British Columbia Hansard — Monday, November 3, 2014

20141103pm-Hansard-v17n2

British Columbia — Debates (Hansard)

Th ird Session, 40th Parliament OFFICIAL REPORT OF DEBATES OF THE LEGISLATIVE ASSEMBLY (HANSARD) THE HONOURABLE LINDA REID, SPEAKER ISSN 0709- 1281 (Print) ISSN 1499-2175 (Online) Monday, November 3, 2014 Aft ernoon Sitting Volume 17, Number 2

PROVINCE OF BRITISH COLUMBIA (Entered Confederation July 20, 1871) LIEUTENANT-GOVERNOR Her Honour the Honourable Judith Guichon, OBC Third Session, 40th Parliament SPEAKER OF THE LEGISLATIVE ASSEMBLY Honourable Linda Reid EXECUTIVE COUNCIL Premier and President of the Executive Council .............................................................................................................. Hon. Christy Clark Deputy Premier and Minister of Natural Gas Development and Minister Responsible for Housing ......................Hon.

Rich Coleman Minister of Aboriginal Relations and Reconciliation ......................................................................................................... Hon. John Rustad Minister of Advanced Education ............................................................................................................................................ Hon. Amrik Virk Minister of Agriculture ........................................................................................................................................................ Hon.

Norm Letnick Minister of Children and Family Development ....................................................................................................... Hon. Stephanie Cadieux Minister of Community, Sport and Cultural Development ........................................................................................... Hon. Coralee Oakes Minister of Education ..................................................................................................................................................... Hon.

Peter Fassbender Minister of Energy and Mines and Minister Responsible for Core Review .....................................................................Hon. Bill Bennett Minister of Environment ..........................................................................................................................................................Hon. Mary Polak Minister of Finance .................................................................................................................................................. Hon.

Michael de Jong, QC Minister of Forests, Lands and Natural Resource Operations......................................................................................Hon. Steve Th omson Minister of Health ............................................................................................................................................................... Hon. Dr. Terry Lake Minister of International Trade and Minister Responsible for Asia Pacifi c Strategy and Multiculturalism ..................Hon.

Teresa Wat Minister of Jobs, Tourism and Skills Training and Minister Responsible for Labour ...................................................Hon. Shirley Bond Minister of State for Tourism and Small Business ....................................................................................................Hon. Naomi Y amamoto Minister of Justice ...............................................................................................................................................................Hon.

Suzanne Anton Minister of Social Development and Social Innovation......................................................................................................Hon. Don McRae Minister of Technology, Innovation and Citizens' Services ................................................................................... Hon. Andrew Wilkinson Minister of Transportation and Infrastructure ......................................................................................................................Hon.

Todd Stone LEGISLATIVE ASSEMBLY Leader of the Offi cial Opposition ...................................................................................................................................................John Horgan Deputy Speaker .............................................................................................................................................................................Douglas Horne Assistant Deputy Speaker ...............................................................................................................................................................

Raj Chouhan Deputy Chair, Committee of the Whole ....................................................................................................................................... Marc Dalton Clerk of the Legislative Assembly ................................................................................................................................................... Craig James Deputy Clerk and Clerk of Committees .................................................................................................................................

Kate Ryan-Lloyd Sessional Law Clerk ...................................................................................................................................................Roderick MacArthur, QC Sergeant-at-Arms ................................................................................................................................................................................. Gary Lenz

ALPHABETICAL LIST OF MEMBERS Anton, Hon. Suzanne (BC Liberal) .............................. Vancouver-Fraserview Ashton, Dan (BC Liberal).....................................................................Penticton Austin, Robin (NDP) ................................................................................ Skeena Bains, Harry (NDP) ....................................................................Surrey-Newton Barnett, Donna (BC Liberal) ............................................... Cariboo-Chilcotin Bennett, Hon.

Bill (BC Liberal) ...................................................Kootenay East Bernier, Mike (BC Liberal) ................................................... Peace River South Bing, Dr. Doug (BC Liberal) ................................ Maple Ridge–Pitt Meadows Bond, Hon. Shirley (BC Liberal) ........................... Prince George–Valemount Cadieux, Hon. Stephanie (BC Liberal) ................................Surrey-Cloverdale Chandra Herbert, Spencer (NDP) .................................Vancouver–West End Chouhan, Raj (NDP) ...........................................................

Burnaby-Edmonds Clark, Hon. Christy (BC Liberal) ........................................ Westside-Kelowna Coleman, Hon. Rich (BC Liberal) ...........................Fort Langley–Aldergrove Conroy, Katrine (NDP) .............................................................. Kootenay West Corrigan, Kathy (NDP) ..................................................... Burnaby–Deer Lake Dalton, Marc (BC Liberal) ............................................. Maple Ridge–Mission Darcy, Judy (NDP) ..................................................................New Westminster de Jong, Hon.

Michael, QC (BC Liberal) .............................. Abbotsford West Dix, Adrian (NDP)............................................................Vancouver-Kingsway Donaldson, Doug (NDP) ......................................................................... Stikine Eby, David (NDP) ..........................................................Vancouver–Point Grey Elmore, Mable (NDP) ................................................... Vancouver-Kensington Farnworth, Mike (NDP) ............................................................ Port Coquitlam Fassbender, Hon.

Peter (BC Liberal) ................................... Surrey-Fleetwood Fleming, Rob (NDP) .......................................................... Victoria–Swan Lake Foster, Eric (BC Liberal) .......................................................Vernon-Monashee Fraser, Scott (NDP) ............................................................Alberni–Pacifi c Rim Gibson, Simon (BC Liberal) ............................................. Abbotsford-Mission Hamilton, Wm.

Scott (BC Liberal) .................................................Delta North Hammell, Sue (NDP) .................................................... Surrey–Green Timbers Heyman, George (NDP) .................................................... Vancouver-Fairview Hogg, Gordon (BC Liberal) ............................................... Surrey–White Rock Holman, Gary (NDP) .......................................Saanich North and the Islands Horgan, John (NDP) .......................................................................

Juan de Fuca Horne, Douglas (BC Liberal) ..............................Coquitlam–Burke Mountain Hunt, Marvin (BC Liberal) ....................................................Surrey-Panorama Huntington, Vicki (Ind.) ..................................................................Delta South James, Carole (NDP) .........................................................Victoria–Beacon Hill Karagianis, Maurine (NDP) ........................................Esquimalt–Royal Roads Krog, Leonard Eugene (NDP) .............................................................

Nanaimo Kwan, Jenny Wai Ching (NDP) ........................... Vancouver–Mount Pleasant Kyllo, Greg (BC Liberal) ........................................................................ Shuswap Lake, Hon. Dr. Terry (BC Liberal) ....................Kamloops–North Th ompson Larson, Linda (BC Liberal) .........................................Boundary-Similkameen Lee, Richard T. (BC Liberal) ......................................................Burnaby North Letnick, Hon.

Norm (BC Liberal) ..............................Kelowna–Lake Country Macdonald, Norm (NDP) ....................................Columbia River–Revelstoke McRae, Hon. Don (BC Liberal) .................................................. Comox Valley Martin, John (BC Liberal) ..................................................................Chilliwack Morris, Mike (BC Liberal) ..................................... Prince George–Mackenzie Mungall, Michelle (NDP) ..........................................................Nelson-Creston Oakes, Hon.

Coralee (BC Liberal) .............................................Cariboo North Pimm, Pat (BC Liberal) .........................................................Peace River North Plecas, Dr. Darryl (BC Liberal) .............................................Abbotsford South Polak, Hon. Mary (BC Liberal) .............................................................. Langley Popham, Lana (NDP) ...................................................................Saanich South Ralston, Bruce (NDP) ................................................................ Surrey-Whalley Reid, Hon.

Linda (BC Liberal) ..................................................Richmond East Reimer, Linda (BC Liberal) ........................................ Port Moody–Coquitlam Rice, Jennifer (NDP) ........................................................................North Coast Robinson, Selina (NDP) .............................................Coquitlam-Maillardville Routley, Bill (NDP) .................................................................. Cowichan Valley Routley, Doug (NDP) ............................................Nanaimo–North Cowichan Rustad, Hon.

John (BC Liberal) ................................................ Nechako Lakes Shin, Jane Jae Kyung (NDP) ...............................................Burnaby-Lougheed Simons, Nicholas (NDP) ................................... Powell River–Sunshine Coast Simpson, Shane (NDP) ..................................................... Vancouver-Hastings Stilwell, Michelle (BC Liberal) ........................................ Parksville-Qualicum Stilwell, Dr. Moira (BC Liberal) ........................................ Vancouver-Langara Stone, Hon. Todd (BC Liberal) .........................

Kamloops–South Th ompson Sturdy, Jordan (BC Liberal) ..................................West Vancouver–Sea to Sky Sullivan, Sam (BC Liberal) ...........................................Vancouver–False Creek Sultan, Ralph (BC Liberal) ..................................... West Vancouver–Capilano Tegart, Jackie (BC Liberal) ............................................................Fraser-Nicola Th omson, Hon. Steve (BC Liberal) .......................................Kelowna-Mission Th ornthwaite, Jane (BC Liberal) ..........................

North Vancouver–Seymour Th roness, Laurie (BC Liberal).................................................Chilliwack-Hope Trevena, Claire (NDP) .................................................................... North Island Virk, Hon. Amrik (BC Liberal) ............................................. Surrey-Tynehead Wat, Hon. Teresa (BC Liberal) .............................................. Richmond Centre Weaver, Dr. Andrew (Ind.) .......................................... Oak Bay–Gordon Head Wilkinson, Hon. Andrew (BC Liberal) ........................ Vancouver-Quilchena Y amamoto, Hon.

Naomi (BC Liberal) ................ North Vancouver–Lonsdale Y ap, John (BC Liberal) ......................................................Richmond-Steveston LIST OF MEMBERS BY RIDING Abbotsford-Mission ......................................................................Simon Gibson Abbotsford South ..................................................................... Dr. Darryl Plecas Abbotsford West ...................................................... Hon. Michael de Jong, QC Alberni–Pacifi c Rim ..........................................................................

Scott Fraser Boundary-Similkameen ................................................................ Linda Larson Burnaby–Deer Lake ................................................................... Kathy Corrigan Burnaby-Edmonds ..........................................................................Raj Chouhan Burnaby-Lougheed .............................................................Jane Jae Kyung Shin Burnaby North .............................................................................. Richard T.

Lee Cariboo-Chilcotin ........................................................................Donna Barnett Cariboo North .................................................................... Hon. Coralee Oakes Chilliwack ......................................................................................... John Martin Chilliwack-Hope ....................................................................... Laurie Th roness Columbia River–Revelstoke .................................................. Norm Macdonald Comox Valley...........................................................................Hon.

Don McRae Coquitlam–Burke Mountain .....................................................Douglas Horne Coquitlam-Maillardville........................................................... Selina Robinson Cowichan Valley ................................................................................ Bill Routley Delta North .........................................................................Wm.

Scott Hamilton Delta South...............................................................................Vicki Huntington Esquimalt–Royal Roads .....................................................Maurine Karagianis Fort Langley–Aldergrove ...................................................Hon. Rich Coleman Fraser-Nicola.................................................................................... Jackie Tegart Juan de Fuca .....................................................................................John Horgan Kamloops–North Th ompson ............................................ Hon. Dr.

Terry Lake Kamloops–South Th ompson ..................................................Hon. Todd Stone Kelowna–Lake Country ..................................................... Hon. Norm Letnick Kelowna-Mission .............................................................. Hon. Steve Th omson Kootenay East .......................................................................... Hon. Bill Bennett Kootenay West ............................................................................ Katrine Conroy Langley.......................................................................................Hon.

