Finance and Government Services - Issue No. 15

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

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES



CONTENTS

		Page

Presentations		511
	S. Crawford	511
	B. Vanderland	514
	B. Carle-Thiesson	518
	D. Cherry	519
	D. Barr	521
	S. Beasley	524
	S. McDowall	525
	D. Annis	527
	A. Wynn-Williams	529
	D. Prouse	530
	B. Peters	534
	J. Waite	535
	I. Beveridge	538
	K. Campbell	540
	G. Sanford	541
	C. Timmermans	544
	D. Barker	545
	R. Vinden	545
	E. Skehor	547

Chair:	* Blair Lekstrom (Peace River South L)
Deputy Chair:	* Tony Bhullar (Surrey-Newton L)
Members:	* Harry Bloy (Burquitlam L) * Jeff Bray (Victoria–Beacon Hill L) * Ida Chong (Oak Bay–Gordon Head L) Brian Kerr (Malahat–Juan de Fuca L) * Kevin Krueger (Kamloops–North Thompson L) * Lorne Mayencourt (Vancouver-Burrard L) * Barry Penner (Chilliwack-Kent L) * Ralph Sultan (West Vancouver–Capilano L) * Joy MacPhail (Vancouver-Hastings NDP) * denotes member present

Witnesses:

David Annis (B.C. Chamber of Commerce)
Dorothy Barker
Douglas Barr
Steve Beasley (Malaspina Students Union)
Ian Beveridge (B.C. Federation of Fly Fishers)
Kathy Campbell
Barbara Carle-Thiesson (Purtzki Carle-Thiesson Chartered Accountants)
David Cherry
Scott Crawford (Island Farmers Alliance)
Stephanie McDowall
Barb Peters
Dennis Prouse (Insurance Bureau of Canada)
Glen Sanford (Home Support Action Group)
Eric Skehor
Casey Timmermans
Bill Vanderland (President, EnerGreen Power Inc.)
Russ Vinden
Janis Waite
Andrew Wynn-Williams (B.C. Chamber of Commerce)

B. Lekstrom (Chair): Good morning, ladies and gentlemen. I would like to welcome you to the Select Standing Committee on Finance and Government Services prebudget consultation. I look forward to the presentations that we will receive here in Nanaimo today.

Before asking the other members of the committee to introduce themselves, I would just like to go over what we're going to try and accomplish today. Each presenter will be allowed 15 minutes — usually ten to 12 minutes for the presentation and allowing three to five minutes for questions from members of the committee if there's any clarification needed.

Everything that is said today will be recorded and transcribed by our Hansard staff. With us from Hansard today we have Catherine Schaefer and Virginia Garrow. Our assistant to the committee, Jacqueline Quesnel, is at the back of the room, and to my left is Anne Stokes, Clerk to the committee.

Our goal today is to hear from you on your priorities and views for next year's provincial budget. I think it's safe to say that there are many challenges that we face as British Columbians, and we as a committee are here to listen to your priorities in the development of that budget. Our report is due out on November 15, at which time it becomes a public document.

For people that are unable to attend the hearings, there is the ability for written submissions to be forwarded to our committee, and they will be considered equally to the verbal presentations we receive at any of the 16 committee hearings we are hosting around the province.

Our mandate is to examine, inquire into and make recommendations with regards to the prebudget consultation paper. If you haven't had an opportunity to review that paper, there are copies available at the back table where Jacqueline is sitting. I would encourage you to pick one up and go through it. I think it's a very interesting document, something that says a lot about the financial situation and what we have to do as a province.

We have a full agenda today — a number of presenters. I will begin at my far left for presentations and introductions.

I. Chong: Good morning, everyone. Ida Chong. I represent the riding of Oak Bay–Gordon Head in the capital region area.

T. Bhullar (Deputy Chair): Tony Bhullar, MLA for Surrey-Newton. Good morning.

H. Bloy: Harry Bloy, MLA for Burquitlam. It's a new riding in the lower mainland.

K. Krueger: Kevin Krueger, MLA for Kamloops–North Thompson. I'm happy to be with you in Nanaimo, although I've never lived here. [Laughter.]

B. Lekstrom (Chair): It's a standing joke. Kevin appears to have lived in virtually every place we've been so far.

I'm Blair Lekstrom, MLA for Peace River South and Chair of the Select Standing Committee on Finance and Government Services.

I would like to begin our hearings today and call on our first witness, who is with the Island Farmers Alliance, Scott Crawford.

S. Crawford: First of all, I'd like to take the opportunity to thank the committee for being able to come here and make a bit of a presentation. We have submitted a written presentation, but it's nice to get out once in a while, meet our MLAs and do a little bit of talking.

As was mentioned, my name is Scott Crawford. I am the executive director of the Island Farmers Alliance. The Island Farmers Alliance is a grass-roots organization on Vancouver Island and the Gulf Islands representing farmers from all sectors. Within our membership we have everything from the small organic producer right up to the large dairy operations. Our mandate includes leading and speaking on behalf of Island agriculture and developing goodwill through positive communications: interaction between producers, processors, industry representatives, retail, media, government and the public. Today I've been asked to come here and speak on behalf of the farmers of Vancouver Island to the government of British Columbia.

We realize government faces some difficult choices in deciding what financial and other services are vital to this province. Every ministry program and service must provide its value in helping our economy thrive and prosper in today's challenging world. Too often agriculture is the first sector on the cutting edge; we've seen decreases in the budgets over the years. Our industry and our ministry people have been able to work with the decreased budgets, and I guess what we're basically doing here today is showing support for the Ministry of Agriculture and the industry as a whole through the province.

We've had the opportunity over the last two years — our organization is only two years old — to work

with the Ministry of Agriculture and their staff people on Vancouver Island and in other regions of the province. These people are key to our industry in moving it ahead. We're on the cutting edge. We've seen throughout Canada that the industry has grown in B.C. Back in 1996 Census Canada showed that across the country there was a 1.8 percent decrease in agriculture, but in B.C. we actually saw a 12.6 percent increase in the industry. So the industry is moving ahead.

We're a little bit different on the west coast. We have about 200 different types of products. We've got a huge diversity in the industry, so we do need a lot of resources in terms of education, new technologies that are coming out and communications. We've found that working with our local agriculturalists in Courtenay, Duncan and Sidney, we're able to access this information.

Again, as an organization, we actually came together two years ago because the industry was faced with a fair amount of erosion, and the decision that farmers made was actually to take the initiative and basically regain control of their industry. Rather than letting other people look after them, they decided they would regain the reins and try and direct the industry in a more positive direction. It has been two years, and at the survival forum two years ago there was a lot of negativity at that event. Today we're seeing a lot of positive stuff coming from the farming community, but we do require the support of the Ministry of Agriculture.

We're involved in a lot of processes, a lot of workshops, and the people that we work with are there all the time. They're not in a nine-to-five type of job; in the evenings when we have events, we see ministry staff there. On weekends ministry staff are there. In terms of revenues or looking at taxpayers' dollars, these people are a good use of public resources. It's not a nine-to-five thing; they put in a lot of their own time. They also contribute a lot of their own dollars to helping make things happen. As you'll notice, I'm actually not working from my notes; I'm not very good at that.

As I mentioned, we have seen the industry in British Columbia grow over the last few years. The key role played by Ministry of Agriculture staff cannot be underestimated in this industry's ability to continue to be vibrant and strong. Despite years of severely decreased budgets for Ministry of Agriculture staff, they've been able to uphold the industry through valuable support. The ministry has encouraged cooperation between producers. Again, the ministry was a key in bringing this organization together and helping us get on our feet. We are moving to where we have to look at our organization as a business. How do we identify funds, whether it's through our membership or through advertising or sponsorship programs, to get on our feet? Again, we wanted to take the initiative and start to look after ourselves, but we do need the support of the ministry staff.

For too many years we've seen in this province, from an economic point of view, that a lot of focus tends to go towards one resource at a time. As we get out into the global market, we see these fluctuating marketplaces. As we look at, for instance, the forest industry, when we've put all our focus there, and we've seen slumps in the marketplace, that's affected this province. What we would like to see is that this government look at the resource sector from a broader perspective rather than putting all of our eggs in one or two baskets. So when one of the sectors does hit a bit of a roller-coaster ride — whether it's in a domestic or global marketplace — the whole province isn't left dangling. We have other resources that can continue to move ahead.

Agriculture on Vancouver Island actually represents $140 million to our rural communities, and that is currently based on 10 percent of food production. If we can increase that, it's a lot more dollars into our communities. At 10 percent, that's minimal. That's not a lot of food, and it does represent $140 million.

We have 1 percent of the land on Vancouver Island in the ALR. Out of that, 30 percent is in production. We have a lot of room to grow, but we do have to look towards the future. I realize that government has to look at the programs and funding and make some hard decisions. I can appreciate the position that you as elected officials are in right now.

When we look at agriculture, if we broaden how we approach the industry, there are huge benefits to the province as a whole. By consumers having access to local, fresh, nutritious foods, there are benefits from a health perspective to both the consumers and the health system that supports them. As we look at supporting and increasing local production, there are benefits in terms of maintenance on highways, roads and transportation. There are cost-savings in those areas.

When we look at supporting local agriculture and increased consumption, there are environmental benefits. Our farmers are working towards land and water stewardship. They are working towards better practices. That's a result of consumer pressure. We have worked with Ministry of Agriculture staff. They play a key role. Quite often when someone from an urban area has an issue that they have to deal with, the first point of contact is the field staff for the Ministry of Agriculture. Also, from a farming perspective, they are a connection to government in Victoria. A lot of stuff happens out here in the rural areas, and they're our key to getting information and communications back and forth.

Agriculture has huge benefits. Environmentally, if we start choosing and supporting local production, there is less cost to our environment in terms of the excess packaging used to bring products in. There are fewer products going into our landfill.

If we look at the industry just as agriculture, it is significant in terms of job opportunities. We have the primary resource, which is the agriculture itself and the farmers who are growing the foods, but we also have all the indirect businesses related to the industry. Those are the wholesaling, food processing, transportation, retailing, and hotel and restaurant sectors. So the industry is fairly broad. It's not just about the farmers.

We've seen in this province that agriculture has been overlooked. As I mentioned, it seems to be the first one on the cutting block. Yet we are a significant industry. In terms of primary employment, agriculture currently employs more than the forest and fishing sectors combined. Those are jobs directly related to the industry, not the side jobs. But we haven't been heard or recognized by government.

Part of what we're trying to do here today is say that the Ministry of Agriculture is significant. We realize government has some difficult decisions in terms of the programs and trying to become more responsible in terms of the budget, but we have a sector that's been absolutely gutted over recent years.

We have huge opportunities. As we see the downcline in the resource sectors, whether forest or fishing, we know they're not coming back to the levels they once were, but we have opportunities within our sector. We need to encourage government and be able to work with government to identify agriculture and help build this ministry back up. It can't afford to be the bottom rung on the totem pole. We've got to push it back up again.

We're not asking for handouts. We're asking for the opportunity to be able to work with government, with the Ministry of Agriculture. These people are key. They work with the farmers, but they also work with the consumers. Consumers are becoming more and more aware of agriculture, more and more educated about their food products, and they're asking a lot more questions. The Ministry of Agriculture staff seem to be the first people they connect with, whether it's on a negative issue…. Yes, there are issues, whether it's dealing with manure or whatever, and then there are also positives.

We've seen the consumers of Vancouver Island respond to agriculture. We're only about 3,000 producers on the Island, and we have about 2,000 rural landowners that are very involved in agriculture. Now we're seeing the consumer — consumer groups out of Victoria, out of the north end of the Island — recognizing the value and importance of agriculture. We've gone into processes with marketing boards. For the first time it wasn't just farmers who would be making a presentation. We actually had consumer groups coming and saying: "We support this industry, we support the food products, and we want to have access to local food."

So we're asking the committee, as they're doing this, to look at a broader picture: the importance and the benefits that our industry has to offer this province. We are a huge employer. We are growing; we're continuing to grow. Even with the small ministry that we have right now, we've been able to utilize our resources, get the maximum use out of the dollars. We look at programs, for instance, in terms of the safety net and the agrifood trust fund which is a 60-40 split between the federal and provincial governments. There's a good use of resources in terms of giving a maximum amount of coverage out of a few dollars. We've seen that with people who do work for the ministry.

We would encourage the committee to really look at agriculture. We've been around for a lot of years. People are here — and obviously they've been consuming food products — so agriculture has been here. We haven't been vocal. We've chosen not to take an approach of lobbying, putting our hands out and looking for subsidies. We do want to be able to grow, get on our feet and be able to move ahead, but we do need to be able to work with government. There are huge challenges out there. We have them locally in terms of whether it's environment or urban issues. We also have them on a global level with the products that are coming in from across the border or some of the issues we're dealing with in terms of tariffs. We can't really do everything on our own. We're trying as best we can, but we're asking for government support. We're asking that the Ministry of Agriculture and the people we work with be supported by this government and that we be allowed to move on. They are a key to our success in the future and currently.

B. Lekstrom (Chair): Thank you very much, Scott. I come from a background in the northeast. Dawson Creek is my home, and agriculture is vitally important to us. I agree. I think not just British Columbians but Canadians have overlooked the importance of agriculture for far too long. One of the challenges we face is that farmers are quite independent people. To pull them all together and get everybody speaking with one voice is a real challenge, I can tell you.

S. Crawford: It's funny you say Canadians. I remember in school…. I thought they taught us in geography that Canada was the breadbasket. When was this taken out? We don't hear that anymore.

B. Lekstrom (Chair): We're going to work on that. I will look to members of the committee.

R. Sultan: I think all of the panellists share the Chairman's enthusiasm for agriculture — one of our true success stories. Too often in this province we belabour, particularly at the moment, the gloom and doom that we're experiencing in key sectors. We recognize that agriculture is truly a success story, thanks in fact to the representations you and your industry have made. My question is: if we do have to cut — and to some degree we do have to cut somewhere across all these ministries — would you favour protecting the people or the programs? What's the right balance? What I hear you saying is it's the people in the ministry that are perhaps as vital as expenditures on other programs by the ministry. Is that a tough question to answer?

S. Crawford: Of course we support everything. I think the power is in the human resource. As an organization, the Island Farmers Alliance, we're developing programs and working with government. We're sourcing funding. As a non-profit, we've had to take the approach of saying: "We're competing in the real

world. How are we going to generate revenues to develop the programs we're looking for?"

There's been some wonderful programs in the past, but not all programs have necessarily been based on the needs of agriculture. From an agricultural perspective, we have the opportunity to be able to work with the people component to ensure that whatever we're doing best meets the needs of the industry. We have seen programs come down — and not just from government — in terms of working with some of the educational institutions and various other groups, where you wonder where the information came from. We find out after the fact. "Hey, we've got a great idea for you guys," but no one talked to the industry. I do think the strength is in the people resource. It's a little more flexible. We are in changing times. Programs can be fairly stagnant or solid, but if we have the human component there, industry can look at developing programs and work with government as these programs evolve.

B. Penner: Scott, on behalf of my colleague and friend John van Dongen, the Minister of Agriculture, I'd like to thank you for your presentation. I'm sure he'll be quite enthused that there was a presentation here in Nanaimo in support of agriculture. I'll endeavour to make sure I get a copy of your presentation in Hansard and forward it on to the Minister of Agriculture.

T. Bhullar (Deputy Chair): Scott, could you detail for us the assistance that you get from the Ministry of Agriculture — in what aspects they assist the farmers?

S. Crawford: In terms of accessing information and technology, they're very well connected. They obviously have counterparts throughout Canada, throughout the U.S. Because of the nature of the industry, farmers tend to be working seven days a week. I mean, when your cows need milking, the cows need milking. The ministry people are able to secure information. Because of the nature of our industry, we don't necessarily have the time. Seven days a week, twice a day they're doing their cows. The ministry people are good at pulling information together — cutting through the stuff that's not relevant, bringing forward the stuff that is relevant.

They've also played a key role. This organization is the result of ministry people saying: "Why don't you guys pull together?" We talk about unity and a united voice. It was ministry staff that brought the organization together. No, it's not easy sometimes dealing with such a diverse group of people, but they were able to make it happen in terms of helping coordinate some of the workshops and stuff that we've done. They have access to resource people or speakers that we weren't even aware of, and they help in terms of guidance: "Here are people you can talk to."

As the industry grows and as we see urban areas expand, there are pressures. The ministry staff tend to be the first point of contact for the public in terms of issues that they're dealing with in the sector. From an agricultural perspective, the farmers utilize these people all the time. There are provincial specialists, whether it's dealing with soils or drainage or whatever it is, and those are real issues that we deal with now. We are a responsible sector. We do have to look at how we do things differently, but we need access to the provincial specialists in terms of the engineering of drainage or of ditches or whatever it is.

We do have a lot of pressure from not just the public but also organizations such as the Department of Fisheries and Oceans. These are key people to help the communications. I hate to use the word, but they're buffers to some extent. They play a key role in the communications, even within the various ministries within government.

B. Lekstrom (Chair): Scott, I would like to thank you for taking time out of your schedule to come and present to our committee. I can assure you that your presentation will be given due consideration, as all of the others that have been put forward.

Our next presentation this morning is from Mr. Bill Vanderland with EnerGreen Power.

B. Vanderland: Mr. Chairman and hon. committee members, good morning. The ethanol industry worldwide is being driven by three factors: energy security, global climate change, reduced air and water pollution. United States industry is in the process of building 4.5 billion litres of new ethanol production capacity. This amount is about equal to B.C.'s annual gasoline consumption. The U.S. already produces about 7.5 billion litres of ethanol annually. Canada currently produces 230 million litres of ethanol. Last week the federal government announced plans to increase Canada's target for ethanol production and use to two billion litres by the year 2005. If each new ethanol plant that Canada builds averages 50 million litres per year, Canada will need to build 40 new plants in the next four years. B.C. and the Maritimes are now the only provinces without a producing ethanol plant.

As reported in the Financial Post on October 15, Canada's oil industry is not happy with this news. Mr. Jack Belletrutti, the Canadian Petroleum Products Institute's vice-president, was quoted. He stated: "We believe ethanol is of no more benefit in greenhouse gas emission reductions than you would get out of diesel, and it's expensive to produce. It wouldn't be produced except for the subsidies." This attitude has been and continues to be a serious impediment to ethanol industry development in B.C. and Canada.

Ethanol is an alcohol. Ethanol is most commonly produced by the fermentation of yeast in sugar solutions. It can be made from grain, corn, cheese whey, brewery waste, sugar beets, pulp mill waste, forestry and agricultural cellulose. When a tree or plant grows, sunlight and carbon dioxide are converted to sugars during the process of photosynthesis. These sugars store the tree and plant's energy requirements. The application of emerging technologies allows us to

isolate these sugars and convert them into ethanol and other valuable co-products — a virtually unlimited supply of clean, renewable energy in a readily usable form.

This glass here contains ethanol. Ethanol is highly flammable, so we've diluted it down with water to about a 10 percent ethanol blend, much as you would buy at Mohawk Oil. If we apply a flame — I haven't got my lighter — it's non-flammable at this dilution level. You can also see that it's very clear.

If we were to distil this same glass of ethanol-water mixture down to 200 proof, you'd have pure, motor fuel–grade ethanol. Motor fuel–grade ethanol at up to 10 percent blends can be used in any vehicle built within the last 15 years. Ethanol is high octane. It eliminates the need to add lead, MMT, MTBE, benzene and toluene. Ethanol is high in oxygen. A 7 percent ethanol blend will achieve the same oxygen level as a 15 percent MTBE blend will in gasoline.

Let's go back to the three drivers that are moving the industry. Energy security. "Ethanol, biodiesel and other biofuels will slow the flow of dollars to the Middle East, where too many of those dollars have been used to buy weapons and fund terrorist activities." These are not my words. These words were contained in this month's letter to the United States Senate from national security advisers. They included James Woolsey, former director of the CIA; retired Admiral Thomas Moorer, former chairman of the Joint Chiefs of Staff; and Robert McFarlane, former national security adviser to President Reagan. In expressing their support for a renewable fuel standard to advance America's energy security, they stated: "These actions will also develop new industries and jobs, strengthen communities, enhance the environment and assist in the stabilization of greenhouse gases."

