Orders of the Day

Hon. M. Farnworth: In this chamber, I call Committee of the Whole on Bill 36, Gaming Control Amendment Act, continued.

[2:35 p.m.]

Committee of the Whole House

BILL 36 — GAMING CONTROL
AMENDMENT ACT, 2019

(continued)

The House in Committee of the Whole (Section B) on Bill 36; R. Chouhan in the chair.

The committee met at 2:37 p.m.

On section 2 (continued).

M. Lee: I wanted to come back to a question that was raised in comments on the arrangement on an interim basis, just to understand the comment that the Attorney General made near the end of the last period of time we were dealing with this as a committee. It was around what would be a permitted expenditure by First Nations on those arrangements.

I was understanding that when looking at the recitals of the interim agreement and other sections of the agreement, there is contemplation of five or six core areas in which First Nations are expected to be spending the share of revenue that they’ll be receiving from the government. If I can confirm with the Attorney General that that is the case, and if so, what are those areas, for the record?

Hon. D. Eby: Eligible B.C. First Nations will determine their own priorities for these funds, which may be spent within six categories of approved purposes, which were set by them: health and wellness; infrastructure, safety, transportation and housing; economic and business development; education, language, culture and training; community development and environmental protection; and capacity building, fiscal management and governance. Direct distributions to individuals are not permitted.

I think that fully responds to the member’s question.

M. Lee: I appreciate that there has been a level of engagement or discussion around the core areas for which expenditures ought to be provided. When a First Nation is receiving funds, can those funds be expended on any purpose other than the ones that the Attorney General has mentioned?

Hon. D. Eby: I understand that the nation could invest the money, but ultimately, it would have to be spent on one of the six categories that I listed.

[2:40 p.m.]

M. Lee: I wanted to ask about the term…. The member for Skeena — this is one of the questions that he wanted to raise, which is clarity around the definition of “provincial territorial organizations” on page 9 of the interim agreement. The use of the word “territorial” is intended to denote what?

Hon. D. Eby: Provincial territorial organizations are the First Nations Summit, the B.C. Assembly of First Nations and the Union of B.C. Indian Chiefs, which collectively make up the leadership council. As for the word “territorial,” it has its usual meaning, that I understand.

M. Lee: I just wanted to ask, to reconfirm the type of reporting that is required under the interim agreement. If the Attorney General could outline, on an annual basis, what the First Nations are expected to be doing in order to comply with their obligations under this arrangement.

Hon. D. Eby: The limited partners provide their audited reports to the partnership, and then the partnership aggregates the reports and provides an aggregated report to the province about how the money is being spent and what impact it has had on communities.

M. Lee: With these audited statements that are being provided, how do they fit with other existing audit requirements — say, required by the federal government?

Hon. D. Eby: I’m advised that we don’t have sufficient information about the federal requirements. But from what we know of the federal requirements, there’s not intended to be overlap or that somehow one system would feed into the other, necessarily. The auditing function is about ensuring that the money that’s provided is used for the project as stated and not for other purposes.

M. Lee: Just in terms of the general partner, what are the requirements on reporting on the use of funds, apart from the audited statements, that is needed to be provided by each of the First Nations?

Hon. D. Eby: The current requirements, as we understand them, are that within 90 days following the end of a fiscal year, the general partner will receive audited financial statements from the limited partner, which are going to show the receipt of the distribution from the partnership itself and then how the limited partners spent that money. The report will be of all the amounts expended on permitted expenses. It’s sort of a straightforward grant report, I guess, if any of you have had exposure to the non-profit world, and that report is going from the limited partner up to the partnership.

[2:45 p.m.]

M. Lee: I wanted to come back to a few aspects of what we were discussing in the last committee session and ask the Attorney General: were First Nations given the option of having the funds, the net annual gaming revenue, flow directly to them other than through the partnership?

Hon. D. Eby: Once a First Nation becomes a limited partner in the partnership, there is an option for them to direct the partnership to instruct the province to provide the funding directly to the nation. But they do have to become a limited partner first. They’re still subject to all of the reporting accountabilities that are in the partnership agreement.

M. Lee: We did touch on this yesterday, in that regard. That would be, presumably, for one individual First Nation to work through the partnership arrangement in order to make that direction.

In terms of the review that’s contemplated down the road under the long-term agreement, if the limited partners choose to alter the way, the mechanism, in which funds are received…. We discussed yesterday in committee that presumably that would be a material change to the partnership agreement arrangement and would require approval by way of an extraordinary resolution of all of the limited partners. Could I confirm that that is the case?

Hon. D. Eby: The previous answer that I gave to the member was in relation to an individual nation that might want to have its money flow directly from government. They still have to become a member of the limited partnership.

If the limited partners decided to dissolve the partnership and have money be administered in a different way, then certainly, they’re entitled to do that through special resolution. It would obviously be a fairly significant step, given that the partnership is written into all of the agreements as well as the legislation.

It’s possible, but it would be fairly substantial, compared to just somebody saying: “I’d rather have my money come directly from the provincial government.”

M. Lee: When we look at the Gaming Control Act itself and look at sources of revenue and sharing of revenue from gaming in this province…. As a point of reference, under the act that we’re currently considering an amendment to under part 6, “Grants to Eligible Organizations,” there is contemplation, of course, about annual community gaming grants.

Can I ask the Attorney General to confirm the current level of another form of revenue-sharing that’s occurring in this province with not-for-profit organizations and others in the arts or in sports or other needs in the community? What is that level of funding that’s currently being received by those organizations, in an aggregate nature?

Hon. D. Eby: We’re getting the number for the member. We don’t have it immediately at hand. It shouldn’t take long.

[2:50 p.m.]

M. Lee: I appreciate that. I appreciate the opportunity to confirm that level.

To the Attorney General and his team there, it would be helpful…. My next question was going to be to look back in terms of for this current budget year and, let’s say, the four previous years — recognizing that there’s obviously been a previous government that is in that range. I just wanted to see, to establish some steady-state pattern, I expect, from that level of gaming, under either the previous government or this current government. That would be my request for that information that would facilitate this discussion.

Just as we look at part 6, the way it is established, there is the mechanism for which there is, under section 41 of this act…. “Subject to there being an appropriation under the Financial Administration Act,” on application, “grants may be made to organizations that meet the prescribed standards of eligibility.” Has there been any consideration, in the context of revenue-sharing, to establishing a minimum committed amount for community and gaming organizations, organizations that are of need for these funds and rely on these funds on an annual basis?

Many not-for-profits, including the ones that I’ve served as a director of, look to that funding in order to fund their good operations, including — I think I referenced this in my second reading speech — an arts and education training organization that I used to be on the board of that was able, with the help and the assistance of community gaming funds from the province, to establish new programs for after-school care, particularly for children who were vulnerable, low-income people who don’t have access, families that don’t have access to that kind of strength in arts and education training.

Organizations like that have the need to have the ability, at least, on an annual basis, to apply for further funds based on their track record and based on their need. Has there been any consideration in this area looking at establishing a minimum commitment for a proportion of gaming revenue to be set aside on an annual basis for community gaming?

Hon. D. Eby: This legislation is not related at all to the community gaming program. Government does have a fixed amount that it provides to community organizations, which is independent of the particular financial income of the B.C. Lottery Corp. As the member will know, when we banned bulk cash transactions at casinos, there was a lot of concern: if it affected B.C. Lottery Corp.’s revenues, would it impact gaming grants? Government committed that no, we would be keeping a consistent amount of money in the gaming grant system.

I’ll do my best to answer gaming grant–related questions, but this is a totally different project program and a different stream of government revenue, and so on.

M. Lee: I appreciate that it’s certainly a different section of the act, but we are talking about gaming revenue. Certainly, there’s been a history in this province of community gaming grants being established. As I understand it, in talking to a previous member of this Legislative Assembly, back in the ’80s, under the Premier of the day, it was his intention and desire to ensure that revenues that were being made available from gaming were made available directly to communities and that those revenues did not flow back through government through general revenue.

We’ve since moved a great deal of distance there, but the intention of ensuring that these funds are put to good use in communities…. As we look at this arrangement, it’s important to consider what has been a very important program of funding. That’s the reason why I’m asking questions around this, and my colleague the member for Cariboo North will join me shortly in further discussion around that.

[2:55 p.m.]

Let me just pause there for one moment, because there’s some information coming and also because the member for Kelowna–Lake Country asked me to ask a point of clarification in response to the previous answers around how a limited partner, as a First Nation, would have the ability to withdraw from the limited partnership arrangement. If that was the case as an individual First Nation, would there be any further administrative or carrying charges or any other costs that the First Nation who is withdrawing from the limited partnership would need to pay?

Hon. D. Eby: Perhaps a point of clarification here. In order to be able to direct your payment to come directly from the government, you need to become a member of the limited partnership. That’s the structure that’s been established around accountabilities, around reporting, and so on. You’re still a member of the limited partnership. You’re just saying: “I don’t want you to cut the cheque. I want the government to cut the cheque.”

To my knowledge, there would be no extra cost to request a cheque from the government, rather than to do what every­body else would presumably do and receive their cheque from the limited partnership.

M. Lee: Thank you for that response. This is an important consideration for the member for Kelowna–Lake Country. He spoke yesterday about the feedback he had from a Chief of a First Nation in his area of representation. If I can, I’ll just pursue that a little more here.

If we have a First Nation who withdraws or — as put correctly by the Attorney General, just to clarify the language — directs the limited partnership to provide the funds directly from government to the First Nation, presumably, at some point, the general partner…. If there were a number of First Nations that were doing that, there is going to be some cost.

Yesterday we learned that the estimated budget of the general partner is up to or less than 1 percent of the annual carry for the fund. That’s been estimated at roughly $1 million or less. The Attorney General stressed the less part. Who knows what that is? But let’s just say for discussion purposes, it’s $1 million or so.

Presumably, with the 203 First Nations, if they all started withdrawing or directing, what would be the role, first of all, for the general partner? And assuming there is a role, presumably, there is going to be — or is there? — some fee necessary by those First Nations in order to continue to support the overall enterprise, given that that First Nation is still a limited partner.

Again, I’m assuming in the case of a limited partner who directs funds to go directly from government to the First Nation, not through the limited partnership, that there’s still a role for the general partner. So what is that role? Two, what fee would there be for the performance of that role payable from that First Nation, who is making that direction, to the general partner?

Hon. D. Eby: The limited partner is an incredibly important entity. It is the democratic body that hears concerns, suggestions, feedback from all the nations that are participating about various things: the categories for which grants can be given; the reporting structures that are in place; the decision about particular projects that may be close to the edge or, for some reason — we can’t speculate why — might be controversial.

That is the decision-making body for administration of this pool of funds. It is an incredibly important structure, because it’s Indigenous-led for Indigenous people. If a nation wanted to receive their cheque directly from the government, they would still want to participate in the limited partnership, because this is where decisions are being made around the formula, around the areas where you can apply for a grant and the reporting structures and the administration costs as a whole.

[3:00 p.m.]

It’s hard to imagine a scenario where a nation would say: “We don’t want to participate in the criteria-setting or the formula-setting discussions. Go ahead and make those decisions for us.” It’s possible, but they at least have the option as limited partners to participate in that. That’s the nature of the body. It’s not solely a cheque-cutting facility.

