2014 Legislative Session: Second 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)

Thursday, March 13, 2014

Afternoon Sitting

Volume 8, Number

ISSN 0709-1281 (Print)

ISSN 1499-2175 (Online)

CONTENTS

Page

Orders of the Day

Committee of the Whole House

Bill 16 — Supply Act (N o . 1), 2014

M. Farnworth

Hon. M. de Jong

Report and

Third Reading of Bills

Bill 16 — Supply Act (N o . 1), 2014

Committee of the Whole House

Bill 8 — Budget Measures Implementation Act, 2014

M. Farnworth

Hon. M. de Jong

Hon. B. Bennett

A. Weaver

Report and

Third Reading of Bills

Bill 8 — Budget Measures Implementation Act, 2014

Tabling Documents

Government's proposed response to 2013 Judicial Justices Compensation Commission report

Government's proposed response to 2013 Judges Compensation Commission report

Second Reading of Bills

Bill 7 — Laboratory Services Act (continued)

D. Donaldson

Hon. T. Lake

Committee of the Whole House

Bill 13 — Off-Road Vehicle Act

N. Macdonald

Hon. S. Thomson

B. Routley

Proceedings in the Douglas Fir Room

Committee of Supply

Estimates: Ministry of Children and Family Development (continued)

C. James

Hon. S. Cadieux

S. Hammell

A. Weaver

D. Donaldson

G. Holman

M. Elmore

J. Rice

[ Page 2217 ]

THURSDAY, MARCH 13, 2014

The House met at 1:33 p.m.

[Madame Speaker in the chair.]

Orders of the Day

Hon. M. de Jong: In Committee A, Committee of Supply, the ongoing estimates of the Ministry of Children and Family Development; in this chamber, committee stage of Bill 16, the interim supply act.

Committee of the Whole House

BILL 16 — SUPPLY ACT (N o . 1), 2014

The House in Committee of the Whole (Section

B) on Bill 16; R. Chouhan in the chair.

The committee met at 1:34 p.m.

Section 1 approved.

[1335]

section 2.

M. Farnworth: So that people who are watching this debate and understanding the sheer size of the amount of money that we are dealing with, why is it that nine out of 52 weeks was chosen — as opposed to, let's say, 12 or 24 or what have you?

Hon. M. de Jong: Essentially, because it takes us to the end of the session. That is what we anticipate will be the length of time required to move through all of the estimates and the tabling of the final supply act.

M. Farnworth: I thank the minister for his answer. I think it's an important point to make. What this does — as we said in second reading debate — is allow for the examination of the spending estimates of the individual ministries in a more thorough fashion.

At the same time, the passage of this particular bill also allows government to fund its obligations financially — in particular, the payment of people who work for the province or agencies, health authorities around the province. I thank the minister for his explanation.

Sections 2 to 4 inclusive approved.

Preamble approved.

Title approved.

Hon. M. de Jong: Mr. Chair, I move the committee rise and report the bill complete without amendment.

Motion approved.

The committee rose at 1:36 p.m.

The House resumed; Madame Speaker in the chair.

Report and

Third Reading of Bills

BILL 16 — SUPPLY ACT (N o . 1), 2014

Bill 16, Supply Act (No. 1), 2014, reported complete without amendment, read a third time and passed.

Hon. M. de Jong: Madame Speaker, I call committee stage of Bill 8, Budget Measures Implementation Act, 2014.

Committee of the Whole House

BILL 8 — BUDGET MEASURES

IMPLEMENTATION ACT, 2014

The House in Committee of the Whole (Section

B) on Bill 8; R. Chouhan in the chair.

The committee met at 1:39 p.m.

Section 1 approved.

section 2.

M. Farnworth: This

section of the bill is an appropriation for unfunded pension plan liability. This is something that is not unique and is often a key part of the Budget Measures Implementation Act.

My question for the minister is: has the government recently made any contributions for unfunded liabilities, and is it expected that it will have to make any in the future?

[1340]

I ask the question, and a fulsome answer from the minister…. Not that I would expect anything less. Rather, I also think this is an opportunity to make an important point on this issue.

One of the things that we hear out in the broader public, particularly those who do not believe in pensions or do not like the fact that there is a public pension plan…. They often look to other jurisdictions in the States where you see significant unfunded liabilities, where some pension plans are only funded 47 percent.

Or you hear tales about, in the United States, where cities are going bankrupt, and as a result, they can't afford their pension plans. Their pension plans have to be

[ Page 2218 ]

either…. The extreme is to scrap them or benefits are significantly reduced. They go: "Oh, that could happen here. We need to ensure that…. We can't afford these pension plans, because what's happening in the States is happening here."

I know it is a misinformation that is popular to be spread on all kinds of media, whether it's on radio talk shows — hosts who have a habit of talking about pension plans and the inability of the province to afford them.

The fact is that our pension plans are in very sound financial shape in this province, and one of the reasons is because of the way they're currently structured. Amendments like this one here allow us to keep doing that. So I would like the minister to just elaborate further on that.

Hon. M. de Jong: So wanting to confirm an always technical aspect of this…. With respect to the pensions, what we rely upon, recognizing that employees and employers make these contributions…. There's an actuarial snapshot of what the obligations would be, going forward, if nothing else changed, based on all of the assumptions that that exciting group of people we know as actuaries engage in.

The change here is that to this point, where that actuarial snapshot results in a finding of a need for an additional contribution on the part of the employer, the source of that funding to this point has been the individual ministry or the voted appropriation. In many cases, because it can be difficult to anticipate until the time the actuarial work is done, what that amount, if any, will be, has practically translated into a draw on contingencies.

[1345]

Because the obligation is known, the change being proposed here is to make it a statutory appropriation so that in the same way that fire protection branch has the statutory authority to spend what is necessary to fulfil the obligations around public safety, this would create the ongoing statutory authority to fulfil the obligations as they relate to funding the pension plans as determined by that actuarial snapshot.

M. Farnworth: That means that we will not, then, have to be dealing with this amendment in each budget implementation measures act. Would that be the effect, then?

Hon. M. de Jong: That is correct.

M. Farnworth: In terms of when there is a shortfall or there's an actuarial determination that it needs some additional contribution, that's split between the employer, the province and the employee. That's also correct, isn't it?

Hon. M. de Jong: In answering the member's question, I'll take advantage of the moment to correct an incorrect use of terminology. I talked, in my earlier answer, about the contributions. There are certainly contributions that are determined by the joint trusteeship, and that's been in place for some time.

What we're talking about here is the balance-sheet reflection of those obligations based on the actuarial snapshot. For the experts in this field, and practically speaking, that is an important distinction that I made incorrectly.

M. Farnworth: Could the minister just also comment on the actual funded liability of the plans and how they compare to other jurisdictions here in Canada? I'm not asking about a specific jurisdiction but rather broadly and particularly in the United States, particularly in relation to the comments that we often hear.

As I said a moment ago, you often hear on the radio from noted financial individuals — the brother of a former Premier comes to mind or certain taxpayers organizations — about how we can't afford our plans, that they're unfunded in the United States and that there are all kinds of problems that we're going to look forward to.

The reality is the plans in this province are funded. There are rules and mechanisms in place to ensure that that happens, and they are very sound vehicles and are doing a terrific job.

Hon. M. de Jong: The short answer to the member's question is yes.

[1350]

It is something that I'm actually glad he asked, because it comes up time and time again in the context of other conversations that take place elsewhere in the country and North America, where jurisdictions are labouring under the burden of uncertainty around large unfunded liabilities. That's not the case in British Columbia. The joint trusteeship model has worked well. It has led, from time to time, to adjustments having to be made.

But I'm happy to say and do say to colleagues, when I meet with them, elsewhere in the country and also financial analysts elsewhere in North America that there is a mechanism through the joint trusteeship model for those adjustments to be made, it no longer, in British Columbia, attracts the kind of political attention that it does in many other jurisdictions. So there is a good story to tell, and one that I think we are at last beginning to get credit for at least on the part of thoughtful analysts if not less in-depth analysis Also, the methodology that has been developed around the joint trusteeship model is proving its worth.

Section 3 approved.

section 4.

M. Farnworth: Can the minister just explain…? Sections 4, 5 and 6 deal with the charitable trust and the First Nations clean energy business fund. Can you just

[ Page 2219 ]

describe what's being accomplished with these particular sections, how it will work and what's different from what is currently in place?

Hon. M. de Jong: I'll give a brief answer, and then the member can explore with me if he requires further detail.

Section 4 is pretty straightforward. It provides an injection of an additional $1 million, and that is the sole purpose behind the

section with respect to that fund.

Section 5 — I'll give a quick synopsis — relates to the Gwaii Forest Charitable Trust. The trust has been operating and been undertaken for some years, as I think the member knows. During the course of work by the members, it was discovered that the original trust deed instrument was lacking. I can, when I review the notes, provide a little more detail about that.

Suffice to say there was a deficiency in the original legal documentation that was discovered. That's been fixed. Also, to ensure that the decisions and the work that have gone on to this point are valid, I believe — as I recall the wording; yes, in sub (5) — there's a deeming provision of sorts that validates the work of the trust since then. It's a corrective measure to address a deficiency in the original deed instrument and to allow the Gwaii Forest Charitable Trust to continue its work as originally contemplated.

M. Farnworth: I thank the minister for that answer. A mistake was discovered — and, obviously, you have to correct that — so this is going back retroactively. Was it March 29 when the mistake dates from? When was the mistake discovered?

Hon. M. de Jong: The deficiency was, I'm advised, discovered about six months ago. The date, March 29, 2007, goes back to its founding. That's when the trust was created.

[1355]

M. Farnworth: That's what I just wanted to clarify and make sure that the mistake hadn't been discovered back in 2007. I was going to say: "What's taken so long to get it fixed?" But six months — yeah, okay. That's fine, then. We can move on, on these sections.

Sections 4 and 5 approved.

Section 6.

M. Farnworth: The next group of sections deals with some amendments to the Carbon Tax Act, adds a number of sections. Some of them appear to be pretty straightforward in terms of defining who a collector is or validating individuals who are deemed to have been doing the work of collecting — if my

interpretation of the

section is correct — and acknowledging their work in terms of a deputy.

What I'd like…. I guess one of the key questions is: what is the need for the amendments? I guess, more importantly: were there people in the province who were supposed to be collecting the carbon tax but failed to register?

Hon. M. de Jong: Here's the problem that we are endeavouring to address. What has become apparent is that in some cases vendor penalties are excessive. For example, in the following circumstances: where a vendor has acted as if they were a collector or where a vendor did not realize that they had to be appointed a collector but most of their sales would have been either exempt or the purchasers eligible for a refund.

It's intended to be something of a fairness adjustment. Where folks were acting in good faith and believing they were acting appropriately and it turns out they were not in complete compliance, the penalty regime is a pretty harsh one. The belief is that in a few of these circumstances, it's appropriate not to impose the full weight of those sanctions on people who are acting in good faith.

M. Farnworth: I'd ask the minister if he could give a more specific example so we can get a sense of the nature of the type of transaction we are dealing with.

I'd also ask the minister…. He may want to take the opportunity to introduce his staff, all of whom, I know, are very able. Also, I want to make mention that my colleague the member for Surrey-Whalley wanted to recognize, wanted you to be aware, that he found the staff member to your right to be particularly informative, when he had this position. He wanted to say that he thought she did a terrific job. [Applause.]

