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

Today in the BC Legislature we debated, at second reading, the Private Members’ Bill, that I introduced earlier this week, designed to enable BC companies to become benefit companies.

Below I reproduce the speeches I gave when moving second reading and closing the second reading debate. The BC NDP spoke in favour of the legislation. The BC Liberals didn’t bother to put up a single speaker.

Committee stage for the bill is likely to be in the fall to give us time to canvas stakeholder reactions over the coming months.

Videos of Speeches

Text of 2nd Reading Speech

A. Weaver: It gives me enormous pleasure to rise and speak to Bill M216, Business Corporations Amendment Act, 2018. I’m particularly excited about this bill and the fact that we’re debating it at second reading as it is a bill that my office and I worked on quite extensively to bring to fruition over the past several….

Deputy Speaker: Pardon me, Member. Just kindly move second reading.

A. Weaver: I do apologize, hon. Speaker. I move second reading of Bill M216, Business Corporations Amendment Act, 2018.

Deputy Speaker: Thank you very much. Please continue.

A. Weaver: Let me start again. It gives me great pleasure to rise to speak to Bill M216, Business Corporations Amendment Act, 2018. As I said, I’m particularly excited to be debating this bill, as it’s a bill that my office and I have worked on to bring to fruition for the past number of months.

We took the Attorney General up on his offer of legislative drafting services that all opposition members have been granted. We did this a few months ago. We are very grateful to the Attorney General for bringing in this new approach to politics here in the province of British Columbia. It’s very refreshing, and it allows us to ensure, when we bring legislation or amendments forward, that it’s done in a matter that ensures that it’s legally enforceable and works within existing B.C. laws.

As you will see in going through this legislation, it’s a very, very complex piece that has many, many required changes in other sections in order for it to be enacted here in British Columbia. We could not have done that without the services of the legislative drafter. Again, we are very grateful to government for doing that. I think it bodes very well for this government as we move forward in the years ahead.

I’m glad to see it receiving second reading, and I’m hopeful that all members of this House can debate this bill in an earnest way as they consider the merits of supporting or not supporting it. What this bill does…. This is what I’d like address to begin with. I want to spend a few minutes canvassing this. This bill adds a new part to the Business Corporations Act enabling companies to register as benefit companies.

This legislation is intended to encourage the adoption of business forms that have an expanded social and environmental mission, to provide a legal framework that supports and protects businesses that choose to take on this broadened mandate and to ensure that there is adequate transparency and accountability that benefit companies must adhere to.

This framework would provide greater certainty for companies and their investors as to the mandate of their directors and nature of the company. This bill is intended to be complementary to the existing community contribution company legislation passed by the previous government. The C3 — as it’s called — framework is a model for social enterprise and is particularly useful for non-profits and charities who need a way to raise revenue.

However, we’ve heard loud and clear that it is too limiting for most for-profit companies to consider, so it’s been limited in its adoption here in the province of British Columbia. I’ll speak to the differences between these pieces of the legislation at greater detail in a few minutes.

In the present legislation, there are two key components to it. No. 1: there are requirements that companies must adhere to if they want to become benefit companies. No. 2: protections are in place that we include for these companies. I’ll canvass both of those briefly here.

First, benefit companies must commit to conducting their business in an environmentally, socially responsible and sustainable manner, which takes into account the well-being of persons affected by their conduct and endeavours to use a fair and proportionate share of available environmental, social and economic resources and capacities. They must also pursue one or more specific public benefits. They must set out their purposes in their articles, including specifying the public benefits the company is promoting.

Second, benefit companies must report their performance against a third party standard, which must be developed by a person or entity that is unrelated to the benefit company. The reporting must be done annually and must be made publicly accessible. This is important to ensure transparency for suppliers, purchasers and customers that the company is indeed living up to its stated goals.

Companies incorporating for the first time as benefit companies must have the words “benefit company” or “B.Co.” as part of their name. Companies that alter their articles to become benefit companies do not need to change their name.

This bill also provides continuity and greater certainty for companies established with a broader mission. A company can only become or cease to be a benefit company if shareholders authorize it by a special resolution that requires at least a two-thirds shareholder majority.

The choice to become a benefit corporation is completely voluntary and has no impact on other existing corporations, corporate forms, taxes or government regulation. There are no financial benefits, and benefit companies are taxed at the regular corporate tax rate.

This legislation also includes important requirements and legal protections for directors and officers of benefit companies. It requires that directors and officers of a benefit company act honestly and in good faith with a view to the best interests of the persons materially affected by the company’s conduct. This bill requires that directors balance this broader requirement with the existing duty, already enshrined in corporate law, which specifies they act in good faith with a view to the best interests of the company.

