2015 Legislative Session: Fourth Session, 40th Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

official report of

Debates of the Legislative Assembly

(hansard)

Tuesday, May 5, 2015

Afternoon Sitting

Volume 25, Number

ISSN 0709-1281 (Print)

ISSN 1499-2175 (Online)

CONTENTS

Page

Routine Business

Introductions by Members

Orders of the Day

Committee of the Whole House

Bill 23 — Miscellaneous Statutes Amendment Act, 2015 (continued)

L. Popham

Hon. N. Letnick

V. Huntington

Hon. S. Anton

D. Eby

L. Krog

Hon. R. Coleman

B. Ralston

A. Weaver

M. Karagianis

Proceedings in the Douglas Fir Room

Committee of Supply

Estimates: Ministry of Community, Sport and Cultural Development (continued)

S. Robinson

Hon. C. Oakes

L. Popham

D. Eby

S. Chandra Herbert

D. Donaldson

[ Page 8039 ]

TUESDAY, MAY 5, 2015

The House met at 1:31 p.m.

[Madame Speaker in the chair.]

Routine Business

Introductions by Members

D. McRae: I seek leave to make an introduction. Since we’re in introductions, I don’t need to actually seek leave now that I just said that, do I? I’m excited.

Madame Speaker: Proceed.

D. McRae: There are a number of schools across British Columbia that are amazing, but my favourite by far is G.P. Vanier. Why is it my favourite? Not only did I actually have my father teach there for over 30 years, not only did I teach there for 15 years, but I went to preschool there, and I graduated from G.P. Vanier.

Today in the House we have six students and one teacher visiting us from, arguably, the greatest school in British Columbia and my favourite. And I used to work there for….

Interjection.

D. McRae: I’m on leave. This is the worst introduction ever. I’ll keep going.

From Heidi Zirkel’s tourism 12 class in the Chamber today, we are joined by her students. We have, of course, teacher Heidi Zirkel, who recently just became a Canadian citizen last November. We have Robert Allison, Andrea Newman, Aurora Chang, Jennifer Kurt, Ian McLean and Christian Mitchell. Would the House make them and G.P. Vanier very welcome.

Orders of the Day

Hon. T. Stone: In the chamber of the assembly I call continued committee stage of Bill 23; and in the Douglas Fir Committee Room, the continued estimates of the Ministry of Community, Sport and Cultural Development.

Committee of the Whole House

BILL 23 — MISCELLANEOUS STATUTES

AMENDMENT ACT, 2015

(continued)

The House in Committee of the Whole (Section

B) on Bill 23; R. Chouhan in the chair.

The committee met at 1:34 p.m.

section 2 (continued) .

L. Popham: Before we were rudely interrupted by lunch, the minister was answering a question that I had asked, and I’m wondering if he could repeat that answer.

[1335]

My question was regarding the possible implications of delaying this legislation with regard to the avian flu outbreak in December.

Hon. N. Letnick: Thank you to the member opposite for the question. I’ve made a few additions to the comments I made just before lunch. Apparently, my stomach limited the length of the answer before we left.

First, I would like to say there was no delay in bringing the legislation forward. We did our due diligence during last year. The program is something that…. The scope we’ve been looking at is a work in progress for a number of years.

If you recall, back in the early 2000s we had a major outbreak, which resulted in millions of birds being lost. The learnings from that were applied in other outbreaks since. Of course, we had a major one in 2014, whereby we lost about 250,000 birds. But when you put that into comparison with what’s going on in the States right now, where they’ve lost 25 million layers already, it pales in comparison to what’s going on down there.

Also, I have to say that by all accounts from the industry and from CFIA and our ministry folks, the response to the AI outbreak in last year’s episode was extremely well done. It was within 12 hours. We had the movement shut down. We had our quarantines up very nearly after that.

Since then, the applications for AgriRecovery have started. CFIA has started to pay for lost birds. I believe we’ve seen a great amount of success last year, done by people who worked for all of us in B.C. and all of us across the country through CFIA. I of course look forward to a debrief at some point, after the payments have gone through to our farmers, to talk with staff and see what learnings we can have from this episode that we can apply to help in the future.

L. Popham: Yes, and I look forward to a report on lessons learned from this last outbreak as well. I believe there will be some very important lessons learned. I understand that one of the problems was that there may not have been access to CO 2 at the time that it was needed. I think that’s part of the process that needs to be looked at.

[1340]

Getting back to what I believe is a delay in the legislation, I think that given the situation that happened at Christmas and the financial implications for some of the growers — although you can apply for reimbursement

[ Page 8040 ]

through AgriRecovery, etc. — the idea of having an industry insurance program is something that the growers have been very interested in.

It’s my understanding that possibly there was a breakdown in the process of getting this moving forward. I’ll just say on the record that I believe that we need to expedite this legislation as quickly as possible, because I think it’s really important for the industry. But I do also believe that there may have been a problem with moving that forward. From what I’ve been told — and the minister can correct me if I’m wrong — the feet-dragging came from the Farm Industry Review Board. Is that true?

Hon. N. Letnick: Again, thank you to the member opposite for the question.

Nothing currently, because this legislation hasn’t passed yet, is stopping the industry from instituting their own insurance program. They, of course, wanted FIRB, the B.C. Farm Industry Review Board, to make it mandatory. When B.C. FIRB, I’ve been advised, looked at the options, they didn’t believe that they had clear jurisdiction without the legislation saying so. That’s why we’re bringing forward the legislation today for the members’ consideration.

L. Popham: Thank you for that answer.

Does the minister believe that the chair of the Farm Industry Review Board may have had a conflict in bringing this legislation in?

Hon. N. Letnick: I’m not too sure what that question has to do with the legislation, but I’ll answer it anyway. No, I don’t believe the chair had any conflict of interest. It is a board decision. The chair is one member of the board, and there are rules governing conduct of all members of boards throughout B.C. — all our boards. I’m sure that the chair would have abided by those commonly held rules.

L. Popham: Well, I guess what I’m thinking about is that this legislation would have been good for the industry. The Farm Industry Review Board, in my view, is supposed to make the right choices for the industry. I believe in this case there was feet-dragging. I am under the understanding that it possibly had to do with maybe the chair of the Farm Industry Review Board not having the same passion around this legislation that he might have.

I guess I’m mostly just putting this on the record, because I think that there are implications to not bringing this in sooner. It’s unfortunate, because probably much like the minister, I have been in discussions with producers that have suffered because of that. I know that the conversation around bringing the legislation in has been conflicted. So I guess I just wanted to make sure that the minister knew that I know that and that I think it’s imperative that we move this ahead as soon as possible.

Can the minister tell me anything about…? As far as the requirement for producers to have mandatory insurance, at this point is there any idea about when that will kick in?

[1345]

Hon. N. Letnick: I would also like to put something on the record. I’ve met many people in my life as an elected official, and I have every confidence in the integrity of the chair of the B.C. Farm Industry Review Board. So I’ll just put that on the record as well.

The question is when, if the legislation passes, we would inform the marketing boards of the passage of the legislation and invite them, if they wish, to submit new applications. I imagine they’ll want to update their applications. They would do that through the B.C. Farm Industry Review Board. Then — being quasi-judicial, independent, arm’s length from government — it would be up to them to decide, based on their workplan, when they would hear those applications and make their determination.

I would expect it would be in the near future. But that would be really up to the boards themselves to submit their applications.

L. Popham: If the minister sees that the Farm Industry Review Board isn’t moving quickly enough, is the minister willing to make a move to speed that up?

Hon. N. Letnick: Again, thank you to the member opposite for her question.

Under the taxpayer accountability principles that the Premier announced last year, a new relationship between the chair of the Agricultural Land Commission and the chair of the B.C. Farm Industry Review Board where…. Just like I as a minister have a mandate letter to the Premier, they will now, at some point, have a mandate letter to the minister.

In that list of principles will be one about moving on this file. Again, it would still be up to the industry themselves to do their due diligence to provide their application to the board. But it will be one of the items on the list that the minister would like to see the B.C. FIRB and the industry move forward on.

L. Popham: Well, I understand that. But I guess my question is directly to the minister. Would the minister be in a position to override FIRB in order to speed it up?

Hon. N. Letnick: No.

L. Popham: Can the minister explain why?

[1350]

Hon. N. Letnick: The legislation gives the power to BCFIRB to make those decisions. As the minister, I cannot override BCFIRB or the legislation, and I don’t think the member opposite would want the minister to do so either.

[ Page 8041 ]

L. Popham: Yeah, I think that is what I believe. But I think the minister and I both understand that if the government wants to override a quasi-judicial board, they can. It’s their discretion. Is this a case where that would happen?

Hon. N. Letnick: Thank you to the member opposite for the hypothetical question. Yes, it’s true that cabinet could override BCFIRB if it wished to.

I think there are a lot of things that need to happen here. One is that the legislation needs to pass. We can never assume anything. Two, the industry needs to do their due diligence and make their application to BCFIRB.

BCFIRB has already heard the previous application and saw a lot of merit in the previous application but didn’t feel it had the legislative authority to make that decision. Assuming the legislation passes, they’ll now have the legislative authority, so I don’t see, in this hypothetical situation, a case where cabinet would need that opportunity that the member opposite is talking about.

L. Popham: Well, then, can the minister tell me what the timeline would be?

Hon. N. Letnick: That would be up to when the legislation, if it does pass, passes and how long it takes the industry to do their due diligence and submit a new application, should they choose to do so. Then it would be up to BCFIRB to look at that application within their workplan.

As I’ve stated before, my best ballpark is sometime this year, but I couldn’t tell you whether it’ll be in summer, fall, winter. It all depends on both the industry and BCFIRB to get their ducks — no pun intended — in a row.

L. Popham: I guess that’s exactly what I’m trying to do is get my ducks in a row here. I don’t think this is as hypothetical as the minister is implying because we’re talking about legislation being brought in.

We’re talking about the requirement for the industry to have, basically, independent insurance — independent of the province. The cost to the province when we have an avian flu outbreak is quite heavy. This would fit, I’m sure, with the general idea that a core review looking for efficiencies, which is a lot of what the government talks about…. This would be one of the efficiencies.

The hypothetical part, to me, that the minister is implying is not hypothetical, and it’s because we would override a quasi-judicial board, I expect. I’ve never sat in cabinet before. I’m not sure how the decisions are made. You would, possibly, look at the good of the province. Whether this legislation takes a year or two years makes a big difference. At what point does the minister and cabinet put their foot down and override the quasi-judicial board?

[1355]

Hon. N. Letnick: Thank you to the member opposite for the question. Maybe in my communication I’ve misled the member opposite. Let me just clarify here, just in case I did that unintentionally.

The legislation does not require a producer to participate in any particular insurance program. However, it does enable marketing boards to require producers to have insurance. In other words, the legislation does not give the power to the government to set up and enforce a mandatory insurance program. All it does is allow the BCFIRB to then allow the industry to set up or purchase their own insurance program. I just wanted to be clear that this is not the government doing this.

On the question of if cabinet should step in within a year or two years or whatever the question is, again, I don’t think it’s going to be necessary. We have willing partners in this. The industry is very willing to move forward on this. They’ve been fully consulted on it. BCFIRB has also indicated willingness to move forward on this. The government is obviously willing to move forward on it. It’s bringing in this legislation and using up very valuable chamber time and staff resources on it. I believe the opposition wants us to move on it.

I don’t know who out there is saying no to this. I haven’t heard it. Therefore, I would expect — given the right amount of time for the industry to do its due diligence and provide a new application, should it wish to, to BCFIRB — that BCFIRB will do their due diligence. At the end of the day the legislation, should it pass, will enable them to come up with a reasonable decision.

