Today in the legislature we debated at second reading Bill 45 – 2018: Budget Measures Implementation (Speculation and Vacancy Tax) Act.

Earlier in the day the Finance Minister and I held a joint press conference (see press release reproduced below). In this press conference we provided details concerning the agreement that we had reached in order to assure that the bill passed. In particular, government has agreed to support three BC Green amendments:

• The first amendment requires that mayors from affected municipalities be part of an annual review process with the Minister of Finance;
• The second amendment requires that revenue raised by the tax will be used for housing initiatives within the region it came from;
• The third amendment equalizes rates for Canadians and British Columbians – it brings the rate for Canadians down to 0.5%.

As I note in my second reading speech (reproduced below), these amendments, combined with the modifications government has already implemented in its tabled legislation, are such that the BC Green Caucus will now support the bill.

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Text of Speech

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A. Weaver: Please let me start by acknowledging the remarks, and thoughtful remarks they were, from the member for Kelowna West. I hope to be addressing some of the concerns he raised in the process of him outlining some of the issues from his particular riding and some of the concerns he received which were similar to some that I received. I also want to acknowledge the talk from the member for Powell River–Sunshine Coast who also brought some important information to this debate.

In this debate, I’ll say to start, I’m the designated speaker on this issue. I’m not going to be too long, but I will probably go just beyond the half-hour mark. I’m going to outline my comments in a number of ways, in a format that starts with a broad introduction to what I would argue is a crisis here in terms of affordability in British Columbia. I’ll follow that up with a little bit of a discussion about how the speculation tax was rolled out.

I think my comments will jibe with some of the comments made by the member for Kelowna West in particular. I’ll highlight some statements made in the messaging early on and some of the subsequent changes that occurred leading up to the actual legislation being introduced. Then I’ll move, in my address, to discuss some of the concerns I’ve raised consistently, such as treating Canadians equally, as well as the concerns I’ve had with respect to meaningful consultation with local governments.

And some of the concerns I’ve had with the ability of some strata, for example, or some districts that have no rental, secondary suite or tourist commercial zoning, so you can’t actually, even if you wanted to, rent out your unit because of existing laws, legislation or bylaws. Then I’ll talk a little bit about some of the land under development issue, an issue that I spent a good deal of time on, as the member from Kelowna West raised, specifically with respect to the uncertainty that this created in the development sector. Some of the other issues I raised were the impacts on British Columbians who, frankly, aren’t speculators. I’ll go through a number of personal stories. I’ll then move towards the whole issue of reaching this agreement with respect to amendments that I’ll be putting forward with government, and trying to address how those came about, to provide a public record of the process.

Then finally, I’ll conclude with what I believe is critical: the need for ongoing monitoring of what’s being implemented, to ensure that we are not, as legislators, overly interfering in the market but rather that we ensure the purpose of this tax. This, fundamentally, is to recognize that leaving homes vacant in a market with zero vacancies creates a social externality that should be internalized, somehow, to those leaving the properties vacant, until such time as vacancy rates improve.

To the introduction of the housing crisis: without any doubt in my mind, there are a number of communities where affordability has reached crisis proportions. Those are, predominantly, the urban centres in our province — in particular, the regions of Victoria and Kelowna — Vancouver is the poster child of this issue — and Nanaimo. This is a crisis facing an entire generation of millennials, who literally cannot find a place to rent, who literally cannot afford a place to purchase, who are struggling to actually live anywhere near where they can work.

We’re seeing a generation starting to move away. We just had the community move into Oak Bay — the tent community, just yesterday, of homeless people in Victoria who cannot get a place to live. This is an issue that’s moving around the province. We’ve got, in talking to business, a crisis in terms of attracting and retaining highly skilled workers. If you talk to those in the tech sector, the single biggest issue for the tech sector is the attraction and retention of highly skilled workers. They cannot pay the salaries that other jurisdictions are paying, yet the cost of living has gone through the roof.

This isn’t a problem in parts of British Columbia. There’s no doubt that for some parts of British Columbia, this isn’t an issue, but certainly, in some of our urban issues, affordability has reached crisis levels. We know the offshore money that has been flowing into our market — both in terms of speculation as well as through some nefarious activities that the Attorney General has been looking at — needs to be dealt with, but I’ve always argued that in doing so, in trying to treat the issue of foreign capital coming into British Columbia, we need to be sure that we protect Canadians and British Columbians.

Now the government’s approach was to introduce something called a speculation tax, initially. It’s now changed, and I’m actually pleased with the change of the name. I think it’s far more appropriate. It’s now called the speculation and vacancy tax. The vacancy component is critical, because the speculation component, in my view, largely applies to the offshore money.