Hon. M. de Jong: She is. I thank the member for relaying the comments of his colleague. Ms. Anne Foy, who is to my right, dazzles with a breadth of knowledge about the unendingly fascinating world of taxation policy. Thank you for acknowledging her expertise.

Richard Purnell is on the far left; Paul Flanagan to my immediate left.

I'll take a moment to provide a specific example of what the provision is intended to address.

[1400]

I am reminded that here's a classic example of where we're trying to provide a little sensitivity to some practical situations that arise. A person or an agency has been appointed as a collector for one type of fuel, gasoline. The business expands, and they start selling diesel.

They're doing the right thing. They haven't been appointed as a collector. They're behaving accordingly, but they haven't actually taken the necessary step of being appointed as a collector. It would seem to us in those circumstances to be somewhat unfair to impose the existing sanctions that would otherwise apply.

M. Farnworth: Have there been many cases of that?

[ Page 2220 ]

Just a ballpark figure of how many times this has occurred, the scope of the problem.

Hon. M. de Jong: I'm advised that the number of instances to this point that would have been covered are a handful. I'm further advised that, to confirm my earlier comments, it's not a case of the Crown having lost any appreciable revenue. But because of the way the penalty structure applies and because of the volumes involved, the penalties, had they been applied, would have been quantified in the millions of dollars. That seemed unfair, given the circumstances.

Sections 6 to 12 inclusive approved.

section 13.

M. Farnworth: I just want to clarify. In this particular section, this "provides for the assessment of interest on an amount owing to the government under the act." I just want to…. This may be the right

section or the wrong section.

With the passage of the change that we have just made earlier, back in

section 6, if someone now makes a mistake that that

section does not cover, they are in violation of the act and this allows for interest to be added to the penalty. Is that correct?

[1405]

Hon. M. de Jong: Thanks to the member for the question. A couple of things. We're trying to bring a measure of consistency between the Carbon Tax Act and the provincial sales tax provisions around the calculation of interest and interest netting, which I think the member knows is a mechanism that comes into play in certain circumstances where it is revealed that on the one hand, someone owes the Crown money, and on the other hand, they are entitled to a refund.

In certain circumstances, interest netting is permitted. In the case of interest imposed on a failure to levy a penalty, interest netting does not apply. There are some very technical rules around when interest netting can occur.

What we're trying to do is, one, ensure that the proper legal authority exists for that tool to be used, and two, to bring consistency between the Carbon Tax Act and the Provincial Sales Tax Act.

Sections 13 and 14 approved.

section 15.

M. Farnworth: Can the government just outline how this

section is intended to work and what it will do when it comes into force?

Hon. M. de Jong: I think I'm going to interpret the member's question as not being an invitation to go through the details of what the B.C. early childhood tax benefit is and the quantified amounts, but rather how the act will operate to give effect at the appropriate time to the B.C. early childhood tax benefit.

The provisions that we're dealing with are intended to ensure that the B.C. early childhood tax credit legislation is completely integrated and integratable with the appropriate federal legislation. That, in a nutshell, is what these

definitions and provisions are intended to try and achieve.

Section 15 approved.

section 16.

M. Farnworth:

Section 16 extends the B.C. mining flow-through share tax credit for another year, to the end of 2014. This is an issue that we have dealt with in consecutive budgets for many years now. It's an issue that we've heard about in the Finance Committee's journeys around the province — the importance of it.

A couple of questions on this. Has the ministry done studies on the effectiveness and the efficacy of the flow-through share credit? Have they looked at other models of delivering it? Are they convinced that this is the best model there is to achieve the desired result, which of course is increased mineral exploration activity?

[1410]

Hon. M. de Jong: I guess analysis can take place at a variety of levels, and I can provide the member with some statistics relating to the 5,000 taxpayers that claim the B.C. mining flow-through share tax credit.

Probably the number that is significant for the government is that relating to exploration expenditure data. In fairness, I think the rate at which exploration takes place is the product of a range of factors, and I wouldn't want to suggest that the growth we've seen is attributable to any one single component. But we do believe that part of setting the appropriate climate and public policy framework is the B.C. mining flow-through share tax credit. It was introduced in 2001, and we've seen exploration expenditures increase from $29 million in 2001 to in excess of $600 million a year today — again, lots of factors attributable to that.

We would make the point and are satisfied through analysis that this is an important feature of that overall approach to creating a competitive framework.

M. Farnworth: I appreciate the minister's response. One of the issues that we heard in the Finance Committee in terms of the importance of this particular credit is that it's not responsible for the whole of exploration. In fact, a great deal of that, apart from the regulatory framework, of course, is the price that many minerals or many metals

[ Page 2221 ]

command on the world market, and they are very price sensitive.

The minister, I know, is well aware that when copper is at 65 cents a pound, it's staying in the ground. No amount of flow-through tax credits are going to get that to change. But when it's $3 a pound or $2 or $4 a pound, it's of considerably more interest, and this program has been, I think, successful. So I appreciate the minister's response.

[1415-1420]

Section 16 approved unanimously on a division. [See Votes and Proceedings .]

Hon. B. Bennett: It seems that a comment I made in the House a week or two ago was inaccurate. At the time, in terms of the second reading vote, it wasn't inaccurate, but it turns out that it's inaccurate as of the recent vote by division. Therefore, I retract that comment…

A Voice: And celebrate.

Hon. B. Bennett: …and celebrate just how close we're all becoming.

Section 17 approved.

section 18.

M. Farnworth: This

section changes the eligibility requirement for the B.C. family bonus. It slightly relaxes the B.C. residency requirements for eligibility, effective July 2014. I'm just wondering if the minister can say the purpose, why this is taking place. How many people will it impact?

Hon. M. de Jong: Probably the most important thing I can indicate is that I'm advised this will impact, perhaps, 100 families and less. To the extent that it impacts them, it operates in their favour by reducing the residency requirement from the present to a one-day requirement in the month.

The ultimate purpose is to harmonize the administration of the early childhood tax benefit with the B.C. family bonus and the Canada child tax benefit.

[1425]

M. Farnworth: I understand that it deals with a very small number of individuals, and that's great.

What are the circumstances, then, that create the need for this amendment? What are the circumstances that these 100 families or so find themselves in?

Hon. M. de Jong: The small remaining number that are on this old program, the family bonus, still had the 14-day requirement. We're harmonizing the early childhood tax credit with the Canada child tax benefit, so we want everyone to be on the one-day test as opposed to the 100 on the 14-day test. That's the harmonization that's taking place.

Sections 18 and 19 approved.

section 20.

M. Farnworth: This is the

section that deals with the B.C. early childhood tax benefit that will begin in April 2015. Can the minister explain how this is going to work in terms of existing programs? With relation to the family bonus, obviously you're harmonizing the dates, but specifically, the income thresholds and how that clawback will take place and at what point you become ineligible.

Hon. M. de Jong: Practically, the intention here or the reason we are fairly adamant about wanting to coordinate with the existing federal program is so that eligible families will receive a single cheque. It'll be administered through that system, and they'll receive the additional amount — in most cases $55 per month for the eligible families, for the eligible children — through the federal program. It will be added on to that cheque.

The income thresholds and the fact that for families with net incomes exceeding $100,000 and how that reduces downwards until a family has income of $150,000…. There is a different threshold that can be accommodated within the administration through the federal system. But that is unique to the calculation of the B.C. early childhood credit and different from the federal criteria. But they can be administered together, and eligible families will get a single cheque that includes both.

M. Farnworth: In terms of family eligibility, it is based on family income as opposed to individual income. If you have two individuals each making $55,000 each, that would be $110,000. They would start to see that reduction because their combined income is over $100,000. It's not on the basis of an individual earning $100,000 and another individual in the family earning $50,000. I'm correct on that?

Hon. M. de Jong: That's correct. I think I can probably get a table for the member about how that reduction occurs between $100,000 and $150,000.

[1430]

M. Farnworth: If the minister could provide that, I would appreciate that.

Section 20 approved.

section 21.

[ Page 2222 ]

M. Farnworth: This is an important issue, and it relates to the corporate income tax preference for credit unions being phased out. This, if my understanding is correct, is in relation to changes made at the federal level, and they then impact credit unions here in British Columbia. If the minister could just elaborate on the nature of that, then I have some follow-up questions on that particular topic.

Hon. M. de Jong: I think the member has, by and large, characterized this correctly. The federal government has decided to eliminate preferential tax treatment, an aspect of their tax treatment of credit unions — across Canada, to be fair — that was preferential to credit unions. In the ordinary course of affairs, the province might be expected to follow suit, which would add an additional burden to credit unions within British Columbia.

We have chosen instead to continue the preferential treatment at the provincial level for a period of time as laid out here and then to begin to phase that out over a period of, I think, five years, beginning in 2016. There are changes, to be sure. We have chosen to delay the implementation of those changes contrary to the federal government and then to phase them in over a longer period of time. Those decisions, in the short to medium term, accrue to the benefit of B.C. credit unions.

M. Farnworth: Can the minister tell me what the financial benefit will be with the impact of these particular changes?

Hon. M. de Jong: I'm just going to confirm the figure. I've got a $1 million figure for the year coming, but I think the member said: "What's the cumulative effect of that change?" My recollection is it's $14 million or $16 million. I'm going to verify the figure.

M. Farnworth: A few more questions on this particular

section and this issue, because it is important. This is one of the issues that we heard on the Finance Committee. Credit unions made a number of presentations on this particular issue and its impact on them.

My understanding is that British Columbia is making this change because we're tied, or our current legislation is linked, to the federal legislation. So if in the federal legislation there is a change made and we don't change our existing provincial legislation, then that impact automatically impacts here on British Columbia. Other provinces don't have that challenge because they have their own legislation so that even though the feds have made that change, it doesn't impact, because they have their own statute.

[1435]

I'm wondering if that's correct and if the minister can tell me how many other provinces are in a different situation than British Columbia.

Hon. M. de Jong: The member correctly points out that there are different linkages between provincial and federal statutes. The jurisdictions I can speak to relatively authoritatively…. Saskatchewan, I think, is going to look at this for a year before making a final decision. We haven't heard from Ontario about what their intentions are.

The question confronting both jurisdictions, as it was us, is whether or not to take steps that would provide an additional measure of relief from the impact of the federal change. As I think the member has correctly pointed out, in B.C.'s case, there is an impact from the federal change, and there will ultimately be an impact provincially. What we have done is delayed that impact and phased it in over a longer period of time.

M. Farnworth: Has there been any thought to the delinking from the federal legislation so that, in essence, we can do what we want when we want, as opposed to…? The feds have now made a change, and now we are, in some cases, potentially behind the eight ball, having to make a change on a timetable that might not be of our own choosing. Other provinces that don't have to deal with the issue in the way that we're dealing with it in British Columbia have a greater ability to meet their own needs on their own timetable.

Hon. M. de Jong: I'm not sure there were any legal impediments to the province of British Columbia charting its own course. In fact, that's what we're doing now. Had we not taken this step, the impact would have been greater, to be sure.

The other thing. I've just received confirmation that the cumulative impact to the treasury of the provisions we're dealing with has been estimated to be $14 million.

Sections 21 to 26 inclusive approved.

section 27.

M. Farnworth:

Section 27 deals with extending the scientific research and experimental development tax credit by three years. In the budget documents, the estimated cost is about $170 million a year.