L. Popham: Then let me clarify my understanding. The government won’t require producers to have insurance, but the marketing boards can require producers to have insurance, or it may be the producers’ choice. If the producers choose not to sign onto the insurance program, are they still able to come to the province for recovery money if an avian flu outbreak were to happen?

[1400]

Hon. N. Letnick: The question is: if someone doesn’t subscribe to the insurance program, would they still have the other programs available to them? Again, I can’t tell you what will happen down the road. As it is right now, let’s say this legislation passes and let’s say BCFIRB and the boards come to an agreement as to the authority of the boards to implement a mandatory insurance program; it would depend on what insurance program the boards decide to go with.

It could be that the insurance programs cover chicks or disinfecting, or it could be a whole range of things. The answer today, if this was in place: it would just give the ability to the boards to then make insurance mandatory for their members. AgriStability, AgriRecovery, the program from CFIA — they’re all still there. Right now they’re not changing. But who’s to say what’ll happen in the future? We have no crystal ball on that.

[ Page 8042 ]

L. Popham: Can the minister tell me why the definition of “biosecurity” was added to the legislation?

Hon. N. Letnick: Like some of our legislation in B.C., since we have been around for a while, this piece of legislation is old — somewhere around 80 years old. Back 80 years ago they didn’t contemplate biosecurity as we currently define it now. So we have made that clearer in the legislation.

L. Popham: Is this bringing it in line with the Animal Health Act?

Hon. N. Letnick: The answer is: yes, it is.

L. Popham: “In the definition of ‘marketing’ by striking out ‘producing, buying, selling,’ and substituting ‘producing, packing, buying, selling, storing’” — can the minister tell me why packing and storing are added to the legislation?

Hon. N. Letnick: Packing and storing have not been added. They were there before. They’ve just been shifted around. It’s just to provide clarity.

[1405]

L. Popham: So it’s included in the definition of “marketing” now.

Hon. N. Letnick: It used to be under “Marketing schemes, boards and commissions,” 2(1). Now it has been moved over into marketing.

L. Popham: Why was that done?

Hon. N. Letnick: It’s consistent throughout the act.

L. Popham: Okay, that’s it for that section.

V. Huntington: I wonder if the minister could advise whether

section 2, the definition of “biosecurity program,” anticipates self-regulation within the industry of that definition and those requirements.

Hon. N. Letnick: Thank you to the member opposite for the question. Yes, this anticipates that the industry will be self-regulating on biosecurity, but they are ultimately accountable to B.C. Farm Industry Review Board.

V. Huntington: I take it, then, because these seem to be so specific in the definition, that it requires one or more of the following to be undertaken. Is it the board — and which board specifically — or the ministry that would be pinpointing to a particular producer one or more of these requirements under the definition?

Hon. N. Letnick: The way it’s crafted right now, it gives flexibility, because we have a number of commodity groups, as the member knows. The boards themselves, then, would adopt the measures that they deem appropriate for their particular commodity group, and then, of course, they are accountable to BCFIRB.

V. Huntington: Do I understand, then, that this is not triggering one or more of the following conditions or restrictions just because of a biosecurity hazard? It is giving commissions the flexibility to require this of a commodity group — one or more of the following of a commodity group? When is this triggered?

[1410]

Hon. N. Letnick: Thank you to the member opposite for the question. Maybe the best way to do this is through an example.

In the case of 2(a)(a), it says: “establishes standards or certification programs.” For example, the industry could establish a standard whereby you had to put your feet into a pail or a container of liquid before you walk into the barn. Then under (

b) here is how that standard would actually be applied — what the standard is, who does it, etc.

Then the board would be able to use that, through the legislation, to enforce that biosecurity standard for the industry. And then, of course, BCFIRB, being the umbrella over the boards, would have the ability to help the board enforce that.

V. Huntington: Not to belabour it, but in (a)(b)(iv) the permissive word “or” is just to make the requirements quite discrete in their nature? A commodity producer wouldn’t be required to follow each of these requirements. It’s just a very discrete requirement that can be defined company by company on the basis of what it is that they’re producing or what problems they’ve had in the past. Is it all very permissive in how the board might establish the requirements?

Hon. N. Letnick: If we’re looking at the first “or” in the sentence versus the last “or” in the sentence — there are two ors; it’s good for a rowboat — the answer is that the “implements best-by procedures” is generic, versus the “or procedures for specified purposes,” which would be specific.

[1415]

Is it discrete in nature? I guess what we’re trying to do here is provide the industry and the boards the most discretion they can, the more comprehensive language we can, so they can trap all the different parts of the biosecurity that they would like to engage in.

V. Huntington: Just one last question, then, Mr. Chair. That means that the boards, commodity by commodity,

[ Page 8043 ]

have a choice of actions they can take but that within a commodity the

definitions would be the same? I just want to make sure.

Hon. N. Letnick: Yes.

Section 2 approved.

section 3.

L. Popham: Can the minister tell me the purpose of

section 3?

Hon. N. Letnick: The rationale is to amend the purpose of the act to include biosecurity programs and imposition of requirements related to insurance.

L. Popham: Why was this direction taken?

Hon. N. Letnick: In large part, clarification for some of the act, in 2(b), 2(c) — basically clarification of language. This

section states the purpose of the act, which is “to provide promotion, control and regulation” of marketing; the reference to the ability to impose requirements in relation to insurance programs and the establishment of biosecurity programs. It provides explicit authority for marketing boards and commissions to act under the new sections of the act.

Without this amendment, the new sections related to insurance programs and biosecurity could be seen as inconsistent with the purposes of the act.

L. Popham: Are there going to be minimum standards of insurance that are needed to be purchased?

Hon. N. Letnick: No.

L. Popham: Why not?

Hon. N. Letnick: The intent here is that it’s not up to the government to determine what’s in the best interest of the industries; it’s up to them to determine that. This legislation gives them the framework to do so.

L. Popham: I’ve probably already asked this, but I’m going to ask it again. So the government has no oversight on the decisions that are being made around the types of insurance programs that are going to be investigated and possibly used.

I guess my question is: does the minister have any concern that if some error is made and something is left out of an insurance program, there are going to be financial implications for the industry?

Hon. N. Letnick: Again, we are asking, if the legislation passes, for the industry to do its due diligence, determine what it really wants, go to BCFIRB, make its case. We have very excellent panel members on BCFIRB supported by great staff that will review the applications on a case-by-case basis.

They will then, if they deem it appropriate, allow the different industries to compel their members to an insurance program. They will decide whether or not the right package of insurance is being purchased or is being dictated to their members.

At the end of the day, the government has confidence in the process and in the industry purchasing — again, should this all pass and pass by BCFIRB — the right package that meets their needs.

L. Popham: That sounds like quite a lot of work for the Farm Industry Review Board to undertake. Is the minister confident that they have enough resources to do that work?

Hon. N. Letnick: I think, if I remember correctly, through estimates, we had increased the budget for BCFIRB by a third. So yes, on the resource side. Again, what we’re doing here is we’re empowering FIRB with the ability to say yes or no to the industry’s request to make insurance compulsory.

[1420]

A lot of the work — I would say most of the work — is going to be on the industry making their application, on the industry deciding which insurance package to buy, if at all, or which insurance to mandate as compulsory for the members, if they wish to do so.

Again, it is a caveat emptor kind of situation.

L. Popham: Well, just a comment on the budget increase to FIRB. I think some of that was to cover off some of the expenses regarding the changes to the SPCA, as far as I know. Is that correct?

Hon. N. Letnick: The member is right. I did bring it up because she asked the question. But $300,000 for the BCFIRB — that includes all the work that they do, including work for the SPCA. And since I did bring it up, I’d just like to remind the member that we also contributed $5 million to the BCSPCA for their capital project.

L. Popham: Okay. Well, the minister has made it very clear how the situation is working and how the legislation is working, and I appreciate that. The concern that I have is that if the industry signs on to an insurance program and a disaster happens and for some reason there’s a problem with the insurance program and people don’t qualify for what they thought they were going to qualify for, or there’s something that wasn’t considered…. How does the Ministry of Agriculture approach something like that if the insurance program fails?

[ Page 8044 ]

Hon. N. Letnick: As we discussed before, BCFIRB has asked the industry, when they made their application prior, to do their due diligence, to make sure they understood what the insurance packages were going to be that they were going to sign up for.

Without the legislations to backstop them — I don’t know if “backstop” is the right word — or to empower them, they didn’t believe that they had the authority to do so. With the legislation, if it passes, they will have that. It’d still be up to the industry to do their due diligence to make sure that whatever insurance they want to purchase covers the risks that they believe should be covered, and at the end of the day, a lot of that responsibility will go onto the industry.

V. Huntington: We have just passed the previous subsection, 1(b), with the definition of “marketing” as “producing, packing, buying, selling, storing.”

[1425]

I’m sorry. Did the act itself include the word “transportation,” and we’re just adding these? Or has

section 2(b), wherein we’re substituting “of the marketing”…? We’re excluding the word “transportation.” Now, is that an oversight, or was transportation part of the previous act?

Hon. N. Letnick: Yes, transportation has been removed from there. But now it’s in the

definitions of marketing. So in “marketing” it says including: “packing, buying, selling, storing, shipping for sale, offering for sale or storage, and in respect of a natural products includes its transportation in any manner by any person.” So that way it’s consistent throughout the whole act. Transportation is still there.

V. Huntington: Just to be clear, then, the definition of marketing that was substituted in

section 1(

b) was in addition to the language that included “transportation” and “shipping.”

Hon. N. Letnick: I understand the question, and it’s always difficult when you look at one piece of the legislation. I always prefer the red-lined version because everything is all in one place.

In 2(

b) it says: “in the definition of ‘marketing’ by striking out ‘producing, buying, selling’ and substituting ‘producing, packing, buying selling, storing.’” That doesn’t give you the flavour of the whole clause, because when you look at marketing in the

definitions, it includes transportation still in there. So the member can have confidence that transportation is still part of marketing.

Section 3 approved.

section 4.

L. Popham:

Section 4. It looks like a minor change, and maybe the minister can explain the reason.

Hon. N. Letnick:

Section 4 amends

section 6, “Delegation.” The rationale is to clarify that “board” actually refers to the marketing board.

L. Popham: I didn’t quite understand the minister’s answer. Could he explain it again?

Hon. N. Letnick: “Board” is not a defined term in the act, so the amendment clarifies this

section refers to a marketing board.

Section 4 approved.

section 5.

L. Popham: Can the minister explain

section 5?

Hon. N. Letnick: Similarly, the commodity board is not a defined term in the act, so the amendment clarifies that the

section refers to a marketing board.

Section 5 approved.

section 6.

L. Popham: Can the minister explain

section 6?

Hon. N. Letnick: It amends the language so it’s consistent with

section 2. The wording of each of these sections is not the same as the wording of

section 2, which are linked.

[1430]

These sections enable the LGIC to establish marketing boards and commissions, and the powers that the boards and commissions may exercise must be consistent with the purposes of the act.

L. Popham: Can the minister explain the difference between a marketing board and a marketing commission?

Hon. N. Letnick: Yes is the answer to the question: can I explain? So that we can save time, so I don’t get the question as to “well, go ahead and explain,” I’ll just explain.

Boards came first. Commissions were more of promotional tools, but over time they basically started doing each other’s work. That’s why they’ve been put together.

L. Popham: Do they have the same powers?

Hon. N. Letnick: Yes is the answer to that one.