We wouldn’t have done this. I’ve already pointed out that the approach of our party would have been to bring in place a New Zealand–style approach — to actually say: “You know what? If you want to own property in our nation or in our jurisdiction, you must be paying taxes here.” This is what New Zealand does, this is what Australia has done, and this is what many European countries do.

The idea here, of course, is that we are not living in a free market for investment in real estate and land. You and I cannot buy a home in New Zealand. We cannot buy a home in Denmark. We cannot buy a home on the coast of Mexico. We cannot buy a home in Australia. The idea here, of course, is that these other jurisdictions have recognized that when there are small local population centres and seven billion people in the world, the influence of external capital on small domestic markets can be profound. This happened in British Columbia.

Our approach was to be different from what was the government’s approach. We wanted to initiate that ban on foreign purchase. When I say “foreign,” it doesn’t matter what passport you own. It means where you’re living and paying taxes.

Now, we’re not government. There are three B.C. Green MLAs in this Legislature that got elected by 17 percent of the popular vote in British Columbia. We recognize that in not forming government, we are not able to actually initiate a ban, New Zealand–style, on foreign capital flow.

But we’ve certainly supported, and I have certainly supported all the way through, government’s efforts to deal with some of the aspects of foreign money coming in, whether it be through dealing with money laundering, whether it be through the foreign buyer tax and, more importantly, dealing with the issue of satellite families.

Now, satellite families are defined in this legislation, and we’ll be exploring that further at committee stage…. These are families where you might have one person in the family working elsewhere, paying all their taxes elsewhere, living in, say, Point Grey or Oak Bay or Vancouver-Quilchena, living in a $5 million home and declaring taxable income of $20, accessing our health care system, accessing our social services, accessing our education system but paying taxes in other jurisdictions which are not declared here in British Columbia.

To me, this so-called satellite family is actually…. Again, the cost of them actually being part of our society and living in these homes is not being internalized. The taxes are paid elsewhere, but the benefits are collected here. The government’s approach here — I wholeheartedly, and I have done so since day one…. This is dealing with the so-called satellite family.

Over the months, I’ve pointed out numerous concerns to government. This decision we came to today to introduce three amendments was not something that was taken lightly. I saw this legislation for the first time when it was introduced…. It’s likely…. It’s been such a blur with these, like burning the midnight oil. It could have been yesterday or the day before now. It’s just been one big, long blur, in terms of negotiation.

But when it was first introduced, I saw this, and I was pleased with some of the additions. One of these critical additions was identified by the member from West Kelowna. As the member from West Kelowna pointed out, when government first introduced this speculation tax, I would argue the details had not been thought through.

One of those critical details was: what about development of land? What about, if you have accumulated some land and you’re going to build townhouses and condos to sell to British Columbians, to Canadians, and, in doing so, you’re waiting for permits, you’re waiting to actually ensure that you get construction built? It takes a few years. That’s not speculation.

I’m absolutely thrilled — after meeting with the UDI, developers in Vancouver and Kelowna and all across B.C., bringing these concerns directly to government — the government listened and the government has actually included in here exemption, during the development of land, of a speculation tax. That was critical.

I suspect some, but not all, of the correspondence that the member from West Kelowna had — with respect to uncertainty and construction on hold — is a direct consequence of the uncertainty. We have now seen certainty.

I agree with the member from West Kelowna. It would’ve been awfully nice if, when the tax was first implemented or announced back in March, the certainty had been given to the market. Because I, like the member from West Kelowna, believe that market uncertainty is not a good thing, because you have projects going on hold. You have projects potentially walking. You have people then speculating on the uncertainty. So I completely agree there. But I am pleased that this has been dealt with.

Not all the concerns have been dealt with. Not everything has been addressed. I spent, after seeing this, a bill come out — and I’ll come to some of the things that have been addressed — many, many hours. My staff spent many, many hours trying to actually get to the a fundamental position where we could actually support the overarching structure of this bill, recognizing that there’s still work that needs to be done. I’ll also identify some of those things, and there is time to fix some of these things.

In my view, good government works when people work together. I recognize that it’s a much more difficult position for official opposition, and I recognized that when this government now was in opposition. It’s more difficult for official opposition to actually constructively work with government because of the setup we have in our legislative structure.

As a small third party, we have a duty and a responsibility to British Columbians to be responsible with the so-called power, the so-called influence, that we have. That duty and responsibility is to ensure that we listen and communicate our concerns and do what we can, through collaboration and compromise, to come to a situation, to come to development of good legislation, to policy that we think tempers some of what was introduced and reflects some of the concerns, but not all, that allows us to support the policy moving forward — with the recognition that this is not what we would have done. This is not what we have done.

