Second Session, 42nd Parliament

(2021) OFFICIAL REPORT

OF DEBATES

(HANSARD)

Tuesday, May 18, 2021

Afternoon Sitting

Issue No. 74

ISSN 1499-2175

The HTML transcript is provided for informational purposes only.

The PDF transcript remains the official digital version.

CONTENTS

Orders of the Day

Committee of the Whole House

Bill 5 — InBC Investment Corp. Act

Hon. R. Kahlon

T. Stone

A. Olsen

Committee of the Whole House

Bill 13 — Employment Standards Amendment Act (No. 2), 2021 (continued)

Hon. H. Bains

Proceedings in the Douglas Fir Room

Committee of Supply

Estimates: Ministry of Citizens’ Services (continued)

B. Banman

Hon. L. Beare

L. Doerkson

A. Olsen

B. Stewart

Proceedings in the Birch Room

Committee of Supply

Estimates: Ministry of Environment and Climate Change Strategy (continued)

E. Ross

Hon. G. Heyman

S. Furstenau

Estimates: Ministry of Energy, Mines and Low Carbon

Innovation

Hon. B. Ralston

T. Shypitka

L. Doerkson

TUESDAY, MAY 18, 2021

The House met at 1:34 p.m.

[Mr. Speaker in the chair.]

Orders of the Day

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

the Douglas Fir Room,

Section A, I call continued debate on the estimates of the

Ministry of Citizens’ Services.

In Committee C, the Birch Room, I call continued

debate on the estimates for the Ministry of Environment. When those finish, I

also call the estimates for the Ministry of Energy, Mines and Low Carbon

Innovation.

[1:35 p.m.]

Committee of the Whole House

BILL 5 — I n BC INVESTMENT CORP.

ACT

The House in Committee of the Whole (Section

B) on Bill 5;

N. Letnick in the chair.

The committee met at 1:38 p.m.

On clause 1.

Hon. R. Kahlon: Thank you so much. I’d like to start off by introducing the

following staff who are in a room nearby and on my headset. I’d like to

introduce Associate Deputy Minister James Harvey, QC, and also executive

director Jessica Prince, who will be supporting me today. I look forward

to hearing questions from the hon. member.

The Chair: Thank you, Minister. The bill has 36 clauses and a title that

we’ll deal with one at a time.

Clause 1 approved.

On clause 2.

T. Stone: I’m pleased, on behalf of the official opposition, to today lead

our questioning through the committee stage of Bill 5. I do look forward

to the back-and-forth with the minister. Lots of questions, for the most

part seeking clarity on a number of different sections.

Just for some housekeeping purposes here, we have a whole bunch of

more generalized questions here on

section 2. I’m hoping it’s okay with

the minister if we ask these more general questions here. Then we’ll

move on, as fast as we can, through this important piece of

legislation.

[1:40 p.m.]

The first question I wanted to ask the minister was…. A mandate

letter for the corporation, InBC, hasn’t yet been published. Obviously,

that’s a critical tool that provides a fair bit of transparency in terms

of the government’s expectations around public bodies.

I’m wondering if the minister could let us know when we could

expect a mandate letter to be released. What does the timing look like

around that for the InBC Corp.?

Hon. R. Kahlon: Thanks to the member for the first question. We are just finishing

up the work on the mandate letter, and we hope to have the mandate

letter up on the website, public, very soon.

T. Stone: Will the mandate letter contain investment priorities for the

corporation? Can the mandate letter alter the investment priorities for

the corporation after they’ve already been set?

Hon. R. Kahlon: The mandate letter sets out high-level objectives of the

organization. The investment policy will go into a lot more detail. The

consultation around that and the development of that is still

ongoing.

T. Stone: I just wanted to ask a question around the data that the minister

likely relied upon in order to make the decision or to recommend to his

colleagues that InBC Investment Corp. be created and that this approach

be embraced. There has been a lot of talk in the messaging wrapped

around this initiative about the concerns that government has about

small businesses not being able to scale up and grow in British Columbia

and, therefore, the desire to anchor businesses here, the ability to

stem any brain drain that may be leaving the province and so

forth.

I’m wondering if the minister could share with us what data he is

using to underpin the decision that was taken here to create this

corporation and embrace this approach, and the data specifically around

B.C. companies having difficulties in accessing capital in order to be

able to start up and scale up, the data that might support claims that

we have been losing businesses, that they’ve been leaving the province

in the tech sector generally and that this initiative will help stem

that.

If the minister could lay out for us, as part of that data

collection: was there engagement with the broader sector and

stakeholders? Maybe speak a bit about what that effort looked

like.

[1:45 p.m.]

Hon. R. Kahlon: There are a couple of things. One, the hon. member will know that

this was in my mandate letter that the Premier had given me. This is

about taking important steps to advance that mandate commitment by the

Premier and by the government.

Also, I guess it’s not necessarily only about what we’re losing,

it’s about what we could potentially gain. We know from many engagements

we’ve had with the business community that there is a real opportunity

with this capital to be able to grow and expand our current businesses,

but also to be able to support new innovation, new

technology.

The hon. member asked questions around our engagement. I’ve got

pages and pages of quotes from stakeholders that talk about the need for

access to capital. I referred to that in my wrap-up of second reading,

if he does want to see it on the record.

Also, there were over 200 engagements on both the market sounding

as well as…. For the last six to eight months, there were broadly

engaged stakeholders across the country. We had 200 conversations with

individuals and organizations with expertise in this area to get advice

on what it is we need and how we could structure it.

T. Stone: I’m just wondering. As the minister knows well, the B.C.

Renaissance Fund was set up a number of years ago. The B.C. tech fund

was funded in 2016 by the former government — $100 million was put into

that. It’s managed by an independent third-party venture capital

firm.

When you look at the results of the B.C. tech fund — we can talk

about the renaissance fund as well — since 2016 and the creation of that

fund, about $41 million of the $100 million that was put into that fund

has been deployed. That has resulted in pretty significant scaling up of

additional investment that’s been attracted from other venture capital

firms — that sort of layering on effect. All of this, of course, is done

independent of government and not through a beefed up or juiced up Crown

corporation with a whole bunch of salary and so forth.

I’m just wondering if the minister could inform the House if

government considered just adding additional funding to the B.C. tech

fund, for example, and have those dollars deployed by an independent

venture capital firm. Kensington Capital Partners currently manages the

tech fund.

Did government consider just embracing the current fund that was

in place and putting some more money into it? If not, why? Why did the

government decide to…. What were the pros and cons of sticking with the

B.C. tech fund versus the approach that the government has taken with

the creation of InBC?

Hon. R. Kahlon: Thanks to the hon. member for mentioning the B.C. tech fund. This

InBC legislation we’re proposing, in fact, has greater transparency than

was with the B.C. tech fund.

The B.C. tech fund, for example, a minister could pick up the

phone, call folks at the investment firm that was involved in this

investment and make suggestions about certain companies in B.C. that

maybe needed support. Now, of course, the investment fund can make their

own decision, but that call could still happen.

[1:50 p.m.]

The current Attorney General spent many years debating in

estimates, trying to get answers on what was being invested in with the

B.C. tech fund. He couldn’t get answers.

What we’re doing with this is not only are we putting in

legislation that no minister or no one from government can go directly

to a chief investment officer to direct or even suggest a company, to

build in that transparency; we’re also building that into the board so

that a board member cannot go to the chief investment officer and say:

“I’ve got a company here I think you should consider investing

in.”

This was advice that we were given by all the engagements we’ve

had — that independence is critically important, independence of

government but also independence from the board. The board’s role is to

provide accountability and to ensure that the business case that was

being used was being used with the best methods possible.

The other piece around the tech fund, and what’s different than

the tech fund in InBC, is InBC is a triple-bottom-line fund. It has the

values of government. Mark Carney just recently wrote a book where he

talked about how public values need to help shape private values. InBC

is that type of fund.

T. Stone: I appreciate that the minister covered a number of different bases

there. We’ll get to transparency and a few of the other topics a little

bit later. But again, I would like to just ask or maybe suggest to the

minister that if the goal here is to, through the InBC Investment Corp.

and this approach that government has taken, actually attract additional

funds, we should be very careful about creating any impression that

we’re not happy with the private equity markets out there and the

venture capital companies that are out there that we’re trying to

attract.

He kind of suggested in his last response that there was no

transparency around the investments that are made in the B.C. tech fund

and that there is undue influence and so forth. There has never been any

documented evidence of that whatsoever. If there has been, I’d be happy

for the minister to correct the record and point that out to

me.

This is page 10 of the InBC Investment Corp. Service

Plan , the performance measures table at the top of the page, where

it breaks out the B.C. Renaissance Fund and the B.C. tech fund. The

baseline call on the B.C. tech fund is $41.5 million for the ’19-20

fiscal year. That grossed just over $51 million for the ’20-21 fiscal

year.

But when we look at the next line in this table, the cumulative

investment by fund managers and syndicate partners in B.C. companies,

meaning the layering-on effect of the investment or the call on the B.C.

tech fund’s resources, has been quite significant to date and is

anticipated to grow dramatically over the forthcoming four years. In

2023-24, $80 million of the tech fund’s $100 million is anticipated to

have been called. That will have attracted cumulative investment from

other fund managers and syndicate partners to the tune of ten times

more, about $850 million, again on a cumulative basis.

I just wanted to make sure I’m really clear. Does the minister not

believe that the B.C. tech fund approach has been successful in

deploying resources, managing that risk as best as possible and,

clearly, attracting a tremendous tenfold additional leveraging of those

dollars to invest in B.C. businesses? Is the minister not happy with

that track record of the B.C. tech fund?

[1:55 p.m.]

Hon. R. Kahlon: I’ll start off by commenting on the suggestion by the hon. member.

It was an example, but certainly I would say that we’ve worked closely

with investment funds. We’ve been getting advice from them on how to

structure this. This is well-received by those that we’ve been able to

engage with. They see the opportunities here. But this is not about the

B.C. tech fund, of course. We’re talking about InBC.

We see great opportunities with the model that we have now to be

able to get additional investments, to attract additional investments —

to get other funds, whether they be domestic or whether they be

international, to potentially partner with and fund alongside with.

Before it even was made public, there were investment funds from other

parts of the world reaching out to us, saying: “Hey, we’re interested in

what you’re doing. How do we build relationships on what you’re doing

and find opportunities to co-invest?”

I think there are going to be great opportunities. Of course, the

B.C. tech fund doesn’t go anywhere. It’s still there, but we think this

model will be just as effective. In fact, we think it will be more

effective.

T. Stone: I just wanted to again circle back to the minister’s comments in

his response a couple of questions ago where he actually said, in his

response, that Kensington Capital Partners is independent. If they’re

independent, then…. He said in a subsequent response that a minister

could pick up the phone and suggest investments and whatnot.

Which is it? Are you saying that Kensington Capital, which is

engaged to deploy and manage the $100 million tech fund, is not

independent of government? Or are they independent? It can’t be

both.

Hon. R. Kahlon: The point I’m making is that within the legislation here, it makes

clear that you’re not allowed to do that. Previously, with the tech

fund, if a minister were to choose to do so, they could do that. But

this is in legislation. We’ve made it clear, the requirements that both

a minister or anyone in government can’t interfere in any

decision-making, and also board members can’t be interfering. We’ve made

it clear in legislation, and that’s why we’re proud of this.

As the member mentioned earlier, we think there are great

opportunities to see other investments invest alongside this fund, but

this model allows us to control a triple-bottom-line mandate, which is

very critically important to us, to ensure that our values are reflected

in funds that we support here in B.C.