The U.S. currently imports 54 percent of its annual energy demand. In a June 1999 speech supporting ethanol as the "new petroleum," former CIA director Woolsey stated: "During the next 15 years the United States will transfer $1 trillion (U.S.) to the Persian Gulf states alone for oil imports." That's $1 trillion (U.S.). The U.S. General Accounting Office estimates that if the military cost to maintain mid-East oil supplies was factored in, then the true cost of a barrel of oil is $126 (U.S.) a barrel. That's $223 (Canadian) a barrel. Now, that's a subsidy.

On February 19, 2001, Nebraska Governor Mike Johanns, this year's chairman of the 26 member-states Governors' Ethanol Coalition — by the way, as an aside, there is an open invitation to the province of B.C. to join the Governors' Ethanol Coalition — released a study of the economic benefits of quadrupling the use of ethanol over 15 years. It found that American consumers would save $57.5 billion — and this is in U.S. dollars — add $685 billion to the gross domestic product, increase household income by nearly $186 billion and create more than 156,000 jobs. The report noted: "Instead of relying on the goodwill of foreign oil sheiks, the U.S. should consider that every acre of land that produces biomass used to make ethanol becomes an oil patch that never runs dry."

The second driver is global climate change. There is now proposed legislation in the United States, Canada and the European economic union that would mandate a certain percentage of renewable energy content in all gasoline and diesel. As an aside, I'd like to say that the Peace River regional district, in cooperation with myself, first proposed this very thing back in 1996. I think Blair will remember that well.

In July 2001 Senate Majority Leader Tom Daschle, joined by Senator Richard Lugar, the former Republican Agriculture Committee chairman, introduced Bill S 670. Entitled the Renewable Fuels Act of 2001, it would require an average renewable energy content of 0.8 percent in 2002 — this is a target the U.S. is going to hit anyway — increasing every year until reaching 5 percent in 2016.

In Canada, Quebec Liberal MP Clifford Lincoln introduced Bill C-350. This oxygenation bill would result in a minimum of 7.7 percent ethanol in all Canadian gasoline and diesel. A similar legislative proposal is now before the European Union and is scheduled for adoption this fall. It would force European Union countries to ensure that by 2005 at least 2 percent of transportation fuel would be renewable. Increasing by 0.75 percent each year until 2009, the goal is for renewable energy fuels to make up 20 percent by 2020.

A state-of-the-art grain ethanol plant powered with fossil fuel will reduce greenhouse gas emissions, the carbon dioxide emissions, by 35 to 46 percent. A bark or hog fuel grain ethanol plant in B.C. would reduce those emissions by 55 to 65 percent or more. Future cellulose ethanol plants will reduce greenhouse gas emissions by 100 to 140 percent, and these figures are when compared to the net emissions from gasoline or diesel fuels. The larger figure, 140 percent, would be a bark- or biomass-fuelled ethanol plant or a like project built in cooperation with an independent power producer.

In July 2001 President George W. Bush announced $4 million (Canadian) in funding for Caterpillar and Nuvera Fuel Cells to develop an ethanol-powered fuel cell for transportation. Fuel cells using hydrogen sourced from fossil fuels like gasoline, natural gas and methanol cannot make zero-emission claims. Fuel cells using hydrogen sourced from renewable ethanol can.

The U.S. Department of Energy's fall 1997 study quantified the potential for energy-efficient and low-carbon technologies to reduce carbon emissions in the United States. This study was completed by five U.S. Department of Energy national laboratories. Their findings were as follows. I've just highlighted the diesel only because of the comment from the Canadian Petroleum Products Institute. They found on a full lifecycle carbon basis…. That is, it takes energy to explore for gas and oil; it takes energy to recover it and to refine it. When the U.S. Department of Energy calculated all those things in, they found that a gallon of diesel contains 12,377 grams of carbon dioxide. That's compared to ethanol from cellulose at 58. I really don't know where they're getting their information from.

Final point, the driver: air and water pollution. Air pollution is increasingly adding to short- and long-term health care costs for governments. Health care costs are a problem for governments nationwide. In spring of 2001 the Ontario Medical Association estimated that 16,000 Canadians are dying prematurely from air pollution. Immediate health care costs are associated with increased emergency room visits and rapidly rising incidences of asthma, especially in young children.

Although it's difficult to put a price on human life and health, it has been estimated that right now the damage done by air pollution costs up to $10 billion (Canadian) a year for health care costs, lost productivity and other constituents. If this $10 billion (Canadian) health care cost is applied to the roughly $35 billion litres of annual gasoline consumption, it works out to 29 cents a litre.

A June 2001 report by the American Heart Association found that within just two hours of breathing in fine particulates from a city's bad air caused by vehicle exhaust and smoke stacks, the risk of a heart attack increased by 44 percent. A full day after exposure heart attacks increased overall by one-third.

Various reports have documented large losses to agriculture from air pollution. In July 2001 China announced that they will spend billions of U.S. dollars to construct numerous ethanol plants to improve air quality in time for the 2008 Olympics.

On June 12, 2001, President George W. Bush rejected the oil industry and California's call for the oxygenated fuels waiver. The Environmental Protection Agency agrees that for every 1 percent increase in oxygen in gasoline, toxic air pollution will be reduced by 4.5 percent. The request for this waiver was prompted by the progressive phase-out of MTBE use in gasoline. MTBE, after lead was banned, became a popular choice for boosting octane and oxygen to meet their oxygenated fuels requirement. MTBE has polluted thousands of drinking water sources across the U.S., with estimated cleanup costs in the billions. The oil industry is now being forced to use ethanol to attain fuel-oxygen standards, and the ethanol industry, so far, is able to meet this new demand.

Recently completed testing of 1991 Detroit diesels, unmodified and using 15 percent ethanol blends with diesel fuel, resulted in particulate reductions of 41 percent. Carbon monoxide, now recognized by the National Research Council as a precursor to smog, was down 27 percent, and nitrous oxide reductions down 5 percent. Imagine how much cleaner the Fraser Valley air would be if ethanol-blended diesel fuels were widely available.

We also have MTBE contamination problems closer to home. According to Environment Canada's national pollutant release inventory, Chevron's North Burnaby refinery has released more MTBE into the air and groundwater than any other Canadian refinery. In 1999 Chevron Burnaby released 55.5 tonnes of MTBE. To put this into perspective, if we took a glass of pure MTBE, approximately ten ounces of it, that is enough to contaminate 49 million litres of water beyond EPA drinking water standards.

Just before concluding, I would like to add to my covering letter. At the request of the B.C. Ministry of Energy and Mines, we submitted a proposal titled Ethanol Greenprint for British Columbia on July 30, 2001. We called on the government to adopt eight specific initiatives designed to encourage private sector investment in the B.C. ethanol industry. We believe the early adoption of these initiatives will see the construction of 11 ethanol plants in B.C. during the next eight years.

We wish to note that these eight initiatives in our Ethanol Greenprint for British Columbia are supported by the Peace River regional district. This support is very significant. Most residents of the lower mainland — indeed, most of southern B.C. — do not appreciate the importance of the Peace to British Columbia's well-being. The Peace River regional district is located in the northeast corner of B.C., and in energy alone the Peace produces 100 percent of B.C.'s extracted and processed natural gas, 100 percent of its extracted oil, 40 percent of the electricity and over 20 percent of the coal. The Peace understands energy, the environmental impacts that go with it and the important role that ethanol will play in British Columbia's future well-being. We hope that the committee will see fit to support the initiatives that we have before government. I haven't gone into specifics on it, because we have a lot of detail with the Ministry of Energy and Mines, and I know the time limitations. I've done a summary for you in the handout.

B. Lekstrom (Chair): Thank you very much, Bill, for your presentation. It's certainly something I'm well aware of, having had some history of dealing with this issue. We do have a couple of questions. I will go to Ms. MacPhail first.

J. MacPhail: Thank you very much, Mr. Vanderland. That was very interesting — and thank you for referring to the eight points, because it answers a couple of my questions. I have a couple that arise out of that.

When you say private sector investment, would they invest in the infrastructure necessary to transport it? How is ethanol transported?

B. Vanderland: It could be transported by tanker truck. Ultimately, we want to see the transport done by railcar. That would be the most energy-efficient way of moving it around at the least cost.

B. Vanderland: No. Actually, one of the problems we've had with ethanol is that because it's infinitely soluble in water, oil companies don't like to pipeline it. Oil pipelines are notorious for having a lot of moisture content in them. The U.S. industry has gotten around it, though. It has sort of been an ongoing argument against ethanol — the fact that they can't pipeline it.

The fact is, you don't need to. With this product, you can splash-blend at regional terminals, so it really is a non-issue. It really is.

Secondly, conversion of vehicles now takes place, I think, to allow for ethanol use?

B. Vanderland: Yes. At the present time any vehicles built in the last 15 years can run up to 10 percent ethanol. Actually, you might recall that back in 1997, when the Canadian manufacturers first announced that they were going to start building what's called E-85 vehicles, or 85 percent ethanol flexible-fuel vehicles, we ran — the first in Canada — the B.C. ethanol clean-air tour. That was just to promote the idea.

It was not until the following year that Chrysler was the first one — well, Ford as well — that started producing the E-85 flex-fuel vehicle in Canada. More recently, just this year there is a wide range of vehicles available, both cars and trucks, to run the E-85 fuels. In one of the initiatives, we call this kind of a housekeeping initiative. We don't see that there is any cost whatsoever to government. We have suggested that the government, in their purchasing policy, simply start buying E-85 flexible-fuelled vehicles where there's no additional ticket price to the government. I've had the argument: "Well, why bother, because we don't have the fuel here?" Well, it's the old chicken-and-egg. Somebody's got to go first. As far as I'm concerned, if the government is buying vehicles and they can buy a vehicle for the same price that has the flexibility of fuel use, that's better bang for the buck.

J. MacPhail: Just one more. It's a technical question. The recommendation to expand to include vehicles that are biodiesel — is that possible in British Columbia at this time?

B. Vanderland: When they refer to biodiesel, it can also include ethanol diesel, but the term is being used extensively in the States to describe an oil-based product that's being produced from soybeans, from canola and that. It's now starting to be adopted quite widely in the U.S. I really haven't spent any time with it, because it's taken me 12 years, and I'm still working on getting the ethanol industry off the ground.

I. Chong: Mr. Vanderland, thank you for your presentation. I'm looking at your initiatives as well, and I was just curious. Your proposal of a 30 percent investment tax credit in this industry — can you just give me an idea why you would suggest that amount? Have you seen that happen in other jurisdictions and the outcomes that are related to that?

B. Vanderland: Yes. You have the disadvantage here of not having a full description of how we arrived at this investment tax credit. It's actually based on Hawaiian legislation that was adopted about a year and a half ago, with a little modification from discussion. The whole idea was getting away from the idea of government putting money in. We want to see development of new technology. We want to see technology for agriculture and forestry that's never been commercialized before. In order to do that — we believe it's quite doable — it's going to take a lot of money. There's a certain degree of risk, and there has to be some kind of added incentive.

The mining industry has 20 percent flow-through shares. If we look back in history, it's unfair for the oil industries that suggest they don't like the fact that ethanol is subsidized. One only needs to take a look at the various subsidies over the years — and we do have figures on that — whether it's a production allowance, depletion allowance, fast write-offs on equipment or indeed these investment flow-through shares. Our position has been from day one, really, that the ethanol industry, which doesn't exist in this province, has never even enjoyed the kind of incentives that variously, over time, the oil and gas industry has enjoyed.

I. Chong: Just a quick supplemental. Would this investment tax credit, if it were seriously considered, be restrictive in terms of time limit to allow the industry to develop and build its infrastructure, after which it would be phased out like some investment tax credits are?

B. Vanderland: Yes. We put in some built-in time frames. What we suggested was perhaps a ceiling of 5 percent of B.C.'s annual gasoline consumption. In other words, once British Columbia has approximately 5 percent ethanol production capacity compared to the gasoline consumption, then it should be phased out. Ultimately, we believe that any tax concession pertaining to ethanol can be phased out.

B. Lekstrom (Chair): Bill, I would like to thank you for your presentation this morning. As all of the presentations we've received, I can assure you that it will be given due consideration in the development of our report. Thank you for taking the time.

B. Lekstrom (Chair): Jeez, you're okay, aren't you? All right. Take care, Bill. Thanks.

Our next presentation this morning comes from Purtzki Carle-Thiesson chartered accountants. To present is Barb Carle-Thiesson. I had some trouble with names the other day. I'm off to a bad start again.

B. Carle-Thiesson: Good morning, Mr. Chairman, committee members. I'm a little nervous. I don't do this as a general rule, so please bear with me. You have a handout. You're welcome to follow it as I read through my presentation.

My name is Barb Carle-Thiesson. I'm a chartered accountant and a partner with the firm Purtzki Carle-Thiesson chartered accountants here in Nanaimo. I appreciate the opportunity to present some of my ideas to the committee for the next provincial budget, and as a chartered accountant I'm fairly certain that you can anticipate what my message is going to be. My presentation will be brief. I want to focus primarily on the issue of competitiveness, and I will touch upon the need for a provincial debt management plan so that we can reverse the trend that this province has seen over the past number of years.

I would first like to point out that the government's recent policy decisions around personal and business tax reductions will bring the province more in line with our competitors. As the committee knows, both Alberta and Ontario have been reducing business and personal tax rates for several years, and the result has been a serious competitive disadvantage for businesses in B.C. The business tax cuts announced in July were an important and necessary step for B.C.'s business climate. Eliminating the sales tax on machinery and equipment, reducing the general corporate income tax rate and phasing out the corporate capital tax sent a strong signal to investors that B.C. is committed to being competitive.

My colleagues and I are optimistic that once the Canadian and U.S. economies begin to recover from the current downturn, B.C. will be better positioned to attract investment as a result of these business tax changes. However, as you are aware, the province is facing some major challenges around competitiveness. Both Alberta and Ontario have announced business tax reductions that will be phased in over time.

By 2004 a company in B.C. with taxable income between $200,000 and $400,000 will face a general tax rate about four times higher than the same size of firm in Alberta. By 2005 the equivalent B.C. firm will be subject to a tax level over three times higher than a similar company in Ontario. Both Alberta and Ontario are reducing their general corporate income tax rate to 8 percent by 2004 and 2005 respectively. While B.C. has made progress by reducing its general tax rate from 16.5 percent to 13.5 percent effective January 1 next year, the province needs to clarify what business tax changes are going to take place in the future so that B.C. will remain competitive with Alberta and Ontario in the years ahead.

Coming originally form Grande Prairie, Alberta, I retain strong ties with the north and have seen the draw that Alberta holds for business, as Mr. Lekstrom is well aware. I have colleagues in Fort St. John and Dawson Creek who advise me periodically of the drain that their cities are seeing of companies and individuals moving across the border. You may be aware that Chartered Accountants of British Columbia has recommended that a time line be set by the government to match the general business tax rate in Alberta and Ontario.

I agree with the chartered accountants association that we don't need to match the same time frame for business tax cuts as the other have provinces, but we need to show investors that we will match those rates eventually. While a reduction in business tax rates may seem questionable in a time of economic uncertainty, it may be the only way to ensure that B.C. can attract new investment to this province and prosper in the future.

The committee may also be aware that the Ontario government recently accelerated its business and personal tax cuts amid a slowing economy. Tax cuts that were to take effect in Ontario on January 1 next year were implemented on October 1 this year. I believe that the B.C. government should set a time line to gradually reduce our business taxes to meet and match Alberta and Ontario. By doing so the government can send a clear signal to investors that we are going to eventually match those levels. The importance of spelling out a multi-year approach to tax changes is that businesses often make investment decisions years in advance of making the actual investment.

One other issue I would like to discuss is the need for a debt management plan. As you know, the provincial debt is estimated to reach $37 billion this year, and total taxpayer-supported debt is expected to be $28.3 billion, which is 21.8 percent of the GDP. While the province still boasts one of the lowest debt levels in the country, numerous deficits over the past decade have caused a significant increase in the province's debt.

According to the fiscal review panel report in the summer, deficits in the short run and some associated increase in debt will be necessary in B.C. until a proper restructuring of government can take place. However, the panel pointed out that unless the deficit problem is addressed, there is a danger that the amount of debt will get out of hand. As deficits continue, mounting interest costs make future deficits even more difficult to control.

While the government has acted decisively on its plan to balance the budget by 2004-05, one important component missing from the fiscal management goals of this province is a long-term debt management plan. I believe that a debt management plan with measurable benchmarks for debt reduction should be part of the government's fiscal management strategies. Currently there is no long-term plan in this province to tackle the growing debt. I hope that such a plan will be considered in the upcoming budget. Thank you for your time.

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

R. Sultan: I thank you, Ms. Carle-Thiesson, for your excellent and brief presentation. Yesterday this panel

received some very direct and firm advice that the tax cuts which have already been announced have been a big mistake, and they should at least be held in abeyance if not cancelled. What's your reaction to that sort of advice?

B. Carle-Thiesson: I hear some snickers behind, so I think that sums it up. The business community's reaction is that this province needs to continue its tax reductions to encourage business and individuals to want to be in B.C. Mr. Lekstrom is well aware that there are firms that are moving much more easily in the Dawson Creek–Fort St. John–Chetwynd area over to Alberta, and we hear discussion of this on the Island, although it's not that easy to relocate your business from here up to Grande Prairie or Lethbridge. But the popular consensus for many businesses is that if they had the opportunity, they probably wouldn't be here. There's resounding support among the business community for the actions that the government is taking.

I. Chong: My question is along the same lines as that of my colleague Mr. Sultan in regards to tax cuts in particular, because you're an accountant dealing with small and medium-sized businesses, I presume.

I. Chong: The business tax cuts. Do you feel, in consulting with your clients, that if we proceed along the time line that we've indicated, that would create and generate more business activity where there would be more jobs created? If so, how soon would you see that kind of outcome? That's clearly an item that we would want to measure and ask the business community to report back on.

B. Carle-Thiesson: I'm not sure that I'm the individual who could answer the time frame question. Reducing taxes leaves more money for the small and medium-sized business owner to invest in new capital and new operations. I suspect that in the short term, reduction of taxes will simply encourage them to see the future in brighter terms without actually spending any money. As long as the tax changes are here to stay and people believe they're here to stay, then they will invest more funds.

I. Chong: Since June and July, when a number of these measures were introduced, has your practice of consulting to small business owners taken a different turn?

B. Carle-Thiesson: No, but it has renewed optimism, and I think that will turn into real results in the medium to longer term. In the short term the optimism is enough for business to want to proceed.

L. Mayencourt: If you were the Finance minister and you were looking at a long-term debt reduction plan, what would you do? How would you phase it in, and how many years would it take?

B. Carle-Thiesson: Once again, I'm really not the right person to approach a question like that with any particulars at all. This province can only move ahead and be seen as a good place to live and work and invest if it manages its debt. I returned from Alberta a week ago, from a dinner with many chartered accountants. The optimism of that province, now that they've had their short-term pain for long-term gain, is fantastic. They've managed to eliminate a lot of the problems that B.C. is facing. I think for us to get to the place where Alberta is, we're going to have to come up with some concrete debt management strategies, the particulars of which I can't advise you on.

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

D. Cherry: Good morning. I'm just handing out some appendices, so you can follow along. Hopefully, they'll help in the question period. They're sort of notes and stuff that I've added in for you.

I'm David Cherry. I'd like to thank you for the opportunity to speak this morning. I live with my wife and two young children in the community of Merville, which is just north of Courtenay. Our drinking water comes from a deep well, which is fortunately a very safe source of water. I'm also involved in Beavers with my five-year-old son, and I volunteer as a board member of the Comox Valley community health council. I have been employed as a public health inspector for 14 years.