What happened with the speculation tax and the budget rollout? Again, the member for Kelowna West articulated this quite well. When it was first announced, nobody knew the details. I didn’t know the details. The member for Kelowna West didn’t know the details. In fact, government suggested to the media — the Premier suggested — that British Columbians were fully exempt from the tax. I thought they were fully exempt from the tax. In fact, my constituency office sent out an email assuring my constituents and those who contacted me that British Columbians were exempt from the tax, based on the information I received directly from listening to the Premier.

Well, you can imagine I was a little bit surprised when I read Vaughn Palmer’s article pointing out that I was sending out incorrect information. He was right, and I acknowledged he was right. He was right in that an information bulletin had been put out that was inconsistent with the messaging and the language that had been said by government. This is not good for certainty.

This was, quite frankly, from my perspective, somewhat embarrassing. I don’t like to send out wrong information. We did our best to correct it, to do that, and, at that point, realized that we were going to have to spend a lot of time on this file.

We started pushing government to fix some things. We recognized that the issue of the housing crisis is not a rural issue. It is largely an urban issue. So in the act, you’ll see that, for example, we pushed to get some of these islands out. There were islands in the Nanaimo regional district — which was excluded — that had no electricity and no power and no rental market which were included because of what was done in the metrics to determine it. They were used, basically, over broad, regional districts, instead of over urban areas.

What we were able to do was to get government to focus this initially on the urban areas, where there is more of a problem. Some areas, like Saltspring Island, do have rental issues. However, it’s a very complex issue there, as well, and ongoing work with the rental task force, I understand. My good colleague here from Saanich North and the Islands will be discussing that, I’m sure, when he speaks to this bill. There are issues that still need to be worked out.

In March, government announced a few changes that it had made. These included reducing the rates for British Columbians and Canadians,  and ensuring, in particular, that the tax didn’t apply to rural and vacation areas. One of the issues, again…. This was very relevant to the member for Chilliwack-Kent. Cultus Lake, in the initial version, was included. I think Harrison Hot Springs may have been included as well.

Again, these we pointed out. We directly took the emails from your constituents — I’m sure you probably did as well — do not pass go, to government, saying: “How does it make sense for Cultus Lake, which is not an urban centre, for Harrison Hot Springs, to actually be included in a speculation tax, when their markets are quite different from, say, South Surrey or Tsawwassen or Burnaby or Nanaimo or Victoria?”

So government did remove much of the rural aspects and focused on the urban. That was signalled out in March.

Even since then, I pointed out that I’m struggling, because the speculation tax was first introduced in the budget. I’ve heard scores and scores of stories of individual cases, over the last eight months or so, of people who’s asked: “Am I included? Am I not included? Am I here? Am I not there? What does this mean?”

This took a lot of work, honestly. It took a lot of work to try to put together a detailed understanding of the complexity of this issue, of the complexity of what government was trying to accomplish with the introduction of a tax that essentially says that we want to create an internalization of that externality associated with leaving vacant property in areas that have low vacancy rates.

Many of these examples were brought forward. Many, many meetings were had. But the issue, of course, was that we didn’t know to what extent government was listening. We didn’t know to what extent government was listening until this bill was actually introduced, sometime in the last 72 hours, which have been a complete blur to me based on the fact that…. When was it?

Interjection.

A. Weaver: Tuesday. Thank you. This was introduced on Tuesday.

When this came out, I was, as I mentioned, glad to see that government had listened — in many, but not all, examples. For example, there were exemptions for people who obviously should not be hit, where being hit with the tax would cause significant financial hardship. Some of the specific cases I raised to government were included.

For example, people that own a second home in a city because they need medical treatment. There are people in British Columbia who have to go and own a home in a particular area because they’re required for medical reasons to come and report periodically to that area. They have been exempted.

People who have secondary suites. For example, if you are in the community of Kelowna West and you live in Alberta and use your home in the summer but you have a secondary suite on your property, that secondary suite would grant exemption for the entire property. This isn’t without its own problems. For example, in the district of Oak Bay, where I am from, or where I represent, rather, the district does not allow secondary suites. So there are some issues there that we still need to canvass.

Government listened in terms of examples brought forward about couples who own two homes. One home is where one spouse works; one home is where the other spouse works. They don’t work in the same city, but they’re still together. It seemed outrageous to penalize married or partners who happen to come together and formally, you know, take vows and commit to marriage — to penalize them because they had two properties, one of which was being used by one spouse and one by the other. Government listened.

The issue of strata properties, areas zoned as commercial, where you can’t rent out places. Again, government listened. Lands that are vacant or under development. Again, government listened. I’m pleased that the UDI, whom I met with numerous times on this file…. Ann McMullin recently said that when they saw the legislation, they were pleased that government committed today that they will exempt lands under development from this tax. So the UDI is actually pleased. This is a very, very important exemption, because we cannot address affordability if we start passing on a speculation tax to purchasers of condos and townhouses which were actually being built for affordability purposes. It’s a good government lesson there.