T. Stone: “Control a triple-bottom-line mandate” is not exactly the

definition of independence either, I would suggest. We’ll get to some

questions on that in a little while.

I wanted to just say…. The minister mentioned that the legislation

prevents suggestions. Certainly, when you read the legislation, it talks

about directing. It doesn’t talk about saying that you can’t have a

water-cooler conversation or make a suggestion.

If the minister feels otherwise, then which

section in this bill

actually prevents suggestions from being made? I can’t find it. Maybe

it’s coming in regulations, in which case I’d appreciate that heads-up,

if that’s the answer. But where in this legislation are suggestions

prevented?

[2:00 p.m.]

Hon. R. Kahlon: I would refer the member to

section 18. I’m sure we’re going to

get to that

section where it clearly states out the independence and

makes it clear to anyone — people within InBC but also the world — about

the importance of the independence of this decision-making from the

chief investment officer.

T. Stone: Well, again, “not subject to direction” does not make suggestions

and idle discussion illegal. We’ll see how that goes, moving

forward.

I wanted to move on to the approach that’s being taken here. Part

of the concern that we’ve heard in the official opposition is that not

only does this model, in how it’s being structured, place significant

risk on the backs of the taxpayers of this province, with very little

detail provided up front, around investment criteria….

The government can talk about independence of decisions. They’re

imposing very specific criteria, or a lens that investment decisions

have to be made through. The government appoints the board. We’ll talk

later about the concerns we have about the board as well. Part of the

frustration we have with this approach is that it’s being done in

isolation from other critical policy initiatives that really need to be

complementary with efforts around helping small and mid-sized businesses

access capital to start up and scale up.

We would be interested in knowing what the minister is doing to

advance reforms related to tax rates in this province. We don’t need to

get into a huge back-and-forth today, because we deal most days with

different approaches to tax levels and so forth. But British Columbia is

not competitive, from a tax perspective, particularly when we’re talking

about the need to attract the types of highly skilled talent we need to

make these tech companies successful. Having been a former tech CEO, you

need capital, you need talent and you need good ideas. If any one of

those three pieces is missing, it’s extraordinarily difficult to move to

that next level.

With that in mind, I’m wondering if the minister could outline for

this House, with his jobs hat on, what his plans are to make British

Columbia a much more competitive tax jurisdiction, which is a critical

component to attracting capital to British Columbia, attracting

businesses here and ensuring that those that start up or locate here

have a fighting chance to remain here for the long term. What does that

tax-competitive strategy look like, that the minister may or may not be

working on?

[2:05 p.m.]

Hon. R. Kahlon: I appreciate the hon. member’s comments around tech, talent, ideas

and capital. Obviously, that’s what we’re trying to address here:

greater access to capital for B.C. companies, through InBC. I know we

have estimates coming up in the coming weeks, and I’m sure that’ll be a

more appropriate place to discuss the other pieces that the member wants

to talk about. But I look forward to other questions regarding InBC and

this legislation.

T. Stone: Well, the issue of tax rates, skilled labour attraction,

intellectual property reforms and a number of other issues are

critically important to be on the table for discussion while we’re

talking about taking half a billion dollars of taxpayers’ money and,

through this scheme that this government is setting up, putting those

dollars at high risk through venture capital investments. The success or

failure of this initiative will, in large part, be dictated by what else

the government is doing to make British Columbia a place where companies

want to bring their capital here and want to make investments

here.

Again, on the tax piece…. We will get into this in the Jobs

estimates later, too, looking through the lens of the tech sector — in

start-ups and scale-ups — that is the focus of this legislation, that is

the intended objective of this legislation, and against the backdrop of

British Columbia now having a corporate tax rate of 12 percent, against

Alberta’s, which will be at 8 percent.

Washington state has much lower taxes across the board than we do

here. We have an employers health tax, which adds a burden of about $1.9

billion per year onto the backs of businesses, and 23 new and increased

taxes; I won’t go through the whole list. Increasingly, it is becoming

apparent that we are losing the competitive advantage that we had in

this province, and losing it fast.

So I ask the minister if he intends to just leave it today to say:

“No, I’m not prepared to talk about the work that’s underway to look at

tax competitiveness in British Columbia in the context of what we’re

trying to achieve with this piece of legislation.” If the minister wants

to say that today, he can say that, again, for the record.

I would hope that he would be willing to give us some sense of the

work that’s underway to address the significant and increasing tax

burden that business faces in British Columbia and that, frankly, is

going to be an inhibiting factor to a lot of the very companies that we

all want to see start up here and grow here in British Columbia. It’s

going to be a significant inhibiting factor to their growth here in

British Columbia.

Could the minister take another shot at outlining what work is

underway on the tax-competitiveness side of the equation?

[2:10 p.m.]

Hon. R. Kahlon: Again, I look forward to having further conversations with the

hon. member during estimates. I have a much more optimistic view of the

opportunities and the potential of British Columbia. We saw, just

recently, 500 new jobs announced by Microsoft. Best Buy is moving their

headquarters here to British Columbia. We continue to see investments,

and that’s a good thing. I think we would agree on that. We’re going to

continue to see investments.

As far as the legislation goes, the member mentioned talent, ideas

and capital. Capital is an important piece that we’re addressing with

this InBC legislation.

T. Stone: Well, I would say that when the facts are that a software

developer earns $27,000 less in British Columbia than they do in Ontario

to start with, when we’re staring down lower income tax rates next door

in Alberta — lower corporate tax rates next door in Alberta — when we’re

staring down no income tax in the state of Washington…. These are all

our competitors. These are all the jurisdictions that are in our

backyard. It is critically important that the issue of tax

competitiveness be on the table for discussion, moving forward,

complementary to efforts related to making capital more readily

available for start-ups and scale-ups.

The minister forgot one company in his last answer there. He

forgot to mention the several thousand Amazon jobs which are coming to

British Columbia. He talks about those jobs often. I would say, for the

record, I have nothing whatsoever against Amazon. But those jobs and,

increasingly, these tech jobs that the government touts as a sign of

their economic program working…. Increasingly, a lot of these jobs are

slightly above minimum wage.

The Amazon jobs, when you go to the postings that the minister has

talked about often…. It was a recent announcement. I think it might have

even been referenced in the news release related to the latest jobs

numbers. He extolled the virtues of Amazon hiring 2,000 more British

Columbians, which is, again, great for what it is, but these are jobs

that pay $15.75 an hour to $16.75 an hour, depending on whether you work

during the day or during the night.

It’s pretty hard to put food on the table at those wage rates.

Certainly, those are jobs that can often be complementary sources of

income in a household. But what we’re really wanting to see happen in

British Columbia is a vibrant tech sector with companies that start up

and scale up here — that pay really good wages beyond $15 to $16 an

hour.

On that point, though, again — I won’t ask it in the same context

of tax rates — but the minister would know well that talent attraction

and retention is also critically important. A lot of tech companies…. In

fact, the latest tech CEO through KPMG…. The CEOs report is a survey

that they do. It indicated that accessing the talent, getting that

talent here — growing it in British Columbia and also bringing it into

the province — is, for many companies, a greater challenge than

accessing capital.

I’m wondering if the minister could outline what specific measures

he is working on — again, with his Jobs hat on — that would be

complementary to this piece of legislation in relation to improving

access to capital in British Columbia? What specific work is he

undertaking on the talent attraction and retention side of the equation

so that companies in the tech space actually have the talent that they

need to grow their companies?

[2:15 p.m.]

Hon. R. Kahlon: Again, I’ll refer to the comment that the hon. member made

earlier, which was talent, ideas and capital. Of course, InBC is about

providing capital and ensuring that our companies that are doing some

amazing things have the access to capital. Certainly, you know, talent

is critically important. We continue to produce talent. That’s why

companies are coming here. We have that talent, and we need to continue

to do that.

Again, this legislation, InBC, is focused on the capital piece,

which the member acknowledges is a critically important one.

T. Stone: The issue of the retention of intellectual property in British

Columbia is also a growing challenge. Frankly, there’s a real need to

modernize the IP regime in this province. Again, if you have talent and

you have money, but you don’t have the ideas and you’re unable to

capitalize your ideas, you’re not going to make it in the tech

sector.

Could the minister outline what work is underway to modernize

British Columbia’s IP regime so that, again, it doesn’t serve as

headwinds in the face of tech companies trying to grow and move to that

next level, but rather, reforms are taken that make it easier to

commercialize ideas here in British Columbia?

Hon. R. Kahlon: This is, again, why this InBC is critically important. It gives

the opportunity for companies from B.C. to scale and grow. Of course,

the IP question is an important one. I look forward to engaging with the

member further on IP. I’m sure he has some good insights and thoughts

that we can exchange during estimates. But this fund is critically

important to help our companies grow and scale and create employment

here, not just in one area of the province but throughout the

province.

T. Stone: I’ll move on. But I just, again, want to underline and ask for

some sense as to what work is underway on tax competitiveness,

particularly in the context of the tech sector. The minister has punted

that to estimates at a later date. I’ve asked for some insights into

what work is underway on the whole issue of talent attraction and

retention — critically important to successful growth of tech companies.

That’s been punted by the minister. And the whole issue of IP

reform.

There are other issues, but those three in conjunction with access

to capital are really important for the success of tech companies moving

forward. On the IP question, as with tax competitiveness and talent, the

minister has indicated he’s not going to answer those questions here

today. I think that’s regrettable, and we’ll have to move on. We’ll come

back to those topics. I look forward to having a much more in-depth

discussion with the minister during estimates at a later

date.

I’d asked a few questions about data and didn’t get any specific

answers. But I did want to ask…. A lot of people have said to me: “What

is the basis that the government is using to suggest that it makes sense

for the government to take this high-risk move of putting half a billion

dollars into a Crown corporation?” The independence — we can agree to

disagree. Many are suggesting it’s not as independent as the government

says it is.

[2:20 p.m.]

But you also read reports, almost on a daily basis — report after

report after report — in the news media. Reports put out by venture

capital firms, financial institutions, and so forth, on a regular basis,

suggesting that there are unprecedented levels of capital that are

available, that are looking for a place to invest. Some are directly

attributing this to the pandemic.

Certainly, for the first probably six months or so, there was a

freezing of investment across many sectors, including in the tech space.

Lots of investors sat on their hands and didn’t make investments, were

not active in the market. But they’re now all looking to make those

investments. So there are literally billions and billions of dollars, as

one venture capital individual mentioned to me recently. He said

billions of dollars of capital is just sloshing around, looking for good

companies, good investments to make.

With that as a backdrop, what, again, from a data perspective, did

the government rely upon to suggest that this InBC scheme, and half a

billion dollars of taxpayer money at risk, is worth the risk? The way

it’s being structured and the way it’s being set up by this government….

In light of the fact that there have been very strong indications from

many quarters that there’s a tremendous amount of capital that’s, again,

sloshing around, looking for a good place to invest, this is capital

that’s being invested by the private sector, not the taxpayers of

British Columbia.

Hon. R. Kahlon: I think the great thing about this fund is that it’s access for

B.C. companies. It’s access to capital for B.C. companies. We know, as

the member has mentioned, that there is capital, but what’s lacking

right now is patient capital. We’ve heard, certainly from those in the

clean tech sector, that patient capital is needed. A lot of the

investors look for quick turnarounds, and they need something patient so

that they can deliver on the societal innovations that we

need.

The member mentioned about data. I guess he was trying to get at:

is this needed? I’ll just share a few quotes with him. Tessa Seager, who

is the director for the Council of Canadian Innovators, said: “Access to

strategic capital is a key ingredient in any company’s scale-up journey.

CCI applauds the government’s new strategic investment fund and looks

forward to working with InBC to ensure that investments benefit our

homegrown high-growth firms.”