M. Lee: For the member for Kelowna–Lake Country, what I’m hearing the Attorney General respond would suggest that even though a First Nation has the ability to direct the limited partnership to receive the funding flow directly from government, as opposed to through the limited partnership, that limited partner is still a limited partner and, as such, would still be subject to the fees and expenses that are chargeable. The question, then, is how a deduction would be made.

Let me ask that. How is the deduction going to be made from what the First Nation would receive, in respect of the general partner’s expenses?

Hon. D. Eby: I don’t know…. There might be some sort of misunderstanding, but maybe not, about how this is going to work. The money is going to flow from government to the limited partnership. Limited partners, by right, will participate in that according to the formula that is set by the limited partnership through the partnership agreement.

It’s going to be net of any administration costs of that — the money that’s distributed according to the formula. So there are no deductions. I don’t know. The potential, I guess, is that the partnership would do the calculation and say that nation X is entitled to Y amount of money and let government know, and then government would distribute that money directly to the nation according to the formula and their entitlement.

There’s no application for a particular project and then getting approved. There are no deductions. It’s just an entitlement to a fixed amount of money that comes through the partnership according to the formula, net of any administrative costs.

M. Lee: Just as a point of clarification, then, how does the money, as a different option…? I’m hearing the Attorney General describe it as it coming from government to the limited partnership, and the net amount is going out to First Nations, which is part of the structure. So if we’re talking about the alternative, is that still a net amount?

Hon. D. Eby: It always drove me crazy in opposition when the government side tried to do this, but I’m going to try anyway — try to get at what the member is really asking me about. Is there a way to deliver this money with less administration costs and ensure that more money goes to the bands or the nations?

[3:05 p.m.]

The answer is no. There is no way to deliver this money without administration costs. There need to be reports about how the money was spent. Someone needs to receive those reports, compile them and report out to the public about how the money is spent. Someone needs to set the criteria, evaluate the criteria, receive feedback from nations about whether the formula is working properly, adjust the formula if necessary and adjust the categories if necessary to ensure that the program is working properly. There is no world where there are no administrative expenses.

Then the question is: if there are inevitably going to be administration expenses, who is best placed to administer this program? Is it the government, or is it the nations for themselves? The position of government is that the best group to administer this program for the nations are the nations themselves through the structure that they have established, which is the limited partnership.

I hope that broader perspective addresses the member’s questions. There will be administrative costs regardless of whether a nation that’s a limited partner asks for it to be distributed directly from government or distributed from the limited partnership. The reason for that is that all of the work I just outlined still has to get done by somebody, and we believe it’s best done by Indigenous people for Indigenous people.

M. Lee: Well, I appreciate that response. I believe that provides the clarification that my colleague, the member for Kelowna–Lake Country, was asking for. I appreciate that.

Can I ask, just from a process point of view, if the information has been received in terms of community gaming?

Hon. D. Eby: In 2015-16, it was $134.8 million; in 2016-17, $134.8 million. In ’17-18, the incoming government in­creased that amount, so it was $139.7 million — rounded up, $139.8 million. Then in ’18-19, it was $139.8 million.

M. Lee: Thank you for that confirmation. I appreciate the opportunity to have that historical information shared here.

Just one question related to that. I presume that, in terms of as a proportion of total gaming revenue, that percentage — this contribution amount — ranging between $134 million and $139 million over the last four fiscal years, has been a consistent percentage of annual gaming revenue. If that’s the case, what is that rough percentage?

Hon. D. Eby: I don’t believe that any government has run this as a fixed percentage of gaming revenue as the First Nations program is proposed to run. I understand the gaming program was a fixed amount, and the government has generally provided fixed amounts through the gaming program.

Again, this program lies in the Ministry of Municipal Affairs and Housing. We’ll do our best to answer the member, but I hope he’ll have some understanding if I have to stand up and correct myself. It’s my understanding that these were closer to fixed numbers. There wasn’t a formula percentage of gaming revenue.

C. Oakes: Thank you for the opportunity.

If you review the actual 2019 community gaming grant guidelines, is it not true, because it had certainly been identified in the guideline, that, in fact, the Attorney General is responsible for the integrity of the community gaming grants program?

Hon. D. Eby: Certainly, the Attorney General has a role to play around the integrity of any government program if there are allegations of fraud or corruption. Policy-wise, though, the program lives in the Ministry of Municipal Affairs and Housing.

[3:10 p.m.]

C. Oakes: I certainly understand that, but again, if you look at the policy applications on the community gaming grant side, the Attorney General is still responsible for the integrity of the community gaming grants program.

Hon. D. Eby: I think I agreed with that. Also, a staff member here indicated that there is a member in the Ministry of Attorney General that collects the audits in relation to this program.

C. Oakes: I think it’s really important. Again, it was a historic day today, and one of the things that really stood out to me was when Grand Chief Ed John talked about the importance of asking questions. I think that’s a legitimate comment that all of us should take — that we represent constituents in our ridings. They put forward questions that they request of us, as their elected officials, to come and to bring forward to the House.

I have to make a comment in response to the member from Saanich, Gulf and the Islands — quite frankly, were egregious and inflammatory…. The idea that when we bring questions forward from constituents, from Indigenous populations in our communities, if by chance the comments that we make do not deserve the adequate respect of every member in this House….

I want to put on record that some of the comments that have been made about us asking questions that our constituents have asked to bring forward…. To be dismissed and to have comments that were very unparliamentary is just, quite frankly, on behalf of my constituents, not acceptable.

When my constituents raise questions and concerns — and I talked briefly about this on Bill 36 — it comes from a place of concern. It comes from a place that we as a community…. We’ve heard discussions about what has been happening in the Cariboo — the impacts of the wildfires, the impacts of a downturn in the economy, the forestry crisis. Our communities are struggling.

We count on support. We count on programs that have been put in place by government to ensure that there is adequate expected support for our constituents. So when the First Nations and I go home, and they talk about what it means that the government has delayed the rural dividend program — the program where they were expecting those funds to go forward…. It is, rightfully, a concern that they’ve asked me to raise. When they’ve asked me to come forward in this House and raise the fact that, on the formula, the idea of population-based formulas are a concern under Bill 36, it shouldn’t be dismissed.

It shouldn’t be as if…. We are asking questions about concerns of our constituents. We are no less engaged with listening to, advocating for and fighting, quite frankly, for our constituents.

While the minister can look at the ceiling, which looks like it must be quite fascinating….

Interjection.

C. Oakes: Well, that’s fantastic.

The Chair: Members, let’s keep it….

Interjections.

C. Oakes: The formula on the bill. It’s not about….

Interjections.

C. Oakes: To the members, we are talking about Bill 36.

The Chair: No, no. The member has the right to ask questions.

The Attorney was not looking at anything else, Member, just looking at the students. Carry on.

C. Oakes: Okay. I’m glad that we have students here. I know that these students would want to recognize the fact that we, as MLAs, represent constituents in our communities and that our responsibility is to bring their voices forward in this House.

On behalf of my constituents, there is concern around the population-based nature of the formula. There are also concerns…. Around the population-based formula, can the minister confirm that for communities that are small of population, we will get our fair share?

[3:15 p.m.]

Hon. D. Eby: I appreciate the member standing up and asking questions on behalf of the First Nations in her community. I hope that she’s reaching out to them and sharing the good news about the government sharing gaming revenue with them, after so many decades of advocating for that to change — B.C. being the only province that doesn’t share gaming revenue with First Nations.

When she talks about her community being hard hit, we couldn’t agree more on this side of the House. It’s a total crisis, and this money will help. It will help First Nations in her community, which will help the whole community. We’ve seen it in Ontario, where they’ve been sharing gaming revenue for a long time through a partnership like this. Economic development on First Nations reserves, traditionally very impoverished reserves, has had a knock-on and positive effect in the broader community as well.

Certainly, when we see an economic downturn or a crisis, like we do in the forest sector, it is those on the economic fringes that are particularly hurt as well. A lot of people are hurting right now. This is money that’s coming into the community that’s going to make a very positive difference, so we’re very excited about that. I hope the member is sharing that good news with her constituents.

As for the formula, it’s set by First Nations for First Nations. One of the things that is going to happen is that the initial distribution is on three key factors. Factor 1 is just a straight-up equal distribution among all 203 nations, not based on population or geography or anything else, just a straight division. That’s 50 percent of the revenue received by the partnership.

Then the second factor is population, and 40 percent will be distributed according to population. Then the third factor is rural and remote communities and Indigenous communities. There’s an extra 10 percent that will be used to top up those communities, because often they’re very small communities, and there’s recognition of that.

What’s going to happen is that there’s going to be the first year, the first couple of years, of distributions. If the formula is not working out the way that people intended, then the partnership will revisit it. The history of First Nations in B.C. is one of larger nations standing up on behalf of smaller nations. I have no reason to believe that that would change here in terms of supporting them and ensuring that they’re not excluded from participation.

I look forward to this. I hope that it makes some difference in a very hard-hit area, in association with all of the Minister of Forests, Lands and Natural Resource Operations’ $69 million fund for forest workers, that the member can reassure her constituents that government is doing what we can in a very difficult time.

C. Oakes: Could the minister clarify? I’m certainly aware of applications that have gone in through the community gaming grant process by Indigenous and First Nations organizations. The minister just shared that we have not shared these funds. Community gaming grant applications have been open, in fact, for cultural organizations and groups. Could he maybe clarify that comment, as he is responsible for the integrity of the community gaming grant program?

Hon. D. Eby: I will acknowledge that the previous government did not exclude First Nations from applying for community gaming grants, if that’s what the member is suggesting. What the previous government didn’t do was something that every other province in Canada did, which is to have a dedicated stream of revenue from gaming exclusively for First Nations, which is what this is. It’s very significantly different.

I’m not sure if the member understands quite what we’re doing here if she’s confused about that point, because the money is a dedicated stream of revenue from a percentage of the earnings of government from gaming distributed directly to First Nations through a limited partnership controlled by First Nations. It is structurally completely different from community gaming grants, which I will absolutely acknowledge that any First Nation in B.C. could have potentially applied to and did exist under the previous government.

C. Oakes: On page 9 of the new community gaming grant guide, and under organizational eligibility, under 3.2…. I guess my question is, as the Attorney General is responsible for the integrity of the program….

[3:20 p.m.]

It now states that an organization is permanently ineligible for a community grant if it “is a federal, provincial, regional, municipal, First Nation or other local government.” So are First Nations now not eligible for community gaming grant funds?

Hon. D. Eby: I appreciate the member clarifying that.

First Nations governments were never able to apply. Neither were municipal governments, federal or provincial governments. It’s community organizations. As the member said in her initial question, First Nations cultural organizations, language organizations and sports teams organizations could apply. But the First Nations government itself, the band council, and so on, could not apply.

That’s not something new. That has always been the case.

C. Oakes: I’ve just had a brief opportunity to review Bill 41, Declaration on the Rights of Indigenous Peoples Act. Of course, in it are the definitions that have been identified — critically important. Any time we have definitions in legislation, it does have an impact on all other pieces of legislation that we have in this House.

The interpretation of an Indigenous government body and Indigenous peoples has the community gaming grant program…. What impact will Bill 41 now have on other pieces of legislation — for example, the community gaming grant which the Attorney General has responsibility for?

