Public Safety Committee on June 10th, 2014

[Blake Richards, Conservative, Wild Rose, AB]

Okay, I appreciate that.

In your opening remarks you mentioned a task force that you were part of. I think you even chaired the task force, if I'm not mistaken. You looked at these models specifically with that task force. I'm wondering if you could indicate what changes you've seen and what has developed in the time since that report came out, in terms of this particular model in this field, and where you see it going from here.

[Gordon Hogg]

At that point British Columbia was leading Canada in a dramatic fashion. We had lots of interest in the reports we had done. I had previously been the minister for health promotion, and we developed a model called ActNow, which was developing policies in all areas. We created in that model an assistant deputy ministers' committee that reviewed the service plan of every ministry and ensured that, like the Ministry of Highways, it had to have something about health promotion as part of that model. That became the intersectoral breakdown, and the way we tried to break that down. We had to have the political will driving it, and then that type of model.

Since then we've seen five or six provinces now moving ahead with social impact bonds, looking at social innovation, wanting to move carefully into that. We have been working hard at balancing our budget in British Columbia, and the challenges that are associated with that. I think most governments don't want to fail. Our Treasury Board wants to make sure that we do something that is a success, that does happen. An innovation is not always about success. Some risks are inherent in that, that I think have to be followed through with.

The U.S. Senate just finished hearings on social impact bonds last month. A number of proposals were presented to them. I think the outcome was it seemed a bit airy-fairy, so we need to be able to get something that's concrete to work at and to manage. I think that's one of the goals we have to look at and find more concrete ways to present that.

I have given your clerk a copy of the action plans we have, as well as a proposal that came to us. We had representatives of the BC Association of Aboriginal Friendship Centres on our task force. They have developed a proposal for a social impact bond. They've developed a business case for connecting indigenous elders and families to reduce neglect and the costs of placing children in foster care. It is, I think, an interesting proposal, and one that their initial analysis says would help reduce the number of children coming into care.

[The Chair, Conservative, Daryl Kramp]

Thank you very much, Mr. Hogg.

Thank you, Mr. Richards.

Of course, when they're presented and translated, they certainly will be available to the committee.

Mr. Garrison, you have seven minutes, sir.

[Randall Garrison, NDP, Esquimalt—Juan de Fuca, BC]

Thank you very much, Mr. Chair.

I want to start with a reflection on something that came up at the end of the testimony of the last two witnesses.

We're looking at social impact bonds. I think we need to make clear we're not looking at the record of our rehabilitation programs. Many of the statements that have been made presume things about our rehabilitation record that are not true, in particular, things about the rates of those who've been through the programming. Canada traditionally has had very successful rehabilitation programming. The problem is people who don't get it. Also there's the assumption that there's been no innovation in Corrections Canada. In fact, Corrections Canada is known around the world for being very innovative in its corrections. We're not looking at that, so I think we have to keep that in mind.

The second thing, Mr. Hogg, is I have no objection to your being here as an individual, nor do I question your good intentions, but I find your appearing here as an individual a problem for our side. I think your answer to Mr. Richards illustrates why it's a problem.

I think any questions I would ask of you would inevitably lead to the topic of public funding by your government for crime prevention, rehabilitation, and social programs. You just mentioned that the B.C. friendship centres, which have lost all their public funding, are now looking at a social impact bond. I think the appropriate place for those questions is the B.C. legislature and not here.

As a courtesy from one elected member in a federal Parliament to a provincial member, we're going to choose not to ask any questions today.

[The Chair, Conservative, Daryl Kramp]

That's fine. Thank you very much.

We will now go to Mr. Maguire, for seven minutes, please.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Mr. Chairman.

Thank you, Mr. Hogg, for being here today. You bring a world of experience. That's obvious by the introduction that you had. I want to commend you on working toward a doctorate in these areas.

You mentioned that you had 11 recommendations in a report you presented, and I commend you for the work on that as well. With that experience, can you outline for us maybe the top two or three recommendations out of that report that you feel are important issues, that we could be using here federally, rather than going into them all at this particular point. In spite of what was just said, I know there's a lot of experience there and a lot of ideas that we could be using here. That's why we're holding these meetings: to try to get more information so we can implement a much better system across the country. As you indicated, B.C. is a leader in this area in some cases. I wonder if you could expand on that.

[Gordon Hogg]

Certainly.

First, I think one thing that has been referenced already is looking at the CRA rules for charities and support for social enterprise within those, so removing some of the restrictions that the Canadian charities have that prevent them from realizing the full creative entrepreneurial potential they might otherwise have. That is partially why we created the community contribution companies that I mentioned earlier. They are able to actually buy businesses that may assist or support them in doing that. Being able to harmonize that across the country would be a significant benefit to being able to leverage different types of opportunities into the charities and non-profits for the delivery of service and service providers. I think that is one of the more important ones.