There are still issues to deal with. Let me go through a few personal stories first, because I think it’s important to get a sense of some of the issues that I’m going to canvass more extensively in committee stage. Committee stage, as is known in this House, is critical for us to get interpretation of this legislation for broader application. There are some real subtleties as to how this tax will be introduced that government obviously has yet to capture.

In a briefing we had on the introduction of the tax plus some hours in72…. Again, it’s been a blur. I was asking some of the issues directly in the briefing. It’s clear that government has attempted a commonsense approach not to harm people who are not speculating. However, there are going to be examples that have yet to be dealt with. I can think of one example that needs to be discussed where, for no reason other than you’ve actually got a house that’s old, your house happens to be built on two city lots. In terms of the registration of your city lots, you have one house, but there are two lots. It doesn’t make a lot of sense to pay a spec tax because 100 years ago the lot zoning was the way it was. So there are some oddities there where we have to look out.

I don’t know to what extent there are other jurisdictions out there where boundaries of actual lots span multiple zones. For example, there are houses in Oak Bay that have some of their property in Oak Bay and part of the property in Victoria. Now, to what extent does that exist in the province of British Columbia on the edges of the areas covered? I’m sure there are properties in Nanaimo, in the CRD, in Kelowna West and elsewhere where most of the property is in the contained area but some of it isn’t.

These are issues that government may have not yet thought through and that hopefully will be canvassed during committee stage to get some clarification.

I’ve had people who own a house, a strata building that doesn’t allow rentals, contact me. I’ve had people who’ve invested in Victoria, in places that are zoned tourist commercial — specifically designed for short-term rentals. The zoning actually requires short-term rentals and doesn’t allow long-term rentals.

Again, this was partly dealt with in this legislation, essentially by saying that in the affected years 2018 and 2019, these areas — tourist commercial–type zoning or stratas with no rental clause — are not going to be subject. I still have issues there with respect to secondary suites in municipalities that don’t allow secondary suites officially to be zoned. Can you officially declare a secondary suite when, officially, you’re not allowed to have one? There are issues there that I hope to canvass.

I’m hoping that my good friend from the riding of Vancouver–West End and also my good friend from the riding of Saanich North and the Islands will be thinking about the issue of stratas and actually whether or not we in British Columbia are getting close to getting to where Ontario already is. In Ontario, you cannot actually have a no-rental clause, a long-term rental clause in a strata. Stratas are empowered with the power of eviction. That’s important. You can say — and it has been tested in court — no short-term rentals. But you cannot own property and put a no-rental clause on it.

I’m hoping that this committee takes a good, hard look at that because it is an issue. It’s an important issue. If you’re going to apply a speculation tax on somebody because they’re not renting it out but the strata has said you can’t rent it out, there are two components here that are important. One, there’s a real investment opportunity here for British Columbia, if we’re able to invest in new construction in strata units that allow rentals, there’s the ability to attract capital to our province to create new investment. But secondly, there’s a lot of stock in the market that potentially could be sold, if people are friends of this speculation tax, and that would otherwise not be sold and would be rented out. So it’s win-win-win, if we start to think about this in greater detail.

One of the other issues I’ve had e-mails on is…. There have been issues with respect to transition of home ownership. I’ve had couples who own two homes, in the midst of trying to sell one and move to another. One example was a constituent that had a house in Surrey, moving to Saanich. Actually, the housing crisis in our area is largely associated with people saying: “I can cash in, in the Metro Vancouver region and get a lot more over here and live well thereafter.”

This particular family had a house in Surrey and one in Saanich. They wanted to move, both areas subject to a spec tax. They were concerned that in trying to sell their home, they would be subject to a spec tax on one of their homes. Well, in fact, here we have that transition clause, which I think is important to canvass further in committee stage but which does address this particular issue.

I’ve had similar ones with a couple coming from Kelowna, moving to Victoria. Again, same thing. We seem to get a lot of people coming to Victoria to retire, and they’ve lived in other parts of B.C. They’re really worried about selling a home in one place and buying it in another. That transition amount is actually critical there, and we’re seeing that legislation brought forward in what we were shown on Tuesday.

A couple of people have told me similar stories, from the Kootenays, buying in Victoria to retire here. They recently bought. They’re worried that they’ll be hit by a speculation tax. Their child is actually living in the home now, but they’re worried that they’ll be subject to this. There are issues here with respect to whether or not that arms-length or non-arms-length allowance of the son living in the house while he might be attending the University of Victoria, for example, while they’re planning to return, was considered speculation or not.

It turns out, again, people like this have some coverage as per the legislation. Again, we have to canvass this further in committee stage.