[1440]

It's a tax credit that has been in place for a number of years now. I guess the key question is: is the government satisfied with the results of the tax credit? Is it meeting its objectives? Are we measuring its effectiveness, and do we have reports on the measurement of its effectiveness?

Hon. M. de Jong: Thanks to the member for the question. I'm reminded that the B.C. scientific research and experimental development tax credits date back to '98. It was decided then, and I think this has been maintained since that time, that the credits should parallel the eligibility

[ Page 2223 ]

parameters of the federal SR-and-ED tax credits. That's been a positive feature in terms of reducing the cost of administering the program.

The federal government has recently commissioned a review of support in this area. It's commonly referred to as the Jenkins report. I think the member is aware of that. It has reviewed where the positive impacts have been and recommended, I think, some changes. In 2012, in the federal budget, the program was revised in certain ways, and we have paralleled those changes provincially.

A real test for assessing the effectiveness of these tax credit programs is: to what extent are we incenting new investment and behaviour that wouldn't otherwise take place but for the tax credit? I can tell the member that the data that's been collected tells us that more than 2,000 B.C. companies have claimed the credit each year, and about 500 B.C. businesses claim the non-refundable credit each year. The annual benefit is up to $300,000 per claim.

The benefits accrue across a wide range of industries — biotech, manufacturing, digital media, engineering, life sciences, communications, computer sciences, design and transportation. I'm sure that if we spoke with any of those agencies that were receiving the tax credit they would tell you that it was highly beneficial and would argue against a reduction or elimination of the credit.

The more difficult thing, quite frankly, to assess in cases of investment and activity is: would the absence of the credit have reduced investment? The extension of the credit for an additional three years signals, I suppose, fairly conclusively that on balance the government is satisfied that this is incenting additional, incremental activity that would otherwise not take place and, from that point of view, believes that it is a defensible and appropriate investment of taxpayer dollars.

[1445]

M. Farnworth: The minister will get no argument from me on the program itself and its intent because I'm reminded that when the minister outlined…. When the program was introduced, if I'm not mistaken, I was a minister. It is good to see that that initiative from the '90s is still in place.

I also think it's important that that was 16 years ago, and technology has changed. Opportunities, in terms of research, have changed. I think all of us in this province want to see that sector of the economy grow, and there are tremendous opportunities in doing that.

I also think we do need to be mindful in how things do change over 16 years and make sure that we are achieving the goals that we want and we're achieving the results that we expect.

When we see changes in a report…. The minister's quite right. In the Jenkins report, yes, it did outline a concern. It did outline a potential overreliance on tax credits and that the federal government has made changes in that area to make sure, if we're adopting the changes and we make changes ourselves, that we are monitoring, that we are getting a performance evaluation so that we can make sure that for the money we are spending, we get the best bang for the dollar.

My question to the minister would be: is there an ongoing review? For example, a credit will be brought in for five years with a sunset clause. Do we have a

schedule of reviewing the credits over, let's say, a five-year period once changes have been made — and there were changes made at the federal level — to see whether or not they are having the desired impact or whether, in fact, the original structure really was the ideal approach?

I'm wondering how we're looking at dealing with this into the future once these changes are made.

Hon. M. de Jong: I'm not in any way arguing the advisability of what the member suggested in terms of analyzing the effectiveness and the impact of a tax credit program. There is obviously data on who is claiming the credit. We're somewhat restricted in how we use that data, of course, as it relates to individual taxpayers. When I say taxpayers, I include corporate entities in the definition of that term.

It is, at the end of the day, a case of analyzing the foregone revenue. Just to put that in perspective — I think the member knows this — this is not a cheap program. Extending the tax credit until September 2017 will, we believe, and these are estimates, reduce corporate income tax revenue by about $99 million — just under $100 million in 2014-15, $180 million in '15-16 and $190 million in '16-17. That's a fairly significant amount.

The fact that it goes up, one would say, is an indication of enhanced and growing activity. It's the same kind of conversation we have around the tax credit for the film and production sector. As activities ramp up there, as apparently they are this year, the cost in either foregone revenue or, in the case of refundable tax credits, actual payments out continues to grow.

Participants in this program would undoubtedly say that as that amount in foregone revenue grows, that is the best indication of success and ongoing activity in the sector.

[1450]

I'm happy to take advantage of the opportunity to point out that in providing this incentive-based type of program and credit, the cost in this case in foregone revenue is measured in the hundreds of millions of dollars.

M. Farnworth: The minister is correct. It is not an insignificant amount of money; $170 million is a lot. Having said that, at the same time what we're trying to encourage and see develop in this province is a significant research, development and technology sector which impacts issues such as productivity and transitioning and changing our economy. I think that all of us support that.

[ Page 2224 ]

What we want to do is make sure that we're getting, as I said, the best bang for the dollar.

One of the things in the Jenkins report was that issue of tax credit funding and our reliance on it. The issue that they raised and the recommendation that they had in that report was about redeploying that funding to a more direct investment, as opposed to using a tax credit system. The feds made some changes to do that. They didn't go with the full recommendation of the Jenkins report.

Just a final question. Has the minister looked at those changes and looked at that recommendation in terms of what the Jenkins report has recommended? Have they discussed those recommendations with the industry and the sector, for example, with a look to seeing what the reaction would be to taking a more direct approach, as opposed to a tax credit approach, and what the potential costs or benefits might be to the province?

Hon. M. de Jong: Apologies for the delay. I guess the first point I would make — and hopefully this answers, in part, the member's question — is that we are consciously trying to proceed on an ongoing basis in parallel with the federal government to avoid the need to create a whole separate administration. That, so far, has been successful. It does engage us in an interest in tracking changes advanced by the federal government.

I am advised that in the past we have made submissions with respect to the application and the design of the program. I don't want to suggest that the federal government always embraces or responds in an entirely favourable way. I don't say that to suggest mischievousness. It's a large country, and there are other provinces. But we do try to operate in parallel.

In 2012, for example, in response to the Jenkins report, the federal government removed capital acquired after 2013 — machinery, computer equipment — from the base of eligible expenditures.

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We've made a similar change, so to that extent the program has shifted around. They have made some other structural changes that we have tried, where appropriate, to replicate.

I think the overall proposition that the member's advancing, that we try where possible to tailor this to the needs of the sectors that it is geared towards in British Columbia, is a valid one. But I don't want to overestimate the degree to which we have absolute discretionary authority to do that.

Section 27 approved.

section 28.

M. Farnworth:

Section 28 deals with land tax deferral and a change there. I'd like the minister to explain this. I have had personal experience with the impact of this. That is, if you're over 55, you can defer property taxes. The debt from a land tax deferment program needs to be paid off if the property or a portion of the property is sold, but this amendment means that that's not the case for property that's used for easements, for something like a sidewalk or a road.

I wonder if the minister could expand on that and provide more detail. Then I may have an example that I'd like him to address.

Hon. M. de Jong: The basic premise behind the program is that you have the ability, in the circumstances that are provided for at law, to defer the payment of your property taxes. We've expanded that. As I think the member is aware, it was formerly restricted to seniors and then has been expanded to a variety of other circumstances.

One of the triggering mechanisms for when the obligation to repay the deferred amount occurs was on disposition of the property, kind of a logical provision. You can defer as long as you're the owner of the property. At the time you decide to sell…. For the purpose of this conversation, let's assume that is the family home. You can defer, if your circumstances qualify you, the payment of property taxes.

When you decide to sell the home, you pay the deferred amount. Hopefully, there are rules about having sufficient equity to do so. It can be a very, very effective way for families and seniors to take advantage of the equity in their home and to, in some instances, depending where they live, find an additional $4,000, $5,000, $6,000, $7,000, $8,000 or $9,000 a year.

The problem that arose is that pursuant to the

definitions contained within the relevant provisions of the act, if, for example, you chose to offer an easement or a right-of-way — maybe it was to allow a neighbour to have access to something in the back end of the property — because of the

definitions operated within the act, the registration of that easement or statutory right-of-way triggered the obligation to repay, when there actually wasn't a disposal of the property taking place.

The intention here is to ensure that there is legal authority to maintain what the original intention always was — that the obligation to repay does not accrue until there is an actual sale of the interest in the property.

M. Farnworth: I've got some comments on this. What triggered this particular change? Was there a particular case? Was government approached? Was it something that was discovered in the ministry that triggered this particular change?

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Hon. M. de Jong: I am advised of two things. One, there are about 50 inquiries a year, which tells us that the deferment program is gathering a healthy list of participants. I don't have numbers on this, but my strong suspicion is

[ Page 2225 ]

that in a number of those instances the agency asking for the statutory right-of-way or the easement was the Crown itself. So it's the Crown asking a property owner to, as it were, cooperate, and the property owner saying: "Well, actually, I'd like to. But when I do, because of the way your laws are written, it's going to trigger an obligation that I don't wish to assume at the moment."

M. Farnworth: In terms of the Crown, provincial Crown or federal Crown?

Hon. M. de Jong: I can't say for certain. I expect either.

M. Farnworth: The reason I say that is that this is a good amendment, and the minister is right that property tax deferment is becoming more popular. We're going to see it more as we have an aging population and as more people become aware of the program.

There is, I would also suggest, another issue that's going on as to why I think this amendment is particularly appropriate at this particular point in time. That is the changes that are being made at the federal government level with Canada Post. What you are going to see with their elimination of urban mail delivery, particularly in many communities that have delivery now in parts of Vancouver and most of the Lower Mainland which historically had mail delivery….

Streets were built to a different standard. A new subdivision today, when it's designed and built, is designed with the public mailbox location already built into the subdivision plan. It's not on somebody's front lawn. What you're going to see over the next few years…. I know in parts of my own community — Mary Hill, for example — there are a number of streets that are quite narrow. They're not made for cars parking and for people to get out and to put a mailbox there.

We are going to see Canada Post going to homes, identifying sites, saying: "We want to put one of these big boxes on your front lawn, and either we need a right-of-way that you'll give permission for or the expropriation process will take place."

But the bottom line is there may well be an awful lot more cases where an easement is going to trigger the issue that we are addressing with this particular regulation. So I think it is appropriate that it's in this place, and that's why I asked about whether it was provincial Crown or federal Crown that was making the request. I think that as the changes proposed at Canada Post come through, you are going to see an awful lot.

[D. Horne in the chair.]

I think it's going to be — just an aside — interesting to see how many people react when their nice, private front yard that may be landscaped is suddenly going to be subject to a mailbox. The neighbourhoods they're in were not designed to accommodate them. I think this is an appropriate change, and I think it's one that will save a lot of people the very unwelcome headache of having to go through the issue of the deferment tax payback being triggered.

Sections 28 to 35 inclusive approved.

section 36.

M. Farnworth: I just want to get it on the record, because these sections are similar to the ones that we dealt with before.

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I just want the minister to make a comment in respect to these sections — that what we are doing is similar to what we did earlier in terms of ensuring that people who are supposed to be collecting something are not unduly and unnecessarily penalized, and your harmonizing is in place. If that's not correct, inform me.

Hon. M. de Jong: With respect to

section 36, what I can confirm for the member is that the amendment is simply to ensure that there is legal authority for what are existing administrative practices and to make sure the act is consistent with other consumption tax acts.