Hon. D. Eby: Well, the member had us all scrambling for a second. It’s only been a few hours that Bill 41 has been introduced in the House — a proud and historic day for government, introducing that bill.

It’s a wonderful question for committee stage on Bill 41 — not particularly relevant to the distribution of gaming revenue to First Nations that is in front of the committee right now.

C. Oakes: Where it is relevant is that it is a historic day. Any time there’s something like this and there’s been significant change in the legislation and we need to have that conversation, I think it is very fitting — and Grand Chief Ed John said it so eloquently about the fact that it’s important — that we do everything within our ability to make sure we’re answering those questions so that if there are any concerns that are coming from our communities, we’re respecting those, and we’re taking every single opportunity to ensure that we’re not going to have unintended consequences.

The community gaming grant program is incredibly important to our communities. I really value what the Attorney General said about recognizing the fact that our communities in the Cariboo have been struggling. One of the eligibility factors currently within the community gaming grant guideline is looking at the demonstrated need of community members.

When I look at the fact that we have seen significant decline in community gaming grant revenue…. The Quesnel Figure Skating Club traditionally receives $28,000. This year they received nothing. When the north Cariboo Métis society, their healthy relationships, which is critically important…. Again, the North Cariboo Métis Association that puts in for victim services…. We were not successful in getting those funds.

Literacy Quesnel — critically important funding for our community — impacts a lot of Indigenous First Nations and non-Indigenous in our community. We’re seeing that the Lions Club has been reduced. The Rotary club’s funds have been reduced. The Scouts have been reduced. The Quesnel Women’s Resource Centre went from $122,000 down to $80,500.

So women’s groups, First Nations groups, public safety groups, sports groups and arts groups have all seen a decline in community gaming grant funding into our community.

[3:25 p.m.]

There is significant fear that the changes that are being brought forward could have even more impact on our communities that have been significantly impacted.

I think it is fitting. The Attorney General said that he did not have the ability in the last couple of hours to look at the interpretation of UNDRIP and the impact that it’ll have on community gaming grants.

I think it’s fitting, at this time, that we send that sense of confidence back to all of our communities who count on community gaming grants for our volunteer organizations, our sports groups, our public safety organizations — all those volunteer groups that work so diligently and so hard in our communities. They expect us to raise their voices and their concerns, and they want to make sure that the community gaming grant will be kept whole.

I think that is a rightful thing for us to say. So I move an amendment that is on the order paper.

[Section 2 by adding the underlined text as shown:

Amount of net income available for community gaming grants

14.7 Subject to the regulations and the prescribed formula, a minimum percentage of the actual net income of the lottery corporation for each fiscal year beginning on or after April 1, 2020 shall be made available for community gaming grants in accordance with Part 6.

And by adding the following section:

2.1 Section 41 (1) is amended by striking out “Subject to there being an appropriation under the Financial Administration Act, and” and substituting “Subject to section 14.7, and”.]

I think it’s a fair amendment. Again, it just reaffirms that the community gaming grant program will be available.

While I recognize that the minister has said, “Look, we are committed to putting this money forward,” I think constituents across British Columbia would have a lot more confidence in this new environment, before they have the ability to look at what the interpretation is of Bill 41, by confirming that community gaming grant programs will be kept whole for all of our volunteer organizations across British Columbia, because we know how much you are counting on these funds.

Again, I put forward this amendment that has been on the order paper in my name. I look forward to comments from the minister.

Hon. D. Eby: I look forward to reading the member’s amendment. I haven’t seen it. I can advise the member that there is absolutely no impact on community gaming grants by this initiative. Community gaming grants…. We did a little back-of-the-envelope calculation here. About 10 percent of net revenue to government from the B.C. Lottery Corp. goes to community gaming grants. This program — about 7 percent going directly to First Nations in the province.

I’ve asked staff to have a look. As I’ve advised the members repeatedly, gaming grants are in the Ministry of Municipal Affairs and Housing. I’ll do my best to answer. The audit reports come back, but the decisions around issuing grants are made by public servants in a different ministry.

We’ll try to figure out what the changes, if any, have been in gaming grants in the member’s constituency, because our government actually increased gaming grants by $5 million on forming government. There’s $5 million more available for community organizations in the province than there was the year before, under the previous administration, so it seems strange. But we will definitely….

I think the member will find that the intention of government is to maintain what we understood to be the non-partisan distribution of gaming grants to communities in need across the province — community groups, and so on — and that tradition should be continuing. If she has concerns that, for some reason, her community is not seeing good success with the gaming grant applications, to make some time with the Minister of Municipal Affairs and Housing — have a conversation, talk about those groups, try to figure out what is going on and what the issues may be.

The member should also know that government…. It was the same issue when they were in government. I know, because many of the groups that I worked for applied for gaming grants and didn’t get them. There’s a fixed amount of funds and there’s far more need for the funds than government has, so some applications will ultimately be declined. But there are other sources of funds and there are other grants that organizations can apply for, and government can assist with that kind of thing.

[3:30 p.m.]

[J. Isaacs in the chair.]

I look forward to seeing the member’s proposed amendment. I don’t fully have an understanding of it from her description, but I look forward to reading it. But unless she’s been out consulting with First Nations on this issue and has the support of the Leadership Council, it’s going to be challenging.

She talks about the UNDRIP legislation that was introduced today. One of the core principles is, of course, Indigenous people making decisions for Indigenous people, and we have been working with Indigenous groups for more than a year in developing this.

I’ll have a look at her amendment, but I’ll just caution her that this context is a difficult one for an amendment that would structurally change the program.

C. Oakes: I sincerely want to thank the Attorney General for recognizing our communities and for an openness to look at what is happening.

I guess I raise this because I’ve certainly heard that…. And I want to thank staff. I worked closely, as the minister, with the gaming division, and I really want to thank them. I know that the work that’s done is done in a thoughtful, sincere way, and I truly want to say thank you. I am just trying to understand how I can better support my constituents with some applications. Quite frankly, we’ve never seen this level of reduction before, and we just want to get some answers.

I also appreciate some of these programs…. Of course, again, I have that file, and there is a large level of…. You know, everything sometimes tends to be oversubscribed. I had the opportunity to meet with the Minister of Public Safety on the victim services program. When communities are in crisis and you lose a significant program that is designed to help victims at a really, really difficult time, and a significant portion of the folks are Indigenous…. I have those concerns. And if we’ve looked at every funding option and we’re still not having success, then it is our job to advocate.

Further to the Attorney General…. I appreciate his comments around Bill 41. What I was talking about is interpretations, interpretations that are created in legislation that identify in this act how we interpret a body. A governing body can have application to other pieces of legislation. I will say that in the pieces of legislation I’ve had the privilege of bringing forward, I was certainly advised by incredibly capable public servants that any type of interpretation or change that we make in legislation can have ramifications or can have changes in other pieces of legislation.

I think what the amendment is about is saying we have a community gaming grant program that, yes, is separate from what has been proposed in Bill 36. But what constituents are asking of this minister is: can you confirm that the community gaming grant funds, that the funds that he has, in fact, stated will remain the same, that people will still have access to community gaming grant funds, that we will, in fact, keep as well — to create that certainty across British Columbia that community gaming grants will not be impacted? That is the statement that we are hoping, within this amendment, will be recognized by this minister.

Hon. D. Eby: One of the repeated concerns that people brought forward to me in community, following the government’s ban on bulk cash transactions at casinos, following the revelations of large-scale transnational money laundering happening in our casinos, was concern that this might impact the revenue at casinos and, by extension, the revenue of the B.C. Lottery Corp. and, by extension, community gaming grants, all negatively.

I assured people, the Premier assured people across the province, and the Minister for Municipal Affairs and Housing assured people across the province that we would not be reducing community gaming grants. In fact, our government increased community gaming grants by $5 million in our first year.

We understand the importance of community gaming grants to communities, to all of the cultural groups, the dance troupes, the language groups, the services that are delivered to people, really, for pennies on the dollar because so many of them are volunteer-driven.

[3:35 p.m.]

We fully support the project, and I can assure the member that there will be no impact on this that comes from further sharing of gaming revenues directly with First Nations.

C. Oakes: Could you also confirm that funds will be regionally distributed as well? Again, I’m trying to identify how come, in rural British Columbia, we’ve seen such a reduction in organizations getting access to community gaming grants. The question is: can the minister confirm…? He’s just confirmed that there won’t be any reduction in the community gaming grant program. Can he also confirm that rural British Columbians will not see a negative impact — we don’t have the population; we talked a little bit earlier about population formulas as it pertains to this bill — and that there won’t be any reduction in rural British Columbia on community gaming?

Hon. D. Eby: It’s a challenge to get the information the member needs, because it’s not squarely on the bill that’s in front of the House. We’re doing our best. I will endeavour to get her the distribution — how it’s distributed geographically, whether population plays a factor. It’s certainly based on applications. People have to apply for the money, but I don’t know exactly how it’s distributed.

I don’t believe there has been any change to distribution plans or policies, but again, I don’t know. So what I’d like to do is to get the information for the member and share it with her as soon as I can, but I don’t currently have it.

C. Oakes: I really do appreciate and look forward to getting access to that information. Maybe part of the reason is…. And again, this is the integrity piece that the Attorney General is responsible for.

I know, for example, that on the sports side, March 1 to May 31 is when the applications went in. All organizations, by policy, were to be told by August 31, and the sporting groups are still waiting. I don’t know if perhaps that’s a piece of a policy change or something from an audit perspective, but we’re wondering why there are such significant delays. There were also delays in the arts and cultural funding announcements that were supposed to go out on July 31. I think this year it went out in September.

So if that information could also be accessed — why there are such significant delays in organizations that have applied for community gaming grants, why they have not yet heard.

Hon. D. Eby: I’m afraid I just don’t have that information for the member.

C. Oakes: Would the Attorney General also be willing, though, to provide that information in the other information he is accessing?

Hon. D. Eby: Absolutely, I will. But in the interest of red-tape reduction, I might suggest that the member go directly, as well, to the Minister of Municipal Affairs and Housing, or ask her staff to reach out to the minister’s staff. It sounds like she has a number of questions about the program. Because, essentially, what I’m doing is getting the information from the Minister of Municipal Affairs and Housing and then passing it through to the member. So if she has additional questions, if she wants to get into detail, I’m sure that staff would be glad to arrange it.

M. Lee: Well, I’d like to join the member for Cariboo North in supporting her amendment to this bill. This amendment to the Gaming Control Act would propose a new section….

The Chair: Yes, and Member, you’re speaking on the amendment.

[3:40 p.m.]

M. Lee: I am, to 14.7. The amendment has been moved, so now I’m speaking in favour of the amendment.

When we look at revenue-sharing of gaming revenue…. I mentioned earlier that in the 1980s under a previous Premier, Bill Bennett, there was a real recognition of the importance of gaming revenue to communities and that those gaming revenues ought to be shared with arts and cultural organizations, sports and other social infrastructure in our communities around the province directly and not at the behest of government through general revenue.

The Attorney General just mentioned more recent history. But when we talk about history in this House, I think it’s important that we all understand the history. In the 1990s, there were issues around gaming revenues with the previous NDP government — Bingogate, as it was known — concerns about the funneling of money through various charities and kickbacks. Criminal charges were laid.