I'd like to talk to you today about my concern for the safety of the vast majority of British Columbians who currently consume their water from surface sources as well as for communities such as those in the Fraser Valley, where manure runoff has potentially contaminated their wells. The recent cuts in funding and amendments to the legislation have the potential to further put British Columbians at risk. The documents I'm providing you, I will be referring to here.

In April of this year the B.C. safe drinking water regulations were amended in response to the incident in Walkerton, Ontario. You will remember the contamination in their well that resulted in seven deaths and 2,300 people being seriously injured. These regulations were amended again on September 25, 2001, and the funding for their implementation was cut. The changes are in that package on the front page; it mentions the sections. The key lesson from Walkerton was removed on the second page of the appendix 1. This is section 5.1(a), the notification of the user of an unsafe water system. In other words, the operator of the water system that has failed to meet the standards is no longer required to tell the consumer that the water they are drinking is unsafe.

British Columbians usually get their water from surface sources, which are more prone to contamination

than the wells in Walkerton. The Ministry of Health and Ministry of Environment had planned to work together to protect our watersheds and prevent contamination. The removal of contaminants is much more expensive than preventing the water from being contaminated in the first place. The added expense of repairing the damage will be felt in future budgets.

Two speakers ago, when the gentleman mentioned MTBE contamination of wells and the billion-dollar cleanup, it was a very good example of the future cost. It's a lot higher than preventing it in the first place. The $50 million that was intended to support the regulations for safe drinking water pales in comparison with the $250 million class action lawsuit filed in the wake of Walkerton.

There are, of course, more serious issues than money when your family, friends, neighbours and constituents are unaware that their water's not safe to drink. In appendix 2 you'll see a list of boil-water advisories for the North Island. That's on page 3; it's got a No. 2 on top. The top system on a boil-water advisory is a B.C. park. If a B.C. park has a boil-water advisory, tourists will no longer see B.C. as a pristine place to bring their family to visit. There are several high-end resorts listed on that list of places. When a high-end resort has an outbreak, our ecotourism industry will be harmed. The small communities listed there will have a difficult time attracting and retaining businesses after their names are splashed on the front pages of newspapers across Canada. B.C. takes on the tones of a developing nation when our citizens cannot be assured that their drinking water is safe.

In appendix 3, I have a photocopy of a Vancouver Sun article from this past Saturday. It's a good example of a drinking water problem and the associated response. The article discusses the problem in the Fraser Valley of handling farm waste — manure — and protecting drinking water. Once again the public are not being protected, as stated in the quote by the ex–medical health officer Gillian Arseneault.

On the second page of the article I photocopied, I've starred her comment on the bottom left-hand corner: "There really isn't very good public awareness. Most places aren't posted with warning notices. I'm not sure if there are any that are, but I've not seen any."

The demand for health care services will rise dramatically, as the province will have to pay the bills to treat the sick from these preventable outbreaks. The government has now appointed a committee to review the September amendments. This is appendix 4. They are due to report back the recommendations by January 15, 2002.

I'd like to request that the government remove the ill-advised amendments, even prior to the committee's report, and place a priority on prevention and disclosure to the public. Unsafe drinking water is not something that should be allowed to be hidden.

The freeze in the health budget also puts a damper on the ability of agencies such as mine to respond. One of the first things frozen is usually training for staff. There are excellent opportunities offered to assist and protect the public health. Appendix 5 is a course that's come along recently to deal with terror and vandalism in water systems — a risk seminar. B.C. will fall behind as our staff are unable to take advantage of the essential training needed to keep up with today's health challenges.

In closing, water is one of the key resources of our province, whether it's used by industry or tourists or for daily consumption. The province will pay a high price if our water is not protected. The commission on Walkerton has shown that drinking water protection needs to be regulated. We all want drinking water in British Columbia to be safe for today's consumers as well as for generations of citizens and businesses to come. Thank you.

B. Lekstrom (Chair): Thank you very much, David, for your presentation to our committee. I would look to members of the committee if there are any questions regarding your presentation.

J. MacPhail: Thank you very much, Mr. Cherry. Are you suggesting, then, that the September 25 regulation change be put on hold? Was that your recommendation?

D. Cherry: Well, the regulations were changed back in April. Walkerton happened a while back, and it took a while to get some legislation through, so it was changed back in April. Then on September 25 they removed some of the key lessons of Walkerton, like notifying the public that their water's unsafe. Then they appointed a committee to review it once again.

I'm saying that things like notifying the public should be put back into the regulations as soon as possible. Don't wait for a committee's response. The Ladysmith outbreak was not that long ago. The public needs to be notified. If it's one of our tourist facilities, if we lose that industry because they needed to keep the tourists there and didn't want to notify them that they couldn't drink their water, we could have some serious consequences for the province and the economy here. So I think the money that's spent to try to prevent these problems from happening, as well as the notification of the public, is wisely spent.

L. Mayencourt: The minister's committee that she announced includes a gentleman from the Fraser Basin Council. I just wonder if you have had an opportunity to make a presentation to that committee. Have you asked to speak to them, and what has their response been?

D. Cherry: I haven't had an opportunity at the present time. It's a new committee. It's a very good committee that they've formed. There are senior health inspectors like myself on the committee and things like that, so it's a good committee. I'm looking for impetus to change things a little bit quicker. For some reason a very important section — you can read it for yourself there — was removed. That's not a budget thing; that's

a health thing. It would be nice when it's put back. I'd like to put it back sooner.

L. Mayencourt: I don't come from a real agricultural-based community. This bit with the manure — you hang onto it until the spring, and then you spread it around? Is that the deal?

D. Cherry: There are certain regulations; I'm not an expert in manure. It's really a Fraser Valley issue, and some of the MLAs are in that area. The majority of people, though, get their drinking water from surface sources — from the valleys and the rivers. They're much more prone to contamination than a well — like what they have in the Fraser Valley where it has to seep through all their soil, and it's usually filtered. Unfortunately, with manure the nitrates can accumulate in the drinking water down below, and that can cause illnesses for children under six months of age as it interferes with their ability to carry oxygen in their blood. There's brain damage; I can't remember exactly the term. So that area has that problem that's preventable. If you read the article, not much is being done. That would be one example. It's a nice article when I was doing my presentation, rather than going to a lot of details about something that's happening in Fanny Bay or Dennee Island or wherever it's going to be up in the North Island that we're going to have issues.

L. Mayencourt: Thank you very much for bringing this to us, and I would encourage you to contact the ministry and get an opportunity to make a presentation to them on those items. I think it's very important.

B. Lekstrom (Chair): David, I would like to thank you for coming and presenting to our committee today, and certainly the information you brought forward is very important.

D. Barr: Mr. Chairman, members of the committee, thank you for this opportunity to speak today. My name is Doug Barr. I have lived in British Columbia since 1967. I have lived, gone to school and worked in this province for almost my entire life. I have never wanted to live anywhere else, and I'm proud and happy to call myself a British Columbian. I've been married for 15 years to the smartest and most wonderful woman any man could ask for. She was born in Nanaimo and has lived in B.C. her entire life as well. I'm the proud father of three beautiful, smart, self-reliant daughters, age six, nine and 11 years old. I've lived in the Comox Valley for the last eight years where I own my own home. I work and shop there to support local businesses.

I'm also a social worker who has worked for ten years in the public service. I have worked in child protection social work and currently work for the Ministry of Children and Family Development, community living services in Courtenay. I support special needs children and their families. I'm proud to be a public servant and feel that the work that I and thousands of others do is vitally important to all the people of B.C. This work and our province's commitment to supporting others are what make British Columbia the best province in Canada to live.

I want to start by saying that I take no formal position on the recent tax cut made by this government. This was an ideologically based decision that I respect the government felt needed to be made. However, I am concerned that with every decision there are consequences — often as not, unforeseen due to a lack of information.

The reason I am presenting to this committee is that I have watched, read and listened to the many announcements the government has been making about the services my colleagues and I provide to thousands of our fellow citizens. I am concerned that in a rush to balance the budget or follow through on political promises, families and children will suffer. I've spent the last eight years working for families with special needs children. It is a full-time job for families to support their special needs children, just to get by in today's world. Parents tell me of their daily struggle to obtain the supports for their child that he or she needs. I can only imagine what the impacts of 25, 35 or 50 percent cuts would look like to our services.

Currently there are wait-lists for most of the services we do offer. My colleagues and I are as creative as we can possibly be with the existing services to meet the needs of the families we serve. Over the last several years, as budgets became tighter, we have stretched programs and funding beyond the limits to support children and families who need us. However, there are limits to what we can to do within existing structures.

As a person who works inside the system, I would be the first to tell you all that change is needed, but I have concerns that fiscal decisions will override what is important and necessary social policy. I am concerned that with social services cuts, there are also major organizational shifts planned. I have worked for my current ministry since its inception in 1996. The last five years have been ones of instability and continual reorganization. I cannot stress too strongly that huge amounts of energy and resources were absorbed by that process. Those resources were not available for families and children. The only saving grace was that the previous government did not cut services while reorganizing. Therefore the people we serve, for the most part, were spared the confusion and instability that went with that change.

The B.C. Association for Community Living stated in the submission to the core services review that if change in this, of all ministries, is hasty and ill-considered, government will not be successful in creating a legacy that brings either health or prosperity. I could not agree more with this statement. Even though the BCACL was speaking specifically about British Columbians in receipt of community living services, I believe this statement applies to all levels of government-supported social service programs. There is a strong need for sincere and responsive consultation prior to ministry reshuffling and structural change.

In ten years of government service I have been consulted many times. Unfortunately, like families, I often felt that meaningful consultation never occurred and that previous governments paid only lip service to our suggestions for change. In the current environment of fundamental change, I worry that there is not sufficient time being set aside for a thoughtful review of where changes may be needed. My fear is that the decisions that change the way in which we view our social responsibility for each other will be made in haste and that these decisions will be based solely on financial consideration which fulfil political promises that were made at some point in the past. I also believe that those decisions will be made without critical information that could now affect the direction we go as a province.

The current plan to devolve or deregulate the Ministry of Children and Family Development, specifically community living services, is focused on change for change's sake, in my opinion. It fails to address the key questions of increasing need coupled with declining resources. By keeping the focus on structural change, wait-lists will grow and families will continue to experience further stress and breakdown. Every day that my colleagues and I go to work, the families we serve are struggling with different levels of crisis and stress.

The average parent of a special needs child is already relying on their personal resources to the maximum of their ability — this, just to meet the day-to-day requirements of life. Furthermore, this is before they choose to access the services through my office. Parents of special needs children usually tell me that they came to see me only after realizing with some personal anguish that they needed assistance to support their child. It is humbling for me to think about what life is like 24-seven for parents of autistic children, medically fragile children and developmentally delayed children. The daily struggle they must engage in just to ensure their child's basic human rights are met and to enhance their capacity to contribute to society is huge.

In my job, I have helped parents of physically dependent children obtain critical pieces of required equipment so that their child can more fully take part in their community. I have helped families access behavioral consultation services that allow parents to understand and look for alternatives in parenting their special needs child. I have to wonder: will these services be cut by 20, 35 or 50 percent? I fear for our society if we decide to penalize those that most need our support and energy for the sake of fiscal expediency.

In preparing for today, I also felt the need for the committee to understand the impact of changes being suggested on myself and my family. I have a stable, good job that supports my family. I have for ten years paid taxes and contributed to the economy of my community and this province. I fear that the uncertainty this government has created surrounding the public service may mean that I no longer am able to economically contribute to the province at the same levels.

I chose to be a social worker after working for ten years in the private sector. The work I do is important to me. I took very seriously my public service oath and accept what it means to serve the people of B.C. For you to understand my job I need to give you an example of what it is I do. I have worked with dozens of families in eight years, and some I still work with. I have watched their children grow and have helped families in some small way have their child succeed in an often tough world. In one case I helped an amazing single mother bury two of her sons, aged 11 and nine, who died within two years of each other after struggling for years with a degenerative illness.

This job is more than a paycheque to me. I do have to feed my family, but I have done other things in my life that would support them without having to see the pain in that mother's eyes when she buried her sons. However, helping others is what makes B.C. great. It is what being a public servant is all about. It is what I want to continue to do with my life. I remain committed to the people of B.C. and the families I have the honour of serving. I only ask: are you all as committed?

I did not come here today without recommendations for change. I have the following suggestions for the committee to consider: that government acknowledge that the worth of social services cannot be measured in financial terms alone. Government must base its decisions on broader human and social outcomes. These are the things that make our society strong and caring.

Make the Ministry of Children and Family Development a senior portfolio in government, like Health and Education, therefore providing stable and effective leadership.

Adopt the six-point plan to improve services for children and youth as laid out by Joyce Preston, the former child, youth and family advocate, in March 2001 — specifically, that the Ministry of Children and Family Development move to needs-based, multi-year budgeting.

The government does not embark on another radical restructuring of the Ministry of Children and Family Development and its services. Instead, adopt a clear, achievable agenda for change, with target dates of 12, 24 and 48 months for review.

Adopt point 4 of the June 2000 children's commissioner's annual report Blueprint for a Better Future — for British Columbia Children and Youth. Keep the Ministry of Children and Family Development together. Breaking up the ministry now would focus efforts on administrative tasks rather than on improving services to children and youth. Moving the boxes is not the answer.

Listen to and acknowledge the July 23 Report of the British Columbia Fiscal Review Panel: British Columbia Fiscal Forecast and Issues 2001-02 to 2003-04, specifically when it states: "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." Further: "We believe that B.C. has an opportunity to address the deficit problem in a manner that avoids mistakes made elsewhere."

That the government engage in a real process of seeking input for change and efficiencies. This process for change should take time — not necessarily 90 days. The government should set a goal of where they would like to be in the future and then engage in a process of seeking input from the people who know best: families, youth, self-advocates, service providers and thousands of dedicated line staff who deliver services every day to the people who need them. The government needs to be prepared to alter their future goal if, during the consultation phase, information gathered supports that changed goal.

Finally, the government needs to accept that to fund a true, long-lasting change that values equity and contributory citizenship may require running deficits for a longer period of time than first envisioned. In the end, this investment in the future of our society will reap dividends far higher than the short-term gains achieved by cutting services to British Columbians who can least afford it. Thank you.

B. Lekstrom (Chair): Douglas, I want to thank you for your presentation today and certainly commend you for bringing some suggestions forward. Far too often, I think, people in society find it very easy to complain and bring problems to the table without bringing solutions. I thank you for bringing your ideas.

J. Bray: Hi, Doug. Good to see you. Thank you for a very thoughtful presentation. You certainly covered a lot of points.

First of all, in looking at your recommendations, obviously coming from MHR, I just want to echo what I've heard from constituents who work in your ministry — that another reorganization is not necessarily the answer. There have to be different ways. I've certainly heard a lot of that, and we've had discussions about that as well. I think that's a very valid point.

We've been around the province and talked to a lot of the community service providers — for instance, the Williams Lake Child Development Centre. One of the issues that comes up is the number of contracts that service providers have with the ministries of Children and Family Development, Health, Human Resources and various other things. My question to them in various communities has been: do you find it unduly restrictive in your ability to deliver services to families to be spending as much time as you are in administering the contracts for government? Would one area of efficiency from a service-provider standpoint be more a core funding or bulk funding model or even a multi-year bulk funding model where service providers were measured more on the outputs rather than how many seats or how many participants — that type of thing? From a ministry perspective, where you're working with families and service providers, do you see an advantage to government maybe showing a bit more faith in the service providers and providing them with core funding and then measuring the outcomes rather than always individual contracts measuring the inputs?

D. Barr: Again, in my experience, in the last several years there have been several attempts to review the numbers of contracts and the types of contracts that fundamentally change the way in which we deliver services to communities. I have a personal opinion about that. I think there is no cookie-cutter approach to the way in which we deliver services to families. Some families require literally very little assistance. The individualized funding model has been spoken about quite frequently, allowing them to have complete freedom to choose the services they wish. There are some families that that doesn't work for. They require a lot more intervention. I think that would go the same with respect to some contractors.

There exists, probably, within our ministry some contracts where the ability to measure the outputs would be quite useful for line staff. You look at these contracts and wonder, in some cases, why they're continuing. We started down that road several years ago — to look at that, to look at outcome measurement and try to redraw and redraft the way contracts were drawn. We never completed that process. I believe that's some of the kinds of things…. If line staff were asked those questions, we could tell you where efficiencies could be made, where money can be saved, where money can be redirected into more efficient programs that more adequately meet the needs of families and children.

J. MacPhail: Thank you very much, Mr. Barr. That was very thoughtful. Is your area of practice around Nanaimo?

J. MacPhail: Well, I think the same stat applies there. I note from the statistics that there's a higher proportion of retired people. I should say older people. I assume they're retired; I hope they are.

J. MacPhail: We have heard that there are developmentally challenged adults being looked after by retired adults in their own homes and that there's a possibility of those caregivers dying just through old age. Are those pressures existing in your community? If so, what are your plans?

D. Barr: Those pressures exist, I think, in all communities that provide services to developmentally delayed adults. That is not my area of practice. Specifically

in our office we've certainly had discussions about the increasing needs. In Down syndrome adults, for example, there is an early onset of Alzheimer's, which brings about a whole set of care needs that probably weren't even foreseen 30 years ago when these people were in institutions. Now you have that coupled with the fact that their primary caregivers in some cases are parents who are themselves needing increasing amounts of care. We struggle daily with trying to provide supports to those families, be it home support, medically related support, respite, residential supports, day program supports.

There is an incredible amount of creativity that goes into trying to shoehorn and fit people into programs that do exist and that perhaps need change, but the biggest issue is that we have no increase in funding. The need is increasing, and our funding levels have been…. Essentially, base funding has been frozen for quite some time, so it's very difficult to meet those needs. We foresee that that need is only going to increase. We have had discussions to try to set up almost an intermediate care style of resource, but that costs huge amounts of money that we basically don't anticipate being available. We don't know what's going to happen.

B. Lekstrom (Chair): Douglas, I would like to thank you for coming and putting your presentation to our committee. Fifteen minutes is not a great deal of time in which to put a message across, but I think you did a very effective job. I appreciate that.

We will move on to our next presenter this morning. With the Canadian Federation of Students, we have Mr. Steve Beasley and Rose Dacosta.

S. Beasley: Good morning. My name is Steve Beasley, and I am a student at Malaspina University College. I'm executive officer of their student union, and I'm also a student representative on the college's board of governors.

I'm here today to talk about post-secondary education and the government's plan for funding post-secondary education and tuition fees. I understand that this committee has received several presentations from student unions already, including the province's main student union, the Canadian Federation of Students. I'm not going to reiterate everything they've said. I think their presentation speaks for itself. I want to make it very clear that the students at Malaspina fully support the presentation made by the Canadian Federation of Students and the recommendations in that presentation to your government.

I would like to say that students do believe in affordable education, accessible education and an education of high quality. We believe that affordable education allows citizens of our province to transcend economic barriers and move up to what would be their potential. I'd like to provide an example, if I could, of a student at Malaspina who came to Malaspina in 1997 as a janitor and who did not graduate high school. That person is now in law school and also taking a master's of anthropology. He was able to go from adult basic education to a double major in anthropology and psychology in less than four years. That's because of the efforts made by the previous government in funding grants to students, ensuring a more accessible student loan program and reducing and freezing tuition fees.

We would like to encourage the government to find ways other than increasing tuition fees to fund education, to increase public support for education. Malaspina has recently moved to a trimester system or is working towards that. As I'm sure you'll recognize, that definitely decreases…. I'm never clear whether it's decreasing completion rates or increasing completion rates. It basically allows students to take courses all year round and lets them finish their degrees quicker, while still maintaining a low level of tuition.

We're very proud of the work that Malaspina does. We stand behind the institution in the work that they do to increase their revenues and work with the government to provide public support. We also extend the invitation to this government to work with them, as we did with the last government, to make sure that education is a priority in this province. That's pretty much all I have to say.

