an urban guy, I didn’t really realize that the rules are made, basically, for urban issues. The drive for many of these things like rent controls and such are more urban-related. I realize that the manufactured home parks are under some difficult criteria that they have to fulfil. One of the differences between manufactured home parks and regular rental buildings is that when they rent out a pad, they can…. This pad ownership can be assigned to another purchaser.
That means there is no reset. The market rate can’t be reset into the price of that rental. So what happens is…. If a person lives there for 20 years and then moves out, but they assign that pad to another person who comes in to rent, that will maintain a very low rent that was maybe 40 years old. What happens, also, with the manufactured home parks is that if there’s a snowfall…. If, for example, B.C. Hydro has to fix some problem, normally, in an urban situation, B.C. Hydro would do that and not charge. But because this is on private property, now they ask that the owner of the park pay for that.
There are a number of things that are different in manufactured home parks that are very much different than what we would experience in urban tenancies. There is a request that they would have this situation looked at and perhaps separate manufactured home parks from other regular tenancies that we would expect with an urban area.
I’d like to ask the minister: has she heard about this difference in treatment? It is really quite a serious hardship when there’s some expense that comes up for the park, yet they’re only allowed to increase their rent by the cost of living.
Hon. S. Robinson: While the residential tenancy branch serves tenants in both of those forms, they’re two separate acts. They’re governed by two separate acts. One is the Manufactured Home Park Tenancy Act, and the other one is the Residential Tenancy Act. They are very different because they’re different kinds of tenure. As a result, they have different kinds of acts that determine how costs are borne out.
They both have rent control, but with the Manufactured Home Park Tenancy Act, the landowner can pass through costs to tenants, who are the homeowners, related to operations like utilities, septic costs, and they’ll get a percentage of what those costs are for the park. That’s built into the act. They own the building, and all they rent is the pad. So that’s sort of built in. The acts themselves recognize the difference in that context. They’re quite dissimilar in that respect.
I hope that answers the member’s question. There is one other thing I want to say. We are familiar with these concerns, and they have been raised with staff.
S. Sullivan: Some of the information that I have would indicate that they are liable to some…. They’re kind of like small municipalities in themselves. They have to cover all the costs of any unforeseen problems, like a major snowfall and damage to sewer or water. They have to, then, absorb all of those costs. As far as I am told, they are not able to pass those along.
Can I, then, forward you a contact and have that followed up with?
Hon. S. Robinson: Absolutely. The member can pass along the contact information, and we can make sure that there’s a clear understanding of what the manufactured home park owner is responsible for, what pass-through costs they can include in any rent increase and make sure that they understand the Manufactured Home Park Tenancy Act so that they can continue to operate in a way that makes the most sense. So certainly pass that along, and we’ll be sure to communicate with the individual.
S. Sullivan: Who would I pass this along to, then?
Hon. S. Robinson: You can pass it along to me.
S. Sullivan: Okay. I would like to pass off to the member for North Vancouver–Seymour.
J. Thornthwaite: I have one main question, but it might prompt a follow-up. It’s about recommendation 9, the British Columbia Rental Housing Task Force’s Rental Housing Review: Recommendations and Findings. Recommendation 9 states that in order to increase rental housing stock in British Columbia, the task force is recommending to “increase the availability of currently empty strata housing by eliminating a strata corporation’s ability to ban owners from renting their strata units.”
My question is to the minister. I don’t know if the minister wants me to read them all or do them separately, but they’re all pertaining to this recommendation 9. Why don’t I ask two related questions?
How many strata corporations in the province currently have banning rentals written into their bylaws? How many units are currently vacant within those strata complex developments? How many units are currently held by speculators that you know of? How many units would be available for rent should the legislation pertaining to this recommendation come to fruition?
Hon. S. Robinson: I appreciate the member’s questions. That has been the effort of this ministry, to make sure that we’re doing everything we can to address the housing crisis, which has been pretty significant, and to make sure that we get the right kind of supply available to the people who’ve been desperately looking for housing that they can afford and that meets their needs.
As a result, we did some preliminary work around rental housing, in particular. Then the Premier suggested and assigned one of my colleagues, the member for Vancouver–West End, to chair a task force, to go out, to talk to renters and landlords alike, to hear from those who are in the market and to identify the kinds of things that we might want to look at and consider as we work together with all kinds of stakeholders to make sure that we have the kind of housing that people need.
That’s the work the task force undertook, with a couple of other members, the member for Courtenay-Comox and the member for Saanich North and the Islands. They went out, and they heard from a variety of these folks. They came back with a number of recommendations, and we announced yesterday that we would be looking to address all of them.
This particular one that the member described is one that we have some more work to do on. We said we would address it. That’s why it’s part of phase 3, I think, of our plan to take a look at, to get the kind of numbers that she’s talking about, to talk with the condominium owners associations and to engage with those stakeholders. I think it’s really important that we make sure that their voices are heard as well, and they weren’t part of the structure of the task force. It’s for that reason it’s part of the phase 3 activities.
Staff are going to undertake some further policy work to identify if that’s the right direction to be moving in, in terms of identifying opportunities for more rental stock — which we all agree, I think, is desperately needed, given we have a near zero vacancy rate, certainly in the Lower Mainland and here in the capital region.
It was a recommendation that we look into that, and we said yes, we’re going to do that. We’re going to look into that and see what would be possible and what would make sense.
J. Thornthwaite: On that note, I have some follow-up questions that indicate the possible implications to strata owners in this recommendation No. 9.
Currently 50 percent of the strata corporations in British Columbia are under 50 units, and most of those strata corps are self-managed. Has the province considered the added financial burden this legislation would cause to these strata owners? That’s one.
Has one considered the cost to the strata corporation and its owners to manage the rental housing stock within the complex and the hardship that extra cost would have on seniors and to those on a fixed income, of which there are many?
Third, has one considered the potential legal costs required to implement and enforce the eviction of renters due to non-compliance with any of the other strata bylaws that owners and potential renters would be required to follow?
Hon. S. Robinson: I want to express appreciation for the questions that the members asked. They’re good questions, and it’s for that reason that this particular recommendation is part of phase 3.
We have three phased actions that we’re doing. We just announced it yesterday. The key focus for right now is education, collaboration and compliance and enforcement. We’ve already sort of undertaken those actions, moving forward on that to make sure that the rental arrangement between landlord and tenant works better.
But as I said yesterday in the announcement…. There’s more work to be done on a number of the other recommendations, and that includes making sure that we’re consulting with the appropriate stakeholders so that we understand what the implications are and that would be part of the consideration in moving forward on these recommendations.
J. Thornthwaite: Thank you to the minister for that answer. The questions I’ve been asking actually came from a constituent of mine who is an owner in a strata complex. I’m just going to read you what he said, with regards to the bylaw that they’ve got in their strata that does not allow rentals at this particular point. That’s why he’s concerned about this recommendation No. 9.
“In fact, in many cases, one of the substantive reasons why owners purchased units within our complex was because they did not allow rentals. We have no vacant units. None are owned by speculators, as all 44 units within our complex are owner-occupied, and as a result, there would be no rental units created as a result of this proposed legislation.
“We believe that we are not alone on these facts, in that the majority of strata developments that have this no-rental clause within their bylaws would be in a similar situation to ours, and as a result of this proposed legislative change, or proposed legislative change, there would be little if any impact to the existing rental housing stock in the province.”
His point is that by forcing strata complexes to have rentals, in this particular case, it would have absolutely zero impact on the availability of housing stock in the province. That’s why he wanted me to ask these questions.
I’m wondering if the minister has thought about these implications, of this recommendation No. 9, and if there’s any information that my constituent can help to inform the minister or the minister’s staff on this issue. As I said, I’m representing my constituent. I understand his concerns, and I’m waiting for a response from the minister.
Hon. S. Robinson: Well, I thought I’d provided a response already, which is that this is a process that is part of phase 3, and we’re taking the time to consult with the strata stakeholders, because they have a perspective on this.
They weren’t part of the original task force consultation process. This was a recommendation that came out of that process, and we said: “Okay, well that’s an interesting idea, recommendation. We’re going to take a look and address it by doing some more work, some more policy work, engaging with the strata representatives to understand what the implications would be if we were to move forward on that recommendation.”
I think it’s our responsibility to do that due diligence and to understand what the pros and cons are, what the opportunities and risks are. That’s work we’ve committed to undertake.
P. Milobar: One or two questions for the minister as well. We have a housing area in Kamloops that’s right next to the hospital. It goes back into our government precinct behind the courthouse and that. There’s one set of older housing stock called the Glenfair Seniors Housing. That’s a managed property, low-income housing for seniors.
Then on the front end of an attached property, an adjoining property, is the Ponderosa Place, which is about 100 housing units again, run by a different society and a different group than the Glenfair property. That’s for low-income seniors housing as well.
The Ponderosa Place board and society is trying to engage with B.C. Housing around, basically, taking the same building they’ve built — and they built it around 1996 — with a few modern tweaks to the footprint.
They know that they could basically replicate that same building in between the existing Glenfair Housing and the Ponderosa Place housing. It is, apparently, land that is already owned by B.C. Housing. However, they’re a little frustrated at this point because they’re trying to figure out how to navigate their way through. I’ll just read some of what they’ve said. They said: “We’ve been told that B.C. Housing is overwhelmed with the current social housing push, and thus, access to information is hard to get.” They’re seeking help to provide contact names or information.
The other concern they have is that they’ve been told just to watch the B.C. Bid site for any RFPs or RFQs that may come out. I guess the concern they have is that you have two operating societies already on that one mass of land. Would it be more typical for B.C. Housing to go to a full-on RFP or RFQ than trying to work with one of the two existing housing providers that are in that exact spot, to see if they would not be the first to try to expand their housing options, within that area of Kamloops, for seniors housing?
Hon. S. Robinson: I want to thank the member for the query about Glenfair and Ponderosa. Staff have just started conversations around the Glenfair property, taking a look at redevelopment, so it’s very, very early days. They’re just looking at what the possibilities are. There’s absolutely an opportunity to work with Ponderosa as well. So I would encourage the MLA to support them in pursuing that partnership.
The next opportunity for housing funds, out of the community housing fund, is spring of next year, 2020. So you can let the operators know that that’s the opportunity. We’ll be sure to let all the MLAs know when that opportunity is there. You can certainly work with them and help support the opportunity as well, as the MLA representing the area — making sure that they know the opportunity is there. Now is a good time to start that conversation so that when the opportunities become available, they have their ducks in a row, so to speak, and so that they can put in their application for a rebuild in the member’s community.
P. Milobar: Just to clarify, then, should they be making contact through B.C. Housing, through more of a local face, or should they be seeking out more of a provincial B.C. Housing representative to make sure that those talks start early and that they’re in the loop once timelines and things are moving forward?
Hon. S. Robinson: The contact is Danna Locke for the Interior. There is a point person for B.C. Housing who does the region and takes a look at any opportunities that are there. We’ve sent out to all the MLAs — I think it just went out this week — about what we’ve been doing at B.C. Housing in terms of all the various opportunities for housing in communities around the province. Danna’s contact information is on that. If the member doesn’t have that, I’d certainly be happy to pass that along and make sure that he has the contact information.
P. Milobar: Thank you for that. We’ll follow up after estimates and make sure that that information gets shared to them.
Switching gears to the accessibility programming for housing adaptations — I know I’d asked the minister a couple questions in supplementary estimates as well — has that money been approved for this coming year? Are applications currently being accepted, or not, for people to be able to make adaptations to their homes for accessibility issues, to be able to stay in their own home environment?
Hon. S. Robinson: I appreciate the member’s question. I was anticipating that, because he asked it during supplementals. Just for the record and for anyone who’s watching the fascinating exercise of estimates, I thought I would just explain what…. [Laughter.] I did get a laugh. That was good.
We call it the HAFI program. It’s the Home Adaptations for Independence program, and it provides financial assistance to help low-income seniors and people with disabilities or loss of ability to fund adaptations to their home so that they can continue to live safely in the comfort of their own home. There continues to be strong demand, I think, as the member has talked about, for this. The applications are open for ’19-20. They reopened April 1, as a new fiscal year. I have to say that it provides all kinds of assistance — for walk-in shower tubs, lever door handles, making life better for people in their own homes.
The Chair: If the members could guard that their cellular devices are on mute. Thank you.
P. Milobar: Last year $5 million, I believe, was in the fund. It was matched federally. Have there been federal dollars put back into this as well, or is it strictly provincial? Have any extra funds been added? What is the full provincial portion? Last year it ran out of money about six months into the year. I think people are hoping that there has been a lift and that it’s not contingent on whether the feds come to the table or not.
Hon. S. Robinson: Again, I want to thank the member for the question. We know that we took a look over the last number of years, and this program consistently runs out of funds about halfway through the year. So that is a problem. We recognize that.
The applications are open again, with the same amount of funds. But I want to assure the member that this is…. We’re acutely aware of the pressures that arise, and the uptake is always very strong. So we are actually seeking opportunities to bring more resources to the program, given that it consistently runs out. It is a priority, and we’re continuing to do the work to make it more robust so that more people can take advantage of the opportunity.
P. Milobar: Thank you. Well, it’s good to hear that it is running again. It’s a little disappointing to hear that there are not more funds, frankly. It’s something that’s only going to…. As the population ages, demands are only going to increase. I would, at least, hope and put a marker out there then.
Last year we saw about $2 billion in supplemental estimates — we saw an extra $30 million to make sure we had electric cars on the road — get bumped up as finances permitted. So hopefully, this will make the cut, as a prioritization, to make sure there’s top-up money as the fiscal year moves along.
I guess the question…. One final question on this, and I’m assuming the answer is that it’s not part of the same. But I just want to make sure and get confirmation that none of this money is being counted as part of any of the commitments under CleanBC around housing renovations, upgrades or anything like that. This is strictly the stand-alone money for adaptation and accessibility for people in their homes and has nothing to do with any of those other pots that are starting to get announced around CleanBC.
Hon. S. Robinson: I want to assure the member that this is a separate pot and that I do appreciate and agree with the member that, as the population ages and grows, we’re going to see greater demand on this fund. It is a priority to find a way to make sure that we have more opportunities for people to adapt their homes. We know that home is the place that we feel safest and that we need to make sure works for us.
As a government, we’re committed to making sure that people are living in homes that meet their needs, and this is another way that we can do that. I want to join with the member in recognizing how important that is. We’re doing our level best to make sure that there are opportunities for people to stay at home as they age.
S. Sullivan: I have a number of questions about specific issues in the budget, but I would like to start with a general critique of the 30-point plan and just ask the minister some general questions.
The 30-point plan. Generally, I think the first 15 points are pretty much about demand suppression, to try to either use taxes or some other technique to suppress demand. We know that, of course, any market consists of supply and demand, and the price is an intersection of those two things. So you can either affect price by demand or by supply.
There are a couple of other categories in the 30-point plan. Some are about rentals. There are a few proposals about how to deal with rental housing. Then there is a category that I would just call special populations, and that is about supply. It is about government, non-profit, etc., building of housing for special populations, whether it be students, elderly people, Aboriginal people, etc.
Then there’s another category that I just call miscellaneous that has to do with, maybe, tourism. There’s a point about transit and some other issues. I hope I’ve remembered them all correctly. There is one item in there that could be about supply, which is the housing hub. That could possibly be…. I will have some questions about the housing hub a little later on.
Basically, this is about demand suppression of the market, about some government supply, and practically nothing about market supply. You would think 80 percent, 90 percent — possibly even more — of all housing is market housing.
Most housing, certainly in Metro Vancouver, is called spec housing. Spec housing means it was created by speculators. Given the discussion and even the naming of the speculation tax, given the fact that almost all of us live in speculative housing, I think, should give some pause, at least, to make sure we understand how the market works.
I understand and I’m sympathetic to the desire to focus on demand. I was an elected mayor, city councillor. I know how unpopular supply is, trying to create supply. When I look at where we went wrong in this region, certainly in the city of Vancouver…. Up until, actually, 1973, Vancouver, for example, had — it was just the decade before — created the West End. There were 250 residential towers created before ’73.
After ’73, there were 20 for that whole decade. I haven’t checked into every one of them, but most of those were approved before ’73. So there was a major shift in urban processes in ’73 that completely suppressed supply. There was a legal case to stop townhouses in the single-family areas. There was a process to stop even the high-density residential on the waterfront. That happened in ’73 as well. We’ve been living in that era since ’73.
Many of the processes of the other urban areas, other than Vancouver, have been very affected by the effort to stop the West End and to make sure we never had another West End. That was the intention of the ’72 campaign and the ’73 election.
Given that we’re in that era of suppression of supply, the natural effort by government is to try to deal with that suppression of supply by suppressing demand. So we’re trying to suppress both supply and demand, yet we find Vancouver is a popular destination. In the city of Vancouver in 1973, about 80 percent of our residential base was single-family homes. Today it’s pretty close to 80 percent. It’s almost unchanged. It’s quite remarkable.
The situation in all of those neighbourhoods is that almost all those neighbourhoods have less people living today than they did in the 1970s.
I think of my own block, and Lynn and me. I used to live on the same block, and my house had seven people. It currently has one. Her house had five people. It currently has two. As we go up and down that block, we find there are far less people living today in the single-family neighbourhoods than there were in the 1970s. That’s 80 percent of our land base.
You know, there’s talk about foreign buyers and all these other things, which is a very popular scapegoat, in my mind, for blaming high house prices. But you don’t really have to do too much economic analysis to conclude that there’s probably a supply problem happening here.
In fact, the CMHC last year issued its definitive report. It’s called Examining Escalating House Prices in Large Canadian Metropolitan Centres. That was the title. They had 30 PhD masters economists working for a year. They spent $1½ million, and they came up with a definitive result, a conclusion, of what is going on with Vancouver and other large metropolitan house prices.
They noted that Vancouver had, by far, the worst supply, what the economists call “elasticity.” I think 0.25 is what they said. A normal house price rise should…. If it was, say, at least a one supply, it would create a certain amount of houses. In Vancouver, that same house price rise creates a quarter of the houses that we would normally expect in a healthy market.
Part of that, of course, is geography. We have the ocean on the west, the mountains on the north, the border on the south. Then we have, also, the agricultural land reserve on the east. So we are seriously constrained in terms of geography, but the rest of it is policy issues.
There’s my critique. We have a serious supply problem, a serious supply elasticity problem, and almost all of the minister’s 30 points do not deal with market supply.
I’d like to ask the minister her response to that and maybe add one question about ways that we can help local governments. You know, local governments are in a tough situation. The system is biased against them. The system is designed to stop supply. It was intentionally made that way in the ’70s. Is there some way that we could change the processes to make it easier for local governments to approve supply?
I will give one example of an analysis that has been discussed. Generally, the city councillors are legislative bodies. If you think of political science 101, we have legislative, we have executive, and we have judicial. Those are the three main functions of government.
In the 1860s, the British North America Act basically gave cities to provincial governments. Provincial governments are completely responsible. The Baldwin Act and other acts have basically said: “Let’s just put all of the functions of government” — because cities are so small; they’re about 5,000 people, maximum — “into one body, the city council, the legislature.”
So now what we have is very large bodies like the city of Vancouver — over 600,000 people, very complex functions — yet their governance structure is very simple. It’s a city council, a legislative body. It doesn’t have judicial and executive functions that are separate. So we will now have the legislature, the city council, not only making development laws but also deciding, doing judicial decisions, on development. So you will have them actually sitting in judgment on whether a specific development proposal goes forward or not.
My question is a general one. How would the minister respond to this critique that this 30-point plan has almost nothing to do with the average British Columbian, a typical British Columbian, who must rely on the market to produce their housing?
The Chair: Members, the Chair requires a short break. If the committee could be in recess, then, for the next five minutes.
The committee recessed from 2:26 p.m. to 2:41 p.m.
[D. Routley in the chair.]
Hon. S. Robinson: I appreciate that the member has read our 30-point plan, which we brought forward just seven months after forming government. I would remind the members, and this member in particular, that we had a significant housing crisis. We still have it. We’re still in the middle of it. In that election, it was in every single household — certainly in the Lower Mainland and in other parts of the province — that we were hearing about that.
Some of that was really due to what I would call inaction. The previous government had lots of opportunity to take steps. They didn’t do, I don’t think, the right steps, and they certainly didn’t do it in a timely fashion. I’m very proud of our 30-point plan in terms of putting together an action plan that would deal with the problem from many different sides.
I want to just correct the record: there were seven demand measures, six fraud-related measures and 17 right supply measures. That includes…. I’ll include right supply and housing security. I’ll lump those in together, because if you’re in housing that’s insecure, where the risk of eviction is always there, then you’re not in the right kind of supply.
People need to have a sense that their housing is secure so that they can get on with living their lives. While we’re talking just about housing, it’s not housing for the sake of talking about housing. We’re not talking about buildings. We’re talking about people, right? It’s for people to live in houses. It’s not for houses to exist for the sake of existing, right? It’s about shelter, and it’s about raising your family, and it’s about aging in place, and it’s about living with grace and dignity and opportunity. If you don’t have a home, if you don’t have that safety and security, then frankly, you don’t really have much of anything else, because it’s just too hard.
We recognized this as an important thing to act on as quickly as we could, and I’m pretty proud of the fact that…. It was a crazy seven months. I think I can share that. I didn’t know that I would survive. But we were committed, because we’d heard just really how desperate people were getting and how desperate the situation was. We knew we needed to act quickly. I’m very proud of the work that I did together with my colleague the Minister of Finance to put those 30 points together.
Having said that — and I’ve made a couple of notes here — I wanted to respond to a comment that the member said around the neighbourhood that he grew up in and how now there’s only one or two people living in those homes. I want to join with him, because I’m in a similar situation.