It also includes key legal protections for directors. It clarifies that only shareholders can bring a challenge against a director. Their broader duties to public benefits do not open them up to broader liabilities, which is very important. It also specifies that shareholders may only seek injunctive relief against a director under this part, not monetary damages.

Why do we need this legislation in B.C.? First of all, I think it’s important, at this stage, to recognize the initiative of the previous government, and particularly the member for Surrey–White Rock at the time, Gordie Hogg, who brought forward and championed the community contribution company legislation in 2012. However, I view benefit company legislation and the C3 legislation as being complementary ways for government to support social enterprise and mission-driven companies.

The C3 structure provides a useful tool for non-profits and charities that need a way to raise revenue, but we’ve heard that it is far too limiting for most for-profit companies to consider. To become a C3, companies would have to fundamentally change their corporate structure and reduce their ability to attract investment. For example, the so called asset lock for C3s limits the dividends a C3 can be pay to shareholders, and this cap is 40 percent of annual profits. Moreover, in cases of C3 dissolution, the majority of assets remaining after debts are settled must flow to a qualified entity, such as a charity or a cooperative.

I would fully support efforts of this government to build upon the work started by the previous administration to support C3s, including promoting the C3 brand, enhancing public knowledge of these types of companies and providing tax incentives and benefits for investments in C3s. But the restrictions on C3s mean that the majority of mainstream businesses, even those that have a social and environmental mission at their core, wouldn’t consider this structure.

We should provide another option for sustainable and responsible businesses in B.C. We’ve heard from many in the social impact space, including a number of businesses that chose to prioritize social and environmental benefits in addition to profit, about the important role that a benefit company legislation would play in growing this movement and supporting the work already underway across B.C.

It’s true that directors of companies in Canada already have more discretion to pursue a broader mandate beyond maximizing shareholder profits than they do in the United States. However, a number of issues arise for companies that try to embed this broader mandate in practice, since we lack a legal framework that explicitly supports these types of businesses.

For example, this legislation would provide clarity for directors and for shareholders about the mandate of the company. It would help directors avoid the risk of a shareholder challenge regarding the director’s duties to the company. And it would take the uncertainty out of the process of embedding a broader mandate within your articles.

It would provide certainty for impact investors looking to invest in mission-aligned companies of the nature and the mandate of the company. It would enable companies to attract capital while enabling them to stay true to their mission and protect the vision of the company’s founders as their company grows.

One concern we’ve heard over and over again is that as companies grow and new investors come on board or as founders consider secession planning, they are worried about losing their company’s initial mission. This legislation would provide greater protections for the original mission of a business. Moreover, this legislation would provide a simple framework for companies to adhere to that is legally and commercially recognized.

If B.C. had this legislation on the books, if companies were able to incorporate as benefit companies with an explicit social or environmental benefit baked right into their articles, it would send a strong signal that government supports this approach to business. We would encourage more companies to pursue a socially responsible and environmentally sustainable approach, creating beneficial outcomes for society as a whole. We can better leverage the power of the private sector to help us tackle the significant social and environmental challenges we face.

To conclude, this legislation is an opportunity for British Columbia to lead the nation in supporting businesses that want to be a bigger part of developing innovative solutions to the challenges facing the 21st century.

This legislation is common elsewhere in the world. In the United States, for example, over 30 states have passed this type of legislation. Countries in Europe and South America already have it on the books or are actively considering it. Successful companies of all sizes have signed on, both here voluntarily and elsewhere through the legal approach that’s been provided to them.

I believe that becoming the first jurisdiction in Canada to champion benefit companies is an enormous opportunity to position the province as a leader in the new economy. B.C. is home to many socially responsible companies. It’s part of our stellar brand as one of the greenest and greatest places in the world to live.

But we are struggling to adjust and respond to massive technological, social and environmental shifts that the world is facing, from climate change to automation. We need to think differently in order to turn these challenges into opportunities that we lead in the development of solutions for.

Government and the non-profit sector cannot respond to these changes alone, nor should they have to. For-profit businesses have a huge role to play in our society. They are part of the solution and will continue to be so moving forward.

The companies that pursue a triple-bottom-line approach are on the cutting edge of rethinking the role of businesses in the 21st century. They know that acting in the best interests of people and the planet is the best way to build a thriving economy for not only this generation but also the next and the subsequent generations thereafter.