M. Farnworth: That was what I was expecting the minister to say. I want to say that those numbered sections — in case someone is concerned, going through them — are just to bring into compliance and to make sure that there's consistency in fact taking place. I see the minister nodding his head, and I thank him for that.

Sections 36 to 38 inclusive approved.

section 39.

M. Farnworth: This is an amendment dealing with the property tax rate cap on designated port property beyond the 2018 taxation year. It's been introduced, and it has had — for a five-year period, and it's been extended — a sunset clause.

Can the minister give us the rationale for doing away with the sunset clause? Has there been analysis done in terms of why it's now felt that it's the appropriate time to make it permanent as opposed to continuing, saying for an additional five years, and then a sunset clause or renewing it over the five-year period?

Hon. M. de Jong: Not to be cute about it. One of the triggering mechanisms for why this is here is that it was asked for by the ports, of course, who make the case that, as pleased as they are and were with the original provision, the possibility of a change in 2018 was causing distress and uncertainty around attracting the kind

[ Page 2226 ]

of investment and development that they were seeking.

The request was for certainty around this to extend beyond 2018. The measure, of course, does that by making the tax rate cap permanent. However, to be fair, we also recognized that municipalities have an interest in this and, therefore, thought it appropriate to ensure that municipal compensation would also continue beyond 2018.

M. Farnworth: Did that consultation take place with the municipalities?

Hon. M. de Jong: There was. I should say, though, in fairness, two things. Most of that consultation would have taken place in advance of the announcement that was made in Budget 2012 about the intention to do this. The other observation I would make is that most of the anxiety that might otherwise have arisen seems to have been addressed by the assurance that the compensation will be tied to inflationary rates as well.

M. Farnworth: Just to get it on the record, how is the inflationary rate calculated? Is it the consumer price index? Is it a federal government measure? Is it a provincial determination? How is the inflation rate calculated?

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Hon. M. de Jong: In fact, and I did not recall this, the act makes clear that it is the consumer price index for British Columbia.

Sections 39 to 42 inclusive approved.

section 42.

M. Farnworth: This particular

section is going to increase the first-time-homebuyers grant — the eligibility, the qualifying value of the property from $425,000 to $475,000. Can the minister explain how the determination was achieved, how the determination to move from $425,000 to $475,000 was decided? What's the anticipated expectation of individuals able to take advantage of this? Then I'll have some further questions following on that.

Hon. M. de Jong: The genesis of the inclusion of the provision — probably a couple things. First of all, as I think I indicated earlier, a realization that much has changed since the days when a former government introduced the property transfer tax. I will resist the temptation to get into a history of the tax itself, as tempted as I am.

Nonetheless, the more salient feature today is that property values have obviously changed. Admittedly, governments have acquired a dependency on the revenue that flows. Yet the argument is made that with property values increasing in the way they have over the last several decades, it is perhaps time to address that.

The impediment that might be developing, especially for first-time homebuyers who have enjoyed an exemption…. The member's specific question is: where do the numbers come from? The matter was raised, I think, in some of the submissions to the committee that the hon. member sits on.

The other two factors are…. Well, we know what the floor is. It's where the threshold existed at $425,000. How high to raise it? It was, in large measure, an analysis of affordability. The data allows our officials to say, with some measure of certainty based on history and market trends, what it's going to cost, what the foregone revenue will be. In this case, we estimate, again, that this will allow upwards of 1,700 first-time home purchasers to enter the market without having to pay the property transfer tax. Of course, that translates into savings of over $7,000.

I think I've mentioned in other places, if not here, that we're anxious to do more to adjust this, to take into account increased property values. This is what we think is affordable today in terms of the foregone revenue, but we also think that we have to offset that foregone revenue against the benefits associated with facilitating people — we hope, in many cases, young people — entering the housing market.

M. Farnworth: When the minister says "affordability," is he talking about the affordability of people looking to buy a house or affordability of the province in terms of providing the program?

Hon. M. de Jong: We're concerned about both. In the context I used the term, I was talking about affordability from the point of the Crown and foregone revenue.

M. Farnworth: The reason I raise that is because this is a very important issue in terms of affordability for families or young people or, in fact, older people who want to get into the housing market.

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Either (

a) they've always had that desire for a home of their own, or (

b) they've decided, as I know a friend of mine has decided after 25 years of renting that maybe it's the time to actually buy a place of their own. So the question becomes: what is affordable?

When the program was initially put in place, we were talking about houses. That was what was meant by the property purchase. That's what has been meant by the homebuyers' grants. When you traditionally talked about a home, you were talking about a stand-alone house, in most cases. The reality is that if you're looking in the Lower Mainland, $425,000 to $475,000 for a house, certainly in Metro, is basically nonexistent. So what you can do with this is look at a townhouse or a condominium, particularly if you're living in Vancouver. You know, $1,700 seems like a lot, but the reality is that the issue, I think, is pretty significant.

[ Page 2227 ]

My question to the minister is: are you looking at other measures besides this? If so, what are they, in terms of being able to…? Let me rephrase that question. Has the government looked at other measures, budgetary measures, that they could take besides this one in terms of trying to address the issue of affordability? I'll leave it at that for now.

Hon. M. de Jong: I'll mention a few things that I would place within the basket of public policy that might be of assistance. We've talked about land tax deferment and the expansion that's happened there. There is, of course, the homeowner's grant that is particularly for people occupying lower-income levels and purchasing homes in the range we're talking about here. That provides additional assistance.

I don't think the member's question was an invitation for me to launch off on a broad

summary of other taxation measures. I think he is wanting me to focus more particularly in the area of property and property ownership and costs of property transactions. What I can say to the member is that there is a specific interest in finding additional ways to provide relief and allow people to gain entry, particularly at the entry level, into the housing–home ownership market.

We continue to look at some of the options there and did, in fact, consider a number of other measures but, at the end of the day, within the context of the balanced budget, couldn't make the numbers add up and settled upon this as an initial step into trying to make entry into the housing market more affordable.

M. Farnworth: I've got one suggestion, and I'm not by any means — the minister is right — looking for a broad discussion or a broad examination of all of the possible things related to land ownership or property ownership. It falls into this vein of: you've got the threshold and the grant in place.

One of the ways in which people can come up with that down payment or make first-time home ownership more affordable is by accessing their RRSPs. You can take out, I think, $20,000. That's a federal program. It's not a provincial program. It has been quite successful.

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The challenge for those of us here in British Columbia is that $20,000 in Spuds Acre, Saskatchewan, for example, will buy you maybe a $100,000 home or what have you. You can actually do something. Here, when you're looking at…. Let's say, for example, you find an affordable piece of property at the $450,000 mark. That's not quite…. You know, if you want a 10 percent down payment, that doesn't meet it.

What I'm wondering is: has the minister approached the federal government to look at the potential of expanding that, recognizing that certain places such as British Columbia have a significantly higher housing cost in relation to the rest of the country? That, in addition to something like this, would be a way to increase affordability. I know it's not directly tied to the budget, but it would have an impact in terms of when measures like this are introduced.

Hon. M. de Jong: I haven't had that specific conversation with the federal minister. It's an idea worth pursuing.

A. Weaver: We might agree that the property transfer tax is a very regressive tax because it taxes something that we try to encourage. That is home ownership and property ownership. When it was first introduced, the average house price in Vancouver was below $200,000. The average house price in Vancouver is substantially high.

I recognize here that we have a small movement towards increasing the amount that you're eligible for under first-time buyer, prior to paying property tax. My question to the minister is: to what extent are you also exploring increasing the 1 percent, 2 percent threshold from $200,000 and above? The reason why I ask this is that many people need to move for circumstances that are beyond their control, or sometimes they are in their control.

Let's suppose, for example, that you have a child who's allergic, and the home you're in is a 1912 home which will cost $150,000 to renovate. You might have to move to a new home to deal with a medical problem associated with your child, but in that move you're now subject to property transfer tax at a 1 percent, 2 percent threshold.

Again, my question to the minister: are there moves or plans, as we move forward, to actually expand upon the relief for property owners by increasing that threshold to a more realistic value for average home prices?

Hon. M. de Jong: Again, no argument with the member's analysis of the issue and the challenge and the change that has occurred since 1989 — I think it was — and the advent of the tax itself.

The member may be happy to know that I gave specific consideration to the question he's raised about the other thresholds and where the shift from 1 percent to 2 percent occurs. I wish I had a more elaborate answer than this. In terms of costing the shift in thresholds in that area, it adds up very, very quickly. That's not an argument for not doing it. It just meant that with the limited fiscal room we had available at this point, we chose to use it on the first-time-homebuyer side.

The member's description of circumstances that can confront families is a very valid one and a very practical one. I'm hopeful, candidly, that going forward we can have a look at the other thresholds. My guess, looking forward, is that movement there will be very incremental. It doesn't take long for government to become hooked on a revenue stream. Delinking the dependency on that revenue stream can be a more prolonged and difficult process.

[ Page 2228 ]

A. Weaver: I recognize the importance of living within one's means and balancing a budget, and I recognize that one would have to find savings in other aspects of taxation.

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I don't believe that the property transfer tax is a fair tax either, because there is a loophole that has been closed in Ontario. This is the bare trust loophole. A bare trust allows people to put property into a bare trust and not pay transfer tax upon the sale of a property. Instead, the bare trust is registered on title and, upon sale, you sell your ownership in the bare trust.

In Ontario this loophole was closed because of recognition that it became unfair. My question to the minister then is: to what extent is the minister taking steps to ensure that this loophole is also closed in British Columbia? It would provide a substantial source of revenue that would then allow the 1 percent, 2 percent threshold to increase. It is becoming more increasingly used, and accountants are recommending their clients use it for expensive properties where it's well worth doing so.

The Chair: While the related party policy discussion that we're currently having is interesting, I'm not certain of the relevance on

section 42. I'll let the minister continue.

Hon. M. de Jong: I appreciate the member's interest in this. I've read and acquainted myself with the arguments. Our tax, clearly, is one that is registration-based. That presents certain constraints to the ability to change.

The other facet of this that, candidly, I've not really heard a convincing response to is: the other way to avoid the payment of the tax — a very common way, as well — is, in the case of corporate transfers, a share transfer. Again, the property may be held by a corporation, and the way effective ownership of that property is transferred is not through a change in the registered titleholder but simply an acquisition of the shares in the company holding the property. I think you can make the same argument that that is a means by which payment of the tax is avoided.

For families who are confronted by a tax bill on transfer property, which could be $7,000, $8,000, $9,000, $10,000 or $12,000, it is frustrating, to be sure, to see a mechanism in play that allows other agencies to avoid the payment of a tax.

So far I haven't seen an approach to this and changes to the registration-based element of our property transfer tax that satisfy me that we would be providing a comprehensive solution, but it is an appropriate issue for the member to raise in the context of the collection of the tax and the changes that we are making here.

M. Farnworth: A final question before we move from this section. In terms of the increase from $425,000 to $475,000, is it the intention, then, to increase it on an annual basis by the rate of inflation in the housing market? Is this a one-off time? What's the government's thinking in terms of dealing with this going forward?

Hon. M. de Jong: There may be merit in that. This provision does not include an annual adjustment; it resets the threshold. If it were to be changed, that would require a purposeful act of the Legislature.

Sections 42 to 44 inclusive approved.

section 45.