I moved into Coquitlam in the ’90s. I realized, just last month, it was 25 years ago that we moved into this neighbourhood. It was a neighbourhood that we picked because kids were playing street hockey, and that was something that we wanted for our children. There were lots of children on the street.
Here we are 25 years later, and we’re still…. My husband and I are now empty-nesters, and we are some of the youngest people on the block. We’re overhoused, as my son likes to remind me, because no one has moved on.
When I talk with my neighbours about moving on, like downsizing, what I hear consistently is that there’s no place to downsize to in our community. It just doesn’t exist. You either have a 3,000-to-4,000 square-foot home in my community or a 600-square-foot condo. Those are the two housing choices that exist in my community and, I expect, exist in other communities, certainly around the Metro region. And that, I think, is a very significant problem.
What it means is that, as I age, I will need to make accommodations for what is likely to happen in terms of frailty, at some point. I have stairs. My house is two levels, and at some point, I may want to be in a single level. But it also means that families can’t access my house. It’s not available to them. So we have a mismatch in our system.
Really, our focus has been about right supply in the right communities. I want to draw the member’s attention to the fact that we implemented the housing needs assessment so that we can get the right supply, so that local governments have the information in front of them about what kind of housing your community is going to need in the next five years, so that they’re making the right kinds of decisions.
The member was the mayor in Vancouver, and I was a city councillor in Coquitlam — same time frame. So I suspect that these might be some of the choices that were in front of the member when he was mayor.
I would have developers consistently come forward with their plans. I mentioned this yesterday. SkyTrain was coming to Coquitlam. We all knew that was happening, and it put a lot of pressure to develop what I will call speculation housing, in the form of 500- and 600-square-foot condos.
I remember, very specifically, saying to one developer: “Who is going to be living here? It’s 500 square feet.” It’s not going to be the people on my street, and it’s certainly not going to be me. I adore my husband, but I would kill him in 500 square feet. So it was not going to be me, and it was not going to be anybody in my block. It was going to be purchasing. These were purchased.
Interjection.
Hon. S. Robinson: It’s on Hansard.
“Honey, I love you, but….”
The response that came back…. They kept saying: “Well, the market’s demanding it. We are selling these like hotcakes.” We know now that the hotcakes, the sales, were really investor housing. People were seeing investment opportunities and gobbling this housing up. We certainly saw evidence that this was not…. These homes, thousands of them, around SkyTrain, were not and are not being lived in.
I can provide the member with another anecdotal experience that I had volunteering with KidSport, the Red Nose campaign, when you drive people home if they’ve had too much to drink. You drive their car home.
My husband and I were doing this volunteer work. This woman said: “Well, yeah, I live right down by the SkyTrain in Coquitlam.” My husband was driving her car. I was driving our car behind him. She said: “Let’s just go into the underground so you can park my car in the parking stall.” It’s three o’clock in the morning, in December. There were no cars in the underground. Really, no cars.
I said: “Where is everybody? Where are all the cars? It is the middle of the night, and they can’t all be partying.” I really did not believe that. She said: “They’re always empty. My building is half empty.” These were being held for investment purposes.
We have this real disconnect about the decisions that we made — that I made — on council to support the construction of these homes with who we were building for. We weren’t building for families. We weren’t building for downsizers. We were building for people to invest in property. I think that’s how we got here, and it’s a place that I never want to be again.
Bringing on the housing needs assessment is another tool that local governments have in their toolkit to make sure they’re making decisions for the right kind of supply to meet the needs of their communities going into the future.
Now, the other thing that I want to correct the member on is making sure that when we’re investing in transit, we’re requiring that there’s the right kind of housing built along the transit lines. We canvassed this a little bit earlier. That is about getting the right kind of supply into communities, into his community, making sure that there are expectations when we sign agreements, when TransLink signs agreements with these communities — that there’s an understanding that they’re going to deliver on the right kind of housing for the people who need it.
That’s another piece that we’ve done in order to push that supply side of the equation. Again, I want to emphasize: the right kind of supply. Because, God knows, in my community, we do not need any more 500-square-foot condos. It is just not needed.
I want to take a moment to reflect on the member’s commentary about our funding, our commitment to fund 37,000 homes over the next ten years, and his comment around — and I’m putting quotations on because they’re his words — “special groups, special populations.”
I don’t make those distinctions about who people are. There are people who need homes, and they need the range of homes. People need to be able to move through the different kinds of housing. So you could have a woman who is fleeing violence, and they need a home. At some point, they will move into secondary housing, and then they’ll move into affordable rental. At some point, they may or may not move into market rental or home ownership or whatever the opportunities are.
We need the full range of housing for all people. There are other cases where someone loses a job, and they’re no longer able to maintain their market housing. They need to be able to access rental housing, because life happens, and things change. We need to make sure that we have the full range of housing for all people for when they need it.
I want to point out…. Frances Bula, when we announced what we were doing around housing supply and we noted our very first tranche of housing — our funding announcement for 4,900 affordable homes for low- and middle-income families and seniors back in November 2018 — said this: “That used to be a lot of what the province funded. That was killed in 2001 when the Liberals were elected.” This is more than a Canadian provincial government has done in two decades.
You know, we have been at this now for about 20 months. The previous government, over their 16 years, funded about 27,000 homes for people who needed help at some point in their life. I’m proud to say, to date, in process or completed, we have 20,000 in 20 months. I’m very proud of our record to make sure and to build the strength of the social housing sector — that there is the right kind of housing for people when they need it. I will continue to work with all of our partners to make sure that we can continue to deliver on the right kind of supply.
I know the member is going to ask me some more about the housing hub, but by way of introduction to the housing hub and the successes that we’ve had, I will share with him how I came to identify a gap in opportunity. Again, I go back to Coquitlam and my time on council. It was very instructive for me. I didn’t know at the time that I would be the Minister of Housing, but I am surprised at how much I had learned as city councillor, identifying where there were gaps and where there were challenges.
We had a co-op in my community in Coquitlam that had been deteriorating. It was, I would say, substandard housing. The leadership of the co-op knew that they were sitting on a prime piece of land for development. It was less than 400 metres from a SkyTrain station. But they didn’t have the wherewithal or the know-how or the strength, actually, to figure out how to use that opportunity to leverage it — the value that was in that land — to create new housing and additional housing, additional co-op housing or affordable housing, or to bring on market housing. There were choices before them.
I sort of ran around a little bit like a chicken with her head cut off trying to find the right people to help them, because I’m not a developer, and learned that there…. We were able to help them hook into B.C. Housing and to others around what would be possible. It showed me that there was a lot of opportunity that we were missing, because what was happening was the market developers were coming in, taking the value out of the land for their purpose, to build strictly market, but the people who could benefit, in terms of an affordability perspective, weren’t able to.
I certainly am prepared to say more. But that was sort of the genesis for the housing hub, which was about bringing people together, making sure that there was an opportunity to leverage an asset to deliver the right kind of housing in communities that people desperately need. I look forward to hearing some more questions about the housing hub. I look forward to answering the member’s questions.
S. Sullivan: Thank you, Minister. I’ll just maybe make a couple of comments about your points. I have heard the minister speak quite often about: “Why do we have these 500- to 600-square-foot homes? That’s not what we need.”
Clearly, people are risking a lot of money to build them. I’m sure there are people living in them. I think what you… Another way to say investor housing is rental housing. Any housing that is rental is investor housing. Someone has invested their money and made it available for rental. So we have to be careful when we worry about investor housing.
My understanding and reading of this topic is that the real problem, depending on how you define it, of empty homes is in the high-end homes. That’s where most of the issues are.
You were right, when you went into that parking lot and found no cars. It could be like my building, where my household has no cars. We do not have a car, and many of my neighbours do not. If you go through the West End and you go through the parking lots, you will find cars with licences that are out of date.
A lot of people actually like to keep a car just because of a sentimental thing or they just feel that it’s more secure to have a car. You’ll find that a lot of the people who are renting in the building that she was in are probably actually renters that don’t have a car.
So let’s not go too far into that, because there are anecdotal…. I don’t think it’s wise to make policy based on anecdotes. What we do know is that, in the city of Vancouver, when B.C. Hydro studied this issue, they found that the rate of empty homes had not changed between 2002 and 2015, I believe. So there has not been a serious shift in empty homes.
In fact, the city of Vancouver, I believe, found that…. I think it was 2,500 homes that were empty that are subject to the tax. Most of them are actually urban flats. Important to deal with real figures.
Let’s deal with a real figure that the minister has mentioned: 20,000 homes. Okay. So when I was looking at the budget speech, it was a claim of 17,000 homes. So it looks like that figure has increased by 3,000.
Now, what we’ve done is we’ve tried to keep aware of announcements of successful completions of housing. From what we can figure, there are about 1,600. Well, first of all, there are 13,486 announced. Of those, 1,607, according to announcements, have actually opened, 707 are in development, 700 in land purchase, 267 in pending approval and construction and 255 are under construction, for a grand total of 17,000.
I would like to ask the minister…. I guess, it looks like about 1,600 of these units are actually open, according to government announcements, and most of those are modular units. Could the minister provide an up-to-date tracking for each of these units that were promised?
[S. Malcolmson in the chair.]
Hon. S. Robinson: I want to thank the member for the question. We’ve been keeping close tabs on the activity, and it has been an extremely active file. I’m surprised that our CEO for B.C. Housing is even upright at this point, given how committed, how busy B.C. Housing has been in terms of delivering quite robust and desperately needed attention around the housing file.
I have to say…. I want to plug these folks. They have been outstanding. The people at B.C. Housing have been unbelievable. They have been responsive and creative and innovative. They work so hard every day with communities, with developers, with faith groups, with anybody who is willing to work with us. With local governments, they have been….
Everywhere I go, I hear how great they’ve been to work with. So hats off to the folks on the front lines who are working diligently to deliver on this housing.
What I will share with the member…. This is as of April 15, 2019, which is the latest numbers that we have. I get numbers regularly. They change, because so much activity is happening on this file. I can tell the member that completed, to date, out of various different programs, we have 2,182 homes. Under construction, 4,008 homes. This is under the Building B.C. program. Initiated, 1,914 homes. We have in the pipeline — these are known in the pipeline, and there have been dollars allocated, so they’re in early stages — 10,591 homes. That gives us 18,695.
Then, through the housing hub, which is a different department of B.C. Housing…. Those are our partnership-based projects, working, quite often, with the private sector, but other sectors as well. We have, under construction, 76 homes. Initiated, 335 homes. Those that are in the pipeline that are known and have dollars allocated — that’s 587 homes, for a total of 998 homes. This gets us pretty close to 20,000.
S. Sullivan: Completed 2,100 homes. Can the minister tell me, of those completed, how many were initiated by her government and how many by a previous government?
Hon. S. Robinson: I thank the member for the question. I want to point out that in 2001, when the previous government, the Liberals, took power, they cancelled every project that was in the pipeline from the NDP government. We didn’t take that position.
We made a point of reviewing every project, and in fact, we deepened the affordability on it. We delivered more funding to it because some projects were just 10 percent below market, and that was considered social housing. That just wasn’t good enough for us. It wasn’t going to meet people’s needs.
Of the 2,182 homes, 305 were previously in the pipeline. But again, we added dollars to it to actually make them affordable homes.
S. Sullivan: Then I would suspect that about 1,800 of those completed were initiated by the current government, part of the 114,000.
How many of those in the pipeline…? Can you explain what that means, when you say “in the pipeline”? I see construction — 4,000. What was the category of 1,900? You said there was….
Hon. S. Robinson: That means that the project has been initiated. It’s been approved in some way, with design, permitting, pre-construction phase. It’s also in early days, but the details are more laid out. So we’re using these categories as a way to track and monitor the progress of various projects.
S. Sullivan: Going through the government announcements, what we found was 1,600. Obviously, there must have been some completions and some work that was done that was not announced. Or maybe we missed the press release.
How many of these projects are currently awaiting a building permit, awaiting city…?
Hon. S. Robinson: At this point, what I can say to the member is that those that are initiated and that have been identified…. They’re in the pipeline. They’ve been identified. We’ve attached dollars to them. They’re at various stages. Some are awaiting permit. Others are…. We’re still finishing off the design work. They’re all at various stages.
At this point, I can’t speak to specific building permit — how many. Again, I want to remind the member that this is across the province. Projects are on the go. Depending on which local government we’re working with will depend on how quickly it moves through the system.
S. Sullivan: What has been the average cost per unit of projects completed? We have the completed 2,100. What has been the average cost?
Hon. S. Robinson: What the member may not appreciate is that we have nine different programs which have different kinds of building forms. If the member is asking specifically around the modular, then that’s sort of one kind of answer. But we also have stick-built, and we have concrete — and in different regions of the province. Building in the Lower Mainland is not quite the same as building in Haida Gwaii in terms of average cost. So it’s not a measure that we track in terms of the global.
If he has a specific project in mind or a specific housing form in mind or a specific fund that he wants to speak to, then we can give him more specific details. But a global response to that across all of the programs and all the various forms and all of the communities is not a fair assessment of what the costs are.
S. Sullivan: Yes, I would like to break that down into some finer detail. The minister gave me very good numbers. Thank you. That was very helpful. Can I get a copy of those so that I could actually then ask more specific questions about these projects?
Hon. S. Robinson: Well, the numbers are in Hansard. The member is more than welcome to pull them out of Hansard and work with the numbers that I’ve delivered. They’re there.
S. Sullivan: But if I wanted to ask specific questions about specific projects, obviously, you have a detailed breakdown. You were able to give me 1,914 in process. I’m wondering if the minister could allow me to take a look at that. Then I could ask some questions about the details of those.
Hon. S. Robinson: Well, I could certainly read into the record the different kinds of funds, and the member is more than welcome to ask us questions. The funds are public. It’s on the B.C. Housing website around all the various funds that people can tap into and the kinds of housing that we build. It’s available for public consumption.
We have the affordable rental housing program. We have the rapid response to homelessness. We have a deepening affordability program, the community housing fund, the supportive housing fund, the women’s transition housing fund, the Indigenous housing fund. We have student housing, of course, that we’re building, as well, to help alleviate some of the challenges. Then, of course, we have the housing hub.
There are various projects, various funds and kinds of housing that we announced. It’s part of the plan. The details are in it. They are certainly available on the B.C. Housing website to understand what’s going on. As well, the list of projects is also listed on the website. The member does have access to that information.
S. Sullivan: The numbers that I have are quite different from the minister’s. Obviously, my data is not up to date. So even the completed of 2,100 — it would be very helpful for me to know which those are. Then I could ask some more detailed questions about it.
Hon. S. Robinson: Certainly. I can certainly share that with the member. I want to just stand corrected that the projects within each fund are on the website.
In the affordable rental housing fund, we have completed 71 units. In the rapid response to homelessness, completed are 1,376. In deepening affordability, that’s the 305. That’s the number that I had mentioned earlier that had been started by the previous government. We actually brought in more funding in order to make these homes truly affordable. The supportive housing fund, 358. In the women’s transition housing fund, 72 are complete. That gets us to 2,182. Those are the numbers that are completed.
I also want to point out, and I know that the member is fully aware, that the processing time varies from community to community. I also want to let him know that this was as of April 15, 2019, and these numbers change. So keeping on top of it, I appreciate, is going to be a challenge, because we are moving very quickly. There are some announcements happening over the next couple of weeks. I think there’s even one tomorrow. So the numbers are continually evolving and changing, because we are working diligently and quickly with all of our partners to deliver the kind of housing that people need in communities right across the province.
S. Sullivan: Okay. It looks like the rapid response to homelessness is really the lion’s share — 1,300 units. These are the temporary modular housing units. There was, I believe, a promise of 2,500 units of rapid modular housing in 2017. It looks like 1,300 of them have actually opened, and that’s two years into the program. What is the minister’s timeline for opening all of them, 100 percent of them?
Hon. S. Robinson: I want to correct the member. It was 2,000 units that we committed to in September 2017. I’m very proud of the fact that so many communities jumped at the chance to work with us, to deliver on housing for those who are most vulnerable and most at risk in communities.
We’ve seen this homelessness crisis grow and evolve over the last decade and a half and balloon to proportions that we never expected to see, that I don’t think any of us ever expected to see. So we moved very quickly to deliver on housing that comes with wraparound services, making sure that people are supported in their housing. We want to make sure people are successful, that their health care needs are met, that there are opportunities for them to learn life skills and find a way to get back to their life, get back to the dreams that they once had. And making sure that they have a safe place to be has been a key factor.
Of the 2,000, 1,376 are now open. We have 437 that are under construction and 251 that are in the pipeline. The dollars are allocated. Oftentimes, just to let the member know, because of the construction method, it can move very quickly.
The challenge, I have to say, admittedly, is oftentimes about finding the land. That’s always the challenge. The member had talked about the challenges with land. It needs to be serviceable land. There needs to be servicing. And it needs to make sense. It needs to be near transit and be near shops. These are people who don’t have cars, for sure, so it needs to be in a walkable place.
Specifics for finding land have been a challenge at times, but I have to say how proud I am to be working with 22 different local governments who came forward with land, identified land. There have been people in the private sector who have come forward with their land, as well, and said: “You know, we’re doing to be developing here. We’re not ready for another five years, so you can use it temporarily. Here you go. Let’s at least get these people started on a journey to healing and to health.” That, I think, has also been outstanding, in terms of people understanding how desperate these folks are and how important it is that we work together to deliver the kinds of homes and services that people need.
That work is continuing. I expect most of these will be open in the months ahead. Like I said to the member, it feels like every week there’s another one and another one and another one and another one. These numbers keep changing on a weekly basis.
Just so the member understands sort of what the scope is that we’re dealing with…. We have these 2,000 from 2017 that we announced. We’re rolling those out. So 606 in the city of Vancouver alone that are open. We had so much demand and so much success that as part of Budget 2018, we allocated 2,500 more, over ten years, of permanent supportive housing so that communities can continue to access the supports and the opportunities for this kind of housing going forward. Then again, in 2019, we announced an additional 200 for this year alone. That would bring us a total of 4,700 of these supportive homes with wraparound services.
We know that there’s desperate need, and communities are seeing the impacts of what it means for everybody when you house those who are homeless, when we house those that need services, that need supports. Not only do those people benefit, but the entire community benefits. People feel better knowing that those who are most vulnerable are cared for in their community and have an opportunity for stability and for living a healthy life going into the future.
Interjections.
The Chair: Members, do you mind lowering your voices, please? Thank you.
S. Sullivan: These are temporary housing units. The majority of the completed are actually temporary. Can the minister maybe give some understanding of how temporary they are, what commitments there are for these units?
Hon. S. Robinson: Most of the land opportunities outside of the member’s community, outside of Vancouver, are permanent. I think it’s important to recognize that the buildings last 40 years, and the buildings belong to the province. Where there are temporary sites, we have the ability to move these homes to a more permanent location, once that’s identified. That gives us an asset that we can use to house people for the long term. They have a 40-year life. So these are a good investment to use to house folks.
I also want to point out that when I talk about 20,000 homes, that equates to about 350 projects that are on the go. That’s what the scope means, and that’s why Shayne Ramsay looks a little tired. It’s 350 projects.
S. Bond: Good afternoon, Minister. I really appreciate the opportunity — and I want to thank my colleague — for just a few minutes. As the minister would be aware, I’m involved in estimates in the other chamber. Basically, we’re continuing on over there and running in here.
I wanted to raise an issue with the minister, and it certainly precedes her time in government. So I fully realize that it has been fairly lengthy, in the time that it has been discussed. I think, recently, it’s fair to say, there has been a lack of…. Let’s put it this way: there has been no progress made on the issue, and it seems like there is not an interest in having a discussion about it. It’s related to bidding and how projects are bid in British Columbia.
I want to begin my comments by saying that I have enormous regard for the work that is done by B.C. Housing, but there has been an ongoing concern about the bidding process. In fact, we have heard from a number of contractors, people who would normally be involved in this process, concerned about transparency and about the process itself. A discussion started, I believe, in 2015 or 2016, and I think there was some fairly meaningful discussion going on, but recently there has been no discussion. I’m concerned about that, because what it causes is construction associations to provide, in essence, warnings and risk announcements to potential bidders on those projects.
I’m wondering if the minister can…. I know she’s got a lot on her plate. What I’d be most interested in…. This is a serious…. I fundamentally believe that the bidding process needs to be open, transparent and encourage as many people as possible to participate. When I hear that the construction association and others are concerned about this process and that that concern continues, I’m wondering if the minister is prepared to ask for an update on what happened here and perhaps re-energize a discussion with really important proponents in British Columbia.
Hon. S. Robinson: I’d like to thank the member for the question, and I can assure her that B.C. Housing has been taking the construction association’s concerns seriously and has met with them to discuss their concerns. There have been some changes to the B.C. Housing process that have already been made. I can assure the member that the Northern B.C. Construction Association has been actively engaged with us. They are satisfied with these initial changes. They look forward to working with our team on additional changes.
I can assure the member that the BCCA has been working collaboratively through the deputy ministers industry infrastructure forum and will continue to work directly with B.C. Housing as well.
S. Bond: Thank you to the minister for that response. I do appreciate it.
I think that it’s a matter of confidence in the process. There is a clearly laid out process. For example, there have been, and I’ve been provided with, examples where the association believes there are owner’s bidding conditions in place, and they are then being forced to issue a risk statement to people who want to bid — for example, missing an important step in what is actually looking like a tender, and that’s not what the process says.
I’m encouraged to hear that dialogue is going on. I would encourage the minister to jump-start those conversations. We want as competitive a process as possible in order to make sure British Columbians and taxpayers are protected.