I’m not going to go through all of them, but I just want to share

a couple, so he has an understanding of where we’re going and why we’re

going there.

Jeanette Jackson, who is the CEO of Foresight, said: “Raising

capital is a key challenge for clean tech ventures. InBC is the support

businesses need to anchor and scale in British Columbia, creating green

jobs and accelerating the adoption of clean tech innovation needed to

address urgent climate change goals.”

Bentley Allan, who is the associate director of Pacific Institute

for Climate Solutions, says: “We need an investment vehicle like InBC to

help companies take advantage of economic opportunities. It has the

potential to help…low-carbon industries and play a central role in the

success of low-carbon innovation here in B.C.”

The last one I’ll share, unless the member has more questions on

this, is from Stephanie Andrew, who is a founding partner of the Women’s

Equity Lab and Capital Investment Network. She says: “We’re happy to

have InBC provide additional capital for investments, capitalizing

promising companies so they can compete on the world stage and reach new

milestones, valuations and exits.”

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

[2:25 p.m.]

I heard the minister’s response, and I think I share the curiosity

as to the problem that InBC is trying to solve. Now, I recognize that

currently the people that we’ve been talking to say that there’s a lot

of capital. I think the quotes were informative in that every single one

of those quotes highlights the need for investment capital. It doesn’t

necessarily, I think, address the current situation. I think every one

of those quotes welcomes public contribution to the capital that’s

available to these companies.

But I think what’s important to acknowledge is that when you

connect that directly to low-carbon innovation, as an example, if those

companies that are in that space are developing useful technology,

whether it’s for low-carbon innovation or not…. Right now there is, from

all indications that we’re getting, a lot of capital there to invest in

good ideas, whatever sector of the economy it is.

Now, I understand the minister’s response to patient capital. But

I’m just wondering if the minister refutes what we’re hearing from the

marketplace — that there is a lot of capital available for these

companies — and if right now, putting $500 million of public money into

a space that has billions and billions of dollars of private capital

looking to be spent, is necessarily the good time to be doing

that.

Hon. R. Kahlon: I appreciate the member’s question. He answered a bit of the

question in his question, which is that there is a shortage of patient

capital. We’ve heard that. We’ve heard that clearly, that there is a

shortage of patient capital. But there’s also a shortage of funds that

are supporting B.C. companies but also that are working to create and

co-create opportunities and new markets within B.C.

That’s what InBC allows us to do. It provides our companies with

the patient capital but also allows us to drive and create new economic

opportunities here in B.C. Clean tech is one example. I know the member

talks about that quite often. I’m passionate about it as well. We’ve

heard the most amount of excitement, actually, from the clean tech

sector, which sees an opportunity for them to access capital and stay

here in British Columbia.

We do see companies get access to capital from another

jurisdiction. Part of that is you’ve got to go. They want to see

opportunities to be able to stay here in British Columbia, the place

that they love and a place where these companies are coming

up.

A. Olsen: Thank you for the response, Minister. One other question on this

note. We often have heard about federal programs to fund clusters — the

cluster in Vancouver around medical innovation, as one example — and

complaints that the provincial government has not been there to provide

matching or to at least provide a contribution into those federal

dollars, and that in fact, British Columbia loses a lot of the

innovation type and research and development funding to other provinces

because those other provinces are prepared to match or to provide some

type of contribution.

Is this fund going to be available for that kind of activity,

where the provincial government can step in and contribute to attract

federal dollars into research, development and innovation in the

province?

[2:30 p.m.]

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

[S. Chandra Herbert in the chair.]

Certainly, some quarters of the tech sector have been raising this

historic grievance. This goes back a long time, certainly well before my

time and even before our government’s time, where there’s sometimes a

sense that governments could be doing more to support the tech sector.

But I think the investments we’ve been making are considerable. InBC

goes a long way.

The question around the federal government’s involvement and the

funding that they have available…. I certainly think there’s opportunity

for the federal government to co-invest — also, obviously, opportunities

to crowd in other investments from the private sector.

We also see opportunities in two ways. One, the fund can also see

opportunities, when InBC invests in a company, to get access to other

funds. We’re already having conversations with the federal government

with the SIF fund, which is the strategic investment fund. A whole host

of other funds that they have available can be leveraged, so the money

gets doubled and tripled.

We also see opportunity for funds that perhaps don’t fit within

InBC or whatever decision the chief investment officer makes — also

supporting them to go to other funds within the federal government. So

it’s not just, “The door is closed; this doesn’t work,” but providing

opportunities for them in other avenues that may exist, because at the

end of the day, they’re B.C. companies, and we want to see them

succeed.

We see great opportunities for organizations like BDC and other

funds to potentially co-invest. Perhaps there are opportunities for

pension funds to also partner. But these are things that will have to be

explored over time.

Clause 2 approved.

On clause 3.

T. Stone: On

section 3 here, I just thought this would be an appropriate

place to ask a couple of questions about the application of the Freedom

of Information and Protection of Privacy Act.

As the minister knows — I’m sure he knows — in order to be subject

to an FOI and being included as a public body, a Crown corporation needs

to be listed in

schedule 2 of the FOIPPA act. There is no mention of

freedom of information and protection of privacy in this bill. It’s not.

There is a consequential amendment as well.

[2:35 p.m.]

I’m just wondering if the minister could clarify whether or not

InBC will actually be subject to FOI requests. If yes, what will

facilitate the adding of InBC — again, presumably — to

schedule 2 of the

FOIPPA act?

Hon. R. Kahlon: Thanks to the member for the question. It’s critically important

that…. In the legislation, there are many pieces that are important for

transparency. Every year a report has to be made public, here at the

Legislature, on the investments being made by this new InBC corporation.

Every five years an independent audit needs to be done, which I think is

good for public transparency. Of course, the investment policy will be

made public as well so the public knows before any investments are

made.

Now, it’s important to note that this legislation and this

structure are a continuation of the B.C. Immigrant Investment Fund

which, I believe, was created by the opposition. At that point, the FOI

pieces were left out — I assume for good reason. But this is a

continuation, and we continue to look at that question.

T. Stone: I didn’t hear a commitment to ensuring that InBC be made subject

to the Freedom of Information and Protection of Privacy Act. I’ll just

ask again. Is it the government’s commitment to ensure that InBC is

added to

schedule 2 of FOIPPA like all other public bodies and Crown

corporations are, which affords a very important level of transparency

for the public on these public bodies?

[2:40 p.m.]

Again, I would remind the minister that we’re talking about a

half-billion dollars of public funds to be invested in highly risky

venture capital investments. Is he prepared to commit and is it the

government’s commitment that InBC will be subject to the Freedom of

Information and Protection of Privacy Act, yes or no?

Hon. R. Kahlon: Again, I’ll refer the member to

section 23, where it’s pretty

clear how the operation of InBC will be transparent and open to the

public. I think one of the challenges that a fund like this has is that

a lot of very sensitive and confidential information will be shared with

InBC, so it’s critically important for us that that protection be in

place for that sensitive information.

That being said, as I noted earlier, this fund that now is the

InBC, which was originally created by the opposition and called the B.C.

Immigrant Investment Fund, was not included under the FOIPPA rules. But

that being said, we are engaging with the OIPC around the challenges

around sensitive information coming in and how to ensure that that

protection is there. Those conversations are ongoing.

T. Stone: Well, again, that wasn’t really a yes-or-no answer. It doesn’t

sound like the government’s intention is to ensure that InBC — again, a

corporation that will be responsible for half a billion dollars of

public funds in a highly risky venture capital environment — will be

subject to freedom-of-information legislation in the

province.

I would say it’s a bit of an interesting point here. When I look

at

schedule 2 of the FOIPPA act, the B.C. Investment Management Corp.,

which manages billions and billions of dollars, is included in this

schedule and therefore is subject to the FOIPPA legislation. I believe

it’s

section 17 of FOIPPA that covers financial information that can be

redacted in terms of ensuring that commercial interests are not

compromised. So there are tools within the FOIPPA legislation that

provide the flexibility that seems to work for most, if not all, other

public bodies and Crown corporations in this province.

[2:45 p.m.]

Again, one last time on this point, because I do think it’s very,

very important for public confidence moving forward on a

half-billion-dollar fund of public funds that will be invested in risky

venture capital investments: can the minister confirm that what he is

saying here today is that this InBC corporation will not be subject to

the Freedom of Information and Protection of Privacy Act?

Hon. R. Kahlon: Again, I will remind the member that this is a continuation of the

B.C. Immigration Investment Fund, which the opposition created. They did

not put FOIPPA in. I assume there was a reason. The member may know the

reason. Certainly, one of the concerns we have is that the confidential

information that companies provide to us be protected to make sure

there’s no sensitive information — which companies are required to

provide a chief investment officer — that becomes public.

That being said — I’ve told the member this already, and I’ll say

it again — we have been in contact with the OIPC around that. Our

concern is

interpretation around the legislation and how best to ensure

that those parts are protected — the information that private companies

provide — but that at the same time, we give the public the

accountability that they need. Those conversations are ongoing. We’ll

have more on that once we’ve concluded those conversations.

T. Stone: It always makes me nervous, and I think British Columbians are

nervous, too, when you hear the government say: “We’re going to make

sure that the public has the information it needs.” It’s about ensuring

that the public has the information it wants and that it’s entitled

to.

I would remind the minister that in the 2017 provincial election,

it was a very specific commitment of his party. In that election, the

NDP were very clear that they intended, as part of a broader package of

FOI reforms and enhancements to the FOI framework in British Columbia….

They were very, very clear in promising to cover more Crown agencies

with the FOI framework moving forward should they be successful in

winning that election.

They’ve been in power for four years now. There is no excuse

whatsoever for this government not to immediately make the InBC

applicable in its operations and its investment decisions to the rules

contained within our FOI framework in this province. The imperative to

do so is even greater, considering we’re talking about half a billion

dollars of public funds that the government wants to see invested in

highly risky venture capital investments. It is a broken promise of this

government. What more can be said?

[2:50 p.m.]

Chair, that’s all the questions that we have on

section 3, so we’d

be happy to move on to

section 4.

Hon. R. Kahlon: I know the member will be going to estimates and having a chance

to engage with the Minister of Citizens’ Services around the good work

that she’s been doing.

I’ve had a little bit of a challenge trying to understand his

critique there, saying that you promised to be more accountable than us

and you’re just as accountable as us. I’m not quite sure where he was

going.

I just want to remind the member that this is a continuation of

the B.C. Immigrant Investment Fund, which is a fund that they created,

which wasn’t under FOIPPA. I also want to highlight that the B.C. tech

fund, which was $100 million, went out, and the Attorney General had to

go through estimates year over year to try to get information on what

companies were being invested in, where this money was going, what the

returns were for the public. He was not able to get that

information.

We will be making the reports. The operations are public. They

will be transparent. Every year a report will be made public on all the

investments. Every five years there will be an independent audit done.

We’re continuing to engage with the OIPC around

interpretation of the

legislation. Hopefully, we’ll have a positive announcement

soon.

A. Olsen: If I may, just as a follow-up to that. I’ve heard the exchange

that’s happened here. I guess if there’s any pushback or any response

that I could provide to this, it’s that just because they did it or this

is a continuation is not a justification for something where we could

have more transparency and accountability.

This isn’t an amendment act. We’re not amending anything. We’re

creating a new thing. When you’re creating a new thing, you have the

opportunity to do it right. I recognize the history that goes on, on

either side of the aisle, in this place. I just think that it’s

important to acknowledge that when we are doing something new, even if

it’s a continuation of, we have the opportunity to get it

right.