Our hope is that if other members in this House support this bill, we can play our part in supporting this growing movement internationally. We can encourage more B.C. companies to incorporate social and environmental values into their own business articles, empowering them to promote change in our province and helping us, collectively, solve the challenge that we all face.

Text of Closing Speech

A. Weaver: I rise to close debate on Bill M216, Business Corporations Amendment Act, which is being debated at second reading. First off, I’d like to thank — the comments from the previous speakers — in particular, the minister who spoke extensively about the values encapsulated within B corporations and how those values actually resonate with the values of the present government and, clearly, the values that we have in the Third Party as well.

For those that may not know what B Corps are…. Some might think that they’re not big companies and only small companies. There are small companies who are B Corps, but there are also multinationals like Unilever, which is a transnational consumer goods company dealing with foods, beverages, cleaning agents and personal care.

Unilever is a B corp, and they’re proud of their branding. A European bank, called Triodos Bank brands themselves as the world’s most sustainable bank. They are a B corporation, and they’re a very successful one. Many people in this Legislature will know about the Natura products — the Brazilian company that builds beauty products, household care, personal care, skin creams. They are another example, a Brazilian B corporation.

In B.C., one of our more celebrated ones is Hootsuite. It’s a local start-up, B.C. grown, that grew dramatically to become a big player in the tech sector. Many have probably actually participated in Kickstarter campaigns. Well, indeed, Kickstarter is a B corporation.

They’re proud of their branding, and they’re protected because of the fact that they’re certified and incorporated as B corporations. They’re protected to allow that their mandate extend beyond the traditional of only for-profit and to actually have broader societal goals as well.

Ben and Jerry’s. We all love their Ben and Jerry’s ice cream. Ben and Jerry’s is a B corporation — again, a company that’s proud.

Why this is particularly important — you heard this from the discussion from the minister — is that we know that there’s a new generation of young people, the so-called millennials, who are emerging into our society and have a different set of values than we may have had when we came out. We came out at a different time, my grey-haired generation.

The millennials of today — I’m pointing to my colleague here, too — are looking for more than just a job. They’re looking for the quality of life associated with that job. They’re one of the reasons why in British Columbia, for example, we’re struggling to meet with health care practitioners — doctors, for example. We’re graduating a lot, but for doctors, when they come out, this millennial generation, it’s not only about the profession. It’s about the quality of life associated with that profession.

B corporations 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.

I’m absolutely delighted that here in British Columbia we’re moving this forward. I’m actually very pleased that this legislation will shortly be voted on at second reading. Over the course of the summer, I’m hoping that we will hear more from companies — we’ve been approached by a number — and that more and more companies will actually approach us and ask for further information. So as we move into the fall session, we can actually have a good public discussion about the benefits or any potential unforeseen consequences associated with B corporations.

I will say that since bringing in this legislation, a very, very big, multinational B.C.-based company has approached us and asked for details about how they might move on this process. I know there are companies out there that are looking for this. We know that. We met with stakeholders in Vancouver, with business leaders there, a couple of weeks ago. There’s actually a very integrated group of senior professionals in Vancouver. Many of these are engineering firms or consultant firms, but there are bigger firms — construction firms, a number of firms — that are moving toward a B corporation because they want to be good corporate citizens.

We recognize — and it’s good to see that government does; it’s a shame we have no speakers from the official opposition — that it’s actually critical. As we move forward in the 21st-century economy, it’s critical that we ensure that we work with business to provide solutions and move us forward to dealing with some of the challenges of our times.

With that, hon. Speaker, I move second reading.

Motion approved.

A. Weaver: I move the bill be referred to a Committee of the Whole at the next sitting of the House after today.

Bill M 216, Business Corporations Amendment Act, 2018, read a second time and referred to a Committee of the Whole House for consideration at the next sitting of the House after today.

Media Release

Weaver’s bill to support businesses with environmental and social missions takes next step towards being passed into law
For immediate release
May 17, 2018

VICTORIA, B.C. – A private member’s bill introduced by Andrew Weaver passed second reading, taking the next step towards becoming the first opposition Party bill to become law in B.C. The bill would amend the Business Corporations Act to allow companies to incorporate as benefit companies. Benefit companies would choose to pursue social and environmental goals, rather than just profit.

“I am delighted that this legislation to support businesses with a social and environmental mission passed second reading,” said Weaver.

“A minority government is an opportunity to do things differently by putting partisan politics aside and focusing on issues and ideas that will move our province forward. 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.”

