Finance and Government Services -- Issue No. 6 -- Wednesday, October 12, 2005

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

5. The Committee recessed from 11:13 a.m. to 11:41 a.m.

6. The Committee adjourned at 11:42 a.m. to the call of the Chair.

Blair Lekstrom, MLA
Chair

Kate Ryan-Lloyd
Clerk Assistant and
Committee Clerk

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES



CONTENTS

		Page

Presentations		137
	D. Daly M. Foot E. Harding A. McCreary J. Davidson S. Robertson J. Winter D. McInnes T. Lyons

Chair:	* Blair Lekstrom (Peace River South L)
Deputy Chair:	* Maurine Karagianis (Esquimalt-Metchosin NDP)
Members:	Harry Bloy (Burquitlam L) * Dave S. Hayer (Surrey-Tynehead L) * Gordon Hogg (Surrey–White Rock L) * Richard T. Lee (Burnaby North L) * John Yap (Richmond-Steveston L) * Leonard Krog (Nanaimo NDP) * Jenny Wai Ching Kwan (Vancouver–Mount Pleasant NDP) Nicholas Simons (Powell River–Sunshine Coast NDP) * denotes member present

Witnesses:

Dean Daly (Federation of British Columbia Woodlot Associations)
James Davidson (Smithers Regional Airport)
Maggie Foot (Smithers Parent-Caretaker Coalition)
Jon Garson (British Columbia Chamber of Commerce)
Ernie Harding (Smithers Parent-Caretaker Coalition)
Terry Lyons (Mining Association of British Columbia; Chair, Northgate Minerals Corp.)
Al McCreary (Hudson Bay Lodge)
Donald McInnes (Northwest Powerline Coalition; President, Western Keltic Mines Inc. )
Sharon Robertson (Smithers District Chamber of Commerce
John Winter (President and CEO, British Columbia Chamber of Commerce)

B. Lekstrom (Chair): Well, good morning everyone. My name is Blair Lekstrom. I'm the MLA for Peace River South, and I have the honour of chairing the Select Standing Committee on Finance and Government Services. We're here today to host the prebudget consultation hearing held in Smithers, or Smithers and the surrounding area.

Prior to asking the other members of the committee to introduce themselves, I'll just lay out exactly what our mandate is. We have been asked by the Legislative Assembly of British Columbia to tour the province and talk to British Columbians about what their views are on the choices for the upcoming budget. We have concluded three hearings so far. We will continue through this week and then again next week in Vancouver and conclude. We have been requested that we report back to the Legislative Assembly by the 15th of November with our report, at which time this will become one tool in the chest to develop next year's budget.

With us today we have Marilyn Pollard as well as Adam Wang from Hansard, over to my right. As well, joining us is Kate Ryan-Lloyd from the Clerk's Office and Jacqueline Quesnel. Our hearings are public hearings. They are recorded and transcribed. It is a full public transcript, and it is for the public record.

We hope to hear from British Columbians, as I indicated earlier. If there are choices that can be made with surplus funds, where would those funds be best located in the province? If you have ideas, that's what we're here to talk about today and go through what you feel is right for British Columbians. I think it's a great process for the public of B.C. to become involved in helping develop the budgets, rather than just having them set in Victoria by government. We have taken this route over the last…. This is the fifth year that the committee has toured to hear from British Columbians.

With that, rather than take up a lot of time, I'm going to ask the members of the committee to introduce themselves.

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

At this time we will begin our hearings this morning with a presentation from the Bulkley Woodlot Association. Joining us is Dean Daly. Good morning. Welcome, Dean.

D. Daly: Good morning. Thank you very much. So I get to be the first on the docket. Overhearing some of the conversations, it sounds like there was some spotty sleep and rest last night.

Welcome to Smithers and the beautiful Bulkley Valley. Hopefully, you'll get a night or two of better rest and come back and stay a few days with us, because we'd sure like to host you doing some other things, like fishing or skiing or those kinds of things.

I appreciate you guys making the trip through to Smithers and the other rural areas, and I really appreciate the opportunity to speak on behalf of the Bulkley Woodlot Association. I've given you a couple of papers that I hope you have had distributed there. One is a backgrounder on woodlot licences, and the other is titled "Prebudget Consultation." That's the one that I'll speak to this morning.

Basically, I have a couple of requests or suggestions for your consideration in preparing the budget. The first, to provide the Ministry of Forests and Range with the dollars, money and resources required to double B.C.'s woodlot licence program. The second request that I would make is to modify the revenue expectations or stumpage from the woodlot program. I've tried to carefully word that. I didn't say: "lower." I would like you to rethink this process, and I'd like to give you some reasons why.