With that question, I’ll just ask….. The minister states that

they’re working with the OIPC and hoping to have an announcement. Now,

we’re debating this legislation. Can the minister maybe shed a little

bit of light on that ongoing conversation and how that potentially

impacts this? Once this legislation is passed, how does it affect that

legislation? Is this something that can be reflected in regulations?

That kind of thing.

Hon. R. Kahlon: Again, I just want to highlight that one of the concerns is around

the chilling effect on the willingness of third parties to provide

complete and accurate information to InBC. There may be companies that

have sensitive information that, perhaps, their competitors would like

to see. We’re very conscious and aware of that.

[2:55 p.m.]

That being said, as I mentioned to the member, we are in

discussions with the OIPC. He asked specifically around this

legislation. It does not require an amendment to this legislation. It’s

something that can be done by the Minister of Citizens’

Services.

Clause 3 approved.

On Clause 4.

T. Stone: Clause 4. I just wanted to ask…. We’ve got quite a few questions

in this section. The first one. The StrongerBC report that made

references to the creation of a fund at a later date, which now we know

is InBC, promised that the fund would invest in high-growth potential

firms. But we’ve since learned that the expectation of government is

that they’re forecasting about a 5 percent return on the investments

that this InBC fund will make.

How does the minister reconcile the high-growth potential firms

comment in StrongerBC with a forecasted 5 percent rate of

return? No one who understands venture capital — and that risk-return

balance that is always at the centre of those investment decisions —

would suggest that a 5 percent rate of return is an acceptable rate of

return on such a risky investment. So how does the minister reconcile

those two pieces?

Hon. R. Kahlon: I think it’s important to highlight here, given the member’s

question, that this is not…. InBC is not about venture capital. This is

about impact investments. We have engaged with other funds that are

typical funds like this fund to get a sense of the returns they’ve

received, and we’ve based it off that.

T. Stone: Well, we’ll get to the patient capital, venture capital, piece in

a moment. The service plan for this scheme, InBC, references venture

capital numerous, numerous, numerous times. I guess we’re at a point

here where there’s a fundamental difference of perspectives between the

minister and his colleagues believing that government should be risking

public funds on high-risk investments in start-ups and scale-up

companies, with an expected rate of return of 5 percent, versus the

perspective that we have on this side of the House that government

should not be in this business of picking winners and losers, and

certainly not doing so with public funds.

The government should be creating the conditions — back to my

points earlier about tax competitiveness, attracting talent, attracting

investment and intellectual property reforms. There are a number of

other items. The government should be working on all of that stuff to

create the conditions that make British Columbia an incredibly desirable

place to set up a business, to come here with your investment and to

grow.

[3:00 p.m.]

This whole concept of patient capital that involves the risk of

public funds on high-risk investments really bothers a lot of British

Columbians, and rightfully so.

Next question. A number of the materials that came with the

announcement indicated that InBC would be guided by a framework for

improving British Columbians’ standard of living. That framework is

quite a significant document. The government refers to it still, quite

often, as a guiding policy document. Again, it’s referenced in the InBC

materials.

Just wondering if the minister could let the House know how that

framework will apply to the investment goals of the corporation. I’ll

use one example. I mean, there’s…. The community benefits agreements are

a significant feature of this framework. The framework includes a lot of

promotion of community benefits agreements. Will CBAs be an outcome of

companies that receive investments from InBC? Is that one of the guiding

principles or objectives of the framework that will make its way into

investment decisions that are taken by InBC?

I’d appreciate a response on that specific example. Then, perhaps,

more generally, the minister could again inform the House as to how that

framework will be applied to the broader investment goals of

InBC.

Hon. R. Kahlon: Thanks again to the member for the question. The investment policy

document is under development, as I’ve mentioned several times. Of

course, we’re going to be making that public before any investment

decisions are made so the public has full awareness of the lens that

InBC will use.

[3:05 p.m.]

I think there are a lot of elements of StrongerBC, the values in

StrongerBC, that certainly will be important in InBC’s mandate going

forward. Of course, we want to see distributed growth. We want to see

inclusiveness. But fundamentally, this is about people, planet and

profit. Those are the key pillars to the work InBC will be doing —

again, aligned with our values. As I mentioned earlier, it’s where a lot

of the thinkers on economic recovery are going as well. I mentioned to

the member about what Mark Carney had said about public values and

private values and co-developing new markets. So I think there are great

opportunities.

Now, the question of CBAs. I’m not sure what the member is

implying. How a CBA may be connected to this? Maybe if he could

elaborate on that, I can give him more clarity.

T. Stone: What I was looking for was, as one example, whether community

benefits agreements, and the promotion of CBAs, would make their way

into the investment criteria or the investment framework that InBC will

end up putting on the table. I think there are all kinds of theoretical

examples that one could come up with, where technology that’s being

developed, ideas that are being commercialized within companies that are

engaged in capital construction that could, wittingly or unwittingly,

find themselves looking for an InBC investment and there being some

requirements around CBAs as part of that mix.

All I’m looking for is just a definitive no — that that’s not

something that would make its way into the investment framework or

criteria that InBC would have, going forward.

Hon. R. Kahlon: I appreciate the member trying to maybe give an example. I think

the example is a bit extreme, so if that’s the type of example he’s

providing, then the answer is no. That’s not something that is being

considered. But the investment policy framework work is ongoing.

Certainly, as I’ve highlighted many times, we will be making that public

well before any decisions are made by InBC.

T. Stone: So I’ll take that to be a qualified no — you know, a clean energy

infrastructure company perhaps. There likely could be others. I think

it’s an important question to ask, and I would certainly hope that CBAs

would not be part of the investment framework, moving

forward.

I’m just wondering if…. Again, I’d like the minister’s thoughts on

this. The same framework document makes some interesting statements

around…. Well, I’ll quote a statement on page 72 from the framework. It

says: “Much of B.C.’s technology sector is currently concentrated in

downtown Vancouver. This constrains growth, as tech investments in B.C.

often require significant immigration or temporary foreign workers,

which adds to pressures on the availability and cost of housing in

Vancouver.” It continues along that vein.

[3:10 p.m.]

Just wondering, again, if the minister can reconcile that the tone

of that comment in the framework document would suggest that this

government sees foreign investment and foreign immigration as, in some

respects, a negative on housing prices. We certainly know that certain

members of the government — the Attorney General, others — have

acknowledged comments that have been made in the past, and regrets that

have been expressed for comments related to British Columbia’s housing

market and the role that, it was suggested, Asians, perhaps, had played

in that. Obviously, those comments have been walked back, and rightfully

so.

Where I’m going with this is immigration and foreign investment

are critically important to the success of our economy generally, but

certainly in the tech sector. Attracting investment as partners in these

InBC investments is going to be really critical.

So again, how does the minister reconcile the commentary in this

Framework for Improving British Columbians’ Standard of Living:

Economic Plan , relating to significant immigration playing a

role in driving up housing prices in the Lower Mainland, and the tone

and tenor of that being quite negative? How does the minister reconcile

that with the fact that we really need immigration and we really need

foreign investment, including from countries in Asia?

Hon. R. Kahlon: There’s a lot there. Of course, I want to spend as much time

talking about InBC and the legislation, and not get into a debate about

other matters. There’s a time and place for that; it’s called question

period. But I think it’s fair to say that our government welcomes

immigration. We believe if a person is good enough to come here to work,

that they should be able to stay and live.

I won’t go into major infrastructure projects that were built by

temporary foreign workers. I can, but I won’t, in the interest of time.

Certainly, I hope the member doesn’t want to be engaging in that kind of

debate here. Question period might be a better place for that. But we’re

proud of the work we do around human rights. We’re proud of the work we

do for welcoming immigrants here. Our government doesn’t see them just

as a vote. It’s not a quick win. It’s about welcoming people and making

sure that they feel safe in their communities. I won’t go too much

further into that.

On the foreign investment piece, I will say that we welcome

foreign investment. It’s an important piece of the work my ministry

does. We see opportunities for co-investment. I had a meeting recently

with the consul generals, the corps. This was an important piece.

They

wanted to talk about InBC. They wanted to talk about opportunities for

companies from all over the world to come and invest, especially in our

clean tech sector. They see huge opportunities with what British

Columbia is doing. They see opportunities with us, not only in our clean

tech companies but just climate change solutions overall. We see great

opportunities, and that’s why we’re proud of InBC coming

forward.

T. Stone: Well, again, page 72 of the government’s framework…. This is the

government’s framework for improving British Columbians’ standard of

living. It’s an economic plan that the government references on a

frequent basis.

[3:15 p.m.]

It’s still a guiding document. On page 72, it says: “Much of

B.C.’s tech sector is currently concentrated in downtown Vancouver. This

constrains growth, as tech investments in B.C. often require significant

immigration or temporary foreign workers.” Imagine that. Temporary

foreign workers. That’s in an NDP document — this framework. “This…adds

to pressures on the availability and cost of housing in

Vancouver.”

I’m not going to stand here and have the minister be evasive on

the question. The question is…. We cannot succeed in growing companies

in British Columbia if we’re not, in part, willing to embrace the world

and welcome everybody to this province. That includes Europeans,

includes Americans, includes folks from Asia. It includes folks from

every corner of the globe. The point is that this guiding document, this

framework document…. How certain components are written would suggest

that immigration, foreign workers, actually serves to drive up the costs

of housing, particularly in Vancouver.

We couple that with very public comments that were made on a very

sustained basis, particularly by the current Attorney General, which he

has since walked back and acknowledged and regretted. He says his

comments, in part, stoked anti-Asian sentiments in this province. You

can’t have it both ways. These tech companies, in order to be

successful, need to know that there’s an open immigration approach and

that investment from around the world is welcome here, including from

Asia.

This document, this framework, and comments that have been made

by, particularly, the Attorney General when he was an opposition member,

which he has walked back since, as an Attorney General, would suggest

that this government has got some issues around that, the role of

certain immigrants from certain parts of the world in inflating housing

prices in particular, which has been disproven over and over and over

again.

I’m looking for a reconciliation here from the minister, as to the

guiding influence of this framework document, which references, very

directly, the fund that would later be called InBC — that that would be

created. The success or failure of that fund rests in part on access to

capital, but also, all of those other things that we’ve talked about,

which includes attraction and retention of skilled workers, a lot of

whom are grown right here in British Columbia, and a lot of whom come

from all corners of the globe.

Again to the minister: how does he reconcile those two pieces?

What confidence can he give British Columbians that investment from

every corner of the world, including Asia, is absolutely welcomed here

in British Columbia and particularly in the context of this InBC Crown

corporation that is being established here?

Hon. R. Kahlon: I’m sorry. I thought we were talking about InBC. But the member

seems to want to talk about other documents.

Again, I could talk about the quick-wins document as a founding

document of the opposition, of how they view immigrants as just an

opportunity to get votes. But again, this doesn’t serve anyone’s purpose

in the work we’re doing here with InBC.

The member wants to know…. He wants to hear from government, to

say that we welcome investment. I tell him we welcome investment. We are

always looking for opportunities to get investment here from all over

the world. We’ve been talking to investment funds from Ireland, Denmark,

even Singapore, about opportunities to co-invest with us here in our

B.C. companies.

The member wants to know if we care about immigration. I can tell

him we do. We have elected officials who themselves are new immigrants,

who’ve just arrived to this country, who are contributing valuably to

the mosaic and the fabric of British Columbia.

[3:20 p.m.]

So I think the insinuations by the member are not helpful for the

dialogue. But of course, we have all day, and we can go for days if he

likes, because I have a lot to say on this topic. But I think it better

if we focus on InBC.