My other question. I note that — I think it was yesterday; as I said, I’ve been up to my eyeballs in estimates as well — the minister responded yesterday and made an announcement regarding protection of renters and landlords. I wanted to come today and talk a little bit about that.
I admit I haven’t had enough time to look at what the implications of that announcement are, but I’m appreciative if they are about trying to find a balance that protects both the landlord and the renter. Both of them are important. Without landlords who are prepared to be landlords, we’re going to have a much more significant rental problem in British Columbia than we have today.
Recently I’ve just had an ongoing stream of landlords who are struggling with how to work their way through the system when they have an issue. I had, for example, a relatively new…. He says in his own words: “I am a relatively new landlord and experiencing my first major issue.” The tenant actually won’t leave. There are all kinds of problems. The tenant will not leave. This man and his wife have done extraordinary things to try to make it respectful and responsible and do all the things. They checked all the boxes. They cannot get the renter to leave.
On the other hand, I had the story of a young woman who has two children. She’s a single mother. Her rental unit was infested. Somehow, through this entire process — she made a complaint; she did all of those things — it’s her fault. That is not acceptable. Somehow she is now facing additional costs to deal with that and had to actually relocate her family.
I have seen very poignant stories on both sides of this argument. I am hopeful that the minister, in thinking through…. I did read, quickly, things like reducing wait times, trying to make the processes more simple and all of those things. I just want to reiterate how important it is to find that balance for both landlords and renters, and from a regional perspective.
I’m wondering what assurances the minister can give constituents like mine, who live 500 miles from where offices exist and resources are…. I’m hopeful that in the new approach that there is going to be a contemplation of regional needs. Have we thought about…? Even if it’s itinerant services that show up in communities so that renters or landlords can have a face-to-face conversation. Those kinds of services. This gentleman asked: “Are there opportunities for a local office or a specific advocate for landlords?”
I just would appreciate the minister’s response. I did want to tell those stories here, because it is very difficult, even for us — I am a very experienced MLA — to find solutions and help those constituents. Frankly, I feel terrible about those circumstances. I’m wondering….
As I said, I appreciate that there’s been a recent announcement. Will there be a balance? Will we look at how we help landlords deal with those issues, protect renters and what about regional resources?
Hon. S. Robinson: I want to express gratitude to the member for coming here as an MLA, about how hard it is sometimes when we hear all sides of what’s going on in landlord-tenant relationships. Because, in fact, that’s what they are. They’re agreements, and then when people don’t follow through on the agreement on either side, it becomes a problem for either side.
We have taken that very seriously — that balanced approach that the member talked about. If she has time over the weekend, she can take a look at the full announcement in terms of what we’re doing. But I will let her know and assure her, just as an example, that we’ve given money to both LandlordBC and to TRAC, the tenants’ group, to provide education.
As she pointed out, a new landlord might not know all the rules about how you go about doing this in the right way and not be offside. I believe that most people don’t want to be offside of the rules, but it’s really hard if you don’t know what the rules are. They’re often left to their own to figure it out, or they pick up and call their MLA. As an MLA, then we have to go on line and do the research.
We’re investing in educating both sides of the relationship so that they each know what their rights and their responsibilities are so that they can be the best tenant they can be and the best landlord they can be.
The other part that I think is important for the member to hear in this context is that we’ve invested significantly in the residential tenancy branch because the waits for service were so long. They went from 45 minutes down to five minutes to get your phone picked up. That’s the wait time. The average wait time now is five minutes.
It’s the same thing for…. It was 6½ weeks for an emergency dispute. It’s now down to four weeks. It used to be over eight weeks to hear an urgent dispute. Now it’s six weeks. Monetary disputes used to be 25 weeks. They’re down to 12 weeks. There’s still room to go, but we’re moving in the right direction. Call centre wait times are averaging four minutes. That’s well below the 20-minute service standard, so things are moving in the right direction, and people are getting service.
The other thing I want to assure the member is that we’re continually…. We’ve just done a major investment in the on-line portion of getting information and service. That is continuing to be done so that people who are not in a major centre can use the technology and use the phone, as part of it.
The last thing I want to mention, aside from the education piece which is going to go provincewide, is we’ve established a compliance unit, an enforcement unit. The major push of the announcement yesterday was that we now have a number of people, staff, who work at the residential tenancy branch to follow up on those chronic challenges or where people don’t act in the way that they’re supposed to. They’re not following the rules.
We’ve also legislatively given them teeth to actually provide administrative penalties, monetary penalties, if they don’t follow up. Part of the announcement yesterday was that the first penalty was assigned — $5,000 to a landlord who refused, after five or six notices, to do the repairs. They still hadn’t, so they were fined.
We really mean business about both sides behaving appropriately. Renters who are chronically skipping on rent or being problematic…. We will also fine them and penalize them.
Those are the pieces that we’re doing. Really, at the end of the day, I think we all want those relationships to work better, work well, so that people aren’t left struggling to protect their asset and their investment or finding themselves without a home and finding themselves desperate with inadequate housing. That’s the work that we’re going to continue to do.
S. Bond: I’ll just thank the minister for her answers and for the initiatives that she’s taken. I will certainly attempt to find some time to review those.
I think that we do need to continue to look for balance. While I understand that in some parts of the province, obviously, rental supply is a critical issue, making sure we have landlords who are even willing to get into the market is an absolutely essential piece of this puzzle. If people are simply saying, “I’m not doing it; it’s way too much trouble,” then we have a bigger problem on our hands.
With that, I thank the critic for the time and the minister for the time as well.
S. Sullivan: I would like to ask some questions about the recent decision to impose rent controls in British Columbia. We have a very great concern by economists, both on the left and the right, that rent controls are very damaging to people who are renting. What happens is that there’s an underinvestment in rent housing. New investors don’t want to come in to rent.
I would like to ask the minister about what is behind that. Is there any economist that she can point to, perhaps, that actually endorses this as a positive thing for renters?
Hon. S. Robinson: I appreciate the member’s question. I got a little bit of a history lesson because rent control actually came in, in the ’70s, here in British Columbia, so it’s not a new thing. It’s not anything we created or brought in. It’s been around for a very long time.
There are various kinds of rent control. Some are more stringent than others, and ours is seen as a moderate kind of rent management, I suppose. I want to remind the member that in any new construction, here in British Columbia, they can set the rent. Any owner can set the rent at whatever the market will bear. So there’s no requirement for what the rent should be on a particular size or location. It’s based on what the market is, and they can set the rental rates at whatever works for the landlord.
The only change that we have made is the annual formula to determine how much rent can go up from year to year. That’s the only change we made, which is the rate of inflation.
Again, I want to point out…. I know that the member has referred to economists. In between renters, there is an opportunity to increase rents to whatever the market would bear. That’s certainly an opportunity. The economists call this vacancy decontrol. So they actually have a term for this, which I learned today.
Learn something new every day. I learned that rent control came in, in the 70s, and I learned that economists call this opportunity to increase rent between renters vacancy decontrol.
S. Sullivan: Thank you for the historical reference to the 70s. That’s very interesting because I would think…. I believe, somewhat 80, 90 percent of all the rental housing that is currently available was built before the 1970s. It was built before rent controls when you had…. In the 1960s there was a very serious amount of new rental housing that came onboard, much of it in the West End. You can find buildings all over Vancouver — Cambie and 57th, 10th and Alma, those kind of places where you will find a lot of rental buildings.
After the 1970s, there was practically nothing built until fairly recently, when cities started to incentivize — you know, Rental 100. Vancouver and, I think, Coquitlam and New Westminster had a real incentive program.
Now that is in jeopardy. I know that just yesterday there was an announcement that a rental building on Alberni Street in the West End has just been cancelled and converted to luxury condos. I’m just concerned, perhaps, that the minister be aware that the rent controls did cause almost a complete end of rental building housing.
Now what we have is that the great majority of rental buildings are now 50 years old or more. They are getting toward the end of their life in which they can be maintained without a lot of extra investment. At that same time, comes in a more constrained rent control. We used to allow a little bit of leeway with 2 percent, plus cost of living. Now that’s gone down to just cost of living at the same time when 50-year-old buildings are now needing a lot of help.
Now we have a situation, with the Alberni announcement, that there is actually going to be less rental housing as a result of that building not going forward.
I’m concerned, and perhaps I can ask the minister…. Given that the rent control does tend to stifle the market supply of rental housing, is there a concern that we will see even a bigger drop in the construction of rental housing?
Hon. S. Robinson: I thought it would be really helpful to get some data for this response. I just checked in, and in the first four months of 2019, purpose-built rental is up 46 percent over 2018, which I think is a good thing. In terms of the history lesson….
I’ve been talking with UDI and developers and people who have been around a long time in this business. Certainly, when I became a new minister — I don’t think I’m so new anymore — I would ask lots of questions about: how did it used to be? What was it like back then, back when? These longtime developers would talk, and I would ask: what happened to purpose-built rental? What happened? Because in my community of Coquitlam, which really didn’t get growing until the ’70s…. Parts of it were around in the ’50s, but it really took another leap through the ’70s. That’s where the stock is, right? It stopped also in the ’70s there.
The message that I heard back, consistently, over and over again, was that the key factor was the federal tax incentives. It was having access to these tax incentives that drove the development community to build purpose-built rental. It was based on their information to me, as a new minister, that I’ve been regularly asking the federal government to come back to the table with something like that that would work to stimulate purpose-built rental.
There is significant agreement among the development industry, when I ask them, those who’ve been around, and I say: what made the difference? They continually point back to what was called the MURBs, this federal tax incentive.
The other thing that I think is missing from this conversation and from the questions is: what about people? Because at the end of the day, this is about people — people who need security in their housing.
We have all heard stories. I mean, we heard from the member from Prince George, talking about a mom and a son, a single mom. I think she was a single mom. The issue for them was an infestation in their housing. But I would expect that, for them, they need to know what their rent is going to be. They need to know. They need the security.
I can’t imagine what would happen to me if, you know, I’m living in my home, and then all of a sudden I get a notice that my rent is going to go up by 50 percent — what that would do to me and my ability to continue to stay in the community, to continue to provide stability for my children, to age with dignity and grace on a fixed income. What would that mean to me, as a person?
At the end of the day, I think that, as MLAs, that’s who we’re serving. It’s those people. Making sure that they have stable housing is absolutely critical because, if you think about it, without that, your ability to do anything else — to work, to volunteer in the community, to raise your children, to heal if you’re not well…. You can’t do any of that. And to have to fret because you don’t have a sense of what your major costs would be…. Again, housing is the number one major cost to all of us. That is pretty critical to just doing a family budget.
I can remember the days about what it was like for me and my family when my husband and I were two grad students and we had children — how we were going to make this all work, budgeting to the nickel some months because it was so tight.
I remember being so relieved when Safeway finally started taking credit cards in, I want to say, 1990, because there were some months that I wasn’t sure that I could get groceries, and having a credit card afforded me that extra little bit of wiggle room so that I could balance some months that were particularly difficult. I can’t imagine what it would have meant to suddenly have an increase in my rent that I wasn’t expecting and how I would have managed.
I know that there are many thousands of others. I think there are a million and a half renters who are in this province who could be in the same boat, so they need some certainty. I’m very proud of the fact that we made the decision to make sure that there was stability and affordability built into the formula so that they can plan, they can budget accordingly, and they can have peace of mind — peace of mind that comes with knowing how you’re going to make rent next month and the month after that and the month after that.
S. Sullivan: Thank you for that. I guess a question that arises from that comment is….
For better or for worse, this society has chosen to provide its basic needs of citizens through the market forces. We’ve decided that people don’t live in government housing. The great majority of people do not live in government-built housing as in other countries — say, in eastern Europe or such.
The question the minister asked about some supplier of rental housing just jacking up the rents by 50 percent…. Let’s just deal with that in terms of food, bread. Bread is not regulated. We do not regulate and put an upper limit on bread and food. We do not tell people that they cannot sell bread for any more than a certain amount and they cannot raise the price of bread by a certain amount. The people who need bread, all of us, are given security by having a healthy market. If someone decides to put up the price of bread by 50 percent, then there will be other suppliers that jump in and provide that bread.
The greatest security for a renter like myself is to have a lot of empty rental units in my neighbourhood and that I know I could tell my landlord that I will just go down hall or go down the street to another rental unit. Unfortunately this province, or at least, certainly, Metro Vancouver, has an extremely low vacancy rate. A renter cannot just go to another building right now. It is very hard to get rental. You’ll find lineups of people wanting to get whatever is available. This is probably the greatest threat to renters right now.
The minister made reference to tax policies of the federal government, which resulted in an enormous amount of rental housing. Yes, exactly. If you incentivize rental housing, they will build it. If you put punitive restrictions on rental housing providers, they will not build it. That’s what we have right now. That’s what we’ve had since the 1970s, when rent controls were introduced. We have not seen any real, significant rental housing being built since 50 years ago.
On the topic of incentives, clearly we need incentives. We find the two jurisdictions right next to us, Alberta and Washington state, do not allow rent controls. Washington state specifically bans rent controls as a way to give confidence to rental builders. They will not be threatened by rent controls. Right now, there is a lot of vacancy in Seattle. There’s a lot of vacancy in Alberta. That market works. The market works. Right now, you’ll find in Seattle, if you want to get a rental unit, you will have landlords offering you one, two, three months free rent. You will find them offering you flat screen TVs. This is what you call security for renters.
On the issue of incentives, I will note that there are rental providers who are assembling land for purpose-built rental, but they are subject to the school tax for, basically, luxury homes, and for the property transfer tax. These were meant for luxury homes, yet they are actually being levied on people who want to provide purpose-built rentals. Is there an opportunity and any interest by the minister, in the spirit of providing incentives, to exempt them from these taxes?
Hon. S. Robinson: Well, first of all, I want to thank the member for Vancouver–West End, who had some, I think, pertinent information related to the project on Alberni. It was cancelled because of a negotiation breakdown with the city of Vancouver. It had nothing to do with rent control. He’s familiar with the project. It had to do with a different kind of negotiation with the city.
The other thing that the member had asked about was taxes and relief of taxes. It’s the Minister of Finance who makes those decisions and considers all of that. She’s in estimates right now, so I would encourage the member to take that question to the Minister of Finance.
The Chair: Members, does anybody want to have a break? I don’t know how long ago….
Okay, that was a yes from the minister. Let’s say we’ll reconvene in eight minutes.
The committee recessed from 4:07 p.m. to 4:20 p.m.
[S. Malcolmson in the chair.]
S. Sullivan: A couple of questions. The minister referred to a 46 percent increase in rental supply, I believe, this year. I would imagine this increase was initiated, put in place, started the construction, etc., quite a few years ago. I guess the question would be: if there is indeed a great increase in rental this year, what are we looking at, though, in terms of the following years? What is the pickup right now in rental housing construction?
Hon. S. Robinson: I thank the member for the question. I wanted to double-check the exact timing of which stage of development these units are at. In the first four months of 2019, purpose-built rental is up 46 percent over 2018 at the permitting stage. These are all at the permitting stage.
S. Sullivan: Question about the issue of renovictions. Now, I believe it’s also one of the Rental Housing Task Force recommendations.
Under section 49(6) of the Residential Tenancy Act, a landlord can end a tenancy for renovations. This is completely legal. Tenants have a right to dispute the notice to end tenancy if they think the landlord’s planned renovations are not extensive enough to require the unit to be vacant.
Last May the government added a first right of refusal for the tenant to return to the suite under a new tenancy. They’ve increased the notice period and added a 12-month rent penalty for bad faith. Okay.
Rental housing owners have some concerns with this. As you know, the current stock of rental housing is very old. The average age of a rental building is 50 years, and there is a need for significant capital improvements to maintain their structural integrity. They need to be safe. They need to extend their useful life.
The concern is that if it becomes more difficult financially and with more onerous requirements to end a tenancy to carry out these necessary repairs and renovations, will that not ultimately hurt renters who will face a deteriorating stock of rental housing?
[R. Leonard in the chair.]
Hon. S. Robinson: Welcome, Chair, to the fun here at Municipal Affairs and Housing estimates. We’re having a grand time.
I want to thank the member for the question. I have many parts for the answer because I think there are a number of different questions pulled in there. But it’s mostly around what we call “renovictions,” which are evictions because a landlord wants to renovate.
When I renovated my bathrooms, for example, in my home, I didn’t move out. I was able to live in my home while the renovation was undertaken, and it needed to be undertaken. The house was built in the 1970s. It needed that. We need to be very mindful about: what does it mean to renovate and to invest, and what are possible workarounds?
I know that most landlords want to keep good tenants, and it’s important that they keep good tenants, and most renovations do not require that people vacate the property. Most certainly, when we did bathrooms, we were able to stay in one place. It was awkward to bathe, sometimes, but we made it work because it was important to us to stay in our home. Where there are workarounds…. It’s really important that landlords invest in the properties, and they should. We encourage them to do that. But they also need to recognize that we’re talking about people who have lived here, and many of them have lived there for a long, long time.
Making sure that when there is a notice of eviction for a renovation, there has to be a legitimate reason that people need to be absent from the property and need to be removed and living somewhere else while that happens. The right of first refusal…. So when that happens and they significantly — whether it’s dealing with changing the foundation and like really significant renovations that does require people not to be on site…. Changing a toilet doesn’t qualify. I’m sure that the member would agree that changing a toilet does not qualify for having to vacate.
When they do need to do that, the right of first refusal is at market rent. The reason for that is we understand that when you make those kinds of investments, it’s important, and it’s a new tenancy, essentially. But the right of first refusal is that when people live in a neighbourhood for a long time, it’s more than just where they live physically. It’s where they live spiritually and socially, and it’s where their community is. Being able to come back, wanting the opportunity to come back, even if the rent has changed, is an opportunity for people to really put down roots.
Again, I want to keep coming back to people. This really is about people and how they live their lives. In my neighbourhood, there’s a family that has been renting a house that the neighbours purchased when it came up for sale. This other family was already living there, and they wanted to stay there, so the next-door neighbour actually bought it knowing the tenants. They’re longtime tenants. They’re part of the neighbourhood. They’re part of a community. We recognize that people live that way. The right of first refusal is about providing people with the opportunity to stay in community. That’s really important.
The last thing I want to say about that is that we’ve all heard the stories, as MLAs, of landlords who want to make investments and don’t necessarily know the rules around what to do when you want to make those investments and when it is okay to do an eviction for a renovation — what’s appropriate.
We recently heard of a story where ten people in a building were renovicted, essentially. The compliance and enforcement unit, when they heard about it, reached out and provided accurate information about what the criteria is, and the landlord pulled those notices, recognizing that they didn’t understand what the rules are.
I believe that most landlords want to do the investments. They want to do them right, and they want to follow the rules. That’s why we’ve invested in making sure that everybody understands their roles and their responsibilities in this landlord-tenant relationship, because that’s really what it is. It’s a relationship that needs to work well.
The member for Prince George–Valemount I think spoke really well to that, in terms of providing the both/and — the landlord has needs, and the renters have needs — and making sure that it’s a system that is fair and transparent. Everybody understands the rules, and everyone follows the rules.
S. Sullivan: I don’t think anybody has troubles with what you’re saying. If people don’t need to move, then that shouldn’t have to happen.
The reality is that the majority of rental buildings are coming to the end of their lives. Without serious input into the infrastructure, there will be a real degradation of the living conditions. So if a landlord, an owner, has to go and do significant work to try to maintain the viability of the building, the liveability of the building, and cannot try to recover that through the rents, then I think what will happen is it just won’t get done. That’s what we’re probably looking at.
Hon. S. Robinson: If they are significant to the point where people need to move out, then they’re new tenancies when they come in. They can charge the rent to recoup their costs. That is the system that’s in place.
However, if they’re cosmetic, if it’s about changing toilets, if it’s about adding in a dishwasher, those are regular ongoing maintenance. A good landlord would build that into the ongoing maintenance and ongoing upgrades that they would do in terms of investing in their properties. Those would be considered sort of cosmetic, I would imagine, whether it’s a fresh coat of paint….
We’ve all heard those stories of landlords who’ve chosen not to follow the rules, who say: “I’m doing a major upgrade. You need to leave.” People leave, and what they’ve done is they’ve slapped on some paint. They’ve added a dishwasher. They’ve changed a toilet. Now they’ve increased rent by 40 percent.
Well, the reality is that those are cosmetic changes. They’re not significant to warrant a renoviction. That’s what we’re talking about when we talk about renoviction. That’s an inappropriate use of that.
But where they need to do major structural, where people ought not to be physically in the building because it needs that much work, then they become new tenancies. People are asked to leave so they can do the work that they need to do, and then they become new tenancies.
What we’ve said is the right of first refusal is an opportunity to create a new tenancy with an old tenant so that they can continue to maintain their relationships in the community, their relationships with familiarity, and come back to live where a home has been for however many years, however long it’s been for that person.
S. Sullivan: I wanted to ask about the rental-only zoning that was passed last year. At that time, during the committee stage, second reading, the minister and I had some interactions about this.
I’ll just quote the minister’s words at the time. “It just reflects the guiding principle that a zoning bylaw that would require housing to be rental housing does not intrude on the property rights of individuals who own property or who own and occupy housing in existing buildings.”
It seemed quite clear from the minister’s statements at the time that rental-only zoning was not meant to be used as a kind of a downzoning. It was to be used as an upzoning, as incentives that developers would be able to sort of voluntarily go into.
What has happened in, certainly, the city of New Westminster is that the city took that zoning and then tried to impose it on existing strata buildings. I believe that this is in court right now. But I would love to hear the minister’s thoughts on this, given that her statement seemed to be indicating that this should not be used in the way that New Westminster used it.
