2005 Legislative Session: First Session, 38th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD

MINUTES SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES Friday, October 7, 2005 9 a.m. Douglas Fir Committee Room Parliament Buildings, Victoria, B.C.

 

Blair Lekstrom, MLA  Chair

Kate Ryan-Lloyd Clerk Assistant and Committee Clerk

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

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON 
FINANCE AND GOVERNMENT SERVICES

FRIDAY, OCTOBER 7, 2005

ISSN 1499-4178

[ Page 17 ]

FRIDAY, OCTOBER 7, 2005

       The committee met at 9 a.m.

           [B. Lekstrom in the chair.]

           B. Lekstrom (Chair): Good morning, everyone. I would like to welcome you to the first public hearing of the Select Standing Committee on Finance and Government Services for the province of British Columbia. My name is Blair Lekstrom. I have the privilege of chairing this committee. I am the MLA for Peace River South in the northeast portion of this province.

           It's an exciting time for people in B.C. to have their input into the upcoming budget. For British Columbians, I think it's a great opportunity. We have the opportunity to speak with our MLAs and have full access to them, but to have a full Select Standing Committee on Finance, which is an all-party committee of the Legislative Assembly, tour the province and accept written submissions is, I think, a great principle and a great credit to democracy in our province. I look forward to the submissions we're going to receive today as well as throughout the next week and the written submissions that will come in as well.

           Today we are going to hear a number of presenters. The format will be based on the presenters who will have ten minutes to present, allowing about five minutes for the members of the committee to ask any questions for clarification on the presentation, if needed. I would hope to keep to that time frame. I know it's a tight schedule.

           For the individuals who were unable to get to the public hearings, we do accept written submissions, as a committee, up until October 23. All submissions, whether given personally or accepted written by the committee, will be given full and equal consideration. We will then have to report back to the Legislative Assembly by the 15th of November with our full report outlining what we've heard from British Columbians and recommendations included in that report put forward by this committee.

           Prior to moving forward, I just want to point out a couple of things. All of our hearings are recorded and transcribed by Hansard staff, who are located behind me. This is a public meeting, so they will be public documents, and the transcriptions are available on the Internet as well. Before I ask members of our committee to introduce themselves, I will introduce to the left of me the Committee Clerk, Kate Ryan-Lloyd, who is also here. As well, we have Jonathan Fershau, who will be joining us. He's in the back busily preparing some paper for individuals. He works with us as well.

           I will begin with our Deputy Chair. Maurine, if I could ask you to introduce….

           M. Karagianis (Deputy Chair): I'm Maurine Karagianis, MLA for Esquimalt-Metchosin.

           G. Hogg: Gordon Hogg, MLA, Surrey–White Rock.

           D. Hayer: Good morning. I'm Dave Hayer, MLA for Surrey-Tynehead.

           R. Lee: Good morning. I'm Richard Lee, MLA for Burnaby North.

           J. Yap: Good morning. I'm John Yap, MLA for Richmond-Steveston.

           B. Lekstrom (Chair): I would like to thank the members and certainly express my thanks as Chair. I know it has been a long day that probably started for most at about 6:30 yesterday morning and seems to continue on. We will, and I can promise you this, give you our full consideration and attention to your presentations.

           At this time I am going to turn it over and welcome Dr. Liz Ashton and Jim Reed to the committee hearings this morning. They are with the B.C. College Presidents. Welcome. We look forward to hearing your presentation.

Presentations

           J. Reed: We very much appreciate the opportunity to appear before you this morning. What we're going to do is a bit of a tag team here. I'll kick it off and give a little bit of an introduction to our presentation, and Dr. Ashton will elaborate on a couple of the key areas that we would like the committee members to consider as they travel the province. Certainly, there are a lot more areas that we think are important, but we're just focusing on a couple.

           Without further ado, let me explain first that the B.C. College Presidents is a consortium of 12 community colleges, one aboriginal institute and the Justice Institute of B.C. Together we have over 50 campuses in British Columbia offering over 280 programs to over 135,000 students a year, and we do that very efficiently.

           Community colleges receive approximately $635 million annually from the provincial government. That excludes apprenticeship and trades training. That comes down to $7,166 per college, university college and institute FTE. From 1991 to 2002 the college sector increased the number of FTE students served by 48 percent — again, excluding apprenticeships. We serve 27 percent of the system's total FTEs with 23 percent of the system's funding. College is still the most affordable route to post-secondary education for students and for society.

[0905]

           Whatever measure you use, I think community colleges provide a great return on investment. We provide a great return on investment for government because we focus on teaching, not research. We educate more students at a lower cost per student than the university sector does. We provide a great return on investment for students. Community colleges provide top-quality, affordable education for students in every region of the province. Tuition costs are half that of universities, and students can complete their first two years of university studies at a college for a fraction of the cost.

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           We provide a great return on investment for communities. For those 50 communities across the province with a college presence, we are the focal point for education and training and for economic, social and cultural development. We give young people across British Columbia the opportunity to study and to build a life in their home community. Recent economic impact studies in both our urban and rural colleges produce similar findings. For every $1 of public investment, colleges generate $3 of economic activity. That's a 3-to-1 return on the public investment.

           Obviously, we are key to workforce development in the future. You would have seen the result of a B.C. Chamber of Commerce study just published in the Vancouver Sun this morning about the skill gap we have and the real issues we have around that. Some 21,000 students earn diplomas and certificates and go on to jobs as paraprofessionals, in mid-management, trade and commerce or in a wide range of entry-level positions in all sectors. Another 11,000 students earn an apprenticeship certificate or a certificate of qualification, or Red Seal certificate, and graduate as highly skilled and job-ready workers.

           This government's commitment to post-secondary education is clear. Creating 25,000 new seats and renewed investment in capital and infrastructure costs are clear proof that the government gets it. Our presentation today will focus on the role of community colleges as a key part of the province's post-secondary system and as essential linchpins in developing and growing the economies of their regions, and on their contribution to the overall economic well-being of British Columbia.

           I'd now like to turn it over to Dr. Ashton, who will elaborate on some of the areas that we think are of importance.

           L. Ashton: The first area I'd like to talk a little bit about is regional development. Education and training are preconditions for economic and social development of any community, especially in economically depressed areas. For example, our northwest has the lowest literacy rates in British Columbia, and its K-to-12 students have poorer educational outcomes than do most students in other parts of the province. With a declining population, at a time when much of the rest of the province is seeing growth, the northwest cannot fuel its own economic expansion through demographic growth. It will only succeed in meeting projected labour demands if it recruits significant numbers of new people into the region or provides more education to a higher proportion of its own population. When this committee travels to Smithers, I'm sure you'll hear much more about this.

           Other regions have different challenges, but the requirement to educate or train more people is the same. If we are going to have the educated and skilled workforce required to stimulate the economy and meet the workforce needs of the future, there must be more strategic investment in colleges throughout the province.

           Community colleges are key to regional economic growth. They educate people in the regions, and students who study at home are more likely to stay in their home community. By investing in post-secondary education in our regions, we build the education and training capacity of communities. Educated communities are healthier. They have lower rates of alcohol usage, teen pregnancies and crime. Educated and skilled communities also generate wealth and economic growth.

           Over the past decade the colleges have become more productive and efficient at serving communities. We have increased the number of FTE students served by 48 percent, as compared to 27.5 percent for the universities. This is part of what I mean when I say that colleges provide a powerful return on investment. This is important, especially since there will continue to be increased pressure on colleges to educate more people and prepare them for a very demanding workforce.

           However, colleges have very limited sources of revenue. We rely on government for about 75 percent of operating revenue, tuition for approximately 15 percent and outside sources for the remainder. Opening up tuition rates four years ago has made a big difference to our ability to provide a top-quality education for students. Colleges have invested that tuition right back into programming and facilities, expanding the learning environments, student financial support, classroom lab support and equipment, student services and sustaining the learning environment.

[0910]

           Our challenge now is managing the gap between revenue and inflationary costs over and above the consumer price index. Our challenge is also to make sure that our graduates are ready to step into the workplace. That means they need to train on top-of-the-line equipment. Whether they're mechanics or computer programmers, there's no point in graduating students if they've never worked with the current technology in their field. Government must ensure that inflationary costs are covered in annual operating grants. We must also protect the investment we've already made and must continue to make in capital and infrastructure.

           The pressure on colleges will continue to increase. Educational attainment is the key to the future prosperity of British Columbia. According to Statistics Canada, the number of jobs requiring some kind of post-secondary education will increase to 73 percent over the next ten years. These jobs will require more than high school but less than university. This is college education.

           Considering the overall mix of skills in British Columbia's population in 2004, 36 percent of the population aged 25 to 54 have non-university certification, 23 percent have university degrees and 41 percent have

[ Page 19 ]

no post-secondary education at all. The gap between educational attainment and future job needs could erode British Columbia's competitiveness in the future. We need to ensure that more British Columbians take advantage of these opportunities, and one very effective method of meeting this challenge is through accessible education in the regions where they live.

           Community colleges will be a key part of the province's strategy to meet the dramatic labour shortages that will unfold over the next decades. Unfortunately, there is a misapprehension that a university degree is the only way to good employment. This is not true. The accountability branch of the B.C. Ministry of Advanced Education forecast that almost half of the 700,000 job openings to 2011 will require a college education. A majority of the job openings between now and 2015 will be replacement positions, and most of them will not require a university degree. This includes many well-paid positions in trades, career or technology occupations.

           The need for better resourcing of aboriginal education is critical, and the B.C. College Presidents applaud government's commitment in the throne speech and budget. We also want this committee to understand colleges' role and responsibility in providing post-secondary educational opportunities to aboriginal students. The lack of educational opportunities for aboriginal students, low completion rates for aboriginal students and low employment rates within the aboriginal population have long been recognized as serious challenges.

           We acknowledge the recent announcement of the $100 million First Nations New Relationship fund as a very good step in the right direction. The BCCP will be making several recommendations to government focused on accelerating provincial action on a wide range of issues related to aboriginal post-secondary education. For example, we believe that more and better action directed at the fundamental reasons for low participation, success and retention would be achieved if more funding were provided for special initiatives to increase participation and such funding was then rolled into base operations.

           We would also like to see the establishment of an aboriginal access bursary to enable these students to access college and institute programs, including the upgrading necessary to meet post-secondary access and prerequisite requirements.

           What we have here is a people's need for training and employment opportunities, an economy that will need skilled workers and qualified tradespeople, and a government that seeks to establish a new relationship with first nations. This is surely an opportunity to ensure that our community colleges work well for first nations. The BCCP stands ready to assist all parties in their pursuit of this opportunity.

           J. Reed: As you begin this series of hearings across the province listening to what British Columbians tell you about economic development, social investment and financial support, I ask you to pay particular attention to the background story. I'm sure you will be.

[0915]

           In every community you visit and behind every presentation you hear, there's an important role for colleges to educate health care workers, to act as catalysts in regional economic development, to provide the opportunity for people from the northwest to the southeast, in the lower mainland and Vancouver Island to study and build a life at home.

           Community colleges are critical to the growth and development of British Columbia. We do it very well, but we do need more support from government. We have only touched the tip of the iceberg today. This is a big area. We elaborate on many of these issues in our third Triennium Paper, which we are about to submit to the Minister of Advanced Education. We'd be pleased to provide the committee with that when it's duly submitted.

           Our purpose today is to emphasize just a few key points. The education of our young people and the re-education and training of adults are critically important to the economic and social development of the province. As a system of community colleges, we are committed to the communities we serve and to working with government and the rest of the post-secondary system to ensure that B.C. has a highly educated and skilled workforce. We do this very efficiently; and we provide a tremendous return on investment to government, students and the communities.

           The province's community colleges are a natural and effective infrastructure by which this government can successfully achieve its goal of having the best-educated, most literate jurisdiction on the continent and provide an educated and skilled workforce to fill more jobs per capita than anywhere else in Canada.

           We thank you very much for having an opportunity to appear before your committee. We'd be pleased to answer questions that you may have.

           B. Lekstrom (Chair): Thank you very much. I think that was a wonderful start to the committee's hearings. Dr. Ashton, Mr. Reed — again, I want to thank you.

           I will look to committee members to see if there are any questions.

           M. Karagianis (Deputy Chair): My question is to Dr. Ashton. We have been reading that Ontario universities are noting some concern with levels of literacy coming into universities at this point. You alluded to it at one point in your remarks, about the level of literacy in schools in the north. Is that a concern for you for entry level into college? And is there any way we can find some statistics on that, which are relevant to British Columbia?

           L. Ashton: The answer to the second part with respect to statistics…. I'm sure the statistics are available. In terms of entry into the colleges, the colleges have well-established programs in what we call access areas, which enable students that don't meet the literacy re-

[ Page 20 ]

quirements for entry into post-secondary education to actually come to the college and be able to get their upgrading at the college.

           If the literacy level is low enough that they're not even able to go into our access programs, we'll work with community organizations such as Victoria READ and Literacy Victoria, where they can get one-on-one tutors and then move from there into the lower-level access programs at the college and then into post-secondary education. So that's what colleges provide — an ability for adults to do that even if they bridge back into education.

           J. Reed: It's particularly important in terms of the apprenticeships too. The B.C. College Presidents sit on a steering committee for aboriginal education that comprises all the post-secondary system, the first nations, the province of B.C. and the government of Canada. It's really particularly important. It's where our largest labour pool in the future is going to be, and we need to work very strategically, targeted in terms of raising the literacy so that students can then move into an apprenticeship trade. They do require a certain level of literacy in order to be able to do that. It's very critical.

           B. Lekstrom (Chair): All right. Thank you.

           R. Lee: Because of the growth of the economy and also the retirement of the skilled trade workers, there are many programs. For example, in secondary schools, in colleges, in industries, in universities — they have training programs. How do you see the role of the colleges compared to other training opportunities, and what percentage of apprentices is currently graduating from the colleges?

           J. Reed: Currently, the public system takes up about 90 percent to 95 percent of the apprenticeships and certificates trades area. It's a very big area in terms of colleges' participation. Within that 90, we then represent about 50 percent of all the trades and apprenticeship training that takes place in the province and will be at those community colleges in the 50 campuses across the province.

[0920]

           We work very closely with the high schools. Dr. Ashton has a great example of that in Camosun College, working with the different school districts so that we have a good transition from high school into the college — a smooth transition so that the student does not lose time.

           We need to do more in that area. We need to have better collaboration, but we do work well with the post-secondary system and the private trainers. We've actually formed a trades training consortium of British Columbia that comprises BCIT, the urban-rural colleges and the university colleges in this province, which makes up about 95 percent of trades training. Our efforts are to work collaboratively together with the Industry Training Authority, which is a new body that was created by government to work to try to address the skills training shortage in this province, which is becoming very critical. We're very sensitive to that.

           B. Lekstrom (Chair): We do have time for one further question. I will go to Dave.

           D. Hayer: My question is…. Some of the university colleges I've talked to all want to drop the word "college" out of it and just become universities. Do you have any views on that? At one time I thought it reasonable that they were university colleges, because they were easier to get to, had small classes and generally the fees were lower.

           J. Reed: Well, we rather like our brand "community college," because it really signifies what we do within the community. We understand, I think, some of the issues around the university colleges and the desire to be special purpose universities. We certainly wouldn't stand in their way. It's not our right to do that.

           I guess the observation I would have goes back to the classic principle of putting the strategy in place before you put the structure underneath it. I'd like to see an overall strategic direction, moving out in the next couple years, developed for the province for where we're going in the next ten or 20 years — a vision, and I know the government is working on that — so that we can then look at what structural requirements we need in order to address the human resource and education development requirements of this province. I think we need a ten- or 20-year vision and direction for the province. Then we can start to address some of the structural issues around that.

           B. Lekstrom (Chair): All right. Again, I would like to thank you very much.

           Earlier in my introductions I forgot to mention that we do have a number of committee members who aren't able to be with us today for reasons that are certainly unique at this point. They're attending to other business. I can assure you that your submission will be reviewed by the members, and they will be given all of the information that you've shared with us here today.

           Again, thank you, Dr. Ashton and Mr. Reed, for your presentation. I look forward to the committee's deliberations, once we've concluded our hearings, to put our report together.

           Our next presenter to the committee this morning is with the Victoria Real Estate Board — Mr. Gary McInnis. Good morning, Gary, and welcome to the committee.

           G. McInnis: Good morning, Mr. Lekstrom, committee members, and thank you for this opportunity to give you our prebudget submission. The Victoria Real Estate Board appreciates this opportunity, simply because open dialogue with government is always appreciated.

           I'd like to begin our presentation with a brief overview of how our board functions and the impact of our profession on the economy. I'll then focus the bulk of the presentation on our call for some relief for home-

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buyers from the property transfer tax. I'll also be asking the provincial government to do more to stimulate construction of more affordable housing and to lobby the federal government to take similar measures.

           The Victoria Real Estate Board was founded in 1921 and since that time has been a key player in the development of standards and innovative programs aimed at enhancing the professionalism and community standing of realtors. We don't take that lightly. We view this as a profession, not simply an industry. The primary function of the board is the operation of the Multiple Listing Service, MLS, which realtors use every day to bring buyers and sellers together.

           The impact of real estate sales is significant. The strong real estate marketplace has been a driving force in the local, provincial and national economies for a number of years. Realtors in Greater Victoria sold over $2.3 billion in residential real estate alone last year. From a provincewide perspective, realtors sold a record $28 billion in residential real estate last year, creating jobs and numerous spinoff benefits for thousands of people.

[0925]

           The first report by Clayton Research shows that for every home purchased in Canada, there is an average further expenditure of some $27,000 on needed furniture, appliances and services, which helps the economy even more. Given that in the first nine months of this year there have been nearly 6,200 residential sales in the Greater Victoria area, the result of this multiplier effect is a staggering $167 million in the local economy.

           In terms of the property transfer tax, you will be hearing from the B.C. Real Estate Association during their presentation to your committee next week in Prince George. I would, however, like to offer the following thoughts. Our profession and other industry groups have consistently maintained that government has been taking too much revenue from the housing sector through the PTT. When questioned on this matter, however, the response from both sides of the Legislature has been to point at the tax as an important revenue source. And given that the dramatic increase in the value of real estate has resulted in a windfall for government in property transfer tax revenues, we feel there is significant room for substantial tax relief in this area.

           The 2005-2006 budget tabled by Minister Hansen in February projected total PTT revenue for this year of $460 million. The restated budget update given to the Legislature by Minister Taylor a few days ago had a new projection of $650 million in PTT revenues, which is an increase of $190 million. Given the continued fast pace of the real estate market, we fully expect that the year-end figure will be even higher. Notwithstanding the additional $190 million, the provincial treasury was already looking at a surplus. We think it is clear that there is plenty of room to reduce the PTT and exempt more first-time buyers from this tax.

           We welcomed the initial introduction of thresholds of exemptions for first-time buyers in our area, and we commend the government for recently increasing these thresholds. However, in the February budget the exemption was only increased to $325,000 for a first-time buyer in our region. In practical terms, this offers little relief for many people who are trying to realize the dream of home ownership. The most recent MLS data shows the average selling price of a single-family home in the Victoria area in September to be $481,786, with a median price of $419,950 — both of which are well above the $325,000 threshold.

           Condominiums are certainly and naturally more affordable. The average price of condominiums sold in September was $255,558, while the median price was $212,900. But we do not believe that the intent of the program was only to assist condominium buyers. It is clear that the policy aimed at helping first-time home buyers by exempting them from this tax is having, at best, only limited success, particularly in the urban areas — ours certainly being one of those.

           Realtors and others believe that this onerous tax makes it more difficult for British Columbia to compete with other jurisdictions for investment, and we will certainly be raising this issue with the Premier's Competition Council this fall. In a brief to the legislative committee last year, the B.C. Real Estate Association presented an economic argument highlighting the value to the provincial economy if the province removed the PTT on the first $200,000 of the purchase price. Next week in Prince George, the British Columbia Real Estate Association will present you with new research that makes this case even stronger.

[0930]

           Similar concerns are being expressed in Washington State, where the Washington Association of Realtors — please, I don't like the acronym either, WAR; it's a little scary — plans to lobby the government in Olympia this fall regarding the Washington State real estate excise tax. It's estimated that the tax will raise over $800 million U.S. this year. Their contention is that the real estate excise tax makes home buying more expensive and creates an especially heavy burden for lower- and middle-income purchasers. The added expense is also a drag on businesses that are looking to relocate to the state or expand their operations within it.

           On the topic of other initiatives, we congratulate the government for increasing funding in the next ceilings for the Shelter Aid for Elderly Renters program. These steps help support a healthy housing marketplace.

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           We also strongly support the other announced initiatives aimed at providing more housing opportunities for British Columbians. We congratulate the Premier for forming the Premier's Task Force on Homelessness and hope that within the context of the new spirit of cooperation in the B.C. Legislature, the government and the opposition will work more closely to address this issue. We would encourage the Premier to include opposition members on the task force, and as a profession we would be pleased to offer any input that might be helpful.

           We also urge the government to pay additional attention to helping lower-income individuals and families keep a roof over their heads. We would strongly support any new program such as portable rent subsidies, which help low-income families directly rather than focusing just on the construction of more public housing.

           Since 1995 we believe that fewer than 50 units of purpose-built new multifamily rental suites have been constructed in the capital regional district. The need for more of this kind of affordable housing is clear, and we urge the provincial government to remove some of the barriers that act as disincentives to the private sector to build more rental units.

           For example, we suggest that the government remove the property transfer tax from the sale of land to be used between now and 2010 for the construction of affordable rental units. The province could then encourage the municipalities to waive development cost charges on properties to be used for this same purpose. The precedent has been set. There is a social housing program sponsored by the Royal Canadian Legion in Langford where the municipality or township of Langford waived the development cost charges on Legion housing of 74 units. It was some $630,000 off the ticket on that building. That is substantial.

           We also urge the province to strongly encourage the federal government to do the following: remove the GST from building materials used for rental construction; remove or at least significantly reduce the capital gains tax from the sale of rental apartment buildings so that new owners and new blood can take over maintenance and upgrading of existing units; and encourage the federal Finance Ministry to stay out of adjustments to the calculation of allowable expenses, rollovers and capital gains that negatively affect this marketplace.

           To conclude, our main recommendations are: review the property transfer tax and, at the least, increase the tax thresholds; provide housing assistance directly to low-income families through such mechanisms as portable rental subsidies; increase incentives for the construction of affordable rental accommodation; and lobby the federal government to remove tax disincentives for rental construction.

           On behalf of our 1,100-plus members throughout Greater Victoria, we sincerely thank you for this presentation and welcome any questions you may have.

           B. Lekstrom (Chair): Thank you very much, Mr. McInnis. That's certainly an informative presentation for me and, I'm sure, for all of our members. We will go immediately to questions. I'll begin with John.

           J. Yap: Thank you, Mr. McInnis, for your presentation — very informative. I'm not unsupportive of the need to review the property transfer tax. Generally speaking, if we can reduce taxes, it's a good thing for encouraging the economy.

           Having said that, as you pointed out, the real estate market has been very strong in recent years. An observer might say: "What's the problem?" The industry is strong. Realtors are doing very well. People are buying homes. Market values are increasing. The rate of home ownership, I believe, is edging up. This tax is actually doing its work. It's generating revenue for government so we can make the investments in other areas. It's not, on the surface at least, a drag on the industry involved.

[0935]

           G. McInnis: Respectfully, I must disagree. I believe it is a drag on home ownership, in general — particularly first-time buyers, at a $325,000 threshold in this particular area. When an average price is $481,000 and market forces are going to continue to let that happen, I don't believe you're going to see any return to a $325,000 single-family home for a first-time buyer anywhere in this jurisdiction anytime soon.

           Having said that, we recognize that government has to operate on tax dollars. But if a full review of this tax were implemented and if the spinoff dollar generation were factored in, would it be possible to forecast the incentive change for someone to buy a single-family at $325,000 if it were increased to $375,000 — or whatever that number might be — versus the overheated condo market where the affordability allows that to happen?

           Do we create better communities by building condominiums, or do we create better communities by having people in single-family ownership? I'll leave that to the committee to try and determine.

           B. Lekstrom (Chair): All right. I will move over to Maurine for the next question.

           M. Karagianis (Deputy Chair): I'm actually very interested in some of the proposals you've put forward with regard to affordable housing, having in fact done that just prior to becoming an MLA. I've been involved in building independent seniors housing in Langford. I'm actually familiar with how Langford has stepped forward and participated in more projects than even the Legion one. They've participated in the M'akola housing project that's just reaching completion.

           Not all communities have development cost charges, and certainly there is considerable debate among municipal leaders on how they participate — the effectiveness of that.

           I think many of the proposals you've put forward here are very interesting and very exciting. Are you, in

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fact, taking some of these ideas directly to communities and helping to promote that from the municipal end?

           G. McInnis: Yes, we have a very active government relations committee, where a member of our committee attends council meeting and reports back on all of our local jurisdictions. So we are taking that message to them as well.

           M. Karagianis (Deputy Chair): I'd be very interested in hearing more, and the idea of portable rent subsidies as well…. I think there's a package here that could be very interesting to present to the region.

           G. McInnis: The theory on portable rent subsidies is very simple. In previous rental subsidies they would go straight to a building, and the tenants in that building would have the rent subsidy paid to the unit. We think that prevents a possible migration for a better job. What if somebody who is living in an address in Victoria that has a rent subsidy is offered a better job in Duncan? Will they go, if they lose their rent subsidy? Highly unlikely. Why not make it portable? Why not allow them the mobility?

           M. Karagianis (Deputy Chair): So you're seeing this as something that would probably be the responsibility of B.C. Housing through their current rent programs?

           G. McInnis: Yes.

           M. Karagianis (Deputy Chair): That does put them more in the realm of then being human resource managers rather than property managers, which is a shift in thinking in some ways.

           G. McInnis: That's true. There is a philosophical change, and there is a completely different approach to this. But the opportunity to allow someone to move along, I think, is substantial — just from the point of view of considering this as an alternative, rather than keeping the same property forever on subsidy and very likely the same tenants in place. Perhaps it would allow people to move up. It's certainly worth the discussion.

           M. Karagianis (Deputy Chair): It's a very interesting proposal. Thank you.

           B. Lekstrom (Chair): Gary, thank you very much. I will echo the comments of the members here. I think you've put forward some ideas that are certainly due for consideration from our committee. You have brought some issues forward, as well as solutions — what you think will help. I very much appreciate that, on behalf of the committee.

[0940]

           Again, if there was more time, there would be far more questions and dialogue, but watching the clock closely…. We began a couple of minutes late, and so far we've managed to keep it quite on track. Again, thank you very much for your time here today.

           G. McInnis: We strongly appreciate our opportunity here and hope that your committee gets exactly where you need to go.

           B. Lekstrom (Chair): We will also make sure that the presenters are made aware once the report is completed. We will stay in touch.

           Moving along, our third presentation this morning comes to us from the Greater Victoria Chamber of Commerce. Joining us today are Mr. Bruce Carter and Mr. Bryan Dreilich. Good morning and welcome.

           B. Carter: Good morning. It's a pleasure to be here, Mr. Chairman. Thank you.

           On behalf of the chamber of commerce, I'd like to say that we really appreciate the opportunity to be here, particularly today, when I know that it's probably a bit of a challenge. I think it's important to note that we're here this morning after having launched our Small Business Month, where we had a tremendous speaker in. I'm going to try and echo his energy and enthusiasm.

           Small business in Victoria. Certainly, in my membership, businesses of fewer than ten people represent 80 percent of my membership. I think they represent over 80 percent of the revenue and employment in this province and are the lifeblood, so it's my honour to be here representing that group.

           We have a number of items that we wanted to talk to the committee about today. Probably the most important one to talk about is a fiscal policy one. We have some concerns about overall taxation — already, almost out of the realm of the provincial government. We certainly commend much of the tax relief that we've had in the recent past and the recent budgets. We think they're good incentives.

           We are concerned, though, for the individual taxpayer who pays it all. We're not getting much tax relief on the federal level, and we're seeing rising taxes, to be quite honest, at the municipal level, particularly in the form of property taxes and the possibility of new taxes. Our concern there is that any tax relief given at a provincial level could possibly be negated by increases at other levels. That's not good for the economy.

