Orders of the Day

Hon. M. Farnworth: In this chamber, I call committee on Bill 5, InBC Investment Corp. Act.

In the Douglas Fir Room, Section A, I call continued debate on the estimates of the Ministry of Citizens’ Services.

In Committee C, the Birch Room, I call continued debate on the estimates for the Ministry of Environment. When those finish, I also call the estimates for the Ministry of Energy, Mines and Low Carbon Innovation.

[1:35 p.m.]

Committee of the Whole House

BILL 5 — InBC INVESTMENT CORP. ACT

The House in Committee of the Whole (Section B) on Bill 5; N. Letnick in the chair.

The committee met at 1:38 p.m.

On clause 1.

Hon. R. Kahlon: Thank you so much. I’d like to start off by introducing the following staff who are in a room nearby and on my headset. I’d like to introduce Associate Deputy Minister James Harvey, QC, and also executive director Jessica Prince, who will be supporting me today. I look forward to hearing questions from the hon. member.

The Chair: Thank you, Minister. The bill has 36 clauses and a title that we’ll deal with one at a time.

Clause 1 approved.

On clause 2.

T. Stone: I’m pleased, on behalf of the official opposition, to today lead our questioning through the committee stage of Bill 5. I do look forward to the back-and-forth with the minister. Lots of questions, for the most part seeking clarity on a number of different sections.

Just for some housekeeping purposes here, we have a whole bunch of more generalized questions here on section 2. I’m hoping it’s okay with the minister if we ask these more general questions here. Then we’ll move on, as fast as we can, through this important piece of legislation.

[1:40 p.m.]

The first question I wanted to ask the minister was…. A mandate letter for the corporation, InBC, hasn’t yet been published. Obviously, that’s a critical tool that provides a fair bit of transparency in terms of the government’s expectations around public bodies.

I’m wondering if the minister could let us know when we could expect a mandate letter to be released. What does the timing look like around that for the InBC Corp.?

Hon. R. Kahlon: Thanks to the member for the first question. We are just finishing up the work on the mandate letter, and we hope to have the mandate letter up on the website, public, very soon.

T. Stone: Will the mandate letter contain investment priorities for the corporation? Can the mandate letter alter the investment priorities for the corporation after they’ve already been set?

Hon. R. Kahlon: The mandate letter sets out high-level objectives of the organization. The investment policy will go into a lot more detail. The consultation around that and the development of that is still ongoing.

T. Stone: I just wanted to ask a question around the data that the minister likely relied upon in order to make the decision or to recommend to his colleagues that InBC Investment Corp. be created and that this approach be embraced. There has been a lot of talk in the messaging wrapped around this initiative about the concerns that government has about small businesses not being able to scale up and grow in British Columbia and, therefore, the desire to anchor businesses here, the ability to stem any brain drain that may be leaving the province and so forth.

I’m wondering if the minister could share with us what data he is using to underpin the decision that was taken here to create this corporation and embrace this approach, and the data specifically around B.C. companies having difficulties in accessing capital in order to be able to start up and scale up, the data that might support claims that we have been losing businesses, that they’ve been leaving the province in the tech sector generally and that this initiative will help stem that.

If the minister could lay out for us, as part of that data collection: was there engagement with the broader sector and stakeholders? Maybe speak a bit about what that effort looked like.

[1:45 p.m.]

Hon. R. Kahlon: There are a couple of things. One, the hon. member will know that this was in my mandate letter that the Premier had given me. This is about taking important steps to advance that mandate commitment by the Premier and by the government.

Also, I guess it’s not necessarily only about what we’re losing, it’s about what we could potentially gain. We know from many engagements we’ve had with the business community that there is a real opportunity with this capital to be able to grow and expand our current businesses, but also to be able to support new innovation, new technology.

The hon. member asked questions around our engagement. I’ve got pages and pages of quotes from stakeholders that talk about the need for access to capital. I referred to that in my wrap-up of second reading, if he does want to see it on the record.

Also, there were over 200 engagements on both the market sounding as well as…. For the last six to eight months, there were broadly engaged stakeholders across the country. We had 200 conversations with individuals and organizations with expertise in this area to get advice on what it is we need and how we could structure it.

T. Stone: I’m just wondering. As the minister knows well, the B.C. Renaissance Fund was set up a number of years ago. The B.C. tech fund was funded in 2016 by the former government — $100 million was put into that. It’s managed by an independent third-party venture capital firm.

When you look at the results of the B.C. tech fund — we can talk about the renaissance fund as well — since 2016 and the creation of that fund, about $41 million of the $100 million that was put into that fund has been deployed. That has resulted in pretty significant scaling up of additional investment that’s been attracted from other venture capital firms — that sort of layering on effect. All of this, of course, is done independent of government and not through a beefed up or juiced up Crown corporation with a whole bunch of salary and so forth.

I’m just wondering if the minister could inform the House if government considered just adding additional funding to the B.C. tech fund, for example, and have those dollars deployed by an independent venture capital firm. Kensington Capital Partners currently manages the tech fund.

Did government consider just embracing the current fund that was in place and putting some more money into it? If not, why? Why did the government decide to…. What were the pros and cons of sticking with the B.C. tech fund versus the approach that the government has taken with the creation of InBC?

Hon. R. Kahlon: Thanks to the hon. member for mentioning the B.C. tech fund. This InBC legislation we’re proposing, in fact, has greater transparency than was with the B.C. tech fund.

The B.C. tech fund, for example, a minister could pick up the phone, call folks at the investment firm that was involved in this investment and make suggestions about certain companies in B.C. that maybe needed support. Now, of course, the investment fund can make their own decision, but that call could still happen.

[1:50 p.m.]

The current Attorney General spent many years debating in estimates, trying to get answers on what was being invested in with the B.C. tech fund. He couldn’t get answers.

What we’re doing with this is not only are we putting in legislation that no minister or no one from government can go directly to a chief investment officer to direct or even suggest a company, to build in that transparency; we’re also building that into the board so that a board member cannot go to the chief investment officer and say: “I’ve got a company here I think you should consider investing in.”

This was advice that we were given by all the engagements we’ve had — that independence is critically important, independence of government but also independence from the board. The board’s role is to provide accountability and to ensure that the business case that was being used was being used with the best methods possible.

The other piece around the tech fund, and what’s different than the tech fund in InBC, is InBC is a triple-bottom-line fund. It has the values of government. Mark Carney just recently wrote a book where he talked about how public values need to help shape private values. InBC is that type of fund.

T. Stone: I appreciate that the minister covered a number of different bases there. We’ll get to transparency and a few of the other topics a little bit later. But again, I would like to just ask or maybe suggest to the minister that if the goal here is to, through the InBC Investment Corp. and this approach that government has taken, actually attract additional funds, we should be very careful about creating any impression that we’re not happy with the private equity markets out there and the venture capital companies that are out there that we’re trying to attract.

He kind of suggested in his last response that there was no transparency around the investments that are made in the B.C. tech fund and that there is undue influence and so forth. There has never been any documented evidence of that whatsoever. If there has been, I’d be happy for the minister to correct the record and point that out to me.

This is page 10 of the InBC Investment Corp. Service Plan, the performance measures table at the top of the page, where it breaks out the B.C. Renaissance Fund and the B.C. tech fund. The baseline call on the B.C. tech fund is $41.5 million for the ’19-20 fiscal year. That grossed just over $51 million for the ’20-21 fiscal year.

But when we look at the next line in this table, the cumulative investment by fund managers and syndicate partners in B.C. companies, meaning the layering-on effect of the investment or the call on the B.C. tech fund’s resources, has been quite significant to date and is anticipated to grow dramatically over the forthcoming four years. In 2023-24, $80 million of the tech fund’s $100 million is anticipated to have been called. That will have attracted cumulative investment from other fund managers and syndicate partners to the tune of ten times more, about $850 million, again on a cumulative basis.

I just wanted to make sure I’m really clear. Does the minister not believe that the B.C. tech fund approach has been successful in deploying resources, managing that risk as best as possible and, clearly, attracting a tremendous tenfold additional leveraging of those dollars to invest in B.C. businesses? Is the minister not happy with that track record of the B.C. tech fund?

[1:55 p.m.]

Hon. R. Kahlon: I’ll start off by commenting on the suggestion by the hon. member. It was an example, but certainly I would say that we’ve worked closely with investment funds. We’ve been getting advice from them on how to structure this. This is well-received by those that we’ve been able to engage with. They see the opportunities here. But this is not about the B.C. tech fund, of course. We’re talking about InBC.

We see great opportunities with the model that we have now to be able to get additional investments, to attract additional investments — to get other funds, whether they be domestic or whether they be international, to potentially partner with and fund alongside with. Before it even was made public, there were investment funds from other parts of the world reaching out to us, saying: “Hey, we’re interested in what you’re doing. How do we build relationships on what you’re doing and find opportunities to co-invest?”

I think there are going to be great opportunities. Of course, the B.C. tech fund doesn’t go anywhere. It’s still there, but we think this model will be just as effective. In fact, we think it will be more effective.

T. Stone: I just wanted to again circle back to the minister’s comments in his response a couple of questions ago where he actually said, in his response, that Kensington Capital Partners is independent. If they’re independent, then…. He said in a subsequent response that a minister could pick up the phone and suggest investments and whatnot.

Which is it? Are you saying that Kensington Capital, which is engaged to deploy and manage the $100 million tech fund, is not independent of government? Or are they independent? It can’t be both.

Hon. R. Kahlon: The point I’m making is that within the legislation here, it makes clear that you’re not allowed to do that. Previously, with the tech fund, if a minister were to choose to do so, they could do that. But this is in legislation. We’ve made it clear, the requirements that both a minister or anyone in government can’t interfere in any decision-making, and also board members can’t be interfering. We’ve made it clear in legislation, and that’s why we’re proud of this.

As the member mentioned earlier, we think there are great opportunities to see other investments invest alongside this fund, but this model allows us to control a triple-bottom-line mandate, which is very critically important to us, to ensure that our values are reflected in funds that we support here in B.C.

T. Stone: “Control a triple-bottom-line mandate” is not exactly the definition of independence either, I would suggest. We’ll get to some questions on that in a little while.

I wanted to just say…. The minister mentioned that the legislation prevents suggestions. Certainly, when you read the legislation, it talks about directing. It doesn’t talk about saying that you can’t have a water-cooler conversation or make a suggestion.

If the minister feels otherwise, then which section in this bill actually prevents suggestions from being made? I can’t find it. Maybe it’s coming in regulations, in which case I’d appreciate that heads-up, if that’s the answer. But where in this legislation are suggestions prevented?

[2:00 p.m.]

Hon. R. Kahlon: I would refer the member to section 18. I’m sure we’re going to get to that section where it clearly states out the independence and makes it clear to anyone — people within InBC but also the world — about the importance of the independence of this decision-making from the chief investment officer.

T. Stone: Well, again, “not subject to direction” does not make suggestions and idle discussion illegal. We’ll see how that goes, moving forward.

I wanted to move on to the approach that’s being taken here. Part of the concern that we’ve heard in the official opposition is that not only does this model, in how it’s being structured, place significant risk on the backs of the taxpayers of this province, with very little detail provided up front, around investment criteria….

The government can talk about independence of decisions. They’re imposing very specific criteria, or a lens that investment decisions have to be made through. The government appoints the board. We’ll talk later about the concerns we have about the board as well. Part of the frustration we have with this approach is that it’s being done in isolation from other critical policy initiatives that really need to be complementary with efforts around helping small and mid-sized businesses access capital to start up and scale up.

We would be interested in knowing what the minister is doing to advance reforms related to tax rates in this province. We don’t need to get into a huge back-and-forth today, because we deal most days with different approaches to tax levels and so forth. But British Columbia is not competitive, from a tax perspective, particularly when we’re talking about the need to attract the types of highly skilled talent we need to make these tech companies successful. Having been a former tech CEO, you need capital, you need talent and you need good ideas. If any one of those three pieces is missing, it’s extraordinarily difficult to move to that next level.

With that in mind, I’m wondering if the minister could outline for this House, with his jobs hat on, what his plans are to make British Columbia a much more competitive tax jurisdiction, which is a critical component to attracting capital to British Columbia, attracting businesses here and ensuring that those that start up or locate here have a fighting chance to remain here for the long term. What does that tax-competitive strategy look like, that the minister may or may not be working on?

