It’s been more than four years now since I started calling on government to close the bare trust loophole which is being exploited to provide cover for anonymous real estate transactions as well as to avoid paying property transfer and, potentially, capital gains taxes.

A bare trust is a legal entity that allows for the separation of beneficial and legal ownership. The beneficial owner of a property is the person or persons who make all the decisions concerning such things as rent, repairs, management, sale etc.; they are also the person or persons who receive all the revenue from and arrange financing for the property. The trustee of the bare trust has no substantive decision-making capacity as they simply act upon the instructions of the beneficial owner. Typically the trustee is a corporation that has no other purpose but to act as a trustee for the bare trust and for which the beneficial owner owns all the shares.

Now here’s the loophole. Suppose you own a home or apartment building that you want to dispose of. If you simply transferred title, like most of us do when we sell a home, the purchaser would have to pay the property transfer tax.

But if instead the property is in a bare trust where the trustee is a company, then you will pay no tax. All you have to do is sell your shares in the company for 1$ (the company has no assets anyway), and sell the “beneficial ownership” rights of the property to a third party via a “bare trust agreement” which is not registered at the Land Title Office.  Since no change in title occurs, no tax is paid.

Today during budget estimates for the Ministry of Finance I asked the Minister once more as to what the hold up is. While I appreciate that government is now collecting data on beneficial owners and sharing that data with the Canadian Revenue Agency (thereby potentially giving the CRA the ability to crack down on capital gains evasion), she is still resistant to do what Ontario did ages ago and apply the property tax to transfer of beneficial ownership rather that to transfer of title.

Below I reproduce the video and text of our exchange.

Video of Exchange

Text of Exchange

A. Weaver: I’d like to pivot to the issue of beneficial ownership and bare trust, a key issue and aspect of both the B.C. NDP and B.C. Green election campaigns. As the minister will know, I’ve been calling on government — both past government and present government — to close this loophole for years now.

In this budget, we’ve taken some steps, which I recognize, requesting more information about beneficial ownership on property transfer tax forms, as well as establishing a beneficial ownership registry. But we need to do more than this, frankly, and rather than just collecting information on the beneficial ownership, we need to take steps to actually close the loophole — as was done decades ago in Ontario in direct response to seeing some shenanigans occurring in the real estate sector.

We know that the market has already discounted this, and the market had expected government to announce that the measures would have been taken in their budget.

I have two questions in this regard, and then I’ll conclude. What information are we currently collecting about beneficial ownership on PTT forms — that’s property transfer tax forms — and what additional information are we collecting now? When do these changes come into effect, and what are the purposes of collecting this additional information? What do you expect the impacts to be from gathering this information?

Hon. C. James: Thank you for the question. This is an issue that the member has been raising for a while, and it’s certainly a piece that we’re keen on moving on. I think there are some lessons to be learned from the Ontario example, where Ontario, again, didn’t do the collecting of the information and so had some challenges when it came to implementing the tax that they’re looking at.

We will be starting, as the member has said, with changes coming in the fall on information that’s collected. The best way probably to describe it is it’ll basically be look-through rules, so it will provide an opportunity for us to look at the owners of the land, regardless of what structure they’ve put in place. All that information will be held by the Ministry of Finance.

We will be bringing in, as well, information-sharing rules that will be put in place, particularly with the CRA, so we have the immediate opportunity to be able to look at tax loopholes or tax fraud if it’s there. That’ll give us a chance to be able to do that. Then, when we have the information, that gives us the next step to be able to look at. Whether it’s Ontario or other jurisdictions or other ideas and approaches, it’ll give us an idea of the challenges and the ability to be able to determine further action.

A. Weaver: To be fair, I frankly don’t think that’s good enough. We are, right now, proposing a speculation tax, which is causing chaos in the real estate sector because we don’t have information, and we’re making exemptions as we move along.

We have a clear understanding of what the bare trust loophole is being used for in the residential property. We know you don’t have to go and collect data to know exactly what’s going on. Talk to realtors. Talk to commercial developers. Talk to bankers. Talk to accountants.

We know that properties are being purchased in trust. Those shares are owned by a corporation, and those corporation shares are flipped and switched. We know that that’s happening with offshore companies as well, and we know that that is fuelling the speculation that we truly want to deal with in the housing market.

