Fifth Session, 41st Parliament (2020)
OFFICIAL REPORT
OF DEBATES
(HANSARD)
Tuesday, July 21, 2020
Afternoon Sitting
Issue No. 345
ISSN 1499-2175
The HTML transcript is provided for informational purposes only.
The PDF transcript remains the official digital version.
CONTENTS
| Orders of the Day | |
TUESDAY, JULY 21, 2020
The House met at 1:32 p.m.
[Mr. Speaker in the chair.]
Orders of the Day
Hon. M. Farnworth: I call continued committee stage, Bill 6, Mines Act.
Committee of the Whole House
BILL 6 — MINES AMENDMENT ACT, 2020
(continued)
The House in Committee of the Whole (Section B) on Bill 6; S. Gibson in the chair.
The committee met at 1:35 p.m.
On section 2 (continued).
T. Shypitka: A question to the minister. Is it the intent to have this office — I’m talking of the mining unit office, the office of the chief auditor — function similarly to the Auditor General’s?
Hon. B. Ralston: No, it’s not intended to reproduce the Auditor General’s office. In the legislation, it has a very specific purpose. The process is not to duplicate the Auditor General’s office. It is generally similar in the sense that they are conducting audits, but this is a very specific and focused process internal to the ministry, in the way that we’ve been discussing this morning.
T. Shypitka: Will elected officials be able to suggest audit coverage areas?
Hon. B. Ralston: Yes.
T. Shypitka: Can the minister give me an example of what the chief auditor may give as a subject matter?
Hon. B. Ralston: The example I gave earlier was of a possible audit of the tailings treatment by an individual mine or by mines in British Columbia, but part of the process of opening it to nominations from the public — or as the member has mentioned, elected officials such as Members of the Legislative Assembly — is that there would be a variety of topics. The ultimate decision on selecting those topics for audit would be that of the chief auditor. So it would be difficult to predict in advance what all the topics might be.
T. Shypitka: When is the audit plan due every year? Is there a set date, a certain time of the year or a month? Can priorities change throughout the year?
Hon. B. Ralston: The proposed section 2.3 speaks of the audit plan and speaks of an audit plan that would be developed — I’m reading from the section: “…identifying the subject matter of the audits to be given priority in that year.” So it would be an annual plan.
T. Shypitka: I wasn’t sure if I understood the answer there. Is there a set time per year when the audit plan is to come out, and can the priorities change throughout the year? I might have missed that.
Hon. B. Ralston: Although the legislation mentions each year, it’s expected that it would align, as many things — indeed, almost all things — in government do, with the fiscal year. In terms of a change in direction or an addition or amendment to the plan within the year, any responsive and well-functioning organization is capable of doing that. So yes, I imagine that that would be…. If emergencies arose or some urgent and pressing issue arose, obviously the plan would be able to be responsive to such an event, whatever it might be.
The plan is to give direction and thought and to solicit the ideas of the public and, in this case, as the member has suggested, Members of the Legislative Assembly to focus on issues of public concern. But that plan would be flexible enough to be changed in response to conditions that may change throughout the year. Certainly, this year is a pretty good example of a year where it wouldn’t function now, in July, in the same way that you might have thought you were going to function in January.
T. Shypitka: In the added section 2.5, can the minister tell us what a reasonable time might be? And does a mine include all mines regardless of status?
Hon. B. Ralston: Answering the second part of the member’s question first: referring to mines, that includes all mines in the province, whether they’re permitted or not. I took from the member’s question that he was referring to proposed subsection 2.5(1)(a), “at any reasonable time,” and I think that is fairly self-explanatory. That would depend on what a reasonable person would do. That’s a drafting convention. It’s interpreted widely in case law, so I think it follows those conventions.
T. Shypitka: What types of persons will be brought along by the chief auditor under subsection 2.5(2)?
Hon. B. Ralston: This section is intended to refer to those persons who are not delegated. The typical example would be a person with expertise in, say, waste management or tailings or something like that. It might also include, where there are agreements with First Nations, the opportunity for a member of a First Nation to accompany the auditor in the process.
T. Shypitka: All right. So no specific technical skills or mining experience to be an invitee. But can that person be employed by anyone in the private or public mining sector?
Hon. B. Ralston: I thought I’d given an example of someone with specific technical expertise of waste management or tailings. It would be someone who would add value and be able to assist the chief auditor in conducting the inspection. It could be anyone that the chief auditor deems an appropriate person, based on her or his judgment.
In addition, I want to stress the possibility, where there are agreements with First Nations, to invite a member of a First Nation to accompany the chief auditor on an inspection.
T. Shypitka: In regards to reclamation, currently, doesn’t the chief inspector already have the authority to order reclamation work to be done?
Hon. B. Ralston: I just would invite the member to narrow his question, if he could. Is he talking about this section in reference to reclamation? There are other sections that deal more specifically with reclamation. I’m wondering just where he’s focusing his question.
T. Shypitka: My apologies, Chair. I’ll ask that question in the appropriate section. No more questions for this section.
Section 2 approved.
On section 3.
T. Shypitka: Is this, essentially, strengthening previous language? What specific situations brought the need for these changes? Under the existing legislation, could the chief inspector not already take these actions?
Hon. B. Ralston: The current section speaks of making an investigation or report about an accident that has caused serious personal injury. The key amendment here is the addition of “…an incident that has caused, or has or had the potential to cause….”
It’s the opportunity to investigate, in a preventative way, before something has happened, where there’s a concern that it might cause serious personal injury, loss of life or property or environmental damage. It widens the avenue or the ambit of a potential investigation to investigate something where there’s a serious concern that something might happen but hasn’t yet happened. That’s the key change. It enables the chief inspector to focus on a preventative investigation.
T. Shypitka: What was the rationale for this change? I think the minister has hinted about it. Has the ministry encountered problems that required this change?
Hon. B. Ralston: The broader investigation authority is required because…. As I’ve said, the current investigation authority doesn’t allow investigations into incidents that did not cause serious personal injury or fatality or damage but that had the potential to do so. If there is a near miss, that would enable an investigation to be undertaken. It enhances the potential and the actual safety of a mine operation by giving the inspector that power.
T. Shypitka: No more questions for section 3.
Section 3 approved.
On section 4.
T. Shypitka: I’d like to recognize the member for West Vancouver–Capilano. I think he has a few comments.
R. Sultan: As my esteemed colleague from Kootenay East observed, if I could speak to section 4 of Bill 6, the B.C. Mines Amendment Act, 2020. I have five questions to ask.
We’re dealing specifically, in section 4, with the functions of the chief permitting officer, a newly created officer position in the ministry.
Just to put my cards on the table, Minister, I intend to support this bill. It’s an important bill.
Public confidence in the mining industry has taken a bit of a beating in recent years, sometimes for good reason. It’s terribly important for the productivity, efficiency, morale, investment confidence, and so on in the mining industry in the future that we have smart new regulations and laws, as required, but ones which are transparent and crystal-clear as to their intent.
Maybe, in some respects, this important bill could be improved. I’m here not to debunk the bill, heaven forbid, but, hopefully, to suggest some ways it might be improved to achieve the ends, which I think the government has made quite clear.
With the permission of the minister and probably the Chair, I would like to read into the record, in consecutive file, five different questions with comments in between, answers first. I say this because I’ve observed the dialogue on the first three sections of the bill with some disappointment.
This minister has one of the most technically challenging assignments in the entire government. Think about it. He’s responsible for B.C. Hydro. He’s responsible for the oil and gas industry. He’s responsible for mining. He’s responsible for a lot of other stuff. So when asked a question, naturally he has to consult deeply with his advisers, who themselves may not entirely know the answer. So the Q and A rolls along rather slowly.
What I would prefer to do is to lay out my questions all at once, and then the minister may choose to answer them. From my personal point of view, at least, it would be quite sufficient, from my perspective, that he responds in writing after he has had time to further consult. Whether that violates parliamentary procedures or not, I’m not sure, but that’s my personal feeling about it.
I think there are many important issues here that I could raise. They cannot be answered just with a snap of a finger. They do take thought. I think the industry itself would appreciate more than just the sometimes politically motivated banter back and forth on a subject that really should be above politics. That’s my request.
I may also — trying to keep my ego parked on the shelf where it belongs — just mention a couple of things about my own background. Section 4 is about permitting. I was sitting there last night, saying: “Permitting. Wait a minute. I know something about permitting in British Columbia.” As a matter of fact, I personally permitted a mine here.
I looked it up. Yes, indeed, in 1992, I was the senior officer of the corporation which received the mine development certificate, as it was called in those days, for the Cirque deposit. That is probably 25 miles up the side of the Rocky Mountains above the Fort Ware First Nations community, which didn’t even have road access in those days.
I spent a lot of time trampling around that hillside, talking to Chief Charlie Boya of the Fort Ware band and so on. Finally, with a lot of help from Rescan Environmental Services, we got a mine development certificate to proceed.
Now, one of the lessons of this whole experience was that in those days, a mere 28 years ago, it was very heavily and environmentally driven permitting process…. The number one issue that we had to answer was, in fact, how to dispose of the tailings safely, both environmentally but also physically. I watch with some bemusement the change that seems to have occurred in permitting, the subject, I repeat, of section 4, as an EMPR responsibility without reference to the Ministry of Environment.
But we all know damn sure the Ministry of Environment is not above it all, an uninterested party. So I think one thing the industry will be trying to puzzle out is: how does this new set of functions on permitting and other activities interface with the perhaps parallel functions of the Ministry of Environment? I’m sure they’re going to be there at the end of the day, but it’s not spelled out in this legislation for today.
In fact, aside from my little interlude as a mine permitter in person — I’m sure the only person in the chamber, real or virtual, who can make that claim — I have some other interfaces. I was a member of the Public Accounts Committee which reviewed the Mount Polley collapse report of the Auditor General.
I was a senior line officer at Hudson Bay Mining. I was in charge of a $5 billion mining and energy portfolio at the Royal Bank. As a registered professional engineer, I am more or less aware of the disciplinary actions ongoing, probably as we speak, against some of the engineers involved, geoscientists — they’re all in the same regulatory body — on Mount Polley.
Finally, I had my own mining task force, which I invented, much to Gordon Campbell’s dismay, back in 2001. As I went through the list of properties, major mines as they’re listed on the government’s website, I recognized some old names, from 20 years ago. So the industry does not change that fast.
Anyways, the first question I have is: would it be possible to obtain a job description for the chief permitting officer, which is the purpose of section 4? The proposed law says: “The chief permitting officer may delegate in writing to an inspector any of the powers conferred on the chief permitting officer under this Act.” You search through the act to see where it explains what these powers are or duties or responsibilities or a job description. It’s not there.
I think if the ministry expects the industry to respond, they have to try and understand the structure that they’re going to be dealing with, and a job description is a simple way of doing that. That’s my first question: could I get a job description of this chief permitting officer?
I must say, some of the commentary and the answers to questions by the member for Kootenay East have revealed to me, I think, the thrust of permitting as envisaged by the drafters of this bill in the ministry. But that’s speculation on my part, and that’s not good enough.
The second question I have refers to the scope of responsibilities of this new permitting responsibility. At the risk of causing, perhaps, some fuses to blow in the Hansard transcribing machine, let me just rattle off 30 major mines and mining projects as I gleaned them from the government’s own websites. Let me assure Hansard that I will send them the list so that they don’t have to try and keep up with a lot of strange names.
Let me just rattle them off. It won’t take two or three minutes. Tulsequah Chief, Silvertip C&M, Red Chris, Brucejack, Kemess, Huckleberry, Equity Silver, Mount Milligan, Endako, Willow Creek, Brule Dillon, Wolverine, Murray River, Trend-Roman, Bonanza Ledge, Gibraltar, Mount Polley, Orca, Quinsam, Myra Falls, New Afton, Highland Valley, Moberly, Craigmont, Copper Mountain, Greenhills, Fording, Elkview, Line Creek, Coal Mountain — 30 names.