Included in that is certainly ensuring that the different types of opportunities for training for small and medium enterprises across the country are also made available to non-profits and to the charities that are actually looking at providing that or entering into that space.

Also, I've been frustrated over the years of my working within the social science field, working primarily in corrections and the work they've done there, and seeing what happened in particular with one of our foster children as she moved on, the challenges she went through. I think it's time for us to actually do something. It's time.

This is the first new space that has come along, in my experience, that looks as though it has some promise. I think we have to take some chances and actually move into that space and see what promise it does have, see what potential it does have. Give us an opportunity to help some of those people who may have a chance to do that, particularly when we have organizations such as the BC Association of Aboriginal Friendship Centres that are very anxious to look at that and do it.

Those would probably be the three areas for which I would say let's not wait until we know for sure that this is ironclad, because we'll be way behind the curve if we wait too long.

I think we have some of the best social innovators, and across our country we have some of the best programs that exist in Canada and in the world. We should give them the opportunity to do that, for instance, perhaps by issuing a requisition for proposals for a social impact bond so that you can reach out to all of those innovators and people who have ideas for programs across our country, people who will come forward, I'm sure, with a wonderful group of ideas they would be interested in putting forward to you.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you.

I have a follow-up question. You touched on the creation of community contribution companies. You talked about the 30% flow-through and the tax credits and that sort of thing. With the provincial governments being responsible for the youth justice system in their areas, it would seem we have a lot of preventative measures that could be used. You've also experienced some of those personally in those areas.

Can you expand on the creation of those community ventures as well?

[Gordon Hogg]

First, with respect to our youth justice system, the last time I looked, in British Columbia we have per capita the lowest youth in custody in Canada. We have worked hard.

When I was the director of Burnaby youth custody centre, we could have over 200 youth in there at overcrowded times. We had that, and the Victoria Youth Custody Centre, which has just been closed, the Prince George Youth Custody Centre, and four camps, so our population could be 500 or more. Now it's well under 100.

I think that has occurred for a couple of reasons. Partially, that cohort of age group is down somewhat, but also, we've worked hard at developing restorative justice models and community-based alternatives for youth. We also recognize that there are some high-risk youth who need to be incarcerated and need to be held out of the public in doing that.

The model we've used has been helpful in terms of doing that. Crime rates for youth are down. Again, there are lots of reasons for that, and I don't want to draw a direct causal relationship, but I think there's a significant correlation in terms of the development of community-based programming that has occurred in British Columbia. It's starting to occur in a number of other jurisdictions across Canada as well.

Those are probably some of the more significant ways.

In terms of the community contribution companies and their ability to thrive, I think we really need to get our flow-through tax credit in place. We don't have that there yet. Our Minister of Finance has been looking at it. Originally, the ministers of finance I've been dealing with on it had been fearful that it would reduce income to our province. In fact, we have a cap of $32 billion on that, and we can cap our percentage to community contribution companies at whatever level we choose, so I don't see that it presents an economic risk. Hopefully we're going to move forward with that in our fall session.

[Larry Maguire, Conservative, Brandon—Souris, MB]

You mentioned the cap earlier, and I think that's an important part of it. That would limit the provincial risk, would it not?

[Gordon Hogg]

In terms of community contribution companies?

[Larry Maguire, Conservative, Brandon—Souris, MB]

Yes.

[Gordon Hogg]

Certainly the level of exposure that taxpayers' dollars would go to would be limited through that. We now limit it at roughly $32 million a year. Designating just a portion of that for community contribution companies would be the intent.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Which is not a cost; it's a good investment.

[Gordon Hogg]

That's right.

[The Chair, Conservative, Daryl Kramp]

Thank you very much, Mr. Maguire. Your seven minutes are up.

Mr. Andrews, please, for seven minutes.

[Scott Andrews, Liberal, Avalon, NL]

I'd like to continue on with a little bit of discussion about the flow-through tax credit. You mentioned in your closing remarks that there wasn't a lot of take-up in the flow-through tax credit. Could you explain what you mean by no take-up? Do you have any statistics to say why it's working, why it isn't working, or why there isn't some take-up in that?

[Gordon Hogg]

The flow-through tax credit is now only available to, primarily, mining associations, the mining industry, development, and high tech. With fluctuations in the economy, there has been less take-up in that. The last time I looked at it, last year, I think we were maybe a couple of million dollars short of full exposure to that. A number of conditions go with that as well; I think that may well be the reason. I don't have any statistics beyond that.