The spec tax is not dealing with speculation. The spec tax is a paper wealth tax. Whereas a measure that we could take to actually deal with speculation, a measure that was dealt with in Ontario…. I’m told it was dealt with in Ontario precisely because of concerns about money laundering that was happening at the time in the housing market there in Ontario. The tax went on to the beneficial ownership transfer.

It is critical, because you buy at home, a mega-home, and you buy it for, say, $2 million in a trust, and you can flip that five times. You can launder money in this flipping, and there is no record. You’re collecting information, sure. But there’s property transfer tax avoidance, which should be there to discourage this behaviour.

Now, the bare trust existed…. There are reasons historically why it was important to have these properties in trust, particularly in commercial properties. But it is being abused in the residential market.

I’ll conclude, then, by saying I don’t think it’s appropriate not to close a loophole now. I think we have a measure to truly deal with speculation right now. The Attorney General, the member for Vancouver–Point Grey in opposition, pointed this out. The government said they would do it. They campaigned on doing it. Here we are a year later. We’re collecting data about hypothetically doing it down the road while implementing, at the same time, a speculation tax that is actually not dealing with speculation.

So it’s a plea. Why is the minister not standing up and closing this loophole that is being exploited right now in British Columbia and is leading to speculation — instead, taking the steps to introduce a tax that doesn’t actually deal with speculation but instead conflates two issues? One is the issue of satellite families; the other, the issue of vacancy.

Hon. C. James: I appreciate the member’s urgency around this. We feel the same urgency, but we also want to make sure, as I said, that we provide the opportunity to really get at what we need to get at and to get at the individuals we need to get at. I think, as the member has described well, there is all kinds of discussion out there. There are all kinds of people talking about examples that they know of where people who are very sophisticated at tax planning are utilizing these opportunities.

What we’re doing first is figuring out who owns what. That’s a critical piece because right now there isn’t a registry in place. There isn’t an example in place that gives us that. The work we’re doing right now will help us to do that. It’ll help us to build a registry to determine who’s incorporating where. It’ll require people, when they incorporate, to actually register that. So again, we’ll have a tracking around where things have occurred, where people are utilizing the opportunity to be able to avoid paying the correct taxes.

Then the next step, obviously, is to take action. But this will still give us the opportunity to share that information with the CRA and go after existing taxes that are not being paid. I don’t want the member to believe that this does nothing. In fact, it provides us with the opportunity to share that information with the CRA to be able to deal with taxes that aren’t being paid now or opportunities that people are trying to utilize to not pay taxes now. This will give us a chance to do that by the fall.

Further steps then can come after we’ve got the registry in place and we have the opportunity to address it.

Today I had the distinct honour of attending Ducks Unlimited Canada’s 80 years in Canada | 50 years in BC Celebration at the Delta Ocean Point Resort in Victoria. George Heyman, the Minister of Environment and Climate Change Strategy, Andrew Wilkinson, the Leader of the Official Opposition and I each were asked to speak for a few minutes. Below I reproduce the text of my speech.

Text of Speech

Thank you. It’s a distinct honour for me to be here tonight at the Ducks Unlimited 80 50 Anniversary Celebration and I am grateful to be given the opportunity to say a few words.

While I am not a member of Ducks Unlimited, I am in fact the proud owner and winning bidder of two Ducks Unlimited prints from the Ross Bay Pub.

I picked up “Morphing Landscape” by Derek Wicks a couple of weeks ago and it now stands behind my desk in the BC Legislature. Prior to that I obtained Kevin Johnson’s pencil art print “Endearing Moments – Mother Seal and Pup”.

Prior to becoming the MLA for Oak Bay – Gordon Head and the leader of the BC Green Party, I was an atmosphere-ocean-climate scientist, with a background in applied mathematics and physics, at the University of Victoria.

As a scientist I come from an environment where decisions flow from evidence.

But I’ve found it challenging at times over my last five years in the legislature watching so much of the opposite occur — the so-called decision-based evidence-making wherein ideological positions are taken and evidence is sought after the fact to support them.

Never is this more prevalent than in wildlife, watershed and environmental management.

While the concept of science-based wildlife and environmental management has generally been endorsed by governments in B.C., it has not been consistently followed.

There have been some successes. But as you likely know all too well, its selective use has led to many more poor outcomes.