If passed into law, this legislation would make B.C. the first jurisdiction in Canada to extend legal recognition to benefit companies. Weaver says the bill will encourage businesses to take on an expanded social and environmental mission, provide a legal framework that supports and protects businesses that choose to take on this broadened mandate, and ensure that there is adequate transparency and accountability.

For more information about how a Bill becomes law in the BC Legislature:https://www.leg.bc.ca/content-peo/Learning-Resources/How-a-Bill-Becomes-Law-English-print.pdf

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Media contact
Jillian Oliver, Press Secretary
+1 778-650-0597 | jillian.oliver@leg.bc.ca

In the Ministry of Finance budget estimates yesterday I had the opportunity to question the Finance Minister on a number of topics concerning the recently proposed speculation tax.

Below I reproduce the text and video of our exchanges.

Text of exchange

A. Weaver: I have a number of questions, just to follow up on this theme. I thank the members for Prince George–Valemount and Surrey–White Rock for canvassing this issue. A couple of these questions have been addressed, but I’d like to develop the narrative just very briefly.

I’ll start off by saying I understand the issue that the minister is addressing. The housing market has got out of control through wanton speculation. I do understand that it is the government’s prerogative to choose the means and ways to deal with it.

The approach the government has taken is not the approach we would have taken. Nevertheless, we agree to disagree on this, and we do support government’s effort. I will say that our approach would have been to actually address taxation after sale of a property, when people had the ability to pay, as opposed to upfront with respect to a paper value.

With that said, I also want to thank and commend the minister for listening to the concerns that we’ve brought to her from a number of areas and issues. I just want to canvass two more of these areas and see what she says.

The first question to the minister is this. With respect to the intention of the speculation tax, is the intention of the speculation tax to reduce the number of homes being left empty by encouraging people to sell or rent, or is it to generate revenue?

Hon. C. James: I think the member has hit on a very important point. I would be thrilled if we saw all of these properties become rental properties and some people not having to pay the tax, because that would be, in fact, the achievement of providing more housing in these communities that have an almost zero vacancy rate.

I think, as I said earlier, we have been conservative in our numbers when it comes to the tax revenue coming in, because we don’t expect that everyone will look at renting their places out. But we have been conservative in those numbers for precisely that reason, because the hope and the encouragement is that people will actually utilize their empty, vacant properties to be able to increase the supply of housing in communities.

A. Weaver: The follow-up question, then, is with respect to the budget. The question is: why is the government anticipating flat revenues, then, from the speculation tax? Shouldn’t they be expecting a diminishing amount over time if the speculation tax were to take the effects that the government is hoping it would take?

Hon. C. James: Thank you to the member for the question.

I think it’s important to note, and we’ve talked about this on other taxes, that it’s important to be able to see behavioral change to be able to build into the budget. I expect that there will be adjustments after the tax is in place and after we start seeing behaviour.

If adjustments need to be made in the budget, the adjustments will be made in the budget. But we certainly expect that there are more vacant homes that are going to be not rented out that will continue to bring in tax revenue. But adjustments that need to occur can occur, and that’s why we build improvements in the budget, as we go along.

A. Weaver: I’d like to switch, then, to land that’s proposed to be under development.

Now, I’ve heard a number of concern. I’ve met with a number of developers, both here in Victoria and Vancouver and other areas, with respect to the problem that could arise if the speculation tax is applied to undeveloped land. The scenario you might imagine is a builder acquires some land, is now waiting — in some cases, a couple of years — for a permitting process to go through with the local municipality. The speculation tax starts to get involved.

The actual builder or developer has to face one of two choices. Do they pay this up front, and then that, ultimately, would be passed along to the buyer — which actually goes against government’s mission and mandate to try to create affordable housing — or do they walk away from the project because it’s just not worth the hassle.

My question with this is: will the speculation tax, as implemented, be dealt with in a way similar to the way that Vancouver has addressed the vacancy tax, by ensuring that developers aren’t liable to pay the tax in specific cases where land is being collected and put in a process for development?

Hon. C. James: Thanks to the member.

We certainly have been engaged in those discussions. I think the member points out the Vancouver model. I think one of the discussions…. We’ve been working with UDI, we’ve been working with the Canadian Home Builders Association, the urban land initiative — there are a number of groups that we’ve been working with — to look at exactly the kinds of challenges that the member raised.

There are different development timelines in different communities. Some require an upfront consultation with the community before the development permit is even issued. Others require the development permit and then out to do the consultation. So we’re looking at all of that as part of the implementation. There will be an answer shortly.

We’re working with those groups to make sure that we capture all of those kinds of examples that the member raised.