M. Farnworth: This particular amendment relates to the purchase price for tax purposes of vehicles which are bought using coupons or to which another reduced price applies. My question is: how is this treated? Is the larger price used or the smaller price? Why is this change necessary, and how did the issue arise here?

[1530]

Hon. M. de Jong: I'll start with this, and the member may have questions that arise from this.

What we're trying to do…. This is, I think, the case with many of the sections we're going to deal with between here and

section 104. The administrative practice that was in place under the previous PST…. When I say previous, I mean previous to the HST.

When we effected the transition legislation from the HST back to the PST, we inadvertently created a legal structure that would not permit, did not specifically include the authority for the administrative practices that were in place under the original PST, resulting in taxpayers perhaps being saddled with a higher rate of tax than was the intention.

The short answer is that this is correcting an oversight in the original — when I say the original, the transition — legislation from the HST to the PST to ensure that the legal authority exists to proceed on the basis of the practices that were in place under the original PST.

M. Farnworth: Just so I understand, and we make sure that I've got this right. If I had bought, let's say, a vehicle under the HST, I would have paid X amount percent on that vehicle. We went back to the PST, and during that time there was a transition in place. What the amendment is doing is making sure that instead of the taxes it would have been with the HST in place, I am paying the tax that would have been in place had the PST continued to be in place. Is that correct?

Hon. M. de Jong: Yes.

M. Farnworth: I appreciate the definitive answers. My question would be: does the minister know how

[ Page 2229 ]

many vehicles were involved in this and the scope of the particular problem that we are dealing with, with this amendment?

Hon. M. de Jong: The advice I'm given is that we're not aware that anyone has been disadvantaged. We think the administrative practices…. If anyone believes they have been, then I'm also advised that they would qualify for a refund for any overpayment. But again, to emphasize, we're not aware that anyone has been disadvantaged.

Section 45 approved.

section 46.

M. Farnworth: What I might try and do with 46 and 47…. These changes are similar to the changes that we just dealt with in

section 45. Would that be correct — the same issue in these two sections as the previous section?

[1535]

Hon. M. de Jong: I hope this is helpful to the member and the committee. Further on in

section 74, we make a change to address a matter and create

section 82.01. This is consequential to that, to ensure that we haven't inadvertently allowed a tax avoidance loophole relating to leases of tangible personal property. It relates to that later amendment and is consequential to it.

Sections 46 to 62 inclusive approved.

section 63.

M. Farnworth:

Section 63. This is dealing with an exit tax that is applied to a multi-jurisdictional vehicle. Can the minister just go through what the issue around this is and how this

section is intended to work? I know I've had a number of queries about multi-jurisdictional exit taxes and when they apply and when they don't apply. It can be quite controversial at times.

Hon. M. de Jong: This is designed to deal with a problem and relates to an announcement that we made previously. It all gets a little bit complicated, but there is something called a multi-jurisdictional tax and a multi-jurisdictional exit tax.

What we discovered and what we were advised is that in terms of a triggering mechanism for when the multi-jurisdictional exit tax becomes payable, the intention was, throughout, that it would become payable when the vehicle became licensed for use solely in British Columbia.

The problem that arose was that people who had registered under the system and paid accordingly would put their vehicle in storage. They might leave the country for two or three months.

In the case that the member may have heard of, the owner of a vehicle — I think it was a commercial trucker, quite frankly — became ill, suffered a serious medical ailment. The cost of insurance is such that it would…. In circumstances where the vehicle wasn't going to be on the road, to take the insurance off, under the original unamended version, inadvertently created an obligation on the part of the corporation to demand payment of the exit tax. That was not the intention.

[1540]

So we announced the change. Through this, we are giving legal effect to that change. I believe I can say that there is a mechanism in place for anyone that paid the tax in the intervening period, in circumstances where they now would not be obliged to, to reacquire that money, to receive a refund.

M. Farnworth: I thank the member for that explanation. In fact, that case I think was one of the issues that has triggered the interest in this particular

section and the issue around exit taxes and multi-jurisdictional and what happens when someone does become ill or they do put the vehicle off the road for three or four months. Do we have any sense of how many individuals are going to take uptake on this particular change and the number of vehicles that are going to be impacted by it?

Hon. M. de Jong: What I can alert the member to is the chronology. This became an issue and acquired some profile. I wouldn't say a huge public profile, but the phone started ringing in the fall — September, October. I believe we issued a statement and instructions to ICBC in October, asking that in the circumstances I've described, they not collect the tax. There is that period between April and the end of September. I think we have done a relatively good job ensuring that the insurance sector knows that for any clients that fell into that period of time, they are entitled to a refund.

I'm going to say that the numbers…. Based on my sense of the speed with which the commercial trucking sector and their insurance agents — and there are some who are notable for involvement in the sector — got on this and brought the matter to our attention, and our ability to at least deal with the problem quickly in terms of practices, I can't give the member a number.

I think it will be very manageable, because I got a pretty good indication very quickly about where the problem was. This will create the legal certainty, and for anyone that requires a refund for the period April to September-October, we'll ensure that happens.

M. Farnworth: Just another question. With the passage of this amendment, will this mean that if a person pays an exit tax or its equivalent in another province or jurisdiction, they won't have to pay it here in B.C.?

[ Page 2230 ]

Hon. M. de Jong: I don't think that's correct. I may have misunderstood the question. This only comes into play if you're registering your vehicle — generally, commercial vehicles registering here — with a sizeable amount of use outside of the province. If your vehicle is registered outside of British Columbia, the multi-jurisdictional exit tax isn't really applicable.

Sections 63 to 73 inclusive approved.

[1545]

section 74.

M. Farnworth: Can the minister just explain the purpose of this section, how it's intended to work and how it is different from any existing sections that deal with it?

Hon. M. de Jong: I'll give the member a rather technical answer. If we need a more practical example, we'll try and give him that.

This relates to the earlier area we explored as it relates to the amendment. This will ensure that leased exempt tangible personal property is treated consistently with other tangible personal property — for example, tangible personal property purchased in B.C. So it's to ensure that there is consistency between leased exempt tangible personal property and purchased tangible personal property. That's the technical answer.

Sections 74 to 107 inclusive approved.

section 108.

M. Farnworth: This

section eliminates the tax credit for owners of class 5 property under the act. This is a phased-out elimination. This is an elimination of a 60 percent reduction of school tax. The property tax in the heavy industry remains in place, but the light industrial disappears. Can the minister tell us what consultation took place with light industry on this particular issue?

Hon. M. de Jong: Well, I'll say candidly to the member that most of the discussion that took place around this occurred prior to Budget 2013, when we indicated that we'd be phasing this out. I'll also candidly say that I'm not sure I ran into anyone that is captured by the class 5 light industry

section who stood up and cheered when we indicated that we were looking to phase it out. I think most people, having received the benefit of this…. It provided relief through a particularly difficult economic period dating back to 2009.

I don't think this is something that folks in the class 5 light industry

section are necessarily thrilled about. But as I say, it is consistent with the announcement we made in advance of 2013 and provides the legislative underpinning for following through on that announcement.

M. Farnworth: I understand the minister's comments and the fact that much of the work on this was done prior to this budget. I guess my question is…. Yes, once people started realizing the impact, then of course they approached governments, and I'm wondering: were there further consultations on that, and if so, what were they?

[1550]

Perhaps the minister can also give, for those people who were affected…. I heard from a number of them in my own constituency. What was the rationale between light industry gets the exemption phased out but heavy industry gets to keep the exemption? A number of them thought that that was quite unfair.

Hon. M. de Jong: I've been asked that question not a lot but by a few others who asked about the rationale. The answer I have given is that it kind of goes back to the original rationale for the relief in the first place, in 2009.

The bulk of the pressure that was trying to be addressed related to the challenges that large industrial ratepayers were facing in towns with a single mill — a large enterprise that was employing many, many people — and the potential for a combination of the deteriorating international economic circumstance and pressure from local government in the guise of tax rates that were going up.

The provincial government at the time stepped in and said: "We will, as a matter of public policy, provide some relief around that." We just had a conversation earlier about ports property and providing a measure of ongoing relief and certainty there. That was the focus.

Somewhere along the way the decision was made to extend that to class 5, to light industry. We can go through the list of what that captures. It does tend to be more akin to a business class than an industrial class, both being important. But with changed economic circumstances, not to say that things are necessarily easy, the crisis that befell much of the western world and visited upon B.C. and Canada in 2008-2009 has largely abated.

Shifting away and returning to the rules that were in place prior to that is something the government has decided is appropriate, again, for any agency where relief has been granted and enjoyed for a period of years. A return to the former regime, to the normal regime, will impose an additional cost. We're alive to that.

That is probably as forthright as I can be about the rationale behind the shift and how that is visited upon class 5.

M. Farnworth: I appreciate the minister's explanation. I guess the light industry property class owners may have a slightly different take than the minister does on it. I think that most of them would probably look at it as a tax increase from what they were paying. I think that would be a fair way to assess it.

I understand the issue around heavy industry. We've seen the blow that that has taken. But I don't think that

[ Page 2231 ]

governments should underestimate the impact that the economic downturn had on light industry, particularly that which exports to many other jurisdictions — for example, the United States, which is still this province's largest trading partner.

[1555]

With the rise of the dollar, even though that has abated somewhat, the fact remains that they have and operate under significant challenges and pressures under their own right. When change like this takes place, I think one of the key issues is that they are included in the discussion and the consultations around this and don't feel that it's just arbitrary.

I know the minister says much of those discussions took place in a previous budget, but the reality is that those same businesses now have to cope with those changes.

So my question would have been: did the minister do any impact to see what the changes were on the light industrial sector since the initial implementation of these particular changes in the tax structure?

Hon. M. de Jong: There are two things I should probably convey. This is not a complete answer to the member's question, but I can relate the rates for the light industry class over the last number of years, and I've got data going back to 2006.

In 2006 it was 9.2. In 2007 it was 7.9. In 2008 it was 6.8. In 2009, after the credit, it went down to 3.5. In 2010, again after the credit, it was 3.4. In 2011, after the credit, 2.6; and in 2012, after the credit, 2.5. Without the credit, in 2012 it would have been 6.4. In 2013, with the credit, it's 4.3. Without the credit, it would have been 10.8. For 2014, tied to the business class, we think it will be in the neighbourhood of 6.2.

Again, not to diminish…. We're talking about, in effect, a return to normalcy.

The other point I would make is this. To the extent that there is a more significant impact, I at least have to make this observation. This is true on property tax and the relationship between federal, provincial and local governments. Where one level of government provides relief to a taxpayer and another level of government immediately steps in to scoop up that relief through adjustments to their mill rates and other things, yes, the impact will occur.

I dare say there may be elements of that at play here as well. That is a perennial problem that we have to be aware of as legislators in this country — that there's just one taxpayer.

Section 108 approved.

section 109.

M. Farnworth: Can the minister just outline the changes here as it relates to the innovative clean energy fund and how this is going to work with this change?

Hon. M. de Jong: This is, I'm reminded, a purely administrative change consequential to the amendment to

section 229.1 of the Provincial Sales Tax Act.

[1600]

The other thing that I can inform the member and the committee of is that the estimated revenue for 2014-15 fiscal year is $6.5 million.

Sections 109 and 110 approved.

section 111.

M. Farnworth:

Section 111 in the budget that did not raise taxes, according to the Premier…. This this is probably one of those sections that would be really interesting if I could have her explain, as opposed to the Minister of Finance, but it is the Minister of Finance who will be dealing with this particular issue.