Section 6 approved.

section 7.

[ Page 8045 ]

L. Popham: Can the minister explain

section 7?

Hon. N. Letnick: It’s a clarification section, making sure the language is consistent with the amended definition of “marketing.”

V. Huntington: I just want to confirm. In subsection 11(f), really what we’re doing throughout this is changing even the production of a commodity to be the marketing of a commodity. So the entire operation of farming, producing and creating that commodity is now considered part of the marketing of it? Is that really what we’re doing here?

Hon. N. Letnick: Again, it’s the same situation we were in last time. We’re taking out a bite, but if you look at the definition of “marketing,” the definition of “marketing” still includes producing. Just for the record again: “‘marketing’ includes producing” — the first one — “packing, buying, selling, storing, shipping for sale, offering for sale or storage, and in respect of a natural product includes its transportation in any manner by any person.” So it’s still all there. It’s just that now it’s consistent throughout the act.

V. Huntington: Yes, I understand that. I’m not meaning to catch anybody on anything. But what I’m commenting on is that it’s an interesting redefinition of producing a commodity. I mean, my family has been in the packaging business of foods for years and years and years, and I wouldn’t have thought the production of the food or even the transporting of the food to the packing facility would have been part of a definition of “marketing.”

[1435]

Yes, the packing; yes, the selling; yes, the storage of the packaged item might be part of a marketing effort. But producing it? It’s just an interesting way of including that terminology within the definition of “marketing.” I would have thought they were two different elements. Just a comment on the definition.

Section 7 approved.

section 8.

L. Popham: Can the minister please explain

section 8?

Hon. N. Letnick: This

section enables the LGIC to amend marketing schemes operated by commissions. The

section should apply to both marketing boards and commissions. Marketing boards are established under

section 10, and marketing commissions are established under

section 12. That’s for (a). For (b), it is unclear whether “objects” applies to the objects of the scheme or the objects of the order, so the language has been amended to clarify that “objects” refers to schemes. And (c), the production and processing are included in marketing and are therefore duplicative.

Section 8 approved.

section 9.

L. Popham: Can the minister explain

section 9?

Hon. N. Letnick: I see a trend.

Section 9 — renumbering for the big part. Renumbering is required, as the

section is being expanded. That’s for (a). For (b), this

section applies equally to marketing boards and commissions. And (c), the

section describes powers, in addition to those in

section 11, that may be exercised by a marketing board or a commission. These new powers do not require LGIC approval. The insurance requirements specifically relate to production losses, either from disease outbreak or from other interruption of production.

V. Huntington: Here we’re going to go back to my comments with regard to the new definition of “marketing.” Why then, if marketing includes production, are you using the word “production” in subsection 14(c)(a.1) and (a.2)? Why do we use the word “production” and not “marketing”?

[D. Horne in the chair.]

Hon. N. Letnick: I just want to be specific that the intent here is to insure people involved in the production of a natural product. That’s why we specifically say in here “production,” as opposed to production as a part of the marketing format.

V. Huntington: Well, I agree that it’s very specific to the production of the natural product, but does that mean you’re now excluding all the other

definitions that apply to marketing? If you’re specifying production, are you then excluding the other components of marketing that you’ve been so careful to define?

Hon. N. Letnick: Yes. This is specific to production only.

[1440]

V. Huntington: Elsewhere in the act does it carry through, then, requiring those who are transporting, those who are packaging, those who are selling…? It goes through many different operations to get to the end user — at least many products and distribution systems do. So if here you’re specifying production, do you then have other sections that are specifying those who transport, those who package, those who sell? Or are they no longer necessarily required to implement or comply with the biosecurity program?

[ Page 8046 ]

Hon. N. Letnick: Good question. The act does apply to everyone. But specifically, biosecurity measures and compulsory insurance only apply to those people who are in the production of the goods.

Section 9 approved.

section 10.

L. Popham: Can the minister explain

section 10?

Hon. N. Letnick: Subsections (

a) and (

b) are a clarification of language, (

c) is to add provincial boards to sections 16(2)(

a) and (c), and (

d) is also a clarification of language.

Section 10 approved.

section 11.

L. Popham: Can the minister explain

section 11?

Hon. N. Letnick: Here’s where we have a new

section that empowers marketing boards and commissions to impose the requirements to enable monitoring of compliance with biosecurity programs.

L. Popham: What sorts of qualifications are the people investigating to have?

Hon. N. Letnick: A lot of the boards have trained field staff that go out and do the work. Some, I understand, are even ex–police officers.

L. Popham: But the qualifications wouldn’t be defined?

Hon. N. Letnick: Boards determine the qualifications. It’s not in the legislation.

V. Huntington:

Section 16.1 says the commission “may…require a person.” I wonder: does this involve a class of persons — all those involved in the production of or the transporting of or the marketing of? Or is this a very discretionary, discrete authority that the board can exercise?

[1445]

Hon. N. Letnick: In law, a person is more than just one person. It could be a person. It could be groups, all of whom are subject to the biosecurity program, so it’s not just one.

Section 11 approved.

section 12.

L. Popham: Could the minister explain

section 12?

Hon. N. Letnick: Here we’re empowering marketing boards and commissions to apply an administrative penalty system for contravention of biosecurity program requirements. We’re also providing authority to BCFIRB to oversee the manner of serving the penalties and any other procedures that must be followed and were prescribed in conditions that must be applied by the marketing boards and commissions to determine the amount of the penalty prior to the amendments.

It was either you lose your ability…. This way, with the administrative penalties, there could be some progressive discipline and much better opportunity for the boards to change behaviour.

L. Popham: Can the minister explain what sort of penalties could be faced?

Hon. N. Letnick: The maximum is $10,000. It would be a graduated amount, but up to the discretion of BCFIRB to institute.

L. Popham: So FIRB would enforce the penalty?

Hon. N. Letnick: The whole system won’t come into force, the penalty system, without cabinet approval, so it will have to come through regulation. The regulations would be worked on between the boards and BCFIRB. Once that happens, the boards would be responsible for administering the penalties. Then the subject of the penalties could appeal, if they wished, to BCFIRB.

[1450]

L. Popham: So the commissions would see that the penalties would always be a monetary penalty?

Hon. N. Letnick: It could be monetary. You can still suspend or cancel a licence as well.

L. Popham: I guess I’m trying to establish if it would be something other than monetary, like jail time.

Hon. N. Letnick: Not changing the provision under 18(2), which says: “A person who commits an offence under subsection (1) is liable on conviction (

a) to a fine of not more than $20 000, (

b) to imprisonment not longer than 6 months, or (

c) to both a fine and imprisonment.” So that’s still available on conviction.

L. Popham: Did the minister say that this would be up to cabinet to decide on the penalty structure then?

Hon. N. Letnick: This is the only

section that requires the regulations. Those come through cabinet, so cabinet would have to see something being proposed and approve of some.

[ Page 8047 ]

L. Popham: When it comes to the point where cabinet is deciding on that, will cabinet be consulting with the industry?

Hon. N. Letnick: The consultation with the industry will happen before it comes to cabinet.

L. Popham: FIRB consults with the industry and brings the recommendations to cabinet?

The Chair: I believe the answer was yes, prior to that.

V. Huntington: I was somewhat concerned about the phrase “if satisfied on a balance of probabilities” that the person who is subject has failed to comply. I’m assuming then — or am I correctly assuming? — that subsection (3) then becomes the definition of “on a balance of probabilities.” Is that correct?

Hon. N. Letnick: I’m not too sure this will answer the question, but I’ll give it a try and we can confirm. There are two legal tests. One is the balance of probability test, which is “more likely than not.” The second standard is a reasonable doubt standard. This is a higher threshold usually applied in criminal offences.

V. Huntington: Well, it’s going to be my next question. Is there a legal understanding or definition of “on a balance of probabilities”? If it’s “more likely than not,” then does subsection (3) guide the issue of “more likely than not”? Where is the evidentiary value to issuing the administrative fine?

[1455]

Hon. N. Letnick: When we look at

section 3, we’re still talking about “more likely than not,” based on a case-by-case situation. The boards would be the ones adjudicating that — subject to BCFIRB, of course, if someone wants to appeal the result of the boards. But they would have to look at all of these and then consider, on a balance of probabilities, whether or not a penalty should be applied.

V. Huntington: I wonder if the minister could just discuss subsection (6) a little bit. Given that I have not pored through the act in its entirety, what are the other fines, penalties, orders, rules, determinations or decisions that could be imposed under this act on a biosecurities program marketer?

Hon. N. Letnick: First, I’d like to compliment staff for having all these answers laid out for me in advance. It makes the job a lot easier.

Explanation for (6) is that administrative penalties may be imposed in addition to any other action that might be taken under the act. For example, for a very egregious act, a person could receive an administrative penalty and have a licence terminated as well.

Section 12 approved.

section 13.

L. Popham: Can the minister explain

section 13?

Hon. N. Letnick: These amendments are made for consistency with previous related amendments to the act. It’s clarification of language.

Section 13 approved.

section 14.

L. Popham: Can the minister explain

section 14?

Hon. N. Letnick: Clarification of language, one more time.

Section 14 approved.

section 15.

L. Popham:

Section 15 has to do with the Prevention of Cruelty to Animals Act, and from my consultations I understand that the BCSPCA is in favour of this change and looks forward to that happening. From my understanding it adds that registered veterinarians can destroy an animal in critical distress in addition to authorized agents. I’m just wondering why this change is taking place and who requested this change.

Hon. N. Letnick: Both the college and the BCSPCA requested the change. The change right now is to allow a vet to put down an animal. Before, it was very difficult. The BCSPCA, of course, had to be called in. This way the veterinarians could actually take some action themselves.

L. Popham: In what circumstances was it a problem to put an animal under distress down? What part of the legislation was stopping that from happening?

Hon. N. Letnick: Previously you had to wait for the BCSPCA to give the authorization to put an animal down. Clearly, you don’t want to have an animal that is going to be put down to suffer for hours while you wait for BCSPCA to give that authority. So with this change in the legislation, supported by the veterinarians as well as the BCSPCA, the veterinarians would have the ability to make that decision themselves, without waiting for the SPCA.

[1500]

L. Popham: These are unowned animals? These are

[ Page 8048 ]

stray animals? Which animals are these that would have required the BCSPCA?

Hon. N. Letnick: Any critically distressed animal. The ownership is not a part of the legislation.

Section 15 approved.

section 16.

L. Popham: Can the minister explain

section 16?

Hon. N. Letnick: This extends the statutory immunity that is provided to agents of the SPCA to veterinarians where decisions are made to destroy animals in critical distress.

L. Popham: The BCSPCA is also in support of this change?

Hon. N. Letnick: Yes.

Section 16 approved.

section 17.

L. Popham: Can the minister explain

section 17?

Hon. N. Letnick: This

section provides for certain transition measures to retroactively authorize biosecurity programs, retroactively authorize requirements imposed by marketing boards or commissions in respect of those biosecurity programs and extends the retroactivity under (1) and (2) as necessary to ensure that the programs’ requirements are lawful.

L. Popham: Why was this change made?

Hon. N. Letnick: Some marketing boards have already required members to participate in biosecurity programs without the clear authority to do so in statute, so this

section retroactively makes such actions legal.

L. Popham: Would the new act make any decisions previously invalid?

Hon. N. Letnick: It’s actually the other way around. It’s validating previous decisions.

Section 17 approved.

The Chair: The committee will stand down on sections 18 through 23, and we’ll resume at

section 24 when the Attorney General gets her staff.

Sections 18 to 23 inclusive stood down.

section 24.