A. Weaver: I have two final questions. The last one on this topic is that one of the key things, of course, in the industry is uncertainty. Uncertainty creates turmoil in businesses. I know some examples of projects that are on hold because of this uncertainty.

My question is: when can developers expect certainty on whether or not they will be subject to this tax?

Hon. C. James: Thank you to the member for the question.

We certainly recognize that. People are eager to know all of the final details. We want to make sure we finish up these consultations and take into account all of the examples. So “soon” is what I would say. I certainly hope before the summer that we’ll have all of this wrapped up and have the details out.

A. Weaver: Thank you to the minister for the answer. My final question is with respect to secondary suites. Now, I’m not sure whether these are covered or not, so my question is: if the intention of the speculation tax is to actually reduce the number of homes being left empty, are these situations included now, or is there a way of exempting them from the speculation tax?

Let us suppose that I am somebody who lives in Victoria or Vancouver and I have a secondary home in Kelowna and that secondary home stands vacant. But now I put a secondary suite in that secondary home, and I recognize there’s an opportunity — an opportunity for income, safety for my house because I’ve got now somebody living in that secondary suite, and also I might perhaps eliminate the speculation tax.

Would a person who is subject to the speculation tax be exempt from the speculation tax if they were to create a secondary suite in their house that would not otherwise have existed were there not the speculation tax in place?

Hon. C. James: Certainly, it’s consistent with the intent, which is to make sure that people are renting their places out, so that would apply. They would be renting their place out.

Video of Exchange

Today in the BC Legislature I had the opportunity to further question the Minister of Finance in Budget Estimates with respect to whether or not she would consider stepping in to rectify numerous problems that have arisen from the impending ban on limited dual-agency transactions in the real estate sector. The BC NDP inherited this problem from the BC Liberals’ “sledgehammer” approach to dealing with what was largely a Metro Vancouver issue. There are profound consequences for rural BC if this ban goes ahead.

After a series of exchanges with the Minister, I became more and more reassured that she was aware of the impending crisis and is willing to step in.Below I reproduce the video and text of our exchange.

Video of Exchange

Text of Exchange

A. Weaver: I’d like to carry on the line of questioning that my colleague from Cariboo-Chilcotin has been pursuing.

I’ve got several letters here from various organizations, but first, I’d like to comment upon and seek your response to the statement that you’ve made. I do recognize, right off the bat, that this is legislation that government has inherited. It was brought forward as an amendment to the Real Estate Services Act by the former government. That amendment was put in, in the lead-up to, and following, some rather newsworthy issues that were occurring in Vancouver. The office of the superintendent of real estate was created through these legislative changes, and that office has put forward some measures which some would describe as a sledgehammer response to issues that arose in Metro Vancouver.

Now, there have been unforeseen consequences of this. According to section 89.2 of the Real Estate Services Act, the minister has regulatory power on all aspects of what the superintendent of real estate can do. So I would argue that, in fact, it is within the minister’s jurisdictional and legal right now to pass regulatory powers to limit the ability of the office of the superintendent, according to section 89.2 of the Real Estate Services Act, with respect to his or her jurisdiction in terms of licensing or requirements at this particular time.

Perhaps the minister could comment, and I will get back to some specific examples of why this is an important issue right now.

Hon. C. James: Thank you for raising the issue. The member is quite right. There are regulatory powers that exist around authority of the superintendent, as the member has mentioned, in the area of jurisdiction.

I think it’s important to note in this legislation, though, where the legislation identifies the superintendent as independent, that those regulatory powers also have to be balanced with the independence that is also in the legislation — so in taking a look at due process, whether due process was followed in bringing forward the rule; in taking a look at the discussion, the consultations, the work that was done around the consultations.

Remember that this recommendation around dual agency came forward as a central recommendation in 2016 from the independent advisory council. They brought this forward. They, again, did consultation. The superintendent’s office, again, lengthened the consultation.

I certainly, as I’ve said, have passed along the concerns. I think there are concerns there. But when I look at the balance of due process and balancing regulatory powers with the independence of the office, I did not see the ability to be able to utilize regulations in this specific case.

A. Weaver: With respect to the statement about the Independent Advisory Group, I understand that 28 recommendations were done. I would like to quote from a letter I received from the B.C. Northern Real Estate Board, which was copied to my colleague from Cariboo-Chilcotin. The letter says this:

“We are writing to request your support in our call to government for a review of the ban on limited dual agency. The ban was instituted, along with 28 recommendations from the Independent Advisory Group, after a limited review, no consultation with small communities and based on no empirical evidence.  It is important to remember that the IAG began its less than 15 weeks of work in response to a ‘shadow-flipping issue in the Lower Mainland.'”