Numerous wildlife populations and ecosystems are in jeopardy today. Mountain caribou are facing extirpation, wild salmon – a foundational species – are in shocking decline, spotted owls are virtually extinct, moose populations are in trouble across the province, and Shorebird populations have declined by an estimated 70 per cent across North America since 1973.

What we find in almost all of these instances is that there has been inadequate science, particularly concerning the cumulative impacts of human activity, and that an unacceptable loss of vital habitat has occurred. For wetlands, in particular, the situation is critical.

Our province lacks a wetland policy and in developed areas of the province, over 80 per cent of fresh water and tidal wetlands have already been altered or destroyed.

Things are not going to get easier. The management of ecosystems is becoming increasingly complex and fraught with risk.

Habitat loss is mounting.

The human population is growing.

Industrial development is expanding.

Adding to all these other stressors is, of course, climate change.

Our climate is changing at an unprecedented rate. And it will continue to do so. Rising temperatures are drying up wetlands and receding glaciers threaten their long-term regeneration.

A recent analysis of data from the Gravity Recovery and Climate Experiment (GRACE), a NASA-led mission that combined 14 years’ worth of satellite data, shows that the global water supply is rapidly shifting. In Canada that has made some regions wetter and more flood-prone. While others, like the western sub-Arctic, have become much dryer.

We must be prudent and precautionary as we manage our changing wetlands because so much is at stake.

Those declining shorebirds I mentioned earlier, for instance, are among the many who rely on wetlands, open landscapes and shorelines for their survival. These are the same areas your members and volunteers are working so tirelessly to protect.

As one of Canada’s greatest science reporters, Margaret Munro, writes:

“The birds are so tuned to the natural pulse of the planet that they know where and when to touch down on their ultramarathon migrations. As the climate shifts and key habitats shrink and degrade, researchers say the migrations are growing more dangerous, and more deadly. Many long-distance migrants are in serious decline.”

Effective natural resource management is reliant on funding, science, and social support. We seem to have consensus on this within the current B.C. government, but it needs to be put into action.

My colleague Adam Olsen organized a forum in April to speak to experts about his proposal to create a Wild Salmon Secretariat in B.C. Your Director of Regional Operations, Les Bogdan, generously made the trip to be there.

Fins and feathers working together, he said. He also said something that mirrors my experience in the BC legislature: we are planning nature to death. We have so many plans, we need to start implementing them. We need to get on the ground and get to work.

Where governments have failed in that regard, Ducks Unlimited and its community partners have excelled.

Your service to BC over the last 50 years has been incredible. By protecting wetlands and shorelines, you are protecting the people and animals who live in here, preserving our water quality, moderating the effects of flood and drought, and providing a buffer against climate change.

As an organization I hope you continue and expand this important work. As a government I hope we can follow your lead.

Thank you for all of your hard work, and congratulations on your incredible success.

Today in Kamloops I had the pleasure of giving a keynote presentation at the 2018 Annual General Meeting of the BC Chamber of Commerce.

I took the opportunity to outline our vision for a thriving, diverse 21^st century economy that builds upon our strategic strengths.

Below I reproduce the text of my speech.

Text of Speech

Introduction

Thank you for inviting me to “the River City” to speak not only about some of the work we’ve been doing over the past year, but also about our vision of economic prosperity for BC.

It’s been almost exactly one year since we signed our confidence and supply agreement with the BC NDP, signalling our commitment to supporting them in a minority government.

It’s somewhat ironic that it’s also been almost exactly one year since the publication of your breakfast keynote speaker (Adam Kahane’s) book Collaborating with the Enemy: How to Work with People You Don’t Agree with or Like or Trust — a book I bought and read last summer.

The last year seems like a year on fast-forward.
The minority government produced by the election – the first in 65 years in BC – led to the BC Greens playing a role we’ve never before played in BC politics.

It provided us an opportunity to champion key aspects of our economic platform in our agreement with the NDP.

To be successful in the 21st century economy, we need to capitalize on our strategic strengths and position ourselves to be leaders in the new economy. Achieving this has been the focus of our efforts in BC’s minority government.

As many of you know, before running for office in 2013 I was a climate scientist at the University of Victoria for 25 years.

Year after year, my students would ask me why so little progress was being made to reduce greenhouse gas emissions given that the science on climate change was so clear.

I told them that if they didn’t like the decisions politicians were making, they should consider finding someone to run or consider running themselves.