Hon. S. Anton: I’m joined by Toby Louie, Anita Nadziejko and Gina Henley.

The Chair: Is the member for Nanaimo ready to proceed?

L. Krog: I wonder if we might have a short recess, perhaps five minutes, just to get our critic present.

The Chair: The committee will take a very short recess.

The committee recessed from 3:03 p.m. to 3:06 p.m.

[D. Horne in the chair.]

Hon. S. Anton: I’m joined by Toby Louie, the executive director of policy and planning; Anita Nadziejko, senior policy adviser to Justice; and Gina Henley, who is general counsel for the Liquor Distribution Branch.

D. Eby: Could the minister please give an explanation of the intent of these amendments?

Hon. S. Anton: The amendments provide for B.C. Liquor Stores to operate under rules available to other liquor retailers. They will clarify and simplify administrative processes in the statute, including removing outdated provisions regarding advertising and purchasing liquor products by B.C. Liquor Stores as well as simplifying how government store operating hours are set. This contributes to continuing the modernization of the B.C. liquor industry in response to our liquor policy review.

D. Eby: One of the concerns that I’ve heard, particularly from small craft brewers, is that they cannot get their products listed by government stores. They talk about SKUs that they can’t get from the government stores. For example, a small brewery on the North Shore can’t get a SKU with the government store so that the manager of the local store can order his product and stock the North Shore beer in the North Shore government store.

Will these amendments address that issue for craft brewers, making it easier for them to get SKUs to sell their local products in their local government store?

Hon. S. Anton: None of the changes proposed today in these amendments relate to the issue raised by the member.

D. Eby: I just see in

section 24 the elimination of something called the “listing committee.” There’s a staff member that does the listing within the government liquor stores right now.

Perhaps the minister can explain…? Maybe this is one

[ Page 8049 ]

of the outdated provisions, but when I read that we were getting rid of the listing committee, I thought that meant that craft brewers would now be able to get their products listed as a right. If you have a product — it’s an alcohol product, and it’s licensed in B.C. — sure, we’ll list it. If the local store wants to order it, they can.

What’s the connection between the listing committee and actually getting a listing?

[1510]

Hon. S. Anton: Most products that wish to be on the market in British Columbia can be registered. There are some restrictions, but generally, products can get registered.

I think the point that the member is raising is whether or not they would be listed in individual stores. That is up to the Liquor Distribution Branch to decide in the case of government stores. Of course, in the private stores it’s up to them to decide.

Section 1 is a listing…. It takes out the definition of “listing committee.” It is made redundant by the proposed repeal of

section 15, which is found in

section 26 of the Miscellaneous Statutes Amendment Act.

D. Eby: I wish that I could have followed — and I tried — the minister’s explanation of how a product can be listed.

The system, as I understand it, is this. If I am a brewer of a small craft beer, I need to apply to the LDB to have my product listed in a catalogue that would be available for any government store to order from. The problem is that they’re not getting listed in the catalogue. If you’re not listed in the catalogue, then your local store can’t order the product. It can only order products that are listed in the LDB catalogue.

When I read — the minister talked about

section 15, which is being repealed, and

section 24, which is a consequential amendment — about the listing committee, I thought: “Great. They’re getting rid of the listing committee. Every brewer that qualifies will be able to have their product listed in the catalogue. It will be able to be ordered equally by government stores, private stores, restaurants and so on.”

Can the minister clarify for me whether this understanding of how the system works is correct and, if so, how these amendments relate to that, if at all? The listing committee seems pretty self-explanatory. I’m missing something here.

Hon. S. Anton: A manufacturer of a product, a brewery, can apply to the Liquor Distribution Branch to be registered in the catalogue, and then they would wish to be listed in the stores. So it’s two separate decisions. One is to be registered so that they’re available for anyone in British Columbia to pick up. The listing is whether or not they’re actually going to be sold in a government liquor store. Then they are listed for the stores.

[1515]

D. Eby: Thanks to the minister. That makes a lot more sense, now that I understand the difference between those two terms.

So, then, when the listing committee is being repealed by this section…. I assume

section 27 is putting something in its place, which is giving the powers to the general manager to deal with registration of products. What functions do the listing committee serve, and where are those functions being distributed in these amendments? Or was the listing committee simply some sort of archaic thing that hasn’t existed for a long time?

Hon. S. Anton: Yes, it is correct. The listing committee is now redundant. It hasn’t actually operated for a few years now. The new products are simply registered by staff. For example, to give a sense of the proportion of these things, last year there were 8,687 new products registered and only 19 rejected, so the vast majority of things which are presented to be registered are, in fact, registered.

D. Eby: Well, certainly, I can advise the minister, having met with many craft brewers, that the vast majority of craft brewing products are not available for listing in government stores because they have not been registered. Those statistics are not reflective of the experience of craft brewers in British Columbia, so I’d encourage her to push her staff on that a little bit and get the true story from craft brewers.

Mr. Chair, those are all my questions on

section 24.

Hon. S. Anton: I’d just like to respond to the last statement for craft breweries. They mainly are registered in British Columbia. If you can drink them in British Columbia, they are registered. The question I think the member is raising is whether or not they’re listed for sale in the government stores. They may not be listed, but they are definitely registered.

D. Eby: I thought we had cleared this up, but clearly, I didn’t understand.

When the minister says “registered,” she’s talking about the catalogue for public and private stores. When she says “listed,” that means whether or not a government store manager can actually order the product.

What I’m interested in is…. In my fictional scenario of a North Shore brewer and a North Shore government liquor store, I want the manager of the North Shore government liquor store to be able to order the product from the brewery that is, literally, just up the street. I want that to happen. I just need to understand from the minister….

section 27 — we’re going to get to it — we’re going to talk about registering liquor products, and I want to really understand this before we pass this section. I want the government liquor store to be able to order from the brewery that’s just up the street. Right now I’m told by

[ Page 8050 ]

craft breweries across the province that they’re having a great deal of difficulty — and I want to use the minister’s term — getting listed in the local government store, which means actually getting stocked and being available for British Columbians to buy and take home.

I wonder if the minister can clarify for me what the issue is there about registration versus listing and the sections that we’re being asked to pass here?

[1520]

Hon. S. Anton: As I said earlier, the products are registered. They then can be sold. A government store can pick them up. Private stores can pick them up. Once they’re registered, they can be sold. Hospitality can buy them and so on.

In terms of who carries the product, those are business decisions. For a private liquor store, it’s a decision of that store whether or not they’ll pick up that particular craft beer. Similarly, it is also a business decision of the Liquor Distribution Branch whether or not to put that product into the stores.

It is the case that those decisions, as to what products individual stores are carrying, will become more centralized over time. Up till now it has been up to the individual stores. But those decisions about which products will go into which stores will become more centralized.

Certainly, the branch itself does talk to the industry. Industry people will do what salespeople do on all of our products, which is persuade the stores that these are a good thing, or persuade the LDB that these are products that they should be carrying.

D. Eby: So it is a prerequisite for any restaurant or store that wishes to sell a particular alcohol product in British Columbia that you must be registered before the product can be sold. Is that correct?

Hon. S. Anton: That’s correct.

D. Eby: That’s all for

section

Section 24 approved.

section 25.

D. Eby: Can the minister explain the intent of this section?

Hon. S. Anton: This is correcting an outdated reference. It was the Litter Act. Now it’s the Environmental Management Act.

Sections 25 and 26 approved.

section 27.

D. Eby: Can the minister explain the intent of this section? I think I understand it, but I don’t understand why this is new. Why is this being added to the act? If you have to be registered to be sold in the province, why are we only adding now a power for the general manager to register products in B.C.?

[1525]

Hon. S. Anton: The intent of this

section is not different than what the previous intent was. It’s simply having the act match the nomenclature of the business. We had a listing committee. We used to list products. It is now registration of products.

D. Eby: And it’s now the general manager as opposed to a committee that’s responsible for what used to be called listing but is now called registering. Is that right?

Hon. S. Anton: The general manager always had the power. He or she used to do it through a committee. Now they do it through staff.

D. Eby: The proposed subsection 15.1(2) gives the general manager some direction about what to consider here. It says that the general manager “may consider the size, nature, form and capacity of containers and packages used for the liquor product.”

Can the minister clarify for us what the concerns are here? What would we be asking the general manager to look at? I can think of some very large product containers that are currently available in B.C. Is this about the materials the packaging is made of? I don’t understand what we’re asking the general manager to be careful about and to watch for, based on the wording of this section.

The containers need to be recyclable. The labels cannot be offensive. The products have to be socially responsible, so for example, alcohol freezies have been denied. They need to have proper documentation, so if they say they’re organic, they need to be able to demonstrate that. They can’t be counterfeit.

Those kind of things are things that the branch is looking at when it’s concluding whether or not to register a product.

D. Eby: The proposed subsection 15.1(3) says that a person must not sell or offer to sell a product that has not been registered. Where are the penalties contained for this section? In what manner will they be implemented? Are they within the act itself, or is that in the Offence Act? Can the minister clarify that?

Hon. S. Anton: The penalty

section is

section 35 of

[ Page 8051 ]

the current act. “A person who contravenes a provision of this Act or the regulations commits an offence, and if no other penalty is provided, is liable on conviction to the penalties provided in the Offence Act .”

Section 27 approved.

section 28.

[1530]

D. Eby: Can the minister explain the intent of this section?

Hon. S. Anton: It’s a lovely piece of bureaucracy that we’re getting rid of.

D. Eby: It’s a pithy answer, I’ll give the minister that. I don’t understand it.

I understand this repeals the

section that describes the regulations that a general manager must comply with in purchasing liquor.

Can the minister explain why we’re repealing this and what the intent is in eliminating it?

Hon. S. Anton: I don’t know if this is nostalgia for the good old days or what. But the provision,

section 17, says that “An order for the purchase of liquor by the government must be authorized and signed by the general manager” and that “A duplicate of every order under subsection (1) must be kept on file in the office of the general manager.” I hate to say it, but we’re just not doing that anymore. We’re just keeping these records electronically.

Section 28 approved.

section 29.

D. Eby: The minister certainly had her afternoon coffee, and I appreciate a little humour in the answers.

Section 29. Can the minister explain the intent of amending

section 18?

Hon. S. Anton: There are three things going on in this section.

One is in 18.1(c). This is the companion piece to registration. Earlier we were talking about registration of a product and then listing for sale in a store. This is the listing piece of that pair — registration and listing.

The second thing that’s happening is in (a). It is permissive now as to whether the general manager opens stores through British Columbia. I think it used to be thought that there were certain locations where they had to operate. Now it is permissive. The general manager can decide where to operate.

This is also a reflection of the fact that the stores, the government stores, will now be subject to the one-kilometre rule. So again, the general manager needs some flexibility.

The third thing that’s going on is in subsection (2). Having this

section in suggested that the only advertising the general manager could do was advertising to the public of the opening of a store.

[1535]

Taking this away, we are now freeing up the advertising requirements so that the general manager can advertise like any other retailer.

D. Eby: Starting with subsection (

a) of

section 29, does this create the possibility that the general manager may not actually establish or maintain at all any government retail outlets? It seems to me that this would…. The mandatory

section says there must be government retail liquor stores in British Columbia, and this amendment suggests that that is now an option, that the general manager doesn’t have to maintain stores. So the general manager could close every single government store in British Columbia or sell them or whatever. Is my understanding of that correct?

Hon. S. Anton: The intent of the

section is that the general manager has discretion as to where he or she opens a store or operates a store. I would remind the member that we are under a collective agreement. There must, under the collective agreement, be 185 stores kept open.