I come back to this. This is a very real concern that has been outlined and addressed by the member for Cariboo-Chilcotin that I would describe solely as a sledgehammer response to issues that were arising in Metro Vancouver. As the member for Cariboo-Chilcotin pointed out, there was limited, if any, representation from rural B.C. on the IAG.

Again, coming back to the issue at hand here, I understand that the minister has inherited this office from the prior government. I understand that the 28 recommendations came from the IAG. The problem therein comes in exactly with that consultation process, as well as with the recommendations and their implementation.

Just today, May 15, 2018, one month prior to the full implementation, finally rules have been put up on a website. I received an email from a couple of realtors in Parksville today in this regard. They haven’t even had the instructions, the guidelines, about how they’re supposed to implement these. There are brokers who are profoundly troubled about the legal liability they are taking on, by what can only be perceived as a half-baked list of recommendation follow-throughs, to implement these on a timeline that is just not possible, when there are no educational tools available.

I’ll quote this right here. It says: “Today, one month prior to the scheduled rule implementation, the new forms and corresponding rules, interpretations, were finally emphasized, made available to licensees on the RECBC knowledge-base website. It’s notable that significant errors in the information required RECBC to retract and amend the information.” This is one month before it’s supposed to be implemented.

The error noted wasn’t typographical or grammatical but a clear misrepresentation of the rules. If there are troubles with the understanding of the rules with RECBC and the superintendent’s office and realtors in B.C. are trying to implement these in a month — one month —we’ve got a problem. I think it’s a duty and responsibility that the minister recognize that she has the regulatory powers under section 89.2.

Again, I ask the minister, knowing that she has alluded to the consultation process, knowing that there are profound flaws with that, including the inability of realtors to get information on the topic until today, which was then retracted, is the minister willing to step in and use her regulatory powers or to insist that the independent office actually delay the implementation of its regulations — in particular, a limitation on dual agencies — now as opposed to waiting until disaster ensues on June the 15?

Hon. C. James: Thanks to the member. I think it’s just important to unpack a little bit of the issues that the member raises, because certainly I’ve heard those concerns and heard those specific issues as well.

I think it’s important to note that information has been posted since January. They’re continuing to post. Today it was the new forms that were posted. So it’s not that no information had gone out. Today they had the new forms go up. There have been previous postings that have been happening since January.

I think when the recommendation came forward — and the member, I’m sure, will remember this, as we both were part of that discussion — as the member had said earlier, it was in reaction to making sure that there was consumer protection in place.

Then concerns, as the member has rightly pointed out, were raised about representation for all of British Columbia. That’s why you see the exception there for rural and remote communities so there is an opportunity for rural and remote communities to have an exception to this rule if there isn’t proper representation.

Again, I come back to the issue of balancing the independence with the regulation. When there was process, when there was consultation, all of the real estate boards, all the regional boards were consulted through this process.That includes the Northern Real Estate Board and other real estate boards. The Real Estate Council, which is the body that licenses real estate agents — their own organization — has given written confirmation that they believe that everyone will be up and ready to go on the 15th of June.

Again, that reassurance has been given. So given all of that, from my perspective as minister, I think there was due process. It doesn’t mean that there aren’t concerns that have still been raised. That’s part of why, as I said, I’m making sure that I go through the review so that if there’s clarification around who is responsible for what, we’re able to look at that.

If there are still concerns after the implementation date, if people feel that the exception isn’t working, those will be concerns that I’ll continue to raise as well.

A. Weaver: I have two final questions. This is with respect to follow up on the issue.

Again, I’m quoting from a letter that I received today, in fact, from the Real Estate Alliance of B.C. This letter is referring to a response that they got on May 14, which was yesterday, from the office of the superintendent of real estate. The office of the superintendent said this: “Licensees should not wait until June 15, 2018, or council’s new course to prepare for the approaching implementation date. OSRE encourages licensees to take proactive steps to educate themselves” — in bold — “and determine what, if any, business practice changes are necessary to comply with the rules.”

The superintendent is confident that the industry can and will adapt in a positive manner to the new rules. Well, that’s not very reassuring, because this is the counter-argument that is given. The assumption that licensees — these are realtors on the street — will be able to educate themselves and understand how to comply with the rule when it takes effect is unrealistic and unreasonable.

There are changes to the rule interpretations that are ongoing — daily, in some cases. Questions posed to regulators regarding the new rules have yet to be answered. The mandatory education course on compliance under the new rules has not yet been launched, nor will licensees have access to the education prior to the effective date of the rule implementation. The forms have just been made available to licensees on May 15.