Hon. S. Robinson: The member is quite correct. We provided the authority in May 2018, in response…. Again, this was a response. This is about us listening to local governments. Local governments have been on the front lines of the housing crisis, doing their best to address the challenges that, certainly, they have been seeing. They asked for this tool. We’ve heard it from a number of cities as well. We heard it, in particular, from Vancouver. That was a city that asked for it as well. They put forward a resolution.
The Union of B.C. Municipalities supported a resolution. We know that they are on the front lines of the housing crisis. They are also in a position to identify local housing needs and advance the delivery of new homes. They have the land use planning decisions, and they asked for a tool that would help them deliver on the kinds of housing that they wanted. So it’s really up to them to determine whether and where rental zoning would be helpful to address their local housing needs.
S. Sullivan: Yes, but the minister was quite clear that the zoning was not to be used as a kind of downzoning, taking away property rights from existing buildings. That seems to be what has happened, or what is being attempted, in New Westminster.
Hon. S. Robinson: Like I said before, it’s up to local governments to make the decisions about when and where to use this tool. They have a whole range of land use planning tools about whether to put commercial here or industrial there or single-family over here or multifamily over there. It really is up to local governments. They’ve asked for tools. Our job is to give them some tools.
It’s what we’ve done. We’ve given them this tool, and now it’s up to them. They have a whole suite that they get to use and make decisions based on their needs and the situations that they are in. I think there’s agreement with the member that that is the role of local government: to make the land use planning decisions. They’re on the ground, so it’s up to them, once they have the tools, to figure out when and where to use them that best meets their needs. That’s the expectation of all local governments.
S. Sullivan: The minister’s previous statements that rental housing would not intrude on the property rights of individuals who own property or who own and occupy housing in existing buildings…. That is not what you believe now. Your current approach on this zoning policy is that it can be used to intrude on the property rights of existing owners.
Hon. S. Robinson: Like I said previously, local governments, as an order of government, have the autonomy to use a range of tools. They have professional staff to provide them with guidance about how to best use these tools. The expectation is that they will be thoughtful and mindful about how to use these tools that makes sense for them in their communities. That’s up to local governments to do just that.
S. Sullivan: The minister’s point about professional staff being responsible…. Now, the hon. member from the West End very helpfully corrected a point, that the Alberni Street development that was supposed to be about 200-some-odd units of rental is now going to actually be more units of luxury condos. He also mentioned that that’s the case on Robson Street, where a major purpose-built rental building was cancelled because of city of Vancouver staff that were obviously trying to extract much more benefit than the market could bear.
I note that Amazon, which is moving in as a serious employment generator and which is going to result in a serious demand for rental housing in the area, has now taken out its residential because of city staff.
I remember, certainly as mayor and a councillor, being quite shocked by the policies that were being proposed. When I went to look at the curriculum of planning professionals, I found at the time that there wasn’t a single economics course required. I believe that has changed now, that there is one course where economics is dealt with as a certain part of the course.
I’m wondering if there is some way that the minister might be able to encourage or even mandate that planners take an economics course.
Hon. S. Robinson: I got a little bit of a lesson about planning. I have a couple of planners here on staff and a couple of economists as well. We had a little conference about the member’s question.
The Canadian Institute of Planners accredits planning schools. Here in B.C., the B.C. chapter is PIBC, the Planning Institute of British Columbia. I would invite the member to take his query to them, given that they accredit the planning schools.
Here in British Columbia, to be a registered professional planner, that’s managed by the Minister of Advanced Education. Again, that would be a question that would be more appropriate for that minister.
S. Sullivan: I wanted to ask a couple more questions about the rapid response to homelessness. The minister indicated that of the 2,000-some-odd units that have been completed under her mandate, the majority are the temporary, modular housing units — I believe 1,378, if my notes are correct.
I was especially…. Well, first of all, I’m very interested in Vancouver, the experience of Vancouver, because those seem to be approved very quickly. I was just wondering if the minister has taken any lessons from this process that could be applied to market and non-market projects.
Hon. S. Robinson: I want to thank the member for the very interesting question.
In terms of acknowledging the work to get 606 units open in the city of Vancouver, it took a lot of hard work. Certainly, we heard consistently from the city of Vancouver that having a provincial government that was ready, willing and able and committed to working together with them to bring this housing online quickly was a valued partnership. What I learned from that is that having a partnership, having a relationship…. When you want to accomplish the same things, you can get a lot accomplished in a very short period of time. That we were working collaboratively with the same goals in mind really moved things forward as well — but also coming forward with the resources.
We came forward with the resources to deliver, and we were committed to delivering. Because it was available to them, they were really able to move in a direction that was able to deliver for people. Again, at the end of the day, it’s really about delivering for people. So I think that made it very successful. It wasn’t just in Vancouver. It was the same thing in Surrey.
I don’t know if the member had a chance to visit the Whalley strip when it was at its worse, but I did. It was a year before the election. I have to say, frankly, that I was appalled. Most of us are familiar with the Downtown Eastside. But it was a completely different level of sadness and loss. These people were lost, and they were literally on sidewalks. You’d walk down three or four blocks, and the sidewalk was covered with tents and tarps — sidewalks — and people moving all over. And businesses…. People couldn’t access their businesses because there were tents on the sidewalks. Because it was off the main strip, one street over from the main strip, most people didn’t see it.
The city had been struggling with it for a long time. They had come up with a plan to engage people differently, support them as best they could. But it was when we made the announcement that we were here to help, that we were here with resources, here with commitment and with relationship, they, too, moved very, very quickly. The mayor was on it, moved her staff, gave them very clear direction to engage with us to deliver on a temporary solution for that Whalley strip.
One of the highlights of my short career as Housing Minister was back last June, when over a three-day period, all of those people were moved into their homes, where there were wraparound supports. There was a story that one of…. They brought movers in to physically work with them to box up their belongings, label the boxes and bring them to their home.
There are five sites in Surrey. We are continuing to work with Surrey to identify permanent sites for this kind of housing, because this had been going on for a very long time. That was also a demonstration of what happens when you roll up your sleeves and say: “We are going to get this done.”
I do want to give a shout-out to the previous mayor, Linda Hepner. There was one instance where there was a bit of a hookup around…. “Your folks are saying that they can’t move forward on this, and my folks are saying that they’re not moving forward on this.” I picked up the phone, and I said: “Linda, what’s going on?” It wasn’t about blaming anybody. It was about: “We want this, so you go talk to your people. I’m going to talk to my people. Let’s just get moving on this.” Really, by the end of the day, whatever the hookup was, it was resolved, and they’ve continued to move forward. That, to me, is about commitment and about relationship. That was really good learning. Of course, it’s about resources.
The last one I want to talk about — I mean, there are certainly many others — is the one in Smithers, a small town. They did a count. They needed, I think, 20-some-odd units of this supportive housing with the wraparound services. They were one of the first to pick up the phone and just say: “Minister, we want some of this in our community.”
I’m very proud of the fact that in just this year, it was opened. They’ve always had a shelter, to manage the people who were homeless, but everybody who was in the shelter or identified as homeless now has a home. So that shelter no longer needs to be open. We’ve closed the shelter, because everybody who has been identified as homeless now has a home. I’m very proud of that as well, because when you house people, you get to make other choices. Choosing to close a shelter is another proud moment for me. That was significant learning for me, around what it means to be committed, to be in relationship and to have resources.
There were other things that we learned along the way. That’s about the development approval process. I know the member has talked about that before. We’ve heard this before. When I became a new minister, talking to the development community, whether it was the Home Builders or UDI or whoever it was: “What are some of the barriers, in terms of moving things faster?”
They talked about the development approval process. It hasn’t been reviewed in a very, very long time. We’re undertaking a comprehensive review. We’re working with stakeholders. We’ve engaged in comprehensive consultations with a range of stakeholders from across the province, communities of all different sizes, various aspects of the development world, making sure that we’re all talking to each other and identifying issues and opportunities to improve local government development approval processes. Not only do we need to move faster to bring the right kind of supply, but it’s also very expensive when you’re developing a project and it gets stuck somewhere in a system. Time is money; we recognize that.
We’re working on that end as well, because we learned that when we’re committed, we’re in relationship and we have resources, we can move with some considerable speed. So identifying ways to speed up other parts of the system is certainly a commitment of this government.
S. Sullivan: I regret that I haven’t been able to experience all of the other areas of homeless concentrations. My main experience is in Vancouver. I note that just in the last week, there are four or five tents that have just been set up in Helmcken Park, which is two blocks from my home. There is a home, Yaletown House, that is made for, especially, people with dementia, who often will sit in that park.
There’s a lot of concern by the people who staff that house that this is quite new and quite sudden. I am getting other requests and comments from people. We do have Oppenheimer Park. We have other places where there are a lot of tents being set up. Despite that we have these 1,300 units, I’m wondering: are there more units being planned for the city of Vancouver that can take the pressure off, with these homeless tents that are now setting up around the city?
Hon. S. Robinson: I do have a response for the member, but I do have a lot of staff here. I just wanted to ask if we’re just going to use the remaining time for housing, and I can let staff go? Okay, thank you.
The member had asked about additional resources in Vancouver and commented on the fact that there are homeless people who are finding a place to rest their heads at night in a local park. First of all, let me assure the member that we are in regular conversation with the city of Vancouver. The new mayor is pretty tenacious about advocating for his community, and we have regular conversations about additional modular supportive housing, as well as shelter space. So that work continues.
I think it’s important to reflect on how we got here. The fact that there hasn’t been…. In the last dozen years before we formed government, we couldn’t even get a homeless count, a provincial homeless count, in order to do proper planning. To me, that was.… I remember asking for it. I remember being in opposition and asking for a homeless count — how many people are homeless? — so that we can plan, so that we can prepare. That wasn’t happening.
That was, for me, frustrating on my side, but also, I think, for all the front-line folks, because people just kept coming. They kept coming into homelessness, and there was no response. There was no coordinated response. I think there was a response, but it was never coordinated.
It didn’t fit in with anything else, and cities were left to handle it on their own. I’ve certainly heard from the mayors of Vancouver, Surrey, Port Coquitlam and Coquitlam that they were left on their own to just handle it. Terrace had a significant homeless problem for a very small town with limited resources. It was very, very difficult for them to manage the people that were living in the forests, that were living by the river and that were living in their parks, because there was no coordinated effort.
I’m very proud of the work that we’ve done as a government. We have done a homeless count provincewide. We’ve committed to do it. We’re going to keep doing them regularly, because it’s important to know what the scope of the problem is so that we can plan accordingly. I think this is basic strategic planning, and it’s good policy to understand the scope of the problem so that you can create a response.
I’m very proud of my colleague the Minister for Social Development and Poverty Reduction. This year, based on the homeless count, he’s put together a homeless action plan, because we’re going to keep seeing people falling into homelessness if we don’t stem that flow, if we don’t address some of these other pieces. He and I are working closely together. I’ve got the housing file, and with B.C. Housing, we do the response when people fall into homelessness.
Again, we have to have a plan to address the fact that people have been becoming homeless for a very long time because no action was being taken. Having a coordinated response that addresses prevention…. We want to make homelessness a rare occurrence. Having an immediate response…. We want to make homelessness, the experience of being homeless, as brief as possible because we know that when people get more and more entrenched in a homeless life, it’s harder and harder to get out.
We’ve all heard the stories of the people that we have housed who talk about and say that they can’t sleep in the bed for the first little while. They need to sleep on the floor, and that’s because, for years, they have been sleeping on concrete. That has to be awful. I can’t even imagine.
So making sure that we keep it brief — addressing stability, making homelessness a one-time occurrence so that it’s not like people cycle through. That’s why we have supports when people first come off the streets. It’s really important to support them in their housing so that they’re not cycling through, because that’s hard on them, and it’s hard on the service providers as well.
Also, working better together. We need to coordinate among our ministries and externally with our partners — with local governments, with service providers — so we can ensure that our programs are all properly connected and we can also ensure accountability so that people don’t fall through the cracks.
Coordinating the implementation of the plan is being led by the Ministry of Social Development and Poverty Reduction. To inform the plan, the provincewide homeless count was completed in 2018. They identified a total of 7,655 individuals who are experiencing homelessness. We expect that that’s probably a slight undercount, because it’s always difficult, but at least we have a starting place.
We know where we need to target, where we need to focus, and we know often where these people are. It’s the first time that we’ve had a provincewide baseline, which will allow us to measure our progress. I’m very proud of that work.
The other thing that dovetails into this is the overall poverty reduction strategy. People don’t wake up and just find themselves homeless. They fall into it. There’s a series of events that happen that result in homelessness, and poverty is the common theme.
If you’re extremely wealthy, you tend not to be homeless. You tend to find something. But if you’re poor, you don’t have enough resources to pay rent. It’s very easy to fall into homelessness. So our poverty reduction strategy is part of that.
All of these pieces fit together to make sure that we are addressing some of the core issues that lead to homelessness so that we don’t have people setting up a place to sleep, a place to rest their heads, in parks. I know that’s not what the member wants. I know that’s not what the people who live nearby, who have dementia, want. It’s not what any of us want.
Making a concerted effort is going to take a coordinated effort with many different partners. And it’s certainly going to take time, because this homelessness issue didn’t appear overnight. It’s been building for well over a decade. We’re doing our best to move as quickly as we can on it.
S. Sullivan: Thank you for that, Minister. I think the key point I’d like to make is that this homelessness has now appeared in my neighbourhood last week, after the temporary modular housing. Many of them have been constructed. So there seems to be something still that needs to be done beyond what we’re doing now.
I’ll just mention that the minister is probably too young to remember this, but I do. Old guys like me remember when we didn’t have homeless. It certainly wasn’t visible. It was a shock to the system. People were so confused and surprised to see homeless people, basically in the early ’80s.
I tried to find out why, what went into that. I certainly know the SROs in the city…. It was in 1973, ’74, ’75 that the city shut down over 2,000 SROs. Then in the late 1970s again, another shot of shutting down SROs. And then the early ’80s. That seems to have been the tipping point.
I remember speaking with one of the staff people who was very respected in this area, Judy Graves, who said that in the ’70s, there was just so much housing around. There was availability. There were vacancies. It seemed to be that people always found a place, no matter what their situation was.
That seems to be a critical part of the problem, which as my theme — “Supply, supply, supply; more housing available, more housing availability, more vacancy”…. It will take some of these issues just by virtue of the housing being there.
I wanted to ask about the temporary modular housing. There are two cases where there’s been a lot of public comment and, I think, may have even damaged the welcomeness, the welcoming, of temporary modular housing. Those are Maple Ridge and Nanaimo. I believe those two were situations where government actually took special efforts to ensure that those were available.
Can the minister explain what went on there, or her interpretations of that? What technique was used to secure that housing, that space? I believe it was not welcomed at that point by either the landowners or the neighbourhood. That has certainly led to some commentary that has not been particularly helpful.
Hon. S. Robinson: Because these are two very different examples, I’m going to start with one, tell the member the story about where we started and how we got to where we got to in Nanaimo, and then I’ll talk about Maple Ridge. They are very, very different, and they required different strategies in terms of supporting the community.
With Nanaimo, the previous council had rejected a modular housing project, and almost literally overnight there was a tent city that formed. I think folks who were homeless sort of were hopeful, and then they congregated. It got to the point where there were up to 300 people in this particular tent city. It was pretty challenging for the city, for the neighbours, for everybody.
The city did get a successful order to close the camp, but what that meant was that 300 people now were going to be scattered into the community. We felt, and certainly the city felt, that there needed to be some sort of response. It forced all of us to move quickly to address what was going to happen with 300 people who had been homeless, who had been sort of congregated, but now were no longer allowed to be where they were.
We were able to bring on 170 homes on two sites within the city. One of the sites was owned by the city and one by the province, as the landowners. The city asked us to work with them in an urgent manner to move to make these available. There were, absolutely, community consultations and information sessions around the community, letting people know what was happening, but it really was an urgent matter.
I want to thank everybody who worked on it. Within a matter of three months, we purchased existing workforce housing; we moved them from Fort St. John, which is where they were; we shipped them down to Nanaimo; and they were refurbished and open. All within three months, which I know that the member will fully appreciate, given how long it can take.
For us, it was about a crisis response. It needed a crisis response, because a crisis had been created. And these are temporary. These are a temporary solution to a problem that was an extreme problem, and it was a crisis.
We continue to work with the city council to identify a long-term solution, not just for housing for these folks but for all kinds of people in the community who need housing that they can afford. That work continues. We’re in regular contact with the council, identifying opportunities and making sure that we can continue to deliver the kind of housing, again, that people need.
I also want to assure the member that each building has its own advisory committee that is set up with RCMP, neighbours, local government. They do ongoing monitoring and, again, try to engage in education but also identify any potential problems that might arise so that we can nip it in the bud, make sure that everyone is responsive and doing their role. So it’s also a way to do accountability.
We continue to make sure that people have an opportunity and the supports that they need to take care of themselves; to get to their medical appointments; to take care of, perhaps, chronic health needs; to develop life skills; and to have a regular meal. I was talking with a provider who was talking about helping people to clean. No one ever taught them how to clean a bathroom.
These are the kinds of things that the on-site providers are doing and making sure that people have the opportunity to learn new skills that they can take with them as they move through the various levels of housing. That’s Nanaimo, which was a unique situation that required a response. We’re continuing to monitor, and we’re continuing to move forward with that.
Maple Ridge is a very different kind of situation because it had a different kind of history and different kinds of challenges. The homeless situation in Maple Ridge, which has become quite entrenched, has been going on for four years. It’s resulted in two different camps, gone through two different local governments and two provincial governments. So it’s a long-standing problem in this community.
In fact, the Quality Inn was under contract to provide services and supports. That was in 2017, but the previous government collapsed the deal. We believe that if that hadn’t collapsed, we wouldn’t be in the situation right now that we’re in, in this community.
What’s happened there is Anita Place homeless camp was formed. It’s the second camp — again, significant numbers of people. A new local government was elected.
Well, let me go back. We had been working with the previous council. What we were able to do, under the previous council, is we installed, actually, 53 units of modular housing on provincially owned land. That relieved a little bit of the pressure from the camp, and we were working to identify other opportunities to deliver additional housing. The election happened. A new council came in, and they made different choices than the previous council.
This council decided to shut down the camp without any notice to anyone. They shut it down. That meant that 50-some-odd people were now going to be scattered into the community, again, with no supports, with no monitoring, with certainly no housing, no access to water, no access to bathrooms. That did create a significant crisis, sending those people out.
We opened up an emergency shelter. We’ve had an average of 40 people in that emergency shelter since then. But we also have another piece of land to bring in 51 more units, with supports, because the shelter is very temporary. The contract is going to run out fairly soon on the property at the old mattress shop. We know that we need to make sure that we have housing. Winter is going to come. It comes every year, and we want to make sure that people are housed.
In this instance, that’s the work that we’re doing. Again, we’re still and we’re continuing to work with this existing council to look at long-term situations. We’ve already identified that the land that we’re currently building the 51 units…. Again, both are temporary. Both the Royal Crescent and the current one that we’re working on, the 51 units at the Burnett site, are temporary.
We’re looking for long-term supportive housing. We’re working together with the council to determine that. The council has made it clear they want seniors housing on the Burnett site, so we’re continuing to look at how to do that. We recognize that.
We’re working with the community to make sure that they understand, having information sessions, doing all of that work, having a community advisory committee as well, setting that up so that everyone in the community knows what’s going on. They can monitor it. We’re going to continue to do that work, making a difference in the community, because — and I know the member would agree — having people living in tents is not acceptable.
Providing them with a place to rest their head, with the dignity of a shower, with the opportunity to make a meal for themselves, as well as having all those wraparound supports, people who can make sure that they get to medical appointments, make sure the nurse can come in and have a place to actually do a wound dressing change, make sure they can access the supports of the health authority to address any mental health issues or other health issues…. All of those things are done with 24-7 supports. Staff are on site 24-7, making sure that people have the opportunity to make the kinds of choices they need to make so that they can have a stable life and create the kind of life that they want for themselves.
S. Sullivan: Thank you for that description. I’m wondering about the wraparound. I’m looking at a few quotes now.
His Worship Mayor Krog: “Things were put together very quickly…there were significant issues with…security, criminal behaviour, all sorts of problems. I’m not going to pretend that it was a pleasant experience for the neighbourhoods.” Then he also said: “We have a Ministry of Mental Health and Addictions. I think they need to try harder, to be quite blunt about it. The citizens in my community are losing their sympathy, which I think we should all naturally have for those suffering from mental health or drug addiction issues.”
Then a letter that was shared by the member for Langley East in which the minister stated that there will be a rotating nurse providing essentially one-third of an FTE for the housing sites in Maple Ridge. So it seems like the three sites, apparently, that one FTE…. I guess my question is about whether the minister would consider that wraparound services, if it’s just a portion of an FTE for each building.
Hon. S. Robinson: Again, I appreciate the member’s concerns. In these particular instances, again, they were crisis and getting things identified. Because these two very different challenges were crisis, doing the assessments that need to happen in all the other programs that we do happened simultaneously. So making sure that we’re getting the right services did take a little bit longer.
Again, I want read into the record and remind the member that for every single project, we do an assessment, an individual assessment for every single tenant. We use the vulnerability assessment tool. It provides a consistent and fair way of identifying who could benefit most from supportive housing, different approaches to handling their case. The tool can help prevent people from falling through cracks in the system by coordinating services among agencies.
This tool assesses a person’s level of vulnerability in ten areas: survival skills, basic needs, indicated mortality risks, medical risks, organization and orientation, mental health, substance use, communication, social behaviours and level of homelessness. It’s used to assess the support needs of applicants, assess eligibility of supportive housing, inform housing placements to create a healthy tenant mix and create a fair and transparent process. So as a result of that, when we do that work, we’re able to identify the exact needs and the exact services needed by the people living in this community.