[2:05 p.m.]

Hon. R. Kahlon: I appreciate the hon. member’s comments around tech, talent, ideas and capital. Obviously, that’s what we’re trying to address here: greater access to capital for B.C. companies, through InBC. I know we have estimates coming up in the coming weeks, and I’m sure that’ll be a more appropriate place to discuss the other pieces that the member wants to talk about. But I look forward to other questions regarding InBC and this legislation.

T. Stone: Well, the issue of tax rates, skilled labour attraction, intellectual property reforms and a number of other issues are critically important to be on the table for discussion while we’re talking about taking half a billion dollars of taxpayers’ money and, through this scheme that this government is setting up, putting those dollars at high risk through venture capital investments. The success or failure of this initiative will, in large part, be dictated by what else the government is doing to make British Columbia a place where companies want to bring their capital here and want to make investments here.

Again, on the tax piece…. We will get into this in the Jobs estimates later, too, looking through the lens of the tech sector — in start-ups and scale-ups — that is the focus of this legislation, that is the intended objective of this legislation, and against the backdrop of British Columbia now having a corporate tax rate of 12 percent, against Alberta’s, which will be at 8 percent.

Washington state has much lower taxes across the board than we do here. We have an employers health tax, which adds a burden of about $1.9 billion per year onto the backs of businesses, and 23 new and increased taxes; I won’t go through the whole list. Increasingly, it is becoming apparent that we are losing the competitive advantage that we had in this province, and losing it fast.

So I ask the minister if he intends to just leave it today to say: “No, I’m not prepared to talk about the work that’s underway to look at tax competitiveness in British Columbia in the context of what we’re trying to achieve with this piece of legislation.” If the minister wants to say that today, he can say that, again, for the record.

I would hope that he would be willing to give us some sense of the work that’s underway to address the significant and increasing tax burden that business faces in British Columbia and that, frankly, is going to be an inhibiting factor to a lot of the very companies that we all want to see start up here and grow here in British Columbia. It’s going to be a significant inhibiting factor to their growth here in British Columbia.

Could the minister take another shot at outlining what work is underway on the tax-competitiveness side of the equation?

[2:10 p.m.]

Hon. R. Kahlon: Again, I look forward to having further conversations with the hon. member during estimates. I have a much more optimistic view of the opportunities and the potential of British Columbia. We saw, just recently, 500 new jobs announced by Microsoft. Best Buy is moving their headquarters here to British Columbia. We continue to see investments, and that’s a good thing. I think we would agree on that. We’re going to continue to see investments.

As far as the legislation goes, the member mentioned talent, ideas and capital. Capital is an important piece that we’re addressing with this InBC legislation.

T. Stone: Well, I would say that when the facts are that a software developer earns $27,000 less in British Columbia than they do in Ontario to start with, when we’re staring down lower income tax rates next door in Alberta — lower corporate tax rates next door in Alberta — when we’re staring down no income tax in the state of Washington…. These are all our competitors. These are all the jurisdictions that are in our backyard. It is critically important that the issue of tax competitiveness be on the table for discussion, moving forward, complementary to efforts related to making capital more readily available for start-ups and scale-ups.

The minister forgot one company in his last answer there. He forgot to mention the several thousand Amazon jobs which are coming to British Columbia. He talks about those jobs often. I would say, for the record, I have nothing whatsoever against Amazon. But those jobs and, increasingly, these tech jobs that the government touts as a sign of their economic program working…. Increasingly, a lot of these jobs are slightly above minimum wage.

The Amazon jobs, when you go to the postings that the minister has talked about often…. It was a recent announcement. I think it might have even been referenced in the news release related to the latest jobs numbers. He extolled the virtues of Amazon hiring 2,000 more British Columbians, which is, again, great for what it is, but these are jobs that pay $15.75 an hour to $16.75 an hour, depending on whether you work during the day or during the night.

It’s pretty hard to put food on the table at those wage rates. Certainly, those are jobs that can often be complementary sources of income in a household. But what we’re really wanting to see happen in British Columbia is a vibrant tech sector with companies that start up and scale up here — that pay really good wages beyond $15 to $16 an hour.

On that point, though, again — I won’t ask it in the same context of tax rates — but the minister would know well that talent attraction and retention is also critically important. A lot of tech companies…. In fact, the latest tech CEO through KPMG…. The CEOs report is a survey that they do. It indicated that accessing the talent, getting that talent here — growing it in British Columbia and also bringing it into the province — is, for many companies, a greater challenge than accessing capital.

I’m wondering if the minister could outline what specific measures he is working on — again, with his Jobs hat on — that would be complementary to this piece of legislation in relation to improving access to capital in British Columbia? What specific work is he undertaking on the talent attraction and retention side of the equation so that companies in the tech space actually have the talent that they need to grow their companies?

[2:15 p.m.]

Hon. R. Kahlon: Again, I’ll refer to the comment that the hon. member made earlier, which was talent, ideas and capital. Of course, InBC is about providing capital and ensuring that our companies that are doing some amazing things have the access to capital. Certainly, you know, talent is critically important. We continue to produce talent. That’s why companies are coming here. We have that talent, and we need to continue to do that.

Again, this legislation, InBC, is focused on the capital piece, which the member acknowledges is a critically important one.

T. Stone: The issue of the retention of intellectual property in British Columbia is also a growing challenge. Frankly, there’s a real need to modernize the IP regime in this province. Again, if you have talent and you have money, but you don’t have the ideas and you’re unable to capitalize your ideas, you’re not going to make it in the tech sector.

Could the minister outline what work is underway to modernize British Columbia’s IP regime so that, again, it doesn’t serve as headwinds in the face of tech companies trying to grow and move to that next level, but rather, reforms are taken that make it easier to commercialize ideas here in British Columbia?

Hon. R. Kahlon: This is, again, why this InBC is critically important. It gives the opportunity for companies from B.C. to scale and grow. Of course, the IP question is an important one. I look forward to engaging with the member further on IP. I’m sure he has some good insights and thoughts that we can exchange during estimates. But this fund is critically important to help our companies grow and scale and create employment here, not just in one area of the province but throughout the province.

T. Stone: I’ll move on. But I just, again, want to underline and ask for some sense as to what work is underway on tax competitiveness, particularly in the context of the tech sector. The minister has punted that to estimates at a later date. I’ve asked for some insights into what work is underway on the whole issue of talent attraction and retention — critically important to successful growth of tech companies. That’s been punted by the minister. And the whole issue of IP reform.

There are other issues, but those three in conjunction with access to capital are really important for the success of tech companies moving forward. On the IP question, as with tax competitiveness and talent, the minister has indicated he’s not going to answer those questions here today. I think that’s regrettable, and we’ll have to move on. We’ll come back to those topics. I look forward to having a much more in-depth discussion with the minister during estimates at a later date.

I’d asked a few questions about data and didn’t get any specific answers. But I did want to ask…. A lot of people have said to me: “What is the basis that the government is using to suggest that it makes sense for the government to take this high-risk move of putting half a billion dollars into a Crown corporation?” The independence — we can agree to disagree. Many are suggesting it’s not as independent as the government says it is.

[2:20 p.m.]

But you also read reports, almost on a daily basis — report after report after report — in the news media. Reports put out by venture capital firms, financial institutions, and so forth, on a regular basis, suggesting that there are unprecedented levels of capital that are available, that are looking for a place to invest. Some are directly attributing this to the pandemic.

Certainly, for the first probably six months or so, there was a freezing of investment across many sectors, including in the tech space. Lots of investors sat on their hands and didn’t make investments, were not active in the market. But they’re now all looking to make those investments. So there are literally billions and billions of dollars, as one venture capital individual mentioned to me recently. He said billions of dollars of capital is just sloshing around, looking for good companies, good investments to make.

With that as a backdrop, what, again, from a data perspective, did the government rely upon to suggest that this InBC scheme, and half a billion dollars of taxpayer money at risk, is worth the risk? The way it’s being structured and the way it’s being set up by this government…. In light of the fact that there have been very strong indications from many quarters that there’s a tremendous amount of capital that’s, again, sloshing around, looking for a good place to invest, this is capital that’s being invested by the private sector, not the taxpayers of British Columbia.

Hon. R. Kahlon: I think the great thing about this fund is that it’s access for B.C. companies. It’s access to capital for B.C. companies. We know, as the member has mentioned, that there is capital, but what’s lacking right now is patient capital. We’ve heard, certainly from those in the clean tech sector, that patient capital is needed. A lot of the investors look for quick turnarounds, and they need something patient so that they can deliver on the societal innovations that we need.

The member mentioned about data. I guess he was trying to get at: is this needed? I’ll just share a few quotes with him. Tessa Seager, who is the director for the Council of Canadian Innovators, said: “Access to strategic capital is a key ingredient in any company’s scale-up journey. CCI applauds the government’s new strategic investment fund and looks forward to working with InBC to ensure that investments benefit our homegrown high-growth firms.”

I’m not going to go through all of them, but I just want to share a couple, so he has an understanding of where we’re going and why we’re going there.

Jeanette Jackson, who is the CEO of Foresight, said: “Raising capital is a key challenge for clean tech ventures. InBC is the support businesses need to anchor and scale in British Columbia, creating green jobs and accelerating the adoption of clean tech innovation needed to address urgent climate change goals.”

Bentley Allan, who is the associate director of Pacific Institute for Climate Solutions, says: “We need an investment vehicle like InBC to help companies take advantage of economic opportunities. It has the potential to help…low-carbon industries and play a central role in the success of low-carbon innovation here in B.C.”

The last one I’ll share, unless the member has more questions on this, is from Stephanie Andrew, who is a founding partner of the Women’s Equity Lab and Capital Investment Network. She says: “We’re happy to have InBC provide additional capital for investments, capitalizing promising companies so they can compete on the world stage and reach new milestones, valuations and exits.”

A. Olsen: Thank you for the opportunity to ask this question.

[2:25 p.m.]

I heard the minister’s response, and I think I share the curiosity as to the problem that InBC is trying to solve. Now, I recognize that currently the people that we’ve been talking to say that there’s a lot of capital. I think the quotes were informative in that every single one of those quotes highlights the need for investment capital. It doesn’t necessarily, I think, address the current situation. I think every one of those quotes welcomes public contribution to the capital that’s available to these companies.

But I think what’s important to acknowledge is that when you connect that directly to low-carbon innovation, as an example, if those companies that are in that space are developing useful technology, whether it’s for low-carbon innovation or not…. Right now there is, from all indications that we’re getting, a lot of capital there to invest in good ideas, whatever sector of the economy it is.

Now, I understand the minister’s response to patient capital. But I’m just wondering if the minister refutes what we’re hearing from the marketplace — that there is a lot of capital available for these companies — and if right now, putting $500 million of public money into a space that has billions and billions of dollars of private capital looking to be spent, is necessarily the good time to be doing that.

Hon. R. Kahlon: I appreciate the member’s question. He answered a bit of the question in his question, which is that there is a shortage of patient capital. We’ve heard that. We’ve heard that clearly, that there is a shortage of patient capital. But there’s also a shortage of funds that are supporting B.C. companies but also that are working to create and co-create opportunities and new markets within B.C.

That’s what InBC allows us to do. It provides our companies with the patient capital but also allows us to drive and create new economic opportunities here in B.C. Clean tech is one example. I know the member talks about that quite often. I’m passionate about it as well. We’ve heard the most amount of excitement, actually, from the clean tech sector, which sees an opportunity for them to access capital and stay here in British Columbia.

We do see companies get access to capital from another jurisdiction. Part of that is you’ve got to go. They want to see opportunities to be able to stay here in British Columbia, the place that they love and a place where these companies are coming up.

A. Olsen: Thank you for the response, Minister. One other question on this note. We often have heard about federal programs to fund clusters — the cluster in Vancouver around medical innovation, as one example — and complaints that the provincial government has not been there to provide matching or to at least provide a contribution into those federal dollars, and that in fact, British Columbia loses a lot of the innovation type and research and development funding to other provinces because those other provinces are prepared to match or to provide some type of contribution.

Is this fund going to be available for that kind of activity, where the provincial government can step in and contribute to attract federal dollars into research, development and innovation in the province?

[2:30 p.m.]

Hon. R. Kahlon: Thank you to the member for raising the question.

[S. Chandra Herbert in the chair.]