In 2012, as I watched the dismantling of Gordon Campbell’s legacy of positioning BC as a leader in the new economy, I realized I had to take my own advice. So, what motivated me to get into politics is fundamentally the same thing that I’m sure motivates a lot of you to do what you do.

I believe we have a responsibility to the next generation.

I believe in British Columbia and want to contribute to building the brightest possible future for our province.

If we want to secure a bright future for BC, we will do ourselves no favours by doubling down on the economy of the last century.

Instead, we must take stock of global trends – climate change, technological innovation, the rise of the knowledge economy – and point ourselves in a clear direction of where we want to go.

This year, the auditor general confirmed BC will miss our legislated 2020 greenhouse gas reduction targets.

Without a plan we will almost certainly miss our recently legislated 2030 targets as well.

Last year, wildfires, which the scientific community agrees will become more extensive, cost our province $750 million. Communities in BC are still recovering from flooding. The effects of global warming are not in some distant future – they are here now. And they will get far worse.

In this context, it’s not acceptable to continue to ignore our greenhouse gas reduction targets, and to continue to expand the fossil fuel infrastructure of the last century thereby pushing our targets further out of reach.

And this isn’t just an environmental issue – It’s critical from a business perspective as well.

The cost of failing to reduce greenhouse emissions will be profound for all sectors of our economy, both here in BC and around the world.

The world is coming together to find innovative solutions to the energy challenges arising from the transition to the low carbon economy. Globally countries like Saudi Arabia, China and Germany are investing billions in alternative energy production to position themselves as leaders of tomorrow.

There are opportunities to be had from transitioning to the low carbon economy, but they will flow to those who lead, not to those who follow.

Climate/LNG

Global investment trends are being driven by the world’s shared Paris commitments, predicated on the fact that keeping global warming under 2 degrees Celsius is far more cost-effective than dealing with the effects of a temperature rise above that level.

In the next two decades, renewable energy sources like wind and solar will comprise almost three-quarters of the US$10.2 trillion in new global investment in power generating technology.

The cost of solar is already on par with coal in Germany, the U.S., Australia, Spain and Italy, and will reach parity in China, India, Mexico, the U.K. and Brazil in 2021, if not sooner.

This shift presents a significant opportunity for B.C.’s economy. Our province is well poised to bolster its leadership in the cleantech sector – Vancouver alone is home to a quarter of Canada’s cleantech companies. And we can thank the leadership of Gordon Campbell for bringing this to fruition.

In 2016, B.C. cleantech generated approximately 13,900 jobs with an average salary of $84,000. We have a strong competitive advantage in the building blocks required to foster a knowledge-based economy.

Natural gas – royalty credits

Despite the new opportunities we’re presented with, in BC today, our government is continuing to pursue the dream of exporting LNG, and is perpetuating a natural gas giveaway.

We have seen massively decreasing revenues to BC from gas extraction.

What the data shows is quite shocking – while gas production has gone from 25 billion cubic metres in 2001 to over 50 billion cubic meters in 2016/17, royalty and land lease revenues to the BC government have gone in the opposite direction, from a record $2.4 billion in 2008/09 down to only $139 million in 2015.

This is partly due to the fact that the B.C. government provides hundreds of millions of dollars every year to subsidize horizontal drilling in the northeast of our province, through the deep-well royalty credit program.

The deep well royalty credit program was originally meant to offset the cost of deep well drilling.

It was later extended to apply to horizontal drilling as well. Now both are common practice, so much so that companies have amassed more credits than they can spend.

The companies earn these credits by drilling qualified wells, and when the wells start to produce gas, the companies apply the credits to reduce or even eliminate provincial royalties that they normally pay on this public resource.

In recent years, the participating companies have amassed credits faster than they can spend them. The balance in their deep-drilling account has increased from $752 million in 2012 to an accumulated $3.2 billion today.

Not only are we not getting paid for this public resource, we are literally paying companies to take it from us.

In 2009, B.C. collected $1.3 billion in natural gas royalties. Last year, we collected a mere $152 million. Measured as a share of the value of oil and gas production in B.C., royalties collected by government has fallen from 44 percent in 2008 to just 4 percent last year.

In 2009, BC earned $39.90 in royalties for every 1000 cubic metres of natural gas. In 2017 it was $2.95.