L. Mayencourt: You mentioned that you've basically got a year-round university college. Of course, that provides the students a benefit, because they can complete their degree faster, but it also improves the use of a capital asset for us. Is that something that the other university colleges are doing? Do you have any comment on that?

S. Beasley: Sure. This is the first year that Malaspina has run a full summer session or close to a full summer session. Yeah, the points that you brought up are points that we discussed with the institution about usage of space and making the institution more efficient in that way. I'm not aware that it's something that every university college does. I know that Simon Fraser probably is the leader in running a trimester system. It's certainly something that we've spoken with other student unions about, at meetings of the Canadian Federation of Students, as a way to improve the system without increasing the costs.

L. Mayencourt: With students, it also makes it faster for people to get in. Do you have a large wait-list to get into the programs at the college?

S. Beasley: It depends which program. There are programs such as nursing where there's a two-year wait-list. There are other programs where you can basically walk in off the street, really, as long as you fit the criteria.

B. Penner: I'd like to also support your comments about the trimester system. I benefited from that both at SFU and at UVic in 1990 or '91.

I'm just curious because we've heard a number of references to student aid and so forth. What is the

S. Beasley: It depends on what category of student you are. There are several different categories. If you're a single parent, I think it's around $14,000. If you are a single student with no dependents and no parental support, I think it's about $8,400.

S. Beasley: I think so, yes — $8,400 for eight months, which doesn't seem like a lot.

R. Sultan: Thank you for your presentation, Mr. Beasley. As I guess we're all aware, education is a high priority for the present government, as it has been in the past. In your opinion, what is a reasonable percentage of the cost of your education being paid for by the taxpayers as opposed to by you and your family? What would your ideal percentage be?

S. Beasley: If you'll forgive me, sir, that's somewhat of a loaded question, because it assumes a certain basic belief about the way education runs. I feel that I will pay for all of my education because I will be a taxpayer, and I will pay lots and lots of tax. I'm perfectly fine with that. I think that's a fair trade-off for what we receive in our society, including free high school and free elementary education. I believe that university education should be free, so I guess the answer is zero.

I'm proud to be a taxpayer, and I'm happy about the tax I pay. I went to Malaspina, and I graduated with a diploma. I worked for their student union, and I paid lots of tax. I'm proud to pay that tax, and I'm proud to go to free hospitals. Hopefully, one day I'll be proud to go a university that's free also.

B. Lekstrom (Chair): I see no further questions from members of our committee. Steve, again, I'd like to thank you for your presentation this morning.

S. McDowall: Good morning. Mr. Chairman, members of the committee, ladies and gentlemen. My name is Stephanie McDowall. I was born and raised in Vancouver. I'm presently employed by the Ministry of Human Resources in Nanaimo as a CSW, which stands for client service worker. I'm one of the admin staff and a front-line worker. My co-workers and I are the first to speak with the clients either on the phone or at the front counter.

When I was asked if I would be interested in addressing the committee with a view to influencing the provincial government's financial plan for the next three years, I laughed. I laughed because it's hard to believe that the government is interested in my views or, for that matter, the views of some of the people in this room.

I'm a bit of a political junkie and have therefore paid attention over many years to various provincial and federal committees established to investigate a variety of matters. I have also seen how most have been put on the shelf and forgotten about, in most instances with not one recommendation being implemented. I am not even sure how much influence your committee's report will have on Mr. Campbell's financial plan. I hope this financial plan is not already a done deal and that this isn't just a PR exercise. Nonetheless, this travelling committee allows the public to have some kind of input, and perhaps some of you have already been moved by the people you have listened to and the submissions you have read. I hope so.

I read the Budget 2002 Consultation Paper and noted the topics listed under "My suggestions for a realistic, affordable and measurable fiscal plan." Under expenditure priorities I believe that health care, education and child welfare are the areas which first come to mind for me under your points (b), (c), (d) and (e). I am not an expert in these areas and would really like to be able to trust my government to make wise and fair decisions for me.

So why am I here? I am here because I am frightened for my co-workers, for my 87-year-old mother, who has a problem getting adequate health care, and for my disabled daughter. I want this province to remain a good place to live for ordinary working people and for those people who are struggling with health problems and disabilities. I do not want to see higher unemployment. I do not want to see this province sink into a terrible recession which results in more massive job layoffs and the accompanying social ills which go hand in hand with these layoffs. I do not want to see prisons and jails or our Hydro being run for profit by private companies.

I want to be proud of my government's treatment of first nations people, and I do not want to see a referendum on treaty negotiations. Aboriginal rights have been recognized by the courts. The process for negotiated settlement is established and underway. I shudder to think of the cost of litigation and confrontation. I will be truly ashamed and embarrassed — as you should be too — if this government instigates a process which will cause further harm to first nations people.

Regarding our health care funding, what happened to Mr. Campbell's election promise to maintain the current level of funding? Under this government's New Era document, I read that health care funding will be frozen this year and will increase over the next three years as the economy grows. However, under the Finance ministry's October chart, Mr. Campbell is predicting a government revenue increase of 4 percent but no increase for health or education for three years.

What does this mean when we take into account our growing population and inflation, etc.? What kind of tragedies can we expect with the incredible shortfall that will exist for these two ministries? Sick people will

die, of course. They already have without these kind of spending curtailments. Learning-disabled children will not receive the special education they require in order to become fully participating members of society, resulting in more crime, higher welfare costs and suicides. Yes, suicides. Check it out with your local funeral parlours in your own hometowns and find out how many of the poor commit suicide.

I recognize that our province has some financial difficulties, as all the provinces across the country do. We can expect that our province and country will now have further financial problems because of the September 11 terrorist act and now the anthrax scare, which has plunged the United States into a very serious economic downturn. We are right on their coat-tails, following them into something unknown but probably much worse than what we are experiencing now. I recently read that our GNP was 0.2 percent. As I understand it, this is a depression, not a recession. My question to the committee is: why has our economy sunk to such a depth? Aside from September 11, what else has happened here and in the United States to cause so much job loss and such a poor economy?

It is my opinion that none of this is the fault of this government or the previous one, for that matter. It is because of NAFTA and free trade. Between 1990 and '97 there was a 50 percent increase in trade. This has not produced jobs, prosperity or growth except, to quote our esteemed Canadian philosopher John Ralston Saul, "in some kind of dreamland which bears no relationship to people's real lives." Wealth has grown in the least useful sectors of the economy. The example Mr. Saul gives is that international subsidiaries have grown at the expense of Canadian-owned companies. This translates into loss of leadership positions, research and development, reinvestment in Canada and, in general, high-level jobs involving across-the-board responsibilities. Jobs have moved to Mexico and other Third World countries where workers are paid 65 cents an hour. It also translates into a drain of capital being sent overseas to owners.

Now that we have a Liberal government in British Columbia and a Liberal government in Ottawa, I would hope the government members of this committee will start to put some pressure on Mr. Campbell to demand that the federal government do something about what is happening to this country because of free trade and NAFTA. These agreements have not been good for the people of Canada as a whole and certainly not for the people of this province. Governments have lost the ability to do very much about their economies. Our country and the world are being run by multinationals. I see no reason why provincial members of the Legislature cannot play a role in shaping the decisions our federal government makes which affect your constituents in such a serious and unhappy manner.

I, too, am a taxpayer, and like you I hate to see my tax dollars wasted. I believe that we should not employ more civil servants than are necessary to do a decent job. However, I can tell you that in the ministry I work in, there are no downtimes. People are working to their maximum capacity, providing services to the most needy in our society. I know that almost every person who collects a welfare cheque would rather work if they were able to or if they could find employment. In my office we have many clients who have only been able to find part-time jobs. Many of these people work two or three jobs, and they still qualify for a cheque from us. Things are not easy for people in Nanaimo.

You need to know that the people I work with worry and fret over many of our clients. Most of our clients, especially the single employables, suffer a great deal financially. Given the amount of money they receive from us, they have a very hard time eating properly, never mind travelling by bus to look for work. If a person gets sick — and I believe they get sick more often than the rest of us — they can't afford over-the-counter medicines or vitamins. Some are missing their front teeth. I'd like to know who's going to hire someone without teeth.

A huge number are functionally illiterate, and we need to help them write out notes to their financial workers. When they receive letters from us in the mail, many of them have no idea what the letter says.

I would love to see more programs available, not less. I understand our ministry will be moving more towards having clients utilizing technologies to provide us with the information we require, thus removing some of the paperwork which we are all required to do. This is great, if it will free up staff to enable them to become more involved in counselling and/or helping in other areas which might lead to people finding and holding a job. It won't be good if it just results in lost jobs and poor services to the public.

These are troubled times we are living in. Our government should work towards making things better for all of us, not just for a small elite group. The ramifications of major layoffs within government will have a devastating effect on our economy, although the banks will benefit in a major way as they foreclose on residential mortgages and businesses, just the way they did during the Great Depression. This was how Canadians at financial institutions became so very wealthy.

You men and women of this committee are most fortunate in that you have more opportunity than most to leave a legacy to your constituents in this province. Each of you has the opportunity to become an outstanding parliamentarian. You can help to ensure we become a province where all people can experience the fullness of life, where all people are themselves valued and where the realities of all the people of this province are given your profound consideration. The good of all the people you represent should be first and foremost in your minds. We need to get rid of this us-against-them mentality, and we should not care more about money than the need of those less fortunate.

Running a deficit is not such a bad thing during the kind of economic climate we are experiencing. If Mr. Campbell is so very concerned about our pending deficit, then I believe with all my being that he should do away with the 25 percent personal income tax rate cut — or at least part of it, because I recognize that small business needs stimulus, etc. This tax cut put very little

Given the current economic situation, I will go as far as to say this tax cut has become irresponsible on the part of this government. The people of this province will pay a terrible price if Mr. Campbell continues on this path, and I truly believe Mr. Campbell will go the way of Brian Mulroney. I think this will be a terrible shame for this province.

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

B. Penner: I didn't hear how long you've worked with the ministry, but I was wondering if you could comment on a program introduced by the previous government. I think it was called job training requirements for people that were single employables receiving social assistance. As I recall, the program required people to be either seeking employment or, over a certain period of time, engaged in job training. Otherwise their benefits would be terminated. The government at that time said it greatly reduced the number of people receiving social assistance. Did that program actually work? Is that the right direction?

S. McDowall: I think it worked to a degree. I have some strong views about government programs pertaining to employment. I haven't seen a lot of really good ones in any province except by the federal government years ago under Trudeau. I think employment programs which pay small business dollars to hire people…. As soon as those dollars are gone, the jobs disappear, and the jobs almost always are mind-numbingly boring. There's very little training component in it.

I would like to see something where people were trained for jobs that would take them out of that working-poor category. I would like to see a program to help people become literate, one that isn't done just by volunteers. All those programs now rely totally on volunteerism, and it's not sufficient.

J. Bray: As somebody who worked in MHR, I can speak to the importance of the CSW position. I just wish we could get rid of the cross-component problems so that CSWs could actually apply for FAW jobs and not lose all their seniority for that, but that's a whole other thing.

Because you, as a CSW, see people coming in the door — you are the front line, as you say — I have two questions. The first is: would you say you see a lot, especially single employables, cycling all the time back through income assistance, employment, EI?

J. Bray: When somebody, especially a single employable who may have had quite an extensive action plan — but the push is always first employment and then education and some of those others things — finds that job at Subway or at Chevron, all the services stop, and so does their action plan. Do you see where there might be a benefit in having people, who would operate as almost post-benefits workers, continue to work with that client who's actually left income assistance to ensure that they continue on with that action plan — that they're accessing services, night school, apprenticeship programs and those other types of things — to try and break that cycle? Do you think there's a benefit possibly for the ministry to look at positions that focus on that?

S. McDowall: I do. I worked in Ontario for a number of years, and I was a personnel officer there. I was in charge of the youth employment program and had about a $3 million annual budget. We followed up. If an employee was having a problem with one of these young people, they weren't able to fire them. They had to speak to us. We would go in and counsel and do everything we possibly could to keep them on the job. A lot of it was just helping them get up in the mornings to get to work. Certainly, the companies were not able to take our money, hire these people and do whatever they wanted. They had to create good job experiences with learning components in them, and they couldn't terminate them unless they went through us. I do think that the government needs more control over these jobs that they are funding in the business community.

B. Lekstrom (Chair): Stephanie, thank you. Just a couple of points. You started off on your first page when you stated you laughed because you weren't sure our government or this committee was out to listen. I can assure you that this isn't just a PR exercise. I can tell you, speaking on behalf of the colleagues that sit on this committee, that I believe everybody is taking their responsibility very seriously. That's why we're here. I want to make sure, if that's of any comfort to you. The other one you touched on was that you'd asked the question on page 3 on the commitment to maintain funding for health care. Actually, there's already been a $200 million increase in funding health care that we have put in. Health care is a demand-driven issue, and it is a challenge trying to bring some balance to that, but I thank you for your presentation today.

Our next presenter this morning is with the British Columbia Chamber of Commerce.

D. Annis: Good morning. My name is Dave Annis, and I chair the economic policy committee of the British Columbia Chamber of Commerce. With me today is Andrew Wynn-Williams. He's the director of the policy and communications for the chamber. To put into perspective the chamber's background and membership, we represent approximately 26,000 businesses — most of which are small to mid-sized — and approximately 120 local chambers throughout British Columbia. Our key mandate as an organization is to advocate a policy framework that promotes a healthy and vibrant economy for all British Columbians where we can grow and

prosper. Consequently, we are very pleased to have the opportunity to make this submission to you today.

We will begin with a discussion of the economic and fiscal situation facing British Columbia. We'll then talk about some of our policy recommendations surrounding fiscal issues. We will close with a quick discussion of economic impetus and overall plan for recovery.

The magnitude of the fiscal challenge facing government cannot be underestimated. The report from the fiscal review panel, with which I am sure you are familiar, made clear that in order for this government to meet debt targets, it must find several billion dollars in savings by February 2004. The enormity of this task is heightened by the economic situation.

To understand the recommendations of the B.C. Chamber of Commerce and how to address these issues, we've been instructed to examine how British Columbia ended up in this situation. Throughout the 1990s the province faced a severe economic decline, particularly in comparison to our neighbours. For example, total GDP grew at only 5.7 percent from 1992 to 2000. This is a very poor rate when compared to Alberta, which had 27.4 percent, Ontario 24.2 percent and Canada, as a whole, 21.8 percent over the same period of time. Other indicators throughout B.C.'s economy demonstrate some of the challenges. For example, real personal disposable income per capita dropped from $17,497 per annum in 1992 to $17,223 in the year 2000. The growth in corporate profits was only two-thirds of that of Ontario and Alberta, and this has reflected a much lower growth in corporate income tax revenues in spite of the higher tax rate in British Columbia.

The B.C. Chamber of Commerce has made a number of presentations in the past indicating that these economic problems were largely attributable to government policy. In particular, the chamber expressed concerns about high taxes, overspending by government, excessive regulation, unbalanced labour laws and other government activities that were unfriendly to business. It is clear from the economic record of the past ten years that British Columbia's policy on high taxes and high expenditures has been unsuccessful as a means of generating any economic success. It is definitely a time for a change in policy.

In the year 2000 our economy showed signs of recovery, growing at a rate of 3.4 percent. This carried on into 2001 as various indicators were favourable. Exports increased in value; housing starts and building permits were up, as were retail sales. Most importantly, disposable incomes were growing, primarily due to tax cuts.

Unfortunately, three key external factors are impacting on this economic growth. The first was the collapse of the high-tech stock market. This affected British Columbia in two ways. It had a negative impact on our own high-tech industry, but more importantly, it drove the United States close to a recession by severely limiting the amount of British Columbia's goods and services that can be sold in this most important market.

The second is the dispute over softwood lumber. The 19.3 percent duty imposed by the United States Department of Commerce represents a severe blow to British Columbia's economy, which remains heavily reliant on the forest industry. This has caused particular challenges in rural areas that are even more dependent upon forestry.

The most recent blow is the economic downturn caused by the tragic events of September 11. This will undoubtedly delay any recovery of the U.S. economy — again, limiting B.C.'s access to this most important market. This also had a severe impact on B.C.'s tourism industry as people are uncomfortable travelling. Finally, the potential for strict, new laws at border crossings and the resulting slowdown could act as a severe impediment to the conduct of business with the United States. The overall impact is that British Columbia's economic growth is likely to be much lower than projected in the year 2001. It appears that we have traded a made-in-B.C. economic crisis for one that is driven by external factors.

There is, however, some reason for optimism. The impact of the September 11 crisis is likely to be short-term. There is a great deal of cash in the markets, and interest rates are low. The tax relief both in B.C. and in Canada and indeed in the United States is likely to assist economic recovery. When the economies of North America finally begin to recover, that recovery is likely to be quite abrupt. The jurisdiction best placed to attract the investment dollars that will be in the market due to low interest rates is likely to benefit hugely.

At its annual general meeting last May the members of the British Columbia Chamber of Commerce passed a number of policy resolutions that directly impact on the mandate of this committee. The bottom line on all of these recommendations is competitiveness. We want B.C. to be that jurisdiction in which investors are most comfortable placing their money. Our recommendations touch on issues of tax reduction, spending cuts, balancing the budget and accountability. We will highlight some of these recommendations now, but the full text of the chamber's policy on these issues is attached as an appendix to the presentation.

We would like to begin our presentation of policy recommendations by complimenting the government on its initiative to reduce both personal and corporate income taxes. The speed with which government moved on this issue was as astonishing as it was commendable. Areas where the B.C. Chamber of Commerce made recommendations included the reduction of personal income tax and of corporate income tax, the elimination of the social services tax on machinery and equipment, the elimination of the corporate capital tax and changes to the luxury tax on automobiles. As you may note, many of these have already been addressed. We hope that government will take further steps as finances permit.

We would like to see the government take further measures on the sales tax on machinery and equipment and to extend its measures on the corporate capital tax to financial institutions. We understand, however, that with the large revenue measures taken so far this year and the current state of both the economy and the

government's fiscal imbalance, it would not be prudent to take these measures immediately.

It is clear that the primary driver of the government's budget difficulties as outlined in the Report of the British Columbia Fiscal Review Panel: British Columbia Fiscal Forecast and Issues 2001-02 to 2003-04 was the increase in government expenditures. During fiscal 1990-91 and 2000-01 government expenditures rose 61 percent from $15 billion to $24.3 billion. Between 1996-97 and 2000-01 government expenditures increased by 18.7 percent, or $3.8 billion, compared to a population increase of only 3.9 percent.

While the tax cuts highlighted above are welcome, they cannot be totally justified unless the government greatly reduces its expenditures. The Business Summit estimated that government could safely reduce total expenditures by 5 percent without causing undue harm to important social services like health and education. The B.C. Chamber of Commerce subscribes to this view. The chamber believes that within a budget of several billion dollars, there are a number of ways to achieve efficiencies. Some examples would be to increase productivity, reduce time paid for time not worked through an employee management system, contract out services and implement partnerships with the private sector, privatize and/or sell public assets and use proceeds to pay down debt, thereby reducing debt-servicing costs.

It is clear to us that government, through its core review process, is addressing all of these issues. We encourage government to continue with this process, and we would be more than happy to contribute or consult with government through its various core reviews.

The B.C. Chamber of Commerce passed recommendations at its AGM that focused on the introduction of balanced-budget legislation and introducing greater fiscal accountability in government. Government has taken these recommendations to heart by passing the Balanced Budget and Ministerial Accountability Act, which targeted 2004-05 as the year for the introduction of a balanced budget.

We would like to reiterate our policy recommendation by urging government to stay the course on this issue in spite of recent events. We, in fact, believe that government should legislate a debt management plan that would lay out the process not only for balancing the budget but for reducing the provincial debt thereafter.

The B.C. Chamber of Commerce has some admittedly strong positions on fiscal issues. Part of its justification for taking these positions is fiscal necessity. The report from the fiscal review panel made that clear. Another key justification, however, is that the chamber believes government can encourage economic growth through other measures and help offset the cuts to revenue and the economic challenges that may arise as a result of reduced expenditures.