One of the most profound issues brought to me was Canadians saying that this is not fair. “I am being taxed at a different rate living in Ontario, compared to living in B.C. Why is it that the rate is 1 percent for me in Ontario to one-half a percent for me in B.C.?” This one really struck it hard. I’m a Canadian first, I’m a British Columbian second, and third, I am actually a person from the riding of Oak Bay–Gordon Head. We are all Canadians, and to me and our party it’s critical that we treat Canadians equally.

One of the issues here that really took midnight oil being burned was working with government to ensure that they recognized that the tax rate for British Columbians and Canadians — making that difference was simply not acceptable.

This, again, will not deal with all of the issues raised by the member for Kelowna West, but I can say that when it goes 1 percent to one-half a percent, that actually affects a lot of decision-making for people that I know who have homes in West Kelowna but may live in Alberta and spend four months of the year there. The one-half a percent makes a significant difference in terms of the amount that one would pay. It’s not perfect. It’s not what we would do, but it’s significantly less than what would otherwise be.

One could argue, as government does, that what it’s doing is while it’s still encouraging development through this exemption of land under development, at the same time, it’s saying: “You know what? There’s an external social cost to developing property that is vacant that needs to be internalized by those who leave the property vacant.”

That external cost now is not differentiated between the rate…. It’s not differentiated between British Columbians and other Canadians. That is one of the amendments, which I’m working on now with legislative drafters, that we’ve kindly been given access to through this government to ensure it’s brought forward at committee stage for this bill.

I agreed with these Canadians that they pay taxes. They may not have paid taxes in B.C., but they pay taxes in Canada. I have a problem with the way the taxation system is in Canada, and we can come to this more in question period. I’m sure we will. Right now we know that a lot of people retire in British Columbia. Part of the reason why we have an affordability crisis is that we are the destination of choice in Canada for retirement.

If you look at the amount of money spent as a function of age in the health care system, it’s also really clear that you spend more as people get closer and closer to the end of their life. The older they are, the more they cost the health care system. We also know that the demographic of places like Vancouver Island and B.C. as a whole is older than other jurisdictions in Canada. So people are paying taxes in other jurisdictions and accessing our health care system here, but our Canada health transfer does not recognize age. It is not weighted by age.

Our Canada health transfer shorts British Columbia to the tune of $200 million to $300 million. Based on a simple calculation, we should be getting age-weighted cost transfers, not per-person cost. Had we been getting $200 million to $300 million more in health care transfers under the Canada Health Act, we’d have $200 million to $300 million more we could put directly into health care.

It means $200 million to $300 million more not coming out of other budgets and going into health care. It means we could have been spending $200 million to $300 million more in affordability and housing every single year. This needs to be dealt with, and this is something we will continue to push on in the years ahead.

I’ve had lots of people contact me. I have a good deal of sympathy for the member for Kelowna West. I’ve had a good deal of his constituents contact me as well. I understand some of the issues that are there, and it’s put us in a very difficult position. We’ve done many, many hours of trying to ensure that we reflect the values that we’ve been trying to instill, that Canadians are treated equally. I’ll come back to that the mayors are consulted, as well as that money stays in the local community.

Examples have been given. There are two professors in the family. They’re not hurting financially. One professor works at UBC, one professor works at UBC Okanagan, and they have two places. They were both initially living in one place, and the other would have been treated as spec tax. They were getting very confused. Now we have a recognition that with married couples there’s an exemption for them.

Again, I had a very compelling email just today from a woman whose family home is in Surrey. Yet this woman was a teacher who worked in downtown Vancouver. This family home in Surrey had her elderly mother staying in it. She didn’t want to sell it. Clearly, it was in her name. But she had a condo in Vancouver because she couldn’t fathom that commute every day to teach in the elementary schools or the school system in Vancouver. So she stayed in a condo during the workweek and lived with her mother in her home on the weekends and during the summer. The question is: would she be covered under a spec tax?

I’m virtually certain, based on the exemptions that have been put here based on government listening to the numerous feedbacks that have been given to it, that they will not be covered. They are exempt. Again, I’ll explore that story in detail during committee stage.

I could go on and on with other stories. But I think you’ve got the point that in fact, there are many examples — secondary suites — that can’t be listened to, that have to be dealt with and so on, so forth. The stories are endless. Again, I’m sure other members opposite will provide more stories. I believe the member for Chilliwack-Kent may be speaking very shortly. I’m sure he has similar stories to offer as well.

The concerns I’ve had coming back to this issue that have not been addressed in this bill as of now, I have highlighted on an ongoing basis over the past eight months. Honestly, this bill does not deal with flipping. It still doesn’t deal with somebody who buys a home, leaves it vacant for nine months, flips it out — they’ll have to pay a capital gain — buys another home and flips it out.