First off, in the box, just a bit of a briefing on what a woodlot licence is. Some of you may not be familiar with the actual tenure itself. Woodlot licences are small, area-based forest tenures that combine private land and Crown land to form a sustainable management unit.

The licensees…. There are about 800 of them — 812 in B.C. They're basically families that run small businesses in managing forests. They harvest the timber. They have the exclusive right to sell the timber, and that's where they generate their revenues. For the privilege of doing that, they also have the expense of building roads and doing the planning, environmental permitting, silviculture, reforestation efforts, etc. It's a small business associated with a very small parcel of fixed land, so you get to know that land quite intimately.

I'm going to digress a little bit and just hit a couple of highlights on the background. I won't go through it all. Hopefully, you'll have time in the next day or two, when you're fishing in the Bulkley, to look at this one.

A couple of highlights on the woodlot program, just to give you some more statistics that I think are

worth bearing in mind as I go through the presentation. These woodlot licences are replaceable tenures, and they have a 20-year term. Those terms are renewable or replaceable on a five-year or ten-year basis for another 20-year period. They're a longer-term tenure, and they connote a longer-term management commitment to the land.

Woodlots typically account for about 1½ percent of the provincial harvest in trees. Woodlots harvested just over 2.5 million cubic metres of the provincial harvest in 2003-2004. They generated an estimated $220 million in economic activity. So yeah, they're small to medium-sized businesses, but they do have a significant impact. Just for your background, that $220 million is a 1.75 multiplier on our direct cost. So it's a very conservative multiplier to look at the economic spinoff and benefits directly from the woodlot program provincially.

Again, in 2003 woodlots paid over $21 million in stumpage to the provincial coffers. That's one form of revenue, obviously, that the government looks at. I know it's key for your budget process, but $21 million is a significant contribution.

When we look at the government's actual cost to administer this program, it's cheap — about $4 million to $5 million annually to administer this program. So $5 million out, $21 million in return — it's a heck of a good return on investment. We think it's a good program from a financial perspective as well as from environmental perspectives.

A couple of more highlights before I come back to the presentation. The woodlots are a form of small business. Each of us families…. There are about a thousand of us provincially that rely on these things for part or most of our income. For the most part it's a small portion of our income. It's a part-time thing, but it's a long-term commitment.

The woodlots offer a personal level of management on this small-scale land base. Many have been purposefully located in close proximity to communities and in these interface areas where there are very sensitive resource management issues. In short, there are lots of places where you wouldn't be managing for forests unless you put a woodlot there and a family was managing it. There have been opportunities for B.C. timber sales to try and manage an area, and they've been rejected by the local residents because it's not the style of management they want to see.

A light footprint on the land is sort of the characteristic that the woodlot licensees bring to the table. I think we actually manage a lot of timber lands that would be de facto parks if they were not managed under this kind of tenure. There's a real social benefit there, which I think is somehow lost in the assessment of what the economic value of these tenures really is.

Each woodlot generates a significant amount of full-time, part-time and seasonal employment, including jobs in planning, harvesting, road construction and maintenance, reforestation, silviculture and small-scale timber processing. Again, just some background on woodlots so that you have a bit of a characteristic of what these things are.

Back to my suggestions. Why provide the Ministry of Forests and Range with the money and resources to double B.C.'s woodlot licence program? Well, it was a commitment made by government. Government would be able to fulfil this commitment that was made in the B.C. heartland economic strategy. The forest revitalization plan lists all the reasons why government believed at that time that it was a good thing to do.

The previous Forests Minister, Mr. de Jong, had made a commitment, and we appreciated that very much. Unfortunately, to date there haven't been any new woodlots issued. That was over two years ago when that commitment was made. I'm asking you to please consider, in the budget allocation, the money and resources to make this thing happen. I really believe it's an important economic peg in the provincial economy.

Woodlot licences are good for B.C., and they're good for B.C.'s rural economies. They are small businesses, they create local employment and economic activity, and they support families in rural B.C. and the dollar cycle locally. I think that's important.

A couple of years ago the Urban Futures group released a report — I'm sure you've all read it back to front — that talked about where the GDP in British Columbia gets generated. Over 70 percent is generated in rural B.C. If we don't somehow piece together the ways to hold people and attract people to rural B.C. to generate that GDP, everyone in the province is in trouble.