           It's an area that we have concern over. We look to the provincial government to provide leadership in examining overall taxation and how that fits. At this point we have a thought for economic development councils that would operate regionally and would be chaired by business or by business groups and would provide input to all levels.

           To be quite honest, we're not really sure exactly how that works, but we think it's a concept that could work and that the possibility of running a trial project somewhere in the province with this council to try and see how that might work is something that could be done. Certainly, Victoria would be willing to participate in that. We do have an enterprise partnership,

[ Page 24 ]

which is a series of entities that would be willing to take on that task. It might be something that's put out to any community in the province that might want to run that pilot project. I'm sorry I don't have more details on that, but I think it's a great idea.

           Certainly, we think that the recent reductions in the provincial sales tax have had a positive effect on the economy. We encourage and recommend a half-percent reduction in the sales tax and an ongoing commitment to the reduction of that sales tax. We think it's a broad-based tax relief that really is applied equally to everyone. It provides a direct input to our economy and has a multiplying effect, in the end. Although it looks like a $270 million hit to the budget, we think the activity will be greater than that.

           We applaud the recent recognition of provincial debt and the requirement to reduce it, although economically we understand that debt reduces as a part of GDP. That's a good number. We are a bit concerned that small changes in GDP can have a large effect on that debt number. Ideally, we'd like to see a real-number reduction in the debt. Of course, we understand that managing the complex fiscal books of the province is a challenge.

[0945]

           It was interesting earlier today to hear Camosun College or, sorry, the colleges present — Liz being from Camosun — and talk about education and training. That's certainly something where we share concerns and have some specific policies that we think may help. One of the things we're finding with the skills shortage that we're definitely seeing — and it's exacerbated here in Victoria with a 3½-percent unemployment rate; we certainly see that — is the very quick mobility of workers and the challenge in providing training to students as they move forward. One of the comments that one of our members put forward to us was: "It's interesting to be at a college graduation ceremony now. No one's there. They're all out working already."

           That's a good thing, but one of the challenges is that it has really hurt our co-op programs. As opposed to getting that work experience and running those co-op programs, a lot of the time now people are opting not to do that or it's difficult to get a co-op placement. We think that's an important part of the training process, and we need to encourage that. We have a specific recommendation for a tax credit to those small businesses that employ those co-op students in order to encourage that portion of training in the economy. We think it's important to skills development. Our numbers on the offset are really quite insignificant — about a $6 million incentive. We think that's quite worthwhile.

           The other challenge is that we have a proposal for a human resource development tax credit. This is specifically designed towards apprentice training. Many of the trades employers are concerned about employing and training apprentices who, as soon as they complete their apprenticeship, move on to a different employer. That leads to a hesitance to get involved in it because of the high cost of doing that.

           Economically, training apprentices and getting them out in the workforce is a good thing, so we think that possibly providing an incentive in the form of a tax credit to the person or the company that is providing that apprenticeship training may help encourage the development of trades and make us more competitive as a province. We have a recommendation for a tax credit there. If we need to talk about the details of those numbers, that's why I brought Bryan.

           Certainly from a Victoria perspective, there are a couple of other things that we're after. Victoria has a unique position in the province and, I think, on the Pacific and on the Pacific Rim. We're one of the oldest cities on the Pacific Rim. We have significant architecture. We are the gateway — Canada's gateway — to the Pacific. We have something called Belleville Street terminal, where we like to welcome visitors, make them feel welcome, and do a U.S. customs clearance there and then bring them to our province. I'm going to stop short of calling it a really bad name, but it's not very attractive. It is on the doorstep of the Legislature. We think that project really needs to have provincial funding participation in order to make it viable, and we're looking to get funding for that.

           In addition, there has been considerable discussion and a lot of work underway on a partnership among the city, the provincial and the federal governments on the Victoria urban development agreement. We're hoping that will come to fruition, and we'd like to see allocation in the budget on the order of $10 million for that project. That's similar to what was awarded to the downtown east side, and to be quite honest, the area being covered is quite similar. My understanding is that the specifics of that project should be worked out in the next month or so as the consultation process continues working towards a vibrant economy.

           I think I'm actually short of time, but I'm going to stop there and answer questions.

           B. Lekstrom (Chair): Thank you very much, Bruce and Bryan. I will look to members for questions, and I will begin with Maurine.

           M. Karagianis (Deputy Chair): Bruce, it's good to see you again — and Bryan as well. I'm assuming Bryan has some of the background information to some of this for us. I know you've alluded to a couple of things here that have more complex background material. Bryan, do you have some of the background material for some of these proposals?

           B. Dreilich: Yes, certainly. We have whole policies on a lot of this that we can certainly….

           M. Karagianis (Deputy Chair): I think that might be a good submission for some of these things — certainly your economic development councils and things like that. It would be nice to have some background to actually flesh that out.

           Bruce, I wanted to ask you a little bit here. You alluded to the idea here of these tax credits for trades,

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and I think it's an interesting idea. Have you given any thought right now to the current shift in how trades apprenticeships are being offered, where in fact industry specialization is changing how apprenticeships are delivered?

[0950]

           B. Carter: I'm not sure that will have all that much effect in the application and this tax credit in particular, and it probably will make that much more difficult. Although people will specialize, that specialty is still very much required in the workforce. Those workers will have considerable value in the economy and will be quite mobile.

           I think that recognizing the person who's providing and the business that's providing that core training for our economy and for the greater good is still worthwhile. If we can encourage that, we may find that we are able to get more people into those trades and that training just because the system will work better and, certainly from a Victoria perspective, compete with the rest of the country for that skilled labour force.

           M. Karagianis (Deputy Chair): Any concerns at all with this sort of shift in apprenticeships and what the end result is going to be for the skilled workers, in the forests in particular? I've heard from many within the trades that the specialization is actually watering down the level of certification and, in fact, giving us many semi-trained tradesmen rather than full-on certified trades. Have you given any thought to that whatsoever from your perspective?

           B. Carter: It's not something that we've looked at in great detail. There have been discussions about making sure that in our efforts to get people out into the workforce, we don't water down, and that those people who are qualified remain to do so.

           We certainly are a knowledge-based economy. We're looking for skilled artisans in all areas. I'm going to have to stop there.

           M. Karagianis (Deputy Chair): Great. Well, I look forward to some of the background material — some fleshing out of some of these concepts from Bryan.

           B. Lekstrom (Chair): We'll have one further question.

           D. Hayer: Thank you very much for your presentation. Have you discussed some of these things, like a tax credit, with the B.C. Chamber of Commerce? I think most of the small chambers in British Columbia are members of this chamber.

           B. Carter: Well, if the system works well, you'll hear about this at almost every presentation that happens. Both of the tax credits have the support of the B.C. chamber and were passed as policies B.C.-wide at our recent convention. Certainly, the B.C. chamber will be seeing you in Smithers and will be bringing both of those forward then. They have broad support from all of the 130 chambers in the province.

           B. Lekstrom (Chair): All right. I see no further questions from members of the committee here this morning.

           The information that Maurine had asked to put forward…. We would certainly encourage you, if you would like, to submit further information on that. You can do it through the Clerk's office, and each member will certainly receive that. Again, I want to thank you for coming this morning to present to our committee.

           B. Carter: Wonderful. Thank you for the opportunity.

           B. Lekstrom (Chair): Our next presenter this morning to present to our committee is with the North West CruiseShip Association — Mr. John Hansen. Good morning and welcome.

           J. Hansen: Good morning, Mr. Chairman, members of the committee. Thank you for the opportunity to be here this morning with you. I know there are a lot of other things going on in the Legislature yesterday and today, so I appreciate the opportunity to be here.

           My name is John Hansen. I'm president of the North West CruiseShip Association. NWCA is an association representing the international cruise lines that operate here in British Columbia and in Alaska, Washington State, Hawaii and the east coast of Canada as well. Our member lines are Holland America, Carnival, Princess and so on — in other words, the major lines. Our mandate is to work with the ports and with the communities and state and provincial legislatures and national government agencies to ensure the continued viability and growth of our business in this region.

           Our organization was established in '86, incorporated in B.C., to provide security services in the port of Vancouver — screening, walk-through metal detector and so on — and we still do that.

[0955]

           This morning I'd like to give you a brief update on how this season went and some of the matters that are of concern to us at this time and some of the challenges that we face. But first, on behalf of all the member lines, I'm here to commend the government of British Columbia for the very positive economic climate and also to extend our really sincere thanks not only to the province of B.C. but also to the residents and the communities for the warm welcome that has been extended to the cruise lines and, more particular, to the guests. They now number close to one million that we bring through British Columbia ports. In fact, the number this year looks like it's going to be around 940,000 people. Many of these are first-time visitors to B.C., and many come back.

           This season went well. It was a very successful one. The weather was good; that always helps. We had 27 very modern ships. Average age is under five years old. There were 450 cruises, and every one of them came through a B.C. port — either Vancouver, Victoria

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or Prince Rupert. Operationally, it was a good season as well. There were no health, safety, environmental or security issues to speak of that caused any problems this year.

           Incidentally, the port of Vancouver counts people. Some of them are counted twice — the round-trippers. So there were 900,000 that passed through the port of Vancouver, 290,000 through Victoria and 95,000 through Prince Rupert. Prince Rupert has a new dock that was opened two years ago. Eighty-five percent of the passengers that we handle are non-Canadian. Most of them are U.S. residents.

           We have done some work on the economic impact of our industry in Canada and British Columbia. We have some handout material of a study that we had completed a year ago. Let me just summarize very briefly. In 2004 the industry in total expenditures by passengers, crew members and companies spent about $660 million directly. If you apply even a modest multiplier on that, it's well over a billion-dollar contribution to the economy.

           On average, with the arithmetic as it works out, with 450 cruises that pass through B.C. ports, it equates to about $1½ million that every one of those cruises leaves behind. The impact, of course, is significant on jobs for British Columbians. I won't list all the different kinds of jobs — we do talk about them in the brief — but it adds up to something over 10,000 people that owe their livelihood to our industry.

           One thing I do want to mention specifically — and it's one area that really is exciting as well — is the growth in the amount of major refits by the cruise lines, particularly right here in Victoria and Esquimalt. This year it looks like about $60 million worth of refit work. That's done because the yards are competitive. The work is excellent, and they do bring good value to what they provide.

           We have seen strong growth over the years. One of the factors, of course, behind that is a predictable economic environment and relationship with communities. We certainly have that here in B.C., and we value that a lot.

           Last year I appeared before this committee and cited one example that related to elimination of a tax on deep-sea bunker fuel, which took place about four years ago, not only for cruise but also for all deep-sea ships. B.C. had been the only jurisdiction in North America that still had that tax on deep-sea bunkers. The result of the elimination of that has been dramatic in terms of the amount of new bunkering that takes place here, which does two things. It brings new business here for the fuel companies, or the refuellers, and so on and also — and this is really important — because the fuel quality is really good here. It's really low-sulphur fuel. It's good for the environment as well. So we win on both counts. In fact, the fuel here in B.C. is well ahead of even a highly sensitive place like California.

           I also want to say that we appreciate this government's support for initiatives to develop other cruise destinations in B.C. — namely, Prince Rupert, Nanaimo, Campbell River and so on, in addition to Vancouver and Victoria.

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           Let me conclude by mentioning a couple of the challenges ahead. Our region is seeing a little bit of reduction in our share of the global market for cruises. We've gone from 9 percent to 7½ percent, which doesn't sound like much, but it is significant in the scheme of things. While in absolute terms we're still growing, our market share is shrinking.

           One of the key issues facing us, in my opinion, is the difficulty of crossing borders and the hassle of crossing borders and the additional cost of travelling, say, to board a ship in Vancouver, compared to travelling to Seattle. Those are the kinds of things that we are concerned about.

           We're also concerned about the mandatory requirement — this starts at the end of 2006 — for passports for all people entering the U.S. — U.S. residents, U.S. citizens, Canadian citizens and in fact anybody entering the U.S. That has an effect on our business and probably even more effect on other segments of the tourism sector, but certainly it affects us as well.

           We also have some challenges in Alaska, which we are working through, in terms of major new tax initiatives — basically an entrance fee to travel to Alaska by cruise ship. This is something that is really top of our priority in dealing with this. It's a matter that will go before the voters in Alaska in August 2006.

           So let me conclude with that, Mr. Chairman and members of the committee. I'd welcome any questions.

           B. Lekstrom (Chair): Thank you, Mr. Hansen. I know there are a couple of questions. I will start with John this morning.

           J. Yap: Thank you, Mr. Hansen, for your overview. I certainly can see that the cruise ship industry is very important to British Columbia and Canada. One of the things that we had heard about in recent years was the competitive threat posed by Seattle. Can you give us an update on that situation?

           J. Hansen: Yes, I can.

           Vancouver has historically been the major port, of course. It was the port that started the whole industry here in the Pacific Northwest and Alaska. For many years it was the only home port until basically four years ago. A couple of things happened at that time. One was September 11, 2001, and the additional security requirements and additional border protection. That had an effect in terms of people's willingness or wish to travel across borders.

           Secondly, Vancouver was running out of weekend spots, weekend berths. There simply was not any room for expansion on Saturdays and Sundays, a little bit on Mondays and Fridays. But the reality was and is that people like to start their vacations around the weekend. Seattle offered the berths, so it was an opportunity for some ships to start running out of Seattle.

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           I guess the third thing that happened is that as new ships came into the market…. These are new ships that are faster and larger, and up until that point ships had not had the capability to do seven-day round-trip cruises out of Seattle. To do seven days you had to run out of Vancouver. So it was a number of factors. Right now I guess the additional factor is just the ease of getting to Seattle compared to Vancouver. There are a lot more flights, and it's possible to get better bargains when you're looking for cheap flights into Seattle than it is Vancouver. So airlift capacity becomes a really important matter.

           If you want to put it in money terms, the additional cost for Vancouver for the individual traveller averages to about $150 to $200. You could start your vacation cheaper, by that amount, out of Seattle than out of Vancouver. Those are some of the factors.

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           Having said all that, all the ships that run out of Seattle are required by U.S. law to call at a non-U.S. or foreign port in the course of their cruise, which brings Victoria into play — and Prince Rupert. While the port of Vancouver has lost some, it's been Victoria and Prince Rupert's gain.

           R. Lee: Thank you for the presentation, Mr. Hansen. I have a question, though, regarding marketing. We know that, as you said, 85 percent of cruise ship passengers are from the United States. But has the industry done any marketing besides the U.S. — you know, overseas, say Asia-Pacific countries? That's a huge market, potentially.

           J. Hansen: Yes, it is a huge market. So far, the numbers of people from overseas cruising in North America have been pretty small. I think in the Alaska market, maybe 2, 3 or 5 percent are from Asia. There are some German and some British, and a little bit of French, and of course some Canadian as well.

           Where the industry seems to be going in terms of the Asian and the European market is to expand operations in those areas and provide closer-to-home cruising for people from Japan, China and so on so that they can cruise closer to home. That seems to be the next major expansion of the cruise business worldwide. Europe has come back dramatically after a slowdown in some years. The European cruise market is dramatically increasing.

           But so far in this market here in the Pacific Northwest it's really been, as I say, 85 percent American.

           R. Lee: Do you think that because a lot of Asian visitors have a very short time, a very tight schedule, when they visit Canada…? If you have a shorter route, maybe it's easier to go home. Do you think that could be the problem?

           J. Hansen: Well, one of the lines is experimenting with a new product in the marketplace this year, Mr. Lee. That is three-, four- and five-day cruises. In fact, the ship is still here. They're running cruises — Seattle, Victoria, Nanaimo and Vancouver. So far, from what I hear, it's going really well. I think the industry as a whole is looking to this kind of expansion, working into the shoulder season and maybe even year-round at some stage to provide those kinds of short vacations for more of a regional market here — the Washington, British Columbia and Alberta markets.

           Canadians have a high propensity to cruise. The problem is that they don't cruise here; they go south. A lot of Canadians cruise in the Caribbean and Mexico.

           B. Lekstrom (Chair): All right, we're quickly running out of time, but I know that you, Maurine, do have a question.

           M. Karagianis (Deputy Chair): I had several, but I'll actually keep it really short now. I didn't hear a lot of actual requests of government at this time. I heard the things that you talked about: passport requirements and things like that. Those are obviously efforts that are federal in nature, as well.

           My thought here with regard to Alaska now bringing in some new taxation…. Does this offer greater opportunities for Canadian cruise destinations? If Alaska is more expensive, can we see cruises that only have destinations within Canada?

           J. Hansen: The Alaska market really depends so much on Americans travelling to Alaska. I think anything that harms the Alaska market harms the British Columbia market as well. In time, maybe ten years from now when B.C. cruises have more of an identity, more of a brand in the marketplace, you may be right. If Alaska made it prohibitive or more costly to cruise there, it would send people to British Columbia.

           M. Karagianis (Deputy Chair): Maybe Haida Gwaii should be the next big destination, not just Alaska.

           J. Hansen: There certainly are some great destinations. Prince Rupert is coming along really well, and it will become a good-quality destination for a cruise.

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           B. Lekstrom (Chair): I was going to recommend Dawson Creek. Unfortunately, it's a little tough to get a boat up there.

           John, I want to thank you for your presentation. You did touch on something. I had the honour of being the Chair of the Finance Committee during the presentation originally on the bunker fuel issue that was brought before the committee, and I can tell you it's a good example of a success. Not that every issue that's brought before the committee can be acted on by government, but in the case of that issue, it was acted on. I think it has been of some assistance to the province, to the industry, which benefits us all.

           Again, thank you for your presentation here this morning.

           Our next presentation this morning comes to us from Hayes Stewart Little and Co. Joining us this

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morning is Dan Little. Good morning and welcome, Dan.

           D. Little: I respect that you've had a long night, so I do wish you a good morning.

           My name is Dan Little, and I'm a partner with Vancouver Island–based Hayes Stewart Little and Co., chartered accountants. I'm also a council member for the B.C. Institute of Chartered Accountants, which regulates the standards and conducts of CAs throughout the province.

           Before I begin, I'd like to give some background on me, my firm and the clients my firm represents. That way you can put into context the ideas and recommendations I'm here today to provide.

           I've been in public practice for 18 years and a partner with Hayes Stewart Little and Co. since 1991. Hayes Stewart Little and Co. is the largest independent accounting firm on Vancouver Island. We have offices in Nanaimo, Victoria and Duncan and employ more than 25 professional staff who provide advice and services in financial planning, tax preparation and financial restructuring. Our base of clients reflects the diverse structure of the economy on Vancouver Island. We provide services to small and large businesses, municipal governments, industry sectors including forestry, transportation and construction, Crown corporations and not-for-profit organizations.

           This is the third time I've appeared before the Select Standing Committee on Finance and Government Services. I keep returning, because I believe in this process. Consultations on the budget are necessary and important. They give the private sector the opportunity to provide input on government program and spending priorities.

           Every day in our firm, my colleagues and I talk to individuals and business owners about what they need to compete, grow and succeed in British Columbia today. What we hear again and again is that government needs to continue to focus on making sure their fiscal decisions are responsible ones. A strong fiscal position gives us the luxury of making policy choices that create an even more competitive economy in British Columbia, and a competitive economy allows the private sector to be entrepreneurial, to be profitable and to create jobs.

           My comments, ideas and recommendations today will focus on key fiscal and economic issues that contribute to our overall competitiveness, and as a result, are the priorities I believe the provincial budget should address in the coming year.

           Government has introduced fiscal policy improvements including the Budget Transparency and Accountability Act and the Balanced Budget Act. These have helped restore British Columbia's fiscal credibility and made British Columbia's budget process the most transparent and accountable in Canada. The next logical step is to introduce a debt management plan.

           British Columbia's debt-to-GDP ratio was as high as 21.3 percent in 2002-2003. Fortunately, through improved fiscal management and a strong economy, that ratio is forecast to decline to 15.8 percent by 2007-2008. As a result, British Columbia's credit rating from the three major credit-rating agencies was upgraded over the past year. While this is great news, now is not the time to become complacent. I believe our province needs a strong commitment to debt management in the form of a ten-year debt management plan to reduce taxpayer-supported debt-to-GDP ratio to 10 percent by 2015.

           Government spends $1.6 billion annually to service the debt. With ever-increasing demands for spending on services like health care and education, it's important to reduce debt in order to accommodate increased spending on priority programs.

           It's clear that the government's commitment to getting British Columbia's fiscal situation under control is contributing to a stronger economy. British Columbia has created more than 230,000 new jobs so far this year. GDP growth is forecast to be 3 percent for the next few years, and the number of major investment projects planned or underway is at record levels. All of this has contributed to an astounding $1.3 billion surplus for 2005-2006 and a forecast $1 billion surplus over the following two years. Strong economic growth combined with a strong fiscal position means that British Columbia now has an ability to devote resources to priority program areas.

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           One area that I believe should be a priority is encouraging investment and innovation. Reducing the corporate income tax rate to 12 percent from 13.5 percent in the September 2005 budget update demonstrated that British Columbia is committed to attracting and retaining investment. The corporate tax rate is a key factor that businesses consider when making investment decisions. This reduction moves British Columbia's rate closer to Alberta's 11.5 percent and increases the province's competitiveness. I would encourage the government to keep monitoring tax rates of our major competitors to ensure that we retain or increase British Columbia's competitiveness.

           Another key factor in keeping British Columbia competitive is to support policies and programs that increase our innovation and productivity. Innovation is not only a measure of how investors view our investment climate, but it's also closely linked to future productivity. One measure of innovation is the number of patents per million of population. British Columbia has seen steady improvement but still lags behind Alberta, Ontario and the national average.

           Spending on research and development in British Columbia, measured by our R-and-D-spending-to-GDP ratio, is also lower than Ontario and the national average. While growth of R-and-D spending has been very fast, we still have improvements to make before we can catch our competitors. I would recommend that any future tax reductions be targeted at policies that increase innovation, particularly R and D. The results will not only be increased R and D but more productive workers who in turn attract the best incomes.

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           My final recommendation is in the area of skills training and post-secondary education. B.C. Check-Up 2005, released earlier this week by the Chartered Accountants of B.C., shows the province will face a worker shortage by 2015. By 2015, 73 percent of jobs will require some form of post-secondary education. However, at the moment only 59.3 percent of British Columbians have completed post-secondary studies.

           Projected labour market requirements for British Columbia between 2003 and 2015 also show some gaps that need to be addressed. Some 44 percent of jobs will require non-university certification, but only 36 percent of the population has non-university certification. Though 29 percent of jobs will require a university degree, only 23 percent of the population has a university degree. Only 27 percent of jobs will require no post-secondary education, but 41 percent of our population has no post-secondary education. Clearly, we need policies and programs that match the skills of our residents with the needs of our labour market.

           In conclusion, B.C.'s fiscal position has improved. Our competitive position is better. We are seeing strong economic growth in job creation. The government is to be congratulated for many of its policies, which have contributed to economic growth and an enviable fiscal position. We need to keep focused on balancing the budget and maintaining strong fiscal discipline, but we also need to continue to make policy choices and program decisions that contribute to a more competitive economy.

           I hope the comments I have made today have been helpful. Thank you again for providing the opportunity for me to present my views and the views of my clients and colleagues.

           B. Lekstrom (Chair): Thank you very much, Dan. Most certainly, I can assure you, they have been helpful and will be given full consideration, as I indicated earlier.

           I have a number of questioners. I will start with John.

           J. Yap: Thank you, Mr. Little, for your input. Certainly, we're on the same wavelength when it comes to debt management. But I'd like your thoughts on the following: do you see a difference between debt that comes from structural deficit versus debt that is used for investing in infrastructure, which includes things like hospitals, bridges and highways?

           D. Little: Investing in infrastructure, I would say, is far more positive than structural debt, otherwise. I would say, though, that it has to be in the context of an overall plan. Infrastructure is incredibly important to expanding the economic diversity of our province, and it can come in many different ways. Certainly, with debt related to that, although important, there are other ways — through continuing to foster development with the federal government, getting infrastructure grants and that sort of thing. I would say that yes, it is, but it has to be done in the context of an overall plan.

           J. Yap: Just as a supplementary, I appreciate your thoughts on that, because it's one of the challenges we're facing. We do, as I'm sure you're aware, have a number of infrastructure investments that we have to make in the coming years.

           D. Little: Right.

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           M. Karagianis (Deputy Chair): I was particularly interested in the things you had to say about patents and R-and-D investments. Do you actually have any recommendations on how we become more competitive? I noted that you commented that we're sort of lagging behind in both of those areas, so do you have any clear recommendations for government on how we might…?

           D. Little: Increasing product innovation — measuring that is very difficult to do. Innovation is very hard to see in the short term but extremely easy to see in the long term. A sawmill that was producing 50 years ago wouldn't be able to produce today, and that's through innovation.

           I guess there are different things you can look at. Research and development is one target that is very important, and tax credits related to research and development are a great way to do it. They are sector-based, as you've seen through the biotech sector, but also they encourage the spending before the benefit. To me, that's a very important way to get that.

           M. Karagianis (Deputy Chair): I'm fascinated by this concept because I think there are a lot of areas where we can actually grow in that end of things, especially with green technologies. So I appreciate your comments on this. If you had further input, I'd be interested in hearing more about that.

           D. Little: I'm sure you'll hear lots about it.

           R. Lee: Thank you for the presentation. We know that from research and development, moving to patents and commercialization is a path, and at each stage there are sometimes problems. For example, going from patents to commercialization, do you have any concrete proposal so that we encourage more products of research to go into the market, so that the company can grow?

           D. Little: I guess research is always defined by successes and failures. What I'm here suggesting is that we encourage it and foster it. Fostering research through advanced education is one way of doing it, partnering with the universities — a lot of trial happens through universities — and expanding that. I guess what I'm saying is that needs to be a policy area that is important, and recognized as important, within the terms of

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the budget — that means through research and development tax credits that will allow sector-specific spending. Of course, not all of it's going to translate into marketability and productivity, but it will expand the research in that area, which eventually will increase the innovation and technology in sector-specific areas. It also provides that business and industry will spend the money before they get the benefit.

           R. Lee: Sometimes it's the step from getting the patent to getting the product to be viable in the market. Do you have any idea on how to help the progression?

           D. Little: I can't specifically think of an example of how that would work. Sorry.

           R. Lee: Okay. Thank you.

           B. Lekstrom (Chair): Dan, I would like to thank you, on behalf of the committee members, for your presentation here this morning. If it is possible, whether you have speaking notes or a written submission, if you could leave it with us I would make sure that all committee members could have a copy of that — if that works for you?

           D. Little: Certainly, no problem at all.

           B. Lekstrom (Chair): I would thank you very much for that. Again, thank you for taking the time.

           Our next presentation this morning is from Arts Action British Columbia, and with us this morning is Mary Desprez. I hope I pronounced that right.

           M. Desprez: You did. I'm impressed.

           B. Lekstrom (Chair): Oh, wow. Thanks very much, and welcome, Mary.

           M. Desprez: Good morning. I have been the general manager of the Belfry Theatre for the past 18 years, and I am also the past president and current chair of government affairs for ProArt Alliance of Greater Victoria, but today I'm speaking as a founding member of Arts Action B.C. We are a collaboration of not-for-profit professional arts organizations and community arts councils from across the province.

           It is our belief that the arts have intrinsic value to our citizens and our society. Access to and being involved with the arts has a lasting and transforming effect on many aspects of our life. When we think of our theatres, galleries, museums, opera companies, symphonies, jazz festivals, dance companies, we recognize that these organizations make life for communities of all sizes richer and more vibrant. They are indeed the heart and soul of our communities.

[1025]

           This government has shown leadership in supporting the arts, and our organizations are immensely grateful for the funding initiatives provided in the '04-05 budget. We are encouraged to see that our government has recognized the worth of cultural activities and the invaluable place the arts occupy in the lives of so many citizens. We hope to see that the upcoming budget will continue to be able to provide for the financial needs of our treasured institutions, both large and small.

           Pardon me. Those are the nerves talking. Okay.