T. Stone: Again, the framework document that I’ve been referencing here is

supposedly a critical guiding document on all public policy,

particularly economic and social policy in this province. Far be it from

me to suggest that we understand how the goals and objectives of this

economic framework will, in any way, shape or inform the InBC scheme

that the government is establishing, which is also very directly

referenced in the framework documents.

I will move on. I just wanted to ask a couple of questions about

the relationship between InBC and CleanBC. We have heard in numerous

media interviews — and you can read supporting documents that suggest —

that InBC is supposed to be guided by the CleanBC plan. I just wanted to

ask if the minister has a target for emissions reductions that will be

directly related to InBC investments.

Hon. R. Kahlon: We’re extremely proud of the work happening on CleanBC, but we

know we need further investments in innovation in order to meet our

global targets. A low-carbon economy piece will be a very important

focus of InBC. It will help contribute to finding more opportunities to

be able to invest in the low-carbon economy and also create clean energy

jobs here in British Columbia.

[3:25 p.m.]

T. Stone: Well, I appreciate that, but the question is: will InBC have any

CleanBC emissions reduction targets that will be part of the framework

within which investment decisions will be made?

It’s all fine and dandy

to say that one of the target sectors will be clean tech, as one

example. It’s a very different thing to actually have specific targets

in place that relate to ensuring that there’s a linkage between

investments in the types of companies that could make a demonstrable

contribution to emissions reduction targets. Here’s what the target is

for those reductions, and it’s part of the investment criteria. That

should all be established up front, and that should be reported

on.

To put a further point on it, the 2020 accountability report on

CleanBC emissions actually says, on page 14: “As a result, based on

current modelling, we estimate that our existing CleanBC actions will

get us between 56 percent and 72 percent towards our 2030 target. Though

the new estimates mean we are further from our 2030 target, we are

committed to closing the gap.”

The government is potentially 44 percent and, if we want to be

really optimistic, 28 percent…. That’s the range — 28 percent to 48

percent off, or there’s a gap in their plan insofar as achieving the

2030 emissions reduction target. One would assume that based on all of

the hype that has been wrapped around the InBC scheme, clean tech

companies and clean tech investments would be a significant focus of

this government. One would think that there would be targets, CleanBC

emissions reduction targets, associated or related to, or as part of,

the investment criteria related to ensuring that there are investments

in clean tech companies that can help the government facilitate its

emission reduction targets.

Will there be a component within InBC’s investment criteria

requirement for achieving specific emissions reduction targets pursuant

to the goals detailed in the CleanBC plan?

[3:30 p.m.]

Hon. R. Kahlon: Again, this fund is focused on people, planet and profit. InBC

will employ performance measures that assess its success at achieving

the triple-bottom-line mandate. A common tool that is used is an impact

scorecard. A scorecard can be used to capture information specific to

how investments achieve investment criteria associated with the triple

bottom line.

The scorecard can have information such as a description of the

impact investment will have, the activities the investment will carry

out to achieve the impact. The metrics will likely be including things

like return on investment, job creation, economic growth, advancing

reconciliation with Indigenous communities, promoting diversity

inclusion, achieving low-carbon goals while establishing B.C. as a

globally competitive low-carbon jurisdiction.

T. Stone: I didn’t hear there a commitment to the inclusion of emissions

reduction targets pursuant to the CleanBC plan.

[N. Letnick in the chair.]

I would point the minister to the backgrounder that was released

as part of the announcement of InBC on April 27, 2021, where it says —

it’s the third bullet down — investments will “be guided by the B.C.

economic plan, A Framework for Improving British Columbians’

Standard of Living ,” which we just canvassed in a few aspects,

“and the CleanBC plan.”

One would think that there would be a specific focus on the most

critical aspect of the CleanBC plan, which is reducing emissions in

British Columbia. We all know what the targets are, the 2030 target.

Government’s own admission, through CleanBC accountability reports, the

most recent one in 2020, indicates that they’re between 28 and 44

percent off of achieving…. There’s a gap in terms of meeting their 2030

emissions reduction targets.

I just wanted to ask one more time, and then the member for

Saanich North and the Islands has a question. Can the minister confirm

that, indeed, emissions reduction targets pursuant to CleanBC will be

part of the investment criteria that InBC will utilize to determine

which companies they will be investing in and which ones they

won’t?

[3:35 p.m.]

Hon. R. Kahlon: There are three key pillars to this fund: people, planet and

profit. I think the question is: will our climate change metrics be an

important metric in assessing the success of this fund? The answer is

yes. But there may be opportunities by, for example, a company that can

have an innovation or a biotech company that is making the lives better

for British Columbians. They may get opportunities to get an investment

as well.

Of course, climate change is going to be a critically important

piece of it. It’s going to be an important part of the metrics of what

we think we can achieve. Certainly, we are hearing about the

opportunities in clean tech, but there will be other businesses. For

example, there may be an Indigenous-owned and -operated business that is

about distributor growth, and it may not be directly linked to our

climate change target, but it could be linked to other

opportunities.

So it has the three key pillars, and I highlighted some of the

metrics we’ll be using to assess the work, but this is a critical part

of impact investment.

A. Olsen: When the chief investment officer is looking at the mandate that

they have — people, planet, profit — and they’re looking at the values

that are informing this — climate change, CleanBC, as the member from

Kamloops has raised — are they looking at it from the context of the

entire portfolio that they’re managing, or are they looking at it from

each investment decision? Because you could argue that with people,

planet, profit, the entire portfolio of this $500 million fund has a

balanced approach. Or you could also look at it and say that each

investment opportunity that is sitting in front of that chief investment

officer needs to have people, planet, profit at its core.

I’m just wondering, from the minister’s perspective: is this an

individual investment decision that’s made, or is it that the entire

portfolio has to be balanced?

Hon. R. Kahlon: I think I understood the question from the member. The answer is

that across the entire portfolio, it must meet the triple-bottom-line

mandate: people, planet, profits. I think that’s the question the member

was asking.

A. Olsen: Just for clarity’s sake, you’ve got a handful of investment

decisions in front of the chief investment officer. One is a remarkably

good investment that’s going to be a partnership with a private

corporation and an Indigenous nation, for an example, and the Indigenous

nation is going to see some benefit from that, and it’s going to have a

technology that improves the environment.

Then you have another

investment that is a clean tech investment, but it also has a strong

profit aspect to it as well — a really good chance that this business is

going to flourish and make some money. From that, you can start to see

that there are a variety of economic investment opportunities that are

going to be in front of this chief investment officer.

[3:40 p.m.]

I’m just wondering how it is that we say that this person is being

successful in their investment in terms of…. If there’s a

single-bottom-line approach, you can tell. Is it making money or isn’t

it making money?

From the triple-bottom-line approach…. What I’m trying to get at

is: are we evaluating each investment decision that’s being made for its

people, planet and profit, or are we taking a look at the entire

portfolio and having it balance? If that’s the case, it’s going to be

much more complex for us to be able to determine whether or not the

chief investment officer and InBC are achieving the goals that we’ve set

forward here.

Hon. R. Kahlon: Having an Indigenous business running a climate change–related

company and having a clean tech company coming that also can address

climate change is, I think, a good problem for InBC to have.

How impact investment is assessed, typically, is through this

impact score card measure that I was just highlighting. I can share more

information with the member if he would like.

The score card generally includes information such as, for the

investment: description of the impact the investment will have; the

inputs required from the investor, external parties to achieve the

proposed impact; the activities the investee will carry out to achieve

the impact; the outputs associated with each strategic investment

criteria; the case for investment creating additionality; the process of

measuring, capturing and reporting the impacts. Measures must be

integrated with the investment decision-making and monitoring process

and must be resourced in a manner that supports the credibility and

objectivity of reporting.

The metrics, as I highlighted, include return on investment, job

creation, economic growth, advancing reconciliation with Indigenous

communities, promoting diversity and inclusion, achieving our low-carbon

goals while establishing B.C. as a competitive low-carbon jurisdiction —

impacted with the score card model.

T. Stone: Just following along on the line of questioning from the member

for Saanich North and the Islands. Will those impact score cards be

available to the public, or will they have to be pursued through freedom

of information?

[3:45 p.m.]

Hon. R. Kahlon: You won’t need to FOI that. Every year, there will be a report on

the investments that InBC makes, and there will be an assessment on our

investment policy framework on how those investments are impacted by

that. It will be made public every year to the Legislature.

T. Stone: Just for clarity, the impact score cards…. The minister read into

the record what those contain. Those impact score cards for each

investment that InBC decides to proceed with…. Each of those impact

score cards will be brought to this Legislature, unredacted, and will

be, therefore, available to the Legislature and to the public of British

Columbia for scrutiny?

Hon. R. Kahlon: The aggregated information will be made public. With that will be

how the investment has impacted the triple-bottom-line mandate that is

given to InBC.

T. Stone: Okay. Well, aggregated information is very different than the data

specific to each investment, so I think this just plays into the theme

here of transparency lacking in terms of how InBC is being established.

We canvassed earlier that InBC is not going to be subject to the Freedom

of Information and Protection of Privacy Act. Now we learn that the

impact score cards will not be made public. The government will take the

data from all of those impact score cards and aggregate the data, thus

rendering it basically useless in terms of providing that level of data

that I think the public has a right to know.

That’s regrettable. Maybe we’ll get a chance to talk about the

business plan and the minister’s refusal to make that public for InBC

and a number of other components to the lack of transparency that we’re

seeing emerge increasingly with InBC.

I did want to ask the minister: of the $500 million, how much

investment does he anticipate will be invested in technologies being

developed to support traditional industries — you know, mining,

forestry, oil and gas, and so forth — versus investment in companies

that are focused on emerging sectors, emerging technology?

[3:50 p.m.]

Hon. R. Kahlon: The member talked about an important topic, which is that there

are emerging technologies and then there’s a natural resource sector.

Obviously, there’s a lot of coalition between the two. It’s important to

note that this fund is sector agnostic. If a fund helps us advance, say,

for example, a low-carbon economy, there is an opportunity to find an

investment. The triple bottom line is the key piece in the

decision-making.

T. Stone: Again, on the traditional industry versus the emerging industry, I

completely understand the government’s main objectives here are people,

planet and profit. But what I think is also an important component, or

should be an important component of that, is ensuring that there is a

lens applied to ensuring that different sectors have equal access to

these funds.

If you are a company, an emerging company that has developed an

incredible technology that’s used in excavators at big mines that

measures the ore that’s being picked up and, even furthermore, can

determine the types of ore in a scoop and that kind of stuff, that type

of company should have the same ability to access support or investment

through InBC.

I think it would be cold comfort to companies engaged

predominantly in technologies to support traditional industries in this

province to hear that InBC is agnostic. InBC is not agnostic. The

minister has said may times today that investments will be prioritized

based on that lens of people, planet and profits. Clean tech, he’s

mentioned. He’s mentioned Indigenous-led businesses. He’s mentioned all

kinds of types of companies.

What I’m looking for here is an understanding from the minister as

to what government intends to ensure is baked into that investment

criteria to ensure equal access to InBC investment, regardless of

whether the business in question is engaged in traditional industries or

emerging industries. What commitment is the minister able and willing to

make to ensure that there is that equal access afforded to companies

across the entire spectrum here in British Columbia?

[3:55 p.m.]

Hon. R. Kahlon: Again, I didn’t say that it was just agnostic; I said sectorally

agnostic. So, any sector can access InBC.

The member used an example that it could be an Indigenous business

getting money, or it could be a clean tech or natural resource. All

three could be in one. We know, certainly in my meetings, a lot of our

businesses — those in the natural resource sector — are looking at

emerging technologies to advance their operations, whether it’s around

water or the air or land. So, again, sectorally agnostic. Any business

that meets the triple bottom line can apply.