We have a real problem here. We have an office of the superintendent of real estate that is implementing these new regulations, which are being applied in response to dealing with shadow flipping in Vancouver, frankly.

We’re having consequences across B.C. — one last question on limited dual agency in a second — we have realtors on the street who can’t get questions answered. We have the brokers who have a fiduciary responsibility, who are unable to train their realtors, because they can’t get answers. We’ve got the Real Estate Council not knowing who is on first base in the office of the superintendent, and we have rules changing on a daily basis.

Forms came out today, and apparently, one had to be retracted. This is a gong show, hon. Chair. And we cannot expect one of our…. I think it’s something like 30 percent of our GDP is in this broad sector. We cannot afford, as an economy, to have this uncertainty continue in the real estate sector, particularly in light of the fact that there are issues like speculation tax, employers tax, which I’m sure we’re going to canvass more thoroughly.

My question, again — the final question on this topic — to the minister is this. Will she, in recognition that there is chaos out there in terms of education, exercise her right under section 89.2 of the Real Estate Services Act to step in and ensure that the implementation date is deferred so that a proper consultation and due diligence can be done to ensure that licensees are actually educated across British Columbia.

Hon. C. James: I come back again to due process because I think that’s really the critical piece here when we’re taking a look at new rules coming in or we’re looking at changes and the ability to use regulations to override the independence. That’s really the balance that is required when you take a look at the legislation — the ability to set regulations but to be balanced off with the legislation that makes it very clear that the superintendent’s office is independent.

The Real Estate Council, as I said, is the governing body for all real estate agents in the province, rural and urban. They cover everybody. They are the professional body for real estate agents — have assured us and assured the superintendent’s office that agents will be prepared. That is the assurance that they have provided. They are the body that governs the real estate agents.

The rule was announced in November 2017. So the rule was announced. I recognize, as the member raised, that there continue to be questions raised. But the information continued to go out.

I think, just in case anyone’s wondering what the dual agency is…. I realize we haven’t really talked about what the dual agency rule is. This is related to not allowing a real estate agent to represent both sides, as a consumer protection issue.

This isn’t a rule that changes practice for most agents or most communities, because you basically are saying to someone, “This is a practice that you can’t do,” and then the exception provides an opportunity in those communities where there are few real estate agents — or remote communities — the ability to get the exception. Someone can then look at representing both sides. So that opportunity is there.

I think the last piece I just want to touch on is the personal responsibility for real estate agents, who are professionals and who do have a responsibility to inform themselves.

Do I believe that we need to make sure that the information continues to be out there? Will I continue to raise concerns that I hear, just as the member has done, with both the superintendent and the council? Yes, I will. But in weighing the due process with the ability to use regulations to override the independence — I do not see the ability to be able to do that.

A. Weaver: My final question — and I’ll come back to that again — is…. Clearly I disagree with the minister on this. And clearly, just to follow up on the limited dual agency….

The limited dual agency serves very useful purposes in many cases. In rural B.C., it’s very important for those educated buyers who want to go directly to the listing agent. They know that they can negotiate a better price because there’s only one side of a commission that has to be negotiated.

Sometimes, for example, a realtor might have a slew of clients that they’re working with. They get a listing. What’s happening right now is that one of their clients….

Let’s suppose that I’m a realtor — let’s pick: in Comox — and I listed a house and had 15 clients who were going to come to that house. Then one of my people want to buy that house. Well, I go and find my other friend to be a realtor with them, and I now have to get off of both sides of this because I’m in a conflict because that was originally my client. Now I’ve assigned that client over to someone else, but I’m still the listing agent. I can’t even be the listing agent for that house.

There are many, many problems that have arisen from this application. I recognize, again, that the government has inherited this mess from the previous government. And as it played out…. I don’t, frankly, think the previous government had thought it was going to play out the way it has, either. But we have a situation now where they have an impending deadline that’s going to likely lead to chaos.

I know, again, that the minister is setting up a review process. Why this is important is that there is a recognition that there can be potential conflicts of interest that arise in limited dual agencies. This is why, for example, in the province of Alberta, they’ve created something called a transactional agency, where they’ve created a different type of response for dealing with limited dual agencies in the case of potential conflicts. The review that B.C. is doing might, for example, come and recommend an approach like this.