Certainly, some quarters of the tech sector have been raising this historic grievance. This goes back a long time, certainly well before my time and even before our government’s time, where there’s sometimes a sense that governments could be doing more to support the tech sector. But I think the investments we’ve been making are considerable. InBC goes a long way.

The question around the federal government’s involvement and the funding that they have available…. I certainly think there’s opportunity for the federal government to co-invest — also, obviously, opportunities to crowd in other investments from the private sector.

We also see opportunities in two ways. One, the fund can also see opportunities, when InBC invests in a company, to get access to other funds. We’re already having conversations with the federal government with the SIF fund, which is the strategic investment fund. A whole host of other funds that they have available can be leveraged, so the money gets doubled and tripled.

We also see opportunity for funds that perhaps don’t fit within InBC or whatever decision the chief investment officer makes — also supporting them to go to other funds within the federal government. So it’s not just, “The door is closed; this doesn’t work,” but providing opportunities for them in other avenues that may exist, because at the end of the day, they’re B.C. companies, and we want to see them succeed.

We see great opportunities for organizations like BDC and other funds to potentially co-invest. Perhaps there are opportunities for pension funds to also partner. But these are things that will have to be explored over time.

Clause 2 approved.

On clause 3.

T. Stone: On section 3 here, I just thought this would be an appropriate place to ask a couple of questions about the application of the Freedom of Information and Protection of Privacy Act.

As the minister knows — I’m sure he knows — in order to be subject to an FOI and being included as a public body, a Crown corporation needs to be listed in schedule 2 of the FOIPPA act. There is no mention of freedom of information and protection of privacy in this bill. It’s not. There is a consequential amendment as well.

[2:35 p.m.]

I’m just wondering if the minister could clarify whether or not InBC will actually be subject to FOI requests. If yes, what will facilitate the adding of InBC — again, presumably — to schedule 2 of the FOIPPA act?

Hon. R. Kahlon: Thanks to the member for the question. It’s critically important that…. In the legislation, there are many pieces that are important for transparency. Every year a report has to be made public, here at the Legislature, on the investments being made by this new InBC corporation. Every five years an independent audit needs to be done, which I think is good for public transparency. Of course, the investment policy will be made public as well so the public knows before any investments are made.

Now, it’s important to note that this legislation and this structure are a continuation of the B.C. Immigrant Investment Fund which, I believe, was created by the opposition. At that point, the FOI pieces were left out — I assume for good reason. But this is a continuation, and we continue to look at that question.

T. Stone: I didn’t hear a commitment to ensuring that InBC be made subject to the Freedom of Information and Protection of Privacy Act. I’ll just ask again. Is it the government’s commitment to ensure that InBC is added to schedule 2 of FOIPPA like all other public bodies and Crown corporations are, which affords a very important level of transparency for the public on these public bodies?

[2:40 p.m.]

Again, I would remind the minister that we’re talking about a half-billion dollars of public funds to be invested in highly risky venture capital investments. Is he prepared to commit and is it the government’s commitment that InBC will be subject to the Freedom of Information and Protection of Privacy Act, yes or no?

Hon. R. Kahlon: Again, I’ll refer the member to section 23, where it’s pretty clear how the operation of InBC will be transparent and open to the public. I think one of the challenges that a fund like this has is that a lot of very sensitive and confidential information will be shared with InBC, so it’s critically important for us that that protection be in place for that sensitive information.

That being said, as I noted earlier, this fund that now is the InBC, which was originally created by the opposition and called the B.C. Immigrant Investment Fund, was not included under the FOIPPA rules. But that being said, we are engaging with the OIPC around the challenges around sensitive information coming in and how to ensure that that protection is there. Those conversations are ongoing.

T. Stone: Well, again, that wasn’t really a yes-or-no answer. It doesn’t sound like the government’s intention is to ensure that InBC — again, a corporation that will be responsible for half a billion dollars of public funds in a highly risky venture capital environment — will be subject to freedom-of-information legislation in the province.

I would say it’s a bit of an interesting point here. When I look at schedule 2 of the FOIPPA act, the B.C. Investment Management Corp., which manages billions and billions of dollars, is included in this schedule and therefore is subject to the FOIPPA legislation. I believe it’s section 17 of FOIPPA that covers financial information that can be redacted in terms of ensuring that commercial interests are not compromised. So there are tools within the FOIPPA legislation that provide the flexibility that seems to work for most, if not all, other public bodies and Crown corporations in this province.

[2:45 p.m.]

Again, one last time on this point, because I do think it’s very, very important for public confidence moving forward on a half-billion-dollar fund of public funds that will be invested in risky venture capital investments: can the minister confirm that what he is saying here today is that this InBC corporation will not be subject to the Freedom of Information and Protection of Privacy Act?

Hon. R. Kahlon: Again, I will remind the member that this is a continuation of the B.C. Immigration Investment Fund, which the opposition created. They did not put FOIPPA in. I assume there was a reason. The member may know the reason. Certainly, one of the concerns we have is that the confidential information that companies provide to us be protected to make sure there’s no sensitive information — which companies are required to provide a chief investment officer — that becomes public.

That being said — I’ve told the member this already, and I’ll say it again — we have been in contact with the OIPC around that. Our concern is interpretation around the legislation and how best to ensure that those parts are protected — the information that private companies provide — but that at the same time, we give the public the accountability that they need. Those conversations are ongoing. We’ll have more on that once we’ve concluded those conversations.

T. Stone: It always makes me nervous, and I think British Columbians are nervous, too, when you hear the government say: “We’re going to make sure that the public has the information it needs.” It’s about ensuring that the public has the information it wants and that it’s entitled to.

I would remind the minister that in the 2017 provincial election, it was a very specific commitment of his party. In that election, the NDP were very clear that they intended, as part of a broader package of FOI reforms and enhancements to the FOI framework in British Columbia…. They were very, very clear in promising to cover more Crown agencies with the FOI framework moving forward should they be successful in winning that election.

They’ve been in power for four years now. There is no excuse whatsoever for this government not to immediately make the InBC applicable in its operations and its investment decisions to the rules contained within our FOI framework in this province. The imperative to do so is even greater, considering we’re talking about half a billion dollars of public funds that the government wants to see invested in highly risky venture capital investments. It is a broken promise of this government. What more can be said?

[2:50 p.m.]

Chair, that’s all the questions that we have on section 3, so we’d be happy to move on to section 4.

Hon. R. Kahlon: I know the member will be going to estimates and having a chance to engage with the Minister of Citizens’ Services around the good work that she’s been doing.

I’ve had a little bit of a challenge trying to understand his critique there, saying that you promised to be more accountable than us and you’re just as accountable as us. I’m not quite sure where he was going.

I just want to remind the member that this is a continuation of the B.C. Immigrant Investment Fund, which is a fund that they created, which wasn’t under FOIPPA. I also want to highlight that the B.C. tech fund, which was $100 million, went out, and the Attorney General had to go through estimates year over year to try to get information on what companies were being invested in, where this money was going, what the returns were for the public. He was not able to get that information.

We will be making the reports. The operations are public. They will be transparent. Every year a report will be made public on all the investments. Every five years there will be an independent audit done. We’re continuing to engage with the OIPC around interpretation of the legislation. Hopefully, we’ll have a positive announcement soon.

A. Olsen: If I may, just as a follow-up to that. I’ve heard the exchange that’s happened here. I guess if there’s any pushback or any response that I could provide to this, it’s that just because they did it or this is a continuation is not a justification for something where we could have more transparency and accountability.

This isn’t an amendment act. We’re not amending anything. We’re creating a new thing. When you’re creating a new thing, you have the opportunity to do it right. I recognize the history that goes on, on either side of the aisle, in this place. I just think that it’s important to acknowledge that when we are doing something new, even if it’s a continuation of, we have the opportunity to get it right.

With that question, I’ll just ask….. The minister states that they’re working with the OIPC and hoping to have an announcement. Now, we’re debating this legislation. Can the minister maybe shed a little bit of light on that ongoing conversation and how that potentially impacts this? Once this legislation is passed, how does it affect that legislation? Is this something that can be reflected in regulations? That kind of thing.

Hon. R. Kahlon: Again, I just want to highlight that one of the concerns is around the chilling effect on the willingness of third parties to provide complete and accurate information to InBC. There may be companies that have sensitive information that, perhaps, their competitors would like to see. We’re very conscious and aware of that.

[2:55 p.m.]

That being said, as I mentioned to the member, we are in discussions with the OIPC. He asked specifically around this legislation. It does not require an amendment to this legislation. It’s something that can be done by the Minister of Citizens’ Services.

Clause 3 approved.

On Clause 4.

T. Stone: Clause 4. I just wanted to ask…. We’ve got quite a few questions in this section. The first one. The StrongerBC report that made references to the creation of a fund at a later date, which now we know is InBC, promised that the fund would invest in high-growth potential firms. But we’ve since learned that the expectation of government is that they’re forecasting about a 5 percent return on the investments that this InBC fund will make.

How does the minister reconcile the high-growth potential firms comment in StrongerBC with a forecasted 5 percent rate of return? No one who understands venture capital — and that risk-return balance that is always at the centre of those investment decisions — would suggest that a 5 percent rate of return is an acceptable rate of return on such a risky investment. So how does the minister reconcile those two pieces?

Hon. R. Kahlon: I think it’s important to highlight here, given the member’s question, that this is not…. InBC is not about venture capital. This is about impact investments. We have engaged with other funds that are typical funds like this fund to get a sense of the returns they’ve received, and we’ve based it off that.

T. Stone: Well, we’ll get to the patient capital, venture capital, piece in a moment. The service plan for this scheme, InBC, references venture capital numerous, numerous, numerous times. I guess we’re at a point here where there’s a fundamental difference of perspectives between the minister and his colleagues believing that government should be risking public funds on high-risk investments in start-ups and scale-up companies, with an expected rate of return of 5 percent, versus the perspective that we have on this side of the House that government should not be in this business of picking winners and losers, and certainly not doing so with public funds.

The government should be creating the conditions — back to my points earlier about tax competitiveness, attracting talent, attracting investment and intellectual property reforms. There are a number of other items. The government should be working on all of that stuff to create the conditions that make British Columbia an incredibly desirable place to set up a business, to come here with your investment and to grow.

[3:00 p.m.]

This whole concept of patient capital that involves the risk of public funds on high-risk investments really bothers a lot of British Columbians, and rightfully so.

Next question. A number of the materials that came with the announcement indicated that InBC would be guided by a framework for improving British Columbians’ standard of living. That framework is quite a significant document. The government refers to it still, quite often, as a guiding policy document. Again, it’s referenced in the InBC materials.

Just wondering if the minister could let the House know how that framework will apply to the investment goals of the corporation. I’ll use one example. I mean, there’s…. The community benefits agreements are a significant feature of this framework. The framework includes a lot of promotion of community benefits agreements. Will CBAs be an outcome of companies that receive investments from InBC? Is that one of the guiding principles or objectives of the framework that will make its way into investment decisions that are taken by InBC?

I’d appreciate a response on that specific example. Then, perhaps, more generally, the minister could again inform the House as to how that framework will be applied to the broader investment goals of InBC.

Hon. R. Kahlon: Thanks again to the member for the question. The investment policy document is under development, as I’ve mentioned several times. Of course, we’re going to be making that public before any investment decisions are made so the public has full awareness of the lens that InBC will use.

[3:05 p.m.]

I think there are a lot of elements of StrongerBC, the values in StrongerBC, that certainly will be important in InBC’s mandate going forward. Of course, we want to see distributed growth. We want to see inclusiveness. But fundamentally, this is about people, planet and profit. Those are the key pillars to the work InBC will be doing — again, aligned with our values. As I mentioned earlier, it’s where a lot of the thinkers on economic recovery are going as well. I mentioned to the member about what Mark Carney had said about public values and private values and co-developing new markets. So I think there are great opportunities.

Now, the question of CBAs. I’m not sure what the member is implying. How a CBA may be connected to this? Maybe if he could elaborate on that, I can give him more clarity.

T. Stone: What I was looking for was, as one example, whether community benefits agreements, and the promotion of CBAs, would make their way into the investment criteria or the investment framework that InBC will end up putting on the table. I think there are all kinds of theoretical examples that one could come up with, where technology that’s being developed, ideas that are being commercialized within companies that are engaged in capital construction that could, wittingly or unwittingly, find themselves looking for an InBC investment and there being some requirements around CBAs as part of that mix.