We’re not dealing with flipping here. So we’re going to continue to actually do what we can to ensure that this aspect of speculation is actually looked at. We’re collecting data now on British Columbia in terms of the presale of condos offshore.

Again, we’re not dealing with some of the aspects of presale flipping as well. There is some that can occur. I know that members opposite, the Leader of the Official Opposition, introduced a private member’s bill that would require the flipping of a presales condo. If you actually did that, that you would have to report 50 percent of the actual profit as income.

That, with respect to the Leader of the Opposition, isn’t going to do anyone any good because, essentially, that bill says: “If you’re going to break the law, you shouldn’t,” because you already have to declare 100 percent of that flipping income as a capital gain.

So this isn’t dealing with the actual issue. We need to have realistic solutions. That is the difficult position we’ve been put in as a small, three-member caucus working in between two large parties, one which is government and one which is not. We see our role as working to ensure that government policy is better, at the same time as doing what we can to continue to move forward this issue to deal with some of the real aspects of speculation.

Government has taken some steps with respect to hidden ownership to get at trust, beneficial and corporate ownership. We, frankly, don’t think they’ve done it as aggressively as it should be done. We know that government has taken steps to actually deal with potential money from nefarious activity entering real estate. We don’t think they’ve done it fast enough. We have been pushing for more progressive action on no rental clauses with, of course, a provision that the power of eviction be granted to strata.

Government, we think, also needs to ensure that people know that they’re dealing with a common sense approach in this legislation. We haven’t given up on this.

In the briefing that I had yesterday, plus some hours the last little while, one of the questions we asked is: what is the intention? You’ve made these changes. Why these ones, and not these ones? The information I got, which we hope to explore further in committee stage, was that government is trying to take a common sense approach to ensure that most things most people who are just regular people are not captured by this speculation and vacancy tax.

But it’s really targeting the overall goal of affordability, which is when you leave homes vacant for no other reason, you’re creating an externality of social cost that is going to be partially internalized.

We know one of the things that does exist here is in the legislation, there is an appeals process. But again, appeals processes that aren’t publicly brought forward, aren’t communicated, aren’t demonstrated, will not be known about. So we’re pushing to ensure that the public understands that they may have certain criteria that government hasn’t actually realized exists.

The one I just gave an example of is a property that may straddle two regions. I’m sure there are some, because there are properties in Oak Bay where half the house is in Oak Bay and the other half is in Victoria. Go figure that one. But they exist. There must be properties on the boundaries of some of these urban areas that have similar issues.

There must be a mechanism that people know that they can bring these issues forward and get a response in a timely fashion, subject to the commonsense kind of approach of ensuring that regular people are not being hurt.

With that said, after reading this bill, after going through many months…. This has been not just one or two meetings. It has been months. I’m sure, again, the member from West Kelowna, as somebody who’s quite passionate on this file, has also spent many, many hours on this file. After many, many hours, seeing this legislation…. In my view, in our view as a caucus, it still needed to go further. It still needed to go further in three more ways.

Over the past number of months, inspired by those myriad stories in my in-box and the many conversations with people in industry, with homeowners, mayors of affected areas, I’ve consistently raised concerns with government’s proposed approach to the speculation tax.

In particular, I say it again, I had these three critical areas. The first is that need for local governments to have a more significant role in determining what happens in their communities. The second is the fact that Canadians should not be paying higher rates than British Columbians. The third is the need to limit the unfair impacts on Canadian homeowners who are not speculators.

Again, these have come through the myriad stories, the hard work…. I thank the constituents, the other British Columbians, the member for Kelowna West and all of those people who emailed from across Canada for their input on this.

I do regret…. I agree, again, with the member from West Kelowna that the uncertainty that has been created has not been helpful, has not been helpful for the investment in Kelowna, has not been helpful for investment in the capital regional district.

However, I think today we have certainty. We have certainty in the legislation in terms of the land being developed. We have certainty in terms of our support for this legislation, subject to government’s supporting the three amendments we’re going bring forward. And we have certainty in allowing us to move forward.

Let me come to the three amendments, and I’ll speak to each of these in detail, that I’ll be bringing forward.

The first amendment requires mayors from affected municipalities be part of an annual review process with the Minister of Finance. Now, at cynical first look, you might think that that amendment is just saying: “The minister has to meet with mayors.” That is not the intent of the amendment. The amendment will be far more thorough than that.

I’ve publicly said I would’ve preferred to have a local government opt out automatically. We would’ve done that. That would’ve been our approach. We brought that into conversations. I recognize that that would’ve given the mayors and communities a clear channel to making a case, based on evidence, as the member from West Kelowna has done with the commissioned report that they have from West Kelowna. That evidence would’ve been able to show how tax applied to their communities. We would’ve then allowed them to opt out.

What we’ve done instead is say: “Okay, government, you say you know best. We understand where you’re coming from. We have the same shared value. But we critically believe that you need to ensure that you have metrics — affordability metrics, rental vacancy metrics — that you actually put together in a meeting with mayors every year to ensure that the ongoing application of the speculation tax is done through consultation — with data, with evidence, with mayors annually.”

It’s not just about a meeting. It’s also about the metrics that must be brought and argued at a meeting, and we’re grateful that we’ve got the full support of the minister on that. That comes from a case where no such other than informal meetings were going to occur, and that was the position of government, to our position where we wanted a full opt-out. That was where we ended up.

Now, why the role for local government is critically important — and why the annual review process must ensure government is looking at community impacts and considering whether vacancy and affordability metrics within affected communities warrant removal of the tax — is that communities know best what is in their best interest.

I recognize now is an odd time for this discussion, in light of the civic elections occurring in two days. But once the dust settles from those civic elections, it’s critical that mayors and new councils or incumbents actually have informed discussions with government, informed by metrics that are relevant to their communities.

The second amendment put forward here is a requirement and a recognition that we did not want this to become a tax grab, basically a central government tax grab for broad, undefined housing affordability issues. We felt that if you’re going to go and have money raised in a community — in the community of Nanaimo, Kelowna or West Kelowna — that that money needs to stay in that community. That money should not flow back to revenue of government coffers.

In fact, that money — the reason and the justification for this tax — is in essence an internalization of that social externality caused by the preponderance of vacant properties. It’s important that you use that revenue in a neutral fashion to actually offset and deal with the affordability issue.

We’re pleased to come to an agreement on that issue, and while there was broad recognition in this legislation that it will go to broad affordability measures, here it’s very specifically, in the amendment that we’ll be bringing forward, going to direct affordability issues in the communities from which the money arose.

The final amendment that’s being worked through right now will be to equalize the rates that Canadians and British Columbians pay. It’s saying that if you’re a British Columbian or an other Canadian, you’re Canadian first. You’re all paying the ½ percent.

Again, this is an important issue of fairness, from my perspective. Punishing Canadians in a differential way like that didn’t seem to be fair. Again, we know that this will meet…. In some of the exchanges I’ve had with people across Canada, people don’t mind recognizing that there is an externality there that they can internalize with this small extra, additional tax. They recognize that. They recognize they’re not paying provincial taxes here, perhaps, and they don’t mind paying a little bit more. I’ve got examples where people have said that.

However, they do mind egregiously being charged twice the rate as British Columbians, because they ultimately are Canadians first. We agreed with them.

Government did not want to move on this. This took a lot of work. This amendment is actually being supported by government, but it’s not without government, essentially, having to compromise on the intent of this, because government came into this very much trying to differentiate between those who live and pay taxes in B.C. and those that live and come to B.C. We felt it was important to treat Canadians the same.

Again, coming back to it, this bill is not how I would’ve approached the issue. It’s not how the B.C. Green caucus would approach the issue. But with the amendments that we’re bringing forward and the work done that has been done by government to limit the impacts of this tax on Canadians who are not speculating, I feel, at this stage, subject to the approval of those amendments, I’ll be supporting this legislation.

There are still key elements, such as implementing the tax on satellite families and foreign owners who do not pay income tax in B.C., that I’ve always believed are critical to support. In fact, the government, I don’t believe, has gone far enough. We need to crack down on foreign money flowing into our real estate market, pushing housing far beyond the reach of ordinary Canadians.

There are 4½ million people in British Columbia. There are 7 billion in the world. There’s an awful lot of capital out there looking to park itself as an investment in this province in real estate solely for the purpose of speculation. Here, in our caucus, we think that that actually needs to be clamped down on even more than is being done.

The components of the tax that deals with foreigners and satellite families — always supported that. We believe that this will have a significant impact, as articulated in the bill, in terms of dealing with this issue. With that said, one of the key aspects of this legislation is that we need to have ongoing, continual, rigorous monitoring of what is going on in the housing market.

My worry is…. We all know the issue of supply and demand. Right now, we know that there is not a lot of supply in the rental market. In fact, there is very little supply in the rental market. We have begun to see increasing supply in some of these urban areas in the market for sale. We’ve started to see a softening of demand in some of these areas, not so much the low end, but at the high end of the market — softening of demand. The very careful step in monitoring that needs to be done as we move forward is to ensure that in a time of reduced demand, we don’t suddenly initiate a massive influx of supply, because that can lead to market instability.

What I mean by that is we’ve got to ensure that the communication to those people who are being exempted here, communications to those people about the importance of an appeal process, the importance about a process to ensure that situations that may not have been thought through can still be addressed. People who are in no-rental clauses — the communication to them that there are two years, and government has two years to get to the bottom of this. For people who are in tourist commercial zoning, who recognize that there are still two years to come, to play, before government has to fix this. This needs to be communicated so we don’t see people rushing to sell properties out of lack of knowledge of what this legislation is actually doing.

