Orders of the Day

Hon. R. Kahlon: In the main chamber, I call continued debate on the Committee of Supply with the Ministry of Finance.

In committee room A, I call continued debate on the Committee of Supply for the Ministry of Public Safety and Solicitor General.

[2:35 p.m.]

Committee of Supply

ESTIMATES: MINISTRY OF FINANCE

(continued)

The House in Committee of Supply (Section B); S. Chandra Herbert in the chair.

The committee met at 2:38 p.m.

On Vote 26: ministry operations, $338,869,000 (continued).

P. Milobar: Just for the minister’s knowledge, my colleague from Kelowna West has a follow-up question or two on the pension issues that we were talking about with BCFSA, and then I have a question or two as well. We’ll have a few questions for B.C. Lotteries and then a few questions around B.C. Infrastructure Benefits after that. We’ll just get into the more generalized questions after that.

I’ll turn it over to Kelowna West.

B. Stewart: I wanted to confirm that the correspondence that we spoke of yesterday had got to her, from Lind Logging and Lindwest Holdings. What I wanted to clarify…. Yesterday the minister described the change that was happening because it was a defined benefit program.

[2:40 p.m.]

In that letter, the plan we were talking about yesterday to deal with the Interior lumber pension plan…. It was set out in 1978 as a targeted benefit plan, and it was changed to being a defined benefit plan by the regulator sometime around 2016. I guess the question, really, is that the person I referred to that it was set out in 1978 as a targeted benefit plan, and it was changed to being a defined benefit plan by the regulator sometime around 2016.

I guess the question really is that the person that I referred to and shared the letter with you, the Lind logging group, and many other private lumber contractors…. This is after over 12 years of these companies having been dissolved and selling off their assets and giving back, in some cases, contracts that they had in order to harvest.

The minister suggested that B.C. Financial Services Authority oversees the plan for the benefit of the employees. However, the failure in this case that I see — and, I think, the Interior lumber association representing these logging contractors — is by the BCFSA not sounding the alarm bells when they realized that there was the situation of a lack of ownership by the trustee — which is who regulates and runs the plan, is overseen every three years, you referenced yesterday.

The situation is that the BCFSA, I believe, has a level of incompetency in terms of the fact that they did not ensure that there was solvency in the Interior lumber pension plan so that — the issue that’s come up now — former logging contracting companies, which were paying the funds and paid it willingly and met the increases, were not left with this bill.

My question to you is that there are dozens of Interior lumber contractors, like Bob and Bruce Lind and the Horovatin families, that want to know if there’s any contingency that the Ministry of Finance or BCFSA has set aside to help protect them or deal with the insolvency of the Interior lumber pension plan.

[2:45 p.m. - 2:50 p.m.]

Hon. K. Conroy: Just for the member’s information, I did get the letter. There’s information in the letter that is inaccurate. I’m going to make sure that the member gets the letter back in writing, so that he can have a full list of what’s inaccurate in the letter rather than us trying to do it verbally here. I think it’s better to just write it out for the member.

Just so the member knows, he’s talking about the responsibility of the BCFSA. The member needs to know that there were no material issues of insolvency prior to 2016.

Insolvency evaluations of pension plans can change quite often, or not — it depends. In this case, it was totally caused by low interest rates. At that time, the regulator, who works with trustees, reached out in 2016 — because there was no issues of insolvency prior to that — to the trustees and granted temporary relief, as was requested by the trustees, so that the trustees could develop a plan to deal with the insolvency issues.

[2:55 p.m.]

That’s who they have a fiduciary responsibility to. The trustees have a fiduciary responsibility to the members of the plan, and the members of the plan are the pension plan members, the people receiving their pension. It’s their responsibility to ensure that those pension plan members get their pension at the rate that they expect to get it at. So the BCFSA has done everything that they should do to ensure that. They’ve been working with the trustees to make sure that happens.

P. Milobar: I’m sure my colleague might have some follow-up questions that he may have to do in written correspondence. In the interest of time, we’ll have to move on. This is obviously a very critical thing for people impacted as it relates to their pensionable earnings and what they would have to live on. I’m sure the minister understands that as well. I look forward to the follow-up back and forth.

Just moving on. Recently, the member for Kamloops–South Thompson and myself met with the Association of Interior Realtors. Now their geography goes all the way through the Interior, basically down into the Kootenays. Strangely they also have an orphaned piece up in Peace River South, southern area as well. They represent the realtors up in that area. So pretty large geography through the Kootenays, the Okanagan and Kamloops area, into the Cariboo as well.

They have some concerns. The Strata Property Act around obtaining documents hasn’t been amended or updated since 2000. For realtors that need to access these documents — and obviously, they need to provide strata documents to potential purchasers moving forward — there are the seven days that the documents must be delivered, counting after the day it was first requested. The realtor will request from the holder. They get it. The third-party service where the documents are often processed will get that request. They have seven days to get it back to the realtor.

It’s around $180 or so for your typical document to get sent. However, in a hot real estate market, and they’re not doing their job properly…. Obviously purchasers have not had proper scrutiny of strata documents. They may need to have it faster than the seven days. There’s a rush fee that gets associated with that as well, and those fees are anywhere from $600 to $800. It takes the potential cost of $180 to closer to $1,000 in a lot of cases for these documents.

Part of the problem is not just with the rush fee but also how the minutes and such are billed. In 2000, the last time it was amended, 23 years ago, it was all based on a per page charge of 25 cents a page. With electronic distribution, which is much different than faxing or photocopying, obviously, sending off a large strata minute document electronically…. They’re still charging 25 cents a page for however many pages are within that attachment, which starts to get very costly, as the minister, I’m sure, can relate to.

The long and short of it is this. Is there anything underway? I mean, we’ve had strata bills come to this House, like 44. We just had one or two other ones just recently come as well. This wasn’t addressed in any of those. It hasn’t been addressed, obviously, in any miscellaneous housekeeping bills either.

Is there any work ongoing? If not, will there be some work starting to be undertaken this year to see about changing and modernizing the disbursement of strata documents and the fees associated with it to recognize electronic distribution and recognize that it should be a faster timeline to process an electronic file and ship it electronically? As well as the per page charge, which is no longer relevant.

What is the status of any update to this 23-year-old piece of legislation that obviously hasn’t met changing modern times?

Hon. K. Conroy: Can I just get the member to clarify which legislation he’s actually referring to?

P. Milobar: This is directly from the realtors. They’re saying it’s the Strata Property Act, which dictates the fees and timelines for obtaining strata documents. The act has not been amended or reviewed since the year 2000 in relation to this piece. Obviously, the Strata Act has had some changes done over the 23 years, but this is about any updates or amendments made for this type of document production for realtors and purchasers.

[3:00 p.m.]

Hon. K. Conroy: That’s what we thought. The Strata Property Act is actually under the Ministry of Housing, so you would need to ask them if they are doing anything. I’ll give the minister a heads-up that you’ll be asking him.

P. Milobar: Okay. My error. I assumed that it was BCFSA that would have been overseeing with the realtors, given that it was a realtor request.

With that then, I’ll move over to B.C. Lotteries.

Thank you to B.C. Lotteries for joining us today. I only have a few questions, hopefully, depending on the answers, and then we’ll keep moving on.

Several years ago, recognizing it was a completely different minister responsible, there were plans, obviously, for the capital expansion and rebuild of the Kamloops headquarters. That was shelved. COVID hit. There were remote-workplace policies brought into place, which I’m assuming did help some of the space constraints in Kamloops.

I’m just wondering if we can get an update on the physical employment numbers within Kamloops — working remotely but, more importantly, located within the building — and where we are at with space-utilization rates within that building now, given that COVID has, kind of, worked its way through and a lot of work-from-home situations have stopped happening.

[3:05 p.m.]

Hon. K. Conroy: I want to introduce staff that are with me. Of course, I’ve got my deputy minister Heather Wood, and we have associate deputy minister Cheryl May. Also with us is the CEO of the B.C. Lottery Corp., Pat Davis; and Alan Kerr, the CFO of the corporation.