They also get, automatically, staffing that is 24-7 from professional organizations that are housing providers, that have some counselling skills, that have listening skills, that work with people to develop life skills, that also do case planning, that provide meals and make sure that they get to medical appointments as needed. I have an example from Maple Ridge that I’d like to share with the member around the deployment of Fraser Health services that are available to the programs that are there.
We have an intensive case management team that’s contracted service with RainCity Housing Society. We have a nurse practitioner, full-time. Outreach primary care services for homeless, vulnerable individuals that works with the modular housing, as well as the homeless camp — because there are still people there — as well as the shelter. A full-time combo of an outreach nurse and another mental health nurse, as well as a mental health care worker. The nurses provide dedicated services to the same clients, and the mental health worker assists with medical appointments, housing searches, recovery focus interventions and other supports.
There are psychiatric services that are available to these clients. Again, the workers who are on site help to facilitate the appointments, helping to make sure people get to their appointments, helping to make sure that they take their medications. We also have contracted substance use services with Alouette Addictions Services society. There’s a contracted service, as well, for an opioid agonist treatment clinic. There’s a public health nurse — 0.75 FTE assigned as overdose lead for Maple Ridge — and a portion of a full-time community health specialist that supports the Maple Ridge team.
There’s a harm reduction coordinator. The Maple Ridge public health unit provides fixed-site harm reduction supply distribution as well as immunization and outreach clinics for marginalized populations. Then we have home health. It’s a small 0.2. But, again, primary care nursing assessments, wound care, palliative care…. We’ve had some formerly homeless people who passed away because they had cancer, and having palliative care was really important.
Again, this is part of a wraparound, based on an assessment. Doing the assessment helps us identify what services need to be brought to bear and what services people can access. It’s the combination of the two. Also, a 0.2 FTE home support worker that provides personal care support. These are the kinds of supports that are included as part of wraparound services. I hope that answers the member’s question.
S. Sullivan: Minister, this is about the housing hub. I wanted to get a better sense of that. Maybe the best way, rather than asking general questions…. Maybe about a specific one…. WestUrban Developments in Squamish received construction financing, $14 million.
I just wanted to know: is that a loan on the government books? I believe that it was underway and approved in 2018. Was the housing hub involved from the start, or is it possible for developers to approach the government mid-process?
Hon. S. Robinson: I’m going to answer the second question first, which is that developers can approach at any time and check in with the housing hub to see what opportunities might be available.
In this particular case, it was construction financing, which will be paid upon completion. In return for the low cost financing, we got a concession on rent levels and affordability for the community.
Vote 37: ministry operations, $318,559,000 — approved.
Vote 38: housing, $486,365,000 — approved.
ESTIMATES:
OTHER APPROPRIATIONS
Vote 50: Auditor General for Local Government, $2,608,000 — approved.
Hon. S. Robinson: I move that the committee rise, report completion of the resolutions of the Ministry of Municipal Affairs and Housing and ask leave to sit again.
Motion approved.
The committee rose at 5:47 p.m.
PROCEEDINGS IN THE
BIRCH ROOM
Committee of Supply
ESTIMATES: MINISTRY OF ENERGY,
MINES
AND PETROLEUM RESOURCES
(continued)
The House in Committee of Supply (Section C); R. Glumac in the chair.
The committee met at 1:36 p.m.
On Vote 22: ministry operations, $177,038,000 (continued).
G. Kyllo: Before the break, I’d asked a series of questions, specifically if the minister would be able to confirm B.C. Hydro’s increased generating capacity as it related to some of the increased capital expenditures on existing infrastructure. I just wonder if the minister had an opportunity to provide that information.
Hon. M. Mungall: We’re still getting the final numbers for the member. Once we have them, I’ll be sure to rise and share them. The member did also ask some questions looking for information around the load that we get — the long-term purchase volumes that we get from the IPP program.
At the time, this morning, we only had five years’ worth — two years in terms of forecasting and three years in terms of what’s already been acquired. The member asked for the ten years preceding this year and five years into the future. I’m happy to read that now into the record for the member.
Going from the last ten years, for fiscal 2010, it was 8,890 gigawatt hours. All of these numbers will be in gigawatt hours, so I won’t say gigawatt hours every time. Fiscal ’11, it was 10,800; fiscal ’12, it was 10,830; fiscal ’13, 10,670; for fiscal ’14, 11,030; for fiscal ’15, 13,380; fiscal ’16, 14,320. As I said earlier, fiscal ’17 was 13,644, fiscal ’18 was 14,354, and fiscal ’19 was 14,631.
These are all the long-term purchase volumes that we have had up until now. The grand total, for the member, is 122,550 gigawatt hours.
The forecast going into the future. For fiscal ’20, it’s 15,400. That’s a 5.6 percent increase over the previous year. For fiscal ’21, it’s 16,000. For fiscal ’22, it’s 16,300. That is the same amount for fiscal ’23 and fiscal ’24.
G. Kyllo: Thank you, Minister, for those responses. If the minister could just share with us…. Do you expect to have answers with respect to the increased generating capacity yet this afternoon?
Hon. M. Mungall: Oh yes.
G. Kyllo: All right. Fantastic.
Just as we broke for lunch, I’d asked a question. I asked the minister if she’d undertaken any review to determine the value for money with respect to the contract tender that was let to Ken Davidson. The minister had provided a response with respect to not having sufficient expertise in-house in order to undertake those works. My other question that I had was how the minister was able to determine that the ministry received value for money with respect to the sole-source contract that was provided to Mr. Ken Davidson.
Hon. M. Mungall: It’s an interesting question — a bit ironic in that doing an analysis of value for dollar is exactly what Ken Davidson does. That’s what he’s well known for. So to be asked if I think that we got good value for taxpayer dollars for the work he did — absolutely. Ken was extremely thorough in what he did, and the analysis he put forward, I think, shows exactly why he’s known around British Columbia for having the type of expertise that he does have.
G. Kyllo: I certainly wasn’t asking the question about Ken Davidson’s experience in undertaking value-for-money audits. My question was: did the ministry undertake any review, especially when there’s the opportunity for a sole-source contract…?
My understanding is that anything over $50,000 would actually have to go through a tendering process. So the value of the contract at $49,500 is, I think, a little bit suspect. Obviously, the intent of the value for the contract was such that it actually did not meet the requirement to go through a regular tendering process.
When we have a single-source contract awarded to a single individual, I’m just wondering: how was the minister able to determine that that decision and that amount was an appropriate amount for the work that was undertaken?
Hon. M. Mungall: Mr. Davidson put over 300 hours into this report. That’s quite a lot of work hours that he put in. Then just in terms of whether something is direct-awarded, there are a few things going on. I talked about internal expertise, but also, as a government, we wanted to have an outside set of eyes looking at this, because we wanted to increase independence. That’s precisely what Mr. Davidson did.
Also, government awards these types of direct contracts under a variety of circumstances. I mentioned timeliness being one earlier. Most notably is: is it going to have a review of confidential and privileged information? For this, the answer to that would be yes. Mr. Davidson, or if we had selected somebody else, would have had to be reviewing confidential and privileged information. An open bidding process would, therefore, have interfered with the ministry’s ability to maintain security and confidentiality. That was another reason why we went to a direct award to Mr. Davidson.
I’ve talked about his qualifications and the concern that the member raised in terms of: did we get value for dollar, and did we do a review of that? Of course, we monitored the type of work that he put in — as I said, over 300 hours. Then, of course, there’s the final report, which was very detailed. It was quite thorough, and it reflects the type of work that he did.
G. Kyllo: What I’m hearing is that there was no formal process undertaken to determine the volume of work or what the fee structure would actually be at the front end. Maybe the minister might be able to provide a bit more clarity. Were there terms of reference that were identified to establish the work that would actually be undertaken by the contractor? Was that spelled out in the actual contract that was direct-awarded to Mr. Davidson?
Hon. M. Mungall: Mr. Davidson’s contract. The services that are expected of him, as well as the scope of his work and the overall budget for that work, are all listed in the contract that was signed before he commenced his work. The ministry believes that the overall budget for his work is reasonable in terms of the scope that we were asking him to do.
G. Kyllo: The minister referenced 300 hours of work that were undertaken in completing the review. Is the minister able to confirm that the 300-hour requirement, at a rate of $166 an hour, was actually set out in the terms of reference of the contract that was signed with Mr. Davidson?
Hon. M. Mungall: The number of hours were not set out. We did not prescribe that to him.
G. Kyllo: In one of her previous responses, in answer to identifying the reason for going to a sole-source award, the minister referenced confidentiality. Does the minister feel that going through an open and fair bidding process would in any way interfere or somehow negate confidentiality — information that might be obtained by a successful contract recipient?
Hon. M. Mungall: Government is directed by a policy in terms of how to award direct-award contracts. So I’ll just provide the member with that. He can find this in the core policy manual on the Ministry of Finance website. I’m happy to send over the link, as well, if you’d like that.
I’ll just read the key part of the policy, which is: “A competitive process would interfere with a ministry’s ability to maintain security or order to protect human, animal or plant life or health; or the acquisition is of a confidential or privileged nature and disclosure through an open bidding process could reasonably be expected to compromise government confidentiality, cause economic disruption or be contrary to the public interest.”
G. Kyllo: Can the minister explain how confidentiality would in any way be at risk should the ministry have chosen to actually look to a number or a series of different contractors for bidding on this specific contract? I don’t have the liberty of having the specific language in front or me, but from what the minister shared with us just now…. I certainly don’t infer from that anything that would negate the ability of the ministry to go to an open and fair bidding process and how going through that process would anyhow breach confidentiality.
Hon. M. Mungall: I’ve cited a few reasons of why we decided to go to a direct award, and I’ve read portions of the policy out for the member opposite. We went to a direct award. We felt that that was the appropriate way to go. It’s well within the policy framework, so we have met the standard here.
G. Kyllo: The minister references confidentiality. A word that comes to mind, which may be better suited, is more of “secrecy.”
As a follow-up, has the minister read the report titled Zapped in its entirety?
Hon. M. Mungall: Yes.
G. Kyllo: Does the minister stand by all of the assumptions that are actually stated in the Zapped report?
Hon. M. Mungall: I found it interesting that the member wanted to use the word “secret.” There are no secrets here. Mr. Davidson has completely documented and disclosed his methodology, his assumptions — all of that. That’s why the member is able to even ask questions all about it. It’s all there for people to read and criticize, if they so choose. Our government, however, feels that his assumptions and his methodology are sound.
G. Kyllo: The minister referenced the lack of capacity, I guess, or expertise within the ministry, and I appreciate that this report was actually requested by the ministry. Did the minister give consideration to either having the B.C. Utilities Commission and/or B.C. Hydro — to seek upon their expertise — see if they would have the opportunity to maybe undertake the work on behalf of the ministry?
Hon. M. Mungall: In terms of B.C. Hydro staff, B.C. Hydro is very busy conducting the phase 1 review. As they were doing that review, they highlighted this issue that we had Mr. Davidson look into. Could BCUC have done that? Not within the time frame that was required.
Again, I spoke to timeliness, in a previous answer, of why we went to a direct award and why we selected Mr. Davidson — his availability being one of the criteria. Of course, his skill set is the top-of-mind criteria. Going to the BCUC would not have allowed us to complete the analysis in a timely fashion so that we could continue on with our review of B.C. Hydro.
G. Kyllo: If I’m hearing correctly, the ministry did actually consult with both B.C. Hydro and B.C. Utilities Commission to determine their capacity, and it was their response back to the ministry indicating they did not have sufficient capacity to meet the timelines of the ministry. And that was what led the minister to actually sole-source contract to Mr. Davidson. If the minister could just confirm that.
Hon. M. Mungall: I just want to be really clear for the member that it wasn’t any one thing that led to the direct award. Sometimes I feel like the member is saying: “Oh, it was confidentiality. Oh, it was because there wasn’t expertise. Oh, it’s just because of timeliness.” I’ve cited a variety of things — right? — that all came together.
One was that we had B.C. Hydro ministry staff working on the review of B.C. Hydro, looking at the costs and in terms of how those costs impact rates. They were quite active and busy doing that. In terms of going to BCUC and timeliness, it wouldn’t have allowed us to complete this report in a timely fashion.
I think what’s very important here and one of the reasons I cited earlier — and I really want to underscore it here for the member at this time — is independence. We needed an independent set of eyes to look at how we got to the point we are at today with costs associated with the former government’s IPP program. We needed those independent eyes, and we needed the right skill set to do that.
I’ve already pointed out many times that Mr. Davidson had that skill set. He also had that external view, that independent eye coming from outside of government, coming from outside of B.C. Hydro, to dig down and truly understand. So in terms of the reasons that we went to Mr. Davidson and the reasons that we went to a direct award, I’ve cited many. I don’t want to lose sight of the fact that independence was also a key consideration.
G. Kyllo: I thank the minister for her answer. I’m certainly not trying to belabour the point, but it was the minister’s own answer that indicated that neither the B.C. Utilities Commission nor B.C. Hydro had the time or the capacity in order to meet the timelines established by the minister. Those were the minister’s words, not mine. I was just looking for clarity.
In any event, just going back, then, to the document that was actually provided to Mr. Ken Davidson, did the contract award actually set out the timeline both for the commencement of work and the completion of a report? In addition to that, was the minister provided a draft report for review and reconsideration and provided an opportunity to provide comment back to the author before the final report was submitted?
Hon. M. Mungall: A draft report was provided to the ministry and to B.C. Hydro for fact-checking. That’s the only advance copy, in terms of where it went to. The purpose of why it went to the ministry and to B.C. Hydro was for fact-checking. In terms of when I read it personally, in advance, it might have been the day before. I’d have to go back in my calendar and so on. I can do that for the member.
In terms of when I saw it and if I provided him feedback on what should be in it, and so on and so forth: no.
G. Kyllo: Thank you to the minister for the response.
A couple of things. Is the minister able to provide any comment on the timelines that were set out in the actual contract — when the contract was issued, what timeline was established for the commencement of the work and when the final report was actually expected?
While I’m on my feet, if I could, just as a bit of a follow-up…. The minister references the draft report being shared with a number of organizations, including B.C. Hydro. I’m just wondering if the minister could also provide comment on what efforts were undertaken by the ministry when the draft report was shared with B.C. Hydro, around who the report was let to, and her concerns that she expressed earlier around confidentiality.
Hon. M. Mungall: Apologies to the member that I didn’t provide him with the dates that he was asking for in my previous answer. Yes, we have that.
The work time frame was October 11, 2018, to be completed by March 30, 2019. We released the report publicly on February 11. Mr. Davidson came in earlier than his time frame even allowed, which speaks to his efficiency.
In terms of the draft report and who saw it and did they maintain confidentiality, it wasn’t a variety of organizations. It was two: the Ministry of Energy, Mines and Petroleum Resources being one; B.C. Hydro being the other. As we all know, civil servants have to sign an oath of their office to maintain confidentiality. I fully trust that everybody in this ministry takes that oath very seriously and discharges their duties accordingly.
Then, in terms of confidentiality, not only does the ministry, of course, work with B.C. Hydro all the time, and confidentiality is well respected all the time, but B.C. Hydro’s president and CEO personally ensured that confidentiality was maintained.
G. Kyllo: Thank you to the minister for the answer.
If I might ask, was the Premier’s office consulted prior to the issuing of the contract tendered to Mr. Davidson?
Hon. M. Mungall: Yes.
G. Kyllo: Would the minister be able to share what the level of engagement was with the Premier’s office with respect to the determination of who the contract would actually be awarded to?
Hon. M. Mungall: As I would normally do and as is appropriate, I informed the Premier’s office of what we were doing and the choices that we were making.
G. Kyllo: With respect to the timing of the release of the Zapped report, the minister indicated…. The original contract tender indicated that your report would not be required until March 30, 2019. The minister has indicated the report was done on February 11, about six weeks ahead of schedule. I’m just wondering if the minister could share with us the timing of the report and if an advance copy was provided to anyone in advance of the report being made available to the general public on the B.C. Hydro website.
Hon. M. Mungall: The member wanted to know if any advance copies were being provided to anyone. No one outside of government. Rather, there were advance copies provided to government communications and public engagement, GCPE, so that they could draft the news release and provide some information from a communications perspective and prepare it for the government release on the government website.
G. Kyllo: Would the minister be able to confirm the date and time that the report was made available on the government website?
Hon. M. Mungall: It was to be posted on February 11. I don’t have the exact time that it went live. If the member wants that, we can try and track that down. I don’t know if it’s even possible to track that down. But February 11 was the date it was released.
G. Kyllo: Yes, if the minister would be able to provide the timing that it was actually made available to the general public, I’d certainly appreciate that.
Just back to the qualifications of Mr. Davidson. I know that the minister shared at great length the qualifications of Mr. Davidson. A question to the minister: did Mr. Davidson have any experience in the energy sector?
Hon. M. Mungall: Mr. Davidson’s expertise, as I’ve spoken to before, was specifically around procurement. The IPP program under the previous government was a procurement program, and he was looking at how that procurement program was undertaken, its costs and how it was affecting ratepayers.
I went through these four pages of a list of the variety of projects that he’s undertaken. This is just, actually, a highlight of all of the projects that Mr. Davidson has done. Not all of them are even here. It’s a long list of a variety of different types of analyses on procurement.
If the member is wondering if Mr. Davidson has had any expertise in procurement around the energy sector, the answer is yes. I would highlight one that is most notable for me personally, coming from the Kootenays, and for him as well, in the area. He has provided strategic negotiating advice with respect to acquisitions proposed by Columbia Power Corp. and the Columbia Basin Trust.
G. Kyllo: Thank you to the minister for her response. The minister referenced one specific project with respect to procurement. If I may, does the minister believe that the energy sector is a simplistic sector? Or is it extremely complex, which requires a high level of sophistication and actually making determinations around power procurement?
Hon. M. Mungall: Perhaps the member would like to get to the point of his questions. This has, actually, nothing to do with budget estimates.
G. Kyllo: I differ with the minister in that the…. The tender process, or the direct-award process, that was undertaken with respect to this particular project….
It is apparent that the minister has provided varying answers with respect to the reasons for providing a sole-source contract. As I mentioned, the amount of the contract, at $49,500, is just barely, only by $50, below the threshold which would actually have required a more open and transparent tendering process. The minister references concerns around confidentiality. I also have some concerns with respect to how going through a fair and open bidding process would in any way breach confidentiality.
In addition, the minister references, by her own admission, that both the B.C. Utilities Commission and B.C. Hydro do not have the capacity to meet the timelines that were established by the minister, yet we see a direct, sole contract being awarded to an individual who, from my understanding, has limited experience in the energy sector. A report of this magnitude and significance…. I think one of the most important tenets of looking for a tender or for a contractor to actually undertake that work would be to have significant experience in the energy sector.
This report that was tabled on February 11 makes some fairly critical accusations about the previous government. The minister has shared with this House the expansive qualifications of the contractor, yet there are a number of concerns that we have with respect to the report that was undertaken. If I may just surmise, the concern that I have — and that I think British Columbians should have — is where the government certainly spoke a lot about a new way of doing business, being open and transparent. We have a single, sole-source contract provided to an individual who, as the current leader of the Green Party indicated, had worked during the NDP government in the 1990s.
It’s a sole-source contract that actually makes a number of statements that we know, categorically, to be false. Just one claim, in particular — which is the fundamental basis that actually substantiates this report — was with respect to B.C. Hydro’s requirement to only procure additional power capacity through IPPs. There are a number of statements that are set out in the Zapped report.
In particular, B.C. Hydro substantially increased its internal generating capacity between 2002 and 2017, and it did so by following policy directions made by the previous government. In Zapped, there are allegations that the previous government stopped B.C. Hydro from adding new generating capacity. It’s completely at odds with the nameplate capacities that B.C. Hydro lists for its generating facilities.
I asked the question early in the estimates, looking for the actual increased generating capacity by a number of specific projects that were actually undertaken by B.C. Hydro, including Aberfeldie, Ash River, Bridge River, Cheakamus, G.M. Shrum, John Hart, Kootenay Canal, Mica, Peace Canyon, Revelstoke, Ruskin, Seven Mile, Site C and Waneta. They all added increased generating capacity to B.C. Hydro.
Yet the minister has quoted and has shared her support for this report, which states that the previous government negated and did not allow B.C. Hydro to increase their generating capacity other than through IPPs. I’m just wondering if the minister can share with us how both her comments and the claims that are set out in the Zapped report do not align with B.C. Hydro’s own operating numbers, which indicate a significant increase in generating capacity.
Hon. M. Mungall: First, to start off, Mr. Davidson highlighted in his report that the previous government put limits on B.C. Hydro. That is true. That is actually true, Chair, and I don’t know why the member is trying to suggest that that’s not true.
What the previous government was very clear about, in terms of their directions to B.C. Hydro and disallowing the B.C. Utilities Commission to oversee, was that B.C. Hydro was only allowed to do modest upgrades to existing assets, as well as to construct Site C. So government shuts down Burrard Thermal, which is a firming of power and is part of the broader grid.
Interjection.
Hon. M. Mungall: You don’t even know where I’m going.
Interjection.
Hon. M. Mungall: No, that’s not what I was about to do at all. So maybe just listen.
Chair, sorry for the interruption there.
When the government of the day shut down Burrard Thermal, that meant that they had to fill the need for that type of energy. There are a variety of ways to go about doing that. What the government of the day chose was to allow the modest upgrades to existing assets, but they also chose to go with the private power program, the IPP program or the standing offer program — whatever name you want to give it. That’s what the government of the day chose to do.