This is when, of course, we talk about ensuring integrity in the way that gaming revenue is provided to community organizations in this province — that there’s a level of stability. I appreciate when the Attorney General says that we have to have confidence in how gaming revenues are shared. Absolutely. That’s the purpose of this amendment.

This amendment ensures what has been confirmed at this committee level. There’s been a stable level of funding available to the community gaming program. That’s been at the 10 percent level. It has ranged between $134 million to $139 million over the last four fiscal years. And there will be no impact on that program by this other arrangement with First Nations.

We are just trying to ensure that, through this amendment, we’re saying to communities around this province that that important community gaming program will continue, with a minimum percentage commitment from our government. Again, for the reasons that the member for Cariboo North indicated at length, both in her second reading speech and just now at committee stage, there is tremendous need, and there is tremendous concern as a result.

Communities that are not just rural parts of our province but other parts of our province really depend on the ability to access gaming funds to support their organizations. We know, with the economic pressures — the increased taxes, the uncertainty in the forestry industry and other industries resource-wise and others in this province — that there is downward pressure. There is downward pressure on giving.

Individuals who want to support our community organizations and our communities for good intention have less disposable income to do that. The trend lines are coming down on that. So we need to ensure, as a government, that we continue to support these organizations, the not-for-profit organizations that have to fill in the gaps.

I certainly believe that government can’t do everything. We need community organizations that can respond to local needs. They’re best situated to do that. Government has a part to support that. We can’t do it on our own. We need that partnership. That’s why, through the community gaming grant program, it’s been a vital program of funding.

I believe, with other colleagues on this side of the House, that there’s a great need to ensure that we demonstrate that level of commitment to community organizations all over this province by setting a minimum percentage of the same term — the actual net income of the Lottery Corp. on an annual basis. This amendment would propose that that would be set by regulation and the reg-making power under subsection 41(1) of the act and that we begin with that minimum commitment in the upcoming financial year of government, recognizing that, under the interim agreement, the revenue-sharing as a commitment to First Nations has already been underway.

[3:45 p.m.]

The two streams can run side by side — 7 percent, in the first case, for First Nations and a minimum percentage to be set and confirmed under this amendment. For discussion purposes, we’ve been talking about it at the 10 percent level. That would be the expectation, if not more.

We need to ensure, with the changes in the program and what members on this side of the House are seeing in their communities…. There seems to be some difficulty in some of the organizations that have been depending on that funding, as the member for Cariboo North has been describing. There seems to be some change here.

Now, I appreciate the Attorney General has indicated that the Minister of Municipal Affairs and Housing will provide that information through her team, but it’s in that context that we want to ensure that we have that level of clarity and transparency and commitment. That’s why we’re proposing this amendment. Certainly, I’m supportive of this amendment, and I hope that all members of this House will consider this amendment in that spirit.

Point of Order

Hon. D. Eby: I’m glad to hear the member’s comments. I think, really, any government would approach reducing gaming grant money extremely carefully. The impact of these grants, although small, is very significant for many, many, many community groups all across the province. That’s why our government increased gaming grants by $5 million a year.

I note that simply because I can’t help but wonder if this proposed amendment is out of order on a couple of fronts. One is that it’s not related to the bill in front of the House, and the other is that it purports to put a financial obligation onto government. So I would ask for a decision from the Clerk on whether or not this amendment is in order.

I mean, that’s assuming that the members want to go ahead with it, in light of repeated assurances that the gaming grants not only haven’t decreased under our government but have actually increased, even though we’ve written down $30 million a year at B.C. Lottery Corp. because they’re no longer taking bulk cash transactions from people involved in money laundering.

M. Lee: If I may, just for consideration by the Clerk and others here, this amendment that is being proposed has been on the order paper, given notice to all members of this House. By way of discussion, we have confirmed at this committee level that this would not be a new financial obligation to government. In fact, as confirmed by the Attorney General, it’s been an existing, repeated, stable, steady level of commitment.

We are also not specifying what that number is. We’re only saying, in concept, that the government, through this act, should set a minimum percentage, and that percentage would be determined by regulation. That regulation, of course, will confirm what level of funding has been made available by government on a consistent basis and clearly has been done so in this current budget year as well.

S. Chandra Herbert: I’d be interested in a ruling, but I’m happy to speak while you confer, to give you the time to see if there is a ruling on whether or not the amendment is in order.

I guess I rise to speak because it’s interesting. There seems to be an attempt…. I think the member for Vancouver-Langara said: “There seems to be some change here.” I think the member for Cariboo North talked about something that has happened that has meant that non-profits in her riding haven’t got gaming grants, as if the government, through some secret backdoor move, has deleted funds, when the actual fact is that $5 million has been increased in gaming grants.

I rise to speak to this because the only time we’ve seen some change to gaming grants in British Columbia, the kind of change that those members are trying to suggest we are doing, which is completely wrong, is when they were in government.

I was new to this House in 2009, 2010. The government of the day found that they had told the public they would have a balanced budget. They didn’t, so then they went and raided charities to patch the hole that existed in the budget. This amendment seems to suggest that that’s what’s going on today, and that’s not what’s going on today.

[3:50 p.m.]

Their government was so vicious, in the sense that they even took money from charities that had multi-year contracts with government and that had already spent the money. There were charities that had spent the money to put on performances, to support youth, to do those kinds of things.

They were required by government rules to have a big logo of the province of B.C. They were required to thank the province of B.C. for the money. They put the money. They paid their artists. They paid their staff. Then they were told by government, by the former Liberal government, that, no, actually the money that they’d been promised, the money that was to pay the salaries of those people who’d already done the job, wasn’t coming, that, in fact, the government was going to renege, break its commitment to fund charities.

The only time that happened was under the B.C. Liberals. So for them to suggest there’s some change going on here when, in fact, we’ve increased the gaming budget by $5 million to go to charities and non-profits…. It doesn’t add up. I could use stronger language, but I’m trying to be warm and friendly, because today is a good day.

It was wrong. It hurt people. It caused non-profits to shut their doors, to lose their ability to serve their communities. I know of arts councils, for example, that were forced to fire all their staff because of what the Liberal government did.

Gaming grants matter. The only time in our province where a government didn’t think they mattered was when those people were on this side of the floor. I remember the former Premier of the day saying there…. This is a quote. He was on the radio. When asked why he was tearing up contracts with non-profit charities, he said, “Well, there are commitments, and then there are commitments,” seeming to suggest that a commitment to a charity was not a real commitment by the government.

Now, thankfully, people rose up. They spoke out in opposition, and they made it clear that gaming grants mattered. I think, in some small part, that it led to the loss of that Premier, not to mention the HST and all the rest. There was some small move under the next Premier to try and repair some of the damage they’d done to non-profits by putting a bit of the money back, but fundamentally, they didn’t do much else. I think they realized that you can’t go after non-profits and charities in this way, and I’m glad they realized that.

Our government recognizes that very strongly. That’s why we increased the budget for gaming grants to communities. That’s why more people are getting more money from gaming grants in this province today. But this legislation, fundamentally, is not about non-profits and charities. It’s about First Nations communities getting access to gaming grant funds that they should have been getting a long time ago.

I’m not sure if this amendment is in order. I understand the spirit of it, but I just find that the argument in support of it is false. There’s been no reduction in gaming grants. There’s been no move to limit them going to charities. There has been no sum change here, as the member obliquely referred to. In fact, the opposite — the only change here has been the gaming grants going up, more money going out to communities and a stronger commitment to gaming grants in this province than we saw under the former government.

C. Oakes: I’ve sat in this House over the last few days, and people have heckled. They’ve said I’ve…. The member for Powell River–Sunshine Coast somehow alluded to the fact that I was lying. The member for Vancouver–West End said that what I am saying is somehow false. I would like this opportunity to read into Hansard the experiences of my constituents, what is happening now, the actual numbers. It is not false. It is happening in our communities, and it is wrong.

The member for Vancouver–West End talked about the Arts Council, so let’s look at what the Quesnel arts council put in for. In 2018, they received $11,500. This year, they received $6,000. I mentioned the Quesnel Figure Skating Club. For years, they’ve received $28,000. This year, they received nothing.

The Baker Creek Enhancement Society: last year, $44,000; this year, nothing. And they’re important. Their job is around…. They do work on wildfire mitigation and restoration and resilience. The Quesnel Women’s Resource Centre: 2017, $122,000; under this NDP government, under this community gaming grant program, it is now down to $80,500.

[3:55 p.m.]

How about the Scouts? Let’s see what the Scouts group got. In 2018, they received $7,700. This year they received $5,600. How about Quesnel Rotary? Last year, Quesnel Rotary received $32,235. This year, they received $20,000. How about the Lions Club? The Lions do excellent work in supporting seniors in our community. Last year, $29,058; this year, 2019, they received $20,000. Victim services through the North Cariboo Métis healthy relationship program — cut, no funding.

I have a very difficult time…. I’ve got pages, and I would be happy to spend that time going through each of these organizations, because I have been tracking it.

To the members who say or suggest to my constituents, who I represent and who I proudly come and serve in this House…. To suggest for one moment that what I’m sharing with you in this House is false is wrong. It’s absolutely wrong.

I appreciate the sincerity of the Attorney General for looking and finding and providing me the opportunity to get the answers that my constituents are asking for. If $5 million has, in fact, increased in the community gaming grants — and I know, through the financials, that it has — the constituents in my riding, who’ve been absolutely decimated by what has been happening in our community…. Where a fundamental value that states in the community gaming grant program that you are supposed to look at communities who are having significant impacts, the only impact I see in my community and for my volunteer organizations and my groups is a reduction in funds from the community gaming grant program.

So forgive me if I have put forward an amendment to ensure that for my constituents and for my volunteer organizations, who have served for so many years, there is some sense that funds will be kept whole and that organizations in our community — and communities across British Columbia — who work tirelessly to volunteer, whether it’s sports, arts, public safety, environment, know that they can trust this government to ensure that those funds will remain. That will ensure that through this piece of amendment, financially, they will know that they can count on this government and future governments to make sure that the community gaming grant funds will be kept whole.

The Chair: The House will recess for about five minutes.

The committee recessed from 3:58 p.m. to 4:14 p.m.

[J. Isaacs in the chair.]

Point of Order
(Chair’s Ruling)

The Chair: In response to the point of order raised by the Attorney General, I’ve examined the section 2 proposed by the member for Cariboo North.

[4:15 p.m.]

The amendment to section 2 proposed by the member for Cariboo North appropriates a portion of the income of the Lottery Corp. for community grants in accordance with part 6 of the Gaming Control Act. Bill 36 provides for the sharing of annual provincial gaming revenue with the B.C. First Nations Gaming Revenue Sharing Limited Partnership.

In my opinion, in the opinion of the Chair, the proposed amendment exceeds the scope of Bill 36. Additionally, the amendment contravenes Standing Order 67, which requires a message from the Lieutenant-Governor for any resolution for the appropriation of any part of the public revenue for any purpose. The amendment is therefore ruled out of order.

Debate Continued

Amendment ruled out of order.