This is one of those ones that…. Most people don't argue about the increasing of tobacco taxes. They believe that it is the right thing to do, that it improves our health outcomes and all of those things that we have discussed when he was Minister of Health and when I have been Minister of Health. It has widespread public support, but there is one issue.

We talked about it a bit at second reading, and that is the issue about the increase in tobacco tax rate and the likelihood of an increase in the smuggling of contraband tobacco. This is particularly, I think, worthy of comment, because in this particular budget not only is the province raising the tax on tobacco, but it's following on the heels of the federal government which also has increased the tax on tobacco.

What I particularly want to get a sense of is: has the government looked at that impact in terms of either an increase in contraband tobacco and tobacco smuggling or…? The issue that goes along with that is the potential decline in revenue. So instead of expecting, let's just say for the sake of argument, $100 million, the tax has risen to the point now where you're going to start to see a decline in revenue from tobacco as illegal tobacco sales rise?

Hon. M. de Jong: Well, it's a fair question, and it's one that needs to be asked. I can assure the member I made the same inquiries before authorizing, as part of the budget, the increase.

I will say this, because I've said it elsewhere and I should say it in the House. At the time we finalized and authorized the increase to the provincial tax rate, we did not know that the federal government was intending to increase, I think by 40…. One of the unique features of this is that we tend to talk about cartons of cigarettes and grams of tobacco. I tend to be a per-pack calculator.

[ Page 2232 ]

I think it was 42 cents or 41 cents a pack.

In any event, it was a relatively significant increase at the federal level, coupled now with an additional provincial increase. The question was….

Interjection.

Hon. M. de Jong: It's 32 cents a pack. Combined, it was just over 70 cents a pack of cigarettes — the increase, a not insignificant amount. The assurance that I received, based on analysis, was that we were below the tipping point at which authorities believe there was a likelihood of additional smuggling activity or illegal activity.

From the point of view of interprovincial trafficking, if that is the correct term, the addition of the federal tax was inconsequential because it applied elsewhere. The combined increase, though, is probably more relevant in considering cross–international border activity.

I'm told and was advised prior to making the decision that enforcement officials believe that we are still below that tipping point at which smuggling activity would increase, and aside from all the other negative consequences from smuggling activity, the impact on revenue would reveal itself. We'll have to track that. That was analysis. Time will tell.

[1605]

I won't and can't sit down without restating something that I'm sure the member in his time in the Health Ministry stated and has been said over and over. There is actually a desire to see revenue from this stream of taxation reduce, but the vehicle by which we would like to see that happen is in reduced smoking rates and reduced purchases of tobacco products.

B.C. does well. We compare most favourably with the rest of the country, at about 14 or 14½ percent. But imagine the money we'd save and the lives that would be improved if we could drive that number down further.

M. Farnworth: I appreciate the minister's comments. He's right. We do want to see tobacco revenue go down — but through people not smoking.

I also have to acknowledge that when you're talking about tobacco, the reality is, for many people…. So few people in this province now smoke that most people don't know what a pack of cigarettes costs — or a carton, for that matter — and when they do, they are shocked and go: "My god, you could do an awful lot more with the money that's spent on that habit."

Be that as it may, there are still lots of people that do. The issue around contraband tobacco is particularly, I think, an important one. We've seen it in eastern Canada, in particular, and that is a concern. There's the issue of monitoring. I would like to know on what basis that monitoring takes place. How does the Finance Ministry deal with that particular issue?

Also, what I'm aware of is an increased rise, particularly, again, when it relates to tax rate differentials. This time it's probably where B.C. is in…. I don't know if the worst-positioned place is the right way to put it, but we are uniquely positioned in the fact that significant amounts of contraband tobacco are now coming out of China and destined for the shores over here.

Whereas before it was eastern cigarettes that were contraband, making their way westward, now we're starting to see incoming contraband tobacco from China. I'm wondering if the ministry has, as part of their monitoring and tracking program, that issue on their radar screen.

Hon. M. de Jong: I'm not going to dispute the veracity of what the member said and the need for enforcement.

The ministry actually has a team — the investigations unit that conducts penal investigations into non-compliance, fraud against provincial tax revenues. They are, in fact, designated special provincial constables. They work closely with the RCMP, federal excise and Canadian Border Services Agency. There's also a toll-free tips line where callers can leave anonymous messages.

I suppose the point that the member wants to make — and I'm happy to emphasize — is that the potential for the flow of contraband tobacco products exists within North America and within the Canadian context and North American context.

One of the things we learned just a few years ago — in 2011, I believe — was the potential for organized crime activity from Asia — containers and contraband and Asian-brand cigarettes. Happily, the intelligence that led to the uncovering and elimination of that source and that criminal activity was successful.

The estimate there is that the potential for lost revenue to the provincial Crown was in the neighbourhood of $25 million, so there's a sense, in that case, of the order of magnitude and the rationale and the justification for the vigilance the member urges.

Sections 111 to 120 inclusive approved.

Title approved.

Hon. M. de Jong: I move the committee rise and report the bill complete without amendment.

Motion approved on division.

The committee rose at 4:10 p.m.

The House resumed; Madame Speaker in the chair.

[ Page 2233 ]

Report and

Third Reading of Bills

BILL 8 — BUDGET MEASURES

IMPLEMENTATION ACT, 2014

Bill 8, Budget Measures Implementation Act, 2014, reported complete without amendment, read a third time and passed on division.

Tabling Documents

Hon. M. de Jong: Madame Speaker, the first thing I have to do, on behalf of the Attorney General, is table two documents, the government's response to the report of the 2013 Judicial Justices Compensation Commission and the government's proposed response to the report of the 2013 Judges Compensation Commission.

Then I call continued second reading of Bill 7. I've got 7 and then 13.

Second Reading of Bills

BILL 7 — LABORATORY SERVICES ACT

(continued)

D. Donaldson: I'm happy to take my place once again in the second reading debate of Bill 7, the Laboratory Services Act.

[D. Horne in the chair.]

I'm happy because I was in the midst of telling a story from the withdrawal of services in the laboratories in Stikine. The story, I think, really has pertinence to this bill. I know that the Health Minister wanted to hear the end of the story because it relates…. I think he was actually thinking about this all night, about how this story ended — this story about strep throat, which is a very serious issue, as he knows and as we all know.

The context is that people, from the experience back in 2009, have a healthy skepticism about when this government and this Health Minister start talking about streamlining, integrating, making things more efficient when it comes to lab services. We went through this experience. Under this government, microbiology lab services at Wrinch Memorial Hospital in Hazelton and Bulkley Valley District Hospital in Smithers were lost.

I wanted to finish the story about the impact that has had. Just recently, since the introduction of this bill, I've had two different constituents come to me with examples of how, really, patients are put at risk and clients are put at risk by the withdrawal of microbiology lab services.

[1615]

One of them was a woman with an adult son who went into the hospital. I won't say which one. Instead of her son being swabbed for strep throat…. The doctor knew that it would take two, three, four days, possibly, to get the results back, depending on the day of the week that these swabs are done. Because of the withdrawal of services, these samples are now sent to Mills Memorial in Terrace by courier, which can be, depending if you're in Hazelton or Smithers, anywhere from a two- to three- to four-hour drive.

The physician, instead of taking a swab and determining whether it was strep throat, just prescribed antibiotics. We know that that's another cost to the system. It's a cost not just to the system but also to the environment. We know that over-prescribing of antibiotics is an issue. I'm not saying it happened in this case, but the physician wasn't able to confirm that it was needed, because microbiology lab services were withdrawn, and wasn't able to wait the two to four days and just went ahead with this course of action.

The other example I wanted to bring was another constituent, a woman who had a younger child. They waited two days for the swab sample to come back on strep throat to find out the results. In one case, the doctor decided not to wait, and it could have resulted possibly in overmedication, over-prescription, a cost to the system. In the other case, the family was put through two days of waiting for results to come back on strep throat.

Again, these were tests that could've been done previously right at the labs in those two hospitals, so they definitely wouldn't be waiting two, three, four days for these results.

This also relates a little bit to people having a fear about how good the system is, when they go in and are tested for things like strep throat. It adds to a fear factor, it adds to anxiety, and it adds to costs. This is what the withdrawal of laboratory services at the two hospitals has resulted in. Again, back then the government said it was for streamlining, integrating and efficient services as well.

I'll give one other example of how there is healthy skepticism when the government talks about efficiencies around lab services, and this relates to this bill. A person I know quite well, a relative, was in hospital in Hazelton, was tested, had a medical condition and ended up getting shipped by ambulance over four hours in a snowstorm to Prince Rupert — this is what we face in the north — for surgery.

Meanwhile, his lab work went to Terrace, to Mills Memorial, which either he had gone past, or maybe it went with him, but anyway, it got to the lab there. This was on a Thursday. He subsequently got released on a Sunday from Prince Rupert, made his way back to Hazelton, and lo and behold, that night he got a call from a doctor in Hazelton saying his lab results were back from Terrace. Not only did he go past the lab and back again; he also waited four days for test results. These were test results that could've been done previously in Hazelton.

I just wanted to let the minister know what he's up

[ Page 2234 ]

against, as far as a healthy skepticism when it comes to changes that we see in the Laboratory Services Act and why people might have some skepticism around that.

I wanted to finish this second reading debate by saying that in rural areas, given the examples I just gave, when this government says, "Trust us about changes to the health care system — we're going to streamline; we're going to integrate; we're going to be more efficient" — this is what we've come to expect: a decrease in services.

Thank you very much for allowing me to finish my stories and contribute to this debate at second reading.

Deputy Speaker: Seeing no further speakers, the minister closes debate.

[1620]

Hon. T. Lake: I appreciate the views and the concerns that have been expressed by members of this House on some of the aspects of this bill. I look forward to getting into committee stage to address some of them.

Just to maybe comment on some of the things that we have heard in the debate and remind the Legislature that this single legislative framework will make it much easier, I believe, to manage a large laboratory system.

When we talk about demonstrating value for money — there was some concern about the ability to demonstrate value for money — I think having a single legislative framework goes a long way to be able to do that. With the data management and the legislative framework being in one area rather than the two separate areas we have now, I think we will be able to demonstrate value for money. It will, in fact, allow us to take advantage of newer technologies to do exactly that so that the costs of running these tests will accrue to the taxpayer when those occur.

In terms of stakeholder consultation, because it is important that we go out and talk to the people that are impacted by this change, this is the second time that we have done consultation, and we will continue to do consultation following the legislative framework that is this bill. We will be consulting with physicians, including the B.C. Association of Laboratory Physicians. We'll be consulting with nurse practitioners, with medical technologists, with laboratory service providers, with health authorities, with professional colleges.

There will be a three-year implementation, so in the short term nothing will change. We will go about these changes thoughtfully and make sure that we do full consultation, and I appreciate some of the comments that have been provided in the debate today.

Whereas it's not unusual to send off a sample with a tentative diagnosis, start a prescription and reassess once you get the laboratory tests back…. That happens now and will continue to happen in the future, no matter what changes are occurring. Physicians, nurse practitioners, primary care providers do have the ability to treat a suspected disease while they are waiting for laboratory results. Our intention is to have those laboratory results faster than ever through a streamlined and efficient system.