I would say that Mr. Davidson’s report shows — it is clear evidence — that he understands the electricity markets very well. He understands very well how the electrical grid works. He understands how procurement, especially, works. I’m happy to read, even in more detail, Mr. Davidson’s background showing his expertise. Every time the opposition tries to suggest that he did not have the expertise to do this job, I’m happy to correct the record on behalf of Mr. Davidson, to make sure that his reputation isn’t besmirched any further.
G. Kyllo: I certainly am not trying to besmirch Mr. Davidson at all. I am just trying to point out that there are a number of falsehoods that were actually set out in his report. The Zapped executive summary makes the following allegation that emphasizes policy direction. I’m quoting from the Zapped report. These are not my words. These are words directly from the report.
“Government’s approach began to change, and by 2002, a move to green clean power and energy self-sufficiency was expressed in the 2002 energy plan. The direction was further clarified with the 2007 energy plan…and the 2010 Clean Energy Act. Government provided clear direction that moving forward, B.C. Hydro would not increase its internal generating capacity….”
We know that that is categorically false, that B.C. Hydro did increase its generating capacity through the upgrades to a significant number of existing assets, which I’ve read into the record. We are still waiting for the ministry to provide us the specifics of the increased generating capacity. The reason that this is so fundamental to the report is that the report makes the assumption that all of the IPP power that was produced and procured was somehow not needed and that it was a total waste. It indicates that B.C. Hydro did not actually add to the energy supply of their existing assets, which we also know is categorically false.
The minister stands behind Mr. Davidson. The minister stands behind the report, indicates that she has read it front to back and stands behind the assumptions that are actually drawn from this report. I have significant concerns, and I think British Columbians would have significant concerns, that when a ministry undertakes to have a report conducted that has a look at the IPPs….
I think British Columbians are very proud of the fact that there’s such a significant portion of our power that is coming from clean energy sources. We saw the concerns, largely by Metro mayors, with concern around Burrard Thermal.
We also saw that back in the mid-2000s, 14 percent of our energy supply was being purchased on the open market. Decisions were made by previous government to actually move forward with meeting B.C.’s energy demands through IPPs, which attracted about $8.6 billion in new capital to the province and provided economic opportunities for First Nations and for municipal governments — the amount of taxation that was provided.
When this report clearly stamps on the great work that was done by IPPs in the province by making false accusations, it is something that I think is very significant. I certainly would appreciate hearing the minister’s response to how it is that she can support a report that makes absolute false accusations that were used in determining the report that was actually submitted to British Columbians — which, I might add, mysteriously or magically appeared mere days before B.C. Hydro or the ministry announced an 8.7 percent rate increase for British Columbians.
The Chair: Member, can you clarify how your question relates to the budget estimates for the Ministry of Energy, Mines and Petroleum Resources?
G. Kyllo: Most definitely, Mr. Chair. The report that is in question was entertained at a cost of $49,500. It was a sole-source direct-award contract to a Mr. Ken Davidson. It is both the procurement process as well as the qualifications of the individual and the information outlined in the report that are the substance of my questions.
Hon. M. Mungall: I totally appreciate that members of the B.C. Liberal caucus are fond of policies that their government enacted and that they would want to defend them. That’s understandable. I disagree with many of their policy decisions — understandable, not surprising.
In terms of the IPP program, I think the evidence is there to show that it is problematic for British Columbians and ratepayers.
The member asked for the increased energy — we highlighted it earlier — from the modest upgrades that B.C. Hydro has made to a variety of different projects. We weren’t able to provide that earlier. We now do have that. I think the member’s conclusions show why these numbers truly are very important, and I’m glad he’s asked for them.
In the G.M. Shrum units 1 to 5 turbine replacement, which was completed in 2015, the incremental production — the increase — there was 135 gigawatt hours. At the Mica units 5 and 6 project, it’s 195 gigawatt hours. At the Ruskin dam, it’s 25 gigawatt hours. At John Hart, it’s 52.
At Cheakamus, the Cheakamus unit 1 generator replacement was 45 gigawatt hours, and at Bridge River, it was 30 gigawatt hours. That’s a grand total of 482 gigawatt hours.
I mentioned Burrard Thermal coming off. I have not ever given my opinion one way or another about the previous government’s choice to shut down Burrard Thermal. That’s a choice. It’s there. That’s reality, and we’re moving forward with it, no matter what my opinion may or may not be. But it’s important to know how much energy that was generating, and that was 6,000 gigawatt hours. So 42 gigawatt hours to replace 6,000 gigawatt hours. Obviously, we have quite a discrepancy.
The previous government brought in their IPP program. As I’ve already read into the record, the energy that was brought in from that…. We look at any one particular year — 14,000, 13,000 gigawatt hours, and so on. You can see that when the previous government made the decision to say to B.C. Hydro, “You can only do modest upgrades to your existing assets, and you must get all new power from private power operators,” that clearly was the case. That’s quite a significant difference of well over 13,000 just for fiscal year ’17 alone.
I hope that gives the member some clarity around exactly what was happening. The member cited Kootenay Canal — I’m not sure why — and he also cited, again, Waneta dam. I want to just explain, once again, that the purchase of Waneta dam by B.C. Hydro is not new power coming on line to the grid. It’s existing power that has been there for many decades and is still serving the exact same function it always has over the last several decades, which is serving the Teck smelter in Trail.
G. Kyllo: Thank you to the minister for the response.
There was a…. I guess it’s a bit of semantics when it comes to Waneta, but fair enough. That was not the only one. There was also Site C, which is apparently not completed yet, but it still is going to add to the increased operating and improved megawatt hours of B.C. Hydro.
The information that I was able to pull off — and this is comparing the nameplates for both before and after the different upgrades were undertaken on the existing assets — actually runs to a total of 3,361, which is significantly higher than the minister referenced. I believe the minister referenced 42.
In any event, the thrust of these questions is to identify and, I think, bring to British Columbians’ attention the fact that there were false claims established in the report, which had a significant impact on the resulting outcome. The report indicated and was based on the fact that all new energy capacity for the province was only acquired through IPPs. We know now, by the minister’s own admission, that that is not correct.
Despite the minister having made specific quotes and references on, I believe, February 15 — this is a Ministry of Energy, Mines and Petroleum…. They repeated the allegation in the backgrounder to the Zapped press release issued on February 15, 2019.
Again, the information being provided by this government to British Columbians indicated that beginning in 2002, the previous government manipulated B.C. Hydro’s energy planning process by providing a clear direction to B.C. Hydro to not increase its own generating capacity. By the minister’s admission today, that claim is false, and I think that British Columbians should be concerned about that.
A ministry that undertakes a report, a sole-source award contract to an individual who previously worked for the NDP government…. The report was released mere days before the ministry announced a significant increase for B.C. Hydro customers. That increase, again, is in opposition to what the government actually stated, in their election platform, on freezing Hydro rates. It certainly appears to be a bit of a smear job.
There are further inaccuracies within the report — again, which I think British Columbians should be aware of. Those have to do with the determination of the rate which IPP power prices are compared to. That comparison, by the minister’s own admission, is the Mid-C price rate of $25 per megawatt hour. Could the minister share with us…? Does she still believe today that the Mid-C pricing of $25 per megawatt hour is a fair, reasonable and accurate price by which provinces or energy providers would be able to purchase long-term power contracts to meet the needs of their citizens?
Hon. M. Mungall: I think the important thing to note from Ken Davidson’s report is that ultimately what was happening was that B.C. Hydro was buying too much power at too expensive a price, and it was coming on line at the wrong time, not necessarily when we needed it. That meant we had to turn around and we had to sell it. So what would be the price point that we’d have to sell it at? The Mid-C price is the relevant price to that power.
G. Kyllo: That is actually not the point. The point is that the report draws comparisons and establishes conclusions based on false information. If B.C. Hydro was only acquiring additional power capacity through IPPs, that would be one thing, but B.C. Hydro was also undertaking significant upgrades to its existing assets, also increasing the generating capacity of B.C. Hydro’s historic assets.
To blame IPPs and to make the determination that all power produced by IPPs was not required is categorically false, because B.C. Hydro was also increasing their own internal generating capacity.
I think, at this juncture, I’m going to take my chair and pass things over to my colleague the leader of the Green Party, who also has a series of questions in and around this particular tender process.
A. Weaver: A thank-you to the member for Shuswap for his thorough canvassing of the issue of the Zapped report. I’d like to pick up on this a little bit. The member was able to canvass the procurement process, which I was as equally troubled by as the member was. The answers drawn from that were very troubling.
What I’d like to do is come up to some of the comments that are in the report and fill in some additional detail, building on what the member for Shuswap has asked. For example, the report noted that the average surplus per year that B.C. Hydro acquired was “9,500 gigawatt hours of blended energy.” However, the Clean Energy Association of B.C. highlighted that the average surplus that B.C. Hydro recorded was closer to 1,532 gigawatt hours. They base this off the numbers shown on B.C. Hydro’s website.
My question to the minister is: could the minister confirm that B.C. Hydro actually did acquire, as stated in the report, 9,500 gigawatt hours per year of unneeded energy?
Hon. M. Mungall: Sorry for the length in trying to sort this out, but I just want to make sure that I completely understand what the member is asking and understand the analysis and the expertise those who are sitting with me have to offer.
Basically, what happened was that the way the previous government defined what B.C. Hydro could do in being self-sufficient is what drove what would ultimately be this surplus — B.C. Hydro having to buy power that was surplus to their needs. As I stated earlier for the member’s benefit, shutting Burrard Thermal, saying that only very modest upgrades to existing assets plus Site C were allowed…. That all constrained B.C. Hydro’s ability to meet the demand of its customers throughout the province.
It forced B.C. Hydro into a position where they had to buy power from private power producers, which therefore created this market for private power producers to develop their generation assets and then sell that power back to B.C. Hydro. As I’ve stated earlier and as Mr. Davidson pointed out in his report, much of that power was expensive and was also coming on line at the wrong time of year — namely, during the spring freshet, when B.C. Hydro just didn’t need it.
A. Weaver: I shake my head every time I get an answer. The minister is saying what the report concludes, but the report assumed the conclusion that it concluded. So it’s kind of circular to suggest that the report is concluding that the surplus required them to go to the IPPs. It’s just circular logic.
I’ll ask another question, then. What is the total surplus energy that is produced in British Columbia each year, on average? Simple question.
Hon. M. Mungall: From year to year, the total that the member is asking about does vary. But we can give him that, on average, it’s 4,000 gigawatt hours per year.
A. Weaver: That report also notes that the value for energy would be its market value. The member for Shuswap talked about this — mid-C, basically.
I understand that since 1989, British Columbia Hydro has entered into quite a number of long-term contracts. Can the minister confirm that B.C. Hydro buys energy through long-term contracts that don’t follow the mid-C market value rate?
There’s no excuse for this delay. It’s a simple yes-or-no answer. I asked the question: can the minister confirm that B.C. Hydro buys energy through long-term contracts that don’t follow the mid-C market value rate — yes or no? It’s not a complex question.
Hon. M. Mungall: In every estimates, I feel like we go through this with the Leader of the Opposition. Honestly, Member, I’m just doing my best to make sure that I provide a fulsome answer. I’m not trying to delay or scoop up any of his time. I’m just trying to be fulsome. So please, just give me a moment to be able to do that for you.
To that, B.C. Hydro does buy energy, as he’s asking, at mid-C price. Only one project, though, as pointed out in Mr. Davidson’s report. Yes, B.C. Hydro does have contracts, many multi-year contracts, that are for above the mid-C price. That’s exactly the point of Mr. Davidson’s report, because the IPPs are all well above mid-C price. We know that.
For example, a lot of the IPPs are coming in at $100 per megawatt hour. Compare that to what Alberta is now doing for their wind projects, at $40 per megawatt hour. So you can see that there’s still quite a difference, even if we’re not going to be comparing it with the mid-C price. But I do want to highlight that the mid-C price is a benchmark for what ratepayers can get for surplus energy when B.C. Hydro has to sell that.
A. Weaver: Again, I shake my head. I ask a question, and I get a response to a question I didn’t ask. I was asking about long-term mid-C market value rates. Maybe the minister can say why Mr. Davidson didn’t consider these. I’m not talking about the IPPs. I’m talking about whether or not B.C. Hydro, since 1989, long before the IPPs were ever even talked about, has bought energy through long-term contracts. Yes or no? And if so, why were they not discussed and mentioned at all in the Davidson report?
Hon. M. Mungall: Yes, B.C. Hydro does have long-term contracts. I did mention that in my previous answer. I’m sorry I don’t have the report right in front of me, but I do recall Mr. Davidson talking about some of those. I did already mention, as well, that he noted that there is one project that does have a long-term contract for mid-C prices.
A. Weaver: In the Zapped report, there was a line that caught my attention. It was based on the interviews. The report claimed that the 2007 energy plan was created with the intent to “create the appearance of an energy shortfall.” It is remarkable that an independent consultant would provide value-added commentary like that in a so-called independent report. I’m shocked, to say the least. Anyway, I continue.
However, I was under the impression that much of the 2007 energy plan — and frankly, I was here and working with government at the time on that energy plan — was designed to get British Columbia to be self-sufficient in its energy production.
Can the minister confirm that prior to 2007, there were several years of high net energy imports and a strong domestic load growth projected? It’s a simple question. Prior to 2007, can the minister confirm that there were several years of high net energy imports and strong domestic load growth projected?
Hon. M. Mungall: The member wants yes-or-no answers, so I’ll just say yes, and I will not endeavour to seek further information unless he specifically asks for it. Pardon me for doing that in the past.
A. Weaver: I’m going to continue on this theme, because there are a lot of assumptions that have been stated here as facts and conclusions from the report that were not conclusions. They were assumptions. Here are some others. I’m going to discuss the issue of importing power.
The minister has said that we have a surplus of energy produced over the last number of years. However, the large fluctuations that happen from year to year, based on water levels, can dramatically change how much power we produce.
In B.C. Hydro’s compliance filing form F17-19 revenue requirement application, it stated: “In the past ten years, there has been a difference of 12,000 gigawatt hours between low and high water…requiring surplus sales or market purchases.” There’s a slight missing word in there.
[J. Rice in the chair.]
Anyway, the reality is that the 12,000 gigawatt hours between high and low waters is the key number there. It’s a very big difference.
My question to the minister is this. I’d like to know if we were a net importer of energy in British Columbia over the last year, yes or no; or in any of the other previous years, yes or no.
Hon. M. Mungall: Yes.
A. Weaver: Can the minister please tell us how much B.C. Hydro paid to import energy in March or this past quarter?
Hon. M. Mungall: We spent $54.9 million net importing energy in March.
A. Weaver: So we spent $54 million importing energy. We had too much energy surplus. We didn’t need these projects. Very interesting.
Can the minister please provide how much power, on average, we have been importing over the last ten years?
Hon. M. Mungall: I did say that I would only provide the yes-or-no answers that the member wanted and the very short answers that he would like, but I feel like I’m doing a disservice to the British Columbians who might be watching this, as well as to the member to not inform him that the reason why there was an import of energy recently is due to low water levels.
For example, in my riding, I can look not too far down the hill and see exactly what those water levels are because the Kootenay Lake is, essentially, a reservoir for B.C. Hydro, along with Duncan Lake and so on. Those are parts in my riding. But generally, over the last decade, we’ve actually been exporting energy, not importing it.
A. Weaver: I’ll come to that shortly, or maybe now. Pushing on to…. Well, first I’d like to ask: the $54 million — what was the price that you were selling it at in March of this year?
Hon. M. Mungall: I think the member might have misspoken, but he can correct me if that’s not the case. I think he meant what we were buying it at, the price that we were buying it at.
A. Weaver: Sorry, yes.
Hon. M. Mungall: Okay. In March, we were buying it at $57 per megawatt hour Canadian.
A. Weaver: So the average price was $57 per megawatt hour.
I understand that Powerex is the key trading arm of B.C. Hydro. Well, it is a trading arm of B.C. Hydro, but I know it’s separate. It imports and exports power when it’s financially advantageous to do so. It brings money directly into the provincial coffers — a good thing, I would suggest.
However, the power we import comes from Alberta and the U.S. I’m concerned that much of it, if not all of it, is brown power, despite the rhetoric we hear from this minister and her government. That’s power created by burning natural gas or coal, which emits high levels of CO2. Over 80 percent of Alberta’s electricity is coal- or gas-generated. In Washington state, there are over a dozen coal and natural gas plants.
Can the minister confirm that the majority of the power that B.C. Hydro, via Powerex, imports to B.C. is from natural gas- and coal-fired plants?
Hon. M. Mungall: I appreciate the member’s concern about exactly what type of power is coming to B.C. I know that he knows that electrons aren’t tagged one way or another, except in the situation with the Canadian entitlement, which is the Columbia River treaty. When we’re getting that power coming up from the United States, that is hydroelectric power. We know that that particular power is not generated using coal or natural gas. In terms of in March, it’s hard to say whether it was natural gas–fired or coal-fired if it was not the Canadian entitlement, power that we were purchasing at that time. We were purchasing it at that time, as I said earlier, because of low reservoirs.
That being said, it’s important to note that in Alberta, they are increasing their wind generation. Solar is increasing as well, in Alberta. Wind, and solar as well, below the 49th parallel are also increasing.
As more renewables come on line, we are obviously trading in more renewables. What I would say is that it may not be the case for March, but in general, when we are buying power from other jurisdictions, it’s normally when they have an excess of wind or an excess of solar and they’re putting that onto the grid.
What is likely coming into B.C. is power generated from those avenues.
A. Weaver: I’m getting very close to calling for the resignation of this minister, hon. Chair, based on the lack of substance of these answers. This is a minister who clearly does not understand the file, clearly does not understand how electricity is produced and shipped. This is a minister who is responsible for the oversight of B.C. Hydro’s next review? It’s just shocking.
Let me explain to the minister how the power comes through. Coal and natural gas plants typically run, not on natural gas, 24-7. Powerex recognizes that, at night, coal power, which is going 24-7, is really cheap, because demand is low. But it doesn’t need to actually sell the power from its hydro dams, so it saves that for the day. We’re importing coal power and making money by shipping off clean power.
The minister should know that. The minister should not be trying to imply to British Columbians that somehow we’re buying wind and solar, intermittent sources. We’re not. It is shocking, just shocking, that we’re hearing this in estimates today. I’m stunned. I almost feel like sitting down. I cannot believe that this is what we’re hearing.
Anyway, I’ll continue. I think it’s fair to say that based on these aspects of how the U.S. Pacific Northwest and Alberta generate their power, particularly their low-cost power, that the majority share of it will come from coal and natural gas. I think that’s safe to say.
Can the minister give an estimate of how much emissions were generated based on B.C.’s import of this brown power over the last year? What the emissions input…? That’s leakage into our province from emissions, because we’re buying brown power in this province.
Hon. M. Mungall: The Ministry of Environment does work with Powerex to calculate the carbon intensity of the energy that British Columbia imports. I’m happy to get that number for the member.
In terms of my previous answer that has clearly sparked outrage from the other member, I want to be clear that I’m just trying to share information that is coming to me from our experts at B.C. Hydro who are working on these issues every single day and trying to share that with the member so that he has a better understanding but also a bit of comfort in terms of where we are getting our electricity from when we are importing. The world is changing, as we know. We know that coal-fired plants are starting to be shut down in favour of renewables or lower GHG emission plants. I’m just wanting to share that information with the member.
A. Weaver: I so very much appreciate the minister providing the information on a file that I’m not certain she understands, frankly. I’m not certain she has a grasp of this most important file in our province, based on the answers — not of the last question but the answers that I’ve been getting throughout estimates here, both this time and last time and in question period — time after time after time.
And to throw the good people of B.C. Hydro under the bus, to suggest that she is conveying the information to me about wind and solar in the U.S. from the good people at B.C. Hydro — that’s just ludicrous.
Coming to energy self-sufficiency. In 2012, the provincial government changed the regulation that forms the basis of electrical generating and planning criteria that B.C. Hydro uses. Historically, the definition of “critical water conditions” was used to ensure that there would always be a certain amount of power available. The previous government changed that metric. Instead of using critical water conditions, they now use the average water conditions. Overnight the amount of energy that B.C. Hydro could reliably produce went up by 5,600 gigawatt hours, through the definitional change there.
With climate change and variability predicted to continue, this change to using average water conditions for planning does not seem to be very prudent. Instead of being self-sufficient when a drought happens, we could be faced with a real possibility of importing large amounts of power if such a drought were to happen because of poor planning.
Has the minister considered the impact of using average water conditions to forecast energy generation potential? I can maybe do two at once. Given the variability in water flows this province is facing, is it prudent to continue to use average water flows as the basis for predicting the amount of power that we can generate?
Hon. M. Mungall: The member’s question is if using average water flows for predicting energy generation is good, if it’s the right way to go. I think that is a very important question, and it’s actually one that we’re going to be looking at in phase 2 of our B.C. Hydro review. It is going to, ultimately, feed into the integrated resource plan, the IRP.
As we continue on in this process, I very much appreciate the member’s knowledge on this file. I very much appreciate the member’s expertise in this area and that he is seeking more information. I am doing my best to offer it to him. I know he doesn’t like me personally, but I don’t know that personal attacks are helping the estimates process at all.
Point of Order
A. Weaver: May I ask that you please, as a point of order, ask the minister to withdraw that? That is outrageous. This has nothing to do with personal and everything to do with lack of substance in the answers that we’re getting on a file that’s very, very important. I find it offensive that the minister would stand and try to deflect from the criticism and concerns that I and my friends here have had on the answers that we’re getting and turn it into an ad hominem.
The Chair: I think that in the best interests of everyone, we should take a five-minute break. So I’m going to recess the committee for five minutes.
The committee recessed from 3:21 p.m. to 3:49 p.m.
[J. Rice in the chair.]