The problem with not delaying is that if the B.C. review says, “We can see that it’s better to follow this transactional agency approach like they do in Alberta,” we’ve already gone and switched the whole system in B.C., and now we’re going to switch it back. This is chaos upon chaos. Surely the prudent response would be to pick up the phone or use regulatory powers under section 89.2 and say to the office of the superintendent: “Until such time as this review has been completed, we will recognize the potential conflict that may arise in limited dual agencies. There are solutions on the table. We don’t want to fix it twice. So let us delay the application of limited dual agency until, say, the fall, at which point we’ll re-look at it then.”

My question to you is: will the minister consider either picking up the phone and suggesting a delay on this or using what she seems reluctant to do — regulatory powers under section 89.2?

Hon. C. James: I just want to clarify one piece because this, again, comes to the details of the dual-agency rule that’s in place. Because of the consultation that occurred, because of the discussion that has been going on since November when the rule came out, there actually is a clarification. The example that the member used — where someone is selling a place, they’re representing it, they had a former client, the person came — that they would have to exclude themselves from both those sales is actually not accurate. With the rule clarified, they do have an ability…. Where both parties agree that they understand that that’s there, the person can continue to represent one of the parties. They don’t actually have to exclude themselves from that sale completely. I just wanted to make sure that people are aware of that. That is an important piece.

Again, when I take a look at that rule clarification, when I take a look at the exception that’s been put in place for dual agency in remote and rural communities, it’s hard not to say that there was a consultation process and exceptions made because of that consultation process — therefore, listening to the concerns that were raised to be put in here.

I think the other piece, just to clarify for the member, is that the review that’s going on is not a review of the rules. Right now the superintendent, according to the legislation, has the ability to set those rules. The review that’s going on is to clarify roles and responsibilities. Who is responsible for what? Where are there problems in place? Where does that need to be addressed? So the review wouldn’t, in fact, touch the rules one way or the other because that’s not part of the review process. It’s a review around roles and responsibilities — clarification there.

A. Weaver: I just wanted to thank the minister for her comments. I recognize that there were some…. This is part of the problem, actually. There’ve been numerous changes. Things are changing on the fly. With respect to the upcoming review, we must not forget section 89.2. Ultimately, neither of these other bodies has the rules. Ultimately, the rules fall squarely in the jurisdiction of the minister, who has regulatory power to say what they can and cannot do, in terms of the rules. I think that the minister needs to own some of these rules because they are within her regulatory power. I hope that we see that happen in the months ahead.

Today my colleague Adam Olsen, the MLA for Saanich North and the Islands, held a press conference in front of the Legislature to announce the release of the BC Green Caucus report entitled report entitled: Standing up for Wild Salmon.

The report outlines the challenges facing B.C.’s wild salmon populations and highlights a proposed path forward, through the creation of a Wild Salmon Commissioner and supporting Wild Salmon Secretariat.

Below I attach the press release that was issued today.

Media Release

MLA Olsen releases report: Standing up for Wild Salmon
For immediate release
May 16, 2018

VICTORIA, B.C. – Adam Olsen, MLA for Saanich North and the Islands, publicly released his Standing up for Wild Salmon report today outside the B.C. legislature. The report outlines the challenges facing B.C.’s wild salmon populations and highlights a proposed path forward, through the creation of a Wild Salmon Commissioner and supporting Wild Salmon Secretariat.

After making the initial pitch to the Premier in March, Olsen hosted representatives from a diverse range of fisheries backgrounds for a consultation forum where there was unanimous consensus on the need for a Wild Salmon Secretariat or Commissioner in B.C. Following his forum, Olsen presented their feedback to government along with a detailed proposal. Today’s public report is an extension of that work.

“Now is the time to appoint a champion for wild salmon,” said Olsen. “The crises facing BC’s wild salmon populations, while dire, provide opportunity for action: stakeholders, First Nations, the public and the commercial sector are aligned and eager for provincial leadership on this file like never before.”

A key finding from the Forum was the shared frustration of many participants in trying to deal with the provincial government to resolve salmon issues, having been passed from department to department because there was no single ministry in charge of the file. The proposed commissioner and secretariat would serve as a unifying force in the provincial government to see the big picture and ensure that all the fisheries work being done within the B.C. government is aligned towards a consistent, positive outcome. They would be a strong defender of wild salmon in negotiations with the federal government and work to rebuild declining stocks.

“Protecting wild salmon is a priority we share with the B.C. NDP government,” Olsen continued. “My hope is that they take today’s unified call as an opportunity to finally take action and establish a dedicated wild salmon representative responsible for this foundational B.C. species.”

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Media contact
Jillian Oliver, Press Secretary
+1 778-650-0597 | jillian.oliver@leg.bc.ca