All I’m looking for is just a definitive no — that that’s not something that would make its way into the investment framework or criteria that InBC would have, going forward.

Hon. R. Kahlon: I appreciate the member trying to maybe give an example. I think the example is a bit extreme, so if that’s the type of example he’s providing, then the answer is no. That’s not something that is being considered. But the investment policy framework work is ongoing. Certainly, as I’ve highlighted many times, we will be making that public well before any decisions are made by InBC.

T. Stone: So I’ll take that to be a qualified no — you know, a clean energy infrastructure company perhaps. There likely could be others. I think it’s an important question to ask, and I would certainly hope that CBAs would not be part of the investment framework, moving forward.

I’m just wondering if…. Again, I’d like the minister’s thoughts on this. The same framework document makes some interesting statements around…. Well, I’ll quote a statement on page 72 from the framework. It says: “Much of B.C.’s technology sector is currently concentrated in downtown Vancouver. This constrains growth, as tech investments in B.C. often require significant immigration or temporary foreign workers, which adds to pressures on the availability and cost of housing in Vancouver.” It continues along that vein.

[3:10 p.m.]

Just wondering, again, if the minister can reconcile that the tone of that comment in the framework document would suggest that this government sees foreign investment and foreign immigration as, in some respects, a negative on housing prices. We certainly know that certain members of the government — the Attorney General, others — have acknowledged comments that have been made in the past, and regrets that have been expressed for comments related to British Columbia’s housing market and the role that, it was suggested, Asians, perhaps, had played in that. Obviously, those comments have been walked back, and rightfully so.

Where I’m going with this is immigration and foreign investment are critically important to the success of our economy generally, but certainly in the tech sector. Attracting investment as partners in these InBC investments is going to be really critical.

So again, how does the minister reconcile the commentary in this Framework for Improving British Columbians’ Standard of Living: Economic Plan, relating to significant immigration playing a role in driving up housing prices in the Lower Mainland, and the tone and tenor of that being quite negative? How does the minister reconcile that with the fact that we really need immigration and we really need foreign investment, including from countries in Asia?

Hon. R. Kahlon: There’s a lot there. Of course, I want to spend as much time talking about InBC and the legislation, and not get into a debate about other matters. There’s a time and place for that; it’s called question period. But I think it’s fair to say that our government welcomes immigration. We believe if a person is good enough to come here to work, that they should be able to stay and live.

I won’t go into major infrastructure projects that were built by temporary foreign workers. I can, but I won’t, in the interest of time. Certainly, I hope the member doesn’t want to be engaging in that kind of debate here. Question period might be a better place for that. But we’re proud of the work we do around human rights. We’re proud of the work we do for welcoming immigrants here. Our government doesn’t see them just as a vote. It’s not a quick win. It’s about welcoming people and making sure that they feel safe in their communities. I won’t go too much further into that.

On the foreign investment piece, I will say that we welcome foreign investment. It’s an important piece of the work my ministry does. We see opportunities for co-investment. I had a meeting recently with the consul generals, the corps. This was an important piece.

They wanted to talk about InBC. They wanted to talk about opportunities for companies from all over the world to come and invest, especially in our clean tech sector. They see huge opportunities with what British Columbia is doing. They see opportunities with us, not only in our clean tech companies but just climate change solutions overall. We see great opportunities, and that’s why we’re proud of InBC coming forward.

T. Stone: Well, again, page 72 of the government’s framework…. This is the government’s framework for improving British Columbians’ standard of living. It’s an economic plan that the government references on a frequent basis.

[3:15 p.m.]

It’s still a guiding document. On page 72, it says: “Much of B.C.’s tech sector is currently concentrated in downtown Vancouver. This constrains growth, as tech investments in B.C. often require significant immigration or temporary foreign workers.” Imagine that. Temporary foreign workers. That’s in an NDP document — this framework. “This…adds to pressures on the availability and cost of housing in Vancouver.”

I’m not going to stand here and have the minister be evasive on the question. The question is…. We cannot succeed in growing companies in British Columbia if we’re not, in part, willing to embrace the world and welcome everybody to this province. That includes Europeans, includes Americans, includes folks from Asia. It includes folks from every corner of the globe. The point is that this guiding document, this framework document…. How certain components are written would suggest that immigration, foreign workers, actually serves to drive up the costs of housing, particularly in Vancouver.

We couple that with very public comments that were made on a very sustained basis, particularly by the current Attorney General, which he has since walked back and acknowledged and regretted. He says his comments, in part, stoked anti-Asian sentiments in this province. You can’t have it both ways. These tech companies, in order to be successful, need to know that there’s an open immigration approach and that investment from around the world is welcome here, including from Asia.

This document, this framework, and comments that have been made by, particularly, the Attorney General when he was an opposition member, which he has walked back since, as an Attorney General, would suggest that this government has got some issues around that, the role of certain immigrants from certain parts of the world in inflating housing prices in particular, which has been disproven over and over and over again.

I’m looking for a reconciliation here from the minister, as to the guiding influence of this framework document, which references, very directly, the fund that would later be called InBC — that that would be created. The success or failure of that fund rests in part on access to capital, but also, all of those other things that we’ve talked about, which includes attraction and retention of skilled workers, a lot of whom are grown right here in British Columbia, and a lot of whom come from all corners of the globe.

Again to the minister: how does he reconcile those two pieces? What confidence can he give British Columbians that investment from every corner of the world, including Asia, is absolutely welcomed here in British Columbia and particularly in the context of this InBC Crown corporation that is being established here?

Hon. R. Kahlon: I’m sorry. I thought we were talking about InBC. But the member seems to want to talk about other documents.

Again, I could talk about the quick-wins document as a founding document of the opposition, of how they view immigrants as just an opportunity to get votes. But again, this doesn’t serve anyone’s purpose in the work we’re doing here with InBC.

The member wants to know…. He wants to hear from government, to say that we welcome investment. I tell him we welcome investment. We are always looking for opportunities to get investment here from all over the world. We’ve been talking to investment funds from Ireland, Denmark, even Singapore, about opportunities to co-invest with us here in our B.C. companies.

The member wants to know if we care about immigration. I can tell him we do. We have elected officials who themselves are new immigrants, who’ve just arrived to this country, who are contributing valuably to the mosaic and the fabric of British Columbia.

[3:20 p.m.]

So I think the insinuations by the member are not helpful for the dialogue. But of course, we have all day, and we can go for days if he likes, because I have a lot to say on this topic. But I think it better if we focus on InBC.

T. Stone: Again, the framework document that I’ve been referencing here is supposedly a critical guiding document on all public policy, particularly economic and social policy in this province. Far be it from me to suggest that we understand how the goals and objectives of this economic framework will, in any way, shape or inform the InBC scheme that the government is establishing, which is also very directly referenced in the framework documents.

I will move on. I just wanted to ask a couple of questions about the relationship between InBC and CleanBC. We have heard in numerous media interviews — and you can read supporting documents that suggest — that InBC is supposed to be guided by the CleanBC plan. I just wanted to ask if the minister has a target for emissions reductions that will be directly related to InBC investments.

Hon. R. Kahlon: We’re extremely proud of the work happening on CleanBC, but we know we need further investments in innovation in order to meet our global targets. A low-carbon economy piece will be a very important focus of InBC. It will help contribute to finding more opportunities to be able to invest in the low-carbon economy and also create clean energy jobs here in British Columbia.

[3:25 p.m.]

T. Stone: Well, I appreciate that, but the question is: will InBC have any CleanBC emissions reduction targets that will be part of the framework within which investment decisions will be made?

It’s all fine and dandy to say that one of the target sectors will be clean tech, as one example. It’s a very different thing to actually have specific targets in place that relate to ensuring that there’s a linkage between investments in the types of companies that could make a demonstrable contribution to emissions reduction targets. Here’s what the target is for those reductions, and it’s part of the investment criteria. That should all be established up front, and that should be reported on.

To put a further point on it, the 2020 accountability report on CleanBC emissions actually says, on page 14: “As a result, based on current modelling, we estimate that our existing CleanBC actions will get us between 56 percent and 72 percent towards our 2030 target. Though the new estimates mean we are further from our 2030 target, we are committed to closing the gap.”

The government is potentially 44 percent and, if we want to be really optimistic, 28 percent…. That’s the range — 28 percent to 48 percent off, or there’s a gap in their plan insofar as achieving the 2030 emissions reduction target. One would assume that based on all of the hype that has been wrapped around the InBC scheme, clean tech companies and clean tech investments would be a significant focus of this government. One would think that there would be targets, CleanBC emissions reduction targets, associated or related to, or as part of, the investment criteria related to ensuring that there are investments in clean tech companies that can help the government facilitate its emission reduction targets.

Will there be a component within InBC’s investment criteria requirement for achieving specific emissions reduction targets pursuant to the goals detailed in the CleanBC plan?

[3:30 p.m.]

Hon. R. Kahlon: Again, this fund is focused on people, planet and profit. InBC will employ performance measures that assess its success at achieving the triple-bottom-line mandate. A common tool that is used is an impact scorecard. A scorecard can be used to capture information specific to how investments achieve investment criteria associated with the triple bottom line.

The scorecard can have information such as a description of the impact investment will have, the activities the investment will carry out to achieve the impact. The metrics will likely be including things like return on investment, job creation, economic growth, advancing reconciliation with Indigenous communities, promoting diversity inclusion, achieving low-carbon goals while establishing B.C. as a globally competitive low-carbon jurisdiction.

T. Stone: I didn’t hear there a commitment to the inclusion of emissions reduction targets pursuant to the CleanBC plan.

[N. Letnick in the chair.]

I would point the minister to the backgrounder that was released as part of the announcement of InBC on April 27, 2021, where it says — it’s the third bullet down — investments will “be guided by the B.C. economic plan, A Framework for Improving British Columbians’ Standard of Living,” which we just canvassed in a few aspects, “and the CleanBC plan.”

One would think that there would be a specific focus on the most critical aspect of the CleanBC plan, which is reducing emissions in British Columbia. We all know what the targets are, the 2030 target. Government’s own admission, through CleanBC accountability reports, the most recent one in 2020, indicates that they’re between 28 and 44 percent off of achieving…. There’s a gap in terms of meeting their 2030 emissions reduction targets.

I just wanted to ask one more time, and then the member for Saanich North and the Islands has a question. Can the minister confirm that, indeed, emissions reduction targets pursuant to CleanBC will be part of the investment criteria that InBC will utilize to determine which companies they will be investing in and which ones they won’t?

[3:35 p.m.]

Hon. R. Kahlon: There are three key pillars to this fund: people, planet and profit. I think the question is: will our climate change metrics be an important metric in assessing the success of this fund? The answer is yes. But there may be opportunities by, for example, a company that can have an innovation or a biotech company that is making the lives better for British Columbians. They may get opportunities to get an investment as well.

Of course, climate change is going to be a critically important piece of it. It’s going to be an important part of the metrics of what we think we can achieve. Certainly, we are hearing about the opportunities in clean tech, but there will be other businesses. For example, there may be an Indigenous-owned and -operated business that is about distributor growth, and it may not be directly linked to our climate change target, but it could be linked to other opportunities.

So it has the three key pillars, and I highlighted some of the metrics we’ll be using to assess the work, but this is a critical part of impact investment.

A. Olsen: When the chief investment officer is looking at the mandate that they have — people, planet, profit — and they’re looking at the values that are informing this — climate change, CleanBC, as the member from Kamloops has raised — are they looking at it from the context of the entire portfolio that they’re managing, or are they looking at it from each investment decision? Because you could argue that with people, planet, profit, the entire portfolio of this $500 million fund has a balanced approach. Or you could also look at it and say that each investment opportunity that is sitting in front of that chief investment officer needs to have people, planet, profit at its core.

I’m just wondering, from the minister’s perspective: is this an individual investment decision that’s made, or is it that the entire portfolio has to be balanced?

Hon. R. Kahlon: I think I understood the question from the member. The answer is that across the entire portfolio, it must meet the triple-bottom-line mandate: people, planet, profits. I think that’s the question the member was asking.