The Lottery Corp. has 1,271 employees in total. Of that, 575 work in Kamloops, including Pat Davis, the newly appointed CEO. Three of the six executive officers also work in Kamloops. That has grown by approximately 14 percent over the last three years, the number in Kamloops.

The utilization fluctuates because some people want to work at home. Some don’t. Some, they’re a hybrid model.

We’ve got some totals of the entire organization. They’re trying to get just Kamloops, but for…. They feel that it’s fairly equitable in some ways. So 33 percent of employees for the entire corporation work in the office, 27 percent fully work at home and 40 percent are hybrid.

Just to let the member know, about 575 work in Kamloops, about the same amount in Vancouver and then the rest are scattered throughout the province, doing various jobs throughout the province.

P. Milobar: I won’t take issue with Pat’s history in Kamloops. We actually went to junior high even, I think, as well as high school together. So very well rooted in Kamloops and the volunteer community and all of that. There’s no debate from the opposition around that.

In terms of future planning though, there’s a very large piece of cleared land now. The old dry cleaner on the site was bought. The site was cleaned up. It was all part of that bigger vision. What are the future plans, then, for Lotteries within Kamloops?

[3:10 p.m.]

Obviously, we take a lot of pride in the fact that we have a head office in Kamloops and that it’s a very stable head office, in terms of job numbers and things of that nature. But we’re also very protective of it because of other head offices like Telus and others that we’ve lost over the years, going way, way back.

What is the overall strategy for the Kamloops site overall — the whole complex, the empty lot as well as the existing building, and where those next few years are planned to go with capital improvements?

Hon. K. Conroy: I just want to let the member know that the B.C. Lottery Corp. is absolutely committed to Kamloops. It’s not leaving. It’s not going anywhere. I couldn’t convince them to come to Castlegar. They’re staying in Kamloops. It’s been there since 1985, and it’s staying there.

The building is quite old. It’s been around…. It was built in the’60s. So the corporation is currently looking at plans which include looking to enhance the energy efficiency of the building and to meet safety standards — things like that. Address systems that are near end of life, if it’s been built since the’60s. There are some end-of-life systems in there that need to be replaced.

[3:15 p.m.]

Also supporting climate action commitments, what they can do…. They also are looking at evolving needs. Now that they have employees with the hybrid…. Some work at home, some work in the building. So they’re looking at, once things have settled down from COVID, what kind of needs do they have in the building? Looking at renovations and what they can do.

P. Milobar: As part of all that work, is there going to be a cost-benefit analysis done in terms of layering on things like energy efficiencies, overall timeline left of a viable building to use? As the minister said, it was built in the ’60s. It was actually a Woodward’s department store, and it’s gone through several iterations before Lotteries even moved in. It’s probably been renovated and hacked up as much as it possibly can, as a concrete bunker can be.

But there are just certain realities in this day and age in terms of, at a certain point, saying: “Okay, we’re committed to Kamloops.” We know Lotteries likely isn’t going to go bankrupt any day soon. It’s going to be in operation for a long time, kind of like a courthouse. So you build for the future.

You eventually have to replace the courthouse with a newer courthouse. That’s just happened in Kamloops. In fact, the old courthouse is right across the street from B.C. Lotteries, and the new one’s up by the hospital. So that happens, and that’s what happens with public buildings and public infrastructure. I view, and, I think, most people would view B.C. Lotteries as that public-type institution as well.

Is there going to be a proper cost-benefit analysis done? Not worry so much about adhering to, “It has to be a renovation, or it has to be a new build,” but what will actually serve the long-term needs of B.C. Lotteries and, by extension, the public most cost-effectively over the long term as opposed to a very short five- or six-year window of time, where we may spend $150 million renovating something when, for $200 million, we could have built a brand-new building that was going to operate for a long, long time, versus what seemed to be the short-term, cheaper option?

Hon. K. Conroy: The CFO assures me it’s a very decided yes.

P. Milobar: I ask that question because when I first started this role, we had a tour. There had been a plan to essentially build a new building, hence the creation of the new lot and the purchases next door and things of that nature. There were plans well underway. A lot of work had been done. The building was deemed to be not in great condition. A change of government happened, and, magically, the building was better and just needed — I’m simplifying a little — a couple of new wires and a coat of paint here and there and we’re good to go, and we can reshape things and make things work.

My understanding is that it very much felt like…. The member for Kamloops–South Thompson and myself took a tour of the building. It very much felt like the decision was much more that of a new government wanting to put their own stamp on an organization. Not just Lotteries, it was happening across government. Fair enough. But that was six years ago now.

This building is now six years older. Systems are six years older. There are space constraints. My understanding is there’s an offsite, fairly significant storage area now for either B.C. Lotteries directly or one of their contractors, with a lot of the gaming equipment in an area that’s going to be redeveloped in the very near future, as well, in Kamloops.

So this game of leapfrogging around with satellite areas starts to get problematic. It also starts to get expensive because it’s constant moving. I would think it’s a security issue, too, in terms of extra security costs and oversight needed for things being stored that directly impact the gaming industry.

Again, it’s great that that analysis is going to be undertaken, but how committed is the government…? Does the government have a preference, ahead of time, what they would like to see in terms of a renovation or rebuild? Because we’ve been down this road. We were well down that road when, kind of, the rug was pulled out, and suddenly the reports that were previously done and the reviews were no longer deemed to be as valid, even though all of the main players that created those reports were still within B.C. Lotteries at that time.

[3:20 p.m.]

Hon. K. Conroy: The member can be assured that all of those issues that the member raised will be part of the analysis for the plans to the existing building.

P. Milobar: Thank you to B.C. Lotteries for making the trek down. It’s one I’m fond of. I do it weekly, it seems.

I’m not going to continue. We are short of time as it is. Fair enough. I’ll take everything at its word right now. I don’t think B.C. Lotteries will be stunned to know that both myself and the Kamloops–South Thompson MLA will be keeping a close eye on Kamloops operations, as we always do, as well as the overall operations. But the numbers and revenue estimations always seem to come in pretty bang-on with B.C. Lotteries. There’s good work done there.

I guess my final question, and then we’ll transition over to B.C. Infrastructure and CBAs, is around online gaming in terms of sports. We’re being inundated right now. I’d probably be remiss if I didn’t ask about this right now.

Now obviously, Bet99 and other ones like that are Ontario-only. They’re supposed to be geofenced. There are others that are supposed to be. But there are a lot that are pretty easy to work around. What steps is B.C. Lotteries taking to try to block that from happening? Is there a way for them to try to electronically interfere with that or work with the other governments across the country or try to keep that leakage out from online gaming?

At least we finally have gone to the single-game sports betting, so that, hopefully, has helped a bit. But if people don’t want to go to Play Now, and they want to go to one of the other sites, what prevention measures are in place? What is coming in the future to try to keep that solidified, given that the bulk of the advertising we see right now, through the playoffs of various sports, is geared directly to much larger population markets out east but technically shouldn’t be available to people in B.C.?

[3:25 p.m.]

Hon. K. Conroy: The Gaming Control Act mandates that the BCLC is responsible for the conduct and management of all commercial gambling, including online gambling, in B.C.

Unregulated operators continue to scale up marketing in B.C., like the member’s alluded to, but across Canada, as well, where hundreds of unregulated gambling websites are targeting players through marketing campaigns and enticing sign-up bonuses.

BCLC has joined a coalition with other provincial entities, working with stakeholders in the system, to protect Canadians from the misleading advertising and operation of unregulated gambling websites, which do not provide employment or financial benefits to provinces and present risks related to money laundering, addiction and game integrity.

Ontario’s licensing of online gambling, in April 2022, has also led to increases in online gambling advertising across Canada, creating market confusion for customers and oversaturation of advertisements of gambling websites that are operating outside of the regulated industry in B.C. There are a number of tools to address these issues, but they lie with the federal government. I just want to let the member know that. Also, the gaming policy and enforcement branch is in PSSG, so the actual regulations are within the Ministry of PSSG.