This isn't the answer, but it is certainly part of the answer. These kinds of tenures that will attract and maintain families productively, generating economic activity in the rural areas, will be significant. They are today significant in our economy, so I think it's good for B.C. — good business for government, as I stated before. For every dollar the government spends on woodlot licence administration, there's about a $4 return. That $4 return on expenditure represents one of the best returns on expenditure, I think, that the government has made in any of its tenuring.

Woodlot licensees generate more employment than other sectors in the forest industry, because we're small mom-and-pop types of operations. It's estimated that about 1.25 man-years per thousand cubic metres of harvest are generated by woodlots, compared to the industry average of about one. It's estimated that over 12,000 British Columbians have derived some or all of their annual income from working on woodlot licences, so not only the thousand families but all of the subcontractors and suppliers that are associated with our harvesting, hauling, manufacturing, etc., are benefiting from that activity.

In our view, woodlot licensees practice the best forest management in B.C. We get to know our land base very, very well. I have 1,500 acres here, about 10 kilometres from where we're sitting right now, and my family and I have managed it since 1995. I know every mineral lick and every stream and every tree, almost, by name. It's kind of an exciting thing. It's a real privi-

lege for us, and we think we do a fairly good job there. It is a different type of management than you see in the rest of the province, so we're keen on it, and we think there's a heck of a lot of room for expansion.

Woodlot licensees help B.C.'s forest sector to be more competitive. They create more independent log sellers along with community forests, first nations non-replaceable licences. It creates businesses that sell logs to our manufacturing sector.

It helps break what I think is becoming too strong a monopoly in the control of timber resources by creating more small businesses to increase the amount of competitiveness in our log market — a lot of benefits from that. It contributes to the sector diversification in the forest sector, and again, it creates a better mix of small, medium and large businesses. We have some very successful, world-class large businesses. We're very fortunate, but we do need to somehow create a mix of medium- and small-sized businesses. I think it's healthier for our economy.

To the second request: why modify government's revenue expectations on stumpage from woodlot licences? I want to emphasize I'm not suggesting to lower expectations on stumpage revenue. What I'm suggesting is we need to have a rethink on how we calculate assessed stumpage and who we should collect it from. I've been involved in this for many years and have thrashed around on this issue for many years. I'm very happy to answer any questions you might have to the best of my ability.

I hope the points I have here will illustrate what the issue is on stumpage. Independent log sellers, like woodlots, in the interior — our stumpage is assessed based on the lumber and chip values that are assumed to be derived from those logs. Now, government has a certain expectation — X — of what its stumpage revenue should be from each of those logs, and that's fine. I think it's a fair expectation. But I as a log seller, when I harvest the log and sell it to a mill, have a market that's defined by the log market.

What are they willing to pay for my logs? It has nothing to do with the lumber and chip market. It's a completely different marketplace, and it's completely delinked. There is no linkage between…. When lumber and chip prices go up, my log price does not go up in an indexed fashion. It's all supply and demand — period.

What's happening is that those stumpage rates that are assessed on lumber and chips are being requested to be paid by me as the log seller for my tenure. At points…. The stumpage rate now on my woodlot could be $30 per cubic metre, and I have a sales value of $50 on my log market. It does not leave me enough room to pay for road construction, harvesting, silviculture, administration. So there's a problem there.

What I'm suggesting is that for independent log sellers, like woodlots, community forests and our fells, our stumpage that we pay — a part of X, whatever government's expectation is for those logs — should be indexed to what we sell our logs for. The balance, whatever that might be, ought to be collected from those that are deriving a benefit from the lumber and chips.

Those people are making a very healthy profit the last couple of years, and I'm glad for them. I think they're doing very well. But the independent log sellers have not prospered to the same degree, because the stumpage system is fixated on the end product of lumber and chips, and they're asking the log sellers to bear that burden. It doesn't make any sense.

What I suggest is that we need to have some kind of a tiered system, where the log sellers pay whatever their fair portion of that is, indexed to the log sales price, and the balance of the stumpage is collected from those that produce the lumber and chips. That way, government does collect its fair rent for the resource, and the burden of that stumpage payment is distributed fairly across those that are actually receiving revenues for different products — logs versus lumber and chips. I think this will allow the independent log sellers to be able to grow their business and continue to be profitable. It's an important feature.

I think that from a budgeting point of view, we sometimes get fixated on stumpage, saying: "Don't do anything to adjust stumpage." But there are two groups here. There's a manufacturing sector, and then there's an independent log-selling sector. We are growing. There are more and more community forests. There are more first nations non-replaceable licences. If you double the program like I suggest, you will create more small businesses, but you will also create a bigger problem for government if we don't address and rethink this whole pricing system to make it equitable amongst log sellers and lumber manufacturers.

Allow the much-needed dollars to remain in the rural economies. If you adjust the revenue expectations, you'll allow us to continue to be profitable, and these communities where the dollars are invested are going to benefit by the employment creation and other economic activity that's generated. I suggest to you that we need to leave more dollars in the 250-exchange areas and not somehow deplete these areas because we are generating over 70 percent of the GDP of the province. We need to somehow foster that.

Sure, it's economical and profitable for the woodlots in the path of the beetle to be able to salvage dead trees so they can meet their reforestation and forest management obligations. The province benefits from these expenditures that have to be made, and the province also benefits from these areas being put back into production promptly and efficiently. Right now this conundrum we have between log-selling price and the lumber sales price when our stumpage is set is inhibiting — and, in fact, will stop — some people from harvesting. They cannot afford to pay the stumpage bill.

What do we do? If we have large tracts of pine that die and somebody can't afford to pay their stumpage bill, they hand the keys back in. You're going to have people saying: "I can't afford to operate my woodlot. Please take it back." What will we do at that point?

I think government then has to sort of wrestle with: what's the least-cost alternative for us? Does government want to manage that, or should we maintain the private sector looking after it? I believe the private sector can do a fine job, but somehow we've got to adjust this pricing mechanism to allow that to happen.

Currently we have a big problem. It's going to continue to get worse as the beetle continues to expand through the interior. I've been in touch with the minister, and we've gone through all the hoops, but I want you folks that are talking and making recommendations on the budget to realize that you can play a big role in trying to set expectations for the budget folks to deal with the independent log sellers a little differently.

Remember that many sensitive areas in B.C., if it weren't for woodlot licences, would no longer be managing and harvesting timber. I think that's a factor that's really hard to put a value on. When we try and make good economic arguments to government, we try to be very objective on this. There are some socioeconomic benefits to having these small-scale licences in very sensitive areas. Quadra Island, the Slocan Valley and the Bulkley Valley all have very sensitive areas where you would not be harvesting were it not for woodlot licences. What's the socioeconomic benefit of that? I think it's very significant. Otherwise, we have a lot of land tied up that is really not generating the type of economic benefit that it could.

In conclusion, increasing the number of woodlot licences and rethinking the timber pricing system — these are two things for independent log sellers that I think would help the province achieve its objective to revitalize this sector, especially the rural B.C. sector. I encourage you, please, to make those recommendations and support us on this. Thank you.

I will now look to members of the committee, if they have questions. I'll begin with Leonard.

L. Krog: Dean, that was an excellent presentation. Are you familiar with Merve Wilkinson?

L. Krog: He's one of my constituents, so you can imagine that I'm pretty sympathetic to what you've had to say here this morning. Just a technical question, because we're not as bright as we look — small joke: what is the cost right now…? You talk about the government doubling the woodlot licence program. What are the dollars, the cost to government? Are you aware of what that budgetary line item is?

D. Daly: I can get back to you on that. I would like to, because I know that our association…. You know, I'm speaking on behalf of the Bulkley Woodlot Association, but I work a significant amount with the provincial association, and I'd like to be able to get you a reasonable estimate of that, Leonard. I'd like to get back to you on that.

R. Lee: You mentioned salvaging the pine-beetle trees. Right now it's 25 cents per cubic metre? I think that's the stumpage you pay — from other communities as well.

D. Daly: Right. It's a common misconception that all beetle wood is salvaged at 25 cents. It's not actually correct. It's a very complicated pricing system. Right now we pay a range. Yes, there are some people paying as low as 25 cents per cubic metre. The average, I would suggest to you, is somewhere around $10 per cubic metre, but some of our woodlot licences have had stumpage assessments in the $20-to-$45-per-cubic-metre range.

The folks that I'm concerned about right now…. The policies that are in place for timber pricing in the interior are generating stumpage rates that will range between $10 and $45 per cubic metre, which are prohibitive in terms of selling our logs. And I don't think that's a small percentage. I suggest to you that probably 50 to 60 percent of the people are going to be facing those kinds of stumpage rates, because the policy does not allow for any reduction to the stumpage just because it's damaged timber.

The government is saying, "Hey, we have to go out and salvage" — rightly so. Go out there and do your best. Rope in all of these areas that are damaged. But the pricing system is based on lumber and chips. It should yield a stumpage back to the government of somewhere between $10 and $45, but only if you're realizing the revenue from lumber and chips. We are not; we sell logs.

R. Lee: You say it's based on market, really…. Do you have long-term contracts when you sell the logs?

D. Daly: No, they're generally short-term contracts. The contracts generally run…. I sold timber this winter. Typically that contract ends at the end of March, which is the end of our harvest season, so you'll sell between November and March. You'll have a fixed price in general. In the summer periods between the end of June and the end of September there'll be a contract price. It's normally about a four- or five-month contract, and for our scale of operations it's about 2,000 to 3,000 cubic metres at a sale.

M. Karagianis (Deputy Chair): Dean, the Minister of Small Business is currently putting together a pro-

vincial round table on small business. Are you aware of that? Or is your association aware of that round table?

D. Daly: I am not personally. I can't speak for the association executive, but I'm not personally aware of that.

M. Karagianis (Deputy Chair): I think that it might be a good recommendation for your association to approach the minister about participating in that round table. I think that some of the things you brought to us here this morning are very significant issues that could be discussed at that round table and will form some of the policies of government regarding small business.

M. Karagianis (Deputy Chair): In fact, I would suggest you contact the minister's office soon. I know that he's been putting that round table together for a couple of months now, and there's just sort of a last-minute opportunity to get some representation there.

D. Daly: We would appreciate it. I'll pass it on to our executive and ask that they do that. Minister of Small Business?

D. Hayer: Your logging system. Do you use the same one as other people, or are you, because the land is sensitive, using maybe helicopters or horses or other different methods?

D. Daly: Well, we do use a variety of methods. There are a lot of licensees that still use horse logging because it's a socially accepted harvest method in their areas. Horses really aren't any more environmentally sensitive, in many cases, than small, low-ground pressure machinery, but the social pressure to adapt to a higher-cost system requires some of those little systems to be used. But the full range…. You know, there's very little helicopter logging in woodlots, but it's the full range: cable systems, ground skidding, feller-bunchers and mechanized, right through to hand falling, line skidding and horse logging. We cover the gamut.

It's no different than the industry. I would suggest to you, though, that it's a higher percentage of horse logging because we're in that interface area where that seems to be something that is more socially acceptable.

B. Lekstrom (Chair): Well, Dean, I want to thank you for your presentation. The backgrounder you presented is a great document. I think it would be nice if we could get something like that to all British Columbians. There are so many issues that we deal with in the province, yet…. I wouldn't say there's little understanding, but the greater understanding people have, I think, the greater it is to effect change. I thank you for the work.

B. Lekstrom (Chair): Our next presentation this morning comes to us from the Parent-Caregiver Coalition. Joining us is Ernie Harding and Maggie Foot. Good morning. Welcome to the committee.

M. Foot: Good morning, standing committee members. Thank you for giving us the opportunity to do our presentation with you.

The Smithers Parent-Caregiver Coalition represents developmentally disabled individuals, their families and caregivers. The Bulkley Valley–Hazelton area is lacking in services that are readily available in the urban centres throughout the province and in many of the smaller communities in the southern part of the province.

For developmentally disabled individuals, there is no exercise fitness program, no recreation leisure program. Day programs are available for only a select few. There is no employment vocational program, but there is a pre-employment program involving eight special needs individuals that is dead-ended. Minimal respite is available. No transportation is available. No safe and secure residential facilities are available other than the one group home that accommodates four individuals. This is unacceptable.

We have prepared a summary of the services available in the Victoria area and compared these to the services available in this area, and this comparison is presented on pages 3 to 6 of this presentation.

Powell River, which has a population of 16,000 and serves an area of 20,000, has 14 group homes providing services for the developmentally disabled. The Powell River Association for Community Living has a work program that employs approximately 40 individuals and is funded by Service Canada, formerly known as Human Resources and Skills Development Canada.

The Bulkley Valley–Hazeltons has a population of approximately 30,000 and has only two group homes that can accommodate only nine developmentally disabled individuals. There are no government work programs.

This comparison of services clearly shows that in all areas we do not have the facilities, the funding or the service providers to extend the services and benefits available in the larger centres. The developmentally disabled individuals living in our area are being treated as second-class citizens.

There are a number of reasons why there is a lack of services available in our area, some of which are as follows. There is a lack of funds available to provide services — not to mention quality services — and support for individuals with developmental disabilities. We are the forgotten part of the province.