S. Chandra Herbert: I certainly didn’t mean to, in any way, suggest that community organizations in the member for Cariboo North’s community may have had, in some cases, a decline in gaming grant revenue. Some years it’s up, and some years it’s down. I know that’s really a tough struggle for charities. I’ve worked in them, and I understand that.

I think what I’m trying to suggest…. I double-checked the math here, and it may be helpful for the member. She can probably pass this on to the community groups in her neighbourhood. In Quesnel, in specific, the numbers that I’ve got suggest that in 2016-2017, Quesnel itself — the community non-profits there — received about $515,000, give or take, in gaming grants. That’s in the BCLC report that was provided to council. It’s on the web. It’s easily accessible.

However, 2017-2018 saw about a $100,000 boost to community charities in her community through BCLC gaming grants. In fact, instead of seeing a decline, we saw about $100,000 more go into Quesnel than under the last year of the previous government. Now, to say what will happen in 2020, when they release the report…. We haven’t seen it, obviously. I haven’t seen it. It will be re­leased publicly in April.

I want to clarify that it wasn’t to suggest…. Certain non-profits may have seen a change in their funding levels, as has happened in my own community. Some have got more. Some have got less. And in fact, in the entirety, more have got more than some have got less. The numbers have gone up, and $100,000 more into the community of Quesnel is, I think, something that should be celebrated as opposed to suggesting there’s less money going in than there was before.

Sections 2 and 3 approved.

Title approved.

Hon. D. Eby: I move the committee rise and report the bill complete without amendment.

Motion approved.

The committee rose at 4:18 p.m.

The House resumed; Mr. Speaker in the chair.

[4:20 p.m. - 4:30 p.m.]

Report and
Third Reading of Bills

BILL 36 — GAMING CONTROL
AMENDMENT ACT, 2019

Bill 36, Gaming Control Amendment Act, 2019, reported complete without amendment, read a third time and passed on the following division:

Hon. M. Farnworth: In this chamber, I call second reading, Bill 33, Securities Amendment Act.

[R. Chouhan in the chair.]

Second Reading of Bills

BILL 33 — SECURITIES
AMENDMENT ACT, 2019

Hon. C. James: I move that Bill 33 be read a second time now.

The amendments that are included in Bill 33 are to improve security law here in British Columbia in a number of ways. I’ll use my second reading comments to talk about the various ways and the positive impacts that we could see through these changes in this bill.

I think people may think of the Securities Act as far removed from their own life and that it’s not something that impacts most people. They don’t have large investments. They may not think of the Securities Act as something important to them or that impacts them personally.

I think we’ve all seen the headlines. We’ve all seen the stories of fraud that often occurs, fraud that may occur through investors telling people that this is a great investment. In fact, people are often losing, in many cases, life savings or retirement savings. So these are very personal, heartbreaking stories that, in fact, we see when we take a look at the Securities Act and the impact of strong regulation.

[4:35 p.m.]

I think the other piece that’s really critical and important is the faith that people have in our public institutions and, certainly, faith that people need to have in our financial institutions in this province — to make sure that they know that there are strong regulations around investment, around derivatives, around securities, that those are in place, that they can feel confident when they’re investing, that those rules and regulations are being followed and that there are penalties for people who don’t follow them.

I think this is critical legislation. There are critical amendments that are coming forward in this bill to crack down on fraudsters, to support victims and ensure that we do everything we can so that victims have as much of their money returned as is possible and that we build public confidence in the systems that we have here in our province. That’s why I think this is a bill that, while people may not see it have an impact on their lives, in fact is critical to the confidence in our province.

Many of these amendments, just to look at a few of the specifics…. I think it’s also important to note that these changes to the Securities Act are the first significant changes that have come forward in a long period of time — in fact, in almost a decade since we’ve seen these kinds of major changes come forward in the Securities Act.

So many of the amendments, as we go through them…. I’m sure in committee stage, we’ll have an opportunity to be able to go through the specifics: increase enforcement and fine collections and fine collection powers that will serve, again, as I said, to deter security fraud in our province and will ensure that we continue to be a leader in this country. Many of these new changes that are in this bill, in fact, will have British Columbia as the leader. We will be ahead of other provinces when it comes to cracking down on fraud.

There are new powers, as well, that really will aid the commission in the difficult task of collecting fines from people who violate securities. What you’ll find, and I’m sure members will know this in this House, is that the fraudsters often have ways of trying to hide their assets, hide their money, when they know that they’re going to be facing challenges for the work they’re doing. So what you will see in these changes is to close as many loopholes as possible, to be able to find the areas that have been used for evasion and to be able to evade detection, and to be able to address those.

For example, in this act, you will see that we’ve included more expansive investigatory powers that will allow the commission staff to investigate both the person who is under investigation and the people who have received property for less than market value from that person under investigation.

This is a very critical piece of these changes. It is a new piece but a very critical piece of these changes. Very often what you will see are fraudsters who will transfer their property for less than market value, for a very low cost, to individuals in order to hide it from the fine that may be coming or to hide it from the dollars that could be returned to victims, so this is a very important piece. Once these assets are identified using the new investigatory powers, as I mentioned, the commission will then have expanded powers to be able to preserve the assets until the person of interest’s guilt can be determined through a commission hearing.

I think that’s very important to note. Again, as I said, it will give the opportunity to preserve those assets, go through the hearing process. If guilt is found through the hearing process, then you still have the ability to be able to utilize that asset, to be able to provide support back to victims who have been victimized.

Again, as I talked about loopholes, this prevents people…. Well, as much as possible, it will hopefully prevent people and serve to deter people from hiding their assets or transferring their assets to other individuals to avoid their fines, to not have to pay their fines. Again, let’s remember that this is about returning resources to victims. This is about providing compensation to victims, and, as much as possible, that’s the goal in the changes that are coming forward.

[4:40 p.m.]

As I mentioned, you would go through a hearing process. After a hearing where the commission orders a person to disgorge any funds that were wrongfully obtained from investors, the commission then will be able to use a process that people will know because it’s very similar to the process found in the Civil Forfeiture Act. It’s a very similar kind of process they’ll be able to use it to seize the assets that were preserved during the investigation to satisfy the disgorgement order. “Disgorgement” is their formal term they use to return money to victims. So again, as we’ve seen in the Civil Forfeiture Act, it means making sure that people don’t profit from crime, that you can actually utilize those resources to be able to provide the support.

These expanded preservation and forfeiture powers will, hopefully, make it more difficult for the person who violated security laws to actually shield their assets. It will certainly assist the commission in ensuring that there are more assets available to repay the victims, which, ultimately, is something that I think all of us in this House certainly support.

It also is about making sure that there are real consequences for people who violate security law. That’s a key component in all of this. Because while we want to make sure the penalties are in place — and you will see through these amendments in this act that we’ve done that — it’s also important to send a message that we are not going to tolerate it. We are going to do everything we can in this province to ensure that victims are compensated, that people don’t fall victim to these kinds of crimes.

In addition to the investigatory, the preservation and the forfeiture powers, we’ve also introduced a process for those people who fail to pay their security fines. There are additional penalties in here now where they will be unable to renew their licence to drive or be able to get numbered plates for their vehicles. This is, again, another deterrent. If someone has a fine on record and they’re avoiding paying their fine, they will be penalized. They will be penalized now, as I said, through fines, through other processes, but also an additional strength by not being able to renew their licence to drive or to get numbered plates for their vehicles.

We’ve also included some other measures in this bill to improve enforcement and collection. That includes increasing maximum fines — again, an important deterrent but also an important piece to be able to, as much as possible, get resources back to be able to support victims — and jail time for committing an offence to $5 million and five years. These are, again, pieces that we believe are important to be able to put in place.

We’re also looking at how we can ensure that as many fines and as many people who have been found guilty go through the process. We’re looking at a streamlined regime to ticket less serious violations, so people who have not gone through the hearing process. It’s a less serious violation. We’ll actually have the opportunity to be able to ticket those people rather than going through a full hearing process, which, again, will move the process along and deal with that issue.

We’re also looking at expanding the securities commissions’ access to funds to be able to establish a whistle-blower program, which we think, again, is another tool in the toolkit to be able to address the challenge of fraudsters and also help us improve our collections activity.

Other pieces in the bill include expanding prohibitions on making misrepresentations about investment products; adding mandatory minimum sentences for people who commit fraud; prohibitions against conduct such as obstruction of justice, breach of trust and conspiracy to commit fraud. Again, you would think that most of those would’ve been included, but in fact, these will be additional pieces that we will be strengthening up and tightening in this act.

And then protections. I talked about the whistle-blower, putting in place a whistle-blower structure — also providing protections for whistle-blowers, who will help the commission detect fraudulent activity early. Obviously, the best solution is that people aren’t defrauded of resources, and we don’t have to give money back, because it was caught before they got to that place. So that really is the kind of prevention work as well.

[4:45 p.m.]

There are also some pieces outside of that work, which are around amendments made that were commitments by provinces after the 2008 financial crisis to create a regulatory regime for over-the-counter derivatives and related regulation of financial benchmarks. Certainly, coming out of the 2008 crisis, I think all jurisdictions around the globe recognized that we needed to make sure that we tightened up the protections in place, that we tightened up the regulatory regime around these products.

The regulatory regime will mirror many of the same measures that already apply to securities. So these aren’t different from those kinds of pieces. The amendments for derivatives, for example, would include provisions to regulate trade repositories that would penalize misconduct, such as manipulation, fraud, front running; that require disclosures for trades; that also allow for halt-trading orders, which, again, is just another tool in the toolbox to make sure that we’re putting a regulatory regime in place; and that are related to investigations, enforcement orders and regulatory-making powers.

Again, these are about tightening up processes in place, putting the regulation in place. I think that often people think of regulations as not a positive, that they get in the way of things. In fact, these are perfect examples of the importance of regulation, of regulation being in place for consumer protection, to provide the strength that is needed so that people aren’t subject to fraud — that those protections are in place.

The amendments for financial benchmarks, for example, include the ability to regulate benchmarks, benchmark ad­minis­trators and benchmark contributors, which will hopefully prohibit improper conduct. Again, another piece.

One of the areas that came up as a challenge during the 2008 crisis was the issue of over-the-counter derivatives — certainly identified as a potentially significant source of risk to the financial system. In years, in fact, there have been instances of manipulation or attempted manipulation of key benchmarks related to securities and derivatives. The amendments that we’re bringing forward will be expected to reduce the chance of some of those abuses occurring and that occurred during the financial crisis. So it is, in fact, specifically looking at those pieces.

Once that’s in place, once we have a full regulatory framework for derivatives and the financial benchmarks, British Columbia will, in fact, meet the international standards and will be harmonized with other jurisdictions in Canada. This is ensuring that. As I said, we haven’t done amendments for ten years, so there hasn’t been an opportunity. British Columbia didn’t take the opportunity to be able to put these in place. These amendments, in fact, will match us up with international standards and match us up with other jurisdictions across the country.

Then, finally, as you do with every piece of legislation when you bring forward amendments, there are some commonsense changes, some basic changes to modernize and strengthen the legislative framework for securities, for derivatives and for financial benchmarks.