T. Stone: Well, I’d be curious to know what the minister’s perspective is on

what the target sectors really are for InBC. The material that was

released on the day that this InBC scheme was announced in April — the

news releases, the media interviews that have been done…. Even a lot of

the validators that were at the actual announcement were from very

specific sectors. These were sectors that are predominantly in emerging

technologies — for example, the life sciences sector. By the way, I’m

very proud of that sector. I know the minister is as well. We’ve got

tremendous opportunity and potential for dramatic growth in the life

sciences sector in British Columbia.

The artificial intelligence and virtual reality sectors have been

talked about a lot. Supercomputing and quantum computing, the clean tech

sector — those are the kinds of sectors that we’ve all been hearing a

lot through, again, government communications and media interviews, and

even what was announced in April when InBC was rolled out by the Premier

and the minister. There wasn’t a lot of talk about tech sectors that are

engaged with resource companies, for example, or more traditional

industries.

That’s why this is really important. Perhaps the minister could

take a moment to just reflect back to this House what the target sectors

for investment are. Or is he going to say they’re agnostic on that, too,

and that there really isn’t a plan in place with target sectors in mind

for the $500 million of investment that will be on the table through

InBC?

Hon. R. Kahlon: I think I’ll just go to the answer that I just shared, which is

the fund is sectorally agnostic. I think he mentioned a few of the folks

who were at the initial announcement. I think maybe he may have missed

Greg D’Avignon, who’s the head of B.C. Business Council, who was also a

speaker at the event. I know many of his members are in the natural

resource sector.

We’ve had the B.C. Chamber of Commerce and many organizations that

represent members of diverse types of businesses see the value in this.

I think I’ve given the member the answer, which is this fund is

sectorally agnostic, as long as it meets our triple-bottom-line mandate,

as long as it helps us address some of the societal challenges that we

all want to see addressed.

T. Stone: The minister’s responses have, I think, been more along the lines

of suggesting that there are no commitments to ensuring some semblance

of an equal disbursement of funds across these different

sectors.

The added challenge that I think InBC is going to find here…. I’d

be curious to know what the minister’s thoughts are. There are certain

sectors in a tech space — like artificial intelligence I mentioned,

supercomputing and others — that are extraordinarily investment

intensive. They chew through massive amounts of investment in order to

scale in any way that’s significant in British Columbia, so it would not

take much.

[4:00 p.m.]

This is a comment that certainly has been made many times to me,

that $500 million is a lot of money. But if the predominant investment

sector that is going to receive those dollars is supercomputing and

artificial intelligence and life science sectors, it won’t take much to

burn through $500 million.

What I’m looking for here is a commitment from the government that

there is going to be an equal access, but equal as roughly as possible —

an equal disbursement of the funds here — so that companies, start-ups

that are engaged in the traditional industries in our province are able

to access this InBC funding as much as a life sciences company in

Vancouver is.

I guess my question would be this, and then it looks like we’re

going to have an interruption to our regular programming here for a

moment. But my question would be this. If I take the traditional versus

emerging one step further, let’s talk about the geographic

consideration.

The tech sector in Prince George, Kamloops, even Kelowna,

for that matter, looks and feels very differently in terms of the

sectors that are predominant there, the types of start-up companies that

exist there, the mix of start-ups versus scale-ups when compared to the

Lower Mainland, and in particular, when compared to Vancouver and Surrey

— you know, the big hubs of tech activity in the Lower

Mainland.

Can the minister let the House know, let British Columbians know

what consideration has been given to ensuring that a tech company up in

Kelowna, or my hometown in Kamloops — which, by the way, predominantly

are not engaged in the life sciences sectors or artificial intelligence

or quantum computing and so forth…. Those companies are predominantly in

the Lower Mainland. What assurances do tech companies outside of the

Lower Mainland have that they’re going to be able to access these InBC

investment dollars?

[4:05 p.m.]

Hon. R. Kahlon: I appreciate that there are a couple questions there. The fund

will be accessible across all sectors. I think the member was asking

about whether all of the money would be placed in year 1, and we do

expect it’ll be six to eight years for the fund to be placed. And

obviously, in the investment policy, which I’ve said a couple times now,

distributed growth will be a criteria of the fund. We do want to see

opportunities. There is a great tech sector in Kelowna, in Kamloops, as

the member knows because he’s from there and he’s had success

there.

We also see opportunities throughout the province. There are a lot

of projects that I can think of that may want to look at InBC in

Hazelton and other communities. But we do want to see distributed

growth. We do want to see opportunities in other parts of the province

getting access to this fund, and it will be an important metric in our

investment policy when it’s complete.

T. Stone: Did the minister or his ministry survey the capital needs of the

tech sector companies outside of the Lower Mainland? Was there work done

in the ministry, looking at what those investment needs actually are,

the types of companies that exist in Kamloops, Kelowna and Prince

George, whether they’re start-ups or scale-ups, predominantly? What

sectors are they in? Traditional industries versus emerging? Did the

minister and the ministry actually do that work to assess the unique

needs of tech companies in communities outside of the Lower

Mainland?

The minister is correct. I’m not just talking about the southern

Interior. There are some incredibly innovative companies in places like

100 Mile House, certainly, that I’m aware of — and on Vancouver Island,

in the tiniest of little communities. So did the minister do the work to

understand the needs that are very unique to the tech sector in the

communities outside of the Lower Mainland? If he did, could he speak to

what that actually looked like and how that informed his decisions,

moving forward?

The Chair: We’re going to take a five-minute recess, and the minister

will come back with an answer after the recess. We’re now in recess

for five minutes.

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

[N. Letnick in the chair.]

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

The member asked who we engaged with outside of Metro Vancouver.

The team has shared a list. We’ll go through it: Accelerate Okanagan,

the Gitxsan Development Corp. We’ve got Krista Mallory, who’s from the

Central Okanagan Economic Development Commission, which is Invest

Kelowna. We’ve got SIDIT, Southern Interior Development Initiative

Trust. That’s the Okanagan. We’ve got Central Okanagan Economic

Development Commission, the UBC Okanagan, Northern Development, the B.C.

Resources Coalition, the Nisg̱a’a

government. That’s the list.

Of course, the engagement continues. It’s ongoing. Certainly, I

know that we all wish that we would have been able to travel the

province and meet people face to face, but with the challenges we have

through COVID, it made it a little more challenging. But that being

said, our engagements continue.

T. Stone: Yeah. My question wasn’t so much: which organizations did the

minister talk to? I know how engagement works. I did a lot of it when I

was a minister. You send out letters, and your ministry staff make some

phone calls and so forth, and you put a check mark in the box next to:

“Yeah, I talked to Accelerate Okanagan.”

[4:20 p.m.]

What I was looking for was: did the ministry do any research or

any surveys or any efforts to actually generate the data that is helping

inform the shaping of InBC and its investment criteria — specifically,

to ensure that companies that are outside of the Lower Mainland,

emerging tech companies in rural parts of the province and smaller

non–Lower Mainland urban centres, have access to these InBC funds? I

didn’t really hear an answer to that part. That was the question that I

was asking. The minister can try again.

I wanted to ask the minister this question as well: can the

minister confirm that InBC will be investing in both start-ups and

scale-ups and that that would be a key part of the investment framework,

moving forward?

Hon. R. Kahlon: The member talked about the engagement that he did when he was a

minister. I’m sure it was more than just checking boxes. Certainly, what

we were doing is more than checking boxes.

The team has been doing extensive formal market sounding, both on

governance as well as the investment principles. That market sounding

helped shape the legislation and what we’ve brought forward.

The other question the member had was: will this fund be available

to start-ups? The answer is yes. The fund will be available to both

start-ups and scale-up companies.

T. Stone: Could the minister advise the House what he understands to be the

failure rate of start-up tech companies?

[4:25 p.m.]

Hon. R. Kahlon: We don’t have the number he’s looking for right now. Staff advise

me they don’t have that at their fingertips. But I guess that I kind of

know where the question is going, so the answer to the question he may

want to ask is that early-stage investment could be placed through fund

managers. And that could happen through InBC as well.

T. Stone: Well, I think it should concern British Columbians that the

minister is presiding over the creation of InBC, a scheme that will take

$500 million of taxpayers’ money and invest in high-risk venture capital

investments. He can call it patient capital, whatever; these are venture

capital investments. They’re high-risk.

Not knowing, not being able to actually reference, what the

failure rate is of companies, when he’s taking $500 million of public

funds to invest in these very ventures, is quite astonishing. I’ll

enlighten the minister. The failure rate is about 20 percent of tech

start-ups in their first year. That grows to about 60 percent by year 3.

It’s a high degree of failure rate. That’s why it’s viewed as one of the

riskiest sectors out there, from an investment perspective.

So with that as the backdrop, what’s the context for risk here

that the minister has in front of him? What’s an acceptable risk? How is

the minister going to ensure that the investment criteria, the framework

that is put in place, embodies a level of risk that’s worth taking $500

million of public money, knowing that there are going to be a

significant number of those companies that aren’t going to make it in

the first year and a lot more that won’t make it to year 3?

The question to the minister is: what’s the acceptable level of

risk that he and his government are prepared to take, with $500 million

of taxpayers’ money, on these venture capital investments?

[4:30 p.m.]

[S. Chandra Herbert in the chair.]

The Chair: Minister.

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

I think there are a couple of things. I’m not making the

investment. The chief investment officer and a team around a chief

investment officer will be making the investments. Of course, they’ll be

weighing the risk and opportunities when they’re assessing each business

opportunity that comes forward. They’ll be co-investing with the private

sector, which helps spread the risk. Of course, we also are creating an

oversight mechanism, with the board keeping oversight of the decisions

that are being made by the chief investment officer and their

team.

T. Stone: Well, the minister isn’t personally making the investments, but

this government is making the gamble. It’s the government that’s taking

half a billion dollars of public funds and putting into this InBC

scheme. It’s the government that’s allowing that amount of taxpayers’

money to be put at risk in these venture capital investments.

So we can split hairs here if the minister wants to do that, but

no one is suggesting that he or anyone in his ministry is actually going

to be making the decisions. Of course, we know that’s the chief

investment officer at the end of the day, but it’s the government’s

gamble with half a billion dollars.

I want to move on to just further along this line here. We talked

earlier about profitability, the rate of return, if we can call it that

— the anticipated rate of return on InBC’s portfolio. Several reports

have suggested that the minister and government’s expected rate of

return is 5 percent across the whole portfolio.

Actually, I would like to ask the minister if that number is

correct. Is the anticipated rate of return 5 percent on InBC’s

investment portfolio? Yes or no? If it’s not, what is the anticipated

rate of return that the minister has in his foreview here, relative to a

half-billion-dollar investment, or risking of public funds through this

InBC scheme?

Hon. R. Kahlon: I think it’s important to remind the member that this type of fund

exists in other parts of the world. I’ve highlighted to him Denmark,

Ireland, Scotland, Singapore. Many countries have had funds like this

with similar mandates for over a decade, have been quite successful.

Maybe I don’t agree with his labelling it in such dire straits. We have

seen this fund work and drive innovation and clean growth in many

countries around the world.

We based the number that he refers to off…. It’s kind of in

between what we saw between Denmark and Ireland on their returns. I

believe Denmark’s percentage was coming back at about 4½ percent, and

Ireland was around 6 percent. So we used 5 percent for the business case

for InBC.

[4:35 p.m.]

T. Stone: So what is the exact anticipated rate of return? Is it 5 percent?

Is it 5.5 percent? Is it 5.2 percent? What is the anticipated rate of

return? That’s a basic question at this stage of the game, when we’re

talking about half a billion dollars at stake.