A. Olsen: Just for clarity’s sake, you’ve got a handful of investment decisions in front of the chief investment officer. One is a remarkably good investment that’s going to be a partnership with a private corporation and an Indigenous nation, for an example, and the Indigenous nation is going to see some benefit from that, and it’s going to have a technology that improves the environment.

Then you have another investment that is a clean tech investment, but it also has a strong profit aspect to it as well — a really good chance that this business is going to flourish and make some money. From that, you can start to see that there are a variety of economic investment opportunities that are going to be in front of this chief investment officer.

[3:40 p.m.]

I’m just wondering how it is that we say that this person is being successful in their investment in terms of…. If there’s a single-bottom-line approach, you can tell. Is it making money or isn’t it making money?

From the triple-bottom-line approach…. What I’m trying to get at is: are we evaluating each investment decision that’s being made for its people, planet and profit, or are we taking a look at the entire portfolio and having it balance? If that’s the case, it’s going to be much more complex for us to be able to determine whether or not the chief investment officer and InBC are achieving the goals that we’ve set forward here.

Hon. R. Kahlon: Having an Indigenous business running a climate change–related company and having a clean tech company coming that also can address climate change is, I think, a good problem for InBC to have.

How impact investment is assessed, typically, is through this impact score card measure that I was just highlighting. I can share more information with the member if he would like.

The score card generally includes information such as, for the investment: description of the impact the investment will have; the inputs required from the investor, external parties to achieve the proposed impact; the activities the investee will carry out to achieve the impact; the outputs associated with each strategic investment criteria; the case for investment creating additionality; the process of measuring, capturing and reporting the impacts. Measures must be integrated with the investment decision-making and monitoring process and must be resourced in a manner that supports the credibility and objectivity of reporting.

The metrics, as I highlighted, include return on investment, job creation, economic growth, advancing reconciliation with Indigenous communities, promoting diversity and inclusion, achieving our low-carbon goals while establishing B.C. as a competitive low-carbon jurisdiction — impacted with the score card model.

T. Stone: Just following along on the line of questioning from the member for Saanich North and the Islands. Will those impact score cards be available to the public, or will they have to be pursued through freedom of information?

[3:45 p.m.]

Hon. R. Kahlon: You won’t need to FOI that. Every year, there will be a report on the investments that InBC makes, and there will be an assessment on our investment policy framework on how those investments are impacted by that. It will be made public every year to the Legislature.

T. Stone: Just for clarity, the impact score cards…. The minister read into the record what those contain. Those impact score cards for each investment that InBC decides to proceed with…. Each of those impact score cards will be brought to this Legislature, unredacted, and will be, therefore, available to the Legislature and to the public of British Columbia for scrutiny?

Hon. R. Kahlon: The aggregated information will be made public. With that will be how the investment has impacted the triple-bottom-line mandate that is given to InBC.

T. Stone: Okay. Well, aggregated information is very different than the data specific to each investment, so I think this just plays into the theme here of transparency lacking in terms of how InBC is being established. We canvassed earlier that InBC is not going to be subject to the Freedom of Information and Protection of Privacy Act. Now we learn that the impact score cards will not be made public. The government will take the data from all of those impact score cards and aggregate the data, thus rendering it basically useless in terms of providing that level of data that I think the public has a right to know.

That’s regrettable. Maybe we’ll get a chance to talk about the business plan and the minister’s refusal to make that public for InBC and a number of other components to the lack of transparency that we’re seeing emerge increasingly with InBC.

I did want to ask the minister: of the $500 million, how much investment does he anticipate will be invested in technologies being developed to support traditional industries — you know, mining, forestry, oil and gas, and so forth — versus investment in companies that are focused on emerging sectors, emerging technology?

[3:50 p.m.]

Hon. R. Kahlon: The member talked about an important topic, which is that there are emerging technologies and then there’s a natural resource sector. Obviously, there’s a lot of coalition between the two. It’s important to note that this fund is sector agnostic. If a fund helps us advance, say, for example, a low-carbon economy, there is an opportunity to find an investment. The triple bottom line is the key piece in the decision-making.

T. Stone: Again, on the traditional industry versus the emerging industry, I completely understand the government’s main objectives here are people, planet and profit. But what I think is also an important component, or should be an important component of that, is ensuring that there is a lens applied to ensuring that different sectors have equal access to these funds.

If you are a company, an emerging company that has developed an incredible technology that’s used in excavators at big mines that measures the ore that’s being picked up and, even furthermore, can determine the types of ore in a scoop and that kind of stuff, that type of company should have the same ability to access support or investment through InBC.

I think it would be cold comfort to companies engaged predominantly in technologies to support traditional industries in this province to hear that InBC is agnostic. InBC is not agnostic. The minister has said may times today that investments will be prioritized based on that lens of people, planet and profits. Clean tech, he’s mentioned. He’s mentioned Indigenous-led businesses. He’s mentioned all kinds of types of companies.

What I’m looking for here is an understanding from the minister as to what government intends to ensure is baked into that investment criteria to ensure equal access to InBC investment, regardless of whether the business in question is engaged in traditional industries or emerging industries. What commitment is the minister able and willing to make to ensure that there is that equal access afforded to companies across the entire spectrum here in British Columbia?

[3:55 p.m.]

Hon. R. Kahlon: Again, I didn’t say that it was just agnostic; I said sectorally agnostic. So, any sector can access InBC.

The member used an example that it could be an Indigenous business getting money, or it could be a clean tech or natural resource. All three could be in one. We know, certainly in my meetings, a lot of our businesses — those in the natural resource sector — are looking at emerging technologies to advance their operations, whether it’s around water or the air or land. So, again, sectorally agnostic. Any business that meets the triple bottom line can apply.

T. Stone: Well, I’d be curious to know what the minister’s perspective is on what the target sectors really are for InBC. The material that was released on the day that this InBC scheme was announced in April — the news releases, the media interviews that have been done…. Even a lot of the validators that were at the actual announcement were from very specific sectors. These were sectors that are predominantly in emerging technologies — for example, the life sciences sector. By the way, I’m very proud of that sector. I know the minister is as well. We’ve got tremendous opportunity and potential for dramatic growth in the life sciences sector in British Columbia.

The artificial intelligence and virtual reality sectors have been talked about a lot. Supercomputing and quantum computing, the clean tech sector — those are the kinds of sectors that we’ve all been hearing a lot through, again, government communications and media interviews, and even what was announced in April when InBC was rolled out by the Premier and the minister. There wasn’t a lot of talk about tech sectors that are engaged with resource companies, for example, or more traditional industries.

That’s why this is really important. Perhaps the minister could take a moment to just reflect back to this House what the target sectors for investment are. Or is he going to say they’re agnostic on that, too, and that there really isn’t a plan in place with target sectors in mind for the $500 million of investment that will be on the table through InBC?

Hon. R. Kahlon: I think I’ll just go to the answer that I just shared, which is the fund is sectorally agnostic. I think he mentioned a few of the folks who were at the initial announcement. I think maybe he may have missed Greg D’Avignon, who’s the head of B.C. Business Council, who was also a speaker at the event. I know many of his members are in the natural resource sector.

We’ve had the B.C. Chamber of Commerce and many organizations that represent members of diverse types of businesses see the value in this. I think I’ve given the member the answer, which is this fund is sectorally agnostic, as long as it meets our triple-bottom-line mandate, as long as it helps us address some of the societal challenges that we all want to see addressed.

T. Stone: The minister’s responses have, I think, been more along the lines of suggesting that there are no commitments to ensuring some semblance of an equal disbursement of funds across these different sectors.

The added challenge that I think InBC is going to find here…. I’d be curious to know what the minister’s thoughts are. There are certain sectors in a tech space — like artificial intelligence I mentioned, supercomputing and others — that are extraordinarily investment intensive. They chew through massive amounts of investment in order to scale in any way that’s significant in British Columbia, so it would not take much.

[4:00 p.m.]

This is a comment that certainly has been made many times to me, that $500 million is a lot of money. But if the predominant investment sector that is going to receive those dollars is supercomputing and artificial intelligence and life science sectors, it won’t take much to burn through $500 million.

What I’m looking for here is a commitment from the government that there is going to be an equal access, but equal as roughly as possible — an equal disbursement of the funds here — so that companies, start-ups that are engaged in the traditional industries in our province are able to access this InBC funding as much as a life sciences company in Vancouver is.

I guess my question would be this, and then it looks like we’re going to have an interruption to our regular programming here for a moment. But my question would be this. If I take the traditional versus emerging one step further, let’s talk about the geographic consideration.

The tech sector in Prince George, Kamloops, even Kelowna, for that matter, looks and feels very differently in terms of the sectors that are predominant there, the types of start-up companies that exist there, the mix of start-ups versus scale-ups when compared to the Lower Mainland, and in particular, when compared to Vancouver and Surrey — you know, the big hubs of tech activity in the Lower Mainland.

Can the minister let the House know, let British Columbians know what consideration has been given to ensuring that a tech company up in Kelowna, or my hometown in Kamloops — which, by the way, predominantly are not engaged in the life sciences sectors or artificial intelligence or quantum computing and so forth…. Those companies are predominantly in the Lower Mainland. What assurances do tech companies outside of the Lower Mainland have that they’re going to be able to access these InBC investment dollars?

[4:05 p.m.]

Hon. R. Kahlon: I appreciate that there are a couple questions there. The fund will be accessible across all sectors. I think the member was asking about whether all of the money would be placed in year 1, and we do expect it’ll be six to eight years for the fund to be placed. And obviously, in the investment policy, which I’ve said a couple times now, distributed growth will be a criteria of the fund. We do want to see opportunities. There is a great tech sector in Kelowna, in Kamloops, as the member knows because he’s from there and he’s had success there.

We also see opportunities throughout the province. There are a lot of projects that I can think of that may want to look at InBC in Hazelton and other communities. But we do want to see distributed growth. We do want to see opportunities in other parts of the province getting access to this fund, and it will be an important metric in our investment policy when it’s complete.

T. Stone: Did the minister or his ministry survey the capital needs of the tech sector companies outside of the Lower Mainland? Was there work done in the ministry, looking at what those investment needs actually are, the types of companies that exist in Kamloops, Kelowna and Prince George, whether they’re start-ups or scale-ups, predominantly? What sectors are they in? Traditional industries versus emerging? Did the minister and the ministry actually do that work to assess the unique needs of tech companies in communities outside of the Lower Mainland?

The minister is correct. I’m not just talking about the southern Interior. There are some incredibly innovative companies in places like 100 Mile House, certainly, that I’m aware of — and on Vancouver Island, in the tiniest of little communities. So did the minister do the work to understand the needs that are very unique to the tech sector in the communities outside of the Lower Mainland? If he did, could he speak to what that actually looked like and how that informed his decisions, moving forward?

The Chair: We’re going to take a five-minute recess, and the minister will come back with an answer after the recess. We’re now in recess for five minutes.

The committee recessed from 4:08 p.m. to 4:17 p.m.

[N. Letnick in the chair.]

Hon. R. Kahlon: Hon. Speaker, thank you for that short break.

The member asked who we engaged with outside of Metro Vancouver. The team has shared a list. We’ll go through it: Accelerate Okanagan, the Gitxsan Development Corp. We’ve got Krista Mallory, who’s from the Central Okanagan Economic Development Commission, which is Invest Kelowna. We’ve got SIDIT, Southern Interior Development Initiative Trust. That’s the Okanagan. We’ve got Central Okanagan Economic Development Commission, the UBC Okanagan, Northern Development, the B.C. Resources Coalition, the Nisg̱a’a government. That’s the list.

Of course, the engagement continues. It’s ongoing. Certainly, I know that we all wish that we would have been able to travel the province and meet people face to face, but with the challenges we have through COVID, it made it a little more challenging. But that being said, our engagements continue.

T. Stone: Yeah. My question wasn’t so much: which organizations did the minister talk to? I know how engagement works. I did a lot of it when I was a minister. You send out letters, and your ministry staff make some phone calls and so forth, and you put a check mark in the box next to: “Yeah, I talked to Accelerate Okanagan.”

[4:20 p.m.]

What I was looking for was: did the ministry do any research or any surveys or any efforts to actually generate the data that is helping inform the shaping of InBC and its investment criteria — specifically, to ensure that companies that are outside of the Lower Mainland, emerging tech companies in rural parts of the province and smaller non–Lower Mainland urban centres, have access to these InBC funds? I didn’t really hear an answer to that part. That was the question that I was asking. The minister can try again.