           B. Lekstrom (Chair): You're doing wonderfully.

           M. Desprez: In the great goals for a golden decade one of our government's stated objectives is to make B.C. the best-educated and most literate jurisdiction on the continent. We applaud government for making strides in that direction in the area of literacy and the arts. But in order to achieve this goal and for the arts to be truly effective, we must stabilize the financial underpinnings of our organizations. Across the province we agree that there are three crucial areas necessary to create a firm foundation. We refer to this analogy as the three-legged stool.

           [M. Karagianis in the chair.]

           This notion is simple. The three legs must be sturdy and in balance for the whole structure to be capable of supporting the needs. If any of the legs is neglected, it'll prevent the other two from achieving maximum potential and ultimately, just like a lopsided wooden stool, it will collapse. The three legs are: endowments, facilities and operating investment.

           Our government has made clear steps towards recognition of this principle. Last year an endowment program was created for the arts in B.C. via the Vancouver Foundation in the amount of $25 million, and we applaud our government for this tremendous step forward.

           Facilities, the next leg, means capital investment in arts infrastructure for both implementing new facilities and maintaining existing ones, ensuring that there will always be a home for arts activities in our communities. In the coming months we would very much like to explore ways to encourage the creation of the facilities leg. It is our hope that through dialogue and cooperation with government we can create a fully realized and rational funding program. In this way we can also begin to leverage capital funding that is available from our federal government.

           Most importantly, the third leg: the operating funds. A positive approach to the arts by our government has been clearly demonstrated. In 2004 Arts Action B.C., on behalf of our organizations, expressed the need for an increase of $5 million per year for four years through the B.C. Arts Council funding budget.

           [B. Lekstrom in the chair.]

           The government came through for us with $3 million in increased funding for 2005, the first year of our proposal. In its allocation for the arts funding for the upcoming budget, we ask that government maintain

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this vision for the health and growth of the arts and approve our original recommendation by allocating a $5.6 million increase for each of the fiscal years '05-06 and the two years following.

           To put this into context, the original $11 million provided by government for B.C. Arts Council funding, plus the $20 million increase over four years proposed by our organization, amounts to not more than 0.09 percent of the government's total projected budget. This is a very small investment for a very visible return to our citizens and to our communities. We believe that our artists are worthy of one percent of our budget.

           B.C. Arts Council funding also acts as a leveraging tool to access our fair share of federal funding. In 2004 B.C. received only 5 percent of the $3 billion spent annually by the federal government, despite the fact that B.C. has the third-highest performing arts attendance rates in Canada, after Quebec and Ontario. Every dollar of increased funding by the B.C. government to the arts means increased financial support flowing into B.C.'s arts industry from other sectors.

           In conclusion, we are asking that the government continue its achievements in supporting the arts by continuing to support the $20 million operating recommendation by allocating $5.6 million in operating fund increases into fiscal year '05-06, as well as the two following years, while keeping in mind the three-legged stool concept in future discussions. This will create a solid foundation for a sustainable and flourishing arts industry that will be a huge asset to our province.

           Finally, to quote my friend Mark Bellamy, British Columbia and its people need to be celebrated, to be recognized and to be remembered. By funding artists and their work, you create a legacy that lives not only for today but for all time. Funding the arts is your gift to the future.

           Thank you to the members of the committee for the opportunity to speak, and I am very pleased to answer any questions you may have.

[1030]

           B. Lekstrom (Chair): Thank you very much, Mary. It was a wonderful presentation. You were worried about being nervous. I think you presented extremely well, and I appreciate that.

           M. Karagianis (Deputy Chair): Mary, an excellent presentation, and it's very good to see you.

           Do you want to elaborate a little bit on what kind of funding structure there is at the federal level right now? I know, from my past history with the arts, that it is three levels of government participation often that are requisite and are the foundation of some funding. So what is the federal programming looking like at this time?

           M. Desprez: At this time there is funding through the Canada Council for the Arts and through Canadian Heritage under the banner Tomorrow Starts Today funding. The federal government has actually invested quite a large amount of funds over the last few years into Tomorrow Starts Today, and this includes endowment funding, capital spaces programs and the like.

           The challenge is partly with respect to facilities in particular. Because we have no program here on a provincial level, we're not allowed to play, if you will, because there has to be support shown from all three levels of government. So even if we are fortunate enough to secure funding from our regional and municipal governments, and we have the federal government onside, it puts a stop to leveraging the money for facilities in that way.

           Infrastructure is getting, again, more and more difficult for arts organizations to access because of the huge need for the roads, sewerage kind of infrastructure that it is geared towards, so that's becoming almost impossible for arts organizations to access as well.

           M. Karagianis (Deputy Chair): So if I may just quickly finish. The whole concept of infrastructure, capital improvements — that kind of thing…. That's a question that's still very much up in the air. It has been for as long as I've been associated with the arts, but I'm just wondering whether or not there is any glimmer on the horizon of some changes in that direction. Could you see government being a bit of a leader in that way?

           M. Desprez: We need leadership desperately with respect to facilities. Our infrastructures are crumbling. We have had very, very few new facilities in our province. Sadly, we tend to only seem to be able to find a way for our recreation. There's nothing wrong with our recreation facilities, by any means, but it would be very nice to see some action taken towards our arts institutions.

           J. Yap: Thank you, Mary, for your presentation. I think we concur with you that arts are crucial to our continued progress as a culture. In fact, our government, as you know, has a ministry dedicated to the arts.

           My question is…. I don't think I heard you mention any tie-in to 2010, the Olympics and Paralympic Winter Games and the opportunities for some leverage there. I understand there is a program — you may have heard of it — that's available to arts and cultural groups, I believe, outside of the lower mainland. Have you heard of it or thought about accessing it?

           M. Desprez: Oh yes, absolutely. It's the 2010 arts legacy program, and that's a wonderful initiative. However, that's very much a one-time celebratory program that is surrounding the Olympic Games, for obvious reasons, and while it may be helpful for a few festival-type activities, it's doesn't exactly help the ongoing operations of our professional arts institutions for the long term. We're looking for the stabilization that we would achieve through funding at the B.C. Arts Council level.

           R. Lee: Thank you for the presentation. Arts Action B.C. management is a collaboration of professional arts

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organizations. Under this organization, in your observation…. In B.C., which area for some of the performing arts and other areas would need more attention?

           M. Desprez: Oh, that's a hard question. Okay. Well, that's an unfair question because I have a bias for theatre, and, traditionally, the performing arts with theatre have been, if you will, the poor cousin. But it's not fair to say that the theatre industry requires more attention than the opera or the dance or the galleries or the museums.

[1035]

           We're pretty much all in the same leaky boat, and that's why Arts Action B.C. has been created, because we have realized that if we don't start to speak in unison, we are all going to capsize in that little leaky boat. So I would have to say yes. I mean, all of the live arts which we represent are in need of investment.

           B. Lekstrom (Chair): All right. Again, Mary, I would like to take this opportunity to thank you on behalf of the committee. You made a wonderful presentation, and as you've indicated — and I think all of us share — the arts are extremely important to British Columbians. Again, thank you for taking the time.

           We'll move to our next presentation this morning, brought to us by Conservation Voters of B.C. Joining us this morning is Matthew Price.

           Good morning, Matthew, and welcome.

           M. Price: Good morning, and thank you for having me here today. I'm quite glad I came early to listen to some of the prior presenters and to actually get a feel for what your committee's going to be going through over the coming weeks. You have some real challenges in terms of balancing all of the interests you hear around the province and, I think, also some real opportunities. I've already learned a whole lot just in my hour and a half here sitting and listening. I guess you will be learning a lot from your travels as well as trying to balance all the interests as you go ahead. I wish you well with that enterprise.

           I'm with an organization called the Conservation Voters of British Columbia. Our mandate is to hold our elected officials in B.C. accountable to the strong environmental values of the B.C. public. We do this through working on election campaigns in a non-partisan or multipartisan way, through endorsing candidates in different parties who have strong environmental records. In between elections we try to move a progressive policy agenda forward in British Columbia, and that's part of why I'm here today.

           The past few years have been somewhat difficult for our community. I'm a big believer in honesty, so I'll say that there's been some disappointment in terms of the perceived direction of environmental management in the province. Having said that, we were heartened when a new goal was identified in the throne speech, which was to lead the world in sustainable and environmental management, with the best air and water quality and the best fisheries management, bar none.

           Our community discussed how we best and constructively react to that goal being put out there. We've instituted a number of different measures. One will be a big push over the coming months and years in really building our supporter base. We're going to be recruiting tens of thousands of new members and supporters throughout our community so that we can more directly communicate to voters out there.

           Also, we created the organization that I work with so that we can more directly engage in elections. Most important for today, we began an initiative called the priorities for environmental leadership. This was in reaction to something that you have helped us with over the years in terms of…. When we sit down with elected officials, we often have a list of 800 things that need to be done — all by yesterday. The net result of this is that we usually get none of them done because the list is just too big and too unmanageable. We responded to this by saying: "Could we get some of the largest conservation groups in B.C. together around a short list, a common agenda just for things?" So we said: "Let's give it a try." We sat in room together over a number of months, and the process was actually more friendly than many of us thought, and we ended up arriving at four things.

           The four things are: (1) bringing B.C.'s operational parks budget up to levels seen in other jurisdictions so that we can care for them properly — that's what I'll be talking to more about today; (2) finding a lasting solution to traffic congestion in Vancouver, rather than falling into the trap that road- and bridge-building is the answer, which, in fact, simply makes matters worse; (3) making B.C. a world leader in smart salmon farming technology by providing incentives for commercial closed containment production; and (4) consolidating B.C.'s patchwork of endangered species measures into one strong, clear law that actually reverses the decline in endangered species, which continues to happen across B.C.

           I'm happy to answer questions about any of these four in the question period after. Plus, your constituents will be hearing more about these over the coming months, as the groups participating begin to reach out to them There's more information about all of this at a website called www.environmentalleadership.org.

[1040]

           I'd like to spend the remainder of my time today, though, talking about the first one, which is improving core funding for B.C. Parks.

           Forgive me if I'm going to bring back bad memories for you. If you were sitting down designing an election campaign today and you had to design a TV commercial, what images would you use to signify British Columbian values? The odds are that near the top of that list might be some long, sweeping helicopter shots flying over British Columbia's mountains, trees and oceans. That sounds very familiar to me. The challenge is, of course, between election times, are we investing in our parks and wild spaces in B.C. such that we care about them and not just once every four years when we get to use them in TV commercials? The answer, unfor-

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tunately, is not, or perhaps with the help of this committee today, just not yet.

           The B.C. parks system has been chronically underfunded for more than a decade. Consider some of these stats. In the last decade, B.C.'s park base has doubled, while the core operating budget has fallen. In the 2005-2006 operating budgets, Parks Canada will spend over six and a half times more per square kilometre on national parks than B.C. will spend on our parks.

           Strathcona Park here on Vancouver Island, which is a similar size to Kananaskis in Alberta, has just one person assigned to it with three seasonal staff, while Kananaskis has 75 full-time people assigned to it with 19 seasonal staff. B.C. joins Mississippi in being one of the only two jurisdictions in North America that doesn't have a publicly funded parks interpretation program. As far back as 1999 the Parks Legacy Panel recommended doubling the B.C. Parks budget, yet nothing has happened. Rather than leading the world, bar none, in terms of our parks management, we're really heading up somewhere close to the back of the pack.

           The result of the underfunding pans out in a number of ways. We don't have the basic planning and monitoring budget to do just basic planning for our parks, in terms of protecting their ecological integrity. We don't have enough money to do basic patrols to catch poachers. We don't have enough money to do education in the parks, to teach our children about nature. We're simply not putting the resources necessary into our parks to care for them in a manner that British Columbians want.

           This conversation about funding for core parks operating budgets shouldn't be confused with the capital spending in parks. I commend the government in terms of the $24 million commitment to capital spending in B.C.'s parks. That is much welcomed. Unfortunately, as a one-time investment it doesn't actually solve the chronic underfunding of the parks, which has existed for a decade.

           It's also fashionable these days to talk about making things pay for themselves, so I also have included today some stats that were generated in a 2001 B.C. government report on the economic benefits of British Columbia's provincial parks. That found that total expenditures related to park visits of $533 million in 1999 — a return of $10 on every dollar invested by the government in the protected areas system. Economic activities associated with parks translate into over 9,000 direct and indirect person-years of employment, a $521 million annual contribution to the GDP and some $219 million in tax revenues for the provincial and federal governments.

           This is all back in 2001. Compare those numbers to the actual parks operating budget, which I'll talk about now, because it's a bit of a mystery. Even people like my colleagues, who watch parks very closely, can't quite figure out what the actual operating budget for B.C. Parks is. It's subsumed under another line item in the Ministry of Environment, and that line item is called "Parks, fish and wildlife." The 2005-2006 estimates pegged that number at $35 million, some fraction of which is for the B.C. Parks budget.

           So, on the one hand, you have numbers like $500-plus million in economic contributions, and we have probably somewhere around $18 million to $20 million in terms of our parks budget. There is a massive discrepancy between those two. When you compare those numbers it sort of challenges a direction that we seem to be heading in B.C. Parks, which is to try to make them pay for themselves. They are already paying for themselves and then some, but there's been a recent move afoot to put parking meters into parks and to even open the door to putting commercial lodges into parks.

           The public has never been consulted on these directions. When we consult the public, the public doesn't want this, and I don't think the direction actually works. I think you'll find the stats coming out from the parking meters show that they're not living up to their revenue projections. There's even a lot of vandalism of parking meters in parks.

           In conclusion, B.C. is well past due for a significant boost in core funding for parks. I'm going to end with a challenge today, a challenge to both political parties. As you go into the next election campaign, if either political party wants to use images of parks, I challenge you in the interim to please invest in them so that we can not just see them once every four years and care for them at that point.

[1045]

           Thank you again for your time and for all your work travelling around the province. I'm happy to answer any questions.

           B. Lekstrom (Chair): Thank you, Matthew, for your presentation here this morning. I'm sure there will be questions. I will begin with Maurine.

           M. Karagianis (Deputy Chair): Excellent presentation, Matt. Thank you very much for this. First, I would like to ask whether or not part of your website is actually accumulating some informational stats for us. You've commented on what you believe British Columbians want in the way of parks investment. Are there any efforts being made to sort of collect some data for government to back that up?

           I think that recently in my own community we did a parks strategy. We did a questionnaire with all of the citizens in Esquimalt on how they wanted to see local government invest in the community. Number one was to invest more money in parks. Have you got that kind of data for us, or is it possible for you to collect that so that in fact, government has something a bit more in the way of hard numbers?

           M. Price: Sure. One of the things that our community is good at is writing reports. I'm happy to submit to the panel, after I leave, some reports which have been done. For example, as part of the recreation stewardship panel, the Canadian Parks and Wilderness Society ran an independent public input process to submit input to that panel, which travelled around, I think, several communities in B.C. to get this very

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thing — input into how people want to see their parks managed. They have compiled all of that information, which can be submitted to the panel if it's of interest.

           M. Karagianis (Deputy Chair): Do you have any recommendations on the kind of funding increases you would like to see, either one-time or incrementally — preferably incrementally, because governments find that easier — you know, a five- or ten-year plan on how we actually replenish funding into our parks?

           M. Price: As always, you start with a high bar. If the federal government is spending more than six and a half times per square kilometre on parks than us, that seems…. Do British Columbians care about our parks as much as Canadians care about their parks? I would say the answer to that is yes. To ask for a six-fold increase in the core budget for parks is probably not going to happen. Having said that, in 1999 the parks panel did recommend a doubling of the budget over a five-year period. I think that recommendation would still stand today.

           J. Yap: That was basically the question I had. You mentioned surveys that you've done in the past. If you can share some of that with us, make that available, that would be helpful.

           M. Price: I'm happy to submit that to the Clerk after.

           B. Lekstrom (Chair): I see no further questions, Matthew, at this time. Again, I want to thank you. You bring a very important subject before the committee, and that is our wilderness, our parks in British Columbia — something I think we all enjoy and love very much. I'm from the northern part of British Columbia. We enjoy our wilderness as well. Without it, we would be in trouble.

           I know all governments try and do the best, but in working with associations like yours, it helps governments. We look forward to seeing what we can do. Any further information you would like to provide to the committee can certainly be directed through the Clerk's office, and we will receive that. Again, thank you very much.

           M. Price: Thank you, Mr. Chair, and good luck to the panel with your work.

           B. Lekstrom (Chair): Our next presentation this morning comes to us from the B.C. Wood Specialties Group. Mr. Bill Downing is joining us.

           Good morning, Bill. Welcome.

           B. Downing: Thank you, Mr. Chair. Thank you, committee, for the opportunity today. I'll wait till everybody gets a copy of the presentation. While we're waiting, perhaps I'll just review the mandate of B.C. Wood Specialties Group.

           Many of you are probably already familiar with B.C. Wood, as it's known in short form. Basically, we help the secondary wood products industry in British Columbia, which is another word for the value-added industry, to access and develop export markets — places where they wouldn't likely go without our help. That's our general mandate. By doing that, we'll maximize the value of B.C. fibre as well.

           I'm just on page 1 of this presentation here. When I talk about the secondary forest industry or the value-added wood products industry, it's broken down into six different sectors. I'll just quickly run through them here.

           The first one is remanufactured products. Those are products that are generally from the primary industry — construction lumber — that are then resawn, recut, rechopped, whatever, into either dimension lumber again or into building components. That's a sector that's been particularly hard-hit by the softwood lumber tariff in the United States.

[1050]

           For a lot of people when they think of the value-added sector, that's the one they think of quite often. But a whole part of the value-added sector is in the interior-furnishing side, which includes cabinets. You wouldn't think that cabinets, offhand, are exportable products, but you'd be surprised. We have companies in British Columbia that have built their companies around exporting cabinets to Japan, for example, or into the U.S.

           Furniture. There's a real structural change happening in the furniture industry here in B.C. We're getting away from the commodity-type pine furniture. It's simply very difficult to compete with the market from manufacturers in China and Southeast Asia. We're getting into the more high-end products with a lot more design.

           Then we have the log and timber frame sector. That's a very exciting sector that's growing rapidly now here in B.C. We have a competitive advantage in this sector because of the large-size fibre we have here, and we have a lot of expertise. This is just becoming a more and more popular form of home as time goes on.

           Millwork products. Here I'm including windows, doors, flooring and panelling. Again, the transition in B.C. is happening into more high-end products here, as opposed to low-end commodity.

           Next is the pre-built home sector. This is another growing sector. Frankly, here in Canada we make great houses, and in British Columbia it is no exception. We have a number of companies that build complete factory-built homes. Those are getting very elaborate and are being exported all over the globe.

           It's interesting to note that if you send a 2-by-4 across the border, it's subject to a tariff. If you put that same 2-by-4 in a home, it's not — again, another reason to move into more value-added products.

           Finally, engineered wood products. Here I'm talking about panel board like OSB, plywood and also glue-lam beams. In the three pictures I've got here — Surrey Hospital on the left, Brentwood SkyTrain station in the middle and the UBC forestry building on the right — you can see the opportunity to use some archi-

[ Page 35 ]

tectural design features here using engineered products.

           What a great opportunity coming up here in the Olympic venues. We'd like to ensure that we're well represented in the Olympic buildings, both the venues and the ancillary buildings that are being constructed in the next five years.

           B.C. Wood has been around since 1989, and that's the last 15 years. We have target markets here of existing markets, traditional markets like the U.S., Japan and Europe. We also have three emerging markets that we focus on, being Korea, China and India.

           You can see a list of our services down here. I can summarize them all by saying that B.C. Wood is about connecting sellers and buyers. We are the business-to-business guys. We search the globe for opportunities for our members, and we spend a lot of time either taking our members into the marketplace or bringing buyers from the marketplace here to British Columbia and making the connections there.

           If you can imagine where we sit on the diagram on page 6 at the top, we sit up there in the top right-hand corner. We're the guys that help our manufacturers find and connect to those opportunities. Quite often we find that manufacturers here in British Columbia can't immediately sell their products into that opportunity. There's usually something that has to happen — be it new investment in technology, maybe quality assurance, maybe some R and D, some new equipment. We connect with organizations like Forintek and BCIT to make sure that they can take advantage of the opportunities we find.

           I think a great example of what we do we did in Whistler two weeks ago. We had what was called…. It was our second annual global buyers mission. We had one in Penticton last year. This time we brought 170 buyers from 20 different countries to Whistler two weeks ago. We had a total attendance of over 500, and projected sales from that day and a half of interaction are about $20 million, just to give you an idea. That event, I think, really goes to show you that those 170 buyers weren't here just to buy B.C.'s fibre. They weren't here to buy dimension lumber. They were here to buy our value-added wood products. I think it's a real testament, a recognition that British Columbia makes some of the finest value-added wood products in the world. This is an awesome event.

           If you look at what we're talking about in terms of the advantages of value-added…. When we talk about value, we can talk about the value per cubic metre or thousand board feet or the jobs it created. There's a big advantage in maximizing the value of the fibre resource we have here in B.C. We'd all like to see that happen. We'd like to see the right logs go to the right application. B.C. Wood can help make that happen.

           Frankly, when you think about value-added, you also have to think that it's actually cost-added. It costs money to process that wood into other products. Where's that money being invested? It's being invested into jobs. It's being invested into equipment, new plants right here in British Columbia. It's an important thing.

[1055]

           If you look at what the industry does for the province, we estimate that it's about $4.7 billion in sales annually. It's not trivial. Even more important than that is that the exports are about $2.8 billion. About one-quarter of the solid-wood products fall into the value-added category and are exported from B.C.

           What's our vision? Our vision is to double those exports from British Columbia by 2010. We think it's possible by…. We see the opportunities for new products into our existing markets. We've got fantastic access to the two biggest economies on the globe — those being the U.S. and Japan. We're established there. We can certainly sell some additional value-added products into those markets. We're quite bullish on the new incoming markets like China and Korea in Asia. Half the 170 buyers that came to Whistler two weeks ago were from Asia, by the way.

           How are we going to do it, though? The stark reality there, on page 8, is that we are suffering from declining funding, like so many others. We understood. We took a haircut, like so many other associations and interest groups did, as well. We've gone from about $5.58 million in funding down to about $1 million in funding this year, so we have been suffering from declining funding.

           When you compare it — I've got page 9 there — to a couple of other sectors like the film sector, which produces about $1.4 billion annually, estimated, they receive $55 million in direct government funding and tax exemptions. Tourism industry, as well — way up there. I mean, the government has recognized the importance of those two sectors. We're in that same category. We'd like the government to recognize the importance of the value-added sector as well.

           What can government do for B.C. Wood? On the policy side, I think this is a really good-news story. I think the move to market-based stumpage here in British Columbia is excellent news for the secondary wood products industry. Again, we're seeing our fibre resource going to the proper application, and we think that's great. We'd just like to see more of a commitment to invest in this sector.

           What can B.C. Wood do for the government? A number of things. For every dollar the provincial government puts into the value-added industry, we can leverage that by two times to $2 — and with federal government programs. We're doing that on an active basis. We have 15 or 16 years now of brains trust. We're experts on international markets, specifically in Asia. We'd like to share that expertise. We can also see the secondary industry picking up from some of the consolidation in the primary industry. Frankly, we're going to see fewer larger mills. That has a huge impact on a lot of communities in B.C. We think the value-added industry can move in to fill some of that gap.

           I think we can play a role in the mountain pine beetle. There's an awful lot of excess fibre coming on stream. The value-added industry, again, has the ca-

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pacity and the expertise to use some of that fibre. We think we're already seeing an increase in stumpage fees due to the value-added industry, due to the demand for a certain portion of the woodpile that's out there.

           We want to play a significant role in ensuring that our wood products are showcased in the 2010 Olympics. Just to let you know, in Whistler we invited 60 architects and designers to join us to meet with those value-added manufacturers — huge success. Many of them were absolutely blown away at what we make here in British Columbia. They'd never been exposed to it before. It was a fantastic connection made there.

           Of course, the global buyers mission, again, is a good example of us looking for different markets for those products that are subject to tariff into the U.S. For those products that aren't subject to tariff, we want to expand those opportunities as well. So new markets and new products are what we can also offer.

           In conclusion, I've got a hundred communities there that B.C. Wood members are in, in British Columbia, listed on page 10. Virtually all of your ridings have B.C. Wood members or value-added companies in them. I just wanted to alert you to the importance of that on a regional basis and to the economy in B.C. in general. We think the future of the B.C. forest industry is in the value-added wood products industry here in B.C.

           B. Lekstrom (Chair): All right. Thank you very much, Bill. We do have a couple of questions. I'll begin with Dave.

           D. Hayer: I just have a comment. I think that was a very good presentation. I just want to say that every time I hear the Premier speak at UBCM and other conventions, he's always promoting B.C. Wood, especially in Surrey. We have a Simon Fraser University campus. They use a lot of wood. We bring a lot of people from overseas that come over to visit there and use that. I think it's the right way of going through. And this is an excellent brochure, the information you provided. Keep up the good work.

           G. Hogg: I assume, in the statement you made with the reduction in funding and the graph you have shown, that that funding doesn't go generically to B.C. wood but specifically to the organization that you represent. Is that what you're…?

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           B. Downing: Correct.

           G. Hogg: Secondly, a couple of submissions I've had in my constituency office, with respect to people who are part of the specialties group, have talked to me about some of the expositions that have been held internationally and the participation within those. They have suggested to me that the way the government organizes those expositions is, perhaps, much more ineffective and inefficient than having some of the people who are marketing there more specifically and who have the expertise in doing that. If they were to take the lead in doing that, we might have a far better representation — more efficiently, more effectively done — than facing some of the problems that sometimes are generated with an overly bureaucratic presentation — or model that. Could you comment on that perspective?

           B. Downing: Are you saying here that your members are saying it's in the better interest for an association like B.C. Wood to play the lead role as opposed to CMHC or someone like that? I'm not sure I caught your question.

           G. Hogg: I think they're saying that a number of the people who are marketing in the Pacific Rim area, who are probably represented through you and who participate in expositions sponsored by the province and the federal government tend not to be as effective or efficient as if they were to take the leadership. There tends to be much more money spent in receptions and things that may not be as productive in terms of the evolution and development of business and business relationships.

           Whether that's B.C. Wood that should take a greater leadership in that or some of the specific members of B.C. Wood, as opposed to the government…. I'm interested in your perspective on that point of view.

           B. Downing: I appreciate that. I mean, where we see value is…. We have to get our manufacturers in front of the buyers. We have to make that connection. Quite frankly, those buyers will often guide them in different directions — new products, new lines, what have you.

           The receptions are one thing, and that's all very nice, but we spend our time making sure that the linkages are made on the ground. That's what our companies want. That's what the companies in the province want.

           G. Hogg: Maybe I can rephrase that. Can we spend our money, the taxpayers' money, more efficiently and effectively in trying to make connections for the businesses in British Columbia than we do today?

           B. Downing: Absolutely. Yeah, I think we can. I think the kinds of things that B.C. Wood does, though, are great examples of that. It's not an easy thing to do, either. You have to understand that the value-added industry in B.C. has a huge variation in terms of size, geography and the products you create. It's not easy — right? — to make an effective marketing program that sort of crosses over.

           We've kind of gravitated more into sector-based marketing programs, which I think are really efficient. In other words, we'll get a group of the log and timber framers together, or we'll get a group of the millwork guys together who want to work together and don't consider Harry, down the road, to be their competitor

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any more. It's the competitors over there, actually, in Indonesia. We're seeing that transition happen and those companies working together more effectively. Does that make sense?

           G. Hogg: That does make sense, but when I asked the question about if we can do it more efficiently and effectively, you said absolutely. Was your comment subsequent to that…? Was that telling us how we could do it more efficiently, or can you tell us how we can utilize taxpayers' dollars more effectively, to make those linkages that you're referring to?

           B. Downing: Yeah, I think another way of doing that…. There are a number of associations in British Columbia. I think it's really important to have sort of a unified marketing approach when we go into China or Japan. Quite frankly, we confuse the marketplace a little bit by everybody doing their own thing. I really see coordination amongst…. Even into the primary industry, all the way down into the wood products industry and the various associations on the coast and the interior, I think that to have some kind of an overriding strategy in terms of those markets would be hugely important. That would definitely increase the efficiency.