P. Milobar: Has B.C. Lotteries done any calculations on what the anticipated, or estimated, leakage of revenues is to these sites?

[J. Tegart in the chair.]

[3:30 p.m.]

Hon. K. Conroy: The BCLC has about 62 percent of the market share of online gaming in the province. That was done by an external contractor with expertise in gaming marketing — that provided that analysis. So we’re missing about 38 percent of the market. There’s an updated analysis that is currently underway that they’re working on to get exact numbers.

I think it’s important to recognize that BCLC’s PlayNow.com channel is the fastest-growing part of the business, with consistent year-over-year growth. In fiscal year ’23-24, PlayNow.com expects to achieve revenue growth of 9 percent over last year’s fiscal year, with continued growth expected through to ’25-26. And Play­Now.com generates higher revenue per capita than any other regulated platform in all of Canada.

BCLC continues to drive the success of PlayNow.com, including through investments in strategic growth initiatives that include modernization of the platform and new products. Since 2013, BCLC has provided Play­Now.com to Manitoba Liquor and Lotteries, and in November ’22, it also launched in Saskatchewan under the contract to the Saskatchewan Indian Gaming Authority and Sask Gaming.

P. Milobar: So there’s a 38 percent leakage. What does the 38 percent translate to in actual dollars? That’s really kind of more of the crux in terms of what the taxpayers of B.C. are missing out on in terms of that 38 percent.

[3:35 p.m.]

Hon. K. Conroy: They figured out last year’s numbers, which they feel is approximately $280 million, which is a significant amount. That’s why they’re doing the work they are doing to try to change that trajectory.

P. Milobar: Thanks for that. It’s definitely something to keep an eye on. The dollars are definitely large enough to make sure steps are taken.

With that, I think we’ll transition over to the community benefit agreement questions. I’m doubtful Lotteries will want to answer those, but if they want to, they’re more than welcome. It’s up to the minister.

Hon. K. Conroy: If the member could just ask the first question, because then we can determine who we actually need to come in.

G. Kyllo: I certainly appreciate the time allotted me by the member for Kamloops–North Thompson.

With respect to the community benefit agreements, it was one of the hallmark changes that the current government actually undertook. With that, when the CBA agreements were initially put forward, British Columbians were informed that they were going to, at first, just apply to the Pattullo Bridge and Trans-Canada Highway construction four-laning improvements, largely.

[3:40 p.m.]

At the time that the CBAs were put in place, there was a focus on the building trade unions, at the conclusion of what would be considered more progressive unions — Christian Labour Association of Canada, Canada West, CISIWU, All Nations union.

Can the minister indicate or share what work was undertaken to determine which unions would participate and which unions would not be provided an opportunity to participate in community benefit agreements?

[3:45 p.m.]

Hon. K. Conroy: We just went and got staff in, and we wanted to confirm. With me in the room, additionally, is Assistant Deputy Minister Tiffany Ma, Carol Bishop from the Ministry of Finance and the CEO of BCIB, Irene Kerr.

We were just making sure staff got in here because the question the member was asking was when the CBA was the responsibility of the Minister of Transportation. None of the people here have that information. So what we’ll do is I’ll make sure that the question gets relayed to the Ministry of Transportation and get that question for the member in writing.

G. Kyllo: Great.

We’ve certainly seen significant cost escalation, both in horizontal and vertical construction projects, over the last number of years. We’ve also heard a lot of that cost attributable to what’s been identified both by government and the media and opposition as being a shortage of available skilled labour.

There are literally tens of thousands of additional workers that are ready, willing and able to work both on horizontal and vertical construction projects in the province today that are members of some of the more progressive unions — Christian Labour Association of Canada, Canada West, CISIWU, All Nations union.

As we see these significant cost pressures…. As even government has indicated, a lot of those cost pressures are attributable to a shortage of available labour. I wonder if the minister has given consideration and will give consideration to expanding the opportunity for progressive unions to actually bid and work on projects that are identified under the community benefits agreement.

[3:50 p.m.]

Hon. K. Conroy: About 65 percent of the contractors working on the projects with the CBA are members of the Progressive Contractors Association, and all skilled workers can apply to work at BCIB, regardless of their union affiliation.

G. Kyllo: I appreciate the response from the minister, but it was not the question that I’d asked. The Progressive Contractors Association is an association of a large number of companies, both unionized and non-unionized.

My question to the minister is that…. Currently the CBAs provide an exclusion where only members of 19 handpicked unions, members of the B.C. Building Trades, or they’re under the umbrella of the B.C. Building Trades, are actually allowed to work on community benefit agreement projects.

There are literally tens of thousands of additional unionized workers, members of the Christian Labour Association of Canada as one, probably one of the larger ones in B.C. with, I believe, upwards of 20,000 members. There’s also Canada West, CSWU, All Nations Union. There are a number of other unions.

The minister wasn’t able to share an answer earlier on what was a determining factor on why Building Trades’ unions were provided a monopoly at the exclusion of other, more progressive unions. As a follow-up to that…. The minister, I appreciate, was not there and part of that decision-making process.

The question now is: with significant cost pressure largely attributable, and the government has announced this themselves, to a shortage of labour, will the minister give consideration to expanding the scope of CBAs to also allow progressive unions, bringing in a lot more workers potentially able to work on these projects?

Will the minister look at considering expanding the CBA agreements to also provide the opportunity for other unions like Christian Labour Association of Canada, Canada West, CSWU or All Nations Union to actually participate and work on community benefit agreements?

[3:55 p.m.]

Hon. K. Conroy: Actually, there is no intention to change the policy right now, but there is so much work in this province that any tradesperson who wants to work in our province can be working. BCIB actually encourages all tradespersons who want to work to apply. In fact, they actually recruit them.

[4:00 p.m.]

When a tradesperson is hired, after 30 days, they are required to join one of the 19 affiliated unions, but they can keep their CLAC membership, for instance, if they choose. Tradespersons quite regularly can hold two or three union cards, depending on what projects they’re working on. Construction work is very cyclical. The member seems to be upset by that answer, but it’s reality in this province.

My father had two union cards. He did two different jobs. I did, briefly, for a while myself. I’ve talked to many union people that have multiple memberships because it depends on which project they’re working on. As I said, construction is cyclical. You don’t have one construction project for the rest of your life. It’s not like you’re working in a pulp mill for the rest of your life like many people I know in my community.

There’s no bias to other unions. In fact, as I said, tradespersons can have the opportunity to hold more than one card, and there is so much work in this province that there’s no reason for any tradesperson not to be working.

G. Kyllo: The minister mentioned there’s no bias, but there certainly was bias when excluding a significant number of workers that chose to be represented by different union affiliations.

This government has provided a monopoly to the building trades unions at the exclusion of all others. That’s very unfortunate. I’m going to move on, though.

Can the minister share with this House what efforts are undertaken within the Ministry of Finance to monitor and track what the costs attributable to CBAs are?

When the Minister of Transportation initially announced that the CBA project was going to be applicable to the Pattullo Bridge and Trans-Canada Highway expansion projects, the minister at the time indicated that the estimated cost of CBAs was between 4 and 7 percent. A considerable range but those were the numbers that the minister shared in the House.

Can the minister share what work has been undertaken to monitor and track the true costs associated with CBA agreements and what the magnitude of those costs may be? The minister may be able to confirm that cost variation of 4 to 7 percent is still true and, after the last four years of projects, may be able to validate that, or is it a different number?

[4:05 p.m. - 4:10 p.m.]

Hon. K. Conroy: Once the business cases for projects are approved by Treasury Board, the ministry works with the ministries that are responsible for those capital projects to update project costs on a quarterly basis, based upon spending, and any updates on CBAs are included in this as well.

[4:15 p.m.]

We know that CBAs cost between 1 percent to 4 percent of a project’s total budget. I believe that was the amount that was said last year, as well, in estimates. This is based on actual results, on completed CBA projects.

