2009
Legislative Session: First Session, 39th Parliament
COMMITTEE A BLUES
This is a DRAFT TRANSCRIPT ONLY of debate in one sitting of the Legislative Assembly of British Columbia. This transcript is subject to corrections, and will be replaced by the final, official Hansard report. Use of this transcript, other than in the legislative precinct, is not protected by parliamentary privilege, and public attribution of any of the debate as transcribed here could entail legal liability.
(HANSARD)
PROCEEDINGS IN THE
DOUGLAS FIR ROOM
Committee of Supply
ESTIMATES: MINISTRY OF
TOURISM, CULTURE AND THE ARTS
(continued)
The House in Committee of Supply (Section A); H. Bloy in the chair.
The committee met at 2:35 p.m.
On Vote 41: ministry operations, $104,454,000 (continued).
S. Herbert: Thank you to the minister and his staff who are here today to take some further questions to our conversation this past Thursday. [DRAFT TRANSCRIPT ONLY]
We're moving now into a discussion on the tourism section of the ministry. Then we'll continue on with arts and the trail system on Crown territories, if we get that far. I know we have only about two hours, give or take, as there are many other ministry estimates waiting for me to finish up my time here. If I do get to the end of time and I still have a number of questions, as is likely, I'm wondering if the minister would feel it appropriate for me to read those into the record and then, hopefully, get a written response in a week's time or so. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: We'd be happy to accept the member's written questions. I won't commit to a week, because these are very busy people, but we will honour the request. [DRAFT TRANSCRIPT ONLY]
S. Herbert: The first decision was a big decision of the minister early on in his time as minister, and it relates to this budget allocation for the Ministry of Tourism, Culture and the Arts. The question is: when was the decision made to scrap Tourism B.C. as an independent operating entity, and who was involved in making that decision? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: As the member knows, I think, conversations within cabinet or committees of cabinet are subject to cabinet confidentiality. We take an oath that we will maintain that, so I can't give him details of meetings. [DRAFT TRANSCRIPT ONLY]
As he knows, I was sworn in with these responsibilities in June, and on August 17, I personally telephoned each member of the board of Tourism B.C. that I could reach and advised them that a decision had been made to take the entity into government. The same day Ms. Lori Wanamaker, my deputy minister, who is seated to the left of me today, met with the CEO and gave him the same news. The CEO is the only person who has left the organization. Everyone else who was working with Tourism B.C. still is, within the ministry. [DRAFT TRANSCRIPT ONLY]
The decision was made in order to maximize efficiencies, making sure that as we approach the most wonderful opportunity we will have in our lifetimes to market British Columbia which is, of course, the awareness that builds about British Columbia leading up to and going on through the Olympics and then the level of interest in British Columbia we can capitalize on our values by making sure that we bring people back to British Columbia for years and years ahead by building a relationship with them. [DRAFT TRANSCRIPT ONLY]
The Tourism B.C. staff, the ministry staff have both been working in those directions. We thought it made sense to combine forces, make sure that we enjoyed the synergies that would flow from that and make sure that we eliminated any duplication of resources, whether financial or human resources. [DRAFT TRANSCRIPT ONLY]
We got a really high level of commitment from the Tourism B.C. people immediately. They've been moving ahead with ministry staff under Ms. Wanamaker's leadership. We have absolutely no doubts that it was the right thing to do. [DRAFT TRANSCRIPT ONLY]
S. Herbert: The minister will no doubt be aware that I myself, as the opposition critic for Tourism, Culture and the Arts, disagree with the minister's viewpoint on this issue. I think that Tourism B.C. was a vital leader in terms of marketing tourism in B.C., well applauded internationally for its independence from political interference. [DRAFT TRANSCRIPT ONLY]
We've had this debate before in the Legislature, when the decision was made and when we saw this come through in the amendments that the minister was involved in. I'm going to try again to keep it focused on quick questions. Hopefully, we'll get quick answers so that we can make the political debates outside of this committee room. There are many, as the minister well knows. [DRAFT TRANSCRIPT ONLY]
[1440]
Had Tourism B.C. made any decisions that the government disagreed with? I just mention this because the minister had mentioned that we needed to align values between the government and Tourism B.C. I'm wondering if there were any decisions or values that Tourism B.C. held which were not held by government, forcing this change. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: The decision was about making sure that we built on the synergies possible between the two groups of staff, eliminating duplication of effort or resources and maximizing efficiency of the resources of government to capitalize on a once-in-a-lifetime opportunity and make sure that for years to follow the Olympics, we were able to capitalize on the exposure we'd received and to market British Columbia with a leg up that one could have never had without an opportunity of this scope. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I guess I would say that if that was the real reason and I have thoughts about what the real reason was for eliminating Tourism B.C . The question which has been asked is: why wasn't it done eight years ago if it was such a waste of resources, if it was so not focused, if it didn't have synergy? [DRAFT TRANSCRIPT ONLY]
I argued that it did and that it was necessary, and I think we need to move back to something like Tourism B.C., as opposed to what the minister is moving towards. I think it is such a world leader, with the performance-based funding and with the independence of its board, because they could stay above the political fray and just focus on marketing the province. [DRAFT TRANSCRIPT ONLY]
That being said, this is the decision the minister has made, so I'll ask some specifics about that. How will Tourism B.C. be funded next year? I know the current budget was about $59 million. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Tourism B.C. will be funded by a voted appropriation from the ministry's budget. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Can the minister provide a breakdown for how Tourism B.C.'s budget is being spent this year say, to the nearest million? [DRAFT TRANSCRIPT ONLY]
[1445]
Hon. K. Krueger: I have already introduced most of the people with me to this House, but seated to my right is Raymond Chan, the vice-president for 2010 and corporate relations in Tourism B.C., and behind him is Mr. Len Dawes, the chief financial officer. [DRAFT TRANSCRIPT ONLY]
I'll read those numbers into the record. The revenues budgeted for 2009-10 estimate: $58.8 million from hotel room tax, $125 million from grants and contributions, $267 million from investment and miscellaneous income, totalling $59.192 million. [DRAFT TRANSCRIPT ONLY]
Interjection.
Hon. K. Krueger: Did I get something wrong there? Oh, sorry, yes. I was giving us a lot more than we actually have there: $125,000 from grants and contributions and $267,000 from investment and miscellaneous income. That would have been a glorious day for Tourism B.C. if I got away with that. [DRAFT TRANSCRIPT ONLY]
Operations net, consumer marketing: the anticipated expenditures are $24.584 million. Partnership marketing: $10.935 million. Visitor experiences: $13.1 million. Support services: $5.27 million. Amortization: $2.4 million. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Within that budget that the minister broke down for me, I know a lot of it is advertising, as is necessary in the tourism field. Can the minister break down for me how much of the advertising is going to be spent domestically within B.C. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Within British Columbia the advertising budget is $1,089,100. The total advertising budget is $21,693,877, so outside of British Columbia is the second amount minus the first. Also, there's a budget of $5,811,318 to fund regions and cities in the regional and destination marketing organizations. [DRAFT TRANSCRIPT ONLY]
S. Herbert: The minister mentioned the destination marketing organizations. I'm wondering: will they continue? What assurances do they have that they will continue to receive investments from governments in years ahead, as I know they were receiving them in the past, through a performance-based funding model? What assurances? Will they receive it in that way in the future? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: I have to remind the member that we're dealing specifically with the budget for the rest of 2009-10. We're currently building the budget for 2010-11, but it isn't the subject of these estimates. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I take that, as I know the Chair ruled on that earlier. I know previous estimates have been involved, and they did allow me to ask about out-years. [DRAFT TRANSCRIPT ONLY]
[1450]
I asked because the tourism industry has been raising this question many times with me and, I'm sure, with the minister. They're very concerned because, as good business people do, they plan for the future and for the years ahead. So they still have no answers for the years ahead, and I'm aggressively seeking those answers. [DRAFT TRANSCRIPT ONLY]
As soon as the minister knows, I am hoping that he'll let me and, of course, the industry know, because a lot of the jobs depend on it, as the minister well knows. [DRAFT TRANSCRIPT ONLY]
All right. So we've got a little over a million dollars, I understand, from Tourism British Columbia's budget of $59 million, going towards advertising within B.C. Just nod if that's correct. Is that correct? [DRAFT TRANSCRIPT ONLY]
Interjection.
S. Herbert: Yeah, you gave me the exact figures great. Thank you. So that's the Tourism B.C. budget. [DRAFT TRANSCRIPT ONLY]
Did the minister or this government ever have occasions where ideas that they put forward to Tourism B.C. in shareholders' letters of expectation or other such forms were rejected by the board of Tourism B.C. as not being useful in building Tourism B.C., or too prescriptive, or other suggestions from that board? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: In my time and Ms. Wanamaker's there have been no such disagreements, and the Tourism B.C. executives with me who have been, obviously, in their roles longer than I have been in mine say that they don't remember any, either. [DRAFT TRANSCRIPT ONLY]
S. Herbert: In 1997 when the NDP introduced the bill that created Tourism B.C., the B.C. Liberals supported that bill, and they argued quite strongly that tourism marketing in the province be made independent, as the current member for Oak BayGordon Head said. The former member Christy Clark said: "We know that if the board doesn't have autonomy, if politicians are allowed to have a say in the decisions that are made by the board, those decisions won't necessarily be the right ones." [DRAFT TRANSCRIPT ONLY]
I know, as the member's colleague from Saanich North and the Islands, also a B.C. Liberal, said at the time: "I can assure you that tourism will be a disaster if it becomes part of this government's controlling mechanism. So I want to see that this board is independent of this government's manipulation." [DRAFT TRANSCRIPT ONLY]
My question to the minister is . Those comments were about the independence of Tourism B.C.'s board, independence from political manoeuvres. Why does this minister think that it will be different now that he's in control, and that those sentiments no longer ring true? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Those members in the '90s were talking about a different government, of course. We all know that, and the member has referred to it as, I think, the government of the last century, and said that he was in the K-to-12 system at the time. This is a different reality. [DRAFT TRANSCRIPT ONLY]
But the really dramatic thing that led to our decisions this August was the news that was announced July 2, 2003, which is the day that the world learned that we were going to be hosting the 2010 Winter Games and Paralympic Games. Tourism B.C., to their credit, engaged on that opportunity, and they've done a tremendous amount of good work since, and so have the people in the ministry. [DRAFT TRANSCRIPT ONLY]
It was time to bring the teams together, with six months to go, knowing that in our lifetimes we won't get another marketing opportunity like this with three billion people watching the opening ceremonies; over a quarter million guests in the province attending the games; 15,000 foreign journalists covering British Columbia for months before and, hopefully, months after; and, certainly, throughout the games a level of interest and awareness about British Columbia that we'll probably never see duplicated but that we are working to maintain. [DRAFT TRANSCRIPT ONLY]
That is the very significant thing that changed. We won the Olympic bid, and we're working hard to make sure that we leave no stone unturned in making sure that we take advantage of every opportunity that flows from this huge occasion. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Yes, the Olympics coming is certainly an exciting time. I know a number of folks in the tourism industry, when it was first announced in 2003, were very excited about it. I've had the occasion recently to speak with many senior leadership figures in the tourism industry, and while they say it will be a good thing the Olympics for the short term, they're very concerned about the long term. [DRAFT TRANSCRIPT ONLY]
[1455]
When I asked them about the dissolution of Tourism B.C., they said: "Well, why would you take this organization down six months before the Olympics? It doesn't make sense." If, indeed, it was supposed to be done, and the minister believes that it should have been done, their question is: "If it was so important, why didn't the minister do it earlier?" [DRAFT TRANSCRIPT ONLY]
Of course, the tourism industry has been vocal, very strong in their opposition to the dissolution of Tourism B.C. I know the Council of Tourism Associations, the industry's voice, has spoken out against it again and again and, in fact, is calling for something similar to Tourism B.C. to be brought back. [DRAFT TRANSCRIPT ONLY]
The minister didn't answer the question. Well, I guess that he tried, which was to say that his government is not the government from the 1990s, so somehow they're different in terms of being absent from political manipulation and those kinds of things, which his colleagues were alleging of the government at the time. [DRAFT TRANSCRIPT ONLY]
Certainly, I think anybody who watches B.C. politics will know that a political party is a political party is a political party. That's why Tourism B.C. was so important to be independent, because while the minister might be well-intentioned, and I know he is, there are things that go off the rails in politics on occasion, as we all know from history. That's why I asked the question, but I understand the minister doesn't want to go there, in that sense. [DRAFT TRANSCRIPT ONLY]
Maybe the minister can help me with this one. How does the minister respond to the Council of Tourism Associations' recent decision to refuse to participate in the minister's council on tourism, as they believe and I'll quote the letter: "It will not help or advance tourism issues in B.C."? Instead, they're calling for a special operating agency with the same sort of structure as Tourism B.C. had. How does the minister respond to the Council of Tourism Associations' refusal to sit on his committee? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: When the member refers to Tourism B.C. being "taken down," that's a mischaracterization. I know that the member is hearing it from other people who use that phraseology, but it's a puzzle to me why anyone would think so when we have 146 of the 147 people still working as a unit. We have their corporate culture. We have their plans. I don't think they've skipped a beat. I've heard nothing but optimism and commitment from the people of Tourism B.C., and they have the additional resources of the ministry itself and its people working with them. [DRAFT TRANSCRIPT ONLY]
Our thrust is to make sure that we not only maximize the benefits that will flow from the Olympics but that we spread those benefits to every corner of the province all the small communities, all the rural areas. With regard to his question on the minister's council on tourism, I have been respectfully waiting for COTA to announce its decision. Initially COTA had said to me that they would like their chair to be on the minister's council on tourism. We agreed to that; that's Mr. Jim Storie. [DRAFT TRANSCRIPT ONLY]
They have provided a letter saying that they're going to sit it out, and I respect that. We'll be naming the minister's council on tourism very soon. That's what we've been waiting for. The people that have already agreed besides Mr. Storie, who had agreed, subject to COTA's approval are people that, I know, have tremendous credibility with the industry. [DRAFT TRANSCRIPT ONLY]
S. Herbert: In reading the minister's press clippings over the years, I see that he fashions himself as a guy who gets things done. Certainly, I know that in his constituency he has spoken about a number of the things that he's been able to do for his community. The question is: if the minister had a bright idea for a project that he thought needed to be funded, am I right in understanding that the minister could make it so, now, from Tourism B.C.'s funds? [DRAFT TRANSCRIPT ONLY]
[1500]
Hon. K. Krueger: There is a careful planning process that Tourism B.C. and Ms. Wanamaker, as the interim CEO of Tourism B.C., have been working through. It was well underway before Tourism B.C. was embraced back into the ministry. [DRAFT TRANSCRIPT ONLY]
There will be an annual business plan, which will be published for public awareness. There may be changes to business plans, because any business needs to respond to the market, but by and large the ministers set policy, deputy ministers and CEOs implement policy, and that's what's been going on at Tourism B.C. [DRAFT TRANSCRIPT ONLY]