One of the key hindrances to business activity in British Columbia has been overregulation by government. Be it the WCB, whose regulations are almost completely incompatible with small business, or the Forest Practices Code, which wound every tree in the province in red tape, or regulations laced throughout government, all have hindered economic growth and job creation.

Consequently, we are encouraged by the mandate of the new red-tape task force. Its mandate seems much more aggressive than previous such committees. We encourage this task force to be both vigorous in its attempt to reduce red tape and vigilant in its duty to prevent needless new regulation. This measure will contribute significantly to increasing competitiveness and encouraging business growth in British Columbia.

The coastal communities of British Columbia are facing some serious challenges. The crisis in the forestry and fishing industries may cause the actual demise of some of these communities. The pending and necessary cuts to government services and entities will generate further challenges.

Fortunately, there are measures that government can take to encourage other kinds of economic growth in these communities. One such avenue is for government to lift the moratoria on fish farming and on oil and gas exploration, which would have an impact on the coast communities. Another measure would be for government to encourage the rebirth of our mining industry by allowing explorationists better access to the land base and security of tenure.

Without delving into the details of these issues, it's clear from a fiscal and economic perspective that taking such measures will be of immense benefit both to local economies and to the provincial government's coffers.

A. Wynn-Williams: Just to close up what Dave has been saying, we believe the government must generate an economic vision for the province. Elements must send a clear message to the business community that their endeavours are welcome in British Columbia. The overriding principle of such a vision is and should be that government must allow investment to flourish and must recognize knowledgable businesses and entrepreneurs as the primary engines of prosperity, job creation, growth and innovation. They must be allowed to decide how and where to invest, what goods and services to produce, which markets to serve and how best to organize their activities to be efficient and profitable.

Government does have a role in this vision. Some provincial government investments provide substantial payback while creating an asset that creates employment, which benefits the economy in general. Such things include highway maintenance, capital spending on transportation infrastructure and an education system that is responsive to the needs of the business community and provides the kind of skilled workers that our province needs in order to grow.

In short, it is government's business to maintain essential public programs and services, to invest in infrastructure and to address legitimate concerns over equity and distribution issues. Government should concentrate on doing these tasks well and cost-effectively and not take on functions that fail to serve the broader public purpose. Government should not be

competing with us. It should allow us to compete with everyone else. Thank you very much.

B. Lekstrom (Chair): Andrew, David, I would like to thank you for your presentation to our committee this morning. I will look to our members of the committee if there are any questions.

R. Sultan: Thank you, gentlemen, for a thoughtful and detailed presentation. I'm particularly intrigued by your notion — a rather obvious one when you point it out, although I hadn't particularly dwelt on it — that with all the liquidity being pumped into the system by the fed and the Bank of Canada at this moment, there is going to be a lot of liquidity sloshing around. And when the turn comes, it will be very abrupt — I think was your phrase.

To position ourselves to take advantage of that, I'm just wondering what the chamber's reaction would be if this government actually accelerated its program of tax cuts.

A. Wynn-Williams: I think we have to balance the need to attract that kind of investment against the needs of government. We mentioned in the presentation that we think the revenue bite that we've taken so far this year is enough for now until we have a better idea of when that economic boom is going to come.

D. Annis: Just to add to that, I think the key message in terms of what we're suggesting is to create a climate that will induce investors to want to come to British Columbia. Tax is but one of the issues. Create that overall climate.

J. Bray: David, maybe you can just clarify. The B.C. Chamber of Commerce represents the chambers of commerce around the province. It's my understanding that the vast majority of your membership, in terms of individual businesses in their individual chambers, is small business entities of 20 employees or less. Is that correct?

J. Bray: So your association is endorsing the plan even though it recognizes that some downsizing in government may have an impact on small business. Your overall membership is still saying: "Stay the course"?

B. Lekstrom (Chair): Are there any further questions from members of the committee? Seeing none, gentlemen, I would like to thank you for taking time to come and present to our committee today. As all the other presenters have been assured, your presentation will be given due consideration in the development of our report, which is due out by November 15.

Our next presenter this morning is with the Insurance Bureau of Canada, Mr. Dennis Prouse. Good morning.

D. Prouse: Good morning. Thanks, members of the committee. I appreciate the opportunity you've given me to be here. It looks like it was a lovely wedding, and I'm sorry I missed it. This is the only place I could catch up with you folks, and I'm appreciative of the opportunity. I'm mindful of the time. I've got a lot of material I want to get through, and I know you've got other people, so I'll get to work right away.

In most years we make a prebudget presentation that covers a wide range of issues. Obviously, there's one issue which is on the minds of most folks these days, and that's the auto insurance issue. That's the one we'll focus our efforts on today. Obviously, we believe pretty passionately that competition and choice work for consumers. We think it holds down prices; we think it creates better customer service. We think it creates a better climate for product innovation, and we think there's fairly clear and compelling evidence, both in auto insurance and in other elements of the economy, that this basic economic truth works. We are obviously perfectly prepared to debate that vigorously, as we have, and we'll do so at any time.

We also think that in applying the basic tests that are outlined in the core review, monopoly public auto insurance fails them and fails them in a pretty spectacular fashion. It doesn't serve a compelling public interest, and we don't think it represents a financially sound or affordable use of public resources within the current fiscal environment, to quote the words of the core review. Therefore, we don't think it's a legitimate or essential role for a public monopoly in delivering automobile insurance that the public policy role can be dealt with through regulatory oversight.

The slides that I have in front of you, though, are focusing pretty tightly on fiscal issues. We thought that was important, given what the mandate of this committee is and given the fact that the budget is looming. What we're talking about is, first, what the real cost of the monopoly has been over the last 25 years; second, what the tax revenue benefits of competition and choice are; and third, what the investment benefits are. I think those are all issues that are fairly relevant to British Columbians.

When we talked about benefits to taxpayers, we talked about realizing value from the corporation, which obviously can be done through any number of means that the government may choose to the best interests of taxpayers; improved ongoing tax revenue; and the improved private sector investment.

On page 3 I had a slide about the disappearing fiscal dividend. The reason for this is that I've obviously been talking to MLAs on a regular basis, and they asked: "What about ICBC's dividend?" Well, we've moved from the 2001 budget in March, which projected a $75 million dividend. It went to $35 million in July and has now gone to a minus $150 million position projected for the end of the year. It's important to note,

as well, that in its existence ICBC has never paid a fiscal dividend to government — not once.

If you compare provincial taxes paid by insurers, obviously premium taxes are paid by both. ICBC has only since 1987, interestingly enough. Corporate income taxes are the key difference. Our members pay corporate income taxes, and ICBC does not. If you flip to page 5, you can see fairly graphically where those differences are.

Our members did have $1.4 billion in premium income in this province last year. Because there's a large number of companies, people don't tend to know our names as well, but I think it is worthwhile remembering that our member companies do sell the home and business insurance on a competitive level to British Columbians in every community in this province. ICBC's size is about $2.4 billion in premiums. That approximately 60-40 split — between auto and then home and business on the other side — is relatively constant in other provinces in terms of the overall size of the businesses. The private optional market was $115 million last year, which amounts to a little under 5 percent of the market. ICBC's share was over 95 percent.

What did that equate to? Our members paid $56.8 million in premium taxes. ICBC contributed $99 million in premium taxes. Last year, in what was a relatively slow year, the members paid $25.8 million in corporate income taxes. ICBC paid zero dollars in corporate income taxes. When you see the final total, even though our relative size is a lot smaller, our member companies paid out $82.6 million in taxes directly to the provincial government, and ICBC's was $99 million.

I think page 6 is relatively interesting as well. We're talking about annual taxes — forgone taxes to government by ICBC. What you'll see in green were premium taxes that were forgone. Obviously, premium taxes weren't paid until 1987. The ones in blue are forgone corporate income taxes. These are corporate income taxes that ICBC would have paid based simply on their fiscal performance of that year.

Now, you go to slide 7, and you'll see what the fiscal performance has been since 1975. The reason why we chose 1975 is that 1974 was a partial year. ICBC didn't actually start selling policies until March 1 of that year. It's important to note that in 1976 there was an injection of $176 million to keep the corporation afloat. That's $500 million in constant dollars. Can we put a dollar figure on the forgone provincial taxes? Yes, we can: $497 million in premium taxes and $233 million in corporate income taxes for a total of $730 million.

When you go to page 9 and toss in the 1976 bailout, you're talking about a figure roughly over $1.2 billion. Can we measure in dollar terms what keeping this policy in place has done for taxpayers? Yes, we can, and there it is.

What are some of the other tax implications of competition and choice? The primary one, the one of most interest, is increased corporate tax revenue from the inclusion of a $2.5 billion industry within the tax base of British Columbia — an industry of which a large portion is not included in the tax base at present — and increased investment, and revenue from that investment, by competitive insurers.

On page 11 there is a slide on open competition and what the net new annual tax impact would be. These numbers, incidentally, stem from a report done by CIBC World Markets on the evaluation study performed in 2000. I know Mr. Sultan has that study, and the Minister of Finance and the chair of ICBC do. If any member of the committee wants that study, I'd be happy to provide it to you. Now, it is roughly the size of the greater Vancouver phone book. I don't think it quite ranks up there with a Tom Clancy novel in terms of gripping reading, but if anybody wants it, we're more than happy to provide it.

What you see in the net new annual tax impact is a large bump in year one. That is largely due to investment. Then there is a little bit of a soft landing thereafter. You have to remember, of course, that these projections are based on economic growth. Obviously, the amount of corporate tax paid is largely hostage to economic conditions.

Investment will be the last thing I'll finish up on. I know members may have a few questions, so I want to roar through this fairly quickly. Investment is one of my favourites to address. The first myth out there is that ICBC is a cash cow for government. I think we've pretty much dealt with that. The second myth out there is that private sector insurers don't invest in British Columbia, that investment flees to far-off places and that only Crown monopolies trap investment. I don't think that's exactly true, and I don't think that passes the reality test.

ICBC's annual report stated in 1999 that their goal is to invest 12.5 percent of the total portfolio in B.C. It's important to know they did not meet that and haven't yet. They're still slightly under 12 percent; the goal is 12.5 percent. They leave you with the impression that it's a lot higher than that, but it is under 12 percent. Our forecast that you'll see on these following pages actually assumes that that target is met.

In 1999 competitive insurers invested $1.15 directly into the British Columbia economy for every dollar of premium earned in the province. ICBC invested ten cents directly into the British Columbia economy for every dollar of premium earned in this province. Is that because our member companies are wonderful philanthropists? No, that's because our members are infinitely better capitalized than ICBC is, and the level of capitalization is important here. ICBC has weak capitalization for a reason. It's a Crown monopoly. They have a monopoly source of revenue. They are backed by taxpayers. Competitive insurers have a larger capital base and therefore a much larger investment base.

In 1999, as a result of that larger investment base, competitive insurers had over $1.7 billion invested directly in the B.C. economy. That's under present conditions; that's the present market share that we have, based simply on home business insurance. Now, if ICBC had met that 12.5 percent, their direct investment would have been $233 million. I should clarify that

when I talk about direct investment, that's investment directly into the economy. In both instances that is excluding investments in what could be best termed as financial instruments — government bonds, GICs and the like.

The last slide outlines the various scenarios that government may or may not consider: the status quo, open competition, an IPO, private divestiture or runoff, or a partial runoff and IPO scenario. What would the investment impact be? Well, CIBC World Markets estimated that the direct investment that would come into British Columbia would be anywhere from $200 million to $550 million over a five-year period. In a province that has had more than its share of difficulties in terms of attracting private sector investment, this would be a relatively attractive proposition.

I leave you with those slides. We are happy to address questions about them here today or in the following days and weeks, but given the fiscal questions in front of government, this is important to consider. What is the tax base? Where can revenue best come from? Again, applying the criteria of core review, does this meet a compelling public interest given the options that are out there and given that this product is delivered competitively in seven out of ten Canadian jurisdictions and in every U.S. jurisdiction — and, in fact, in every other jurisdiction in the western world?

I have managed to wrap that up in a relatively short period of time, Mr. Chairman, and keep the ship running decently on time. I'm happy to address any questions you might have.

B. Lekstrom (Chair): Thank you very much, Dennis. You did wrap that up in a very quick time frame. I do have a couple of speakers. I will begin with Kevin.

K. Krueger: Thank you, Dennis, for the presentation, which, as usual, adds some new and interesting grist to the mill. You know, obviously, that the government was elected with a promise to open automobile insurance to first-dollar competition — basic liability coverage. In the past, on a number of occasions, the industry had indicated they weren't necessarily interested in the basic coverage. I'm long enough in the tooth to remember the pre-ICBC days. I was actually a driver then, and there was a lot of dissatisfaction on the part of the motoring public with the industry pre-ICBC. There was a perception that insurance companies dragged out settlement till the courthouse steps to keep their money in the investment pool as long as possible. There was an outcry about poor customer service and so on.

You mentioned the catastrophic losses incurred by ICBC under the Dave Barrett administration, and there's no question about that. I, for one, thought that Bill Bennett would swing back to private automobile insurance immediately and was surprised when he didn't. I know that the Socreds certainly evaluated whether or not they should do that, but ICBC survived. I think it's because of its economy of scale and because of its performance, frankly.

We've made this commitment that we will allow first-dollar competition, and there are difficulties in implementing that, which will be overcome. My first question is: will private insurers meet certain tests in engaging in full competition? Will they pay pro rata for the number of policies they sell; their share of section 19, uninsured motorist claims; section 23, unidentified motorist claims; part 7, no-fault benefits; loss prevention initiatives? Will they take their share of novice young drivers in a kind of round-robin rotation without discrimination on the basis of age, gender and marital status? Will they commit to performance standards with regard to promptness of payment to claimants, including third parties? Of course, when you have the $200,000 liability coverage, you're dealing with claimants that never paid you a premium. There is that temptation to keep the money in the investment pool to the last minute. Will they not hold out on claims payments to the courthouse steps?

D. Prouse: I guess I would ask you and any other member of the committee, rather than to take the word of a solo lobbyist standing in front of you, to have a look at what the performance standards have been in other provinces: namely, Alberta and Ontario. You should examine that fairly closely, because I think the members have met the kind of standards that you talk about in fairly strong fashion.

Just to give you an example, they run polls. In fact, Polara does polling for customer satisfaction on behalf of FSCO, which is the Financial Services Commission of Ontario. This is all part of an agreement the industry has with the government of Ontario. Well, they had 62 percent of Ontario claimants saying they were very satisfied with their claims service. When the same question was asked in British Columbia, only 44 percent gave the same reply. Customer satisfaction rates all across the country are exceptionally strong in private sector jurisdictions. I think that would indicate that payments are doing well.

Private companies aren't very motivated to drag things out to the courthouse steps, necessarily, because one of the more expensive elements of the business is administrative costs in dragging out claims. One of the big motivators for the companies, frankly, is in cleaning this up as quickly as possible, because experience dictates that the longer a claim file stays open, the more expensive it gets to settle. I think that motivation is there.

When you talk about the basic product, the basic product in every province, no matter what the system, is dictated by government. Government determines what the minimum standards are. That is different in Ontario than it is in Alberta than it is in British Columbia. Our quarrel is not with the product that currently exists in British Columbia. Our quarrel is in the monopoly and in the fact that we're unable to sell it. The government determines what the product is.

Just to get to one final element, that being what is known as the Facility Association in other provinces, dealing with drivers who are unable to get insurance in

the marketplace. A facility association exists. It exists in Alberta. It exists in Ontario, shared by the members. But in Ontario these days, they're kind of the Maytag repairman. Less than 1 percent of Ontario drivers are in facility right now; 99 percent are able to buy insurance in the standard marketplace. That's all due to strong capitalization. We will set up facility here. We will work with government to set that up, but competitive marketplaces are minimizing the need for that in other places.

K. Krueger: I think the concern people have is that people don't find themselves falling into the facility association category just because they're not 25 years old or they're just learning to drive. Since you've said that your quarrel is with the inability to compete, and we've promised that you'll have the ability to compete, I'd like to see a proposal from industry that clearly sets out what the position will be on those questions that I just asked. I trust it'll be that we pay our fair share according to the number of policies we sell.

I was surprised to see on your page 5 that after all these years of wide-open competition — and as you know, it is wide open, except for the basic $200,000 liability coverage, which doesn't tend to be a money maker — that private industry only has 5 percent of the auto insurance market in B.C. I thought it was more than that, because your members have been selling all the other coverages. Why is that?

D. Prouse: We would question how wide-open it is. That is because ICBC controls the basic and controls where it's sold and how it's sold. It controls the network through which it's sold. We also think that frankly, there is profit in the basic. We put in a freedom-of-information request in 1998 asking for a simple breakdown of revenues and expenditures on the basic side versus the optional side. We were denied that. They hid behind section 17 of the act, claiming it was competitive data. We hardly think that was very competitive data. We thought that the taxpayers of British Columbia, given that I'm always told that I own this corporation, would be entitled to that information. Apparently we weren't.

I'd like to see that, because we believe there's fairly strong cross-subsidization between the basic side and the optional side. I note that over the last few years, most of the product innovations and the price cuts have been on the optional side and not the basic side.

B. Lekstrom (Chair): Kevin, if we could, we're going to have to be quick. We were on schedule, but we're quickly falling behind.

B. Lekstrom (Chair): I do have one other question from a member, if yours is brief.

K. Krueger: One quick one, and that's geographic. Do your members presently refrain from selling coverage in any parts of the province?

K. Krueger: You're convinced that's not their intention under full competition either?

D. Prouse: No. Once again, please don't take my word for it. Examine Alberta; examine Ontario. There is strong, vigorous competition in every section of those provinces, including rural areas. In fact, rural drivers do exceptionally well in those jurisdictions. I note that whenever there's a price comparison, those who don't like my side of the argument always compare downtown Toronto to downtown Vancouver. I very rarely see Kamloops-to-Peterborough and Kamloops–to–Red Deer comparisons. I think those would be pretty intriguing.

Our commitment to service in those is very strong. As I say, please don't take my word for it. People ought to examine how that marketplace works in competitive provinces.

B. Lekstrom (Chair): We will go to Barry for one quick question to wrap this up.

B. Penner: Just a comment about your remark about 12 percent of ICBC's total investment portfolios in British Columbia: I was wondering whether that included the interesting investment in the Surrey Place Mall. That wasn't really my question.

My question stems from conversations I've had with people associated with the insurance industry, who tell me they have a concern with liquidity and capitalization post-September 11 and the terrorist attacks in New York City and Washington, D.C. These people tell me that insurance companies may, in fact, not be eager to rush into British Columbia to underwrite more than a billion dollars' worth of policies because of their preoccupation with having to pay out staggering claims in the northeast United States. I'm wondering if you can comment on that.

D. Prouse: I'd be happy to address that. It's a question I've gotten a lot. What is going to stem from September 11 is upward pressure and reinsurance. Insurance companies also buy insurance; this is one of those little-known facts. However, that is not going to have any impact on auto. Companies rarely buy reinsurance on the auto side. If you look at British Columbia, the reinsurance comes on the home and residential side, and that's largely based on earthquake. We already had a fairly tight reinsurance market in British Columbia because of the earthquake risk. That is going to put pressure on it. Is that a crisis? No. Have we had anybody drop out of the B.C. coalition for private auto insurance? No. We don't see September 11 having any impact on auto. Is there going to be some upward pressure on reinsurance rates? Yes. Is that going to put

some upward pressure on home rates? Maybe. On commercial rates? Probably. It doesn't tend to affect the auto side.

Reinsurance, incidentally, has had the effect of spreading the effects of September 11 out internationally so that the initial effect is one that hasn't crippled the company. You'll note that no one's gone bankrupt yet, and no one's said that they can't pay out these claims. Is it painful? Yeah. So was the ice storm. Is it debilitating? No, because the industry is broadly spread, and reinsurance spreads that risk even further. Obviously, it was a tragic event. Does it impact our industry financially? Yes. Is it debilitating, and does it affect this file? No.