My question is: are all of these mines and mine projects potentially under the purview of the chief permitting officer? Are they? I’d like an answer to that. It can be in writing. I don’t need it right away.
Let me just make some comments on the list. About half of them are active, and half of them are dormant in various stages. Of the active mines, maybe close to half of them are owned and operated by Teck Corp. — one company. So this is a very concentrated industry, and there are a lot of names out there, including….
What caught my attention was Barkerville Gold. My mining task force went up and listened to the story from Barkerville Gold. There was a very attractive younger lady, geologist. She had all the cores, there in boxes on the ground. We understood they were trying to assess, probably, a three- or four- or maybe even five-kilometre trend line of a vein that would make everybody rich some day.
I forgot about Barkerville Gold, but last night I’m trying to figure out: “Well, what? Is Barkerville Gold still around? It’s on the list here.” So I clicked on a broker analysis website, and here’s a broker analyst talking about Barkerville Gold. They showed a clip. It had a young lady, geologist. She didn’t have core samples in front of her, but she gave exactly the same pitch: “There’s a trend line here, maybe three to five miles long. The core grade of the drill core is amazing. We’re just going to scope this thing out.”
Now, wait a minute. That’s the same story I heard 18 years ago. I have to say, as politicians, we’re taught to stay inside the message box. I congratulate Barkerville Gold for being able to stay in the message box for so many years. I was tempted to ask — but I think I know the answer — how many ounces of gold has Barkerville Gold actually produced? You don’t have to answer that. I think I know the answer already.
My third question, having dragged you through this long list of names, is to ask: is the chief permitting officer responsible for new mines only? Existing mines? Sand and gravel operations, like Orca, one of the names on the list? Inactive mines? Bankrupt mines? Decommissioned mines? Speculative mining ventures, and I’ve just described one of them to you, and so on? What are the boundaries here? Because if I go to two different government websites, and I see the list of more or less the same names of major mines and major mine developments in British Columbia, I expect this to be the final word on what’s going on in the mining industry.
I might assume that if we’re going to have a chief permitting officer, this person is very active on all 30 of those names, presumably, but could you enlighten me?
The fourth question I want to ask is how this new officer, the chief permitting officer, will interface with the other officers, both within the ministry and across ministry? It seems to me that there are five entities involved here — a little bit hard for industry to keep track of.
Let me just explain to those who might read this transcript and say: “Oh, is that what’s going on?” Well, first of all, we have the chief of mines, permitting. That’s what I’m talking about here with section 4. Then we have the chief of mines, auditing. And my esteemed, very confident colleague from Kootenay East was asking many, very pertinent questions about what, in fact, mine auditing is all about. Thirdly, mine inspections. Well, that’s another big job there. Then we have the über-regulator of engineering and other professions — as I call them, but that’s a rather disrespectful title — emerging from the Professional Governance Act of 2018 of this government.
The relevance of this is — propelled by some of the motives, I suspect, which led to this new bill — that the government decided that the professions, whether we’re talking forestry, geology, technologists or engineers, aren’t quite up to snuff, and they’d better get their act together, and we’re going to appoint somebody up top there to make sure it happens. So we have this so-called über-regulator.
This is not academic. As a member of the EGBC, the Engineers and Geoscientists of B.C., I’m more or less aware of the disciplinary hearings, which have been underway for some time now, for those somewhat junior engineers who were the last people to be assigned at Mount Polley. Now their professional careers are on the line.
I can advise this ministry again, this House, that it is no fun to be brought up to disciplinary hearing by your peers, by EGBC, because you could lose your licence or practice. It certainly impairs your employability. This is a professional disaster, but the engineers….
The Chair: Member, thank you very much.
We’ll turn things over now to the member for Kootenay East, recognizing the minister first, please.
Hon. B. Ralston: The member for West Vancouver–Capilano is a well-known member and has some considerable expertise in this area. Perhaps, if there’s unanimous consent of the House, he could continue and finish his question.
The Chair: Member for West Vancouver–Capilano, as you are probably aware, there is a 15-minute limit to the time you can speak. The minister has spoken, allowing that break, and if the member for West Vancouver–Capilano would like to continue his soliloquy…. You’re certainly welcome.
R. Sultan: I do appreciate that I’ve bent the rules here a little bit out of shape.
My fifth question: could the minister provide us with a retrospective description of how the amended act will operate with increased efficiency and reduce risk in the permitting of an actual case history that we’re all familiar with — which in fact, perhaps, motivated this bill — namely, Mount Polley?
This mine, and the mining dam which collapsed, was permitted in the 1990s on the watch of the NDP government of the day. So if this bill purports to inhibit or discourage or even prevent such fiascos from happening in the future, I would like a retrospective analysis of the key mistakes that had been made and how this new bill would make sure it would be very unlikely those mistakes could ever happen again. That’s the end of my remarks.
Hon. B. Ralston: I certainly appreciate the questions that have been asked. The member has said that he…. Obviously, that would require some time, as he acknowledged, to answer these questions fully and accurately. So subject to any ruling that you may make, Chair, I would propose to follow what he has asked, and that I respond in writing.
Obviously, that won’t be part of this debate. I’m not sure how fast we can get those, but it would not be immediate. I’m not sure whether there’s any prohibition in the rules in responding that way, and I’d invite you to give me direction on that.
The Chair: Thank you, Minister. That’s appreciated.
I believe we’re still on section 4. Are there any remarks or comments on section 4?
T. Shypitka: Thanks to the member from West Vancouver–Capilano. That is why he is my mom and dad’s favourite MLA.
In section 4, permitting and enforcement budgets…. To the minister, between the presentation of the 2019 estimates last year and the 2019 actuals this years, it appears that the ministry reallocated about $1½ million from the competitiveness and authorizations division to the enforcement division. Why was this allocation made?
Hon. B. Ralston: This topic was canvassed in budget estimates, and it does have, certainly, a financial dimension to it. Both sides of the division of the budget have increased. There is a beginning of a practical separation of the two functions, and that has taken place. So it’s not a question of one side being preferred over the other. It’s a question of beginning the separation of functions.
T. Shypitka: Well, the separation was done a couple of years ago, and a budget was allocated — $20 million. A certain amount was requested over to the permitting and authorization side, and the other part was to the enforcement and compliance side. The reallocation was done last year in the actual budget from the 2019 estimates.
I understand there’s a separation, but there are also two sections to the mining sector now. They each have their own budget, and a reallocation was made of $1.57 million. The question is: why was that done?
My spider senses tingle a little bit when I see this mining audit unit that’s coming into play and a chief auditor coming in and this whole new independent model coming in. I’m just asking the question: why was the $1.57 million reallocated from the authorization and competitiveness side to the enforcement side?
Hon. B. Ralston: This, I would say, is more strictly an estimates question and not really directed to any particular section in the bill. But nonetheless, in the interest of disclosure and furthering the understanding of what’s going on…. The $1.5 million was transferred. It was a reallocation of expenses, which had formerly…. So overhead and travel costs…. It’s split between the two for accounting purposes. There was no movement of any staff from one division to the other. It’s really an internal accounting adjustment that was made to better reflect the reality of the two divisions.
T. Shypitka: That’s a lot of travel for those in the permitting side, I would imagine. The separation and why this is relevant to this bill is that the minister has stated that the separation, and to formalize the separation, is what part of this bill is — what a third of this bill is about.
If it’s the mandate to support permitting through this bill, what does the minister think the implications are if the permitting side is being sapped resources to hold up the enforcement side?
Hon. B. Ralston: Thank you very much to the member for the question. I just want to comment on his comment: “That was a lot of travel expenses.” In fact, that’s not the case. That’s inaccurate. I don’t think that should be left unanswered.
What is being spoken of there is corporate services, so it’s accounting, bookkeeping — all the centralized administration that was then being reallocated to the other division to properly reflect the services that that particular section was drawing on. I don’t think it’s fair to leave a false impression on the Hansard record, as the member seems to want to do.
Secondly, again, these are budgetary questions. These don’t seem to be directed to any of the sections that are before us. But again, in the interests of disclosure, I’m advised that the permitting section in the budget has an allocation of $18 million plus earned revenue — $3 million in permitting fees — for a total of $21 million. The health and safety division has a budget of about $10 million.
I wouldn’t particularly draw any conclusions from that — certainly not the conclusions that the member seems to be predetermined, defying any evidentiary basis, to want to drive at.
While I’m speaking about this and on my feet, I just wanted to draw to the attention of the Legislature some of the industry support for this division of functions that the member seems to want to disparage and oppose. I’m reading from a letter by Kendra Johnston, who’s the president and CEO of the Association for Mineral Exploration.
“We thank the government for creating an audit unit within the mines health, safety and enforcement division, and we are encouraged that this mandate includes recommendations for improving regulatory effectiveness.
“An effective and streamlined regulatory framework supports a healthy and sustainable industry that benefits all British Columbians as well as government and industry. As such, we recommend that audits of regulatory effectiveness, such as notice-of-work permitting, include aspects such as timeliness of authorizations, consistency of decisions and functionality between government ministries and agencies, and we recommend that this is an early priority for the new audit unit.”
That’s support for the change and some good recommendations about what the new chief auditor might turn her or his mind to.
T. Shypitka: The whole point was that if we’re constantly…. We could have the best robust enforcement and compliance department in the world, but if we’re not getting permits out the door, we’re going to have a lot of chief auditors sitting around doing nothing.
I’ve heard time and time again through industry that we’re not getting permitting through. There’s definitely a bottleneck in permitting, FrontCounter all the way through. I’m just trying to draw attention to the minister on…. I’m really hoping that this bill does support permitting. But no more questions in section 4.
S. Furstenau: Just one question on section 4. I know this has been canvassed by the opposition, but I just wanted some clarity.
This section requires the minister to designate a chief permitting officer and establishes authority for the chief permitting officer to delegate any powers to an inspector. So it proposes to enable the chief permitting officer to delegate these powers to inspectors, which seems to conflate the separation described above between permitting and inspections.
Can the minister just provide some clarity on the separation of these roles?
Hon. B. Ralston: I thank the member for the question.
The term “inspector” is a generic one, and there will be inspectors employed in both divisions. But the chief permitting officer would not have authority to delegate to any inspector in the other division. There’s a functional separation.
I think the lack of clarity arises from the fact that those in both divisions are entitled “inspectors,” which is a generic term.
[R. Chouhan in the chair.]
T. Shypitka: Before we go on to section 5, I just wanted to make a quick comment that…. I think the minister alluded to that I was disparaging the division. I just wanted to say that I’m not disparaging anyone. I just want to make sure the divisions, both divisions, are well-resourced and well-supported. That was the intent of my comment.
Sections 4 to 6 inclusive approved.
On section 7.
T. Shypitka: One of the newer powers contemplated by this section is that the chief inspector or their delegates may “enter on or below the surface of the mine and cause the required work to be performed or completed.” What would the process for this look like?
Hon. B. Ralston: These were powers that were exercised by a previous regime, by the chief inspector, so they’re not new powers. What this does is just give greater clarity to the authority of the chief inspector to exercise those powers.
Under the Oil and Gas Activities Act, these powers are expressly set out. So the drafters thought, in the interest of greater certainty and greater clarity, it was important to add this detailed language at the time of the amendment of this bill and clarify and give certainty to the powers of the chief inspector.
T. Shypitka: No more questions on section 7.
S. Furstenau: If I may, I have one question.
On section 7, there’s some clarity made in the proposed bill on reclamation and an ability for the inspector to take from the reclamation bond, if it exists, to put toward perceived or real risk to environment or people. But we have yet to see an update on financial assurances. The previous government agreed to update the mine reclamation bond policy because of the Auditor General report. There has been a subsequent report and public consultation by this government in 2018.