G. Kyllo: I appreciate the response from the minister. The minister is indicating that CBA costs are only 1 to 4 percent, and that’s interesting.

Infrastructure B.C. undertook a fairly extensive cost analysis and review of the Cowichan Hospital before it actually went to tender. My understanding was that that internal cost evaluation — about a 334-page report — clearly identified the two scenarios: a typical design-build or a CBA-type contract tender. My understanding is that the additional cost magnitude of moving to a CBA on that particular project was initially identified at over 24 percent.

I don’t have the exact numbers, because of course, I wasn’t provided a copy of the report. I think it’s an important internal government analysis of what the costs — the true costs, estimated costs — of CBA agreements are.

Is the minister willing to share and release the internal review that was undertaken of the Cowichan Hospital prior to it going to tender, which establishes a couple of different cost analyses on whether the project was tendered as a design-build or under a CBA agreement?

Again, my understanding is that that cost magnitude was actually a 24 percent increase of cost to let that contract go as a CBA. Now, I appreciate the minister may not have direct access to it, so if the minister would be agreeable to respond to that specific question in writing, I’d certainly appreciate that.

That’d allow me to maybe move on to an additional question. That has to do with the fact that the community benefit agreement applicable to the Cowichan Hospital….

I believe it was in early December that the Ministry of Finance came out with a revised cost estimate for the Cowichan Hospital. Although it was certainly government’s choice to move forward with the Cowichan Hospital as a community benefit agreement at a higher cost estimate, initially estimated between $600 million and $800 million, there was a revised estimate that came out by the Minister of Finance, I believe, in the last week of November or early December that pegged that project with a $455 million additional cost increase — the tune of, I believe, $1.45 billion.

Is the minister able to share with this House what the reasons and justification were for that significant cost increase of $455 million? What portions were attributable to material cost increases, and what portion of that cost increase was attributable to labour?

As a bit of context, Island Health came out with a news release that indicated that the cost increase was attributable to supply chain challenges and a shortage of available skilled labour. Again, I hope the minister might be able to provide a bit of information and context and whether she is tracking the difference in cost escalations.

What portion is material? What portion is labour? Then, also, if she has an opportunity to share with us: what work was undertaken by the ministry to determine that $455 million cost increase on the Cowichan Hospital?

[4:20 p.m. - 4:25 p.m.]

Hon. K. Conroy: The Ministry of Finance is responsible for reporting all of the changes across all of the ministries. We don’t report on why project budgets have changed for specific projects. So for that information, you need to go and ask the specific ministry.

What we do report on is what I said, and the revised estimate for Cowichan was publicly provided in our second quarterly report in’22-23.

[4:30 p.m.]

G. Kyllo: Can the minister confirm which ministry would actually have the responsibility? It’s my understanding that Island Health wouldn’t necessarily be responsible for the contract tendering process. The minister indicated that she’s not monitoring or managing the budget with respect to the Cowichan Hospital. Which specific ministry or Crown corporation would we be looking to, to seek that advice?

The Chair: Minister.

Interjection.

G. Kyllo: I certainly appreciate that. With respect to the community benefit agreement, the original agreement — the very first one, actually, in the province — was a project in my riding, Salmon Arm West. It was originally about 6.1 kilometres of four-laning. A community benefit agreement was put forward, which included a master section. The agreements, to my understanding, were let on an individual project basis. A different project came online. There was a CBA agreement that was specific to that project.

There was a change that was undertaken just a few years ago where the existing CB agreements were bundled into what’s called a harmonized community benefit agreement. I just wanted to confirm that the minister is familiar with that change and if she has the ability to actually answer any questions specific to the change from the original community benefit agreement to the harmonized community benefit agreement.

[S. Chandra Herbert in the chair.]

[4:35 p.m.]

Hon. K. Conroy: There’s always just been one document. The original document included only two projects, and as new projects were added, project definition appendixes, like the scope of the work for the projects, were developed and added to the original CBA,which became the harmonized version. It’s still the one document.

This is a public document. It’s readily available. In fact, the CEO and her team would be happy to walk you through it and answer any questions that you might have.

G. Kyllo: Thank you, Minister, for that response. I appreciate that.

The master section of the agreement and the original agreements that went out on July 17, 2018…. It’s my understanding that is the date on the first master section of the CBA agreement. Within that specific agreement, there was an article 9.505 of the CBA, and in this particular section it reads: “Indigenous contractors or Indigenous persons working on a project subject to, or as a result of, an agreement between the government of British Columbia and an Indigenous group may elect to obtain a permit under article 8.400, in which case a permit will be guaranteed by the union for the scope of the work set out in the permit request.”

Now, that was the language that was included in the initial CBA agreement. On March 1, 2022, which I believe coincides with the date of the harmonized agreement, that particular clause was removed. That clause diminishes the rights of First Nations to contract directly with the lead contractor for work on CBA projects. In article E on page 8 of the CDHRP addendum within the harmonized CBA agreement, it reads: “Article 9.505 of the community benefit agreement will not apply with respect to this project.” Now, that is in respect to the Cowichan District Hospital, specifically.

Can the minister advise or indicate why there was a modification and an exclusion which diminishes the rights of First Nations to contract work directly on the Cowichan Hospital, and, with that removal of that specific clause, which again diminishes the rights of First Nations, what consultation was undertaken, either directly with Cowichan Tribes themselves or any other First Nations groups within the province of B.C.?

[4:40 p.m. - 4:45 p.m.]

Hon. K. Conroy: The article the member refers to only pertains to projects where there is an impact-benefit agreement or an accommodation agreement with a First Nation. Impact-benefit agreements only occur on transportation-related agreements, not vertical projects like hospitals or schools. So that article doesn’t apply to the Cowichan project, for instance.

I realize there was a lot of misunderstanding about this. Again, the article only applies where there is an impact-benefit agreement or an accommodation agreement.

G. Kyllo: Thank you for that answer.

There’s, obviously, a great amount of concern both within Cowichan and a number of contractors. Jon-co Contracting, for one, continues to be sidelined and not to have the ability to work directly on that project.

The minister references the impact-benefit agreements, yet there is no reference to that anywhere within the master section that I could see. What I have heard from First Nation members in the province is…. They’re concerned that the exclusion of this specific clause diminishes the opportunity for First Nations to directly contract with the lead contractor to work unimpeded within their traditional territory and be forced to actually join one of these 19 handpicked unions. It’s a considerable concern to First Nations.

Can the minister share what information was shared or otherwise communicated with First Nations clearly setting out or identifying or indicating the reason for the exclusion of that specific clause?

[4:50 p.m.]

Hon. K. Conroy: As this is a Ministry of Health project, the member would have to refer the questions re consultation to the Ministry of Health.

I want to clarify that no contractor is required or at risk of becoming a unionized contractor. There’s very specific language in the CBA that protects them on current and future projects.

Actually, there’s a reference to this in the CBA. It’s article 9.505:

[4:55 p.m.]

“This article 9.505 applies only to and only in respect of the existing projects. Indigenous contractors or Indigenous persons working on a project subject to, or as a result of, an agreement between the government of British Columbia and an Indigenous group may elect to obtain a permit under article 8.400 in which case a permit will be guaranteed by the union for the scope of work set out in the permit request. For certainty, the provisions of articles 8.402, 8.403 and 8.408 will not apply to such permits. For clarity, an ‘Indigenous contractor’ and an ‘Indigenous person’ shall be those determined between the applicable Indigenous group and the government of British Columbia as communicated to the employer by the government of British Columbia.”

So it is there.

I want to just further state that one of my colleagues, the Minister of Indigenous Relations and Reconciliation, has talked to Chief Lydia of the Cowichan Tribes, and she has expressed that they are very pleased with how things are progressing on the project.

It is also my understanding that the contractor the member refers to has been awarded significant numbers of work packages on this project.