B. Lekstrom (Chair): Dennis, I'd like to thank you for coming and giving your presentation to our committee today. I'm certain our questions could go on for a considerable length of time.

D. Prouse: Whenever I do auto insurance on open line, the phone board lights up like a Christmas tree. Everybody's got an opinion pro or con.

B. Peters: My name is Barb Peters. I'm not a very experienced public speaker. However, I built up the courage to come here today to share my feelings and opinions on how the decisions of government could affect me, my family, friends, co-workers and community.

I was born and raised in British Columbia. My belief is that all people need to help each other and especially defend and fight on behalf of the weakest. Fitting in with this belief is my history working in ministries that provide services for the people of the province who are the most needy. I also work as an activist in my union. The reason I do this is to help ensure that all people are treated fairly and with respect and dignity. I believe that as a union, the BCGEU has fought hard to bring up the standard of living of not only the members but all people in our society. The understanding we have is: what we want for ourselves, we want for all people. We stand together for social justice and equity for all. We work together to educate all regarding the diversity of the people and to be tolerant and accepting of differences in cultures and languages used in our province. We also promote support for issues related to environmental concerns and our world.

We have sometimes been portrayed as demanding, greedy and lazy government workers. We are often made to feel that we are insignificant and that our work is not important. What we are is hard-working, dedicated, well-trained workers in a world that has been very demanding with less and less resources to provide much-needed services. We are people of this province trying to make a decent living to support our families.

When I heard on the news that my current government was doing a core review that appears to be focused on major cuts within government, I became quite concerned. Government has a huge responsibility, I agree. Along with that responsibility is acknowledging the concerns of all people in the province. The poor don't have a strong voice. It would also appear that the employees of the government may have a strong voice but may not be listened to. We are people in this province, and we need to be heard. We have ideas for saving taxpayer dollars. After all, it shouldn't be forgotten that we, too, pay our fair share of taxes. We also have ideas on how to streamline, but we are seldom asked; and if asked, we are seldom heard.

We need to have a voice on how our work is done. I encourage government to think more about the future of this province. Currently, there are many government employees who will be eligible to retire in the next seven years. Ministries need to be looking at succession planning. If layoffs were to occur, it would be more difficult to plan on how the work will continue when mass retirements start. The results could be disastrous, to have untrained staff with a lack of experience needed to do the work effectively left to find ways to make government run smoothly.

On a more personal level, I've been a single mom for many years. I raised two daughters, who both live on the mainland. One is married now and has two children. For me to visit my family I need to travel to the mainland regularly. While I have a job, that is possible to do on a monthly basis. If government were to be cut as drastically as is rumoured, I would not be visiting my family, as I would not be able to afford the cost of the ferry travel. I would not be able to keep my vehicle either. My home would need to go on the market, as I have a mortgage that would not be feasible to keep paying. If I were to lose my job, it is unlikely that I would find other work. There are not many jobs around these days, and it sounds like there will be severe competition for the ones that are around.

People in B.C. and around the country are being encouraged to travel to show support for the travel industry after the September 11 disaster. I did have a vacation planned for December, and I was willing to travel by air, but with the threat of job cuts my vacation pals and I have cancelled our vacation plans and will be staying home. Right now, with the rumours, I have stopped spending money on anything except groceries. I drive as minimally as possible. Who can afford to pay gas and vehicle upkeep if jobs are threatened? I'm not spending money on clothes or things for my house. I was looking at a new car, but that's off the books at this point. I even gave up my membership at the gym and cancelled my cable Internet.

Businesses in my community are being affected. There are approximately 1,000 government workers in Nanaimo, and of many I know, spending money has been drastically curtailed. People are afraid and preparing for the worst. The residual effect is that business

will not be making the profit they had hoped for in promises made during the provincial election regarding economic growth in British Columbia.

How can there be economic growth when every day we hear of more and more cuts? It is irresponsible and ruthless to be making assertions that don't appear to have a lot of substantive or factual information to support them. The results of making these assertions that have been in the media lately may well involve the injustices to thousands of B.C. citizens, including businesses, workers and of course the many people who are helped with the services that government workers provide.

I have grave concerns regarding the way health care is provided within the regional health boards. I feel that the cost of health care went up with the advent of the boards, and the service went down. My understanding is that the regional boards had autonomy to manage their regions whichever way they saw fit — at high costs sometimes. When government ministries have control over providing services, they have a structured layer of staff that includes ministers and a deputy minister or two and upper middle management for each region.

When the regional boards came in, they developed their own version of structure that put in many more layers of management. The cost is enormous, and the services to the people are reduced, as the budgets do not stretch far enough to cover it all. If the intent is to have more regional or community boards to deliver services that are currently done within direct government service, I fear that the cost would increase, not decrease, as shown in health. Yes, the cost would come from different budgets, but is it really cost-effective to have the added bureaucracy? I say no. I say that the cost to the human element is the one that has to be foremost in the minds of the government.

Privatizing or contracting out our work is a mistake, I feel. I am a government employee and have always been proud to be so. Which political party was in government wasn't the issue for me, but what was important was that we were providing good services to the people of this province. I urge you to consider each and every option before taking such drastic cuts in public service. Government needs to create an atmosphere where hope can exist and support the people, not devastate them. I thank you for giving me this opportunity to speak.

T. Bhullar (Deputy Chair): Thank you, Barb. I believe there are some questions from the committee members.

J. MacPhail: Thank you, Ms. Peters. How long have you been a public employee?

J. MacPhail: When you describe the circumstances that you've imposed upon yourself in terms of spending and saving, are they self-imposed, or has your worksite been targeted? Do you know, through the core services review, the future of your work?

B. Peters: I've heard about several different ministries, but there's nothing out on my ministry yet that I've been able to ascertain. But there is the fear that it is going to happen, and we hear in the media quite regularly about the 20, 35 and 50 percent cuts. So just about everybody I know…. And being a union activist, I know many, many government workers. They've all said: "We're not spending money now. We're really frightened."

We feel that our government, as the employer, needs to acknowledge that we do a lot of work, and maybe they need to let the public know that. I've listened to Voice of B.C., for instance, and the public phones in there, and they attack public service and say that yes, they should be cut. When I hear some of the things they say, I realize that they don't even know what we do. We don't make enormously high wages. We do have good benefits, but we don't have a lot of support within our jobs to do our jobs correctly. We don't have people asking us: "What can we do to save money and streamline things?" We need to have that input out on the line. I know several years ago these were tried in different governments, but there's still a lot of work to be done. We do have ideas.

J. MacPhail: Just one final question. In terms of the uncertainty, have you asked for and been denied reassurance, or is it just that there's not an opportunity to get reassurance about your future?

B. Peters: We've asked for it, and within our region the regional management team has not been able to assure us of anything because they don't know yet.

T. Bhullar (Deputy Chair): Seeing no further questions, Barb, I wish to thank you on behalf of the committee for making your presentation.

J. Waite: I, too, am not comfortable with public speaking. I'm going to read my notes so I don't go off on some tangent and waste too much of my time.

J. Waite: Members of the committee, members of the audience, fellow presenters, I'm presenting today both as a lifetime B.C. resident and taxpayer and as a government employee who has worked within five different ministries. Thank you for allowing me this opportunity.

A brief overview of my concerns. I'm worried that government is moving too fast to make the proposed changes and cuts, without time to really learn how government works — which services are vital and which may be superfluous. The size of the cuts being proposed, both in services and personnel, are too drastic as well as too quick. I'm worried about cuts to

welfare, Pharmacare, regulatory and safety services and the established infrastructure. I'm worried about NAFTA and making any changes permanent, even if the change turns out to be detrimental to our province and economy.

I'd like to look at resource communities. I'm a longtime resident of Port Alberni, and I've seen the devastation to my town from layoffs in logging divisions and mills, including both downsizing before the present tariffs and the increasingly frequent shutdowns lately due to NAFTA and trade problems with the U.S. In the past our economy also depended upon the fishing industry and the sport fishing industry, and both of those are almost nonexistent now with Barkley Sound closed to fishing for the past several years. We've gone from the community with the highest per-capita income in Canada to a town with lumber workers laid off every few weeks, many businesses that have gone bankrupt, many people having to move to employment but unable to sell or even rent their homes since there've been approximately 700 houses unable to be sold for the past two years. At the same time property values are falling far below purchase prices, and property taxes are rising.

One of the only secure sources of income in town that has been supporting our economy the past few years is government income. This holds true for the many resource industry towns in B.C., not just Port Alberni. If the government follows through with the massive layoffs they're suggesting, what will happen to all the resource towns? Will they all become like Ocean Falls and Tumbler Ridge? Removing this number of secure jobs from the economy can in no way stimulate the economy. Also, in Port Alberni we've heard that if the proposed aluminum smelter comes, there will be eight spinoff jobs for each smelter job. Given that government doesn't require as many supporting industries, we still purchase supplies, furniture and janitorial services, and rent convention and meeting rooms. The workers spend most, if not all, of their earnings in their hometown. A conservative estimate might be three spinoff jobs for each government job lost. If the government lays off 35 percent of government workers, this would total approximately 19,950 jobs provincewide out of approximately 57,000 BCGEU members. This includes community health and community social service workers but doesn't include Crown corporations. Spinoff jobs could total 59,000 lost jobs or a possible 79,000 people not spending money in B.C. I don't see how that can improve the economy.

Another concern of mine is Pharmacare. The government proposing massive cuts to the Pharmacare program is one of many steps being taken that will eventually undermine our health care system — something I remember another government promising would never happen, despite our fears that free trade might bring this about. Pharmacare has proven to be an effective and less expensive program in B.C. than in other provinces and takes a huge burden off the shoulders and pocketbooks of the poor, the elderly, those sick with chronic illnesses — the most vulnerable members of society.

The U.S. medical system can bankrupt working-class people when they get ill and wipe out their life savings. Canadians have always prided themselves on having a country that cared about its citizens and provided social and health services for the vulnerable. Nowadays the middle class are feeling very vulnerable. We're barely able to keep our heads above water financially with high taxes, increasing fees for everything and the prospect of losing what little we have worked so hard for.

I'd like to suggest that government keep the taxes and repeal the tax cuts, stop undermining our health, social and environmental protection services. I know I didn't see any increase worth having on my cheque, but I understand it was quite different for the rich. I've heard that for every dollar the poor and middle class saved, the rich saved $18. The top 8 percent of our society and big corporations will benefit from the tax cuts. The rest of us will see almost nothing but increased fees at every turn and fewer services.

Please don't cut Pharmacare. It delivers an essential service and keeps drug and medical costs down. The cost of overall health care is kept in check by increasing reliance on drugs and outpatient care as opposed to inpatient care. Traditionally in Canada pharmaceutical companies have charged less for drugs due to government-imposed pricing and will certainly raise prices to individual consumers. It follows that many more people will have to seek hospital treatment if they can't afford the drugs that will keep them at home.

I'd also like to touch on NAFTA. As a B.C. resident and taxpayer, I'm concerned about the government's statements that they plan to privatize whatever possible. I don't want B.C.'s assets to be sold. The richest countries and provinces in the world are financially sound due to government-controlled assets and resources such as oil, gold, diamonds, forests, energy, etc. It's essential to taxpayers that government continue controlling these resources and not allow rich individuals or multinational corporations to gain control of them.

Similarly, social services and health care are there for the protection of citizens, not for companies or individuals to get rich off. The thought of privatizing either child protection or welfare services is horrendous to me. The major rationale of private corporations is profit, and the only way to make profits in these service areas is to cut services or to offer inferior services with undertrained personnel. We cannot allow this to happen.

I wonder how many B.C. residents know that under NAFTA, once a government-controlled service or industry is privatized, it cannot be reclaimed. If the government rushes into these decisions and the results are disastrous, we cannot rectify the situation. For starters, I would say no to privatization of social services, forestry, health or B.C. Hydro.

Now I'd like to make a few comments as a government employee. I've worked for the Ministries of Social Services, Labour, Education, Advanced Education and Human Resources. I've seen how hard-working the employees are at the point where the actual work of government is done: the delivery of services. This could be anything from authorizing payments and benefits, testing safety, investigating fraud, protecting the environment, guarding prisoners, aiding in a variety of ways. These people are essential. They are government to most citizens.

However, I've also seen the proliferation of management positions and notice that the further up the management ladder people move, the less actual work they seem to do while at the same time making considerably more money. I'm not suggesting there's no need for management. Obviously, someone has to be writing policy and determining what the programs and services of government are and how to administer the budget. But there are many layers of management between the actual service delivery and the policy-makers, many of which serve only to underutilize the skills of the professionals working for government. I suggest that if the government wants to cut positions, this is a place to start looking.

I'm also very concerned about some of the changes to the welfare system this administration has been suggesting. As I've already described, many if not most of the small towns in B.C. are resource industry towns. There are few jobs and many workers recently laid off with a better attachment to the workforce than welfare recipients. If the government puts a time limit on welfare and punishes people that don't get a job within a couple of years by cutting off their benefits, they are giving these people little choice but to commit criminal acts to feed themselves and their families.

I've read in various publications that it costs $60,000 a year to keep a person in jail. I know it only costs $6,000 to keep a single employable person on welfare. I don't see where there's any saving there. Also, if we're replacing laid-off welfare workers with law enforcement and corrections workers, I don't see where there's going to be any saving there.

I've already mentioned my concerns about contracting out and the horror of allowing corporations or individuals to profit from delivering social services. I won't elaborate, except to say that this is one industry that must stay within government. Our national sense of identity depends upon government taking care of the vulnerable members of its society.

To summarize, I'd like to say to Gordon Campbell and the current B.C. government: please go very slowly. Learn how government works, what services are essential to maintain within government, and don't rush into any changes. They may be permanent, and they may do significant additional damage to our economy and to our province. We hope to discover, after this round of public input, that our concerns as citizens and taxpayers are valued and acted upon, as opposed to the possibility that government have already made up their minds and are just going through the motions.

Please remember that your position as government is to represent the citizens that make up this province. We hope that you will listen to us not only for our own sake but for our children, our grandchildren and our beautiful province. Thank you.

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

R. Sultan: Thank you for your presentation. I'm particularly intrigued by your comment about the layering of management, a phenomenon that I've observed in large business organizations. It's rampant; it's like crabgrass. It's almost impossible to stamp out. It's mentioned all the time.

Have you noticed any increase in layering over the last few years in the many departments that I gather you've had experience in? Is this a phenomenon that's grown, in your experience?

J. Waite: It has been, and it's also very difficult to comment on as a public servant. I have asked the Clerk of Committees if there was a way in which government workers could submit suggestions and comments anonymously, because it's very threatening to somebody who works for this management to make suggestions that might not be approved of by management. Nothing was sent back to me about a way that somebody could submit a written submission. I thought people could even prove that they were government workers by printing off the home page of the intranet — or something on computer that only government workers can access. They could make some very valid comments about ways to save money and increase effectiveness without threatening their own positions and livelihood. So that's one suggestion I've made.

R. Sultan: The dedication, sincerity and obvious hard work of the front-line workers who have appeared before us — and quite a few have — are so evident. Recognizing that we do have to make cutbacks, it's distressing to think that perhaps you'd be on the front lines in more ways than one, whereas some layers that perhaps aren't as necessary as your function is might escape.

I believe the waste-buster website, if I'm not mistaken, is one way of anonymously presenting suggestions.

J. MacPhail: What's the status of the aluminum smelter proposal? I haven't heard anything.

J. Waite: The last time that the committee that is working on it gave us any feedback, it was looking positive. But just a couple of days ago city council refused to pass the bylaw that would allow B.C. Hydro to put in that generating station. The comment that B.C. Hydro was making was that possibly that would have axed our ability to bring the aluminum smelter into town. We've very worried that those two projects might have been tied together, and we're hoping that they weren't. It's not that Port Alberni is against having a generating station; they just didn't want it in that location. B.C. Hydro was insisting that it had to be there or nowhere. We would like to see more industry come to town; it's just very sensitive as to the placement of that industry.

T. Bhullar (Deputy Chair): Thank you very much, Janis, for letting us know that it's not totally anonymous. I was under the same misperception as Mr. Sultan. That might be something that'll have to be corrected.

J. Waite: I have heard quite a few government workers say that they would like to make submissions, but of course they're afraid to do so.

B. Lekstrom (Chair): Janis, just in closing, I would like to thank you for your presentation. Regarding the ability to put an anonymous presentation forward, I would like to work with government to make sure that the people who do put these presentations forward don't have to fear for their jobs, because it is the front-line workers that we can learn a great deal from. We'll work towards that on your behalf and on behalf of all the workers.

Just prior to going to our next presentation this morning, you may see members of the committee coming and going from time to time for a few moments. We do try and accommodate as many presenters as we can. With that structure, the time frames for lunch and dinner are scheduled into the meeting times, so on occasion you will see a couple of members of the committee leave for moments in order to get some lunch into their system. Following this meeting, we take off for Port McNeill immediately. Just for your information, it isn't that people are being rude or anything; it's a necessity to accommodate these hearings.

We will now move on to our next presenter, who is with the B.C. Federation of Fly Fishers, Mr. Ian Beveridge.

I. Beveridge: Thank you, Mr. Chairman and the committee. I'm the past president of this federation. I'm also currently chair of the fisheries issues and government relations committee. We are constantly in touch with government on one thing or another. We do appreciate this opportunity, but we also must express our disappointment that the opportunities for direct input to the ministries through the core review process have been so severely restricted. We cannot, in our instance, get copies of presentations that have gone forward so far. They're not given to us.

The BCFFF has prepared a formal position paper, which I believe you now have, and we will be distributing it to the pertinent ministries, the ministers' staffs, recreational and environmental interest organizations and the news media. Rather than simply reading the brief into the minutes today, we wish to make absolutely certain that we leave your committee with three salient messages, all of which I'm certain are of vital concern to a much larger constituency than our own federation. Namely, they will be of interest to all environmentally conscious outdoor recreationists as well as the vast majority of the residents of this great province.

The first point is that history will not look kindly on any government that steps backwards in time by relaxing environmental regulations to the detriment of the health and well-being of all living things, including our own species: mankind. The second point is that there is a direct connection between the health of British Columbians and the protection of water quality, which is often assessed by examining the condition of the fish populations in our rivers, lakes and wetlands. Third, it would be entirely unacceptable to reduce the provincial recreational fisheries management program below its current funding level, which is only $10.7 million annually — firstly, because this expenditure is already far below what is required to maintain its essential services and, secondly, because this rather paltry expenditure, which is almost entirely recouped from freshwater angling licence sales revenues, generates many times that sum in direct revenues to the province.

In addition to that, there is the incalculable benefit to the environment that flows from the programs of B.C. fisheries. Further cuts to this department would only exacerbate the problems created by the previous government's actions and create further economic and environmental havoc. While I doubt that there are any anglers who participate in their sport to generate revenues for the government coffers, in recognition of the fact that reviving the economy is necessarily the provincial government's priority at this time, the balance of my time here this morning will be directed at highlighting the economic benefits derived from recreational fishing.

An analysis by the Ministry of Water, Land and Air Protection completed last year has demonstrated that direct return to government from freshwater angling licence fees alone virtually offsets the ministry's entire annual fisheries program costs, which total only $10.7 million. Incidentally, revenues to government from freshwater angling licence sales have increased from $5 million to $10 million over the last ten years, and undoubtedly they are going to increase further in the near future.

A provincial study carried out in 1999 indicated that business revenues of about $660 million were generated by recreational resident and non-resident anglers and related sport-fishing activity. Of this economic benefit, $324 million came from freshwater angling, which falls entirely within the jurisdiction of the province.

The sport-fishing sector employs 6,400 people in B.C., with fully half of these again attributable to the freshwater angling activity. Recent studies indicate that those businesses most dependent on sales to anglers include charters and guides, fishing resorts, lodges, marinas and gear retailers, which we have all around the province, all of which contribute significantly to local economies.