I have lots of information on flow-through tax credits and the proposals that a number of people—people who are far better informed than I am with respect to that—have made to both our Social Innovation Council and our Minister of Finance. We have some interest in being able to pursue that further, and hopefully we'll get there. We believe that will really augment the types of programs I've talked about, such as the parents who are wanting to deal with autistic children. Broadly, I think, the notion that....

Perhaps I'm getting a little further away from your question.

[Scott Andrews, Liberal, Avalon, NL]

Actually, I'm glad you brought up the autistic group. Perhaps you could elaborate a little on that, as I think you were going to, and tell us how the families have taken up on this. How has the autism society, for instance, been able to take advantage?

[Gordon Hogg]

This group of parents of autistic children tends to be rather well off. They said, “We want to be able to run some programs for our youth specifically, and we've looked at this as a model.” They talked about forming a society or community contribution company.

They see this as a way of taking responsibility in terms of being able to deal with and work with their children. We've operated from the belief that parents of special-needs children are the best at making decisions around them as long as they fit within best practices models. We've been working with them to do that.

When I was the Minister of Children and Family Development, we created CLBC, Community Living B.C., which was to move at arm's length from government so they could actually be more flexible. This was an idea that came to me from a number of parents of developmentally disabled children. They really wanted to have the flexibility to be able to invest in the marketplace, to have the marketplace come to them. So we created an arm's-length board that is now responsible. They're wholly funded by the state, but they're also going out and trying to use entrepreneurial skills in terms of doing that.

We're finding that those organizations that have greater flexibility and are closer to the issues have a better ability to respond quickly, and with less overhead, to the issues they are dealing with. I suspect that the parents of autistic children, for example, will have an overhead that's negligible, if anything, whereas the state's overhead can be up to 14%. Many of the non-profit societies we go to have.... With some of them, we really push down in terms of contracts, but the range can be from 7% to 14% in terms of doing this.

Government's overhead can be significantly larger than that in terms of the delivery of models. It's questionable as to whether we're doing better. In fact, in some instances I think we've spent far more money and we haven't changed the needle at all. That's why I'm so optimistic and believe that we should be trying something new and different. These are, again, the first ideas that have come into this space that give us an opportunity to look at things from a new perspective.

[Scott Andrews, Liberal, Avalon, NL]

You talked about crime prevention. A lot of different groups out there deal with crime prevention and in partnership with law enforcement. How do you see social finance working in conjunction, in partnership, with these community groups out there in crime prevention and their partnership with law enforcement?

[Gordon Hogg]

Let me give you an example. When I was director of the youth detention centre, I found out that about 92% of the offences being committed by youths who were coming into custody were happening late at night. We had an NBA team in town in those days, so I went to them. I received federal funding and provincial funding to start a program that I called Night Hoops. The program went on late at night on Fridays and Saturdays. To get into it, you had to be referred by a police officer, a probation officer, a social worker, or a school counsellor. That was the only test. Most of these players had never been on a team.

The Grizzlies gave us 30 season's tickets, which we used as an incentive for these kids. My favourite story is the one where one of the kids came to me and said, “I need two tickets, Gord.” I knew he already had two, but he told me, “I want to take the police officer who arrested me and his wife to see the Grizzlies.” It was neat to see the dynamic shift with respect to that.

If I'd been way smarter in those days, I'd have done some random sampling. I'd have taken half of the kids who were referred to us and put them into Night Hoops, and the other half I would have just tracked. But I wasn't that smart in those days. Anecdotally, when a child comes into custody, it can cost us $130,000 a year for just the custody portion. Then there's court and all of those things. If, through the program, we had stopped just two of them from that, we would have more than paid for the program. But I can now only report to it anecdotally, because I didn't do what I should have done if I'd had better rigour and insight at that point in time.

That's an example of what happens, and of what I think can happen, in terms of prevention. The proposal from the BC Association of Aboriginal Friendship Centres has the same model idea in place, only they are looking at children coming into the care of the state and the significant challenges there. We have about 9,200 kids in the care of the state. Over half of them are first nations. They are the fast-growing cohort of youth in our province and I think across Canada as well. There are significant issues with respect to them and their overrepresentation, as you're well aware, in our institutions provincially and federally. I think this is also an opportunity to start looking at some of the issues around that.

[Scott Andrews, Liberal, Avalon, NL]

Thank you.

[The Chair, Conservative, Daryl Kramp]

Thank you very much, Mr. Andrews.

Now we'll go to Mr. Payne, please, for five minutes.

[LaVar Payne, Conservative, Medicine Hat, AB]

Thank you, Chair.

Thank you, Mr. Hogg, for coming.

This is very intriguing stuff that you folks are looking at in B.C. I want to touch on a couple of things.

First of all, you talked about your community interest corporation. Is that in actual fact set up now?