Just to give you an example, the kind of change that we’re talking about would be a change that ensures the prohibition against one investment dealer improperly using the name of another dealer. Right now that applies simply to letterheads, forms, advertisements and signs. This will broaden it to apply to all forms of communication. In other words, you can’t use somebody else’s name in all kinds of forms of communication. Again, as times change, those are the kinds of pieces that need to come forward in legislation to make sure we’re keeping up with the opportunities or the challenges that may be out there.

I certainly feel that these amendments collectively provide a very-much-needed update to the Securities Act, which really is part of the work that we’re doing as a government, across the board, to crack down on white-collar crime. I think it’s important and critical that we send a very clear message from British Columbia. These amendments, as I said, really add to the work that our government has already been doing to crack down on white-collar crime, to crack down on money laundering.

As the members will know, that started off with the German report that came in. We then did a second report by Peter German.

[4:50 p.m.]

We also put together the Maloney expert panel report on money laundering to really put forward the kinds of challenges that we saw in this province, the kinds of impacts that money laundering was having, which often people think of as white-collar crime but is, again, an issue that impacts all British Columbians.

I think we saw, through the Maloney report, the real challenges in real estate, for example, with money laundering and driving the price of housing up through speculation and utilizing real estate as a tool to be able to launder money. It has an impact on every British Columbian who is struggling to find a home, who is struggling to find something affordable. It’s not something that’s removed and simply with the criminals. It, in fact, impacts everyone and challenges the trust that people have in our systems, which is a critical piece. So we put those panels together.

I think it’s also important to recognize that we acted on beneficial ownership with a land registry. This was through the Land Owner Transparency Act, which members will remember was passed in this House last spring. Again, a first in Canada, just as many of the pieces that we are introducing in the Securities Act will make us a first in Canada to be able to move ahead.

The Land Owner Transparency Act was a first in Canada where now people will be no longer be able to hide behind partnerships, behind corporations and behind numbered companies when it comes to real estate. This will all be in a transparent land registry. It will provide the kind of transparency that you and I need to do when we buy a home. We’re on the land registry. Our basic information is there. This will now require everyone’s basic information to be there, whether you’re a numbered company or whether you’re an individual buying a home.

We also, members will remember last spring, amended the Business Corporations Act, which will be required to be held in a business. They’ll be required to hold true in­for­mation on the owners of all the shares in the company. That gets to be held in the company’s office and is available, then, to law enforcement if there is an issue around law enforcement and they need some basic information. That will be provided there.

Then, as the members know, the public inquiry on money laundering has started already.

With that, I will take my place. I know we’ll have others who wish to speak on this bill. Certainly, I’m very proud to bring forward these changes to strengthen the Securities Act, to give more tools to the people at the B.C. Securities Commission who need these tools to do their job and are keen and eager to do their job.

They are the ones, through these hearings, that have the reality of facing the kinds of victims of fraudsters — who see that firsthand, who hear those stories, who do the investigations, who see people who are trying to get away with fraud — and that do not have any opportunities to be able to go after property that they know has been transferred or to go after retirement savings funds, for example, because they’re not on the list. Those things need to change, and we need to ensure that those tools are there.

There are some changes that we believe that the federal government should also take on. Bankruptcy, for example. A fraudster can declare bankruptcy, and then the B.C. Securities Commission fines don’t have an ability to have standing in that bankruptcy change. We believe that needs to change. That’s something we’re going to talk to the federal government about, now that we have a federal government in place again, and that we will continue to raise with the federal government because we believe that there are changes that need to occur at the federal level that will support the work that we have done through the B.C. Securities Commission.

With that, I’ll take my place and look forward to other members’ comments.

R. Sultan: Let me agree wholeheartedly with the Finance Minister’s emphasis on the importance of having financial markets and instruments of investment in those markets that have integrity, merit the confidence of the general population and are subject to the highest standards. So we certainly agree on the intent of Bill 33.

Just for the record, again, I’m speaking on second reading for Bill 33, intituled the Securities Amendment Act, 2019. The Securities Act being amended, of course, is the Securities Act of 1996, passed under a previous NDP ad­minis­tration.

[4:55 p.m.]

I will give you advance notice of my overall conclusion of this bill by saying that I think it’s a tremendous lost opportunity. I say that with some regret. At the risk of perhaps being accused of massaging my own ego, let me just list the battle scars that I’ve accumulated, both meritorious and some not so, in an extended lifetime in the financial sector. I chaired the asset liability committee of one of our largest banks. I have been a registrant of the Ontario Securities Commission as owner of a mutual fund company.

I was sued as a senior officer of a large multinational conglomerate over financial disclosure — an action later ruled to be of no merit. But it certainly made me think a little bit harder about my own vulnerabilities or, perhaps, failings. I’ve negotiated with OSFI, the Office of the Superintendent of Financial Institutions — which is the federal regulator of institutions such as trust companies — at a time when I was chair of a trust company which had, certainly, challenges in the way it conducted its affairs.

That’s my background. Those are the scars I’ve accumulated. The takeaways from those several years — many years, really — perhaps repeat the points already made by the minister; namely, that the seriousness of the securities and financial sector regulation business should be obvious. The complexity of this world is overwhelming and getting more so with the advent of computerization. The seriousness of the consequences of misdemeanours and rule-breaking by operators can harm not just individuals but whole economies. We’ve seen the consequences of that in the 2008 financial collapse brought upon by a completely inappropriate use of mortgage-backed derivatives.

Finally, the overriding importance of maintaining market confidence. Our economic relations depend upon the reliability of the numbers we’re given. It is necessary — it’s essential — to maintain integrity, transparency and compliance at all times.

With those lofty — and maybe, to some degree, confessional — words on the record, let’s take a quick overview of Canadian securities regulation in general. Canadian securities regulation is a bit different. It’s managed through the laws and agencies established by Canada’s 13 provincial and territorial governments. Each province and territory has a securities commission or equivalent authority and its own piece of provincial or territorial legislation. This is unlike any other federation in the world. We do not have a securities regulatory authority at the federal government level. It has all been pushed down to the provinces and territories.

Notwithstanding the lack of a federal authority, there has been an attempt to homogenize through something called the passport system. So if you say a security is okay — you’re my neighbour, and you seem to know what’s going on in your province — I just accept your word for it, and vice versa. The passport system, a system of mutual trust, has been worked on and worked on again. However, at the extreme, an issue of securities could get that stamp of approval up in Nunavut, in Iqaluit. I defy all of you to show me exactly where Iqaluit is on the map.

You then take that security down to Toronto and say, “Hey, it’s all ready to go,” and expect the Ontario Securities Commission to say: “Of course. If you folks say it’s good, it’s gold. I take your word for it.” That’s not quite how the people in Toronto react, for good reasons. So the passport system has struggled. Furthermore, it has been swept aside, in some degree, by the winds of change in the financial system worldwide.

[5:00 p.m.]

This has resulted in a concentration of financial operations in the financial centres so that they have, through gravity, you might say, tended to migrate to Toronto. Toronto just doesn’t worry about it — the odd stranger that might show up from Iqaluit with a piece of paper saying: “Please stamp.” There’s no…. You know: “Go back. Go away. If you’re serious about doing business in Ontario, you start all over again with us.” That’s been Ontario’s attitude.

You know what? It works. Because surely, all of the gravity forces have been moving in the direction of Toronto, Ontario, as far as Canada is concerned. Of course, Ontario — Toronto, has its own problem, because a lot of their stuff follows the natural paths of gravity down to New York City. So they face their own competition.

Nevertheless, the passport scheme, the passport system, is still pointed to by…. For example, I believe, the B.C. Securities Commission has an answer to this fragmentation. Thirteen? If I want to sell security in Canada, I have to get approval from 13 different regulators? Come on. Give me a break. Maybe I’ll just raise the money down in New York. It sounds a lot simpler. That’s what we, as a country, have encumbered ourselves with.

Now, I have to confess an ancient piece of research underlies my remarks. The Finance Minister will be forgiven if she smiles a bit at my rather ancient data.

About a dozen years ago, I got all excited about the passport and regulation and securities and all that stuff. Quite on my own, I launched forth into a project, just like the aborted mining task force. I guess I’m a slow learner. I should not do these things by myself, but I did. I set out to research securities regulation in Canada, which even in those days was somewhat controversial and seemed to be begging for improvement. So I set off.

Before my little mission was complete, I’d spoken to over 240 decision-makers relevant to this market. If I could say there was one common theme, many believe structural reform is a fundamentally important issue in this arena. But they are weary. They were weary then, a dozen years ago, with so many false starts. “Oh my god, Ralph. You’re not going to come talk to us about harmonization and all that stuff all over again.” This has been going on for decades.

In composing these remarks, I have not updated my 247 interviews and do not plan to, I feel in my gut that what I heard and what I learned a dozen years ago isn’t that different from what I would learn and hear today. That’s a statement of faith.

To explain why I have no appetite to repeat the exercise, here’s who I talked to: eight people at the B.C. Securities Commission; eight at other Canadian securities commissions; 14 B.C. government officials; six officials in other provincial governments; four from the federal government; five in the American government; eight committees of reform — there’ve been lots of committees of reform; eight scholars and advisers; 12 business associations; 20 dealers and merchant bankers in Vancouver, Calgary and Toronto; venture capitalists; fund managers in Canada, Boston and Chicago — 12 of them; the TSX and TSX Venture Exchange; some litigators; securities lawyers — a total of 38 of them in Vancouver, Calgary, Toronto and the United States; private investors in Toronto and Vancouver; five chartered banks; five people in the oil patch in Calgary; 20 large issuers; 16 juniors, mostly mining; three in the tech sector; and nine in the biotech sector. Add it all up, and it’s about 247 people.

I was so proud. I came back and printed a 150-page PowerPoint and then was surprised when nobody really wanted to read it. But nevertheless, knowing that I was expected to speak, lo and behold, I asked my assistant: “Do we still have that old PowerPoint?” She produced it in about ten minutes, through the wonders of good recordkeeping. What did I find out?

[5:05 p.m.]

Well, here’s what some key participants in this world, and it is a world unto itself, had to say. Here’s what the chief financial officer of a major B.C.-based utility organization told me: “We must register our securities, if we’re going to sell them in all jurisdictions. Hence, if B.C. has a unique approach, it simply adds to our regulatory complexity. It doesn’t simplify it.” Well, that’s obvious.

What did somebody else say? Here’s a very senior Toronto securities lawyer, maybe the guy I hired to defend me back then in the good old days. I forget. “The fact of the matter is that the difference between the various securities acts in each jurisdiction across Canada doesn’t amount to a hill of beans. You could pick any one of them out of a hat, adopt it as the national statute, and it wouldn’t matter which one was selected.”

Here’s another person I interviewed, a former bank president, the head of probably the largest pension fund in Canada. “Securities commissioners and their extensive staff fly back and forth across Canada, business class, holding meetings and burning up time and cost and arguing over the minutiae, searching for harmonization. Ah, that word.”

Here’s what Jimmy said. I will not give you his full name. He happens to be a constituent of mine. “Now, I appreciate those who want to maintain their private little empires, but we should have a single national regulator, and it should be located in Toronto.” That’s what Jimmy told me a dozen years ago.

Those are four very senior persons who offer comments which go to the heart of how securities are regulated in Canada. Let’s look at that in a little bit more detail. I have written down here at the bottom of the page — I hesitate to repeat it, but I will — “absurdity.”