Our federation is just one of many which have in the past provided significant numbers of volunteers and accumulated untold hours of labour towards restoration of fish stocks, rivers and wetland habitat to mitigate damage which for the most part was caused by industrial activity under lax government supervision. It is a fact that volunteer labour and generously donated time have greatly multiplied the impact of the few government dollars made available to these essential works. The more important fact is that it costs hundreds, if not thousands, of times as much to correct the ravages caused by industry than to preserve the habitat in the first instance.

Anglers support and promote stewardship of these vital resources. Angling is itself a family-friendly activity with significant social value to a substantial percentage of British Columbians. There are 600,000 of us who annually buy fishing licences. We are a major component of the population.

If you refer to appendix 1 in our brief, you will find that in 1985 in British Columbia direct revenue to government attributable to recreational fisheries included $36.21 million to the province and another $46.74 million to the feds. That's direct revenue. The unavoidable conclusion from all of these studies is that the provincial government generates very substantial direct revenue from recreational fisheries even before corporate and employee income taxes and the benefits from related economic activity are taken into consideration.

Surely the $0.7 million expended annually by the province on fisheries programs — that is, $10.7 million total cost less the $10 million recovered from licence fees — is a remarkably inexpensive and productive investment in the economy of the province, particularly when consideration is given to the invaluable environmental benefits which flow from their fisheries programs.

Over 50 percent of the province's freshwater sport fishing and related economic activity is dependent on 1,100 lakes that are annually stocked with 11 million fish from the province's five hatcheries. A new program already garnering international recognition as well as local respect for its innovations and results is the steelhead recovery program. As its title indicates, it is aimed at restoring B.C.'s decimated runs of steelhead, the most highly regarded of all the sporting fish in this part of the world. Steelhead in particular attract substantial international tourism business to B.C., as well as draw many lower mainland anglers and their dollars to the interior of the province.

Any further cuts to the regional fisheries office budgets will eliminate the little remaining ability of front-line biologists, technicians and contractors to perform even the most basic tasks essential to the maintenance of B.C.'s fishery. We would also remind the government of its fiduciary responsibilities with respect to the environment and to its new-era promises in that connection.

In closing, I would again like to express on behalf of the BCFFF our thanks for this opportunity to express our opinions and concerns and to confirm that we stand ready to offer our assistance to the pertinent ministries with respect to prioritization of the fisheries programs, including discussions with respect to means for increasing revenues and even privatization of some of the programs. But that, of course, is a last resort.

B. Lekstrom (Chair): Ian, I would like to thank you for presenting to our committee today. I will now look to members of the committee if there are any questions surrounding your presentation.

R. Sultan: You implied that some of these cutbacks and changes might cause irreversible damage. Is that generally the case? Not that I would ever advocate anything like that, but should it occur, I understand these fish populations can, in many cases, be quite resilient.

I. Beveridge: What they are replaced with out of hatcheries don't have the same genetic biodiversity. They're not tailored specifically to the stream or lake from which they came originally. That is a substantial concern. Also, of course, B.C. Fisheries are responsible for the enforcement of fishing regulations. Without these fishing regulations, without that enforcement, many more stocks would be lost.

L. Mayencourt: I notice that you've got other interested organizations, like the B.C. Wildlife Federation and others. We basically collect $10 million; we spend $10.7 million. So we're really only spending $700,000 net on this. Do these organizations contribute to Fisheries Renewal programs as well?

I. Beveridge: Absolutely. They all do. I'm personally a member of the Wildlife Federation. They have extensive activities in habitat and fish regeneration projects. The Steelhead Society probably doesn't need to be mentioned, but that's their major activity. Trout Unlimited is the same. I'm also a member of the Sport Fishing Advisory Board at four different levels in that organization, advising the DFO on these things. The

Sport Fishing Institute, which some would consider to be the industrial section of our sector, is involved in activities of the same kind. We all do. Currently, I'm working with all of these organizations trying to pull them together for a specific brief on this topic.

L. Mayencourt: Could I ask another? Aside from the considerable amount of volunteer time that's put in, is there any way you could estimate for us how much these groups have put towards fisheries in, say, the last year or the last five years so that we could see how much…? I mean, that's a contribution that should be noted when we look at….

I. Beveridge: We have tried to quantify this on a number of occasions with the help of the ministries responsible — for instance, in the old days MELP and B.C. Fisheries and so on. We've never really been able to get to that number. We just know that, in fact, there are many times the number of people involved in these activities than there are in government staff activities. It therefore is a very significant contribution.

R. Sultan: Perhaps I can have one more. I understand that at least part of the stress on these fish populations appears to be due to climate change. I don't know if you subscribe to that, but if there is something going on there beyond just habitat destruction and what we're causing locally, is there much we can do about it, in your opinion?

I. Beveridge: I could probably spend an hour on that question, which you certainly don't have. Climate change has certainly impacted the salmon stocks. It has not, to any degree, impacted the other freshwater lake stocks. Acid rain has, in some instances. There has been a very substantial drop, which is now fortunately turning around, in the percentage of fish which return from the oceans. I'll take a local river, the big Qualicum. They used to get back 15 percent of the fish that went out as smolts as adult fish. In recent years it's been 1.5 percent. It's like one-tenth of it. That, again, is rebuilding in a number of our rivers, but certainly there is that as a factor. It is probably the main factor, along with commercial overfishing, which may have caused the reduction in salmon stocks.

B. Lekstrom (Chair): Ian, again I would like to thank you for your presentation to our committee today. We will move on to our next presenter. Again, 15 minutes is not a great amount of time to put forward a presentation, but thank you.

K. Campbell: Hi. My name is Kathy Campbell. Thank you for affording me the opportunity to speak today. I'm a single one-wage earner working in government for the Ministry of Children and Family Development. I'm an admin worker — some would say the backbone of any office. Right now when I think of a backbone, I think of a salmon, and by God, the timing is right. I feel like a spawning salmon fighting for survival, taking three steps forward and five steps backwards with all the decisions about my employment and the economy of this province coming from the 77 elected seats that surround those decisions.

I am one of the lowest-paid workers in government. We in admin services are the front-line workers that meet and greet the public as soon as they walk through the doors. We are the workers that can and do get subjected to the public's frustration and anger if they are not getting what they want or need, regardless of who is responsible or what we believe. I shudder to think of what will happen in the coming months. Could that be why the employer has recently given us violence training?

Article 25(1) of the International Declaration of Human Rights sets out the obligation of a government towards its citizens. Everyone has the right to food, clothing, housing, medical care and necessary social services and the right to security in the event of unemployment or other lack of livelihood. It doesn't say this is a privilege. It says that basic sustenance is an entitlement. May I remind this government that Canada's signature is on that charter.

The citizens of this province deserve good service, and the workers that deliver those services have the right to work in a safe environment. My fear is that when the axes start to fall in this province and the programs we deliver are cut by 20, 35 or 50 percent, our workers are going to be subjected to more verbal and physical abuse aimed at this present government. If citizens lose their basic rights for survival, then we will experience an increase in public frustration, quite possibly with an increase in sick leave for workers that can no longer take the verbal or physical abuse hurled at them on a daily basis.

When the parents of a newly diagnosed severely handicapped child are told that they will not receive support from this government to support them in taking a much-needed break or to receive a much-needed service so they can continue to look after their child in their own home as opposed to the child coming into care — whereby the costs can get exorbitant — who is going to be the messenger? I personally don't want to be looking down the barrel of a shotgun, which has happened and can happen again in any of our offices. The fines our ministries will receive from WCB — if we have a WCB — and the payouts to the families of workers involved should death occur can be astronomical.

In Ontario, as you know, cuts have happened. At present workers at the Children's Aid Society are overloaded, like our workers here in B.C. and like in the Gove report of this province. There has been a recent new assessment system implemented, which has created mountains of paperwork that forces workers to spend 70 percent of their time in front of the computer doing mostly admin work and leaves only 30 percent of their time to actually address the needs of children at risk.

We in this province do not need yet another inquest into the death of a child. We need a government that is as committed as you were while in opposition to adequately fund child welfare services and enough staff to deliver those services. We in this province do not need the parents of a child in need to berate our workers and threaten violence because we are the messengers.

I believe that if this government offloads the children's ministry or any part of it, it is doing so to protect themselves from the heat when yet another child dies. In looking at what happened on September 11, 2001, in New York, I urge the government to rethink how it thinks it needs to deliver services or how it thinks that cutbacks and layoffs are the answer for fixing the deficit. When that tragedy happened, it was the firefighters, police officers, doctors, nurses, social workers, emergency rescue workers, technicians, office workers, etc., that ran to the rescue. When that tragedy happened, the people in New York didn't look to Bill Gates or to the president of Coca-Cola or to the CEO of GM. They looked for help to their city and the thousands of people it employs, and they got it. This is what we want in beautiful B.C.

We want the people elected to make decisions for the good of all our communities, not for the good of a few. To quote Nelson Mandela, security for a few is insecurity for all. We want to know that everything possible is being done to ensure a well-ordered secure society, and that means upholding our institutions, honouring them and honouring our workers. It doesn't mean chipping away at them or letting them die deaths by a thousand cuts so that those of us who already enjoy a way of life envied by much of the world can acquire even more. If we're prepared to trade our institutions for trinkets, then we won't have any business complaining when there aren't enough people to help in the event of a disaster. God forbid we ever experience anything like New York, but I believe it wouldn't take much for some of those in our province, who have already been marginalized with cuts in the past few years, to completely lose it.

Privatization opens the door to corruption. It opens the door for anyone to have access to confidential information about our clients in this province. What is this government going to tell the judge when the women and families that are in hiding from abusive ex-partners are at risk of being found or have just been found dead because they were found, or the organized criminal that has just been given the address of his most-hated enemy, or the new breed of terrorist that can use any information to create false identification papers? We need to have all our systems intact and not given to the private sector to cut corners for business to make a profit. The potential dangers of privatizing a service that deals with such private and personal files should be stopped, and the general public should be forewarned.

I don't believe this government has informed the general public of the ramifications of their vote. Time will tell. We were lied to when this government said they wouldn't reduce an already lean government or when they said that in order to stimulate the economy, they would cut personal income tax.

Well, panel members, I have to tell you that I was personally incensed when I heard that for every dollar I received, big business got $18. I believe you cannot stimulate the economy that way. The services government provides do cost money, and that means we're going to have to pay. Thank you. I don't care if you ask me any questions.

B. Lekstrom (Chair): Thank you, Kathy. You did a very good job, I think. We've heard a number of presentations from people certainly speaking from the heart, and yours was one of them.

We will move on to our next presenter this afternoon: Glen Sanford with the Home Support Action Group.

G. Sanford: Good afternoon. My name is Glen Sanford, and I'm with the Home Support Action Group. I just want to start by saying that as I drove here, I heard on the news that the Legislature is cleared right now as the result of an anthrax threat sent to the Premier's office. That made me think about all of you and all of the workers in the Legislature building who are sort of on the front line as a result of their decision to take on public life. I just wanted to express the respect that I have for people who do take on a public role and a public life. That goes for you and for the workers who are in that building.

Let me start by explaining a little bit about who the Home Support Action Group is. It's a coalition of individuals and representatives from various organizations that deal with home support workers. Some of you will be familiar with us. We've met with Ida Chong before and with Joy MacPhail. We formed in late 1999 as a result of a growing crisis in the provision of home support in B.C. Most of the members of the Home Support Action Group are people with disabilities who receive home support. The organization is based in Victoria, although it has links to broader organizations across the province. The reason I'm here today is that we were unable to get on the list in Victoria. Most of our members, like I say, have disabilities, and this kind of travel is inconvenient for them. That's why you've got me today. Also, I live up-Island.

I think the main message we want to deliver to you is, obviously, that health care spending is a crucial issue with regard to our budget. We need better, more cost-effective ways of delivering health care in this province. For us, one of the biggest disappointments of the previous administration was its decision to sacrifice home support services, at tremendous expense. In our view this was a very penny-wise and pound-foolish approach, because what we've seen is that for thousands of British Columbians, their health and well-being has been sacrificed. People's health has been ruined. They're living in increased isolation and desperation, and at the end of the day, this has cost B.C. taxpayers thousands and thousands of extra dollars. It does not save money; it costs money in the long run.

Our message is pretty straightforward. By providing targeted, direct funding to home support, this government can save hundreds of thousands of dollars in unnecessary spending, and it can greatly improve the lives of tens of thousands of British Columbians. Let me provide you with a little bit of background. Home support can be fairly complex to people who aren't that aware of the issue. Included in the package you've got is a brief put together by the B.C. Coalition of People with Disabilities called The Home Support Crisis, which goes into details about what happened. This brief was prepared over a year ago. It's from August 2000. Since then, the material in here is still completely relevant. The only difference is that the situation is getting worse with each passing month.

I've also provided you with a copy of Transition magazine, which comes from the B.C. Coalition of People with Disabilities. It outlines a great deal of information about home support and what it means to people.

In a nutshell, home support is essentially the services that enable people with disabilities and seniors to live healthy, independent lives in their own homes. We think that home support is important and significant strictly on the merits of the fact that it provides citizenship rights to people with disabilities and dignity for seniors. There's another benefit that is very important, too, which is that it saves thousands of dollars from the health care system. At the end of the day, that's money that can be spent in helping to improve our health care system.

One important development since these reports came out was the release of a report by Dr. Marcus Hollander. I've given you a press release that summarizes that report. It's the most comprehensive study of its kind. It came out in the spring of last year. It was able to use B.C. as, essentially, a laboratory for what the results of home support were. When home support started cutting, different regions were cut at different times, and they were able to study the direct impact on seniors who were able to receive basic home support and seniors who weren't. The most important finding was that at the end of three years, people who lost their basic home support ended up costing the system overall and in other health care costs an extra $4,000 per person.

This is not surprising to us, and I think it demonstrates the significant role that home support plays in prevention and promoting health. The other point that is really important in this is that the quality of health for people who lost their home support declined horribly. We saw an increase of 50 percent in the rate of death for seniors. That's 50 percent more seniors died when they lost their home support. We saw a definite increase in isolation and the need for extended care and so on.

Let me tell you about another very disturbing fact. At the last meeting of the capital health region they pointed out that there's a waiting list of approximately 1,000 people for extended care units in Victoria. Those are units that don't exist. They're waiting for them. Their own research shows that about half of those people could live in their own homes if they got basic home support — home support that's no longer available to them as a result of service cutbacks.

When we're looking at the costs of not providing home support, one of the things we also have to consider, which isn't part of Hollander's study, is the cost we're looking at as our population ages. If we intend to warehouse people in extended care units instead of allowing them to live in their own homes, we need to look at the capital costs of building those extended care units.

In my work I've had to deal with a woman on Vancouver Island who's 102 years old and legally blind. Three years ago they cut off her home support entirely. She's on a fixed income. She told me that the way she deals with it is that she no longer buys fruit. That is no longer part of her diet because she has to pay out of her own pocket, which is already well below the poverty line, to have somebody come in once a week because she simply cannot operate a vacuum cleaner. She can't do the basic cleaning that provides her with proper hygiene.

I just spoke yesterday with a woman in the North Shore who's trying to care for her severely disabled mother. They are unable to get the amount of home support they need. As a result, they're only able to pay $5 an hour, something that's allowed under the Employment Standards Act, because they're live-in caregivers. But at $5 an hour, they cannot find the experienced, quality staff they need. This woman has a revolving door of workers that require training. A recent worker just stole her mom's bank card and took all the money out of her mom's account. This is a family now on welfare and desperately trying to stay together.

Then there's the tragic case of Dwayne Gough, who some of you may have heard of. He died last fall alone in his apartment, two months after all of his home support was cut off. He had no care whatsoever. We're not saying that the provision of home support would have saved his life, but if the home support worker had been in to see him on the day he died, they would have seen that he was suffering from severe dehydration and explosive diarrhea. He was incapacitated to the point where he couldn't even phone for help. These are the kinds of consequences of not providing home support.

Let me just summarize, and then if you have any questions, you can ask them. I think that as a result of cuts to home support, B.C. taxpayers are paying thousands of extra dollars for far worse service. What you have an opportunity to do with this budget is provide targeted, direct funding to home support. We need a provincial government that will show leadership on this issue. One of the problems we've experienced is that there's a certain amount of finger pointing between three jurisdictions — the federal government, the provincial government and the health authorities — about who should be handling this situation. We say that the provincial government should set strong provincial standards. Target the money where it's needed so that people can get appropriate level of

home support, and then what you will do is enable people with disabilities to achieve their basic rights as citizens. You will provide dignity and better health to our seniors. You can help families stay together. You can make the concept of closer-to-home health care a reality, and at the same time you can save thousands of wasted dollars.

I hope you'll look at the material that you've got there. The press release on the Hollander report also refers to where you can get more information. I really think you should be looking at the Hollander report. It's too big to circulate here, but it's the most comprehensive study of its kind in Canada, and the evidence is devastating.

B. Lekstrom (Chair): Thank you, Glen, for your presentation. We do have some questions. I will start with Jeff.

J. Bray: Thank you for making the effort to come up here. Firstly, I'd also encourage you or somebody else from your group to make a presentation to the Health standing committee.

G. Sanford: Yeah. We will be doing that in Victoria tomorrow, and it will be an actual home-support recipient.

J. Bray: I've got three questions — very quickly. The first is just for clarification. When you talk about portability, is what you're referring to having the dollars follow the individual regardless of which health region or community health council area they're in?

G. Sanford: Sure, you may have seen in the media the case of a woman named Annette Gerein from Vancouver, who was receiving…. I forget the exact details. When she decided to move to Victoria, the health region there told her that she wasn't entitled to get the same level of service that she got in Vancouver. Well, this is a real violation of people's mobility rights. Also, what is that saying? She was barely having her needs met in Vancouver — struggling in Vancouver — and Victoria was telling her she was going to get even less.

J. Bray: Thank you. The second question is with respect to…. You mentioned a lot about families, and in fact families are often the primary caregivers for people with disabilities or for seniors. Much like in other segments, like child protection cases, you have different levels of funding based on who the caregiver is. Right now there is nothing to support families. You have to go right to professional care. Do you see a role for recognizing the financial hardships that caregivers have — perhaps that families can be a level in between no home care and professional home care?

G. Sanford: Well, there is some support for families in that home support does provide respite to family caregivers, which isn't as direct. We think that's something that very much does need to be looked at. In many cases family caregivers are the only people who are able to provide the kind of care that's required, especially if you're talking about people who have Alzheimer's or cognitive disabilities — brain injuries and so on. It is extremely difficult and often retrograde to their health to keep training new people and having new people in their lives when the loved ones that are close to them know what needs to be done but find themselves unable to both bring in the income that's needed for all of the extra health care costs that they experience and pay for support outside of the home. Again, what we see are long-term costs that are horrific for both the family and the government.

I. Chong: Some of the questions I wanted to ask have been raised by Mr. Bray. I've just one very specific question in relation to your presentation. You talked about targeted funding, and everyone's idea of targeted funding is different. Has the home support action group ever provided a definition of criteria as to what they feel targeted funding would be and presented that to the local health region or health councils wherever they may be?

G. Sanford: Well, the reason why we're saying the provincial government should target the funding is that the health regions have their own ideas about how to spend health dollars. What we're saying is that the provincial government should direct money that is specifically for home support. There is a problem, and I'll be the first to admit it, if you're in a health region and you're struggling with a limited budget to begin with. If there is a problem with your acute care and lives are at risk on the front line, it is very difficult to do something that will save lives further down the road.

This is one of the problems with home support. I think most people would be shocked if they knew the conditions of people who are suffering from inadequate home support services. It happens behind closed doors. It's in people's homes. The consequences affect the most vulnerable people in our society. They don't have a voice, so we don't see it in the headlines or in the news and so on. That's why I don't think there is as strong a campaign for home support as there is for acute care. That's why we're saying that the provincial government needs to play a leadership role and say: "This money is for home support, to provide appropriate levels of home support." I don't know if that answered your question.

B. Lekstrom (Chair): Glen, I would like to thank you for your presentation today to our committee. Certainly, what you've put forward will be given consideration in the development of our report.