Hon. R. Kahlon: The target that we set just for the business case was 4.7 percent.

But there is going to be a lot more work to be done on that once we’ve

finished the investment policy framework. Of course, the member knows

that work is ongoing. For the business case, we based it off of returns

seen in both Denmark and Ireland.

T. Stone: Well, again, I think there are a whole bunch of folks that aren’t

going to be sure whether to cry or to laugh. I mean, to say that we’re

putting $500 million on the table that will be invested in risky venture

capital investments and that there is essentially, as the minister just

stated, a 4.7 percent rate of return — although that’s an anticipated,

projected draft; there is more work to do on this — I find preposterous

at this point.

Denmark’s rate of return. He mentions 4.5 percent. The Ireland

strategic investment fund actually has a historical rate of return of

about 3.1 percent since inception. In Ireland’s case, that’s lower than

inflation, which was 10.5 percent in that same time period. So I think

that this is part of where the rubber is hitting the road here, on the

concerns that, I think, are rightfully placed about taking half a

billion dollars of public funds for an expected rate of

return….

Pick whichever number you want that we’ve just talked about,

whether it’s Ireland’s 3.1 or Denmark’s 4.5, or the 5 percent that has

been out in media reports, or the 4.7 percent that the minister just

threw out there — although that is draft. That is going to be refined

more, moving forward.

I guess the question is, does the minister believe, for the risk

that taxpayers are being asked to take on $500 million…? Twenty percent

of tech start-ups fail in their first year; 60 percent fail in their

first three years. For the risk that is associated with these

investments, is the minister comfortable with an anticipated rate of

return on the portfolio of investments that will be on the table here of

this 4- to 6-percent range? Is the minister comfortable with that? Is he

comfortable with that risk-benefit ratio for the taxpayers of British

Columbia?

[4:40 p.m.]

Hon. R. Kahlon: I hope the member will excuse me for not believing his numbers. I

think we’ll believe the Irish strategic investment fund on the number

that they’ve given us, which, in fact, I even stated wrongly. I said 6

percent. It was 7.6 percent. That number has come from the Irish

strategic investment fund themselves.

I think one of the important pieces here, and the member frames it

as in just for profit…. Again, this is impact investing. This is a

triple bottom line. I think, partly, the challenge that we’ve seen in

the marketplace, the reason why this type of fund exists, is that a lot

of investors are looking at just the profit. They’re looking at how much

money they can make in a quick turnaround, and there’s a real gap in

providing patient capital over a long term.

This is not just about a profit. This is about people. It’s about

our planet and finding the innovation that’s needed to advance the

well-being of British Columbians, the well-being of our planet. It’s

about scaling and anchoring companies here in British Columbia, ensuring

good-paying job opportunities here in British Columbia. It’s about

distributed growth, and it’s about climate change. Those are the policy

focuses of this fund. It’s not just profit.

T. Stone: Well, it sounds like this whole…. Going to go way out there. This

concept of rate of return is barely going to be a target. It’s not even

really a target with this government’s approach. We’re certainly not….

Any suggestion of a rate of return across this portfolio doesn’t seem to

be based on any forecasts. It would sound like the rate of return may

shift dramatically based on changes to the investment framework and the

investment policy as well.

The minister…. Again, I’d ask the question, but I’m not sure if

I’d get an answer other than: “We don’t have the numbers in the

ministry.” That is, again, shocking for what we’re talking about here

today, which is half a billion dollars of public funds, not to be

invested in health care or to go towards helping struggling businesses

in the Cariboo or in Coquitlam today that are barely making ends meet,

but to go into high-risk investments, a significant percentage of which

are going to fail.

The average venture capital firm expects a rate of return on their

investment portfolio of somewhere in the range of about 25 percent, some

as high as 30 percent — some are a bit lower — which means that the

NDP’s performance expectation is about five to six times less than the

venture capital firms out there.

I get the minister’s continuous assertion that this is patient

capital. This is about the planet. This is about filling a void that

exists in capital markets, which again is questionable. The member for

Saanich North and the Islands asked some relevant questions about that

earlier. But this is also public funds. These are taxpayers’

dollars.

[4:45 p.m.]

I guess the next question I would ask would be…. Contrasted

against venture capital firms, which have an expectation of 25 percent,

30 percent rate of return on their portfolio, contrasted against the

S&P 500’s historical annual average rate of return of about 13.6

percent…. Contrasted against those examples, those benchmarks, is the

fact that the NDP’s expectation is going to be five, six times less than

that rate of return really acceptable for taxpayers to assume that

risk.

Is the best explanation of this really that the government has a

low expectation of much of a rate of return on these investments in

order to facilitate the government’s policy objectives, which don’t seem

to be placing the respect for the taxpayer and the taxpayers’ dollars

here — half a billion dollars’ worth — anywhere near the top of that

priority list?

Hon. R. Kahlon: Again, I’ll take this back to the main purpose of this fund. This

fund is about investing in B.C. companies. That’s what we’re doing here.

We’re investing in our B.C. companies, in the innovation of our B.C.

companies.

The member mentioned money that could be going to health care,

could be going to employment opportunities. This money is going to those

things. This money, this patient capital, can go to an innovation that

will help improve health outcomes. It can go towards an innovation that

will help create employment opportunities for Indigenous communities or

communities throughout the province, give opportunities for women-led

businesses. This is about investing in our planet. This is about

investing in our people, in our B.C. companies. So I’m quite proud of

this. I’m quite proud of this investment.

Again, I highlight to the member that we’re not the first

jurisdiction to do this. This type of fund exists in other

jurisdictions. Denmark is quite successful. Ireland is very successful.

Scotland is very successful. Singapore is incredibly successful. The

jurisdictions that have these types of funds are not backing away from

them. In fact, more jurisdictions are going in this

direction.

This is what’s needed to address the challenges that we see in a

society. If we want to support the innovation required to address

climate change, it’s going to require patient capital. This is well

understood.

I’m not sure what entirely the member’s question was, but I tried

to give him a few things there to, hopefully, answer some of those

concerns he may have.

T. Stone: Well, I was talking about if it’s really, truly the government’s

policy priorities here which are tilting the balance away from

profitability, return on investment, ensuring that we’re stretching

every tax dollar, every public dollar as far as we possibly can to

maximize the benefit for all British Columbians or if the minister

believes that the importance of a financial lens on this, financial

imperatives on this are much less important than the achievement of the

government’s policy goals.

[4:50 p.m.]

That’s what I was getting at. I’ll ask it again in the context of

the

section that we’re on,

section 4. Subsection 4(1) says: “The

purposes of the corporation are as follows: (

a) to make investments that

achieve a financial return; (

b) to make investments that support the

social, economic and environmental policy objectives of the

government.”

I’m trying to understand: what is the financial return that is

anticipated? What is that balance that the government is going to

strike, in this InBC scheme, between that requirement in

section 4(1)(

a) for a financial return — don’t know what the level of return is, because

it’s not indicated anywhere — and the support for the government’s

policy priority areas? That’s what I’m trying to get to the bottom of in

this particular line of questions. I’ll put it to the minister one more

time: what is that balance between those two things? It’s not specified

in the legislation.

Hon. R. Kahlon: We are tilting the balance. We’re tilting the balance towards the

planet. We’re tilting the balance towards our people. We’re tilting the

balance towards distributed growth, to inclusive growth. The member is

correct; we are tilting the balance. We know there’s a need for this

kind of patient capital to tilt that balance towards the values of

British Columbians, and that’s what we’re doing. Profit is obviously a

key component of it. It’s planet, profit and people. We are tilting the

balance, and that’s what this fund is trying to do.

It’s what the fund will do. It has been successful in other

jurisdictions. Again, I’ll highlight for the member that we’re not the

first jurisdiction to do a fund like this. This is not groundbreaking

for the world. It’s not the first time the world has seen a fund like

this. Denmark, Ireland, Scotland and Singapore are just a few that have

been very successful for over a decade. We’re proud of the direction

we’re going.

T. Stone: Look, I think we’re at an impasse here, in the sense that the

minister seems to think that an anticipated rate of return in that 3- to

5-percent range, 6 percent, for the risk that taxpayers are being asked

to take with half a billion dollars, is acceptable. I do not; our caucus

does not.

Just to set the record straight on the Ireland strategic

investment fund, the 6.2 percent return that the minister mentioned

moments ago was for 2020. That was at a time when most other markets had

actually gained by 15 to 30 percent. The average annual return on the

Ireland strategic investment fund, since 2015, has been 3.1 percent.

We’re also getting that data, from the Ireland strategic investment

fund. He thinks that a rate of return of 3.1 percent, for the level of

risk that’s attached to these investments, is an acceptable risk to take

and that that’s responsible. We do not — a point of

difference.

I want to reiterate that the minister can use phrases like

“patient capital,” and he can talk about the people, the planet, and so

forth. The service plan for InBC is actually quite an enlightening

document. It uses phrases that the minister doesn’t want to apparently

acknowledge as forming a lot of the foundational thinking for InBC.

page 6 of InBC’s service plan, with respect to key risks identified for

the upcoming fiscal year, it says, with respect to returns: “Venture

capital is a high-risk asset class that does not afford guaranteed

returns.” It’s a high-risk asset class. There are the evil two words,

“venture capital,” mentioned there. Venture capital is referenced

throughout this service plan.

[4:55 p.m.]

On page 13, in a note underneath the financial

summary for the

corporation, it says: “InBC does not include revenue from venture

capital investments when forecasting, due to the variable and

unpredictable nature of the investments and associated distributions.”

This is an extremely high-risk scheme that is being set up here — for

maybe, in the Ireland example, a 3.1 percent rate of return, over the

past five to six years, on an average basis. We differ on whether or not

that’s an acceptable risk for taxpayers.

The minister keeps talking about people, planet and profit. On the

planet aspect of this, we ask: “Well, are the CleanBC targets, the

emission reductions targets, intertwined at all with InBC’s investment

criteria and targets?” No, they’re not. This is all seems to be

nebulous, notional and whatnot — or it’s coming. We’re being asked to

vote on, endorse and support a piece of legislation where these details

are so sorely lacking.

I’d ask the minister this question. The InBC service plan — again,

this is on page 6 — states that a j-curve effect is anticipated for

InBC’s returns. Again, it says: “Negative returns may occur in early

years. Gains occur in later years as portfolio companies mature and

exit.” Does this mean that InBC will be using an exit-value-based system

to determine the value of investment targets?

[5:00 p.m.]

Hon. R. Kahlon: InBC, obviously, is committed to long-term investments. We

understand the j-curve effect. We’re not looking for quick exits in this

fund. I think it’s important to highlight…. The member talks about risk

and when the returns will come. I think the member probably knows — but

if he doesn’t, I’ll share — that the B.C. tech fund launched in 2016 and

has yet to turn a profit. It’s just coming out of the j-curve now, five

years later. So I’m sure he had similar concerns then.

But we’re very aware of this and, again, look forward to any

follow-up questions that the member may have.

T. Stone: I want to really make sure that we’re clear on this point. Is the

minister aware that the typical venture capital exit value method is

based on the company being acquired and exiting the market? If the

minister does agree with that — if an exit is the objective, whether

it’s in three years, five years or longer — then how does that jibe with

the other significant or often-stated objective of this fund to anchor

companies here in British Columbia?

Hon. R. Kahlon: Perhaps I’m not fully understanding the question. The member can

maybe elaborate on that. But the objective of this fund is to help — to

see companies self-anchor here. We want to see them kind of connect

within the community, stay and self-adhere to the community, see them

put in roots and grow here.