S. Herbert: If I'm given to understand, mostly the minister would set policy in relation to this budget allocation, but there is the occasion where the minister might have a specific project or something like that that he thought needed to be funded and might make inquiries about that? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Well, everyone at Tourism B.C. is very busy preparing for the opportunities that we have spoken of that flow from the Olympics. The ministry has many other responsibilities, and that has been the territory of Ms. Wanamaker and the Tourism B.C. staff. [DRAFT TRANSCRIPT ONLY]
S. Herbert: So I take that as a qualified yes that it could happen, and has happened, but mostly they're focused on other things. [DRAFT TRANSCRIPT ONLY]
Will the government, through Tourism B.C. or the ministry, continue to support COTA's annual convention every year, as it has in the past? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Tourism B.C. is in the middle of budget-planning. They will see where they end up. I haven't seen the outcome of those deliberations because there isn't an outcome yet. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I know one thing that happens in the ministry and with Tourism B.C. is often there are openings openings of new centres and openings of new things. I'm just curious if the minister might be able to tell me how it happened that the B.C. Liberal campaign bus just happened to be at the Peace Arch visitors centre official opening during the election. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: No one with me here has any knowledge of that, and I don't either. My campaign was in the Kamloops and Thompson valleys area. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Am I given to understand that there were no communications between either the minister or the Premier's office to Tourism B.C. around that campaign event, back and forth? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: I'll refer the member to my previous answer. None of us present have any knowledge of that didn't even know that it happened. [DRAFT TRANSCRIPT ONLY]
S. Herbert: My colleague from Saanich South and the critic for Agriculture has a couple questions on that sector. [DRAFT TRANSCRIPT ONLY]
L. Popham: My question is regarding the budget for tourism and the reflections of tourism being an important part, spreading through four corners of our province. I'm just wondering if there is a line item for agritourism and how much that would be. [DRAFT TRANSCRIPT ONLY]
[1505]
Hon. K. Krueger: Tourism B.C. has a sub-budget called Experiences B.C. They break that budget down between marketing and development, and it totals this year $877 million no, $877,000. Those zeros just keep trying to slip in there. Sorry. [DRAFT TRANSCRIPT ONLY]
They don't break it down by sector, but I think the member's question is a very good one. We have a lot of unique marketing niches for tourism in B.C. Agritourism is certainly one of them. Mining tourism is another, and cultural tourism is another. Tourism B.C. is working to be able to make the travelling public and the travellers from outside our borders aware of all of those things through our circle tour marketing approaches. That's one of the ways we hope to push the post-Olympic activity out to all those corners of the province. [DRAFT TRANSCRIPT ONLY]
So whether they're visiting an agritourism operation in the member's riding or in the North Thompson Valley, which I used to represent, where there's one of the biggest sheep ranches in B.C. they have a bed-and-breakfast and 1,600 lambs a year and welcome visitors in lambing time or all sorts of other.... Tobiano, for example, is a beautiful golf course, but it's also going to be a working ranch and agritourism resort between Savona and Kamloops. There are probably similar examples all around the province in the other sectors that I mentioned. We don't have a detailed breakdown of that, but certainly, that's part of the plan. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Can the minister break down the $20.555 million in the 2009-2010 estimates and how it is being spent for the ministry under the tourism line item? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: The reason I took a moment is the member jumped from the Tourism B.C. budget to the ministry's own budget and maybe knew that, but it just took a minute to find the chart. [DRAFT TRANSCRIPT ONLY]
The 2009-10 budget that the member just questioned is allocated as follows: to tourism development, $1 billion sorry, $1.809 million I'm really optimistic here today; tourism and resort operations, $15.958 million, and that includes sub-items such as resort development, the management and development of recreation sites and trails, tenure administration and so on; $1.555 million to the archaeology branch; $1.232 million to the heritage branch; for the total that the member offered of $20.555 million. [DRAFT TRANSCRIPT ONLY]
[1510]
S. Herbert: I had the privilege of meeting with the deputy minister some time ago, and I believe there was a figure quoted of approximately $9 million in one of these budgets for aboriginal initiatives. It wasn't defined at the time. I'm wondering if the minister can give me some more update on what that is. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: The allocation for aboriginal initiatives is within the tourism and resort operations sub-budget of $15.958 million. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Can the minister just provide me a little background on what that's for, because I know that times are tight for money all over government. So some definition on how and what the plan is over the next year would be appreciated. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Planning processes are ongoing with regard to the aboriginal tourism component. There are negotiations underway, and the plan has not been finalized yet. There will be an announcement when it is finalized. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I know that the minister has spoken before about how proud he was that he was able to get the government to put $39 million towards tourism marketing is how it was laid out and to promote the Olympics, which was announced in the budget. Can the minister and his team break down how that money is supposed to be spent? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: This money is allocated to a marketing campaign whereby the province, through the Olympic Games secretariat and this ministry, is looking to maximize already existing opportunities to market British Columbia to the world during the post-games period. [DRAFT TRANSCRIPT ONLY]
The campaign will focus on domestic Canadian advertising outside British Columbia's borders and on North American markets. We'll also encourage British Columbians to participate in Olympic-related activities before and during the 2010 games. We'll be using a mix of traditional and new techniques to bring a unique focus to British Columbia as an Olympic host. [DRAFT TRANSCRIPT ONLY]
[1515]
The funding will be invested in a multiphased marketing campaign to promote B.C. travel opportunities to travel audiences across North America. The first phase will be unveiled in the next several months, and subsequent phases will run through the games and beyond into 2010, focusing on the many opportunities that come to us as a result of the Olympics and in the years ahead. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Can the minister do a budget breakdown for that $39 million? How much for, say, television advertising, how much for billboards and how much for print advertising? Then also, a budget breakdown based on how much is being spent domestically versus how much is being spent in North America and elsewhere. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Those decisions have yet to be made, specifically on which tools receive how much funding. There are negotiations with media outlets going on. When we come to ground on those decisions, the detail will all be available in public accounts. No contracts have been signed yet because negotiations and decision-making are ongoing. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Is the government considering spending approximately $6 million on billboard advertising in British Columbia from this fund? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: I've just verified with my officials that there will be no billboard spending within B.C. None of the money that we're talking about presently is intended to be spent inside of British Columbia. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I'm curious. The minister has said that none of the money we're talking about is supposed to be spent within British Columbia, but his answer to my earlier question spoke about promoting marketing to British Columbians about the games. He also spoke about the post-games period and that that was where the focus of this money was being spent. [DRAFT TRANSCRIPT ONLY]
But there's only, really, two months, or I guess it's a month and a half, post-games until the government's next budget. So would it be more fair to say that the budget was pre-Olympics and just running over that shoulder season after the Olympics? I'm assuming that this $39 million is supposed to be spent in this budget year. [DRAFT TRANSCRIPT ONLY]
[1520]
Hon. K. Krueger: The CEO has just made a clarification for me. We are not spending any money on a marketing campaign within B.C. There is expected to be a small amount of money spent on what is referred to as citizen engagement within B.C., and that is expected to be on social media. [DRAFT TRANSCRIPT ONLY]
S. Herbert: So we've gone through Tourism B.C.'s budget, the ministry's budget and now the $39 million that we are talking about. Just to be clear for myself, none of that money is dedicated to billboards within B.C.? Is that correct? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: That is correct. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Thank you for that. That's useful for me to know. Going back to the $39 million, how much of this money will be applied to cooperative marketing with industry partners? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: None of it. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Is the ministry going to use Tourism B.C.'s website a very good website, I might add; thank you to the staff who maintain it for this marketing effort? Or is there a new website, or something like that, that's going to be created? If so, what's the cost? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: There will be a new website for this particular campaign. It'll be linked to the Tourism B.C. website. Again, the details are still in negotiation, and price breakdown isn't available yet. [DRAFT TRANSCRIPT ONLY]
[1525]
S. Herbert: It concerns me and I'm sure the minister is on top of it, or is working to be on top of it, as sometimes is the case that we're less than six months to the Olympics and a lot of these details have not been confirmed. I thought that the whole reason for this $39 million was because there was a plan that it was part of, not just something else pulled together. Maybe I'm wrong. Maybe it's part of Tourism B.C.'s plan. [DRAFT TRANSCRIPT ONLY]
Can the minister tell me: was this $39 million expenditure part of the original plan from Tourism B.C. on how to market the games and use it for the best possibilities for B.C. tourism? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: This allocation of $38.6 million is in addition to the pre-existing Tourism B.C. budget. It's a supplemental allocation of one-time money complementary to the Tourism B.C. budget, again because of the huge opportunity before us and our desire to make sure that we capitalize on it. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I've spoken to a number of people in the tourism industry, and what they've told me, based on reading past Olympic plans and past Olympic experiences, is that where the money needs to be spent on tourism marketing is right after the games and that period flowing after the games. That's where you'll get the most bang for the buck. [DRAFT TRANSCRIPT ONLY]
Of course, leading up to the Olympics, there's a lot of international media and focus already. If you don't have a lot of resources, the best place, they argued to me, for this money is after the Olympics, not pre-, during and during the Paralympics. [DRAFT TRANSCRIPT ONLY]
Does the minister have another study or something which refutes that argument they made to me? Or is there a plan even for future increases in funding for tourism marketing over and above this increase this time? [DRAFT TRANSCRIPT ONLY]
[D. Horne in the chair.]
Hon. K. Krueger: The focus of this campaign will be having the attention of the world on the Olympics and, having raised the level of interest as well as awareness, making sure that those who are watching the Olympics and seeing the advertising realize that British Columbia is far more than a winter tourism destination. It's a four-seasons destination with a lot to offer all around the province. [DRAFT TRANSCRIPT ONLY]
The member's colleague, moments ago, asked questions about agritourism, which is probably mainly not in the winter. We intend to showcase British Columbia in all seasons through this campaign. Tourism B.C. itself has for more than six years been focused on the post-Olympic opportunity, and they continue to be. [DRAFT TRANSCRIPT ONLY]
[1530]
Throughout this campaign and the coming years Tourism B.C. and the ministry will be focusing on conversion of the market from this time of awareness and interest to long-term visitation participation in our tourism industry, not only in our traditional markets but in the many new ones that will be taking an interest in us because of watching us for all this time on international television. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Hon. Chair, welcome. [DRAFT TRANSCRIPT ONLY]
Can the minister tell me when the public affairs bureau became the lead agency for marketing the games? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Public affairs bureau is not the lead agency. They're working very closely with Tourism, Culture and the Arts. We have wonderful experts in Tourism B.C. and in public affairs bureau, and they are collaborating across the board as in-house experts on how to make the very best of a great opportunity. [DRAFT TRANSCRIPT ONLY]
S. Herbert: That's interesting, because I was here in this room I guess it was a week or two weeks ago and I asked the minister's colleague, the Minister of State for the Olympics, who the lead agency was for marketing the games. She told me that the public affairs bureau is the lead. Tourism B.C. works with them, but yes, public affairs bureau is where the final decision rests. Can the minister explain to me the incongruity between those two statements? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: I wasn't here for those comments, and having not read them . Some of the ways the member quotes me, even during this debate . I don't say it's dishonestly at all, but when he quotes what he thinks I just said and later I read the Hansard, I wonder how he thought that. [DRAFT TRANSCRIPT ONLY]
I can't really comment on my colleagues' comments, except to say that the Minister of State for the Olympics is responsible for the Olympics. Tourism B.C. and the Minister of Tourism, Culture and the Arts are responsible for the long-term marketing of British Columbia for the tourism opportunities. So we're really talking about two different things. If the minister said that public affairs bureau is responsible for marketing the Olympics themselves, I'm sure she meant in concert with VANOC. That's certainly the case. [DRAFT TRANSCRIPT ONLY]
We in this ministry certainly the people of Tourism B.C., who as I've said have been fully engaged for more than six years in these initiatives are marketing the post-Olympics opportunities. As various media sponsors have signed on for the Olympics, Tourism B.C. has embedded employees in those media organizations, with their full knowledge, and has been streaming video to the organizations, taking every opportunity that they can possibly discern to market the long-term tourism opportunities for British Columbia. [DRAFT TRANSCRIPT ONLY]
S. Herbert: A question for the minister about the HST. My first question, before I get into too many of the follow-up questions on this, is: is the minister willing to take questions on the HST the impact on the tourism industry and his ministry? I know some previous colleagues of his don't and instead push it to the Finance Ministry. The tourism folks have asked me to ask these questions, since they're still waiting for answers. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Mr. Chair, welcome to the chair. A little slow in saying that. Sorry, I was focusing on the critic. [DRAFT TRANSCRIPT ONLY]
The protocol is that taxation questions should go to the Minister of Finance during his estimates, and we need to follow the protocol. That's what's appropriate. [DRAFT TRANSCRIPT ONLY]
[1535]
I do invite the member, if he wishes, to get a head start on that by giving us his questions on the record now. I will refer them to my colleague in order that he can give perhaps more fulsome answers. [DRAFT TRANSCRIPT ONLY]
We have both been in consultation with the industry. COTA did express their concerns about HST to me immediately after the announcement in July. I met with them at their request, which I think was the following week in Vancouver. At that meeting they expressed a desire to meet the Minister of Finance. He and I met together with them the week after that. [DRAFT TRANSCRIPT ONLY]
I know there has been a lot of activity in the Ministry of Finance. If the member would like to put those questions on record, he's welcome to. I won't be answering them here, but I will make sure they're passed on immediately. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Sure. I'll just fly through them. I think the industry is hoping and glad to hear, I'm sure, that the minister will ask those questions of his colleague. They've been asking them for a lot longer than me asking them here today and are waiting for answers, because they have to plan for their futures. What I'm hearing from many of them is very, very concerning for those small businesses and for the employees associated with them. [DRAFT TRANSCRIPT ONLY]
I'll go through this quickly. How will the introduction of the HST impact funding for Tourism B.C.? Will funding still be dedicated from the tax collected on accommodation services? Will local governments continue to be eligible for the 2 percent additional tax or the 4 percent resort municipality portion, and how is that planning for the next couple of years? [DRAFT TRANSCRIPT ONLY]