           B. Lekstrom (Chair): All right. I will move to our next questioner, and I thank you for that dialogue.

           M. Karagianis (Deputy Chair): Continuing on a similar vein on the previous question and looking at ways to invest more effectively, I guess, in this aspect of the industry I think it is really an excellent sort of subset of the forestry industry in British Columbia, and I would like to see us find ways to be more effective.

           You mentioned earlier something about programs around pine beetle wood, which I understand is actually quite unique and could have a market value even beyond what we're currently seeing just as cut lumber.

           Talking a little bit about research and development, you mentioned at one point that research and development is another challenge for you. We've heard that from previous speakers here about research and development funding for technology, patents and that kind of thing. Is this an effective way for government to be investing in this industry as well? And do you have some recommendations for us?

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           B. Downing: The mountain pine beetle is an interesting one. We've gone down the road of looking at the opportunity of exploiting the blue stain in the wood. We feel, as time has gone on, that that's a very niche opportunity. I don't think that's going to use a huge amount of volume, frankly. We really have to focus on the construction lumber uses of that pine.

           We have to focus on things that it's good at. It absorbs treatment — so things for outdoor wood, for preservatives, for fencing, for outdoor applications of wood. On the value-added side, I think we could use huge amounts of volume, using pine beetle. What we need to do there is we need to…. If you look at the secondary industry, it's made up of a very entrepreneurial group of people. You need to get them together and thinking about different ways of using that kind of fibre in various kinds of products, and then get them out in the marketplace and test it. Let the marketplace decide and drive, ultimately, which way we go with that. We've put a couple of proposals around that now. I think you'll see more of that happen.

           On the research and development side, I came originally to B.C. Wood from the high-tech, from the software business where it was routine to use things like IRAP grants and S-R-and-D tax credits and all the things that are available to implement technology. I don't see any of that happening in the secondary industry. I think there's a real gap still between the R-and-D resources that are out there and our secondary manufacturers. They simply don't…. They're nervous about even taking advantage of the opportunities that are out there, whereas in the high-tech arena it's second nature. I think we could really benefit if there was more of a linkage there. It's not really B.C. Wood's bailiwick, frankly, but I can sure see an opportunity there.

           B. Lekstrom (Chair): I do have one other question. Noting the time, we'll have to be very quick. I'm not trying to cut the dialogue off. With all due respect for our presenters coming forward, I want to make sure that we can meet their time frame.

           R. Lee: We know that FII is also doing some promotion in marketing and Forintek, into the technology and research. Do you see any closer relationship between those two organizations and yours?

           B. Downing: Between FII and B.C. Wood?

           R. Lee: Yes, and Forintek.

           B. Downing: And Forintek. You know, when I show you that sort of circle where we see the connection between when a company finds an opportunity and being able to take advantage of that opportunity, often they need to do some additional quality assurance or some R and D and modify their products somehow. We already have a very tight linkage with Forintek. As a matter of fact, B.C. Wood is actually looking at…. We've added new members from Alberta now, which is a first. Again, we're linking with Forintek in Alberta to have the connectivity.

           In terms of FII, FII is B.C. Wood's funding partner here in B.C. FII does do some additional promotions as well, but it tends to be more species-related, more overall creating of demand for our hardwoods or our softwoods, whereas we're making the connections on the ground between the buyers and sellers. We love them creating demand for our product, because it helps us, in actual fact, to make those business connections later on.

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           B. Lekstrom (Chair): Bill, I would like to thank you for your presentation to our committee. It's interesting when we talk about the value-added sector. It is something that in the evolution of what we're looking at is relatively new, but it has come so far, I think, in the time frame we've been working at it. I appreciate your presentation here today.

           B. Downing: Thank you, Mr. Chair and the committee. Let's see you all up at Whistler. We're going back there for the next buyers mission next year.

           B. Lekstrom (Chair): Our next presentation this morning is from Retail B.C., and joining us this morning is Mark Startup.

           Good morning, Mark, and welcome.

           M. Startup: Good morning. Thank you, Chair Lekstrom and members of the committee. My name is Mark Startup. I'm president and CEO of Retail B.C. We welcome the opportunity to share with you our thoughts on the upcoming budget.

           First of all, a little bit about Retail B.C. We represent some 3,000 independently owned and operated B.C. retail companies. The majority of our members generate less than $1 million a year in annual retail sales. We represent retailers from the Peace down to the Kootenays and just about every place in this province. As I'm sure you know, retailing is a cornerstone of the provincial economy.

           I might add that I'm not going to read from my presentation. I will be selecting some highlights. If you'd like to glance at it, please do so, but I'll be jumping around a little bit.

           The retail industry in British Columbia is a $40-billion-a-year-plus industry. It surprises some to learn that the retail industry is the fourth-largest GDP contributor in our province.

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           We are the largest private sector employer, employing close to a quarter million British Columbians. Our economy, as I'm sure we all know, has been very, very strong. Our industry, retail sales, has been very strong for a number of years. In fact, we took a look at the month of July 2005, wherein we posted $4.46 billion in retail sales, which was a $160 million increase in sales over the month of July. We are also experiencing year-to-date increases in total retail sales in B.C. in the magnitude of over 5 percent in '05 compared to '04.

           We also note that the '05-06-fiscal-year government sales tax revenues are projected at $4.2 billion. Compared to 2001, this represents an increase of $661 million to be allocated to government spending priorities.

           Retail B.C. has been serving our members on public policy issues for a number of years. I think it's important to note that the PST has remained the number-one public policy issue of concern for our members year after year after year, together with a growing disparity or a growing rise in the commercial property tax payment that retailers make every year. These are the top two taxation issues that B.C. retailers are experiencing. Among the various issues related to the PST, the PST rate is identified by our members as the number-one issue.

           I'd also like to point out that the sales tax is the province's second-greatest revenue source, representing 27 percent of taxation revenues and 12 percent of total budget revenues. The '05-06 provincial budget forecasts that the PST will accumulate, or will generate, $4.2 billion in revenue to government. I would also add that PST has outperformed all other sources of taxation revenue in terms of rate of growth since 2001.

           Now I'd like to cut to the cut — or cut to the chase. Retail B.C. is recommending that the B.C. government reduce the sales tax rate to 6 percent by fiscal '06-07, with the rate falling a half-point in '05-06 and another half-point in the '06-07 fiscal year. In our opinion and in the opinion of our members, B.C. families deserve a break. The economy is booming, and a PST cut is the simplest and most sensible way to return the wealth of fiscal surpluses back into the hands of British Columbians. As a tax on consumption, our members believe that PST erodes disposable income for consumers and retail margins. We believe a PST reduction is ideally suited as a tax measure that provides relief to lower-income families.

           I'm sure you're wondering: "Well, what is the impact of such a cut to the PST?" In general terms, a half-point reduction in next year's fiscal year would return approximately $270 million to consumers. The PST can be reduced without putting the books in the red. For example, it was just about a year ago that the PST was returned to 7 percent from 7.5 percent. We had about a five-month period at the end of last fiscal year with a lower PST rate, and it's important to note that the government achieved its budgeted PST revenues in spite of that half-point reduction toward the end of the year. So the impact of that cut was revenue-neutral in that particular fiscal period.

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           PST rate reductions can be absorbed by projected growth in retail sales tax revenues and forecasted budget surpluses. We've looked ahead for the next three years, and we have calculated that there is a forecast surplus in the magnitude of $4.1 billion over the next three fiscal years. The combined impact of the full-point cut, at $573 million, would represent a reduction of that $4.1 billion surplus of only 14 percent. And I might note that that is net of the forecast allowance as well. In our view, that leaves plenty of room and flexibility for government to meet its obligations, supported by retailers, to reduce that and to continue to fund important education and social programs.

           We would also stress that we do believe that there are preconditions to our recommendation to reduce the PST. Of course, it is contingent on fiscal flexibility. Rate reduction should occur when the economy can absorb such a reduction without having to change its fiscal course.

           There are other PST issues of importance to retailers. There are a number of outdated and Byzantine rules and regulations. I note that Minister Thorpe has

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taken on these issues very aggressively. We are working with the ministry and other associations to tackle this myriad of issues and to try and continue the streamlining process. We congratulate government for its record on that. Since 2001 we note that 113,000 regulatory requirements have been streamlined.

           There's one last thing. I think it's really important to note that the PST has changed many times in this province since the '40s. The last time we enjoyed a rate reduction was in 1987, when the PST was changed from 7 percent to 6 percent. The last time we enjoyed an increase, at least from a base below 7 percent, was in 1993 when then NDP Finance Minister Glen Clark increased the PST from 6 percent to 7 percent.

           In conclusion, retailers believe that the economic stars are aligned. This is an ideal time to reduce the PST. We feel it will stimulate the economy and create jobs. It will be sending a message to investors and to consumers that government is confident in our economy, along with consumer confidence. In our opinion, there is no better time to implement this policy.

           I'll stop there. I'd welcome any questions that you have.

           B. Lekstrom (Chair): All right. Thank you very much, Mark.

           I believe if I heard you right, the PST is extremely important. I can tell you that in the northeast part of our province it has been an issue, with the proximity to the Alberta border — the East Kootenays as well. So what you've addressed is an issue that I'm sure all British Columbians and all governments will strive to look at. As you've indicated, I believe it's about $270 million for each half-point. That's what will have to be taken into consideration.

           I have two questioners. I'll begin with John and then Maurine.

           J. Yap: Thank you, Mr. Startup, for that presentation.

           No question that we want to make British Columbia competitive from a taxation standpoint, all forms of taxes. One of the things that as legislators we have to look at is kind of balancing the budget, in terms of taxation on one side and debt on the other. Am I hearing from your presentation that you would place tax reduction — a half-point or maybe a one-point PST reduction — ahead of provincial debt reduction? That's your one-two priority?

           M. Startup: Our analysis of the current situation…. The budgeted forecasts of increasing retail sales and increasing surpluses, in our opinion, provide government with the flexibility to do both. If you're focusing on a sales tax reduction and debt reduction, we believe there's enough room in these projections to do both.

           However, again the caveat would be: who knows what happens in this world we live in and in the industries that also drive the B.C. economy? To be more direct, we would not want to see this PST reduction put the books in the red again or significantly impact government's ability to continue to balance the budget on an annual basis and reduce the debt.

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           J. Yap: Right. As a supplemental, we'd like to do both, obviously. The challenge is to also recognize that one of the things that we do know — it's not an unknown; we do know — is that we do have a number of major infrastructure investments that we have to make over the next number of years, whether it's investments in highways, bridges or hospitals. That revenue has to come from somewhere, or debt has to go up.

           M. Startup: Well, I can only speak on behalf of retailers in addressing your question. If you take a look at the very laudable and effective tax decreases that government has introduced since 2001, they have been, if you will, at the back end of the retail business. They're at stages, many layers, before a transaction occurs at a retailer's point of sale. Retailers are, in many ways, the last transferral of government tax policy on many fronts from the government to the retailer to the consumer. Retailers are just kind of looking at this situation and saying the economic stars are aligned.

           We have not been asking for a reduction in the PST for the past ten years, although it has been the number-one issue, because there has not been the flexibility in our economy or forecasted surpluses to do so. We don't believe that government would be sacrificing its ability or materially affecting its ability to meet the other obligations you cite through modest decreases in the PST staged over a two-year period.

           M. Karagianis (Deputy Chair): Mr. Startup, I'm interested in your comments here with regard to burdensome regulations. I know as the small business critic…. In meetings with the minister, he's assured me that regulations have been reduced by 40 percent, which actually exceeded the original target that government had.

           Yet I see here you're saying that ever-changing exemptions and fairly complex regulatory compliance are still a burden. Can you just talk to me a little bit more about that, because I'm interesting in seeing where else we can sort of continue to assist retail business with that?

           M. Startup: Yes. We've been addressing this issue for a number of years when we met with you. With each successive year, we tackle, and begin to understand better, the regulatory burden that exists purely within PST regulation. So that's the focus of my comments for today.

           When it comes to audits, the ongoing business of creating exemptions for certain products or removing those exemptions and the related impact that has on audits and the interpretation that merchants might make of certain regulations that may not be correct or that are open to two or three different interpretations — that's the arena we're referring to there. I should stress that we have been at the table with the various

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ministries in the past several years identifying what those issues are. We are now under Minister Thorpe's leadership. I believe the entire scenario will be looked at, and we look forward to streamlining, simplifying and removing as many of those obstacles as we can.

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

           Mark, I would like to thank you for coming forward. Certainly, the information you brought and the research you've done is very much welcome by our committee, and I appreciate the time you've put into it.

           M. Startup: Thank you very much.

           B. Lekstrom (Chair): We will move on to our next presentation before the committee this morning, which comes to us from Water Highway B.C. Joining us this morning is David Sellars.

           Good morning and welcome, David.

           D. Sellars: Good morning, Chair, members of the committee. Thank you for this opportunity to speak to you today.

           My name is David Sellars. I'm a professional engineer and have been a water resources engineering consultant in this province for the past 30 years. I'm the president of the Water Highway B.C. Society, which was formed by representatives of several industry associations in the spring of this year to promote the enhancement of our water data networks.

           Now, water in British Columbia is a critical resource. Everyone understands that but perhaps doesn't understand just how it works.

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           Water-related information is used every day by companies, business organizations, all levels of government, first nations and non-governmental organizations to make critical and important business decisions related to economic development, public safety and resource protection.

           The sustainability of the water resource in British Columbia is paramount to our well-being. However, the management of water in this province is challenging and requires a thorough understanding of the distribution of water in time and in space, and the understanding is provided by a comprehensive set of water-related data-gathering networks and reporting programs. This is what we call the B.C. water information highway. The data provided by these programs are essential for making meaningful business decisions. The lack of adequate data can result in unnecessary loss of life and property, increased business costs and resource degradation.

           Now, the Water Highway B.C. Society is perhaps unique in this province in that it is an association of associations. It has many important business associations as members, and I'll just mention a few of them. There's the Association of Professional Engineers and Geoscientists of British Columbia; the B.C. and Yukon Chamber of Mines; the Independent Power Producers Association of the province; the Council of Forest Industries; the Irrigation Industry Association; Water Supply Association; the Mining Association of B.C., which is going to be talking to you this afternoon; the B.C. Agriculture Council; and the Council of Tourism Associations.

           The members of these organizations are responsible for much of the wealth generation in this province, and all appreciate the importance of water-monitoring data to community economic and environmental sustainability. You might ask: "Okay, so what's the issue?" The hydrometric water quantity network is cost-shared with the federal government. The cost of operating and maintaining the present network of 461 stations is about $5 million annually. The British Columbia contribution to that is only $2 million. In a recent business review of the hydrometric network, which we carried out for the province, we estimated the benefit-cost ratio of the current network to be 19 to 1. That means that every dollar spent continuing to support the present network returns more than $19 in benefits.

           Now, for a variety of reasons, the British Columbia Ministry of Environment has a potential budget shortfall for 2006-2007 of close to $2 million for B.C.'s contribution to the B.C.-Canada hydrometric program. Without an immediate commitment of this funding, Environment Canada, which is the other major partner for the water monitoring program, will have to begin the process of closing up to half of the existing stations, reducing the network from 460 to 230 stations.

           The existing network is already inadequate for the needs of many communities and the mining, small hydro, oil and gas sectors, and a further reduction would have a major impact on the project approval process. As you are aware, I'm sure, uncertainty around a project's impacts on water quantity and quality is a leading cause of public concern.

           British Columbia is one of the most climatologically diverse areas in the world. It ranges from near-desert in the southern Okanagan to temperate rain forest in coastal areas. The stream-flow variability in the province reflects that climatic diversity. There are not only seasonal and year-to-year variations but also climatic cycles that can last for decades, and the potential for long-term climate change adds yet another level of complexity. The water data must reflect this complexity and variability if it is to provide the level of information needed to make these critical business decisions.

           Public safety benefits of the hydrometric network relate to flood prevention and the forecasting of flood and drought threats. The economic development benefits of the hydrometric network primarily relate to the planning, design and construction of subdivisions, industrial developments, roads and bridges and other highways. Where data are inadequate, there is increased uncertainty in the design process, and to compensate for the risks, conservative decisions are made. These decisions are made not only by project designers and operators but also by regulators. This sometimes leads to less water being allocated for a project than is

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available. In other instances, approvals may be delayed, or in the extreme, approval may not be provided due to the uncertainty of water availability and flood risk.

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           Just to give you an example, in the case of the small hydro and mining sectors, investors require low risk regarding available water supplies for power generation, mill operation and waste disposal. Stream-flow records are key to demonstrate project feasibility, and the absence of adequate data can lead to reduced investment in the province.

           The hydrometric stations funded by the province serve the needs of a multitude of users. This part of the water information highway provides broad value for public safety and economic development far in excess of the cost, like other infrastructure programs such as transportation, electronic data networks and even convention centres. These are the stations that will be closed if the proposed provincial funding cuts take place.

           To give you another example. Now, I'm sure you all remember the major drought in British Columbia in the summer of 2003. One of the hardest-hit areas was the Okanagan, where forest fires raged and conflicts arose for use of water between irrigation, residential consumption and fisheries flows. To avoid future conflicts, I helped the district of Summerland develop a management plan for its water supply to ensure that enough water would be available for agriculture, the community and fish flows. The plan was based on an analysis of 40 years of data from a critical stream gauge in the watershed. Without the 40 years of data, there would have been no confidence in the community that sufficient water could be allocated to all stakeholders. In this example, the long-term monitoring data were crucial for development and acceptance of the water use plan for the community, which has now worked wonderfully well for the past two years.

           Changes to the hydrologic regime due to the clearance of mountain pine beetle–affected trees will impact many communities in the interior. Closing stations instead of adding new ones will make it difficult to track these changes and to take appropriate remedial action.

           In the presentations that you will be hearing today, there will be many advocating additional spending on very important programs such as health and education. Without question, these programs are important for the well-being of the people of this province. But we must also consider how the programs will be paid for in the future. The resource industries are the primary engines of economic wealth in this province. It's critical that the water monitoring program is maintained for sustainable economic development and environmental protection.

           There's a consensus among water resources professionals such as myself and resource industries, as demonstrated by the membership in Water Highway B.C., that the network should be maintained and enhanced.

           Just in closing, to give you sort of a context here, no other provinces in Canada are planning reductions of their water monitoring networks, and several with climates less complex than B.C. are planning increases to their networks. It makes no sense for British Columbia, which has the most diverse hydrologic regime of any province in the country, to effectively get out of the business of water monitoring.

           In Canada's constitution the provinces have jurisdiction over water resource management. We should not be depending solely on the federal government to make decisions regarding where and when our resources should be monitored. The commitment required to sustain the water monitoring network is relatively small. We're only talking about $2 million a year. But the consequences of not making this commitment are significant.

           Thank you for your attention, and I'll be pleased to answer any questions.

           B. Lekstrom (Chair): All right. Thank you very much, David, for your presentation. I'm going to look to members of the committee. I'll begin with Maurine.

           M. Karagianis (Deputy Chair): Is there more information and data available to us on the risk — some risk data and things like that? You didn't really make mention of where we might go for more background information here.

           D. Sellars: We are handing out a brief information package, but we do have a lot more. We didn't want to deluge you with a lot of information, but if you'd like, we could provide you with a lot more detailed information on the importance of the hydrometric network.

           There is a report that we prepared for the Ministry of Sustainable Resource Management a couple of years ago on the importance of the hydrometric network to the economy of the province. It was a business review that the province engaged us to carry out as consultants. That business review is available on the government website, and we could give you the URL of that. That provides the most comprehensive information of the value of the hydrometric network.

           M. Karagianis (Deputy Chair): Thank you very much. I would expect that probably members of your organization will be lobbying us as well with this regard. I'm thinking that you have some fairly significant members there.

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           D. Sellars: Well, what's interesting, if you look at those association memberships in Water Highway B.C, their interests cover many things. Water monitoring, although it's important to members of those associations, is just one of many things they have to be concerned with.

           What has been happening in the past decade in the province is that water monitoring has kind of been forgotten, because there's no association that has it as

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its prime focus. It's important to all these business associations, but it's not the prime focus.

           This has really led to the formation of Water Highway B.C. We felt that it's important to everyone, but it's not sufficiently important to one organization to make it their major focus. This is why we formed the association: in order to bring all those pieces together and demonstrate the importance of this and how it crosses so many different industry sectors and environmental concerns in the province.

           B. Lekstrom (Chair): We do have time for one further question. I will go to John.

           J. Yap: Thanks for your presentation, David. Would dredging come under your purview? We hear that's an issue certainly within the Fraser River Basin. That's a pretty major water highway within the province. I wonder if you could comment on that.

           D. Sellars: Are you talking specifically about gravel removal in the Chilliwack area because of the concerns of the dikes potentially being overtopped?

           J. Yap: That would be one.

           D. Sellars: It's one issue where it's important.

           J. Yap: Through the rest of the….

           D. Sellars: Absolutely. When gravel is removed from what's known as the gravel reach of the Fraser River, in the Chilliwack area, there are obviously fisheries concerns, and there are obviously concerns about the potential benefits for flood protection and the trade-off between the two.

           That is a classic example of where you need good water data in order to make the right water management decisions, both for environmental protection and for public safety. That is a good example of where water data is absolutely vital for making the right decisions.

           B. Lekstrom (Chair): Seeing no further questions, David, I want to thank you again for taking the time out of your schedule to come and present to our committee. Certainly, like all other presentations, we will review yours and give it due consideration. I appreciate your time.

           D. Sellars: Thank you very much.

           B. Lekstrom (Chair): Our next presentation to the committee this morning comes to us from the Canadian Federation of Independent Business. Joining us is Laura Jones. Good morning and welcome, Laura.

           L. Jones: Good morning. I am representing the Canadian Federation of Independent Business here. We have 10,000 small and medium-sized business owners across a wide cross-section of industries in British Columbia.

           As you may know, CFIB regularly surveys its members for their opinions on important public policy matters. What I would like to do in today's presentation is to walk you through some of those survey results that I have in the slide deck and make our recommendations as we go along.

           I know you'll be interested in these recommendations, because small and medium-sized businesses in this province generate over half of the private sector employment and are responsible for creating most of the new jobs in the economy.

           The first slide shows you our quarterly business barometer, our latest results. These were released just last week. They tend to be a very accurate reflection of where the economy is at. As you can see from the results, British Columbia has been tracking above the national average for the past two years or so. In fact, for many of those quarters British Columbia businesses have been the most optimistic in the whole country.

           The latest quarter, however, does show a downturn in expectations, although we're still tracking about 12 points above the national average. So the optimism is still very strong in British Columbia.

           The next slide gets into a little bit more detail on some of those results. This tells you that 60 percent of small business owners in British Columbia are expecting a better 12 months. There is only a handful of businesses expecting a worse 12 months. Again, this is a very strong indication that optimism is still very high in British Columbia, especially when you compare that to the Canadian average of 42 percent expecting a better 12 months.

           The next slide gives you some data on employment expectations. This tells you that 39 percent of small and medium-sized businesses in British Columbia are expecting to increase full-time employment over the next 12 months which, in and of itself, may pose some challenges, which I'll point to later in the presentation. So again, it's a very, very high level of optimism.

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           However, as the first slide showed you, there has been a fall in expectations. One of the risks we see, if you'll turn to the next slide…. One of the things our business owners are identifying across the country — and certainly, this is consistent in British Columbia — is that higher fuel prices could be a very big concern, particularly if the prices stay high. This shows you that if they stay high, 55 percent will need to make some minor adjustments but a full 33 percent will have to make significant adjustments either to their prices or their employment levels. That's certainly a risk we're keeping our eye on in terms of prosperity.

           The next slide shows you our small business priorities. Again, these survey results are very recent, and you can see that the total tax burden is at the top of the list for our B.C. members, with 82 percent identifying that as their top priority. The regulatory burden and the government debt and deficit are also high on that

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list. Those are the three things I'm going to focus on today, starting with the tax-cut priorities.

           These survey results are from the fall of last year, when we asked our members what they'd like to see. We're pleased that several of these recommendations have already been adopted, including the increase in the threshold from $300,000 to $400,000 and the corporate tax reductions, which were high on the list. However, some of the things that were even higher on that list, including reducing the PST to 6 percent and looking at the small business rate reduction, have not been. There's been no movement in those areas, and we would like to see some movement in those areas, as well as looking at personal income tax reductions.

           When you look at the small business rate, B.C. is not as competitive as many other jurisdictions. Our rate is 4.5 percent, Alberta is at 3 percent, and New Brunswick is looking at going to 1 percent. There are many other jurisdictions that are more competitive than British Columbia on that rate. It is one of the top tax-cut priorities of our members, and it's an affordable tax-cut priority, especially relative to something like reducing the PST, although that, it should be noted, is high on our members' priority list. I'm sure you've heard that before.

           If you look at why tax cuts are important to business, the next slide shows you what our members tell us they would do with tax relief, and I think these are the very things we want them to be doing. We want them to be investing in new equipment, expanding their businesses, increasing employee wages, paying down their debt and hiring more employees. This is what our members are telling us they need in order to be able to do more of these things that we want in British Columbia.

           When looking at the budget surplus, our members prioritized debt reduction — the next slide shows you — and tax relief over increased spending. If the choice is simply between tax relief and increased spending, 75 percent of our members would like to see tax cuts take priority. Of course, that entails controlling government spending in order to afford that tax relief — at least, controlling spending in the short run. Our view is that the tax relief in the short run does support…. As businesses do create more jobs and pay their employees more, the economy prospers. Then there is room for more spending over time, but in the short run, it does involve controlling costs.

           One of the big cost challenges for governments is public sector wages. We did ask our members whether the freeze on public sector wages should be continued, and two-thirds of them support that. Now, it's important to understand the reason why they support that. CFIB has some research that shows that when you compare equivalent private sector–public sector jobs, there's a 10-percent wage premium for public sector jobs. If you include compensation into that, that rises to almost 15 percent. In our members' view, the private sector should lead, not follow, the public sector wages, because it's the private sector that's generating the wealth. Over time, as the economy grows, of course, everyone's wages can go up. But in the short term, to make this wage gap even wider, in our members' view, is completely inappropriate — particularly since it exacerbates the problem that was also high on the priority list, the shortage of qualified labour for our members, who are often competing with the public sector for talent. It's sort of a double whammy. It means there's less room for tax relief, and it also hurts them on the shortage-of-qualified-labour front.

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           I'm shifting gears a little bit now. The next slide. The second-highest priority for our members is regulatory relief. Again, this is going to echo some of Mark Startup's comments. When we asked where the biggest regulatory headaches are, provincial sales tax is top of the list. Now, there has been an enormous amount of very positive work done in this area over the past two years. The taxpayer fairness and service code, in our view, was a very positive development for small business and has some very meaningful things that I think will help address some of the regulatory horror stories that frequently cross my desk in this area.

           However, I think everyone acknowledges that there is still much more work to be done in that area. The next slide shows you that there's overwhelming support for simplifying PST regulations. There's still an enormous amount of work that needs to be done in that area.

           Over all, this government, I think, has done an admirable job — actually, it was work that was started by the NDP government, under Joy MacPhail — on the regulatory reform initiative. The follow-through to that of counting and reporting regulatory requirements is something that I think B.C. should be proud of and that B.C. is a leader on across the country. There's no other jurisdiction in this country publicly reporting measures of the regulatory burden to its citizens. When you think about what an accountability deficit that is, I think it's something we can be very proud of — that we've addressed that deficit.

           However, we're concerned that there is nothing to stop this from being reversed very quickly. We want to see the accountability institutionalized.

           One way to do that is to publish the counts in the budget. This was done last year. There's obviously wide support for that. If you look at the next slide, it shows you that it was done last year, but as you can see from the slide, it's in the bottom left corner of page 73 of the budget document. We would like to see it afforded a little bit more prominence and a little bit more space in this budget, which I think is a fairly simple request and would go a long way towards promoting regulatory accountability. To go even further, we would like to see a legislative requirement that these counts appear in the budget.