G. Kyllo: I appreciate the response from the minister. Certainly, it’s my understanding, as recently as last week, that Jon-co Contracting is still unable to actually work directly on the Cowichan project.

I appreciate the response from the ministry. The minister is responsible for the CBA projects, and it’s challenging when different projects and questions are put back to different ministries.

We had sent a letter specifically to the House Leader, asking specifically where we should bring any of the questions in and around community benefit agreements and BCIB, and we were directed that it was with the Ministry of Finance. So it’s unfortunate that the minister is not able to provide clarity on some of the questions and queries we have around some cost escalations on projects, which we believe is, in part, due to the community benefit agreements.

Just more in closing, there were a couple of things that I had asked for early on, and I just was hoping the minister might be able to confirm her willingness to provide those documents.

One has to do with the Infrastructure B.C. initial review of the different cost scenarios associated with the contracting of the Cowichan Hospital. It’s about a 334-page report that I referenced earlier. I’m just wondering if the minister may be willing to actually provide or release that report, so we actually have an actual copy of it.

Then the other piece would be with respect to the community benefit agreements.

The minister has referenced that the new cost estimate that has been undertaken by the ministry is that the CBA costs are between 1 and 4 percent.

Again, can the minister provide or direct us to any documentation or any report or an internal analysis that actually draws that conclusion? I certainly would be more than happy to receive and better understand what analysis the government is undertaking to determine that full cost.

If we go back to when these CBAs were first announced, back in 2018, the Minister of Transportation at the time indicated the cost was between 4 and 7 percent.

In my understanding, through this internal analysis that was initially done by Infrastructure B.C., it was 24 percent. So the minister’s comments about 1 to 4 percent…. If she has any data or any information that would support that, I certainly would be more than happy and welcome to receive it.

With that, I’ve come to the end of my time.

[5:00 p.m. - 5:10 p.m.]

Hon. K. Conroy: A lot of information here. In reference to the 1.4 percent that the member has referenced and that BCIB….

What it is, is BCIB costs, and then the differential costs that they actually do.

For example, they do considerable additional training for people that come and work on the projects, like Indigenous cultural training. They provide outreach.

They do considerable recruiting of underrepresented workers. There are more women, more Indigenous people working on CBA projects than most other construction projects in the province.

They’re actually doing payroll services for contractors who provide their services to the project. We know that 92 percent of the contractors in the province actually have less than 20 employees, and the BCIB will do HR work for them.

We actually have a quote from Mike. He’s a subcontractor on the Chase East project that I think the member referenced, Chase West to Chase Creek bridge, and he says: “As a subcontractor, it doesn’t cost me anything to work with BCIB. BCIB helps new tradespeople enter the workforce and join the union, which is good for the workers. BCIB offers win-win solutions to help the project move forward. I can name hire, so I pick and choose my crew. I pay one paycheque to BCIB instead of paying a dozen paycheques to my crew, so it’s a smooth process.”

So it’s actually helping contractors in the province too. There are quotes from other contractors, and there are also quotes from people that are working on the projects who talk about getting pension and benefits and good wages. There are a number of positive things, but that’s also what’s contributing to the 1.4 percent that the member keeps referring to.

As far as the report that the member is referring to, it is not a report that any of us have. We’ll have to get some more information and get that back to you in writing.

With that, Mr. Chair, we need to take a quick break.

The Chair: Thank you, Minister. We will take a short recess. Thank you, Members.

The committee recessed from 5:12 p.m. to 5:18 p.m.

[S. Chandra Herbert in the chair.]

The Chair: All right, let’s call this committee back to order. We’re here with the Ministry of Finance estimates.

P. Milobar: I’ve got a few questions for the minister. It’s in relation to page 26 of the budget book, the 2022 shared recovery mandate. Very quick and easy — quick one. Can the minister confirm that the first year, year 1, was fiscal year 2022-2023 of the three-year agreement?

Hon. K. Conroy: Yes.

P. Milobar: That would mean we’re in year 2 of it. The BCNU has settled and ratified, which, from my understanding, is the final agreement that needed to be done. There are the wage mandate contingencies for ’23-24, and the description is not knowing what inflation rates were going to be and other issues within a settlement. But in year 2, it’s 5.5 percent, plus the potential cost-of-living adjustment to a maximum of 6.75 percent.

[5:20 p.m.]

How much of the wage mandate contingencies for ’23-24 of the $2.2 billion set aside has actually been needed to be used, now that most of these cost pressures have actually been fleshed out over the length of time here?

Hon. K. Conroy: If the member would like to ask another question while she’s looking up the actual number, then we can speed things along.

P. Milobar: Sure. Thank you.

My understanding, in seeing what was published in media around the BCNU agreement, was that they were happy that there were some commitments made around staffing ratios and patient ratios and things of that nature with the nurses — other areas that were being described as very unique and first-time-ever type of clauses.

Most unions…. The government has me-too clauses within their collective agreements that would have been settled well in advance of the BCNU. Did the BCNU agreement trigger me-too clauses with the other unions?

Hon. K. Conroy: No to the me-too clause. Even though we’ve ratified or have tentative agreements on 90 percent of the agreements, we still have 61 outstanding agreements. So it wouldn’t be appropriate to share what’s left in the contingencies. We’re still bargaining.

P. Milobar: Was there any consideration given, any evaluation done, when the agreement with the BCNU…?

I guess I’ll preface this. I don’t want the Nurses Union to think I’m attacking them. They just happen to be the latest agreement, and I fully respect and understand the collective bargaining agreement and the rights of people to bargain and get the best deal for their members. That’s their job as union representatives.

It was the last current bigger agreement. It was characterized as completely new areas that they were going into. Was there an evaluation done in terms of the potential me-too clauses kicking in with other unions? If they haven’t already, was there any anticipation that that might actually happen, moving forward?

[5:25 p.m.]

Hon. K. Conroy: The answer is yes. They did do an evaluation, looked at all of the other negotiated contracts, and there are no concerns. So yes, they did some work.

P. Milobar: What was the final cost-of-living increase for year 2? Was it the 5.5 percent, was it 6.75, or was it somewhere in the middle?

Hon. K. Conroy: We’re just confirming the number, if the member would like to ask another question.

P. Milobar: Just further clarification on the descriptions. It could be that the ’22-23 was missing when I looked at the numbers.

I’m assuming that the…. The description is that the 2022 shared recovery mandate is estimated to cost $10.8 billion over the three-year mandate term, 2022-23 to ’24-25, with an annual ongoing cost of $5.4 billion. But when you add in the ministry-based budget increases, it’s $4.8 billion. The numbers don’t quite jibe with where this is at with the $10.8 billion. I’m on page 26, just so that your staff can be looking at the same chart.

It says $15 billion over the three years. Again, I’m back to that original question. I’m just trying to figure out the total cost structure now that there are much better lines of sight on what the percentage increase in year 2 was, which is significant. It’s understandable that there would have to be a contingency there.

Outstanding agreements that have now been settled with most of the major unions out there in terms of numbers of people. The year 1 and 2 flexibility allocation of up to a quarter of a percent in years 1 and 2 to support mutually beneficial outcomes of both parties would be known by now. So all those various cost pressures are known. I’m trying to get a sense of what the actual, true cost of the 2022 mandate has been in year 1, will be in year 2 and what it’s projected to be in year 3.

[5:30 p.m.]

Hon. K. Conroy: The reason that ’22-23 isn’t here is because this is a forward-looking document.

In ’22-23, the number was $1.2 billion. The COLA for…. The member was asking for the COLA. It was 6.75 percent.

P. Milobar: The total cost increase, in actual dollars, in 2022-2023 was $1.2 billion. A 6.75 percent wage increase.

What is the actual dollar value increase that’s being assigned to the overall package of wages and benefits? The reason I’m asking this is….

A lot of the focus on agreements ties in heavily with the wage increase, the percentage of the wage increase. We all know that benefit packages make a big difference, and changes to a benefit plan make a big difference to the cost structure and to the taxpayer. We also know….