Point of Order
(Chair’s Ruling)
The Chair: Prior to the recess, the Leader of the Third Party raised a point of order relating to comments made by the minister. Upon consideration of the point of order and the circumstances leading to it being raised, I note that both the Leader of Third Party and the minister expressed some frustration with this debate.
I recognize in this committee room that any criticism within the debate can escalate and be amplified, particularly in this small setting. It’s my expectation that we can now resume debate on Vote 22 with all members treating each other with all members treating each other with respect.
Debate Continued
A. Weaver: I’m going to move to final questions on Site C. As Site C progresses, we learn more and more about the shady nature of what occurred and continues to occur to get the project past the point of no return.
Between 2016 and 2018, no fewer than 38 contracts were directly awarded, avoiding a more transparent and competitive tender process. Close to $90 million has been awarded from B.C. Hydro to a variety of companies, some with close ties to the official opposition, with respect, and some that are simply numbered companies. Transparency is lacking, and awarding public funds to numbered companies is, frankly, somewhat suspect.
Site C is a huge undertaking that has already cost the citizens of British Columbia an enormous amount. For contracts to be awarded directly, without due process or justification, frankly, I would argue, is unacceptable. Can the minister please explain why the awarding of direct contracts like this was occurring under her watch?
Hon. M. Mungall: The percentage of contracts that are direct award is 3 percent of all the contracts since July 2015 that B.C. Hydro has procured. Many of those contracts that are direct-awarded are to Indigenous businesses.
The numbered company that the member spoke of…. That direct award happened in January 2017, prior to the 2017 election. It’s pursuant to B.C. Hydro’s Aboriginal procurement policy, and it is for road remediation and various erosion and sediment control works.
That company was designated by the Doig River First Nation as their business partner to complete the work. As I said, it falls in line with B.C. Hydro’s Aboriginal procurement policy as well as their IBAs.
A. Weaver: The government announced a Site C project assurance board to oversee the project and ensure it stays on time and on budget. But what is the point, frankly, of having a private board issue reports that no one can have access to, other than government?
When the government was in opposition, they rightly criticized the previous government for excluding Site C from review by the BCUC. However, now that they’re in control, they set up their own board to oversee the project — a board that is not accountable publicly, a board whose members were handpicked and a board that is anything but independent. I understand that even a year after this project assurance board was created, the government has still not determined if the public will be privy to what it’s reporting on.
Can the minister please let us know if the project assurance board will have any accountability to the public?
Hon. M. Mungall: I know the member recalls that our government did have the B.C. Utilities Commission review the Site C project, and it continues to review quarterly reports about Site C. Those reports are reviewed and approved by the public assurance board. PAB is the acronym. I would mention that PAB is accountable to government, and it reports regularly to Treasury Board as well.
A. Weaver: My question was not that, hon. Chair. My question was: can the minister let us know if the project assurance board will have accountability to the public — yes or no?
Hon. M. Mungall: I think the member may have a different view of how that accountability occurs than it currently does. Perhaps he would like to lay out what he thinks might be a better strategy or a better process than what we have right now, which is going to Treasury Board, accountable directly to government as well, in that it is reviewing all of the quarterly reports on Site C that are ultimately delivered and deposited with the B.C. Utilities Commission.
A. Weaver: Well, I’m not the minister. Therefore, I’m not able to answer the question as to whether or not the reports and recommendations written by the project assurance board are made public or not. That is really a question of her ministry. It’s not for me to say we would…. Yes, if I were Minister of Energy, we would make those reports public if there are such reports. That’s all I’m asking.
Is there going to be…? As I pointed out, the public assurance board was created by government, appointed by government. There’s nothing reporting out from government. It’s a simple question. Will there be a public transparency component to the assurance board?
Hon. M. Mungall: I appreciate that maybe the member would like to see reports put on line or so on. The reports that are made to the public are the quarterly reports on Site C that are approved by the public assurance board and then delivered to the B.C. Utilities Commission. Those reports are available to the public on their website.
A. Weaver: We’ve heard directly from residents on the ground who are monitoring the progress of the dam and the work on the diversion tunnels. It has been on hold for quite some time now, I understand. Can the minister please provide an update as to what is going on and if this is further delay to the construction schedule?
Hon. M. Mungall: There was a two-week stand-down. This was because WorkSafe was investigating an electrical incident that happened with a worker. The worker is fine — so that everybody knows that he’s fine. That’s very good news for that worker, but it required a two-week investigation by WorkSafe following up on that.
The tunnelling does still continue, and Hydro is still projecting to achieve river diversion by September 2020.
G. Kyllo: I just wanted to kind of follow up, back from where I left off. The minister has made a number of claims to the media, both in print and on radio. I’m just wondering if the minister now — after her own admission by the ministry of B.C. Hydro’s ability to actually increase power generation through upgrades to existing assets — wishes to, I guess, advise British Columbians as to her statements about the previous government restricting the opportunity for B.C. Hydro to increase its generating power, other than and only through IPPs. Is she willing to share with British Columbians how she feels about that today?
Hon. M. Mungall: What I’ve said on the record today: other than the Site C projects, the very modest upgrades that B.C. Hydro was allowed to do to their existing assets only allowed for 482 gigawatt hours — very, very low, compared to the actual power that was needed, once changes were enforced by the previous government. The situation that the previous government created — and, therefore, their solution for that — did result in too much power being bought at too high a price at the wrong time.
G. Kyllo: We’ll read into the record the Energy Minister’s announcement, which she made on February 20, 2019: “The B.C. Liberals then told B.C. Hydro it could not buy power from other jurisdictions, nor could it generate its own power, except for Site C.” Through the admission of the minister, through a response provided by the ministry staff, we know that that statement is categorically false — that B.C. Hydro did have the opportunity to increase its generating capacity significantly.
I’ll continue with a question to the minister. Does the minister accept the Zapped report’s claim, made in its executive summary: “As government had removed the options for B.C. Hydro to increase its internal generating capacity or importing power to meet demand, this need for new energy could only be met through procurements to elicit proposals from IPPs”?
Hon. M. Mungall: Yes, it’s absolutely true.
G. Kyllo: A further question. Does the minister accept Zapped’s claim, made in chapter 11: “Government policies then resulted in B.C. Hydro being unable to add internal generating capacity or to rely on trading in external markets to buy the energy required to meet domestic needs…. As B.C. Hydro has always tried to optimize demand-side actions, the only option left available to BC Hydro to meet the new load levels projected was to acquire large volumes of additional IPP energy”? Does the minister agree with that statement?
Hon. M. Mungall: Just going back to the numbers again for the member, when we compare 482 gigawatts to 14,630 gigawatts for fiscal ’19, just the past year, in terms of the amount of load that B.C. Hydro has had to buy, I think the evidence is right there, in terms of the amount of power that we’ve had to buy from private power producers, making that statement true.
G. Kyllo: I must say that it’s a little frustrating where, on one hand, by the minister’s own admission, she has told and shared with British Columbians the fact that B.C. Hydro had the opportunity to significantly increase their generating power by upgrading existing facilities…. I read into the record the number of projects that were actually undertaken to increase the energy output of B.C. Hydro. Yet the minister seems unable to accept — and, by her own admission, refutes — the claims that she has made in the media and portrayed to British Columbians.
Between 2002 and 2017, there was a total increase of 7,800 megawatt hours of generating capacity in B.C. Of that amount, B.C. Hydro provided 43 percent; government-owned generators like Columbia Power added 6 percent; and industrial generators like Alcan and pulp mills added 18 percent. The remaining 33 percent was provided by IPPs. So only a third of the surplus energy capacity, or the additional energy capacity, was actually provided by IPPs, with a further two-thirds provided by those different entities, as I’d stated. Clearly, the increased energy supply was not entirely provided solely by the IPPs.
To the minister, I’m just wondering if you’d be able to clarify your position.
Hon. M. Mungall: Can the member please clarify if he’s talking about capacity or generation?
G. Kyllo: Generation.
Hon. M. Mungall: After some conversation with the president and CEO of B.C. Hydro and my ADM responsible for energy…. Listening to the member’s question, we all conclude that we think he’s actually talking about capacity, which is different from generation. Capacity is like the batteries, the storage that a reservoir, for example, would provide. That’s pretty much what Mica is all about. It’s more about storage than actual generation.
In terms of the actual generation, the gigawatt hours that I stated earlier, of the 482, as well as the much higher numbers I stated around IPPs are the numbers that I think the member is actually looking for.
G. Kyllo: Yes, it’s generating capacity. Does the minister accept Zapped’s claim made in the executive summary that as government had removed the options for B.C. Hydro to increase its internal generating capacity or import power to meet demand, this need for new energy could only be met through procurements to elicit proposals from IPPS?
Hon. M. Mungall: There’s a variety of very technical terms within this sector. I think that’s why there was just a little touch of confusion there. I think what’s being talked about here is B.C. Hydro’s ability to generate energy. It’s not the ability to have capacity, as a concept, in terms of the battery storage, as I said earlier, but the ability to generate energy.
Because it did not have the ability to generate the energy that was necessary to meet demand, B.C. Hydro had to go out, under the previous government’s directives, to acquire that energy from private sources, so it did. Whether it was IPPs or another source, it was all stuff that ratepayers had to, therefore, pay. I provided those numbers to the member earlier on.
G. Kyllo: One has to do with capacity. I think it’s well understood that B.C. Hydro was not meeting or fulfilling all of the energy demands of our province. It was evidenced in some of the questions by the leader of the Green Party and the subsequent answers by the minister.
The minister also indicated in her previous response, in answer to the leader of the Green Party, that as recently as March of this year, about $54 million of additional power was purchased at a rate of $57 per megawatt hour. Knowing now and understanding that as recently as March of this year, government was purchasing power at $57 a megawatt hour….
How does the minister, I guess, correlate that to the assumption that was established in the Zapped report indicating that the comparable would be used as the mid-C price of $25 per megawatt hour, knowing full well that the current government is purchasing power at rates significantly higher than the $25 mid-C price?
Hon. M. Mungall: When Mr. Davidson was doing his analysis, he was looking at the mid-C price over a long period of time, right? Not just a particular point in time. So that’s really important to having a fulsome analysis in terms of how these costs will be borne out to ratepayers over a long period of time. Specifically, he was looking…. He noted that the IPP program is costing ratepayers $16.2 billion in excess over a 20-year period of time.
He needed a price point to understand that over a long period of time. That’s why he identified the $25 mid-C price, because that’s typically where it’s at. This March we had a very specific circumstance that was associated with drought over the winter months that resulted in low reservoirs, so the price at that time was $57 per megawatt hour.
G. Kyllo: Can the minister share with us any other long-term supply contract that was negotiated by the government in the last three years or, say, in the last year that was at a rate anywhere close to the mid-C price rate?
Hon. M. Mungall: I think the member has highlighted that the whole point of the Zapped report was to point out that the price B.C. Hydro has been having to pay for its long-term contracts, particularly with IPPs, is too high. The reason why B.C. Hydro has, I believe, only one long-term contract at the mid-C point is because most of their contracts are IPPs, and the going rate was $109 per megawatt hour as opposed to the mid-C point of $25.
G. Kyllo: The minister was quoted on CFAX on February 15. I’ll read the quote into the record. “If we’re going to even renegotiate and renew any of these contracts, they’ll be at market rate, which is about $25 per megawatt hour.”
Now, the minister has shared with us that the most recent purchase was at $57 a megawatt hour. The rate that was utilized to determine and to establish the support for the construction of Site C was significantly higher. I’ve seen rates anywhere from $85 to $95, depending on what the ultimate capital cost of that project would be. I think it’s important for British Columbians to appreciate that if they believe, from the minister’s comments, that B.C. should be only purchasing power at $25 a megawatt hour, that is categorically false. It is not available.
For you at home that might be watching, a good analogy for mid-C pricing…. It’s like you go to the market garden, and everybody comes and purchases everything they want. Whatever is left at the end of the day that goes in the discount bin, that is what would represent mid-C pricing. If you want to purchase and have consistent, sustainable power for a future, longer-term contract, you will not be able to acquire that at the mid-C price rate.
I guess this is what comes back to the report. The false information and the false conclusions that are drawn from the report are both based on the fact that B.C. Hydro was able to continue to increase its internal generating capacity through upgrades and expansions on existing assets and the fact that the assumptions that were drawn from the report are based on an illogical price of $25 a megawatt hour.
I hate to belabour this, but the report is full of false information. My concern is that the current government gave a direct contract award to an individual, not through a proper procurement process — certainly not something that I think most businesses would look to do. They established a price, from my understanding and from the minister’s own comments, without the opportunity to actually have a competitive bid process. It was a direct award contract with set conclusions, it appears.
Also, the timing of the release of that report, a matter of just mere days before the minister announced a significant rate increase for B.C. Hydro…. I’m not a conspiracy theorist, but the timing is just so suspect that I think it’s important for British Columbians — and, I think, for the energy industry — to have a full understanding of the value of green energy and IPPs in this province.
At the time that government was looking to increase its green energy capacity, there was concern in the Lower Mainland for Metro mayors to look at shutting down Burrard Thermal. There was a desire for British Columbians to look at acquiring and becoming self-sufficient in our energy supply. So yes, contracts were let from IPPs, with no capital expenditure and no risk put on the taxpayers of this province.
It attracted about $8.6 billion of outside capital that was invested in our province, creating jobs, economic opportunity not just for locals and for residents but for First Nations and First Nations communities. It provided opportunity for First Nations communities to get off of diesel generation.
The government’s current CleanBC plan also sets out some fairly significant targets for increasing the generating capacity to meet the increasing demands of our province through clean initiatives. I think British Columbians also need to know and appreciate the fact that both solar and wind generation 15 or 20 years ago was significantly more expensive. As technology has increased, the utilization of these technologies has grown. As we increase the demand, the supply is increasing and prices are coming down.
What I’m hoping to share with British Columbians is that IPPs are a significant contributor to meeting B.C.’s energy demands, that they were undertaken with all of the best intentions, and it was actually B.C. Hydro that had the ability to continue to increase their own generating capacity which significantly added to the surplus supply.
If you have a look at the B.C. Hydro revenue requirements for 2007 to 2016 that was actually presented to the B.C. Utilities Commission, it was as follows. This has to do with rate increases. Capital charges were increasing at 53 percent, operating costs increasing at 31 percent. Other incomes were down 7 percent, and the cost of energy was increasing at 5 percent, along with increases in taxes at 4 percent.
The evaluation that we’ve undertaken indicates that the IPPs form only a very small portion of the cost of energy. What our numbers are showing us is that the IPPs only contributed less than 5 percent to the overall increase in revenue requirements during that time period. That’s the time period from 2007 to 2016.
That is very different from the claims that are made in the Zapped report. I think that British Columbians need to have fulsome information with respect to why their rates are going up. I think that the timing in the release of this Zapped report, mere days before the B.C. Hydro increase that was announced by this minister, was very suspect when, in actual fact, there’s a very small portion of the rate increase that can be in any way attributable back to IPPs in this province.
[M. Dean in the chair.]
Hon. M. Mungall: There is quite a bit in the member’s statement there. I didn’t necessarily hear a question, but let me address some of the issues that he was bringing up.
First off, in terms of cost of IPPs…. And this is all IPPs, not just those that may be members of Clean Energy B.C., or the IPP Association — all the IPPs, all the independent private power producers that B.C. Hydro is working with. They are 25 percent of the energy supply that is the grand total of B.C. Hydro’s energy supply, but they are 29 percent of costs, whether that’s generation, transmission, distribution. All of those costs — they are 29 percent of those costs.
Our heritage assets generate electricity at $33 per megawatt hour. We are buying IPP power at, on average, $100 per megawatt hour. That number alone is disconcerting for British Columbians.
The member…. Let me go first to this point that he’s trying to make around rates and timing of the Zapped report and when we announced the rates as a result of our phase 1 B.C. Hydro review.
There really is no conspiracy here. He keeps talking that we announced a rate increase. I feel like he’s doing a little bit of revisionist history here, Chair, because what he needs to be clear about with British Columbians is that the rate increase that is a part of our first phase of our B.C. Hydro review is 40 percent less than the rate increase that was under his government’s watch. We actually went in, we did our review, we found cost savings for ratepayers, and we are delivering on those cost savings for ratepayers.
To suggest that Zapped was about allowing us to jack up rates is patently false, because we are actually coming in with a lower rate increase than what was projected under their government. I appreciate that the member wants to defend his past government’s policy decisions. Clearly, as partisan politicians, we’re very passionate about the decisions that we make, and we’re passionate about the policy decisions that we often move forward with. Sometimes, even when it’s pointed out that they were not good decisions, there’s still a drive to want to defend them.
I appreciate that that’s what the member is wanting to do here, but to suggest that the previous government had no direction to B.C. Hydro in terms of where it needs to be buying power is just not accurate, Chair, so I’m going to highlight this for the member. The 2008 long-term acquisition plan went before the B.C. Utilities Commission. This was the long-term acquisition plan that the B.C. Liberals had put forward, when they were in government, through B.C. Hydro. That went forward to the B.C. Utilities Commission. The B.C. Utilities Commission shot it down, saying that that was not in the public interest.
Was B.C. Hydro allowed to go away and do something different? No. The B.C. Liberals intervened, and they actually forced that 2008 long-term acquisition plan onto B.C. Hydro. That was, essentially, the IPP plan. If there’s any mistake, I just want to highlight that the Minister of Energy in 2009, on November 2….
This is on the Internet, at the IPP Association conference. That reporting out of what he said to the conference is…. This is what the minister was saying to the group: “His government will direct B.C. Hydro to proceed with its call for clean power and bioenergy.” The minister was out at a conference saying that his government would direct B.C. Hydro to do exactly what the member is saying didn’t happen.
G. Kyllo: Madam Chair, that is not what I was saying. What I was sharing with British Columbians was that the statements made by the minister and statements set out in the Zapped report that indicated that B.C. Hydro was directed to only increase generating capacity through IPPs are categorically false, by the minister’s own admission. There are a number of projects that have been identified and read into the record where B.C. Hydro increased their own generating capacity on their own assets.
Madam Chair, it was not my intention to in any way state that it wasn’t government’s intention previously to move towards more green energy, and I would suspect that British Columbians even today would appreciate that future energy demands for our province are undertaken and purchased or built directly or to be bought by B.C. Hydro through IPPs, from green sources. The minister’s colleague had made a number of comments…. Sorry, I think I’ll come back to that.
Just going back to the Zapped report, shortly after the Zapped report was released, within a matter of days, the NDP announced a rate hike at B.C. Hydro. Will the minister admit that she failed to deliver on her mandate letter and a key NDP promise that established and required her to freeze hydro rates?
Hon. M. Mungall: I’ve made no bones about it that I, personally, wanted to deliver on freezing hydro rates for British Columbians. That was something that I think all of us in government wanted to see. But we also want to make sure that there’s good process in doing that. We want to make sure that the public interest is always upheld and that the long-term vision and regulatory responsibility over B.C. Hydro is maintained.
Because we value that process and because we know that process is a good process, we didn’t just freeze rates or increase rates or give directions to B.C. Hydro the way the previous government did. Rather, we did what we were supposed to do, and what the previous government should always have done as well, which is go to the B.C. Utilities Commission with such questions. And that’s what we did.
What the B.C. Utilities Commission found was that a rate freeze would have long-term negative impacts financially on B.C. Hydro that would, ultimately, have to be borne by the ratepayers. So if we were going to freeze rates, it would come back at a later date in a way that was not beneficial to ratepayers.
I thank the B.C. Utilities Commission for their work in always putting British Columbians’ interests first and foremost. Not that we weren’t doing that, but they have a regulatory responsibility that is independent. They did that, and they came back and said freezing rates would be a problem down the road. We appreciate the work that they did, and we followed it.
G. Kyllo: Well, we do know that last fall the minister actually made an announcement that B.C. Hydro rates were going to be frozen, only to have to retract and walk that back a week or two later and provide — I think what the minister is now indicating — respect for the B.C. Utilities Commission in providing them the opportunity to actually establish rates.
Further, when the minister has now indicated that work was undertaken to try and reduce the increases for B.C. Hydro, one can only suspect that the claim that was set out and established by the government in their election platform, which was obviously important enough to be included in a mandate letter to the minister to freeze hydro rates, was an outlandish claim at best.
The minister is now sharing with us, in the House, that she respects the independence of the B.C. Utilities Commission and that it should be up to the B.C. Utilities Commission in order to establish rates. Yet the mandate letter that she was provided by the Premier, which is in line with promises made by the NDP government before the last election, was just that — to freeze hydro rates.
The proposition was put before British Columbians: “Vote for us. We’ll freeze hydro rates.” Now we are seeing that that has not occurred. I’m not disagreeing that we should not respect the B.C. Utilities Commission. But is the minister able to share with British Columbians whether your claim of freezing hydro rates for British Columbians was actually realistic or whether it was just an empty promise — then to further claim their respect for the B.C. Utilities Commission with respect to establishing rates?
Hon. M. Mungall: Pointing out that I had to eat humble pie is not a gotcha moment. I was there; I know.
Like I said, our government wanted to freeze rates for British Columbians. I personally wanted to freeze rates for British Columbians. But there’s an appropriate process that needs to be followed that their side of the House refused to do in so many ways for so many years — 16, actually. That was not right.
We did not want to get off on the wrong foot with B.C. Utilities Commission. We did not want to get off on the wrong foot with making sure that that body was doing its job for British Columbians. We, in fact, came into government wanting to re-empower the BCUC, and that’s exactly what we’re doing with another piece of legislation that’s before the House right now.