Maybe if the member elaborates on his question, I might be able to

better understand what he’s going at.

T. Stone: Well, the typical venture capital exit value method is based on

the company being acquired and exiting the market. To put that, maybe,

into layman’s terms for everyone watching, the typical objective for

most tech companies is to grow as quickly as possible, all the while

attracting multiple rounds of investment, different series of investment

with venture capital firms and angel investors. You typically start with

friends and family. They call it love money. Then you move to angel

investors, and then you move to the more sophisticated institutional

investing and venture capital firms and so forth. But every level of

investor expects a return on their investment at some point.

[5:05 p.m.]

The typical opportunity for that return on investment happens

through an exit, meaning that the company is acquired. It’s acquired or

there’s a merger or there’s some other activity that takes place and

buys out the shareholders. When that happens, we often see those

companies in question end up no longer being located in British

Columbia, or the headquarters might remain here, but there’s a

significant growth in operational capacity in other jurisdictions around

the world. Or the headquarters leave British Columbia, but there’s still

an operational capacity for delivering products and services here in

British Columbia.

I’m trying to understand if this exit-value-based method of

capturing the valuation and capturing that value and exiting is the

approach that InBC will take, or if there will be some other approach.

If it’s to help companies grow, to get to a point where they end up

being acquired…. The minister has made very clear public statements that

there are no strings attached in terms of precluding subsequent rounds

of investment from being made in these companies. At some point, there’s

going to be an expectation of an exit, and that company may, at that

point, no longer be based in British Columbia.

The question was: how does that reality jibe with the objective

and the goal of this government to anchor these companies here in

British Columbia?

Hon. R. Kahlon: I think the member is implying that an exit will mean the

companies will leave, and certainly, that is not how we view it. We have

seen companies that have been bought by other jurisdictions, but they’ve

scaled to the size, and they’re attached to their workforce, or they

maybe have the manufacturing capacity built here.

[5:10 p.m.]

There’s a strong ecosystem, and they still stay. So we don’t

necessarily see that as being the only challenge, but the member may

have been implying something different in his question.

T. Stone: No, I wasn’t implying that, automatically, companies will leave

British Columbia. There are many examples of B.C. companies that do the

acquiring.

Whether we agree that the InBC scheme is the way to go about it or

not, I think we all share the objective here of wanting to see B.C.

companies not just start up here in British Columbia, in large numbers —

we’re actually pretty good at that in this province — but also scale up,

move to that next level, do the acquiring, be engaged in those and be

the leading entity in mergers and so forth.

But let’s talk about anchoring. The initial backgrounder for InBC

defines anchoring as: “Companies that maintain their head offices and

senior decision-makers here, pay taxes and develop the skills and

capacity of their B.C. workforce.”

The question to the minister: is that still how he would define

this commitment to anchoring? The second part of that question would be:

what mechanisms will the government have at its disposal, if any, to

enforce or to do as much as it can to ensure that these anchoring

objectives are actually achieved? If a company receives InBC investment,

moves to the next level and then is acquired and leaves British

Columbia, are there any ramifications for that whatsoever?

Hon. R. Kahlon: We see that by investing directly in B.C. companies, InBC will

have a seat at the table. So if a company is approached by a foreign

buyer about selling or leaving the jurisdiction, InBC will be able to

participate in and influence that discussion. We acknowledge that we may

not have enough seats on the board to block that move, but we will have

a say in that decision.

Across the portfolio, I think we’ll be also able to gather

intelligence about what the issues are and why this is happening.

Further to that, I think the objective here is to help our companies

scale up so that they get to a certain size and a certain footprint —

that they want to stay. We want to try to make it sticky for these

companies and find ways for them to get big enough that they’re anchored

and they stay here in British Columbia.

T. Stone: The InBC backgrounder states: “These investments would be

complementary to private investment and would be on the same terms as

the private investment.” First part of the question: is that still the

intention, moving forward?

[5:15 p.m.]

Secondly, if the investments are on the same terms as private

investment, then what is really serving to anchor that company here in

British Columbia, recognizing that most private sector venture capital

firms and other financial institutions that would be participating and

leveraging these investments are going to want to see a return on their

investment at some point, which is typically provided for through an

exit of that company?

Hon. R. Kahlon: The intention here is obviously to co-invest with private capital,

and each party will have slightly different terms in that investment. I

think the member understands that. Although the member is focused on

just venture capital, I think he should also understand that there are

opportunities with public funds as well.

BDC Capital, there’s the Canada infrastructure fund, EDC. There

are public funds that would want to co-invest along with the decisions

that InBC makes, as well.

T. Stone: This next question kind of involves the same topic. There are four

parts to it, so I’ll be really quick, and perhaps the minister can then

just answer each piece in his subsequent answer.

First, is the intention here for InBC to spread this $500 million

around to as many companies as possible or to participate in multiple

rounds of investment with the same company? I appreciate that every

situation will be unique and so forth, but again, this comes back to

policy objectives of the InBC framework here. Does the minister envision

InBC, as a default, trying to spread the money as widely as possible or

going deep into a smaller number of companies through multiple rounds

with those companies? That’s one.

Two, can the government be bought out of its shares by investors

in subsequent rounds? So if InBC participates in a series A round or a

series B round, can a subsequent investment round and the investors

participating in that round buy out the government or the InBC

position?

Thirdly, can a tech company that’s received investment through

InBC just simply pay back the funds to InBC whenever it wants

to?

[5:20 p.m.]

Fourth, if a company moves out of British Columbia after having

received an investment from InBC, and I think we’ve established that

there really will be nothing that will be holding that company back….

Hopefully it doesn’t happen, but there really is nothing that the

government will be able to do, unless the government has participated in

multiple rounds such that the government, through InBC, ends up with a

majority of the board seats in a particular company.

If that company moves out of British Columbia after receiving InBC

investment, would it be a policy imperative of InBC to divest itself of

the shares in that company or sell, dispose of, those shares in a

company which has left the province after receiving the InBC

investment?

[5:25 p.m.]

Hon. R. Kahlon: Four questions there. One of the things I’ll say off the top is

that we’ve been clear from the beginning that InBC can invest up and

down on the capital structure. But each of the questions is case by

case.

For example, the first question was around: will InBC try to

invest in many companies or multiple rounds with the same company? I

think the answer there is that InBC will have the scope for follow-on

investments. Of course, this is something that the chief investment

officer will have to decide on, obviously, upon reviewing the investment

policy document.

The second question was: can government be bought out on, say, for

example, a second round? This one is similar to question 3. The answer

is that it depends on the terms. It depends on the nature of the

investment. It depends on when InBC wants to exit. It depends on a few

variables, and that’s certainly the same with the third question, about

the payback option.

I mean, if it’s a loan, yes. But if it’s equity, it’s not quite

chief investment officer, so it’s case by case.

The fourth question was around if a company moves out of B.C.

Again, it depends on the nature of the investment, and that work on the

investment policy is still happening and still has to be set.

T. Stone: Those, I think, were responses that, frankly, I was anticipating.

It will depend on the term sheets and the specific circumstances of each

company. But the point I was trying to make is that at the end of the

day, the goal or the objective of anchoring businesses in British

Columbia, as stated in the backgrounder, in the context of companies

maintaining their head offices and senior decision-makers here, paying

taxes and developing the skills and capacity of the B.C. workforce, are

really that. They’re goals.

There is nothing that’s going to be much different here in terms

of this approach, this InBC scheme, really enhancing the likelihood of

success on these anchoring objectives in comparison to investments being

made through more traditional means — venture capital companies, and so

forth. I think it’s important that that be established because, again,

the broader discussion here is: should government be taking $500 million

and risking it on these kinds of venture capital investments when one of

the oft-stated goals of doing so, when this was launched, was to anchor

businesses in British Columbia?

[N. Letnick in the chair.]

I think it’s just important for British Columbians to know that

there’s really nothing that’s happening here, through InBC and how this

is being structured, that is going to provide a greater likelihood of

that anchoring to take place. I certainly hope I’m wrong. We all want

these companies to be anchored here for the long term and grow here, but

I don’t think there’s anything extraordinary happening here, in how this

is being structured, that’s going to make that a reality as a

default.

[5:30 p.m.]

I just have a couple of final questions on

section 4, and then

we’ll be able to move on to subsequent sections. I just wanted to ask

the minister this question: will UNDRIP compliance be a prerequisite for

investment decisions? Secondly, will Indigenous consultation be

undertaken on all investment decisions, each and every investment

decision, or just on the investment policy framework?

Hon. R. Kahlon: First Nations won’t be consulted on individual investment

decisions. That is something that is squarely in the decision of the

chief investment officer. We are engaging right now on the investment

policy statement, and that conversation is ongoing.

T. Stone: What happens if a First Nation actually objects to an investment

that is made by InBC? Would that investment decision, after it was

announced, be reversed, or does the investment decision that was made

stand?

Hon. R. Kahlon: I think the answer is in the earlier answer I gave, which is that

we won’t be consulting on individual decisions made by the chief

investment officer, but we are engaging with First Nations communities

right now on the investment policy statement.

T. Stone: Last question on clause 4. I have no questions on clause 5, so

then we can move to clause 6 after this question.

Can the minister confirm that the necessary engagement

consultation with First Nations was undertaken on this specific piece of

legislation that is before the House today?

[5:35 p.m.]

Hon. R. Kahlon: Yes. We engaged with Indigenous political organizations, economic

development corporations, nations and individuals. Obviously, this

conversation is ongoing, as I’ve mentioned, and we’re going to continue

to engage on the investment policy statement, which I think is

important.

Clauses 4 and 5 approved.

On clause 6.

T. Stone: We’re now into

part 3 of the bill, Bill 5, dealing with

governance. We’ve got a number of questions here.

Section 6 specifically deals with the board of directors. I guess,

right off the top, I think a question that a lot of people would like an

answer to is…. While the minister has said many times that the board of

directors for InBC is independent, will be independent and, when the

appointments were announced, that it was independent, when you actually

look at the nine members that have been appointed to InBC’s board, it’s

pretty hard to come to the conclusion that this board is actually going

to be independent.

Now, no disrespect is intended towards any of the individuals that

have been appointed. I certainly have respect for the two deputy

ministers, who I absolutely understand operate in a non-partisan manner,

worked with our former government, and so forth. But these senior civil

servants will do what is expected of them. They will do what they’re

told to do. Any suggestion otherwise is folly.

Carole James was appointed. She is a former Finance Minister and

leader of the NDP, hardly independent from the NDP government. In

addition to the two deputy ministers and Carole James, you have a

Canadian Centre for Policy Alternatives senior economist, Iglika

Ivanova, and a special adviser to the Jobs Minister, Glen Lougheed, who,

again, we’re supposed to believe are going to be independent of the

minister, independent of government, with respect to their roles as

members of the board of InBC.

I guess the obvious first question is: how does the minister

seriously think that British Columbians are going to view this board — a

former NDP leader; two senior civil servants that report to this

government; a senior economist with the Canadian Centre for Policy

Alternatives, a left-wing think tank; and an individual who was

appointed as a senior adviser to the Minister of Jobs himself? How does

the minister actually think that British Columbians are going to look at

this board and say: “Yeah. Yeah, it looks pretty independent to

me”?

Hon. R. Kahlon: Thanks to the member for the question. I guess I’ll try to go at a

few of the pieces that he mentioned.

He mentions the two deputy ministers. I know he’s worked with

them. But to suggest they’ll do the government’s bidding is, I think,

false. They’re public servants. They do what’s in the best interests of

the public. They provide fair and accurate information.

[5:40 p.m.]

If the member has experienced where it’