The question is: why not, at this point, add the much-needed change to the act so that the chief inspector must — as opposed to may — require financial securities for mine reclamation?
Hon. B. Ralston: This is an important question and quite a legitimate one. What this amendment does is give greater clarity to how the money that’s been posted may be used.
In terms of the question of what the policy might be in terms of requiring posting of money for potential reclamation, that policy is under development. I would say that in the oil and gas sector, in the orphan well area, that policy has been revised in the sense of requiring more — some may argue not enough. But certainly, a change in that policy and a similar policy would…. Work is underway here to have a look at that and see what would be appropriate in the sector.
Of course, consultation obligations require further consideration before we’ll be in a position to come forward with a change in policy. So the member’s question is timely. I appreciate it. It is a reminder that this work needs to be considered at an early point in the future.
S. Furstenau: Just following up on that just a little bit. Could the minister provide any kind of timeline on that work? And does the minister have a ballpark figure of reclamation costs that have fallen to the province for sites that have not been reclaimed after being finished with the mining?
Hon. B. Ralston: To the member’s two questions. On the timing of the policy, there is an internal policy being developed. There’s an anticipated further engagement this fall on that policy. Work is underway and moving forward.
In terms of the member’s second question — about how much reclamation work there has not been funding for — there’s no answer available immediately. I can commit through the staff to follow up with the member. That will be outside of this process, but again, I think it’s an important question. We’ll endeavour to get the member an answer.
Sections 7 to 10 inclusive approved.
On section 11.
T. Shypitka: How are mine emergencies determined under the new section 17? What would be out of scope here?
Hon. B. Ralston: I wonder if the member might just perhaps add a few words on what he means by “out of scope.” I’m not quite clear on what he’s getting at here. Certainly, there are some reasonable questions to ask about this section. I just don’t…. The term “out of scope” doesn’t….
T. Shypitka: How are emergencies identified? I guess it’s all I really want to know. Simply, just how are mine emergencies determined under the new section 17?
Hon. B. Ralston: I think there’s a pretty standard and common understanding to determine an emergency. It is not defined in this act, but I don’t think there’s any intention to make a mystery of it. I think most people would recognize and understand an emergency as a catastrophic event requiring urgent action, whether to save life, save property or prevent damage to property, persons, the environment or something in the nature that I think most people would understand as an emergency.
T. Shypitka: No more questions for this section.
Section 11 approved.
On section 12.
S. Furstenau: I just have one quick question on this, which adds “authority for an inspector to order the preparation of a professional report.” Could the minister just help me understand why “incident” isn’t better defined and what we should understand as what an incident is that causes actual or potential environmental damage?
Hon. B. Ralston: The choice of “incident” is a deliberate one, rather than an accident or an occurrence. I think the agreed interpretation of incident is that it is broader than either of those two categories, so it gives a broader scope to matters that an inspector could investigate. It’s intended to broaden the powers of the inspector without having to define whether something is an accident or not.
T. Shypitka: The member from Cowichan Valley stole one of my questions, but that’s all right. I’ve got another one.
Can the minister confirm that environmental damage reports ordered under this section are carried out by an independent third party?
Hon. B. Ralston: Yes. The language of the section does use the term “an independent study,” so yes, it would be independent.
T. Shypitka: No more questions on this section.
Sections 12 to 14 inclusive approved.
On section 15.
T. Shypitka: Reclamation obligations are clarified to be required, regardless of the provisions of security. Was this at issue in any prior case?
Hon. B. Ralston: Yes, the member is correct. There has been some ambiguity about the application of the language in the previous section, so this is intended to provide clarity.
T. Shypitka: The question was: were there any previous issues or cases that brought on this piece of legislation?
Hon. B. Ralston: Yes. In the past, there’s been some dispute about the interpretation of this section, where a party has provided money for reclamation. They regarded that as an end to their obligations for reclamation, and this section is intended to clarify that.
Sections 15 and 16 approved.
On section 17.
T. Shypitka: What types of obstructions, if any, have been encountered by investigators or officials that required this provision?
Hon. B. Ralston: The language in the previous section is somewhat dated, I think at least 30 or 40 years old. So this is a fairly standard phrasing of powers under a penalty section. Just given the opportunity to amend the act and clarify the powers, the opportunity was taken to bring this section, as a penalty section, into conformity with other penalty sections — very similar to other provincial statutes.
T. Shypitka: I will take it that there were no previous obstructions or encounters by investigators or officials to bring this legislation…? It’s just some housekeeping that we’re just tidying up, I guess. Is that true?
Hon. B. Ralston: This particular section was recommended by Crown counsel in drafting a penalty section. There have been concerns in the past, so I wouldn’t want to leave that impression that the member has suggested.
This section, as it’s drafted in the new form, is intended to provide the powers to deal with those.
Sections 17 to 24 inclusive approved.
Title approved.
Hon. B. Ralston: I move that the committee rise and report the bill complete without amendment.
Motion approved.
The committee rose at 2:56 p.m.
The House resumed; Mr. Speaker in the chair.
Report and
Third Reading of Bills
BILL 6 — MINES AMENDMENT ACT, 2020
Bill 6, Mines Amendment Act, 2020, reported complete without amendment, read a third time and passed.
Hon. S. Robinson: I call committee on Bill 14, intituled Municipal Affairs and Housing Statutes Amendment Act, 2020.
Committee of the Whole House
BILL 14 — MUNICIPAL AFFAIRS AND
HOUSING STATUTES
AMENDMENT ACT (No. 2), 2020
The House in Committee of the Whole (Section B) on Bill 14; R. Chouhan in the chair.
The committee met at 3 p.m.
On section 1.
T. Stone: Good to see everyone today. Happy afternoon. With the indulgence of the minister, I just wanted to ask a couple general questions. I’ll do them here in section 1. I just have maybe half a dozen general questions. Then we’ll move through the specific sections.
The first question I wanted to pose to the minister was this. In the opposition we’ve called for a relief on the 4.4 percent insurance premium tax, the tax which is charged on insurance premiums, including strata insurance premiums. I’m just wondering if the government has considered looking at that particular piece as a means that would provide some immediate relief to strata owners across British Columbia.
Hon. S. Robinson: The insurance premium tax is not new. It’s been collected for decades on every type of insurance and in all Canadian provinces. Moreover, it’s insurance companies that pay the insurance premium tax, not individual consumers. That’s why ending or reducing the tax would actually provide little or no benefit to people. The tax is not one of the factors contributing to increased costs in the strata insurance market.
T. Stone: Well, the 4.4 percent insurance premium tax is layered into the cost that’s passed along to the consumer. The out-of-pocket amount that the consumer pays at the end of the day for their insurance, including strata insurance, is inclusive of the 4.4 percent insurance premium tax.
The B.C. Financial Services Authority in their recent report indicated very clearly that this was an issue that was, in part, driving higher costs for consumers and that this was one measure that could be passed along to consumers insofar as alleviating some of the pressure that they’re facing from higher rates.
I believe the B.C. Financial Services Authority estimated in their report that was delivered to the Minister of Finance and the Minister of Municipal Affairs only weeks ago that there’s about $300 million that’s collected in insurance premium tax at the 4.4 percent level on strata insurance premiums. The savings of a temporary holiday on this tax would be in the range of about $13 million per year. Those are real dollars that could be passed along to consumers.
Is the Minister of Municipal Affairs willing to commit, along with her colleagues, that she will look at and consider a tax holiday on this insurance premium tax for strata insurance premiums to leave those dollars in the pockets of strata owners?
Hon. S. Robinson: I want to remind the member that these changes that we’re making here are changes that are based on an interim report that we received from the BCFSA. There’s a final report, and I look forward to seeing what else might be in the final report.
T. Stone: Again, there’s $300 million charged in strata insurance premiums on an annual basis. That’s as estimated by the B.C. Financial Services Authority, indicated in their recent report, and 4.4 percent of that amount represented of the insurance premium tax works out to about $13 million.
Again, one more time to the minister. Will the minister commit to working with her colleague the Minister of Finance and others to provide a temporary tax holiday to leave that $13 million in the pockets of strata owners, who, by the way, are paying…? Every time their insurance premiums go up…. They’ve been going up, in many cases, not by the 50 percent to 60 percent that the BCFSA says, but in many cases, they’ve been going up by 100 percent, 200 percent, 500 percent, 800 percent year over year. They’re paying the 4.4 percent premium tax on that ever-increasing higher amount, which is just simply not fair, and people can’t afford it.
Will the minister commit to doing what it takes, working with her colleagues to provide strata owners with relief in the form of leaving the insurance premium tax, otherwise a charge — leaving those dollars in the pockets of strata owners?
Hon. S. Robinson: Again, I want to remind the member that the insurance premium tax is not new. It has been collected for decades, and it’s collected on every kind of insurance, including car insurance, life insurance, property insurance. The amount of tax payable is calculated based on the total amount of insurance premiums collected by an insurance company.
Reducing the tax rate — I think members of the chamber need to know — for one sub-type of property insurance will reduce the total tax owing by an insurance company. It really doesn’t mean that those tax savings — I have to say — will be passed on to individual consumers. We have no guarantee of that. Again, I think the savings would be minuscule.
T. Stone: Well, the minister can say that the insurance premium tax has been in place for quite some time. That is factually accurate. What is also factually accurate is that it’s only over the last year to 18 months that strata owners have been facing ridiculous increases in their strata insurance premiums, related deductibles and the flow-through impact of higher monthly strata fees. This has been happening just over the last year to 18 months, and people need relief.
The minister said in her answer moments ago that she’s looking forward to reviewing the B.C. Financial Services Authority final report, which is scheduled to be released at some point this upcoming fall. Is the minister basically saying to strata owners across British Columbia that they have to wait until the fall of this year before she and her colleagues in government may consider providing financial relief which strata owners need today?
Hon. S. Robinson: Like I’ve said before in earlier debate, we are working as quickly as we can to address a significant challenge for many strata owners. This is a first step, and there’s absolutely more to do.
T. Stone: I will take from my multiple questions and the multiple answers from the minister that the answer is no. There won’t be financial relief coming in the short term for strata owners. The minister has had several opportunities now to suggest that she would focus on immediate and short-term measures such as a tax holiday on the 4.4 percent insurance premium tax, and she’s not willing to go there.
I’ll ask this question. In the same BCSFA report that was provided to government and released publicly recently, it indicated that approximately half of claims — total dollar value of claims — were related to water damage events. I don’t think that comes as a surprise to anyone. Certainly, when you talk to folks who live in stratas, whether it’s involving a dishwasher or a toilet or any other fixture that has water coming in and out of it, it is prone to having leaks and is prone to things going wrong. That can obviously have a huge impact on that unit and other condo units in a building, usually below that unit.
One of the other ideas that the official opposition had presented a number of months ago was for the government to establish a strata water damage prevention program. That would incentivize and help strata corporations and strata owners to cover the costs of doing some of that critical prevention work, that maintenance and prevention work up front — to install a variety of different fixtures and so forth that would reduce the prevalence and the severity of water damage events occurring in the first place.
Can the minister tell us why there has been no…? Certainly, there’s no inclusion of a water damage prevention program or contemplation of a water damage prevention program in Bill 14. There was no mention of it in the announcement that wrapped around this bill when it was introduced. Can the minister tell us and, more importantly, strata owners across British Columbia why she and her government are not considering some form of a water damage prevention program?
Hon. S. Robinson: Home maintenance, of course, has always been the responsibility of the homeowner. These can certainly be useful upgrades. They’re preventative as well. Homeowners in strata corporations are certainly free to consider them, to consider these upgrades, because when they make these upgrades, they can save money on their premiums by improving their risk profile.
T. Stone: Certainly, it is the case today that strata corporations and strata owners make decisions to do the investments, the required maintenance and upgrades, as and when they can.
The issue here…. The question, I guess, is: why is the government, recognizing the unique circumstances of massive increases in insurance premiums for stratas, huge increases in deductibles as part of that, huge increases in monthly fees…? Many strata owners are also facing one-time special assessments, often in the thousands of dollars. Why would government not consider these unique circumstances to be such that a government-led initiative around preventing water damage events from occurring in the first place might be advisable and might actually help strata owners with the pressures that they’re facing from increasing insurance premiums?
I will point out that the Home Adaptations for Independence program, HAFI, which was created by the former government and is still in place today, albeit under a review at the moment, has provided significant dollars to enable homeowners to make necessary upgrades that are all about mobility and independence and so forth. Obviously, a very, very different objective than preventing water damage. But there is a model there, the HAFI program, that works very, very well. It directs dollars to those homeowners that can make those upgrades that are needed in that particular household.
We’re talking about investments in things like automatic water shutoff valves, hard-wired water detection systems, steel braided hoses, low-flow toilets, drains in laundry and washroom floors, recessed sprinkler heads, protected sprinkler guards — you know, the list goes on and on.
Again to the minister, is she considering creating some form of a water damage prevention program that could help offset some of these preventative maintenance upgrades for strata owners which would serve the purpose of preventing claims from happening in the first place and thus apply some downward pressure on strata insurance rates in the months and years ahead?
Hon. S. Robinson: It is a good thing, I think, for strata corporations to understand the state of their buildings, the state of their homes. That’s why in this bill we are requiring the depreciation reports. We’re changing the framework around that so that building owners and homeowners can really know what needs to happen and they can make the appropriate investments that would have impact on their insurance rates.
Water detection, flood prevention — these are good things. But requiring a depreciation report so that they understand and can then make the appropriate investments as needed is a good thing, I think, for everybody.
T. Stone: Well, we’ll get to the depreciation report changes in a moment. But the difference between the discussion around depreciation reports and what the government is proposing and a water damage prevention program is that a water damage prevention program would actually incent investments today in those areas of a strata unit and a strata building that would reduce the prevalence and the severity of water damage events — thus reducing the frequency of water damage–related claims, thus reducing pressure on strata insurance premiums.
I think that’s the important point that strata owners, strata corporations, have been making to all of us elected officials. So it’s disappointing to hear that the minister is not considering a water damage prevention program — call it whatever the minister wants — a program that would provide some immediate help insofar as reducing the frequency and severity of water events. We’ll continue to press government on that point in the weeks and months ahead.
Another idea that the official opposition has proposed is that we’ve encourage the government to extend, on a temporary basis, the property tax deferment program to be inclusive of strata property owners that are facing significant financial stress as a result of skyrocketing strata insurance premiums. Is the minister prepared to consider this idea — again, the temporary extension of the property tax deferment program — for strata owners facing significant financial distress from soaring strata insurance costs?
Hon. S. Robinson: First of all, I think it’s fair to say in this House that taxation is out of scope on this particular bill. So I can’t provide any significant comment. That would be up to the Minister of Finance.
What I can say is that almost 80 percent of homeowners are already eligible for B.C.’s tax deferment program, and I would encourage anyone who might be listening to the exciting committee stage on this bill to make sure that they are taking full advantage. We do know that lots of people can absolutely take full advantage of an opportunity that’s before them.
T. Stone: Well, it’s interesting that the minister says, “I cannot talk about taxation; that’s the purview of the Finance Minister,” and that then she goes on to talk about taxation.
The 80 percent of British Columbians being eligible for the property tax deferment program is a wonderful statistic, but we’re talking about real people here. There are a heck of a lot of people that don’t fall within that 80 percent — who, therefore, are not eligible for the property tax deferment program and who are facing massive increases in their strata insurance costs as a result of these increases. Their monthly fees are going up. They’re facing one-time special assessments, and there is no relief that’s being provided to them, in the short term here, to address that situation.
[S. Gibson in the chair.]
Again, will the minister commit to working with her colleagues, particularly the Minister of Finance, to extend the property tax deferment program to be inclusive of strata owners that are facing significant financial distress as a result of soaring strata insurance costs?
Hon. S. Robinson: This question was already asked, and I already answered. I believe I do get to share, with British Columbians, information about an existing program. I think it is the appropriate thing, when I have the floor, to remind British Columbians about an opportunity that is available to them.
T. Stone: I did ask the question, and the minister did not answer the question. I asked the question twice: is she willing to commit to working with her colleagues to extend the property tax deferment program? She did not provide an answer to that question, other than to say that she can’t talk about tax, but then she talked about a tax. I would suggest that, for the thousands of strata owners out there who are impacted by soaring strata insurance costs, that’s not good enough.
I guess we’ll just assume that the answer is no, so that again, there’d be no consideration by this minister for extension of the property tax deferment program, as there will be no consideration by this minister for a water damage prevention program, and no consideration by this minister and government for a tax holiday on the 4.4 percent insurance premium tax that’s charged on insurance premiums.
Why don’t we try this one? We have suggested that the government undertake a review of the B.C. building code, again looking at what changes could and should be made to strengthen the requirements for construction related to those areas of a building that typically factor significantly into insurance claims. Again, a lot of that would be water damage–related claims.
Is the minister willing to commit to undertaking a review of the building code, again with that in mind?
Hon. S. Robinson: The member probably knows, but I will read it into the record, that the B.C. building code is updated, of course, to meet world-class health, safety and energy efficiency standards. It’s based on the model of the national building code of Canada. We always monitor changes and what the best practices are. We are monitoring proposed amendments to the national plumbing code in response to the strata insurance issue.
T. Stone: Does the minister have any timing as to the review — I think she used the word “review” — of the national standards, the plumbing codes? Is there any timing that people can hang their hat on here in terms of when that work would be done and any potential changes might be brought forward?
Hon. S. Robinson: We’ve got the 2020 model codes that are being reviewed right now, and we will adopt any changes that are merited. I also would like to let the member know that we’re also looking at best practices in other provincial codes, like Quebec’s, for potential adoption in the B.C. plumbing code.
T. Stone: Can the minister tell us if she and her ministry have contemplated any enhanced requirements, training or tools from an education perspective that might be brought forward to provide strata corporations with a broader set of best practices and tools that they can use? Recognizing that strata councils are all volunteers, they work very, very hard, in most cases, to do the best job that they can with the tools, the expertise and the resources that they have available to them.
Some provinces have gone so far as to implement mandatory training modules or training tools in other forms that are not so much, I think, intended to be onerous additional requirements on a strata corporation but, rather, are intended to be additional resources and tools that can be embraced by strata corporations to assist them with what can be some very complicated and challenging work — which they’re often trying to do after they’ve put a long day in at work or to tuck it in at different hours of the day around other personal priorities.
The question is: has the minister and her ministry considered adopting best practices in this space from other provinces insofar as implementing tools and training modules and so forth, particularly around risk management, for use here in British Columbia by strata corporations in our province?
Hon. S. Robinson: Being educated and having the information that you need is certainly helpful for strata council members. What caught my attention in the question was people tucking kids in at night, being really busy with work and having to take additional courses, even when people are volunteering for their strata council. What we also know is that they already have access to some extensive educational resources through the Condominium Home Owners Association, the Canadian Condominium Institute and the Vancouver Island Strata Owners Association. They have many comprehensive programs and modules that are available to strata owners.
What we’re finding is that the main obstacle, really, to proactive maintenance is not the strata council’s, perhaps, lack of knowledge — they often know what needs to get done — but it’s the reluctance of enough owners to approve the needed expenditures, which really goes back to the depreciation reports.
T. Stone: In my previous question, I didn’t say “tucking kids in.” I was simply saying that because strata councils are volunteers and are often busy in their own right with other aspects of their lives, they end up having to tuck strata council work into odd, different hours of the day and night and whatnot, above and beyond other priorities that they may have.
I am certainly aware of the Condominium Home Owners Association and other organizations that do make resources available. I have also heard, loud and clear, from a lot of strata councils that they do believe that there is a deficiency of resources available to them. They would like to see the ministry or some other agency take more of a proactive lead role on getting those tools out into the hands of councils.
Certainly, that’s no criticism of the resources and the work that’s in place today with existing associations. I’m simply reflecting back to the minister a theme that I have heard from a lot of people on strata councils.
I guess the final piece to this question would be…. I think Ontario has adopted a model of mandatory training, some modules that strata councils need to engage in and complete. I took a look at them. It wasn’t like these were day-long courses and so forth. They were modules that were fairly straightforward and quick to engage in and complete.
Is the minister giving any consideration to…? Again, from a training and education perspective, particularly around risk management, is she considering or has she considered adopting a mandatory model of training as exists in other provinces in Canada?
Hon. S. Robinson: B.C. Housing is already doing research on best practices on water leak prevention. That information does go into the strata property guide that is pushed out to all of the various organizations. As well, it’s available to any strata corporation.
The member had asked a question about mandatory education and training. The member described people tucking into their training — sorry, I thought he was talking about tucking in children — in the bits and pieces of their lives where they have some free time. I think the member recognizes that these are volunteers. It can be quite challenging to get people to volunteer to sit on a strata board, on a strata council.
We’re trying to balance the needs to make sure that people have adequate information to make decisions on behalf of their strata corporation and, at the same time, making sure that people are willing to volunteer. We don’t want to make it too onerous. That becomes, then, a different kind of challenge for the strata corporation. So really trying to balance these needs and making access to the information as simple and as available as possible is a goal that I think we can all agree is really what we ought to be doing.
T. Stone: With respect to the transparency of data and information…. One of the things that I think we’ve all heard from strata owners frustrated with the skyrocketing strata insurance costs has been the lack of access to the information that insurance companies are using to justify these astronomical increases in premiums and deductibles.
One of the things that the official opposition has called for the government to consider is to require the BCFSA to make public the data and the information that it receives from the insurance industry related to insurance premiums and deductibles and so forth so that the public can actually see that information and, possibly, better understand the rationale for these increased costs or, likely, call even more into question the justification for these huge increases in premiums and deductibles.
The question to the minister is this. Why has she not included any requirement in this Bill 14 for the BCFSA to make the data and the information that it receives from insurance companies publicly available — for strata owners, in particular — to better understand, at least, the insurance industry’s rationalizations and justifications for these massive increases in strata insurance costs?
Hon. S. Robinson: There has been, certainly, some interest in this issue that the member raises. The Ministry of Finance and the BCFSA are working on a plan to release the aggregate data to the public as part of the final report.
T. Stone: I will look forward to that. If I heard the minister correctly, she said that the aggregate data that the insurance industry has provided to the BCFSA will be included in the BCFSA final report. If I’ve captured what the minister said correctly, I, again, will look forward to that and pay close attention to it when it comes out.
I guess my final question on this piece will be this. Will the minister consider a further amendment to the legislation requiring, as an ongoing matter of practice, the disclosure of the data and the information that is provided by the insurance industry to the BCFSA, as opposed to just a one-off dumping of that aggregate data in the report that we are all anticipating will be provided to us elected officials and to the public later this fall? Can the minister commit to making that a permanent requirement on a go-forward basis in the interests of transparency?
Hon. S. Robinson: The BCFSA, as a Crown that we work with, have access to this data. In the course of them acting as a regulator, they can collect the data the member was asking for, and they can make that available.
T. Stone: I’m well aware that the BCFSA can make the information available.
My question to the minister is, will the government require, as a matter of the regular expectation going forward of BCFSA, that they will make that information…? Not can they make it available; will they make the information available on an ongoing basis to the public?
As opposed to requiring people to try to extract it from BCFSA, will the government require BCFSA to actually just push the information out proactively in the interests of transparency so that on an ongoing basis…? Particularly in the short to mid-term, as British Columbians ride whatever this strata insurance storm has in store for them in the months and hopefully not years ahead, at least as a matter of practice, it would be required for that data and information that is provided from insurance companies to proactively be disclosed and made available to British Columbians. Is the government prepared to make that a requirement?
Hon. S. Robinson: Like I said earlier, the data that will be released in the final report will show British Columbians, and explain to them, why their insurance rates are so high. Should we need to in the future do another data call, we will do just that.
T. Stone: I will take from that answer that, again, the answer is no. The government does not intend on making it an ongoing requirement for the data and the information that the insurance industry provides BCFSA to be disclosed to the public. That’s very regrettable. That is very disappointing.
When people are facing such massive increases in their out-of-pocket expenses through no fault of their own and they’re looking for answers, the transparency of those that are driving these higher costs, that are demanding these higher premiums and demanding these higher deductibles, transparency on the underlying financial rationale for those increases is the least that I think British Columbians facing those increases can expect. It really is a matter of transparency, so it’s very disappointing that the minister won’t commit to that becoming an ongoing requirement.
I wanted to next ask the minister this. I’m curious as to what level of engagement the minister and the ministry have had with other provinces. This is, obviously, a huge issue across the country, particularly in larger urban centres, but we know that increased strata costs are taking place in Alberta and Ontario and Quebec.
I’m wondering if the minister could share with us what the nature of her engagements and consultations have looked like with other provinces. Has she met with, had conversations with…? I’m sure that they would have been Zoom calls if they were meetings, but has she actually had formal discussions with other Housing ministers across the country? If she has, which other jurisdictions has she engaged with on this issue of skyrocketing strata insurance costs?
Hon. S. Robinson: I can let the member know that we have engaged with Ontario and most other provinces and territories on this issue. The problem, however, is most significant in British Columbia, given the numbers of stratas that we have and some of our most unique challenges related to our own geography. We also know that we need solutions that reflect our own regulatory framework and that work for British Columbians here.
T. Stone: Well, I appreciate that. I wanted to also ask the minister if she could advise as to where the federal government is on this issue and if she, on behalf of the provincial government, has sought any support, financial or otherwise, from the federal government that could be provided to pass along to strata owners in British Columbia. There’s no question that the challenge is significant here in British Columbia, and I believe that Ontario and Quebec are also experiencing similar challenges.
I’m curious to know if the minister has actively sought some federal engagement and support on this issue. That could potentially help those British Columbians that are facing such astronomical increases in their strata insurance costs.
Hon. S. Robinson: I want to assure the member that this is something that we have considered. It’s an issue that we are raising with the federal government, and we are certainly anticipating the final report that will help us in further engagement.
T. Stone: I want to thank the minister for indulging me in those more general questions. I’ll now move to a few questions on section 1. Actually, these couple of questions, or handful of questions, relate to sections 1 and 2. They’re very similar, as I think we all know that sections 1 and 2 authorize regulations prescribing the percentages of the estimated operating expenses set out in the sections.
I’m just wondering if the minister could advise the House and advise British Columbians if she and the ministry have determined what the new prescribed percentages will actually be. At the moment, they’re at 5 and 25 percent. Those numbers are being removed, and the amounts will be prescribed in regulation. Could the minister advise the House as to what those new prescribed regulation amounts will actually be?
Hon. S. Robinson: No, at this time we don’t have specific numbers. We have some consultation that we’d like to be doing with the stakeholders. I want to make sure that we balance the needs of owners and strata corporations with developers. So we need to engage with these groups accordingly so that we could strike the right balance.
T. Stone: Will minimum initial contingency contributions be different or be prescribed for different types of stratas, different sizes of strata corporations? What is the minister’s thinking around what any differentiation might look like insofar as what these new prescribed percentages will end up being?
Hon. S. Robinson: Again, pending further consultation is part of what will help us get there. At this point, we are not considering differentiated minimums.
We need to remember that a more robust contingency reserve fund will just help ensure that strata corporations have enough funding for their depreciation reports and the repairs from the beginning. That, I have to say, is about alleviating rising insurance costs and future claims due to inadequate maintenance. We want to make sure there’s a good base there when these homes become occupied.
T. Stone: Can the minister advise the House and British Columbians what the timing will be on these consultations related to establishing new prescribed minimum initial contingency contributions? What does the timing look like for those consultations? Are we talking 30 days, 60 days, end of the year, into next year?
Hon. S. Robinson: Our intent is to start these consultations imminently, with bringing regulations in this coming fall.
T. Stone: Can the minister advise the House and British Columbians what immediate financial relief will be provided to strata owners as a result of section 1 and section 2 of this bill?
Hon. S. Robinson: Sections 1 and 2 are about ensuring that strata corporations can maintain their buildings properly, that they understand what the needs of the building are and they can invest appropriately in the maintenance of the building, as well as, of course, mitigate the risks going forward. That, I think we can all agree, is absolutely critical to managing skyrocketing insurance premiums. This is really about mitigating the risks so that the payments can be more manageable.
T. Stone: I think we understand that these two sections, section 1 and section 2, are about mitigating those risks. My question was: how do these two sections actually provide relief in the immediate term, the short term, for strata owners who have been facing skyrocketing strata insurance costs? Perhaps the minister could take one more run at the question from that perspective. What immediate relief do these two sections provide British Columbians who are facing massive increases in their strata insurance costs?
Hon. S. Robinson: We know that the rising cost of insurance for condo and apartment buildings is, of course, a serious and urgent issue.
The skyrocketing insurance rates — the harm caused by this is clear. But it’s the local and global factors that have been driving these increases. We also know that it’s quite complex. For the first time, thanks to the BCFSA interim report, we have an in-depth analysis of the many factors that are driving the skyrocketing costs of strata insurance here in British Columbia.
It’s complex. It’s impacted by local, national, as well as global factors. They’re affecting the cost and the availability. It is a problem that does not have a quick fix. But this legislation and these sections, in fact, are a first step to help tackle the problem while we work to get the market to balance.
T. Stone: Well, I hazard to say that in-depth analysis by the BCFSA doesn’t pay the bills. That’s not going to help the hundreds of thousands of British Columbians who are suddenly facing huge increases in their insurance costs, huge increases in the deductibles, huge increases in monthly strata fees as a result — and often one-time special assessments, often in the range of thousands of dollars.
It’s cold comfort for those people, I believe, to hear the minister say: “Well, for the first time ever, we have in-depth analysis from the BCFSA.” People know what the problem is. They can’t afford these skyrocketing insurance costs.
Again, what I took from the minister’s answer is that nothing in sections 1 or 2 of this bill will provide immediate short-term relief for British Columbians facing soaring strata insurance costs.
With that, I have no further questions on section 1 — or section 2, for that matter, Mr. Chair.
A. Olsen: Thank you for the opportunity to ask some questions. On section 1, I’m just wondering if the minister can give some indication as to what measurable impact the changes of the rates might have on people living in stratas today and maybe the expected increases next year or over the coming years.
Hon. S. Robinson: I want to ask for clarification from the member. Was he referring to the rate that stratas would pay or the insurance rate? I just want to understand. The rate that they have to pay into the reserve…. I’m just trying to understand the nature of his question — what specifically he’s asking.
A. Olsen: This is a really unique situation. I don’t think ever before has the committee stage of the bill happened where the minister is sitting directly in front of the member asking the questions. Anyway, it’s one of the unique challenges of the seating arrangement that we have here.
The question is just to try to get an understanding of whether there’s going to be any material impact on the people living in…. The member before was asking the questions about the savings. I want to know what impact these percentage changes may have on people today and in the near future.
Hon. S. Robinson: The contingency reserve fund is used by the strata corporation to pay for common expenses that usually occur less often than once a year or that do not usually occur. Prescribing the minimum amount that the owner-developer must contribute to the contingency reserve fund will allow government to increase the initial contribution amount, if appropriate, to encourage proper maintenance of strata properties.
A more robust contingency reserve fund will help ensure that the strata corporation has enough funding so that they can complete the depreciation reports and the repairs, which will help to alleviate rising insurance costs and future claims due to inadequate maintenance.
The contingency reserve fund may also be used to pay an insurance deductible. This will help people whose homes are in a strata.
A. Olsen: One of the challenges with moving these numbers from legislation into regulation is that those numbers then can also again be changed by regulation in the future. I’m thinking about the relationship that the developer has now with this project. Maybe the minister can provide some context to….
I’m just thinking in my head of a developer who’s putting the costs together of constructing a building. They look at the legislation, and they say: “We’ve got 5 percent, and we’ve got 25 percent in the legislation.” Now that’s being moved to regulations. It’s solid, but it’s less solid than if it’s in legislation and we have to have a debate where we have this kind of conversation to go through.
Can the minister maybe just highlight some of the conversations that she has had or some of the thoughts that have gone into the impact that this might have on the construction of new units and the construction of future buildings?
Hon. S. Robinson: We are engaging with the development community as part of moving forward on this, because we do need to strike the right balance. We also need to recognize that it’s affordability over the long term that we also need to consider. So making sure that we do that, it’s critical that we engage with the industry.
We also want to ensure that the strata fees are not set at, realistically, low amounts when a unit is first sold so that they can get off on the right foot when they’re starting to build their contingency reserve funds. This is really about making them more robust and, in the long run, a stable, well-functioning strata sector. It’s also good for developers too, because they too are investing in this. They want to make sure that they’re not seen as problematic investments for families and for people retiring or for young people just getting a start in life. We’re going to make sure that we do a robust consultation so that we can address this for the long run.
A. Olsen: I just want one final question on this, and then I’m kind of going to work my way backwards. The member for Kamloops–South Thompson asked some general questions to begin with. I’ve got a few before we move on to other sections, if that’s okay.
I just want to inquire a little further on this. The buildings that are in the middle of construction right now…. I’m just kind of wondering where those stand in this. A developer has dug a hole. A developer has got 12 storeys being built. How does this change impact those construction projects that are midstream right now?
Hon. S. Robinson: Again, this is part of the conversation with the development community to better understand how to best move forward on this — to work with them to address some of these transitional measures. Of course, the timing of the regulation will be based on that consultation so that we can strike the right balance, recognizing that at some point, a change needs to happen and what the things are that need to be considered in order to attach it — recognizing, too, the sensitivity of timing on development projects.
A. Olsen: There was a comment that was made in the BCFSA report. I look forward to understanding a little bit more about it, maybe. I’m going to ask a question here about the construction and, perhaps, deregulation in the construction sector.
There are some challenges with newer buildings, as has been highlighted in this report. I’m just wondering if the minister can maybe provide any comment on whether there’s been deregulation in the construction sector that has contributed to some of the construction quality issues that we now face that have been highlighted in the report.
[R. Chouhan in the chair.]
Hon. S. Robinson: The member mentioned something that was in the report, and I think he’s referring to new buildings less than five years old seeing more claims. I think that’s what the member is referring to.
At this point, we don’t see any evidence that suggests poor construction here in British Columbia. We do have a well-regarded new-home warranty insurance system that protects consumers against construction defects in newly built homes.
We have been made aware that, in some cases, claims that should be covered by the warranty are instead ending up on the strata corporation’s property insurance policy. We’ll be looking into this with B.C. Housing, whose licensing and consumer services division oversees new-home warranty insurance.
A. Olsen: Just a question with respect to the Strata Act. I’m wondering if part of the challenge that is being faced here is that we’ve had a large amount, 1.5 million British Columbians, living in strata homes, homes with a strata corporation.
I’m just wondering if the minister can comment on the regulatory regimes and the number of different strata arrangements that exist and whether or not the Strata Act has been a contributing factor to this problem.
Hon. S. Robinson: The short answer to the member’s question about the Strata Property Act is no. It’s not the Strata Property Act; it’s, really, a global insurance challenge. What we’re doing here today is to make some changes so that strata corporations can better manage a very difficult global insurance challenge.
Sections 1 and 2 approved.
On section 3.
T. Stone: With respect to section 3, this being the section that requires a strata corporation to include a summary of the strata corporation’s insurance coverage in an information certificate, I’m just wondering if the minister could confirm for the House what information will be included in that summary of the insurance. What would the specific information be that will have to be included in that insurance certificate?
Hon. S. Robinson: What’s proposed to be required are the types of coverage that the strata needs, as well as the deductibles, as well as other requirements that we will identify through consultation.
T. Stone: Could the minister clarify the intent of new subsection (5.1) respecting the information in this information certificate not being binding?
Hon. S. Robinson: The proposed change also indicated that the summary is not binding on the strata corporation, just as the member queried, if the information is obtained from the strata corporation’s insurer or insurance agent. This will just help to ensure that the strata corporation is not liable if the information provided by third-party insurers or brokers is inaccurate.
T. Stone: Can the minister explain what immediate financial relief this section 3 of Bill 14 provides the hundreds of thousands of strata owners, the hundreds of thousands of British Columbians, who are facing skyrocketing strata insurance costs?
Hon. S. Robinson: Again, it’s important to recognize the dynamics that are driving these increases are playing out in the private insurance industry. Government does not set insurance rates or regulate pricing. These amendments to the Strata Property Act and the Financial Institutions Act are going to help to lessen the impact of rising insurance costs for strata corporations and increase transparency for strata lot owners and purchasers.
The proposed amendments are intended to protect consumers and to help them to make informed decisions and deal with rising insurance costs. The amendments will also help to make sure that strata owners and purchasers can get timely information about their strata corporation’s insurance coverage.
The bill, of course, will also help protect people by limiting their liability for soaring strata corporation insurance deductibles, which we’re going to see a little bit later on in this bill.
T. Stone: I take from the minister’s answer that — as with sections 1 and 2, dealing with new prescribed minimum initial contingency contributions — this section 3 of this bill, providing for the requirement to include insurance coverage in an information certificate, also does not provide any immediate financial relief for all of those British Columbians out there trying to figure out how to pay these ridiculous increases in strata insurance costs. That’s regrettable.
With that, my colleague from Abbotsford West has some additional thoughts, comments, questions, with respect to section 3.
M. de Jong: Just flowing from that, I think the conversation…. The minister has brought the legislation to the House and commends it to the House. In the section that we’re now on…. I think it’s a disclosure section. I think the minister would make the case that at this time, in particular, information is important for owners and prospective owners to have. I think that’s fine. I think we shouldn’t pretend it’s something that it’s not and just go from there.
I’ve alerted the minister previously that I’d like to explore with her some broader questions and approaches to the situation we’re facing, which I think is accurately described as a structural or systemic failure. Just as a preamble to that, I thought that it might be useful for us to clarify on the record, or seek to establish on the record, that we have a mutual understanding about what the problem is. I think we do. I hope we do. But this might be the time, quickly, to run through and do that.
We have seen the reports. Some of us — likely the minister herself, given the part of the province that she represents as an MLA — have had constituents attend and provide information showing increases to insurance premiums of 100, 200 percent, all the way up to 500. I think there was one case of 600 percent.
The insurance industry says those higher amounts are outliers — there seem to be a fair degree of outliers — and instead counters that the average increase is more in the 60- to 70-percent range. Well, we can talk about that in a moment. In this day and age, to see, year-over-year, even a 60 percent increase is troublesome.
Deductible increases. In this case, there doesn’t seem to be much dispute. Deductibles seem to be increasing by 1,000 percent — commonly, from $20,000 or $25,000 to $250,000. That seems to be the new benchmark.
I think it’s worth just asking the minister to comment. Does she accept those reports and that information as accurate? Or does she, and the government, feel that they are exaggerations of a situation that isn’t that serious?
Hon. S. Robinson: What I say to the member opposite is that we certainly have heard the same stories, the same concerns. We certainly, I believe, have read the same reports, recognizing that these are significant increases that are very challenging to many British Columbians.
M. de Jong: Well, that’s helpful. At least we’re in agreement in terms of the magnitude of the problem and the challenge it represents.
Does the minister — I think she does, but again, on the record — accept that those dramatic and, I would say, unreasonable increases in premiums are translating into increases in strata fees, of between 50 percent and 100 percent, depending on the amount? In any event, they are translating into significant increases in the strata fees that the owners of strata units are having to pay.
Hon. S. Robinson: We certainly do acknowledge that there could certainly be significant impact on fees or special levies. But we also know that 54 percent, according to the BCFSA report, received an increase of less than 30 percent. In digging down into that data, we saw that those strata corporations that got the most significant increase were those with a significant claims history.
That’s why, in this bill, we want to provide more predictability. We want to make sure that strata corporations are taking a look at what the opportunities are to address any depreciations and any improvements they can do to their building so that they have affordability over the long term and that they have stability and predictability with their insurance costs.
M. de Jong: That’s actually a nice segue into the next question. I’m not intending it to be a loaded question, but some might perceive it that way. That is that I would be curious to know whether the minister….
When I ask this of the minister, I mean on behalf of the government, because these are issues that engage her as a governmental spokesperson, but there is an overall government perspective and government approach that will guide the public policy that arises from the government benches.
Knowing what she knows, based on the reports and the other advice that she receives as minister, does she accept as appropriate or reasonable the decision by insurance companies to impose these dramatic increases? The insurance sector itself confesses — or acknowledges, maybe, is the more neutral term — to average increases in excess of 30 percent, 60 percent or 70 percent. But does she accept as reasonable or acceptable those increases when we are in the midst of the worst economic downturn recession in living memory?
Hon. S. Robinson: I certainly appreciate the member’s question. I know that he knows that this is an issue that was raised pre-COVID. We started seeing this late in the fall as an issue. But also, there are some significant dynamics — again, pre-COVID — that were at play here, that are playing out in the private insurance industry.
Again, I know that the member knows this, but I want to make sure that British Columbians know that the government does not set insurance rates or regulate pricing in the private insurance industry. The skyrocketing costs and diminishing availability of strata insurance is not unique to British Columbia. We’re seeing it in some other provinces and in some U.S. states as well.
The combination of high property values and increase in severity in weather-related disasters in recent years have increased costs. These, of course, have posed risks to global insurers. To add to that, there are only nine or ten insurers that provide significant capacity here in British Columbia. We have heard…. They’re reporting to us that sustainability for them in the market due to losses for mostly minor claims is certainly having an impact.
The interim report that we received from the B.C. Financial Services Authority identified risk factors that make B.C. more susceptible, including the rapidly-growing number and value of stratas here in the province. Some poor maintenance in some of the existing buildings, and of course, heightened earthquake risk. All of these are feeding in to some of the challenges that we’re having in the private insurance market.
M. de Jong: I want to get to what I hope will be the more positive part of the conversation. The minister has outlined some of the arguments we have heard from the insurance sector, but I’m going to make this proposition for her to at least comment upon, to the extent that she can or is willing.
Those things do not account, in my view, for the dramatic year-over-year increase. The earthquake risk in 2020 is not appreciably different than it was in 2019, unless the insurance sector has got something they haven’t given the minister or me. Insurance people deal in actuarial data and risk management. To suggest that suddenly something transpired, that the risk profile changed in November or October of 2019, strikes me as implausible.
That there are other dynamics at play where a sector of our economy has decided now they’re going to increase rates, and they are going to do so because they can. There is nothing to stop them. The minister has now repeated, several times, the point that the government doesn’t set rates. I will acknowledge that on the record so she doesn’t have to go back to that page on a regular basis.
In responding, I’m going to ask the minister, because I have forgotten what the allowable increase is for a tenant’s rent this year. I think with COVID, it is nil, if the minister can confirm that.
Yet here is an industry…. The minister points out, “Well, this is a phenomenon that began last year,” and that may be so. But these invoices have been arriving in the minister’s office, constituency office, and mine and the members for Kamloops–North Thompson and Kamloops–South Thompson — all of the members here — have continued on through March, through April, through into the height of the lockdown, where at a time when public bodies, governments, have said that it is unfair and unacceptable for landlords to increase — by any amount — the rent a tenant is paying.
The owners of units, sometimes living side by side with tenants, are being confronted by these enormous increases. I find that unacceptable. My question isn’t designed to be more complicated than that. Recognizing that there are reasons….
We can agree or disagree about what some of the contributing factors are, but I’m hoping that the minister is in a position where she is able to say, on the record, that she too and the government find that to be unacceptable.
Hon. S. Robinson: It is a hard time for everybody. I think we can all agree with that. And I have to say, I think there’s an appreciation that the insurance system is complex. There are many different factors. It’s a global system, with multiple elements to it that feed into how it operates. That’s why we tasked the BCFSA to undertake actions to determine the various elements that are contributing to the skyrocketing prices, and that’s why we need to get a better understanding of all the elements and where the challenges are in the system.
I want to share with the member…. Again, this is, I think, very interesting, because he did start off by talking about earthquake risk. It turns out that in February of this year, there was some brand-new research around the understanding of how the insurance has been developed over a number of years. I think it was that the cost would be 58 percent higher than was previously understood. I know that that’s always hard to imagine.
I think of New Zealand and other places that have had significant earthquakes. The challenge that we have here in British Columbia is real, and getting refined information, of course, I think, is this other element.
I don’t know if he was being cheeky or playful, but there was new information that just came to light in February of this year.
M. de Jong: I’m mindful of the fact that in the time that I have been in this place, it’s about every two or three years that the insurance industry presents to government a new assessment on their risk assessment around earthquakes. Not to diminish the fact that it exists, but it’s a heck of a time in the economic life of most families to decide now is the moment to address that and address it all in one fell swoop, which is what the insurance industry seems intent upon doing.
I don’t want to dwell overly on this. I think the minister is, as is generally the case, receiving advice to be guarded in her comments. I don’t need to be as guarded. I think the insurance industry has acted irresponsibly. I think unveiling reports and doing a risk reassessment and imposing these kinds of increases — particularly in one fell swoop — on strata corporations, which after all are just neighbourhoods of people, is irresponsible in the extreme. I think the people of the province and the nearly one million people that live in strata corporations are ill-served by the behaviour of the industry.
Interesting phenomenon here in that we’re not quite two sword-lengths apart, as we used to be — the free enterpriser taking shots at the market-driven insurance sector and the minister in the position of having to be more guarded in her comments. I think they have acted irresponsibly in foisting these dramatic increases on people in one fell swoop, particularly in the midst of the greatest recession most of us have known and, hopefully, will ever know.
A couple of last preliminary matters. Again, I ask this not to be mischievous but to determine to what extent, if any, the minister is prepared or able to comment.
We have heard reports and the minister has heard reports, speculation, on the part of those who are involved with condominium home ownership, acknowledging a feature of what the minister has spoken about, the limited number of players in the insurance field, but also making allegations and speculating about the degree to which those players collude with one another in a way to facilitate the dramatic increase in premiums — and, by the way, the deductibles.
Does the minister believe there is any collusion taking place to artificially increase rates?
Hon. S. Robinson: I know that the member knows this, but I’ll read it into the record. The BCFSA, as a regulator, has the power to investigate, research and report on a variety of things related to insurance matters. As part of the minister’s mandate letter, she directed the BCFSA to look at the strata insurance issue, in particular. That will include, of course, the practices of insurance companies. It will be and is part of their review.
M. de Jong: Has there been any specific investigation, to date, examining the possibility of collusion in price setting?
Hon. S. Robinson: The BCFSA has identified, as part of their report, best terms pricing, which, it’s my understanding, is a common practice in the insurance sector.
Large commercial insurance policies are generally insured through a subscription policy, meaning that multiple insurers insure a portion of the policy to provide a total of 100 percent coverage. Now, under best terms pricing, insurers are given the right to obtain terms no less favourable than those obtained by any other insurer participating in the subscription policy.
The BCFSA is looking into this best terms pricing further.
M. de Jong: Okay. I want to, though…. I think that was, potentially, a helpful and hopeful response.
Does that mean that as part of their work, the FSA is specifically examining price-setting policy with a view to determining whether or not there is collusion taking place between the very limited numbers of insurers who are offering condominium insurance in British Columbia?
Hon. S. Robinson: The BCFSA is, of course, continuing to do their work. Part of that is to see how this best terms pricing framework, which is used globally and nationally as a pricing method, is impacting the current challenges that we’re seeing here in British Columbia. They’re talking to the insurance companies and trying to understand how this method of pricing they’re using is impacting not just here but other places.
M. de Jong: Again, that’s helpful. Believe me. I’m not trying to trap the minister into saying something inappropriate or unministerial.
I’ve asked her whether she thought there was collusion. Now I’m asking whether or not, in addition to examining pricing policies…. If she’s saying to the committee and the House that the examination of pricing policies will also capture the question of whether or not — and I emphasize that — there is some form of price collusion taking place, then I will be satisfied with that answer.
Hon. S. Robinson: The final report will capture any of those findings.
M. de Jong: I think the last question on this topic, then. Does the minister, in the conversations she is having with the Financial Services Authority and her officials, believe that given, as she has frequently pointed out during the course of our conversations on this matter, the national nature of what seems to be visiting particularly harshly on condominium owners in B.C., there is a role for the federal Competition Bureau? If she does, is she prepared to make a recommendation to what we used to call the combines investigation branch, the Competition Bureau, that they conduct an investigation into pricing policies and the existence or non-existence of collusion in pricing?
Hon. S. Robinson: We have had conversations with the BCFSA that they would bring this to the federal Competition Bureau if they felt that there was reason to.
M. de Jong: Okay. Well, I’ll make my pitch for…. Given the magnitude of the challenge before us, the minister will obviously be interested to hear what the FSA says. But given the national nature of the scope of the problem, it would be worthwhile for her, independently at least, to alert the federal Competition Bureau to conduct an examination on their own, at least to run to ground these persistent rumours, allegations that we are seeing surface — and probably not surprisingly so, given what has happened to insurance premiums and deductibles.
I’d now like to get, essentially, to the part of the conversation around section 3 that I was hoping to have with the minister. Bill 14, as I understand it, represents the government’s response, thus far, to the situation facing so many families residing in condominiums and responsible for strata fees that must be sufficient to cover maintenance, to cover insurance premiums and the sort.
Bill 14 includes a number of measures and amendments. The minister and my colleague from Kamloops South are going to have a detailed conversation about the degree to which those measures will be of assistance, either now or at some point in the future. Some may have merit but be of dubious consequence to the immediate challenge before us. All of those are issues that the minister and my colleague from Kamloops South will discuss.
I’d like to, if I can, now canvass the minister’s views on something that I would characterize as a more fundamental change to the model. I think, in part, what the minister has been saying to the committee and to the House is that the Financial Services Authority is examining this with a view to this whole gambit of contributing factors.
I began this conversation by suggesting that I think there is a structural or systemic failure. It may be time to consider a different approach, a different model.
I don’t know that I’ve mentioned this to the minister. I was, a week or two ago, sitting on the back deck where I’ve lived for 50 years, and all these farms…. It suddenly occurred to me that after the Second World War, most of those dairy farms were in a position where they wanted to expand and couldn’t. The systemic financiers of the day, the big banks, weren’t lending money. It was frustrating for them, I’m sure, but they decided to do something about it. They got together, and it really was the advent of the credit union movement in B.C., which we now arguably lead the nation in.
It was a form of collective action where people in the agrifood sector, farmers, said: “This is not satisfactory. These large financiers from central Canada, from down east or back east, aren’t responding to our needs, so we’re going to come up with an approach on our own where we will pool our resources and find a way to accomplish what we need to do independent of their disinterest.”
It strikes me that when one considers the magnitude of investment and the values involved in the strata property portfolio within British Columbia — I’ve seen estimates in the $250 billion range — there is a plausible argument to be made for a similarly cooperative venture: a model of self-insurance.
There is technical language…. The minister knows that we in British Columbia actually have legislation on the books that contemplates a captive insurance company. That language becomes: captive from who? People say “captive,” and people go: “What’s that all about?”
I prefer the term “self-insured” because it speaks to the concept, which I think has merit, out of necessity, for examination on the part of government — creating the additional regulatory framework necessary for those who reside in strata units and own them, and the strata corporations, strata councils, that represent them, to engage in a process of self-insurance.
The minister knows that municipalities, through the municipal insurance fund, engage in a similar form of self-insurance. The provincial government itself is self-insured. Law Society is self-insured.
We may have come and arrived at a point, by virtue of what I — I won’t ask the minister to say this — will characterize as unreasonable behaviour on the part of the insurance sector, where a preferred option, by necessity, is to facilitate the creation of a self-insurance model for the owners of strata properties.
To believe the insurance industry, they don’t like the risk profile here. They don’t want to be here. Well, if that’s the case, we can either allow ourselves to be held hostage to that attitude or facilitate an alternative. I’m under no illusions about the extent of the work necessary to facilitate that option. It is significant. It would be complex.
[S. Gibson in the chair.]
Today what I’m hoping to elicit from the minister on behalf of the government is an indication of whether they see merit in the idea and whether they are prepared to initiate work, if it hasn’t been initiated already, to explore and facilitate the creation of that self-insurance option and model.
Hon. S. Robinson: It’s always so interesting to hear members opposite talk about a cooperative model of financing, given their — as I guess I’ll call it — allegiance or loyalty to the private sector. It’s always interesting to hear creative ideas around how to support people.
What I have come to understand is that these options do exist for strata owners right now. Certainly, it would take significant effort to raise capital to put the funds together to make this viable. It would take significant work, but there is currently no barrier, from a government perspective, to having this framework in place for strata owners.
M. de Jong: Well, let me say that, candidly, I was hoping that, in articulating the absence of hurdles or barriers, it is accurate to suggest that the legal framework, at a certain level, exists in the statute books over there. To facilitate the creation of a self-insurance model on this scale, involving as many councils and corporations as would be necessary, will probably require two things.
It will require engagement by government to ensure that a regulatory framework is in place.
By the way, I should also say this. This is still a market, driven — to my mind — in the same way that credit unions represent a feature of the financial services market. They happen to be a cooperative venture, owned by the members. That’s a similar type of model that I see having some application here. I think a signal from the government that it is prepared to devote resources to ensuring the detailed regulatory regime necessary for this to happen would go a long ways to attracting interest.
Secondly, the challenge is always the transition. I’m not in a position to articulate authoritatively on what, if any, fiscal backstop would be required to facilitate transition, on the scale we are discussing, to a self-insurance model.
My question today is whether or not the minister and the government are prepared to conduct work to examine what that fiscal backstop might look like — which is a very different thing than pledging to provide it. I understand that as well. We are confronted by this situation that is adversely affecting thousands of strata councils and hundreds of thousands of owners of strata units. They are these independent, little enclaves that need, in my view, some measure of encouragement or coordination if they’re to effectively explore this — and, I would say, a signal from government that their work will not be in vain.
The minister says there are no impediments to them conducting that work. Candidly, I was hoping she’d go a little bit further and say that the government sees merit in their conducting that work — and, where possible, is prepared to lend assistance and to direct the Financial Services Authority to lend analytical assistance, if nothing else, to determine what some of those questions are that would need to be answered to facilitate a regulatory shift on the scale that we’re talking about.
We’re not just talking about a couple of buildings in Coquitlam or a couple of buildings in Abbotsford. We’re talking about a shift that would have to occur on a much larger scale. At least, I think it would. So I’m hoping that the minister can offer a little more encouragement than, “Carry on, folks; there’s nothing standing in your way to do this,” but I’ll wait to see.
Hon. S. Robinson: I listened as the member was describing, with history, around credit union formation. Certainly, what struck me was that if there were entities, private entities, that wanted to explore a self-insurance model like the one he described with the farmers….
I can just picture how they came together and the hard work that they needed to do in order to put together a framework that would work for them so that they could do what they did best, which was farming. But they needed financial support, and they needed to create a system that would give them the tools that they needed.
Certainly, government’s role to provide some general background advice to a private entity that wanted to put this together…. There is nothing saying that that couldn’t happen. I think that’s certainly available to, I’ll say, the sector, if I can call it that — whatever that would look like. But of course, there will have to be decision-making around risk tolerance, retentions, deductibles, coverage. They would have to do a significant amount of work to understand the task that they’re taking on.
I appreciate the member’s creativity and thinking, I would say, outside the box on this. I think there is an appreciation about how hard it is for people in stratas, and looking for solutions when people are significantly challenged, particularly right now with the pandemic and, certainly, the additional economic impact that that’s having on so many people. So I want to express gratitude for the member’s analysis of this and opportunity to explore what that is.
If there are entities that wish to do that, we would certainly be available to provide some background advice on that situation.
M. de Jong: Can the minister advise the committee: in conducting their work thus far in examining the challenges that have beset the condominium homeowners, has the Financial Services Authority conducted any analytical work around the possibility of a self-insurance model in this area?
Hon. S. Robinson: The FSA, as a regulator, has no role in looking outside of existing financial institutions, so that’s not an appropriate role for them — to be looking at alternative models.
M. de Jong: Do I take it, then, that there has been no analysis? I’ll come back to that question, because I have taken far too much of the committee’s time.
I am thinking about what confronts that family in Coquitlam, the one in Kamloops, the one in Langley and the one in Abbotsford who have gotten a notice from their strata council, composed of volunteers. We have federal government. We have provincial government. We have First Nations government. We have municipal government. It’s a form of governance.
Now, it’s not a constitutional form of governance. But it’s these bodies of volunteers that are charged with the task of managing these neighbourhoods — some of them quite small, some of them very, very large — and have, on short notice, been provided with a bill. They are confronted by a legal requirement to insure and now a bill that has seen the cost to comply with that legal requirement increase dramatically.
I will say to the minister — and this may be slightly different, given the market conditions where she lives than where I live — that the rate increases to the premiums are themselves egregious, in my view, independent of any other change. But to be coupled with an increase in a deductible from $20,000 to $250,000…. Well, people are sitting around their kitchen table, going: “My unit’s not worth $250,000. Now, as a neighbourhood, we’re sending $400,000 or $500,000 to some insurance operation in the east or overseas.”
What those people are saying to me is: “If someone would help us, we’d like to set up an agency, and we’ll do this ourselves. We’ll assume that risk.” There are all the benefits that go with that, because when you’re dealing with your own risk capital pool, you’re going to be pretty diligent about the claims you accept. You’re going to be a lot more diligent, I suggest, about ensuring that the maintenance schedule is adhered to.
It will require a signal and some leadership and, candidly, a stronger signal than the minister feels able to deliver today to say that this can be a viable option. And, yes, it is for an agency to do the organizational work around bringing these groups together. But the government is prepared to work with that agency to ensure that the regulatory questions are answered and are in place to allow for them to transition into this new model.
It’s curious. I talk about credit unions, and I don’t want to become fixated on that. I can’t remember when it was. I’ve lost track of time. If it was ten years ago or 20 years ago, credit unions in British Columbia began offering insurance products.
The insurance industry got all upset and said: “Well, that’s not fair. That’s unfair competition, because when the member comes in to get their mortgage, they’re being directed right down the hall to purchase their insurance product.” They were forced to create a wall between the credit union and the insurance products that they were selling. Now here we sit in a dramatically different world.
What a change on this magnitude requires, I would suggest, is a willingness on the part of government to signal that it is prepared to work actively to explore the option. If I am misstating this, then I want the minister to tell me. What I have heard from the minister, though, is a very passive approach: “Well, we don’t see any impediments. If people want to do it, that’s their business.”
I am suggesting that the reality of the situation where all of these small governance entities called strata corporations are strewn across British Columbia’s vast landscape, that they are going to need a signal from government that this could be a viable alternative, and if they were to empower an organizational agency on their behalf, the government would be active and enthusiastic participants in ensuring that the regulatory structure exists and to explore what some of the financial impediments might be in terms of the transition period.
Hon. S. Robinson: I appreciate the member’s line of questioning. I think it’s an interesting one. Again, I express gratitude for exploring options that really are about bringing relief to British Columbians. Certainly, under the Financial Institutions Act, persons are permitted to get together to insure each other through a licensed reciprocal insurance arrangement. I know the member knows that. There is a regime in place for that.
We also know that private sector experts are knowledgeable about these self-insurance regimes and that they could be used by individual strata corporations or groups of strata corporations to explore the benefits and costs of this model. I’ve come to understand that, in fact, there has already been some discussion of various self-insurance options by industry organizations. I know that they’re having those discussions actively, and I look forward to hearing more from them around how those discussions proceed.
M. de Jong: Is the government prepared to engage with those agencies that are embarking upon that work in a concerted way to assist where it can? I see the Finance Minister here. I am not at this point discussing specific financial pledges. That is something that, if it were to happen at all, would be the product of detailed examination and Treasury Board consideration and risk assessment.
Is the government prepared to actively engage with those groups and to report back — either through the report we are expecting in a few months, or by some separate mechanism — on the progress of that work?
Hon. S. Robinson: Yes, to ongoing engagement with the industry groups around a self-insurance framework. If those discussions need to be reported out, we’d be, certainly, happy to do that.
M. de Jong: The minister has been at this…. And I know we’re drawing close. I wonder if this might be, for a variety of reasons, an appropriate moment to take a four- or five-minute recess.
The Chair: We’ll take a recess and resume momentarily, hon. Members.
The committee recessed from 5:57 p.m. to 6:01 p.m.
[S. Gibson in the chair.]
M. de Jong: Picking up where we left off, we’ve had a conversation about one of the options that may well be available to systemically address the dire circumstances that have arisen in the strata home marketplace with respect to insurance premiums and insurance deductibles.
I’m grateful to the minister for the opportunity to have the conversation and engage her and the government’s position. She is aware, as are members, that I have placed on the order paper a proposed amendment to the section that we’re on that includes a specific reference to the possibility of a self-insurance model. It includes in 3(a)(l.2) the words “or, if the strata corporation has opted to self insure, a summary of its self insurance coverage.”
I will be candid. I was hoping for a slightly more enthusiastic response from the minister, but she has, to be fair, indicated the government’s willingness to explore this. She has recognized that there are agencies that are engaged in work, who are alive to this option. I am hopeful, as a result of this and other interactions, that she will signal to those groups — to strata homeowners and, quite frankly, the strata insurance industry — that the government is alive to this possibility, is in no way hostile to it and perhaps may ultimately grow to be an enthusiastic supporter.
Other jurisdictions, I am reminded, have introduced specific legislation to facilitate the creation of a self-insurance model. Happily in B.C., we have the skeleton statutory framework necessary. I’m not under any illusions. I think that would have to be…. There would be significant statutory and regulatory work that would be necessary to facilitate the shift on the scale that I, at least, and others would be contemplating here.
What we have is not working. I haven’t, to her credit, heard the minister dispute that fact. To impose this magnitude of increase on families at the height of the worst recession that any of us have ever experienced strikes me as unconscionable and tells me that the industry is out of touch and needs a wake-up call.
By moving the amendment to section 3, I am hoping that will serve as a wake-up call. It will certainly confirm, in a formal sense, the support of the official opposition for work that will lead to the creation of an entirely different insurance option for families, for people that own strata property, strata homes, in British Columbia.
With that, I’ll move the amendment that stands in my name on the order paper to section 3.
[SECTION 3, by deleting the text shown as struck out and adding the underlined text as shown:
3 Section 59 is amended
(a) in subsection (3) by adding the following paragraph:
(l.2) a summary of the strata corporation’s insurance
coverage , andor, if the strata corporation
has opted to self insure, a summary of its self insurance coverage;
, and
(b) by adding the following subsection:
(5.1) Despite subsection (5), information in subsection (3) (l.2) disclosed in a certificate is not binding on the strata corporation if the disclosed information is obtained from the strata corporation’s insurer, as defined in section 1 (1) of the Financial Institutions Act, or insurance agent, as defined in section 168 of that Act.]
On the amendment.
T. Stone: I appreciate the opportunity to speak today in favour of the amendment that has been moved by my colleague from Abbotsford West. Like most colleagues and any British Columbians watching this debate this afternoon, I think we’ve all been well served by a very thoughtful line of questioning that the Member for Abbotsford West has put on the table with respect to soaring strata insurance costs.
Like the member for Abbotsford West, my colleague, I appreciate the bind that the minister may feel she is in, in terms of the amount of space that she may have to provide more detailed responses to the questions that the member for Abbotsford West has provided, but I don’t take away any sense of the minister also understanding the complexity, the seriousness and the magnitude of the problem that hundreds of thousands of British Columbians are facing with respect to their strata insurance costs.
Strata insurance in British Columbia is at a crossroads. As the member for Abbotsford West has so eloquently stated, it is a place in time in British Columbia’s history where hundreds of thousands of British Columbians are not any longer being well served by the large international insurance companies insofar as the decision by some of those companies — not all, but some — to determine that now is a good time to significantly increase rates.
You know, when we went through second reading debate on this bill and a number of us rose and spoke to the spirit and the intent of this legislation, I think we all commented on the absurdity of those in the insurance industry suggesting that 30, 40, 50, 60 percent increases in insurance premiums year over year was not the end of the world and that British Columbians should somehow be grateful that the increases weren’t higher than that.
Now, we have all — those of us who have spoken to this bill to this point — cited many examples where British Columbians, whether they be retirees, whether they be hard-working men and women just trying to put food on the table for their kids, have not been able to afford the types of increases that they’ve had to face. Those increases have, in many cases, far exceeded 30, 40, 50, 60 percent year over year. We’ve heard examples of 200, 300, 500, 800 percent increases.
We think it makes a tremendous amount of sense — again in the spirit of bringing forward ideas, bringing forward potential solutions, as we have been trying to do throughout the entire course of discussion and debate not just on Bill 14 but over the last better part of a year — to bring forward solutions that would help to provide British Columbians with some relief in the short term and to fix a broken system as well.
British Columbians should have some choice here. Fundamentally, at the root of the amendment that’s being moved by the member for Abbotsford West, is the concept of affording British Columbians some choice when it comes to how they ensure that they’re able to provide insurance for themselves and their strata units and their strata corporations. The current status quo isn’t working anymore.
The member for Abbotsford West alluded to other jurisdictions that, in fairly recent years, have already gone down this path. Quebec, I believe in June of 2018, introduced legislation to create a self-insurance fund for strata corporations in direct response to significant escalations in strata insurance costs in that province.
Thankfully, we have a history here in British Columbia of, as the member for Abbotsford West referred to it, captive insurance. The skeleton of this framework is in place. I believe it was the late 1980s when the current captive legislative framework was brought into our province and brought into effect. There are dozens of “captives” that self-insure, from the Municipal Finance Authority to B.C. Ferries to a wide range of other organizations.
The member for Abbotsford West is absolutely correct that while the strata world in British Columbia — the strata sector, as the minister referred to it a few times — can certainly begin to move down a road towards self-insuring, at the end of the day, as the member for Abbotsford West said, this is an extraordinarily complex task to achieve.
I think the member for Abbotsford West has been very clear. We’re under no illusions. He’s under no illusions of the amount of work, the scope of work, the complexity of the work that would be required to best facilitate the opportunity for strata owners and strata corporations to head down this path. That work is best done and, frankly, can only be done by government — likely a broad range of government agencies, including the B.C. Financial Services Authority. But that work should be undertaken. That work should begin.
The intent of this amendment, at even just a theoretical level, is to send a strong signal to British Columbians, to send a strong signal to the insurance sector, to send a strong signal to strata owners that governments and elected officials at the provincial level recognize that this problem is only going to get worse and that the problem as it exists today is completely and totally unacceptable.
These kinds of insurance cost increases cannot be tolerated. They can’t be tolerated by people who, again, are stretching as it is, against the backdrop of the COVID pandemic, to make ends meet.
The concept of enabling people their own choice to insure themselves, to look after themselves and look after their neighbours is something that this government, we believe, needs to make a strong commitment to — engaging with those in the sector, engaging with the strata sector in British Columbia.
If we do this, if we do that work now, if we ensure that the government does that regulatory work, that government puts in place what would likely be a necessary transitional package for a period of time, then there will be an alternative, a choice that British Columbians living in stratas will be able to embrace to address what will otherwise cause not just significant financial distress but very, potentially, significant financial ruin for British Columbians in communities all over this province.
With that, I strongly support the amendment as provided or written, as tabled by the member for Abbotsford West. I thank him again for the thoughtfulness of the solution that he is putting on the table. I sure hope government embraces it and sends a strong signal to the insurance industry, the international insurance capitals, that enough is enough. British Columbians deserve a framework in this province whereby they can afford the basic things in life, including insurance.
With that, I will cede my place in this debate on the amendment.
Hon. S. Robinson: I’d like to share a few words, if I might, given the time that we have today. I want to express my gratitude to the member for Abbotsford West for being creative and being thoughtful and being responsive to the needs of British Columbians. It’s something that we’re doing, as well, here with this bill.
I want to acknowledge that he talked about how the system is not working as it has been. We can see that it’s not working, and I agree completely with the member opposite. It doesn’t happen very often, but in this particular case, we certainly agree. Government has certainly recognized that the system isn’t working as it should.
That’s a problem. It’s a problem for millions of British Columbians who make their homes in strata. I do want to note that we are very much alive to the opportunity for self-insurance — it exists — and that there is some discussion that is currently underway with various groups. I know that they, too, recognize that the system is broken. It’s not working for them. They recognize that they have a role to play, in a leadership capacity, to see how to best proceed forward.
I look forward to those conversations. Government is not at all hostile to those conversations. We look forward to hearing what they have to say, hearing what their needs are, so that we can get a system that isn’t working back on track for British Columbians.
Having said that, there are some significant challenges with this amendment as it’s written that I think are important to get on the record. But I want to point out that it is an interesting idea, and it’s one that I look forward to having more conversations about as we proceed forward.
I do want to point out that the way this is written, it actually would be outside of a legislative framework of regulatory oversight and would be equivalent to eliminating the requirement to insure. There are certainly some challenges in terms of how this is written, but I do take the member’s intent here.
We won’t be adopting this amendment, but I do appreciate the intent behind it. I just want to express gratitude to the member for his attempts to, with much sophistication, draft this amendment.
The Chair: We’re now going to commence to vote on the amendment as moved by the member for Abbotsford West.
Hon. Members, a division has been called. Under a sessional order adopted here a short time ago, this division vote will take place at the end of the legislative day tomorrow.
Hon. S. Robinson: Noting the hour, I move that the committee rise, report progress and seek leave to sit again.
Motion approved.
The committee rose at 6:21 p.m.
The House resumed; Mr. Speaker in the chair.
Committee of the Whole (Section B), having reported progress, was granted leave to sit again.
Hon. M. Farnworth moved adjournment of the House.
Motion approved.
Mr. Speaker: This House stands adjourned until 1:30 tomorrow afternoon.
The House adjourned at 6:22 p.m.