I just want to be clear: we feel that we did the right thing. We went to the B.C. Utilities Commission. The fact that I had to eat humble pie about it? You know what? I’m glad that we have the B.C. Utilities Commission working for British Columbians, and a little bit of humble pie as the cost for that is worth it.
G. Kyllo: I found the quote that I was looking for earlier. This was a quote that was undertaken by the member for Port Moody–Coquitlam during the debate on IPPs. The quote by the member for Port Moody–Coquitlam is this. “The B.C. Utilities Commission tried to protect ratepayers by saying that B.C. Hydro should use Burrard Thermal in its energy planning, rather than the expensive energy from private companies…Let’s be clear. The government did not do the right thing for the people of this province.” Does the minister endorse that view?
Hon. M. Mungall: I’m not too sure that the personal opinion, as expressed on behalf of his constituents in the House during a debate, has anything to do with the budget estimates for the Ministry of Energy, Mines and Petroleum Resources. Perhaps the member would like to clarify.
G. Kyllo: I think that the question does go to the root of the Zapped report, which the minister has relied upon in order to establish the way that the government moves forward with respect to IPPs. It is less about the small contract award for the contractor but more, I think, the broader implications of a government that sole-sources a contract to a single individual, that uses incorrect information, makes incorrect assumptions, and that that report is then used to try and detract from a significant rate increase that this government put forward to B.C. Hydro.
In addition to that, the comments with respect to Burrard Thermal are something that I think British Columbians are very concerned about. Is it truly the intention of this Energy Minister to reactivate Burrard Thermal?
Hon. M. Mungall: No.
G. Kyllo: If the minister isn’t planning to reactivate Burrard Thermal, then why would the minister endorse a report that makes assumptions based on keeping Burrard Thermal open?
Hon. M. Mungall: The conclusions of the report were not based on keeping Burrard Thermal open indefinitely. In doing the due diligence of the analysis that he was tasked with doing, Mr. Davidson had to acknowledge that the previous government directed B.C. Hydro to shut down Burrard Thermal, which therefore meant that there was a need to procure that level of energy someplace else. How that energy was procured is what was at question, and he made conclusions on that procurement.
G. Kyllo: Well, that’s interesting in that the reliance on Burrard Thermal in establishing the potential future cost to British Columbians, I think, is very important. The fact that the report took into consideration the direction of the previous government to shut down Burrard Thermal and its potential impact on ratepayers is certainly key, and I think part of the whole Zapped report.
The information provided in the report is not 100 percent factual, and that, I think, should be very concerning. Is this a government that will sole-source contracts to an individual that has limited experience in the subject matter of this particular report, draw a number of conclusions that are, by the minister’s own admission, incorrect and then stand behind that report and use that report as justification and as cover in advance of rate increases that are announced by her government, which are in direct contradiction to what her mandate letter was established at?
I think this is something that’s very important. I’m not sure how the minister is able to continue to support the report that was presented back in February.
With that, I will take my seat, and we’ll move on in estimates.
T. Shypitka: We’ll slip into mining. I’m not too sure if the staff….
Interjection.
T. Shypitka: Oh yes, absolutely.
The Chair: A five-minute recess, Members.
The committee recessed from 4:51 p.m. to 4:56 p.m.
[M. Dean in the chair.]
T. Shypitka: With mining, we’ll start with the compliance and enforcement being swapped over to competitiveness spending initiatives. This year’s budget splits the mines and mineral resources line item from last year’s budget into two new line items: “Mines competitiveness and authorizations” and “Mines health, safety and enforcement.” My question to the minister is: can the minister explain the rationale for the split?
Hon. M. Mungall: I’m very proud of what we’ve been able to do on the mines division in this ministry. There’s so much that is going on, but one of the things that I’m most proud of is taking the past recommendations from the Office of the Auditor General and actually implementing them. That was creating a specific unit or an independence to the compliance and enforcement of permitting. This is how other jurisdictions do things as well.
Rather than have the same person issue the permits and then have to go out into the field, ensure that there’s compliance and ensure that they’re enforcing that compliance…. And then there’s one person who’s taking up a lot of their time. That actually can create a backlog in permitting.
We wanted to also be able to free up those responsible for permitting so that we didn’t have that backlog and so that we could make sure that things are clipping along at a fair pace for industry and also for the communities that rely on mining for the jobs and for the benefits that it brings to their communities, like our communities in the Kootenays.
We put $20 million into the mines health, safety and enforcement division. That $20 million has allowed us to create this new division that’s going to be able to ensure that health and safety, for example, on our mine sites is being met — we all know the importance and value of that — and then making sure that not just health and safety for the workers but also for our land base….
Something that occurred that upset everyone in British Columbia was the disaster at Mount Polley. It was one of those learning opportunities. If you read the Auditor General’s report, she went on at quite a length on why we need to take that learning opportunity and why it’s a good example of creating an independence with the compliance and enforcement side of the permitting process — or, once the permit is issued, then the compliance and enforcement of those permits.
I think we’ve done the right thing. I think it was on the trajectory that was originally initiated by recommendations from the Office of the Auditor General.
T. Shypitka: Speaking of Mount Polley — yeah, an absolute disaster.
Would the minister, then…? Is what the minister is saying, then…? If this, a separation of compliance and enforcement, was back when Mount Polley was first constructed, back in the ’90s when the NDP was in government…. Would this new regime, or this new structure that’s in place right now, have avoided something like Mount Polley?
Hon. M. Mungall: I can’t go back in time and suggest what may or may not have prevented Mount Polley from happening. What I can say is that more boots on the ground is good for British Columbians in terms of making sure that we have a good permitting process and that we also have good compliance in terms of health and safety for workers as well as for our land base.
The Office of the Auditor General, however, did make a recommendation saying: “This is a better practice. This is what British Columbia should be doing.” We’ve responded.
T. Shypitka: No, we can’t go back in time. But the minister did use Mount Polley as a reference as to why this new line split in the budget is being afforded to us — between compliance and enforcement and competitiveness spending initiatives. Combined with the two new line items that are here right now, in spending, it’s about $4 million more this year than in last year’s budget. How will this money be spent?
Hon. M. Mungall: The new money is going to be spent on people. I alluded to boots on the ground, and that’s exactly what I mean by that. Specifically, it will be 22 new FTEs in our new division and ten in the mines competitiveness and authorizations, which is, colloquially, the permitting side of the mines division. Basically, the new dollars, the $20 million that was announced, are going to be spent on FTEs — on people, on boots on the ground.
T. Shypitka: Sorry, I missed that. It was 22 FTEs and something else.
Hon. M. Mungall: There are 22 new FTEs in the mines health, safety and enforcement side and ten in the mines competitiveness and authorizations, for a total of 32 new FTEs.
T. Shypitka: So nothing in this $4 million will be spent to physically separate the two departments at all?
Hon. M. Mungall: There’s not really a cost associated with separating things out. I mean, there are overhead costs associated with the new FTEs — desks and so on, maybe a divider in a large office space. I’m not really sure if the divider is needed. Maybe people like more of an open-concept office space. I leave that up to my very capable ADMs, who have joined me. This is Peter Robb and Nate Amann-Blake.
There’s no specific cost with any type of separation. The costs are associated with the hiring.
T. Shypitka: I would just assume office space and, like you said, operating costs must have been factored into this somehow. Is there a ballpark figure of what that looks like? I don’t know if it’s substantial or not.
Hon. M. Mungall: I’ve already mentioned the 32 FTEs in the mining division, but we also have new FTEs…. I feel like saying FTEs is just so dehumanizing. We have new people being hired in the energy division as well as the ministry.
All we have in terms of the overhead costs associated with the new people being hired is for all of the ministry new hires. I don’t have one just for the mining division. What I’ll do is I’ll give the member that. It’s $1.5 million, the total operating expenditures, for the overhead associated with the new hires. That goes to things like IT, building occupancy charges and, like I mentioned earlier, desks and so on.
Again, the total overhead is $1.5 million for all new FTEs that we’re hiring in the ministry.
T. Shypitka: As the minister has said, there’s $20 million over the next three years. I believe it’s $5 million, $7 million and $8 million over the next three years. I could be wrong. I think that’s what it is.
What is the timeline for the creation of the oversight committee and the completion of its recommendations for updating the HSRC for mines, and how much will be spent on it?
Hon. M. Mungall: Just a question of clarification for the member. Is he talking specifically about what we’ve termed the Code Review Committee? Is that what he’s looking to get information about?
Interjection.
Hon. M. Mungall: Okay. Great.
We have announced a standing Code Review Committee. The idea is that it is an ongoing committee. The membership is being appointed for three-year terms right now. We do anticipate some recommendations within their first year, but that hasn’t been decided yet, as they are just getting started right now. The budget for this committee is $500,000 for this fiscal.
T. Shypitka: Sorry. Health, safety and reclamation code, HSRC. I should have said that, I guess.
I saw the report. There was a timeline of hiring 65, I believe. Up to 65 was, I think, the release. What will they be doing, and which offices will they be working in? Up to 65, I believe, was mentioned — 65 employees.
Hon. M. Mungall: Yes, it’s up to 65 new FTEs over a three-year period. The numbers I was saying earlier were just this year.
Over three years, we anticipate that we’ll have 22 new people in the mines competitiveness and authorizations division, and we’ll have a total of 89 new people in our new mines health, safety and enforcement division.
Interjection.
Hon. M. Mungall: You’re right. There are 65 new people over three years.
Where will they be located? Well, we have five regional offices. The member knows that there’s one in his area. They’ll be dispersed throughout the province — ideally, in the five regional offices.
We have some flexibility as well. We know that there are many mines that are a great distance from any of our regional offices, so we want to make sure that we have flexibility to hire the best people and that they’re able to work in the field. That makes sure that British Columbians’ needs for permitting as well as the compliance enforcement are being met. Because so much work can be done on line, as well, there’s greater flexibility that not everybody has to be working out of those five regional offices or Victoria.
T. Shypitka: I’ll just touch on something the minister said. I wasn’t sure if I heard her properly. How many employees right now in those divisions?
Hon. M. Mungall: The number of people right now in the mines competitiveness and authorizations is 155 FTEs. In the health, safety and enforcement is 46.
T. Shypitka: Before the split, when it was just compliance and enforcement, how many employees did we have?
Hon. M. Mungall: You would just add the two base numbers of 155 and 46 to get 201.
T. Shypitka: How many new major mines have been permitted in the last year? Could the minister provide an update on where some of the major projects working their way through the permitting process are at?
Hon. M. Mungall: There have been two major mines that have completed their EA certificate and are moving on to the permitting phase. That’s the Red Mountain and the Kemess Underground. In terms of when a major mine, or even a small mine, gets the go-ahead, it’s at that EA certificate, the environmental assessment certificate.
I want to just let the member know that our major mines permitting office is a very busy place. Permitting is an ongoing thing. Even well-established mines may require permitting to expand or whatever it is that they’re looking to do. That has also been happening in the last year — for example, with the Myra Falls restart here on the Island as well as in the member’s own riding. Many of the mines up the Elk Valley have been engaged with the major mines permitting office for the work that they’re doing throughout their operations.
T. Shypitka: Sorry. It was Red Mountain…. What was the other? There were two, you said.
Hon. M. Mungall: Red Mountain and Kemess Underground.
T. Shypitka: Does the minister have a sense of how long Mount Polley anticipates to be suspending their operations for?
Hon. M. Mungall: That would be up to the company.
T. Shypitka: I believe Imperial Metals has indicated…. Obviously, commodity prices are a big, big deal. That, obviously, drives sustainability of a mine. That’s what I’ve dug up, anyways, on commodity prices mostly.
Would the minister or her staff have any idea what the price of copper would be to keep that…? What’s the pivotal point on copper prices for Mount Polley to sustain themselves?
Hon. M. Mungall: In a nutshell, that’s not something that the ministry knows. It’s up to the company. The reason why is that every mine and every company situation is different — in terms of their debt financing, how they’re managing assets in other parts of the world, if they are a global company. There are a variety of factors at play that really…. In terms of Mount Polley and what works for Imperial Metals, only Imperial Metals can answer that question.
T. Shypitka: Is the minister monitoring the progress of HD Mining as it works towards training and transitioning its workforce away from foreign labour and towards Canadian miners and contractors?
Hon. M. Mungall: HD Mining, for its project, has all its authorizations and permits, but they are not operating right now. As a result, there’s really nothing to be monitoring.
T. Shypitka: I’ll switch over to Blackwater gold. They recently received a positive decision from the Canadian Environmental Assessment Agency. Was that done in synergy with the provincial government? Are both those EAs passed, then — provincial and federal?
Hon. M. Mungall: I am not permitted to speak about Blackwater because it’s before me as a statutory decision–maker.
T. Shypitka: I’ll assume it’s still in the provincial EA, then, so you can’t about talk it at all.
Okay. We’ll go on to the next little piece here. This is something that’s outside of the province a bit, but it should directly affect us here in British Columbia. The Premier-elect of Alberta, Jason Kenney, has promised to reduce the corporate tax in Alberta to 8 percent by 2022. In B.C., the current corporate tax rate is 12 percent. As the minister knows, Vancouver is a global hub. I believe it’s the mining capital of the world for headquarters. It’s 800, in fact, I think, or somewhere in that neighbourhood, for mineral exploration corporate office headquarters.
What assurances can the minister provide to ensure that these offices remain in British Columbia rather than taking advantage of better corporate tax rates in Alberta?
Hon. M. Mungall: We’ll continue to monitor Alberta, as well as other jurisdictions, to make sure that British Columbia is competitive. We have a whole division. I mentioned that that division is responsible for permitting, but let’s not mistake that its title, Competitiveness and Authorizations, is…. We have people who are doing that monitoring to make sure that B.C. stays competitive. This is also something that our Mining Jobs Task Force was established to do — to identify how B.C. can be competitive in a global marketplace for mining.
I say this all the time. This is a foundational economic sector in British Columbia, and it has such an important role for so many communities all across the province. The member and I know exactly the extent of it because we come from the Kootenays, where communities — my home community of Nelson — grew from the mining sector. We know the value that these have in our communities, so we know that we have to be competitive.
We know that we can’t lose any of the edges that British Columbia has, so we will be monitoring what Alberta does, what other jurisdictions do. We have the people for that. We have the Mining Jobs Task Force, which has given us a variety of recommendations that we are in the process of implementing to ensure that we are competitive on a variety of fronts, not just the corporate tax rate.
I would also like the member to know — and I think he’ll be very happy to hear this — that our Mining Jobs Task Force hasn’t gone away. They actually have moved into being a standing implementation committee. The fact that we have such dedication and such passion for the mining sector from a group of volunteers…. They want to continue the work that they started as the task force and move into implementation. Hats off to them, and I thank them very much. I know that people throughout B.C. and, in particular, the regions that myself and the member represent are very grateful to these people for their volunteer efforts.
T. Shypitka: That’s good to know. It sounds like you’ve got a whole suite of tools to use to address the competitiveness in the province.
Has the minister reached out to industry on this issue at all? It’s obviously a big deal — 8 percent. That’s a big cut, 4 percent, on a bottom line to a company.
If I were minister, I would probably be very concerned about some of these corporations uprooting and leaving towards Alberta, not too far away. As a matter of fact, as the minister knows…. She says she’s from the same area as I am. She is a Kootenay person. That’s awesome, but Alberta’s a hop, skip and a jump from there. Calgary headquarters would lean to a lot of these big minds that are in the province, up in the Peace region all the way down through to the Kootenays. It’s not hard to conceive that some of these corporations would uproot. Has the minister reached out to industry?
Hon. M. Mungall: There are a variety of things I want to touch on here to answer the member’s question, because what I hear behind that is a genuine concern. I don’t live as close to the Alberta border as he does, so I can appreciate why he has that concern.
First off, there are a variety of things that determine competitiveness and not just the corporate tax rate. Calgary, for example, does not have, essentially, that incubator side of the industry that makes our jurisdiction attractive to mining. Calgary just doesn’t have that. There’s also proximity to Asian markets as well. Calgary does not have that to the extent that we do here, in the Lower Mainland and Vancouver.
There’s a variety of things that are driving that competitiveness and why the mining industry sets up shop in Vancouver. But like I said, we will absolutely be monitoring this. We are engaging with industry all the time. One of our largest engagements was through the Mining Jobs Task Force. I can speak long about that, but I will not take up the member’s time by speaking about how great they are.
For me, personally, I’m in regular conversations with the mining sector. I was just meeting with Geoscience B.C. just the other day, for example. But in the last week, has anybody approached me with this particular issue? No, they have not.
T. Shypitka: Yeah, and I would just like to mention that complacency is a dangerous thing. We talked about incubators and Calgary. The reason why I’m concerned is that these incentives that the new government’s putting in place aren’t maintaining the status quo. They’re going for business. Alberta’s economy is not so great right now, and they see, maybe, some pickings over here.
The minister mentioned proximity to market: “We’re safer in Vancouver because of our proximity to market.” Well, we’ve got four of the top five mines in British Columbia 20 minutes or 30 minutes away from the Alberta border, so proximity is pretty close for some of those large players.
We will continue to monitor it. I trust that the people that the minister has will do a good job on making sure that we’re not going to let anything get away from us.
Going from corporate tax to carbon tax — it seems like a lot of tax here — does the minister feel the increased carbon tax from $30 a tonne to $40 a tonne is negative for competitiveness?
Hon. M. Mungall: I think it’s really important to understand what is happening in the marketplace now. It’s not the same marketplace that it was ten years ago and certainly not 20 years ago.
As we are dealing with the effects of climate change, more and more consumers of minerals…. Whether it be ultimately in manufacturing — let’s say Google with their phones or Apple with the iPhones that we all carry around — or whatever it is, more companies are wanting to make sure that the minerals that they use in their manufacturing are sourced sustainably. They want to make sure that they’re coming from jurisdictions that are caring and doing something about climate change.
That we have a carbon tax actually allows for that competitive advantage for many companies to say: “The proof is in the pudding. Here we are in a jurisdiction. These minerals are being produced sustainably. We have to pay a carbon tax on it.”
We want to make sure, though, that the carbon tax doesn’t turn around into a situation where it is uncompetitive. We want to ensure that industry has the opportunity to reduce their GHGs, ultimately. That’s what we need to do if we’re going to address our impact on climate change, right? Paying a tax without reducing GHGs doesn’t achieve the goal that we’re actually trying to achieve. That’s why we’re having, as part of our CleanBC plan, the CleanBC industry fund, where the carbon tax above $30 per tonne goes into a fund that industry can access to do projects that are going to reduce their carbon intensity.
These are projects that they weren’t going to be doing anyway. Some of them are very innovative. Some of them might be new technologies that are available in other jurisdictions, and bringing them here has been cost-prohibitive, so we want to help them with the cost of doing that. Whatever it may be, applications will be reviewed, obviously. We’ve created that fund as part of our CleanBC plan.
Another part of our CleanBC plan, though, is also to electrify industry in British Columbia. The more that we electrify British Columbian industry with clean energy, the better it is for their competitiveness in a global market in terms of those customers that want minerals sourced sustainably, but it also reduces the amount of carbon tax that they pay.
T. Shypitka: Thank you for that answer, but the question was: does the minister believe that the carbon tax impedes competitiveness?
Hon. M. Mungall: My personal beliefs are not part of the budget. They’re not. I believe that the member is asking me a question about budgets, so I’m trying to explain about how this program with the carbon tax works.
T. Shypitka: Sorry. I’ll rephrase. Does the ministry believe that the carbon tax is effective for competitiveness?
Hon. M. Mungall: I think I answered that question, in terms of why we have the carbon tax and what we’re doing with it to ensure that there is competitiveness on a global marketplace for the mining sector — for all industry, actually — and to acknowledge that the CleanBC industry fund is available to all industry.
In terms of: does it allow for competitiveness? I think the better groups to ask are the large mining operations in the province who work on a global scale. There are other jurisdictions that also have a carbon tax. They know that their customers want to know that minerals are sourced sustainably. Having a carbon tax allows them to communicate to those customers that, yes, they are.
T. Shypitka: Well, last year in spring estimates, the minister said that the government’s carbon tax increases weren’t very important. As a matter of fact, let’s see if I have the exact quote here: “I would say that as we reduce carbon emissions, we are not reducing our competitiveness.”
As the minister pointed out, the Mining Jobs Task Force is doing a heck of a job. Some great recommendations will be coming out of that, and they’re implementing them now. But the Mining Jobs Task Force noted that carbon tax remains the single largest hurdle for industry competitiveness in B.C. I’m just wondering how the minister wanted to explain the Mining Jobs Task Force’s own statements there.
Hon. M. Mungall: I think it’s so important to always recognize the context in which things are said. It’s really easy to take quotes out and spin them for your own desire. I hope that the member isn’t trying to do that, but it kind of feels like it. So I’m just going to go back to the context of the actual Mining Jobs Task Force report.
He does rightly suggest that they identify it as a competitive disadvantage for B.C. But they also go on to say how we can acknowledge that and overcome it, right?
What they say in terms of that as an action is: “Support government’s low carbon industrial strategy,” which I spoke about as part of our CleanBC plan, “for British Columbia, including development of programs to stimulate capital expenditures,” which I talked about, the CleanBC industry fund, “and address competitiveness challenges.”
I think that we have found a way to address competitiveness concerns, which I already identified. I just want to remind the member, because I know he wasn’t here, but it was actually just before 2009, under the Gordon Campbell B.C. Liberal government, that the carbon tax was implemented. It is them who actually raised it to $30 a tonne.
That we’ve been able to take that and go forward with a way that actually creates incentives for reducing GHGs, I think, is a very good thing. I know that industry is very happy, from what they tell me, in terms of that program.
Noting the hour, I move that the committee rise, report progress and ask leave to sit again.
Motion approved.
The committee rose at 5:46 p.m.
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