This is a dismal return on the resources that are being extracted from our province. We are giving away more gas for less money while barrelling past our climate commitments. That’s race for the bottom economics at its finest.

Opportunity/innovation

The future of economic prosperity in BC lies in harnessing our innate potential for innovation and bringing new, more efficient technologies to bear in the resource sector.

BC will never compete in digging dirt out of the ground with jurisdictions that don’t internalize the same social and environmental externalities that we value.

We will excel through being smarter, more efficient, & cleaner.

This means that we not only export the dirt, but we also export the knowledge, technology and value added products associated with resource extraction.

A great example is Vancouver-based MineSense’s technology that saves mines between $20 million to $200 million per site, while also reducing electricity and water consumption by 20 to 25 per cent and tailings by up to 40 per cent.

Through MineSense’s innovation, B.C.’s economy grows by creating the technology that enables others to make this same transition.

Efficiency also means ensuring B.C. is getting the maximum value for our resources. The last two provincial budgets reported job losses in forestry, fisheries, mining and oil and gas.

My caucus and I hear a common theme from resource businesses, industry groups and local governments — the economic value of B.C.’s natural resources does not remain in our communities.

It’s profoundly ironic that many believe that doubling down on the approach of the BC Liberals is somehow good for the resource sector when in fact, the job losses, downturn in the resource sector, and economic troubles in rural BC have occurred precisely under the watch of the BC Liberals over the last six to eight years.

In forestry, sawmills close as raw log exports persist. In fisheries, quotas become concentrated in the hands of a few companies, pricing young fishers out of the market.

Seafood caught in Canadian waters is shipped to Asia, where it is processed, and then shipped back here to be sold.

The Trans Mountain Pipeline expansion seeks to export diluted bitumen, which must be refined abroad before it can be of any use to consumers.

Every time we ship a raw commodity overseas, we forgo opportunities to create well-paying jobs and grow our economy.

There is no need for this — B.C. has a highly educated workforce, a strong entrepreneurial spirit, and world-class research institutions.

Our high school students are consistently top ranked — with the OECD noting that BC is one of the smartest academic jurisdictions in the world. Our high quality of life and beautiful natural environment attract some of the best and brightest from around the globe.

In every corner of the province, innovative British Columbians are using these strengths to generate economic prosperity. After the Midway Mill closed in 2007, the town raised capital to invest in a technological overhaul and reinvigorate the mill.

At the Wood Innovation and Design Centre in Prince George, students learn how to bring design, technology and forestry products together to develop innovative high-performance wood products.

The centre was built using value-added wood products from Structurlam, a highly innovative Penticton-based company whose products have been used in award-winning buildings all over the world.

To get a fair value for our resources that deliver maximum benefits to our communities, we need to get smarter and more strategic when it comes to embracing innovation.

Government’s role

Government should be doing more to support these initiatives and create fertile ground for a sustainable, resilient, and diverse economy.

In our Confidence and Supply Agreement with the NDP, we included two key pieces from our 21st century economy platform to help us seize economic opportunities in the emerging economy.

The first piece is the Emerging Economy Task Force.

We proposed the Emerging Economy Task Force to enable government to adapt and respond to changes on the horizon.

We need to modernize government so that it is considerably more responsive to technological innovation.

In one example, six years since ride hailing attempted to enter our market, Vancouver is still stuck with fewer options than every other major city in North America. This shouldn’t be the case.

The role of the Emerging Economy Task Force is to look to the future, identify emerging trends and advise government on how to maintain our competitiveness and achieve prosperity amidst these changes.

The second item from our platform that we integrated into CASA is the Innovation Commission (now Innovate BC) as well as the appointment of an Innovation Commissioner.

The innovation commissioner was proposed to be an advocate and ambassador on behalf of the B.C. technology sector in Ottawa and abroad, to enable B.C. companies to more easily tap into existing federal programs and build key strategic relationships.

I’m confident that both of these initiatives will bolster key sectors of our economy as we go forward.

We should be using our strategic advantage as a destination of choice to attract industry to BC in highly mobile sectors, like tech, that have difficulty retaining employees in a competitive marketplace.

We should be using our boundless renewable energy resources to attract industry, including the manufacturing sector, that wants to brand itself as sustainable over its entire business cycle, just like Washington and Oregon have done.

We should be setting up seed funding mechanisms to allow the BC-based creative economy sector to leverage venture capital from other jurisdictions to our province.