D. Eby: Subsection (b). I lost the minister a little bit when she was talking about the advertising. Is that subsection (

d) or is that subsection (

b) that makes it possible to advertise something other than the hours of the store?

Interjection.

D. Eby: I understand that’s subsection (d).

Subsection (c), I think, is — I agree with the minister — where the rubber meets the road in terms of my interest that I’m bringing to this House from craft brewers in British Columbia, in smaller communities, in communities across the province. They would like to be available in their local government store. That makes sense to them. They can do the deliveries. They want the general manager of that store to be able to…. I shouldn’t use that term. They want the manager of that store to be able to order their product.

This subsection, (c), says: “may list liquor products that may be sold in a liquor store.” Why is it that the minister would have a

section that registers everybody but has it that only certain products may be listed for sale in a government store? Why wouldn’t it be that all of the registered products are available for sale in the government liquor stores?

[1540]

[ Page 8052 ]

Hon. S. Anton: To give the general context, and then I’ll come back to the specific question, the general context is that there are about 33,000 products registered in the Liquor Distribution Branch system. They are not all, by any means, available in government stores. In fact, a number of them are specially imported.

For example, the member often talks about wine stores. Wine stores will bring in their own products from Italy or Spain or wherever, and they will have an exclusive on those products. They don’t necessarily want them to be sold anywhere else.

It is not at all the case that the products that are registered are all listed. In fact, there are about 8,000 products listed and about 33,000 products registered. I’m just going to check that number in a moment.

On the specific question as to the craft breweries, they’re customers like anyone else. They can and will and do persuade the branch that their products should be sold. If they have a market on the North Shore, to use the example that was mentioned a moment ago, then they will be able to persuade the branch that they do have that market, and the branch will list the products. They deal with customers every single day, all day long, who make similar kinds of requests. That’s what they are in the business of handling.

D. Eby: I have to note that the minister’s view of how craft brewers get their products into government stores is an optimistic one. That is probably how it should work.

In any event, with respect to subsection (c), then: “may list liquor products that may be sold in a liquor store.” It says “list” here, but actually we’re talking about registering products, aren’t we? We’re not talking about listing products. This is a companion to the registration power, not anything to do with listing a product for government store sale or stocking it?

The Chair: Could the member repeat the question for the minister?

D. Eby: Yes. I’m reading the proposed amendment here that says that the general manager “may list liquor products that may be sold in a liquor store.” When I read the word “list” now, I have the understanding that the minister gave me of a listing, which means that it’s actually stocked or available to be stocked in a government store. But what the amendment actually intends to say, or what it means by “list,” is the registration power — that the general manager may register liquor products that may be sold in a liquor store. Is that correct?

Hon. S. Anton: The registration

section is 15.1, which is found under

section 27 of the bill. The listing

section under this section, 29, is the proposed change to

section 18(1)(c), which says: “may list liquor products that may be sold in a liquor store.” That’s the listing. So everybody’s registered; 33,000 products are registered. Only some of them are listed. The ones that are listed are the ones which are available for sale in the government stores.

D. Eby: The craft brewers would like to have their products listed for sale in a liquor store. I note that the

section says “list liquor products that may be sold in a liquor store.” It doesn’t say government liquor store. It doesn’t say LRS. It doesn’t say independent wine store. Is this a general power to make available across the province in any store no matter what — private, public, whatever…? The general manager may list liquor products for sale in all these stores? Or is this intended to be just government stores?

Hon. S. Anton: This act is dealing with “liquor store” as defined in the act, which means “a government liquor store, government beer store or government wine store, or an agency established by the general manager under this Act.” So this is dealing with the government stores. Once the product is registered, any private store may pick it up and choose to sell it.

[1545]

D. Eby: I wonder if the minister, then, would consider taking this

section back and saying: how can we empower — maybe not empower; maybe require — the general manager to list craft beer products in British Columbia so that they can be ordered by the local government store?

When I read this section, it reads just like the way the world works right now, which is that it’s really difficult for craft brewers to get listed for sale in government stores. All they want to do is have their name on the list so that the local store manager that wants their product can order it in. They’ll do the sales to the local store manager. That’s no problem. But they can’t get on the list centrally, so then they can’t be sold locally.

Is there a way that we can amend this

section to put them on the list automatically? If you’re a craft brewer in B.C., you get a SKU and your local store can order you. Then they can go and do those sales. That’s all they’re asking for.

Is there an opportunity here for us to take this out, have a review of it and fix it so that the concerns of the craft brewers are addressed?

Hon. S. Anton: As I said earlier, this is a question of consumer demand and of sales. There’s no question that the local stores will support local products, because there is local demand for those products. If there’s a particular brewery that is near a store and there’s customer demand there, first of all, the product is likely going to be registered. To be sold at all, it needs to be registered. Will it be listed so that it can be sold in those particular stores? Yes. But that’s, again, an arrangement between the salespeople of the brewery and the Liquor Distribution Branch and the demand for the product in those particular stores.

[ Page 8053 ]

D. Eby: I can tell the minister that craft brewers know that their local government store manager wants to order the product, wants to bring it in, wants to support the local business, but because it’s not listed at the LDB, they are unable to do that. It is endlessly frustrating, because there is one staff member at the LDB that does the SKUs, and she is hugely backlogged. And one of the requirements of craft brewers is that you have to be able to supply the entire province. They don’t even want to supply the entire province. They want to supply one local store.

[1550]

I’ll leave it at that and invite the minister if she has some response to that. But a fundamental misunderstanding of the frustrations of craft brewers with getting SKUs at government stores, to sell to their local store, is behind this section. I’m disappointed that we can’t address it.

I’m ready to move on to the next section.

The Chair: Would the minister like to respond, or shall we move on?

Hon. S. Anton: I’ll just make one comment, which is the comment on having to supply the entire province. That’s not correct. They do need to be able to supply the stores that they are proposing to go into, but they don’t need to have product for the entire province. There are products that are local and that are sold only in certain local areas.

Section 29 approved.

section 30.

D. Eby: This removes a mandatory requirement that the general manager set store hours and creates a permissive power to do it. I don’t understand why we would do that. Frankly, I don’t understand why we’d have to require it. Maybe the minister can clarify the purpose of this section.

Hon. S. Anton: This is an outdated provision. We don’t do orders anymore. It gives the general manager, as it says right on the face of it, the ability to set the hours and days that the stores are open.

Section 30 approved.

section 31.

D. Eby: It’s my understanding that this

section — correct? — is just a consequential amendment, following the removal of the listing committee and the creation of

section 15.1.

Hon. S. Anton: That’s correct.

I gave the number 33,000 products with about 8,000 listed. We think that that number is more or less correct, but I have not got confirmation on it. So it’s possible that I’ll come back to the member at a later time and correct that number. But that seems to be the order of magnitude.

D. Eby: I thank the minister for the clarification.

Section 31 approved.

section 32.

[1555]

The Chair: Are we ready to proceed?

I may be wrong, but perhaps we could pass

section 32, which I believe is a punctuation error that’s being corrected.

L. Krog: I couldn’t possibly turn down an opportunity to ask the minister to explain this. I am sure this was a great problem getting this through the Legislation and Regulations Committee in cabinet. I am very interested to hear why, of all the keen energy and interest that is shown by government in legislative change, they would focus in on what I understand is the removal of a comma. I am just curious to hear the minister’s explanation.

Hon. S. Anton: I hate to say how many hours went into this comma. I know the member opposite will have spent hours contemplating the comma, as did I. After all that contemplation, the conclusion is drawn that we would be better off in

section 173 if we did not have the comma, so we are proposing to remove it. With its removal, we can then bring this

section into force. The Pension Benefits Standards Act will be better for it.

Section 32 approved.

section 33.

L. Krog: I’m curious to know why we’re simply adding this title in

section 12. Is that really necessary?

The Chair: The member’s question was the addition of “Division 1 — Order of British Columbia” and the necessity for such.

[1600]

Hon. S. Anton: The act is being changed so that the two separate functions will be provided for — the Order of British Columbia and the British Columbia Medal of Good Citizenship. We’re simply adding a title to division 1.

Sections 33 and 34 approved.

[ Page 8054 ]

section 35.

L. Krog: The reading of this section, which is an addition to 13, which provides for the Order of British Columbia, says: “

(3) The Order is the highest honour of British Columbia and takes precedence over all other orders, decorations and medals conferred by Her Majesty in right of British Columbia.” I’m going to presume that it’s simply because we’re now allowing for the awarding of the Medal of Good Citizenship referred to in

section 19. Is that essentially the only purpose for this — to distinguish between the two of them?

Hon. S. Anton: The Governor General of Canada is in charge of the Canadian honours system, which defines an order of precedence which must be adhered to in the wearing of orders, decorations and medals. An order is the highest form of recognition a country or a province can bestow on its citizens, so it’s important to make sure that the act reflects that distinction.

L. Krog: If I understand the Attorney General correctly, this is essentially to distinguish this, an awarding of the Order of British Columbia, as being higher than the medal of citizenship because of federal requirements that the Order of Canada is the highest award that the Canadian government can make to an individual.

It’s as opposed to, for instance, a medal awarded for bravery or valour on the battlefield, but in terms of what I will call a civil recognition, the Order of Canada is the highest. Therefore, the Order of British Columbia would take precedence next, and any other medals or awards below that.

Hon. S. Anton: There are national orders and provincial orders. The Canadian honours system does define the precedence. In terms of the provincial orders and decorations of one kind or another, it is the Order of British Columbia which will take precedence.

L. Krog: Is this section, then, based on the concept of the federal legislation, so to speak? I assume there’s legislative authority for the awarding of the Order of Canada. Is it so that we’re now going to mirror it in British Columbia? Do they, in fact, provide for a Medal of Good Citizenship as well?

Hon. S. Anton: I don’t want to go too far down the road of what the federal government does, because I don’t have those details here. What the federal government does define is that the order is the top of the hierarchy. In terms of the provincial distinctions, the order is on top of that list.

Section 35 approved.

section 36.

[R. Chouhan in the chair.]

L. Krog: Whenever the Legislature passes a bill and the sections therein, it’s presumed that there is some reason for this.

[1605]

I have to ask the question on adding this

section to

section 16, which now simply says: “Any person or organization may submit to the advisory council nominations for appointment to the Order.” By renumbering it, it’s making that (1) and this sub (2): “A person may not nominate themselves for appointment to the Order.” Has that been an issue in the past? Is that why we have this before us today?

Hon. S. Anton: It is something that happens occasionally, and it’s always a little bit awkward. So just to clarify, that is not the intent of the act. We are proposing changing it to make that clear.

L. Krog: Is it fair to say, then, that we haven’t had a plethora of people offering themselves up for awarding of the order?

Hon. S. Anton: Around ten times or so in the last 25 years, so not terribly frequent.

Sections 36 to 38 inclusive approved.

section 39.

L. Krog: This is the meat of the change around this, and I have to ask: has the Medal of Good Citizenship been awarded to any British Columbian since its enactment?

Hon. S. Anton: It has never been awarded.

L. Krog: Perhaps the Attorney General could advise, given this

section has been in existence for some time — and perhaps the Attorney General can advise how long that

section has been in place — why it has never been awarded and why we are doing it now.

Hon. S. Anton: The old

section 19 was a general section: “The Lieutenant Governor in Council may award the British Columbia Medal of Good Citizenship….” But it was actually never used. The

section was never developed or fleshed out, and it has just sat there for many years without ever being awarded.