What studies has the ministry done re the impact of the HST on the tourism industry as a whole? Have they done any? What would be the effect of the HST on the resort municipality transfer tax? How would the minister respond to international media who warn readers, in one case I've seen so far, that if you're planning on vacationing in B.C. next year, hold on to your wallets and purses because the government of B.C. wants to institute a 12 percent harmonized sales tax? [DRAFT TRANSCRIPT ONLY]
In an interview on the HST the minister stated that the HST is going to be good for all, but that there are exceptions. What are those exceptions, Mr. Minister? I know I saw him earlier today applauding the HST on another issue. What can the tourism industry applaud for in this tax? Tourism is B.C.'s number one employer, with over 117,000 people employed in the industry. Can the minister tell me how many jobs will be lost with the HST within the tourism industry? [DRAFT TRANSCRIPT ONLY]
They put the figures to me of anywhere from 5,000 to 10,000. I've heard 15,000 as well. What are those numbers of job losses, and how do we go from the Olympics, which is supposed to be a great opportunity for tourism, to July 1, when the HST is brought in? The industry is telling me that it's going to cripple them, especially those who rely on international tourists, which of course is what the Olympics is targeting, according to the minister. [DRAFT TRANSCRIPT ONLY]
So those are a range of questions. There are many more, and I've read them as well. COTA has put them to the minister as well, getting down to incredible minutiae around labour, around a whole range of issues. But I guess the point that I want to make is that tourism is largely a labour-based industry. From what I can see, the HST is not supporting that industry tourism, our number one employer and one of the big economic drivers. [DRAFT TRANSCRIPT ONLY]
The final question on the HST is: how does the HST allow us to ever get close to reaching our goal of doubling tourism revenue by 2015? All the industry operators tell me that no, it will be a big setback, and they'll lose business when they're already struggling with the recession, the passport issues and a range of other issues that the minister well knows. [DRAFT TRANSCRIPT ONLY]
Those are the tourism questions. I could go on all day on them because it's such a vital industry and one that I'm very passionate about, but I'll move on to questions from the ministry around arts and culture and heritage. Thanks for the staff for being here, and we'll talk soon. [DRAFT TRANSCRIPT ONLY]
[1540]
Hon. K. Krueger: I'll just introduce the staff who just joined me. This House met Jeremy Long on Thursday, but it was barely long enough to bask in his aura. Jeremy is the executive director of the B.C. Arts Council. He and they do a wonderful job for the arts and culture community of British Columbia. Immediately behind Mr. Long is Andrea Henning, the executive director of the arts and culture branch. To Ms. Henning's right is Jennifer Iredale, the acting director of the heritage branch. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I'm just wondering how the minister would justify in his service plan and I understand we're talking about the estimates that are based out of that service plan cutting core funding for arts and culture in B.C. down to $3.7 million in 2010. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: The member sowed the seeds to his own answer in his preamble because he's talking about the 2010-11 budget which, as I've said earlier, is still being built. [DRAFT TRANSCRIPT ONLY]
The member's own party, when it was in office, didn't forecast future years. Our government has felt that that's an important part of the planning process: to lay out things that we believe we can predict with certainty. Those numbers are numbers that we felt certain enough of to put out, but they aren't the budget that is before this House for debate in these estimates. We do need to confine the questions and the answers to the 2009-10 budget year, which expires March 31 of 2010. [DRAFT TRANSCRIPT ONLY]
I wanted to correct a couple of other things that the member said on the record as he wrapped up his questions before we introduced the arts and culture people. When he says that the tourism industry is going to be subject to a new 12 percent tax, I trust he knows that that isn't actually true. Perhaps he was quoting someone else who said there would be a new 12 percent tax, because HST will only apply where GST applies up until the implementation of HST. [DRAFT TRANSCRIPT ONLY]
Yes, some industries, which is what I was referring to in the misquotation the member had of me . I know he's quoting Bill Tieleman, who chooses his own words out of a sequence and out of an interview that happened with somebody else. Some industries specifically those which weren't subject to PST, and which still aren't, up until the implementation of the HST are affected in a different way than those many industries that are delighted about the HST. [DRAFT TRANSCRIPT ONLY]
[1545]
When people talk about a negative effect on the tourism industry of HST, they fail to take into account the fact that every new resort that's built, every time there's a renovation to a hotel or a motel or a pub or a restaurant . Every time new facilities of those types are built, they're going to benefit tremendously from the HST, because they won't have all the input taxes that they have had under the current system. [DRAFT TRANSCRIPT ONLY]
When the member talked about small business . There are 380,000 small businesses in B.C. They employ 1.050 million British Columbians. About 20,000 of those businesses are tourism businesses, but in the many small business round tables that I chaired when I had that portfolio, I consistently heard from businesses that said that harmonized sales tax was the last big thing our government could do for small business. [DRAFT TRANSCRIPT ONLY]
They've been pretty happy with our tax cuts across the board, our elimination of unnecessary regulation, our fiscal plan and the way it works. But they would tell me that a harmonized sales tax would be a huge boon to small business. They would no longer have two different sets of government accounting books one provincial, one federal. [DRAFT TRANSCRIPT ONLY]
When you talk about 1.050 million employees and 380,000 businesses, that's less than three employees per business, on average. They would tell me that it's often two spouses and one of their children or one employee, and they were having to give up way too much of their precious time to government accounting, for provincial and federal taxes separately, when they really couldn't afford it. [DRAFT TRANSCRIPT ONLY]
So most businesses are very pleased about the HST. Those who anticipate some negative effect are in consultations with the Ministry of Finance, and I will pass the member's questions on. [DRAFT TRANSCRIPT ONLY]
So take it away, Member. If you asked me a question, sorry, I've forgotten what it was. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I believe I'd asked about the arts cuts and the out-years budget. I know that the minister has said that he won't talk about the future of the budgets in any more detail, since we're just focused on this year. I asked just because the arts and culture community has been asking me to ask those questions, because they don't know what to do. They look at their books, they look at what happens next year, and they have no idea. [DRAFT TRANSCRIPT ONLY]
The B.C. Arts Council, as the minister will well know, has been having forums with arts and culture organizations and people. I think it's great, going out and talking with them, but the comment that still sticks with me from the forum that I got to attend is that currently in next year's budget there's only enough money, really, to keep the lights on and keep the staff there but nothing to actually invest in arts and culture. [DRAFT TRANSCRIPT ONLY]
That scares me and disturbs me, as somebody who is a long-time supporter of arts and culture in the province. Now, we're not going to be discussing that, I know, as the minister said, so we'll move on to some other areas for discussion in the ministry. [DRAFT TRANSCRIPT ONLY]
Basically, I know the minister has made a number of statements in the House and to media about the cuts out of the gaming funding, which have hit arts and culture groups, and about how, well, you had to choose between feeding a child or making an investment to arts and culture and that the government is trying to do all they can, as the minister says, but it's a tough time. I know he's also spoken about the out-years and how, "Well, we'll get what we can get to" those kinds of comments. "We'll see what we can do." [DRAFT TRANSCRIPT ONLY]
The government, I know, has its own study, which was commissioned by the ministry in 2006. In that study it showed that for every dollar invested, the government makes up to $1.36 back in taxes. So there's actually more money, according to this study, to invest in things like health care, dealing with hungry children and those kinds of things. [DRAFT TRANSCRIPT ONLY]
So I'm wondering what the minister's thoughts are on that study and if investing in arts and culture is actually an investment. Or does he see it as a subsidy without an economic benefit? [DRAFT TRANSCRIPT ONLY]
[1550]
Hon. K. Krueger: That particular report was done on one set of economic models. There are many reports that are done on various economic models, and they seldom agree completely. That being said, I don't dispute and this government doesn't dispute the fact that the arts and culture communities and the many tremendous things they do provide economic benefit to British Columbia's economy. They also certainly and obviously provide tremendous social benefit in the way that they enhance our culture, our communities, our province as a whole the way we see the world, the way we think about ourselves. [DRAFT TRANSCRIPT ONLY]
I've also been conducting round tables in the arts and culture community, and they have a very convincing case that they help with health care delivery in that if they are providing music programs in seniors homes, as just one example, they're enhancing the quality of life. They help seniors be happier than they would be otherwise. They do that for all of us, but certainly, seniors can often become isolated and lonely, and their health breaks down as a result. They've given me very eloquent examples of how they believe that they help with the government's health assurance programs and prevention of isolation and loneliness and illness, and all of those things. [DRAFT TRANSCRIPT ONLY]
Also, education. They have been going into the schools more and more. I don't dispute that at all that they help with the delivery of education, social services. [DRAFT TRANSCRIPT ONLY]
The member is probably aware, because it's not far from his neighbourhood, of an organization called Transitions, which helps kids off the street come in and learn how to do work within the film industry an inspirational organization, wonderful people. One of the young people they met on the street has come so far through their programming that he now has a scholarship, and he's taking post-secondary education in film-making. So I don't dispute those things either. [DRAFT TRANSCRIPT ONLY]
The nature of the finding that the member quotes . There's a scripture in the Bible, "Cast your bread on the waters, and it will return to you after many days," and I believe that too. That's a matter of faith in the Christian religion, but it's a similar finding to what this economic report found. I believe those benefits flow. [DRAFT TRANSCRIPT ONLY]
The question of how quickly they flow is another question, and what you do in the meantime with the very physical human needs that people have for health care right now and education right now and social services right now. This budget has a $2.775 billion deficit. Is it right to borrow even more deeply than that to provide grants to the adult community of today that will have to be paid back by people who are now children and grandchildren? Is that right? [DRAFT TRANSCRIPT ONLY]
Obviously, we have provided substantial funding this year, together with the money that flowed from the Ministry of Housing and Social Development through the gaming funds. We were actually able, when you combine that with the $7 million allocation from the supplemental estimates in March, to match the money that the B.C. Arts Council received in the appropriation in '08-09. That's a pretty good record. [DRAFT TRANSCRIPT ONLY]
I always ask the arts community . We know that they have those fears the member spoke of, but we ask them to please look at our record, because the proof is in the pudding. There was a $150 million allocation in 2008 when we ran our large surplus, and the B.C. legacy fund now will be under the care of the B.C. Arts Council. The earnings on it over the future years will be provided in further grants. [DRAFT TRANSCRIPT ONLY]
That was a huge allocation. I don't think there's ever been one like it in B.C. history. It's more than triple the sum of the last four years of B.C. Arts Council funding by the NDP government. [DRAFT TRANSCRIPT ONLY]
I'd respectfully respond to the member again on the question of the out-years. There would be nothing but blackness on an NDP budget about the out-years. They never predicted what people could count on in the coming years. The member chuckles a bit about that, but it is the truth. It was ten years of a government, and that's the way budgeting was done one year at a time. People often didn't know what their budget would be until six months into the budget year. [DRAFT TRANSCRIPT ONLY]
[1555]
Yes, we're talking about today, 2009. We're talking about a worldwide recession that has hit a whole lot of places a whole lot worse than it has hit B.C. because of our solid fiscal plan and performance. [DRAFT TRANSCRIPT ONLY]
We talked earlier about the huge opportunity of the Olympics and the way it's going to benefit our economy. I think it's important and incumbent on the opposition and on government not to dwell on negative things certainly not to join any fearmongering of any organizations but to talk about the facts, talk about the record, talk about what we've delivered so far. [DRAFT TRANSCRIPT ONLY]
A $25 million Renaissance Fund was made available so that arts and culture organizations could find matching money and build their own trusts, and they did that. They grew it to $55 million. I believe that was the reason for the creation of 61 new funds, and it also added substantially to others. [DRAFT TRANSCRIPT ONLY]
The member and I were at the Cultch when it opened a hundred-year-old building completely redone and we were the government that provided the money to make that happen. Everyone present at the grand opening said that it would never have happened without the $9 million from this provincial government. [DRAFT TRANSCRIPT ONLY]
I want to acknowledge fully the $6 million or $7 million of partners' funding, but everyone agreed it wouldn't have happened. The member heard the architect say that it was a church originally. It's 100 years old. It was built on a foundation of faith, and that's all that was left under it because the foundation had essentially crumbled away. [DRAFT TRANSCRIPT ONLY]
This government has demonstrable results, a record to point to. We know we also will be judged by our present and our future. This year we've done quite well, and I hope we do just as well or better next year. [DRAFT TRANSCRIPT ONLY]
No one can say it isn't manifestly true, looking at our record, that we have enthusiastically supported the arts and culture community in very tangible ways that are unprecedented, including our funding to the B.C. Arts Council. We're still doing better in a time of worldwide recession than the previous government did in a time of North American economic boom. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I know I've struck a nerve when the minister goes back to the '90s and when he gets into the partisan speechifying about years of blackness but then accuses the opposition of fearmongering. It's a funny thing. A pot calling a kettle black is, I guess, the phrase. [DRAFT TRANSCRIPT ONLY]
I'm hoping that in these estimates, and we don't have a lot longer, we can share from a position of where I ask a question, I get an answer, and it's not a speech condemning a previous government's times, because I'm asking about this current government. [DRAFT TRANSCRIPT ONLY]
I know that the minister has talked about the Cultch being built on a foundation of faith and that that was all that was left. Well, it seems to me that this government is operating in the same way right now in terms of the arts and culture community. He says, "Just trust us," basically. "Just look at what happened in the past, and this will be the future." [DRAFT TRANSCRIPT ONLY]
People, as the minister well knows, can't eat faith. You can try, but it leaves you a little bit hungry. Arts and culture groups looking forward to the future are very scared by what's happening, as the minister well knows, and saying, "Well, in the future sometime, it'll come back, and we'll get back there," is . [DRAFT TRANSCRIPT ONLY]
For a lot of the companies I talk to, they tell me that they'll be closed. In fact, we've already seen a number of companies close. Organizations shut down and those volunteer networks crumble because of the cuts in the gaming sector. [DRAFT TRANSCRIPT ONLY]
The minister might characterize it as doing very well, but I think in the gaming sector we've seen 44 percent of groups that used to get investments through that sector not get anything at all this year. That's really tough for a group, especially in rural B.C., where they don't have a lot of other investment sources. [DRAFT TRANSCRIPT ONLY]
You know, it's brutal out there right now. You talk to companies, and yes, there are some success stories. I'm happy to share in success stories, but I'm doing my job as critic to push this minister and to push this government to reinvest in arts and culture in those out-years and in this year, because what we're seeing are job losses, as the minister well knows. We're seeing companies lost. We're seeing cultural opportunities all across this province being taken away from the people. [DRAFT TRANSCRIPT ONLY]