At a time of decreasing demand and slightly increasing supply, if you put in a bunch of supply, it’s troubling. So I’m pleased in the discussions and the technical briefing we had with respect to this bill that government is committed to doing this ongoing monitoring, and the ministry staff are committed to doing this ongoing monitoring. I, too, will be watching the market closely and how this tax affects the market closely in the months ahead.

My hope is that the amendments will give us some tools to ensure that local governments have a clear role in a review process on an annual basis, to ensure that we’re having evidence flow into the decision-making going forward, to ensure that uncertainty is removed from, actually, this decision-making process, to ensure that we actually can move back towards a situation where developers in Kelowna, Victoria, Metro Vancouver and Nanaimo have confidence that they won’t be hit with escalating costs to produce, knowing that they’ll end up producing supply that will not be actually ever purchased because the cost will be too much.

It’s critical that we monitor vacancy rates. It’s absolutely crucial in these meetings that happen with mayors annually that vacancy rates are monitored, because if we move to suddenly the removal of no-rental clauses, and we see, for example, the sudden construction of thousands of units on a university campus for students, we might see an increase in rental rates, an increase in rental rates such that you can’t rent your property. So it would seem unduly punitive if you’re paying a tax for not being able to rent a property because there is no demand for it.

Again, the critical aspect of this is monitoring in an ongoing fashion. The enabling legislation does allow for timely order-in-council responses to this, which again is important and something that we felt was important to communicate.

It’s critical that while we seek to improve affordability for British Columbians, we take the steps we should do. We ensure that in doing so we take steps that do so responsibly and avoid a significant market downturn.

With that, I’ll say…. While again coming back to the overall summary of this, this is not something we would have done. I will give government credit for listening in many areas we brought to government. I think we get a little bit closer with these three amendments.

I recognize it’s not exactly what we would have done. I recognize that members from the opposition may have gone farther, but I think, at this juncture, this bill, as amended, will be something that the B.C. Green caucus will support, and we’ll be watching carefully as we move forward.

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Media Release

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The Government of British Columbia and the B.C. Green Party caucus have come to an agreement to ensure support of the Speculation and Vacancy Tax Act, a key piece in the government’s plan for housing affordability in B.C.

“We are in the midst of a housing crisis and we need to act. Once the legislation is amended, the Green caucus has committed its support in passing the bill so that we can tackle out-of-province speculation in B.C.’s housing market and help turn empty properties into homes for people,” said Carole James, Minister of Finance. “When we formed government, we made a commitment to put people above politics and work collaboratively with the Green caucus. Both sides are showing compromise in order to put housing solutions for British Columbians first.”

“While this is still not the approach I would have taken, these amendments will improve the bill and will mitigate many of the key issues I have identified,” said Andrew Weaver, Leader of the Green caucus. “The housing crisis is British Columbians’ number one concern and our caucus is committed to working with government to address the role that speculation has played. One of my key issues with this tax is that it was a blunt instrument applied to communities with unique circumstances. My amendments to include local governments in an annual meeting to review the tax and to dedicate any funds raised from this tax to affordable housing in their communities, strike a far better balance.”

The decision on how to collectively move forward on this legislation was reached by following processes laid out in the Confidence and Supply Agreement. It will result in the Green caucus introducing a series of three amendments to the bill, which government will support in the legislature.

The first amendment will create an annual meeting between the Minister of Finance and mayors in the affected areas to review the tax and relevant performance measures. This is an important way of ensuring the tax remains focused on the communities facing the greatest affordability challenges.

The second amendment will further target revenues raised by the tax, with all funds being directed to affordable housing projects in the impacted regions: Nanaimo-Lantzville, the Capital Regional District, Metro Vancouver, the Fraser Valley and Kelowna-West Kelowna. This will ensure residents of those areas will be able to see the benefits of the tax in their own communities.

The third amendment will permanently set the tax rate for Canadian citizens and permanent residents who reside outside of British Columbia, and who are not satellite families, at 0.5%.

“While we strongly support the intent of the first two amendments, we are of the view that the third amendment lessens protections against out-of-province speculative investment,” said James. “We believe it is fair to ask those who do not pay income tax in B.C. to pay their fair share, but in the spirit of compromise we will support this amendment.”

“Another key concern of mine was that Canadians should be treated equally. We are one country and even if they don’t pay income tax in B.C., Canadians pay federal taxes that benefit our communities,” said Weaver. “The third amendment was an area of compromise and I am pleased that it will lessen the impact for Canadian homeowners, while keeping other critical provisions of the bill intact.”