We will now move to what we call the open-mike session that allows people five minutes to speak to the committee and a very limited time for questions. The intent is for people who were unable to get a 15-minute slot due to time constraints, or who have thought of something while sitting through the hearings, to be able to speak to the committee. So under the open-mike session, first I would like to call Casey Timmermans. Good afternoon.

C. Timmermans: Good afternoon. Thank you. I appreciate the opportunity to talk to the committee. There were a lot of thoughtful presentations here today. I'd like to open up on a note of optimism. Usually, when the North American economy tends to go down, we in B.C. tend to go up. We still live in the best piece of real estate in North America. We're starting to see some of that in our real estate markets.

You have a presentation in front of you. I'd just like to say that I'm a father of four, and I've lived in British Columbia since '75. I'm optimistic about the changes that I see. I'll just read from my presentation.

I believe the new direction must come from our historic reason for offering programs funded by government. Many programs introduced over the years have been purely for the purpose of buying votes with taxpayers' money. Because of our current economic state of necessity, we've got to set some priorities. Here's how I see programs being categorized: (1) programs of true necessity and something determined the public really wants; (2) programs of a lesser critical nature with benefits that can be considered optional but still in the public good; (3) legislation and programs instituted for politicized reasons, which use taxpayers or scapegoat private citizens' money to buy votes. These should be phased out. New laws should be passed preventing this kind of abuse of private and taxpayers' money.

Other factors must be considered in this evaluation. All programs must be evaluated from the taxpayers' ability to pay. Levels of taxation needed to fund government programs must not make our economy uncompetitive within our trading group. Clearly define and understand the total level of taxation that our economy can withstand. If we lose our competitive economic edge, we will not be able to retain our young educated British Columbians, because they will simply move to where the opportunities exist, and with them will go our future wealth creation. For example, define the percentage of GDP that can go through the bowels of government.

There must be something in British Columbia's economy for our productive young people to stay and add value to the resource base available to them. This is a tax issue and not just a provincial concern, because much of taxation is federally enacted and controlled. It is necessary for our provincial lobby to bring to Ottawa's attention the problems caused by overtaxation of Canadians in Canada. This is truer than ever before, because so much of our trade provincially is south of the border.

British Columbia must expand its GDP, which in the final analysis pays for all services that the core review will determine are essential and needed by our growing population base.

I would suspect that much being presented to the committee, as we've heard, is in the preservation of the status quo. Many of the publicly employed and publicly supported will be vocal in this exercise. Natural human resistance to change is understandable. But all must be examined in the light of the severe constraints placed on this government, firstly, because of the irresponsible expansion of government spending under the last government, now complicated even further because of economic repercussions caused by the terrorist attacks in New York. What seems to have evolved is a combination of public sector unions who exhibit their willingness to use their public monopoly of services as a club to extract what they want from the public. I think it's high time that this loosely knit monopoly of unionized public employees be broken up and delivery of public service be opened up to competition.

From what I have seen in the first few months of this government, it clearly understands the problem, is focused and has embarked on the road to economic recovery for British Columbia. I want to lend vocal support here in what they are attempting to accomplish for British Columbia and hope for our children's future in this province that they succeed.

We will not realize or feel the effect of much of what the government does for at least three to four years after legislation is passed, just as in the first three or four years under the NDP, the economy was still doing fine because of the policies and regulation brought in under the Socred administration, for which the NDP always likes to take credit. By the time the hard-left ideological policies implemented took effect in our economy and it started to show signs of weakness, we were three or four years into their mandate. Legislation and regulation passed under the NDP, with the full impact of the last ten years, has been economically disastrous to B.C., which was clearly demonstrated by the NDP's incompetence to govern and to pass laws.

The private economy's deterioration was disguised with massive government borrowing and spending at that time so that if we are expecting a rapid turnaround, we will be disappointed. Note: the provincial taxpayer-supported debt doubled in the last ten years when it took us a hundred years to get to where the NDP started. This recovery will not be immediate, but I believe that groundwork is being laid for B.C.'s future economic recovery by the provincial Liberals. Remember, you can destroy a company overnight with bad legislation or bad tax, but it'll take 30 years to build that company back in a lifetime of somebody's blood, sweat and tears. I believe this government understands that and is doing the right thing so that three or four years from now we, hopefully, should start to see some positive changes.

Attached are some excerpts and graphs to illustrate B.C.'s problem and our consistent slide into the situation we find ourselves today. The Fraser Institute published this with comments by Jock Finlayson from the B.C. Business Council. This is an attachment, and you can view it at your convenience. I will not cover them here except to say that the graphs, which are worth a thousand words, illustrate B.C.'s decline under the NDP. This presentation is in no way a complete analysis but only highlights the problems to be dealt with.

A complete publication can be found and downloaded from their website, and I would encourage all to read this publication and even seek membership in the Fraser Institute. The institute represents an opportunity to get regular input and analysis on public policy and how it will affect you. To inform oneself, I believe, is an obligation for all citizens in a democracy. This is only one avenue to keep you informed and represents a point of view, and many others also exist. Much perspective is motivated for the political gain of certain groups putting forward their perspective, and this criticism could be applied to the Fraser Institute. Other institutions such as the Canadian Centre for Policy Alternatives, a think-tank largely funded by public sector unions, represent an opposing perspective. Private citizens must inform themselves beyond the self-serving perspective of each think-tank and get at the truth. This usually manifests itself within our economy over time. Hindsight is always 20-20. If the last ten years tell us anything about the Fraser Institute, almost everything they predicted came true. Perhaps they are more definitively academic and not political at all nor as right-wing as some would have us believe.

I think some new perspectives should be added when we're looking at public programs. Programs such as health and education should be viewed more in a light of socialized insurance programs where private and public providers compete for delivery, injecting competition and choice.

The Fraser Institute's Public Policy Sources publication outlines the road to economic recovery, because it outlines where the last government went wrong. In the final analysis, it is only real wealth creation that can fund our social conscience and our socialized insurance programs such as health and education.

Also, the deterioration of the last ten years in a lot of these programs — and we've heard some of the complaints about it, and yet they seem to come to support…. I think we have to focus on the problem and look at where there are problems. For example, we can look at tax breaks for higher-income families that have dependent children. I can just look within my own family. Rather than using a government program to fund for care, people would just get a tax break for the money they spend on their disabled child — a Down syndrome child, for example. I don't think necessarily that all of this should be provided through government, because it's costly to provide it through government, and we look at government employment and cost that's provided with that.

B. Lekstrom (Chair): Casey, we're going to have to wrap it up. I know five minutes isn't a lot of time, but you managed to get a lot of information in there, and I thank you for that.

D. Barker: Thank you. You'll be glad to know my comments will be brief. My name is Dorothy Barker, and I was born and raised in B.C. I've been employed by the government of B.C. for the last 14 years. I have always been proud of these two facts until just recently, when the new government announced plans to reduce the public sector by as much as 50 percent. I live in Courtenay, and there are hundreds of government employees in the North Island area which, besides Courtenay, includes Ladysmith, Nanaimo, Parksville, Port Alberni, Powell River, Port McNeill and Port Hardy. A cut of 50 percent would mean many people out of work in this area alone.

Visualize what this would mean to the entire province of B.C. Severe cuts of this type will have a drastic effect on all of us. Even more government offices will be closed, and fewer services will be provided. Just for a moment imagine the streets of your city deserted of shoppers and with closed storefronts. I, for one, will not be spending like I used to. There will no new vehicle parked in my driveway. Christmas won't be our usual Christmas, and I won't be shopping at my local meat market, grocery and clothing stores like I used to. Even our cats will suffer. There will be no extra money for shots at the veterinarian's and the cat food they prefer. What about my dentist, my hairdresser, the mechanic who fixes my car and the gas station where I buy my gas?

It won't just be me. I will be only one of hundreds of ex–public service employees who will not be spending money in my community. It won't be because I don't want to; it will be because I can't. There will be two busy places, though: the employment insurance office and the income assistance office. Of course, by that time, nobody will be able to find an income assistance office. They will all be closed.

The North Island is already devastated by the changes in the logging and fishing industries. Will this area be able to survive through these drastic cuts? I think not. Cuts of this type will only put the province of British Columbia into a deep recession. I ask you to reconsider this decision to cut the public sector up to 50 percent and let the citizens of this province take pride in where they live and hold their heads high. Thank you for giving me the opportunity to speak.

B. Lekstrom (Chair): Thank you, Dorothy, for coming out and taking the time out of your schedule.

R. Vinden: Thank you, Mr. Chairman. Good afternoon. I come from Errington, outside Parksville. I've been interested for many years in the growth of debt

not just in this province but all over the country and all over the world. The whole world is reeling under a massive overload of debt, and I believe this is due to the way in which governments have been funding themselves for many, many years. I'll try to skip through this. I've chopped it heavily to try and get through in the five-minute period.

If the growth of these debts is examined, they all follow a distinct pattern. All provinces and the federal government had relatively small or manageable deficits and debts before about 1975. After that date, they all went into a rapid upward spiral. It's surprising to note that no marked downward trend is observable anywhere over the last 25 years, despite huge and prolonged spending cuts to every conceivable program by every government. All that's been achieved, really, is a rather tenuous halt to debt growth, with no claim that it won't go upwards again if in adverse circumstances or interest rates rise.

It seems sensible to look at the other side of the ledger. Rather than hacking away at every possible program, I suggest that it may be more fruitful to check on the roots of the debt explosion. I believe these are now so well entrenched, so utterly well established, that they virtually escape comment.

I'll take you back to 1966, when the banking industry successfully lobbied Ottawa for a raising of the legal cap on interest rates, which came up at the old Bretton Woods monetary agreement. What they got was not just a raising of the cap by 25 or even 50 percent but a total removal of limit. The effect was not immediately dramatic; it had enormous effect within a decade. By 1970 rates had eased up to 5 percent, not high by today's standards, but nevertheless a roughly 50 percent increase over the average rate for the previous 45 years. It's worth pointing out that in the long period of growth and expansion after the war, when rates could have been expected to soar from the huge demand for money, the bank rate stayed at 1¾ percent for 15 years straight, a scarcely credible figure today.

These rates moved steadily upward after 1970, getting a boost from the Arab oil embargo, and began to really take off after 1976. It rose sharply in the late seventies, going ballistic to an unprecedented 22 percent for a short while in '81-82. Interest rates stayed well into double figures throughout the eighties and did not subside to more traditional levels until 1994-95. Altogether we have endured about 30 years of high, very high or crippling interest rates which have proved extremely damaging to business and government alike.

In looking for reasons for this massive change of direction, I'm drawn to the conclusion that it had rather more to do with ideology than logic. The school of economics which proclaimed that interest should become the sole means of regulating inflation grew in the States. Further, it was painfully obvious that our own government's debts are quite unpayable within any imaginable time frame, since it is inconceivable that such enormous sums can be extracted from our stumbling economies without triggering instant collapse.

I submit that a grievous and highly dangerous financial instability is readily apparent today, which has been developing with increasing speed over the last three or four years and has been given a tremendously hard kick downwards by the events of September 11. I believe that these events cannot be controlled by further cost-cutting measures. We have a mounting flood of plant closures and layoffs already, and these will escalate rapidly as our largely foreign-owned companies are the first to be shut down when widespread problems arise. This is already visible around the province.

The secondary problem, which has almost entirely escaped notice or comment, lies in the 1975 decision, again by the feds, to shut down the longstanding arrangements which allowed governments to borrow large amounts of their finance from the government-owned Bank of Canada. Such loans contributed anywhere from a low of about 20 percent to a high of nearly 50 percent of all borrowings.

R. Vinden: The vital point here is that while interest is paid at the normal going rate, as in any bank loan, these payments contribute to the Bank of Canada's profits which, as an arm of government, are returned to Treasury as dividends. These moneys are then available for recycling back into the economy by various ministries as needed. The loans come virtually at the minor cost of administration and are effectively almost interest-free. This is a positive and regenerative system. It was replaced by a negative extractive one. Accordingly….

B. Lekstrom (Chair): Russ, we've only got about another minute, just so you're aware.

R. Vinden: Okay. I'll say what I can. The deficits translated into more debt, which exploded throughout the late seventies and eighties, only stabilizing in the late nineties. The debts quadrupled…. I'll skip this. All across Canada the pattern was repeated.

This is a stunning situation when the means exist, still largely intact, to fund ourselves at minute cost from our own national bank, exactly as had been done for all of those 40 years of unparalleled prosperity in Canada. It is salutary to realize that the federal government alone, in the last ten years, has paid away not less than $400 billion of interest charges for which there is absolutely nothing to show — no asset remains, no benefit builds. At a guess, there will be another $200 to $300 billion from the provinces.

These loans are absolutely guaranteed risk-free by the OECD through the Bank for International Settlements in Basel. Since the creation of large new loans would also create instant inflation under the current system, the old bank reserve deposit scheme would have to be revived. The new loans coming from the Bank of Canada would simply replace the old private loans, which would be locked away in the nation's

bank without interest until a reviving economy needed them — tough on the banks.

B. Lekstrom (Chair): I'll have to ask you to wrap it up soon. I could give you another few seconds, Russ.

This is simply a reversal of the events which shut off low-cost recirculating Bank of Canada loans to government and replaced them with loans at rates that King Croesus would envy. They have been receiving an average of $50 billion a year from these risk-free loans for at least the last two decades, while the country has been put through the wringer.

We have to regain control over government funding before control over spending can have an effect. In 1996 the IMF stated that Canada did not have a debt problem so much as an interest problem and that our assets exceeded our liabilities by a factor of 23 to 1. There is no reason why we cannot fund ourselves.

I believe, Mr. Chairman, that this is the big sleeper. It might rise up to clobber us yet as our businesses suffer under the current economic climate.

B. Lekstrom (Chair): Russ, I thank you. I know it is a short time frame to put so much information in, but I appreciate your presentation to the committee today.

E. Skehor: Good afternoon, members of the committee. Thank you for the opportunity to speak today. My name is Eric Skehor. I live and work in the Comox Valley. I'm a native British Columbian employed in the construction industry for 12 years and in the provincial civil service for the past 15. I'm a BCGEU member, a taxpayer and a voter. I benefit from my union position. You as government benefit also. In return for my work as a civil servant, the two senior levels of government take away 25 percent of my wage in direct income tax. When I fill my vehicle with fuel, I pay tax again. Any of my consumer purchases directly or indirectly feed the provincial coffers. I do not have tax write-offs or deferred taxation schemes. I support government services directly.

I would ask the committee to consider what impact the proposed budget cuts will have not only on government services but on the communities that have traditionally seen themselves supported by government employees. With our economy reeling from the destruction of forestry jobs and the growing unease about program cutbacks, the local business communities are seeing all facets of spending decline. The corresponding drop in revenue is triggering a domino effect that, at the end of the day, decreases government income.

Statements have been made that after years of inflation, it's time for the civil service to share the pain. We have been sharing the pain for many more years than I care to think about. My division, although entrusted with public safety, has been the recipient of endless zero percent budget increases which effectively cut the available funding by the inflation rate. Clawbacks, reassignments and reorganizations have done nothing to further public safety.

I challenge the people in this province to ask themselves: who's looking out for me? Government policy has directed self-regulation towards industry, a role of auditing and paper-chasing rather than having inspectors out on the street where we belong. Leaky condos are a prime example of industry self-regulation. When letters of assurance and affidavits from so-called professionals under contract to numbered companies replaced the hands-on expertise and knowledge of building inspectors, the costs became astronomical. Do the people of this province want the same principles applied to electrical, gas, boiler and elevator installations in their homes, schools, hospitals and shops? I think not.

The safety engineering services is a thin blue line which is charged with providing a safe living and working environment for the people of B.C. with respect to the use of electricity, natural gas and propane, elevating devices, boilers and pressure vessels and interprovincial railways. As a 15-year employee of the gas safety program, I am intimately aware of the effect of historical cutbacks to our program and the predictable outcome of further cuts ranging from 20 to 50 percent. I believe these comments are generally applicable to the other disciplines in my division as well.

Traditionally, the response to funding shortfalls has ranged from travel restrictions to not providing vacation coverage to destaffing of offices and to not replacing those who retire or quit, with a resulting increase in area responsibilities. This has led to our present field complement of 25 inspectors, which I believe is close to staffing levels of maybe the mid-to-late seventies.

Given the exponential growth in the province and the increase in sophistication and complexity of equipment being used, why haven't we kept pace? Attempts have been made to utilize technology to increase our effectiveness. Terms such as "risk management" and "auditing" are used in an attempt to steer already limited and strained resources toward an ever-diverse industry. Incidents per hundred thousand population have increased 22 percent between '97-98 and 2000-01. I prefer the analogy of a person jumping from a ten-storey building. For just over nine and a half storeys, it's an exhilarating ride, but the sudden stop at the bottom is a problem.

Increasingly, government liability has been examined with a focus to reducing the occurrences of deep-pocket syndrome, whereby litigants attach the government based on an ability to pay. Generally, the courts have ruled that disciplines regulated by government must have the benefit of an adequately resourced regulator able to perform its duties in a timely and effective manner. When government cannot demonstrate this, it is found liable. The people of this province deserve an adequately resourced public safety division. Over time the minuscule percentage of provincial revenue required to attain this will be offset by fewer deaths and injuries as well as successfully challenged lawsuits.

I would like to touch briefly on the electrical safety program as well. This program provides a unique perspective on public safety, as it was a subject of a royal commission chaired by Hugh Keenleyside in 1974. I have been challenged as to its relevance in 2001 with comments such as "old news," "outdated" and the like. My response has been to quote an older learned colleague of mine, who asks: "How has electricity changed since 1974?" I won't dwell on the details of the report as they are a matter of public record but will point to two areas that bear consideration.

E. Skehor: In closing, I ask for the obvious: no more cuts. Do not send us down the privatization road and make public safety a profit-driven entity. The people of B.C. want effective government regulation of their basic safety, whether it be safety engineering, public health, environment or every other safety-related program. We don't need another Walkerton. Restore funding where it is needed. The next time you flick a white switch, ride a ski lift, fill your propane barbeque tank or have lunch in a restaurant, ask yourself: who's looking out for me?

B. Lekstrom (Chair): Okay. We actually have two minutes before we have to leave.

K. Campbell: I just want to make a comment about Glen back here. I don't know Glen. I don't know anything about home support, but just a personal thing that I experienced this year with my father. He was given two months to live earlier in the year. I come from a large family. There's nine of us. We gathered around as a family and made the decision to take care of my father at home. We didn't actually need their support — the home support workers — until the end of the time when he was in bed. He was totally flat-out. When I think of the money that my family saved this government in health care costs by keeping him at home, I also appreciate the fact of having him at home. I know that we extended his life by at least one month by having him at home, so it's a valuable service that is out there in the community.

K. Campbell: Seven or eight years. She had home support during that time. It definitely needs to be considered as a way of saving money for health care.

B. Lekstrom (Chair): We're into something that's a little out of the ordinary. If you can do it very quickly.

S. McDowall: The last gentleman with the grey hair, who was from Errington, spoke about borrowing from the Bank of Canada as opposed to the chartered banks. This is something I've looked into, and I wish that you guys and ladies would set your research staff into looking into this. This is costing us a huge amount of money. I don't know what would happen if you tried to change the system. Maybe people would be assassinated. I think the people who are making these horrendous profits, these obscene profits, would have a vested interest in making sure we never go back to the old way. We're paying a terrible price, and I think our members should at least inform themselves on that issue. That's it.

B. Lekstrom (Chair): All right. Thank you. Change is always tough, and it's something we're all facing — that's for sure.

Just before we close, I would like to thank all the presenters that were here today and the people who sat through the hearings. I would encourage anybody who hasn't had the opportunity to present, or who has thought of other issues to put forward, to put them down in writing and forward them to us. We do have until the end of this month to receive written submissions.

With that, again I would like to thank the people of Nanaimo and the surrounding area for hosting us today, and I encourage you all to have a good afternoon. Thank you.

REPORT OF PROCEEDINGS (Hansard)

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES