2001 Legislative Session: 2nd Session, 37th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD

MINUTES SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES Tuesday, October 23, 2001 1 p.m. Douglas Fir Committee Room Parliament Buildings Victoria, B.C.

The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON 
FINANCE AND GOVERNMENT SERVICES

TUESDAY, OCTOBER 23, 2001

Issue No. 14

ISSN 1499-4178

[ Page 445 ]

TUESDAY, OCTOBER 23, 2001

           The committee met at 1:01 p.m.

              [B. Lekstrom in the chair.]

           B. Lekstrom (Chair): Hello, I'm Blair Lekstrom. I am the MLA for Peace River South, and I'm the Chair of the Select Standing Committee on Finance and Government Services. I would like to welcome you to our public meeting this afternoon and look forward to hearing the views of the presenters.

           Just prior to moving forward and asking the other members of the committee to introduce themselves, I would like to point out how our presentations will work this afternoon. Each presenter is allotted a 15-minute time frame. We like to, hopefully, have them conclude their presentations in the ten- to 12-minute range and allow for a question, if any clarification is needed from any one of the members of the committee.

           Following that, I would just like to briefly comment on what our specific mandate as a committee is: to examine, inquire into and make recommendations with respect to the prebudget consultation paper that was prepared by the Minister of Finance. If you haven't had a chance to receive or review a copy, there are copies by the coffee on the back table, and I would encourage you to do so. It's a very in-depth and valuable document when you look at the financial picture of the province.

           This afternoon we do have a number of people working with us that I would like to introduce. Everything that's said will be recorded and transcribed in Hansard. With us, we have Paul Monette and Wendy Collisson, working with Hansard. Our research staff today is Josie Schofield, and to my left is Craig James, the Clerk of Committees.

           Without carrying on too long and getting into the time allotted for each presenter, I would like, at this point, to ask our committee to introduce themselves, beginning with Harry on my right.

           H. Bloy: Good afternoon. I'm Harry Bloy from the riding of Burquitlam.

           R. Sultan: Ralph Sultan. My riding encompasses part of North Vancouver and part of West Vancouver.

           I. Chong: Good afternoon, ladies and gentlemen. My name is Ida Chong, MLA for Oak Bay–Gordon Head, which is a riding here in the capital city.

           J. Bray: My name is Jeff Bray, and we're in my riding right now, Victoria–Beacon Hill.

           T. Bhullar (Deputy Chair): My name is Tony Bhullar. I'm from Surrey-Newton.

           J. MacPhail: I'm Joy MacPhail, MLA for Vancouver-Hastings.

           L. Mayencourt: I'm Lorne Mayencourt, MLA for Vancouver-Burrard.

           K. Krueger: Kevin Kruger, Kamloops–North Thompson.

           B. Lekstrom (Chair): All right. With that, I would like to begin our hearings this afternoon and call upon our first presenters, who are with the College Institute Educators Association, Roseanne Moran and Maureen Shaw. Good afternoon.

Presentations

           M. Shaw: Good afternoon. My name is Maureen Shaw. I'm president of CIEA, the College Institute Educators Association of B.C. With me today is Roseanne Moran, communications and research staff representative. We welcome the opportunity to share our views on the upcoming provincial budget with the select standing committee today and to participate in the provincial budget consultation.

           Yesterday we met with the federal finance committee. There, we were encouraging that there be improved federal transfers to the province, better support for training and better support for the college sector in research. As with that committee, I know that members of this committee are hearing about the many needs and the many priorities of British Columbians.

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           Just a little bit about our organization. We represent over 7,000 faculty and staff in B.C.'s public colleges, university colleges, institutes and agencies, as well as in a number of private training institutions. Our members deliver programs and services for students in all areas — academic, vocational, apprenticeship, technical, career, adult basic education and English language training — in communities throughout the province.

           As many of you will know, our college, university college and institute system is extensive. It serves more than 85,000 full-time-equivalent students this year. In the university system, there are approximately 63,000 full-time-equivalent students.

           I first want to focus on the current context in which we find ourselves. This provincial government was elected on a platform dedicated to improving B.C.'s economy and protecting health, education and social programs. We note that this is a consultation on the upcoming budget, but we also note that a number of significant decisions regarding future government spending and revenue generation have already been announced.

           We hope this committee is prepared to recommend that based on what you might hear in these consultations, the government review some of these directions. As we all know, this is one of the most volatile times in many decades. It's certainly not the context in which the government found itself six months ago. The global economy on which our province is so dependent is facing a time of great upheaval and uncertainty, especially in the aftermath of the tragic events of September 11.

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           The provincial government continues to identify education as a top priority, and indeed, it has never been more important. As it appears, we are headed into an economic downturn. When we met with Gordon Campbell in September 2000, he expressed the view that education is the best preventative health care. We share this view. Education has benefits that go beyond what simply is learned. When we educate people, we change our economy and our society for the better.

           I just want to focus a little bit on the B.C. context. It's one in which demand for post-secondary education will continue to grow significantly because of demographic, immigration, workforce and retirement trends. Unlike other jurisdictions in Canada, B.C. is experiencing a net increase in the traditional, post-secondary age group, 18-to-29 years old. The Centre for Education Information estimates that the 20-to-29 age group will grow by a further 16 percent in the next ten years — nearly twice the national average.

           British Columbia's economy continues to become more knowledge-based. Between 1989 and 1999, employment in the forestry, fishing, mining and oil and gas sectors fell 13.3 percent on average. During the same period, employment grew by 62.7 percent in the professional, scientific and technical services sector. Post-secondary education is increasingly becoming a prerequisite for employment. Almost 73 percent of the projected job openings between 1998 and 2008 will require a post-secondary degree or diploma.

           Some other factors to consider and that define our context are that B.C. continues to lag behind the rest of the country in terms of the number of undergraduate degrees granted. B.C., like other provinces, will also face serious skill shortages and will need to improve access in all program areas.

           The Industry Training and Apprenticeship Commission in B.C. estimates that 60 percent of the new jobs between 1998 and 2008 will be in the trades, technical and skilled occupations. Adding to that, B.C. could face a serious shortage of college educators. Work Futures 2000: BC Occupational Outlooks forecasts that growth and employment for college educators will be 2.3 percent faster than the all-occupation average and slightly higher than the forecast for university professors.

           There will be an estimated 8,490 job openings for college educators in B.C. between 1998 and 2008, many of those because of retirements. Given this context — the predicted need for more post-secondary education — the three-year freeze on funding needs to be reviewed. B.C. cannot improve our economy while, in effect, cutting education.

[1310] 

           As part of a strategy for making B.C. an economic and education leader, we recommend the following: remove the freeze on post-secondary capital expenditures; remove the three-year freeze on education and provide adequate levels of funding to support existing programs and services and to provide new, fully funded student spaces across all program areas in post-secondary institutions; and finally, take steps to continue to make education more affordable for all students.

           We encourage the committee to recommend continued funding across all program areas, not just those which are currently identified as facing labour market shortages, such as health care, social work, trades, technical and high technology. Funding for liberal arts programs, for instance, is equally important. High-tech CEOs in Canada identify a strong need for those with a broader background who can work in tandem with technical specialists, helping create and manage their environment.

           Other program areas within post-secondary institutions, such as aboriginal education, adult basic education, adult special education and training for B.C. Benefits recipients, are also important. Government must continue to support those in our society who are most marginalized and who face the greatest barriers to successful participation in post-secondary education.

           In our written presentation, we also note that B.C. needs to better support research and innovation in the college sector, and we encourage the committee to pursue this recommendation. Later this week we'll make a presentation to the Standing Committee on Education, and we'll be able to expand on a number of these ideas, but we know there is a need to plan well for the future and to ensure that there is a comprehensive review of our post-secondary education systems.

           We also caution against looking to the private sector as a way to make up for funding shortfalls. We believe that post-secondary institutions should be publicly supported and publicly governed, and we also know that the capacity of institutions to seek and realize private funding varies significantly, depending on geography, mandate and the health of the regional economy. Private funding in the form of direct employer-supported training or sponsored funding is very unlikely to go to those who face the biggest challenges participating in post-secondary education.

           How should government spending be changed to help meet the requirements of balancing the budget by 2004-05? First of all, we recommend delaying balancing the budget. We would recommend rethinking the budget date, especially given the events since September 11.

           We also, as I've indicated, would ask you to look at the capital freeze in the B.C. post-secondary education sector and the negative impacts that that has had already. Some of your own data, which is in our paper and which we can elaborate on, indicates the drastic need throughout the system for further capital dollars.

           We also recognize that the current government campaigned on a commitment to cut taxes within its first term for the lowest two income brackets in B.C. However, the government went beyond its commitment, introducing a dramatic tax cut on the first $60,000 of income within its first term and announcing an immediate tax cut of at least 25 percent for all taxpayers. We would ask this committee to reconsider what impact those tax cuts are having on government revenue.

[ Page 447 ] 

           We're also concerned that tax cuts could lead to higher user fees for individuals who need public programs and services. In other words, we're concerned that it could lead to an increase in tuition. We know what increasing tuition has done across Canada. It has had a very negative impact in Ontario and Alberta, and we do not see that students in B.C. should be as disadvantaged as they have been in those provinces.

           We encourage the committee to recommend an investment in post-secondary education, both operating and capital. We encourage the committee to reconsider the freeze in funding, both in capital and in core, and we wish you all well in your deliberations. Thank you again for the opportunity to present today.

           B. Lekstrom (Chair): Thank you very much, Maureen and Roseanne, for your presentation this afternoon.

           I will look now to members of the committee, if there are any questions.

[1315] 

           J. MacPhail: Thank you, Maureen and Roseanne. It's nice to see you.

           You're in a fairly interesting situation in that your members are middle income instructors in the college system, perhaps a little bit above middle income, yet you will be directly impacted by the decisions of either tax policy or spending policy. That was a very good brief — an excellent brief. What's the scuttlebutt on campus on those two opposing situations?

           M. Shaw: Our members have long taken a position that they do not want students disadvantaged. They do not want students to have to carry the overwhelming cost of education. They recognize that high tuition can be a barrier to access, so the concern of our members is that students be able to enter our programs and participate fully in their education. They recognize that the tax cuts have an advantage for them, but it is not at the cost of good, affordable, accessible education.

           J. MacPhail: Is that the current faculty lounge discussion?

           M. Shaw: We met this weekend, and we had discussion about it. It was reiterated that we have real concerns about the impact of the tax cuts on the revenue and then the downside effect of the cuts or the freeze.

           B. Lekstrom (Chair): Are there any further questions from members of the committee? Seeing none, Maureen, Roseanne, I thank you very much for your submission. As with all of the others from the other communities we have listened to, I can assure you that it will be given due consideration in the development of our report, which is due out by November 15. Again, I thank you very much.

           Our next presenter this afternoon is with the Cement Association of Canada, Mr. Ken Pensack. Good afternoon, Ken.

           K. Pensack: Good afternoon. I want to thank the committee for the opportunity of making a presentation. It's good to see some familiar faces in the room, since I've met some of you before. I'll take you through the brief presentation that's in front of you. Hopefully, it will be fairly punchy and to the point. I'm prepared to address questions.

           Our association represents 100 percent of Canada's cement producers. That's unique in an association. We have a reputation as a world-class leader in what's called high-performance concrete or roller-compacted concrete. Of interest here in this part of the country is that this product, roller-compacted concrete or RCC, was developed in B.C. primarily for log sort areas.

           The Cement Association has a long association with B.C. Ready-Mixed Concrete Association, and we do a number of joint programs together. We recently agreed to work with the B.C. Trucking Association to promote infrastructure and are currently talking with the Greater Vancouver Gateway Council. We seem to have a fair amount of alignment with them in terms of some areas of interest.

           As far as our contribution to the national economy, we employ over 22,000 people with sales of about $4 billion. Of the cement produced, 70 percent is consumed by the ready-mix industry. We're a significant exporting industry, and anything that affects exports affects the vitality of our industry.

           Cement and concrete industries are vital contributors to national, provincial and local economies. In British Columbia, we have some 300 people working in the cement plants and around 4,000 people employed in the industries of concrete and cement. Total industry revenues for the province in 1998 were about $750 million.

           We produce the product at three plants located in the province. We produce around 2.3 million tonnes. I would also like to note that in addition to regular fuels, we also consume tires and waste oil in our kilns, which benefits industry and society. We see a growing demand for our product and are fairly optimistic about B.C.'s future.

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           Our industry is committed to working with government to develop policies pertaining to infrastructure renewal, the environment and roadway safety issues. I will deal with those in the following slides. We believe the tendering process for roadways in B.C. should allow for a fair and equitable competition between concrete and asphalt. This can be accomplished by using alternate tenders, which include life-cycle costing. We recommend that a task force be established that will allow for fair competition, similar to the process that's used in both Alberta and Ontario.

           I think this next slide is a very telling one about priorities. Current plans call for Canada to invest some $2.65 billion over six years for infrastructure renewal, of which only $150 million is earmarked for transfer for highways. In comparison, the U.S. is spending $217 billion over six years, with four years left on that program. Of the $217 billion, roughly $175 billion is for highways.

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           We believe this level of investment in Canada is detrimental to our country. We believe a strong economy is the key to success. This is driven by a sound infrastructure. The CAC is a strong proponent of public-private partnerships, or P3s, and user fees or tolls. We also support interest-free bonds for infrastructure financing. Models exist not only in this country but in the U.S. and across the world for successful applications of all of these.

           Continuing on with economic benefits, I think you might find this next piece interesting. Recently completed research by NRC, or the National Research Council of Canada, noted that a fully loaded tractor-trailer travelling at 100 kilometres over a horizontal road surface between temperatures of minus 18 Celsius to plus 40 Celsius, produced 11 percent fuel savings on average when travelling on concrete versus asphalt.

           Concrete roadways are also an efficient use of aggregate. Concrete roads carry traffic within their structure and therefore require much less aggregate than asphalt paving. We know that aggregate is a bit of an issue for us. This fuel saving is one issue for the vitality of our economy, but I'd also like to point out there is the attendant CO2 saving, the benefit.

           From the safety point of view, concrete does not rut. It is a white surface, it is lighter than asphalt and has better skid resistance. This year the province of Quebec put into legislation what's called a white-grey-black policy for roadway construction. We believe the driving forces behind Quebec's new policy are applicable to other provinces such as B.C. We're asking for a task force of stakeholders to bring forward recommendations to the government on the merits of a white-grey-black policy for British Columbia.

           We encourage the adoption of a purchasing and construction policy that's based on using the most appropriate B.C. product for public projects. We believe that for the benefit of the taxpayers, the marketplace should dictate the product that is used. We also would like to applaud this government for changes made to the Labour Code, changes made to taxation and the restoration of open tendering.

           In conclusion, we'd like to ask for a commitment to alternate tendering, including life-cycle costing, for British Columbia roads. We'd also like to ask for a commitment to establish a task force to evaluate the white-grey-black policy for British Columbia.

           B. Lekstrom (Chair): Thank you very much, Ken. I will now look to members of our committee, if there are any questions.

           R. Sultan: Just to educate me a little bit, are there differences between the suitability of asphalt and concrete in northern climates?

           K. Pensack: There are no differences. There's a number of proven roads that are concrete in northern climates that behave equally as well as, if not superior to, asphalt.

           J. MacPhail: Thank you. That was very interesting, sir. Is Quebec the first one to put in place a white-grey policy, or are there other jurisdictions — perhaps more far-flung, like Europe — that have moved in that direction? That's question No. 1.

           Secondly, just in terms of it being a made-in-B.C. product, which I totally support, what about long-term supply of B.C. inputs?

           K. Pensack: To your first question, yes, places in Europe — you can travel through Germany and places like that — exclusively pave in concrete. I'm not sure if it's policy or if it's good economic decisions. Quebec is the first province in Canada to adopt a white-grey policy network, meaning certain roads will be paved in concrete, certain roads will paved in asphalt and some are left available to competition for both.

           To your second point, availability of resources is not an issue for the industry at all.

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           K. Krueger: It's no secret that this government doesn't have a whole lot of money in the bank and yet has substantial catching up to do around the province with regard to public sector infrastructure — certainly highways. I'm wondering whether the association and its members are exploring private sector partnerships to potentially bring on submissions to government with regard to construction of highways, where the ownership of the highway might well be private partners and the maintenance and so on. With the advantages of your materials, one would think you could be a successful bidder in some of these projects that have to be considered over the next few years.

           K. Pensack: We have met with the ministry and have already expressed our opinion in support of public-private partnerships, of tolls. As you say, the government isn't flush with cash. We think that this is the way to provide infrastructure to the citizens of British Columbia, to provide it now rather than ten or 15 years out and to have private industry own it and transfer it to the province. Yes, we are aligned. I think the B.C. Business Council has made a presentation to you.

           As I mentioned before, the Greater Vancouver Gateway Council is also currently working with the ministry to develop a program as to which infrastructure would be built and under which financial format, and we support that 115 percent.

           B. Lekstrom (Chair): Are there any further questions? Yes, Ralph.

           R. Sultan: Would there be any environmental distinctions made between these two competing materials? Does your industry have significant environmental issues facing it? If so, how are they dealing with it?

           K. Pensack: I don't think we have environmental issues. We have solutions, to be quite honest. We believe that the fuel savings, which have been corroborated by NRC, are reducing CO2. We also believe

[ Page 449 ] 

that concrete homes, for instance, reduce the need for power and also reduce pressure on the environment. We also consume waste products in our process. In fact, we believe that we are a solution to issues of environment.

           B. Lekstrom (Chair): Well, I see no further questions, Mr. Pensack. I would like to thank you for coming forward with your submission this afternoon. It will be given due consideration, I can assure you.

           K. Pensack: Thank you very much.

           B. Lekstrom (Chair): We will move on to our next presenter this afternoon, who is with the Canadian Taxpayers Federation, Mr. Mark Milke. Good afternoon, Mark.

           M. Milke: Good afternoon. Let me start by thanking the members of the committee for today's presentations and for hearing us all.

           For those unaware of the Canadian Taxpayers Federation and its origins, let me just briefly mention that it is a federally registered, non-profit organization that accepts no government funding, does not have and will not seek tax-deductible status and is non-partisan. We are, of course, political — I'd be the first to admit that — in the sense that, as the director of the federation, I seek to promote the views and favoured policies of the federation's supporters, but as a director, I cannot hold a political party card and neither may any board member of the CTF.

           Very briefly, the federation's goals are to act as a watchdog and to inform taxpayers of government's impact on their economic well-being, to promote responsible, fiscal and democratic reforms, to advocate taxpayers' common interests and also to mobilize taxpayers to exercise their democratic responsibilities. The federation was officially formed in 1990 in Regina, out of protest over the GST and in response to the rather sorry state of public finances under Conservative governments in Alberta, Saskatchewan and the federal level.

           It is always surprising to some that the CTF was formed out of response to the shenanigans of three so-called Conservative governments, but we attempt to watch the spending of all, regardless of who is in charge. The B.C. division of the federation opened in 1993. Last year 30,000 people cross Canada made a freewill contribution to the Canadian Taxpayers Federation, its sole source of support.

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           Let me start this afternoon's presentation by pointing out that, at base, governments have a choice between two broad courses. They can either attempt to promote economic growth in general or focus overmuch on redistribution, to the detriment of economic growth. Of course, as long as there are government and taxes, there will be some redistribution. That is assumed, but the focus on economic growth is more useful.

           One statistic — which is not in the prebudget submission but I thought would be useful to share atthe last moment — is this: the federal and provincial governments could take away all the income of those earning $60,000 and over. They could take it all away — anyone earning $60,000 or more. They could take their income away — over $60,000. They can take that money and redistribute it to anyone earning under $60,000. The grand total per person would be $1,300 annually. That's it. However, a 3.5 percent growth in total incomes would accomplish the same feat. Re-distribution is useful in some cases, necessary in others, but it's limited. You as a government have a choice: redistribution or wealth creation as your main focus.

           The current and likely debate for some time to come in British Columbia is likely to surround the tax relief and the cuts to government spending. The CTF has argued for both reduced taxes and a reduced size of government for some time. Taxpayers were subject to a decline in real incomes in British Columbia in the 1990s and cannot now afford the existing size of government, as I will shortly explain.

           As with the rest of the country, taxpayers in British Columbia were subject to rising taxes for much of the last decade, through real rate increases and also through inflation-based rate increases, known as bracket creep, as is commonly known. Bracket creep alone over the last decade poured $90 billion extra dollars into government coffers around the country, federally and provincially, between 1988 and 1999. Only late in the decade did the tax burden, provincially and federally, begin to decrease.

           The CTF supports the government's move to cut taxes. I can tell you it's wildly popular with my members. It is important for competitive reasons. B.C. could not and cannot afford to be as far out of line with other provinces as it was for much of the decade.

           Now, as it concerns the feedback of tax relief. Critics should be aware, as I pointed out last year, that tax cuts will take some time to work. They will pay back part of the revenue lost to governments over time, though likely not all in the medium term.

           As Maurice Levy from the University of British Columbia has argued, though, regardless of what one thinks of the arguments on brain drain to the U.S. and Canada, provinces are especially susceptible to high taxes and/or discouraging economic policies by governments and the eventual emigration that such policies encourage.

           Canadians do not require a green card, for example, to move from province to province. This can be illustrated by the statistical note that you'll find in the study I'm submitting to you today. This is a trend that began in mid-1996. B.C.'s net migration loss to other provinces totalled almost 19,000 people from 1997 to 1999. Preliminary figures for the year 2000 show a similar pattern. It is even more discouraging if you look at the 24-to-54 age category, which, by the way, is usually the high-income years for most people. That has an effect on the tax base later on.

           We at the federation would argue that tax relief is necessary both for long-term economic reasons, the economic growth strategy, but also, quite frankly,

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because taxpayers need it and deserve it after decades of ever-rising taxes.

           As it concerns the size of government. I'll try and skip some of the statistics. Most of those are in what you have in front of you, but here are a few to note. British Columbia's size of government relative to the economy is 26 percent, the highest among the have provinces, compared to 21 percent in Ontario and 20 percent in Alberta. The other provinces all have larger government-to-GDP ratios, but that's because they receive transfer payments from the have provinces — in other words, us.

           British Columbia was the only province where the cost of public sector wages and salaries rose in the 1990s, by 1.7 percent. Now, that's not going to seem fairly dramatic until you compare it to the average Canadian decline of about 11 percent over the same period. Some provinces — Manitoba and Alberta — saw declines of 21 percent in their wage bills. Saskatchewan, an NDP government, reduced them by 13 percent. The average provincial public sector wage in British Columbia is over $4,300 higher than the average private sector wage. No one begrudges that. The question is: when is the private sector going to catch up? How do you get it there?

           According to the B.C. government's own statistical agency, staffed by public sector employees — B.C. Stats — in the 1990s, public sector workers were half as likely to experience unemployment than the private sector would. In comparison with the private sector, as well, the public sector was more likely to be employed full-time — "90 percent in the public sector as opposed to 80 percent in the private sector."

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           B.C. has experienced unusually high net migration losses, as I mentioned earlier, in the 25-to-54 age category. That has significant negative implications for the tax base. Because of these factors, the government must focus on economic growth. Let me give you an example.

           If we currently had Ontario's unemployment rate, 26,000 more people would be working in the province of British Columbia. A conservative estimate of the tax revenue they would contribute from income, sales, property and fuel taxes is $147 million. If we had the same unemployment rate as Alberta, 75,000 more people would be working. They would be contributing $412 million annually from those taxes I mentioned.

           Those taxes don't include business taxes, and they don't include miscellaneous taxes. In other words, if you had more people contributing to the tax revenues, you'd get closer to a balanced budget. It has a lot to do with economic policies put in place and developed over time. No one can snap their fingers and have this overnight.

           When it comes to the proposed spending reductions of $2.7 billion over three years, some have argued that this is about to throw the province into a depression. I disagree. It's 0.7 of 1 percent of the size of the current economy, perhaps less if the economy grows from $125 billion this year. Either way, the choice is between reducing the public sector or reducing the private sector through taxes. There is no free ride.

           Those who argue that the public sector should be exempt from difficulties that the private sector faces are arguing that the private sector must solely bear the brunt of both unwise economic policies enacted over the past decade as well as any current economic downturn that occurs. This would be counterproductive for both the private sector and the public sector. To continue down the path that we trod in the 1990s would one day put us on the per capita GDP average of Mexico.

           In brief, here are the CTF recommendations. A more detailed explanation of each can be found in the complete submission. The government should continue with its planned tax reduction in 2002 and the planned spending reduction over three years. The government should conduct a full-scale review of salaries, wages and benefits in the public sector, including both direct government ministries and Crown corporations, to determine which pay grids are comparable, higher or lower, when compared with the private sector.

           The top two tax brackets should be relabelled the "surtax brackets," because their origin, when you go back to the previous budgets, came in 1991 and in 1992.

           The province should not fund an expansion of the Vancouver Convention Centre. That should set off some fireworks. Let the provincial government seek an agreement among the provinces for a ban on corporate welfare of all types via legislation similar to the existing Alberta law and the proposed B.C. legislation.

           We also support widespread privatization and public-private partnerships that can be used to promote competition, entrepreneurship and efficient and cost-effective publicly desired services. Simply put, the government should attempt to steer the economy, not row it via direct involvement.

           As well, the provincial government should draft a legal opinion on public-private partnerships for municipalities to counter erroneous opinions now circulating to municipal councils as it concerns trade agreements. Public-private partnerships will be an integral part of cost-saving measures for municipalities, and they should be made aware of the correct interpretation of such agreements as it applies to municipalities and public-private partnerships.

           In addition, we recently surveyed our membership, and they support by 90 percent the idea that the government allow drilling for oil and gas on B.C.'s coast if it can be done in a safe manner.

           To wrap up, real incomes in the private sector have declined over the past decades, and British Columbians in their prime earning years started leaving the province in record numbers five years ago.

           One last note on prosperity, which is the focus of our submission today. Prosperity has little to do with the natural resources that a province contains and that are in the ground, though there has certainly been less of a focus on that in the past decade. It also has little to do with the size of the jurisdiction in question. Switzerland is smaller than Germany and has a higher per-capita GDP. Singapore is smaller than Malaysia and has little

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in the way of resources, yet it is much wealthier than its northern neighbour. Hong Kong, of course, is in a similar position vis-à-vis China: smaller and richer.

           Then there is British Columbia. We may have less oil and gas in this province, but we have much more potential for mining, forestry, tourism and lifestyle-type entrepreneurs such as the high-tech industry. There is no reason why British Columbia should not be wealthier per capita than our eastern neighbour or any province in Confederation. That we are not has much to do with where the government's focus has been over the last little while, during the last decade in particular.

           Redistribution for its own sake has not been helpful. The government has a choice: redistribution or prosperity — and it should focus on the latter.

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           B. Lekstrom (Chair): Thank you very much, Mark, for your presentation this afternoon. I will look to members of the committee for questions at this time.

           R. Sultan: I'm curious about your statement about erroneous opinions now circulating to municipal councils with respect to public-private partnerships. Could you explain what you're getting at here?

           M. Milke: Certainly. Certain public sector unions…. I believe CUPE is one that has circulated a brief to councils in Kamloops and, I believe, one in the lower mainland that has said they can't go to public-private partnerships on some issues. I forget which issues in particular. Because of that, these councils have backed off any sort of private–public sector partnerships. The legal opinions, from what I understand, are erroneous, and I think the government would be wise to advise councils of that. It's restricting the flow of private sector money into the province as a result.

           J. MacPhail: Thank you, Mr. Milke. It was very interesting. The fiscal review panel that the Liberal government set up had an interesting note saying that the government should examine different sources of revenue. One of the things that provoked me to ask this question was your issue around bracket creep, which of course results from the tying together of the federal and provincial systems. I think it's this year that provincial governments are permitted by law to separate their taxation systems. Bracket creep benefits provincial governments, but tax cuts originating in Ottawa harm the revenue situation of provincial governments without them having any say about it.

           My point will be very brief. If you combine that with the fact that a province such as British Columbia has no say about the amount of money that flows from Ottawa to British Columbia — particularly around, let's say, fuel taxes, etc. — do you have a view on the separation of the two tax systems and that perhaps that gives a little more stability to revenue prediction for a provincial government?

           M. Milke: Well, a couple of things on that. Provinces, from my understanding, were allowed to delink in the year 2000, and some did. I think Alberta and B.C. delinked as well in 2000 and fully delinked this year by combining all of their surtaxes and taxes into five tax brackets.

           The point about bracket creep is this, though. What has happened since 1986, initiated by the Tory government in Ottawa, is that the tax brackets did not rise with inflation. What happened is that it trapped a lot of people, even though they earn more money, into higher tax brackets automatically, even though they may only have made an increase due to inflation. They were paying higher tax rates as a result.

           The reason the provinces didn't complain was obvious. They grabbed extra revenues — in British Columbia's case, about $10 billion over a decade — and they could blame it on the federal government, saying: "There's nothing we can do. Our hands are tied."

           Now it's a moot issue because British Columbia has delinked. They can set their own rates. In one sense, once they saw the federal government moving to reduce taxes, a lot of the provinces argued in the federal Finance minister's ear that they should be able to delink, precisely because they didn't want to see their revenues go down as the federal government began to cut taxes. In other words, the opposite of what occurred before was going to happen starting in the year 2000. That's why all the provinces scrambled to delink.

           As it concerns the present time, there's no problem. Provinces can initiate whatever rates and whatever brackets they'd like.

           J. MacPhail: I fully understand the point about bracket creep. My point was that it works both positively and negatively, as you say. The government has not taken advantage. They've delinked but taken no advantage of the delinking to date. Do you have any recommendations in that area?

           M. Milke: What do you mean by "not taken advantage"?

           J. MacPhail: Setting different rates.

           M. Milke: Well, they have set different rates. In fact, your government indexed the basic exemption and the bracket thresholds to inflation.

           J. MacPhail: No, I understand that, but delinking so that the other levels of the delinking have taken place across the board. That has not yet occurred.

           M. Milke: Yes, it has. The province can fully set its own rates, its own brackets, its own thresholds as of 2000, and Paul Ramsey initiated that in 2000 in the spring budget.

           J. MacPhail: I understand what our government did. I totally understand that. You're saying there's no other advantage to be taken from delinking? 

[ Page 452 ] 

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           M. Milke: Well, delinking simply means that you can set your own rates and thresholds. Theoretically, the province could raise taxes if they wanted to. They could delink inflation from the brackets, but again, that would be a stealth tax, and we oppose that federally and provincially.

           J. MacPhail: I assumed that was what the fiscal review panel was referring to when it said "to alternate sources of revenue," but you don't take it as that.

           M. Milke: No. I think they were saying that the province could raise taxes in any way they so choose, and that is one way, theoretically, that they could do it.

           B. Lekstrom (Chair): Mark, I would like thank you. We do have time for one more brief question.

           R. Sultan: Referring to your concern about corporate welfare, I'm sure you're aware that this government has declared that it's banning all business subsidies. I take it you want to go beyond that.

           M. Milke: Are you speaking of the convention centre proposal in particular?

           R. Sultan: No, I was thinking in terms of your suggested legislation.

           M. Milke: The government is going to introduce legislation, as I understand. My point would be, though, that the provincial Finance minister should take it up with other finance ministers, because, of course, one of the problems in attracting businesses is that businesses say: "Look, we get this subsidy in other provinces. Why doesn't your government offer it?" I think one way to obviate that in advance is to get other governments to come on board, as Alberta did in 1996 and as your government plans to.

           B. Lekstrom (Chair): Thank you very much, Mark, for your presentation this afternoon.

           Moving right along to our next presenter, who is with the Institute of Chartered Accountants of B.C., Mr. Woody Hayes. Good afternoon, Woody.

           W. Hayes: Good afternoon. Thank you to the committee members for hearing me this afternoon. I'm here on behalf of the Institute of Chartered Accountants but also on behalf of myself as a business practitioner. I understand that the Institute of Chartered Accountants did make a presentation in Vancouver, so I'm here to emphasize a couple of points in that regard, but also to bring you some messages from myself and from constituents and stakeholders I'm familiar with.

           I speak to you first as a past president of the Institute of Chartered Accountants but also as a professional adviser on Vancouver Island for over 30 years. I would like to endorse certain of the recommendations that the Institute of Chartered Accountants has made over the last four or five years.

           During my term on the executive of the institute, we made a special effort to try to make ourselves available to MLAs and cabinet ministers to discuss matters that were important to us as chartered accountants. In particular, one of the things we emphasized was to create and maintain a competitive regimen of corporate and personal taxes. We are in competition with our neighbours for attracting business and for attracting residents, and it's important for us to be competitive. That doesn't mean we always have to have the lowest rate, but we have to be seen to be not punitive in the types of taxation regimens that we impose on our citizens.

           I'd also like to emphasize the desire to have the sales tax eliminated on business investments. I do realize that there has been some movement in that regard. I also would like to refer to that a little bit later. This is a position the institute has taken: that we would like sales tax on business assets removed.

           Thirdly, of particular importance to me is the development of long-term debt management. Again, I'll refer to that in a few moments. Those are matters that were within the institute's presentation in Vancouver, and I'd like just to re-emphasize those for my own personal import.

[1350] 

           I'd also like to speak to you briefly as a past chair of the legislative review committee that examined the Auditor General Act. Within that review, one of the important aspects was to attempt to enshrine the generally accepted accounting principles into the Auditor General Act so that he would be obliged to report on the government accounts on the basis of generally accepted accounting principles.

           That is important to our taxpayers so that they have a clear idea and understand the rules under which the government's financial information is being presented to them. It also allows the auditor general to report on a basis that he is comfortable with, a basis that has the same benchmarks as other reporting entities in the economic world.

           One of the other issues around that is to include what is known as the SUCH sector, being universities, hospitals, schools, institutes and health authorities within the government's summary accounts. Now, that's as much as I care to say on that particular issue, but I think those are matters that are important to chartered accountants in the province.

           My main message to you today is really as a private practitioner on Vancouver Island. There's a number of different issues that have been important to us, and they're all somewhat related to the institute's position. We are currently in the process of eliminating capital tax from the provincial assessments. This is a disincentive that has been disproportionate to its real cost to the province, and it has been a disincentive especially for international investors in the province.

           I recognize that it's scheduled for its final demise just under a year from now, but I would like to make sure it is well and truly dead. It is a tax not on activity but a tax on wealth and is seen by many investors to be quite unpopular. I can tell you that many of my clients

[ Page 453 ] 

are very, very unhappy when they have had a very tough year and are still obliged to pay a capital tax not only on their investment but on the amount of debt they're carrying. Make sure that that stays down for the count.

           I understand that there's a process on the core services review being undertaken right now, and I encourage that process to complete. I also would encourage the government to bring certainty and simplicity to the provincial employees, taxpayers and citizens. Make the necessary changes quickly. Reduce the trauma that is necessary to making these types of changes. It's going to be very upsetting to people who are impacted by this particular change, but I think that (a) it's necessary, and (b) it should be done as efficiently and quickly as possible.

           I'd also suggest to you that you be as courageous as possible in eliminating red tape and the overlap of services in this process. I know that you, Ms. MacPhail, are particularly interested in seeing the red tape issue dealt with, and I encourage you to roll this all into one pot and deal with it. I think what we have to do is to create a can-do approach within the civil service, emphasizing service to stakeholders.

           I've used the word "simplicity" very carefully. All these stakeholders in the province, being taxpayers, civil servants and just our general citizens, are finding the complexity of dealing not only with financial but also with general government relationships becoming a greater and greater difficulty. We have at hand an opportunity to start to simplify that process, and I encourage you to do that.

           What we need to do is create an environment of leadership, authority and responsibility among our civil servants. I have found, universally, that they are extremely hard-working and well-meaning but are bound by interlocking responsibilities. The leadership is needed to simplify and streamline government operations. I believe that process is in place, or commencing, and I encourage you to maintain that course.

           I'd also like to put in a word about providing some leadership in the rationalization of municipal and regional governance. Local governments have so many conflicts and overlapping constituencies that with their own capabilities, they seem unable to proceed with any sort of simplification that is attempted.

           Since they don't have that capacity, they are going to need some leadership in that regard. I would encourage you to take whatever stand you can to assist them in going through their own core services reviews and creating a simpler and more efficient approach to municipal governance. Whether that is initially commenced by creating a common service regimen or providing for amalgamation or elimination of duplication and overlapping services, all of that is important to our citizens who are attempting to deal with local governance.

[1355] 

           My final point is on deficits and provincial debt. I think that every British Columbia citizen has their own tolerance for provincial deficits and provincial debt. Some will tell you that absolutely no debt should be tolerated. Others are prepared to say that there should be a level of debt.

           I had an interview with then-Minister of Finance Paul Ramsey, who asked me what the appropriate amount of debt was to assist him in setting the budget that he was attempting to bring forward at that point in time. My response simply was the same: every taxpayer has their own level of debt. I think that there is a capacity for B.C. citizens to accept the level of debt. What they would like to see is that fiscal policies must consider and work toward a reduction of annual deficits and toward the ultimate elimination of provincial debt.

           Those are my comments this afternoon.

           B. Lekstrom (Chair): Thank you very much, Mr. Hayes. I will look to members of our committee to see if there are any questions.

           K. Krueger: Mr. Hayes, if you assume that we will stay the course on eliminating corporate capital taxes, which we are, and proceeding with the core services review and the things we've announced: cutting regulation by one-third within three years and progressing with the community charter…. You know that our goal and intent is to deliver a balanced budget by 2004-05. Something you haven't mentioned that is also a major economic factor is finally getting aboriginal treaties settled in the province. If those things are given, are there any other major impediments to investors feeling as though British Columbia welcomes them that you haven't addressed in this report or that you don't see us addressing?

           W. Hayes: The key word is attitude. I think that if you speak man-to-man with any civil servant or any servant of the taxpayers, you will find that there's sincerity, a desire to be helpful, yet they seem to be bound by interlocking responsibilities. They can only go so far themselves, and then that's the end of it.

           What we don't seem to be able to unlock is the capacity to simply deal with problems on a continuing basis and get the problem resolved. It always seems to go through some sort of process that involves multiple steps. Any movement you can make towards getting things simplified and turning the process into a much more simple process would be welcomed.

           K. Krueger: Attitude determines altitude.

           W. Hayes: Yes.

           K. Krueger: Anything else? Any specifics like the ones you addressed earlier?

           W. Hayes: I'm not sure I understand you.

           K. Krueger: Like I said, we're doing the corporate capital tax elimination. We've done the personal income tax reductions and what the program is there. Is there anything we aren't addressing as far major im-

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pediments to investors feeling as though British Columbia is a good place to be?

           W. Hayes: It's difficult to say. If we're talking about the current government — and as the Institute of Chartered Accountants, we attempt to be non-parochial — at this point in time, I would be hesitant to be critical. If there's not something you're addressing, I'd certainly be able to tell you in a year or so. I'm prepared to let the policies play out a little to determine just how well that open-door, we're-ready-for-business attitude is showing up.

           K. Krueger: Well, keep the cards and letters coming, because we don't want to wait a year if we're doing something that we ought to be doing differently.

           B. Lekstrom (Chair): Mr. Hayes, I see no further questions from members of our committee. I would like to thank you for taking time out of your schedule to make your presentation this afternoon.

           Our next presenter this afternoon is Martin Webb. Good afternoon, Martin.

[1400] 

           M. Webb: Thanks to the committee for this opportunity to speak to this very important issue. I'm here as a union member, as a public servant and as a middle-class citizen, but most importantly, I'm here as a British Columbian, having lived in this province for the whole of my 45 years.

           I truly believe that this is the greatest province in this country of ours. Over the years, my appreciation has grown for the quality of life afforded to us in this province. Something that I've learned over the years is that things that make the quality of life such as it is for British Columbians do not come without cost, both in terms of dollars and human effort.

           I have been gainfully employed and a taxpayer for 27 years and have never felt the need to come to a committee such as this — that is, until now. That's because I have grave concern for the future of this province based on the drastic proposals by the government in respect to many public services that are very important to me, my family, my co-workers, my friends and my fellow British Columbians.

           If the consequences of the proposed cuts are not properly assessed, our education, health care, highways, natural resources, pristine lands and waters and socioeconomic systems are all at risk. I do accept that there is room for improved fiscal management, but certainly not at any cost.

           I ask that this committee employ the resourcefulness and ingenuity of the people who are the very foundation of the programs and services that make British Columbia what it is: the public servants. It has been proven that given the opportunity, the public servants of this province are very capable of maintaining or even improving services while reducing costs. I am asking that you allow the public service to respond to this current challenge before making irreversible decisions.

           I would like you to reflect on what we have all come to know and expect as citizens of this province, for we have very much to be proud of. We have peace of mind that the air that we breathe and the water that we drink are safe. We have peace of mind that our children will receive an education and the health care that they deserve. We have peace of mind that quality health care is available to all, that the vulnerable and less fortunate are protected and cared for, and that our highways and bridges are safe. We have peace of mind that our natural resources are well managed and sustainable. We have peace of mind that our judicial system is effective and that our streets are safe from crime. We need not live behind tall fences or locked gates in the fear that others may take what we have.

           As average middle-class, hard-working citizens of the province, we have invested much in making the province what it is today. I want my children to have the same opportunities afforded to me. I am not willing to give up what has taken so long to establish in order to meet a single objective — a balanced budget — nor am I willing to see a restructuring of the socioeconomic system such that our society becomes a society of either those that have or have not.

           I ask you to please give careful consideration to the achievement of your objective. Perceive carefully by involving the people that can ultimately solve the problem: the public servants. Good changes take time. There needs to be time to properly assess the impact of the program cuts before committing to such actions.

           Develop a five-year plan with the input of the unions, economic leaders and citizens of British Columbia. Do not arbitrarily take away the services that define British Columbia as the greatest province in this country. The high quality of life enjoyed by all in this province has been brought about through hard work and dedication, and it is not reserved for the wealthy or privileged.

           B. Lekstrom (Chair): Thank you very much, Martin, for your presentation this afternoon.

           Just for the information of the members of the committee, our 2 o'clock presenter was unable to be here. He was delayed by the ferry. Martin was scheduled to hopefully be able to fit in, and I'm very happy that we were able to accommodate you, Martin.

           I will now look to members of the committee, if there are any questions.

           J. MacPhail: Martin, do you live in Victoria or in the area around Victoria?

           M. Webb: I live in Victoria — yes.

           J. MacPhail: I confess, I have not been spending much time in Victoria. In fact, this is my first time here in weeks. Is there discussion amongst your dry cleaner, your butcher or your Safeway or Thrifty's employees about these matters? 

[ Page 455 ] 

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           M. Webb: Yes, it's certainly a concern within the community. I think there's a concern within the community for the potential financial impact it could have with the reduction in the public service. Certainly, a big part of Victoria's economy is the public service.

           There's also starting to be a little bit of concern, as well, in people that I'm speaking to about what things may, in fact, disappear through some of the government cuts, some of the programs they may not see the initial impact of — you know, changes in ministries of environment and lands, changes to the practices as far as forestry goes.

           We may not see the impact immediately. I think people are starting to question whether this is the road we want to go down because of the potential long-term impacts we could have. There are a lot of these things that would really not be reversible, at least not without a lot of effort, a lot of money and a lot of time.

           B. Lekstrom (Chair): I see no further questions, Martin. Again, I would like to thank you for coming and taking time out of your schedule. I can certainly assure you that the committee does have a large job, and hearing the views of all British Columbians is very important. I thank you again.

           We will move to our 2:15 presenter, Mr. Terry Wickstrom.

           T. Wickstrom: My name is Terry Wickstrom. I'm a government employee working in the Ministry of Management Services, but I'm not here representing the ministry. I'm speaking for myself. I've taken the afternoon off so that I can come and address you. I've worked in the field of information systems for 20 years. I see the value that you can derive from matching technology with people's knowledge to direct a system and derive value from the experiences of people, their knowledge and their ability to interact.

           I've read the Liberal's New Era document, and it provides a real vision for positive change. You speak of building a partnership with government employees and opening a new era of improved public services for B.C. citizens, managed in a sensible way.

           I thought the core-review process might lead us to identify better ways to consolidate services and find efficiencies in the way we do things in the public service. Instead, what you've done has been to bring in dramatic tax cuts when you were cautioned by economic experts, such as David Bond, that they would not pay for themselves.

           The uncautious actions of Premier Campbell went way beyond the promises that were made during the election period. He also created a half-a-billion-dollar debt by removing the corporation capital tax. These tax cuts are now showing themselves to have been reckless and unsupportable.

           On a political level, perhaps you thought you could create a fiscal crisis and then solve it by downsizing government, but I won't be that cynical. You created a massive deficit after the previous government had balanced its budgets to the standard required by the open budget legislation and the oversight of the auditor general.

           The previous government achieved this while putting in place one of the most successful education and health programs in our history. We have smaller class sizes. We have the second-highest post-secondary participation rate. We have the lowest infant mortality rate in Canada. We have healthier communities through anti-smoking initiatives, etc., and good and not-extravagant Pharmacare policies. The Liberals are planning to throw all these good public policies away without the analysis they promised in the previous years in opposition and during the election campaign.

[1410] 

           Downsizing government is a huge mistake. Government employees are not the problem. The taxpayers are your partners, and the government's public servants are partners in delivering services to a demanding public. B.C. has the second thinnest public service in the country. There are 86 public servants per 1,000 population, compared to Alberta, which after their massive downsizing has a public service of 88 per 1,000 population. We're already there.

           You're not cutting fat anymore. You're blinding yourself. You're cutting off your limbs and the people who provide services on your behalf. You're going to be putting children at risk, slowing down the judicial system, delaying the registry of businesses, blinding yourselves to environmental problems and to overcutting in the forests.

           Information technology is what I know about. Through the Socred and NDP periods, the B.C. government developed a state-of-the-art network for all ministries to share, called Span-B.C. It connects almost every community in the province. Span-B.C. puts us well ahead of other Canadian governments and, in fact, should be a model that we could sell to Ontario and Alberta.

           All schools and colleges are now connected to the Internet. We leveraged Span-B.C. to create PLNet. This saved millions of dollars over what an international provider — EDS, MCI WorldCom — was going to be able to do, and we did it quicker. Our province and schools are now well positioned, in comparison to schools in other provinces.

           Despite formidable geography, we have assisted British Columbians to become one of the best connected populations in the world. The previous government, as a large telecommunications consumer, was able to negotiate with Telus, AT&T and WesTel to get remote communities the telecommunications services they needed.

           To bring PLNet into communities, we in government learned a lot from the private sector, and they learned some things from us. We partnered with local Internet service providers and other local computer suppliers to support local schools and school boards. They learned from us how to set up a world-class network and got very high-quality training at low cost, and we in government learned that it was cheaper and better to have local entrepreneurs supplying help and

[ Page 456 ] 

support to schools and consumers in their communities.

           We got a win-win, and we are a better province for it. The result is that Nelson and Kelowna have been able to become centres of excellence, along with Vancouver and Victoria, in high technology projects and software development.

           Extending the network is just the start of other potential uses and savings in alternate service delivery. By doing things right for all British Columbians, through a motivated public service, the added values keep multiplying themselves. You need people to provide the network, and you need the people to supply in-depth understanding of what added value services the public expects and will need as B.C. develops.

           Downsizing an already lean and efficient public service is simply destroying the tools you need to build an economy in the future. Bandying terms like cutting the public service by 50 percent or 35 percent only creates economic uncertainty. It undermines the morale, which is just poor judgment and poor management on your part. It undermines the source of public sector innovation. Some of us love these challenges, but we need to know that you will not be throwing away our development efforts out of an ideology-driven agenda that is blind to the value of a mixed economy.

           B.C. is positioned to deliver on the promise of electronic service delivery initiatives. We should leverage our school network, PLNet, to provide the best distance learning to the isolated students and make it possible to share excellent teachers in other classrooms beyond their walls.

           Today PharmaNet helps to reduce the chances of contraindication of drug interactions. It catches oversubscriptions and provides better health delivery in our communities. Health care will be further improved through delivering health records where they are needed — that's where the patient is — when they are needed, 24-seven.

[1415] 

           Recently, there was a newspaper story of a patient in France being operated on via optical network by a doctor in New York City. This could be done in B.C. if we made it a government deliverable. In Victoria, Kelowna and Nelson are examples of smart people who are attracted by a great lifestyle, creating jobs literally out of thin air. All they need is to be able to connect to their consumers, who are in Vancouver or across Canada or in the United States.

           Well, it's time for decisions on your part. How will you treat your employees? How will you build their confidence and their security in working hard? How will you deliver services that people are dependent on? How will you build the fundamentals that our economy can grow on? Will you use reason and analysis, like the core review process promised, or will you slash budgets and create disruption without acknowledging that you are ruining things?

           You are in the driver's seat now, and your decisions are critical to the strength of our economy over the long term. People in the future are going to say to you, just as Mr. Mulroney said: "You had an option, sir." I hope you will be able to answer that you thought things through, worked with your partners and didn't march lemming-like behind a right-wing ideology.

           Thank you for your time this afternoon.

           B. Lekstrom (Chair): I will look to members of our committee to see if there are any questions. I see no questions from members of the committee.

           J. MacPhail: There's time available. I mean, I hate to be asking a lot of questions, but there's time available, so I think I will, Mr. Chair.

           B. Lekstrom (Chair): Certainly.

           J. MacPhail: Terry, it's nice to see you. There were two presenters in previous hearings, one saying that government service could more efficiently deliver information technology in-service, and another presenter from the private sector saying the reverse was the case. Now, I expect that you might have a particular point of view, because you're inside the public service, but are there any statistics accumulated by your division on that matter?

           Secondly — and don't think that I'm asking a question that I know the answer to, because I do not know the answer to this — is your division a combination of both private delivery and in-service delivery now?

           T. Wickstrom: It is. In fact, it's a really good example of a combination between us in government directing things and creating initiatives and the private sector being able to provide the delivery vehicle. Telus is a partner in a number of areas. We've been able to do some things that the public service alone couldn't do. We need each other.

           If you look at other provinces, you'll see where they've really used the private sector quite a bit, and they're behind us. We were able to do these things because we had an overarching vision. We could extend beyond urban locations, where the profit is, to drive things out into the rest of the province.

           Those things multiply one another. They make for healthier communities, and they make for smarter, well-educated people, but you don't get there without making an investment. That's what the B.C. governments have done in the past, both Socred and New Democrat. Taxes do pay. They do make sense. You've got to step back and see what you might be destroying before you go too far.

           B. Lekstrom (Chair): Maybe just a follow-up question from myself, Terry, if I could. Certainly, you've touched on it, having the experience you've got. If we took the issue of the tax cuts right out of the picture for the moment, we would still face a $3.8 billion deficit by 2003-04. I'm just wondering if you have any ideas on what we could look at to try and accommodate that. I think it's fair to say you can't continually spend more than you bring in.

           T. Wickstrom: Exactly. 

[ Page 457 ] 

           B. Lekstrom (Chair): I'm just looking for your comments on that, if you have any.

[1420] 

           T. Wickstrom: I would say that in good times, you really do have to pay down your debt. I think that when the softwood lumber issue comes up, when tourism is hurt, it's the wrong time to try and balance the budget. This is the time when we need to have a lot of foresight and look ahead, say: "We'll take on some debt right now, and we'll bite the bullet when things are rolling again."

           You have an opportunity to partner with the private sector people that you know and to work with the public service to make things more efficient, but it's definitely the wrong time to be trying to pay off debt and face an economy that's on the ropes right now.

           B. Lekstrom (Chair): Terry, I see no further questions. At this time, again, I would like to thank you for taking time out of your schedule to come and present.

           We will move on to our next presenter with the B.C. Government and Service Employees Union, Mr. George Heyman.

           G. Heyman: Would you prefer to have copies of the brief before I begin?

           B. Lekstrom (Chair): Yes, we'll just take a moment and get those handed out. Good afternoon, George. Thank you for being here. We will begin. Just for the information of the public in the gallery, there is other media that may come in during the proceeding. We're a little ahead of schedule, and I appreciate you being here.

           G. Heyman: Good afternoon, Chair and committee members. I want to thank you for the days you are spending on the road to hear from British Columbians. I hope your advice will help the Minister of Finance develop a budget that reflects current economic conditions as well as the best interests of all British Columbians.

           My union, the B.C. Government and Service Employees Union, represents 65,000 workers. Just under half of our members — 32,000 workers — work directly in the provincial public service. Another 33,000 members work in the broader public sector, including community social services, community health and the advanced education sectors, as well as in the private sector.

           The next budget for British Columbia will be particularly important, because the economy of North America is extremely shaky. People are counting on you not to make things worse. Premier Campbell said before the election that when you cut income tax, revenues increase. Premier Campbell also said to our members: "Our goal is not to go in and slash the public service." Those are significant commitments that the government should remember.

           The tax cuts announced on the second day of the new government's mandate were welcomed by most British Columbians, but people are now starting to see that the cuts were not targeted to low- and middle-income families, as promised. In fact, the biggest benefit from the tax cuts went to the wealthiest British Columbians. People making over $150,000 a year — the richest 1 percent of British Columbians — received 20 percent of the tax cut dollars.

           Will these tax cuts pay for themselves, as Mr. Campbell said? Perhaps. There are two main ways that could happen. Tax revenues could go up if people's incomes increase or if more people are working. If the government hopes to recoup the lost revenue through income growth, every worker in B.C. will need a wage increase of more than 35 percent. For people earning $80,000 a year, the exact increase would be $27,964. The only people I know these days getting increases that large are deputy ministers.

[1425] 

           Another way to rebuild revenue is if more people are working. To make up the lost revenue, we need about 840,000 new jobs paying $40,000 a year. That's well above the average income in British Columbia. I think it's clear that it may take a while to achieve either of these optimistic goals. In the meantime, the government has put itself in a fiscal box. It has given itself a very short time line to eliminate a self-inflicted deficit.

           Your government has been talking about budget cuts of 20 to 50 percent. These cuts are being planned even though British Columbia has the second-leanest public sector in Canada. Our ratio of public employees to population is lower than Alberta's and has dropped every year in the last decade. Anyone who thinks a $6 billion projected deficit can be covered with a few layoffs is sadly mistaken.

           You can't cut $6 billion without major cuts in services to people, and it looks like those cuts have already begun. Construction of schools and post-secondary spaces for young people are now on hold, child care for working parents has been cut back, the poorest families in our province are told not to expect welfare, and social housing is eliminated. The sick and the elderly are worrying about proposals to cut Pharmacare and doing without the drugs they need to stay healthy. St. Paul's Hospital is closing one bed in six. Eye exams, essential for people to function at home and at work, are suddenly going to be an added personal expense. Commuters are talking about how much toll highways are going to take away from their paycheques. Public employees, many of them represented by the BCGEU, are worried about their jobs, their families and, not least of all, their clients. Let me give you some examples of what BCGEU members are saying to me when I meet with them.

           In small communities already ravaged by downturns in resource industries, the potential loss of jobs and services in northern communities is killing confidence and consumer spending. A check-scaler says that staff cuts will make it almost impossible to ensure that the public is getting paid full value from B.C.'s forests through stumpage payments. A clerical worker whose husband has a heart condition is worried sick about job loss and the loss of medical coverage. A counsellor

[ Page 458 ] 

worries that she will no longer be able to give alcoholics and drug addicts one last opportunity and help them to have productive and healthy lives. A highways planner with 32 years of experience worries about how further cutbacks will affect road safety. A worker in the Ministry of Human Resources is concerned about increasing illness, homelessness and hopelessness for those who are already disadvantaged and in need.

           I urge you to hear the stories of child protection social workers struggling to help children live free from abuse, from neglect, from domestic violence. One social worker said to me that before the government makes cuts, it should look into the eyes of an abused child and listen to her story of pain. She said: "Children must not die or grow up suffering or be unable to reach their full potential because keeping children safe is no longer a government priority."

           The government's own fiscal review panel said in its report: "Based on recent experience in other Canadian provinces, we are concerned that cost-cutting in government often comes at the expense of those groups in our society that can least afford it or by lowering standards designed to protect the environment and public health and safety."

           World leaders, including the President of the United States, are saying that now is not the time to focus on deficit cutting. In the words of George W. Bush, this is the time to do whatever it takes to get our economy moving again. Service cuts and job cuts will take us in the opposite direction. They create fear; they create uncertainty, and they create confrontation.

           Small business owners around the province know that consumer confidence is fragile. Nothing dampens confidence more than fear of losing your job, the job that supports your family.

[1430] 

           In Victoria, layoffs averaging 35 percent in government ministries will increase the unemployment rate from 6.9 percent to 10.5 percent. Such layoffs will increase the B.C. unemployment rate from 7.2 percent to 8.2 percent. These are conservative numbers. They don't include the inevitable economic multiplier effect, and unemployment is contagious. If these things take place — the service cuts, the layoffs, the spreading unemployment, the confrontation — you will dampen economic activity, not stimulate it as you say you seek to do.

           Public services were established to meet critical needs and to protect our common interests as citizens. These days, more than ever, citizens are looking to public employees to be ready and able to step forward and deal with crises. Whether it's a flood, a forest fire, an earthquake, a public health threat or a terrorist attack, public employees are our first line of defence.

           After the deep cuts of the Social Credit government of the 1980s and continuing cuts in the late 1990s, we are already too thin on the ground to do the job that the public expects of us. As the fiscal review panel advised your government, proceed with caution. You should avoid across-the-board spending cuts and take the time to create made-in-B.C. solutions.

           There are alternatives. There are ways to reduce costs without cutting jobs and services. I urge you to step back from plans to simply slash services and spending by up to 50 percent. I want to reaffirm to you today that the BCGEU has always been, and we remain, ready to work with government to find savings.

           Let me give you one example. The Ministry of Human Resources operates with 200 information services personnel. Only 120 of those are direct employees. The rest are contractors providing the same service at a cost that is two to three times greater. We're prepared to begin work with you immediately to identify and implement such savings or any other savings we can identify through efficiencies.

           Secondly, I urge you to listen closely to the people you've heard from around the province. Yes, a balanced budget is important, but services to people are even more important.

           Third, reconsider your deadline for balancing the budget. The deadline is arbitrary. It's self-imposed. It was established before it became clear how serious the economic downturn really is and before the terrible events of September 11. I note that many groups, including the Vancouver Board of Trade, have urged you to re-evaluate this time line.

           Fourth, delay the additional tax cuts to corporations and upper-income groups that are scheduled for January 1. British Columbians will not thank you for giving new breaks to a favoured wealthy few while you are slashing services to low- and middle-income families.

           Fifth, don't create confrontation. Don't change labour laws to attack workers' contracts and drive down their wages, as the Minister of Labour has suggested. Don't attack the poor and the sick by cutting welfare and Pharmacare. Don't attack workers for being young by cutting their minimum wage and calling it training.

           Sixth, I urge you to open up the government's core review process. The very nature of government, the foundation of public service that supports our people and our enterprises and our businesses is being rewritten and decided entirely behind closed doors. If you're serious about being the most open and accountable government B.C. has ever seen, you must demonstrate this in practice. Redefining public services and the role of government is a huge decision. It must be open to public scrutiny and to public input.

           Finally, I urge you to be careful. British Columbians have placed a great trust in you. Your first priority must be to people, to British Columbians, not to hasten to balance the bottom line. Don't make things worse for B.C. by ignoring the changing economic conditions in our world today. Don't make things worse for British Columbians by being afraid to delay your self-imposed deadline for eliminating a self-inflicted deficit. Don't make things worse for British Columbians by creating confrontation when what we really need is to work together.

           Thank you for listening to me.

           B. Lekstrom (Chair): Thank you very much, George, for your presentation this afternoon. I will look

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to members of the committee. Are there any questions at this time from any members?

[1435] 

           J. MacPhail: I think this is the first time we've heard from George. Is this the first time you've presented, George?

           G. Heyman: Yes.

           J. MacPhail: I mean, it is an opportunity to discuss with a person who speaks for about 35,000 people. One of the things we have heard throughout the province is that the core services review is a process that doesn't involve the front-line workers. Has that changed? That was very early on in our presentation.

           G. Heyman: I believe that some ministries and some Crown agencies are handling their internal discussions and preparations differently. Some are seeking input from front-line workers; others aren't. What I'm particularly concerned about is the final product that gets presented to the committee, that gets presented in a closed fashion behind closed doors. There's no chance, really, for the public to comment directly on the proposals. I think the Premier invited British Columbians to communicate with government, either directly or through their MLAs, about programs that they deemed important and that they wanted to see saved.

           In the vast array of services that the government provides, either directly or through the broader public sector, it's a bit like asking people to guess what is going to happen and then acting to prevent it. It makes more sense to put out a discussion paper to allow for consultation and, to make sure that if the government really believes it's acting in a particular area with a particular proposal, to cut a particular service in a way that British Columbians would support. Put that out to public debate. Let us have that discussion. Is time that short that we can't ensure we're taking the right steps?

           B. Lekstrom (Chair): The next question is from Kevin.

           K. Krueger: Mr. Heyman, thank you. We're facing a bulge in the population moving into retirement, and we already have a shortage of skilled workers in a number of areas across the economy. Can you tell me what percentage of your membership is imminently approaching retirement?

           G. Heyman: My understanding is that within the direct government service, over the next three years about 17 percent of our membership in the direct public service — I don't have the figures for the broader public sector at hand — will be eligible for retirement without penalty, and over the next five years, 29 percent will be eligible for retirement without penalty. Certainly, that leads one to believe that there is room for attrition to be a significant factor, if enough time is allowed for that to take place.

           K. Krueger: The second number includes the first, I take it — the 29 percent.

           G. Heyman: Yes.

           K. Krueger: What sort of job has government done to date in succession planning to replace those people?

           G. Heyman: Frankly, the average age of people working for the public service today is significantly higher than it was a decade or two ago. There are not enough young people currently working for government, and I think that program cuts and layoffs will unfortunately make that worse. I know there have been succession-planning documents circulating for some time in government, but I'm not aware that significant work has been done on that.

           R. Sultan: I don't have a question, but I have a comment — namely, you have expressed your views with great clarity and directness. I thank you for that.

           B. Lekstrom (Chair): I see no further questions at this time, George, but I want to thank you for coming forward. As you have indicated, there are many challenges that you certainly face on behalf of your members and that government faces on behalf of the people of British Columbia. I think one of the key issues you spoke on was trying to accomplish what has to be done together, and I appreciate your comments.

           G. Heyman: Thank you. I would simply reiterate that my union is very eager to work cooperatively for common solutions. We hope that opportunity is afforded us.

[1440] 

           B. Lekstrom (Chair): I thank you for your time.

           We will at this point move to our next presenter, Mr. Robert H. Botterell. Hopefully, I've pronounced that properly.

               [T. Bhullar in the chair.]

           R. Botterell: Thank you. My name is Rob Botterell. I'm a Victoria lawyer. Before entering private practice, I was the senior public servant responsible for B.C.'s freedom-of-information legislation. During the recession in the 1980s, I was the financial comptroller for the TD Bank in B.C.

           Fifteen minutes to suggest how to restructure $25 billion in government services and balance the budget is certainly a tall order, but really not nearly as tall an order as cutting government spending by $100 million per month for 24 months, which is what it will take to balance the budget.

           I'd like to reflect today on the task ahead for this committee as the 16 public meetings wind to a close, recommendations are prepared and the reporting deadline of November 15 looms. Before I do, I wish to note a number of things.

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           The first is that I unequivocally support the need to balance the budget. I also support the need to follow the advice of the government's independent fiscal review panel. In my view, after September 11 — and in this I am joined by none other than the Vancouver Board of Trade — this means slowing down and extending the timetable for eliminating the deficit. We must never forget that there are people like you and I behind every dollar of government spending.

           In my view, it is very irresponsible to pretend that people have the same opportunities and options for re-employment that they did prior to the tragic events of September 11. The work of this committee is vital, because this committee is the non-partisan link between the myriad of budget processes going on within government and the over four million residents of British Columbia.

           Ultimately, the success or failure of this committee in this role will be measured by what it says or fails to say about three words: three words that measure the difference between government by and for the Premier's office and government by and for the people of British Columbia; three words, the approach to which show proper respect or callous disregard for the views of a highly educated and understandably jaded electorate; three words that can mean the difference between government decisions that foster unity and understanding, if not wholesale support, and government decisions that foster division, distrust and confrontation. These three words are the core of the single most important promise of the Liberals during the election: to be the most open, the most accountable and the most democratic government in Canada.

           Let me give you my mid-fall report card on the promise of openness, accountability and democracy in this budget process. So far this government receives a failing grade of D on openness. The budget 2002 consultation paper and the work of this committee is a start, but it is only when the public are equipped with information about all the choices and options facing government before the decisions are made that there is real openness and a real opportunity for meaningful public discussion about which options to choose and, importantly, what are the trade-offs.

           It's not good enough that the Ministry of Children and Family Development says it will take up to four months to process a request for information. It's not good enough that letters to the Premier go unanswered for over a month. It's not good enough that a plea for greater openness in the legislative committee process is dismissed by George MacMinn, Clerk of the Legislative Assembly, with the following statement to me: "I think that perhaps you misunderstand our relative positions."

[1445] 

           I urge you to democratize information. Recommend in your report that government take immediate steps to ensure that all parts of government act in accord with the culture of openness imbedded in the freedom-of-information legislation. Release stakeholder impact statements before the decisions are made. Release analysis of the potential social, economic, financial, environmental and legal implications before the decisions are made. The public deserves the right to know beforehand, not after the fact. Government ministries get to see this analysis. Why shouldn't the public — subject, of course, to limited confidentiality safeguards?

           Turning to accountability. You've got a bare pass. I'd give you C at the midterm. The establishment of the British Columbia fiscal review panel and its report are a good start, but they're only a start. As Premier Campbell said at the time of the fiscal review panel: "It's essential that all British Columbians have a clear, complete and accurate understanding of the province's finances, so they can have confidence in the province's fiscal statements as a baseline for accountability" — not just now, not just this month, but in the future.

           Unfortunately, this good start was followed by fiscal obfuscation or fudging at the October 3 open cabinet meeting. The Minister of Finance, the Hon. Gary Collins, failed to compare the forecast he had, the planning scenario, to the credible financial baseline — I'm quoting from the fiscal review panel — prepared by the fiscal review panel. If he had, the public would have learned that the real cut to spending across government is 18 percent on average and not 10 percent. The real cuts outside of education and health are 42 percent on average and not the 35 percent we keep hearing about. That's when you make the proper comparison: the comparison to the independent fiscal review panel.

           I urge you to introduce real accountability. Recommend in your report that government regularly report on performance against the fiscal review panel financial baseline. The independent fiscal review panel could be reactivated to prepare those reports and supporting commentary.

           When I was the financial comptroller of the TD Bank, we set target levels for a range of key indicators beforehand and then regularly measured and reported on our success in meeting those indicators afterwards. Right now, all we know is that spending cuts will range between 20 percent and 50 percent. We don't know what the three-year target is for taxpayer-supported debt to gross domestic product. That, as far as the fiscal review panel goes, was a key indicator. We don't know what you're trying to work towards.

           We also need to know what key indicators the government will use to ensure that the cost-cutting is carried out in a manner which is balanced, fair and safe and which responds to the concerns of the fiscal review panel, where they stated: "Based on recent experience in other Canadian provinces, we are concerned that cost-cutting in government often comes at the expense of those groups in our society that can least afford it or by lowering standards designed to protect the environment and public health and safety."

           I'm not suggesting you abandon efforts to balance the budget. I'm not suggesting that at all. What I'm suggesting is that from an accountability point of view, you've got to report on how you're doing vis-à-vis your own fiscal review panel.

           In terms of democracy, I'm giving you a passing grade of C-plus, but it's going to be a lot harder in the

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next half of this term. I applaud the hard work of this committee, the establishment of open cabinet meetings, the creation of the waste-buster website and the core review processes. Those are good things. The fact is that major program changes and spending cuts are being announced almost every day before these processes are complete — before members of the public have the information they need to meaningfully participate.

           Examples that I can think of right off the bat include changes to Pharmacare, policy changes to B.C. Benefits and Income Assistance and the elimination of Fisheries Renewal B.C. I'm sure that as you've travelled around the province, you've heard many other examples. Democracy does not mean seeking forgiveness from the electorate four years from now after a blitzkrieg of change during the first year in office. You've got to be democratic now. I urge you to uphold democracy.

[1450] 

           Recommend in your report that government divide its three-year financial plan into two components. The first component, phase 1, could cover spending and job cuts required to reduce or save $600 million by June next year. I'm not saying "Stop"; I'm saying "Divide it up." That's phase 1.

           The second component, phase 2, could cover the balance of spending and job cuts required to eliminate the deficit. A phase 2 report could be prepared and released on budget day, February 19, 2002. This committee, this very committee, could hold public meetings and hearings around the province to obtain public input before the phase 2 cuts are finalized. That phase 2 report must be clear, complete and accurate. To do less is to ignore the urgings of the Premier.

           Proposed spending cuts should be set out together with potential implications, including implications for local communities. Other options considered but discarded should be described. Let's know what the tradeoffs are. If the public urges you not to make the proposed cuts, then challenge the public to tell you what should be cut instead.

           I've read the transcripts of your meetings around the province. You ask the right question. When people come forward and say, "I have this wonderful idea of how we can spend an extra $50 million in this area," you correctly ask: "Tell us where we're going to cut to create that room." Well, you should do the same, but the public has to have the information about what the choices are. It should be the public that has a real role in making those choices.

           In my view, this approach would show much greater respect for the well-educated residents of British Columbia rather than the current practice of making the decisions behind closed doors. This would be a complete answer to the fears of many that this government has embarked on a New Zealand–style government restructuring, where dramatic changes are rushed through before the public has any real opportunity for meaningful input.

           We live in a democracy, and massive expenditure and job cuts without first providing the public with the information and an opportunity to discuss the proposed changes is inherently undemocratic. The electorate did not write the government a blank cheque on May 16 to act in a secret, unaccountable and undemocratic manner — quite the contrary. The electorate voted for the most open, accountable and democratic government in Canada.

           In a time of international crisis, it's very disturbing to me to think that this government, which ran on a platform of openness, accountability and democracy, apparently feels it has carte blanche to make rapid change without informed public participation. Some would say the government is taking unconscionable advantage of these uncertain times to slip through as many changes as quickly as possible before anyone notices and while the public's attention is focused on the international terrorist threat. I don't believe that's true, but that's what I'm hearing.

           The fact is that it's not too late. This committee has a vital role and an important opportunity to make recommendations that will help this government keep its promise of openness, by honouring the spirit and intent of the freedom of information legislation; of accountability, by publicly comparing progress to the fiscal review panel recommendations; and finally, of democracy, by undertaking meaningful consultation with the public before, not after, the spending cuts are finalized. Demonstrate what it is to be the most open, the most accountable and the most democratic government in Canada.

           T. Bhullar (Deputy Chair): Thank you, Mr. Botterell. I'll see if the committee members have any questions now.

           J. Bray: Thanks, Rob. Good to see you. You mentioned that you've read some of the transcripts, and some of the right questions were being asked. Taking the tax cut issue aside, the province is still left with a structural deficit of about $3.8 billion by 2003-04. Having been both in government and in private business, have you got any suggestions for this committee on where we might make some recommendations to the Minister of Finance to deal with that deficit?

           R. Botterell: Sure. The difficulty I have, Jeff, which is really the thrust of my presentation, is that it's very hard for me to make concrete suggestions when I don't really know what the implications are of the options. It's just very difficult. For me to say we should cut here or cut there is hard without having some information on the implications and knowing precisely what the key factors are.

[1455] 

           Let me illustrate that with an example. In the Ministry of Finance, there's a corporate services operation. Whether that operation, which in large measure provides policy advice to the deputy minister, is really needed with a fairly centralized policy advice function in the Premier's office is one area to look at.

           Look at other parts of the Ministry of Finance. The registry, for example, is basically a cost-recovery operation.

[ Page 462 ] 

There's not really too much you can do there. What do you do with Treasury Board staff? How would you streamline that? I think you need to go ministry by ministry. I think that over a longer period of time, letting the core services review play itself out and with public consultation, you'll find areas where you can make significant savings.

           I don't have the magic list. I guess the thrust of my presentation is that I really urge you to release the stakeholder impact assessments and the analysis on implications, because then I could provide you with a much more detailed idea of where to look and how it would impact the public.

           R. Sultan: I think that you are quite firm in your resolve that the books should be balanced at some point, even the $3.8 billion structural deficit that was just referred to. If you're recommending a stretch-out in achieving that goal, what target date would you suggest?

           R. Botterell: If this issue were being faced when I was financial comptroller of the TD Bank, the way that we would have approached it is we would have started by identifying the key indicators or the framework within which we had to manage. We'd start out by saying: "After September 11 what is the tolerance for debt-to-GDP in a recession?" We would look at indicators of the ability to protect programs that are, as the panel pointed out, important to the poor and to the environment and so on. We'd establish some parameters around that to see how fast we could move.

           I haven't done that analysis, because I don't know what the targets are, other than a spending cut. I'll venture to say that if you went through a process, I think you could stretch it a year or two more and involve the public. I'd think you'd find a set of reductions and changes that would have not total cheering from the sidelines but certainly broad-based support.

           T. Bhullar (Deputy Chair): Seeing no further questions, I wish to thank you on behalf of the committee, Mr. Botterell.

           Our next presenter is Geoff Squires, with the B.C. Pharmacy Association. We'll get started when your presentation is delivered to all the committee members.

[1500] 

           G. Squires: Thank you very much. My name is Geoff Squires. I'm a pharmacist. I'm the elected president of the B.C. Pharmacy Association. I'd like to thank the committee for allowing us to make this presentation. I'd also like to thank you for allowing Mr. Bob Kucheran, our executive director, and Tony Toth, our director of public affairs, to join me as well.

           The B.C. Pharmacy Association thanks the Select Standing Committee on Finance and Government Services for this opportunity to present our views regarding the 2002-2003 British Columbia provincial budget. We are very concerned about the state of provincial finances.

           As a matter of both public interest and enlightened self-interest, our association wishes to contribute to the effort to create sustainable financial strength for this province. We are here because we want good health for patients, and we want a Pharmacare program that provides medicines for people who need them.

           The B.C. Pharmacy Association is a professional advocacy association. We have over 430 pharmacies and 1,600 pharmacists as our members in British Columbia. We represent by far the majority of pharmacy practitioners in this province. Our association and its members have strong relations with all health system stakeholders. We maintain strategic alliances with business groups, including the B.C. Chamber of Commerce, the B.C. Business Council and the B.C. Business Summit.

           The B.C. pharmacy profession and business is community-based. Our members are drawn from all areas of the province, and we employ in excess of 5,000 professional and service workers. Approximately $2.5 billion are spent on drugs every year in British Columbia. Of that, $1.2 billion are prescription drugs, and of that $1.2 billion, the province pays for approximately half, or $600 million, through the Pharmacare program.

           Following commitments that we made at a July meeting with the Ministers of Health, we've put together a very comprehensive policy paper and proposals recommending measures to enhance health care through better use of pharmacists' clinical skills, and recommending policy changes to contain health cost increases. These seven pages you have before you are recommending actions that will result in $98 million in savings in next year's budget through the Pharmacare program.

           Our position paper is entitled Pharmacare in the New Era and it's available on our website and through the B.C. Pharmacy Association office as well. We will be detailing the recommendations — there are 23 of them — through two separate appearances at the Select Standing Committee on Health. The presentation we're making today doesn't provide a comprehensive look at our recommendations or our submission to the Ministers of Health.

           Today we want to focus our comments on a few specific and useful short-term common-sense solutions to the questions posed in the Budget 2002 consultation paper. At the end of our presentation, we will briefly list for the record some long-term common-sense solutions which are aimed at impacting future budgetary cycles.

           Our short-term suggestions are as follows. Number one, ability to pay. We believe that people should have the responsibility and be accountable for the resources they consume, and that includes Pharmacare resources. If ability to pay was implemented for plan A, for example, approximately $70 million a year could be saved if the 30 percent of plan A patients who are currently earning above $25,000 in annual taxable income paid $500 more for their drugs. Pharmacare could provide catastrophic coverage for drug expenses above

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$2,000 a year, and 70 percent of plan A patients would remain covered, exactly as they are now.

           The second idea that we have will save approximately $12 million, and that's to increase the deductible for plan E, which is the program that probably most of us are covered by, from its current $800 per year to $1,000 per year.

           Consumer co-payments are the third area that we think could be addressed to save money and help to maintain a sustainable Pharmacare program. Right now patients in plan A, for example, pay only the dispensing fee portion of their prescription. The entire drug cost is covered by the Pharmacare program. This leads to two issues.

           One is that there's no individual patient accountability or responsibility for the cost of that prescription. The drug portion is free. If patients had to pay a percentage of the drug costs, they may ask some tough questions: "Is this the best drug for me? Is it the cheapest form of therapy that will treat my condition?" We think that's a healthy thing.

[1505] 

           The other thing is that with the co-pay only being applicable to the dispensing fee, it encourages patients to get as much drug as they can on each individual prescription. This leads to a tremendous amount of waste. There's a program in this province called EnviRx, which is responsible for the collection, distribution and destruction of unused medications. That EnviRx program collects literally tons of unused, expired medications. It's a waste that can be addressed by apportioning the co-pay on prescriptions as a total part of the prescription cost, as opposed to just the dispensing fee. Changing the co-payments from just the dispensing fee to a percentage of the total prescription cost will also save another $15 million and help to maintain the sustainability of the Pharmacare program.

           We believe that the operation of Pharmacare can be privatized, and the same with PharmaNet. Assuming a 10 percent savings due to the privatization, there will be another million dollars saved by privatizing the operational administration of Pharmacare.

           We are recommending an expenditure increase in the area of helping to train new pharmacists. The shortage of health care workers in this province is acute, as I'm sure all of you realize. I personally believe that the shortage of pharmacists is a hidden health care shortage. You don't see the fact that we're at a very, very critical point now, to the point where it may eventually endanger public safety.

           We have to do something to rectify this Pharmacare shortage. For a very small investment in the University of British Columbia's pharmacy program, we can help train 100 more pharmacists a year, which is what it's going to take to help alleviate the critical shortage that we're in now.

           Taken together, all of the recommendations I've just made, including the expenditure to help train more pharmacists, will save approximately $98 million in next year's budget.

           I wanted to comment briefly on regulatory reform and paperwork excess. We applaud your government's approach to looking at the burden of regulations on business and on the professions in this province. We estimate that approximately 75 percent of a pharmacist's time is spent in dealing with non-pharmacy-related regulatory and administrative issues.

           Frankly, that is not a good use of a pharmacist's time. There has been study after study proving that when the pharmacist devotes his time to clinical issues — dealing with patients, dealing with drug-related issues — there are enormous savings to the system from a cost perspective and enormous benefits to the patient from a health care perspective. That's why we're doing it.

           Only 25 percent of the pharmacist's time is available for devotion to those activities now. We're asking you to continue in your review of regulatory, paperwork and red tape issues to help free up the pharmacist's time to spend more time dealing with health care issues.

           We have some long-term suggestions as well. Those long-term suggestions are outlined in our brief — or our not-so-brief — to the Ministers of Health in an addendum called "Community Pharmacy-Based Solutions for British Columbia Health Care." Although these will not provide short-term cost savings, as you've requested for this consultation, I'd like to state them just for the record and talk to the magnitude of the cost savings that these initiatives will provide.

           The duration of treatment management. This is for patients who are on long term medication therapy. We've estimated in our document that the net cost savings will be $31 million per year to the health system.

           Dose management in asthma. Besides the health care benefits of that, we believe there'll be net cost savings of $12 million per year to the health care system.

           Pharmacist involvement in the dose management of anticoagulants will provide, we believe, $4.5 million in net cost savings to the province every year.

           Reducing cardiovascular risk. By following the recommendations and proposals in our document, $51.2 million per year can be saved in the provincial health budget.

           Reducing drug-related problems in seniors. There will be net cost savings of $32 million per year to the Pharmacare program and to the health system in British Columbia.

           The final one is cost neutral, but by dealing with travel medicine, pharmacists can have a tremendous impact on public health and on individual patient benefits. That, again, is why we're there: to help individual patients.

           The total additional savings available by these six recommendations that I just read to you are $129.7 million annually.

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           In conclusion — and I'd like to read this right from my brief — the B.C. Pharmacy Association looks forward to working with the government to achieve efficiencies that will enable the people of British Columbia to enjoy a high-quality health system and to benefit from a sustainable Pharmacare program for this and future generations. 

[ Page 464 ] 

           We've had the privilege to pre-review the submission to this committee by the Business Council of British Columbia. There are two areas of advice from that group that we want to highlight, because we concur with it.

           Firstly, it's true that the primary policy objective for this province must be to establish conditions that will lead to faster economic growth and a sustained improvement in economic performance in the medium term. Decisions in this direction, even very tough decisions, are required. We acknowledge that, but given the opportunity for meaningful consultation, these decisions will be supported by the British Columbia Pharmacy Association. We believe we need an economic environment in which all British Columbians can thrive.

           Secondly, it is very true that government should concentrate on a few core services that it can do very well and leave the rest to the efficiency, expertise and energy of the private sector. The membership of our association offers its entrepreneurial know-how, our community business orientation and our patient care expertise to help British Columbia regain its position as the very best province in which to live in this country.

           Thank you for allowing us to make this presentation.

           T. Bhullar (Deputy Chair): I believe there are some questions.

           J. MacPhail: Nice to see you, gentlemen. As I said to a senator from Washington State who was here visiting to learn about our health care system — she was a pharmacist in her real life — some of the best health advice I ever received was from pharmacists, both as a Minister of Health and also as a mom. You're often available 24-seven in the community. You make a very valuable contribution to the health care system that I think often goes unrecognized.

           I just want to spend a couple of minutes on this, Mr. Chair, if I can. This is so key right now. It's got a lot of emotion attached to it, our Pharmacare program, in terms of the review of it.

           I happen to agree with every single one of your long-term solutions. I think they're very valuable. I know you've made them before, and there has been some movement on some of them. I wonder whether you would add to that an examination of the combination of complementary medicine with prescription drugs — whether there are any ill effects or if we need to study that kind of effect.

           G. Squires: That's a very interesting point. Certainly, a lot of complementary therapies are being utilized by patients out there. There's no question that the combination of those with prescription medications can lead to problems and can also have patient benefits. I think that's a very worthwhile suggestion.

           J. MacPhail: I'm going in reverse order in terms of your brief. On the issue of the operation and administration of Pharmacare and PharmaNet being privatized, have you given consideration to privacy issues around that? If so, are there ways of dealing with that and privatization?

           G. Squires: Absolutely. Patient privacy has to be paramount. Any move to a privatized system of administration, we believe, has to maintain the patient privacy. There's absolutely no question about that.

           J. MacPhail: Now I'm on to the short-term solutions. I actually appreciate very much you making suggestions. Of course, the rumours are out there that the Pharmacare budget has to be…. Well, they're not rumours. It's been suggested that the Pharmacare budget has to be reduced. I don't agree with that; I agree with your long-term solutions.

           On the short-term solutions it does seem to me that…. Plan A are seniors — right?

           G. Squires: Correct.

[1515] 

           J. MacPhail: We have, as some of us like to say, an issue there: that plan A is specifically seniors. It is interesting to note that the proposal to save $70 million per year would be more — way more — than the cost of the tax cut that that particular group of people get. It's a solution where people get in one pocket and then pay out of another pocket. I know you're trying to deal with it in the context of just the Pharmacare program, but the particular tax cut for people earning $25,000 or a little bit above doesn't even equal $70 million per year.

           On the expenditure reduction, the change so that you raise the deductible means you would then be shifting the cost to private sector employers, basically — wouldn't you? — because the premium of their private sector plans would go up.

           G. Squires: That depends. Many patients who have a private plan would have that plan cover the amount up until the Pharmacare deductible kicks in, if you're talking about plan A.

           J. MacPhail: Under current circumstances? You mean current plans?

           G. Squires: Yes.

           J. MacPhail: If there were to be an adjustment where the deductible increases, where a current plan doesn't cover it, then there probably would be an adjustment in employer premiums.

           G. Squires: That's a possibility.

           J. MacPhail: Okay. Lastly is just to applaud you on the strong stand that the association has always taken around tobacco sales — a huge contribution to reduction of health care costs that often goes unnoticed.

           G. Squires: Thank you. 

[ Page 465 ] 

           K. Krueger: Thank you, Mr. Squires and your association, for a really thorough, careful and quantified set of recommendations. It's really good to have that.

           I was particularly interested in this issue of wastage of medicines. I've had some input from constituents about having to go through their elderly parents' medicine cabinets every quarter or so, finding bags of unused pharmaceuticals and actually flushing them down the toilet, which sounded like a really bad environmental practice to me. I appreciate the recommendations about how to deal with some of that wastage. Would it be practical to only dispense medications under the plan in relatively small quantities?

           G. Squires: Absolutely. You've touched on something that's very important. Until a patient is stabilized on a medication, the response is unknown. Even once a patient is stabilized, if changes occur in their health condition, then there may have to be changes. It's not a good idea to have large quantities of prescription medications.

           K. Krueger: Could that practice of people flushing medications into the sewers be causing some of the superbug issues — resistances and so on — or is that unlikely after most of them have probably been through sewage treatment systems?

           G. Squires: That's a good question. I don't know the answer to it. My guess is that it would be a very hard question to answer, but I'm sure there are experts in infectious disease that would have an opinion on that. I know that pharmaceuticals have been detected in sewage effluent.

           It's not a good idea, which is why the EnviRx program was started several years ago and deals with as much of that unused medication as we possibly can. That program is managed through the community pharmacies. Patients can bring their drugs back to the pharmacy. It's handled there, and then it's disposed of through an environmentally sound method.

           K. Krueger: I certainly commend the association and the individual pharmacies for taking part in that. I wonder if you could come forward with a concrete proposal to government about limiting package sizes for medications that are dispensed. As you say, there's a temptation to feel free to overuse, or overstock at least, when everything's free. Clearly, that's not a good idea, for a lot of different reasons.

           G. Squires: We can do that. That's certainly one of the reasons for our recommendation that the co-payment be based on the total cost of the prescription. That will have a very significant effect on reducing the amount of wastage.

           T. Bhullar (Deputy Chair): We are running a little bit behind. The final question, Ms. Chong.

           I. Chong: Mr. Squires, thank you for your presentation — very concise and quite complete. I have one question for clarification, just for my understanding. You've got your short-term solutions and your long-term solutions. I appreciate that. What do you refer to as long term?

[1520] 

           G. Squires: Well, that's another question that would be hard to put a cut-and-dried answer to. Some of these programs will take some time to implement and will take some time to see the result of, as well. Boy, we'd get to work tomorrow if we could work in concert with the Ministry of Health to help make these things happen.

           I. Chong: Just a quick supplemental. In terms of your long-term savings that you anticipate, of $129.7 million per year, if you were to assist in implementing those, would you see the benefits within a year or two years, something like that? Is that what you mean, or would it be longer term?

           G. Squires: Can I turn that question over to the executive director? Would you mind, Bob?

           R. Kucheran: I believe that we're ready, willing and able to implement any one of those changes, and you would see the cost advantages immediately. I think the best example is the emergency contraception program last year, which was brought in by pharmacies. The economic advantages were felt immediately, I believe — certainly in the emergency rooms that used to deal with the patients. The same thing would happen with any of those other suggestions. We just need the program to do it.

           T. Bhullar (Deputy Chair): Gentlemen, on behalf of the committee, thank you very much.

           G. Squires: Thank you for allowing us to come.

           T. Bhullar (Deputy Chair): Our next speaker is Mr. Murphy, with Conduit.

           J. Murphy: Good afternoon, and thank you. My name is John Murphy. I'm representing COLCO, which is the Coalition of Leaky-Condo Owners, based out of Vancouver; Conduit, which is a leaky-condo lobby group on Vancouver Island, headquartered in Victoria; and the Victoria Harbour Residents Association.

           There has been a systemic failure resulting in premature building envelope failure to more than 65,000 homes in British Columbia. The beleaguered, non-culpable leaky-home owners are footing the entire repair bill for this incredible catastrophe. They need and deserve compensation similar to that provided to Canadians in other devastating disasters.

           I will first discuss the economic situation. NDP policies have wantonly wasted money and have effectively destroyed the business climate for both existing and potential industry in British Columbia. As a result of the past grossly mismanaged government under the NDP, we have been thrust into the unsavoury position

[ Page 466 ] 

of being a have-not province. With British Columbia's natural resources, its population diversity and strength, its prime location due to climate and its strategic proximity to the Pacific Rim markets, it's absolutely incredible and incongruous that British Columbia has become a have-not province.

           Canada is an integral part of the North American economic model, which has been heading towards a recession prior to the September 11 terrorist attacks. Those devastating strikes merely enhanced the fall towards economic recession and highlighted the actual ailing economic situation that many had refused to recognize or to accept.

           British Columbia needs to find and implement the financial formula to economic recovery relative to the rest of Canada. I am certain that this committee is investigating ways to reverse the NDP-induced economic backslide. You've already announced the government plan to reduce personal income tax aimed at stimulating the economy by placing more money into the hands of British Columbians. There's more that you can and must do, particularly for the stricken leaky-home owners.

           I'll explain, but first I would like to point out what would happen if you don't use the financial tools that are at your disposal. The cost of doing nothing — and that means precisely what you're doing right now — it has been estimated, would cost the province and British Columbians more than would the full cost of compensation to leaky-home owners. The cost of compensation has been estimated to be at $1.5 billion, but it is believed that it may be even greater, perhaps in the $2 billion range.

[1525] 

           In British Columbia, the loss to the province in revenue from property purchased — that is, from lost sales and lower purchase prices of those homes that are being sold — is estimated to be $800 million annually just in the lower mainland, Fraser Valley and Vancouver Island alone. This covers the region that has been severely affected by premature building envelope disaster.

           In the last two years, the province has lost over $1.6 billion in direct revenue, not counting associated incremental losses. It will lose the same amount over the next two years without dramatic intervention. Over a four-year period, this will amount to a loss exceeding $3 billion.

           This bleak economic situation will continue in British Columbia until confidence is restored in the housing industry. This confidence restoration will never happen as long as there are beleaguered leaky-home owners continually forced to fight for economic survival in protracted litigation. In essence, you have $1.5 billion to $2 billion in repair costs — the cost of the proposed compensation. There will be lost revenue to the province of more than $3 billion in a four-year period if you do nothing, so doing nothing about the leaky-home disaster in British Columbia is not a viable alternative.

           The homeowner protection office loans — that's HPO — are only obtained by 16 percent of the affected leaky-home owners. This benefit, in reality, has the banks, mortgage companies and CMHC as the major beneficiaries. Only 20 percent of the affected leaky-home owners actually applied to the HPO.

           Of those who apply, only 80 percent are deemed eligible for and receive an HPO loan, so those 16 percent affected homeowners who received HPO loans have to eventually pay off the loan principal. The HPO loan merely delays the inevitable home sale. It prevents widespread foreclosures that would have ended up costly to the loan companies, the banks and CMHC — estimated at $65,000 per unit that goes into foreclosure.

           Confidence has to be restored in the housing industry, both for new construction and for homes that have undergone extensive reconstruction for leak repairs. The real estate market continues to suffer with both the loss of confidence generally and the financial devastation that an estimated 65,000 homeowners are facing in particular. Doing nothing means more of the same.

           British Columbia will continue to be a have-not province with a shaky housing industry. This industry, by the way, affects 20 percent of Canadians directly and indirectly. Until the housing industry and real estate market recover, the British Columbia economy will rest in the doldrums or perhaps even slip beneath the waves.

           Compensation. What will that do? The non-culpable leaky-home owners should be compensated for the cost of the repairs and associated legal costs. There are other valid claims that are not being sought that include claims for pain, suffering, loss of loved ones, health deterioration, loss of investment opportunities, repair loan interest costs and devalued properties. These claims are not being pursued, to keep the compensation procedure as simple as possible and to avoid bureaucratic and legal quagmires. Each individual case would be different, even within the same single building complex.

           In a very recent and ongoing court case in Los Angeles, a building with a $4 million repair bill — similar to that of my own — is suing for $28 million. That would indicate that we leaky-home owners are asking for only 15 percent. In asking for 100 percent compensation for repairs and associated legal costs, in reality we are only asking for 15 percent of the potential claim amount. We believe that an ultra-conservative approach to compensation is extremely reasonable and responsible.

[1530] 

           Now, the 84 percent of the affected homeowners is the other part of the 16 percent. The 16 percent get loans, and the other 84 percent of the affected homeowners finance the repairs without help from the homeowner protection office. It would be reasonable to presume that the compensation to the 16 percent assisted by HPO would revert to the province for loan principal repayment. The province would get 16 percent of the compensation package back immediately to clear those loans, which could amount to from $240 million to $320 million, depending on what the total cost is. With compensation, the other 84 percent of the

[ Page 467 ] 

leaky-home owners would have a huge cash infusion to their pockets.

           Those people have deferred spending on discretionary items and on necessities as well. There's a bow wave of needs that would be quickly satisfied through dramatically increased consumer spending with a compensation package–induced cash spending unfreeze. This would be a real and significant economic stimulus. This is precisely what it will take to get a failing British Columbia economy back on track.

           Each dollar spent on the local economy will be re-spent numerous times, with both the federal and provincial governments rewarded with PST and GST revenues on each step of the new spending cycle. This is a win-win situation for the leaky-home owners and the provincial and federal governments.

           Not only that, British Columbians who are fortunate not to have leaky homes would also benefit from such a compensation package. Let me explain. With compensation, the non-leaky-home owners would benefit by paying less through taxes and, in addition, would be rewarded with a healthy economy that benefits everybody. If nothing were done, the non-leaky-home owners would have a bigger economic price to pay and would be forced to continue to live with a faulty economy.

           [B. Lekstrom in the chair.]

           Breaking, perhaps heartbreaking, news. A Chelsea Green erstwhile proud homeowner of a CMHC-approved condominium paid $115,000 for their dream home. Facing a $46,000 repair bill, they initially listed that $115,000 condo for sale at $75,000. They reduced it to $20,000. They just sold it for a paltry $11,000.

           Three elderly people died in my building prior to and during renovations, and five people died in the building next door, where they commence restorations next month. Elderly people do die, but perhaps their demise was hastened by the mould and the stress. I am aware of one suicide directly related to the stress of coping with living in a leaky building. We need immediate action.

           By the way, the Ottawa trek conducted last week by British Columbia leaky-condo lobby groups, comprising Simma Holt from Vancouver, Port Moody Mayor Trasolini, COLCO and Conduit last week obtained more compensation commitments from the federal government than did the previous provincial government and the present government. I say shame on you.

           In conclusion, doing nothing will cost the province and every British Columbian more than will compensation. Compensation combined with restored confidence in the housing economy will start the B.C. economy on the road to economic recovery. The province would immediately get back 16 percent from paid-up HPO loans.

           The provincial government planned on spending approximately $140 million over the next ten years on the homeowner protection office. That would be unnecessary under the compensation strategy. Compensation money, we have been advised, is on the table in Ottawa. All the province of British Columbia has to do is ask and be willing to contribute. All levels of government have been aware of the leaky-condo catastrophe since 1995. That's six years. What are you waiting for?

           The province has vast natural resources, a huge workforce population base and a superb strategic location that is just begging for sound financial policies to enable British Columbia to blossom into a much-deserved, long-awaited economic recovery and economic boom.

           Compensation to the leaky-home owners will do just that. The sooner you act, the sooner British Columbia will recover and grow economically. Act now. You have the tools. Don't be satisfied with being a have-not province.

           Before I take your questions, I would just like to apologize for not having copies of my speech. I think my printer was suffering from the wind-driven rain this afternoon. It just refused to operate. I will leave this with the research analyst, and you can make copies of that.

           B. Lekstrom (Chair): Thank you very much, Mr. Murphy, for your presentation. I will look to members of the committee, if there are any questions.

           B. Penner: Just a clarification. Did I hear you say that a leaky condo was found in Los Angeles?

           J. Murphy: That's correct.

           B. Penner: It's not strictly related to climate, then.

[1535] 

           J. Murphy: I can tell you that it is directly related to climate, but if the buildings were built properly and inspected properly, perhaps we would not have had those problems. It surfaced first in Vancouver, because as you know, they get 50 percent more rain than Victoria does. Just because of the large volume of rain there, the problems surfaced there first.

           They surfaced somewhat later in Victoria, and it's starting to spread to other places. I know there are places in Alberta, Saskatchewan — the Prairies. There are places on the east coast, and certainly over in Washington State and down the western seaboard.

           This is just something that was noticed first in Vancouver, but it's not just a southwestern British Columbia problem. However, we're addressing the government here. It is going to manifest itself in other places as soon as they get the same quantity of rain over a period of time that we get in a short period of time.

           B. Lekstrom (Chair): All right. I see no further questions, Mr. Murphy. I would like to thank you for your presentation this afternoon. Certainly, you can be assured that we will get copies of that if you would leave it, if you would be so kind.

           J. Murphy: Thank you for being attentive. 

[ Page 468 ] 

           B. Lekstrom (Chair): Our next presenter this afternoon is with the Brain Injury Associations of British Columbia, Mr. Mitch Loreth. Good afternoon.

           M. Loreth: Same to you. We're worried about how long you've been sitting in here. I wonder how you're doing.

           B. Lekstrom (Chair): Very well. It's early yet.

           M. Loreth: Awesome.

           We're now circulating copies of our brief and a little bit of background information on the Brain Injury Associations of B.C. As noted, my name is Mitch Loreth, and I work as the executive director of this non-profit federation of associations. Without a card, I'd like to introduce Sue McKinnon, a local person from Victoria who's the president of our provincial board and also works at the Vancouver Island Head Injury Society.

           We very much appreciate this opportunity, as you can imagine. In particular, the issue of brain injuries in B.C., we feel, is not as strongly on the radar of all British Columbians as it needs to be. We consider this a valuable opportunity to share this with you. I'll just say a little bit about who we are, and I'll ask Sue if she'll say a little bit about acquired brain injury and then make our proposal to you.

           The Brain Injury Associations of B.C. was formed in 1982 as a non-profit society and has recently been through a significant reorganization and renewal effort whereby we've changed our name and our governance structure. We're now the voice for brain injury in British Columbia on behalf of about 35 non-profit associations from all corners of the province who are trying to support people who've been injured.

           Some of those associations are tiny enough that in Golden and Williams Lake, it's one woman who is, off the corner of her kitchen table, responding to calls for information and support from the hospital when people have been injured. Some are very large organizations like the Prince George Brain Injured Group Society and the Central Okanagan Brain Injury Society in Kelowna. We kind of cover the provincial territory, and we're proud of that — and growing.

           If Sue would talk a bit about acquired brain injury and what we mean by that term.

           S. McKinnon: The definition that we use for the people with an acquired brain injury who we support is a non-progressive injury. It can either be acquired as a result of a trauma — unfortunately, we're seeing more and more people who are injured as a result of an assault and/or a motor vehicle accident — or a medical incident, such as an aneurysm or a stroke.

           M. Loreth: Our non-profit society is sustained primarily by donations and fundraising efforts. We've had a really successful year and a half in forming new partnerships, particularly in the private and corporate communities. This year, for the first time ever, the provincial government saw its way clear to grant us a $100,000 a year annual operating grant, which we're most grateful for and indebted for. It helps with our operations at the provincial office. We've got really dynamic partnerships with the Rick Hansen Institute and the G.F. Strong Rehabilitation Centre, for example, and our corporate partners are many and growing.

[1540] 

           The situation is that our province lacks a system whereby we can ascertain the exact numbers of survivors of brain injury. Today in B.C. what we know for sure is that at least 20 and as many as 38 people will have sustained a brain injury. The window is big because we don't have what in many jurisdictions is now a surveillance and tracking system to know who's been injured and what happens to them.

           It means for us that we know that at least 8,000 and up to 14,000 people every year in British Columbia sustain a brain injury. That means that right now in B.C. between 32,000 and 76,000 people are living with disabilities that are the direct result of a brain injury.

           When we speak to you with respect to finance, we think the cost for supporting people now is too high. We think the work can be done better, and we think it can be done for less money. If we ask the question, "Where are people who have brain injuries living now?" you would see that many people who've had brain injuries are living in extended and long term care beds in the province.

           Whatever communities you're representing, if you go to your local extended care hospital, you're going to meet people there who will be really identifiable to you by the fact that most will be young. They won't fit in exactly with all the other people who are there. The reason they got there is that they'd had a brain injury.

           In 1990 in a national survey in the States, Willer found that one in six institutional care beds in the U.S. was being taken up by a person with a brain injury. Dr. John Higenbottam, who some of us might know and who works at Vancouver Hospital & Health Sciences Centre, reported the exact same statistics in British Columbia in 1997. One out of every six beds that are filled now in extended or long-term care in British Columbia is filled with a person with a brain injury.

           I want you to think for a minute about the criminal justice system. At least 80 percent of people who are in jail in B.C. have had a brain injury. Mr. John Simpson, who's from Chilliwack and who's kind of a godfather of brain injury thinking in B.C. and is a great friend and supporter of ours, has been working at Matsqui and Sumas in the maximum care facilities there for years and doing research. He's trying to retire, and we're not letting him.

           He reported last September at a presentation in Penticton, to some of your colleagues actually, that there were 304 men last year living at the Mountain Institution that's attached to Matsqui. At least 270 of them have had a brain injury. These are the people that have committed the worst crimes in society. Also, an inordinate number of people, percentage-wise — we can't tell you exactly — are living in shelters or on the street.

           We want to talk to you about prevention. We've had an audience with Dr. Cheema, the Minister of State

[ Page 469 ] 

for Mental Health, and he was really responsive to our prevention questions. This presentation is more about the fact that we've got to find some better, more creative and cheaper ways to support people with brain injury in a community.

           In terms of resources that are available, what we're being told, for example, by the very senior and wise leaders in the Ministry of Health is that people with brain injuries are going to have to get their services from the generic health system. That's difficult for us.

           More people are surviving brain injury now than ever before. There was an anecdotal note that since the Vietnam War, when army surgical hospital units returned to the States, their capacity to rush out and save people that would have died previously has gone up exponentially. That kind of clinical expertise is everywhere in the world now, and it's particularly strong in British Columbia. The health care system, which takes many bad raps these days, can save people, and they are saving people.

           Our problem at the Brain Injury Associations of British Columbia, and particularly here in Victoria and other places, is that thousands of people are living with the results of brain injury, and we don't have much of a way to respond to them.

           There's a small program that some of you know about called the provincial brain injury program. It has a budget of $11 million a year now. That's compared to $350 million in community living and $450 million in mental health services. I saw a stunning statistic the other day: millions of dollars in spinal cord research. We're working with the Rick Hansen Institute. Last year in British Columbia we think there were between 8,000 and 14,000 brain injuries, and there were 276 people that had high-level spinal cord injuries.

           We feel like we're way back and we're pushing very hard to catch up. One of the things we're being told in the system is that we've got to get people who are brain injured to be assisted by the generic health care system.

           We also feel like we're a little bit under siege, if we might say that. We're all for the balanced budget. Both the Insurance Corporation of B.C. and WCB are currently reducing or cutting back services. One of the service areas that's named — and I don't think it's intentional, necessarily — is brain injury. We think it's because we're so small that when they round off to the ninth decimal point, they're going to lose us. We're paddling as fast as we can to be able to keep up.

[1545] 

           Think of the synergy or the crossing of dynamics when, the other day on CBC — it's actually not the other day, it's about five weeks ago — two things were announced at one time. One was the reflection on photo radar being taken off the streets. It's a controversial thing. For the B.C. Brain Injury Association, that was a bad call. That's the way it goes. We're going to live with that. At the same time, some of the school districts said they don't have enough money to have crossing guards for kids anymore. I live in Fairfield, right up the road here. When my kids were young, they went to Margaret Jenkins, and I was always yelling at people for speeding out of Oak Bay, coming down the hill.

           Take those two pieces of data and extrapolate the data. Less disincentive for people without photo radar, fewer crossing guards. Kids are going to get hit, kids are going to get hurt, kids are going to die, and some are going to survive with brain injuries. They're going to come to our associations, and we feel like we need support to be able to help them.

           Part of the infrastructure that we want you to know about is our group, and we've included a newsletter in that. The experience of people in the acute care and generic system is weak. Many of the people there who were trained to work in our hospitals and health systems were trained before the time when we became so good at saving people. Now people are just in awe of the fact that people are surviving these injuries at all, and the institutional rehabilitation has not been working for people.

           The money being spent. We can find records that on the programs for people with developmental disabilities…. It's a system I'm really familiar with in B.C. We're tagging $384 million to that. We think there's $485 million in mental health, and we're trying to protect our interests on $10 million for up to 70,000 people who have survived a brain injury.

           With that kind of background and hopefully a bit of passion around it so you can think about the thousands of people we're trying to help, Sue is prepared to talk to you about what the issue is for us with respect to the use of alternate-level-of-care beds, which are really expensive, and some solution to that.

           S. McKinnon: Thanks, Mitch. One of the things that we're really challenged by is recognizing that the health system in B.C., particularly, isn't being supported to effectively provide services for people with brain injuries. As Mitch alluded to, we're seeing a lot more people that are now living with their injuries that previously wouldn't have survived.

           What we're seeing is the inappropriate overutilization of these beds and inappropriate use of health care professionals in supporting people within the health system. In our organization particularly, we interview people when they come through our doors. Many times, they have been through five, six, seven different service systems before heading through our doors, each of which is costing our system.

           Dr. Higenbottam talked about this, and Mitch alluded to it before: one in six extended care beds in B.C. is now being lived in by a person with a brain injury. We've seen great examples in the interior, where they actually removed someone who was in Pearson Centre, an extended care facility in Vancouver, for 17 years and is now living semi-independently in a supported environment for less than one-fifth of what the cost was for them to be supported for 17 years in Pearson Centre. These care levels are maintenance care. Most of the time they are not rehabilitative care, and they are also looking at causing serious health decline and increased health services utilization.

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           Right now we're in the process of having policy, and the policy within the Ministry of Health will be looking at transferring responsibility for all the services for people with acquired brain injury from the provincial brain injury program into the health regions. We're really concerned about what this might look like.

           One of the reasons is because — admittedly by our health regions, and certainly with dialogue that I've had with our health region here in the capital health region — they are neither prepared nor resourced to be able to support people with brain injury at this time. In the past the provincial brain injury program has been the funding agent which has been providing the most effective support — a lot of support for very few dollars.

           One of the ways that they were able to do that was through case management services. What we think is the solution, or we at least are beginning to think about as part of the solution, is looking at the idea of putting together an effective case management model for a freestanding case management system for people with brain injuries.

           What we really need to do is make the generic services that we all live with every day work better for people with brain injuries. There was a recent pilot project in the northern interior and another one in the Okanagan. They were both deemed to be cost-effective and a service utility for those who have acquired brain injuries. In the U.S., the National Institutes of Health has a document. In their document, it states that case management is the lead service for this population.

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           What do we really need? A dedicated funding allocation to be established for this service to avoid increased costs and decreased health status for this population. We realize these are challenging times. You've sat listening to many people today talking about the challenges in budget allocations and where to go from here.

           We realize that you will have before you a challenging task looking at resources for all of the priorities set within the province of B.C., but we do feel that the long-term implications in supporting people with brain injury aren't going to go away and that if we address this at this point in time, then we can work together to be able to have a better future for those with brain injuries and those that support them.

           B. Lekstrom (Chair): Thank you very much, Mitch and Sue. We do have some questions, I believe. I will go to Joy first.

           J. MacPhail: Thank you very much for the presentation. It's excellent, but I am a tiny bit confused. I understand the concern about going from a provincial to a regional model. However, the two examples of pilot programs seem to be regional pilot programs. Is that the case, or is there some overriding provincial mechanism that supports the case management model?

           S. McKinnon: The funding, actually, was through the provincial brain injury program, who partnered with the health region to establish both of those models. Our concern is that without that mechanism at a provincial level to be able to partner with the individual health regions, there won't be the same ability, incentive or area of expertise to be able to develop each of those individually in a regional capacity.

           J. MacPhail: So the provincial program gives support to the local models.

           S. McKinnon: Absolutely.

           J. MacPhail: Okay. That explains it.

           S. McKinnon: They not only partnered support in terms of expertise but also partnered with the dollars.

           J. MacPhail: Right, of course.

           My recollection of the brain injury program is that it's separate and apart from a mental health program in that the services are often much different. Like, it's occupational therapy and physiotherapy — almost the alternate medicine supports that are in place, rather than necessarily a pharmaceutical approach to the support.

           S. McKinnon: Yeah. It actually covers a huge range of expectations. The original idea when the provincial brain injury program was established was that it was to be complementary to the generic service system. As everyone within the mental health system and within our generic system started having challenges around being able to serve people, however, what happened was that everybody got referred back to the provincial brain injury program as a stand-alone service versus a complementary service.

           The services that they provide range from residential care — so they actually support people residentially — to short-term crisis intervention work, to hiring and contracting for specialized services as well. They have a very diverse range of services that they offer. It's not necessarily how it was intended but how it's evolved.

           M. Loreth: If I could add, part of the difference is that people with brain injuries don't necessarily get better but can be supported to do better. People who are in mental health crisis can often be helped to manage their illness in a much more creative way, but the people that we're supporting don't go away. Part of the reason we're asking for a sort of case management model to help them find their way in the generic system is not only to save money, it's that people are struggling. With a way-finder, they'll do a lot better and not draw so many dollars.

           J. MacPhail: I was using the term "alternative," but it is complementary programs such as occupational therapy, physiotherapy, etc., that support a person with a brain injury and that aren't necessarily a support for a person with a mental illness. 

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           M. Loreth: Correct.

           B. Lekstrom (Chair): One brief question. Kevin?

           K. Krueger: I'm shocked to see the statistic of 21 to 38 new injuries per day and then to see that only a fifth relate to WCB and ICBC realms. You mentioned that assault was one of the causes. I assume sports are fairly significant. Do you have any idea what percentage?

           S. McKinnon: I couldn't tell you the exact numbers. We're seeing more and more concussion-related injuries. Part of the reason for the increased numbers is also better diagnosis. We often have people that were within other systems previously and that had undiagnosed brain injuries. They were either mild injuries, so they had very little time of unconsciousness and sort of way-finded through a whole bunch of other alternate systems. We're now getting better at diagnosing those injuries initially. So we're seeing more and more sports injuries, whether or not they actually existed before and we just didn't identify them or label them in the same way.

           We're certainly seeing an increase in assault injuries and the level and degree to which people…. It's been on the news. There's now a 20-year-old from Esquimalt in intensive care with a significant brain injury. Should he live through that injury, he will require lifetime supports.

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           K. Krueger: The Chair is rushing me to conclusion. I was thinking that with your very stretched resources, you probably don't have a lot of ability to put time or resources into prevention programs. I'm really wondering what could be done with regard to alerting the public about these potentially drastic affective sports injuries.

           M. Loreth: And all kinds of other ways. We had a dynamic presentation at our conference last week from a Dr. Robert Conn, originally from the Okanagan, doing the Smartrisk program for kids to prevent injury.

           J. MacPhail: Bicycle helmets.

           M. Loreth: Yeah. Well, you look at $700 million in savings, I think. The actuarial study was on how much money's been saved since bike helmet laws were instituted.

           We're looking at the Brain Injury Associations of B.C. We think the corporate community in B.C. is win-win-win on prevention, and we're getting really good preliminary responses to ask them for support there. We're here on the other side of that coin saying: "People are being injured. We're really in deep to try to support people lifelong on it." This proposal would go a long way to assisting us to be able to do that and save some bucks on the other end as well.

           B. Lekstrom (Chair): Well, Sue and Mitch, I would like to thank you for taking time out of your schedule to come and present to our committee today.

           Our next presenters are a combined effort. They will utilize the next hour. There were a number of presenters that had signed up and have spoken with the committee as far as being able to put their presentations together. Certainly, we have concurred with that. So to begin with, we have Mr. Jim Sinclair with the B.C. Federation of Labour as well as David Tones. The process will be that we have from 3:55 until 4:55. We have one hour, at which time we'll look at the presentations and cycle them in your order, whichever works for you, and go from there. Without eating up too much time, welcome and good afternoon.

           J. Sinclair: I want to thank the committee for the opportunity and thank you, Blair. The last time we met, you had another job, and we got together to talk about the economy. Congratulations on your new job. I'm sure it's a challenge, and you'll do well at it.

           You should be fairly flattered. Getting all of these labour leaders in the same room is a huge job. Hopefully, it'll be worth it for you. I'm going to take a moment to introduce them to give you a sense of who the B.C. Federation of Labour is and who's here today. Of course, not all of them will be making presentations to you. Some of them already have. They're all here because, like millions of other British Columbians, they're concerned about what's happening with the economy, jobs and public services.

           Joining me today are Dave Tones from the IWA, who will make a presentation; Angie Schira, the secretary-treasurer of the B.C. Federation of Labour; Chris Allnut, secretary business manager of the HEU; Jim Christensen, representative of the TWU; David Chudnovsky from the B.C. Teachers Federation; Dave Coles, vice-president of the western region of the CEP; Patty Ducharme, vice-president of the PSAC; Tom Dufresne, president of the IWU; George Heyman, who you heard from earlier; Carol Landry from the United Steelworkers of America; Fred Muzin, president of the HEU; Jerry New, president of the OPEIU; Barry O'Neill, president of CUPE; Maureen Shaw of CIEA; Charlie Peck from the IBEW; and Tom Gore from the Professional Employees Association.

           It's a lot of names, but it's a lot of people. When you add up who those people represent or are accountable to, it's about 500,000 British Columbians and their families and their communities. We believe that we represent a large group of people in this province, from forest workers, social workers and hydro workers to paperworkers — people right around the province who are looking at the economy and looking at where we're going and trying to find some way forward which makes sense for their communities.

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           I believe the debate that you're having here is going to set a tone not only for the economy of the province but for how we're going to work together, between workers who are organized, their communities, their

[ Page 472 ] 

families and the government. There's no question that there are lots of issues to deal with there.

           Here's a bit of a context for this discussion today. Obviously, the economy is struggling. Since May we have lost 39,000 jobs, up until August. We've seen the softwood lumber agreement and the tariff — I'm sure Dave will talk about that; it's the third or fourth time the Americans have taken action against us on softwood lumber — lay off probably 8,000 to 10,000 people around the province.

           All of this was looking difficult, and then we had September 11. Post–September 11 there's no question that other industries are suffering. You can't talk to anybody in an airport or in the tourism industry who isn't talking about how both those industries are suffering dramatic cuts right now, and a general recession in the United States has been made worse. That's the context, I believe, for us coming forward to you today about looking for how we deal with these problems and move forward on our agenda.

           We need a vision for jobs, for families, for communities. We need a way in which we can sit down and build those communities stronger, not weaker. We need to find a way where employment numbers are going in the other direction, not down, and we need to find that way quickly.

           I want to raise, first of all, our deep concern about the fact that we see the economy going in the other direction. We see, potentially, government action making it worse. With the number of jobs that are being discussed now, by whatever economic model you want to use, the cuts to the budget you're now describing as necessary — and I won't say anybody in this room, but certainly cabinet ministers are describing it now — will result in an additional 14,000 jobs, by our estimation, being lost over the next six-month period.

           We simply can't afford that. Our communities, at a time when we're facing a recession, can't afford to make a recession worse. It's not only the jobs; it's the services those provide for working people — the education, the health care but also all the other government services for children and for families.

           I'm sure you've heard from many, many people about what those mean in our economy and what they mean for our quality of life in our communities. Many of the people that are going to come forward today to talk to you represent people from those communities and those industries, both private and public, and are themselves very concerned about the future of the province.

           I don't want to take a lot of time; I just want to encourage you to ask questions. Don't be shy, now. We love to debate issues, of course. That's how we survive in the labour movement and with people. I think it's time for our debate, frankly, about where we go. It's our view that we do a whole lot better when we're not confronting each other but are cooperating. It's our view and my experience in the labour movement over many, many years that when an employer and a union had a working relationship and struggled with problems together, it generally came out with a better result.

           That's why I'm very concerned and why our number one recommendation today is that you convene an economic summit where all the players are at the table. I don't think you would imagine — you've all been around B.C. a long time — that the labour movement isn't a player in this province. We're asking to sit down with our counterparts in the business community and our counterparts in government and talk about what the answers are to the economic problems that we face.

           I would encourage you to look at the paper today, where the CAW and Air Canada…. The first approach of Air Canada was to lay everybody off. They ended up in court. They lost the court battle. The contract language applies. Now they've sat down and negotiated a deal which will save 400 jobs in British Columbia, because they worked at it, through issues such as attrition, early retirement and job-sharing. They found answers. I think that's good for this economy and it's good for this government. Those 400 people are going to pay a lot more taxes being employed than unemployed.

           We think that that's the answer, and we really want to challenge the government. Why are we not getting an answer back in the positive on that front? Certainly, before the election you were very clear: you wanted better labour relations in the province. You think that's the answer. The Business Summit had a meeting. They said the same thing. We're saying it here. Everybody in this room would agree. If we talk and struggle together and work together, we'll find a better answer.

[1605] 

           The second thing we want to talk about is tax cuts. Let's be really clear here. We thought they were a risky strategy to begin with. A lot of British Columbians wanted tax cuts. Let's be really clear about that. I do want to say that I believe now is the time to reflect on those differently. In fact, we've seen the strategy in the basis of those tax cuts fall by the wayside. Let's not even blame anybody. Let's just say they were based on 3.8 percent growth and now we're down to 2.8 percent growth. The deficit's gone to $2 billion. We've got a problem. Now we're being told that in order to deal with that deficit, we have to cut the dramatically necessary public services that we need here.

           We want you to sit down and take a sober second look at where we're going. We believe that those tax cuts should not proceed. The figures that they were based on, of course, have proven to be false. They didn't work. The second prerequisite for the tax cuts, of course, was that there were going to be no public sector cuts, because they were going to be returned in revenue. I think it's pretty accurate to say that that's not going to happen — at least, not in the short term and probably not ever. Two underlying assumptions are wrong.

           If you maintain the tax cuts that were given to this date or maintain the ones for everybody's first $60,000 in income, that's what people voted for. That's what people said. I think it's really important that we reiterate that.

[ Page 473 ] 

           A couple of quotes. From Mr. Campbell: "If I thought we were going to reduce a billion and a half in revenue because we were giving people back a tax cut, then that would be a real issue. I don't believe that happens. I don't buy the argument that a personal income tax is a revenue cut. In fact, I think a personal income tax is a revenue increaser."

           Bill Good, May 8: "Well, let me talk about two things. The question is, of course…. Voters have a serious concern: how can we have the best health care and the best education if we cut taxes? It's the obvious question."

           Mr. Campbell: "Number one is we've said we're going to have the lowest basic rate of personal income tax in the bottom two tax brackets — that's the first $60,000 of income — by the end of our first term. We know — and the facts are out there if anybody wants to go and look at them — that when you cut personal income tax, you actually generate more revenue into government coffers, not less."

           "But isn't it the fact that it only happens if government also cuts spending?" — Bill Good.

           Mr. Campbell: "No, that happens because you're driving additional revenues into government. There's no question that if you dealt with all taxes, there'd be difficulty. Let me say that again. There's no question that if you dealt with all taxes, there'd be difficulty. We're talking about personal income tax only here."

           I guess my question is: is that right? If it is, then do you agree with us that given the alternative, which is dramatic cuts in the services we need and a deepening of the economic recession, it would be perfectly logical for your government to reflect on the need to withdraw those tax cuts at this time — given the fact that that's what was said prior to the election and the fact that it's not working out the way we all planned?

           B. Lekstrom (Chair): Jim, certainly I think you understand the legislative committee that we are and what we are here to do. As much as I certainly think we could sit down after and have a coffee and have a good discussion, we're here to listen, actually, and hear the views of all British Columbians. I'm certainly encouraged with the delegation you brought out today. On a debate issue, I think if the committee have questions on what's being said, I would certainly encourage that.

           J. Sinclair: I just thought I'd get you going there, eh? It's time to have a discussion.

           B. Lekstrom (Chair): Time has gone by, hasn't it?

           J. Sinclair: We have a number of other recommendations. The bottom line is: if you go back to the original promise in the budget, hold out the tax cuts in January and increase funding by 5 percent, you'll create 16,000 jobs. We think that's a much better projection of what should happen in this province than losing 14,000 or 15,000 jobs. That makes a whole lot more sense, and it's certainly much more consistent with the values expressed by this government prior to the election.

           There are a number of other recommendations in here, but we have a shortage of time here. This is a long-term debate, and I'd like to turn it over to Mr. Tones — who is the vice-president of the IWA, a union that knows well some of the economic consequences of the last period of time in this province — to talk about the view from the private sector and from the woods industry, which is obviously a critical industry for our province.

           J. MacPhail: It's just a point. I'm sorry, Jim. I'm trying to look through your brief. That Campbell quote was May 8 of what year?

           J. Sinclair: It was 2001. It's not in the brief. Sorry, it's just in my notes.

           J. MacPhail: He said that four months ago?

           J. Sinclair: Four months, yes.

[1610] 

           B. Lekstrom (Chair): David, good afternoon.

           D. Tones: Well, thank you very much for the opportunity to make a presentation to this committee. I have a brief, which I believe you have in front of you now. I'm not going to read that brief, but I'm going to summarize the brief and talk about the state of the forest industry in this province.

           The forest industry, as we're well aware, is one of the main drivers of the economy in British Columbia. It's in very serious trouble. We have about 6,000 members laid off today — maybe 8,000, depending on what week it is. Our membership is really feeling the impact of being laid off, the impact on their families and the community, and the uncertainty about whether or not they're ever going to go back to work. If they didn't have an appreciation for government services when they were working, they certainly start to grow an appreciation for government services when they've been laid off and they're in crisis and their families are in need.

           When the economy's in the tank in the forest industry, we get laid off. There's no question about it. There's no public debate about whether we get laid off. We're simply unemployed and suffer the consequences. We face very serious problems with cost and pricing and market access. Worse, the industry has proven that they're unwilling to invest in needed improvements to production facilities, production line diversification, export enhancement or workforce training. Investment has declined sharply in recent years.

           I just want to read from the brief.

           "It seems fair to point out that in spite of cycles of capital accumulation, total investment in the B.C. forest sector has declined every year from 1996 to 1999. Investment in expansion of operations fell every year from 1995 to '99. Total investment was 8.3 percent of capital employed in '96 but only 4.9 percent in '99. Investments in expansions fell from 2.3 percent of capital employed to only 0.9 percent in 1999, according [to an economic report.]"

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           There definitely seems to be a capital strike in the forest industry over the last number of years that is proving devastating to the industry and to British Columbia in general. We feel that that's where it begins if there's going to be a healthy, vibrant economy where services can be provided to British Columbians. It starts with investment in the industry, which is one of the main drivers of the economy in British Columbia.

           We urgently need to develop a strategy that will put our industry on a sound footing in dealing with these issues that I've just mentioned. Most importantly, we need to take seriously the fact that our economy depends on production in export sectors and increased access to markets. My union has spent a lot of time on the question of market access around the world. We are an exporting industry. We want to encourage government to look at the notion of a North American strategy in developing world markets. Instead of fighting with each other, there's a great big world out there that we can develop a strategy together to supply with wood products. There's more on that in the brief.

           We get locked into a counterproductive debate over the public sector and what we should do. Cut jobs — we find it really is counterproductive. Some people feel the need to cut services — we certainly hear government say that; the notion is to maintain balanced budgets — while others want to continue the services for fear that otherwise we'll slide deeper into recession.

           We feel that neither of these outcomes is desirable. Cutting spending potentially means eliminating many of the quality human services that we've come to rely on. With layoffs in the forest industry, as I've suggested already, our membership really comes to rely on those services provided by government. Maintaining spending in the face of declining revenues means embracing deficit financing, which would result in the loss of fiscal manoeuvrability and costly debts to banks.

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           We have to get out of this box by addressing the things that government can do. We want to rethink regulation and taxation to take into account the need to keep the costs of compliance down while encouraging trade and investment; adopt targets for investment, employment training, research and development, and diversification; and find ways to persuade industry to meet these requirements.

           Certainly, we want to make the comment that we cannot rely on command-and-control types of regulations like the Forest Practices Code and high taxes to turn things around in the forest industry. Without the assurance from industry that they'll invest in the province, we're not convinced that your tax cuts and free market economics are the answer. It won't work if there isn't investment in industry.

           I just want to close by saying that we really believe it's important that labour, industry and government engage in open dialogue towards new answers to a lot of really tough questions. As Jim said earlier, it's a different world, a new world, and it requires us — government, industry and labour — to come together to deal with these tough issues. We want to encourage government to do just that.

           In summary, I would say that balance is the order of the day from our perspective. We want a strong and healthy economy which positions government to provide quality services to people. Our membership understands that need for balance, and we particularly understand it when we're laid off and require services.

           B. Lekstrom (Chair): I will look to members of the committee, if there are any questions at this point.

           J. MacPhail: Dave, to your last point about investment. I understand Dave Haggard is on the advisory committee to the Minister of Forests. I'm not sure what it's called.

           D. Tones: Nor am I. The big committee — the committee.

           J. MacPhail: Anyway, Mike de Jong is getting advice, and Dave Haggard is part of that advice.

           D. Tones: That's right.

           J. MacPhail: I also note that the minister is announcing that we're revamping the tenure system and moving to a market-based system. Do you know if it involves any agreement amongst industries that there will be increased investment?

           D. Tones: No, I don't believe it does. I don't know that. We've heard nothing on it.

           J. MacPhail: The minister has announced that he'll delink jobs and tenure. There's nothing you know of that replaces that?

           D. Tones: No. It really concerns us a lot, because it's a crucial link in jump-starting this economy, obviously.

           B. Lekstrom (Chair): Well, first of all, David, I want to thank you for your presentation. Certainly, you hit on a key issue, and that's balance. I think what we're all here to strive for is to find a balance that works for a better society in British Columbia. I thank you for your comments.

           J. New: My name is Jerri New, and I'm president of the OPEIU. We represent over 11,500 members who work and live in hundreds of communities around B.C. We negotiate with 29 different employers in both the private and public sectors. Many of our members work for B.C. Hydro and ICBC, but we also have members in BCAA, TransLink, B.C. Gas and other service industry workplaces.

           We are very concerned with B.C. Liberal plans to allow private companies to compete against ICBC to sell basic auto insurance and also to sell off vital parts of B.C. Hydro. We believe that this will harm the provincial economy and deepen the recession that we are currently facing. 

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           I have copies of our written brief and related materials, which have been distributed to the committee.

           I have a few comments about the 2002 budget priorities and the plans of government. The federation's brief shows pretty clearly that the government's current fiscal strategy is going to further weaken an already weak B.C. economy. The federation's call for an economic summit of business, labour and community leaders is a sensible way to move forward with a strategy that everyone can buy into and support. We believe that the current economic condition in B.C. will be further undermined if the government continues to move forward with its deregulation, restructuring and sell-off of assets within B.C. Hydro.

           B.C. Hydro has asked for expressions of interest for customer service and for its information technology arm, Westech, among other areas. This is the start of the breakup of B.C. Hydro. Hydro is successful because of its integrated systems. It works because we do. We have, through our public ownership of B.C. Hydro, an enormous economic benefit for every shareholder, the people of B.C.

           We have postage-stamp rates, low electricity production costs and high-quality service in electric power. Jurisdictions that have embraced deregulation in electricity markets have, in fact, regretted it. Alberta and California are the best examples of that regret. Deregulation will cost consumers more and devalue a critically important public asset. We believe the breakup of B.C. Hydro will lead to deregulation.

           B.C. Hydro earned $859 million in profits last year. It has electric rates that are the second cheapest in North America. As a publicly owned utility, these moneys go back into the B.C. economy. Selling off parts of B.C. Hydro could mean the loss of profits flowing to the B.C. government and through to our economy and the loss of control of our electricity and water management.

           We could be subject to U.S. laws and brownouts caused by U.S. market demands. B.C. will be less attractive for businesses due to higher power costs. In our OPEIU kits you have a CD which talks about B.C. Hydro and the dangers of deregulation. I encourage you to take the time to view it. In these difficult times we need to protect local communities in our province. B.C. Hydro is the B.C. advantage.

           We are similarly concerned about the government's move to dismantle public insurance in B.C. We have included in our written brief a copy of the Consumers Association of Canada and CCPA reports which show very clearly that B.C.'s public system provides cost-effective coverage at a very comprehensive level — far superior to what private insurers provide in provinces like Ontario and Alberta. Private auto insurance failed terribly when it was the standard in this province.

           Discriminatory rates and problems with uninsured drivers were just some of the glaring problems that came with private insurers. Through public auto insurance we get the added benefit of road safety programs that a private insurance model simply would not provide. ICBC invests $60 million a year in road safety and reimburses $43 million annually to our Medical Services Plan.

           The Insurance Corporation of B.C. was formed 27 years ago because of unfair, discriminatory rate practices by private insurance companies, staggering costs from the large proportion of uninsured drivers, lengthy claim-settlement delays and huge backlogs in our court system, as drivers had to sue for compensation.

           We believe that we would see job loss, reduced road safety, higher costs for the provincial treasury and more uninsured drivers on the road. ICBC is better, cheaper and safer. Let's learn from history and from experience and not undermine a valuable system of public auto insurance. Don't wreck public auto insurance.

           One final point. This committee has an important role to play in setting the economic agenda for this province. The government's priorities to date will destabilize what should be a strong and viable economy. Hopefully, you see the need to move in a different direction, one that benefits everyone.

           Thank you very much for taking the time to listen to my presentation.

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           B. Lekstrom (Chair): Thank you very much, Jerri.

           Would it be the preference of the committee to ask questions of Jerri now, if that's acceptable, or would you like to do your presentation, Barry, and then we'll answer them together?

           J. Sinclair: Let's do them both.

           B. Lekstrom (Chair): Okay. Why don't we do it that way. Go ahead.

           B. O'Neill: Good afternoon. CUPE BC also appreciates the opportunity to provide input into the planning of the province's finances and, hopefully, the 2002-03 budget.

           Government budgets represent more than just financial decisions, we believe. Budgets direct our resources to determine what kind of society we all live in. We believe those directions must be based as much upon equity as economics and as much upon fairness as finance.

           The majority of our brief, which was distributed to you earlier, looks at the impact of government spending cuts. CUPE represents about 65,000 workers in British Columbia. Most of these people are front-line workers and have a very good idea of what happens when government services are cut. They are on the front line, and they recognize those things very quickly.

           Added to that, I think it's important to understand that CUPE members aren't flown in from another planet to do their jobs and flown back to that planet. In fact, they do work and live here. They have children in schools and support their communities, pay taxes and all the other things that I'm sure you do.

           Our members will see the impact in small areas as well as big areas, impacts on such things as libraries

[ Page 476 ] 

and museums — not often the high-profile things we talk about but clearly important to small communities and very important to those least able to afford those kinds of services at home.

           Libraries and museums are important institutions, although they don't get very much in the media or they don't get very much in front. Our museums bring in tourists, and our libraries spread learning, history and so on. As you know, those kinds of resources and those institutions have already faced, in proportion to anything else, significantly more cuts than other areas.

           I want to talk a little bit about education. Your government has said that they're going to freeze spending. The president of the B.C. School Trustees Association has said that a frozen provincial budget for the next three years will amount to cuts in education at the local level. We agree. We see that and will experience that if, in fact, those things happen.

           Many of those cuts are going to come at the expense of children with special needs. Many school districts are spending more money now than the province provides for special education and special needs children. They won't be able to afford that kind of spending with frozen budgets.

           Another little known commodity in schools is custodian and maintenance services. We know that they'll suffer. We already have school districts where standards are so low that teachers have called it a health and safety concern. Your cuts, we believe, will put children in a dirty and unhealthy institution. We know from research that's been done that if children find themselves in that atmosphere, then they often do not believe that what is happening there is very important.

           Then there are social services. The Ministry of Children and Family Development spends a billion dollars annually for contracted services through community partner agencies. In recent years those agencies have seen their funding cut by inflation while their caseloads have grown. I'm sure you've heard that from my colleague in direct government services. They've had huge administrative burdens placed upon them. Even without the funding cuts that we now face, the situation for those agencies was getting much worse. There's no fat left in those agencies, we propose. Any cuts will come directly out of the services for the people in British Columbia who need them the most.

           The ministry is complaining that in the last five years the number of children in care has risen from 6,000 to almost 11,000. Can you really imagine that the situation will improve by cutting community services, or do you plan, simply, to cut some of those older children loose? Those are the questions, I think, that we all need to ask.

[1630]

           Other people will speak about direct provincial services, but I have to comment on the damage that cutting those areas will do. I'm deeply concerned about the quality of our water, and I fear when I see government talking about deregulation. I fear when I hear talk about 50 percent cuts in ministerial spending. Will that happen in the Ministry of Energy and Mines? Will our mine inspectors be the first to go? Do we need to consider facing something as serious as what happened at Westray mine?

           In conclusion, the government's current policy will clearly diminish our quality of life. It will do so while undermining its own stated goals of economic recovery. The world has changed, as Jim has mentioned, since September 11. Citizens are calling for increasing government control in the provision of public services. Now is the time to build and strengthen those services, not to dismantle them. We, for one, are willing to work with you to make that happen.

           Thank you for your time, and I hope you take a serious look at the presentation that we've distributed.

           B. Lekstrom (Chair): I will now look to members of the committee to see if there are any questions.

           K. Krueger: Jerri, you have the people on the ground in your membership with the expertise and the corporate memory — I'm talking about ICBC — to come up with a very concrete proposal for how we could keep our promise to open competition for first-dollar automobile insurance coverage without, in any way, disadvantaging ICBC as one of those competitors. Your membership tell me they don't believe the private sector can compete head to head with ICBC because of its efficiencies, its economies of scale and so on.

           We made a promise. We were elected on that promise. The ability to compete is going to be offered to the private sector, but there are legitimate issues raised by your membership: the propensity for private insurers to cream off the preferred risks; the need to ensure that anyone participating in that market pays its share of section 23 and section 19, unidentified and uninsured motorist claims; and part 7 coverage, the no-fault coverages that are built into the basic liability policy.

           Has your membership prepared any sort of a recommendation to government — or could you have them do it — to make sure that if there's going to be competition, since there is going to be competition, it is absolutely fair with regard to the private sector competitors shouldering their share of those burdens?

           J. New: I guess what we say in response to the question is that there is competition already available to the private insurers, and that's in the form of the optional insurance. The economies of scale that you point to with respect to ICBC make it successful in providing basic auto insurance. Because it is the sole provider, it also allows reduced rates through road safety programs.

           We had speakers here before — I just managed to catch the tail end — that were talking about brain injury and other significant incidents. A lot of the safety programs that ICBC is able to provide as the sole provider of basic insurance in fact provide research into head rests, neck rests, seatbelt safety and several other programs. I think it's critical that if there's examination of competition, it remain in the optional.

           K. Krueger: You're right that ICBC does all of those things, but I'm suggesting to you that a government

[ Page 477 ] 

that's elected committing to do something had better do it. That being the case, if the private sector is also going to be allowed to compete in that first $200,000 liability coverage spectrum, then I think your people raise legitimate concerns about how that competition has to be fair. I'd just like to see that.

           I think you have a wealth of expertise in your membership. I would like to see an actual submission stipulating to government the things that have to be funded by the private sector competitors if they're actually going to compete. Your members don't believe that they'll be able to compete, if they actually have to fund their share of those things, so I think it would be a good thing for government to see. I'll just leave that with you.

           J. New: Just a further comment. It's somewhat difficult to do that with reductions of 700 to 800 people in ICBC right now. Their fear is that ICBC is in fact being set up to fail, so it's frustrating when there isn't consultation with the union prior to some of those decisions being made.

[1635]

           J. MacPhail: Mr. Chair, for the benefit of Mr. Krueger, that study was done and was released two weeks ago, answering exactly the questions that you asked. It was done after interviewing ICBC employees. I can make a copy of that available to you if you wish.

           Actually, I want to go to Mr. O'Neill. I don't think you were present here when Mark Milke from the Canadian Taxpayers Federation presented. Part of the idea of this committee is for us to go on the record so that people who can't be here can have an understanding of the dialogue beyond just those who are in the committee room. I need to put to you a question that he raised with us — that is, that misleading reports were being made to municipal councils.

           He named CUPE, saying that you were giving wrong advice about private-public partnerships and the consequences of those. He urged the government to reverse the wrong opinions that you were giving on private-public partnerships. I think I am quoting him accurately. Do you know what he's talking about?

           B. O'Neill: No. I'm not sure if anybody knows what he's talking about. That aside, we base all of those reports on private-public partnerships on experience and on research that has been done. We've challenged the Taxpayers Federation on a number of occasions to come forward with the evidence that says that P3s are good for communities.

           I think that's an important part of it. People need to understand that it's communities that will suffer as a result of some of the private partnerships. In fact, there's no significant evidence that I've heard — and I wish the Taxpayers Federation would come forward with some — that says that fiscally it's a good idea. It certainly has been proven that the service level comes down.

           There's some self-admission around that — that people need to somehow learn to bite the bullet in the name of profits — but there's clearly no evidence of that. If the Taxpayers Federation has some problem with the research that's been developed by us and for us, then the Taxpayers Federation should come by with some evidence that says otherwise. They haven't done so.

           B. Lekstrom (Chair): All right. I see no further questions.

           Jim, we do have 15 to 17 minutes left. I believe you have a number of presenters.

           J. Sinclair: I do. They'd better run up here quick.

           D. Chudnovsky: My name is David Chudnovsky, and I am here representing the teachers of the province. We would like to thank you very much, members of the committee, for the opportunity to speak to you on behalf of the 45,000 men and women who teach in the public schools of B.C. every day. As others have said, I won't read our brief. I encourage you to read through it. We have made comments both on the general fiscal situation in the province and on a number of specific education-related funding issues.

           For the sake of quality education, the B.C. government must carry through on its promise to maintain and enhance funding for public education. No cuts to funding for health and education was a campaign promise of the current government. That wasn't a peripheral or a by-the-way or a "we just remembered it" promise; it was a central commitment that was made.

           For that commitment to be meaningful, the actual dollars in the budget each year must at least reflect the additional costs from inflation and collective agreement costs. A three-year freeze on budgets for education will have the impact of making deep cuts, cuts that will have a significant negative impact on the quality of education in British Columbia.

           Over the last decade, when real per-pupil expenditure on education declined, cuts to programs were an ongoing phenomenon. The effect of a freeze on spending will have a much more negative impact than the slow squeeze of the past decade. Unless the policy directions of government change to reflect the reality of funding needed to maintain a quality system, the impact will be deep cuts in services to children.

           I'm getting the eye from Jim here. I'm going to skip over a number of points. I do encourage you to read the brief.

[1640] 

           I wanted to speak for a minute about the history, over the last ten years or so, of funding for education in B.C. Provincial operating funding per pupil grew from $5,213 in 1990-2001 to $6,297 in 2000-01, but inflation ate up all the value of that increase and more. The inflation-adjusted operating funding per pupil — that is, adjusted to 2001-02 figures — over the period declined by about 3 percent.

           What we've done for you in the brief — and I recommend that you look at page 7 — is project that decline over the next three years, assuming a freeze on education spending and assuming a very conservative

[ Page 478 ] 

2 percent inflation rate. The additional loss would therefore be, in 2001-02 dollars, from $6,491 per pupil in 1990-91 to $5,934 in 2004-05. That's at least 8 percent. When we say that your policies mean massive and dramatic cuts to education services in this province, we mean it, and the figures show that.

           Now, what can we do in terms of improvements, and where should we be going in terms of improvements for students in our schools? We'd like to take a minute to look at some of the proposals that your government has made and make comments on them.

           First of all, you've proposed a three-year funding envelope for school districts. The BCTF and teachers in the province agree with that proposal in principle. It has the advantage of encouraging stability and providing a framework for effective change through long-term planning. However, all of those advantages disappear in the context of a three-year freeze.

           It doesn't help school districts and those who are planning for the future of students in schools that they have a three-year envelope for planning if your policy is that there be a freeze on funding. It doesn't help.

           You've proposed school board autonomy over budgets, replacing the targets and caps. What do I mean by targets and caps? Well, there has been targeted funding in the system for ESL students, for students with special needs and for aboriginal students — money that comes and is targeted especially for programs in those areas. Our view is that increased autonomy for school boards, in certain circumstances, is a good idea as long as that's not a euphemism for downloading the costs that a higher level of government is unprepared to expend.

           We know that over the period of the nineties, the federal government talked about increased autonomy for provincial governments. That was a euphemism for downloading the costs of medicare, post-secondary education and social services. Autonomy for school districts is a good idea as long as it's not an excuse for downloading costs.

           We don't agree that the targeted funding and the caps should be removed, but if these directives about spending are removed, it's important they be replaced by an open and transparent system of public reporting of school district expenditures. Such a system should have a standard budget format and a standard form for identifying the numbers of employees in each of the different programs.

           A third issue specific to education that I think it important we talk to you about is resources for students with special needs. Teachers have always supported the innovation of inclusion of students with special needs in regular programs. From the beginning, we've petitioned government and employers for adequate funds to ensure the success of these programs.

           According to recent research, B.C. funds less than the prevalent population of students with special needs and at half the rate of some other jurisdictions. B.C. has a history of underserving exceptional students. In 1987 the ministry provided special education funding to 6.2 percent of the students enrolled in public schools, while other jurisdictions were supporting 12 percent of the population.

[1645] 

           I should say, just in terms of spending, that it's important for you to know that a recent research report of the Canadian Teachers Federation indicates that the average teacher in Canada spends about $580 of his or her own money on classroom supplies, equipment and materials. In British Columbia, that's double. The average teacher in British Columbia is spending over $1,000 of his or her own money on classroom supplies, equipment and materials. That's about $45 million per year.

           Finally, I want to speak about the cap on administrative expenses. Previous to the current situation, there was a cap on administrative expenses. The B.C. Liberal platform said that a Liberal government would devote more of each education dollar to improving the quality of education and less to bureaucracy. We agree.

           I want to give you a current example of what's happened in this province and challenge government to find a way to make sure that it doesn't happen. It has to do with the Cariboo-Chilcotin school district. The most recent audited financial statement for the district shows that cuts were made in instructional spending as well as in transportation and maintenance. The district closed schools to save money, against the wishes of parents. While these areas of direct service to students were being cut, the spending on administration went up 2.6 percent. We believe in constraints on administrative spending.

           Thank you for your time. I'm finished. I'll be happy to answer questions if you have them.

           B. Lekstrom (Chair): Possibly what we'll do is allow David to make his presentation, and then we'll follow through with any questions.

           J. Sinclair: Then we have, instead of two more, only one more. Hopefully, we'll get it done.

           B. Lekstrom (Chair): All right. Carry on, Dave.

           D. Coles: Good afternoon. My name is Dave Coles. I am the western regional vice-president for the Communications, Energy and Paperworkers Union. We have approximately 150,000 members nationally and approximately 12,000 to 13,000 here in British Columbia — that is, up until the recent announcements that I'll get to in a minute. We represent workers in a variety of sectors. Some of our largest certifications are in the forest industry, where we represent workers on the pulp and paper side.

           It did my heart good to hear that the government intends to keep its promises. I say that my members most likely voted for most of the rural MLAs in this province, and they are going to keep their feet to the fire so that the government keeps all of their promises, not just selected ones.

           I want to talk to you about some of the problems that we are facing in this sector and why those problems, in combination with Premier Campbell's call for a

[ Page 479 ] 

$2 billion spending cut provincially, are going to be absolutely disastrous for the economy of British Columbia. On the forest sector issues especially, the economy and the concerns raised by the IWA are also our concerns. Our respective members in the wood products and pulp and paper side are taking it on the chin because of the decline both in markets and in European demand.

           Communicators in the U.S. no longer talk about economic slowdowns; they talk about a recession in that country. In fact, most of the debate now focuses on how deep and how long the recession is going to be. It was sharpened and made worse after September 11, but evidence of the downturn in our industry was already well established before September 11.

           I agree with the point in the federation's letter to Premier Campbell in which Brother Sinclair said that the world has changed and that it's time for the province to rethink its economic and fiscal strategy. Certainly, conditions in our sector have become much tougher. The problems with the ongoing dispute with the Americans have made things even worse. If it weren't for the pulp turndown, there would be a critical fibre shortage in British Columbia which would force most of our pulp mills to not be able to run at capacity.

           We have had a series of closures and curtailments that are adding to the job loss conditions that already look bad. These are just the recent ones. Norske Skog Canada last week announced 300 layoffs in Powell River. There was closure of a paper machine in Port Alberni and closures in Crofton and Campbell River. Last week Louisiana-Pacific announced the closure of its pulp mill in Chetwynd. We already have one of the SCI, Skeena Cellulose, mills down at Carnaby. We've been informed in the past couple of months that the Bullmoose mine in Tumbler Ridge is also headed for closure.

[1650] 

           One of the basic features of the forest industry is that we are a world industry. That's where our members work, and that's where they live. When there is a slump in our industry, as there is now, it's the rural communities that feel it first and foremost. In smaller communities, in places like Powell River…. Half of our local was gone as of last week; we lost half of one local union. Port Alberni, Smithers and Quesnel don't have a lot of economic depth when they lose major sources of employment.

           This is one of the places where your fiscal strategy is on a collision course with the problems in our sector. The Premier's call for spending cuts of 35 percent across many ministries is simply going to shut down any provincial government presence in a whole host of small- and medium-sized communities all across the province, but particularly in pulp and paper communities. Many of the communities are the same ones that are already struggling with forest-sector problems, and your fiscal strategy is going to land them in a ton of hot water.

           Our union agrees with the federation's assessment that the wheels have come off the provincial government's economic strategy. The tax cuts that were supposed to pay for themselves clearly are not doing that — a fact that has been made painfully obvious by the Finance minister's almost weekly downgrading of the B.C. growth prospects.

           Those downgrades are a stunning admission that the economic plan is not working. The challenge, of course, is to admit that the plan no longer works and that it's time to draft a new one. The federation's call for an economic summit is a sensible first step in making a new plan. The government needs to admit there's a problem and agree that the solution it needs requires a much broader base of support than the government is currently soliciting.

           I would like to be optimistic and assume that the provincial government is prepared to move toward a different plan. I have seen little evidence of that, however, from either the Premier's office or the Minister of Finance. Hopefully, this committee will acknowledge that there is a problem and help draft new fiscal priorities for everyone and every community in this province.

           B. Lekstrom (Chair): Thank you very much, David.

           With time certainly closing in, I think that rather than go to questions at this time, I would go to your next presenter, if that's okay, Jim. Certainly, our key is to listen, and if we have the opportunity, we'll ask some questions following that.

           C. Landry: First of all, thank you very much for this opportunity to be here this afternoon. As you all know, my name is Carol Landry, and I am representing United Steelworkers here today.

           Our union represents workers in a variety of different sectors across this province, but our largest contingent is in the mining sector. Our membership lives, by and large, outside the lower mainland. Most live in smaller communities — communities in which natural resource industries are important employers. Obviously, ours is an export industry. The strength of the economies of the United States, Europe and the Pacific are what drive our industry.

           Right now those conditions are not particularly great. Low prices for base metals and coal have meant significant downtime for many of the operations where our members work. In some operations that has translated into closures, in others it has meant the layoff of entire shifts, and in some it has meant a cutback in hours worked for everyone in the operation.

           The outlook for base metals and coal prices has certainly been caught up in the economic downturn that seems to have accelerated since September 11. The United States is no longer talking about slowdown; they're now talking recession. Japan has been struggling for the last couple of years and doesn't appear to be making much headway.

           While Europe is stable, growth there is quite modest, and certainly it won't be enough to support higher prices and increased volumes for the products that we produce. None of this is good news for B.C. or

[ Page 480 ] 

for Canada. Every week it seems there is another forecast pointing to tougher times ahead.

[1655] 

           We have already seen job loss in B.C., and our union is very concerned that the $2 billion cut in provincial spending will just make a bad situation worse. Smaller B.C. communities will bear the brunt of those cuts, not because smaller communities are the target, just because we don't have the critical mass of services there to begin with.

           If you push through your $2 billion in cuts, I'm certain it will force the closure of many provincial offices in towns and communities where losing a 20-person, 50-person or 100-person provincial office is a huge economic blow to that community. When you lose offices like that, families leave, the town shrinks and remaining services suffer.

           Just consider for a moment what happens to our local school districts. Families leave because of an office closure, enrolments decline, and the school district responds by closing schools. Kids in rural communities already commute long distances to their schools. Closing schools only adds to the problems.

           Consider the impact your cuts will have on women in smaller communities. This weekend I had the opportunity to speak with some women who work at the Kamloops Sexual Assault Centre. Funding for that centre is being cut because of the government's core review, leaving women and children in that community scrambling to fill the gap.

           Where will these women and children, who are already victims of society, go for help? If you look at it from a cost point of view, in the long run trying to provide help for these unfortunate individuals will cost more without the services offered by the centre.

           It is important for this committee to show leadership. B.C.'s economy is vulnerable and needs a new plan that everyone can support. You have heard from labour leaders that we need an economic summit that brings business, labour, government and communities together. We need to jointly work on solutions that make a real difference to our province and to our communities.

           B. Lekstrom (Chair): Thank you very much, Carol, for your presentation today.

           Jim, it is right on five to five. Possibly at this time, I'll turn the mike back to you, if you have any closing comments. Unfortunately, we won't have time for questions, but I would allow you to make a few comments.

           J. Sinclair: Okay. I get tired of those first tough questions. I didn't quite get through those ones, but we did all right.

           Thank you for your time. We're at a pretty critical moment. We haven't gone down the road very far yet. What you heard people say today was, I think, pretty reflective of this province. They talked about their lives and what's happening to people they represent, and when it happens to people they represent, it happens to communities.

           People sitting back here in this room represent those communities, as well as the people here and other people, and we're offering at this point to get together to cooperate and not head down a road that involves confrontation. Let's seize this crisis we're in as an opportunity for cooperation, not an advantage to take over somebody else, people perceived to be enemies. The answer is really in finding how we build this economy together. No other modern economic society — and we often talk about Ireland as an example in the business sector — has been able to do that without the parties cooperating.

           We don't have the energy for this fight, but we'll have it. Communities won't stand by and watch those offices close down or those services taken away from women and children. We can find another way to solve this, and I think we have to. I think everybody will be willing to give something to make that happen. That's your challenge, and I hope you have the courage to reach it, because it'll be better for all of us.

[1700] 

           B. Lekstrom (Chair): Jim, I would like to thank you and the members that came to present to our committee. I can assure you what's been said will be given due consideration in the development of our report. I think a number of things were said today as balance in the issue of working together. We have to all agree that where we were headed probably wasn't the best direction to develop a better society but that by working together, we can. I appreciate your time and effort and all of you coming out.

           At this time our next presenter is with the Canadian Parks and Wilderness Society, Mr. Bob Peart. Good afternoon and welcome.

           B. Peart: Thank you very much for listening to this today. I really appreciate the opportunity. I've got one longer reference here, but I'll be speaking to the brief that is being passed around. I'm seeing Minister Joyce Murray at quarter after five to present our brief about the future of B.C.'s provincial parks to her. I'm looking forward to that conversation with her as well. My brief is quite short, but I think it's quite a heartfelt issue.

           About seven out of every ten British Columbians visit a park once every other year. I'm sure that most of you have been to the provincial park system. We see the provincial park system as a real opportunity. I'll quickly go through the brief.

           Canadian Parks and Wilderness Society, British Columbia chapter. We're one of 11 chapters of a non-profit nationwide conservation society. We were founded in 1979. The goal of the chapter is to protect wilderness through the establishment of protected areas and the promotion of natural resource use that's sustainable for nature, communities and the economy. Our active chapter membership is about 4,000, and our members live throughout the province.

           [T. Bhullar in the chair.]

[ Page 481 ] 

           British Columbians want to know that the government is protecting the environment. You can see these results in poll after poll. I've just selected a few bullets here. A solid majority of British Columbians, 64 percent, believe that not enough is being done to protect the environment; 68 percent believe a poor job is being done at balancing the need for economic growth with the need to protect the environment; 90 percent feel strongly that nature is crucial to human survival; 76 percent are concerned about species loss; 88 percent have a great deal or a fair amount of concern about environmental problems.

           While the environment isn't at the top of the mind, about nine in ten continue to be very concerned about environmental problems. Eighty-one percent of British Columbians agree that cleaning up the environment will, in itself, contribute significantly to the growth of the economy.

           There's a section here on sustainability. We believe that there are three foundations for true sustainability: environment, society and economy. Sustainability only occurs when the interests of the economy, the environment and the society are met. This is often talked about as a three-legged stool. As you're preparing the provincial budget, it's essential to keep all three of these elements in mind.

           A healthy economy needs to embrace social justice, concern for the environment and business interests to keep competitive. A sustainable environment moves beyond the traditional "jobs against the environment" approach and, instead, accepts the challenge of bringing these two together in a partnership that stresses jobs and the environment.

           There's a section here on economic restructuring. We just make note here about how biologically rich British Columbia is. It's one of the richest places on Earth. There are more species of living things in British Columbia than any other province in Canada. There's been an evolution through the seventies and eighties of resource development and conflict.

           Processes have gradually been put in place over the last eight, ten or 12 years so that a number of land and resource use management plans have been done to help determine the future of how our land use would take place in B.C. This process is about three-quarters complete.

           As well, B.C. is home to aboriginal people. We feel that honouring and respecting first nations rights is very important.

           Parks for the future. First the good news: B.C. has one of the — if not the — finest parks systems in the world. The bad news, as I'm sure you've likely been briefed, is that B.C. Parks has a woefully inadequate budget to meet the demands of this public trust. You'll see, on the very last page here, that I've attached a number of statistics about B.C. parks. There's a lot of data there just to give you a sense of what rough shape B.C. parks are in.

[1705] 

           The budget for B.C. Parks has remained static at approximately $30 million per year since the early 1990s, yet the area and the number of parks has more than doubled. There are now over 700 parks in the system and only about 375 staff. At the present staffing level, B.C. Parks has only one field person for every five parks.

           There was a B.C. Parks Legacy report about two years ago that had extensive public input. It emphasized that B.C. parks serve a compelling public interest and that there's a desperate need for a five-year plan to save the provincial parks system. That five-year plan has not really begun in a serious manner, and we really encourage you to do that.

           Page 5 is a list of some economic and social benefits from B.C. parks. B.C. parks generally have been seriously underappreciated by decision-makers, and we find this information of interest. B.C. parks add $503 million in value to the province's economy, and 62 percent of British Columbians visit a provincial park each year.

           For each dollar the government spends on parks operations there's about $9 in visitor expenditures. The economic activity generated by the parks system sustains about 9,500 direct and indirect jobs. Overall, the parks system is estimated to contribute about $420 million to the provincial GDP.

           The parks system generates about $170 million in tax revenues for the government. Residents spend $1.9 billion on outdoor activities in natural areas in B.C., and this is largely based on areas in or adjacent to parks. The province's $9.5 billion tourism industry is natural resource–based. It's dependent on the maintenance of ecological integrity, and it's anchored on the province's park and wilderness system.

           Three-quarters of the economic benefits of parks and protected areas are outside Vancouver and Victoria. I found that a really interesting statistic. Parks help diversify the economy and decrease the impacts of resource depletion. Some studies have been done. For example, being adjacent to parks is helping drive the rebirth of Kimberley and the economy of Port Renfrew. National park counties in the United States have three to six times the growth found in counties without national parks, so parks can be of value.

           Just to conclude, parks and protected areas are a cornerstone of our identity in British Columbia, we believe, and they're a critical part of who British Columbians are and what British Columbia is.

           Our research suggests British Columbians support the following key principles and conclusions to guide the future management of B.C.'s parks. The primary purpose of provincial parks is protecting conservation values. Revenue generation is acceptable; however, not at the risk of harming the environment. Parks are a public trust, so there's a core responsibility to manage and administer them. New outside sources of funds are necessary. Transparency in decision-making and clear accountability are essential.

           We conclude that a for-profit business model is a poor fit for parks. Core stable funding is critical. First nations rights must be honoured. There needs to be a continued and recognizable B.C. parks structure within the government. The selling of goods and services has limited potential and is not the saviour of B.C. parks.

[ Page 482 ] 

The strategic reduction of facilities and services could alleviate some pressures. We need to involve citizens and the private sector. This would have multiple benefits. Interpretation and public education is critical for communicating a sense of place to park visitors.

           There are two other functions within government that support B.C. parks and that we feel are really important. One is the land use planning process being done in the Ministry of Sustainable Resource Management. We really recommend that you support the work they are doing.

           Also, about 12 percent of the vascular plants and 15 percent of the vertebrate animals in B.C. are threatened or endangered. The anticipated trend for the next five to ten years is that these numbers will increase dramatically. The federal government is about to pass endangered species legislation. Sufficient funding is therefore required in wildlife and habitat to complete necessary habitat ecosystem mapping, identify wildlife, improve conservation enforcement and develop endangered species recovery plans.

           B.C. has an extraordinary natural environment. It's a source of pride, the basis for our high quality of life. As Hon. Joyce Murray said at the open cabinet meeting on October 3, we have a globally significant asset, which is our parks system and our wildlife, something that is increasingly rare around the world and will be increasingly valuable not only to British Columbians but internationally. As you enter your deliberations for next year's budget, I urge you to pledge support to British Columbia's parks and protected areas system.

           T. Bhullar (Deputy Chair): Thank you, Bob. I see there are questions from committee members.

           B. Penner: Thanks, Bob, for your presentation. You may or may not know or care, but I once worked for B.C. Parks as a park ranger.

           B. Peart: I do care, a lot.

           B. Penner: I'm interested in the figure you have on the back page. You have a statistic there that there are 384 staff, as of the year 2000, working for B.C. Parks. Does that figure include contractors working in parks?

           B. Peart: My understanding is that it's their FTE number.

           B. Penner: Those would be direct government employees, then.

           B. Peart: That's right.

[1710] 

           B. Penner: Do you have any figures in terms of government contractors?

           B. Peart: No, I don't. I know they contract out a number of services, but I don't have that information.

              [B. Lekstrom in the chair.]

           B. Penner: When I was first working for B.C. Parks in the late eighties, the former Social Credit government embarked on an initiative to contract out or privatize the maintenance services within parks. I was initially very skeptical about that. I saw a big reduction, of course, in government employees as that happened. Then the contractors came in. There was also a reduction, initially, in terms of park rangers doing enforcement work, like I was doing. Then in the years that followed, up to about 1990, they started to hire back some of the enforcement side, realizing that private contractors didn't have the same legal rights to initiate enforcement action under various provincial statutes, etc.

           Does your association or group have any views with respect to the services provided by contractors in terms of maintenance in B.C. parks?

           B. Peart: No. We feel that sometimes contracting out is appropriate and probably is the best way to do it. What we believe is there are some core functions that are really, really important for government to do, like enforcement, inventory, park management — those kinds of things. We believe the model should be some core services and then some components that can go outside. Does that answer your question?

           B. Penner: Yes, it does.

           B. Peart: Do you want me to try to get that information to you about contracting? Would you like me to try that?

           B. Penner: I would be interested to see that.

           J. Bray: Just going back to your principles for a second. No. 4 had "new outside sources of funding are necessary." Could you elaborate on what you mean? Down in the conclusions you say that a for-profit business model is a poor fit. Could you elaborate on what you mean by outside?

           B. Peart: What I mean by outside is outside government. There might be a way that you could go to foundations or you could go to corporations. There are various other places where there is money. What we believe is that there are some core functions that government should fund, and then there are other places to get money for some of the other functions of B.C. Parks. That's what I meant by outside funding, meaning outside government funding.

           Conclusion No. 1 is: "We believe the operation of B.C. Parks has to be businesslike." There's no question about that at all, but we're really concerned that if B.C. Parks has to raise all the money it needs to operate, it simply couldn't be done. That's what we mean by for-profit. If B.C. Parks is kind of set out someplace and they say, "Go for it, folks," they couldn't do it. Our research has shown they're not able to raise enough money to even cover their core services. That's our concern, and that's what we mean by a for-profit model. Does that help?

[ Page 483 ] 

           J. Bray: That helps. Thank you.

           R. Sultan: A good presentation. I had one question in terms of the area of the province which is in the park system and protected. What would the percentage of the land base be in the protected category, approximately?

           B. Peart: It's about 12.4 percent, I believe.

           R. Sultan: That's the parks now.

           B. Peart: Parks and protected areas. It's basically the same thing.

           R. Sultan: You mean, you're including it already?

           B. Peart: Yes, that's correct.

           That information that Barry wanted, would I give that to him directly, or is that the kind of thing that would be useful for the whole committee?

           B. Lekstrom (Chair): I believe it would be useful for the whole committee, if you could get that to us.

           B. Peart: Okay. I'll do that.

           Thank you for your time. Here's the brief that we're presenting to the minister any moment now.

           B. Lekstrom (Chair): I thank you very much for taking the time out of your schedule. Certainly, as with all the other presenters, your presentation will be given due consideration.

           We will move on. At this point we do have our presenter from 2 p.m., who was able to get across, with the Compensation and Accountability to Soaked Homeowners, Carmen Maretic.

           C. Maretic: Thank you for accommodating me. After sitting here for a little bit, I can appreciate how difficult it would be to try to get your attention on all the different matters before you. I've been given a shorter time frame, so I will follow my presentation verbatim.

           I'm here to represent 45,000 families who have invested in British Columbia real estate that is leaking and rotting. It is anticipated that 45,000 more families will discover they share the same fate in the near future. I'm here to offer you an opportunity to view these 90,000 families as a large buying group that could participate in the recovery of the B.C. economy.

[1715] 

           We are requesting that you consider compensation for this large buying group in the same manner as a cost-benefit analysis applied to the Vancouver-Whistler Olympic bid. According to the information acquired from the Olympic bid secretariat, KPMG undertook a study in 1998 detailing the cost-benefit analysis of the Calgary Olympic Games. The operating expenditure of between $1 billion and $1.5 billion, most of which was recovered through the event, eventually led to a $200 million net gain, mainly from tourism, over a ten-year period following the games.

           Tourism, although an important sector of an economy, provides limited spending — the length of the vacation. This cannot match the strength of a family contributing an average of $53,474 annually to the economy over their lifetime. Investing in people who have committed to spending most, if not their lifetime, in this province seems more promising to an economy than tourist investment during a vacation period.

           We are requesting a similar cost-benefit solution by a provincial investment of $200 million towards a $2 billion problem, with the balance of the funding coming from the federal government. We believe this could be accomplished by declaring the leaky-building crisis a disaster and applying for disaster financial assistance. Please allow me the opportunity to expand on these details.

           The original intent of disaster relief was to provide funding for disasters where insurance was not available, such as floods. Leaky buildings, as you are aware, do not have damage recoverable under any insurance scheme. Under the disaster financial assistance arrangement, the financial criteria is set for 90 percent federal participation of costs that are $5 per capita or greater. The conservative estimate of the cost of leaky homes is $367 per capita. The criteria established under the provincial emergency program are that the disaster may result from a technical failure and can result in serious harm to the health, safety or welfare of people or in widespread damage to property.

           The provincial government has indicated that it does not believe that the disaster relief program is applicable. We are asking this government to specify where it does not meet the criteria. According to the federal government,

           "The provincial government designs, develops and delivers disaster financial assistance to the victims of emergencies and disasters, deciding the amounts and types of assistance which will be provided. The federal government places no restrictions on provincial or territorial governments in this regard. They are free to put in place the disaster financial assistance which they find appropriate to the particular disaster and the circumstances of the province."

           As a result, if any aspect were impeding the solution, we would encourage the appropriate amendments. Emergency Preparedness Canada further indicates that eligible costs include restoration, replacement and repairs to houses and other dwellings — principal residences only — and the cost of damage, inspection, appraisal, cleanup and repairs to government and public buildings and related equipment.

           The benefits of this component of that program are that public buildings would include schools and health facilities that are also experiencing this problem. The costs of remediation are currently being borne by local and provincial taxpayers. Elected officials have questioned the building code and its appropriateness to the west coast climate. This debate cannot be resolved unless an analysis is undertaken to see why these buildings are failing. The litigation costs alone, esti-

[ Page 484 ] 

mated to exceed the cost of the crisis, would be averted, since the act allows for individuals to be billed for the cost attributed to that person.

           In Beijing it is rumoured that the government provided resources to beautify their city and homes to increase the attractiveness of their city to the Olympic Selection Committee. In Vancouver, visions of green, white and blue tarps encompassing large structures and outcries from citizens who feel defrauded out of tens of thousands of dollars is not an impression that would reflect well. Let's not let history repeat itself.

           In 1986 Vancouver hosted Expo 86. The international exposure was considered a triggering event for an active housing industry in the lower mainland, but this exposure, which led to housing start increases, was also considered to stretch resources for inspections and qualified professionals in ensuring quality construction in the lower mainland. A successful Olympic bid would magnify the international attention to this part of the country, and if the leaky-home crisis is not resolved, it will also magnify the cost of the crisis. British Columbia cannot afford to repeat this cycle.

[1720]

           We therefore recommend that this committee encourage government to resolve this issue within the same time frame as the Olympic bid deadline of July 2003, analyze the spinoff costs to a housing industry benefiting from these repairs done in a compacted two-year period instead of a five-to-ten-year period, and consider the economic attributes of 90,000 families that are now able to contribute in other areas of the economy.

           This committee and government have the tools and economic justification to provide 100 percent compensation to its citizens impacted by leaky homes and leaky buildings. It also has the tools to correct this problem before it becomes an international embarrassment through the exposure that a successful Olympic bid would certainly bring.

           Alternatively, we are asking the provincial government to fulfil their campaign commitment of providing the leadership and stakeholder involvement needed to ensure that the financial and emotional damage is mitigated and that future problems do not arise. Through recent lobbying efforts in Ottawa, the federal government has claimed an unsolicited commitment of 25 percent towards a provincially initiated compensation plan. When has a provincial government turned down offerings of this magnitude?

           The Compensation and Accountability to Soaked Homeowners — CASH — Society and the impacted citizens are requesting that this committee make a business decision. Apply the same principles used to promote the Olympic bid — cost-benefit analysis — when reviewing 100 percent compensation to soaked homeowners. These taxpayers deserve a qualified response to this request.

           B. Lekstrom (Chair): Carmen, I would like to thank you for your presentation and your patience in waiting until we could get the time slot accommodated for you. I will look to members of the committee, if there are any questions at this time.

           Carmen, as with the other presenters, I would like to thank you for taking the time out of your schedule. I know you made quite an effort to come here, and I can assure you that your presentation will be given due consideration in the development of our report. Once again, thank you very much.

           I will now call on our last presenter before the dinner break — Katie Scott. Good afternoon, Katie, and welcome.

           K. Scott: Good afternoon. I'm Katie Scott. Thank you for the opportunity to appear before you today.

           Victoria and British Columbia have been my home for nine years. I come from a military background. My dad and my husband were both servicemen, so up until 1992 I had never had the opportunity to choose where I wanted to live. In the summer of '92, I was given that opportunity, and I chose Victoria, British Columbia.

           I'm not an economist, a financial analyst or an expert on anything. I am, however, a very concerned British Columbian — a working British Columbian. I'm extremely concerned about the state of our economy and how the budget and program cuts will impact our communities.

           British Columbia, with its envied natural resources and geography, should be Canada's wealthiest province, but our forestry industry, which has been the traditional economic spine of the province, has taken a severe smack. Our fisheries have suffered for years. Uncertainty over unresolved land claims has certainly weakened our ability to attract investors.

           British Columbians understand that the state of our economy is not healthy and that it needs very serious review. The core review was touted as a much-needed exercise to ensure that the programs government delivers are appropriate for today. I support a review process that is based on sound assessment and evaluation criteria — one that is open and inclusive and has a goal to ensure that we are meeting the needs of our citizens.

           It's apparent to me, however, that this exercise is really not about evaluating programs. I understand that a number of agencies, although they're still talking about core review, have literally shelved it while they're crunching to assess the numbers for the current fiscal realities and for the 20, 35 and 50 percent cuts to the public service.

           We are told that the processes are separate and independent of one another — the core review, the current fiscal overruns and cuts of 20, 35 and 50 percent. It doesn't make sense to me. Again, I'm not an economist or a financial analyst, but it doesn't make sense to me that we can cut and analyze later. I fail to understand how government can effectively evaluate the business of the day while slashing the very programs that are yet to be assessed.

           Over the past few months, we've heard government give a number of different directions to address the budget crisis. I ask: what budget crisis? I think we have

[ Page 485 ] 

a revenue crisis. Government has turned off the revenue tap and is now wondering why the bucket is leaking. Well, the bucket may be leaking, but the well isn't dry.

[1725] 

           I agree that tax cuts are desperately needed in B.C., but they're needed by families whose earning power is among the lowest in the province. Since the tax cuts, we've already seen evidence that there's little in the way of true savings to low- and middle-income families. Already there have been cuts to Pharmacare and exclusion of medical services that up until now have been included in our medical plan.

           From what I understand from reading newspapers and listening to the media, government advisers, your own experts, have told you that this tax-cutting initiative is not going to produce the results that you claim it will. What am I to believe? What are ordinary British Columbians to believe when we hear that your own experts are offering you advice contrary to the position you're taking now?

           This advice was offered well before the catastrophic events of September 11. We've seen how the world's economy has changed since September 11.

           In cutting high income taxes, personal taxes and corporate taxes, I believe that you've unleashed the power of downward-spiralling revenues and lost confidence. Where's the hope and prosperity? Ask the people who've lost their jobs in the mills. We heard labour leaders talk about those losses earlier. Ask the people who are about to lose their jobs in the public service and in the broader public sector. Ask the seniors who are about to have their Pharmacare slashed and business owners whose income relies directly on the paycheques of those who are about to lose their spending power.

           I'm extremely concerned over what privatization will do to British Columbia. One example, I guess, is ICBC. The rates are affordable and competitive. The rate structure is non-discriminatory. They deliver safety programs. They've invested a great amount in road safety programs, a step that's a responsible approach to reducing the number, severity and cost of accidents. I see that a change to a privatized system may sacrifice that very program delivery, to the benefit of multinational companies, salivating over the business prospects in B.C.

           I understand that if privatized, the insurance market is open to free trade. That decision's not easily reversible. It's not like you can put out a trial balloon and bring it back down again. Multinational companies aren't likely to have the same interest in sponsoring road safety programs or ensuring that the rate structure doesn't discriminate against a young man because of age alone. I don't believe that opening ICBC to free trade is good or in the best interests of British Columbians.

           I'm sure that you have the same access to statistics as I do on what centres pay more for insurance than others or whether there's greater discrimination for young drivers or for a young driver that's had an accident compared to an older driver that's had an accident. The point is that we have a system now that's affordable, competitive and non-discriminatory. It also provides good public service.

           The crisis in health care is not a problem that B.C. faces alone. Successive governments have eroded health care, and there's pressure on our health care system. It's no secret that health care is one of the sectors that experiences forced growth, but to say that we'll maintain the current funding levels is de facto a cut.

           To report it any other way is nothing but a devious exercise in semantics. We need a publicly funded service that meets our needs, not the aspirations, again, of multinational corporations. We need that publicly supported funding so that when the funds are expended, they come back into our system, not into the pockets of industry.

           I see a public service that's demoralized. The repeated announcements of cuts, without any specifics, are really demoralizing the public service. People are in fear. They're not able to focus on their work. Their health is suffering, their family lives are suffering, and their confidence is gone. I have friends who were planning to replace a 15-year-old car, and they've decided that it's just not the time to do it. They're holding off because both of their incomes are sourced in the public service. They're waiting to see if one survives. And if one survives, when does the other shoe drop?

           My husband and I have been looking at buying or building a new house. Those plans have definitely been shelved. I don't know whether I'm going to have a job in a year. One of my neighbours is a business contractor. He basically does home renos. Since the announcements of cuts to the public service, he has lost over a million dollars in contracts. That's one contractor. He employs a very small crew, and I can tell you that today their tools are idle.

           I am personally outraged that government would even contemplate changing the law to enable you to not honour labour contracts. I guess the question I'd put to you is: how can breaking a contract instil any confidence in any sector of the province? If it's going to happen to an agreement that you've negotiated with labour, is it a treaty that you then next decide to take back to the Legislature and decide not to honour or an accord that you've negotiated with local government? I ask where the confidence is and where the trust is.

[1730] 

           I've come here today to urge you to take a step back from the current fiscal platform and take a real look at the economic climate and business of the day. In the past few weeks the government's messages have been somewhat contradictory. If workers lose their jobs, they can go on welfare. Welfare recipients need to get out and get a job. Government will protect health care. To meet current budget targets, not only are job cuts necessary, but slashing Pharmacare and medical services is also necessary.

           The one that particularly strikes a chord with me is that industry should be self-regulating, that we need to cut regulation by one-third. Which one-third? What is your evaluation criteria to even determine what regula-

[ Page 486 ] 

tions are? How are you determining what is a regulation or how many regulations are out there? It begs the question: has anybody here ever really thought about why the regulatory process was in place to begin with?

           Where do we go from here? If we take a look at the New Era document, we read that you want British Columbians to stay at home. Do you really want British Columbians to stay at home? That's exactly where they're headed — the loggers, the nurses, the teachers, the public servants and the small business owners. If we don't have jobs, we can't participate and support our community, we can't guarantee health care, we can't achieve excellence in the education system, we can't ensure safer streets, and we can't work to create an era of prosperity and a business climate that will turn our economy around.

           I want to stay in British Columbia. It's my home.

           B. Lekstrom (Chair): Katie, thank you very much for your presentation this afternoon. I will look to members of the committee, if there are any questions.

           On the one issue when you spoke of the tax cuts — and I stated this earlier to one of the other presenters — if you take the tax cuts out of the picture of the budget crisis that I believe we're looking at in British Columbia, we would still face a $3.8 billion deficit by 2003-04. There are some changes needed. Certainly, our job as a committee is that we are listening to British Columbians, finding out what their priorities are, but I don't think holding the status quo is going to solve the problem for all British Columbians.

           K. Scott: I'm not suggesting for one moment that we hold the status quo. That's why I went through my list of areas of the province that I think have experienced extreme difficulties over the last number of years. I am outraged that there's so much as a toothpick leaving this province that's not finished. We could have a fabulous furniture-building sector in this province. The fisheries, I think, have not been managed well. That's been something we've seen not just in British Columbia but on the other coast as well. Gutting the oceans isn't the way to go about it.

           Again, I'm not an expert in these areas. I'm not suggesting that you not take a look at a very responsible fiscal approach. I think that to do that, we need an economic summit. You need to invite labour to the table. You need to do that in a way that recognizes what happens when you impose cuts of 20, 35 or 50 percent in a community. It just absolutely devastates communities.

           Victoria businesses are going to suffer terribly. My neighbour the contractor isn't the first business owner that I've spoken to who's lost business already. That should be the indicator. When we start to see small business closing its doors and when we start to hear people say that they're no longer going to go out and even buy a used car or watch for a sale and buy that pair of shoes, that again is lost revenue to the province.

           I think we need to take a step back in making those assessments. There have been no qualifiers attached to these 20, 35 and 50 percent scenarios, for example. We don't know what you're looking at. Without really having an idea of what you're after, it looks like you've just taken a bar graph and decided that that's where you want to be without there being any understanding of why you're there. If you cut the entire salaries for the public service, you're looking at less than $2 billion. If you cut everything, you still wouldn't solve the budget crisis — what you're calling the budget crisis. I think I would argue that.

           Understanding the time of day and that you need to eat dinner, I very much appreciate the opportunity.

           B. Lekstrom (Chair): Katie, again, I thank you. It's through presentations like yours that our committee is striving to hear the concerns of the people of British Columbia and their priorities. I thank you for taking the time out of your schedule to come and present to us.

           At this time our committee will stand recessed until 6:15 this evening, when we will reconvene. I know that's a short time frame, but that's all we have.

           The committee recessed from 5:35 p.m. to 6:23 p.m.

           [B. Lekstrom in the chair.]

           B. Lekstrom (Chair): Well, thank you very much for waiting. I will call our committee meeting back to order.

           At this time we will move to our first presenter this evening, Russell Katzer. Russell, good evening and welcome.

           R. Katzer: Thank you. I came this evening as a concerned citizen. I just wanted to express my concerns about the tax rebate and the consequent repercussions to the budget and my community and friends.

           Having provided significant tax rebates and a stated deadline of 2004 to balance the budget, the government has created the impetus to cut the public service and the services they provide. A lot has happened since the election: a failing global economy, the softwood lumber disagreement, the events of September 11 — and for Victoria, that's created a significant downturn in tourism — and now the prospect of severe cuts to the public service. I'm concerned that all these negative economic factors will only deepen the debt and create the need for further cuts beyond the publicized 20, 35 and 50 percent.

[1825] 

           My understanding behind the theory of the tax cuts is that they'll inject increased liquidity into the community, produce new jobs and create additional revenue, which could work in theory, if people weren't fearful and not spending.

           I have a disease. I require medication of $1,500 a month. I know that for me the moneys I've earned from my tax cut are going to soon be consumed by the proposed increase to Pharmacare. Reports in the media are saying that the Pharmacare maximum deductible is going from $800 to $2,000. That $1,200 a year increase more than eradicates the nominal increase from the tax

[ Page 487 ] 

benefit, and then you add on the increased costs they're saying about prescriptions and other elements there.

           It's a question of user fees. I'd rather pay a fair tax right up front than be slowly cut by user fee, user fee, user fee. When you add all those user fees together, it more than negates the moneys from the tax cuts, so I'm not putting money into the economy. I'm putting money back to the government, but it's more than I would have paid in tax anyway.

           I'd like to talk about fear and treating people with respect. I have many friends and acquaintances in the public service, and I'm hearing lots of stories about concerns for their jobs. Many of these supporters feel betrayed by the government. During the election, the Premier talked about not cutting the public service. Then — how many months? — five months later, you're a public servant, and suddenly you hear in the newspaper or on the radio or on television 20, 35, 50 percent. It's really frightening. You don't know what you're going to do. You've just taken out a loan, or you were planning to buy something, and now you're frozen. The question is: will I have a job when the axe falls?

           It's how it was delivered. People don't know. It's a climate of fear out there. Just speaking to different people, they don't know if they're going to have a job; they don't know if they're going to be affected. They look at 50 percent, and they say: "Am I going to be part of that 50 percent?" They say and we say that we would not have voted to eliminate your jobs. As a rational person, would you vote to eliminate your job? No, none of us would have. People didn't vote for a massive cut to the public service.

           Having mentioned public services, I'd like to mention another concern. Another fear we've been talking about is the concern about eroding public safety regulations, whether it's privatization of water or privatization of the environment ministry. The thing that leaps to mind is another Walkerton — a B.C.-made Walkerton.

           You listen to the news about the public-private hospital. What that creates is the whole slide into a U.S. style of medical care. It creates a lot of fear for people.

           I have these fears; my friends have these fears. People talk about these fears. What I would urge this committee to do is to recommend a program of moderation that uses attrition and retirement to reduce the public service. Otherwise, the recent hirings — many of them equity-seeking groups, whether they be people with disability, aboriginal employees, visible minorities, women or youth — will be gone.

[1830] 

           In trying to create a more diverse public sector, if you wipe out that diversity by cutting the public service by whatever percent rather than a slow attrition, then I think we'll end up with the classic "stale, pale and male," which is the norm. I would urge you to recommend moderation.

           B. Lekstrom (Chair): Russell, I would like to thank you for coming out this evening and making your presentation. I will look to members of the committee, if there are any questions.

           J. MacPhail: It may be too personal, and please feel free to say so. Of the Pharmacare coverage that you receive now, do you pay any of your own?

           R. Katzer: Yeah, I pay the $800, which is gone in the first month of the year.

           J. MacPhail: Your drug costs are over and above that?

           R. Katzer: My medication is $1,500 a month, so within the first month of the year I reach the Pharmacare maximum. With the $2,000 limit, I guess it'll go into the second month, but the amount of money I got back by the tax reduction was not $1,200 a year. That difference would be consumed right away. Plus medical for your eyes — you're going to pay for that.

           It's just all these shavings of user fees that will pop up. That's why I said I would prefer if you pay a fair tax, rather than have a tax reduction of a nominal amount, and then you pay here, pay there, pay there. If you add up all the pay theres, the money that's going back to the government is more than they gave you in the tax rebate.

           B. Lekstrom (Chair): Are there any other questions? Russell, I would like to thank you for taking time out of your day to come and present to our committee.

           R. Katzer: Thank you very much.

           B. Lekstrom (Chair): Our next presentation this evening comes from the University of Victoria Students Society. I believe we have three members: Kristen Kvakic, Jaime Matten and Marne Jensen.

           A Voice: No, not Marne.

           B. Lekstrom (Chair): Marne isn't here?

           A Voice: No, it's just the two of us.

           B. Lekstrom (Chair): Okay, thank you.

           Good evening and welcome.

           J. Matten: Good evening. Thank you for this opportunity.

           My name is Jaime Matten. I'm the chairperson of the University of Victoria Students Society, and I'm joined by Kristen Kvakic, who's part of the Camosun College Students Society. I'd just like to point out, as well, that we have students with us from Douglas College who were unable to secure an opportunity such as this and are here to join us in support of our presentation.

           The University of Victoria Students Society represents 15,000 undergraduate students at UVic and has long advocated for a quality, affordable and accessible post-secondary education system. Along with other

[ Page 488 ] 

members of the Canadian Federation of Students, we work hard to keep tuition fees low and to support the longstanding tuition fee freeze and the recent 5 percent reduction in fees. The Students Society provides numerous services to its members and has a long history of leadership in the Victoria community.

           I'd like to step back and comment on the process as I see it. There is a committee made up of MLAs travelling around the province to solicit the views and concerns of organizations in the planning for the 2002-03 budget, yet the committee has already decided to reduce next year's tax revenues by $2.1 billion in the form of personal and corporate tax cuts, manufacturing a projected deficit of $5.2 billion when combined with an economic slowdown. Further, on October 3, the Minister of Finance announced a spending freeze in the areas of health and education and a 35 percent cut to all other ministries in government.

           I am understandably concerned about the value of your consultation process, considering the extreme constraints the government has already set for itself. I acknowledge that the citizens of British Columbia had a discussion on the priorities of this province during last May's election campaign. The New Era document clearly committed to a dramatic tax cut for the bottom two tax brackets and the projection of funding for health and education. What actually happened was a dramatic tax cut — most dramatic for those with the highest earnings — and a corporate tax cut that went well beyond what the business lobby even asked for, all at a cost of $2.2 billion to the provincial purse.

[1835] 

           I want to address another commitment made by the Liberal party to the electorate: that tax cuts would pay for themselves by generating enormous economic growth. Increased funding for health and education was conditional on such increased revenue due to the economic growth from such tax cuts. I would like to refer to the Minister of Finance's first-quarter report predicting an economic slowdown and a consequent provincial deficit of $5.2 billion for the 2002-03 year, leading to the Minister of Finance's extreme planning scenario of October 3, which froze funding for health and education.

           With such a prediction, students are concerned that their education is at risk. Tuition fees have been a hot topic of debate at UVic, for students are very aware that any increase in the cost of education would force a re-evaluation of their educational goals. Evidence shows that lower-income students are approximately twice as cost-responsive as middle-income students, making upfront user fees the most difficult barrier to accessing a post-secondary education.

           Approximately 30 to 35 percent of students at UVic are on student loans, which can be translated into 30 to 35 percent of students that will potentially have to rethink their educational plans. We all know that student loans are barely enough to survive on as it is. However, an increase in loan funds to compensate would only lead to higher debt loads upon graduation and, ultimately, fewer people willing to even embark on furthering their education because of the price tag attached.

           With government funding to education frozen, even a modest 5 percent increase to the University of Victoria's operating budget would require a 30 percent increase in tuition fees to fund it. Over the course of a four-year degree, tuition fees would then increase by 120 percent, and universities would be in no better funding position than they are today.

           This government insisted that its tax cuts would pay for themselves, but British Columbians can now see that that's not true. It's now time for members of this government to admit that this was a wrong course of action and that they did not seek a mandate to make program cuts, let alone the scope of program cuts identified by the Minister of Finance.

           I urge this committee to recommend to government that they take a step back and review their economic and fiscal decisions to date. We want the opportunity to debate the choice between dramatic tax cuts or drastic social program cuts rather than accept the limitation these tax cuts have placed on government's choices.

           We recommend that the government return the tax rate for brackets on incomes earned over $60,000 per year to their year 2000 levels and repeal the corporate tax cuts not specifically promised in the New Era document, thus allowing the government to increase resources for important social programs like post-secondary education.

           K. Kvakic: As Jaime mentioned, my name is Kristen Kvakic, and I'm a student at Camosun College. I'm also a member of the executive of the student society there. I'd like to take this opportunity to speak to you about the perspective of students at community colleges, as opposed to the perspective of students at universities. While they are similar, our demographics are quite different, and we face different challenges.

           It would be an understatement to say that students are concerned about the possibility of losing the tuition fee freeze that we have enjoyed for the past six years, as well as the recent 5 percent reduction. This freeze has made it possible for many students to attend training and vocational programs as well as liberal arts university transfer programs at Camosun and many other community colleges around the province.

           The student demographic is not the typical 18-to-22-year-old that you would imagine, but rather, the mature student who has come back to college after many years out of high school — or maybe they didn't even finish high school — to improve their life chances and educational achievements.

           We have many single parents who struggle to balance the costs of everyday living with the debt that they will be left with upon graduation. We have many students who, if it were not for the tuition fee freeze, would never have had the opportunity to participate in the post-secondary education system.

           Years ago it was possible for one to obtain a decent job and a decent standard of living with a few years of high school. This is no longer a reality. Post-secondary education is not a luxury to be enjoyed by a few that

[ Page 489 ] 

can afford it, but a necessity for every individual to participate in the new modern economy.

           The Liberal government was elected on a platform of maintaining funding to health care and education. We have seen that this is clearly not their priority, as demonstrated by the cuts to the health care system. One can only imagine what's next for education. While we do applaud these priorities, we view the lifting of the tuition fee freeze as a cut that is counterproductive to the economic and human needs of British Columbia.

           It makes sense for the province to have a well-educated population, as even a strictly economic argument will reveal that a highly educated population results in increased tax revenues through higher incomes. As well, if British Columbia is to become an attractive place to invest, human capital in the form of an educated population is a basic economic requirement.

[1840] 

           Gone are the days when the timber and fishing industries formed the backbone of our economy. What we need now are technicians, administrators, engineers, nurses, doctors and teachers — professions all requiring numerous years of post-secondary education — to reshape our economy, thus absorbing those displaced by cuts in the job market and changes to the resource sector. In order to train the necessary people to do these jobs, we must have an affordable, fully funded, accessible system of post-secondary education. The best thing this government could do would be to eliminate tuition fees altogether.

           Take Ireland, for example, when they eliminated their tuition fees. Their economy, particularly in the high-tech industry, boomed — quite drastically and quite quickly — after the elimination of tuition fees.

           We often hear from college administrators and others that there are hidden costs of the tuition fee freeze. This is not the case. There are only direct costs of inadequate government funding. While the previous government increased education funding for every year of the freeze, the post-secondary system could have used more money.

           Charging students more money is not the answer to this problem. For every dollar that tuition increases, accessibility decreases. We often hear representatives of business argue that rising wages cost jobs. We do not support that point of view. We do know that many students are struggling now, and any increase in tuition would force them to sacrifice their aspirations for a higher education. It is well known that there were enrolment decreases and demographic changes when tuition fees were raised in Ontario and Saskatchewan. We cannot afford to repeat this mistake in British Columbia.

           There is fear among students at Camosun with the recent replacement of all appointed board of governor representatives and the review of the tuition fee freeze. Students at Camosun are obviously concerned that these two developments are linked and that together they will result in a dramatic increase in tuition fees. With the season of mid-terms upon us, students should be worried about passing their exams and doing well in their education, not how they're going to pay for next year's tuition — if they can afford it at all.

           We would urge you to further reduce tuition fees in this province and maintain a high-quality, fully funded, accessible post-secondary education system for the benefit of all British Columbians.

           Before we move on to questions, I'd like to pass on a message from the president of the Simon Fraser Student Society, Britta Jensen, who would like to respond to Harry Bloy's comment in a previous session of the committee. Mr. Bloy implied that Britta and the students at Simon Fraser did not support the tuition fee freeze. Britta would like the record to show that students at Simon Fraser do indeed support the tuition fee freeze and will spend the rest of the year advocating for it to be maintained.

           B. Lekstrom (Chair): Thank you very much, Kristen and Jaime, for your presentation to our committee this evening. I will look to members of our committee, if they have any questions.

           L. Mayencourt: A comment and then a question. You mentioned that there were other students in the audience that didn't get a chance to speak to us tonight. They can submit written submissions to us, and I encourage them to do that. Those have the same weight as if they had appeared before us, so I would encourage that.

           You mentioned a little bit about the Irish experience. They kind of went through an economic boom, and I wonder if you've looked at where the free tuition started in their economic cycle.

           K. Kvakic: I don't have the particulars. I can find them for you, definitely. We can pass that on for sure.

           L. Mayencourt: I would personally be very interested in them.

           J. Matten: Just to clarify, as well, for the Douglas students. It was just that the committee meetings were full in their area, which is why they couldn't get an opportunity. We are aware of that written submission option as well, so thank you.

           L. Mayencourt: If you find that material, I'd be very interested in seeing how that worked out.

           K. Kvakic: We can find that, absolutely, and pass it along to you.

           B. Lekstrom (Chair): Any further questions, members of the committee? I see no further questions. I would like to thank you for taking the time out of your schedule. Fifteen minutes is not a long amount of time to be able to put forward your views.

           Our next presenters this evening are with the Canadian Life and Health Insurance Association. We have four presenters here with us. We have Jim Witol, John Gill, Mark Daniels and Doug Carrothers. Good evening and welcome. 

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[1845] 

           M. Daniels: My name is Mark Daniels. I'm president of the Canadian Life and Health Insurance Association. With me tonight from the Vancouver-based Industrial Alliance Pacific Life Insurance Company are John Gill, its president; Doug Carrothers, vice-president of law and investments; and my colleague Jim Witol, who is the CLHI vice-president of taxation and research.

           I want to thank the committee for providing our industry with this opportunity to participate in British Columbia's prebudget consultative process. We hope our submission and comments today will provide a constructive contribution to your work. You have before you, Mr. Chairman, the industry's submission — this blue-covered thing — which you will have for your perusal later, and our recommendations are contained there.

           We'll spend just a few minutes — John Gill and I — to provide a brief overview of the submission, and then if there are any questions, we'll be happy to answer them.

           I want to say by way of background that the Canadian Life and Health Insurance Association represents 79 life and health insurance companies in Canada, and that in fact accounts for 98 percent of the life and health insurance business in Canada. The industry makes a significant contribution to the B.C. economy. We employ here just under 10,000 B.C. residents in all parts of the business, and we're currently investing about $35 billion in the province. Benefit payments to the people in British Columbia totalled some $4 billion in the year 2000.

           We certainly commend B.C.'s new government for its determination to restore order to the province's financial affairs, and we support the broad recommendations of the fiscal review panel. Our submission, Mr. Chairman, in fact, drills right down to focus on one of the five questions in the prebudget consultation paper, namely: "Are there specific revenue programs that should be restructured, expanded or terminated?"

           Specifically, we want to outline some of the deficiencies and undesirable effects related to B.C.'s premium tax on life and health insurance. Essentially, there are two major issues at play with respect to the premium tax. The first is the possibility that the B.C. government might increase that tax, and my colleague, John Gill, will address that question in a moment. The second concerns the unfair and uneven application of the existing premium tax. Applying the tax equitably could yield the government of British Columbia an additional $3.5 million in annual premium tax revenue.

           Let me say a word or two about this question before turning to John. At present, B.C. imposes a 2 percent tax on life and health insurance premiums collected in the province. In 2000, British Columbia's tax on life and health insurance premiums amounted to just over $40 million a year. One of the most significant problems with B.C.'s premium tax is that it is not equitably applied to all supplementary medical and dental insurance premiums.

           Blue Cross–type organizations offer products that are virtually identical to supplementary health insurance plans, which are subject to premium tax when provided by life and health insurers. For reasons that are not at all clear, such products are exempt from premium tax when sold by Blue Cross–type organizations.

           This inequitable application of the premium tax is not only unfair at the level of the customer, but it also creates a competitive disadvantage that is unfair to life and health insurance companies. It is also at odds with the new government's commitment to enhancing a competitive business climate in the province.

           Committee members will be interested to know that all provinces in Canada, except the three western provinces, do apply premium taxes to all supplementary medical and dental insurance premiums, including the blues. As I said, applying the premium tax to the blues would add an additional $3.5 million to the province's annual tax revenue.

           At this point, I want to turn the floor over to Mr. Gill, president of Industrial Alliance Pacific Life.

[1850] 

           J. Gill: Mr. Chairman, Industrial Alliance Pacific Life Insurance is now the only full-service life insurer with its head office in Vancouver. This was created by the merger of Seaboard Life and North West Life, two long-time, Vancouver-based life insurers. We operate throughout Canada and in 22 of the U.S. states.

           As the new government re-examines spending and revenue programs, the industry strongly advises against raising the premium tax rate on life and health insurance. This recommendation reflects the adverse consequences that would result from a premium tax rate increase. Any premium tax rate increase in B.C. would immediately expose B.C.-based life and health insurers, such as IA Pacific Life to retaliatory taxes imposed by other governments, particularly in the U.S.

           Retaliatory taxes, which exist in 49 U.S. states, are imposed when an insurer headquartered in one jurisdiction conducts business in another jurisdiction that has a lower premium tax rate than our home jurisdiction. Increasing the B.C. premium tax rate above the existing 2 percent is going to trigger retaliatory taxation by a number of the jurisdictions that we operate in.

           We have been working aggressively at trying to expand our U.S. base over the last many years. This would impact us in a competitive sense, because it would increase our costs in the U.S. and make us less competitive in these markets than our U.S. competitors. Ultimately, this could have adverse consequences for our head office operations in Vancouver and correspondingly for the B.C. economy.

           Another adverse effect of a premium tax rate increase is that it directly increases the final cost of life and health insurance products for B.C. employers and consumers. This could ultimately lead employers to purchase fewer employee benefits and individual consumers to purchase less financial protection than they would do otherwise.

[ Page 491 ] 

           The premium tax also creates competitive inequities in the marketplace for saving products. For example, many Canadians save through the buildup of cash values in permanent life insurance policies. Such policies are subject to premium tax, which does not apply to competing saving products offered by other financial services.

           An increased premium tax rate would further exacerbate the competitive inequity with respect to both Blue Cross–type organizations and deposit-taking institutions. Based on the above considerations, the industry recommends that there should be no increase in the premium tax rate.

           Once the province's budget has been balanced by 2004 and 2005, as required by legislation, the premium taxes on life and health insurance should be reduced or eliminated. There are a number of advantages that would arise from the elimination of premium taxes on these products, including the following.

           B.C. employers would save almost $20 million per year if this tax were eliminated, since competition between group insurers would ensure that the benefits of removing the tax would be passed on to employers through lower costs for these products. The elimination of the tax would result in an additional $15 million in annual savings through lower prices for individual consumers. Based on these considerations, the industry recommends that in the medium term, once B.C.'s fiscal balance has been restored, the premium tax on life and health insurance should be reduced or eliminated.

           Mr. Chairman, that concludes our prepared remarks. Once again, I would like to express the industry's appreciation for this opportunity to participate in the new government's consultation process. My colleagues and I would be pleased to answer any questions from the committee members.

           B. Lekstrom (Chair): Thank you very much, gentlemen. Certainly, I appreciate you taking the time out of your schedules and addressing one of the five particular points that are addressed in our prebudget consultation paper. I thank you for that.

           I will look to members of our committee, if there are any questions at this time.

           R. Sultan: Thank you for an excellent presentation. It's good to see a Vancouver-based head office organization appearing before this committee. We don't have that many big ones left, so you're doubly welcome.

           My question concerns investments. Just as a point of information: you discussed the investment spending you do in British Columbia. Is this a matter of investment judgment on the part of your investment managers, or is there some regulation requiring you to invest in B.C.?

[1855]

           J. Gill: I don't believe there's a specific regulation restricting the source of our premium be reinvested where we source it, but it has been our practice to invest in the very areas where we source our premiums. In this case, with our head office here, we have a sizeable portion of our business sourced in B.C., and we do reinvest that money here in B.C.

           M. Daniels: It is the law. However, I believe, Jim, that we insurers have to keep trusteed assets in Canada to back all their policy obligations. Nationwide, there's got to be enough money in the kitty to pay off, in Canada, all the obligations.

           Now, there are no provincial rules on that, but the insurers have been pretty careful over time not to put all their money in one big sock in a particular corner. When that happens, of course, provincial treasurers tend to get a little grumpy, so there has been an attempt, I think, over time to keep a rough balance.

           R. Sultan: Could I ask a second question? I'm very interested. Am I correct in interpreting your numbers, that perhaps 10 percent of your business here in British Columbia relates to the health care sector in terms of supplementary benefits? Would that be the order of magnitude?

           M. Daniels: Yes, that's about it. We paid out about $40 billion a year nationwide, and about $4 billion of it comes here, so it's about 10 percent.

           R. Sultan: Is this a growth area of your industry? I raise that question in the context that we've just completed a day, yesterday, of a dialogue on health, with many experts talking about the future of our medical system. It's interesting just to understand a little bit better what consumers are voluntarily doing with their discretionary income. Buying supplementary insurance, for example, in the health sector seems to be a fairly big business these days.

           M. Daniels: It's a very big business. Well, let me see, about 65 percent of Canadians are covered by supplementary health care insurance provided by CLHIA members, the private industry. A good part of that is group plans that are sold either through employers or unions or some kind of affinity group or other, but there are also a fair number of individual policies that are available.That 65 percent covers right across the country, and so it is a big business and increasing.

           However this health debate goes on, one thing seems to be clear. Governments are pushing services out of the core, one way or another, in order to manage cost better, either out of hospital or medical provisions. When they do that, people expect that they're going to be picked up by supplementary health care plans. The insurers are prepared to do that, but these plans are priced on an annual basis, of course, so there's an ongoing push and pull. We see ourselves very much as part of the system and, indeed, part of the solution.

           J. Bray: John and my colleague sort of tweaked this question. We haven't had a lot of head office presentations. In fact, when we've been in some parts of the province, we've actually been hearing from suppliers of former corporate offices that have moved across the

[ Page 492 ] 

line, either south or, more predominantly, to Alberta. Of course, with that goes your corporate tax base.

           Do you see in what government has done so far — its change of attitude and its change of tax regulation — opportunities for more head offices either to return or, as companies grow, to actually choose Vancouver, Victoria, Prince George, Kelowna as a place to base their head offices, rather than looking to competing jurisdictions? Do you think government has done enough? Do you think there's more that government should do to try and encourage people like you to actually stay or move to British Columbia to set up their headquarters?

[1900]

           J. Gill: To respond to that, I'll use our own organization. The fact that we have to watch our costs — our basic costs of doing the work we do in our head office, where we have over 300 people there — really requires access to a talent pool. I heard the earlier presentations, and I think that government is doing fairly decent job of being attentive to that.

           Most importantly, I think the initiatives taken on the tax side have made it easier for me to transfer people into a head office environment, which I used to have difficulty with. I couldn't move people from Alberta to work in our head office. Today I don't have that problem. I think you've made significant strides just in the spirit of helping business, helping head offices. The other things will have to come over time.

           B. Lekstrom (Chair): Okay. Gentlemen, as I indicated to the last presenter, I know that 15 minutes is not a lot of time. I do appreciate you coming out this evening and taking time out of your schedules to make your presentation. I can assure you that your submission will be given due consideration, and what you've put forward is quite intriguing. Thank you very much.

           J. Gill: Thank you.

           B. Lekstrom (Chair): Our next presentation this evening comes from the Federation of B.C. Naturalists, Mr. Tom Burgess. Good evening, Tom.

           T. Burgess: Good evening, Mr. Chairman, ladies and gentlemen. I'm pleased to be here, and I appreciate the opportunity to speak to you tonight regarding provincial budgetary and financial policy. I am a member of the Federation of B.C. Naturalists, but I'm speaking to you here tonight on behalf of what is called the Help MELP campaign. I'll explain that just momentarily. What I'm going to be focusing on is the need for adequate financial resources for four specific government programs, those being wildlife, fisheries, habitat protection and parks.

           The Help MELP campaign is an effort on the part of 86 different conservation and labour groups throughout the province, representing several hundreds of thousands of British Columbians from all areas of the province. MELP is the acronym for the former Ministry of Environment, Lands and Parks, now divided between two ministries, the Ministry of Sustainable Resource Management and the Ministry of Water, Land and Air Protection.

           Help MELP is a rather unique and unprecedented affiliation of what has been somewhat disparate interests, with people all coming together because of their overwhelming concern for the resources of the province, the growing realization that those four programs have not been receiving an adequate level of funding and a belief that government has a major role to play as guardian of the environment and should provide a budget commensurate with that role.

           Help MELP came together over the last three years. We came to realize that the MELP budget and staff levels had been reduced by about 50 percent and also that no definitive action was being taken on the Parks Legacy Panel Report, which had been released about three years ago.

           The cuts to MELP from 1995 to the present involve about 50 percent of the staff, 50 percent or more of the annual operations money and nearly all the inventory and research dollars. A survey of MELP employees that was conducted two years ago revealed that 86 percent of those responding to the questionnaire reported that important programs had been eliminated or eroded to the point of ineffectiveness.

           The government's own news releases of the day indicated budget reductions of over $50 million and the loss of some 475 positions. Cumulatively, over all that seven-year period, the damage that has added up is $224 million and 2,000 person-years from former environmental management efforts over that period. I've been in the environmental game for over 35 years, and I can tell you it's one of the largest impacts on the environment that I have seen.

           Over the past three years, the Help MELP campaign has been focused on informing the public, the government and the opposition of the extent and implications of the past cuts. Some of you who may have been MLAs in the previous government will probably have been in receipt of some of the information and material we sent out.

[1905] 

           Within the last two years, we began to have an effect on the government. Initially, the cutting of positions was stopped, and later on, we were actually able to produce a couple of one-time budget lifts — one of $5 million in September 1999 and one of $4.9 million in November of last year. Last March we were very pleased to be successful in seeing a significant increase coming to MELP of some $14 million.

           Regrettably, when MELP was split between the two new ministries, the bulk of that money went to the Ministry of Sustainable Resource Management. The Ministry of Water, Air and Land Protection only got about a $2 million increase, and that was for grizzly bear inventory. After three years we found ourselves having made relatively little impact on still a very overwhelming problem.

           Why are we so concerned? We're concerned because we're environmentalists. Many of us are outdoors users. We love the environment. We treasure our

[ Page 493 ] 

environmental resources, and we want to maintain them for our children, our grandchildren and future generations. We're concerned because so very many fewer workers are out there trying to carry on these vital tasks — fewer than 800 positions provincewide, representing about half of what used to be there.

           When budgets and staff are cut, the workload doesn't just disappear. The remaining staff start to double up. They have to drop the lesser priorities in favour of the very high priorities and legal requirements. That leaves a great deal of valuable work not being done. With operational budgets halved and inventory and research dollars at a bare minimum, staff's ability to conduct normal operations is vastly reduced.

           They have less ability to conduct inventory studies, research, impact assessments, monitoring and enforcement. The legal functions and the administrative functions that have to be done take up an increasing amount of the time of the staff who are left, since there are just not enough staff to handle them all, as there were before.

           The new thing that they had been doing in the last years was liaison and partnering, a very valuable means of stretching resources by working with other agencies, other community groups and so on to try and stretch dollars. Again, when you've lost half your staff, there are just not enough people to be able to do that job really effectively.

           All this affects the planning and management of a wide range of species, including those that are still fairly abundant and, sadly enough, also a growing list of species at risk.

           You know a little bit about our parks system. It has been expanded quite significantly over the last while — doubling in area, I think, and certainly in number. We're very grateful for that. We felt it was a good move, but in the face of this increase, the staff and the budgets have still been reduced. We find ourselves with relative allotments less than for comparable jurisdictions nearby. There is only half a parks staff member per park at the present time, and if you look at the actual number of people in the field, it's less than a fifth of a staff member per park.

           The parks system is really hurting. There's a dearth of inventory occurring and many, many uncompleted parks management plans. There is currently a backlog of some $60 million in required facilities maintenance. There's minimal nature interpretation, increased public damage, less public safety and declining appeal to tourists.

           That Parks Legacy Panel Report, which I mentioned earlier, had 101 recommendations. It was put together, incidentally, after very, very extensive public consultation. There were hundreds of person-hours of effort that went into it. One of the more important recommendations coming out of that was a requirement for government to significantly increase its capacity for managing the system. Over 62 percent of us actually use a park each year, and the public expects the government to provide adequate funding.

           When you don't have adequate funding for all these programs, the losers are the resource, the public and the government. The resource loses first, often with incremental habitat losses, followed by losses to populations in genetic diversity. If carried on to an extreme, we start to lose species, and we are starting to lose some species in the province now. The public loses recreational and educational opportunities and also opportunities to earn income. The government loses from forgone tax revenues.

           Wildlife, in the broadest sense of the term — wildlife, fish, habitat, fun places to be in the environment — is big business. I'll give you some statistics from 1996. Fishers, hunters, wildlife viewers and outdoors users expended over $1.9 billion in pursuit of their recreational activity. They generated $618 million worth of tax revenue, and they supported 34,000 jobs. Those are pretty spectacular figures, but we can do even better than that. With modest investments from the public, not just from government, and careful planning, we can significantly increase those benefits.

           What are we asking of our government then? We're looking for staff and budget recovery for those four programs, back to the levels provided for in the mid-nineties. That will require about $40 million. We're looking for a doubling of the parks budget, although that does not all have to come from government.

           There are a number of other ways it could be explored. That would require about $35 million, so that's a total of $75 million. This could be provided, however, in increments over a five-year period, an annual increase of $15 million per year. That would be only 0.06 percent of the provincial budget of some $24.7 billion.

[1910] 

           While I was preparing this and got to this point in my preparation, I was picturing a whole series of eyeballs rolling back in people's heads as they said: "Where is this guy coming from? Everybody's talking about budget cuts. He's talking about more money." I know it's not an opportune time to be coming to government and asking this. In our defence, I would tell you that we have been pushing for this for some two and a half years. This is nothing new we have just dreamed up. We're not a wild-eyed fringe bunch of eco-freaks. We're solid citizens, and we are deeply concerned about our environment.

           We know you're talking about decreasing funding right now and also considering fairly draconian cuts. We've read the economic forecast, the financial report that was put out. There is certainly the possibility — and it is alluded to in that report — that if revenue figures might have been a little higher and costs might have been a little lower, the forecast allowance could have been substantially lower than it was. This combination of events might have produced something considerably closer to a break-even budget than the deficits that are being talked about now.

           We've had some bad news in the last few months: the softwood dispute, the sagging global economies, the aftermath of September 11. We're thinking that under these rather difficult financial circumstances, a prudent government might want to have a look at the decisions that have already been made.

[ Page 494 ] 

           I'm talking in terms of the tax cuts and the target dates for balancing the budget. There may well be sufficient flexibility in all those decisions so that draconian staff cuts would not be required and that our pretty modest request for $15 million would not look so far out of line.

           Let me just remind you briefly about what you have been telling us the last little while. The New Era document called for a scientifically based, balanced and principled approach to environmental management. When the Minister of Water, Land and Air Protection made her budget submission to the House, she told us a number of things: first off, government will respect the strong environmental values of British Columbians; we need to improve our processes for environmental management and for protection monitoring and enforcement; and finally, it is government's responsibility to protect fish and wildlife and their habitat, ensure populations and species diversity, and manage them for recreational use.

           What's the first principle in the core review process? It's to ensure open government and accountable decision-making. It sounds great, and we applaud these sentiments. We're happy to acknowledge the commitments.

           B. Lekstrom (Chair): Tom, just a couple of minutes.

           T. Burgess: I'll wrap it up very quickly then.

           The bottom line is that government can't deliver on these commitments unless they provide the appropriate resource levels and budgets and staffs to be able to do that.

           In summary, what are we asking for? We're asking :

           1. That a start be made on the recovery of the programs in question — that $15 million a year figure I mentioned.

           2. That the government complete its core services review before making any draconian cuts. We do encourage them to find whatever savings may reasonably be realized, but we would like to play a part in this process. We believe that a truly open, accountable and responsible government will allow this.

           3. That whatever changes may be identified should be implemented cautiously to avoid costly errors, to minimize service disruption and to avoid both environmental and economic losses.

           That concludes my brief.

           B. Lekstrom (Chair): Tom, I thank you very much. We do have time for one quick question. I will go to Lorne.

           L. Mayencourt: Mr. Burgess, you mentioned the possibility of doubling the budget for parks. That would bring it to — what? — $35 million?

           T. Burgess: No, it would be an additional $35 million.

           L. Mayencourt: You said that not all of that would have to come from government, that there were other sources of revenue. That's one of the things we're looking at as we go through this process. Do you have any suggestions on what those other sources are?

           T. Burgess: I can't offer them offhand. I can tell you where they are listed, though. It's in the Parks Legacy Panel Report. There's quite a long listing of alternate ways of coming up with additional funding. They involve possibilities of green taxes, an additional tax on gas, some price increases on certain commodities, a green lotto. I think there are probably a dozen or more possibilities offered.

           L. Mayencourt: I see our researcher has written that down, so we'll get a copy of it.

           T. Burgess: Very good. I encourage you to read it. It's an excellent report.

           L. Mayencourt: Thank you very kindly.

[1915] 

           B. Lekstrom (Chair): Tom, I thank you very much for putting your presentation forward to our committee this evening. Certainly, you've put a lot of information into a very short time frame. I think you did a very good job.

           T. Burgess: Thanks. I practised long and hard.

           B. Lekstrom (Chair): Thanks very much.

           Our next presentation this evening is from Angela Power. Good evening, Angela.

           A. Power: Good evening, panellists. My name is Angela Power, and I have lived in Victoria since the age of six. I have been a public service employee for the last 13 years. I am here tonight because I'm a worker concerned about my employment.

           There is no doubt that job security is the number one problem facing Canadians today. The global devaluation of currencies is creating an order that will affect work and employment conditions around the world. This is also producing fear and uncertainty within the global financial community. As a result, many Canadians are feeling the effects of international pressures at a local level.

           In more recent years, federal government downsizing has created a chain reaction of downsizing at the provincial and municipal levels. This has resulted in the considerable dislocation of workers and a substantial reduction in the quality of social programs. This is especially apparent in the health services sector. The results have produced intolerable levels of stress in health service workers and dangerous levels of patient care.

           The recent announcement from our government that it plans to cut spending in some areas from 20 to 50 percent is leaving workers wondering how they will manage if they become impacted by the job cuts. It is also not a surprise that our local economies are beginning to suffer, as people begin to curtail their spending.

[ Page 495 ] 

When our government decided to cut taxes, the most dramatic breaks went to the wealthy. Corporations were given an enormous tax break, far larger than even they expected.

           It alarms me that services aimed at supporting low-income AIDS and cancer patients, a universal child care program and $7.5 million in job-training programs for welfare recipients have all been cut. All I can ask is: how can we, as ordinary citizens, expect to do more with less? These cuts are a direct result of the core review process and will have a dramatic effect on our economy and our livelihoods.

           A poll was recently conducted among all Canadians following the attacks of September 11 on the World Trade Center. It indicated that 25 to 30 percent have felt increased anxiety since then. I know the meaning of that. Over the next two weeks, I will wait to find out whether or not my partner will be deployed overseas to serve our country in the Persian Gulf.

           I will also concentrate on my own immediate concerns over whether I'll be gainfully employed. Any renovations that my husband and I have planned for our home are now on the shelf. I also have concerns about my children and what kind of an impact this will have on their lives. I will probably have to rethink sending my son to a private school, where I take pride in being able to give him an excellent start to his educational future.

           Now is not the time for the government to be making reckless decisions about the future of working lives in British Columbia. It is time to work together with local businesses, labour, economists and organizations so that we may find ways to stimulate the economy, create jobs, and keep the programs and services that British Columbians deserve.

           Thank you for this opportunity to speak this evening. I appreciate being able to voice my concerns here tonight.

           B. Lekstrom (Chair): Thank you very much, Angela. I will look to members of the committee if there are any questions regarding your presentation this evening.

           Angela, possibly just one from myself. You've touched on the issue of the tax cuts. I'm not sure if you've had the opportunity to see the prebudget consultation paper. If the tax cuts were not taken into consideration — if they weren't implemented at all — the reality is that we still face a $3.8 billion deficit by 2004. Looking to try to face that challenge is something you've touched on: we have to do it together, with all sectors. I'm just curious if you had any ideas as to what we may be able to address, outside of the tax cuts.

           A. Power: I don't have the answers. I'm not a politician — or a public speaker.

           B. Lekstrom (Chair): You do very well.

[1920] 

           A. Power: I rely on the politicians to address these issues for the ordinary citizens of British Columbia. I'm a working mother trying to understand what the future holds for me, my family and the community.

           B. Lekstrom (Chair): Thanks, Angela. Any further questions from members of the committee? I see none. Again, thank you for taking time out of your schedule.

           Our next presenter this evening is Terrence McKenny. Is Terrence with us? Good evening, Terrence.

           T. McKenny: My name is Terrence McKenny. I have lived in Victoria for 13 years. While in Victoria, I completed my diploma in public sector management, my master of public administration, and spent several years working towards my professional designation in records management. I completed that in 1996, so I am a certified records manager and have worked in information management for about 12 years in all.

           One major concern I have with the proposed cuts to ministries budgets is the effect it will have on ministries' information management systems. Recently, the government lost an important court case where poor records management practices were cited in the decision. Frequently, when there are reductions to staff, it is the administrative services component that is targeted. Senior managers may not look upon it as directly related to their mandate.

           The Ministry of Attorney General or Ministry of Forests Web page or annual reports have nothing on records or information management. While I'm not saying they should refer to information management, the Carrier Lumber case alone shows the dangers of not funding it properly, as this case will cost an estimated $156 million to the taxpayers of British Columbia. This money is part of the litigation costs.

           The current estimated amounts the Crown expects to lose in court challenges is entered as a contingent liability. I note with interest that an additional $30 million has been included this fiscal year for the Crown Proceeding Act, or contingent liability. This, as you know, is money set aside in the event the Crown loses a court challenge, like what transpired in Carrier Lumber. The legal services branch and Ministry of Attorney General work in conjunction with the financial area of the same ministry in establishing these estimated costs.

           As I understand it, whenever there is a chance the Crown will lose an estimated amount, it is entered as a contingent liability on the balance statement. As an example, if I am suing the Crown for $1 million and, in the opinion of the legal services branch, have a likely chance of winning, but the lawyer believes I would win only $100,000, then $100,000 would be the number used. These numbers are, of course, all added up together, so a plaintiff would not know his or her opportunity for success. In the fiscal review panel's report, the panel supported the amount the previous government used, which was for $21 million this fiscal. In the July report, it was increased to $30 million.

           With the massive anticipated cuts to government, those costs can only increase. British Columbia already has the second-leanest government per capita in the country. While I'm sure you've been inundated with that comment, here we have a prime example of where

[ Page 496 ] 

cuts in one area will directly affect expenditures in another. If the government cannot locate records, if records show up after it is said they do not exist, like Carrier Lumber, the government will lose credibility and these court challenges. This will increase the contingent liability. Thus the hard dollar cost as noted in the financial reports will increase.

           The soft-dollar costs of searching for documents for disclosure purposes or Freedom of Information and Protection of Privacy Act requests will also increase insurmountably as employees search for documents that were not properly classified or documented due to a dearth of resources. To quote from the Carrier Lumber decision, one of the Crown defendants states: "We spent several person-years searching for documents in my office alone." "Did you say several person-years?" "I did. Between six and ten person-years in my office alone." "And yet you can give no explanation as to why a letter…hasn't been found." "I have no knowledge, as I indicated."

           To continue, how many more person-years are wasted on a regular basis because of a lack of resources in records management? In order to have a legitimate records management system, all records require retention schedules that are approved through a formal process. The formal process adds legitimacy to the records management program, especially in litigation.

[1925] 

           This is a practice engaged in throughout North America by businesses and governments. Using the life cycle of a record concept with disposition dates and a classification system enables them to manage active and semi-active records and to dispose of records no longer required by transferring them to an archives or through simple destruction. This greatly facilitates locating documents. Being able to legally dispose of records also saves money in on-site and off-site storage costs.

           The cuts to the administrative services will make this process impossible to continue, yet it is something that government can ill afford not to do. There is no doubt that if Justice Parrett is correct, government litigation costs will soar. The contingent liability figures will increase, especially as people read his decision in reference to the non-compliance and disclosure due to the inability to locate records.

           Carrier Lumber is a high-profile case, but it's not an anomaly. In a recent Monday Magazine article, a quote from an e-mail states that while searching for documents related to Carrier Lumber, documents pertaining to other legal cases were turning up — that is, other cases where disclosure had not been properly handled. Even though Monday's article does not point any fingers at the staff in the Ministry of Forests, it casts blame directly on the lack of resources.

           I recognize the complexity of some of your decisions. Funding a proper records-management program is an investment, however, that will save money in litigation and other costs, enabling you to better fund the core areas.

           Records management is one topic that may appear innocuous. It is just one of many examples of where expenditure reduction in one area increases expenditures in another. To avoid another Carrier Lumber, to keep the contingent liabilities down, it will be a costly error to not adequately support your administrative services.

           I thank you for your time.

           B. Lekstrom (Chair): Terrence, I thank you for your presentation this evening to our committee. I will look to members of our committee to see if there are any questions.

           R. Sultan: I've got perhaps a rather risky question to ask, but I'll ask it anyway. In cases of this type, is it your judgment that in fact it is poor records management? Is there possibly perhaps an element of records concealment?

           T. McKenny: I would say a big part of it is the lack of resources surrounding records management.

           B. Penner: Just a comment. Whenever you get around to it, feel free to call me up and implement a records management system in my constituency office. We're inundated with paper, and we could use it. I recognize the importance of keeping track of documents. It is a challenge just at the constituency office level, never mind the government level.

           B. Lekstrom (Chair): I see no further questions, Terrence. I would like to thank you. You touched on something that I think is very important: the issue of technology and how we use it. I thank you for bringing your ideas forward tonight.

           We are somewhat ahead. Our next presenter this evening is Doug Kinna. I probably didn't do your name justice, did I, Doug? Good evening.

           D. Kinna: My name's Doug Kinna. I'm a public service employee, and I work in the Ministry of Human Resources. The government is undertaking an internal core and budget review process within the public service, and this can be a positive undertaking.

           Strong private sector companies do this on a regular basis to ensure that they are still an efficient organization and adapting to the changing world, but we need to remember that governments have a different and greater responsibility. We have moved from a cold, dispassionate society where child labour, appalling working conditions, madhouses and poorhouses were the accepted practice to a compassionate society that protects the rights and dignities of all.

           I'm very concerned that the government's core review and budget review process will weaken or destroy the safety nets and the regulatory processes that are currently in place. They protect all British Columbians. British Columbia is a province with enough resources and resilience to be able to protect the needs of all our citizens. I feel that to weaken our safety nets or reduce our regulatory protections while giving a tax break to those who do not need it is a disgrace.

[ Page 497 ] 

           I'm speaking here of need, not want. I'd like greater tax relief, but I don't need it. I use the word "need" in its most basic definition. The need for basic housing, food, clothing, education and affordable health care is paramount over the wants of greater profits or material wealth. The government's responsibility to meet need overrides any of its obligations to meet people's wants.

[1930] 

           Governments must protect those who are not able to speak for themselves, especially against those who do speak and would exploit those who are silent or disenfranchised or those whom some consider unworthy.

           People I talk to in my community are very concerned and, in some cases, alarmed. Some seniors still pay mortgages, and they are worried they may have to choose between their homes and their medications or be forced to move to care homes if they lose home support services. Any cutbacks in these areas is false economy, as long-term costs are significantly higher than the short-term savings.

           Families with special needs adults or children are scared that services will be cut back or cancelled outright, putting more stress on families who are already stressed. Low-income workers, who are recognized as such and who receive premium assistance to ensure they have medical coverage, now have to pay for something as basic as an eye exam. For these people, the needed eye exam will take food from the family table.

           Private sector workers are scared the government cutbacks will negatively affect their employment as well as having to face increased costs for services. Will certain services still be there? Small businesses are worried that they will not survive the loss of income derived from public service spending their pay. Businesses, large and small, are already feeling a negative economic impact caused by announcements of impending cuts.

           In the current climate created by government, very few direct or indirect public servants can take the risk of unnecessary expenditures. The linkage between government services, both direct and indirect, and the private sector are great. One affects the other, and cuts to one produce a negative impact to the other.

           What cost is a human life? How do we measure it? How much do we value it? How much weight does a risk to life have in our society? A cutback in the services of the Ministry of Children and Family Development will increase the risk to all children and to adults with special needs. What is the level of acceptable risk to these people? No government wants to put children at greater risk of death and harm.

           Child protection social workers put the health and safety of children above all else. They do not put any society, board or profit line ahead of the lives of these children. Community living services social workers ensure that services are provided and delivered in a timely and accountable fashion to adults and children with special needs. Privatized services, both non-profit and for profit, deliver the majority of services needed, but it is the social workers who provide the checks and balances.

           They are the ones who ensure that no person takes advantage of this segment of our society. Their focus is on the people of British Columbia and not the society, the board or the profit line. Services such as these must be overseen by a non-partisan, professional public service, not by special interest groups. A brief study of history shows the suffering that comes to vulnerable people without a professional public service to protect and oversee these services.

           Murray Coell, the Minister of Human Resources, announces that B.C. Benefits will be changed, and clients may be found ineligible because they cannot find the employment that caused them to be clients in the first place. The minister's announcement comes at the same time as the Minister of Finance is saying that the public service may be reduced by up to 50 percent.

           Large private corporations are implementing massive layoffs, and airlines are looking to do the same. How does Minister Coell expect those who have trouble securing employment to successfully find employment in a market that is flooded with newly laid-off and very skilled job applicants?

           Job Wave, a public-private partnership, receives payment for income assistance clients that find their own employment. Job Wave need not provide any services whatsoever, and they still receive payment. This is a way for some to make money off the backs of the poor or unlucky without so much as lifting a finger. If this is the wave of the future, I fear for the people of British Columbia. There are better ways to deliver services, and these must be explored.

           Our environment and resources are protected and monitored by public servants who have the same dedication to this province as social workers have to children. Private sector employers are profit-oriented, and their loyalty is not to the people of British Columbia. Is the government considering the folly of having the very ones who have caused great destruction to the environment police themselves?

[1935] 

           Information technology and other services are being contracted out at an ever-increasing rate. In the information technology sector, the cost of a contracted employee is at least twice the cost of a government employee. In some worksites, contractors outnumber true government employees. The wages paid by the contractors to their employees are often lower than government salaries, so people like Ross Perot are making big dollars at the expense of British Columbians.

           Why is this happening? Why is government money being spent in such a wasteful fashion? There are solutions. The slash and burn of cutbacks is like the old concept of clearcut logging. It works, but the long-term effects are devastating. Cutbacks are easy. You decide how many you want to keep, you get out a seniority list, you count down the number of employees you want and then draw a line.

           There is no humane way to do this. An employee receives a letter, and his or her job is gone. Who cares about the lives of the employees below that line? Who cares about their hopes, dreams and aspirations? Who cares about the people in the community who rely on

[ Page 498 ] 

the services provided by these dedicated and committed public servants, whether or not they are direct or indirect public servants?

           Who cares that these employees are now a drain on the social safety nets instead of contributors to it? Who cares if services are no longer available or affordable? Who cares if seniors are forced to sell their homes? Who cares if services are not delivered in the most cost-effective manner?

           The government is supposed to care, so it is incumbent upon the government to take the harder, higher road to search for solutions that may be harder to find but will not cause the same devastation as old-time clearcuts. The core and budget reviews are being conducted by high-level bureaucrats, some of whom do not understand the basic services that are delivered by their own ministries.

           Social workers are being drowned under mounds of paperwork, which in many cases keep them from doing their basic protection work. Financial assistance workers who deliver income assistance are so busy trying to meet statistical requirements that there is no time to work with the clients. There are better, more economical, more accountable ways to deliver services, but you're looking in the wrong places.

           When your car breaks down, you don't take it to the person who designed it. You take it to the mechanic who knows how it works. The government needs to work with line staff, the men and women who deliver the services in communities around the province, the service providers and the users of government services.

           The Ministry of Human Resources has had two joint union-management forums. They had one in 1998 and one in the year 2000. These forums provided an opportunity for all levels of the ministry to meet together on level ground and were successful in identifying areas where the ministry was doing well and areas where work was required. It is in venues such as this that effective, non-harmful changes can occur.

           Staff know what works and what does not, and they take the issues out of the bureaucratic world to the real world of people. Service providers know what works and what does not. They know what is efficient and what is not, as do persons in communities receiving services.

           Having a website for input is not good enough. What is needed is an impartial, in-depth review that allows public servants, service providers and the users of services to speak freely and have input. Focus groups facilitated by independent facilitators for all ministries and services across the province are needed before any review process can be considered a comprehensive review.

           I pray that this committee and this government have the courage to take the harder, higher road, to turn away from the destruction of the slash and burn of cutbacks and start a comprehensive review of what works, what does not and how we as British Columbians can do better.

           B. Lekstrom (Chair): Thank you for your presentation, Doug. I will now look to members of the committee, if they have any questions following your presentation.

           J. Bray: Doug, with respect, you'd mentioned some things that Minister Coell had announced. One of the things that government is looking at is trying to reduce the regulatory burden, in part because there are regulations that have been there since the 1850s. One of the issues is that we have regulations all over the place.

           As you well know, B.C. Benefits used to be the GAIN Act and regulations, and it was broken out into five different acts and different regulations. Do you have an opinion, being someone who worked out in the field, about bringing those back together into a single regulatory regime as being one way your ministry can help in the process of reducing duplication in regulation in the acts?

           D. Kinna: Why, you could repeal all the B.C. Benefits acts and reintroduce the GAIN Act. That would work. That's an act that worked very well for a number of years. It needed to be fine-tuned; it didn't need to be killed.

[1940] 

           J. Bray: Of course, every time you do that, it provides an opportunity to also look at the fundamentals, not just the name of the act. That's certainly an opportunity. I would suggest that front-line staff might have an opportunity to do that examination and advise the minister what things in the old GAIN Act, for instance, worked well versus what came out of the income assistance act, the disability benefits act, etc. — at least as an opportunity for dialogue.

           D. Kinna: Yeah. I think that about 98 percent of the GAIN Act worked well.

           B. Lekstrom (Chair): We do have another question, Doug, if you've got time.

           B. Penner: In your presentation, you made a passing reference to something called Job Wave. For those of us who don't live in the capital regional district, can you tell us what that is? What are you referring to?

           D. Kinna: Well, Job Wave is not a provincewide program. It only goes into communities where it thinks it can make money. It's a program that's supposed to link income assistance clients with employers, and it does do that in some cases, but there's a caveat. If a client is accepted into the Job Wave program, whether or not Job Wave provides services, and if that client finds a job on his or her own, Job Wave is compensated for that to the tune of about $4,800 if they're off income assistance for 19 months.

           If a person applies for B.C. Benefits and is referred to Job Wave, even prior to their assessment for income assistance, and is accepted into the program and goes out and finds their own job, Job Wave may not have even really seen that client — they could have been part of a group intake — and then they receive $4,800. 

[ Page 499 ] 

           It's very similar to a program we did in-house in government about nine or ten years ago. That was called the employment opportunities program, and it was flawed because it was a wage-subsidy program that lasted six months. Unfortunately, as soon as the subsidy ran out, the job ran out. It's just a little revamp of that, but in many people's eyes, it's significantly more expensive.

           B. Penner: Is Job Wave privately owned and operated?

           D. Kinna: Yeah, by contractors.

           B. Penner: And the only people eligible to enter the program are those who are already receiving social assistance?

           D. Kinna: Those who are already receiving or those who apply in some areas of the province. They don't even have to be eligible for social assistance, because they're an exception to the program and gone prior to financial assessment.

           B. Lekstrom (Chair): Doug, I'd like to thank you for coming forward this evening and making your presentation and putting ideas forward. Thank you.

           At this time, we will go to our next presenter, Mr. Randy Bartsch with EcoTech Service Corporation. Good evening, Randy.

           R. Bartsch: Good evening. Hon. Chair, committee members, ladies and gentlemen, my name is Randy Bartsch. I was born in 1958 in MSA General Hospital in Abbotsford. I'm the fourth generation of our family to be raised in the Fraser Valley. My great-grandfather homesteaded land in the mid-1800s that is now near the Abbotsford Airport.

           For the past 25 years I've owned and operated seven different linen supply and commercial laundry businesses across western Canada, in central California and in Washington State. Today I'm a co-owner of two for-profit commercial laundries — one's located in Alberta — and another privately owned health care laundry serving the Vancouver area.

           I'm here as a taxpayer. I'm here as a private business owner. I'm here as a British Columbian, and I'm here as a parent of two fifth-generation B.C.-born and -raised children.

[1945] 

           In the budget consultation paper that was circulated, in bold in the centre there's a statement that says: "These 'status-quo' deficit projections indicate a structural fiscal imbalance exists. This means that unless government makes some fundamental changes, there will be a persistent excess of spending over available revenues, which represents a serious threat to the financial health of the province." I want to call attention to the use of the words "status quo" by the fiscal review panel.

           I have a document in front of me. It's a major paper and research project that was submitted in partial fulfilment of the requirements of a degree in master of business administration by Victor A. Taylor at Simon Fraser University. It's entitled A Policy Analysis for Hospital Laundry and Linen Services, the Purchase of Service Contract and other Major Alternatives. I will leave a copy of this with the committee, but I want to draw a few points out of it.

           First of all, the purpose of the research project, just to put it in context, was to identify and evaluate different alternatives for the supply of services to hospitals. It goes on to say that the recurring theme in Canadian public policy discussions during the past decade has been a concern over the rising level of health-related expenditures.

           Increased provincial accountability for health care expenditures resulting from the Canada Health Act, the global economic recession and a national public awareness of spiralling health costs has resulted in the provinces placing greater emphasis on hospital cost control. The trend of expansionistic hospital programs and deficit operations that were prevalent in the last decade, he says, were replaced with the need for better resource management and balanced hospital budgets. He adds that in the future, there's little doubt that cost containment and more careful fiscal control will continue to be a major goal of hospital administration.

           Ladies and gentlemen, that was written in September 1987 — 14 years ago.

           Mr. Taylor goes on. Hospitals in the province of British Columbia operate under a global budgeting system. Hospitals that can achieve increased efficiencies from ancillary programs, such as laundry and linen services, can redirect those savings to other program priorities, such as diagnostic services and direct patient care.

           He speaks to the utilization of contract services by the public sector, which is also known, obviously, as outsourcing. By using a contract mechanism, the governmental unit in effect delegates to the contract to the performance of a specified function, while at the same time maintains accountability and ultimate responsibility for the entire program or service.

           It has been advanced that competition for contracts among private firms may lead to the production of improved service quality. This assumption is supported by the notion that the purchaser is often able to terminate the contract for inadequate performance and to let a new contract to a quality-conscious competing service supplier.

           The contract relationship, therefore, is a distinct advantage over other service arrangements in that it allows for both the exit and a voice mechanism to be activated in the event of declining service quality or other parameters that do not meet the contract. In other words, it identifies the power of a customer-supplier relationship and the accountability that flows from that.

           Other benefits of a purchase-for-service contracting include economies of scale, which are often obtained by spreading overhead and personnel-related costs over a large volume of output. In some areas where the government produces part of the given service and

[ Page 500 ] 

contracts for the balance, it provides a yardstick for efficiency and effectiveness by providing comparisons. Unlike most government services, the cost of a contracted service is highly visible.

[1950] 

           Large initial capital outlays for new initiatives can also be avoided by the government. Increased flexibility to modify service volumes, it says, particularly in the face of service reductions, and in response to changing demands or adjusting funding levels…. Then it hits the big one. It says the growth in the number of public sector employees could be capped and possibly reduced. In some cases where the workload is maintained, then the same number of people end up doing that work and the benefit is that at a minimum it would reduce the growth in government bureaucracy.

           There's a reference to an Economist article of November 3, 1987. It says: "In England, for example, the National Health Service made it mandatory that all hospitals obtain competitive tenders from commercial contractors for dietary, housekeeping and laundry services. This policy is reported to have saved 35 percent of the costs associated with the public provision without any sacrifice in the quality of service."

           One of the concerns that was outlined in this 1987 report was the concern of labour relations. Due to the existence of collective agreements within the hospital support staff area, it prohibits the contracting out of work resulting in the layoff of bargaining-unit employees. Victor Taylor goes on to state that it is safe to conclude that the preferred policy, at least from the perspective of preserving a good labour-management relationship, is a maintenance of the status quo.

           The principal conclusion of this 14-year-old report was that the regional laundry at Royal Columbian Hospital could be phased out and that the entire service requirements of the then Fraser Burrard Hospital Society could be contracted to a private firm without any significant increase in financial, service or product quality risk.

           From a previous session of this committee, the Minister of Finance — this is from Hansard — states that "The only risks that we have that I would say are significant risks: we may go over budget in the Ministry of Health Services, and government will be taking fairly strong action in the weeks and months ahead to manage that as well. The Minister of Health Services is still managing pressures of between $300 million and $400 million." In the next paragraph: "It's a new culture in government."

           I'd like to raise to the attention of this committee that there are new and other ways to deliver non-medical support services in the area of health at lower costs and without any effect on patient care. These non-medical support services include security services, groundskeeping and maintenance, housekeeping, food services, physical plant and, of course, laundry and linen services. I'd advocate a position that the health system in British Columbia could save between $70 million and $100 million annually without any impact on patients whatsoever.

           However, key barriers to changing from this status quo include leadership by government, labour policy and restrictions like uncompetitive successorship privileges that have accrued over the years as an entitlement to employees within the not-for-profit public sector. I encourage the ministry and this committee to fully explore restrictions and regulations that prevent the management of the health care institutions in the province from more effectively utilizing taxpayers' money.

           In closing, please understand that government services — including food service, housekeeping, security, laundry and grounds maintenance — are, in fact, businesses. As you prepare the 2002 budget, I ask government to apply basic business practices, including authority, responsibility and accountability.

           Thank you for providing this opportunity.

           B. Lekstrom (Chair): Thank you very much, Randy, for your presentation.

           B. Penner: Thank you, again, for indulging me, Mr. Chair. I'm pleased to hear your presentation, particularly since you're from the Fraser Valley and a third-generation Chilliwack resident. You've got me by one generation.

[1955] 

           You may have heard some news last week about proposals or discussion around the new hospital to replace the MSA hospital in Abbotsford that you were born in. It provoked some controversy when the HEU complained that some functions of the hospital might be outsourced, to use your terminology, particularly around dietary and laundry services. In response to what you said, the government is considering all options in terms of getting the best value for taxpayers' money so that we can focus the resources on patients.

           I was heartened to hear that the chair of the Fraser Valley health board, Rollie Keith — a former, five-time unsuccessful NDP candidate — was quoted as saying that he would have no difficulty in seeing an outsourcing of all kinds of functions, including dietary and laundry services, and even groundskeeping, I think. Maybe there is a mindset change happening, or a shift in the paradigm. In my view, it's long overdue. Clearly, there's more work to be done.

           Was your company in the business of providing those types of services to large industrial or institutional settings like hospitals?

           R. Bartsch: We've been in that business in the lower mainland since 1984. We provide the services to hospitals like the Surrey Memorial Hospital, which is in the South Fraser health region, and a dozen others, actually.

           There are other private sector companies in the market today that have the capacity to deliver those costs without any capital expenditure by government, including what's being proposed in the Fraser Valley at Chilliwack, where the laundry is being done at the hospital. The facility itself is not adequate even for current demands, let alone a potential increase from the new hospital.

[ Page 501 ] 

           The government could save not only the capital money, but also certainly $300,000 on an operating cost basis and potentially as much as $500,000 annually on a go-forward basis.

           B. Lekstrom (Chair): All right. I do have one more question, Randy, if that's all right. Let's go to Ralph Sultan.

           R. Sultan: Mr. Bartsch, you seem to be in a unique position, operating both in the Pacific Northwest of the United States, in Alberta and in British Columbia in a comparable business, as I understand it. I suppose you would also observe the in-house provision of those services and the economics of them in British Columbia. Just approximately, how do costs compare for delivery of a comparable product in those four settings, and what are the major determinants of any cost variations you might observe?

           R. Bartsch: When we provide those services, they all go through the public tendering process. Normally, three to six or eight companies would bid on that work, so it's very essential, as we've won those bids, that our costs are competitive. We have to benchmark against our competitors all the time in order to be successful going forward, not only in terms of cost but also in terms of service delivery and consistency.

           We don't compete against the in-house facilities, because they don't go out to tender. They don't have the same benchmarking or accountability for their costs. The costs aren't tracked, in my view, based on information in the public domain that I've reviewed. The cost spread between what's currently going on in the public sector and what's happening within the private sector is in the neighbourhood of 20 to 25 percent. In terms of magnitude, just in the lower mainland the province could save probably $5 million to $7 million annually.

           H. Bloy: Thank you very much for your presentation. How are you enjoying your tax cuts? Are your employees enjoying them?

           R. Bartsch: Yes, I think it's had an impact in terms of the attitude. The last new work that came to the private sector in terms of hospital laundry work was in 1991. For a ten-year period, there was no work even to bid on in British Columbia.

[2000] 

           Our employees do good work. They were very concerned about their future and what was going to happen. We're in the Fraser Valley. Our main plant is in the Abbotsford area, and they've been very encouraged by the discussions that have been going on in that community with the new hospital for a long time. I think the attitude is generally positive, because they can see the opportunity. That's a good thing for everybody.

           B. Lekstrom (Chair): Randy, I would like to thank you for making your presentation to our committee this evening, and for taking time out of your schedule to come and present to us.

           R. Bartsch: Thank you again for the opportunity.

           B. Lekstrom (Chair): We will move on to our next presenter this evening who's with the Victoria Labour Council, Sandi McLean.

           S. McLean: I am here to make a presentation on behalf of the Victoria Labour Council. I am the president of the Victoria Labour Council, but I want you to know that I'm also a government employee. I work for the Ministry of Management Services. Listening tonight, I'm sure you've heard from around the province several similar themes from those of us who are public employees.

           The Victoria Labour Council represents approximately 27,000 workers from 95 different union locals from within the labour force of greater Victoria. This includes the private sector and both the direct public service and the broader public sector.

           We're workers in construction, manufacturing, service, transportation, tourism and retail. We're education workers, college instructors and support staff who nurture and build skills and knowledge. We're municipal workers doing all the tasks related to ensuring a safe, healthy and vigorous community life. We're health care workers and paramedical professionals caring for Victorians in hospitals, homes for our elderly and in community health services.

           We're ferry workers who keep our marine transportation services running. We're counsellors who provide support and shelter to abused women and their children, and we're also direct government employees who ensure our drinking water is clean and safe, protect our children, guard our prisoners, maintain our court systems, ensure adequate fish stocks and forest resources, protect our environment and keep the day-to-day delivery of public services efficient and effective.

           Public sector employment is the largest component — 37 percent, according to the '96 census — of the greater Victoria labour force. It is the backbone of the capital regional economy. This has provided a foundation and stability for our local economy.

           In 1983 the Socred government slashed thousands of public sector jobs under what they called restraint, and Victoria was particularly hard hit. Fear and uncertainty were rampant throughout the public sector. The results of that uncertainty plunged greater Victoria — indeed the entire province — into a recession that was deeper than that felt across the country and that took us two years longer than the rest of Canada to come out of.

           Several years ago the provincial government moved a large number of government employees out of the downtown core into the newly built office towers on the Selkirk waterfront. You may remember that. The move precipitated a crisis for small business owners in the downtown core.

           The range of cuts proposed by this government will be devastating to the economy here in Victoria. If moving

[ Page 502 ] 

government workers from one area of the city to another created a crisis for small business, what do you anticipate as the cost of eliminating a large percentage of those jobs, let alone the impact on workers and their families? What small businesses have you decided to sacrifice?

[2005] 

           What consideration have you given to the impact on communities around the province? I haven't seen or heard of any forecast from the government on the effect of 20 to 50 percent cuts on British Columbians. I'm not referring to the effect on the debt but on real people. What I hear from around the province — and part of my role in the BCGEU is component chair for admin services, which is 12,000 public employees around the province — is that they're not purchasing. They're not purchasing new cars. They're not making those first mortgages. I've even heard a member say to me: "A new winter coat is out of line this year."

           Your proposals come on top of the expected recession across the country. Are you attempting to precipitate the same circumstances that British Columbians faced in 1983? What consideration have you given to the effect on Canada and on British Columbia of the events of September 11?

           I have a personal example for you. My partner is employed by Sears Canada. Sears Canada is the largest retailer in this country. Two weeks after September 11, their stock was down 25 percent. My husband, who manages the automotive centre, had to call his staff in and, starting immediately, cut 60 hours out of that week. This week Sears Canada has announced the closure of 15 auto centres. Only one of those is in B.C., but that's a first move.

           All of our families and communities depend on critical public services, whether in health or education, public transportation, protecting our environment or in any of the dozen services we all too often take for granted.

           Another personal example. I think, from what I've heard of others giving presentations to you, that those are the most meaningful. I have a daughter who's 25, and she's a teacher on call. She graduated just last spring. She managed to graduate with no student debt because there was a tuition freeze, because she was able to live at home and because she took an extra 18 months to finish her degree and always held two — sometimes three or four — part-time jobs at minimum wage. That's another concern to most of us: what's happening with the minimum wage.

           Public services are an important part of the lives of all British Columbians. Public employees are working for B.C.'s future. We are proud of the valuable services we provide, services that are part of all of our daily lives and that create a legacy for a healthy and safe future. A stable, secure, well-trained and fairly paid public sector workforce is a tremendous asset to the province. It is an investment in human capital, an investment in the future for all of us.

           You asked for suggestions on how government spending should be changed. Workers should be consulted — front-line staff, not managers away from the front line, not ministry executives and not deputy ministers. Front-line staff are in the best position to outline where the delivery of public services can be streamlined and where innovations can be made.

           Too often circumstances in the public sector are top-heavy with management who resist change or are unable to accept new ideas from those who actually deliver the services. The waste-buster website may be one part of a systematic mechanism for workers to offer input, but often, less-than-favourable feedback from management on a submission serves to put a chill on further ideas.

           Public sector workers are committed to an innovative service that can respond to the needs of a changing society. Two ideas aren't new but haven't ever been acted on. First, addressing opportunities to reduce overtime. If you look at the overtime in the direct public service, there's an opportunity there. You may actually be able to create more jobs, which I don't think you're looking for, but that's a possibility — jobs that support families and build communities. Second, what about standardizing and consolidating benefits provision under one public sector–wide plan? That would provide an opportunity for cost savings.

           I heard you speak to another witness about the size of the deficit if there hadn't been tax cuts. I remind you that there were a number of streamlining initiatives directed to the administration of government prior to the tax cuts. I particularly refer to the best-practices initiatives.

           I've always believed that one of the fundamental responsibilities of government was to act in concert with its constituents in achieving a healthy, active community, both fiscally and physically. I believe that is a community that attracts further investment by all sectors.

           Every day it seems there is yet another media piece on what public service is about to be eliminated, reduced or taken under control by private interests. "Beautiful B.C." is still how I most often hear British Columbia referred to. It is my fear that in the future it will be: "B.C., where you pay more and get less." That's the end of my presentation.

[2010] 

           B. Lekstrom (Chair): Thank you very much, Sandi. I will look to members of the committee, if there are any questions at this time.

           I. Chong: I'm just curious. You have worked in government and offered some solutions for ways of finding savings, and I appreciate that. You mentioned the waste-buster website. Before the waste-buster web site was initiated, I believe there was a program in government that allowed employees to send in suggestions on where they thought waste was — the employee recognition program.

           I'm wondering whether you took advantage of that, or if you know of people in the public service who took advantage of that? If not, why not? Have you heard whether members of the public service will take advantage of the waste-buster website as well? 

[ Page 503 ] 

           S. McLean: I think I actually saw some numbers of government employees who had identified themselves to the waste-buster website. I think the employee recognition program has been in place for about eight or nine years. There were, you know, some huge and very good wins.

           In any programs that look for input, it has to be made clear that they're supported by the very top folks responsible, and there have to be mechanisms that allow people to work together and provide that kind of input. I have typically been an employee of the Ministry of Finance — whatever name that's been under over the last ten years — in a number of different branches. I have actually participated in that.

           There's a huge group of public employees who are trained in a program of looking at work processes, work programs and products and can continue to do, I think, creative and innovative change, if that's supported.

           B. Lekstrom (Chair): I see no further questions, Sandi. I would like to thank you for taking time out of your schedule to come and present to our committee this evening.

           Our next presenter this evening is Gordon MacKinnon.

           G. MacKinnon: My name is Gordon MacKinnon, and first off, I'd like to say I'm a constituent of Ida's in Oak Bay–Gordon Head.

           Anyway, I'll get to my presentation here. I have to apologize for being a little nervous. Last time I put everyone to sleep when I did a presentation. It's getting a little late here, and I hope that doesn't happen this time.

               [T. Bhullar in the chair.]

           I'm the sole proprietor of a small business. With the budgetary issues that we're facing, it seems to me that everyone's approaching it as an accounting situation. I'd like to approach it as a business situation rather than an accounting situation.

           I've read in some of the previous presentations that there's a focus on being competitive with Alberta and Ontario as the low-tax jurisdictions. I believe this is a misguided approach, if it's based solely on costs.

           To give an analogy, in business there can only be one lowest-cost retailer — for instance, call it Wal-Mart, Future Shop or whatever. Now, we all don't shop at that lowest-cost retailer, and there's a reason for that. It's because other retailers have found a way of adding value.

           In fact, in business there's a theory that the price-sensitive customer is not the most valuable customer. They're the ones who are going to walk across the street to save a dollar, so the effort you invest in attracting the low cost–focused customer is lost when they walk across the street. You don't get any customer loyalty out of that. The preferred business strategy is to have higher prices and provide added service and value for the customer and encourage customer loyalty.

           I'm concerned that the emphasis on creating the lowest-cost jurisdiction will attract fickle investors who will be walking across the street at the next lowest-cost jurisdiction as soon as someone finds a way to lower other costs. It will be Alberta this week, Ontario next week, B.C. the week after. Whoever is offering incentives will be the people they will be looking for, and they'll use that as an argument to gain more incentives from other jurisdictions.

[2015] 

           There's been much discussion of privatization, and there are a few concerns I'd like to address on that. In general terms, looking at privatization and the sale of Crown assets, I would look at the holdings of the government in general as an investment portfolio. It seems to me that the ones most likely to be sold are the ones of greatest value to potential investors.

           These are the ones that generate revenue and would generate more revenue than the cost of capital. When these assets are purchased by the private sector, it's the duty of the corporate officers to provide the best return for investors, and their goals may well be in conflict with the best interests of the general public and the stakeholders of this province.

           [B. Lekstrom in the chair.]

           For example, if the liquor board were to be privatized, as it is in Alberta, it would be unlikely for the new owners of a liquor store to promote the responsible consumption of alcohol. Obviously, the net result for them would be lower sales volume and lower profits. Instead, assuming that the new owners are successful in increasing sales, the increased related health costs and social costs would probably not be offset by the increased government revenues that would be incurred from increased sales of liquor.

           The other part that would come into that would also be the issue of administration. In order to promote public policy or maintain the goals or whatever the guidelines are, that's still going to require some administration, although obviously in the liquor board currently, there'd be administration as well.

           Regarding the privatization of highways, there would be little incentive to improve safety or the ecological impact of highways, and possibly, maintenance would be kept to a minimum. Once again, it's in the interests of the shareholders in the private sector to get the best return, and the duty of the corporate officers is to give them the best return.

           They're not interested in other public policy. They may have public relations benefits. The only reason they would possibly do it would be competitive advantages. The only way that I could see competitive advantages in improved highway maintenance would be if the public roads were let go like they were let go in Ontario for some time.

           B.C. Hydro would fetch a lot of money, but once again, the demands returned by the shareholders would come directly from the pockets of B.C. consumers —

[ Page 504 ] 

well, not entirely from the pockets of B.C. consumers. Deregulated management has brought problems in California and Alberta, and I don't think that we would be immune to similar possible power problems. The promotion of energy efficiency is in line with, for instance, environmental targets for the Kyoto protocol.

           That sort of thing would also not be in the best interests of a private sector owner, unless, obviously, there was a public relations advantage to it. Once again, their focus is on getting return for the investor. If someone's going to buy it, they're going to buy it because the return they're going to get is going to be lower than the cost of capital. If they don't see that being the case, then they're not going to buy it. Either the price has to be low enough to attract them to purchase it, or else the revenues have got to be enough to offset the cost of the purchase and the cost of capital. Certainly, the cost of capital is pretty low right now.

[2020] 

           I believe somebody quoted someone from the TD Bank at one of your meetings in Vancouver. One of the heads of the TD Bank had stated that health care is a competitive advantage, and it is. I believe it's in the range of 30 percent — I'm not certain if that's HR costs or administration costs — that goes into the administration of health care benefits to employees.

           These aren't provided out of the goodness of the employer's heart. It's because if employees are healthy, they're more productive. If they're more productive, the company is more profitable. When diagnoses, therapy and treatment are delayed, people are kept from work. They're kept from providing their valuable skills to their employers and kept from helping to make their employers more profitable, kept from generating income that pays taxes.

           I think the one thing that should be looked into is being a little more proactive with the Health ministry — although I understand that it has been divided into two parts now — to try and encourage more proactive solutions. Rather than it being a health care system, it's an illness care system that we have. It's not necessarily in the business of promoting good health; it's treating a problem after it exists.

           There should be more proactive activities in education and in lifestyle education, and for instance — having to do with the lower eastside in Vancouver — the high downstream cost of HIV and AIDS and hepatitis. Not only that, I think the more tragic part of that is the risk of losing our human capital, the young people who are being infected.

           The public investment in the education of young people would be somewhere, I would presume, in the range of $100,000 a person through the public system up until they leave. That's an investment that the province has made in these people, and I think the effort should be made not to just write them off because we don't agree with their lifestyle or whatever. These can also be valuable contributors to our society.

           It seems to me that a few years ago I heard of a company that set up in one of the economically depressed areas of Boston. I think it was digital equipment or something like that. They found they got very productive workers out of those areas. That's my concern: that there's a valuable resource that's being risked. Obviously, if there are going to be cutbacks, priorities are going to be on a higher profile or just something that's a little easier and more palatable for the general public.

           Another issue that I find a little concerning is ICBC. What has been suggested is not necessarily privatization but the allowing of competition for ICBC. How I would see what would happen out of that is that the competition would be cherry-picking the best customers, the ones who would be switching because they would get better rates after not having had a claim in 20 years or something like that. At the same time, the rest of the customers of ICBC or the taxpayers — one of the two — would have to pick up the tab on that loss.

           At the same time, they would then also lose the benefit — and I think it's a key one — of being able to proactively market safety to the province either through their advertising campaign, highway improvements or funding for road checks to reduce impaired driving. Those proactive activities, as I understand, have had a positive impact.

           There is less incentive for them to do that when they're not the entire market, although I have seen some advertising in the States for health care companies, HMOs, that are actually advertising lifestyle changes for people. They're suggesting this will improve your health — presumably, one, for public relations and, second, as a means of reducing some of their downstream costs.

           Something that I'd like to suggest as a way of reducing expenses — and it actually might increase revenues — would be tax harmonization. I know this is not probably the most popular idea in a provincial jurisdiction, because it would presumably require the abdication of some jurisdictional powers. For instance, meals would then be subject to tax. Obviously, this may be something that's open to negotiation, and something, in cooperation with Ottawa, that there might be a way to figure out — how to allow for some leeway in the zero-rated items under harmonized sales tax so that it could be in line with some of the B.C. government's policy.

           I guess the other challenge would be how to sell an increased…. Either they would have to find a way to decrease the blended sales tax from 15 percent to 14 percent, or else it would be very difficult to sell to the citizens of B.C., unless there were tax reductions in other areas that they would see were offsetting.

[2025] 

           I just brought up Air Canada as perhaps not one of the best examples of privatization. That's also my concern: that there may be short-term gains in privatization at the expense further downstream when a privatized company or Crown corp, or whatever, turns around — say B.C. Ferries, for example. Not that that's necessarily on the block, but everything's on the table, I would presume.

           B. Lekstrom (Chair): We do have some ferries for sale. No, sorry. 

[ Page 505 ] 

           G. MacKinnon: I heard they actually still had one in service.

           B. Lekstrom (Chair): Sorry, I had to throw that in.

           G. MacKinnon: In terms of something like that, they'd be providing a service, and then they'd say, "At the present time, we need some capital in order to reinvest in this, or we just can't maintain services," or "There have been unreasonable costs imposed on us because of outside circumstances." It might be an economic downturn or circumstances like September 11.

           The next thing I'd like to bring up is something I ran across: the outsourcing of business records. In Ontario, they've outsourced that. They've partnered with a private sector company. Now, something costs $8 revenue to the Ontario government, but for me to get the same information that's in the Ontario provincial database, I have to pay $32.08 to a private sector company. I don't know if that provides a lot of value.

           Outsourcing of airport security in the U.S. had great savings to consumers, but at a price. Will self-policing of the environment in B.C. result in the same kind of cost savings, with the same price, as the Ministry of Environment in Ontario?

           Since we're running out of time here, I guess I'll just bring up the idea that I see outsourcing of employees as this. Typically, they go from being paid, say, $15 an hour to being paid $8 an hour. If they're paid $8 an hour, their discretionary spending is pretty slim. It's spent on food and lodging. The $15-an-hour employee has discretionary spending, probably pays more income tax and is generating provincial sales tax as well.

           In conclusion, I'd like to state that even corporations find advantages in debt, and as the government has only begun to track assets through their generally accepted accounting principles, they should examine the value of assets to the economy and public policy — before selling them at fire-sale prices to meet budgetary goals — and recognize that much of our public debt is offset by appreciating assets.

           We should focus on creating and retaining value in the public sector and communicating how this value is worth more than the cost-saving of lower taxes. Then we'll be more competitive than Ontario and Alberta.

           B. Lekstrom (Chair): Gordon, thank you very much for your presentation this evening. As I've indicated to other presenters, the 15 minute time slot is not a lot of time to get a whole lot of information in, but you've done a good job.

           I will look to members of the committee, if there are any questions. I see no questions. I would like to thank you again, Gordon, for coming out and presenting to our committee this evening.

           We are now going to move on to the open mike session. That concludes our registered presenters this evening. We allow the last half hour at our meetings for what we call an open mike session, and our first presenter is Rachel Alma. The presenters are given five minutes. It's unlike the 15 minute time frame.

           Good evening.

           R. Alma: Thanks. I'll try to be quick. I wasn't prepared to do this, but when the opportunity came up, I thought I had to do it.

           What I would like to address is the high incidence of workplace violence in Ministry of Health–funded facilities. My own experience is in the hospital that I work in, where I'm a psychiatric nurse. I've lived in B.C., trained in B.C., worked here and overseas in psychiatry. I am presently employed in a hospital in northern B.C. with a small psychiatric unit that handles up to 12 patients.

           Some of these patients will come in under voluntary conditions. Many of them are committed under the Mental Health Act. They are usually, at this point, brought in from communities. There's one unit in Prince George, and one in Terrace. I live in Terrace. A lot of these people come in from smaller communities. When they're committed, they're brought in by the RCMP.

[2030] 

           Many times, their level of violence and illness is too much for the RCMP to be able to deal with. Even if they have committed a crime, the RCMP will bring them to our unit. We then have to take care of them. We are usually two nurses on duty. We do 12-hour shifts. During the daytime there may be other people like a social worker or ward manager on duty, but after 4 o'clock it's two nurses. On the weekend it's two.

           These nurses are often untrained in psychiatry. I have often worked with people who are casual who have had no experience in psych. This is very difficult when you're dealing with people who come in committed — and psychotic. They're extremely violent at times, and we are left as two nurses — usually female, though we have a couple of male employees — to deal with them.

           We have used the RCMP as backup for years. The RCMP have had a great number of problems with this. They have been very, very good, but it's not their mandate to come and help on the psych unit. They are there specifically to take care of issues in the community. When we have had to call them in to help, it's usually to give medications to people who are locked in a contained room or to help with meals, to help with anything that those individuals need.

           The police will come, but we never know how long it's going to take. It could take a few minutes, or it could take 20 minutes. Meanwhile, often what we have is a situation of violence that puts everybody's life in danger — the staff and the other patients. Sometimes the violence is towards the person's own self. Sometimes it's toward the staff members. Sometimes it's towards the other patients in the unit. It is very difficult to get this message across to administration in the hospital to recognize our need. It's very hard to get this message across anywhere.

           One of the problems has been under the system of, well, silencing and record-keeping, which actually destroys any records of incidents that the hospital does not want to be known. Up until October '99 you could not talk out about these things against your employer. The Workers Compensation Act changed that, but it's

[ Page 506 ] 

still very difficult to come forward with these kinds of allegations that there is actual physical and verbal abuse that occurs on the unit.

           Part of the other problem, I have found, is that the RCMP are their own unit and entity, though I know they're funded by the Liberal government. Mental health, I know, is funded by the provincial Liberal government. One of the things that I wanted to talk about was the need we have for security.

           Five minutes is almost up. It's about having the basic security. I'm just hoping that when you come to do your budget, you will be aware that we truly need a security person on staff in a hospital of our size when we're dealing with this level of acuity that is now out and about in all communities since the downsizing of Riverview.

           I'm sure you're aware that there are many mentally ill people out in the streets. Where I live, we also have a high incidence of alcohol-related problems, fetal alcohol syndrome, fetal alcohol effects. There are a lot of brain injuries. You heard that this afternoon from the Brain Injury Associations.

           There are a lot of elderly people who end up in a unit like this while they're looking for a placement. We're dealing with a large part of the population that's very mixed, with different acuity levels, but the biggest problem is dealing with the violence that occurs.

           What happens with staff such as myself, who after 13 years of service feel that I cannot do it anymore? I think that I was at one time quite good at my job, but I'm just so burned out now that I don't have the energy to go back into that level of work, dealing with that acuity level.

           The WCB is the other big problem, but I know you know that. Myself, as a health care worker, have found that it has been very difficult working through the WCB process. I have seven appeals that have been accepted by the Workers Compensation Review Board. It all deals with the negligence of the employer to provide a safe workplace, resulting in an occupational injury.

           B. Lekstrom (Chair): Rachel, we're going have to wrap it up. I apologize, but we have a number of speakers. I do appreciate you taking the time to present. You didn't have to jump out of the chair quite that quickly. I thank you for coming forward.

           We are going to move to our next presenter, Rose Henry.

           R. Henry: Hello, everybody.

[2035] 

           B. Lekstrom (Chair): Hi, Rose.

           R. Henry: I am from the Salish nation. For me, this would be disrespectful — to be sitting in front of the mike with people behind me. In our culture, when we're meeting with our chief and our elders, what we do is always sit in a circle, because each and every one of us is considered as an equal. I would like to apologize to the people behind me, first of all.

           I would like to acknowledge that I am from the Klahoose territory, which is part of the Salish nation, which is the land that this building resides on. I am one of the few people that could trace my history back quite a few hundred years, which is a part of my culture. It is a part of the Salish nation, I should say, because the Salish nation people are very proud individuals.

           Today I come before you not only as a native but also as an advocate and an activist representing a community of the least privileged people, for whom you people are making some major decisions that are going to affect them in their everyday lives. The agency whose board I sit on is Together Against Poverty. The place I work at is for homeless people. With these budget cuts, every place I go to, we are living in fear right now — fear of all the cuts and what is going to be happening to our people, to our clients, to the citizens of British Columbia.

           It is very scary. At the shelter we're looking at cutting our day programs because of the cuts. At Together Against Poverty, because we advocate for clients on income assistance and unemployment insurance and tenancy issues, our advocates are stretched to the max. They are taking five and six business days to respond to one phone call. It isn't because they're lazy. It is because of all the cuts that have been happening here. Right now in the city of Victoria, statistically 14,800 people are living below the poverty line. That means you pretty well can guarantee that these people are living within a block in each direction.

           Because I have just been asked to be a human rights activist for the United Nations, I'm going to read a couple of articles very quickly to you and then politely put a warning out to you people as you make these decisions. Right now, as the cuts go that you are doing, in articles 25 and 26, you are in clear violation of the Universal Declaration of Human Rights. Article 25 reads:

           "(1) Everyone has the right to a standard of living adequate to the health and well-being of himself and his family, including food, clothing, housing, medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

           "(2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection."           

           Article 26 reads:

           "(1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.

           "(2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further

[ Page 507 ] 

the activities of the United Nations for the maintenance of peace.

           "(3) Parents have a prior right to choose the kind of education that shall be given to their children."

[2040]

           The way I see it right now, parents don't have that right, based on the fact that they are limited in their funds. The education cuts are affecting each and every one of us. It's very scary for us. As a community we need to pull together and start supporting our community. You guys are holding the golden key right now. That's very terrifying, to have only one group holding the key instead of saying: "Okay. Hey, you know, let's share this common wealth."

           My warning to this group is that as the next few months unroll, the winter months are quite notorious for the homeless people and that to be dying, literally dying on the streets. Four blocks away from here, we have what we call tent city. We have 60 people sleeping out in what we call the dead zone — tent city, as it may be called by the media. Down below, we've got maybe a half a dozen people sleeping. It's very scary, because during the winter months, that's when we lose the most people to death. Our detox centres are being cut. Our shelters are full. It is very, very scary.

           I ask you people to come down to our office one time and take a poverty tour. Come and look at what we have to look at every day and what we are trying to do to make a livable life for each and every one of these people. I thank you for your time.

           B. Lekstrom (Chair): Rose, I thank you for coming out. I know the time frame is short, but your presentation to the committee is duly noted and will be given due consideration.

           We will move on to our next presenter, Anne Fletcher. Good evening, Anne.

           A. Fletcher: Good evening. I would like to speak on the issue of the women of British Columbia. Of course, we have to define our terms. What do I mean by British Columbian? A British Columbian, to me, would possibly be someone like myself — I'm speaking of non-native people here; native people would be a bit of a separate issue — a member of an old family, a descendant of one of the families that came here in the 1800s. With the difficulties we are now having, perhaps we should consider length of residency to protect ourselves and our women, because if we are forced to leave the province — and that is something I am considering. I have seen people from other provinces and countries get jobs before me, although I was the qualified applicant.

           I think it is wrong when we don't protect our women. Men, I think, are having a difficult time too, but I'm mainly interested in women. Of course, we do want to protect women and make sure they are as well off as they were. My family came here and established businesses — that's what we did — in the 1800s. We came here and started businesses. I am having to do that again now.

           I know quite a bit about government, because I started in government in the days when the standards were higher for letting people in. I did work under the first Bennett Sr. government. I started working during that period. When the New Democratic Party came in, in 1973…. Although at that time my family foolishly supported the NDP. That was before they knew that they were mainly controlled by people from other provinces.

           The NDP, in 1973 when they got in, dropped the standards in the public sector, particularly in social services. That's one area where they really dropped the standards. They eliminated social workers and had something called financial assistance workers. These were people who did not have the proper education for their jobs. That has been very unfortunate. I hope to see an increase in the standards under this government and, hopefully, social workers again introduced and standards increased.

[2045] 

           That is mainly my concern. I have thought of other things which really aren't provincial. For example, I would like to see an army of local people such as myself and other people who would serve time in a provincial army. That probably is a federal matter. I'm quite concerned about security issues. I'm quite concerned about our police. I think there are really serious problems in our police departments with the people they've hired.

           Mental health issues. I know a woman who was taken into hospital. It took me four days to get her out of a mental health centre. She was forcibly taken from her home by two mental health workers and two police officers. It was horrendous. They took her up to a mental health centre and started to force anti-psychotic drugs on her. She is not in the least psychotic. It took me four days to get her out. Later, they sent her a bill for $4,000 for four days.

           Now they have admitted wrongdoing in this case. There have been numerous cases of women — and men, but I'll speak about women — being forcibly taken from their homes by the police. I am completely against police being involved in these matters. I think that it's very dangerous when you get police involved in these matters, and…. Okay.

           B. Lekstrom (Chair): No, no. I was just saying there's a minute or two left.

           A. Fletcher: I am, and I want to be, quite positive about this concern about protecting the interests. I know that with native people we do look at length of residence in the province, at who was here first. You know, if one native group moved into another native group's territory, they would not be considered to have the same rights as the first group.

           I am a descendant of one of the early families. Now, this is mostly English ancestry, because, of course, the English did have legal title. They were the ones with the land claims agreements, and of course, it brings into question the land claims agreements if we all

[ Page 508 ] 

leave. I mean, if the original people, who the native people had the land claims agreements with, leave, where does that leave the land claims agreements?

           I think that we, the early families and those descendants, have to work with the native people to make sure that we are a part of the province, that we continue to be a part of the province and do not have to leave. Okay?

           Thanks very much.

           B. Lekstrom (Chair): Anne, thank you very much for making your presentation.

           We will move to our last presenter this evening, Joan Russow. Good evening, Joan.

           J. Russow: I did an analysis for several years of the federal budget. The purpose of the analysis was to determine how funds could be redirected, relocated and reassigned. I tried to do it within a framework of international obligations, because I've been to a number of international conferences at which governments have incurred obligations through conventions and covenants and made commitments through conference action plans at the UN.

           I would like to urge the B.C. government to approach the federal government in certain areas where the federal government goes internationally, signs and ratifies agreements in areas over which, often, the provinces have jurisdiction. The only way these agreements can be implemented is if there are funds from the federal level, and I just wanted to use a number of examples.

           For example, at the Habitat II conference, the federal government made a commitment to move away from car dependency. In order for there to be a movement away from car dependency, funds have to be transferred to the provinces to ensure that there are proper transportation systems.

           The federal government over the years has made a commitment and incurred an obligation to reduce the military budget and transfer it into social programs. I know that in the situation we're in now, the federal government is going to be putting an extra few billion into the military budget. It will probably be about $13 billion.

           Rather than the B.C. government encouraging the federal government to put more money into the military, I would hope that the B.C. government would say that money could be much better spent and that there is an international obligation to reduce the military budget and transfer the savings into social programs.

[2050] 

           In addition, there have been international obligations related to moving toward environmentally sound technology, particularly in energy. What we see happening at the federal level is the Prime Minister going to China — or he's in China right now — where at one time the federal government passed on $1.2 billion in order to assist the Chinese in buying Candu reactors. He's planning on doing more. Also with the environment, the federal government has undertaken to reduce CO2 emissions. Again, this is something that needs help at the provincial level.

           My purpose in describing these various essential transfers of payments is that rather than enter into draconian measures here to cut back in a very needed public service, I think the government should look closer at where the federal priorities are. I know you're developing something provincially to examine where the waste is. Well, if you look to see where the waste is federally, you'd just be appalled.

           I'm sure you won't be appalled, because you probably already know. For example, money is put into OECD to assist in some nuclear program that we never get any benefit of. Canada has made a commitment in the International Covenant on Economic, Social and Cultural Rights as was referred to under the Declaration of Human Rights to ensure the right to food, the right to housing. Money should be transferred to assist the provinces even more to ensure that these fundamental rights are in place.

           In addition, the government at the international level has made serious commitments to address inequities at all levels. We just don't see that happening. When we talk about the right to food, what is happening at the federal level in the Department of Agriculture is $1.9 billion, and a lot of the money in the Department of Industry is being transferred into promoting genetically engineered foods and crops.

           At this point very few countries around the world are interested in genetically engineered foods and crops, so this would be a way of transferring funds to ensuring that there's a transfer away from genetically engineered foods and crops and into promoting organic farming.

           What I'm urging you to do is to take this opportunity. We're all involved in a very, very difficult situation, particularly now that Canada has agreed to enter into military intervention in Afghanistan. We're going to be spending more money federally on the military and on so-called intelligence agencies than in ensuring social justice. I urge you to be courageous and bold and go after the federal government and demand that they start spending money in areas that reflect social justice, concern for the environment and prevent war and conflict.

           B. Lekstrom (Chair): Joan, thank you very much for coming out and sitting through our presentations.

           Harry, you had one quick question.

           J. Russow: Do you have a question?

           H. Bloy: No, I'm sorry, I don't.

           If you don't mind, Mr. Chair, I would like to acknowledge my daughter Katie, who is a first-year student at the University of Victoria, who's been here this evening listening to us.

[ Page 509 ]

           B. Lekstrom (Chair): Welcome, Katie.

           Ladies and gentlemen, that concludes our day of hearings in Victoria. It is now nearing 9 p.m. We do have meetings tomorrow and the following day. We travel to Nanaimo and Port McNeill tomorrow and then off to Terrace and Prince Rupert the following day. I woul like to thank you.

          Before we close, Ralph?

           R. Sultan: I didn't mean to usurp your right of summary, Chair, but I cannot help but comment on the power and the passion of some of the presentations we heard in the latter part of the day. I'm impressed.

           B. Lekstrom (Chair): Thanks very much, and I will add to that. It's certainly our job to go out and listen to British Columbians, and it's very encouraging to hear the diverse views and the presentations put forward. With that, I wish you all a good evening, and I will now adjourn our meeting for the day.

           The committee adjourned at 8:54 p.m.          

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