Now, the minister says it would be pushing the burden onto the future population if we were to fund arts and culture right now at the level that it used to be or if we were to borrow it now. I guess, again, that comes up to the question I asked earlier which was: are they investments, or are they subsidies? [DRAFT TRANSCRIPT ONLY]
[1600]
If the minister believes that they're subsidies which cost us, well, then I can understand his argument. I see them as investments in our province's future. Certainly, the various studies that the minister has mentioned . I know the Conference Board of Canada study was saying that something like $1.86, I think or maybe it was $1.88 came back in the form of taxes. That's just to one level of government. That doesn't include the municipal, and it doesn't include the provincial levels as well. That study was about the federal government. So if we want economic stimulus, I think the arts and culture community is one of the main ways to go. [DRAFT TRANSCRIPT ONLY]
I guess because this is the whole ministry, I'm curious if the minister thinks the stimulus money being provided to PavCo either in the form of the B.C. Place roof or in the approximately $42 million provided every year as a subsidy if we want to talk about it as subsidies and not investments . Why is that appropriate whereas steady funding for arts and culture steady investments for arts and culture is not appropriate under the minister's current service plan? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Before I get . Well, maybe I will address the member's last points first. [DRAFT TRANSCRIPT ONLY]
I don't think I've ever used the word "subsidy." I think the member has introduced that word to this debate. The government definitely provides subsidies to PavCo. By and large, governments around the world, I think, accept that with those types of operations stadia and convention centres that some of that is necessary, but they generate huge economic activity. That is really a moot point compared to arts and culture funding. [DRAFT TRANSCRIPT ONLY]
We have common ground that we both value. Both our political parties and both the government of today and the government of the 1990s value the arts and culture communities. There's lots of proof on the record of how deeply we value it, if people measure by results. [DRAFT TRANSCRIPT ONLY]
I don't think that we should go back to talking about PavCo, because the member made a commitment last week about wrapping that up, and we've got really fine people here who've waited a long time to answer questions on arts and culture funding. But the member was called away to other duties, and his colleagues finished up the debate last Thursday. I don't know that he heard some of the answers. [DRAFT TRANSCRIPT ONLY]
Some of the groups that have not received B.C. Arts Council grants this year still will. The B.C. Arts Council has allocated about $6 million out of almost $11 million that they are provided this year. [DRAFT TRANSCRIPT ONLY]
[1605]
So people apply for that. Organizations apply for grants from those funds, and there's a substantial amount of money still to be disbursed. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Yes, I've read the transcript so thanks. I know that the minister has probably heard my speeches on arts and culture and what my party thinks we should be needing to do, and I have heard the minister's speeches many times, so let's move on here. [DRAFT TRANSCRIPT ONLY]
Can the minister explain to me why it makes economic sense to cut investment in B.C. BookWorld, which according to a study funded by the minister's own ministry says that B.C. BookWorld is the most important cog in the infrastructure that supports writing and publishing in B.C.? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: B.C. BookWorld has been in discussions with the B.C. Arts Council. It intends to apply for a grant in the coming year. I can't give any assurances of the outcome that will be determined by the B.C. Arts Council through its system. [DRAFT TRANSCRIPT ONLY]
The fund from which B.C. BookWorld enjoyed funding for, I believe, over 20 years straight derives from the interest that's earned on moneys invested through the B.C. investment corporation, and the earnings are down drastically in today's world financial market even money isn't making very much money so there just wasn't nearly enough to go around. [DRAFT TRANSCRIPT ONLY]
Those earnings are far oversubscribed by the sum of the applications, and decisions had to be made as to where funding should go. The member is correct that there was no allocation to B.C. BookWorld out of those funds in this tranche. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Would I be correct in guessing that that's the same answer that I'm going to get if I ask about the B.C. Association of Magazine Publishers and the Association of Book Publishers of B.C. and Music B.C.? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Yes. [DRAFT TRANSCRIPT ONLY]
[1610]
S. Herbert: Yes. The minister tells me: yes, that is the answer. Okay. The minister has often talked about the supplemental funding the B.C. government gave to arts and culture organizations, and I've read the letters. It knew that things were going to be tight after the election, so it had the great foresight to give this extra money beforehand. [DRAFT TRANSCRIPT ONLY]
The letter that was sent to many of these organizations that received this so-called supplemental funding spoke about it as supplemental funding and good for the future. The letter never spoke about: "There are cutbacks coming in the fall, so hold on to this money because you're going to need it." [DRAFT TRANSCRIPT ONLY]
So I'm curious if the minister can explain to me why the letter spoke about it as supplemental funding and did not refer to the fact that the money would be needed later because there would be cuts coming to the grants going to these organizations. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: We were looking to see if we had a copy of those letters, and one is not coming to hand, but we will provide a copy to the critic. They had a line in them to the effect that the fact that the organization was receiving an apportionment I believe there are 247 organizations that did of the supplemental funding from the '08-09 budget would mean that those dollars would be considered in the adjudication of the next operating grants. [DRAFT TRANSCRIPT ONLY]
We were all opposition, government, arts and culture people and B.C. Arts Council, alike seeing that the bad things happening south of us and moving around the world might well affect us. We'd seen a dramatic decline in our anticipated surplus for the '08-09 year. The term "supplemental" isn't a B.C. Arts Council term, as the member knows. It's a term of the processes of this Legislature. [DRAFT TRANSCRIPT ONLY]
The member said he'd read the Hansard of last Thursday. If he reads the Hansard of last March, it's all over the Hansard that the government was very clear. We've eked out a small surplus. We were heading for . I believe the prediction around September 11 was over a $2 billion surplus. There were indications that it might be substantially larger than that, but that's what we thought was looking likely. [DRAFT TRANSCRIPT ONLY]
Everything changed September 12, 2008, and everybody knows that. It's a matter of record. Everybody knows why. But the supplemental estimates did allocate $7 million to the B.C. Arts Council process and over $8 million to heritage sites. [DRAFT TRANSCRIPT ONLY]
It's a rare time that we get a compliment from the opposition, so I want to thank the member for his term "great foresight." In hindsight it's even greater foresight than we thought at the time. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I guess the reason I asked the question is because in the way that the letter was worded . I know that the minister has read it as well and read out what he thought was the paragraph that I was referring to. [DRAFT TRANSCRIPT ONLY]
[1615]
There were a large number of organizations that I talked to, medium-sized let's say that: medium-sized level of organizations, who read the letter as if it was extra money, as good work on their parts, that it was a vote of confidence in them that they got this extra money. They saw it as extra money and did not see . There's nowhere in the letter saying that your budget, your regular grant allocation, is going to be reduced by 60 percent. [DRAFT TRANSCRIPT ONLY]
So they spent the money and then discovered after: "Oh well, we don't have that money anymore, and we're bigger in the hole." So it's just a caution and hopefully, in future, should government ever do something like this again.... I guess we'll get there when we get there, but these groups felt that they'd been played. [DRAFT TRANSCRIPT ONLY]
I had people say to me that they got this extra money before the election only to be knocked down after the election with a reduction in funding when they thought that the government had actually given them an increase. I know that a number of groups put out press releases congratulating the government for this additional money and saying how happy they were that they got this extra money from government, only to be rudely awakened that no, it was not extra money. But we can leave that there for today and move on to some other discussion. [DRAFT TRANSCRIPT ONLY]
Can the minister tell me about latest developments in the government's announced and then reannounced Asia-Pacific museum of trade? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: I do have that wording now, and I'll just put it on the record. Those allocations the correct number is 247; I thought it was 257. The organizations that got that money, this is the paragraph from the letter they got. "The amount of the supplemental funding allocated to your organization has been calculated as a fixed percentage of your most recent operating assistance grant. The allocated amount will be factored into the assessment of your request for assistance during the coming year." [DRAFT TRANSCRIPT ONLY]
I just asked the B.C. Arts Council people with me how many organizations actually came back with the argument that the member just presented. Of the 247 organizations, only 12 have made that argument in some form. There may still be others who make that argument, because we still have the applications that I mentioned in my previous answer. I wanted to put that on the record for the members, and I need a little consultation before I deal with the question he just posed. [DRAFT TRANSCRIPT ONLY]
With the question about the anticipated Asia-Pacific museum of trade and culture, this was introduced in February 2006 with the following words. "New steps will be taken to support our arts community. A new Asia-Pacific museum of trade and culture, a new national centre of northwest aboriginal art and culture and a world women's history museum will be initiated." [DRAFT TRANSCRIPT ONLY]
In Budget 2008, $3 million was allocated over two years for planning for the three initiatives. As this economic situation unfolded, which the member and I have been debating, we've had to deal with these very tough decisions about: if we're going to keep our commitments, as we have, to fully fund health care and education, and if we're going to have additional social services spending, what are we not going to be able to afford? [DRAFT TRANSCRIPT ONLY]
Obviously, when we're dealing with the kinds of tough decisions the member and I have already canvassed, it's not a time to be launching something new. So presently, planning is not proceeding, and the funding has been rescinded. Concept development has been completed in consultation with stakeholders, and we're going to have to wait on those initiatives. [DRAFT TRANSCRIPT ONLY]
The Chair: Just a reminder to members that when they have the floor, they shouldn't be referring to electronic devices. [DRAFT TRANSCRIPT ONLY]
S. Herbert: All right. Point well taken. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Mea culpa. [DRAFT TRANSCRIPT ONLY]
S. Herbert: "Mea culpa," says the minister. How technology is changing our discourse these days. [DRAFT TRANSCRIPT ONLY]
[1620]
Speaking of technology, the B.C. Liberal platform in 2005 spoke about Picture B.C., a new initiative which would "provide a unique point of connection for all the world to learn about our province and to invite all British Columbians to contribute to the single-largest electronic repository of freely available B.C. art and art sources in the province." [DRAFT TRANSCRIPT ONLY]
When I clicked on the link from the Internet, the website says: "Website not found." I googled it, with a copyright 2008, so I'm not sure what's happening with that. Could the minister provide me an update about Picture B.C.? [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: Well, sadly, I've just been reminded I can't consult my BlackBerry. [DRAFT TRANSCRIPT ONLY]
I am assured that Picture B.C. is a functioning site. The member is probably much more skilled with electronics than I am. My grandkids are getting to that stage. But I am assured that it's a functioning site. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I guess we should talk to Google about that. I checked it in this room not so long ago, and it did not exist. [DRAFT TRANSCRIPT ONLY]
Interjection.
S. Herbert: How did I do that in this room here when we're not allowed to check electronic devices? An implant, Minister. An implant. [DRAFT TRANSCRIPT ONLY]
The next question. We were talking about PavCo earlier, and I know I e-mailed the minister's staff or my assistant did earlier today with a number of questions which I had still remaining on PavCo. I'm wondering, as we are drawing to a close I see some colleagues here that want to talk about the next discussion if now would be an appropriate time to put those questions on the record, or should I wait? I still have a few more questions on heritage. [DRAFT TRANSCRIPT ONLY]
Interjection.
S. Herbert: Okay. I won't check the electronic devices, but I have them on. [DRAFT TRANSCRIPT ONLY]
The questions were around what kind of a contract the government has or PavCo has with the Whitecaps in terms of how many years they are guaranteed to play at B.C. Place, which I guess is one of the reasons justifying the minister's expenditure, the government's expenditure, on the retractable roof. [DRAFT TRANSCRIPT ONLY]
The other question is: what term of a contract do the Lions have? How many years are they scheduled to play in that stadium, and what kind of contracts exist there? Maybe the minister has an answer for those. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: I momentarily harken back to our previous discussion, just to get the website on the record for Picture B.C. It's www.picture-bc.com/. [DRAFT TRANSCRIPT ONLY]
On the question of: how many years have the Whitecaps committed to playing in B.C. Place ? There's a similarity to all these answers, but the questions are distinct, so I'll answer them each. Those details are negotiated business terms with private sector teams, and making key components public reduces PavCo's ability to maximize the benefit to the shareholder. [DRAFT TRANSCRIPT ONLY]
So while the parties have agreed in principle, and in writing, on all terms, they are waiting for legal completion of the licence agreement. The lawyers are working on it. [DRAFT TRANSCRIPT ONLY]
How many years are the Lions committed to playing in B.C. Place? The Lions deal expires next year. It places us in a very difficult position if one team knows what the terms of the other tenant's deals are. [DRAFT TRANSCRIPT ONLY]
These are confidential business terms with private sector teams, and making key components public reduces, again, PavCo's ability to maximize the benefit to the shareholder which is the government, and the taxpayer, obviously. [DRAFT TRANSCRIPT ONLY]
The question of what agreements there are with the B.C. Lions and the Whitecaps. That is lease and/or contracts or any other types of agreement respectively in terms of number of years and number of games they are required to play at B.C. Place. The B.C. Lions play ten regular season games plus playoffs, and the Vancouver Whitecaps will play 15 regular season games plus playoffs and potentially two or three international exhibition games. [DRAFT TRANSCRIPT ONLY]
Fourth question and last: will the minister release all or portions of the above-mentioned agreements to the opposition? The member will probably anticipate where I have to go with that. The requested information includes business information of a third party, and the ministry must take that into account prior to releasing records. The information would be available under freedom-of-information provisions, subject to severing. [DRAFT TRANSCRIPT ONLY]
[1625]
S. Herbert: Just in response to the minister's statements, thank you for answering those questions in the way that the minister has. [DRAFT TRANSCRIPT ONLY]
I'm hoping that the minister will answer in the affirmative, as opposed to the negative, on this question. The minister mentioned that those contracts, those negotiated agreements with the Whitecaps and with the Lions, would be available through freedom of information, subject to severing. [DRAFT TRANSCRIPT ONLY]
I'm wondering if the minister would be willing to release this information to the opposition, subject to severing, once those final agreements have gone through legal, rather than making me go through freedom of information and spending the dollars and the time to do it. If the minister, as a gesture of goodwill and his belief that it makes sense, will release that to us . Certainly, the taxpayers will want to know those numbers as well. [DRAFT TRANSCRIPT ONLY]
Hon. K. Krueger: We will proactively release that information as soon as we think it appropriate. There will be some severing, and the opposition may still decide to follow freedom-of-information provisions. [DRAFT TRANSCRIPT ONLY]
S. Herbert: I'm understanding as we've got the work about to begin on many key pieces, and the work is going to continue if the minister continues on this path that renovating and revitalizing B.C. Place Stadium will have its start immediately after the Olympics. I'm hoping that that report or those agreements will come sooner than later. Certainly I will be following that up with the minister. Thank you for that. [DRAFT TRANSCRIPT ONLY]
The final question I have is on the heritage sector. It's in relation to current budget allocations for heritage. What are they? What is the government's plan in terms of recognizing the need for increased support for heritage in B.C., given the huge number of things that are starting to become heritage as we get older as a province? [DRAFT TRANSCRIPT ONLY]
[1630]
[J. Thornthwaite in the chair.]