In terms of safety concerns, the current laboratory system is under strict accreditation process by the diagnostic accreditation program of the College of Physicians and Surgeons, and that will continue to be the case. It is critical that the standards of our laboratories are held very high. There are strong audit and inspection provisions and enforcement orders in this act to ensure that that is the case.

There was some comment about the need to have a self-regulating college for laboratory technicians. I can tell the House that this is something that has been considered in the past and is still under consideration. In fact, I will be meeting in the very near future with some of the health care professionals that have put this idea forward.

I think this act goes a long way to modernizing the health care system in terms of laboratory services. It will streamline and provide more efficient, effective services for British Columbians and also allow us to provide an economical, yet highly effective system.

With that, I will move second reading.

Motion approved.

Hon. T. Lake: Since we have had second reading, I now move the Laboratory Services Act be referred to the Committee of the Whole House at the next sitting of the House after today.

[1625]

Bill 7, Laboratory Services Act, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Hon. T. Lake: I now call committee stage of Bill 13, the Off-Road Vehicle Act.

Committee of the Whole House

BILL 13 — OFF-ROAD VEHICLE ACT

The House in Committee of the Whole (Section

B) on Bill 13; D. Horne in the chair.

The committee met at 4:27 p.m.

section 1.

[ Page 2235 ]

N. Macdonald: First, on the

definitions section, are the

definitions consistent with other acts?

Hon. S. Thomson: Just before I move into answering the questions on the sections, I'd like to introduce the staff that are with me here supporting it: Richard Grieve, with the legislative section; Vera Vukelich, beside me, who's the one who has put the labour of love into this legislation, which we were talking about yesterday; Duncan Williams, executive director in our resource stewardship branch; and Adria Fradley of our legislative branch.

In response to the first question, yes, they are consistent. For example, the definition of "Crown land" is taken from the Land Act. The definition of "off-road vehicle" and the definition of "vehicle" are taken from the Motor Vehicle Act. So throughout, the

definitions are consistent with other legislation.

N. Macdonald: First, I'd like to welcome staff. We've seen each other a lot over the past week or so. I'm sure the minister did end up taking you out for dinner, as he had promised. I'd love to hear about that.

So the

definitions are the same. I think we can move to the next section.

Section 1 approved.

section 2.

[1630]

N. Macdonald: Could the minister explain the purpose of

section 2?

Hon. S. Thomson: This

section provides the minister with the clear authority to delegate any duty or power under the act and the regulations to a government official or an agent of government. This delegation provision is similar to existing delegation provisions in other ministry statutes — for example, the Forest Act or the Forest and Range Practices Act. It provides for the governance model, based on the delegated decision-making, to provide a greater ability to achieve consistency throughout the province.

N. Macdonald: This is something we've seen in a series of acts, and it seems to be consistent in the pattern. Now, part of the concern with other acts is that in having the minister delegate who is responsible for the particular area, it does remove the ability of the public to hold to account somebody who in the past would have been designated and would have been based in the region.

For instance, if a district manager was responsible for something, the public had the ability to go to the courts, perhaps, and say that this individual was responsible for something and didn't do it and therefore should be held responsible,

whereas when we get to language like this…. Clearly, the minister cannot be aware of what is going on in such a particular area, and it removes some of that accountability. Is that something that the minister has heard, outside of something that he's heard me say? Is it something broader that's been brought to his attention, that this is the perhaps unintended consequence of this sort of language?

[R. Chouhan in the chair.]

Hon. S. Thomson: With this, there are two important points. First of all, there's a clear authority. It is done through a delegation matrix. That delegation matrix is publicly available. With the delegation provisions, the delegation authority can be changed if required, but we haven't had any level of complaints with the authority. It is working, but, again, it's clearly and publicly available as to who the authority and the decision has been delegated to.

B. Routley: Before I get into

part 2, if I…. I know I'm supposed to catch it in

part 1, but I didn't know we were moving on so quickly. I do think, though, for the record that it's worthwhile having read into the record from the minister what happens with the vehicle identification number that is part of the registration, or you can have another serial number or vehicle identification number.

[1635]

We're dealing often with vehicles that might be made up either by, you know, kind of a home-produced product, multiple old vehicles put together to create one, that kind of thing.

Has the minister got an answer to: if you've got a vehicle that somebody manufactured themselves, and it doesn't have a manufacturing plant VIN number on it, how would they go about registering their vehicle in the case where they had multiple parts from multiple vehicles?

Hon. S. Thomson: This situation or circumstance that the member opposite raises is dealt with in the legislation in a

section coming up, under

section 11(1) and 11(2). As you know, the identification number is a unique 17-digit number, signed by the vehicle manufacturer. If a vehicle does not have the VIN for circumstances, a new vehicle information number is assigned by ICBC. This is what is done in other jurisdictions. The provisions to deal with this are in a future

section in the legislation.

B. Routley: Under

part 2, "Registration," I noted the words "may register the off-road vehicle." I'm wondering why it's "may." Is that because other jurisdictions…? For example, I think people can bring vehicles from other provinces. The "may" troubles me a little bit. Does it still have the same legal requirement? Will everyone in British

[ Page 2236 ]

Columbia, at some point, have to register their vehicle with ICBC? How will that matter be dealt with? How will vehicles throughout British Columbia that are out there right now….? Will that be dealt with through regulation?

I don't see anywhere — at least, I haven't put my finger on it — a drop-dead date that people would have to come in and register their vehicle. Could the minister identify when that registration requirement will be, in terms of a date, to have your off-road vehicle registered? Obviously, it will have to be after the legislation is passed, but I'm sure you will have turned your mind to that.

Hon. S. Thomson: In looking here, I think the member opposite may have moved into

section 4, which is talking about the registration process. I just want to make sure that we follow through the process, I guess, in terms of the timing, but I could provide a couple of quick comments.

The registration is made because of the point…. There will be the situation where we have vehicles from other provinces that are already registered. The intent is, obviously, the legislation first and then the registration system. The logistics of the registration system would need to be put in place, the regulation side of it. There will be a grace period for implementation, so there is not the intention to immediately move to strict enforcement on the requirement for registration.

We know there will be the need for an education and communication period. We will work in transition, and there will be transitional arrangements, particularly with already registered vehicles that are under the current snowmobile registration.

It would be phased and moved in, but no intention to move immediately into strict enforcement or a drop-dead date.

[1640]

B. Routley: In

part 2, "Registration," I didn't really hear a clear answer about the issue of "may."

In my previous life I dealt with contract language. We had at one time a major dispute over the words "may" or "shall." There's obviously a big difference about whether you may do something or you shall do it or you will do it.

Again, I'm troubled by the "may." I just want to be assured by the minister and his staff that some legal mind has turned their head to this. Is there any potential that "may" could mean that you have an option other than will or shall?

Hon. S. Thomson: Again, I think we may be a little ahead of ourselves in terms of dealing with this. I think we were still on

section 2, not necessarily

part 2. But to respond quickly, first of all, it's "may" because this legislation is not meant to apply to people who own vehicles and will only be using those vehicles on private lands. You won't be required to register if you're only using those on private land and not using them on Crown lands.

Then further on in the legislation, under

section 14, for the circumstances where it would be used or operated on Crown land and prescribed private land, then the requirements there become — to be able to use it in those cases: registered with ICBC, registered and licenced, and licenced in another jurisdiction or a non-resident permit.

That sets out the conditions, further on in the legislation, where it would be required to be registered. It's permissive in this

section because it will not apply to all off-road vehicles.

Section 2 approved.

section 3.

N. Macdonald: With

section 3, this talks about an issue that was raised in particular in Canal Flats. We had a number of people…. I think the minister has actually been to Canal Flats and will be somewhat familiar with the community. Certainly, it's one that is in proximity to some tremendous country for ATVs. A lot of people keep their ATVs at home and then will go along roads for a period of time before they get into the back country.

I guess the question with No. 3 and the application…. It talks about this law only dealing with vehicular activity that's not part of the Motor Vehicle Act. I guess the question is: what are the rules that are in place, if not in this section, for ATVs, for instance, or snowmobiles as they move along a road quickly or cross it? Does this

section deal with that in any way? If so, how does it deal with that eventuality?

[1645]

Hon. S. Thomson: This

section provides the clarity that the act does not apply to the use and operation of the ORV on the highway. The Motor Vehicle Act applies there, if you're using a highway — registered, insured, valid driver's licence, operational permit where required. But what will be in place is if the ORV is registered under the Motor Vehicle Act, it's deemed to be registered under the ORV Act, so you won't be paying twice. Then you would be issued the unique plate that allows you the utilization on the Crown land to show that you're registered there.

Consequentially, with the work we're doing here, we're looking at aligning Motor Vehicle Act regulations with this to provide more convenience for highway crossings and things as part of the ongoing initiatives. So there will not be the requirement for double registration.

N. Macdonald: Just to be clear, what are the rules now? What is in place now? We're replacing existing acts with this act and, of course, adding a number of elements, but what are the rules now for off-road vehicles as they cross a highway?

[ Page 2237 ]

Hon. S. Thomson: The current requirements are: it would need to be registered, licensed and insured under a restricted plate program; a valid driver's licence; and where required, obtain a police-issued operation permit.

Some of the changes we made, or some of the improvements we made, are with respect to having under regulation now the ability of snowmobilers to cross at stop signs and traffic lights. We're looking, as I mentioned earlier, on the regulation side of things under the Motor Vehicle Act regulations, to apply those same provisions, now with the registration system in place, to other off-road vehicles.

[1650]

B. Routley: Maybe to bring a little more clarity or a sharp point on that issue, I've seen young people, for example, pushing their bike from their home in a rural community to a logging road. If there happens to be a hill, sometimes they'll jump on their bike and glide to the logging road, or if they have to cross a highway, they are pushing their off-road vehicle.

What would the law say about someone that will be under this act if they were involved in some kind of accident? I assume the answer might be that they're covered under the Motor Vehicle Act, but if someone was almost halfway between the highway and the logging road or in the ditch right between both, what would be the law?

Is it okay for young people to be doing that, or should they be registered under the Motor Vehicle Act in some way? Is it okay as long as they're treating it like it's a bicycle or a skateboard?

Hon. S. Thomson: Just to be clear, with this legislation we're not looking to make any changes to the requirements with respect to operation on a highway under the Motor Vehicle Act, so the requirements that I've pointed out apply.

What I am advised is that for purposes of the Motor Vehicle Act, my understanding is that it doesn't make a difference as to whether the engine is on or off. The provisions or the regulations under the Motor Vehicle Act apply.

To be clear, with this legislation we're not making or proposing any changes to that.

Section 3 approved.

section 4.

N. Macdonald: Just to pick up where my colleague left off on

section 4, the word "may." It says "may register" with ICBC. Are there other insurance options available to those that choose to register here in British Columbia?

[1655]

Hon. S. Thomson: Under

section 14, which talks about "Operation prohibited without registration or permit," subject to the regulations must not use, etc., the off-road vehicle that is registered with ICBC under this act. Or the off-road vehicle is registered, licensed, as I mentioned earlier, under the Motor Vehicle Act, if it's registered there, or the Commercial Transport Act.

Both of those registrations, those vehicles, would be registered under this legislation. They'd be provided a plate. They wouldn't have to re-register or register twice.