L. Krog: Again, my question to the Attorney General is: why are we doing it now? If British Columbia has managed to get by without an awarding of the Medal of Good Citizenship…. We’ve had the Order of British Columbia

[ Page 8055 ]

in place, and we’ve got the Community Achievement Awards as well, recognizing the contributions of British Columbians. Why in 2015 is it worthy of — how shall I say — as the minister said herself, fleshing out, so to speak, and being used?

[1610]

Hon. S. Anton: The two sets of awards that the member mentioned are indeed well established: the Order of British Columbia and the B.C. Community Achievement Awards. The Order of British Columbia is a medal. The B.C. Community Achievement Awards are awards.

What this is, is a new medal, which I guess you might say sits between the two of those. But it is definitely a medal, an honour. It is something that we believe — that I believe and the government believes — will be very well received in British Columbia.

L. Krog: The proposed

section 19.1 provides that the committee “is established consisting of the following: (

a) a Chair appointed by the Lieutenant Governor in Council” — cabinet — “for a term not exceeding 4 years; (

b) up to 6 additional members appointed by the Lieutenant Governor…for terms not exceeding 2 years.” I see “up to 6 additional members,” so what’s contemplated in terms of the makeup of the selection committee?

What sorts of British Columbians are we talking about? Are we going to have a representative from labour, for instance? Are we going to have a representative from the charitable community? Are we going to have senior public servants, a member of the judiciary? I’m sure the government has given a great deal of thought to this. I’d be very interested to hear exactly who they’re contemplating in terms of appointment.

Hon. S. Anton: The goal is to choose prominent citizens who may themselves be an inspiration to the community. They should reflect diversity of our province, both regional diversity and diversity of culture and background, and any other ways we do diversity in British Columbia, which is many different ways — but prominent individuals and people who will give the committee the sort of respect that it deserves.

L. Krog: With great respect to what the Attorney General has had to say, if that’s the contemplation, my concern is that

section 19 says: “The Lieutenant Governor in Council may award the British Columbia Medal of Good Citizenship to recognize persons who have acted in a particularly generous, kind or self-sacrificing manner for the common good without expectation of reward.”

Now, with great respect, when some folks hand over millions of dollars to public institutions or make charitable donations in a very public way, it’s not quite as self-sacrificing as the volunteer who goes into the soup kitchen year after year, month after month giving of their time.

They are not going to be a prominent British Columbian, yet it strikes me that that’s the kind of person who is entirely altruistic that you might wish to have on the selection committee, who would not be tempted to award to people to whom life has already been very kind some medal in recognition, as opposed to those who selflessly make great general sacrifices.

It says “particularly generous” — which, obviously, I think means money — “kind or self-sacrificing manner for the common good without expectation of reward.” Again, I’m wondering: has the Attorney General given contemplation to the concept that maybe you appoint British Columbians who are not prominent, who are not in the public eye, who have not sought or received recognition themselves, potentially? In other words, perhaps someone from the faith community who has been recognized in a much less public way who is known to do good works.

Hon. S. Anton: I think we need to be careful not to mix up the selection committee with the recipients. The goal of the Order of B.C. is to award recipients who have got a provincial or national impact to their service to the community. The goal of this Medal of Good Citizenship would be for persons who have more of a local or a provincial impact.

[1615]

L. Krog: Just to confirm, the medal is to be awarded, arguably, by the Lieutenant-Governor-in-Council. That’s cabinet. Is it contemplated how this medal will be presented and who will preside over that kind of ceremony?

Hon. S. Anton: It is, indeed, intended to be ceremonial. It is expected that the recipients would attend a ceremony where they would receive their medal, a lapel pin and a certificate signed by the Premier. Some provinces have the right to put prescribed letters after the recipient’s name. We’re not there yet in British Columbia. It does require approval by the secretariat of honours, in Ottawa.

L. Krog: I take it, then, it isn’t contemplated that this will be presented by the Lieutenant-Governor, for instance. This will, in fact, be presented by the Premier. Is that fair comment?

Hon. S. Anton: That’s not certain, who the presenter would be. I imagine, in different circumstances, it might be different people.

L. Krog: I do know what is contemplated in proposed

section 19.5, that the medal “may be awarded by the Lieutenant Governor in Council on the recommendation of the selection committee.” In other words, it’s not mandatory. Even if the committee makes recommendations, they may in fact be overridden or disregarded by

[ Page 8056 ]

the Lieutenant-Governor-in-Council at any time. Is that correct?

Hon. S. Anton: Possibly.

L. Krog: So essentially, notwithstanding the good work of the selection committee, ultimately, who gets this award will be decided by the Lieutenant-Governor-in-Council — cabinet — presided over by the Premier. Is that correct?

Hon. S. Anton: On the recommendation of the selection committee.

L. Krog: I take it, then, that the Attorney General is saying that you have to be recommended by the selection committee. If you’re not, you won’t be eligible to receive the award from cabinet.

Hon. S. Anton: The intention is that this will be a public nomination process. In other words, members of the public may put forward their nominees. The selection committee will review those names, based on merit, and make recommendations to cabinet.

[1620]

If cabinet members wish people to be nominated, they can add those names to the nomination list to be considered by the selection committee.

L. Krog: Just to clarify, then, notwithstanding that we have a selection committee in place, cabinet itself may award this medal to a person who hasn’t gone through the ordinary process, whose name wasn’t submitted by the selection committee.

Hon. S. Anton: That is not at all what I said, of course. I said it was a public nomination process. The selection committee would review the nominees, the names, based on merit and make their recommendations to cabinet.

L. Krog: Just so I’m clear, there is a selection committee. It’s a public process — got that. It’s the selection committee that makes recommendations. Will you be eligible to receive this award even though you didn’t proceed through the selection committee process? In other words, can cabinet independently give this award to someone who didn’t come through the selection committee process?

Hon. S. Anton:

Section 19.5: “The Medal may be awarded by the Lieutenant Governor in Council on the recommendation of the selection committee.” The recommendations will come through the selection committee.

L. Krog: In other words, you can’t bypass this process. It can’t be a direct appointment by cabinet. You’ve got to come through the selection committee. The selection committee — appointed by cabinet, of course — will make these recommendations. Then the cabinet, essentially, will pick from that list. Is that the way the process is going to work?

Hon. S. Anton: I think it’s laid out pretty clearly in the act. The act says: “The selection committee must recommend each year to the Lieutenant Governor in Council persons who, in the opinion of the…committee deserve to be awarded the Medal.” They may make rules governing the conduct of their business, and the medal may be awarded by cabinet — the Lieutenant-Governor-in-Council, that is — “on the recommendation of the selection committee.”

L. Krog: Well, forgive the cynicism of the opposition. I think there’s a certain fear on this side of the House that this whole process will be used to reward prominent members supportive of the governing party and won’t be used to recognize those ordinary British Columbians who, as the

section itself says as it reads now, “have acted in a particularly generous, kind or self-sacrificing manner for the common good without expectation of reward.”

In other words, when we have a selection committee comprised of prominent British Columbians, which is what the minister tells us, we will end up overlooking those people whose sacrifice, if you will, whose kind or generous self-sacrificing manner in relation to their own lives is a far greater and more impressive act of generosity than somebody who is a billionaire and gives $10 million to a university.

I’ll also suggest to the minister that we won’t see a whole pile of supporters of any party other than the governing party become eligible for this award. With some cynicism, we look forward to how this process will work. I’m sure the Attorney General’s confidence in the good work of the committee, once it’s appointed, will — who knows — come to fruition.

With that, I have no further questions on

section 39.

Sections 39 and 40 approved.

section 41.

[1625]

Hon. S. Anton: I do have the correction to the numbers that I mentioned earlier. I’ve got to say, I wasn’t too far off. Chair, 28,760 products are registered in British Columbia, and 6,142 are listed for sale in British Columbia liquor stores. Those are the numbers from today. I imagine they change every single day.

D. Eby: The Liquor Distribution Act. This appears to be a transition provision, simply confirming previously registered products remain registered.

[ Page 8057 ]

Can the minister confirm if that’s the intent of this, and if not, what the intent of this

section is?

Hon. S. Anton: This is transitional. Just to confirm that anything that has been listed is now deemed to be registered for sale in the province.

D. Eby: Back to our previous discussion about the change in language and the elimination of the listing committee, is that correct? Is

section 15.1 a portion from the amendments to the previous act that we were looking at around

section 24 of this?

Hon. S. Anton: This is a reflection of the change of language from products which are registered to be sold. As I said today, as of this minute, there are 28,760 products registered to be sold.

The terminology used to be “listed.” So it’s simply to confirm that things that were considered listed before are considered to be registered now. The term “listing” now means available for sale in B.C. liquor stores.

Sections 41 to 43 inclusive approved.

section 44.

[1630]

Hon. R. Coleman: Just before we get started, I’d like to introduce my staff that are here today. To my right is Ines Piccinino, ADM, upstream development division. Geoff Turner, the director of pricing, tenure and royalty policy, is behind me. To my left, over a number of ministries that I’ve worked with him, is Richard Grieve, the executive director of policy and royalty branch.

B. Ralston: Beginning with sections 44 and 45 — I’ll deal with 44 first — these are minor amendments. Most of the meat of the revisions here are in

section 46.

Can the minister explain the purpose of the amendment proposed in

section 44?

Hon. R. Coleman: The purpose of the amendment is to provide a definition of “royalty” that includes royalties that are established under regulation under an agreement provided for in sections 78 and 78.1 of the Petroleum and Natural Gas Act.

This is a new definition. The new definition will ensure that provisions of the Petroleum and Natural Gas Act dealing with royalties apply to royalties established under an agreement. This will reduce costs and burdens for producers and for the government, as existing administration mechanisms will be applicable to royalty agreements.

[1635]

B. Ralston: So this change in definition relates to the proposed royalty agreements that are set out in

section 46?

Hon. R. Coleman: That’s correct.

Sections 44 and 45 approved.

section 46.

B. Ralston: This proposed

section amends

section 78 or adds a new

section to the Petroleum and Natural Gas Act which gives the minister wide discretion to enter into royalty agreements. Can the minister, in

section 78.1(1), explain what kinds of agreements are contemplated? What is the purpose for bringing these amendments at this time?

One can assume, I think, that it might be related to liquefied natural gas developments. There are some applicants or proponents who have upstream assets; that is, they own companies that are extracting gas. This is a mechanism that will enable the minister to enter into very long-term agreements with proponents. But beyond assuming that, I’d be interested in the minister’s explanation of why this is necessary at this time.

Hon. R. Coleman: I have a number of

section notes, but I’ll just stick to the beginning of this, and we’ll work our way through it with the member opposite.

The member opposite will recall — or may not recall — that over the last number of decades one of the challenges of successive governments, ours and former governments before us, was always the uncertainty about what we call the ups and downs of the revenues relative to resources.

One of the ones that was most volatile in the 1990s and also in the 2000s was natural gas royalties, because you could have up and down years and these massive swings that affect budgets and planning. One of the things that this is intended to do is to provide a robust framework under which long-term agreements can be entered into that establish that royalties be paid by petroleum and natural gas producers.

This is a new section.

Section 78 currently provides a limited ability to establish royalties by contract. The new

section 78.1 will enable government to enter into long-term agreements, establishing royalties be paid by producers who are making investments. It will increase the demand for B.C. natural gas such as an LNG facility or gas-to-liquids plant.

Subsection (1) enables the minister, if authorized to do so by the Lieutenant-Governor-in-Council, to enter into an agreement establishing a royalty payable by a person on petroleum or natural gas produced in a location or class of locations.

B. Ralston: In subsection (2) in this proposed 78.1 it talks about a prescribed class of agreements. Is it intended that there would be any time limit on these agreements? The way it reads to me is that the agreements could be entered into for, perhaps, the amortization per-

[ Page 8058 ]

iod of an LNG plant — say, 30 or 35 years.

Is it intended to enter into royalty agreements that are of that length? If it’s not intended, would the minister agree that the

section is sufficiently open-ended to permit that, should he so choose or should the cabinet so choose?

[1640]

Hon. R. Coleman: The length would be established by regulation. But certainly, this is about having long-term certainty on both sides of an agreement, both on the royalty side for government and the ability to look long term on what revenues relative to the royalty would be, subject to that curve, which is the up and down, and the same thing with companies.

It gives stability. No money is lost, but it does give stability as to the money that would flow in such a way that government would be able to budget on it and so would companies be able to make long-term investment decisions that they’re going to make in the billions of dollars and to know what their royalty commitment and responsibilities would be so that it would be averaged over the term.

There is no term established in legislation. As negotiations go on, those terms will obviously come to the fore as we work on negotiations once somebody moves towards a final investment decision.

B. Ralston: In the Auditor General’s 2010 report there was a recommendation to divulge more information on the impact of royalty programs in relation to oil and gas activity in B.C. to the public. That’s a quote taken from the B.C. Oil and Gas Royalty Programs: Program Goals and Performance Measures — 2014 Report , from the policy and royalty branch, upstream development division, January 2015. That’s a report from the ministry that talks about better disclosure of royalty revenue.

We’ll get to the provisions that would appear to limit the disclosure of these agreements. But as a basic principle, can the minister explain how having these kinds of long-term agreements will advance the goal that the ministry appears to adopt from the Auditor General’s recommendations — more transparency and openness about royalty revenues? Given that the minister says it’s for budgeting purposes, there may be others than those in his ministry that want to determine what these royalty revenues might be at some point in the future.

Hon. R. Coleman: I think the member is referring to an Auditor General’s report with regards to royalty programs from about 2010. We have been making those reports public since that period of time.

This isn’t about royalty programs. This is about royalties that would be paid to government based on the revenue of royalties coming out of the gas that comes out of the ground to a long-term purchaser of gas or supplier of gas in B.C. through something like an LNG plant.

What the intent is, is to try and give some certainty to both sides of the equation, both the business investment to know over a period of years that curve or that ability to keep this thing shaped so that it’s understandable…. People would know what their costs are going to be rather than having these significant fluctuations in cost, both for the budgeting of government and also for the budgeting of industry.

I think what the member is talking about when he talks about programs…. He’s talking about things like the infrastructure royalty program, which is a program, for instance, where we do an investment off royalties to make sure we can build the roads, the bridges and the infrastructure with regards to the northeast part of the province and its infrastructure required.

Our payback on that — benefits of that program — is about 4 to 1. Some years they’ve been higher, as high as 7 to 1, on each one of those programs with regards to what government gave up in royalties and got back in the value of roads and infrastructure that we would have normally otherwise had to pay for.

B. Ralston: Well, I disagree. I think it is all about disclosure of future revenue. That’s what the minister is talking about.

[1645]

One of the values that is talked about in the performance measure indicators in this ministry report, B.C. Oil and Gas Royalty Programs, performance measures , is striking the balance between incenting investment and providing a fair return to the province.

I can see from the point of view of a producer…. Certainly, the effort is on the part of the ministry and the minister to drive the costs of proposed LNG proponents down, whether it’s advocating for a reduction in the depreciation allowance, which the federal government has now granted; the proposed legislation to reduce the taxes on, for example, the Petronas plant by inviting an exemption agreement for municipal taxes; the reduction of corporate taxes down to 8 percent if a company establishes a permanent establishment in British Columbia.

The effort is to incent investment and drive all taxes across the board for these investments down in order to, presumably, encourage the investment.

The other side of that, as set out in the ministry’s own document, is providing a fair return to the province. I’m quoting again from the ministry’s own document, and this is the question. “If royalty rates are too high, investment will migrate to other jurisdictions. No drilling, no production equals no royalties. If royalties are too low, the Crown does not maximize value to the Crown from the oil and gas resource,” which is, of course, publicly owned.

Can the minister explain how, in an effort to drive down costs and to stabilize royalties at a very, I take it,

[ Page 8059 ]

advantageous level to companies, we will be maximizing here in British Columbia the value to the Crown from the oil and gas — or, in this case, the gas — resource?

Hon. R. Coleman: That’s incorrect. If you take a ten-year level of royalties, and the royalties are up at a certain level because the price is up, let’s say, in year five and goes way down in year six or seven and then goes back up in year eight or nine, what you have is you have fluctuation of costs, which makes it difficult for someone to actually budget, whether it be government or an industry that’s going to make a significant investment.

You can do the same thing, however, and get the same revenue over the same ten-year period by having a royalty curve established that says that within this range, we’re going to receive exactly the same revenues. It’s just that some years we will get more when we should have gotten less, and some years we’ll get less when we should have gotten more, because we actually average across the scheme, the total amount of money being relative to that.

The other questions in and around other aspects the member included in his questions are not included in this

section of the act. They’d be more appropriate for estimates debates, which for this ministry, I believe, start on Monday.

B. Ralston: Well, none of that — the mechanism that the minister claims is thought of in this

section — is actually set out in the section. It just says: “…enter…into an agreement establishing the royalty to be paid by the person to the government, and the method of calculating the royalty….”

Given that the justification, apparently, for this

section is an internal calculation that I gather from the minister’s cursory description will average royalty payments over the life of an agreement — which could be as long as 20 or 25 years, or 30 years; that hasn’t been denied — and will even out the revenue, if I could put it that way, could the minister describe with more detail how that would work and, therefore, why he’s proposing this amendment?

[1650]

Hon. R. Coleman: Basically, you’re wrong again. We’re not reducing royalty rates for any company that wants to do business in British Columbia. All we’re doing is getting to an effective royalty rate over a long period of time to actually establish the stability of the revenues by taking into account all our royalty agreements that exist on the ground. For instance, we have a deep-well credit in certain areas of the province. We have other ones.

As far as the issues in and around infrastructure, we have those royalty infrastructure things. They all go into a basket, along with the expected revenue and the percentage we would expect to get out of it. We take that into a curve. We put it over an effective period of time. We call that the effective rate of the royalties.

Probably the easiest example I can give to the member is…. I think it was in about 2006 or 2007 that the government saw in the neighbourhood of $4 billion or $5 billion in royalty revenue. In the last couple of years that could have been as low as $400 million.

If you took that same average across the last ten years and you were able to take an average that way, you’d be able to budget differently, from the perspective of government, as to what you can invest in — things like health care and education coming off that revenue. At the same time, you would have been able to provide some certainty in and around how the investments would look, and the industry would be stabilized.

Now, if you overlay that with somebody who wants to come into the province and make an investment in the neighbourhood of $30 billion…. They’re trying to do a budget for their business and their capital investment over a period of time, bringing into account the costs, when they go before their board and their financial people to make a final investment decision.

One of the things that became apparent as we’ve come through this cycle — and as I’ve learned as a minister and having been in government long enough to have seen the cycles — is that it would be more effective for everybody if there was actually a way to do a calculation and to protect government revenues over time but, at the same time, put it in such a way that you’d actually be able to budget realistically, particularly if you are either the government that has to deliver programs coming off those revenues or a company that’s having to make a decision to invest in the billions of dollars over a 25- or 30-year period.

So this is only to, basically, try to get to an effective average across rate.

A. Weaver: My question to the minister, then, is: why doesn’t this legislation say that? You’ve just outlined a process by which you want to formulate an averaged royalty rate to protect against boom-and-bust cycles. Why doesn’t this legislation actually specify that, as opposed to specifying the ability to grant the minister powers to do whatever he or she wants at any time he or she wants without having to worry about disclosing it?

Hon. R. Coleman: This is enabling legislation that allows for us to use another tool in the toolbox that could advance the investment of billions of dollars in British Columbia by actually having the ability to stabilize what the revenues to government are and what the costs to companies are within a band that will cost the taxpayer no more money and that allows us to enter into discussion and negotiations to accomplish that.

B. Ralston: Well, as I recall, certainly there was a huge increase and run-up in the price of natural gas which led to increased royalties. In 2007 and 2008 the minister mentioned natural gas royalties at $4 billion or $5 billion,

[ Page 8060 ]

I believe it was. Certainly, that was when Carole Taylor was the Finance Minister. Budgeting was a good deal easier and more comfortable with that kind of revenue.

[1655]

Is the minister saying that this is a hedging strategy against the future price of natural gas, that the companies will be agreeing to pay more royalties when the price is low and less when the price is high? There are many companies which have gone broke trying to predict the fluctuations in the price of natural gas. I really wonder: am I understanding that’s what the strategy is — to hedge against the future price of natural gas?

Hon. R. Coleman: It’s not a bad description from the member. Basically, the member is correct. When you do something like this, you look at the overall and you say…. Actually, Carole Taylor picked a perfect time to be Finance Minister in British Columbia.

Effectively, you end up with an effective rate across the picture, but when it goes way down, we get more money because we’re stabilized at a price, and then it goes across the curve. If it goes way up, it would go down slightly to average off against the back end, but there’s a hedging mechanism that says that once it reaches a point, it doesn’t go any lower or any higher so that you have an average across the board to protect revenues for government and also to have the stability of costs for the long-term investor in British Columbia.

B. Ralston: Well, I understand the advantage for the producer, in the sense that their cost would then be fixed over a lengthy period of time. That facilitates their budgeting process. I’m not certain of the advantage to government, particularly.

Why can’t that same reserve method or hedging against future declines in price…? Wouldn’t that be accomplished by the prosperity fund? Wasn’t it the intention of the prosperity fund to take the natural resource and the revenue earned from it, set it aside for the future and use it to smooth out the bumps in the price of the natural gas? Everyone knows, I think, that as a resource it has a cyclical price.

I’m not sure why the two mechanisms are being merged into one that seems to be more of a benefit to the company, given that they’re going to get that, and less of a benefit to government — other than, the minister says, stability of revenue. But that can be accomplished, I think, in other ways internal to the government that don’t involve unnecessarily fixing the price at a low level — which would certainly be the bargain that the companies would drive.

Certainly, their econometric modelling and their familiarity with the global natural gas market — as talented as public servants are here — I would think, would give them superior bargaining power in any agreement that would be reached.

[1700]

Hon. R. Coleman: Again I will repeat the fact that there’s no price advantage to the company. They will pay the same amount of royalties over the piece as they would whether they went up and down like this or whether we had a royalty curve. Hedges are protections at both ends. Government actually gets more than perhaps the royalty price when the price is down, maybe a little less when the price is up. But then, at the same time, it allows government to take that revenue and budget it.

Out of that money that government is bringing in, it’s quite possible that there’d be excess of revenues to budget that would then go into a prosperity fund. That would build a prosperity fund over time, because you could actually, as any government, be able to budget that surplus to go somewhere and to build on it.

At the same time, when you’re trying to attract an investment in excess of $30 billion for a project in British Columbia to move gas that you have no market to send it to today, at a price that is so significantly depressed that there’s virtually hardly any revenue coming off the product….

To actually build a business case around making sure revenues are protected long term, that the stability is there for these companies to make an investment and making sure the taxpayer gets what they deserve out of the resource seemed to me, when we started looking at this, to be a pretty effective way to go about it.

B. Ralston: Is the minister saying that in any such agreement the royalty rate will be fixed for the life of the agreement? If there’s greater volume or the price goes up, then the take from royalties would be greater. But the royalty rate itself, if I’m following, would be no longer subject to any change. So the government, should it choose to raise the rate at some point in the future, would be forbidden by the terms of this agreement from doing so. Is that correct?

Hon. R. Coleman: I’ll try to explain this for the member without the use of a graph or a piece of paper. Let’s assume you have a price of natural gas here. And you have a price of natural gas here — over, let’s say, a ten-year period. It’s down here, up there. So you take a line across here, and you say: “When it’s down, we get more revenue than the royalty would normally give us. When it goes past here and it’s up, it would be down slightly before the revenue we would get….” But at a threshold, once it reaches a threshold, anything above that would be additional royalties to government, over and above the curve.

B. Ralston: But is it contemplated in that agreement and in setting those terms that there would be no possibility of increasing the royalty rate? I’m not talking about the revenue from the royalty that fluctuates, based on the price. I’m talking about the royalty that, regardless of the price, if it were raised, would generate more revenue at any price.

[1705]

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Hon. R. Coleman: The royalty rate that’s paid is based on percentage. It’s a percentage of the royalty. So all you’re doing is saying that when the price is down, the effective rate of the percentage across royalties is here. If the price is down, government could actually get additional dollars from what it would normally get, because that allows for the stability on the lower price. As you come across and the price goes up, it doesn’t go up as fast, but once it reaches a threshold, then it goes up, and the percentage continues to apply.

That is basically a formula that says you know you’re going to pay royalties based on this percentage on the price of gas over the life of an agreement, and as you pay that, the percentage is going to fluctuate, with some stability built in over the period of that agreement so government is always getting its percentage of royalties based on price.

B. Ralston: Well, I appreciate the further detail on the explanation, but my question is a different one, and I’ll pose it again. Let’s suppose the royalty rate is 10 percent. You enter into an agreement, and when the price is low, you receive a bit more, and when the price is higher, you receive a bit less in order to balance this out and achieve this effect that the minister thinks, for policy reasons, is desirable.

Does that forbid the…? By entering into such an agreement, is it intended that the royalty of 10 percent will be fixed for the life of the agreement? In other words, regardless of where the price of gas is, it will always be 10 percent, plus or minus, in accordance with this algorithm that seems to be developed here. That’s my question.

I strongly suspect that the ministry and the minister, in this agreement, will be locking in a royalty rate for the life of the agreement. That’s the advantage to the company. Is the minister prepared to confirm this or not?

Hon. R. Coleman: Inasmuch as a government can’t bind a future government. But the answer to that question is yes.

B. Ralston: In the recent report of the Auditor General, the Auditor General noted that the government had granted another $1.25 billion in subsidies to the industry to drill deep and shale gas wells this year — this will be 2014.

The Auditor General goes on to say that shale gas developers have “incurred expenditures that will qualify for $1.25 billion in incentive credits but have not yet produced enough oil or gas to claim these amounts.” A further quote: “When these producers claim their incentive credits, that money will be deducted from the royalties that they owe, thereby reducing the amount of money government will generate.”

These agreements will not, I take it, alter the ability of the producers to deduct those incentive credits from any future royalties that they might pay. Is that correct?

[1710]

Hon. R. Coleman: I’ll take a minute with this particular answer for the member. I’m going to take it back with a little bit of history. In 2001 the member for Peace River North…. I believe he may have been the Minister of Energy and Mines, but certainly he brought proposals to government.

At the time, as the member may or may not remember, the oil and gas industry — it’s really a gas industry in British Columbia; we don’t have oil — was really, really cyclical. It was actually operating for a few months of the year. Then it would shut down. The rigs would move. It would come back. Cyclical.

The recommendation was: “Let’s start looking at some of our royalty programs to enhance some different activity on the land base.” Back in 2000 and 2001 we had about 15 years of known reserves of natural gas in British Columbia. We came up with some programs like the deep-well program and those things to offset royalties — money that would not have been spent or invested in the gas fields if we didn’t have some incentive for people to try to be innovative. As a result of that, we found the amount of gas that we have in British Columbia, which could sustain this industry for 150 years.

Baked into our royalty programs for a number of years now has been that incentive program to do this. Some of the deeper wells we’re now seeing — which would have never gotten drilled because they’re very, very expensive — have some significant outcomes. I can’t go into the outcomes and pressures on some of the wells because that is actually information that is trade confidential, but I can tell the member opposite that we have a number of fields.

Each field in B.C. has, basically, what you would call its benefits. The Montney has more liquids that come off, so you can actually get liquids also with the natural gas. You can pull those out and get a benefit for them. Others may have more pressure. Others may be drier, and they have other issues in and around how that gas can be produced.

The whole incentive around the infrastructure royalty program, which I mentioned earlier, was to build the roads and the bridges for the access into these fields, because we’re talking about a very remote area of British Columbia where there was none of that. That was an incentive to get people to build the roads and bridges and get the access.

The drilling programs were to incent industry to go and spend the money to invest and explore to find the gas that we have today. Those deep-well programs continue to exist and are allowed today, as they will be — I would imagine — as we look at different fields and new opportunities, because we do try and adapt those programs. Again, maybe that’s more of an estimates discussion on detail, but we do attempt to adapt those to where we think the next reserve or the opportunity is.

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Basically, the royalties is the royalty. The programs have been offsetting against these to incent the investment in British Columbia to be in a position, actually, where we now know we have a world-class resource that we can send to another marketplace. Obviously, not North America given the price and volume of gas in North America, but it has attracted, because of the world-class resource we’ve now identified, the people that want to invest in LNG in British Columbia for the long term. That’s part of the reason they’re there.

Without making the changes in the early 2000s, which were done by a minister long before me — and, evidently, quite inspirational — we wouldn’t be here today talking about LNG. We will continue to have live programs that would incent opportunities. We may get things that come at us in the future where somebody wants to do more liquids with regards to processing in British Columbia versus shipping them somewhere — liquids not being LNG but other ones like propane, butane and those sorts of things.

Those pieces would all come in to government under policy over time. This is really about saying to people who want to make significant investments in British Columbia: “You’re going to pay us 100 percent of our royalties. However, we are prepared to work with you to shape that program so that you have some stability in your planning to know what your costs are so that you can make that decision.” But at the end of the day, the taxpayers of British Columbia are going to get all the dollars that they’re due.

A. Weaver: Now, I recognize that government is rather desperate to land the $30 billion investment, and in so doing, we’re just seeing a $1 billion investment walk from Vancouver Island EDPR and TimberWest trying to put $1 billion wind farm investment…. Of course, government is not interested in that, because they’re desperate to fulfil this pipedream.

[1715]

The concerns I have here…. I’ll ask a very direct one. In light of the fact that everything is up to the minister’s discretion, in essence, to enter into secret deals — presumably handed to him or her by a company, because this government has lost all credibility on this particular file — one of the things that they might do, for example, is work out a royalty rate that might actually be $1 billion less than it would otherwise be so that the company could then find $1 billion to perhaps give to the Lax Kw’alaams First Nation to get title over their land.

This is the kind of stuff that the public does not trust government on because of this legislation, where there’s nothing that precludes government working out a back deal to say: “Well done, Kw’alaams. Good for you to get your title rights recognized. Good for you to negotiate a cost. But we in the province of British Columbia will pay that cost, and we’ll pay that cost by changing this royalty rate in secrecy so that the company doesn’t actually pay it.” The province of British Columbia pays it.

My question to the minister is this: why does he need this level of secrecy here that he does not even need to give the Lieutenant-Governor-in-Council, his cabinet colleagues, notification as to what deals he is making? Does this minister honestly believe that the millions of people living in British Columbia trust him and only him to negotiate royalty rates for generations to come because somehow he knows what’s going on, and no one else does?

Hon. R. Coleman: I will walk past the ignorance of the question and just go to my answer. If the member would look and do some research with regards to the legislation, the power given to the minister to do this comes from Lieutenant-Governor-in-Council, which is cabinet — the ability to do this. And if there’s any change in revenues or things that have to be adjusted on a financial basis, the minister, as I know, with regards to my service plan, my letters of expectations, with my responsibility to government…. Anything that affects the government fiscally, I have to take back to Treasury Board.

I think it’s inappropriate for the member to think that it’s just the minister that’s making this decision. In addition to that, if the member would like to look at subsection 78.1(3), it also says that “The minister must, as soon as practicable, publish an agreement entered into under (1) but may withhold from publication anything in the agreement that could be refused to be disclosed under” —

an act that governs us all — “the Freedom of Information and Protection of Privacy Act….”

The only thing that would be not disclosed in that, I believe, would be if there was something that was significantly different or something that was — technology or whatever — with regards to the design of a plant or something that may have an effect on the competitive side or the marketplace before it was disclosed by the company in the appropriate manner. If a request were made under that act, the disclosure of the agreement has to take place. It’s our full intent to make these agreements public.

A. Weaver: Well, in fact, I have read this legislation rather carefully. I’ve been following this file very carefully for the last two years. Frankly, what I’ve been saying for all that time is playing out here. Here’s another sellout.

In fact, if you read 78.1(2), it says the following: “The approval of the Lieutenant Governor in Council is not required for the minister to enter into an agreement under subsection (1)….” I don’t know what the minister doesn’t see about that, but it specifically says that “the Lieutenant Governor in Council is not required for the minister to enter into an agreement under subsection (1) (

a) in the prescribed circumstances, or (

b) in respect of a prescribed class of agreements.”

In essence, this is saying that the minister can essentially enter into an agreement. The province of British

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Columbia, all of us, believe that we have such confidence in this minister that we are going to let him — and only him — go into an agreement with a multinational corporation. This has got to be some kind of a joke.

What is the justification that the minister needs these exclusive powers to go and enter into agreements without his cabinet colleagues knowing, without the Premier having to even know, but giving him power under

section 78.1(2) to do this? What gives him the right? This is not an autocracy. Why does the minister think it is?

[1720]

Hon. R. Coleman: If you read the section, it says: “in the prescribed circumstances, or (

b) in respect of a prescribed class of agreements.” These are determined by Lieutenant-Governor-in-Council and allow the minister to sign them as a delegated authority to do so.

The characteristics of these agreements — in prescribed circumstances and in a class of agreements — are dealt with long before they ever get to an agreement with regards to what’s in them and what the minister can sign or cannot sign.

So basically, what it effectively does…. It does what most pieces of legislation do and delegates authority, after certain prescriptions and outlines have been prescribed by government, to a minister that he can execute on behalf of government.

B. Ralston: Subsection 78.1(4) sets out a number of conditions or terms that may be included in any such agreement.

The first part of the subsection says “may be for a term the minister considers advisable, but not for a term exceeding the prescribed number of years.” Then it goes on to specify the charges, specification of locations, oil and gas, petroleum or natural gas production levels of certain locations, terms respecting investment in exploration, development or processing of the petroleum.

They seem to me to be, if I might, very similar to what is proposed in the project development agreements that we have spoken of earlier and the minister has said, in his view, should not be disclosed. But nothing in the recitation there of proposed terms makes any reference — that I can see, perhaps obliquely but nothing direct — about competitive or proprietary information.

The royalty which the Crown receives is a return on a public asset — that is, ownership of the gas, so the oil is publicly owned. The return by way of royalty is returned to the Crown. It’s on the return for the right to extract the asset and use it, and there’s a requirement of a price to be paid for the Crown.

On the minister’s website there’s a lengthy book, about 300 pages, that explains about how royalties are calculated and how they are paid, and there’s a whole series of regulations — all of which is public. So I don’t understand and I don’t accept the