Hon. K. Krueger: Welcome to the chair, Madam Chair. [DRAFT TRANSCRIPT ONLY]
The global number I read into the record a little while ago . That was a little while ago, so we'll do it again. Out of the budget for '09-10, $1.232 million has been allocated to the heritage branch. The heritage branch people have been working very hard in consultation with local governments and those who operate heritage sites, in innovative and creative ways. [DRAFT TRANSCRIPT ONLY]
For example, the member is probably familiar with the community development trust money and the job opportunities programs that have flowed from that as well as the tuition assistance program. A lot of displaced resource workers have been working on heritage sites, and they've been receiving post-secondary training through the College of New Caledonia, which is based in Prince George, on new expertise for them in doing renovations to heritage sites. There has been a lot of important work done, specifically at five heritage sites: Barkerville, Cottonwood, Fort Steele, Hat Creek Ranch and McLeod Lake Post. I'll zero in on that one for a moment. [DRAFT TRANSCRIPT ONLY]
It was established in 1805. It's one of the sites that go back about the furthest for the general population in British Columbia. Of course, first nations were there long before us. It's at Fort McLeod, named McLeod Lake Post, and it had the unique designation as the longest, most active occupied settlement north of San Francisco and west of the Rockies. A number of first nations people have been involved in these restorations and this training. [DRAFT TRANSCRIPT ONLY]
The budget is what I gave the member, but there has been bridging into the community development trust, which has been very successful all around. [DRAFT TRANSCRIPT ONLY]
S. Herbert: Seeing that my colleague is here to take up the next estimates debate but wanting to take more time to ask more questions and hear more responses from the minister, I will, however, have to cede the floor. I wanted to finish up with taking us through the last day and a half, I guess it would be. [DRAFT TRANSCRIPT ONLY]
We started on film, had some good discussion on film and my urging to act now to keep the B.C. film industry competitive. I know we then moved on the PavCo and a lot of discussions around: was there a business case? Were there numbers? When would the trade and convention centre pay for itself, or would it? Certainly, we've made the case a number of times around concerns about how badly blown the budget was, the cost increases. That's been canvassed before. [DRAFT TRANSCRIPT ONLY]
Then we talked about B.C. Place and a number of questions there. I've still got a lot of questions, and I will be waiting for the report that the minister and PavCo said would be put together for myself and the opposition. [DRAFT TRANSCRIPT ONLY]
Then from PavCo I guess we went into tourism and the concerns that I and many have been raising around the loss of Tourism B.C. in terms of it being its own independent entity and what that would do to the tourism infrastructure in the province. Then we got into arts and culture and concerns around cutbacks being made, and the heritage sector as well. [DRAFT TRANSCRIPT ONLY]
I'd like to thank the minister and all the staff who have joined him from the Ministry of Tourism, Culture and the Arts, today and on Thursday, for their assistance in helping the opposition do its job. I'll continue to hold the minister's feet and the government's feet to the fire on this and many other fronts. [DRAFT TRANSCRIPT ONLY]
[1635]
Thank you for the opportunity to ask the questions on behalf of so many people who are supporters of tourism, culture and the arts in this province today. [DRAFT TRANSCRIPT ONLY]
Vote 41: ministry operations, $104,454,000 approved.
The Chair: We'll take a short recess, then, and wait for the Minister of Community and Rural Development to come. [DRAFT TRANSCRIPT ONLY]
The committee will be in recess. [DRAFT TRANSCRIPT ONLY]
The committee recessed from 4:36 p.m. to 4:41 p.m.
[J. Thornthwaite in the chair.]
ESTIMATES: MINISTRY OF
COMMUNITY AND RURAL DEVELOPMENT
On Vote 22: ministry operations, $176,775,000.
Hon. B. Bennett: I'm going to be, actually, quite brief in some preliminary comments. I'm pleased to present the ministry's estimates for 2009-2010. [DRAFT TRANSCRIPT ONLY]
I want to introduce my staff first of all, Deputy Minister Dale Wall. Mike Furey, assistant deputy minister for local government, is behind me here. Shauna Brouwer is assistant deputy minister of management services, and Shauna is directly behind me here. Tracey Thompson is in charge of the community development trust. I believe that we may have more staff over here that I'll introduce when and if they come to help. [DRAFT TRANSCRIPT ONLY]
What I thought I would do is just list for the record what the ministry is responsible for. I'm not providing any particular editorial here today. We'll just carry on with questions after I've listed out the things that we do. [DRAFT TRANSCRIPT ONLY]
We are responsible, of course, for local government legislation and local government generally. We have the Rural Secretariat. We have pine beetle impacts on communities. We don't do the forestry side of pine beetle, but we do work with communities on the projected impacts of the pine beetle epidemic. We have community adjustment. We have community development trust. We have the regional economic trusts in rural development. We've got property assessment. We've got the Vancouver urban development agreement and the University Endowment Lands. [DRAFT TRANSCRIPT ONLY]
In terms of the Crown agencies, boards and commissions that we're responsible for, we have the board of examiners, and we have the Columbia Basin Trust, B.C. Assessment Authority, Property Assessment Appeal Board, Islands Trust Fund board, Northern Development Initiative Trust, the north Islandcoast development initiative trust, the Southern Interior Development Trust I think that's the Southern Interior Development Initiative Trust the Nechako-Kitimaat Development Fund Society, and the B.C.-Alcan Northern Development Fund. [DRAFT TRANSCRIPT ONLY]
Those are the things that we are formally responsible for. That's a brief summary. I think we'd like to spend whatever time we have for this over the next day or so allowing the opposition to ask whatever questions they have, and I'll do my best to provide answers. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Welcome to the minister and his staff, and thanks for being here and making themselves available for this estimates process. [DRAFT TRANSCRIPT ONLY]
Way back when, I came out of the municipal system. I was the mayor of Tofino from '96 to '99, I guess. I still believe that local government is a very critical part of governance in the province and in the country. They're the closest on the ground to what really happens, and their knowledge, wisdom and understanding of local issues, I think, is something that we should all, from all sides of the House regardless of politics, learn from. I'm sure the minister would agree with me on that. [DRAFT TRANSCRIPT ONLY]
We don't have a lot of time for these particular estimates. Certainly, today is already . We only have about an hour and a half. [DRAFT TRANSCRIPT ONLY]
[1645]
The minister rightly pointed out the fairly lengthy list of responsibilities for the ministry in dealing with community and rural development. I don't think it's going to be possible to go through all of those responsibilities in any kind of detail where we can do justice to them. [DRAFT TRANSCRIPT ONLY]
So I'm going to try to nail it down and try to leave a little bit of time tomorrow for members that may wish to ask local questions about their concerns in their communities just for the interests of staff so that they know where I'm going there. I'll try to keep it in some kind of an order, although the notice for these estimates was relatively short this weekend. [DRAFT TRANSCRIPT ONLY]
I'm going to go right to an issue. I know the minister spoke to this, and he knows at the UBCM it's a very hot topic right now in the province, and it's around the industrial taxation issue. I'm the critic, certainly, for Community and Rural Development, but I'm also the MLA for AlberniPacific Rim. [DRAFT TRANSCRIPT ONLY]
Port Alberni is one of the four communities that's facing that taxation challenge from, in this case, Catalyst, although I'm sure the minister and his staff are aware that other corporations, companies, industries are looking at what may finally come out of the court cases and court decisions and, then, what's following through what's going to come out of government and the ministry from the results of those court decisions. [DRAFT TRANSCRIPT ONLY]
Just in general, just for it to segue, since July 2009 Catalyst Paper, as the minister knows, has refused to pay the municipal portions of the property taxes that it owes to the B.C. cities. There are four of them: Campbell River, Powell River, North Cowichan and Port Alberni. The recent court decision has since led to a court challenge by Catalyst. [DRAFT TRANSCRIPT ONLY]
I guess where I'll go to first on this is the February throne speech, the pre-election throne speech. There was a statement made, and I'll just read it here: " more needs to be done to ensure that provincial tax relief is not negated by local property tax hikes. Our government will work with the Union of British Columbia Municipalities to develop new legislation over the summer to introduce early next year that will protect provincial tax." [DRAFT TRANSCRIPT ONLY]
Can the minister explain just what the intent was of that statement in the February throne speech? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: The intent of that statement was to recognize situations in the province where the provincial government had reduced taxes in some fashion for heavy industry for example, the reduction of 50 percent of the school taxes payable. The community, in a few cases, decided to just essentially claw back that savings to the company by increasing its own tax rate on its property taxes. [DRAFT TRANSCRIPT ONLY]
So the intent of the statement in the throne speech was essentially that we as a government would like to see our efforts to create a competitive investment climate in the province supported by local government as opposed to being thwarted by local government, as it has been in a few cases. [DRAFT TRANSCRIPT ONLY]
We haven't, quite frankly, gotten our heads around how we would do that. So I'll save the member a step. In terms of how do we change legislation or create policy that would enable us to do what we suggested we'd like to do in the throne speech statement, we don't know yet how we would do it. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister for the answer. Although I know . Well, I'll speak of Port Alberni. They have made significant cuts to their tax rate for Catalyst Paper. They've had discussions for a number of years, and I'm aware of the tax cut that's around the industrial school tax that I think it was related to. There were two separate cuts, if I'm not mistaken, from the province in industrial tax rates. So I understand that's been done. [DRAFT TRANSCRIPT ONLY]
[1650]
But the community, certainly in Port Alberni and, I think, in other communities too . I don't have the numbers in front of me, but I believe they've made efforts to also cut their tax base, even though they cannot afford to do so. There are ever-increasing stresses on the needs for the tax base. So can the minister clarify where the increases have occurred? There have been cuts in taxes significant cuts by, certainly, the city of Port Alberni. [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: It's important not to mix the two issues. You've got one issue that is more general. It's around the industrial tax rates levied by communities around the province that depend on heavy industry like pulp mills, sawmills, mines and other types of industries. That's an issue that the member has referred to in relation to Port Alberni and Catalyst, and there are three other communities involved in that. [DRAFT TRANSCRIPT ONLY]
I should say at the outset here that there are still some court cases pending, so my comments about industrial taxes are going to have to be fairly general. I really prefer not to end up as a witness in any of those court cases, so I will have to be a bit more general than perhaps I can be after the court cases have been heard. [DRAFT TRANSCRIPT ONLY]
I said that I don't think we should mix up the two issues. The other issue is more specific, and that relates to the statement made in the throne speech that goes to those I wouldn't say rare, but some situations in the province where, again, the province has reduced taxes for industry, and the community has clawed back the tax cut, essentially, through increased rates. Again, we don't know how we're going to be able to deal with that particular situation. [DRAFT TRANSCRIPT ONLY]
I think, in my view anyways, the more important issue is the first one and that is, the industrial tax rates charged by communities to these major employers around the province. It's an interesting and complex challenge, really, for both levels of government to deal with. [DRAFT TRANSCRIPT ONLY]
You have many communities.... Port Alberni certainly is one of those communities, and I live in a community that probably has gone through a bit of a transition in terms of being somewhat less reliant on some of these big industries. But I know that there are certainly towns in B.C. Mackenzie and Fort St. James spring to mind that are completely reliant on the industrial tax base. [DRAFT TRANSCRIPT ONLY]
Of course, some of the communities that the member is very familiar with, like his own and, of course, North Cowichan, Powell River and Campbell River, are quite reliant on heavy industry for their tax base. [DRAFT TRANSCRIPT ONLY]
To their credit and I actually agree with the member's comments about Port Alberni, and I'm not sure if he mentioned North Cowichan or not all of those communities have recognized a while back that they are probably somewhat too reliant on one taxpayer or two taxpayers. So they've attempted, over the last ten years, to reduce that reliance and to change the ratio between the residential tax rate and the industrial tax rate. [DRAFT TRANSCRIPT ONLY]
Whether what they've done is enough to create a more competitive and attractive investment climate, first of all, to keep those companies there in those communities and, secondly, to allow us to attract new companies is, I think, a fair question. [DRAFT TRANSCRIPT ONLY]
We are, as a ministry, working with UBCM and those communities to just consider what else could be done to help those communities be more competitive and help those communities keep those major employers. Because if you ask anybody from Kitimat today how important it is to keep those major employers, I would guess they would probably say it's pretty darn important. [DRAFT TRANSCRIPT ONLY]
So we're trying to take a constructive approach to this. We're not looking at any sort of top-down, arbitrary, unilateral action here. We want to work with UBCM and with the communities. But we do also recognize that the tax rates that these large industries pay in communities go into their evaluation as to whether or not they like doing business and want to do business in British Columbia. [DRAFT TRANSCRIPT ONLY]
[1655]
S. Fraser: Thanks to the minister for that. I'm certainly no expert in taxation or industrial tax rates or anything, but I have heard that the actual cost, the municipal taxation portion of companies like Catalyst, represents a very small percentage of their total costs for operation. I heard the term "3 percent" used. Can the minister comment on that, with his staff, please? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Well, the member's in the range. It's that, and in some cases it's less than that, but I think it would be a mistake . Certainly, on this side of the House we think that when times are tough, when companies are struggling to survive, if their municipal taxes constitute 1 percent, 2 percent, 3 percent of their annual expenditures, when they're in tough like some industries are, particularly the forest industry, they have to look at that. [DRAFT TRANSCRIPT ONLY]
I think it would be a mistake to think that just because industrial taxes constitute only, say, 1 percent or 2 percent or 3 percent of the annual expenditures, they're not important. I also think, frankly, that the ratio between the industrial tax rate, the business tax rate and the residential tax rate is another indicator that communities need to look at as well. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister for that, although, again . So say it's 2 percent or 3 percent, depending on what community, of the total costs associated with their industry. That's for municipal taxation. There was certainly profit made by these companies, like Catalyst, in the past. Although, I'll go back to 2006. [DRAFT TRANSCRIPT ONLY]
The former Minister of Forests said at the COFI convention in April 2006, on record: "A whole lot of people have to do some waking up when it comes to wood products and the manufacturing sector in British Columbia. There are communities in British Columbia that have been dining out on the industrial complex of taxes for too long. And by dining out on them, they have actually made their companies and their communities non-competitive." Now, that statement, I thought, was inappropriate for the minister. That's not you, so I'm not going after you on that. [DRAFT TRANSCRIPT ONLY]
Fast forward a couple years, and you've got a company, which would have been at that meeting, withholding their taxes, unlike any other taxpayer. Certainly, other taxpayers might withhold their taxes, but they have to face consequences for that. Their withholding of taxes, I would suggest, was incited by the previous Forest Minister. [DRAFT TRANSCRIPT ONLY]