           To conclude, our recommendations, then, would be to prioritize tax relief and debt reduction over increased spending and to focus on those priorities of small and independent businesses in that area; to control government spending — in particular, to watch that the gap between private and public sector wages

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does not widen; to publish the regulatory counts in the budget; and to simplify the PST rules. I'd be happy to answer any questions.

           B. Lekstrom (Chair): Thank you very much, Laura, for your presentation. I will go to a speakers list. I have John first.

           J. Yap: Thank you, Laura, for your presentation. I appreciated it. We're on the same wavelength. Thank you for your feedback.

           When our government came into being in 2002, one of the commitments was to reduce red tape. That's obviously happened. I'm intrigued by the feedback from your members that PST regulations are a high priority. I've heard that before from other sources. I know the Minister of Revenue is aware of this. Have your members provided you with specifics on what aspects or "the top-ten list of PST regulations or procedures that we really would like to see reviewed" — that type of feedback?

           L. Jones: That's certainly information that would be very easy for us to provide to government. We do have a number of examples that have come through the office of headaches in that area. As the tax code review — which I think is going to proceed — proceeds, we'll be happy to do that. I think it is important that any review and change of the rules be done thoughtfully, because there's nothing worse than…. Businesses invest a lot in learning the rules. When the rules change, even if they're simplified, that change imposes a burden, so it's important that it be done correctly and thoroughly the first time around so that you're not asking for continual reinvestment in that.

           I didn't bring it with me, but if you look at the PST, the legislation from 1948, it's very, very thin — I think it's about ten pages — relative to today's big stack of rules and regulations. Things have gotten very complicated. This is long overdue.

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           With respect to PST, there are two issues, though. There are the rules themselves, which obviously Finance has a big role in. Then there's the administration of the rules and the attitude of the people who are on the front lines dealing with business owners — the auditors and the front-line staff. Some of that administrative frustration and headache has been dealt with. There's more to do in that area, but there's certainly more to do in reviewing the rules themselves.

           J. Yap: Have you provided specific feedback to the ministry in terms of those two issues?

           L. Jones: We've recently made a submission on phase two of the taxpayer fairness code, and we were very, very involved with Minister Thorpe and his team as they were looking at phase one of the…. In fact, CFIB wrote a letter asking for a fairness code as a result of some of the administrative headaches that came across our desk and some of our survey results showing absolutely abysmal survey results on the customer service side for provincial revenue.

           R. Lee: Thank you, Laura, for your presentation. Half of your members, 50 percent, said that employment insurance is a priority. What kind of action can the provincial government take to address that?

           L. Jones: Well, that would mainly be a federal government issue. Certainly, we're doing a lot of lobbying on that front. Any pressure that the provincial government could put on the federal government in that regard would be welcomed by our members. It's the EI surpluses that bother our members.

           B. Lekstrom (Chair): Seeing no further questions, Laura, I want to thank you for coming and presenting to our committee here today. I want to thank you for the effort that you've put into this presentation.

           We will move on to our next presenter this morning. From the Oak Bay Beach Hotel and Resort, joining us today is Kevin Walker. Welcome, Kevin. It's good to see you.

           K. Walker: Good to see you as well. I'm delighted to have this moment with you today. Thanks very much for including me as one of your prelunch presenters.

           Just a little bit of background. I am the owner of the Oak Bay Beach Hotel here in Victoria. I'm a third-generation hotel guy, actually. I've been in the industry now for 30 years, which is a little hard to imagine. Through our management company we just recently opened a brand-new facility out at the north end of the peninsula in the harbour district of Sidney, called Miraloma on the Cove, a beautiful little 22-room hotel that's really off to a pretty good start.

           My wife and I, between three businesses that we have in the Greater Victoria area, employ about 140 people. That's a little overwhelming — even for us, at times — to believe how that little enterprise has grown to facilitate food and housing for so many people here in the Greater Victoria area.

           I've had the privilege of working on behalf of our industry in a variety of capacities over the last 15 years. I'm currently the chairman of the board for the Hotel Association of Canada, based in Ottawa, which is kind of an unusual thing for a little guy from Oak Bay. I also have been the president of the Council of Tourism Associations. I was one of the founding directors of a Crown agency, Tourism B.C., which has now become viewed as kind of an iconic essential ingredient to the success of tourism here in our province, and a member of Tourism Victoria, the chamber and Tourism Vancouver Island and so on.

           Suffice to say, I'm very concerned and very passionate about the big picture of hotelling, not only here in British Columbia but here in Canada. We really appreciate, as hoteliers, the effort that's being put forth by this committee as you travel about our wonderful province and take public input into consideration as

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you plan the next provincial budget. I want, on behalf of our members here in B.C., to commend this government's efforts for getting the provincial economy back on track. Given the mess that we were all dealing with some four short years ago, we are delighted with the introduction of a balanced budget in 2004. We think that you're helping us to take huge steps forward toward a much better future for all of us here in this province.

           The year 2005 will be a memorable year for B.C. as we begin to move with rapid fire toward the dream of playing host to the 2010 Olympics here in B.C. The successful Olympic bid brings us all a sense of pride and shows the world what we, once again, have here in the province of B.C.

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           Before I get into the details of my presentation, I'd like to acknowledge that we understand very clearly the priorities that the government has placed on the areas of health care, education and the social safety net. That being said, I wish to stress to you that the issues I'm going to focus on could generate additional revenues for this province and for the industry that I represent. These are revenues that would add substantially to government coffers and, in turn, help fund the various social services that are so important to British Columbians.

           Recent tax and regulatory changes that have been introduced by this government have been essential in creating a climate for the travel and tourism industry as it endeavours to revitalize and grow. These changes have been much needed, given the tremendously negative impact of 9/11, SARS, mad cow disease, a rising Canadian dollar and two dreadful years of forest fires here in our province. However, it is essential to the health of our economy and for the health of the travel and tourism sector that this government continue to implement change that brings us betterment.

           The hotel industry in B.C. is facing some very real challenges. Business in some regions in up, while in others it's down quite dramatically. At first glance, it's difficult to draw conclusions as to the reasons for the ups and downs that we're experiencing in travel. As such, the B.C. and Yukon Hotels Association, of which I'm a director, will soon embark on a major, provincewide industry study. The results of this will be shared with all three levels of government, yourselves included.

           We want to bring the discussion of taxation in B.C. to the forefront of this government's priorities. It seems like a common theme. Very recently Retail B.C. launched its "6 percent in 2006" campaign to reduce the provincial sales tax by one percentage point next year. The economy is booming, and a PST cut is the simplest and most sensible way to return the wealth of growing sales tax revenues to the hands of B.C. residents. The B.C. and Yukon Hotels Association supports this move to reduce the PST by one point.

           Furthermore, hotels in B.C. currently pay provincial sales tax on in-room consumables. Specifically, I'm referring to things like shower caps, shampoos, soaps, sewing kits and all these amenities that we provide to our guests. These are truly consumables. They're a part of the total experience, and as such, we feel this is unfair taxation. The items are taxed as part of the total overnight-stay experience for our guests, and they are part and parcel of staying in a hotel room.

           We estimate that eliminating the PST on in-room consumables will cost the government approximately $7 million. It will be a move that is fair to the consumer, and it will in fact assist the hotel industry in achieving financial viability. We have raised these concerns with the former Minister of Finance as well as with the Minister of Tourism, Sports and the Arts, and we look forward to meeting with the new Minister of Finance, Hon. Carole Taylor, in the coming weeks to further discuss this opportunity.

           On the topic of public safety, the B.C. and Yukon Hotels Association maintains that more must be done to make our guests and all B.C. residents feel safer on our streets. The BCYHA was a member of the Safe Streets Coalition. No one in this room will be surprised when we say how pleased we were to see the introduction of the Safe Streets Act and the trespass to property act. However, after several months in existence we've identified that the acts are failing in certain jurisdictions because of a lack of enforcement. In the coming weeks the BCYHA, as well as the Safe Streets Coalition, will be seeking to meet with the Attorney General and the Solicitor General to share our concerns. In summary, on this issue we support more funding for public safety here in B.C.

           Our members across the province are well aware that the previous government allowed transportation infrastructure here in B.C. to crumble. That being said, we must reinforce our support for this government to continue to expand its commitment to transportation infrastructure projects. If we do not continue to grow transportation infrastructure to meet the needs of a growing population, the implications of which would discourage tourism and, overall, would pose a serious economic threat to the province….

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           Projects such as the development of the RAV line, the twinning of the Port Mann Bridge in Vancouver, regional airport improvements, the Sea to Sky Highway, an efficient and functional reliable ferry service and the Okanagan Lake Bridge, to mention just a few…. All of these projects are absolutely essential to tourism and travel right across B.C. If more people are going to experience super, natural B.C., we must continue to invest in transportation infrastructure projects. Every citizen in B.C. has an interest in seeing our tourism industry realize its full potential. Tourism in our province is one of B.C.'s most important sectors, generating nearly $10 billion a year, and it provides at least 120,000 jobs.

           In addition to having adequate infrastructure in our province, we must intensify efforts to train, recruit and retain a skilled workforce. By 2010 conservative estimates have projected that an additional 84,000 skilled

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workers will be required. Many of these will be employed in B.C.'s tourism and travel industry.

           With the 2010 Winter Games only five short years away, there is a lot of cause for optimism. But in closing, I would want to encourage you not to forget the task that is still ahead.

           Anecdotally, I sat down and had breakfast with a hotel owner that recently opened a $40 million facility here in B.C. He had spent the earlier part of his career working in the province of Alberta. As we sat and enjoyed our muffins and coffee, I was reminded by him what a dramatic difference there is still between working his investments in that province and working his investment here in ours. This reminds me…. It sobers me up in many ways to realize that we have not yet achieved all of our goals to ensure a strong, buoyant economy for travel and tourism, and that's the challenge that's before you.

           Thank you very much for hearing our thoughts today.

           B. Lekstrom (Chair): Thank you, Kevin, for coming before the committee and presenting a very well-thought-out presentation. We do appreciate that.

           I will look to members of the committee, if they have any questions.

           R. Lee: Thank you for the presentation. Public safety surely is an important issue. Has the industry itself invested more into security inside the hotels? If the tourists have a bad experience, they may not come back to B.C. You have a responsibility as well. I would like to hear about that.

           K. Walker: It's quite remarkable how much this issue has become front and centre for hoteliers. We're not just talking in the big centres any longer. We have issues in Sidney, where we have had to reinvest greater amounts in our security than we would have imagined to be sure that we have the right experience for our guests.

           We try not to talk about it too much because it's kind of negative press. The reality is that yes, hoteliers throughout the province are taking very seriously their responsibilities related to security. This act of law has helped us tremendously, but actual enforcement of the law seems to be standing in our way for complete effectiveness.

           R. Lee: Besides the Safe Streets Act and other laws…. What I mean is, say, the security inside your facilities — the hotels and other resort areas. Have the owners, the people there, invested more? Are they spending more money on security?

           K. Walker: Absolutely, yes.

           D. Hayer: An excellent presentation, as a matter of fact, especially when you talk about transportation. When I go to Surrey and south of the Fraser River, everybody talks about the transportation issues, especially the Port Mann Bridge twinning. Sometimes what should be a five-minute drive takes 45 minutes. You're putting a lot of pollution in the air, you're burning a lot of gas, and you're spending time away from the family or work, which is not good for anybody. So I was happy to hear your comments on that.

           The other part that I want to find out about is that many people say provincial income tax should maybe be made similar to GST — make it simpler, decrease it so it's easier to calculate, the same as the GST. Any feelings on that? Some think that would hurt.

           K. Walker: We haven't had any discussions around that that I'm aware of, so I really can't comment effectively. You're speaking of the provincial sales tax?

           D. Hayer: Yes, so that it is across the board, and it protects…. Like the GST, it's there to make it… Instead of having that number, it would make it a much lower number, because it would be easier to calculate.

           K. Walker: I'm actually curious….

           D. Hayer: Instead of having two books, you have one set of books.

           K. Walker: I'm really curious that that discussion hasn't made it to our table, because I could see some very lively debate around that subject. At first glance, it would certainly be worth some further investigation.

           B. Lekstrom (Chair): Are there any other questions from members of the committee?

           Seeing none, Kevin, again I wish to express our thanks on behalf of the committee for your presentation here. It's enlightening to know that so many British Columbians — this is our first meeting and our first morning, actually — have put so much effort and time into what their thoughts are and their presentations.

           K. Walker: Thanks for the opportunity.

           B. Lekstrom (Chair): This committee will stand recessed until 1:05 this afternoon.

           The committee recessed from 12:05 p.m. to 1:04 p.m.

           [B. Lekstrom in the chair.]

           B. Lekstrom (Chair): Well, good afternoon, everyone, and welcome back. At this time I will reconvene the Select Standing Committee on Finance and Government Services public hearing. I would like to thank the presenters that were before us this morning.

           This afternoon our first presenter before the committee is with the Federation of Child and Family Services of British Columbia. I'd like to welcome Craig Meredith. Welcome, Craig, and thank you for taking

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the time out of your schedule to come and present to our committee here today.

           C. Meredith: Thank you very much. The federation board and its member organizations would like to sincerely thank you for this opportunity to provide some input on the '06-07 budget.

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           The Federation of Child and Family Services of B.C. is a professional community service association that has been promoting excellence in services to children, youth and families for almost 25 years. Our 95-plus service organizations serve hundreds of communities across B.C. and have a long history of providing essential and cost-effective community services to hundreds of thousands of British Columbians.

           Our members provide a variety of community services on contract to provincial and federal ministries. The federation also includes the voices of other provincial organizations such as the B.C. foster parents, the B.C. Council for Families and the B.C. Association of Social Workers, along with a national research group, an international accrediting body and two universities.

           When I look around this committee room today, I see a lot of tired but familiar faces from both sides of the House. In some respects, I feel I'm talking to the converted when it comes to discussing services for children, youth and families in B.C. We know everyone on this committee ran for office because you care about kids, families and strengthening your communities. I know you're all connected to your communities and are well aware of the unwavering dedication in essential services that your community service agencies provide.

           They are essential services that more than 60 percent of B.C. families have accessed at one time or another. The Premier has said that without investment and stability, neither a province nor a business can perform to its capacity. Similarly, we believe that without investment and stability, you cannot expect to increase the community's capacity to care for the most vulnerable in our society.

           It's interesting. In reference to this point, I was surprised to hear a spokesman for the B.C. Business Council recently say: "When it comes to dedicating more resources to poverty and homelessness, it is like bailing out a sinking boat with a thimble." It is clear that this spokesman does not see that there are real casualties when you institute belt-tightening exercises like we've gone through in the past four years. The collateral damage falls on those who can least cope with such change: the poor, the less resilient, children, youth and families.

           He also does not see that rather than bailing out the boat during the last few years, the budget agenda to improve our economy by shoring up his constituency has put the boat and many of its passengers at serious risk. Even with the great economic boom in B.C., according to the government-appointed B.C. Progress Board, we have moved down to the last spot among other provinces as far as poverty measures.

           Vancouver also has the highest combined violent-and-property-crime rate among major Canadian and American cities. Even as recently as last week at UBCM, it was recognized that it's time to seriously review B.C.'s income assistance shelter rates, which have not been adjusted in well over ten years.

           Community service agencies reflect similar findings. There is an increase in poverty, homelessness, wait-lists, complexity of cases and the number of people returning to violent situations. Even with the record 2005 budget surplus, the percentage of the budget dedicated to the social safety net ministries has reached a 20-year low and will continue to decline, based on government projections. Food banks continue to grow in numbers and are becoming a mainstay for more and more British Columbians, especially for those on income assistance.

           Our members provide services to a number of ministries. However, our greatest concern during the last four years has been the impacts of continuing cuts to the services of the Ministry of Children and Family Development. Kids do come first — right?

           British Columbia's system of support for children and families has been in crisis for more than a decade, beginning with the incidents that led to the Gove inquiry and now exemplified by the Sherry Charlie case. The resources and structures for delivering supports and assistance have been the focus of constant debate and of failed attempts to repair.

           Throughout this turmoil — failed reorganizations, financial instability and a revolving door of ten ministers — your contracted community service providers have not let respective governments or ministers down. Government has done that itself. Your community service providers have been bloodied and have suffered from the negativity surrounding this ministry, but we have remained unbowed in our dedication to serve those who need it most. When you consider the communication failures that have befallen the MCFD in the last four years, the federation and its members have on every occasion made every attempt to advise government in advance of pending disaster. Our members work on the front lines and do have their fingers on the pulse. Our advance warnings were neither acknowledged nor taken seriously.

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           Recently we've seen a change. There is a greater willingness to listen and be responsive. The recent turnaround on the plan to move child and youth mental health is an example that the government can listen. It can be commended, along with the minister, for the response to this situation and our concerns for our clients.

           The committee will receive many suggestions on the budget priorities for 2006 in the coming weeks. We also recognize that government cannot afford to do everything, but we know that each of you agrees that kids come first, and here are some of our suggestions.

           Even with the provincial budget surplus and serious public concerns about services to children, youth and families at this time, some of the children

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and family development regions are still forecasting more reductions in their services this year and next. For example, it's halfway through the year, and the business plan for this year for reducing the Vancouver Island Children and Family Services budget by $1.3 million still has not been released. People, service providers, do not know where they stand. We're now into the fifth year of financial and organizational instability caused by the cuts. You would not expect business to develop greater capacity in this environment. How do you expect front-line staff and community partners to perform in this environment? It's difficult.

           Families, police, communities, government workers and community service providers have warned government for two years that serious gaps have developed in resources and support for youth. As an example, the federation has been advising government for more than two years that it should be preparing for increased youth sexual exploitation and unprecedented use of crystal meth. Investments in prevention must be made immediately, before the situations reach a costly crisis state like we find ourselves in today.

           According to a national study released this week, which is in your package there, the rate of substantiated maltreatment in Canada increased by 125 percent from 1998 to 2003 — 125 percent. It is now obvious that more resources were needed in the last few years to counter this increase, not less. Political decisions were made to place a huge burden of cuts on MCFD and specifically on CFD's family support, prevention and protection services, while sparing other protected areas. Remember, government has an obligation to properly protect and provide for the most vulnerable in our society, especially children at risk and those in foster care. I might add that that comes from the New Era document.

           The B.C. child and youth officer released a report after a four-month provincewide consultation with MCFD, staff and service providers, and it is also attached. The observations in that report I've listed below. Also, as I said before, the report is in your package. Time and time again community service providers who are on the front lines are told by ministers in social services that they do not have the bullets to persuade Treasury Board to take another course.

           Considering what has been disclosed recently, this is no longer acceptable to British Columbians. The messages and bullets are there, but is the political will there to act on behalf of children in this province?

           The number of children in care has been reduced significantly, resulting in substantial reductions in costs to government. But even with this huge reduction in costs, the government is spending as much as 20 percent less on the remaining children in care than it was in 2002-2003. That's 20 percent. Foster parents, social workers and service providers have been telling government that kids now coming into care have more complex problems, and the specialized resources and support services to serve them continue to be reduced.

           The need for resources has been clearly identified, but still the budget for CFD has been underspent by tens of millions of dollars during the last three fiscal years. Tens of millions of dollar have been underspent. It was allocated elsewhere, and it was not to kids. We sincerely hope the government would now recognize that services for kids in B.C. have a large constituency of people who care that scarce budget dollars stay where they are allocated.

           We applaud the government's memorandum of understanding with the B.C. first nations on child, youth and family services in 2003, and we said that publicly. However, in the last three fiscal years we have not seen a single new dollar allocated to this worthwhile initiative. Instead, we've seen the reallocation of scarce resources and the loss of direct services to offset the costs of capacity-building in governments. The result: services have been reduced for both aboriginal and non-aboriginal children, youth and families. If we've learned anything over the last four years…. Meaningful change can only take place if it is properly resourced and monitored from all angles.

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           While government talks about building new infrastructure over the next three years, the infrastructure of our community service partners has been decimated. Seventy-five percent of the MCFD budget goes to contracted services. Most community partners have not seen an operating increase in their contracts for up to ten years. At the same time, demands for greater accountability, more qualifications, more technology, higher liability and property insurance, rents and administration costs have skyrocketed.

           We are also expected to have a balanced budget, and the financial burden you are placing on us does not even allow us the luxury of borrowing to rebuild the infrastructure. At least, we recommend a review of the situation before it is too late.

           Attracting and retaining qualified staff has become a serious problem for community service agencies because of the instability and significant rollback in wages and benefits in the social services sector in the last two years. The result: positions cannot be filled, and therefore service is difficult to provide, especially in the non-urban areas. In the past it has always been difficult to compete with the pay scale and benefits in health and education for the same positions. Now it is impossible. Non-union agencies are even at a greater disadvantage. In the next round of collective bargaining, it is essential that this disparity be addressed so that we are on a level playing field when it comes to recruiting and retaining staff.

           Finally, by working together and making the necessary investments in keeping kids safe and strengthening families, B.C. can truly become the greatest place on earth to live. Please put kids, youth and families first in your recommendations for the 2006-2007 budget.

           B. Lekstrom (Chair): Thank you, Craig, for your presentation before our committee here today. I know

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there will be a number of questions from committee members.

           M. Karagianis (Deputy Chair): Craig, one thing I noticed here is that you made really just passing reference to the Charlie case that has been, obviously, a huge focus of this House over the last few weeks — you know, the reference to a children's commissioner and the process by sort of re-examining that. You haven't talked about any of that here or any of the possible resources for that.

           C. Meredith: Okay. I don't mind commenting on that, and I will if it's okay with the Chair. I should note, first of all, in regard to any comments I make as far as the aboriginal population, that I came to this job three years ago after being a CEO of one of the most successful first nations in this province. I have worked off and on in the aboriginal world for 25 years, so I have some ideas.

           As far as the Charlie situation is concerned, it's a tragic situation, but it's not the problem. It's the symptom of a problem. The CYO and the ministry have known our concerns about the fast-forward aboriginal initiative and Sherry Charlie for two years. We've been talking to both the ministry and the CYO in regard to the fast-forward. The government's agenda in child, youth and families, as far as the aboriginal initiative, was a recipe for disaster. Here we have the government spending ten years on the treaty process and have got not one treaty, and the government plans to develop the capacity in government's models for first nations to care for their children in two years — or three years, as was initially proposed.

           The other point in regard to that was that no new money was put in. As former Minister Hogg knows, it can be a recipe for disaster.

           As far as the children's commissioner is concerned, there is no question in our mind that the CYO must be perceived as independent. I think we all recognize that now. The CYO can say that, but I think it's quite clear that she must be reporting directly to the Legislature.

           I would also suggest that the suggestion made by the Premier in the prepared speech he gave to us a few years ago, which is also included there, was a wonderful one. The Premier promised at that time that he would, as the Leader of the Opposition, have a children's committee in the Legislature. We are still waiting for that five years later.

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           I think we'd also recommend in regard to the ministry, in situations like this in the future, that the responsibilities of the director of child welfare in the Ministry of Children and Family Development should be separated from operations. This is not a usual situation in British Columbia, where we have the director of child welfare also responsible for operations. The director should be responsible for monitoring and reporting and the quality assurance of the programs, but it's inherent that if you're responsible for both the operations and the director of child welfare responsibilities, you could run into some conflicts.

           The ADM responsible for that portfolio is probably the major spokesman for the government in regard to that area. When you combine the operations and that responsibility, I think it creates some difficulties, and I think that's one area that also should be looked at.

           M. Karagianis (Deputy Chair): Thank you.

           B. Lekstrom (Chair): Seeing no further questions from members of our committee, Craig, I want to thank you again for coming and presenting to our committee.

           As we have indicated to all presenters, all of the submissions will be given due consideration by the full committee. There are circumstances today that prevent a couple of our committee members from being able to be with us. They will be given all of the documentation to review, though. Thank you very much.

           C. Meredith: Thank you very much.

           B. Lekstrom (Chair): Our next presentation today before the committee comes from…. It's a joint presentation with Willow WAI and Haven Societies. With Willow WAI is Mr. Mike Hunter, and with Haven Society is Jane Templeman.

           Good afternoon and welcome.

           M. Hunter: Thank you, Chair, members. It's a little different being in this seat.

           Both of us had the opportunity to sleep last night, so I hope that you will be able to stay awake while we make a brief presentation to you. Thank you for the opportunity, which came only yesterday. We had to scramble a little bit.

           I am here as a consultant to the Willow WAI project in Nanaimo, and I'm going to ask Jane to explain to you what Willow WAI is and some of the challenges that are facing the project and its partners, and then I will make the concluding part of the presentation. We will both then be able to answer questions.

           B. Lekstrom (Chair): All right. Thank you.

           M. Hunter: With your permission, Mr. Chair, Jane Templeman would like to speak.

           B. Lekstrom (Chair): Certainly.

           J. Templeman: Thanks, Mike, and thank you for the opportunity to be here. My name is Jane Templeman. I'm the executive director of Haven Society in Nanaimo.

           Haven Society is an organization that receives government funding. We provide a variety of anti-violence services — a transition house, Stopping the Violence counselling programs — and three years ago we got into the homelessness business in Nanaimo. That's the project we're here to talk about today.

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           As you may know, homelessness is on the rise, certainly across Canada and most certainly in Nanaimo. A recent homeless count numbered 150 people homeless and on the streets in Nanaimo. That's a significant change for our community in the last two years.

           The Willow WAI project was conceived three years ago as a solution, in part, to that rising problem. I'm really excited about the opportunity to present a little bit about it to you today, because we're finding great success with this project. It's an innovative partnership that involves Haven Society and three other organizations in our community: VIHA mental health and addictions, Nanaimo Family Life Association and NARSF programs.

           It consists of three parts, and I'll just very briefly outline them for you today. The wraparound initiative — WAI — is an integrated approach that uses flexible funds combined with a supportive team of community resources to assist any homeless individual, male or female, and their families to find their own sustainable and stable housing.

           The housing piece of Willow is a network of three rented or leased homes across the city that are housing women and their children who are at risk of homelessness due to poverty, addictions, violence and/or involvement in the sex trade. The homes provide a secure and healthy home environment from which the women and children are able to stabilize and initiate change.

           We have also introduced an integrated day program, which is a very exciting collaborative interagency initiative that responds to the individual needs of our residents by providing life-skills supports, implementing personal action plans and developing core life skills.

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           I just wanted to touch briefly on some of our successes for you. We're quite amazed over the last two years to watch what for us was a pilot and experiment — to watch it grow and to see the successes. Since last October, in the last 11 months, 87 individuals and families have found housing. Sixty-eight of those have successfully sustained stable, independent housing. That is a 78-percent success rate.

           In our residences, our three homes, we've been able to house 23 women and six children. To date, eight are current residents, 15 women have graduated from the program, and 12 have maintained stable housing and independence — an 80-percent success rate.

           We also want to demonstrate and leave with you the indicator of success that the Willow WAI project is extremely and highly cost-effective. It will require only a $300,000 investment in annualized operational funding to keep all of this program open. This is significantly lower than traditional models of residential care, housing and/or addictions treatment. We believe that the project demonstrated by Willow WAI will create considerable future cost savings. As participants achieve independence, savings are achieved in health care, treatment, policing and corrections.

           One of the interesting aspects of Willow WAI is that it stabilizes people in normal neighbourhoods — in small-scale houses and single-family dwellings. There's no large centre, so there's no large impact in any one neighbourhood. We've had a very good response in our community.

           The challenge of Willow WAI can be named very simply. We received federal dollars through the national homeless initiative SCPI funding. We've seen homelessness increase around us. We know we have a project that works, and yet our concern is, in March of 2006, that SCPI federal funding will cease to exist. We're fearful that we'll have to close the doors of Willow WAI. Our challenge before us, and partly why we're here and Mike is working with us, is that we're trying to see what we can do to attract other support and a variety of partners to help us secure ongoing funding for Willow WAI. I think Mike is going to speak to that.

           M. Hunter: Thank you, Jane. I'd just like to add to what Jane said. I think the broader perspective here is that clearly the federal government, the provincial government and I suspect political parties of all stripes are bemused to some extent by the increase in homelessness across this country. It is a big issue, a big policy issue that everybody is struggling with — from operators of facilities like Willow WAI to you folks. I know there's a big picture out there, and I don't believe there are any simple answers.