There were several agreements where this happened. There was a jumping of steps. If you were at step 4, you suddenly went to step 6 on the pay grid, things of that nature, which can actually accelerate and accumulate very quickly what the actual dollar value of an agreement is. On paper, it may have been a 6.75 percent increase, but in actuality, the cost is much higher than that.

What is the actual dollar figure value increase for each individual year, the cost to the taxpayer? How does that translate to what the ministry feels is the percentage increase to what the overall cost of the same comparable was the previous years before this 2022 mandate came in to be?

[5:35 p.m. - 5:40 p.m.]

Hon. K. Conroy: The benefits or changes to steps or…. They all come out of the same mandate, and the ministry takes into account the total cost of incremental steps. They do a very refined drilldown when they assess the costs. So they take into consideration steps that are moving up. They take that all into consideration for the total cost. So the 6.75 percent is based on the total compensation.

The member asked about the specific numbers, and they’re exactly as they’re portrayed on page 26: $1.2 billion in 2022-23, $4.341 billion in 2023-24, and $5.301 billion in 2024-25.

The member also asked if this year’s wage mandate was any different and how we determined it. It’s determined exactly the same as it was in 2019, as well as in 2014.

P. Milobar: Well, some of that didn’t make sense in that if I’m the worker and I’m being paid, for the sake of easy math, $100,000 a year, the 6.75 percent increase goes directly to the worker. It’s not that the worker gets…. The step and everything else is irrelevant to that 6.75 percent.

That was the purpose of the question. When there are step changes, if somebody goes…. We’ll just say that if you’re making $100,000 a year and your next step change would take you to $105,000, and you get your 6.75 percent on top of that, which would be standard, that would be $112,000.

If I go from $100,000, jump past the $105,000 step and go straight to $110,000 step, which some of these agreements have done — not the dollar figure, but they’ve taken you from step 4 to step 6, I think it was, or in that nature, where you were leapfrogging and bypassing a step in pay — that person now would go from $100,000 to $106,000 to, suddenly, $110,000, which translates to $117,000 with the 6.7 percent wage hike on top of it. So the step actually makes a big difference to the overall pay packet, cost-wise, to the government.

What I’m trying to drill into…. We’ve seen in the past where wage mandates were billed as zero, zero and three, and with further investigation, the zero, zero and three actually equalled 11, as a cost to the taxpayer, not three.

I get that the public likes to look at…. We all talk about it, in terms of the percentage of wage increase on wage settlements, but we all know that there are significant other costs associated with any type of collective bargaining. That’s a change to a benefit plan which could change the cost structure quite dramatically, either adding or dropping medications or services, deductible levels, all of those types of things, all part of the negotiation. But so does moving around how people are classified and which pay level they’re at, especially if they get to advance past one more quickly.

Now, the minister has said that the number is the same as in the budget, except the minister can’t confirm how much of that $4.3 billion, of which $2.2 billion is contingencies, is actually needed. There’s a base cost of staffing costs before the ’22 mandate came in for government.

[5:45 p.m.]

I’m simply asking not what percentage of the wage increase, the 6.75 percent was, but: what is the percentage increase, in real terms, between what was being spent by government on wages and benefits for the same employee groups versus now?

In other words, again to use round numbers, if $50 billion was being paid on wages and benefits, which I know is high, but if that was the number, did it go up by 5 percent, 6 percent, 8 percent? Not what the individual wage increase was; the overall cost percentage increase.

By the looks of the staff nodding their heads, they get where I’m going with this and what question I’m asking. So I’m hoping we can get an answer.

It’s not meant to be a gotcha question. We could do the math ourselves, but until we know how much of the wage mandate contingencies are needed, we can’t do that math, as opposition. We need that number. It’s a pretty critical number when it’s $2.2 billion out of a $4.3 billion line item.

[5:50 p.m.]

Hon. K. Conroy: Just to be clear, if there are no changes to the increment system — no changes at all — it’s not costed. It’s part of just regular costs. If there are changes to the increment system, then it’s costed as part of the mandate. There are no changes to the mandate if it’s not costed. But there are changes to the mandate if it’s costed to the mandate, if there are changes. So they take everything into consideration. Everything that the member said — they take that into consideration. I’m not sure if that answers your question.

Also, the numbers I gave at the bottom of page 26 are the numbers we can share. Again, we’re not finished bargaining. So we’re not releasing numbers right now on what’s still available.

P. Milobar: Well, that didn’t actually address the question. Again, I get that the general wage increase in year 2 is 6.75 percent. But there are other costs that go into wages and benefits. I’m trying to make sure that we are using accurate numbers, because if I start pulling out from each ministry, then we’ll find out: “Oh, no, that really was a different number.”

If you’re spending $20 billion in wages and benefits with this new mandate, it’s more than $20 billion plus 6.75 percent, because there have been step changes. That’s just one of the factors that would go into a cost. I would find it hard to believe that benefit plans have gotten cheaper, let alone that unions would negotiate a lesser benefit plan for their members. Now, they may have, as the trade-off of getting the 6.75. But I doubt it. That would be within their right as a bargaining unit to do that.

I’m not taking issue with any of that. I’m trying to get to the bottom of what the true cost to the taxpayer was with the settlements. Based on what the base costs of wages and benefits were to the taxpayers of British Columbia going into negotiations of the 2022 shared recovery mandate….

[5:55 p.m.]

We’ve already dealt with one full year. We’re already trucking along in year 2, which is the biggest lift of the three-year deal. The steps would have all been adjusted for. The retroactive pay would’ve been accounted for now, as bargaining happened through year 1.

I’m trying to get what the actual percentage cost change to the taxpayer was, not what the wage percentage increase to an individual employee was; what the percentage cost increase was based on the cost for wages and benefits previous to this new three-year deal.

Hon. K. Conroy: What I can say to the member is the overall cost that you see in the budget includes the wages and any other costs. But things like pensions, for instance, are part of the wage costs. That’s not an additional cost. So it includes all the costs in the number there, the overall wage cost.

It’s really too premature to be sharing the actual overall cost with the member or anyone, because the process is still ongoing. There are still a number of agreements that haven’t been signed yet or ratified.

[6:00 p.m.]

Until all the agreements are ratified, we can’t answer that question. We’re not trying to…. The number there is what we’re estimating is the cost, but we can’t give actual numbers until bargaining is completed and contracts are ratified.

P. Milobar: Well, I asked about the $10.8 billion. When you add the $1.2 billion the minister mentioned for ’22-23, with the $4.3 billion and the $5.3 billion, that gets you the $10.8 billion over the three years. So I can understand where that number came from.

What I can’t understand though, is how $1.2 billion in ’22-23 covered off a flat increase of 25 cents an hour — which, according to some unions, equated to about a 0.76 percent wage hike — as well as a 3¼ percent wage hike, 3.24 percent. All of that was able to be covered off with $1.2 billion.

[J. Tegart in the chair.]

Then you go to year 2 and a 6.75 percent wage hike, which is essentially doubled from year 1. You now need not $2.4 billion — and not even, because of compounding, $3 billion or $3½ billion — but $4.3 billion.

There have to be significant added costs, at some point, in year 2, based on the number the minister has provided for year 1 of the agreement. That’s the problem, right now, that people are having with trying to understand where this agreement is landing: what is the true percentage cost increase to taxpayers?

I’ve only had estimates with this minister this year for a couple of days, but I know enough of where to cut my losses. She’s not going to cough up any more numbers, I would suspect, on this. The math isn’t making any sense, in what is being identified — if there are not significant cost pressure changes within year 2, in the laddering and acceleration of changes to people’s pay grids — because we go from $1.2 billion to $4.3 billion.

I’ll move on to the employer health tax instead, because time is precious these days in estimates. I found it interesting yesterday, when the Third Party was in, questioning the minister about employer health tax. Perhaps she found it strange too, because last I checked, the Third Party was still part of CASA when the employer health tax came in. In fact, they voted in favour of the employer health tax.