Too often the only leveraging that is done is the shutting down of BC-based offices and opening of offices in the Silicon Valley.

We should fundamentally change the mandate of BC Hydro. BC Hydro should no longer be the builder of new power capacity.

Rather, it should be the broker of power deals, transmitter of electricity, and leveller of power load through improving British Columbia power storage capacity. Let industry risk their capital, not taxpayer capital, and let the market respond to demands for cheap power.

Similarly, by steadily increasing emissions pricing, we can send a signal to the market that incentivizes innovation and the transition to a low carbon economy. The funding could be transferred to municipalities across the province so that they might have the resources to deal with their aging infrastructure and growing transportation barriers.

Yes, we should be investing in trade skills, as described, for example, under the B.C. jobs plan. But we should also be investing further in education for 21st century industries like biotech, high tech and cleantech. It’s critical that we bring the typically urban-based tech and rural-based resource sectors together.

Natural gas has an important role to play.

But, we should use it to build our domestic market and explore options around using it to power local transport. BC businesses such as Westport Innovations and Vedder Transport have already positioned British Columbia as an innovative global leader in this area.

The digital technology supercluster provides another example of exactly the type of innovation government should be doing everything it can to support. The supercluster is estimated to generate up to 15,000 jobs and $15 billion in economic activity in the coming decade.

It offers an opportunity to bring together the private sector, our post-secondary institutions and government to solve problems and accelerate innovation in key sectors in our province, like health care, forestry and manufacturing.

The companies involved in the supercluster are diverse, innovative and deeply committed to seeing success in British Columbia, and their initiative will help B.C. be more competitive as we respond to changing global trends, and help us get a better return for our resources.

Benefit companies

Finally, I’d like to speak today to a recent initiative our office has undertaken, to have benefit company legislation passed in BC.

This legislation would support companies that choose to integrate economic sustainability and social responsibility into their business mandate, by enabling them to incorporate as benefit companies in BC.

By incorporating as benefit companies, businesses would achieve greater certainty for their directors and investors about their goals and mandate, enabling them to attract capital investment while staying true to their mission as they scale.

Benefit companies are critical because they recognize that in today’s new economy — with triple-bottom-line reporting, providing a workplace where you actually create an environment that is conducive to attracting and retaining employees in a very progressive manner — these are the types of companies that are attracting the millennial generation.

This legislation is an opportunity for B.C. to lead the country in supporting businesses that want to be a bigger part of developing innovative solutions to the challenges of the 21st century.

I am hopeful that government will support this legislation and that we will be the first jurisdiction in Canada to have benefit companies.

Conclusion

We will not solve the challenges of the 21st century by chasing 20th century solutions. In the shadows of the massive challenges that we face, our province needs a new direction.

But we can turn these challenges into opportunities if we have a forward-looking vision, an evidence-based approach to policy and political leadership that thinks beyond a four-year election cycle.

Most importantly, I believe that we must reject politically motivated attempts to pit the environment against the economy. Doing so will only short-change resource-dependent communities by justifying the race-to-the bottom economics of raw commodity exports.
Instead, we need a new direction that offers a realistic and achievable vision grounded in hope and real change.

A new direction that places the interests of the people of British Columbia first and foremost in decision-making. And it’s not only today’s British Columbians that we must think about, it’s also the next generation who are not part of today’s decision-making process.

I am truly excited about the prospects that lie ahead in this minority government. British Columbia has so much to offer and we can and shall be a leader in the new economy.
Thank you all again for having me here today to speak with you.

I look forward to more conversations to come.

Once more, during budget estimates for the Ministry of Finance today, I rose to ask the Minister about the elimination of the MSP. This time, rather than focusing on the government’s approach to replace the revenue through the creation of an employers’ health tax, I asked about the savings that the province will realize as a consequence of eliminating the MSP.

It looks like the province will save about $175 million annually through eliminated MSP premiums.

Below I reproduce the text and video of our exchange.

Text of Exchange

A. Weaver: I have two questions on this subject of the employer health tax. When the B.C. Green Party called for the elimination of MSP premiums a number of years ago, we were basing our decisions on how we would move forward on the Ontario model. One of the big reasons, as well, that we thought that — and one of the issues that I haven’t heard canvassed yet — was that there’s an enormous waste in the MSP system. We know that monthly bills go out month after month to people all across British Columbia. We know that credit agencies are given files where there’s a lot of debt that has never been paid.