I wanted to ask the minister this question as well: can the minister confirm that InBC will be investing in both start-ups and scale-ups and that that would be a key part of the investment framework, moving forward?

Hon. R. Kahlon: The member talked about the engagement that he did when he was a minister. I’m sure it was more than just checking boxes. Certainly, what we were doing is more than checking boxes.

The team has been doing extensive formal market sounding, both on governance as well as the investment principles. That market sounding helped shape the legislation and what we’ve brought forward.

The other question the member had was: will this fund be available to start-ups? The answer is yes. The fund will be available to both start-ups and scale-up companies.

T. Stone: Could the minister advise the House what he understands to be the failure rate of start-up tech companies?

[4:25 p.m.]

Hon. R. Kahlon: We don’t have the number he’s looking for right now. Staff advise me they don’t have that at their fingertips. But I guess that I kind of know where the question is going, so the answer to the question he may want to ask is that early-stage investment could be placed through fund managers. And that could happen through InBC as well.

T. Stone: Well, I think it should concern British Columbians that the minister is presiding over the creation of InBC, a scheme that will take $500 million of taxpayers’ money and invest in high-risk venture capital investments. He can call it patient capital, whatever; these are venture capital investments. They’re high-risk.

Not knowing, not being able to actually reference, what the failure rate is of companies, when he’s taking $500 million of public funds to invest in these very ventures, is quite astonishing. I’ll enlighten the minister. The failure rate is about 20 percent of tech start-ups in their first year. That grows to about 60 percent by year 3. It’s a high degree of failure rate. That’s why it’s viewed as one of the riskiest sectors out there, from an investment perspective.

So with that as the backdrop, what’s the context for risk here that the minister has in front of him? What’s an acceptable risk? How is the minister going to ensure that the investment criteria, the framework that is put in place, embodies a level of risk that’s worth taking $500 million of public money, knowing that there are going to be a significant number of those companies that aren’t going to make it in the first year and a lot more that won’t make it to year 3?

The question to the minister is: what’s the acceptable level of risk that he and his government are prepared to take, with $500 million of taxpayers’ money, on these venture capital investments?

[4:30 p.m.]

[S. Chandra Herbert in the chair.]

The Chair: Minister.

Hon. R. Kahlon: Thank you, hon. Chair, and welcome to the chair.

I think there are a couple of things. I’m not making the investment. The chief investment officer and a team around a chief investment officer will be making the investments. Of course, they’ll be weighing the risk and opportunities when they’re assessing each business opportunity that comes forward. They’ll be co-investing with the private sector, which helps spread the risk. Of course, we also are creating an oversight mechanism, with the board keeping oversight of the decisions that are being made by the chief investment officer and their team.

T. Stone: Well, the minister isn’t personally making the investments, but this government is making the gamble. It’s the government that’s taking half a billion dollars of public funds and putting into this InBC scheme. It’s the government that’s allowing that amount of taxpayers’ money to be put at risk in these venture capital investments.

So we can split hairs here if the minister wants to do that, but no one is suggesting that he or anyone in his ministry is actually going to be making the decisions. Of course, we know that’s the chief investment officer at the end of the day, but it’s the government’s gamble with half a billion dollars.

I want to move on to just further along this line here. We talked earlier about profitability, the rate of return, if we can call it that — the anticipated rate of return on InBC’s portfolio. Several reports have suggested that the minister and government’s expected rate of return is 5 percent across the whole portfolio.

Actually, I would like to ask the minister if that number is correct. Is the anticipated rate of return 5 percent on InBC’s investment portfolio? Yes or no? If it’s not, what is the anticipated rate of return that the minister has in his foreview here, relative to a half-billion-dollar investment, or risking of public funds through this InBC scheme?

Hon. R. Kahlon: I think it’s important to remind the member that this type of fund exists in other parts of the world. I’ve highlighted to him Denmark, Ireland, Scotland, Singapore. Many countries have had funds like this with similar mandates for over a decade, have been quite successful. Maybe I don’t agree with his labelling it in such dire straits. We have seen this fund work and drive innovation and clean growth in many countries around the world.

We based the number that he refers to off…. It’s kind of in between what we saw between Denmark and Ireland on their returns. I believe Denmark’s percentage was coming back at about 4½ percent, and Ireland was around 6 percent. So we used 5 percent for the business case for InBC.

[4:35 p.m.]

T. Stone: So what is the exact anticipated rate of return? Is it 5 percent? Is it 5.5 percent? Is it 5.2 percent? What is the anticipated rate of return? That’s a basic question at this stage of the game, when we’re talking about half a billion dollars at stake.

Hon. R. Kahlon: The target that we set just for the business case was 4.7 percent. But there is going to be a lot more work to be done on that once we’ve finished the investment policy framework. Of course, the member knows that work is ongoing. For the business case, we based it off of returns seen in both Denmark and Ireland.

T. Stone: Well, again, I think there are a whole bunch of folks that aren’t going to be sure whether to cry or to laugh. I mean, to say that we’re putting $500 million on the table that will be invested in risky venture capital investments and that there is essentially, as the minister just stated, a 4.7 percent rate of return — although that’s an anticipated, projected draft; there is more work to do on this — I find preposterous at this point.

Denmark’s rate of return. He mentions 4.5 percent. The Ireland strategic investment fund actually has a historical rate of return of about 3.1 percent since inception. In Ireland’s case, that’s lower than inflation, which was 10.5 percent in that same time period. So I think that this is part of where the rubber is hitting the road here, on the concerns that, I think, are rightfully placed about taking half a billion dollars of public funds for an expected rate of return….

Pick whichever number you want that we’ve just talked about, whether it’s Ireland’s 3.1 or Denmark’s 4.5, or the 5 percent that has been out in media reports, or the 4.7 percent that the minister just threw out there — although that is draft. That is going to be refined more, moving forward.

I guess the question is, does the minister believe, for the risk that taxpayers are being asked to take on $500 million…? Twenty percent of tech start-ups fail in their first year; 60 percent fail in their first three years. For the risk that is associated with these investments, is the minister comfortable with an anticipated rate of return on the portfolio of investments that will be on the table here of this 4- to 6-percent range? Is the minister comfortable with that? Is he comfortable with that risk-benefit ratio for the taxpayers of British Columbia?

[4:40 p.m.]

Hon. R. Kahlon: I hope the member will excuse me for not believing his numbers. I think we’ll believe the Irish strategic investment fund on the number that they’ve given us, which, in fact, I even stated wrongly. I said 6 percent. It was 7.6 percent. That number has come from the Irish strategic investment fund themselves.

I think one of the important pieces here, and the member frames it as in just for profit…. Again, this is impact investing. This is a triple bottom line. I think, partly, the challenge that we’ve seen in the marketplace, the reason why this type of fund exists, is that a lot of investors are looking at just the profit. They’re looking at how much money they can make in a quick turnaround, and there’s a real gap in providing patient capital over a long term.

This is not just about a profit. This is about people. It’s about our planet and finding the innovation that’s needed to advance the well-being of British Columbians, the well-being of our planet. It’s about scaling and anchoring companies here in British Columbia, ensuring good-paying job opportunities here in British Columbia. It’s about distributed growth, and it’s about climate change. Those are the policy focuses of this fund. It’s not just profit.

T. Stone: Well, it sounds like this whole…. Going to go way out there. This concept of rate of return is barely going to be a target. It’s not even really a target with this government’s approach. We’re certainly not…. Any suggestion of a rate of return across this portfolio doesn’t seem to be based on any forecasts. It would sound like the rate of return may shift dramatically based on changes to the investment framework and the investment policy as well.

The minister…. Again, I’d ask the question, but I’m not sure if I’d get an answer other than: “We don’t have the numbers in the ministry.” That is, again, shocking for what we’re talking about here today, which is half a billion dollars of public funds, not to be invested in health care or to go towards helping struggling businesses in the Cariboo or in Coquitlam today that are barely making ends meet, but to go into high-risk investments, a significant percentage of which are going to fail.

The average venture capital firm expects a rate of return on their investment portfolio of somewhere in the range of about 25 percent, some as high as 30 percent — some are a bit lower — which means that the NDP’s performance expectation is about five to six times less than the venture capital firms out there.

I get the minister’s continuous assertion that this is patient capital. This is about the planet. This is about filling a void that exists in capital markets, which again is questionable. The member for Saanich North and the Islands asked some relevant questions about that earlier. But this is also public funds. These are taxpayers’ dollars.

[4:45 p.m.]

I guess the next question I would ask would be…. Contrasted against venture capital firms, which have an expectation of 25 percent, 30 percent rate of return on their portfolio, contrasted against the S&P 500’s historical annual average rate of return of about 13.6 percent…. Contrasted against those examples, those benchmarks, is the fact that the NDP’s expectation is going to be five, six times less than that rate of return really acceptable for taxpayers to assume that risk.

Is the best explanation of this really that the government has a low expectation of much of a rate of return on these investments in order to facilitate the government’s policy objectives, which don’t seem to be placing the respect for the taxpayer and the taxpayers’ dollars here — half a billion dollars’ worth — anywhere near the top of that priority list?

Hon. R. Kahlon: Again, I’ll take this back to the main purpose of this fund. This fund is about investing in B.C. companies. That’s what we’re doing here. We’re investing in our B.C. companies, in the innovation of our B.C. companies.

The member mentioned money that could be going to health care, could be going to employment opportunities. This money is going to those things. This money, this patient capital, can go to an innovation that will help improve health outcomes. It can go towards an innovation that will help create employment opportunities for Indigenous communities or communities throughout the province, give opportunities for women-led businesses. This is about investing in our planet. This is about investing in our people, in our B.C. companies. So I’m quite proud of this. I’m quite proud of this investment.

Again, I highlight to the member that we’re not the first jurisdiction to do this. This type of fund exists in other jurisdictions. Denmark is quite successful. Ireland is very successful. Scotland is very successful. Singapore is incredibly successful. The jurisdictions that have these types of funds are not backing away from them. In fact, more jurisdictions are going in this direction.

This is what’s needed to address the challenges that we see in a society. If we want to support the innovation required to address climate change, it’s going to require patient capital. This is well understood.

I’m not sure what entirely the member’s question was, but I tried to give him a few things there to, hopefully, answer some of those concerns he may have.

T. Stone: Well, I was talking about if it’s really, truly the government’s policy priorities here which are tilting the balance away from profitability, return on investment, ensuring that we’re stretching every tax dollar, every public dollar as far as we possibly can to maximize the benefit for all British Columbians or if the minister believes that the importance of a financial lens on this, financial imperatives on this are much less important than the achievement of the government’s policy goals.

[4:50 p.m.]

That’s what I was getting at. I’ll ask it again in the context of the section that we’re on, section 4. Subsection 4(1) says: “The purposes of the corporation are as follows: (a) to make investments that achieve a financial return; (b) to make investments that support the social, economic and environmental policy objectives of the government.”

I’m trying to understand: what is the financial return that is anticipated? What is that balance that the government is going to strike, in this InBC scheme, between that requirement in section 4(1)(a) for a financial return — don’t know what the level of return is, because it’s not indicated anywhere — and the support for the government’s policy priority areas? That’s what I’m trying to get to the bottom of in this particular line of questions. I’ll put it to the minister one more time: what is that balance between those two things? It’s not specified in the legislation.

Hon. R. Kahlon: We are tilting the balance. We’re tilting the balance towards the planet. We’re tilting the balance towards our people. We’re tilting the balance towards distributed growth, to inclusive growth. The member is correct; we are tilting the balance. We know there’s a need for this kind of patient capital to tilt that balance towards the values of British Columbians, and that’s what we’re doing. Profit is obviously a key component of it. It’s planet, profit and people. We are tilting the balance, and that’s what this fund is trying to do.

It’s what the fund will do. It has been successful in other jurisdictions. Again, I’ll highlight for the member that we’re not the first jurisdiction to do a fund like this. This is not groundbreaking for the world. It’s not the first time the world has seen a fund like this. Denmark, Ireland, Scotland and Singapore are just a few that have been very successful for over a decade. We’re proud of the direction we’re going.

T. Stone: Look, I think we’re at an impasse here, in the sense that the minister seems to think that an anticipated rate of return in that 3- to 5-percent range, 6 percent, for the risk that taxpayers are being asked to take with half a billion dollars, is acceptable. I do not; our caucus does not.

Just to set the record straight on the Ireland strategic investment fund, the 6.2 percent return that the minister mentioned moments ago was for 2020. That was at a time when most other markets had actually gained by 15 to 30 percent. The average annual return on the Ireland strategic investment fund, since 2015, has been 3.1 percent. We’re also getting that data, from the Ireland strategic investment fund. He thinks that a rate of return of 3.1 percent, for the level of risk that’s attached to these investments, is an acceptable risk to take and that that’s responsible. We do not — a point of difference.

I want to reiterate that the minister can use phrases like “patient capital,” and he can talk about the people, the planet, and so forth. The service plan for InBC is actually quite an enlightening document. It uses phrases that the minister doesn’t want to apparently acknowledge as forming a lot of the foundational thinking for InBC.

On page 6 of InBC’s service plan, with respect to key risks identified for the upcoming fiscal year, it says, with respect to returns: “Venture capital is a high-risk asset class that does not afford guaranteed returns.” It’s a high-risk asset class. There are the evil two words, “venture capital,” mentioned there. Venture capital is referenced throughout this service plan.

[4:55 p.m.]

On page 13, in a note underneath the financial summary for the corporation, it says: “InBC does not include revenue from venture capital investments when forecasting, due to the variable and unpredictable nature of the investments and associated distributions.” This is an extremely high-risk scheme that is being set up here — for maybe, in the Ireland example, a 3.1 percent rate of return, over the past five to six years, on an average basis. We differ on whether or not that’s an acceptable risk for taxpayers.

The minister keeps talking about people, planet and profit. On the planet aspect of this, we ask: “Well, are the CleanBC targets, the emission reductions targets, intertwined at all with InBC’s investment criteria and targets?” No, they’re not. This is all seems to be nebulous, notional and whatnot — or it’s coming. We’re being asked to vote on, endorse and support a piece of legislation where these details are so sorely lacking.

I’d ask the minister this question. The InBC service plan — again, this is on page 6 — states that a j-curve effect is anticipated for InBC’s returns. Again, it says: “Negative returns may occur in early years. Gains occur in later years as portfolio companies mature and exit.” Does this mean that InBC will be using an exit-value-based system to determine the value of investment targets?

[5:00 p.m.]

Hon. R. Kahlon: InBC, obviously, is committed to long-term investments. We understand the j-curve effect. We’re not looking for quick exits in this fund. I think it’s important to highlight…. The member talks about risk and when the returns will come. I think the member probably knows — but if he doesn’t, I’ll share — that the B.C. tech fund launched in 2016 and has yet to turn a profit. It’s just coming out of the j-curve now, five years later. So I’m sure he had similar concerns then.

But we’re very aware of this and, again, look forward to any follow-up questions that the member may have.

T. Stone: I want to really make sure that we’re clear on this point. Is the minister aware that the typical venture capital exit value method is based on the company being acquired and exiting the market? If the minister does agree with that — if an exit is the objective, whether it’s in three years, five years or longer — then how does that jibe with the other significant or often-stated objective of this fund to anchor companies here in British Columbia?

Hon. R. Kahlon: Perhaps I’m not fully understanding the question. The member can maybe elaborate on that. But the objective of this fund is to help — to see companies self-anchor here. We want to see them kind of connect within the community, stay and self-adhere to the community, see them put in roots and grow here.

Maybe if the member elaborates on his question, I might be able to better understand what he’s going at.

T. Stone: Well, the typical venture capital exit value method is based on the company being acquired and exiting the market. To put that, maybe, into layman’s terms for everyone watching, the typical objective for most tech companies is to grow as quickly as possible, all the while attracting multiple rounds of investment, different series of investment with venture capital firms and angel investors. You typically start with friends and family. They call it love money. Then you move to angel investors, and then you move to the more sophisticated institutional investing and venture capital firms and so forth. But every level of investor expects a return on their investment at some point.

[5:05 p.m.]

The typical opportunity for that return on investment happens through an exit, meaning that the company is acquired. It’s acquired or there’s a merger or there’s some other activity that takes place and buys out the shareholders. When that happens, we often see those companies in question end up no longer being located in British Columbia, or the headquarters might remain here, but there’s a significant growth in operational capacity in other jurisdictions around the world. Or the headquarters leave British Columbia, but there’s still an operational capacity for delivering products and services here in British Columbia.

I’m trying to understand if this exit-value-based method of capturing the valuation and capturing that value and exiting is the approach that InBC will take, or if there will be some other approach. If it’s to help companies grow, to get to a point where they end up being acquired…. The minister has made very clear public statements that there are no strings attached in terms of precluding subsequent rounds of investment from being made in these companies. At some point, there’s going to be an expectation of an exit, and that company may, at that point, no longer be based in British Columbia.

The question was: how does that reality jibe with the objective and the goal of this government to anchor these companies here in British Columbia?

Hon. R. Kahlon: I think the member is implying that an exit will mean the companies will leave, and certainly, that is not how we view it. We have seen companies that have been bought by other jurisdictions, but they’ve scaled to the size, and they’re attached to their workforce, or they maybe have the manufacturing capacity built here.

[5:10 p.m.]

There’s a strong ecosystem, and they still stay. So we don’t necessarily see that as being the only challenge, but the member may have been implying something different in his question.

T. Stone: No, I wasn’t implying that, automatically, companies will leave British Columbia. There are many examples of B.C. companies that do the acquiring.

Whether we agree that the InBC scheme is the way to go about it or not, I think we all share the objective here of wanting to see B.C. companies not just start up here in British Columbia, in large numbers — we’re actually pretty good at that in this province — but also scale up, move to that next level, do the acquiring, be engaged in those and be the leading entity in mergers and so forth.

But let’s talk about anchoring. The initial backgrounder for InBC defines anchoring as: “Companies that maintain their head offices and senior decision-makers here, pay taxes and develop the skills and capacity of their B.C. workforce.”

The question to the minister: is that still how he would define this commitment to anchoring? The second part of that question would be: what mechanisms will the government have at its disposal, if any, to enforce or to do as much as it can to ensure that these anchoring objectives are actually achieved? If a company receives InBC investment, moves to the next level and then is acquired and leaves British Columbia, are there any ramifications for that whatsoever?

Hon. R. Kahlon: We see that by investing directly in B.C. companies, InBC will have a seat at the table. So if a company is approached by a foreign buyer about selling or leaving the jurisdiction, InBC will be able to participate in and influence that discussion. We acknowledge that we may not have enough seats on the board to block that move, but we will have a say in that decision.

Across the portfolio, I think we’ll be also able to gather intelligence about what the issues are and why this is happening. Further to that, I think the objective here is to help our companies scale up so that they get to a certain size and a certain footprint — that they want to stay. We want to try to make it sticky for these companies and find ways for them to get big enough that they’re anchored and they stay here in British Columbia.

T. Stone: The InBC backgrounder states: “These investments would be complementary to private investment and would be on the same terms as the private investment.” First part of the question: is that still the intention, moving forward?

[5:15 p.m.]

Secondly, if the investments are on the same terms as private investment, then what is really serving to anchor that company here in British Columbia, recognizing that most private sector venture capital firms and other financial institutions that would be participating and leveraging these investments are going to want to see a return on their investment at some point, which is typically provided for through an exit of that company?

Hon. R. Kahlon: The intention here is obviously to co-invest with private capital, and each party will have slightly different terms in that investment. I think the member understands that. Although the member is focused on just venture capital, I think he should also understand that there are opportunities with public funds as well.

BDC Capital, there’s the Canada infrastructure fund, EDC. There are public funds that would want to co-invest along with the decisions that InBC makes, as well.

T. Stone: This next question kind of involves the same topic. There are four parts to it, so I’ll be really quick, and perhaps the minister can then just answer each piece in his subsequent answer.

First, is the intention here for InBC to spread this $500 million around to as many companies as possible or to participate in multiple rounds of investment with the same company? I appreciate that every situation will be unique and so forth, but again, this comes back to policy objectives of the InBC framework here. Does the minister envision InBC, as a default, trying to spread the money as widely as possible or going deep into a smaller number of companies through multiple rounds with those companies? That’s one.

Two, can the government be bought out of its shares by investors in subsequent rounds? So if InBC participates in a series A round or a series B round, can a subsequent investment round and the investors participating in that round buy out the government or the InBC position?

Thirdly, can a tech company that’s received investment through InBC just simply pay back the funds to InBC whenever it wants to?

[5:20 p.m.]

Fourth, if a company moves out of British Columbia after having received an investment from InBC, and I think we’ve established that there really will be nothing that will be holding that company back…. Hopefully it doesn’t happen, but there really is nothing that the government will be able to do, unless the government has participated in multiple rounds such that the government, through InBC, ends up with a majority of the board seats in a particular company.

If that company moves out of British Columbia after receiving InBC investment, would it be a policy imperative of InBC to divest itself of the shares in that company or sell, dispose of, those shares in a company which has left the province after receiving the InBC investment?

[5:25 p.m.]

Hon. R. Kahlon: Four questions there. One of the things I’ll say off the top is that we’ve been clear from the beginning that InBC can invest up and down on the capital structure. But each of the questions is case by case.

For example, the first question was around: will InBC try to invest in many companies or multiple rounds with the same company? I think the answer there is that InBC will have the scope for follow-on investments. Of course, this is something that the chief investment officer will have to decide on, obviously, upon reviewing the investment policy document.

The second question was: can government be bought out on, say, for example, a second round? This one is similar to question 3. The answer is that it depends on the terms. It depends on the nature of the investment. It depends on when InBC wants to exit. It depends on a few variables, and that’s certainly the same with the third question, about the payback option.

I mean, if it’s a loan, yes. But if it’s equity, it’s not quite that simple. Of course, the terms and conditions will be made by the chief investment officer, so it’s case by case.

The fourth question was around if a company moves out of B.C. Again, it depends on the nature of the investment, and that work on the investment policy is still happening and still has to be set.

T. Stone: Those, I think, were responses that, frankly, I was anticipating. It will depend on the term sheets and the specific circumstances of each company. But the point I was trying to make is that at the end of the day, the goal or the objective of anchoring businesses in British Columbia, as stated in the backgrounder, in the context of companies maintaining their head offices and senior decision-makers here, paying taxes and developing the skills and capacity of the B.C. workforce, are really that. They’re goals.

There is nothing that’s going to be much different here in terms of this approach, this InBC scheme, really enhancing the likelihood of success on these anchoring objectives in comparison to investments being made through more traditional means — venture capital companies, and so forth. I think it’s important that that be established because, again, the broader discussion here is: should government be taking $500 million and risking it on these kinds of venture capital investments when one of the oft-stated goals of doing so, when this was launched, was to anchor businesses in British Columbia?

[N. Letnick in the chair.]

I think it’s just important for British Columbians to know that there’s really nothing that’s happening here, through InBC and how this is being structured, that is going to provide a greater likelihood of that anchoring to take place. I certainly hope I’m wrong. We all want these companies to be anchored here for the long term and grow here, but I don’t think there’s anything extraordinary happening here, in how this is being structured, that’s going to make that a reality as a default.

[5:30 p.m.]

I just have a couple of final questions on section 4, and then we’ll be able to move on to subsequent sections. I just wanted to ask the minister this question: will UNDRIP compliance be a prerequisite for investment decisions? Secondly, will Indigenous consultation be undertaken on all investment decisions, each and every investment decision, or just on the investment policy framework?

Hon. R. Kahlon: First Nations won’t be consulted on individual investment decisions. That is something that is squarely in the decision of the chief investment officer. We are engaging right now on the investment policy statement, and that conversation is ongoing.

T. Stone: What happens if a First Nation actually objects to an investment that is made by InBC? Would that investment decision, after it was announced, be reversed, or does the investment decision that was made stand?

Hon. R. Kahlon: I think the answer is in the earlier answer I gave, which is that we won’t be consulting on individual decisions made by the chief investment officer, but we are engaging with First Nations communities right now on the investment policy statement.

T. Stone: Last question on clause 4. I have no questions on clause 5, so then we can move to clause 6 after this question.

Can the minister confirm that the necessary engagement consultation with First Nations was undertaken on this specific piece of legislation that is before the House today?

[5:35 p.m.]