At the time, we, in the opposition, were pointing out things around thresholds, around the percentage, about needing to have it flexible to start being adjusted moving forward. Believe me, we’re glad to hear that the Green Party has finally come on board with that. We’re a little disappointed that they voted to support it in the first place, when we were pointing out that it was flawed and going to have a significant cost pressure, moving forward — to small businesses, especially.

Nonetheless, this is always an interesting place, with how people’s opinions change as election cycles come and go. The Leader of the Third Party wasn’t wrong in questioning the minister on this year’s budget, in particular, as it relates to the employer health tax. Last year, I believe, it was projected to be collecting around $2.2 billion for this year. Instead, it has now increased to $2.7 billion. So an extra $500 million is projected to be collected by employer health tax.

I asked the former minister, last year, the same question, as to why there’s not an adjustment back — either on the percentage paid on your payroll or a lifting of the threshold where it triggers that you will have to pay this tax, or a combination of both.

When the employer health tax was first brought in, there were forward-looking projections of the employer health tax for the government to offset medical costs. It is now far exceeding what the government was projecting it was going to collect. In fact, it’s far exceeding what MSP was collecting when it was replaced with the employer health tax.

[6:05 p.m.]

I guess the question is: why is the government not adjusting the thresholds and/or the percentage paid when you start looking at the competitive structure, cost structure of business in B.C., when you compare it to neighbouring jurisdictions on something around this?

[6:10 p.m.]

Hon. K. Conroy: Just to clarify, in reference to the last statement the member made, the $1.2 billion, as far as the wage mandate goes, is reflective of the cost of the agreements the ministry expected to ratify by March 31, at the time we finalized the budget. It doesn’t include all the agreements we expect to ratify by the third year. Just to answer that for the member.

The employer health tax is a critical part of how we fund health care services in B.C. It’s actually the lowest payroll tax in Canada. More than 85 percent of B.C. businesses, including many small businesses, don’t pay the employer health tax. Every year we take a look at the thresholds as part of the budget process, and we will do that again this year.

P. Milobar: I’m sorry. I’m just confused by the minister’s….

My understanding is that the 2022 mandate is dealing with contracts that were expiring in the 2022-2023 fiscal year. That would be for year 1. Year 2 is ’23-24, and so on. We’re in year 2, ’23-24. These would all be retroactive agreements. People were not working last year without a contract while they were negotiating. Or am I misunderstanding? That cost would still need to be picked up.

Is the minister saying that because the fiscal year closed out…? They just closed it out at $1.2 billion, and then they’re going to have to, basically, back-date money to finish up the agreements as these agreements get signed off. That is the first part.

With the employer health tax…. Ontario and Quebec have been taking steps to look at the competitiveness of small businesses. B.C. has been layering on costs to small businesses at the same time. There is a national competitiveness issue happening, let alone that we’re right next door to Alberta, which has a great many less taxes than British Columbia does.

In the modelling that was used this year to try to anticipate $2.7 billion worth of revenues…. Did that already take into account the anticipated…? At that point, short of guidance from government, the law would say that the minimum wage had to go up by the rate of inflation, which would be 6.9 percent, and that turns out what government still stuck to.

Did the ministry calculate the $2.7 billion coming in on minimum wage going up by 6.9 percent into their calculations, or is that going to be an extra bonanza of funds for government now that that is what the new wage structure will be moving forward in June?

[6:15 p.m. - 6:20 p.m.]

Hon. K. Conroy: We forecast EHT based on total growth of B.C. compensation in wages and salaries across the economy. The member can actually go to page 106 of the budget, and it discloses the numbers that were used to calculate the EHT.

P. Milobar: I’ll peruse that while waiting for the next answer then.

The minister has indicated several times, and previous ministers as well, with employers health tax, that 85 percent of businesses do not pay the tax. However, our understanding is that a significant portion of the 85 percent would include self-incorporated contractors and holding companies — those types of businesses that have no employees so would automatically not pay the tax.

Can the minister share with us just how much of that 85 percent is actually made up of those types of businesses versus actual small businesses that would be like a corner store with an employee-type scenario?

Hon. K. Conroy: Just in light of time, we’re just going to find that number and relay it to you. If not, we will…. The businesses that the member referred to. But if the member was referring to a small business grocery — the member said a corner store that had one employee — they obviously wouldn’t pay the tax either.

[6:25 p.m.]

P. Milobar: No, I understand they wouldn’t. But the minister and the government continually say 85 percent of small businesses don’t pay the tax. We’re trying to find out how many that most people would not consider small businesses. As I say, the holding companies. That is why. I was using the corner store as a representative of what someone would, in their mind’s eye — or a flower shop or something like that — consider a small business. Where there are one or two employees, and it conducts regular transactions with other people and things of that nature, and it interacts in their community. When people hear small business, that’s what people think.

When they hear 85 percent of small businesses don’t pay the employer health tax…. That’s, frankly…. The framing and the marketing the government has to make it sound as if all these small businesses don’t pay employer health tax. There’s a very large portion of GCPE that would help with that messaging, I’m sure. The point being that, with the minimum wage increase now, a business with 14 full-time employees will need to be paying employer health tax. Now 14 full-time employees is not that large of a store or a small business.

So of the 15 percent of businesses that are paying, that makes up a large, large portion of what people out in…. I think most people don’t understand or realize, nor why would they care, just how many holding companies and things like that are out there on the books and classified as a small business when, in fact, they don’t really meet that test to what the public consider…. So that is why we’re looking for that.

The reason I’m asking is it’s about competitiveness. When you take a layering of cost pressures to a small business, a true small business, in this case, one with 14 employees, they will now for sure, regardless of what they pay their employees, because by law they will be triggered over the $500,000. They’re also on the hook for five sick days. That’s approximately $500 million a year overall to business. Five sick days in a year is about a 2 percent cost hit to a business. Five days is about a 2 percent payroll cost.

The property tax and split assessment value of all real estate is up by 11 percent versus 2022. That’s a direct impact to small business. Office rents are up. Storefront rents are up. WorkSafe premiums for restaurants, many of which are small businesses, many of which would have 14 employees because of the nature of the food service industry, in terms of front-of-house and back-of-house staff…. WorkSafe premiums are up 20 percent for restaurants.

So when the employer health tax jumps up by $500 million with no recognition from this government that that might be an added cost pressure to businesses, that it might be time to start looking at adjusting down the percentage paid or upping the threshold before you pay it or both so that it syncs up with what’s happening with wage increases…. It looks like the compensation of employees is expected to change by 6.3 percent in 2023. Businesses start to feel like this is now being used as a bit of a stick over the head for revenues for government.

To put this in perspective, the government is banking on small businesses to increase funding for employer health tax at the same if not higher rate, by the time the year end finally rolls around, than what the Health Minister and Premier were able to negotiate out of the federal government for a health transfer in a year. That’s about $600 million a year.

That’s the problem. The ratios are starting to come way out of whack. That is why small businesses…. We have BIAs here representing small businesses in our downtowns across the province this week. That’s what they’re saying, and it seems to be falling on deaf ears from the government. When you add on that this is a tax, which means it’s not a deduction, which means that the business is required to pay it whether they’re profitable or not, it becomes a very real stress for a lot of these small businesses.

Again we were told the same thing last year: that the government will review, but no change was made. What will it take for the government to actually change the thresholds or the percentages, then, other than continually saying they’re going to review it? Continuing to review, year after year, without actually changing any of the percentages or thresholds, is a meaningless exercise.

[6:30 p.m.]

So what will it actually take? What would be the tipping point for this government to actually agree to either raise the thresholds or change the percentage down or a combination of both?

[6:35 p.m.]

Hon. K. Conroy: Business competitiveness is not solely dependent on taxation but rather a wide range of factors that drive economic productivity. For a small, open economy like B.C., factors such as access to talent and capital, high-quality physical and social infrastructure, strong public health care and a business climate that supports innovation are key to gaining advantage in the global marketplace.