           In this case, you have a project which provides a first-class example of how intervention in people's lives can make a positive difference. I got involved in this because I believe that it would be a shame, in my community and in our province, if projects like this one — and there are many more — suffer because, frankly, the feds can't get their budget act together. To provide funding for three and a half years, to have it withdrawn…. There are people's lives out there that are going to be affected.

           I'm very conscious of the fact that this is more than just a British Columbia issue, but we are in a position where we've got an excellent program. This project has the support of the private sector in Nanaimo. Haven Society's board of directors has agreed to fund $60,000 of the annual cost of the Willow WAI project from its private and corporate donations, so there's good community support for what Haven Society is doing overall and on this project in particular.

           In your package you will see there is some documentation which speaks to the results that Jane referred to and also a document which talks about the best practices that this particular project employs. We believe that this documented commitment to excellence is unique in this field.

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           What are we asking the committee to do? First of all, to go back, you need to understand that federal funding for homelessness for British Columbians is not secure. This is one of many SCPI-funded projects throughout British Columbia that are threatened with

[ Page 51 ]

what I'd like to call orphanage if there isn't some way of finding sustainable funding. I think it's clear that $360,000 a year is a lot of money for a community like mine to find, on top of everything else that is going on.

           I have to say, Mr. Chairman, that we really do appreciate the sensitivity of the government of British Columbia to the approaches we've made and the concerns we've expressed with ministers and officials. We understand the government's frustrations with the homelessness initiative and how we're going to proceed with it. We are particularly grateful to our area MLAs, both of them from both parties, for their support for this project.

           I can tell you that today we had a meeting with B.C. Housing which we were very encouraged by. B.C. Housing is prepared to enter into discussions as to how they, that agency, might play a role in finding a sustainable funding base, but it's not going to be enough. In addition to the actual physical housing, heating and light costs, there are also the costs…. Even though this is very much a volunteer-run organization, there are some wage costs associated with it that are going to have to be funded in the longer term.

           We've demonstrated through this project performance beyond expectations. We think Willow WAI represents a model of intervention that should not be permitted to disappear because of a lack of financial commitment from Ottawa. We believe there is a good case for the province of British Columbia to find some way of finding financial support for this project, pending the emergence of sustainable funding from Ottawa, hopefully, and we're urging the committee to recommend that to the Minister of Finance.

           I can't say to you, Mr. Chairman, how that financial support might be developed. Certainly, B.C. Housing's commitment, if we can come to some conclusion on that, will be very helpful. But beyond that, I think that the Minister of Finance is going to need to look at this project and others to see how British Columbians' needs can be serviced, at least while the federal government starts to come to the plate with some of the responsibilities which I believe it carries.

           There are some ideas that have been put out there. I know that the government does not like to add operating cost items to the budget, and I fully understand why they do not like that. But we are also looking at a substantial budget surplus, and the government has used the tool before of creating large funds from which interest can be drawn to pay for some costs. I don't know if that's a doable thing in this case. I simply can't be specific, but I need to get the committee's attention with the Minister of Finance that this project has a lot to be said for it. It has a lot of good things about it.

           In conclusion, I'd like to read into the record a statement from a research highlight published in September of this year by CMHC. In its conclusions it says the following: "Perhaps the most significant finding that emerges from this study is the degree of success that can be achieved with the 'housing first' approach. The case studies show that most people who are homeless, even if they have substance use issues and concurrent disorders, can be successfully housed directly from the street if they are given the right supports when they want them."

           This project gives people housing, it gives people community supports, and it gives them the tools to re-enter normal life. I think the province of British Columbia should take a very careful look at how sustainable funding for this project can be achieved.

           B. Lekstrom: (Chair): Thank you very much, Mike, and thank you, Jane, for your presentation. I'm going to look to members of the committee if they have any questions. I'll begin with Maurine.

           M. Karagianis (Deputy Chair): Excellent presentation. Thank you.

           At this point $300,000 is your operating cost for a year, and you're looking for that on an ongoing basis until such time as the federal government produces another program similar to SCPI. Is that basically the gist of the request?

           M. Hunter: Maybe I can jump in, and Jane can add, Ms. Karagianis. I've stayed away from the notion of interim funding deliberately because interim has a habit of becoming longer term. I want to repeat. I don't want to offer to this committee a specific mechanism for support. I know there are discussions going on for the Minister Responsible for Housing and the federal minister, and I know that the federal minister has promised that SCPI funding will continue. The questions are: how much, when, and will the model of funding change? I don't want to be back here in a year from now saying: "Well, the SCPI program is going to expire in March 2007."

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           Models of sustainability are what are important. If the province can find a way, in addition to B.C. Housing resources, of assisting these kind of projects — whether it's through the Premier's Task Force on Homelessness, the partnership that health authorities need to play in this, because we're talking in many cases about health issues…. What we are trying to do is find a way of finding a $300,000 ongoing stream of revenue. Others, I'm sure, will be asking the same thing.

           I don't diminish the amount of money, but I do say that if you look at what this investment would return in the case of this project, it's pretty positive.

           I don't know, Jane, if you wanted to add to that.

           J. Templeman: Just to speak from the project operation's point of view, even should SCPI be renewed and its commitment to national homelessness be renewed, they have a criterion that attaches to any project that the project be able to demonstrate sustainability within the two-year funding envelope. In other words, go find another funder. That's the nature of the problem that brings us here today. We need a solution to that problem.

           M. Karagianis (Deputy Chair): I think the reality of what we've seen of HRDC funding, as well, is that what they fund in a specific program may in fact shift and change. Should the program be renewed, they may

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have a different focus and, in fact, be looking to resurrect or start new projects that have slightly different terms of reference. So I can understand your frustration.

           M. Hunter: If I could add that in our community, in Nanaimo, there is a working group on homelessness that has been consulted over the period of years. Even if SCPI funding were to be extended on a better basis, a more sustainable basis, there is no guarantee within our community that funds allocated to the mid-Island region would necessarily go to Willow WAI, because there are lots of other people out there knocking on the door.

           G. Hogg: I support your initial direction in terms of what you're looking for in funding. Maybe I can be obtuse or perhaps even irrelevant for a moment about some of this, but the leading thinkers worldwide in terms of the delivery of the social programs are all talking about social sustainability and how you move to models of social sustainability. The world's biggest foundations are moving into looking at and starting to manage and support those — the whole notion of supply and demand of social service needs — and recognizing that we'll never meet the demands that we have but how you combine those in some supply models.

           Some of the co-op models of service delivery and social programs in Italy are pretty creative. There are people working across Canada nationally now and internationally around issues as big as poverty and homelessness around how we start to address those in a new paradigm and in a new model.

           The World Urban Forum is being hosted in Vancouver next year, and the Al-Can's 30 days of social sustainability are tying into that and starting to be a part of that. We announced the Pacific centre for social innovation in the throne speech, which is again a different model of how we can actually look at getting into social sustainability and some models for the delivery of that.

           I think the type of program you're talking about and the quality that you're telling us about that and being reflected in it…. It may be worthwhile to look at how that ties into some of these bigger-picture concepts. I think if the direction we're seeing worldwide in terms of those people who are writing on it and the…. And we have some of the very best examples of it, I think, in British Columbia initially, but there is a worldwide movement around the delivery of social programs that are moving into this model. There's a lot of literature on that. I'd be happy to show you some of the literature around that.

           I think that your initial move towards looking at getting specific funding through HRDC or through the province and tying those together are good initial steps. But as we look at the bigger picture of social programming, if we're going to be a part of what appears to be the changing delivery models that are going worldwide, I think it's helpful to have successful programs, know about those and start being plugged into those. That way, we can be a part of a leading wave of that service delivery model, which I think will have a profound impact on things such as homelessness over the long term.

           Nations historically have not been able to deal with it very well. It has all been stopgap, as you're talking about. We need to have big-picture, big-thinking responses to that. There are some people who are doing that and some foundations who are funding it well. I think we've got a chance to move into that model. You may well be able to fit into the ground level of that.

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           J. Templeman: Just maybe to build on that, I know that in the service delivery end of it, we're working with three other community partners to deliver the service. It's been learning for us to that, and it's been very successful. As we begin to have these conversations with potential different levels of funding, my sense of it is that what's going to be the solution here is a multilevel partnership around funding.

           It can be difficult to bring all those pieces together. We're learning how to do that, I think, as governments and as social service providers. I guess what I would put forward in terms of Willow WAI…. If we think about it as a pilot, I think Willow WAI offers an interesting pilot opportunity to look at how we have those conversations, what needs to come together and who needs to be at the table to build those sustainable solutions.

           B. Lekstrom (Chair): We're working on 15-minute presentations for each group to try and keep us on schedule. If there could be a short…. I know you had something quickly.

           G. Hogg: I'll be as quick as I can.

           B. Lekstrom (Chair): I knew you would.

           G. Hogg: I think that the example you're putting is one of the great banes of our constitutional democracy. The federal government through a myriad of ministries puts out and says, "We're going to fund this for a period of time," and it's like a colour of the month or a problem of the month that they fund.

           We do the same thing amongst our ministries. We don't give communities a chance to develop their social profile, their social program. What they need to develop for their development and for their best interests, in terms of what is our social development model and how do we fund that…. Then the state, both federally and provincially, isn't willing to sit back and say: "Yes, we trust you, and we'll give you the funding to make some decisions within the framework and context that you're talking about."

           I think that's one of the issues that we keep pulling communities apart. We're really good at pulling aboriginal communities apart, because we fund them from so many different directions. If this is symbolic of something we might do to actually have a coherent

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model of service delivery that represents the needs of a community, and if we as a provincial — and, as they're asking, the federal — government can start funding into that model that allows communities to grow and empower themselves in the ways that they provide those services, I think we'll be better off than what we've been trying to do for a hundred years in this country.

           I was going to be a lot more brief than that.

           B. Lekstrom (Chair): Thank you for that short comment. I did have Richard. If you have a brief question, I will try and entertain that, and then we must move on.

           R. Lee: Thank you for that presentation. The SCPI project. You mentioned that there are quite a few in B.C. and around Canada. They probably have different delivery models. Would there be any research and follow-up on the success of those projects?

           M. Hunter: Maybe I can answer that, Richard. Last week when I asked the question, "What's the dollar value of SCPI funding projects that face this orphanage?" as I describe it, I was told it was about $5 million. Today we learned that it's probably closer to $10 million.

           The fact is that it's very difficult for the province to figure out what's out there, because the SCPI funding was actually allocated without any input from the province. It's done community by community. So if there is $10 million worth of funding out there, some of it is for programs like hot meal programs. Some of it is for projects like Willow WAI, housing and longer-term intervention in people's lives. It's a big potential problem out there come March 31 — actually, come January, because in a project like this, if Jane needs to lay people off and find clients other things to do, those management decisions have to be made sometime in January. You can't go to March 31 and say: "Oops. Doors are closed."

           B. Lekstrom (Chair): Jane, Mike, I want to thank you for taking time to come and present. You spoke with passion about the project that you're speaking about, but it's much broader than that, and we fully understand that. Again, thank you for taking the time.

           M. Hunter: Thank you all.

           B. Lekstrom (Chair): We will move on to our next presenters. With us from the Communications, Energy and Paperworkers Union, western region, we have Dave Schaub and from the Communications, Energy and Paperworkers Union as well, local 514, Donald Vye. Good afternoon, gentlemen. Welcome to the committee.

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           D. Vye: I'll start off with our opening presentation, and then I'll ask Dave to fill in a little bit of the background information that's included in our package as well.

           B. Lekstrom (Chair): Terrific.

           D. Vye: First of all, I'd like to thank the committee for the opportunity to make the presentation today.

           As the elected representative for more than 300 workers in Port Alice, most of whom are currently unemployed, we would like to take this opportunity to express our concerns with the lack of action by government.

           The hon. Minister of Finance, Carole Taylor, has stated in opening comments for the minibudget and in other arenas that:

This government works for the people of British Columbia. It is their ideas, their priorities, their recommendations that will guide us in developing our next Budget 2006. That will be another step towards the government's great goals for a golden decade.

           The people in this province have made incredible progress in the last four years. Today we are able to build on that progress and invest some of the dividends of sound fiscal management and strong economic growth. More support for seniors, important new support for our first nations communities to participate more fully in our economy and society, and tax measures aimed at keeping British Columbia competitive, drawing new business and new jobs to the province.

           "Drawing new business and new jobs to the province." Based on this statement, one has to question the accuracy of this statement and how the budget is to reflect those goals. Services and infrastructure cost money. To fund these growing costs, the government has had to rely on taxation streams. Be they from people or businesses of British Columbia, these taxation streams are flowing largely from the industrial growth in the petrochemical development in the northeast corner of the province, while the income streams from the forest sector — previously the largest — have shrunk dramatically due to significant downsizing or mill closures for numerous reasons. There have been new plants or mill expansions in solid wood or value-added areas in the interior, but the jobs created don't equate to the revenue income either to government or to the employees who have lost jobs from these mill closures. In short, there appears to be considerable discussion but very little action being taken to support these citizens.

           In our opinion, there were priority issues before the government at the time of the election in May 2005, which were or could be directly related to the fiscal responsibility of the Finance Ministry. These issues remain outstanding.

           We would like to address the select standing committee on the one priority issue that we are very familiar with: the situation at the Port Alice mill and the socioeconomic impact of the bankruptcy on the employees and businesses in the community and the North Island.

           The current situation in Port Alice and the North Island is untenable, but there is a solution — a solution that will revitalize the local communities and have a

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positive impact on the economy of British Columbia. But this solution requires an agreement being achieved between the prospective purchaser and the government. Why is it that this government can't reach an agreement that will achieve the solution?

           How many of you are aware of what has happened in Port Alice? I would welcome the opportunity to explain in detail what has happened. But as I only have ten minutes, I have attached a time line of events for your review.

           For this hearing I will restrict my comments to the issues that directly relate to the budget and the economy of British Columbia. If the Port Alice mill is permanently closed, the province of British Columbia will incur site remediation costs, creating a liability ranging from a minimum of $25 million but in reality will exceed $80 million, when reviewing remediation costs of other pulp mill sites.

           There is an alternative, and this alternative is a very positive one for the future of British Columbia. Rather than the citizens of British Columbia having to assume significant costs resulting from a permanent mill closure, we see the mill operating many years into the future, generating socioeconomic benefits for both the residents of the North Island and the province.

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           The most significant reason that supports this alternative is that the Port Alice mill is not a bleach kraft pulp mill. It is a specialty cellulose mill that produces a product for a niche market. I would like to take this opportunity to explain what specialty cellulose is. The Port Alice mill produces cellulose for cellophane, sponges, filters, rayon for clothing, clear acetate sheet — similar to the stuff that's on the cover of these. It's also used in paints and lacquers, food additives, microcrystalline for the pharmaceutical industry, as well as a number of other products shown on the attached product flow chart. Globally the demand is greater than supply for specialty cellulose.

           The economic factors of the Port Alice mill operating are as follows. A hundred percent of the mill's sales are exported worldwide, which contributes more than $150 million in economic activity into British Columbia annually; direct employment of over 300 people; indirect employment in logging, transportation and support services, which accounts for more than 1,000 additional jobs on the North Island and throughout British Columbia. There are no other specialty cellulose mills in B.C., and there are two others in Canada.

           It is our understanding that the prospective purchaser for the Port Alice mill is willing to invest more than $20 million in the first year and to continue to invest more in the future. They have stated that their investment over five years will exceed $100 million in capital expenditure to enhance the productivity and efficiencies, which would secure employment opportunities in the long term. To assist them in determining the optimum return on capital expenditure investment and efficiencies, they sought the assistance of an engineering firm that operates other very efficient specialty cellulose mills in the world. This investment of time to determine what will add value in the near and long term shows a commitment that previous owner-operators have never had. The prospective purchaser does require a somewhat complicated agreement with the province, but under the circumstances I believe this is understandable, especially in light of what has transpired with the most recent purchaser.

           The question before this committee is: how can we ignore significant future revenues for the communities of the North Island and British Columbia? In our opinion, the decision-makers need to come to terms with investors interested in doing business in British Columbia. As stated by the hon. Minister of Finance and other cabinet ministers, British Columbia wants and needs to attract new corporate citizens, but in the case of Port Alice we have certainly not seen actions indicative of this statement. To personally witness the delays that have occurred in dealing with Port Alice, and at the same time see how other provinces and countries deal with this sort of opportunity, leaves us with more questions than answers.

           We have three questions today that all British Columbians deserve to know the answers to — all British Columbians. Why can't an agreement be reached? How can government ignore potential revenues of this magnitude? And is there any accuracy in what cabinet ministers, our elected representatives, say?

           In closing: can this committee please help us find some answers?

           Dave would like to cover the additional information in our package, just to clarify that some of it is not accurate today.

           D. Schaub: The fourth page from the back of the document gives the data that we've gathered up in 2002. It was the last full operating year for the pulp mill in Port Alice. It provides the economic data on the contribution to the local economies. As indicated, it totals not only spending in the benefit area and other areas on the Island — such as equipment purchasers, rentals and along that line — but also the other spending in British Columbia, some $115 million. That's a significant contribution to the economy, especially on the north end of the Island, which has had some serious blows dealt to it with the recent Western Forest downsizing, and Weyerhaeuser.

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           If you take a look further down the page, the other areas of taxes and other fees derived from the Port Alice operation indicate that the local municipal and school taxes paid by the mill and the residences, along with the other fees and taxes, including the stumpages…. We've used the rate of 954,000 cubic metres of pulpwood at $21 a cubic metre. Well, that was in 2002. Between 2002 and the current day, that has ranged up to in excess of $48 a cubic metre for pulp logs. So if you take that, it's another $34 million in contribution to the economy.

           This mill has served to provide training for young people — after growing up and working in the community — in trades and other training throughout, and

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also produces a sale of 165,000 air-dried tonnes of probably some of the highest-quality sulphite specialty pulp that's produced in the world. In fact, they use the pulp produced in Port Alice as the benchmark for other producers, such as Lenzing in Austria and Sappi in South Africa. So there are some very significant attributes to that mill.

           There have been significant expenditures on that mill in the past. In fact, as recently as the early '90s four digesters were added to the process, which again enhances the operation efficiencies.

           So with that, I'm going to leave you with the next page, which shows the different dissolving grades and paper grades that are produced in the mill, and then some of the things that pulp is used for — as Don has indicated, plastics and laminates and that sort of thing. One interesting thing is that if you do like your ice cream, you're getting fibre out of your cones that you eat, because it's 75-percent wood pulp when you eat it — as well as the ice cream. You have additives in that too.

           Thank you, committee, for your time. If you've got any questions, we'd be more than pleased to try and answer them.

           B. Lekstrom (Chair): Certainly, the issue is a serious one, although I believe our committee is here to receive answers to a question we put out in the prebudget consultation paper. I understand your compassion towards the issue, and I would encourage you…. I believe you have been in contact with the minister on this issue.

           In just trying to sum it up so that when we have to compile our report…. It would be my understanding that if there were the ability for government to invest additional dollars in the future, what I'm hearing you say is that you would like to see some of that money go towards the situation that you're facing. Is that a fair summation? Just trying to keep it in context with what our mandate….

           D. Schaub: It's a two-way street.

           B. Lekstrom (Chair): Right. We have a mandate put to us by the Legislative Assembly under our terms of reference. I don't want to dismiss your presentation, but I certainly want to make sure that it gets to the right place for due consideration.

           D. Vye: The reason that we're here today under the budget consultation process…. If there is no solution to operate the Port Alice mill, it's going to have a significant impact on the 2006 budget — okay?

           B. Lekstrom (Chair): Okay.

           D. Vye: The province is going to be faced with a large bill. The alternative, as I stated, is that there is a solution. If the mill runs, the mill produces revenues for the future versus a liability.

           B. Lekstrom (Chair): Okay. What we'll do, both Don and Dave, is certainly…. I can hear the compassion. I can hear your commitment to wanting to make sure that…. You're not talking about yourselves here; you're talking about a community and the workers there. I think we fully understand that, but we will, certainly having heard your presentation, take it. If there are any options for us as a committee to forward it as well, we will commit to do that on your behalf.

           Interjection.

           B. Lekstrom (Chair): Yes, I believe you're in contact…. If you haven't been with the minister today, try to get hold of Colin's staff.

           D. Vye: I have tried many times to meet with ministers on this issue. We, the people of Port Alice, have never had the opportunity to talk directly to ministers on this.

           B. Lekstrom: Okay. I know that they're receptive. If you have the opportunity to contact them right now….

           Interjection.

           B. Lekstrom (Chair): Yes, I would walk to his office right now. I mean, you're in the buildings. I would attempt that for sure. I know he's receptive to that. So that's just an avenue as direction from the committee that we're trying to assist with.

           Interjection.

           B. Lekstrom (Chair): Yes, very much.

           D. Hayer: Can you also send a copy of this to the minister's office?

           B. Lekstrom (Chair): I will ensure — if you haven't got a copy of this — that this will go directly to the minister.

[1400]

           We will have that, but I encourage you, as close as you are right now, to walk over to the office, knock on the door and sit down.

           We have heard your submission — definitely. I appreciate you taking the time We'll have somebody take you over to the office right now, so that you can get there. I wish you the best, guys.

           We are going to move on. Our next presentation this afternoon is from the University of Victoria Students Society, and presenting is Penny Beames. Good afternoon, Penny, and welcome

           P. Beames: As you said, my name is Penny Beames. I'm the chairperson of the University of Victoria Students Society. I'm here to represent over 16,000 full- and part-time students at the University of Victoria. On behalf of those students, I would like to thank you for the opportunity that I get here to provide input on students' priorities for the budget this year. Here with me I've got some of my fellow students from Camosun

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College as well, and they also support the following recommendations.

           Students at the University of Victoria are very concerned about the effect that high tuition fees have had on access to colleges and universities in B.C. Statistics Canada's annual tuition fee survey shows that tuition fees in B.C. have gone from the second-lowest in the country to now paying $4,874 a year. That's $650 higher than the national average.

           At the University of Victoria tuition fees over the past four years have increased for domestic students by $2,497 and for international students by $6,876. That is a doubling in that short time. Tuition fees for students in many graduate and professional programs have increased at an even faster rate than that. Tuition fees have risen so fast, in fact, that they totalled 1 percent of provincial revenue last year. High fees create a very real barrier to access for students and put a university education out of reach for many average British Columbians.

           The University of Victoria didn't meet its enrolment estimates last year, which is a sign that the expensive tuition fees have kept some students from having a chance to start a university education.

           [The bells were rung.]

           B. Lekstrom (Chair): Penny, I just want to apologize for one moment. There is business going on in the Legislature right now. If you could allow us to recess for roughly five to seven minutes, we will be back and go through this presentation. This is an important vote that's coming up. I know each member has to be there.

           P. Beames: No worries.

           B. Lekstrom (Chair): We will return as quickly as possible. This committee stands recessed for six and a half minutes.

           The committee recessed from 2:03 p.m. to 2:29 p.m.

           [M. Karagianis in the chair.]

           M. Karagianis (Deputy Chair): We will continue. Penny, our apologies for the delay.

           P. Beames: Not a problem.

           M. Karagianis (Deputy Chair): You may proceed.

           P. Beames: I'll recap, at the beginning of the last paragraph.

           The University of Victoria didn't meet its enrolment estimates last year, which is a sign that the expense of tuition fees has kept some students from having a chance to start a university education.

           This year the province has capped tuition fee increases at the rate of inflation, and for that we congratulate them. Students look forward to seeing this cap enshrined in legislation to ensure that our institutions don't add to the cost of post-secondary education already on the shoulders of students. Even more than that, now that there's a cap in place, the B.C. government has a chance to do even better by reducing tuition fees.

           The federal budget, passed this May, included $1.5 billion to go toward reducing tuition fees in all provinces. We ask that all of the portion allocated to British Columbia go directly to reducing tuition fees, starting in fall of 2006. It's extra money that won't have to affect any of B.C.'s other fiscal plans for the year, and it will help to start the process of opening up access to post-secondary education for all British Columbians.

[1430]

           Reducing tuition fees is the best way to ensure that students from all backgrounds are able to get the education they need to succeed in life and to fully participate in building a strong, vibrant economy and future for B.C.

           There is research that shows that a financial barrier in the form of tuition fees is the number one reason that young people who would otherwise attend college or universities aren't going. Statistics Canada's Youth in Transition Survey found that seven out of ten high school graduates that didn't go on to pursue a post-secondary education but wanted to couldn't go on because of financial barriers.

           A study conducted at UCLA entitled College-Going and Inequality found that for every thousand-dollar increase in tuition fees, participation from low-income students drops by as much as 15 percent. Considering that, according to HRDC labour market statistics, 72 percent of all jobs created in Canada last year required some form of post-secondary education. A significant investment in accessible post-secondary education is the only way to ensure that B.C. has a well-educated and flexible workforce who can get the jobs they need to participate in the economy and support their families.

           The rapid increase in tuition fees has impacted access for students from traditionally marginalized groups. The province wants to improve access for aboriginal students, yet tuition fee levels are out of reach for many aboriginal British Columbians, especially those from lower-income backgrounds. The decision at the provincial level to increase tuition fees also means that aboriginal students who receive federal supports are left without enough funding to cover their costs. The announced increases for special program funding are great for those aboriginal students who already have made it into those programs. However, lowering tuition fees will open up the doors for those who are being shut out by the high costs.

           Another aspect of providing a high-quality and accessible post-secondary education is increasing per-student funding. Core funding at the University of Victoria has dropped significantly since 2001. In the 2001-2002 year the university's operating grant from the province paid for 70 percent of a student's education. This year the operating grant only covers 54 percent of providing that education. Without increased

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per-student funding, the university can't pay for operational costs, technology upgrades, lab equipment or instructor and support-staff salaries without feeling the pressure to increase tuition fees.

           Community colleges also have a vital role in offering accessible education. However, the effects of funding cuts mean that too many British Columbians who need a college education can't afford it. Reducing college tuition fees will also enhance access to universities. For example, many students at Camosun College will continue on to the University of Victoria and elsewhere in B.C.

           One particular area where fee increases have hurt access is the introduction of tuition fees for adult basic education. Adult basic education courses give adults the chance to complete a high school diploma and let those adults who need to upgrade after time out of school gain admission to college or universities.

           In 1998 the province eliminated all tuition fees for adult basic education, because many adults who require a high school education are not in a position to pay for courses and because free high school education is a right in B.C., but in 2003 some colleges starting charging tuition fees for adult basic education. Students have seen declining enrolment in those ABE programs for which tuition fees are being charged, such as the Vancouver Community College, where enrolment has actually dropped by as much as 50 percent.

           Eliminating tuition fees for adult basic education is a small investment on the part of the government for a program that is so beneficial to B.C. Without basic education and upgrading, many students — particularly those who wish to return to school or need to retrain for a new career — have no hope of getting a further education. We encourage the province to eliminate all tuition fees for adult basic education and provide sustained funding to institutions to cover the cost of instruction.

           Per-student funding also needs to be appropriate to the cost of course delivery. Increased seats, especially in areas that need it, like trades programs, is a very good thing, but those seats need to be affordable, or they'll stay empty. Per-student funding also needs to reflect the higher-than-average cost of providing some programs, like trade courses, to make sure that colleges aren't forced to raise tuition fees or lower curriculum standards.

           Finally, the high cost of tuition fees means that many students need a student loan to pay for their education, yet B.C.'s financial aid system hasn't kept pace with the rapid increase of the cost of an education.

           The province recently announced it would forgive $65½ million in student debt this year. That's good, but it's still less than the grants program, which gave students most in need $80 million a year in grants before it was eliminated in 2004. That seems like a backwards equation.

[1435]

           Tuition fees have gone up, yet a program that was designed to help students cope with the barriers of upfront costs was eliminated. A single student who borrowed the maximum B.C. student loan in the last year will receive $2,504 in the form of a loan reduction. The same student, though, would have received $3,500 under the grant system in upfront money that could've been put toward tuition fees, paying for books or relieving financial pressure so they could instead focus on being successful in their studies. A student with children would have received a grant of approximately $8,000 compared to a loan reduction this year of $6,584.

           What was great about the way the grant system worked was that instead of reducing the debt after the fact, it meant that students didn't have to borrow at all. It also provided a stable amount of funding so that students and their families could create a long-term financial plan. The new program makes it very difficult for students applying for a loan or coming into the system to guess the amount of their loan reduction every year. The student financial assistance system in B.C. needs to refocus on helping students with financial needs succeed in their studies and to help them graduate with the least amount of debt possible. Grants are the best way to deliver that assistance to students.

           To conclude, I would encourage the province to make increased access to post-secondary education, through the reduction of tuition fees and increased funding for post-secondary, its number-one priority in the upcoming year. The choices that the B.C. government makes in 2006-2007 will go a long way to determining whether British Columbians from average families will have the choices they need in the future — the choices to go to the school they want to go to, to study what it is they do best, to make a valuable contribution to the economy and to society and to get the education they need to find stable employment in their own communities. The recommendations outlined in this submission will make sure these choices are available to all British Columbians and will help the government achieve its goal of having the best-educated, most literate citizens on the continent with the best jobs — not just for the years leading up to 2010 but for the decades after. Thank you.

           M. Karagianis (Deputy Chair): Thank you very much, Penny — excellent presentation. I'll open it up for questions.

           D. Hayer: Just a comment. I have one child going to university, one going to Kwantlen University College. I have a niece going to your university here, UVic, and I have another relative at Camosun College and many other places, so I hear some of the comments that you're saying all of the time and some of the different points of view there. You made a good presentation. Advanced education is very important to all of us. Thank you.

           M. Karagianis (Deputy Chair): Any further questions?

           R. Lee: Just a quick question. Do you feel there are more choices in the system right now in terms of course selections?

[ Page 58 ]

           P. Beames: In terms of course selection it really would depend on which college or university you're looking at. There are a lot of colleges that are really streamlining their programs, which means that a lot of funding for a lot of trades that people have taken advantage of is actually…. Like, the course selection in a lot of trades and a lot of courses is actually going down. At UVic, I wouldn't be able to tell you. I can tell you that from my perspective, there are a lot of courses I would like to take that aren't being offered because they aren't in a lot of the departments that are receiving the most attention right now — courses that are in the course calendar, but there just aren't enough profs or enough space to host them. From my personal experience, not necessarily as the chair but as a student, I found that my choices and my selections have actually been reduced since I got to UVic in 2003.

           M. Karagianis (Deputy Chair): Any further questions? Seeing none, thank you very much, Penny. We will give serious consideration to your presentation.

           Our next presenter is Michael McPhie from the mining association. Good to see you, Michael.

           M. McPhie: Thank you. Good afternoon. It's a great pleasure for me to be here and speak to this legislative committee. My objective is to give you a sense of what's happening in the mining and minerals sector in this province, which is going through quite an extraordinary time, and to give some very specific action items and recommendations to take forward to the Legislature.

[1440]

           Before I talk about the mining industry, though, I'd like to state for the record that I think the provincial government deserves a lot of credit for a very prudent fiscal management practices that they're undertaking in creating a competitive tax environment and for controlling spending, both of which are real key factors in making sure our economy is strong into the future.

           Just before I go on about the state of the industry, I'd like to talk to you a little bit about how the industry might have changed in the last number of years and maybe give you a sense of what the key driving factors are for the future. First off, modern mining is really all about innovation, sustainability and good practice. We're a technologically advanced industry. We take great care in being great stewards of the environment, and we know that's our key to our future.

           There are two really dominant factors that determine the attractiveness of B.C. to investment in the business in which we're engaged. The first is a stable and balanced policy environment that provides the predictability and certainty for investment. The second is really having access to affordable and reliable infrastructure, good access to data including water and geoscience, and world-class educational institutions.

           I was happy to hear the previous presenter talking about the importance of university, because we're certainly facing a real job and employment crisis in our industry right now — bringing good people in, and the job opportunities that they can fill.

           The third thing that I think is really critical for our industry is having a positive relationship with the people in the communities of B.C. and in particular with our first nations people. I would offer for the record that we fully support the Premier in his efforts to establish a new relationship with B.C.'s first nations people, and I'd further offer that the mining and minerals industry represents an extraordinary opportunity for many of these communities to achieve the economic self-sufficiency they so desire.

           A couple of facts on the industry in terms of background — just a couple of things for the record. Revenues for the industry will top over $5 billion in 2005. That's up more than 30 percent of just two years ago. If you add in the service side, the educational institutions, the technical and the professionals, it's substantially higher — as much as two times higher than that in terms of economic impact.

           There were approximately 7,000 direct mining jobs and an additional 17,000 indirect jobs around the province last year. These are both union and non-union. There are currently 17 operating mines in the province. That's down from 30 that existed in the '80s. If we look towards the future, it looks like the statistics are pointing all in the right direction, with exports up some 60 percent this year alone.

           I'd also offer, from a perspective of how the current accounts are shown, that really, our greatest economic impact is at the community level. For example, one mine in Kamloops, the Highland Valley operation, spends some $100 million on goods and services in Kamloops alone. It doesn't always get caught in the traditional accounting of government, but it's quite an extraordinary impact.

           I'd like to just touch on what we consider to be some key recommendations, and I touched on this in one of my points. One is infrastructure. One of the things the industry is calling for is consideration of providing a transmission line and power along Highway 37 from what's referred to as the Meziadin Junction to Dease Lake. It's in northwestern British Columbia. I'd offer that if that's possible, you'll create a catalyst for economic development in the northwest, including potential new mine developments, green hydro power — green power, not all hydro — and others — wind, and help B.C. achieve some of its energy needs. Furthermore, it's not just industry but communities that will benefit extraordinarily from this. For example, where a number of communities remain on diesel power in the 21st century, this could address that.

           The second key recommendation from the mining industry is in relation to taxation. We're asking for a removal of the provincial sales tax on electricity purchases. We'd offer that PST should be removed from the cost of electricity purchased by industrial customers. Low-cost electricity is our competitive advantage as a province, and B.C. is the only province in Canada to apply the full PST to industrial electric power pur-

[ Page 59 ]

chases, which really places B.C. industries at a disadvantage.

[1445]

           To give you a sense, Manitoba and Saskatchewan charge PST on heat and light but not on mineral processing, and the other provinces in Canada don't charge any PST. To further give you a sense of what this might mean in terms of the budget, industrial purchases in B.C. amount to approximately $500 million per year, and the 7-percent PST on those purchases generates some $35 million a year to the province. However, the implications of that on individual operations are significant.

           The third key recommendation from our industry relates to education. First off, in terms of trades, there needs to be continued focus on how to increase the number of trades spaces in the province. We're also looking for a matching commitment of $10 million for the development of a world-class earth and minerals discovery centre at Britannia Beach, British Columbia. There's information in your packet about that, including the business plan, but the proposal we have on the table is that this is matching funding between industry putting up $10 million, the government of Canada offering to put up $10 million, and we're looking for the province to match the same. This not-for-profit public interest project will be financially self-sustaining, will directly employ 75 full-time positions and is a partnership between the industry, government, the community and the Squamish and Lil'wat First Nations.

           Just in conclusion, I'd offer that, really, the time to act is now to make strategic investment while the financial health is strong and to prepare the province, because commodity prices will come down at some point. If we invest in infrastructure now, it will return dividends well into the future. If we make the right policy decisions, B.C. will continue to be a competitive and an even more competitive place for investment.

           M. Karagianis (Deputy Chair): Any questions from our committee?

           D. Hayer: I just want to, first of all, thank you for a very good presentation. With some of the questions brought up many times, I just want to get your opinion on this. The reason mining is improving in British Columbia over the last four and a half years, especially since the new government has come into power and they have made some changes…. Some people say it all has to do with the commodity prices. Other ones say it has to do with both. Which one is true, from your point of view?

           M. McPhie: I think, like I mentioned in my presentation, there are really two key factors. One relates to having a strong market, of course, but we're in a very globally competitive environment for spending. I'll give you a statistic that puts it in context. B.C. companies involved in the sector, many of which are in Vancouver, raised almost $4 billion in capital last year alone. Only $130 million of that was spent in B.C. The rest of it was spent around the world. These are the kinds of things we need to look at.

           B.C.'s share of exploration, and it's a bit of a bellwether, is now back up at 13 percent nationally. In 2001 it was 5 percent. Even though the total number had gone down, our actual percentage of spending had dropped off. I'd offer that bringing in at least some predictability and certainty around policies, about the ability to actually approve mines and put them in production, is really what will separate us from other jurisdictions in the world. So it's both — policy and having a strong market.

           R. Lee: Thank you for your presentation. We know there are quite a few explorations going on in B.C. Some of those explorations will eventually lead to production in the next few years. Can you somehow have a picture, say, in the next few years of how many mines and what the volume of production would be in B.C.?

           M. McPhie: Certainly, the only way you are able to sustain an industry and have it grow is if you're looking. You're right. The exploration spending is up some 300 percent in the last two or three years. I think maybe the best indication of this, and it's in your package there, is that there are currently 15 major development projects in the environmental assessment review process. Combined, that represents some $3 billion in capital development, another 3,000 direct jobs and over 3,000 construction and development jobs. That's what the future holds.           

[1450]

           Now, all those projects — we're not sure if they'll all get through. They all need to stand the test of their merits. I'll give you one more example. In 2001 we had one project on the books; we now have 15. That's a pretty dramatic change. If you talk to the folks in the mines branch, they tell us that there are ten or 12 more that may be in the offing. That's the best statistic that we can use to predict where the future might be.

           M. Karagianis (Deputy Chair): Any further questions? Seeing none, thank you very much, Michael. Excellent presentation.

           M. McPhie: Thank you. I appreciate it.

           M. Karagianis (Deputy Chair): Our next presenter is Tourism Victoria. I see Lorne. Hi, Lorne, and welcome.

           L. Whyte: Thank you. It's indeed a pleasure to appear in front of this committee today. On behalf of Tourism Victoria, our board of directors, our over 1,000 businesses and — more important than that — the 34,000 people that work in the tourism industry, I'm here to talk to you today about one of the issues that we find we need to move forward for in our role in the 2010 games and the bid to double tourism revenues by 2010.

           We certainly applaud the province's partnership with gateway infocentres around the province and are asking your assistance to improve our gateway infocentre in B.C.'s capital city of Victoria. Currently we

[ Page 60 ]

assist over 800,000 visitors each year, and we know that if they have one-on-one interactions with staff or self-service technology, they will stay longer and spend more money on Vancouver Island and throughout the rest of the province. This has been proven by Tourism British Columbia research conducted with visitors as they exit infocentres.

           Our current space is 1,600 square feet. It is far too small, and that was noted by Minister John Les at our annual general meeting in March of this year, where he was a guest speaker at our luncheon.

           The other important part of it is that Tourism British Columbia certainly recognizes that we need some additional help in this area. The land we're on right now is owned by the Provincial Capital Commission, and what we have and as Rod Harris states it…. The statistics on the number of people we're servicing at this point he calls incredible, especially given the constraints and limitations that Tourism Victoria faces in such a small facility.

           We are a key entry point from the U.S. market, and we require an expanded showcase centre in Victoria to greatly increase the economic impact levels. Recognizing that, I guess the point to make here is that in the last 12 years, we have doubled our revenues in the capital regional district. We have gone from $500 million to $600 million in overall revenues to $1.118 billion in revenues and would sit as the second- or third-largest destination in the province in regards to returns to the provincial government.

           All of us today look at what is going to be the best return on investment, but more than that, what is going to be sustainable for the future, and I think that is one of the key points that the tourism industry does deliver.

           In regards to the economy, I think we are all very pleased that the economy is thriving, although we are seeing some definite issues within the tourism industry that we're going to have to face in the North American market within the next 16 to 18 months. We require a lot of help from the provincial and federal governments in those efforts.

           We have enclosed our annual report just to prove that we are a viable organization. We've been in business a long time. What we do need is to create a partnership between the Provincial Capital Commission, certainly the provincial government and Tourism Victoria to form a P3 partnership to put up, I would say, a heritage information centre that would be depicting of the capital city and would also allow us to grow the size of the number of visitors that we have now.

           It isn't just for Victoria, because I think Victoria, Vancouver Island and the Gulf Islands are all one contiguous region. Also, we're one of the gateways to the rest of the province, with over a million people coming into Victoria and exiting Victoria through the U.S.

[1455]

           We're asking the province to give serious consideration to a $2 million investment in a partnership, in the form of a P3 partnership, that would allow us to put a new information centre in place and operative by 2008 so that we are prepared to double tourism revenues by 2015 as our part of the commitment as one of the three major destinations in the province.

           Thank you. I'd be prepared to answer any questions.

           M. Karagianis (Deputy Chair): Thank you very much, Lorne. Are you actually talking about in situ, where you are?

           L. Whyte: Pardon?

           M. Karagianis (Deputy Chair): You're talking about doing all of this in the current location?

           L. Whyte: Yes. We've had conversations with the Provincial Capital Commission, and they believe that that would be an excellent location where it is, based on the fact of getting the city of Victoria's considerations and making sure it can be upgraded. They believe that it will be an excellent investment.

           M. Karagianis (Deputy Chair): Excellent. Thank you very much.

           I'll open that to questions. Are there any questions from the committee?

           A Voice: A very good presentation.

           M. Karagianis (Deputy Chair): I think it was very succinct.

           L. Whyte: Thank you, Maurine.

           M. Karagianis (Deputy Chair): Thank you very much, Lorne.

           We are actually ahead of schedule. Our next presenters are Carol Romanow and Dennis Gudmundson.

           Hi, Dennis, Carol — welcome.

           C. Romanow: Good afternoon. I'd like to apologize. I haven't given you a full package. We do not have the financial resources to do that much photocopying, so I've given you a portion and have submitted one that can be photocopied and issued later — at the Legislature's expense.

           M. Karagianis (Deputy Chair): Thank you very much, and we'll certainly do that.

           C. Romanow: Thank you.

           I would like to begin by reading to you some of the problems that have occurred over the last year for some of British Columbia's most vulnerable citizens. Some have to do with promises, some with problems and some to do with questions I'm sure you've heard before.

           I'm a member of SOLID — Society of Living Intravenous Drug Users. I also work ten hours a week for VARCSS, Victoria AIDS Resource and Community Service Society, on Mobile X, a mobile needle exchange.

[ Page 61 ]

They have sent an electronic submission. These are my primary groups. I'm also involved with HepCBC, the HepC Circle and Action Committee of People with Disabilities.

           SOLID is a drug users group in the city of Victoria primarily composed of past and current intravenous drug users. We have been in existence for three years, holding meetings on a weekly basis, and have a needle exchange on a very limited basis. As a user group we are ineligible for lottery funding and do not have the sufficient time, skill or money to do programming, apply for onerous grants or have an office. We keep struggling along, because we believe that users need to be consulted, included and supported. Most of us are on disability and most of us struggle with hepatitis C. Some struggle with HIV, and some are co-infected. Actually, our office is in my van and several other people's homes. A number of our members are homeless. Some are in subsidized housing, and the rest are in market housing, paying over 50 percent of their income for rent. Life for many is bleak and difficult, not just due to addiction but also due to the additional health issues, poverty and the financial inability to participate in society.

           That being said, I'd like to point out the similarities of all these groups: the rising rate of hepatitis; the lack of services and support for those who suffer from addiction; the lack of support for community-based peer-driven and community-directed groups; the rise in poverty, homelessness, addiction and despair. This is apparent by the rising number of homeless on our streets, the rise in people accessing the food banks and the difficulty in obtaining treatment for addiction for those who want it.

           I'd like to read out to you some of the problems we've encountered recently in the poverty, addiction and health areas. Some of it I'm sure you're well aware of, such as Carole James's statements made at the mayors conference, and some you may not be aware of.

           You have probably heard from other groups and will continue to hear from other groups over the next few years. I'm hoping you will act on them and realize that a community includes everyone — not just those who work, not just those who pay taxes and not just those who look and smell good when you meet them. I would like to thank you for your time and hope you will give due consideration to those of us who are not consulted or supported when decisions are made.

           Case one. Client with terminal cancer applies for monthly nutritional supplement June 7 — denied July 29. Although your physician has answered yes, couldn't prove sufficient deterioration of an organ. It was denied. They appealed. Client was approved September 23. Client died September 25.

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           Client with severe obstructive pulmonary disease awaiting a lung transplant applies for MNS. Client can hardly walk and is on oxygen most of the time. Physician completed application with all boxes ticked to spell it out for them, as well as elaboration including malnutrition; significant muscle-mass loss; underweight — 6 foot 4 and 151 pounds, and counting down from 230 — and a compromised immune system.

           The decision is no across the board. Although the physician has answered yes to this decision, the info does not demonstrate that the client had any of the above or the ticky-boxes being accurate. A chronic, progressive deterioration of health has not been established. The physician also noted that the applicant has difficulty eating. This suggests that the applicant may not be consuming adequate dietary intake, and therefore, it cannot be determined that client's condition is resulting in an inability to maintain weight if a regular dietary intake were being consumed.

           Muscle-mass loss is indicated, but there is no evidence to suggest that this is a direct result of COPD, or secondary to reduced exercise. Although this physician answered yes to the question of severe immune suppression and imminent danger to life, the applicant does not support a conclusion that the applicant would face an imminent danger to life from using municipal tap water. The applicant also has up to $400 earnings exemption, which allows for more funds to be made available to meet this family's needs.

           Case three. Clients has annual review, provides worker with receipts. Client goes to visit friends and goes camping with friends to help. Camping is not free for people with disabilities, as they must pay the reservation fee that is levied on every one of the provincial campsites, or they can't camp at all. Upon returning home, the income assistance cheque has not arrived, and when client inquires, she is told that her expenses are too high. How does client manage?

           Client explains that his cancer has now metastasized throughout the body. The family home has been put into the adult child's name to simplify the will and death process, as the doctor has given this client six months to live. The worker then informed the client that this was being referred to the compliance and enforcement unit and that the cheque would be held until further notice.

           Client has several disabilities including hepatitis, COPD and osteoporosis. Client has received home care for seven years in two cities in the province. Client paid from earnings, previously, of $250 a month an additional $100 for another home support worker, as the hours were not sufficient. Client was cut off from home support. As this client is at work during delivery times, this means Meals on Wheels were also cut, as they can no longer provide frozen meals. Client is not allowed to deal with another company which will provide frozen meals at the same or lesser cost.

           Client is unable to continue with employment and continues to pay home support from the welfare disability money. Client returns to part-time employment, earning $400, paying $160 from the earnings, as home support is still not available. Ministry of Health says long-term care is under VIHA, and VIHA says the money from the Ministry of Health is insufficient, so client's considered PC1 — personal care 1 — and will no longer receive home support. Client is offered a bathing program at $5 per month.

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           From the B.C. hep circle: in British Columbia over 53,000 people have been diagnosed with hep CV, the hep C virus. Jenny will remember this from another letter I sent to her and Joy. At that time it was 48,000. It is estimated that another 15 to 20 British Columbians may be infected. Because they have not been informed, they are at a greater risk of unknowingly transmitting the virus to others. Hep CV is ten to 15 times more infectious than HIV through blood-to-blood contact. Despite ongoing calls for substantial awareness campaigns, little has been done and the public is dangerously unaware of this serious viral infection.

           From VARCS I have given you some pretty brilliant postcards and signs. They're to get the point about education and information across. If one person remains free of HIV infection, the health care system saves $250,000 directly in treatment and an expenditure of approximately $1 million over the person's lifetime.

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           Increased HIV and hep C funding can provide prevention campaigns that target large and small and specific behaviours in a variety of communities. Support programs that assist people living with hep C–HIV. More comprehensive needle exchange programs. Increased involvement of peers in delivering services and programs. Increased education for health care professionals. Investing in community-based as opposed to institutional-based initiatives is cost-effective and provides greater innovation being developed by people who are living the experience.

           In a speech to the Union of B.C. Municipalities on September 29 of this year Carole James talked about communities around our province and noted the growing homelessness, addiction and despair on our streets that underscore our collective sense of responsibility. But while the pine beetle infestation threatens our economy, the social fabric of our communities is being tested by the growing problem of homelessness — a problem connected to mental illness as well through the terrible impact that drug abuse is having our communities.

           We must take this head on as government — and opposition must stand with you — providing the resources and the support you need to tackle this problem. The threat drug abuse poses to our youth in our communities is not limited to downtown Vancouver and other urban centres. Communities across the province are struggling to cope with the impact of drugs. We have a significant shortage of treatment facilities for addicts and their families and communities.

           Homelessness on our streets will not be resolved without a significant commitment of resources to deal with addiction or without a firm commitment to deal with a lack of resources for those who suffer mental illness. And those are just two of the fundamental changes. At the same time, we must also make a fundamental commitment to the economic well-being of low- and middle-income British Columbians.

           I have included further statements from Mr. Barr.

           The NDP is supporting the UBCM resolution on crystal meth to increase public awareness and education about crystal meth use, provide assistance in dealing with at-risk groups, provide assistance to treat the addiction problems caused by crystal meth and provide assistance for additional policing and safety inspection required to assure the ongoing of local communities.

           In a package you will be getting, I have included a write-up by Professor Graham Riches of the school of social work and family studies at UBC about putting human rights and social policy back on the B.C. public agenda. I will not read it at this time.

           I've also included some information from Dara Culhane, who has written and put together a grouping of seven life stories from the downtown east side. Culhane and co-editor Leslie Robertson set out to create a space for the voices of women who are seldom heard on their own terms — the words of people who are publicly visible and yet, due to the blur of preconceptions that surround Vancouver's inner city, remain unseen. Through complex pathways from childhood into the downtown east side, through periods of addiction and recovery, strength and illness, affluence and poverty, they confront the similar stereotype too often presented in the popular media.

           September 28, 2005. This week at city hall the Toronto Board of Health passed a resounding recommendation supporting the needs of people living poor in this province. The board voted to communicate to the province of Ontario the urgent need for increased social assistance rates to reduce hunger and health risk. A crucial amendment proposed by board member Valerie Cterling was added, recommending the province grant a special diet benefit to everyone on social assistance.

           True compassion is more than flinging a coin to a beggar. It comes to see that an edifice which produces beggars needs restructuring. "A true revelation of values will soon look uneasily upon the glaring contrast of poverty and wealth." Martin Luther King Jr. in his speech Beyond Vietnam: a Time to Break the Silence.

           M. Karagianis (Deputy Chair): Carol, unfortunately, I'm going to have to ask if you can, perhaps, begin to conclude, just because our time is very tight.

           C. Romanow: I'm doing that right now.

           I read the above first, as these were words I wanted to say, but others put it more succinctly than I. I processed over 50 articles and 300 pages, and I could have produced a very lovely report. However, I live what I read, and my friends do as well.

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           We got a $70 increase for those on PWD, but B.C. Housing costs went up by $8, so the B.C. government actually got 10 percent of what they gave us back. People who are employable did not get a raise. They still get $510 a month. PPMB still get $609 and no raise. The low-income line for a single person, according to Stats Canada in 2004, is $15,000.

           In reading the speech that Carole James gave to the mayors' meeting, I would like to know how this parliament will help the most vulnerable. Will you restore that which was taken away? Will you get rid of the two-out-of-five-years rule, which has sent an

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additional 200 people onto the Victoria streets to become illegal campers? Will you eliminate your three-week waiting period? Will you increase the income assistance rates to reflect the real cost of basic needs? Will you restore home support to those who need it? Will you assist to ensure that those who want treatment and detox get it — not just those who are young or on crystal meth — without having to be drug-free for 30 days?

           How will you ensure balance in housing and food security, when food bank use is up by 47 percent? Will you restore the earnings exemption and child support exemption? Will you support community initiative instead of creating bigger bureaucracies that are more expensive — and rarely those who are seen as the problem? This way you also address the tenets of harm reduction and the basic determinants of health.

           I thank you for your time and the opportunity to present to you.

           M. Karagianis (Deputy Chair): Thank you very much, Carol. You are going to give us that information?

           C. Romanow: Yes, I left a package that can be photocopied and passed around.

           M. Karagianis (Deputy Chair): Excellent. Thank you. Are there any questions of Carol?

           Thank you very much. I think your presentation was very thorough.

           C. Romanow: Thank you.

           M. Karagianis (Deputy Chair): We do extend our apologies for not being a very energetic group. I'm sure you're all aware that there has been debate going on in the House around the clock. Many members of the committee here have been working very hard, and it is not for lack of interest in the topics. It's really just fatigue. Our apologies if we don't seem as keen as you'd wish us to be.

           C. Romanow: Yes, I've been watching on channel 79 and channel 82. I've been doing the MP thing as well.

           M. Karagianis (Deputy Chair): All right. Thanks, Carol.

           Our next presenter is Gordon Watson. Gordon, please proceed.

           G. Watson: I'm going to tell you a few things that you haven't heard. Today in British Columbia about 40 unborn persons will be executed by artificial abortion. They're part of 14,000 artificial abortions that are done every year.

           I'm not here to talk about the morality of killing unborn children; I'm here to talk about the money that you spend doing so. You spend about $20 million a year, the last time I checked. It's probably lots more than that right now.

           The main thing you need to know is that nearly every one of those abortions is illegal. There are a few exceptions. The entire abortion industry is predicated on the word "therapeutic." In the battle for abortion on demand, the pro-abortionists use the word "therapeutic" right up until the day the Supreme Court of Canada ruled in the Morgentaler decision.

           People don't know what the Morgentaler decision is about, because it was mythologized very quickly. The Morgentaler decision only says that therapeutic abortions, artificial abortions, are lawful. The rest are unlawful. Therapeutic means that it's genuinely in the best interests of the health and welfare of the woman who's undergoing the procedure or any other therapeutic procedure, that procedure.

           A few years ago I spent about four hundred bucks on an independent research company, and I directed them to find all the material around the world, at the very highest levels, proving that artificial abortion was in any way therapeutic. They found six studies in the entire world for the entire modern history — six studies, four of which were irrelevant. The leading one, the Hospital for Sick Children in Toronto, said that in cases of severe morning sickness a therapeutic abortion could be done, but even that didn't have to be done. That condition could be controlled with drugs. Therefore, there's no evidence to support the idea that artificial abortion is therapeutic.

[1515]

           Just lately…. A friend of mine is one of the activists in this. He contacted a Member of Parliament, Gary Breikreutz. Breikreutz wrote all the Health Ministers across Canada. The ten provincial Health ministers wrote back to him. Breikreutz said: "Where's your evidence that abortion is therapeutic?" Every single one of them, including this government, said: "We have no evidence."

           The policy of this government is science-based health services. You have no science to support the idea that artificial abortion is therapeutic. But there is an exception. Morgentaler, the leading abortionist in Canada, said 20 years ago that out of 20,000 pregnancies, one genuinely threatened the mother's life and health — about one. That was 20 years ago. Today ectopic pregnancy remains the only condition in which a woman's life or health is genuinely threatened so you have a rationale for doing an artificial abortion. The rest of them are non-therapeutic. They're non-life-threatening. Because they're non-life-threatening, they're elective.

           British Columbia funds those elective procedures, so when you're out in the street advocating as an anti-abortionist, such as I was, you'd meet people who'd come up and argue with you. They'd tell you: "It's not a baby; it's just a mass of cells." Well, if so, does the province fund liposuction and cosmetic surgery of every kind? It does not. Those are elective surgeries.

           Very quickly…. I'm trying to summarize. I know I've got ten minutes. I've spent hundreds of hours in court through seven prosecutions talking about this issue. I was framed for prosecution by the previous

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administration seven different times — three of which I won, never forget. One of them is still alive. It's the leading free speech case in the British Empire. It's in the Court of Appeal for British Columbia. It's to do with the Access to Abortion Services Act.

           In 1991 I went to a rally over here at the Empress, the convention centre. I didn't know it was an NDP meeting; I thought it was an all-candidates meeting. I wound up making national television. Since then, I got involved in this anti-abortion controversy. I was used by the pro-life movement. I was attracted to the pro-life movement because I thought it was a Christian outfit. It turned out that it was not.