I'm just curious as to why there's been no movement by this ministry, this minister or this government to help steer away from forcing communities to have to face this in court, because I believe that the previous Forest Minister incited this action. [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: I have spoken to some of the forest companies in the province who have withheld municipal taxes. None of them have indicated to me that any statements by any former Forest Ministers have had anything to do with their decision to withhold their taxes. They've indicated both to me and also in the media and I've read dozens and dozens of comments by these companies in the media that it is strictly a fiscal reality for them, that they are trying to find ways to survive. [DRAFT TRANSCRIPT ONLY]
They are using their refusal to pay taxes that are owing, I suppose, as a gesture, sending a signal to the communities and to the province as a whole. I'll repeat what I've said here many, many times, each time that I've talked publicly about this and that is, that these taxes are payable, and the companies have no choice. They must pay their taxes. [DRAFT TRANSCRIPT ONLY]
In terms of the member's question or comment about the province stepping in at a time like this, when the taxes were payable as of July 1 and haven't been paid, there are other situations in the province where taxpayers don't pay their taxes. We wouldn't ordinarily step in and pay a delinquent taxpayer's taxes, and we're not going to do that in this case. [DRAFT TRANSCRIPT ONLY]
[1700]
We make it very clear to the taxpayer actually, in all cases, whether it's a large industrial taxpayer or whether it's an individual that when the taxes are levied, they're payable, and we support the communities in that. [DRAFT TRANSCRIPT ONLY]
That's a wholly different issue than the issue of tax policy and competitiveness that I talked about here a few minutes ago. I don't believe that there is a role for the province right now other than to support these communities through infrastructure planning, infrastructure grants. We certainly support them through our small community grants and traffic fine revenues through the community development trust job opportunities projects and the other components of the community development trust. We've tried to support all of these communities. [DRAFT TRANSCRIPT ONLY]
I know that my colleague from the Ministry of Forests has also gotten into a lot of these communities and done everything that he can do from his ministry, but I don't think that it is an appropriate thing for government to do to pay somebody else's taxes. I think that the taxpayer will have to come to grips with that. [DRAFT TRANSCRIPT ONLY]
S. Fraser: In that, I think we're in agreement. I was not suggesting that the minister or the ministry step in there and pay the industrial taxes for Catalyst. I appreciate the minister citing things like community development trust and other things that are happening or have happened, and I plan on getting into those throughout this estimate, but I see those as separate issues. [DRAFT TRANSCRIPT ONLY]
We have established here, I think we've agreed, that it's a very small portion the municipal tax portion of the total cost to the company, Catalyst in this case, and they are claiming it's too much. They are withholding their taxes. That's the reality. They are also threatening and challenging, in essence, the entire tax structure, the municipal tax structure, which the government I'm not saying this government but any government, the provincial government, whoever is sitting there is responsible for. [DRAFT TRANSCRIPT ONLY]
The municipal governments, the city governments of Port Alberni, North Cowichan, Powell River and Campbell River did not design the tax system that they are beholden to, that they must work under. They may have designed it differently, indeed, if they had the option to do that, but they're stuck with what the province has given them, and there has been no assistance in regards to dealing with this. [DRAFT TRANSCRIPT ONLY]
Maybe the ministry or the minister has done some research on this the claim made by Catalyst that the taxes are too high. I think everyone in this room could make the same claim of any taxation. I mean, people don't like paying taxes. I understand that, and I'm sure that the minister understands that too, but has there been any analysis to suggest that there might be other things that would be more applicable to costs that are maybe causing the company hardship at this point? [DRAFT TRANSCRIPT ONLY]
Has the company been overcapitalized? Has there been any research done on that? Have the board of directors maybe been taking too much in the way of bonuses? I think it was in 2007 I could be wrong, but I believe that it was fiscal 2007 that there was $15 million, if I'm not mistaken, that went to the top ten directors in Catalyst. If I'm not mistaken, at that point their books were in the red, too. [DRAFT TRANSCRIPT ONLY]
I'm not going to try to second guess the company and how they want to run their business, but just could the minister explain what analysis might have been done by the ministry as to if there were other things at play here that may have caused the problems for Catalyst? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Well, I'll just correct one statement that the member made. He said that government has provided no assistance to these four communities dealing with Catalyst Paper. In fact, I met almost immediately with the mayors of these four communities, and they asked us for some assistance. We have provided that assistance. [DRAFT TRANSCRIPT ONLY]
[1705]
They asked us to get involved with UBCM, and rather than do something that's somewhat more arbitrary and unilateral as a provincial government, to work with the communities through UBCM to discuss the industrial tax rates and what can be done to make the province more competitive. [DRAFT TRANSCRIPT ONLY]
They also asked that my senior staff work directly with them. That's happened. They asked that in some cases we have staff go up to the communities. They've also asked that we help with things like infrastructure grants, planning and that sort of thing. [DRAFT TRANSCRIPT ONLY]
As far as I'm aware, the four communities, the four mayors, are satisfied with what we have done, and they have not asked for anything different or anything more. They have not asked us to pay the taxes that are owing by Catalyst. I think we have actually provided the assistance that we were asked to provide. [DRAFT TRANSCRIPT ONLY]
With regard to the member's question about the analysis that government might do to determine why . Sorry. I don't mean to make light of the member's question, but we don't analyze a company to determine why it can't pay its taxes. It can't pay its taxes. That's really the important thing. [DRAFT TRANSCRIPT ONLY]
We as a government have reduced their corporate taxes to the second lowest in the country. We've reduced their school taxes by 50 percent, and we got rid of the dreaded corporate capital tax that the member's predecessor government brought in, in the 1990s, that frightened away all kinds of investment. We got rid of that. We took the sales tax off the purchase of machinery and equipment. [DRAFT TRANSCRIPT ONLY]
We've tried, and we're not perfect, and I would never claim that to the member. But we have tried to create a more inviting investment climate for the forest industry and for the business community in general and over the past eight years have had some considerable success at generating investment in the province and new jobs. [DRAFT TRANSCRIPT ONLY]
It just would appear that in the pulp and paper industry in particular they are having great difficulty competing with firms, offshore in particular. With the economy in the condition that it's in today, their product, no matter where it comes from, isn't selling the way it was selling a few years ago. That's a market situation. [DRAFT TRANSCRIPT ONLY]
We can't really change the market situation. The companies have to deal with that as best they can. Again, I think, frankly, that our government has done a tremendous amount to create an investment and operating climate in this province that is attractive for companies in all fields. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister for that. Well, the minister can argue that this government has made an investment climate that's surpassing what's happened before, I suppose. It's not working out very well. [DRAFT TRANSCRIPT ONLY]
The tax cuts that the minister has referred to what agreement or what commitment did the minister get, from those tax cuts, for the companies to reinvest or create jobs? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: You know, we have a market economy here in Canada, in North America. We're part of that market economy. We're a small jurisdiction, and we depend primarily on our exports. There are certain things that governments can do to make a jurisdiction more attractive for investment and for operating a business. I've already indicated or mentioned a number of the initiatives that our government has brought in. [DRAFT TRANSCRIPT ONLY]
With all due respect to the member, I think the question is indicative of the NDP approach to the economy and to business. We on this side of the House will try and keep our taxes down as low as we can to be competitive. We'll try and reduce the amount of regulation that makes it difficult to do business, and we will identify other opportunities to create a more competitive business climate in the province. [DRAFT TRANSCRIPT ONLY]
But we don't run those businesses. We don't control the market economy in the world. We certainly don't control markets, and we don't control the number of housing starts for the housing industry in the U.S. [DRAFT TRANSCRIPT ONLY]
[1710]
I think it would be a mistake for any government to think that they can be that directly involved in the economy and have a positive impact. Frankly, I think we should have learned that, actually, in the 1990s. [DRAFT TRANSCRIPT ONLY]
S. Fraser: I don't want to relive another millennium ago. I wasn't here, and if the minister wants to answer my questions with the '90s, we should switch places, because he's acting as an opposition critic would be doing. I just don't think that's appropriate. We have limited time here. [DRAFT TRANSCRIPT ONLY]
The minister has talked about the great investment climate he has made. That great investment climate and I'm being facetious when I say that has led to the point where Catalyst is refusing to pay their municipal taxes to communities like Port Alberni, Campbell River, North Cowichan and Powell River. Obviously, there's a problem. [DRAFT TRANSCRIPT ONLY]
In 2003, if we're going to take a step back, there was a policy called forestry revitalization, and the forest industry got everything they wanted from this government. The three amigos trip remember that? I don't know how much money in tax breaks they got. Deregulation, union busting you name it. They didn't invest, they didn't reinvest, and they didn't create jobs. All the promises that were laid out as the quid pro quo for this government's largesse to those companies and those CEOs didn't pay back any dividends that they were suggesting would come back. [DRAFT TRANSCRIPT ONLY]
As a matter of fact, with all that, there's apparently no commitment as a quid pro quo from government to provide some kind of reinvestment, technological innovation, investments so we'd stay competitive on the world market in the paper industry and in the forest industry in general for forest communities, and no commitment to create jobs just some vague promise, which was broken subsequently. [DRAFT TRANSCRIPT ONLY]
That's the climate that the minister is referring to that has led us to a place where not only has the provincial taxpayer and we're all the same taxpayer given huge concessions and received nothing in return, now the municipal governments of these four communities, the city governments, are having taxes withheld. [DRAFT TRANSCRIPT ONLY]
When the provincial government reduced all of these taxes, it didn't lead to innovation in the industry. It did not lead to reinvestment in the industry, and it certainly didn't lead to job creation in the industry. We've had a record number of job losses and mill closures in this province. So that model may be somewhat wanting if you're a forest worker in the communities or if you are a mayor or a councillor in any of these forest communities that rely on their tax base. [DRAFT TRANSCRIPT ONLY]
Is the minister planning on doing anything around these court decisions, or is he going to let the court decide how the tax structure for municipal governments is to be adjudicated? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: I don't think the member meant to ask me whether I was going to interfere with the courts on the three outstanding actions. The company has asked in the three actions for the court to determine whether the three municipalities were unreasonable in the tax rates that they levied. That question has already been answered in one case, and there are three more actions to be heard. So no, we won't be interfering in the legal process. [DRAFT TRANSCRIPT ONLY]
More generally, though, to answer the member's question as best I can, we have engaged with UBCM on this issue. There was a resolution, I think, at UBCM asking the province to work with the communities. We're doing that. There is a committee struck. It is a very positive, very constructive atmosphere around that effort, and we will continue to work with local government in good faith in attempting to figure out what can be done for the pulp and paper industry about our competitive position. [DRAFT TRANSCRIPT ONLY]
[1715]
I think if the member wants to take a look at the past 8½ years in terms of the number of jobs that were created and the employment rate and the real disposable income, which I've always contended is probably the best indicator of how the economy is functioning, the member will find that the employment rate, even though it's down right now, is still higher, certainly where I come from, than anytime during the decade that the member prefers I don't mention. [DRAFT TRANSCRIPT ONLY]
Real disposable income has been up every single year that I've been an MLA. That's money in your jeans. I think that's important to everybody. [DRAFT TRANSCRIPT ONLY]
Now, we do have a special problem with the forest industry, and we do have a particularly acute situation with the pulp and paper industry. It is just not a good time to be selling paper in the world today. We can lower their taxes. We can reduce their regulations. We can make B.C. a better place for them to do business. But we can't change the price of pulp, and we can't create markets for their paper. We'll continue to work with the communities and with UBCM on the tax rates. On the other side of it, we will continue to work with any community that wants to consider economic diversification. [DRAFT TRANSCRIPT ONLY]
I know that there are examples of communities in the province that were once completely reliant on one industry. Kimberley comes to mind, the city of Kimberley. They have, over the years, really made a tremendous effort to diversify their economy and become not quite so reliant on that industry. [DRAFT TRANSCRIPT ONLY]
I think that some of the communities are well aware of that. I don't mean to patronize those communities. I have talked to all the mayors, and I know that they're aware they need to work towards economic diversification tourism and mining and whatever else is out there for them. [DRAFT TRANSCRIPT ONLY]
We are doing, I think, as a government, everything we can to set the table for success. Again, we don't control international markets, and we are somewhat at the mercy of a global recession right now, which we seem to be coming out of hopefully, we are coming out of. It's not something where the province of British Columbia can wave a magic wand and make it go away. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister for that. I'm not too sure where to start on the response, my question to his response. [DRAFT TRANSCRIPT ONLY]
You mentioned tourism. Well, we've all seen the dismantling of Tourism B.C., a huge success, and the implementation of what amounts to a broken campaign promise on HST, which the tourism industry that the minister just referred to has said will be devastating to the industry. [DRAFT TRANSCRIPT ONLY]
I mean, the alternatives that the minister is talking about . The communities are having their rugs pulled out, and their alternatives are looking slimmer and slimmer under this government. They're getting hit by every side of this, and attempts at diversification of the economies in some of these communities are being hampered by this government at this point in time. [DRAFT TRANSCRIPT ONLY]
I'll go to a specific here. The minister referred to specific tax breaks. Let's go with the provincial industrial tax breaks around the school taxes. They were quite significant for Catalyst. Can the minister quantify that, with the help of his staff? Thanks. [DRAFT TRANSCRIPT ONLY]
[1720]
Hon. B. Bennett: Sorry for the delay. We were trying to find the number. I know we have a number for the Catalyst situation in the four communities, and I would ask that the member not accept this number as gospel because I'm not 100 percent sure. But my recollection is that through the 50 percent school tax cut, they will save about $5 million a year between the four communities. Provincially it looks like . Well, I'm not in a position to give him the provincial number either, but I'm pretty sure it's around $5 million that Catalyst will save as a result of those tax cuts. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister. That's close enough. I guess we can get the exact numbers. I can't remember at this point. I think this was in two phases. Am I correct? And if so, what was the timing on these? When did those occur? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: As of 2008 the school property tax rate for class 4 was reduced over two years to equal the business class that's class 6 rate providing a benefit of $24 million annually in 2009 and future years to B.C.'s major industrial property. That includes pulp mills, sawmills, ports and mines. [DRAFT TRANSCRIPT ONLY]
The following year, 2009, and beyond there was an industrial property tax credit created that will reduce the provincial school tax otherwise payable on major industrial and light industrial that's class 5 properties by 50 percent. That measure provides an additional benefit of $50 million annually to B.C.'s manufacturing, mining, forestry and other major and light industries. That was the sequence. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister for that. Since those savings were realized by Catalyst, has there been any investment, new technology or job creation since those tax drops? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Well, I don't know for sure whether or not these companies have bought any new machinery since we announced those tax reductions. What I do know is that the company we've referenced here and all of the pulp and paper companies in the province . If they are surviving, it's by the skin of their teeth. [DRAFT TRANSCRIPT ONLY]
They are laying off people. They're cutting costs every which way that they can find to do. I would suggest to the member that in a general global downturn like this, one that seems to contain a very specific weakness for forest products, it's not surprising that forest companies wouldn't be out spending a bunch of money on things that they would perhaps otherwise like to do but can't do during this particular time. [DRAFT TRANSCRIPT ONLY]
[1725]
I know what the member is getting at. The member, I think, is suggesting that these tax reductions don't work and why bother doing them. [DRAFT TRANSCRIPT ONLY]
I don't want to put words in the member's mouth, but we just disagree on this side of the House. We think that when you reduce taxes for business and for individuals, you'll find that more businesses want to locate in that jurisdiction and more people want to live in that jurisdiction. [DRAFT TRANSCRIPT ONLY]
We stand on our record over the course of the last 8½ years. If you look at the trend lines for investment, for employment, for real disposable income, you'll find that, actually, the personal income tax cuts that we made, the corporate income tax cuts that we made and these other tax cuts just referenced that we made did, in fact, lead to considerable growth in our economy. [DRAFT TRANSCRIPT ONLY]
Our economy will grow again. These companies are not in a position right now to invest a bunch of money in new things new technology or machinery. But if we stay with it, and we work with the communities, and we work with the industry, they will once again be in that position to create jobs in the forest sector in this province. [DRAFT TRANSCRIPT ONLY]
S. Fraser: The minister refers to . The timing of these cuts predates the economic meltdown, so I'm not sure that his answer was hitting it on the head there. [DRAFT TRANSCRIPT ONLY]
In the last ten years what significant investment has, say, the company made in new technology and job creation? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Could I ask the member for clarification? By "the company," does the member mean Catalyst? [DRAFT TRANSCRIPT ONLY]
S. Fraser: Yeah. [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Well, I honestly don't know what Catalyst has been about, really, these last four or five years. I certainly hope the member is not piling on here on this particular company or any other company that has fallen on hard times. I think, frankly, that this is a time when we should be working as constructively and as collaboratively as we can with the major employers in the province. [DRAFT TRANSCRIPT ONLY]
I know that the member comes from Port Alberni. We want those companies that operate in Port Alberni to survive. We want to support them. We don't really want to undermine them and suggest that they're greedy and that they just take tax cuts and put them in their pocket and run off to Maui. That's not the approach, I think, that works here. [DRAFT TRANSCRIPT ONLY]
I think that these companies are in tough. There's no doubt about it. I suppose if you want to pick on them, that's your right to do that. But I think that we have to keep our eye on the ball here and focus on making sure that when we come out the other side of this global recession, we have a forest industry that's ready to go again, ready to employ the hundreds and thousands of people that they do and to be successful and pay taxes and help us pay for all the social services that we're all accustomed to here. [DRAFT TRANSCRIPT ONLY]
S. Fraser: I'm not picking on anyone. The company, Catalyst, is refusing to pay four communities' taxes. They have taken them to court. Despite the fact that the minister says that he's working on this, that and the other thing cooperatively, this is the situation we're now in. [DRAFT TRANSCRIPT ONLY]
The minister has just acknowledged that he has no idea what or if they've invested anything significantly in job creation, job retention, protecting workers or investments in new technology. Yet he was explaining the virtues of their government corporate tax cut policy when he doesn't know, apparently, what he's talking about. [DRAFT TRANSCRIPT ONLY]
That is a frustrating experience when you come from a community where you actually talk to the workers and find out what they're going through because of government policy or lack of understanding of what's even happening in these communities. The minister has just explained that he doesn't have any idea whether or not the tax cut policies that he was extolling had any benefit at all to anybody in this province except costing the taxpayer. Now it's costing municipal taxpayers directly. [DRAFT TRANSCRIPT ONLY]
[1730]
What tangible resources is the minister bringing to bear to help these four communities? Is the minister paying for their court costs? Can he give me a number for how he's helping this community a number of dollars? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: I'm sorry the member feels that way that I don't know what I'm talking about. I think I know what I'm talking about, but the member is entitled to his opinion. [DRAFT TRANSCRIPT ONLY]
As I say, we'll continue to work on the policy end of things with UBCM. In fact, the communities themselves should get some credit for the fact that they have worked with the companies because there's more than one company involved in this to try and reduce their reliance on the industrial taxes. [DRAFT TRANSCRIPT ONLY]
I know that Port Alberni has done that, and North Cowichan has done that. Castlegar has done that, and the other communities involved have done that as well. They're going to have to continue to work away. [DRAFT TRANSCRIPT ONLY]
The member asked: "What have we done?" If the member wishes, I can list out the traffic fine revenues and the small community grants that have gone to all of these communities over the past several years. It totals in the hundreds and hundreds of thousands of dollars. [DRAFT TRANSCRIPT ONLY]
I don't know how much the member wants. In the case of Campbell River which is facing at least one reluctant taxpayer, I guess; maybe two reluctant taxpayers our government has been responsible for almost $12 million in infrastructure grants going into Campbell River here in the past eight years some very, very large grants. [DRAFT TRANSCRIPT ONLY]
[D. Hayer in the chair.]
Quite recently, in 2009 the south Island highway improvement project. That was a $4 million project. [DRAFT TRANSCRIPT ONLY]
The Campbell River Airport runway extension. That was almost $3 million as an investment. [DRAFT TRANSCRIPT ONLY]
There's a bunch of things. Traffic fine revenue. I mentioned that. Over the past five years Campbell River has received $2,143,737 in traffic fine revenue. All totalled, Campbell River, over the past eight years, has received almost $15 million. [DRAFT TRANSCRIPT ONLY]
I think that's pretty tangible. I talked to the mayor of Campbell River at UBCM more than once, and I have to tell you that he's a great guy. He actually told me that he thought I knew what I was talking about. [DRAFT TRANSCRIPT ONLY]
He came up and slapped me on the back and said, "You know, really appreciate those infrastructure grants and for the airport," and all the help that we're giving them. We know that they're struggling on this industrial taxation issue, but certainly the mayor of Campbell River was collaborative, and he was positive. He recognizes that we have to work together with these companies to find a way to strengthen our economy. [DRAFT TRANSCRIPT ONLY]
I've got a list of investments in Port Alberni, but rather than use up the member's time, if he wants me to read those out I'll have them here for him. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Yeah, I guess I don't want to surprise the minister. I don't want to hear that. I wanted him to answer the question. [DRAFT TRANSCRIPT ONLY]
[1735]
If the minister is suggesting that parking fines were brought into place so that communities like Campbell River, Powell River, North Cowichan or Port Alberni could fight for their very existence in the taxation structure that is provincial in nature . If that was the intent of the one-third, one-third, one-third infrastructure grants, to offset the communities battling to protect their municipal tax base so they can actually bring the services there, well, then the minister really doesn't understand the file at all. [DRAFT TRANSCRIPT ONLY]
I don't think that there was any understanding from the communities, because of ongoing infrastructure grants that occur from time to time with federal and provincial and municipal government involvement one third, one third, one third that that was designed to help address fighting a court case that is threatening the municipal tax structure. [DRAFT TRANSCRIPT ONLY]
So I'll ask the question as specifically as I can. Lay this out now: in 2006 the former Forests Minister basically said to the forest industry that these communities were dining out on the municipal taxes levied by these communities. Then we fast forward to the throne speech this was the pre-election throne speech that made a veiled threat about the government going to change the taxation structure. Then we've got in July Catalyst Paper refusing to pay the municipal taxes. There's the timeline. The whole time . [DRAFT TRANSCRIPT ONLY]
I went to the same UBCM. The major issue at the UBCM was the disaster that we're walking into here, and where was the provincial government? So I don't need an answer suggesting how some other grants were designed to help these communities fight for their very existence as far as taxation goes. [DRAFT TRANSCRIPT ONLY]
Will the minister explain how he's assisting these communities? Specifically, is the ministry helping with their court costs? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Well, it might be helpful to the member for me to explain how the communities will collect the taxes. The short answer to the basic question: no, the province won't be subsidizing the communities in their legal actions. The communities will look after that. In fact, the communities have not asked us to do that. So let's be clear about that. [DRAFT TRANSCRIPT ONLY]
How it works is if any portion of the taxes is unpaid on July 3, 2009, there's a 10 percent penalty assessed to the principal immediately. Now, unpaid amounts at December 31, 2010, become taxes in arrears. Following that date, unpaid taxes are subject to interest at the prime rate of the principal banker to the province plus 3 percent. That rate is adjusted three times a year. The current rate is 5.25 percent. [DRAFT TRANSCRIPT ONLY]
The following December taxes become delinquent, the interest continues to accrue and the following September 2011 the property can be sold at tax sale for the outstanding taxes. Property owners have one year following the tax sale during which the property can be redeemed for the outstanding taxes plus interest. If not redeemed, ownership shifts to the municipality on September 2012. [DRAFT TRANSCRIPT ONLY]
That's the process for collecting outstanding taxes that every single municipality in the province has at its disposal. In fact, if the member was to fail to pay his property taxes, that's the same process that would be in place to collect taxes from him. Obviously, we hope on this side and I know this is one thing that we can, I'm sure, agree on with the members opposite that we don't get out that far before there is a resolution to this. [DRAFT TRANSCRIPT ONLY]
Obviously, we hope that the company has the wherewithal to pay its taxes much before that. But there is a legal process in place, and despite the temptation to want to suggest that we should somehow or other short-circuit that legal process, we can't do that, and we're not going to do that. [DRAFT TRANSCRIPT ONLY]
[1740]
We're going to let these court cases play out, and we will continue to work with the communities. We will not pay their legal expenses. They don't expect that; they have not asked for that. We will help them in other ways that I've already listed. With an economic recovery I'm sure the member shares this hope with me hopefully, the companies will see, after these court cases, that they should pay their taxes immediately, without being taken to court by the communities. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Hon. Chair, welcome to the seat. [DRAFT TRANSCRIPT ONLY]
If the court cases are protracted like, we've got one decision; however, there is a spectre of an appeal then these four communities are out a whole bunch of money, millions of dollars, from their tax base. [DRAFT TRANSCRIPT ONLY]
Now, under the Local Government Act, as far as I know, local governments are not allowed to go into deficit, unlike the situation here. You can't bring forward a bill to go into deficit and then bring in another one to go into more deficit. You're not allowed to do that at the municipal level. [DRAFT TRANSCRIPT ONLY]
So has there been any discussion? Is there any plan for assisting these communities should hopefully, this doesn't occur they get to the point where they can no longer provide the services, or they're running the potential for a deficit by year-end fiscal? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: The judge in the case has apparently indicated that he plans to rule on the other three cases fairly expeditiously. I don't have, obviously, any control over that, but we're expecting results, decisions, from those three cases certainly in the near term, let's say. I can't be any more specific than that. [DRAFT TRANSCRIPT ONLY]
We have been in pretty regular contact with all of the communities involved. We are talking to them about some what-if's, but it's premature, until we know what the courts rule on these cases, for us to get too excited about things. Let's let the legal action be resolved first, and then we'll know what the courts have to say about the reasonableness of the industrial tax rates levied by the communities. [DRAFT TRANSCRIPT ONLY]
I don't want to get into what-if's here in an estimates debate. Certainly, I can assure the member that if we get into the kind of situation that the member describes, we will definitely be there for those communities. He has my word on that. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thank you to the minister for that. The communities could be between a rock and a hard place if the worst scenario happens here, and I appreciate the minister recognizing that. [DRAFT TRANSCRIPT ONLY]
Is there a plan? In February the statement was made in the throne speech the first throne speech, pre-election that the government would work with the UBCM to develop new legislation. Obviously, I went to UBCM, and this was the major issue there. [DRAFT TRANSCRIPT ONLY]
There didn't appear to have been any discussions between September and the UBCM. Am I mistaken there? Can the minister let me know what meetings happened following the February throne speech statement that there would be specific changes made to the tax system? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Okay. I'm going to say this again. I said it earlier, but it's important that we distinguish between the statement in the throne speech that dealt with a totally different situation . It dealt with the situation where government saw some communities clawing back, I believe it was, the school tax reductions. The member is correct. There was a statement in the throne speech that government was going to take a look at that. That is separate from the overall industrial tax rate discussion that the province is having with the UBCM. [DRAFT TRANSCRIPT ONLY]
[1745]
But in both cases, both of those issues, I have talked directly with the UBCM executive about those issues and other issues. I talked with individual members of the executive, of course, at the UBCM convention. Staff has discussed these issues with UBCM as well, actually, since the UBCM convention. [DRAFT TRANSCRIPT ONLY]
As I said in the beginning of this debate, our intention is to work collaboratively and constructively with communities through UBCM. Our intention is not just to announce one day that we're going to do something, without having the appropriate kind of discussions with local government. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister. I raised the question because since 2006, according to my documentation, ministers of the Crown have laid out the spectre that local governments were dining out on . Obviously, the way he was stating it, that was inappropriate. Then we had the throne speech, where it seemed to reaffirm that. [DRAFT TRANSCRIPT ONLY]
Now we're in a position where . To be fair to the government, I mean, if they were recognizing there was a taxation problem around the industrial tax base as early as 2006 . Here we are in 2009, this money is being withheld from communities, and they're in court. [DRAFT TRANSCRIPT ONLY]
As we've established, there's no assistance from the province in these four communities facing a court challenge around a provincial tax structure. It was with that in mind that I asked the question. Is there a ramification for the municipal tax structure based on, potentially, what comes out of these court decisions? How far-ranging could that be? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: The question, I guess, is: if one of the three court cases outstanding goes against the municipality, could there be far-reaching implications? I can't answer that, because it would depend on what the judge said. If it was some sort of a technicality involving process that the municipality used to arrive at their decision about tax rates, it could be just simply a legal decision that has no sort of fundamental implications. [DRAFT TRANSCRIPT ONLY]
All I can deal with is what we know. We know that in the one decision we have that the judge indicated that the answer to the question as to whether or not the tax rate arrived at by the local government was reasonable . He said: "Yes, it is. It's reasonable." He also indicated that the process for getting to that decision was transparent and was rational. [DRAFT TRANSCRIPT ONLY]
He did make some comments about the importance of local government recognizing major employers and their role in sustaining small communities, but the gist of the decision was that the community had acted rationally and reasonably in determining what the tax rate was for that company. [DRAFT TRANSCRIPT ONLY]
[1750]
S. Fraser: Thanks to the minister for that. I looked through the decision, and I don't I'm not a lawyer understand all the legal ramifications. But we have three more cases here that are still undecided, and I'm hoping that the minister is right that we get some clarity on this fairly soon. [DRAFT TRANSCRIPT ONLY]
I heard this at the UBCM from mayors who had no forest industries paper industry within their communities. They, with their wisdom and local knowledge, saw that the potential for this court decision going a certain way could have ramifications on all municipal taxation. If indeed the court was to find that there was a problem that they saw in favour of Catalyst, for instance with how local governments adjudicate taxation, municipal or otherwise, that could be a precedent. [DRAFT TRANSCRIPT ONLY]
Has there been any discussion about the implications for the municipal tax system that we have in this province? I'm sure I'm not the only one who has speculated or heard speculation on this. [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: We have not spent any time or resources analyzing something that hasn't happened. We will wait for the courts to make their decisions and decide what we have learned from that when that happens. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister for that. I am, reluctantly, going to move off of the industrial taxation issue, just because we have so little time here. We could spend a lot more time on that, and I know there are a lot more questions out there that local governments and mayors have asked me about this and asked me to bring forward on their behalf into this process known as estimates. [DRAFT TRANSCRIPT ONLY]
So if I may and I don't know if it requires a staff change here, so I'll just let you know I'd like to delve into infrastructure funding. That may or may not be involving the same staff members. [DRAFT TRANSCRIPT ONLY]
I'm looking at issues around the infrastructure stimulus fund and the Building Canada fund. I find this somewhat confusing the way the moneys were announced. [DRAFT TRANSCRIPT ONLY]
There seem to be a few different takes on how much money was committed for the province through this. I recognize that it's federal and provincial. But can the minister give me any numbers? How much was the total amount that B.C...? Of the federal announcement, how much of that was supposed to come to the province of British Columbia? I know it varied from province to province. [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Could I just get clarification from the member? Is the member referring to the most recent announcement by the federal and provincial governments on infrastructure generally? Is that the announcement that the member wants to discuss in detail? [DRAFT TRANSCRIPT ONLY]
S. Fraser: No, actually and thanks to the minister for that. I'll give you clarification here. According to the estimates of the UBCM, there was still approximately $200 million remaining in B.C.'s portion of the federal money from the.... That would probably be from the infrastructure stimulus fund. The estimate made through UBCM as B.C.'s share was to be, I think, $520 million in total. [DRAFT TRANSCRIPT ONLY]
[1755]
It's unclear whether there's more money from the fund. If you use the math that UBCM has come up with, there's still at least $200 million outstanding that B.C. has not grabbed onto yet, if that's of any help. [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: I'll start with the best explanation that I've got. The member is correct. It's complicated, and there are a lot of figures, so the member may want to write some of these down. The initial intake closed on September 30, 2008. By April of 2009 there was a total of 41 projects that were awarded $58.5 million in provincial dollars of course, that equated to $110.4 million when you add in the federal component supporting total project costs in that first intake of $222.7 million. [DRAFT TRANSCRIPT ONLY]
During that first intake our ministry saw 28 projects approved for $38.9 million in provincial funding. The Ministry of Transportation and Infrastructure saw 13 projects approved for around $16.3 million in provincial funding. [DRAFT TRANSCRIPT ONLY]
The member should also know that the Building Canada fund supplements an existing flood program, and $25 million in provincial funding was awarded to flood mitigation infrastructure during that initial intake. [DRAFT TRANSCRIPT ONLY]
[H. Bloy in the chair.]
In January of 2009 in the federal budget there was an estimated $66 million that was identified as a top-up to the original Building Canada fund. During September of 2009 the Minister of Finance approved an additional $82 million in provincial funding to top up the Building Canada fund and the infrastructure stimulus fund. That brought the total provincial investment in the Building Canada fund to $201 million. [DRAFT TRANSCRIPT ONLY]
The second intake closed on May 1, 2009. On September 24, 2009, an additional 84 projects were awarded $116.5 million in provincial funding. Totals: $233 million in the combined senior government funding. During this second intake, the Building Canada fund . Our ministry saw 18 projects approved for $29.9 million in provincial funding. The Ministry of Transportation and Infrastructure saw seven projects approved for $22 million in provincial funding. [DRAFT TRANSCRIPT ONLY]
With the top-up funding, our ministry saw 13 projects approved for $7½ million in provincial funding. The Ministry of Transportation and Infrastructure saw 35 projects approved for $52.8 million in provincial funding. We also, again in that second intake, had some flood program awards as well 11 projects, to be specific. They were approved for $4.1 million in provincial funding. [DRAFT TRANSCRIPT ONLY]
So that goes over the two intakes of the Building Canada fund, and I hope that was helpful to the member. [DRAFT TRANSCRIPT ONLY]
[1800]
S. Fraser: Welcome to the seat, hon. Chair. [DRAFT TRANSCRIPT ONLY]
Not entirely helpful. The minister acknowledged that this is complex. I mean, this came in a series of announcements. Now if I go back to the 2009 federal budget, they brought out . Their announcement was $4 billion over two years; that's from '09-10 and '10-11. That was allocated to the new infrastructure stimulus fund only, I think. That was the specific fund, just the infrastructure stimulus fund. [DRAFT TRANSCRIPT ONLY]
That was the new fund related to economic stimulus, and it was to be allocated to the provinces. I think it was largely, if not totally, on a population basis, a per-capita basis. By the calculations that I've seen, the B.C. share of this would be approximately $520 million. [DRAFT TRANSCRIPT ONLY]
You combine that with the required matching provincial money the number that has been arrived at that has been used, certainly extensively by UBCM, and they've got people working numbers there that stand by this. The total amount for the stimulus fund amounts to $1.04 billion. The projects all had to be eligible, and to be eligible, they must be completed by March 31, 2011. [DRAFT TRANSCRIPT ONLY]
I guess that's where I want to get at: that $520 million that we want to be able to access for economic stimulus to get us through this recession. If the minister could comment when he gets a chance, thanks. [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: I suspect that the member knows this, but maybe I should say it anyhow just in case he doesn't. The infrastructure money available from the federal government is shared. [DRAFT TRANSCRIPT ONLY]
Not only does some of it come through this ministry, but a fair portion of it also goes through the Ministry of Transportation and Infrastructure, and I believe that some of it ends up going through the Ministry of Public Safety and Solicitor General when it comes to flood mitigation projects. So I think there are three ministries in total that are involved here. [DRAFT TRANSCRIPT ONLY]
I'll see if I can clarify, for the member's benefit, some of these numbers. The infrastructure stimulus fund provincial allocation was $520 million, and the Building Canada fund component that was remaining before this last announcement, which doesn't include what was announced last spring, was $52½ million $52.5 million. That top-up to the Building Canada fund that I mentioned earlier was $65 million or $66 million. [DRAFT TRANSCRIPT ONLY]
[1805]
I can tell the member that all of those three numbers the stimulus amount of $520 million, the $52½ million remaining in the Building Canada fund and the $65 million top-up will be matched, province to federal, dollar for dollar. [DRAFT TRANSCRIPT ONLY]
I can tell the member that, from the $520 million we have approved through this ministry so far I'm talking about community-based infrastructure like water and sewer we've approved 68 projects worth about $115 million. I don't have all the details on the projects approved by the Ministry of Transportation and Infrastructure. I don't know whether they've done their estimates yet or not, but certainly, the minister there will have all of that information. [DRAFT TRANSCRIPT ONLY]
I think that it's important for me to point out that a lot of the projects that are approved by the Ministry of Transportation and Infrastructure are located within communities and are of great benefit to communities. You know, when you realign an arterial road, a major highway, going through a town like Kimberley or the work that has been done in so many of our communities and is being done, it usually is something that the local government and the community are very excited about. [DRAFT TRANSCRIPT ONLY]
I can give the member assurance that the $520 million has been or will be matched; the $52½ million, the same; and the $65 million top-up, the same. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister for that. Now, as of the Union of B.C. Municipalities convention, by their estimates, only 25 percent of the federal moneys had been committed, and the province has yet to secure the remainder. Now, there's a deadline on this, and it's a federal requirement. I don't know how etched in stone the federal requirement is, but it's March of 2011. The projects have to be substantially completed. [DRAFT TRANSCRIPT ONLY]
I know that the Premier initially made a promise to fast-track all of the infrastructure stimulus money, but we were dead last by the time we came to the convention, as far as the provinces, to actually secure this money. Can the minister comment how that came about? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Hon. Chair, I do think it's necessary to correct the member. I work quite closely with UBCM, and my staff works even more closely with them, and they are not saying anything about us only matching 25 percent of the federal dollars. If that statement was made and it well may have been made it would have been made prior to the last announcement in September about all of the infrastructure projects. My understanding is that UBCM is actually quite happy with all of the announcements that were made. [DRAFT TRANSCRIPT ONLY]
The member is correct about when projects have to be done for some of the federal-provincial programs. I think that the stimulus fund projects must be done by March 2011. I think that the top-up projects the $65 million worth of projects also have to be done by March 2011. The $52½ million and the rest of the Building Canada fund do not have to be done by March 2011. I think that the date for them is 2014. We have communities that receive those grants and will have that length of time to complete. [DRAFT TRANSCRIPT ONLY]
I know that staff in this ministry and staff in the Ministry of Transportation and Infrastructure worked very, very closely with applicants, local government applicants, to determine whether they could get their projects done by March 2011 or if they needed until 2014. [DRAFT TRANSCRIPT ONLY]
Nobody that was given a grant told us that they would not be able to complete the project on time. So we're anticipating that all the projects will be completed on time because the communities have told us they will be able to have them completed on time. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Thanks to the minister for that clarification. I don't know if it came out that way, but I just want to make sure, on the record, that I wasn't accusing the local governments of not being able to complete or putting in incomplete proposals. [DRAFT TRANSCRIPT ONLY]
[1810]
I need some more information. We as a province, British Columbia, were dead last in getting the shovel-ready projects going. The money was flowing to other provinces in a way that simply wasn't happening in British Columbia. The economic stimulus needs to hit the ground quickly, according to the Premier's previous statements, and that's why it was going to be fast-tracked. [DRAFT TRANSCRIPT ONLY]
I guess the question is: why ? We were so late coming out of the gate in getting these funds, compared to a lot of the rest of Canada, that it might actually make some of the larger-scale projects ineligible because they maybe could not be completed, not because of communities not doing their due diligence in their application, but because the money didn't come out in a timely way. Can the minister comment, please? [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Hon. Chair, I have heard the opposition characterize British Columbia's performance on getting the infrastructure dollars out as being slow. In fact, that's not correct. In the case of both the Building Canada fund and the stimulus infrastructure program, we got considerable dollars out the door early in 2009. [DRAFT TRANSCRIPT ONLY]
I know that in the case of the Building Canada fund, by April we had $58½ million in provincial funding out the door. That's $110.4 million between the federal government and the provincial government. The total project costs that were announced in April, then, were almost $223 million. [DRAFT TRANSCRIPT ONLY]
In fact, we were one of the earlier jurisdictions in the country to get that out like that. In addition to the Building Canada announcement, we also announced $134.7 million, so almost $135 million, in provincial money back in April of 2009. [DRAFT TRANSCRIPT ONLY]
You know, the province held an election in May. I can understand how the members opposite would just forget about what happened before the last election as if it never happened, but it did happen. We got a lot of money out the door to communities in April, and I think our record on that speaks for itself. [DRAFT TRANSCRIPT ONLY]
The Chair: Member, noting the hour. [DRAFT TRANSCRIPT ONLY]
S. Fraser: Hon. Chair, I appreciate that. [DRAFT TRANSCRIPT ONLY]
It was not my statement. It was the president of the UBCM that made the statement at the UBCM convention, suggesting that the government was not acting in a quick way, that we were not accessing the money in a timely way. I was referring to that. [DRAFT TRANSCRIPT ONLY]
I'll just finish off by stating that, actually, the B.C. government stated I was going to probe this, but I'll wait until tomorrow that the reason for the timing was because of the negotiations between the federal government over whether provincial dollars would come out of operating or capital funds. It was a funding . [DRAFT TRANSCRIPT ONLY]
There was an acknowledgment by government that there was a problem getting it out, and the problem was dealing with basically how to get the money from the federal government. That's why we were dead last. I'll just leave it at that, and the minister can respond if he wishes to, or we can pick this up tomorrow morning. [DRAFT TRANSCRIPT ONLY]
Hon. B. Bennett: Certainly, I never mind being held to account for using the taxpayers' dollars prudently. [DRAFT TRANSCRIPT ONLY]
I move that the committee rise, report resolution and completion of the Ministry of Tourism, Culture and the Arts and progress on the Ministry of Community and Rural Development and ask leave to sit again. [DRAFT TRANSCRIPT ONLY]
Motion approved.
The committee rose at 6:15 p.m.
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