Hon. R. Kahlon: Yes. We engaged with Indigenous political organizations, economic development corporations, nations and individuals. Obviously, this conversation is ongoing, as I’ve mentioned, and we’re going to continue to engage on the investment policy statement, which I think is important.

Clauses 4 and 5 approved.

On clause 6.

T. Stone: We’re now into part 3 of the bill, Bill 5, dealing with governance. We’ve got a number of questions here.

Section 6 specifically deals with the board of directors. I guess, right off the top, I think a question that a lot of people would like an answer to is…. While the minister has said many times that the board of directors for InBC is independent, will be independent and, when the appointments were announced, that it was independent, when you actually look at the nine members that have been appointed to InBC’s board, it’s pretty hard to come to the conclusion that this board is actually going to be independent.

Now, no disrespect is intended towards any of the individuals that have been appointed. I certainly have respect for the two deputy ministers, who I absolutely understand operate in a non-partisan manner, worked with our former government, and so forth. But these senior civil servants will do what is expected of them. They will do what they’re told to do. Any suggestion otherwise is folly.

Carole James was appointed. She is a former Finance Minister and leader of the NDP, hardly independent from the NDP government. In addition to the two deputy ministers and Carole James, you have a Canadian Centre for Policy Alternatives senior economist, Iglika Ivanova, and a special adviser to the Jobs Minister, Glen Lougheed, who, again, we’re supposed to believe are going to be independent of the minister, independent of government, with respect to their roles as members of the board of InBC.

I guess the obvious first question is: how does the minister seriously think that British Columbians are going to view this board — a former NDP leader; two senior civil servants that report to this government; a senior economist with the Canadian Centre for Policy Alternatives, a left-wing think tank; and an individual who was appointed as a senior adviser to the Minister of Jobs himself? How does the minister actually think that British Columbians are going to look at this board and say: “Yeah. Yeah, it looks pretty independent to me”?

Hon. R. Kahlon: Thanks to the member for the question. I guess I’ll try to go at a few of the pieces that he mentioned.

He mentions the two deputy ministers. I know he’s worked with them. But to suggest they’ll do the government’s bidding is, I think, false. They’re public servants. They do what’s in the best interests of the public. They provide fair and accurate information.

[5:40 p.m.]

If the member has experienced where it’s not the case, he can share. But certainly, my experience and the experience of my colleagues is that the deputy ministers are of the utmost integrity, certainly these two deputy ministers in particular. He’s highlighted that one of the deputy ministers, who happens to be my deputy minister, also served as the ADM to former Premier Christy Clark and I’m sure gave good, honest advice and treated the responsibility of that position with the utmost integrity.

I appreciate the member’s comments that he doesn’t want to denigrate anyone’s position and the work they do. I think he’ll agree with me that having two deputy ministers who are there for the public interest, who will not turn a blind eye if they see something inappropriate…. That’s because of the integrity of these two individuals.

He mentioned the member of the board who is on the Centre for Policy Alternatives. If he knows anything or follows anything regarding this member, he’ll know this person does not hold back commentary and critiques on anyone. Certainly, she is on the record many, many times of being critical of our government and the previous government and every government. If that person believes that the issues are not being advanced, as far as their employment goes…. To suggest that they’re some sort of insider is utterly false.

I’ll just put on the record that the special adviser, as he mentioned, and I won’t say the name out of respect for the individual…. But since becoming minister, I haven’t had a chance to have a meeting with that individual. He was adviser to the previous Minister of Jobs, Economic Recovery — or, at that time, JEDI — but certainly hasn’t been an adviser to me, in my role.

That being said, it’s critically important — the member knows; we’re in this section here — that this board is not allowed to interfere or even direct the chief investment officer in their decision-making. It’s an oversight body, one of the many mechanisms that we have in place. I’m proud of the board. It’s a phenomenal board with great experience. I’m sure that they will do the public duty that they’ve been asked to with the utmost integrity.

As for the former Minister of Finance, I think that the member would agree with me that she has carried her duties with the highest level of integrity and is respected and well loved by all British Columbians. All members across all this House appreciate the work and the integrity that she puts into everything she does. For her to accept this role, while dealing with many challenges in her life, goes to show how passionate she is about the importance of this kind of fund that will help advance the planet, help advance our people and bring a return to the people of British Columbia.

T. Stone: First, in terms of the two senior civil servants, this isn’t about, as the minister described it, “turning a blind eye.” This is about ensuring true independence, which means not necessarily doing what the minister or the government would like to see the board do at a particular time. There’s nothing in this act that precludes a minister from having conversations with members of the board. There’s nothing in this act that says the civil servants or any of the other board members can’t have conversations.

I’m just suggesting that while the two senior civil servants, who are highly accomplished, will approach the role as members of the board from a place of professionalism and respect for their offices and so forth, they’re going to end up doing what the government wants the board to do. There are no mechanisms built into this to prevent that from happening.

[5:45 p.m.]

I won’t make further comments about Carole James. She is respected by everyone in this House. That doesn’t take away from the fact that she’s a lifelong New Democrat, a former leader of the NDP, a former Finance Minister and Deputy Premier for this NDP government. That just, in and of itself, is a discussion. How can she possibly be viewed as someone who is going to be independent from government?

The Canadian Centre for Policy Alternatives individual. Again, this isn’t about questioning that individual’s integrity or whatnot; it’s about highlighting a fact. She is a senior member of a widely known and very activist left-wing think tank. She’s on the board, and we’re somehow supposed to believe that she’s going to be independent in her thinking, in terms of being independent from what government wants to see happen.

We’ve got the special adviser to the Jobs Minister. I didn’t even mention Kevin Campbell, who has apparently donated $60,300 to the NDP over his lifetime. Somehow, we’re supposed to believe that he’s going to be independent in his thinking in terms of what government wants this board to do.

It just seems like if the minister truly believes what he says around the importance of independence, one of the most visible aspects of any organization in terms of independence is ensuring that the people you put on your board of directors are truly going to live up to that — are going to be independent. There are five or six individuals that I’ve just mentioned — out of nine — that, I think, without casting any aspersions on anyone personally…. It’s hard to buy the case that this board is going to be independent from government.

I did want to ask two related questions. One is…. Again, no disrespect intended to Carole James, as I ask this question, but I think it’s an important question. With Carole James being appointed to the board, was she required to clear any lobbying or conflict of interest checks prior to her appointment? She’s going to have an important role in hiring the chief investment officer, which will be all about making investments in private companies and so forth, so I just want to understand if there was anything there that needed to be undertaken to facilitate her appointment to the board.

If there isn’t, then the minister can just say that there was nothing or that there is nothing there, and I will take him at face value on that. But then the other question is: why did the minister make these appointments before the legislation had actually even made its way through this legislative chamber? Why jump the gun on this and just sort of presuppose that this place was going to just sort of rubber-stamp this?

I know they’ve got a large majority, and the legislation is going to make its way through here. But why would the minister not have paid the respect to this institution to say: “You know what? I’m going to make appointments to the board only after the legislation creating the board in the first place has actually taken place”?

He may come back and say: “Well, legally, the corporation, the board, as structured in this legislation, doesn’t take effect until the legislation passes, and all we did was just announce names. We haven’t appointed anybody, technically, yet.” Fair enough. But why not wait? Just respect this place, respect the process, wait for there to be a vigorous debate on this legislation, which I think we’re having today, and then announce appointments to the board of directors for InBC.

[5:50 p.m.]

Hon. R. Kahlon: I appreciate the tone of the hon. member, but he’s trying to have it both ways. He’s trying to say at the same time that these folks can’t be independent in their thinking and can’t provide that oversight because, perhaps in one case, this person has left-wing views.

This person has left-wing views, so this person can’t provide oversight? I mean, what if the person had right-wing views? Could the person do a good job on the board if they had right-wing views? What the person’s views are on the political spectrum, which even now is changing, shouldn’t have anything to do with whether they can provide fair oversight.

The member mentioned our deputy ministers and said they’ll do the government’s bidding. They have a responsibility to do the right thing. Again, if the member has personal experiences of the opposite, he’s more than welcome to share his experience. But certainly not my experience.

He mentioned Kevin Campbell. He’s on the board of directors of Haywood Securities. He’s a managing director of investment banking. The chair is the CEO of the largest credit union in North America — has great experience on impact investing.

So I think you can’t have it both ways. You can’t say that I’m not saying that they can’t have independent views and, at the same time, say: “I don’t think that they can, and they’re not going to do what their responsibility is in B.C. to provide oversight.”

Again, the member will know that, in the legislation, it clearly says that they cannot direct, as board members. Just as I can’t. Just as any other government official can’t. The chief investment officer will make decisions on the investment policy on their own.

The member asked a question, I think a fair question, regarding members and disclosure of conflicts. The hon. member will know that every person, through the CABRO process, has to go through a process of disclosure of conflict. That’s a requirement.

The member will also know — we’re not at that point yet — that section 11(4) has in it that says: “Without limiting subsections (2) and (3), the board must pass bylaws that establish a policy, applicable to directors and senior officers, on the disclosure of interest and handling of conflicts of interest.” We put that into the legislation as well.

[5:55 p.m.]

The Chair: Member, last question before we move.

T. Stone: Well, at the end of the day, we’re talking about whether someone will have a default or an allegiance to the government’s view of the world, whether that’s through one’s employment and the role that they have within a government or whether that’s someone in an organization like the Centre for Policy Alternatives, which is clearly an organization aligned with the NDP. It’s those political views which are the dominant voice on this board — the majority voice on this board. So all we’re saying is that any suggestion that this board is, therefore, independent, is frankly ridiculous. That’s unfortunate.

I guess my last question would be: did the minister post these board of directors positions on the board resourcing office website, which is a very standard practice when looking for board appointees? Did these positions get posted, and if not, why not?

The Chair: Just a clarification, Kamloops–South Thompson. Is this your last question on clause 6 or your last question for today?

T. Stone: Both. Last question on clause 6.

The Chair: Okay, thank you.

Hon. R. Kahlon: I’ll just finish the comment again on the left-wing views, right-wing views. We don’t ask people about their view, left-wing or right-wing. We don’t judge by their employment on their view. In fact, we have people in government that have all views.

We have people who worked for many organizations, whether it’s the Broadbent Institute, whether it’s CFIB, whether it’s the Fraser Institute. We have deputy ministers who worked for all these organizations, yet we respect their opinions and we respect that they come with good intentions to the work they do.

And the question around the board…. CABRO has a standing process where people can go online and express interest in whatever board that they would like to participate in. That process, obviously, is in effect here as well. They’re responsible for public sector organization governance support, which includes overseeing the recruitment and recommendation of candidates for appointments to Crown corps, agencies, boards and commissions, providing public sector governance, advice and training.

Clause 6 approved.

Hon. R. Kahlon: I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 6 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. S. Robinson: I call committee on Bill 13.

Committee of the Whole House

BILL 13 — EMPLOYMENT STANDARDS
AMENDMENT ACT (No. 2), 2021

(continued)

The House in Committee of the Whole (Section B) on Bill 13; N. Letnick in the chair.

The committee met at 6:01 p.m.

On the amendment to clause 2 (continued).

The Chair: Hon. Members, pursuant to sessional order, a deferred division will take place shortly on the amendment proposed by the Leader of the Third Party to clause 2 of Bill 13, Employment Standards Amendment Act (No. 2), 2021. The amendment was distributed to all members and appears on the order paper for this afternoon’s sitting. I would like to remind members participating remotely that they must now enable their video.

Hon. Members, pursuant to sessional order, the committee stands recessed until 6:10 p.m.

The committee recessed from 6:02 p.m. to 6:12 p.m.

[N. Letnick in the chair.]

The Chair: The division will proceed in five minutes.

[6:15 p.m.]

Members, we’ll now proceed with the division. The question is on the amendment proposed by the Leader of the Third Party to clause 2 of Bill 13, Employment Standards Amendment Act (No. 2), 2021.

[6:20 p.m.]

Amendment negatived on the following division:

The Chair: I understand that the official opposition critic has further questions on clause 2 of Bill 13. Therefore, I invite the Minister of Labour to move that the committee rise, report progress and ask leave to sit again.

Hon. H. Bains: I move that the committee rise, report progress and ask leave to sit again.

Motion approved.

The committee rose at 6:25 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.

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

Committee of Supply (Section A), having reported resolution, 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 6:27 p.m.