           So I'm here today as a politician. I started my own political party in order to qualify my speech, so they'd quit sending me to jail for standing out in the public warning and informing the public about how tax money was spent killing unborn children. Been to jail a few times for criticising the government. Not in Cuba or Red China or Soviet Russia or Nazi Germany — in Vancouver, British Columbia. I went to jail for a month. And not for blocking the door of an abortion mill, not for impeding our touching anybody or intimidating anybody or anything. I was sent to jail for criticizing the government of the day about the expenditure of tax money on artificial abortions.

           That's after William Watson, my father, and my grandfather in the First World War went to war and fought for this country, supposedly for freedom of speech and freedom of the press. And their grandson goes to jail for criticizing the government. You think about that for a while.

           On April 1 of 1992 I was here in this House. Elizabeth Cull had stood up that day as the Health Minister and given a million dollars to abortion societies. There are two societies that mainly do most of the abortions — artificial abortions. So I said: "Okay. Where's the contract?" I walked into this place, and I went to the Minister of Health and said: "Where's the contract?" They didn't have it. I had to sue the government….

           Mr. Lali, I'm going to say something that's very pointed to your race in not very long — about sex-selection abortions.

           M. Karagianis (Deputy Chair): Mr. Watson, I would ask you to be courteous to all members of this chamber and to not address individuals specifically or personally in your presentation, please.

           G. Watson: Fair enough. I didn't know that. I'm friends with Mr. Lali. I'm not antagonistic to him, but I'm about to say something that matters to him.

           A Voice: Mr. Hayer.

           M. Karagianis (Deputy Chair): That's not Mr. Lali.

           G. Watson: Excuse me. My apologies.

           M. Karagianis (Deputy Chair): In any case, I would ask you to continue to be very courteous to all members of this chamber and to not specifically address individuals but to address the committee as a whole, please.

           G. Watson: You're right. I didn't know that.

           D. Hayer: I was just going to the washroom, but I'll wait until he finishes.

           G. Watson: No, I'll tell you what. I've only got ten minutes. Let's go to the case that I'm talking about. I'll ditch all this stuff about how I caught the NDP laundering money out of public funds back to itself.

[1520]

           That's really important for you guys on this side. This lady over here doesn't want to hear about it, but I caught the NDP government laundering money that was given to the so-called charities through the false fronts of the charities back to the NDP political campaigns — exactly as the Nanaimo Commonwealth Holding Society was proved to have done.

           Why that matters is because public money was being grafted — good old-fashioned word "graft" — such as in the Gomery inquiry. We saw how it's done. Public money was laundered through the false fronts of the abortion mills and wound up back in the accounts of the NDP government. Well, for the record, let's make sure you understand Jenny Kwan's beating a quick retreat here.

           M. Karagianis (Deputy Chair): Mr. Watson, I will again remind you that you are addressing the entire committee, and this is the Finance Committee. I would like you to keep your remarks focused on this presentation only, and please do not single out nor address individual members of the committee:

           G. Watson: I'm trying to talk about money and a fraud that was made upon the public accounts of British Columbia that was proved in a court of law by special prosecutor Mr. Sorochan.

           I taught Mr. Sorochan how they were doing it. Mr. Sorochan prosecuted me in 1994, and I told him these things that I'm telling you in a prosecution in the Supreme Court of British Columbia. Then the next guy he prosecuted was Dave Stupich. And because I told Mr. Sorochan how they were doing it, the government of the day, how they were laundering the money back through the abortion mills…. I told him how to go after Stupich, and he did. Not just me, but I showed him the mechanism.

           Very quickly, why that matters is: it's still going on. That's what I'm here to tell you. Non-therapeutic abortions are illegal. I've got a judicial notice here. I brought it with me. It's part of my material. It's a judicial notice from that very prosecution in 1994. Judge B.D. Macdonald, on October 5, 1994, made a judicial notice in which he admitted that I had tried to stop an illegal procedure, an abortion that was going on right there at 44th and Victoria. I tried, and he admits that it was an offence against section 163 of the Criminal Code.

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           This is a Supreme Court judicial notice which tells you that in 1994 non-therapeutic abortions were illegal. So he admitted, on paper, that I'd made my point, and Sorochan seconded the point. Then he sent me to jail for 21 days for trying to stop a crime in progress. Later on, Judge Cumming in the Court of Appeal agreed with Mr. Sorochan that this was correct.

           Okay, It's very important you understand that the myth is that abortion has been decriminalized, but the jury…. I've got another letter here in which I quote former head of the criminal justice branch of British Columbia Dennis Murray. Dennis Murray agrees with me.

           M. Karagianis (Deputy Chair): Mr. Watson, I would ask if you could please wrap up now. You have about two minutes to wrap up your comments.

           G. Watson: I knew it. I knew it. Okay, the previous lady could just go on and on. You guys are ahead of schedule, but you sure don't want to hear it.

           I'm going to wrap it up good and proper. There's a fraud going on upon the accounts of British Columbia. When I tried to get the evidence of that, David Flaherty took a bribe — and I can prove it — in order to shut me out of the public accounts of British Columbia. I'm the only citizen you can find in name…

           M. Karagianis (Deputy Chair): Mr. Watson.

           G. Watson: …who's categorically denied access to the public accounts because I could prove that fraud.

           M. Karagianis (Deputy Chair): Mr. Watson, your time is up now. Thank you very much.

           G. Watson: What a perfect illustration of how it's done. Make sure the record understands I despise this committee.

           M. Karagianis (Deputy Chair): I would ask….

           Jenny?

           J. Kwan: Just to be clear and to be on record: if any member of the public comes forward with allegations of criminal activities, I would urge them to report it to the necessary authorities.

           Having said that I, too, beg the pardon of the committee. As we have sat all night through the extraordinary sitting, at this point I must beg my leave in order to catch my flight. I do apologize. It was not my intention to not be present for pretty well the entire meeting. I do apologize, but I'll be there on Monday for the rest of the committee meetings.

           M. Karagianis (Deputy Chair): Thank you very much.

           G. Watson: So are we into the questioning period now?

           M. Karagianis (Deputy Chair): No. Mr. Watson, I'm afraid your remarks are done. Several committee members have to catch planes, and that's this part of the meeting that's occurred.

           G. Watson: We didn't even get to talk about sex selection. That was the one, the proof. She wants to talk about criminal activities? Let's talk about where I proved that there was a sex-selection abortion done, and the province paid for it.

           M. Karagianis (Deputy Chair): Mr. Watson, your time has actually expired at this point, and thank you for your comments.

           Our next presenter is the Canadian Association of Petroleum Producers. I'm looking for Steve Spalding.

           S. Spalding: Right here.

          M. Karagianis (Deputy Chair): Thank you, Steve, very much.

[1525]

           S. Spalding: I recognize it's been a long week for you, and I appreciate your staying around. My presentation will probably be a little shorter than the last two. I appreciate the opportunity to address the committee.

           I represent CAPP, as we're known, here in B.C. I actually live in B.C., although our organization is based in Calgary. Our president, P. Oliver, apologizes for not being here today. He's been travelling a lot. He asked me to come and address the committee. I don't have very many specific things to say, and I'll try to keep my presentation brief.

           First of all, I just want to begin by recognizing that a lot of good things have happened in B.C. for our industry, and we appreciate that. Particularly, as my colleague in the mining industry mentioned earlier, the fiscal regime is very competitive and very supportive for our industry as well. I'd also like to reiterate how important the new relations work of the government is. We thinks it's a key priority for us, and we'd like to offer our assistance in what we can do with the government and the first nations people to make sure that succeeds. We feel that's really important for the continued growth of our industry.

           CAPP represents what are known as the upstream producers. Those are the folks that explore for, drill and produce oil and gas. Our organization is national. We have 150 members. We're based in Calgary, and as I mentioned, I'm based here in B.C.

           B.C. is a significant part of our investment in Canada. It's part of the Western Canada Sedimentary Basin. You often hear, obviously, about what are known as the oil sands in Alberta. It gets a lot of media coverage, and it's obviously very significant for our industry. However, it represents perhaps a third of investment in Canada. A large chunk of the remaining investment takes place here in B.C. As you'll see in the slides, our industry invests about $4 billion to $4.5 billion here in B.C. What's significant about that is not the numbers themselves but the potential for continued growth and the interest in the industry in continuing to grow here in B.C. I think it's sufficient to say that the

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folks that understand the oil and gas industry and the potential here in Canada see a lot of opportunity in B.C.

           As I mentioned, we've got a supportive government, a supportive fiscal regime. We've got a very skilled and experienced service sector, and the government has brought in a lot of other programs over the last eight or nine years — the collective governments — that are helping to realize this potential. A key point here is that there are a lot of undeveloped reserves and opportunity here in B.C. that, down the road, five or ten years from now, will see even further development and growth.

           Just a couple of things I wanted to touch on in terms of key policy initiatives for our industry here in B.C. As we continue to grow here, we recognize that it's important to maintain our social licence. That includes demonstrating to the public that we do a good job in environmental stewardship and other related matters. A key program within CAPP is what's known as the stewardship program. That's a compulsory program where all members must report out each year on certain criteria relating to environmental matters. We report those results publicly. We recognize that it's something we continually need to focus on, not only here in B.C. but nationally.

           Within CAPP our priorities…. I'd like to try to relate these to the B.C. context and what I try to work on for my members here. We focus on three major areas: access to resources, secure and efficient access to markets, and global competitiveness. Basically, the access-to-resources piece relates primarily to our relations with first nations and also to environmental management. As I mentioned earlier, I can't emphasize enough how important this opportunity is with the new relations framework before us. It will provide us with certainty regarding the role of first nations in resource planning and management.

[1530]

           In terms of the environmental stewardship side of things, we are very supportive of what the government is doing on key files such as species at risk. I'd like to mention and point out the efforts of the Integrated Land Management Bureau to develop a made-in-B.C. framework for species at risk, particularly in northeastern B.C. for the boreal caribou. We really appreciate the efforts of that agency to develop an approach that's credible to all stakeholders and first nations. We hope to continue to be able to work with those folks.

           There's lots of potential, as I mentioned, but one of the key things for us…. As we move forward in B.C., a lot of our future growth will be in areas that are known as tight gas formations or deep formations. What that really means is that our companies will require greater investments to access those large reserves. What we will, hopefully, continue to work with the government on is fiscal policies that encourage our members to continue to take those risks and invest in those opportunities. Again, we appreciate the efforts of government to date to recognize that. Things are moving ahead well that way.

           I think just to wrap up…. I know I've got a lot more slides, but I do appreciate that you've probably been on your feet for 24 or 36 hours now. Just in summarizing, we would welcome the opportunity to provide more input to government on further initiatives. One of my slides has here, again, the new relations, the performance-based regulatory regime that government is looking at for oil and gas.

           Another key area that I haven't mentioned but I'll touch on…. I believe one of the previous presenters mentioned it. I think it was my colleague in the mining industry. One of the key success factors for our industry going forward in this province will be development of the workforce. We are running out of skilled workers. This is a key priority for us at CAPP, where there's actually a CEO task force. CEOs of the major oil and gas companies are working on a national initiative to encourage greater participation from young people in the oil and gas sector and also to encourage greater aboriginal participation. This is key for us. We're very interested in any opportunity we have to sit down and work with the government in that area.

           Lastly is something perhaps not directly related to our industry but very important. We recognize that in northeastern B.C. and other areas of B.C., quality of life is important for people that work in our industry. One of the things we would like to continue to work more on with government are matters such as health care and education. As you may know, a number of our members are very active in a trust program up in northern B.C. to encourage doctors and nurses to stay and work in northern B.C. Those types of things…. We feel that as our industry becomes larger in B.C., our corporate and social responsibilities will grow commensurately. We're very interested in working on that.

           Thank you again for the opportunity. I appreciate your patience in staying to the end to hear my presentation.

           M. Karagianis (Deputy Chair): Thank you very much, Steve. Actually, you haven't asked for large amounts of money, so in fact, it's been really easy to listen to your presentation.

           I would ask if any of the committee members have questions. We do have several.

           R. Lee: Thank you, Steve, for the presentation. It was very interesting.

           We know that the process for acquiring resources from oil and gas is different from mining. You go through a bidding process. Are those processes working well now?

           S. Spalding: Yes, things such as…. If I understand your question correctly, you're talking about posting land sales and things like that. We feel it's working very well. One of the key factors moving forward…. That's why the new relations are key.

           What we would like to continue to work on is…. When those land sales are posted, it helps our industry and our members a lot if we understand the concerns of the first nations and other communities at that time. Our preference is to solve those issues and address those concerns up front, at the time of the posting. That way we can carry on. The folks at Energy, Mines and

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Petroleum Resources understand that, and they're working quite closely with us to develop that. In summary, I'd say that it's working well.

           J. Yap: Thank you for your presentation, Steve. It's all positive — good news. You're not here with an ask, so that's kind of interesting.

[1535]

           S. Spalding: That was deliberate on our part. We appreciate what we're doing so far.

           J. Yap: In one of your slides you've got the numbers for reserves, I think. My question is: are these the known reserves, or are these the estimated reserves?

           S. Spalding: These are the known ones. I believe that's the one with the pie charts.

           J. Yap: This one. The slide says: "Petroleum potential in British Columbia, Queen Charlotte Basin, 9.8 billion barrels of oil." Is that what it means?

           S. Spalding: To answer your question, sir, some of these are more known and proven than others. For example, in northeastern B.C., in the upper right of the slide, the figures we have there…. Because we're very active up there, we have very good information on the reserve potential. As you may know, in areas such as the Queen Charlotte Basin, we haven't done much exploratory assessment work for a long time — for 30 years or so. We recognize that those figures are not so much out of date; they just haven't been updated with the newer technology that would probably give us a better understanding of the reserve potential.

           To summarize, I think that the accuracy or currency of those estimates will vary depending on where in the province it is. I think it's fair to say that probably in northeastern B.C. those are pretty accurate assessments of our reserve. Elsewhere, it's more preliminary.

           J. Yap: Okay, but if we accept that these are preliminary, scientifically based estimates…. Just using Queen Charlotte Basin as an example: 9.8 billion barrels — right?

           S. Spalding: Yup.

           J. Yap: That would not be included in the previous slide, which is, "How much conventional crude oil does Canada have?" and you've got British Columbia at 1.2.

           S. Spalding: That's right.

           J. Yap: That's 1.2 notionally, plus the 9.8.

           S. Spalding: That's right, sir. Yes.

           J. Yap: Which would put it at, roughly, half of Alberta's 22.1 today.

           S. Spalding: That's right.

           J. Yap: Okay. Thank you.

           M. Karagianis (Deputy Chair): Dave, did you have a question?

           D. Hayer: Yes.

           M. Karagianis (Deputy Chair): If we could just maybe keep it very short. I am conscious now of the time and that we will probably be required in the chamber in the next 20 minutes. I would like to finish this speakers list, so hopefully, we can keep it quite short.

           D. Hayer: Thank you very much for your presentation. I can tell you this much. In my constituency of Surrey-Tynehead they talk about natural resources, especially oil and gas, quite a bit. They say that's where the future is going, and it'll bring more revenues for us, especially to help out our health, education and social programs. If there were three top things your organization was looking for, what would they be, in short? If you were looking for the province to look at the top three things…?

           S. Spalding: Sure. I just think, again, the new relations with first nations situation — providing that certainty…. What I mean by that is the key is certainty. We don't have a predisposed view on what that role may be. The key is that our industry is very good because they're operating all over the world in all sorts of different situations. The key for us is certainty in that area, so that would be number one.

           I think number two would be a fiscal regime that continues to support expansion of the industry under these more complex areas. Much of the remaining areas of the northeast are in what's known as these tight gas formations and in these deep, deep wells. That's key.

           I think the third area is tying in with the environmental side — ensuring that we have credible and fair environmental standards, which I feel we do. It's a matter of ensuring that the public and first nations have involvement in that, where it works for all sides. I'd say those are the three.

           M. Karagianis (Deputy Chair): Richard, you had one last question?

           R. Lee: No; only a clarification. On the petroleum potential chart, the gas reserve — does that include coalbed methane?

[1540]

           S. Spalding: I'm not sure. I'm just trying…. I've got a really small version of the slide, and I guess I've realized that I need glasses. I know that much of our work is rather preliminary on coalbed methane, and I can't say for sure to what extent that includes coalbed methane. From looking at it, though, it's evident that there are coalbed methane figures in there — just looking at

[ Page 68 ]

the basins in here and that — but I'm not sure of the mix.

           R. Lee: Okay. Thank you.

           M. Karagianis (Deputy Chair): Thank you very much, Steve, and thank you for your presentation.

           Again, I apologize to everyone for the lack of high energy around the committee table, but I know you all understand the fatigue that many of the members are experiencing right now. I am conscious of the fact that we will be called to the chamber at four o'clock, but I will try and allow everybody a fair amount of time to speak.

           Ann, unfortunately, I can only give you five minutes. I apologize.

           A. Geddes: I don't intend to take more than that. I feel it's a privilege to be able to speak to the committee at this open-mike time on your very full agenda, both here in this committee and as part of your work and responsibilities as an MLA in the House, so thank you very much. I think your commitment and stamina are appreciated by all of us and particularly me, because I watched until two o'clock last night so I was up to date.

           I'm Ann Geddes. I was the former chair of the Vancouver Island regional planning committee, Ministry of Children and Family Development, June 2002 to March 2004. It is regarding the children and youth who our government serves as the custodial parent that I wish to make a brief comment to you today. I am preparing a written submission for the committee, as I believe three of my colleagues will be doing as well. I believe they're the colleagues from the Fraser Valley, from the north and from Vancouver.

           Today I will highlight the need to be accountable for the services and suggest ways to allocate surplus funds to this matter. This committee is charged with the task to receive opinions and comments on its fiscal performance and its physical and social infrastructure responsibilities. A significant social responsibility of the government is its role as custodial parent of some 8,000 children and youth.

           As parents it is essential to ensure that the resources to pay for all aspects of our children's growth and development are secure. In this province we have directed the day-to-day parenting function to service-providing agencies and foster parents. The service-providing agencies in this province are a major component of the economy. In fact they are the third sector, along with business and government.

           Included in this sector is the community with its supportive role exercised as volunteers and donors. With this known aspect of our economy it is necessary that our government values and monitors its allocations for accountability purposes to ensure that it accrues the expected outcomes from its expenditures — that is, when we budget for service to children and youth, we can verify that they have been supported with the services which have a successful outcome for the child, youth, family and community, and in fact, for our province.

           At this time the government has an opportunity to allocate some of its surplus funds to its services that fulfil its responsibility as a custodial parent. In the past four years in this region there has been a decrease in the overall ministry budget that does not match the decrease in the number of children for whom the province is their guardian. During this time there have been some efficiencies attained through agency amalgamation, reduction of ministry staff and agency closures, but also in this time, there have been major increases in the operating costs such as for medical premiums, travel, insurance and other overhead operating costs. This is known by each one of us, as we also face similar household budgetary increases.

[1545]

           The second area where I would suggest that some of the surplus could be allocated for children and youth is the funding of an information system that would allow an evaluation and reporting of the outcome of services received for children and youth in the care and custody of government. As recently as May, when the five chairs — my counterparts — met with Jane Morley, we heard that the information system, although talked about and desired, has still not been a piece of work that's been able to be done by the ministry. I insert that into my comments. Being able to adequately follow the care of children is dependent on a strong information system, and this is a priority area to consider.

           The other area that I will cover in my written submission will be to encourage proceeding with the policy direction of establishing regional authorities for ministry responsibilities in serving children and youth in its care and custody. There are both financial benefits and positive outcomes for children and youth in our communities with this policy direction. This needs to be considered now to secure the benefits and not in two years down the road. We need to get those benefits sooner rather than later.

           Getting on with this now provides our agencies, staff and communities with confidence that the envisioned role will be fulfilled — a role of supporting and achieving the belief that it does take a community to raise a child. I thank you for your time and your patience.

           M. Karagianis (Deputy Chair): Thank you very much, Ann.

           Are there any questions from the committee members? No.

           We do look forward to your further written submission to the committee, and thank you very much for coming today.

           A. Geddes: Thank you very much for giving me this opportunity. I didn't know it was available until I came this morning.

           M. Karagianis (Deputy Chair): I do have one last presenter on the list, and that is Chris Doyle.

           Chris, you have five minutes. I apologize if we get called to the chamber before your time has been used.

[ Page 69 ]

           C. Doyle: This being a Finance Committee or whatever it's called and because the Legislature just happens to be in the area, I want to talk to you about the financing of public transit in this area. I don't know if that's important to people on the committee or not. Every newscast that you see, it's mentioned on it. Victoria being the capital city of British Columbia, it should be, I guess, in the top three of your five priority lists for people to get around and things like that, which I do. I usually use the bus.

           The bad thing is that in this area, the buses that serve the Beacon Hill–James Bay route — and I'm not sure of the year, because I didn't even know I was going to talk here…. Routes 31, 32, 34, 27 and 28 were slashed by two-thirds. They gave service from seven minutes to ten minutes. Now at best it's 22 to 25 minutes, sometimes as much as half an hour. That's unacceptable, in my opinion, for a capital city like Victoria to be setting an example.

           I guess I'll pick on my favourite pet peeve in comparison — the RAV line in Vancouver. For apparent reasons — being 2010 and being in a bigger city, I guess — there are endless amounts of money that the government of the day is giving to that. I think that's completely unfair and bad for that to happen. The money for the resumption of service the way it was….

           I wish I had a schedule on me. I don't know if it would be on B.C. Transit's Internet site or not, because it's old information and people might get confused with it. So I don't know how you would get that information, but you need to, and compare the schedule. I think it's either in 2002 or 2003 that it changed from good service to horrendous service. It's just appalling, in my opinion, that B.C…. Apparently, it has picked only on routes south of Fort Street in Victoria. It's not fair that the routes that I've mentioned….

           [The bells were rung.]

           C. Doyle: Does that mean you have to go?

           M. Karagianis (Deputy Chair): I apologize, Chris, but that is a sign that we are being called to the House. I do apologize. We are going to have to leave. I know there's one more speaker after you.

           C. Doyle: Can we talk again at a future date?

           M. Karagianis (Deputy Chair): Well, we can call recess at this time, and you can wait for a few minutes for us to go and perform our duties in the House.

           C. Doyle: I'll do that. I'll wait.

           M. Karagianis (Deputy Chair): I beg your indulgence.

       The committee recessed from 3:50 p.m. to 4 p.m.

           [M. Karagianis in the chair.]

           M. Karagianis (Deputy Chair): I will call the committee to order, with apologies for the interruption.

           Chris, you have a few minutes here on the floor. Thank you.

           C. Doyle: I'll target again the B.C. Transit routes 27, 28, 30, and 31. When the changes were made, the route 11, which coincidentally enough was called 11 Beacon Hill going south — which is almost the next block, I would say, and is diagonal to this building or the precinct…. The diagonal would be Government Street. They took 11 away completely south of Fort Street, so routes had to make up for that route, which decreased the service.

           That's confused a lot of people. It's not fair that Transit is allowed to do that. It's confusing in two ways. During the day routes 30 and 31 alternate Beacon Hill and James Bay routes. The 30 is Carey–Beacon Hill, and the 31 is Glanford–James Bay. After about 6 p.m. or so — you'd have to check the schedule, but it's about that….

           M. Karagianis (Deputy Chair): Chris, I'm sorry. If I can just interrupt you for a moment. I understand your concern. The committee that you are addressing is actually the Finance Committee of the provincial government, and we are looking for input on how people wish to see the budget spent in the year 2006. So you may want to just maybe put your remarks more in the context of how you'd like to see government invest in this community in 2006.

           C. Doyle: Okay. It's probably not going to happen at the next transit update, and 2006 isn't that far away. Hopefully, the Finance Committee can give a recommendation to the Minister of Finance to fund — and not through tax money or fuel tax because nobody wants to pay more taxes…. I don't mean to belabour the point, but the money has to come from some place since the…. I'll suggest it's the provincial government, because of the unfair amounts that are going to Vancouver public transit for different reasons, regardless of the larger population or not.

           It's not fair to make people wait half an hour for a bus anywhere, especially in a…. It should be an example, not the other, which it's become, in my opinion. It's just difficult, I guess, to explain unless you're the one waiting 27 minutes for a bus, which never used to be like that.

           People are confused at six o'clock. The reason I'm telling you this is because they changed the route number to serve Beacon Hill, which is almost part of this jurisdiction. It's not fair for people to be confused. The route changes to 27-28. The 30 and 31 go to James Bay only. The 11 Beacon Hill used to go past Thrifty Foods on Menzies Street, and everybody knew that and understood that. Since they've taken that away, people are always confused. After six o'clock they're getting off of the James Bay bus, 30-31, which may say Carey at that time, after six, and they have to walk after they've paid their fare.

           M. Karagianis (Deputy Chair): I do understand. I'm afraid, even with the interruption, that we've run 

[ Page 70 ]

out of time. Certainly, we will take note of your concerns. You may want to also express those to your local city councillor and perhaps to the capital regional district, because in fact, some of those concerns are under their jurisdiction as well.

           C. Doyle: I didn't know the CRD was involved. I thought it was the city of Victoria and the Victoria Regional Transit Commission.

           M. Karagianis (Deputy Chair): It is, but the CRD actually has governance over this as well, and it might be a place for you to also have your views heard.

           C. Doyle: I'm out of time?

           M. Karagianis (Deputy Chair): You are, my friend. You're certainly welcome to submit a comment through the committee on our brochure as well. Jonathan at the back of the room will give you a form, and you can submit that to the committee with a written recommendation as well, if you wish. Thank you.

           Mike Batty, you've been sitting there patiently all day. Welcome. You have five minutes.

[1605]

           M. Batty: Okay. Thanks, guys. I won't keep you long.

           The reason why I'm here today, actually, is that I'm a student at UVic. I'm in my third year of political studies. I'm also taking a first-year class on "Introduction to Professional Non-fiction." I'm not a journalist yet, so don't worry.

           Anyway, one of the things I had to do was report on a public meeting. That's why I was here today. The reason I wanted to talk to you was not so much to do with how the budget is spent but just on the availability of these meetings.

           One of the security members outside the door kind of gave me a hard time: "Oh, are you here to speak on something?" I said: "No. I'm here to attend the public hearing." He said: "Well, do you have something to say?" I said: "Well, I don't know. I haven't been in there. I don't know what the issues are."

           Anyways, after I explained to him that I was here to report on it for a class, he said: "Okay. You can go in, as long as you don't talk." I said: "Okay. I'm not here to socialize."

           I just wanted to urge you guys to keep these meetings open to all members of the public even if they don't necessarily have something to say on the budget but just to observe the whole democratic process and everything. Thank you for your time.

           M. Karagianis (Deputy Chair): Thank you very much, Mike. I think your remarks were very pertinent. These meetings are meant to be open to the public, and there is an open-mike section, as you know, at the end of the meetings. We'll make sure from now on that when these meetings are held in the precinct, staff understand that there will be opportunities for the public to speak spontaneously at the end of the meeting.

           M. Batty: All right. Thank you very much.

           M. Karagianis (Deputy Chair): Thanks for your patience. This was not the normal meeting. This was an anomaly due to the debate through the night — just so you know that.

           J. Yap: Chair, I just have one question for Mike.

           What did you think?

           M. Batty: I thought it was great for you guys to sit here, especially after you've been awake for I don't know how long. To open it up to people to have input and a say in the budget for the coming year is what democracy is supposed to be about. I think that's great.

           D. Hayer: One comment on that.

           M. Karagianis (Deputy Chair): Yes, David?

           D. Hayer: We've been holding this committee for four years that I've been here. These committees have been open to the public. At the end is an open-mike session — right? We're going to make sure that the staff knows about it, because we don't want any misunderstanding in the future. Thank you for letting us know about that.

           M. Karagianis (Deputy Chair): Yes, we'll make special note of that. Thank you very much.

           Are there any other speakers who wish to speak? Seeing none, I will then call for a motion to adjourn.

           Motion approved.

           The committee adjourned at 4:07 p.m.

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