Mary Polak Maple Ridge–Mission ..................................................................... Marc Dalton Maple Ridge–Pitt Meadows ........................................................ Dr. Doug Bing Nanaimo ........................................................................... Leonard Eugene Krog Nanaimo–North Cowichan ......................................................... Doug Routley Nechako Lakes ........................................................................ Hon.

John Rustad Nelson-Creston ........................................................................Michelle Mungall New Westminster ............................................................................... Judy Darcy North Coast......................................................................................Jennifer Rice North Island .................................................................................. Claire Trevena North Vancouver–Lonsdale ........................................Hon.

Naomi Y amamoto North Vancouver–Seymour ..................................................Jane Th ornthwaite Oak Bay–Gordon Head ...................................................... Dr. Andrew Weaver Parksville-Qualicum .................................................................Michelle Stilwell Peace River North ................................................................................

Pat Pimm Peace River South ............................................................................Mike Bernier Penticton............................................................................................ Dan Ashton Port Coquitlam ..........................................................................Mike Farnworth Port Moody–Coquitlam ................................................................Linda Reimer Powell River–Sunshine Coast ................................................. Nicholas Simons Prince George–Mackenzie .............................................................

Mike Morris Prince George–Valemount ................................................... Hon. Shirley Bond Richmond Centre ......................................................................Hon. Teresa Wat Richmond East ..........................................................................Hon. Linda Reid Richmond-Steveston ..............................................................................John Y ap Saanich North and the Islands .................................................... Gary Holman Saanich South ................................................................................

Lana Popham Shuswap ................................................................................................Greg Kyllo Skeena .............................................................................................. Robin Austin Stikine ....................................................................................... Doug Donaldson Surrey-Cloverdale ....................................................... Hon. Stephanie Cadieux Surrey-Fleetwood ........................................................... Hon.

Peter Fassbender Surrey–Green Timbers .................................................................. Sue Hammell Surrey-Newton ................................................................................. Harry Bains Surrey-Panorama ........................................................................... Marvin Hunt Surrey-Tynehead ......................................................................Hon. Amrik Virk Surrey-Whalley..............................................................................

Bruce Ralston Surrey–White Rock ....................................................................... Gordon Hogg Vancouver-Fairview ..................................................................George Heyman Vancouver–False Creek ................................................................... Sam Sullivan Vancouver-Fraserview ......................................................Hon.

Suzanne Anton Vancouver-Hastings ....................................................................Shane Simpson Vancouver-Kensington .................................................................Mable Elmore Vancouver-Kingsway..........................................................................Adrian Dix Vancouver-Langara .................................................................Dr. Moira Stilwell Vancouver–Mount Pleasant .........................................

Jenny Wai Ching Kwan Vancouver–Point Grey .........................................................................David Eby Vancouver-Quilchena ................................................ Hon. Andrew Wilkinson Vancouver–West End ...............................................

Spencer Chandra Herbert Vernon-Monashee ...............................................................................Eric Foster Victoria–Beacon Hill .......................................................................Carole James Victoria–Swan Lake.........................................................................Rob Fleming West Vancouver–Capilano ............................................................. Ralph Sultan West Vancouver–Sea to Sky ..........................................................Jordan Sturdy Westside-Kelowna ................................................................

Hon. Christy Clark Party Standings: BC Liberal 49; New Democratic 34; Independent 2

CONTENTS Monday, November 3, 2014 Aft ernoon Sitting Page Routine Business Introductions by Members ..................................................................................................................................................... 5125 Introduction and First Reading of Bills ................................................................................................................................ 5126 Bill M205 — Taxi Industry Safety and Fairness Act J.

Horgan Statements (Standing Order 25B) ......................................................................................................................................... 5126 Norman Wrigglesworth J. Yap Crohn’s disease and colitis awareness D. Eby Workplace safety and FIOSA-MIOSA Safety Alliance G. Kyllo Northern Society for Domestic Peace activities and fundraising event D. Donaldson Adoption awareness L. Reimer Simon Bolstad and CPR training J.

Kwan Oral Questions ......................................................................................................................................................................... 5128 Government borrowing costs for public-private-partnership projects J. Horgan Hon. M. de Jong Budget revenues from sale of government assets B. Ralston Hon. M. de Jong Government borrowing costs for public-private-partnership projects in health care J. Darcy Hon. T. Lake Release of information on government land agreement with Kwikwetlem First Nation S. Fraser Hon. J. Rustad Hon. M. de Jong S. Robinson M.

Farnworth Petitions .................................................................................................................................................................................... 5133 J. Kwan Orders of the Day Second Reading of Bills .......................................................................................................................................................... 5133 Bill 6 — Liquefi ed Natural Gas Income Tax Act Hon. M. de Jong B. Ralston Hon. R. Coleman N. Macdonald J. Martin R. Austin M. Bernier J. Rice J. Th ornthwaite B. Routley

MONDAY , NOVEMBER 3, 2014 Th e House met at 1:32 p.m. [Madame Speaker in the chair.] Routine Business Introductions by Members Hon. S. Cadieux: Today, just at lunchtime, we launched Adoption Awareness Month in British Columbia. Joining us in the gallery this aft ernoon are: Russell Pohl from the B.C. foster parent association, an adoptive parent as well; from Adoptive Families Association of B.C., Mary Caros, Andrea McBeath and Correen Coons. We also have Daryl Wisdahl and Jennifer Levesque, friends of mine who have three children — Nathan, Jade and Violet — who are all up in the gallery.

As well, Joe and Heather Haynes, Carrie Crowley and Lee Carlson, and Margaret Treleaven with her children: Summer, Jess, Jasmine and Venus. Would you please make these fam- ilies very welcome. M. Karagianis: Today we have a couple of regular vis- itors to the precinct and to the House. Th ey happen to be the keenest of keeners. Both the member for Juan de Fuca and I share these two individuals as constituents. Th ey religiously and faithfully watch the proceedings in this House. Th ey probably know more about B.C. politics and what happens here than anybody else you could imagine.

I would like to give a warm welcome to Kody Bell and Mark Bridges, who are regular visitors here. It’s a great pleasure to see them, as always. Hon. J. Rustad: I had the great pleasure of getting together with a couple of people today to talk about the Stave West recreation master plan. In the House today are Bill Brooks, who is the lead with the recreation mas- ter plan team, and Tumia Knott, who is the president of the Seyem’ Qwantlen Business Group and also a council- lor with Kwantlen First Nation. Would the House please make them welcome. S.

Fraser: Joining us in the House today to witness the solemn experience of question period is my daugh- ter Emma Fraser, and joining her today in the gallery is her friend Anne Selsberg. She’s from Hamburg, Germany. Would this House please join me in making both Emma and Anne feel very welcome. [1335] J. Y ap: I have two sets of introductions of friends and family. First of all, in the gallery today is a delegation from Zhangzhou, China: the vice-mayor, Mr. Lin Wenyao; director of foreign and overseas Chinese aff airs, Ms. Lin Xiuzhen; director of science and technology, Zhangzhou municipality, Mr.

Wang Jiyue; vice-magistrate of the Pinghe County government, Mr. Y an Guoliang; vice-magistrate of Dongshan County government, Mr. Yuan Y ang; and

section chief of general office of Zhangzhou government, Ms. Xie Xiaoying. With them is a good friend and the vice-chair of the SUCCESS Foundation from Vancouver, Mr. Grant Lin; as well as a friend of his in Victoria, Mr. Liu Hong, who had some kind words at lunch today for the new member for Oak Bay–Gordon Head; as well as my constituency assistant, Mr. Po-Wah Ng. Would the House please give them a warm welcome. My second set of introductions is closer to home. Some members of my extended family are here visiting Victoria. I have fi ve cousins that are here for a one-day visit. In the gallery is my cousin Ms.

Belinda Ng and her husband, Mr. Tock Sinn Ng, and my cousin Mr. Ken Y ap and his wife, Mrs. Joanna Y ap. Th ey’re visiting from London, England. Visiting us all the way from Singapore is Mrs. Sharon Lee, my cousin. With them is my brother-in-law Mr. Daryl Tan. Th e love of my life, my wife, Suzanne Y ap, is here for the fi rst time at question period. R. Fleming: I wish to make a couple of introductions as well. With us is in the gallery today is Carrie Crowley, who the minister introduced a moment ago, here for adoption awareness week.

Carrie is a child protection consultant with the Ministry of Children and Families. She’s also a family friend and a former co-worker of my sister many years ago in the Ministry of Social Services. It’s a pleasure to see her here in the buildings. I hope the members will make her feel welcome. Th ere’s also a couple of constituents of mine, Anna Vunder and Cecile Lacombe, who are visiting the legis- lative precinct for the very fi rst time. I’ d like members to make them feel welcome as well. Hon. A. Wilkinson: I hope the House will welcome Mr.

Riley Whitelock, my constituency assistant, who has the good fortune and the good judgment to have moved from southwest Manitoba to British Columbia and to be fully politically engaged. Please welcome him. N. Simons: I’ d like to acknowledge today a volunteer in my offi ce who has recently had a problem — broke her hip. I’ d like to just say that she’s a senior, but she’s the most vital and engaging person you’ d want. I have to thank her for helping me keep my offi ce open. Donna French is watching from Powell River, as she does faith- fully every day.

I would like to ask my colleagues from both sides of the House to send her good wishes and to enjoy question period. Hon. D. McRae: Joining us from the Comox Valley are Cory and Mary Ruth Harris. Cory owns Signature 5125

British Columbia Debates5126 Monday, November 3, 2014 West Floor and Window Fashions. Mary Ruth is the executive director of the Comox Business Improvement Association. She’s also the host — you guys may have seen it on TV — of go! Island for Shaw TV , north Island and Powell River, and is also on the board for the Comox Valley Child Development Association. I’ d like to add that just yesterday they had their annual telethon and raised $85,009 for the Comox Valley child development centre. It is a great organization. Mary Ruth and Cory are absolute great assets to our community.

I’ d like the House to please make them welcome. M. Karagianis: I have a second introduction to make. I’ve just received a note here that a couple of my constitu- ents are here today, and I’ d like to give them a warm wel- come. It’s David Lowe and Mary Lightly — and a great pleasure to have them in the gallery today. [1340] Introduction and First Reading of Bills BILL M205 — TAXI INDUSTRY SAFETY AND FAIRNESS ACT J. Horgan presented a bill intituled Taxi Industry Safety and Fairness Act. J.

Horgan: I move a bill intituled the Taxi Industry Safety and Fairness Act, of which notice has been given in my name on the order paper, be introduced and read a fi rst time now. Motion approved. J. Horgan: Hon. Speaker and colleagues, it’s a pleas- ure to stand and introduce the Taxi Industry Safety and Fairness Act as a response to the introduction of app- based Internet taxi services potentially here in British Columbia.

We on this side of the House, and I believe on that side of the House as well, want any new entrants into the marketplace to be under the same rules and regula- tions as those who are already here. Th is bill will help do that. I’ve been approached on this side of the House by representatives from seniors organizations and disability organizations concerned that cut-rate competition will reduce service to those vulnerable citizens. Again, this bill will assist with safety and security.

Th e same rules for all participants — that’s what the industry should have, and that’s what any new partici- pants should live by: the same licensing, the same per- mitting, vehicle inspections, criminal records checks, basic standards. Th at’s only fair, and that’s, in fact, the Canadian way. Is the current taxi service perfect? Well, of course it’s not.

But the solution is not to have an off shore company come using the Internet to cut service, to cut rates and put tens of thousands of British Columbians out of work and jeopardize the licences of those who have contrib- uted so much over so many years to the economy and the well-being of the people of British Columbia. I move that this bill be placed on the orders of the day for second reading at the next sitting of the House aft er today.

Bill M205, Taxi Industry Safety and Fairness Act, introduced, read a fi rst time and ordered to be placed on orders of the day for second reading at the next sitting of the House aft er today. Statements (Standing Order 25B) NORMAN WRIGGLESWORTH J. Y ap: Th ree weeks ago, on October 10, Richmond lost a local legend, Norman Wrigglesworth. Norman passed away peacefully in his sleep at the age of 88. A Second World War veteran, Norman was a philanthropist, a com- munity activist and an anti-smoking crusader.

Orphaned at age nine in his native England, he joined the British Navy at 17 and later immigrated to Canada and settled in Richmond in the 1950s. Working as a car- penter, he helped to build George Massey Tunnel and be- came known locally for putting a massive anti-smoking sign on the roof of his home which could be seen by pas- sengers travelling in planes overhead. He was a true pi- oneer in pushing forward the no-smoking campaign, volunteering for the Canadian Cancer Society. He was also a passionate man who cared for the com- munity and was unafraid to tackle social issues.

He wrote frequent letters to the editor in local newspapers and addressed issues such as the need for more public washrooms in Richmond and a plea to stop fi reworks on Halloween. He was a regular attendee of Richmond city council meetings and voiced his opinion on many subjects. Norman lived a frugal life. He was bold enough to challenge the management of the Richmond Hospital Foundation for keeping the lights on during weekends. Y et he was a great philanthropist. He spent the last part of his life issuing cheques to charity, especially to the Richmond Hospital Foundation.

Last year Richmond Hospit al Foundation hosted an aft ernoon tea and presented him a plaque honouring Norman and his wife for their many contributions. In 2012 Norman received a Queen’s Diamond Jubilee Medal to go alongside his Second World War medals. Madame Speaker, I know you will agree that Norman Wrigglesworth was a pillar of our community, a great example of true citizenship. Norman’s memorial ser-

British Columbia DebatesMonday, November 3, 2014 5127 vice and celebration of life will be held on November 10. He shall be missed. Our condolences to his family and friends. CROHN’S DISEASE AND COLITIS AW ARENESS D. Eby: November is Crohn’s and Colitis Awareness Month. I’m pleased to rise to make this House more aware of the impact of these diseases on British Columbians and Canadians, the need for us to prioritize the search for eff ective treatments and cures for these debilitating disorders and the need to be supportive of those who suf- fer from these diseases.

Crohn’s and colitis are the main forms of a group of disorders that as a result of an abnormal immune re- sponse, cause the intestines to become painfully infl amed and ulcerated. Th ese are lifelong, chronic diseases usually starting in early adulthood in otherwise healthy, active individuals. Th ere is no cure. Patients require regular medications to manage their conditions. When medications fail, sur- gery is oft en required.

Canada has among the highest reported prevalence and incidence of these diseases in the world with approximately 233,000 Canadians living with these conditions. [1345] Beyond the very real pain, discomfort and social anx- iety caused by these diseases, the total economic costs from these disorders in Canada were conservatively es- timated at $2.8 billion per year — $1.2 billion per year in direct medical costs and $1.6 billion per year in in- direct costs due to time off work as well as out-of-pocket expenses for those affl icted.

Th is is not to mention the uncounted costs of time away from family, volunteering and otherwise contributing to community due to these illnesses. Th e Crohn’s and Colitis Foundation of Canada is a volunteer-based charity dedicated to finding cures for Crohn’s disease and ulcerative colitis. Th ey hold a Gutsy Walk across Canada each year, which I was pleased to speak at in June when they raised almost $3.1 million for research. Th e CCFC is the world leader in non-governmental med- ical research funding per capita for these conditions, with more than 65,000 supporters, including volunteers in 80 local groups.

Please join me in thanking the CCFC and in recogniz- ing those who live with Crohn’s and colitis. Y our cour- age and dedication is an inspiration, and you have our full support. WORKPLACE SAFETY AND FIOSA-MIOSA SAFETY ALLIANCE G. Kyllo: In any workplace safety is always a top prior- ity. Here in B.C. companies are leaders in reducing haz- ards and enforcing strict safety policies to the highest standard to ensure their operation is running as safely and as effi ciently as possible. Employees deserve to work in a safe environment, and for employers, it’s just good business.

That is why I rise today to talk about the FIOSA- MIOSA Safety Alliance, headed by CEO Lisa McGuire. With over 2,000 members, the FIOSA-MIOSA Safety Alliance is a not-for-profi t organization that helps B.C. companies deal with the challenges and opportunities specifi c to manufacturing in the food and beverage in- dustry and sets industry standards for health and safety. FIOSA-MIOSA is home to OSSE, the occupation- al safety standard of excellence accreditation program. OSSE is equivalent to and more comprehensive than WorkSafe B.C. ’s partners in injury and disability preven- tion program.

OSSE certifi cation rewards organizations that have made a safety culture in their operations and is a best-practices approach to health, safety, injury man- agement and return-to-work management systems. On November 4 and 5 FIOSA-MIOSA is hosting its annual Make It Safe conference in Burnaby. Th e con- ference will bring together industry, government and occupational safety experts to share and discuss safe workplace measures.

Speakers during this two-day event will discuss topics such as people, processes and econom- ics of health and safety, and the most pressing and chal- lenging issues in health and safety management. Trevor Linden of the Vancouver Canucks will also be a special guest speaker at the event, who I’m sure will share a play- er’s version of safety on the ice. I encourage my colleagues in the House to give thanks to FIOSA-MIOSA for their work, as they do every day, to make B.C. workplaces safer for B.C. families. NORTHERN SOCIETY FOR DOMESTIC PEACE ACTIVITIES AND FUNDRAISING EVENT D.

Donaldson: Th is coming Saturday night, November 8, I’m spending the evening with Mz Telkwa and also Mz Portugal. It sounds good, I know. Even better, Mz Demeanor and Mz Understood will be there as well. Th ose I mentioned are part of 17 men donning high heels, ballgowns and mascara to entertain an excited crowd for the third Mz Judged Pageant. Tickets for the event sold out in 20 minutes. It’ll be a lot of fun to be the judge as well as a blast for the audi- ence and participants.

Plenty of fun to be had, but the underlying topic, domestic violence, and the need for fundraising is a serious issue in all communities in B.C., large and small. Th e Northern Society for Domestic Peace organizes the event. Th ey do amazing work for communities in the Bulkley Valley, dating back to 1987. In 1992 they began a domestic peace project for men, supported by the Ministries of Attorney General and Social Services.

British Columbia Debates5128 Monday, November 3, 2014 Funding for this voluntary preventative and holistic counselling approach for men wanting to address do- mestic violence dried up about six years ago. Th e Northern Society for Domestic Peace began Mz Judged in 2010 to help address the funding gap and raise awareness. It’s timed to coincide with the November white ribbon campaign, the world’s largest movement of men and boys working to end violence against women and girls. We know this is a huge issue in Canada and B.C., with recent high-profi le cases putting violence against women in the global spotlight.

Last week, within a 48-hour per- iod, the Twitter hashtag #beenrapedneverreported was used by over eight million people. It helped women speak publicly, many for the fi rst time, about experiences they had been too ashamed of or afraid to discuss. Congratulations to the Northern Society for Domestic Peace for carrying on with this work. Th ey expect to equal or surpass their mark of $50,000 raised in 2012 through Mz Judged. While having a fun event, it puts domestic violence front and centre — where it should be for all of us. Well done. [1350] ADOPTION AW ARENESS L.

Reimer: It is a pleasure to rise before you in the House today to speak about the importance of adoption. I speak to you as an adopted person who was adopted by my parents, Norma and Bill, at such an early age that I have no memories of being adopted but grew up always knowing that I was. I see myself as being so very fortunate. I was adopted into a wonderful, loving family and am the eldest adopted child. My brother, Bob, two years younger, was also adopted. I grew up in a loving, warm and stable home where every need was met, and more.

I’m having a wonderful life, and I’m pretty sure that might not have been possible had I not been adopted. It wouldn’t have been possible had my wonderful parents not followed through on what can be a frustrating process but with very rewarding out- comes for both parent and child. Th at leads me to speak about those children who are in the care of our province and whose needs greatly re- quire for them to be adopted — children who need love, warmth, security, structure and a stable home. When we raise children who have this, it provides the foundation for a more rewarding life and great outcomes.

Every child deserves a stable home and stable adults in their lives who can nurture, love and support them. In the past fi ve years nearly 1,250 children have found permanent families through adoption. However, the need for more adoptive families continues, as approxi- mately 1,000 children in B.C. are still waiting for a perma- nent family. During this month of adoption awareness, let us please not forget those who need a warm, loving, stable, forever home.

I would like to ask all members of this House to encourage those we know who are interest- ed in adopting to consider adopting one of our prov- ince’s children. Please go to 1000familiesbc.com or call 1-877-ADOPT-07. SIMON BOLSTAD AND CPR TRAINING J. Kwan: Simon Bolstad suff ered a sudden medical emergency on July 5, 2014. He collapsed on a public street in Vancouver, and even though there were passers- by, no one administered fi rst aid. It was some 20 minutes before a bystander called 911.

First responders arrived at the scene very quickly once the call was made, but by that time, too many critical moments had passed with Simon in cardiovascular distress. Sadly, Simon was not able to overcome the loss of oxygen to his brain, and he died four days later. Th is was a tragic loss for Simon’s friends and family, and now Simon’s friend Nicole Cote is determined to see that this not happen to anyone else. She’s been talk- ing with the public, has appeared on the radio and writ- ten to elected offi cials to let people know how important it is to have basic CPR skills.

Early CPR could be the dif- ference between life and death in a medical emergency. Heart disease and stroke are two of the three most common causes of death in Canada. Every seven min- utes someone dies from heart disease or stroke. Forty percent of people age 40 to 59 and 70 percent of people between the ages of 60 and 70 will suff er from some form of cardiovascular distress. November is CPR Month. Th e Canadian Red Cross is challenging everyone to get the training they need, and Nicole is campaigning to see every high school student in B.C. get CPR instruction. Groups like the Canadian Red Cross, St.

John Ambulance and the Canadian Heart and Stroke Foundation offer CPR training events to the public throughout the month and year-round. Y ou can even use this on-line tool to learn at home. Take the CPR challenge, and you can make a diff erence. Y ou can be the somebody who saves a life this November. Oral Questions GOVERNMENT BORROWING COSTS FOR PUBLIC-PRIV ATE-PARTNERSHIP PROJECTS Madame Speaker: The Leader of the Official Opposition. Interjections. J. Horgan: It’s not even ten o’ clock in the morning. It’s even an aft ernoon question period.

British Columbia DebatesMonday, November 3, 2014 5129 Even though the Premier has increased the public debt by $16.5 billion on her watch, she continues to maintain that she’s going to make B.C. debt-free. But according to the recent Auditor General’s report, the cost of carrying that debt is more expensive when you use public-private partnerships. [1355] In fact, the Auditor General highlighted that the aver- age borrowing cost for government is about 4 percent if you do traditional borrowing for infrastructure projects like schools, hospitals and roads. But the cost of P3s, like the Fort St.

John Hospital, is as high as 14.79 percent. It has oft en been said that public debt is like a mort- gage: we all own the assets. Or in traditional forms, we all own the assets, so we’re taking out a mortgage till we get a school or a hospital or a road. But I have to say, 14.79 percent sounds like you’re paying your mortgage with your Visa bill. My question is to the Minister of Finance: why in the world would the government give up ten points in borrowing just to hold to a public-private-partnership ideology? Hon. M. de Jong: To the hon.

Leader of the Opposition, fi rst I should point out that I think it’s the fi rst report of the new Auditor General, and I think all members are grateful for the work she and her offi ce are performing. I know, for the government, we are grateful that in this de- tailed examination of the books, the Offi ce of the Auditor General has confi rmed something that members of the opposition, I think without exception, stood and pro- claimed and said couldn’t be done. Th at is that the books for 2013-14 were balanced. Th e hon. Leader of the Opposition made reference to the Fort St. John Hospital.

From my reading of the re- port, the impression might have been left , and perhaps this was inadvertent, that the borrowing charges that the Leader of the Opposition referred to extended to the en- tire project. Because he raised the example, I can tell the House and him that in the case of the Fort St. John P3 project, total construction costs were in the order of $249 million. Of that amount, $95 million was provided by the regional hospital district, $121 million was funded by govern- ment, and $33 million was invested by the private sector.

Th e provincial share was borrowed at government’s cost of 5.2 percent, and private sector fi nance was obtained at the commercial rate of between 11 and 12 percent, for a combined borrowing cost of 6.6 percent. We are well aware of the opposition’s hostility for public- private partnerships. It exists roughly on a par with their aversion for projects being completed on time and on budget. Madame Speaker: Leader of the Offi cial Opposition on a supplemental. J. Horgan: Wow, on time and on budget.

I can see a really red face over there on the Minister of Energy, be- cause, of course, the northwest transmission line was go- ing to come in at $400 million. It’s not quite done yet, and we’re just shy of $1 billion. So we’re not on time, and we’re wildly off budget, but certainly the Finance Minister can get up and stretch the reality if he wants to. I’ d also think it was one of those backhanded com- pliments from the Minister of Finance, welcoming Ms. Bellringer, the new Auditor General. We thank her for her work, and then we dissect it and say that it’s not factual. Well, this is what she told us.

She said that for the South Fraser Perimeter Road we’re paying 9.1 percent interest on that money; Surrey Memorial Hospital — 7.7 percent; Sea to Sky Highway — 7.5. Th e list goes on and on. Th e end-game for taxpayers is $80 million more, according to the Auditor General — not the offi cial opposition but the Auditor General that was just praised, sort of, a minute ago by the Minister of Finance — $80 million more this year than we should. Th at’s the $80 million that’s not go- ing to education. It’s not going to health care. It’s not go- ing to children in need.

Again, my question to the Finance Minister: what does he think he would have done with that $80 million that we gave away in interest charges because you’re fi xated on P3s? [1400] Hon. M. de Jong: I don’t know that the Leader of the Opposition really, really wants to engage in a detailed examination of the 40 3P partnership projects that the government and Partnerships B.C. have overseen over the past ten or 12 years. I’m not sure he really wants to engage in a detailed comparison of the record of achieve- ment of projects coming in on time and on budget, as compared to what took place in that other decade.

Interjection. Hon. M. de Jong: I hear the member’s colleague refer- ring to a particular project that, ironically, was not a 3P partnership. Th e fact is — and I think the hon. Leader of the Opposition actually does know this — that in sign- ing agreements that provide for a risk transfer to a pri- vate partner…. Interjections. Hon. M. de Jong: Well, only a group that didn’t have a clue about how these projects develop would laugh at the notion of risk transfer. Interjections. Madame Speaker: Members.

British Columbia Debates5130 Monday, November 3, 2014 Hon. M. de Jong: In providing for that risk transfer, we have ensured that the taxpayers of British Columbia are protected and that capital projects come in on time and on budget. Th e value that the taxpayers have received has been confi rmed over and over and over again. Madame Speaker: Th e Leader of the Opposition on a further supplemental. J. Horgan: I know that Larry Blain and Partnerships B.C. reaffi rm these things over and over again, because they wouldn’t exist if they didn’t.

For the minister to suggest that the risk has been trans- ferred on the Fort St. John Hospital is absolutely prepos- terous. Th e smallest fraction of the borrowing cost is at 14.79 percent. Th at’s not risk transfer; that’s a gift . It’s not even Christmas, and the government is giving their friends gift s. Again, my question is to the Minister of Finance. It’s not the offi cial opposition that’s highlighting the $80 mil- lion that we don’t have this year for important services to British Columbians. It’s the Auditor General. My question is directly to him.

So $80 million could have gone a long way in a lot of places. I know you’ve got colleagues at the cabinet table that would have loved to have had access to that money. Why did you choose to give it to your friends and bankers? Hon. M. de Jong: I am well acquainted with the hos- tility that the members of the opposition have for tap- ping into the ingenuity that the private sector can bring to the development of capital infrastructure in British Columbia.

I am well acquainted with the ideological aversion they have to drawing on the talents of the pri- vate sector, partnering with government, drawing on the engineering and design abilities that exist and securing projects that are innovative and that are completed on time and on budget. But I encourage the Leader of the Opposition — and I know he travels a lot — to stop in at towns right across British Columbia.

Visit the hospitals, visit the schools, drive along the highways and become acquainted with the other public infrastructure that has been constructed, that has been provided to the taxpayers of British Columbia on time, reliably and on budget. BUDGET REVENUES FROM SALE OF GOVERNMENT ASSETS B. Ralston: According to the same Auditor General’s report tabled last Th ursday, the government is selling the silverware to balance the budget.

As the Auditor noted, asset sales are “a signifi cant part of the bottom line for the year. ” Th e Auditor also notes that half of next year’s planned budget surplus will come from asset sales. Can the minister tell this House what he plans to do when there are no assets left to sell? [1405] Hon. M. de Jong: I am a little bit surprised but not at all disappointed that the hon. member would raise this issue, because of course, he’s relying on the Auditor General’s report to make a point. She has made the cor- rect observation that… Interjections. Madame Speaker: Members. Hon.

M. de Jong: …for fiscal year 2013-2014 we budgeted on the basis of $300 million in the surplus asset sale program. We realized $310 million. She also makes mention of the fact that the surplus, in her view, should be $232 million more than we revealed. And yes, there is a disagreement about the methodology leading to that. But I remember this hon. member specifi cally. I re- member him specifi cally standing there in the days be- fore the House adjourned in 2013 encouraging all his colleagues to stand on the highest mountain and pro- claim: “The budget can’t be balanced. It’s a myth. It doesn’t exist.

It can’t be achieved. ” He encouraged every one of them: “Go to your communities, stand on the cor- ners, and tell everyone it isn’t so. ” Th e Auditor General has confi rmed it is very much so. It is a balanced budget. Madame Speaker: Th e member for Surrey-Whalley on a supplemental. B. Ralston: Well, let’s go back to what the Auditor General says. It’s probably a little bit more reliable than what we’ve just heard.

She said: “It is important to note that assets can only be sold once and cannot be relied upon as a continuing revenue stream. ” To put it into context, the government was in such a rush to sell the silverware that it increased asset sales from $13 million to $601 million in a single year. Again to the minister, does he agree with the Auditor General — her observation that the government cannot continue to rely on asset sales to balance the budget in- defi nitely into the future? Hon.

M. de Jong: Well, the hon. member knows the answer to the second part of the question, because he is an astute observer and studier of the fi scal plan. He will know that for the fi scal year we’re in now, the budgeted forecast for surplus asset sales is $200 million, and for the subsequent two out years, there is no amount that is re- quired, that is being relied upon. Th at doesn’t mean that there won’t be surplus assets sold. Th e member knows the answer to the question.

British Columbia DebatesMonday, November 3, 2014 5131 Interjections. Madame Speaker: Members will come to order. Continue. Hon. M. de Jong: I will leave it to him to decide wheth- er or not he comes and his party comes to this position with clean hands. I note that in that decade of which we do not speak, Crown assets equivalent in today’s dollars to $1 billion were sold. GOVERNMENT BORROWING COSTS FOR PUBLIC-PRIV ATE-PARTNERSHIP PROJECTS IN HEALTH CARE J.

Darcy: Fraser Health has hospitals that are ranked amongst the worst in Canada for patient safety — and that’s according to the government’s own review of Fraser Health. Y et this government thought it was fi s- cally responsible to squander $22 million on higher in- terest charges in Fraser Health Authority alone. Why is the Minister of Health wasting millions of taxpayers’ dol- lars on higher borrowing costs instead of investing that money on the health services that British Columbians need? [1410] Hon. T. Lake: Well, the hon.

Minister of Finance has provided some interesting insights into the Auditor General’s report in terms of the amounts that were fi - nanced privately versus publicly, and only a small por- tion, as it turns out, was at the higher interest rate. But for ten years the NDP promised a cancer treatment cen- tre in Abbotsford. Ten years they talked about it. Th is is the government that built that cancer treatment centre in Abbotsford. Madame Speaker: Member for New Westminster on a supplemental. J.

Darcy: Y ou know, the Minister of Health can dress it up whatever way he wants, but the fact of the matter is that this government is being taken to the cleaners on high interest rates for borrowing for health care, and British Columbians are hurting as a result. Y et at a P3 forum last year the Premier said: “We combine the ac- countability of public ownership with the innovation, ex- pertise and cost-eff ectiveness of the private sector. ” Let’s go back to Fort St. John Hospital.

Can the minis- ter explain the “cost-eff ectiveness” of spending an extra $3.3 million on borrowing charges in a community like Fort St. John, where people are waiting for months in or- der to get in to see a family doctor? Hon. T. Lake: I can imagine that the members oppos- ite are a little envious of the amount of investment that is made by this government in health care — over $9.1 billion invested in health care. I can go through a list of projects that are completed or ongoing, like $606 million for new hospitals in the Comox Valley and Campbell River and $80 million in Kamloops for Royal Inland Hospital.

Th e diff erence be- tween the NDP investing in assets like fast ferries and us investing in hospitals is that we actually use those hos- pitals. RELEASE OF INFORMATION ON GOVERNMENT LAND AGREEMENT WITH KWIKWETLEM FIRST NATION S. Fraser: As part of its rush to sell off the silverware as quickly as possible, government recently struck a deal with the Kwikwetlem First Nation to allow publicly owned property to be sold. In the past two years alone the government has issued press releases and details about economic agreements with First Nations at least 13 times.

Y et when the ministry sig ned an $8 million extin- guishment agreement with the Kwikwetlem last year, there was no release. Th ere was no public statement of any kind. In fact, if it hadn’t been for the federal govern- ment’s new rules, the public would have still been in the dark about this. Why did the Minister of Aboriginal Relations and Reconciliation fail to release details about this agreement until aft er questions arose regarding $800,000 of a bonus paid to Chief Giesbrecht? Hon. J. Rustad: Th ank you for the question. We work very closely with First Nations across the province on a wide range of things.

We’re very much engaged in relationship- building. We’re very much engaged in how we can help, particularly, First Nations to engage in the economy — things like revenue-sharing agreements on forestry and mines and other types of things. When we’re working with First Nations on a wide range of things, it’s very important that we look at ways to be able to make sure we include them, to make sure that we, as the courts have said, consult and, where ap- propriate, we accommodate. Madame Speaker: Member for Alberni–Pacifi c Rim on a supplemental. [1415] S.

Fraser: Back to the question about the Kwikwetlem First Nation. In August the B.C. Finance Ministry con- fi rmed with the media that the Kwikwetlem were paid $8 million to extinguish their claims to “one plot of land. ” But an FOI received by the opposition shows the payments ac- tually extinguished claims to a total of seven plots of land. Several of those plots are currently posted on line — one for $3.7 million and another one for $2.8 million.

British Columbia Debates5132 Monday, November 3, 2014 Why did the Ministry of Finance report that the ex- tinguishment covered one plot of land when it actually covered seven? Hon. M. de Jong: Th ank you to the member for the question. Th e government takes very seriously its obli- gation to both consult and, where appropriate, accom- modate the interests of First Nations.

We also take very seriously the obligation to disclose, as clearly as possible, to British Columbians the nature of those transactions, to disclose through our budgeting process — which, by the way, has been acknowledged by virtually every third- party agency that examines such things as being the sin- gle most transparent budgeting process in Canada. Whilst there is a great deal more work to be done, the process of fulfi lling our obligations, consulting with First Nations and building a more positive relationship going forward will continue, and everyone in the government is proud of that fact. S.

Robinson: I’m really grateful to hear from the mem- bers opposite about the importance of consulting. Th e government has laid out how to meet legal obligations, when consulting with First Nations, in its latest policy manual. Th e manual states that the consultation process should be “reasonable, transparent and proactive. ” In this case, we know that many of the 80 members of the First Nation have said that they were not aware their rights to land had been extinguished.

We also know that the band’s only two councillors have said that they were not aware of Chief Giesbrecht’s $800,000 bonus until aft er the fact. I want to know from the Minister of Aboriginal Relations and Reconciliation how his government can possibly defend the deal as being reasonable, transparent and proactive when it was shrouded in secrecy. Hon. J. Rustad: As we have said, we go out and en- gage with First Nations on a wide range of things.

We are continually out consulting with them — everything from various activities, resource activities and things that hap- pen on the land base, whether it’s liquefi ed natural gas or any types of activities that we’re doing. We’re out work- ing with First Nations. We’re building partnerships. We’re making sure that we seek opportunities for First Nations to be able to participate fully. Specifi cally, how a First Nation deals with things in- ternally — that’s a matter, perhaps, to be asking the First Nation. But what we do is we engage with the leadership. We engage with the First Nation.

We go out and make sure that we walk through everything that’s happening with consultation, and where appropriate, we also put forward accommodation. Madame Speaker: The member for Coquitlam- Maillardville on a supplemental. S. Robinson: Th e minister was certainly talking about consulting, but certainly they didn’t consult with the members of the Kwikwetlem First Nation. Shortly aft er the $800,000 bonus was revealed, federal MP James Moore said he would investigate this deal and meet with the B.C. Minister of Aboriginal Relations. I’ d like to ask the minister….

James Moore, the MP , said he recommended that the province should have more prerequisites in place when striking economic benefi t agreements with First Nations. He said the fact that the chief paid members $10,000 each and then said he had a majority support of the band — the quote is from Minister James Moore — was “dodgy at best. ” [1420] Will the minister admit that his government played a

part in this dodgy deal, and what steps is he taking to prevent this from ever happening again? Hon. J. Rustad: As has been said, we take our duty to consult very seriously. We are out engaging with First Nations. I do fi nd it interesting that the member opposite’s line of questioning seems to indicate that there shouldn’t be a respect for aboriginal leadership in the way that they work with their bands. We’re out engaging with First Nations. We’re out working with the bands. We’re coming to understanding, through the consultation, the things that we need to be taking into consideration and mak- ing adjustments.

As has been said, we provide appropri- ate accommodation where required. M. Farnworth: Th e Minister of Aboriginal Relations and Reconciliation wants to make a great deal out of the consultation that he says his ministry has undertaken. Y et one of the fi rst questions that was asked by the mem- ber from Alberni, which he failed to answer, was on the government’s obviously deliberate decision to skirt the federal rules around the release of the agreement until aft er it had been done. Th ere was no transparency there, none whatsoever.

Th e other questions that have been asked, the minister has again failed to answer. I’ll ask him one more time if he can tell this House, with regard to the land decision with the Kwikwetlem in the Tri-Cities area and those par- cels of land on Burke Mountain: what specifi c steps were taken to ensure openness and transparency of that land sale and the extinguishment of those title rights with the band members of the Kwikwetlem? Hon. J. Rustad: To the member opposite: thank you once again for the question.

I fi nd it interesting that the opposition seems to think that we should be dictating to First Nations how they should spend money that they receive. I will say this. As we enter into agreements with First Nations, as we go through and do consultations and fi nal-

British Columbia DebatesMonday, November 3, 2014 5133 ize agreements, it’s only appropriate that actually when you reach those agreements, the terms of those agree- ments are something that should only be shared in agree- ment between the nation and the province. When we go into these discussions, we make sure that we’re upfront with everything. We talk to the First Nations around all aspects of what we’re doing. Th at is what consultation is. Where appropriate, we provide the appropriate amount of accommodation. Madame Speaker: Th e member for Port Coquitlam on a supplemental. M.

Farnworth: We’re talking about a specifi c agree- ment that saw the extinguishment of title on seven pieces of land on which the band members were not informed, the councillors were not informed and which this gov- ernment did not release the information, in violation of the existing federal guidelines, until aft er the deal was done. How on earth is that upfront and transparent? Again to the Minister of Aboriginal Relations and Reconciliation: what specifi c steps were taken to ensure transparency and openness so that negotiations were up- front?

If you don’t want to answer that question, which you clearly have not been able to, to date, how about just the one: why did you skirt the federal guidelines? Hon. J. Rustad: When we as a province go about look- ing at an asset, a piece of property, that we may wish to consider disposing of, it’s important to be going out to the First Nations that may be involved in it and having the discussion and saying: “Hey, this is something we’re interested in doing. ” We go out, and we make sure that we understand what their interests may be.

We go out and try to work with them, and where necessary or where ap- propriate, we fi nd accommodation. [1425] Th e process for us engaging with nations is the same all around the province. We engage with the leadership of the nation. We engage in the way that they want us to engage with them. I fi nd it interesting that the member opposite is suggesting we should ignore the leadership of a First Nation and go around and do something with the members. We take the consultation very seriously.

It’s something that is not just required under the courts but is something that, fundamentally, we want to do, and where appropri- ate, we provide accommodation. [End of question period.] Petitions J. Kwan: I rise to table a petition. I have a petition with 281 names addressed to the Minister of Housing and the provincial government, calling on the govern- ment to halt the process to sell Stamps Place and instead to engage with the residents and community partners in developing a comprehensive, place-based housing strat- egy for the property. Orders of the Day Hon.

M. de Jong: Madame Speaker, second reading on Bill 6. Second Reading of Bills BILL 6 — LIQUEFIED NATURAL GAS INCOME TAX ACT Hon. M. de Jong: I think, as members know…. Well, fi rst let me move that Bill 6, the Liquefi ed Natural Gas Income Tax Act, be read a second time now. Bill 6 introduces a new tax. It is a tax on income from liquefaction activities in British Columbia that we believe and commend to the House as providing a fair return for British Columbians while ensuring that British Columbia remains a competitive jurisdiction for investment in the liquefi ed natural gas industry.

I will say at the outset that I’m hopeful. Th e bill was introduced several weeks ago. I’m hopeful that all mem- bers of the House, independent members and members of the opposition and the offi cial opposition critic, have received appropriate briefi ngs on what is, admittedly, a complex piece of legislation. Hopefully, those briefi ngs have provided some additional information and insight that will assist in the discus sions and debates that will take place in this chamber going forward. I’ll, I guess, also say this.

I am a member of a govern- ment, and have been a member of a government for al- most 14 years now, that is not accustomed to introducing legislation that creates a new taxation instrument. Th at is not to say that it hasn’t occurred, and I know that mem- bers opposite have their own favourite example. Interjections. Hon. M. de Jong: I was actually thinking about the introduction and discussion that took place around the carbon tax. I recall that one very well. I remember hear- ing, over an extended period of time, from the offi cial opposition — their opposition to that measure.

I heard it repeatedly during the electoral campaign that followed. Th en I think one quiet Friday aft ernoon, someone in the offi cial opposition a year or two ago said: “Well, we kind of got it all wrong, and we’ve changed our position on that. ” I say that because I will be very interested to hear what the offi cial opposition has to say about the taxation meas- ure that is before the House today and to endeavour to understand, as best I can, their rationale for the position

British Columbia Debates5134 Monday, November 3, 2014 that, in a few moments, I am hopeful they will reveal to British Columbians with regards to the establishment or creation of an LNG income tax in British Columbia. [1430] In terms of the mechanics of the tax itself and the legis- lation that we are considering, the tax will be eff ective for taxation years starting on or aft er January 1, 2017. It will apply to a taxpayer’s income regardless of whether the li- quefi ed natural gas will be used domestically or exported to expanding markets elsewhere in the world.

Th e tax will apply on a facility-by-facility basis. A tax- payer that earns income from liquefaction activities at more than one LNG facility must fi le a tax return in re- spect of each of those LNG facilities. [D. Horne in the chair.] Bill 6 also imposes a tax of 3.5 percent on an LNG tax- payer’s net income. Th at is, aft er it has deducted its capital investment and any operating losses from its net oper- ating income, it will pay a tax of 3.5 percent on that net income. Th at rate, pursuant to the legislation before the House, will rise to 5 percent in the year 2037.

While the taxpayer is recovering its capital investment and operat- ing losses, the act imposes a minimum tax of 1.5 percent on net operating income that ensures that LNG taxpay- ers pay tax during those years when they are deducting their costs. I might also point out that, through the introduction of Bill 6, the government is fulfi lling a commitment that we made at the time we tabled Budget 2014, in February of this year, to introduce liquefi ed natural gas income tax legislation in the fall of this year.

During the 2014 budget we pointed to a general structure for the LNG income tax that is consistent with the structure set out in this bill. At that time we also said that the tax rate being con- sidered was at up to 7 percent. But we also said that we were intent on reviewing that rate and fi nalizing it aft er having due regard for an analysis of the global fi nancial situation, the market and local economic conditions. I think that it is fair to say that since February 2014 we have seen some changes in the global economic cir- cumstances surrounding the LNG sector.

Th e long-term forecast of the spread between natural gas prices and prices for liquefi ed natural gas, as given by agencies like the Energy Information Administration, has narrowed relative to earlier estimates. Th e tax rate of 3.5 percent of net income — and it rises, as I said, to 5 percent in 2037 — was chosen in light of this change in expected global economic conditions, bearing in mind that the tax must ensure that British Columbia is competitive relative to other jurisdictions competing for investment in the natural gas and lique- fi ed natural gas sectors.

Th e liquefi ed natural gas industry — it is, in my view, very fair to say — represents a huge opportunity for our province, in which all British Columbians will share sig- nifi cant benefi ts. Revenues from the LNG income tax will contribute towards maintaining the world-class suite of services and provide us with other opportunities that other jurisdictions would only be dreaming of. Bill 6 also includes amendments to the Income Tax Act to implement a natural gas corporate income tax credit that will further encourage investment in liquefi ed nat- ural gas in the province.

Th e natural gas tax credit applies to an LNG income tax payer that has a permanent estab- lishment in British Columbia. Now, there has been some confusion about the use of these terms, and I think some of that’s probably under- standable insofar as these terms have been considered and have specifi c meaning within an income tax legis- lation. [1435] I’ll simply say this.

Whilst it is certainly our hope, de- sire and objective to attract as much corporate presence and investment in British Columbia as possible, includ- ing the establishment or relocation of corporate head- quarters and corporate head offi ces, the natural gas tax credit is not predicated exclusively on that notion. It requires the allocation of income to British Columbia in circumstances where investors will have choices about where they allocate income for activities, for example, taking place within their Canadian sphere of operations.

Th e credit is calculated as 0.5 percent of the cost of nat- ural gas owned by the corporation at the inlet to an LNG facility, with a cap on the maximum credit that can be claimed. For corporations with a permanent establish- ment in British Columbia, the unused credit can be car- ried forward and used in future years if the corporation is an LNG taxpayer in those years. To that end, coupled with the other provisions I’ve described, we believe that the bill creates certainty for investors as they move towards making their fi nal in- vestment decisions.

It also sets the stage, we believe, for British Columbians to begin receiving their share of the opportunities created by this new industry. We have sought, through our analysis and through the discussions and the consultation that have taken place, to arrive at a structure for this taxation measure that represents a balance between ensuring that British Columbians, as the owners of this resource, secure a fair return on the added value that accrues when it is con- verted into a liquefi ed form and available for shipment and sale out of the North American marketplace….

It’s a balance between that primary objective and en- suring that British Columbia represents, from a cost perspective, a competitive jurisdiction within which to attract the signifi cant international investment dollars that are seeking to develop and expand the production of liquefi ed natural gas. We believe — the government does — that, coupled with the numerous other natural advantages that fl ow

British Columbia DebatesMonday, November 3, 2014 5135 from the presence, in abundance, of natural gas in British Columbia…. Our proximity to market, our available skilled labour, the climate — the signifi cantly reduced operating costs that accrue in the conversion process in a climate that is noticeably cooler, and a gas that emerges from the ground signifi cantly cooler than in other places in the world — and our stability…. All of these, and other ad- vantages, will contribute to providing potential investors and proponents with the comfort and certainty they re- quire to make these investments.

Th is is a unique opportunity, Mr. Speaker, and one that the government, as you know, is resolved to work to see realized. It is apparent from the comments that British Columbians have heard from the Premier, from the Minister of Natural Gas, that the government has es- tablished this as a priority going forward, in terms of the economic life of the province.

We believe that the taxation measure contained with- in Bill 6, including the natural gas tax credit, will serve as an important plank in the overall suite of regulatory and taxation measures that will render us competitive and attractive for those who are seeking to develop this industry in a way that will benefi t British Columbians, their families and communities across British Columbia. [1440] I said at the outset that I would be listening with in- terest to the debate as it unfolds.

I have recognized that an instrument like this is complicated and complex and, therefore, purposefully wanted to ensure that members had an opportunity to examine it in detail and come to a position as to whether or not they were supportive of this measure. In this democratic chamber, of course, mem- bers are free, and it is an essential ingredient of our dem- ocracy, to lay out their position.

I hope that the offi cial opposition and other members in the chamber will do so and will make clear what their view is about the manner in which British Columbians can and should benefi t and extract value from this nat- ural resource that we have been blessed with. I will be listening to speakers from all sides of the House and may, at the conclusion of the debate, have some thoughts on what I have heard about the arguments that are advanced. But for now I’ll take my place and wel- come comments from other members. B.

Ralston: I rise to take my place in the debate on second reading of Bill 6, the Liquefied Natural Gas Income Tax Act. I thank the minister at the outset for the briefi ng. He’s mentioned that. He is, of course, cor- rect that it is a complicated piece of legislation. Th e brief- ing did assist in understanding some of the complexities. I was at an LNG seminar not so long ago where one of the principals, actually a proponent, said that it had become, unfortunately, perhaps too complex. We’ll explore that here and at committee stage, perhaps, in some more detail.

What I want to do is just set out briefl y what I propose to touch upon in my comments. I want to talk a little bit about the chronology that has brought us here. Certainly, the promise of establishing an LNG industry in British Columbia was the signature promise of the B.C. Liberals in the 2013 election campaign. Some have said, and I concur with this, that grandiose and extravagant promises were made. I’ll review those in some detail in order to set the context of this bill. I’ll comment on that.

I also want to get the opportunity to comment on what the minister describes as changing economic conditions that have led to a change in the construction of the bill — in particular, the tax rate and through some additional increments such as the deductibility of pre-construction costs, which weren’t envisaged just seven or eight months ago. Th at is the peg on which the government hangs its hat, in the sense that it was necessary to change the bill and reduce the prospective revenue should revenue come about at some point in the future.

Certainly, I will say that there’s no doubt that resource industries are notoriously volatile. Th e challenge in cre- ating tax regimes…. Also, the minister has — in media comments, although not here — talked about economic development agreements with proponents that I gather are intended as companion pieces to the economic ele- ments contained in this package and in Bill 2. It’s no sur- prise that conditions change. Indeed, that’s the nature of global markets — dynamic and intense.

So to proff er that as the only reason for changing the composition, the tax rate and the elements of the bill I think is not something that bears close scrutiny. I’ll have a few comments on that. [1445] I’ll look at the industry in its global context in assess- ing the accuracy of that claim that things have changed and that they only changed very recently, as opposed to being foreseeable in the spring, back when the budget was tabled and the framework was set out. I’ll then look at some of the elements of the bill itself.

Th ere are some signifi cant and interesting elements that go a long way toward reducing the prospective revenue that this meas- ure will capture. Finally, I do have a few brief comments — again, in the context of the bill — about the economic develop- ment agreements, as the minister has chosen to charac- terize them. Th ere’s a vast literature about those kinds of agreements. Th ey are sometimes called stabilization agreements, and many countries that have a natural re- source base and natural resource industries negotiate those with proponents.

It’s widely understood, and there are many variants of that, whether it’s in the oil industry, whether it’s in the natural gas industry or whether it’s in the mineral industry. Th ere’s an interesting literature on that, and I’ll review that. If I could begin, I fi rst want to make it clear at the

British Columbia Debates5136 Monday, November 3, 2014 outset that as an offi cial opposition, as a political party, we support and embrace the opportunity that liquefi ed natural gas may represent for British Columbians. Our leader, the Leader of the Offi cial Opposition, has set out some conditions that we will use to scrutinize the oppor- tunities that are presented. One is that it come with good jobs for British Columbians. We look forward to express guaran- tees about jobs and training opportunities for British Columbians, and British Columbians fi rst.

Secondly, we look to a fair return on the resources that are our Crown resources — that belong to the Crown and to all of us here in British Columbia. Th irdly, that we look to recognition of First Nations in the development of an LNG industry and the man- ner in which they are made partners in that process, in the revenue that may come, and in the jobs and training that may be off ered. Finally, protection of our air, land and water, as well as living up to our climate change commitments. It’s in that context that we set out to examine what the govern- ment has put forward.

I now want to turn to some of the background about how…. It’s useful just to understand, I think, the commit- ment that had been made in the election and the way in which we wound up here with this particular bill. It does seem and it is a bit striking that the Minister of Natural Gas has used the language of negotiating with proponents, although I note that the Minister of Finance didn’t use that language. He used what he referred to as “discussions and consultations. ” Th e idea that one would negotiate with proponents to set one’s tax bill, I suppose, is something that ordinary cit- izens don’t have access to.

But I think it is a more accurate description of what took place than the typical discus- sion and consultations that the Minister of Finance has referred to. I do note that disparity in the language. I’m not sure whether it’s deliberate or whether it’s inadvertent, but certainly it’s marked in the manner in which the two respectively approach these questions. Certainly, there always is an element of negotiation in dealing with major resource investments.

But on the other side, the sovereignty of the Crown is such that one doesn’t, one would think, lightly give up the sover- eign power to set taxes and other ancillary obligations through legislation. [1450] Th e changing landscape of the LNG promises began back in September 2011, although there has been a long history of LNG…. Like many other jurisdictions in pre- vious decades, there was a discussion about importing LNG as opposed to exporting it. But it began in the September 2011 jobs plan. I say jobs plan because that’s what they call it, although it’s been a failure as a jobs plan, I note parenthetically.

Th e promise there was at least one natural gas export terminal on line by 2015 and at least three in operation by 2020. I think it was generally thought that the project to come on line by 2015 would be Kitimat LNG. Th at is the now Chevron project with Apache, although Apache has stated publicly their wish to exit the project. In February 2012 there was a release of what was called the natural gas strategy — again, the date of 2015 and at least three in operation by 2020 with revenue of $90 mil- lion annually from the fi rst phase of the Kitimat LNG plant, totalling more than $1 billion by 2035.

In February 2013 — that was the date of the throne speech — the rhetoric had changed rather dramatically, and it became, certainly, more intense. I’m sure that had everything to do with the impending election. What was promised then were fi ve new LNG plants in British Columbia before the end of the decade, projected total revenues estimated between $130 billion and $260 billion over 30 years. Th e LNG development was poised to trig- ger $1 trillion in cumulative GDP over the next 30 years. Th is was the point at which the prosperity fund was introduced as an element.

Priority would be to elim- inate the provincial debt, enhance government servi- ces and reduce taxes, including eliminating the sales tax — a noticeable shift in the intensity of the commit- ments. A much more frenetic pace was envisaged, and the construction of more plants was foreseen, or at least projected. In the campaign in April and May 2013 the platform of the B.C.

Liberal Party, the governing party going into the election, was, “We’re going to have a goal of at least three LNG facilities on line by 2020, and there was talk of commitments by multinational companies, projected revenues of the same $130 billion to $260 billion over the next 30 years, $1 trillion in economic activity, and a num- ber was put on the prosperity fund — that up to $100 bil- lion would fl ow to the B.C. prosperity fund over the next 30 years. “Our goal is a debt-free British Columbia, and we intend to reach our goal 15 years from now. ” It’s perhaps worth noting, in that pre-election per- iod, some of the further comments.

February 12, 2013 — this was a B.C. government press release on the pros- perity fund. “LNG development is poised to trigger approximately $1 tril- lion in cumulative GDP within British Columbia over the next 30 years, and that means more than $100 billion would fl ow directly to the prosperity fund. “Provincewide LNG is expected to create on average 39,000 an- nual direct, indirect and induced full-time jobs during a nine-year construction period.

As well, there could be as many as 75,000 full-time jobs required once all LNG plants were in operation. ” A February 2013 B.C. government fact sheet on the prosperity fund says: “The economic impact of five new LNG plants in British Columbia before the end of the decade will be significant. Projected revenues are estimated to be between $130 billion and $260 billion over the next 30 years. ” Th at release continues on. “In order to maximize the benefi ts of these developments to fu-

British Columbia DebatesMonday, November 3, 2014 5137 ture generations of British Columbia, the provincial government is establishing a new British Columbia prosperity fund. ” [1455] Th ose were some of the releases that were associated with the release of the Speech from the Th rone in 2013. Indeed, the Premier said, in an

article in the Times Colonist newspaper: “‘Once we bring this opportunity home for this province, by the time my son is 26 years old we could be debt-free, ’ said the Premier” — and her personal name is used there — “whose son Hamish is 11. ” Th is was expressed in a very graphic way, with no ab- sence of self-confi dence or equivocation whatsoever in terms of the prospect, the shimmering prospect that was out there for British Columbians. In March 2013 — again, just in that same period just prior to the election period — there was an internation- al LNG conference.

Th e B.C. government held a two-day “Fuelling the future” conference. Th e government’s news release for that conference states, and I quote an excerpt here: “With fi ve major LNG projects proposed by 2020, British Columbia is on the verge of becoming a global leader in natural gas production, generating thousands of jobs and $1 trillion of economic activity over the next 30 years. ” Th e government, around the same time, issued their one-year update on the LNG strategy, which said: “Monumental progress has been made in only one year. Th e B.C. jobs plan goal of three LNG facilities by 2020 is on track.

We’re even showing strong signs that we could surpass that target. ” Initially, three facilities, one to be commissioned and operational by 2015, expanding to fi ve, and the strategy claims that that goal would be sur- passed. Th e election campaign. Everyone will remember that the Premier toured the province on a bus emblazoned with “Debt-free B.C. ” written on the side of it and said during the campaign: “Our goal is debt-free B.C. We in- tend to reach our goal 15 years from today. ” She made some other similar claims that echo what was in the throne speech and in the natural gas plan.

Th en the period aft er the election. In June 2013 there was a continuation of the same tone, the confi dent rhet- oric — ironically, in a government press release on a BG Group export application. Th is is because, of course, since then BG has signalled its decision to postpone its fi nal investment decision at least a couple years until mar- ket conditions change.

But back on June 20, 2013, the government press re- lease said about the BG Group export application: “‘Once again, we see companies wanting to take advantage of B.C. ’s LNG potential, and this move today highlights industry’s continued interest in its potential, ’ said the Premier. ‘We are developing this sector so that it benefi ts all British Columbians for generations to come. ’” In July and August of 2013 a B.C. Natural Gas Workforce Strategy Committee report was released. It mentioned the same number of 75,000 permanent skilled workers once LNG projects were fully operational.

In September 2013 the optimism, at least from the Premier, seemed undiminished. Th is was on a radio pro- gram, September 10, 2013, CBC. “We are going to get, we hope, the fi nal investment decisions made next year. It’s going to be a pretty quick turnaround, and we are plan- ning for those 100,000 jobs now, Rick. ” [1500] Th ere was no fall session, although the Minister of Finance did note that “the new tax regime won’t be put through until the 2014 session, although he hopes the general outline is going to be settled and shared public- ly before the end of this year. ” Th at was the end of 2013.

The tone then begins to shift in October 2013. Notwithstanding the Premier’s continued optimism and the same election rhetoric, the Minister of Natural Gas said the fi rst plant would be on line in 2017 or 2018. Th e expectation that a plant would be on line by 2015 seems to have been abandoned at that point. Th e delayed tax legislation. Th e Premier said in an

article — this is October 2, 2013, in reference to the tax legislation that we’re now debating and that was tabled just two weeks ago — “We hope we’ll have it done in the fall. ” Th at was last fall. Th e Premier said “an agreement could come as early as the next month or two and would be enshrined in legislation in the spring. ” Th en the Minister of Natural Gas said he expected that the earliest natural gas might be fl owing from some of the province’s LNG prospects is 2017 or 2018.

Th e B.C. gov- ernment had said that there are ten proposed LNG pro- jects, three of which have approved export licences from the National Energy Board. Th ere’s a gathering skepticism about many of these promises. Th e Minister of Natural Gas felt obliged on November 19, 2013, to defend the prosperity fund num- ber of $100 billion. He said: “I have done the calculation. I have looked at the pure numbers, and I’m quite com- fortable that we can reach that goal. ” He went on to say: “Our objective is twofold — to build both.

It’s a way to pay down the provincial debt in about 15 years, doing this as we pay down the debt. Th en this money will go into a prosperity fund that will help for building a legacy for the future of British Columbia. ” Th at was November 19, 2013. Th at’s the response to some of the crescendo of skeptical rhetoric that arises. Th e next signifi cant step in the process is the tabling of the budgetary framework in February 2014. Th at is part of the budget and fi scal plan 2014-15, 2016-17. In that document tabled February 18, 2014, there was what’s called a topic box.

Th at is a couple of pages which discuss the long-term opportunities for liquefi ed natural gas update. Th is was included with the Budget 2014, so this is in the three-year fi scal plan. It’s meant to provide guidance. It’s obvious- ly a document of paramount importance in the fi nan-

British Columbia Debates5138 Monday, November 3, 2014 cial planning of the government. It’s not something that would be undertaken lightly. The topic box confirms somewhat some of the ele- ments that have been expressed up till this point. Th e topic box says: “To this end, the province intends to introduce legislation later this year to introduce an income tax applicable to the LNG indus- try. Th e LNG income tax will be a two-tier income tax, with a tier 1 tax…of 1.5 percent and a tier 2…rate of up to 7 percent — the fi nal rate to be determined and confi rmed in legislation.

Th e LNG income tax will apply to income from liquefaction of natural gas at LNG facilities in British Columbia. ” [1505] It explains some of the elements of how it will oper- ate. We’ll talk about those — the minimum tax and its deductibility from the higher rate later on and some of the costs that will be deducted and the way in which that will operate.

Although there is some reference to projected revenue, the text is careful to say that this chart “is not intended to refl ect actual revenues to the province but is…an illustra- tion of how the LNG income tax will work under some specifi c assumptions. ” Th at’s probably a note of caution from the deputy minister, because the deputy minister does have to sign off , I think, quite literally on the budget. Indeed, at the front of the page there’s a confi rmation by the deputy minister and secretary to the Treasury Board, Mr.

Peter Milburn, where he sets out some more, I think, cautious and accurate information about what may take place. He does say, at the bottom of the fi rst page: “Th e fi scal plan assumes no explicit economic ac- tivity or incremental resource revenue from liquefi ed nat- ural gas development in the province. ” Notwithstanding the fact that it’s set out in the budget notionally, there’s no assumption by the deputy minister, being cautious and accurate as he must be, that there is any revenue that is likely to come about. Th at’s what’s in the budget.

Although the legislation that we have before us was promised in 2013 and touched upon in the budget in February 2014, the act was not introduced until just weeks ago. At a recent conference I attended one of the participants, a senior representative of one of the major proponents, agreed. And there was a question from, I think, Mayor Bill Streeper from Fort Nelson — questioning the number of delays of the legis- lation. I don’t say this to be churlish or peevish.

Certainly, the legislation was promised, and I think it’s recognized by the government and by those dealing closely with this bill that certainty, in the sense of knowing what the fi s- cal framework is, is important to making a fi nal invest- ment decision. Th e idea that this tax regime would be in place in ad- vance of a fi nal investment decision is an important ele- ment in advancing the prospect of an industry here in British Columbia. So the delay I don’t think has helped.

Certainly in the time since this fi scal framework has not been in place, as the minister has noted or claimed, con- ditions have changed, and that may have had something to do with the change in the legislation. Certainly, it’s clear that timing is important. Th e Australian industry — which will be, according to many projections, a global leader up there with Qatar by 2020 — was able to, in the time in which they were looking for long-term contracts, sign and execute long- term contracts of supply with major Asian buyers at a time when the price was higher.

Th ey were able to lock in those contracts, therefore providing the long-term fi s- cal stability to make the fi nal investment decisions to go ahead with a number of plants in Australia. And there are some concerns about the way in which Australia un- folded, but the timing there assisted them. Th e delay of the statute itself I’m sure didn’t assist British Columbia in how its proponents viewed it. [1510] The discussion is of the changing economic condi- tions.

Th e minister referenced some changes, although the slides that were provided at the briefi ng and were pro- vided publicly to the media are a bit more succinct. But certainly, I think everyone was well aware, and I’m going to quote from some documents here just about what the lay of the land was economically last spring, a year and a half ago, in 2013, when the…. Deputy Speaker: To confi rm, the member is the desig- nated speaker? B. Ralston: Y es, please. Th ank you. I was hoping so. I think that’s a self-declaration.

I have the consent of my House Leader, so fear not, and I know the members op- posite are enthusiastic in their wish that I continue, so I thank them for that. Interjection. B. Ralston: Well, it’s something that bears close exam- ination, and sometimes that close examination is quite revealing. So in the spring of last year there were…. Generally, the context of the industry is such that rapid change is occurring. When one looks at….

I’m going to cite a KPMG paper — the emerging markets, KPMG, again, at a conference that I attended — Major LNG Projects: Navigating the New Terrain, with a focus on Canada, the United States, East Africa and Australia. Th ose are new sources that are coming on to market. Th ere are some signifi cant elements that KPMG notes are challenges for any country or any proponent that pro- poses to establish a new industry, and I want to review a few of those. Again, these are well known, and they haven’t changed between February and October of this year.

Th ere’s an “intense competitive environment, ” they say, and they do note that “of the last 12 LNG projects, ten went over time and/or budget, many by 40 to 50 per-

British Columbia DebatesMonday, November 3, 2014 5139 cent, according to Deutsche Bank. ” “Labour markets in Australia, for example, were heav- ily stretched by simultaneous LNG and mining booms…. East Africa needs to create investor confi dence, develop infrastructure and build a skilled workforce. ” They mention British Columbia specifically, that a number of capital projects are being contemplated in LNG, mining and energy development. Th ey say: “Th e vast majority of these projects are in the north, where populations are thin and skilled work has historically been scarce.

At the same time, British Columbia con- tinues to be a net exporter of workers to provinces such as Alberta. ” Th ey note those concerns, and that, I think, is some- thing the government would claim that they are at- tempting to address. Th is is not me saying this. Th is is KPMG, who are specialists. Th ey certainly have a

section that deals with energy, and particularly LNG. Th ey mention challenges, and these are all challenges that are known. Some of these are ones that have been referred to by the minister in his presentation about changed economic conditions. I would say that these are well known — and easily anticipated if they weren’t well known. For example, the U.S. Gulf Coast is changed very dramatically in terms of the opportunities that are avail- able in the U.S. Gulf Coast. One of the projects which is talked about is Sabine Pass. It’s a project that’s owned by Cheniere Energy.

It’s an 853- acre brownfi eld site about a mile and a half from the open water. Th ere’s obviously a port established there. It was an old regasifi cation plant from the days when LNG was imported and then converted back to gas and shipped into the pipeline. [1515] Th ere’s a proprietary pipeline connecting that outlet to the natural gas grid in the United States, and it’s very well established. It’s a brownfi eld site. In fact, this was com- mented on recently in the decision of BG not to proceed at this time, because BG has an interest in Sabine Pass. Th ere are others.

Th ere are others in Corpus Christi in Texas, there are others in Louisiana as well, but I choose this one for illustrative purposes. It’s two trains that are at a state of construction where they should be operational in 2015, and there are a further two trains which will be operational in 2016 or 2017. Th e striking thing about the competition from that part of the world…. Again, this was known. Th is is not new. Th is is not surprising. Th is is part of the challenge that I’m sure the Minister of Natural Gas would say that he is well aware of and that he is hoping to be competi- tive with.

Th e challenge there is that the gas is sold at the Henry Hub price, which is the American domestic price. What KPMG calls it is a non-traditional commer- cial model. “Unlike most traditional LNG projects, the U.S. Gulf Coast will secure gas from the grid rather than from dedicated fi elds, and its price is expected to be linked to the Henry Hub natural gas index rather than to oil. Dry gas feedstock presents quality challenges for Asian customers.

Non-traditional buyers are emerging, such as the Middle East and Caribbean, who may have special requirements, such as diff erent seasonality or small-term contracts. “North American projects are also being seen in a new geopolit- ical light as political developments make some traditional gas exporters seem less reliable. Meanwhile, traditional Asian LNG buyers continue to favour security of supply and certainty of tim- ing but are starting to demand more competitive pricing. ” Th e price element, what LNG proponents in British Columbia are looking for, are long-term contracts.

Th ey traditionally have been oil-linked, linked to the price of oil, and it’s been diffi cult for British Columbia–based pro- ponents to secure those contracts in order to fi nance the project in a successful way. So that group there is a major competitor and, indeed, directly connected to the decision of BG not to advance its interests on Lelu Island. Back in May of 2014, Th e Economist magazine had an

article about the international gas market talking about…. Th e headline is “Buyers Will Gain More Th an Sellers. ” Th ey speak of existing supply but new supply that’s coming on — again, speaking of Australia, which will become the largest LNG supporter after Qatar. “‘ Although piped gas is set to grow too, LNG’s share of the world gas supply is set to rise from around 15 to 20 per- cent to as much as 30 percent if all of the projects being planned come to fruition, ’ says Dirk van Slooten of the International Gas Union, an industry body. ” Th ere are new projects coming on stream.

In Papua New Guinea a plant just opened. Th ere are suggestions that in order to get a better deal from what, I suppose, some of the Baltic countries — Lithuania, Latvia and Estonia — regard as an unreliable supplier, Russia, who has traditionally supplied not LNG but gas by pipe to the Baltic republics…. Given the commercial treatment of Ukraine in recent years, they are scrambling to develop alternate sources of supply, and what they have done is they’ve commissioned a fl oating LNG plant. According to this, they bought a fl oating regasifi ca- tion terminal, the Independence, at a cost of $330 million.

Jaroslav Neverovič, the Energy Minister, said that “it is being treated as part of his country’s pipeline grid. Even if it is not used, it pays its way with bargaining power. It starts operating only in December. But Russia has already off ered a 20 percent price cut. ” [1520] Th ere are many other examples of the competitive landscape and the changes. Certainly, if I can turn to some of the specifi c ones, there are a couple of reasons that are given and that point to, the minister claims, changing requirements, a changing landscape.

Th is is to justify, I think, the change in the rate that was talked about in the budget document in the spring of 2014. Th ese are reasons that are off ered to support that deci- sion and claim that these were, I suppose, unanticipated or had to be accommodated.

British Columbia Debates5140 Monday, November 3, 2014 “LNG selling prices have declined. ” I’m reading from the briefi ng slide. “More global LNG supply due to com- petition. ” Well, what’s very clear — from the International Energy Agency and its mid-term report to 2019 — to ob- servers of the industry and the industry players is that there is more supply coming on, due to competition. Th at’s well known, well established and not a surprise.

Th e further example is: “China’s economic growth is slowing, and China is acquiring natural gas from pipe- lines. ” Th e fact is that China’s economic growth has been trending downwards from the heady days of 12, 13 and 14 percent annual growth in GDP down to now 7 percent. I saw a recent report, yesterday or the day before that anticipated that it might settle at 5 percent, a somewhat bumpy descent — still growth by most standards but nothing like the comparison to the higher growth of pre- vious years.

Th at, again, has been anticipated, certainly foreseeable and known as a speculation, although noth- ing is known for certain in economic prediction. In the spring — the next reason that’s given — “Japan is considering restarting its nuclear power program. ” Again, that hardly should come as a surprise. Given the post-Fukushima events, there was a natural reaction and a political reaction at the leadership level in Japan. Partly, the result was to drive up the price of LNG — certainly in the Asian region, that sub-market.

But the fact that Japan is considering returning to a nuclear program is something that, again, I think was evident. In my own self-funded, self-guided trade mis- sion to Japan last November I met with the Canadian Ambassador to Japan, and he told me that that’s what he expected would be done at the political leadership level. Because of the economic circumstances of the coun- try, the requirement for and the price of electricity, they would return to nuclear — not in a rush, but certainly not at a much higher level than they’ d done in the immedi- ate post-Fukushima era.

Th at element I think is under- stood and anticipated by many, and I don’t know why that would be signalled as a change. “Oil prices are declining, reducing the value of oil-indexed contracts. ” That may be. This may be the one factor that has changed dramatically, certainly in the last two months. Th e higher price of oil has declined, and there is an adjustment taking place.

But it’s very evident from the work that’s being done by proponents in advance of that price decline that they were unsuccessful in luring Asian buyers to sign oil-linked contracts partly because of the alternatives elsewhere, which I’ve spoken of earlier. Th en the fi nal comment in the slide in this category is: “Potential purchasers are looking for Henry Hub–based contracts. ” Th at’s the reference to Louisiana — Sabine Pass, Freeport and Corpus Christi — those potential LNG plants in the United States. [1525] Th ere has been a change, of course, in American energy policy.

Americans, for security reasons, were traditionally loath to export energy, given that they were net import- ers, but the shale gas revolution in the States has meant that for non-FTA countries, the U.S. Energy Department and FERC are prepared to grant export licences. Th at was previously a sticking point. Th at’s changed dramatically now. So that opens up those opportunities. Again, that’s not something that I’m sure that the minister’s advice — the very capable public servants who advise him and advise the Minister of Finance, the Economic Advisory Council…. All these elements were known elements.

Th ey also speak, in the next group, of increasing con- struction costs. “Cost escalation in Australia has raised cost expectations in B.C. ” Well, Australian cost infl ation is notorious. Th e KPMG study that I cited…. I think that’s well known. I think proponents look on the Australian experience with some horror in terms of the escalation of costs, par- ticularly labour costs, in Australia.

Th at has very much conditioned the approach that proponents are taking here — and I think, in fairness to the government, some of the approach that the government has taken to pro- viding what assurances they can about apprenticeship and an available supply of well-trained domestic labour. Obviously, it’s diffi cult when the apprenticeship sys- tem was dramatically attacked and scaled down in the fi rst fi ve or six years of the government’s mandate.

Only with the report from Jessica McDonald has there really been some real work done on rebuilding the apprentice- ship system in order to meet the challenges of what may be a big increase in the labour market here in British Columbia. Th at’s well known. Th en fi nally: “Competition for resources likely to in- crease cost. ” Th at’s a bit of a generic expression. I’m not quite sure what’s referred to by that. Th at may be supply, although supply…. Th e price of natural gas has not been increasing lately. It’s certainly been fl at or declining.

I want to turn to the elements of the bill, the more specifi c elements of the bill. Th e sense that somehow this change in the approach and the numbers in the bill — prospective bill or the prospective act that was set out in February 2014 till now — are somehow explained by this, I think, is not accurate. Th e market itself is dynamic. It’s always changing. Resources notoriously go up and down. What has happened is a change in the willingness, or the bargaining position taken by proponents in the course of these negotiations. In negotiations, I certainly wouldn’t claim to know….

I’m not a professional in negotiations, but some of the basic axiomatic principles of negotiations are that if the other side knows that you desperately need and want a deal, your bargaining position is dramatically weaker because of that. Certainly, given the rhetoric and the commitments that have been made politically by the government, proponents would be foolish if they weren’t aware of those commitments and weren’t positioned to

British Columbia DebatesMonday, November 3, 2014 5141 take advantage of those in what the Minister of Natural Gas Development describes as a negotiation. Th at doesn’t give you strength; that gives you weakness. My sense of the change in the rate and some of the con- cessions that have been made in the bill are concessions to stronger and more capable proponents who under- stand the desperate wish of the government to get a deal, to get a fi nal investment decision, any deal, to go forward. It’ s not from a position of strength that they have ap- proached this but from a position of weakness.

Th at is really what has changed, not objective conditions out in the global marketplace. [1530] When we come to the nitty-gritty of the bill, there are some interesting changes, which we will doubtlessly ex- plore further at committee stage. What I’m looking at here and thinking about are some of the changes from the 2014 budget. I’m quoting from a KPMG analysis of the bill, so it is, I think, respectable and well-known, and a specialist in this kind of analy- sis. Th ey say: “Th e proposed LNG rules include several important changes from the proposed framework originally included in the 2014 B.C. budget.

Specifi cally, the rules now propose a new investment al- lowance when calculating the tier 1 tax. Also, the new rules initially set the tier 2 tax at 3.5 percent, later rising to 5 percent, instead of up to 7 percent as originally indicated. Finally, the new proposed LNG regime introduces a new closure tax credit for LNG facilities. ” Th e minister has mentioned the 1.5 percent as a min- imum tax, but what is clear from the legislation, as I understand it, is that the payment of that tax is then de- ductible in the future from any future payment of the 3.5 percent, the tier 2 rate.

Really, all you’re doing is advance paying it so that there is, I suppose, some available rev- enue to the government during that phase. But it’s not as though that isn’t deductible against a future tax. Th ere’s also…. Th ey say that the minimum tax on LNG profi ts before the recovery of capital investment costs applies to net operating income, which begins with the LNG taxpayer’s profi t or loss from the business based on the principles contained in the Income Tax Act. Th ere is also created an investment allowance, which is essentially a return to the investor.

It’s described as: “computed as 75 percent of the average balance of the ‘adjusted capital investment account’ …for the year of the LNG facility. ” Not only is the 1.5 deductible against the 3.5. Th ere is a ceiling of an investment allowance before any tax is payable — where a return on capital, calculated accord- ing to that formula from the adjusted capital investment account, is permissible before any tax is payable. So the tier 2 tax is only payable once payback is achieved, and that would be payment of the capital cost with those pre- conditions set into it.

What the bill has now added, or at least in the brief- ing it was clear — I’m not sure exactly where in the bill it is; I can’t put my fi nger on it — is that pre-construction costs previously not mentioned in February 2014 are now deductible. Pre-construction costs can be the acquisition of land, legal fees, agreements and contracts related spe- cifi cally to the construction of the liquefaction facility. In some of the briefi ngs I attended at the natural re- sources conference in Prince George last January, where representatives of Shell, Petronas and Chevron, notably, presented….

What was very clear to them — and was not entirely clear to me until aft er I heard the presentations — was that these companies are capable of making huge investments in advance of a fi nal investment decision and then just walking away if the conditions are not met. Although a lot of the releases of the government talk about investments being made…. Indeed, I toured the Kitimat harbour. Th e Chevron site is under construction.

Th ey’re skimming back the earth, doing blasting. [1535] All of these expenses, several hundred million at least, and maybe more, are being made in advance of a fi nal investment decision, but that in itself does not mean the fi nal investment decision will be to go ahead. Some of those costs will now be deductible, which will delay…. If it’s hundreds of millions or $500 million, not all of that expense may be deductible, clearly. If those expenses are deductible, it will delay the prospect of the payback period ending and the 3.5 percent rate coming into existence.

Th at’s a fairly steep hurdle that’s been add- ed before the province benefi ts from the revenue. I would think that that came as a result of negotiations. Obviously, as a member of the opposition, I am not party to those negotiations. Th ey are not publicly disclosed, so I am only speculating, but I would expect that those issues were issues that were on the table with some of the pro- ponents. Th e construction of the statute refl ects those discussions, which are favourable to LNG proponents, as opposed to revenue for the province.

I think that refl ects the balance of forces arrayed in the negotiation process. Th e other elements of the bill that I want to focus on that are included…. Th e other element is that the minis- ter referred to the corporate income tax credit for com- panies that have a permanent establishment in British Columbia. Th is is something that we raised in question period. Under the TILMA agreement, Alberta has resisted the reciprocity that was hoped for or expected. Maybe ideologically anticipated was that an energy company wouldn’t have to have a permanent establishment in Alberta in order to do business there.

Th at’s been resisted by B.C. at the bureaucratic level, at the public service level. Certainly the ministers, I’m sure, have been involved in discussion with their counterparts in Alberta. Th e prospect…. Th at is an impediment to the idea that somehow Alberta companies, even those who may be considering coming to British Columbia to take ad- vantage of this credit…. I mean, if there was a natural gas company that is supplying gas, liquefaction, to the

British Columbia Debates5142 Monday, November 3, 2014 plant, and this falls within the defi nition of the act, they may not want to establish a permanent establishment in British Columbia because of that factor. It seems to me that in his comments, the minister has resiled somewhat from that. He’s backed away from it. Th at was something that was, I think, fl oated at the news conference. Some members of the media reported on it, but it doesn’t seem as though the minister is now stress- ing that as the major factor.

What it does suggest, though, is, again, a concession to liquefaction operators of the prospect of reducing their corporate income tax from 11 to as low as 8 percent. Th at was not something that was in the framework, in the budget of 2014, in February. Signifi cantly, if it’s not utilized in a given fi scal year, it can be carried forward, so it’s a fairly sweet deduction for proponents and, again, would postpone the prospect of future revenue from these projects. Indeed, in the chart that was provided during the brief- ing, the minister…. I am not allowed to use props in here. I’m well aware of that, Mr.

Speaker. So one will have to imagine a graph that’s got considerably more revenue per year — $250 million in an LNG plant producing 12 mil- lion tonnes per annum. [1540] That was February 2014. The somewhat shrunken chart representing the same number of years, presented October 21, shows income at just over $100 million. Maybe $125 million probably is the most accurate. So a dramatic reduction in the projection of revenue. Th e minister does, in his public statements, rely on what the next chart shows. Again, I’m not able to show the chart here.

What was explained, I understand, was that most of the revenue — because that revenue, strictly from the tax, is much diminished, reduced by over half — would come from corporate income tax, although pot- entially reduced corporate income tax because it might go from 11 to 8, motor fuel tax, property tax and PST. KPMG does note in their comment that provincial sales tax on some equipment that’s necessary for the produc- tion process would not attract PST. Th ey don’t have a detailed note on that, but given that it’s KPMG, I take their word on it. In fact, the tax that’s proposed is….

Th e revenue is sub- stantially reduced. Th e minister, I think, is upfront about that. I think he’s very straightforward. He’s not concealing anything. It’s there in the charts. But what that refl ects is not the changed market condition

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Collection	British Columbia — Debates (Hansard)
Citation	20141103pm-Hansard-v17n2
Type	hansard
Volume / chapter	20141103pm Hansard v17n2
Language	en
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