My two questions to this: how much money is being saved by eliminating the monthly billing of the MSPs, and how much of the outstanding liability exists with respect to MSP premiums that have not been collected? What is the government planning to do to get some of that money back — if they have a possibility of getting it back at all?

Hon. C. James: Thank you for the question. I think the member has described exactly one of the many reasons, certainly one of the large reasons, that it’s important to eliminate medical service premiums.

I don’t think there’s anything that people have described as worse to administer. The member mentioned the challenges of administering it for government, the challenges of administering it as employers and then the individuals. So it trickles down.

I’m sure the member has heard the stories, as I have, of people who’ve left a job where they were paid their MSP premiums, gone to a job where they aren’t, trying to get back in — or the other way around — and be able to manage to figure out what they owe and have the billing be correct.

Seniors. I think the member mentioned this issue before, and I’ve certainly heard it — seniors in my office crying because they’ve received the collection notice. This was first time they received the notice. So I think it’s clear that that is something that has to be taken care of.

The contract it services will be about a $60 million savings, to end that contract for managing the medical service premium. The debt expense right now is $115 million, so that would be debt, obviously, that would need to be written off or collected. That’s roughly the amount each year. So that’s, again, a savings when you look at the bad debt that has to be covered each year.

Video of Exchange

In the Ministry of Finance budget estimates today I had the opportunity to question the Finance Minister on the recently announced employers’ health tax. This tax is being proposed to replace revenue that will be lost due to the elimination of the regressive MSP premium.

Below I reproduce the text and video of our exchanges.

Text of Exchange

A. Weaver: I have six short questions to pose to the minister on this theme that’s being raised by the member for Prince George–Valemount and the member for Surrey–White Rock.

The minister has chosen to eliminate MSP premiums, which, of course, we support, because we, frankly, also had it in our platform. But she has chosen a way to do this which is through a payroll tax. Again, we support the government’s intention of doing it. It’s not what we would have done. We recognize we can agree to disagree.

Our approach would have been to mirror more what was done in Ontario, through the creation of a health care premium that was progressive and actually person-based, which would allow people to still recognize that there is a cost to health care. They’re see it on their pay stub, etc.

Again, I recognize that government had different priorities or ideas here. But with that said, I’d I like to ask a couple of questions, because there is definitely some concern out there within the employers of non-profit, local government, school board sectors, as well as small business and other business.

Some of it is not well grounded. I have some troubles with some of the estimated property tax increases that I’ve been seeing coming from municipalities, which suggests to me there’s a property tax gouge that’s going on there that actually is not representative of how much the real cost would be for their employees to….

With that said, I have a couple of questions. They’re with a focus on the MSP Task Force. The MSP Task Force was due to give its final report to the minister just a few weeks after the budget. My first question is: why did the minister make the significant decision that she did with respect to the payroll tax prior to the MSP Task Force reporting in?

Hon. C. James: Thank you to the member for the question. I think, as has been described, I received an interim report, and the member asks why we didn’t wait for the final report.

In fact, in putting together the budget, when we were taking a look at both the challenges and opportunities that were there, one of the challenges, as I mentioned earlier, that I was faced with that was not expected to be in this kind of severe situation was the issue of ICBC and the deficit at ICBC. So when we took a look at building the budget, we felt that this was the time to make the decision around both the ICBC issue and moving towards the MSP.

The other thing that was very clear — a task force certainly raised this issue as well — was the urgency for people to know that MSP premiums were going. That was a very clear message.

There were seniors groups and other organizations that had come forward to talk about the urgency of finding a time to let us know when they were going to be eliminated. “We know you say you’re going to do it by the end of your term, but we really are interested in making sure that we know a date so that we know it’s going to be gone, so that we have the time to plan but also that we know that commitment is there.” So it was also taking into account the urgency of people who really wanted to know.

It was the possibility, then, of looking at our three-year budget term and being able to do the planning that was necessary.

The member mentioned the issue of not-for-profits and school districts. I think, as the member knows, those issues are still being discussed. We’re gathering data, and I think it again points out…. We talk about getting information in government. I think we’ve had this conversation on a whole range of issues, mostly in housing.

It’s pretty obvious, across the board, that more information is needed for groups and organizations, like not-for-profits, to be able to gather the data that’s needed around everybody’s individual circumstances. So we’re finalizing that, and I certainly hope by summertime to have those issues resolved.

A. Weaver: Thank you for the answer. Through you, hon. Chair, to the speaker, to the minister. It’s the end of Thursday afternoon, and I think we’re all tired, especially the minister.

My question, then, is…. If, as alluded to there, there was a budgetary shortfall because of ICBC, surely that would have been realized early in the term of the government. My question: why did the government not then simply go to the task force and ask them to expedite their review so that they could provide the minister the recommendations that she needed prior to her making a decision, in light of the fact that I understand that no such request was actually given?

Hon. C. James: In discussions with the task force and their discussion about the pieces they were continuing to work on, they’re continuing to work on a number of pieces that they wanted time to complete and that, certainly from my perspective, I felt were worthwhile. So I did ask them to continue to do a final report. I felt that that was worth looking at. There are, obviously, future budgets to come, and there may be some really good ideas and good approaches that might be worth looking at and considering. That’s why we got an interim report from them and why I asked them to complete the final report.

On the ICBC, I have to say that the situation was deteriorating much more rapidly than I think anybody imagined, certainly more than the minister of ICBC imagined and certainly more than I, as Finance Minister, imagined. That created a real challenge when it came to the budgeting.

A. Weaver: To the minister, then, on this final report, I have two questions that I’ll put into one here. In the budget, and just now, the minister stated that the task force would still complete their final report and that she was looking forward to receiving it.

My questions, in one, here are: what did the minister direct the task force to look at for their final report, given that she’d already made a decision to implement the employer health tax? Secondly, has she received the final report? If so, when will she release it?

Hon. C. James: The task force, in the discussion we had around the interim report, said that they were still working on a few pieces. I know, certainly, that one of these is an issue that has come up, around the Select Standing Committee on Finance, for a number of years, which is the issue of a tax on sugary drinks. That was one of the pieces that they were interested in finalizing some work on. As I said to them: “Finish up the work that you’re doing, and bring it forward as your final report.”

The other piece that they were wanting to look at and that they’d started some work on but wanted some more time to look at was the issue of the homeowner grant: was there an opportunity, with the homeowner grant, to look at some more progressive kinds of changes to the homeowner grant? Again, I said, I certainly expected that that would be interesting to be able to review. So that’s another piece that’s coming.

I expect to receive…. I’m hoping to receive their final report shortly. Yes, it certainly will be public, once I receive it as minister.

A. Weaver: Thank you to the minister for a very helpful response. It actually dealt with one of my further questions, which was with respect to the issue of taxing sugary drinks, which I know the MSP Task Force had talked about considering in their interim report. I look forward to them providing more information in the forthcoming report and to see how the government responds to that.

My final question, then, is again with respect to the MSP Task Force. In the report, they specifically said, “We are leaning towards a combination of a personal income tax surcharge, a small payroll tax and additional ideas.” The additional ideas, as was mentioned, were like a sugary drink tax…. They said: “A payroll tax would reduce the competitiveness of B.C. businesses at a time when they are facing several competitiveness challenges.” This concern about the competitiveness of businesses partly informed why the task force was not leaning towards exclusively a payroll tax but towards a combination of measures to make up the revenues.

My question finally to the minister, why did she choose to implement a payroll tax, rather than go the route recommended by the MSP Task Force, which would have spread the burden of the tax across a variety of areas?

Hon. C. James: We had a little bit of discussion on this earlier, but I think it’s important to state again, as the member mentions, that the task force recommended looking at personal income tax and a payroll tax, as well as other measures that they’re still going to bring forward.

On the personal income tax, as the member knows, as government, we made a change, in September’s budget, on the high-income earners — on the income over $150,000 — and had taken away the tax break that the previous government had given. We felt we had already impacted and made a difference around the personal income tax. That was a piece that we had already moved on, in the September budget.

The other piece that’s important to recognize is that we aren’t actually recouping all of the MSP revenue with the payroll tax. We aren’t actually collecting the magnitude of the MSP. The MSP is at $2.6 billion. We’re bringing in $1.9 billion on the payroll tax. I think that’s another important piece to recognize and to look at when we’re looking at a payroll tax. It’s not actually looking at recouping all of the resources that were there, so we felt it was reasonable to do it as an employers health tax.

Video of Exchange