N. Macdonald: What is the cost to ICBC for this initial registration? Does the minister have a clear idea of that?

I guess what it relates to is to get a sense of what the cost to ICBC is. What is the revenue that the registration is expected to generate? I guess where I'm coming from is…. The explanation that was given is that the $48 relates to the cost of the registration and that it's nothing more than that. This is simply what it costs.

We don't need exact numbers. If you have them…. Essentially, is the registration cost representative in total of what it's going to cost ICBC? Is that what is laid out here?

Hon. S. Thomson: The fee has been proposed, and as we've talked earlier, we've worked to keep the fee as low and as reasonable as possible. The projected fee is $48. That covers the broker services within ICBC — broker services and inventory and a portion or a contribution of that fee towards the one-time systems cost for implementing the registration system.

That implementation cost is $500,000, because we're using existing framework that's in place. Once that registration fee or a portion of it is paid back, then we will have the opportunity to look at what the fee would be then. It comes in to where we were talking about whether we would be able to, at that point, take a portion of the fee, with the provisions and the opportunity we've set up, for the contribution to the trail fund.

N. Macdonald: With this section, does the minister have a sense of a timeline for how long it would be before the minister feels that there's significant registration to allow the beginning of enforcement on these rules? Presumably, discussions with ICBC as to how quickly they would manage the registration…. Does the minister have a sense of a timeline as to when one would start to enforce the registration rules?

Hon. S. Thomson: Current plans are targeting having the system available and operational this fall.

[1700]

B. Routley: I do get it that the "may" in this

section 4 refers to a later section, 14. But while government doesn't exactly have the friendly amendment, as we used to call it…. When I used to represent forest workers, when we had a group of issues on the floor, we used to talk about the term "friendly amendment."

[ Page 2238 ]

A friendly amendment, for example — again, I'm just asking whether the minister thinks this could be a clearer way to deal with this — is that "an owner of an off-road vehicle must or shall register the off-road vehicle with the Insurance Corporation of British Columbia, unless they comply with the requirements under

section 14," or words to that effect. You should have the lawyers look at this from my point of view to ensure that the enabling language is clear that you're going to have to register.

While you're contemplating that friendly amendment.… Maybe it's not so friendly, if you like it your way. I guess it all means that, but the guy out riding around on his dirt bike would understand it better if it said "shall."

Accompanying fees. I know it starts out at $48, but would the minister agree that that's just a starting rate and that as we move into the future, that number could change?

Hon. S. Thomson: Firstly, with respect to the first point, I'm advised that from the legal drafting perspective the provision for "may," in combination with the requirements under

section 14, provides the requirement to register if you're going to be using the off-road vehicle "on Crown land or prescribed private land."

As we've pointed out, you may prescribe certain private lands for this to apply to. That would be by request and agreement. We've already had some requests from people who, once it's in place, would like it to be applied — to private managed forest lands, some municipal lands where they would like to be able to have this in place so that they can have the benefits of this legislation with respect to identity, safety and environmental protection.

In terms of the fee, our commitment…. You can see, clearly, with the work that we've done to keep the fees as low and as affordable as possible, that we recognize that this is an additional cost. We've talked about, in the second reading debate, the benefits of it. I think the comments that I've heard on both sides of the House are that the fee is reasonable. The discussion in the future, I think, will be much more focused on: is there a willingness and a desire on the part of operators to pay an additional amount in a fee for trail enhancement and the benefits around the tourism component that we've talked about? This provides us those opportunities.

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To say that it's going to be this fee forever and a day — I don't want to stand here and say that that's the case. There may be very valid reasons why there may be requests from all of the user groups who support this to look at that opportunity. The key provision on this was to keep it as low and as affordable as possible.

B. Routley: Could the minister more fully explain and describe what happens in

section 4(3)? It talks about the conditions for registering an off-road vehicle, where it's a vehicle that's registered or licensed in a jurisdiction other than British Columbia. It goes on that as a condition of registering the off-road vehicle, the applicant must "surrender any current registration, licence or other documentation."

That sounds fairly onerous. Could the minister explain how that is a workable proposition and how it would work?

Hon. S. Thomson: This provision mirrors what's currently in place under the Motor Vehicle Act. This is the

section that…. If you have your vehicle registered in another province and you bring that vehicle to British Columbia to be registered in British Columbia. It's not about bringing it in to be used while you're here for a weekend or that sort of thing. It's when you're moving and bringing that vehicle into British Columbia.

The current requirements under the Motor Vehicle Act require you to surrender the plate and the documentation. This is around preventing fraud and assisting with the overall registration system. It mirrors exactly what currently takes place under the Motor Vehicle Act.

N. Macdonald: Of course, the region that I represent and live in is a border region. In Invermere, for instance, I think almost the majority of the population, at times, will be Albertans. Many of them have second homes. I'm sure that's the case in Sparwood and Elkford and other places. Many of these recreational vehicles, while they are owned by Albertans and residents of Alberta…. Unlike a vehicle that they would take back and forth with them — a motor vehicle — it's possible that the snowmobile, the ATV, would stay at the second home.

I guess the question is: if that is the case, would it be appropriate, then, that they simply had the Alberta registration or licensing? Or is the intention that if the ATV or the snowmobile is left almost all of the time in British Columbia, it would have to transfer to B.C.? Then, how is that going to be regulated, or is it not seen as a significant issue?

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Hon. S. Thomson: This is some of the implementation details and things. The current situation…. If they are registered in Alberta and have an Alberta registration, which they're required to do, but they have the vehicle here, that registration will be recognized here. They have a plate. So long as they're registered and our system recognizes it, then they won't have to register here.

If they're here, they own property here, they keep their vehicle here and it's not registered in Alberta, it will be required to be registered here, if they're going to be using it on Crown land. If they register it here and eventually take that vehicle back to Alberta, they will be required to do just what is the reverse of what is happening here, when you have to surrender the plates and the documentation and register there.

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There will actually be no incentive to do that because here we have a one-time registration fee. In Alberta it is an annual registration fee that is actually higher than the current B.C. registration fee.

D. Routley: I seek leave to make an introduction of sorts.

Leave granted.

Introductions by Members

D. Routley: I've just been told that a very well-known entertainer in Nanaimo, Miss Vikki Smudge, is watching our Hansard broadcast, and I want the House to say hello to Miss Vikki, who is leading a parade of St. Patrick's Day celebration tonight in Nanaimo. Can the House help me say hello and welcome to Miss Vikki. [Applause.]

Debate Continued

B. Routley: Well, in addition to saying hello to Miss Vikki, whoever Miss Vikki is…. I'm sure she must be a wonderful person if she's a personal friend of…. Anyway.

The question I have…. You were talking about Alberta. I just wanted to be sure that we had some kind of reciprocal agreement with the province of Alberta. Do they also acknowledge people who will be licensed in British Columbia? And are there any other provinces? What happens if you travel afar, to Saskatchewan or Manitoba or any other province in Canada? What are the arrangements there?

Hon. S. Thomson: Yes, it will be just like your vehicle. If you're taking your off-road vehicle into another province to use, that registration system will be recognized. If you move, then it's exactly what we talked about earlier.

Section 4 approved.

section 5.

N. Macdonald: For

section 5, the title is "Restriction on registration." Basically, this mirrors the Motor Vehicle Act. Could the minister explain what is being copied from the Motor Vehicle Act and what the restrictions are on registration?

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Hon. S. Thomson: This

section applies to

section 4, as it's pointed out.

Section 4 of the act provides that registration cannot be made, except in the name of the owner, and if the owner is not an individual, a B.C. corporation, registered interprovincial company or prescribed entity…. So this ensures that the same entities that could be registered under the Motor Vehicle Act can also be registered under this act. And it reduces the amount of training for ICBC brokers to receive prior to this coming into….

Section 5 specifies that regulations could also be made to apply to non-individual entities, similar to what we do under the Motor Vehicle Act regulation, which includes foreign states, consular posts, international organizations and any political subdivision of foreign state granted privileges and immunities under the Foreign Missions and International Organizations Act for Canada. So this simply takes those provisions, the same provisions that are in the Motor Vehicle Act, and says that the requirements of the registration are the same.

B. Routley: We're talking about

section 5 now, but I do notice that there was an important question that I had on the new, distinctive number plates, decals or stickers. Are they going to be made by British Columbians, and will they be union-made?

Hon. S. Thomson: Those are implementation details, so I don't have a direct answer, so it's something we can undertake to get back to the member opposite on. Again, we will want to ensure that in doing the implementation we ensure that we keep the fee as low as possible, that we can keep that within the provisions that have been provided for in terms of implementation costs in total. That will be one of the things that we'll be watching very, very carefully, that the amount we have provided for the implementation gets done within that implementation commitment.

The directive has been set, so we'll continue to make sure that that fee is low and affordable — for families and for people in rural British Columbia.

Sections 5 and 6 approved.

section 7.

N. Macdonald: The idea with this section, then, is if one is to change address or name, and it lays out the circumstances for that happening. It's a requirement to change, to notify ICBC, within ten days. And I guess the question is: is that a standard requirement that one would find in other acts? Is this an attempt to mirror regulations that one would find, for instance, in the Motor Vehicle Act? Is that what this is?

Hon. S. Thomson: This mirrors the Motor Vehicle Act provision,

section

Section 7 approved.

section 8.

N. Macdonald: Again, this is a series of regulations around the transfer of ownership. I guess the same question is this. Is this identical to what one would find in the

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Motor Vehicle Act, or are there elements of this

section that are particular to off-road vehicles?

Hon. S. Thomson: Yes, this is consistent with the provisions in the Motor Vehicle Act. There are no real variations from that.

N. Macdonald: What are the implications if…? I mean, ten days? I can certainly see, for somebody dealing with a car or even a motorhome as sort of a second vehicle, that one would think to go and change these things.

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But sometimes, in the midst of moving or in the midst of some of the other changes of ownership that we're talking about here…. For instance, if somebody has passed away and it's been past you ten days, it might be something that is expecting too much of people to go and change the registration on the snowmobile.

I guess that the question is: what if it's not done? What does the act consider as reasonable action if one doesn't change it within ten days?

Hon. S. Thomson: This section, as we pointed out in the earlier response, is consistent with the Motor Vehicle Act. It mirrors those time provisions.

Just to point out that this only applies where it's transferred by gift, exchange, barter or sale. This doesn't apply in the circumstances of an estate or inheritance or those that would go through the other processes. The consequences for not complying are listed in

section 26(1).

B. Routley: Just to be clear, this does talk about: "…is transferred by gift, exchange, barter or sale." For example, if a father went out and bought a vehicle, paid the fee, and then a few months later he decides to give this off-road vehicle as a gift to his son or daughter, would they then have to, within ten days of the gift, apply to ICBC and then again pay the $48? Is that the proper

interpretation of what this would mean?

Hon. S. Thomson: If the transfer takes place, if it's a transfer of ownership and the plate goes with it, there would only be a transfer of ownership fee of $28. If the father is keeping the plate to put on because it's registered, and putting it on another vehicle, then the vehicle would have to be re-registered in terms of the plate fee, which would then result in the total of $48.

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Sections 8 and 9 approved.

section 10.

N. Macdonald:

Section 10 deals with the possibility of there either being number plates, decals or stickers. What does the minister anticipate? That's a selection. There is the anticipation that it's going to be number plates. Has the ministry made up its mind as to which of these it intends to use?

Hon. S. Thomson: The intention is a numbered plate. What the

section provides for is flexibility in the case t