We recognize the importance of listening to business owners and entrepreneurs to help them grow and succeed. This government has taken steps to support B.C. businesses through the taxation system.

These supports include expanding access to the small business corporate income tax rate so businesses can invest and grow while still benefiting from the reduced rate; eliminating the provincial sales tax on electricity for businesses; continuing to provide tax credits to support numerous industries, such as film, research and development, shipbuilding, book publishing, clean technology, construction — such tax credits have helped to reduce cost to employers and allow these businesses the opportunity to reinvest profits to hire and retain employees; undertaking the property assessment strategic review to find a long-term solution that will provide relief to certain small businesses paying high property taxes; and expanding the hydrogen exemption for motor fuel tax, reducing input costs and benefiting businesses in the transportation sector.

We also have a low corporate income tax rate. At 2 percent, B.C. is tied with Alberta for the fourth-lowest small business corporate income tax rate among provinces. B.C. has also expanded access to this rate so that more businesses will be able to scale up while remaining eligible for the reduced rate for longer. At 12 percent, B.C. is tied with Saskatchewan and Manitoba for the fourth-lowest general corporate income tax in the country.

I have to tell the member: I have been travelling around quite a bit in B.C. after tabling the budget. I’ve talked to many chambers of commerce, boards of trade and small businesses. What I hear from them…. One of the biggest issues for them is labour and the need for housing for their employees, so our housing program is going to help that. Our Future Ready program, which the minister just announced, is going to help small businesses to get funds to be able to actually hire people and get the skills they need.

One of the biggest factors that people are talking about is the fact that last year, 75 percent of the people returning to the workforce were women, and it’s directly attributed to our child care program. Not only are employers talking about the fact that they are finding women that want to come back to the workforce because they have child care. They’re also talking about the fact that, because of the money that people are saving on child care, we’re putting up to $900 back into people’s pockets. They’re spending it on….

The member can roll his eyes, but these are important statistics for small businesses.

Those people are investing that money right back into the small businesses in their community. They’re not investing offshore or doing other things with that money. They’re taking it to the small businesses in their community.

Small businesses are telling me that they’re seeing more people coming and shopping in their stores, and it’s especially attributed in communities that have the $10-a-day, or less, child care, because those people are investing that back at home.

People are telling me that they can afford to invest and save. They’re buying homes. In our area, people are actually getting a vehicle, because they need vehicles to get around. That is an investment in the economy. It’s definitely an investment in small businesses.

Those are the other things that we’re doing. The member can talk about very specific things, but when you look at the big picture, there are a lot of things that are going on that help small businesses, and that’s what I’m hearing from them. I just want to make sure that people remember that.

P. Milobar: Well, the reality is that you have to actually be profitable for tax rates to matter. Employers health tax, which is what I was talking about, is being paid whether you’re profitable or not. It’s a cost that the government says: “Thou shalt give us your money, and you figure out how to get it to us.”

Competitiveness and affordability are critical. The minister can talk about our competitive advantage around high-quality health care. Our cancer care system has plummeted in national rankings, and 20 percent of British Columbians don’t have a family doctor.

[6:40 p.m.]

In my city, it’s actually 40 percent. Our obstetrics clinic’s going to close in the next month and a half, with no relief in sight. Hardly a competitive advantage. In fact, we have doctors not wanting to locate into community because of what’s going on. We have professionals, professional couples — an engineer and a lawyer or a doctor — that can’t afford the housing in British Columbia and are choosing….

In fact, we have the highest interprovincial migration rate that we have seen on a yearly basis since the’90s. That’s mainly because Alberta started a move-to-Alberta campaign last year.

Now the minister is the one rolling eyes and scoffing.

Well, let’s look at this. B.C.’s housing affordability in Canada. It takes $268,000 of yearly income just to afford a standard home in Vancouver. It’s about $110,000 a year in income to afford rent in Vancouver — rent — and $110,000 is well past the rent subsidy limit that this government has put in place for their rent rebate.

The tech sector is experiencing headwinds. According to BetaKit, the tech outlook for 2023 is weak.

Revelate Data, formerly Ticksmith; Bridgit; Reach; E Automotive Inc.; and Leaden have all confirmed to BetaKit that they have made layoffs in December of 2022.

Properly, TealBook, D2L, Symend and League have all made layoffs in November of 2022.

Hootsuite laid off 400 employees, which amounted to a 30 percent reduction in staff in August, according to Daily Hive.

Software company Unbounce announced layoffs August that impacted 47 employees as part of a restructuring and a reduction. Thinkific announced layoffs earlier this year.

In March 2022, 100 employees were let go. January 2022 — Vancouver-based cancer biotech company Zymeworks let go of over 100 employees as part of a company restructuring, and another 20 percent layoff of staff for Appnovation.

Indeed has said the job postings on its site for Canadian tech roles have dropped by 32 percent since May and show no signs of stabilizing.

That’s but one sector.

I know the minister is well versed on the turmoil going on in the forest sector. I know the minister very well knows the delay in permits.

The lag this government has created in trying to process any type of permitting doesn’t exactly help competitiveness for businesses and small contractors and that waiting on government paperwork to get done.

Of course, this government’s response was to hire more people to clog up the system instead of just speeding up the system itself. It’s like that in mining. It’s like that across the sector.

The question, back to the minister, that she once again skillfully, completely avoided trying to come anywhere close to answering, was: what would it take…?

What is the trigger point for this government to seriously consider changing either the threshold that triggers employers health tax or the percentage paid of employers health tax or a combination of both?

What would it take for this government?

Would it be that you’re projected to collect $3½ billion? Is it that that would be deemed to be just getting a little too greedy on the backs of small businesses?

Is it that the economy has to be tanking?

What is the trigger point by this government where they will seriously consider the repeated calls from small businesses and the chambers of commerce of B.C. to properly address the employers health tax?

[6:45 p.m. - 6:50 p.m.]

Hon. K. Conroy: In response to the member’s question, every year the ministry staff and the minister consider each tax measure and consider those tax measures seriously.

We also consider, in combination with each other, how those tax measures interact with each other.

We use standard measures you would expect with tax policies — these are standard measures that have always been used with tax policies — and then we look at equity within a group of taxpayers, the state of the economy and the effect the tax mix would have on the economy and the revenue needs for the province.

We’re looking at that, trying to figure and making sure we have everything in. Then we also look at work with other ministries and initiatives from other ministries. The Future Ready put a massive investment that will directly benefit small businesses. As I said, the child care initiatives.

Before I wrap up, the member talked about affordability issues, and I think we need to remind the member of the significant number of affordability measures that are actually in the budget that he hasn’t talked about. I mean, expanding K-to-12 school food programs right across the province has been…. People are talking about that, how much it’s helping them.

He made some disparaging remark about the low-income renters tax credit, but I haven’t talked to anybody who hasn’t said that they’re really happy about it.

A permanent increase to the B.C. family benefit plus a $500 increase to single parents. Again, that is money that goes right back into small businesses in their community.

A significant increase to the climate action tax credit. People that were getting 200-some dollars last year are getting $500 this year. I mean, it’s significant. Another B.C. affordability benefit in April.

People are getting those dollars in their bank accounts, and they’re spending it right back in their local community.

They’re also knowing that this is funding that’s helping them to deal with some of these affordability issues. Lowering the child care bills has been significant. Reducing ICBC rates. I didn’t have anybody who said they weren’t happy about the $100 credit on their power bill in December. People were really happy about that.

All of it adds up. There’s nearly $2 billion in cost-of-living relief for people.

This budget makes things easier for people. We haven’t had a chance to talk about that. The member hasn’t asked any questions about that, here or in question period, but that’s another story.

I move that the committee rise and report progress and ask leave to sit again.

Motion approved.

The committee rose at 6:55 p.m.

The House resumed; Mr. Speaker in the chair.

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

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

Hon. D. Coulter moved adjournment of the House.

Motion approved.

Mr. Speaker: This House stands adjourned until 10 a.m. tomorrow.

The House adjourned at 6:56 p.m.