Why do we have a B.C. Securities Commission at all? Let’s look at the context. I understand why we have a B.C. Securities Commission when you examine the context. Those of you old enough may remember a character named Murray Pezim. He tore a strip through this town back in the ’60s, ’70s and ’80s and was the cause of the history of the Vancouver Stock Exchange being published titled Fleecing the Lamb. You can still look it up in the library. It was a great read.

Although Murray Pezim is credited with discovering the Hemlo and the Eskay Creek gold fields, huge mineral discoveries…. Oh my goodness, the headlines and the scandal along the way through were quite horrendous. Unfortunately, it gave Vancouver at that time — I don’t know whether you’d say it — an unsavoury reputation. People just wouldn’t take us seriously. They’d say: “Oh, you’re from Vancouver. That’s where that guy Murray Pezim…. Oh, yeah, I read a crazy story about him in some tabloid in New York.”

I’ll just interject a bit of humour into rather dry proceedings if I may, hon. Chair. Here’s how he was described in one journalist’s introduction. “Murray lives somewhere beyond Outrageous. To get there, drive to Crazed. Keep going towards Bonkers via Berserk, and slow at Around the Bend.” That was Murray’s reputation in international journalism.

Even though I wasn’t living back home in Vancouver in those days, I did appreciate we all winced that this was our reputation. Somebody had to put a stop to it. We pumped responsibility and resources into the B.C. Securities Commission to do the job. In a way, they’ve succeeded.

[5:10 p.m.]

What did we end up with? Well, the B.C. Securities Commission today is a self-governing entity. It certainly is self-interested, we must admit. It’s funded via industry taxation powers that we’ve delegated to it, so much so that today…. When I wrote my report, it was a $32 million enterprise — 32 million bucks. That pays for a lot of regulators. Then I thought: “Gee, I’d better update it.” It’s a $50-million-per-year enterprise — 50 million bucks. Wow. I have written down here: “It believes it is proudly innovative among all of the commissions across Canada.”

To their credit, on their watch, the previously scandal-ridden Vancouver Stock Exchange became a continental leader in the computerization of trading. I can remember, when I was still at the bank, saying: “Wow. These guys are really way out in front.” And they were, so give them credit for that.

What are the key issues today? That’s colourful history. Well, the regulatory issues facing B.C. are complex and diverse. We want to encourage junior companies, and we still are primarily a small business economy. This is Small Business Week, after all. At the same time, we have to facilitate international capital market access for the big companies — starting with the province itself — whether it’s Telus or Goldcorp or other.

Then, most startlingly and most, in some ways, perplexing, is the rapid evolution of what is called fintech — financial technology — so that even big banks in Canada are trying to figure out what means such phenomena as the blockchain, AI, quantum computing, the cloud and the fact that you can do your banking on your iPhone, if I may hold up a prop for a second without being rapped by the Speaker. The world is changing. You could probably convict Murray Pezim with this little thing in your hand. You didn’t need a $50 million enterprise if the technology of the day had existed.

As another example, the Royal Bank of Canada went down in the annals of, let’s say, financial automation history a couple years ago because somebody at the Royal Bank in New York discovered a peculiarity in execution of trades when they put in an order at the terminal. By the time that order appeared on the screen, the market had moved, not a lot but enough. It was systematic. Somebody said: “Wait a minute. This always happens. What’s wrong with us?”

What they discovered was…. They were several blocks away from the exchange, maybe even half a mile. I’m not sure. In the time that electrical signal was transmitted from the terminal and the trading desk at the Royal Bank to the computer in the basement of the Toronto Stock Exchange, somebody intercepted the signal and introduced a front-running order. Front running was referred to by the minister a few moments ago.

Think about it. The speed of light — 186,000 miles a second, I guess. Electricity? But they figured it out. They could front-run in the time it took that electrical signal to run maybe — what? — 15 blocks. That’s why today you find these machines right next to the server. There’s still a lag. There’s about 12 feet, not 15 or 20 blocks.

This is what’s happened to the world. It’s become electronic. New vistas of cheating and fraud have emerged. A lot of creative people out there. It’s become just another way to hack the system.

The old green-eyeshade accountant at Eyebrow, Saskatchewan, which we always used as the funny example of the branch-banking system that I became quite familiar with…. They would not quite enter entries by hand with a quill pen, but they could remember when they did. That’s been replaced by all of these computers talking to computers. Some people are wondering: “Well, gee. Maybe they don’t need us at all. What’s happening here?”

[5:15 p.m.]

I go into this in some detail because the B.C. Securities Commission, bless their souls, is expected to be on top of all of this stuff. What does it mean from a regulatory point of view? What new means of fraud detection and cheating, whether it’s intercepting that signal as it goes 15 blocks or whatever?

I respect them for, I’m sure, giving it a good shot. They do have the history of being among the first anywhere in the world to engage in on-line trading.

That’s one situation, though — the immense complexity of the world, which is removed, in terms of technology. But there’s another complexity that’s arisen. That is the growing volume, complexity and cost burden of the rules and regulations imposed by governments on investors, dealers and security issuers.

For example, in 1933 — this goes back to my dozen-year-ago research — I learned that a young law clerk named Brandeis, who subsequently became a famous Chief Justice of the United States Supreme Court, I believe, was asked by President Roosevelt, brand-new on the job: “We’ve got to clean up Wall Street. We’re in the depths of the Depression. The world has collapsed. We’ve got to straighten out big business.”

He set out to do so. “We need to regulate the securities interests.” So in a few weeks, he wrote a 58-page U.S. Securities Act. It’s a little skinny book like that. Here’s a picture of it. I guess I’m not allowed to show it. That was securities regulation in 1933.

Fast-forward to a dozen years ago. Ontario Securities Commission had a rule book, if I’m allowed to flash the page. It’s 2,700 pages long, and they updated it every week. But that was small-time. I always said that the big-time is the United States Securities and Exchange Commission law regs, and a decade ago it was 10,000 pages. That’s how big it was, and it was updated every day. If you think it’s easy to keep track of 10,000 pages being updated every day, well, you haven’t worked as my friend the MLA for Vancouver-Langara, who knows this world much better than I do.

Here we mix it all together. Forget about Murray. He’s history. We have a world of technology that is racing forward. Then we have governments that keep spewing forth rules, particularly the Americans — something called the Dodd-Frank regulation.

Here’s a lesson. When I lived in Boston, Barney Frank was a constituency assistant to a congressman. He said: “This job is too easy. I’m going to run for election.” He did, and in about 15 years, he tacked his name on a bill creating such a mountain of regulation on banking and the securities business in the United States that they should put a monument to him on Wall Street for being the biggest employer of lawyers you could imagine. Dodd-Frank is still the rule, and it’s nightmarish.

I don’t know who to blame for complexity more than governments or technology, but both of them have had a big impact on how the B.C. Securities Commission tries to do its job.

What have we got here? In Ontario, we have an Ontario Securities Commission. I was a registrant. They gave me a licence, and I did my best to live up to it. It had a $100-million-a-year budget when I wrote my report. I looked it up the other day; it’s $120 million.

Here’s the B.C. Securities Commission. The $32 million annual budget when I wrote my report is now $50 million. That’s 3½ percent per year compounded, as I’m sure my friend from Shuswap figured out as I was speaking.

So if we add up the deadweight cost of regulating these institutions in Canada, it was about a quarter of a billion a dozen years ago. It’s probably getting closer to half today. This is the cost of trying to respond to the circumstances I have described.

[5:20 p.m.]

Are we pretty good at it? Well, I’m sad to report, not really. The United States spends about six times as much on securities regulation as we do, but only six. They’ve got a market capitalization of securities being managed 15 or 20 times larger than we do. So they’re much more efficient in how they regulate their affairs. Why is that? Well, we’ve got 13 of them, after all, and they’ve only got one.

My favourite is Nunavut. I thought: “How do I communicate if I want to register a security in Nunavut?” I looked it up. You send your security and all of the forms, which I’m sure are voluminous, to the superintendent of securities of the legal registries division of the Department of Justice of the government of Nunavut in Iqaluit, Nunavut, Canada. If you don’t know where Iqaluit is, it’s on the north side of the Northwest Passage, I figured out.

I looked up the population of Nunavut. It’s smaller than West Vancouver, which inspires me to suggest that we should maybe start a securities commission in West Vancouver to create some local employment. I don’t want to make light of all of this. These are all hard-working, sincere people.

Then we have a final phenomenon. Namely, capital markets have gone global while Canadian regulation is still provincial. What’s wrong with this picture? Even Toronto worries about its future. The whole world has gone global. What’s going to happen to us? To come back to the basic point that I presume you understand, if you’re going to sell a security to anybody in Canada, it has to be registered first. You’re not allowed to sell an unlicensed piece of paper. And here you have to register it in 13 places.

The system has laboured on with much encumbrance technically — rule-making but also these massive shifts in how we conduct our financial affairs as a world. Pick up Bloomberg every morning, see what’s happening in London, Frankfurt, Tokyo. They have a very active stock market in China. The news out of China just looks like the news out of the United States, nothing to distinguish this Communist-run world. They’ve got the same problems — orders, inventories, purchasing agents, index. I find it all quite astonishing. They’ve joined the world of commerce as we understand it.

Of course, they have tried to patch up this harmonization thing as they’ve lost their market. As the market has moved to Toronto, people out here in Vancouver say: “This is terrible. We need to harmonize. We have to make it better. We have to streamline it. We’ve got to encourage people to not give up on us here.” They continue to fight the battle of harmonization, even though Ontario says: “Do what you want. We’ve won. You didn’t notice, but we crossed the finish line a few years prior.”

That leads me to wonder why we are spending $50 million a year on this. What’s the public value? How many child care spaces could we buy with $50 million? Even blue chip, I presume, but I’m not an expert — I would bow to the experts in the chambers — 5,000, 10,000 additional kids? We’ve got to make these trade-offs, because we create and give the taxation powers to these entities, and maybe we should reshuffle the deck.

Deputy Speaker: Member, are you the designated speaker, I believe?

R. Sultan: Yes, I am.

Deputy Speaker: Then you can speak for two hours more.

Interjections.

Deputy Speaker: Carry on.

R. Sultan: I will be briefer. Thank you, Mr. Speaker.

[5:25 p.m.]

It’s a series of trade-offs in my mind. I admire the B.C. Securities Commission for its sense of survival and its skill in convincing all of us that it’s terribly important, and in many ways it is. But the world has changed under their feet, and no one is more aware of that than themselves.

I just leave the thought with you. I met with the BCNU other night. Boy, did I get an earful about budgets and overtime, and we don’t have enough staff. It sounded like that particular facet of the health system is beleaguered. Having been married to a nurse for 43 years, I believe them. And here we are spending $50 million over here on a bunch of people. I just leave the question with you.

Then we come to perhaps the most interesting topic of all, and that is really the issue of compliance, fraud and catching the bad guys. Here’s the deal. When I went out and started interviewing people, I learned something about my province that I did not appreciate. I was told in Washington by people at the SEC — now we’re going back a dozen years — that the volume of communications they have on fraud-related work going back and forth to Vancouver exceeds the communications they have with any other city in North America.

Really? More than New York? More than Seattle? Really? It is. I thought: “Wow. Well, no wonder they need 50 million people answering the phone down there at the securities commission.”

In other words, dark money — I didn’t think much about it until this assignment to respond to the act came — has been around a long time, so much so that the Americans identified us as a hot spot years ago. They aren’t very happy about it. They want cooperation. They want to catch these people, because the people being victimized are frequently Americans, and they’re up here in Vancouver.

In fact, they said that there are three hot spots. “You’re not alone. There’s Vancouver, there’s San Diego and there’s Palm Springs.” Oh, really? I didn’t know that. Palm Springs. You know, that’s where Mr. Trump hangs out. What do they have in common? Well, think about it. They’re all beautiful places to live. So I think you could conclude that the high-level fraudsters go to places where the golfing is great and the enforcement is a little bit sloppy and the cost of living isn’t too high. There’s lots of ocean. Why not? If you had to set up shop as a criminal, those three names probably are pretty good candidates for your domicile.

So not only am I shocked by the volume of transactions that the SEC indicated to me, I’m shocked to realize that I’m the home of — at least I was a dozen years ago — a group of…. Now, we’re basically talking international fraudsters here.

It’s not like the fraud that was perpetrated at the Swedish Lutheran church, which I loyally attended as a kid with my brothers and sisters and which fell into another religious group and another religious group and then a big scandal. Somebody took advantage of the congregation to sell them all sorts of pie in the sky and took what, for them, was a lot of money and disappeared.

This is the classic fraud that this legislation is aimed at. Good for them. We should catch those people too. But, of course, what bothers the SEC is the big-time operators, probably many of them living in my constituency. So we have to get both of them.

Fortunately, by coincidence, Gordon Hoekstra, a journalist with the Vancouver Sun, on Tuesday, wrote a story with our Finance Minister’s picture on it — nice, attractive person photograph. He reports about the new bill, and he reports numbers, which I found interesting.

[5:30 p.m.]

The number that pops off the page to me is that the B.C. Securities Commission has more than half a billion dollars of uncollected penalties over the last decade, which happens to work out arithmetically to $50 million a year, which happens to be their annual budget. I thought: “Could there be any connection?” They figure they can be self-funding if they only collect the fines, which they have a lamentably bad record in doing.

If the minister’s amendments change that lamentable history, more power to the government for having put some new teeth into the powers of enforcement. Think about it: half a billion dollars of fines in only ten years. It doesn’t indicate what the collection record is, but it sounds like it wasn’t anything to brag about.

Then, insofar as fraud victims, and I presume this is local people, they said in analysis not over — well, yes, it is over — about a decade, not quite, about 5,000 victims, $185 million in schemes lost, stolen, fraudulently taken from all sorts of people, probably a lot of people who can’t really afford that kind of money. I thought: “Well, this is a genuine cost.” We have an institution here which is faced with a changing world but also can be improved on the enforcement side, particularly if we give it some legislative assistance.

I have a suggestion for the minister. You know, I come back saying: “What are we spending $50 million a year on?” Think of all those daycare spaces. Why don’t we call the chair of the Securities Commission and say: “Brenda, you’ve done a great job over the years. You’re trying to deal with blockchain and quantum computing and all this stuff. I know it’s quite a hassle. There are a lot of bright people in other parts of the world trying to solve the same problem. What we want you to concentrate on is catching the bad guys — period. If somebody wants to register a security, you send them to Toronto, because that’s where most of them go anyways. You’re losing your battle to keep market share by registering people here in Vancouver.”

So the passport? No, you just take out the shingle and say that we’re not in the registration business anymore. Anybody that’s got a licence from Ontario — that’s good enough for us. We’re going to spend all our money on catching the bad guys.

[J. Isaacs in the chair.]

Just as a suggestion, I would give them a $10 million budget to do that. I’d take the other $40 million, and I’d spend it on daycare. That’s my sincere suggestion to the minister.

One final caveat. Do not regard this as a licence to copy the unfortunate IMET experience. Because when all the fraud headlines were rolling, the federal government said: “This is outrageous.” I mean, we’re recognized internationally as a place of money laundering, etc. “So we’re going to send an RCMP task force out there. We’re going to catch the bad guys and clean it up.”

Here’s a story by David Baines. You remember him. I think he died, sort of a requiem for IMET. He said that it’s been such an operational and financial disaster that it’s being shut down in March 2013, and nobody in the federal government wants to talk about it.

I called on IMET, and there were a bunch of RCMP guys there with their leggings. I forgot to look whether they had spurs on their boots, but probably. Here they are trying to catch up with the Murray Pezims of the world, or the fraudster in the basement of the Swedish Lutheran Church. I think over maybe five years, they caught three. Somebody in Ottawa said: “This is a losing cause. Let’s quietly shut it down.”

[5:35 p.m.]

They, first of all, did it in two stages. They moved it out to Surrey, and then they just moved it back to Ottawa and closed the desk, and nobody ever heard of IMET again. So the government should not underestimate the difficulty of catching these people who live by their wits, cheating people. To think that: “Well, we’re going to go after their RSPs. That’ll slow them down….”

Maybe. I think it’s going to take a more ambitious effort, focused. Forget about all that other stuff, Brenda. We’re going to save $40 million and spend it on daycare.

S. Chandra Herbert: I want to thank the member for his statement. It brought back memories from when I was a kid and “the Pez” was all the rage in the news — outrageous, the owner of the B.C. Lions. I think at the time, as a child, I tried to understand how he was both venerated by some but attacked by many others, because he harmed many people through the kinds of frauds and activities he took on.

It is an issue that white-collar crime, in many cases, has been treated differently than somebody stealing food for their family, for example. That person can end up in jail. Somebody who is a white-collar criminal can get lauded in the press, can become the President of the United States and can do all sorts of other things. It seems that some may suggest, “Well, we laud them because they got away with it,” as if it’s some sort of badge of honour.

I think Murray Pezim is a great example. He was quoted as saying… I thank the member, again, for raising it. I looked at the article that he looked up, and another great quote in it had “the Pez” saying: “Look, I’m a character. People expect me to get charged with something at least once a day.” Right there in the press, quite proud of it. At a roast for him, Milton Berle had this to say: “Thanks to this man I now have $14 million. Before I met him, I had $30 million.”

We laugh about it, and it’s hilarious, because, in many cases, he rubbed shoulders with all these greats, and some people he did make very rich. But unfortunately, that kind of example destroyed many people’s lives, and it continues to this day. That’s why I’m so glad that we have this legislation coming forward to try and right what I would say was an abysmal record of collections over the last ten years.

I thank Gordon Hoekstra from the Vancouver Sun, who was referenced, for looking into this. I think it was 2016, perhaps maybe 2017, when he revealed that there was about $510 million in outstanding penalties that had never been paid, one of them from two fellows who’d cheated people out of $21.7 million for phony real estate bids that never went anywhere. They got charged $30 million each in fines and were ordered to pay $21.7 million back to the 700 investors that got bilked. Of course, have they done it? As far as I can tell, they haven’t paid any penalties, and they haven’t paid back the money owing to those that should have got the money.

I’m interested in the suggestion of one securities commission for Canada. I seem to remember a number of political parties have made the argument that they were going to do it. It never happened. It’s part of the challenge of our Confederation. You know, winds change. Things move from one place to another. Everybody is worried about losing what they have. I think that in this case, there certainly would be a fear: “Oh, jeez. Well, would that mean we have no regulator?” or “What if that regulator somewhere else were to loosen the rules up so much that abuses would continue?”

I’m not sure that Ontario has a much better record — or that, really, any of the regulators across Canada has a much better record — in terms of collections, in part because of technology, in part because people go into hiding and in part because the laws have been structured in such way that white-collar crime, I believe, is not taken as seriously.

If it’s a matter of “I give you a penalty, for cheating people, of ordering you to pay me money” — when maybe you were so good at cheating people that you’ve become a multi-millionaire — it’s, “A bit of a fine. Okay, but I managed to get away with a whole bunch of other stuff,” as opposed to: “Now I’m in jail, and I’m not allowed to do any business.”

[5:40 p.m.]

I think this legislation is good because it expands the ability of the Securities Commission here in B.C. to do things like saying: “Well, you’ve cheated people, and you haven’t paid the fine. Well, you’re not allowed to drive in this prov­ince anymore.” Now, some might say: “Well, these people might have chauffeurs, so it doesn’t matter so much to them.”

We have to find ways to get at these people, because so far, many of them act as if they can get away with anything with impunity. Things like saying: “Well, yes, your RRSPs are gone. You don’t have them anymore.” Things like saying: “Oh, the house you live in that you’ve transferred to a friend or a relative at a below-market price shortly before you were caught cheating? Well, actually no. You can’t transfer it, and that house may be gone, and you may no longer have it and neither may your family, because you don’t get to cheat people and then get rewarded for it.”

These are new changes in the law that I think will really help. I certainly hope they will really help. I think there are a number of other changes, which the minister outlined, to get at white-collar crime that our government is undertaking. Ending hidden ownership — obviously difficult to catch somebody if you can’t see what they own and if the property is hidden in terms of who owns it.

Increasing resources for tax fraud. I know we’ve pushed the federal government to do that, and they’re starting to look at that. They’re starting to put more resources, they say, into that. I know that real estate fraud and other things, across Canada, were really given very little attention from previous federal governments, and I hope we can continue to push. Because clearly, if 12 years ago we had a problem, I think we certainly illustrated, and the minister has illustrated, that we have a real problem now in terms of real estate impacts. I know the Attorney General, as well, through his work around the money-laundering inquiry….

There’s more to do, no question about it. I just know that constituents say to me: “Well why is it that that person down the block who stole food from the grocery store because they’re not doing so well…? Why did they go to jail? But the guy who stole millions upon millions from people from their savings, from their retirement, from their ability to have a good life…. Why do they get to continue to drive around in fancy cars and live in mansions?”

I think that for far too long, those with the most have been able to find ways to evade detection, to evade justice and to continue to feather their nests through the assets and the hard work of other people who’ve been cheated, who have good hopes in their hearts and sometimes answer that call and think: “Jeez, that does really sound like a good deal. I can make it so I never have to work again” or “Jeez, maybe I can get the retirement that I always wanted for my partner if I only do this.” Then too often they get taken advantage of, and they never get that money returned.

I want to thank the Finance Minister for taking this legislation on. I want to thank her for forwarding this work, for taking it seriously. I know that there have been many people over the last decade to 15 years or so who have said we need changes. We can see that in the collection rates. We can see that in other places. So I’m hopeful that this is a continued evolution in this work.

I also want to say that I hope the suggestions that the member for West Vancouver–Capilano…. We look at those things. I know the minister does, because value for money is important. I know that the minister, certainly…. If we can find more money for child care or all the many other things that people want in this province, she would be more than happy, because she cares very much about a sane financial system and a sane economy and an economy that works for people, not just for people like the Pez.

I would like to, noting the hour, move adjournment of the debate, and perhaps I’ll have more remarks upon my return.

S. Chandra Herbert moved adjournment of debate.

Motion approved.

Hon. C. James moved adjournment of the House.

Motion approved.

Deputy Speaker: The House is adjourned until 10 a.m. on Monday.

The House adjourned at 5:44 p.m.