There is incompetent management directing the local ministry programs. Families have been divided,

threatened with legal action and abandonment when on the verge of a breakdown. Local management has squandered hundreds of thousands of dollars that should have been used to provide much-needed services. Funds allocated by Community Living British Columbia are siphoned off by the larger centres, leaving less-than-adequate funding for programs in the rural areas and communities.

There is a lack of staff available to complete evaluations on numerous special needs individuals living in the area. As a result, they are denied benefits and access to programs that might enhance their quality of life. There is no staff available to certify individuals and homes that would be available for respite and proprietary care. There are no adequate facilities available to provide efficient and effective programs.

A summary of services. The special needs individuals in Hazelton to Burns Lake: 92 adults, and those under 19, 79 — for a total of 171. The lack of services from Community Living: exercise and fitness provided to five; eligible, 171. Recreation and leisure: provided to 11; eligible, 171. Day programs for adults, two mornings per week: five; eligible, 92. Four mornings per week: provided to four; eligible, 92. Thirty-five hours per week: provided to two; eligible, 92. Employment, full-time: provided to three; eligible, 92. Part-time: provided to six; eligible, 92. Pre-employment: provided to eight; eligible, 92 — and this must be upgraded from a babysitting program. Respite: provided to 12; eligible, 171. Caregiver must have home study to qualify: never done, due to cost-saving to ministry. Family and personal support: zero out of 171. There is no support for adults. This has been tragic for several families. Nutrition: zero of 171. Transportation: provided to zero; eligible, 171. Individuals are only transported to and from programs if the worker has a vehicle. Many could not participate if programs were available, due to transportation.

Housing and vulnerability. The current housing situation in the area allows for the exploitation of our special needs individuals. Housing needs are identified for dependent, semi-dependent and independent. None of the present accommodations would meet the criteria of the health authority accommodations standards for dependent and semi-dependent units.

Areas of good service. In Smithers there is a group home with three dependent and one semi-dependent. In Smithers there's a main-street apartment with one dependent. In Burns Lake there is a group home with five dependent. Expansion of the aspect of this program is required.

Our recommendations. Number one: that there be a special and substantial allocation of funds available to rural areas and communities to allow the same benefits that are available in the urban centres on a pro rata basis. Resources that drive the provincial economy come from the area, but no benefits are being returned.

Number two: that Community Living B.C. recognize the discrepancies that exist in our rural environment and award us a pilot project and funding to rectify the problems. CLBC's business plan for building the foundation for the future must be used for implementing this project. Individuals and families are responsible for their own lives. They have the fundamental right to decide where, how and with whom they receive support and/or services.

Number three: that funding be made available for the construction of safe and secure housing for the special needs individuals living in the area.

Number four: that funding be made available to acquire, renovate, operate and maintain the vacant Chandler Park Middle School. This school has classrooms, a home economics room, a computer room, offices and a gymnasium. This would provide a learning, administration and activity centre for the programs for developmentally disabled individuals. There would also be space available to accommodate other organizations in the community.

Organizations and programs that could be based out of the community activity centre include the following: special needs, exercise-fitness program, recreation-leisure programs, day programs, employment-vocational program, daycare-respite, rehabilitation program, supervised work placement, transportation services.

Organizations that could use this facility: brain injury society; child development centre; community services; mental health; Salvation Army; Domestic Peace; supported child care; learning disabilities association; senior citizens society. Other community users: community recreation could use the gym. You could have access to meeting rooms. Use it for elections, for enumerations and polling booths. Community organizations such as Bulkley Valley fiddlers, community choirs, dance groups, cadets, Brownies and Girl Guides….

The local initiatives that we have in place that support our special needs…. A recycling centre is the first one. Through the efforts of parents, caregivers and interested citizens, the Smithers and Area Recycling Society established a recycling facility that provides an employment base that allows opportunities for individuals with mental disabilities and physical challenges. This society has a charity status and now employs two special needs individuals full-time and five part-time.

The bottle depot. Two charities, the Smithers and Area Recycling Society and the Smithers Community Services Association, partnered and purchased the Smithers Bottle Depot. Two special needs individuals are employed part-time at the depot. This will eventually be used for funding local programs.

B.C. Special Olympics, Smithers and Burns Lake: 56 special needs individuals participate in the various sporting activities sponsored by this group, and $30,000 per year is raised locally to make these activities available.

Number four: the Grendel Group. This group is presently raising funds to establish a hostel that would be manned and operated by special needs people.

B. Lekstrom (Chair): Thank you, Maggie, for your presentation, and Ernie for coming. We do have a number of questions.

L. Krog: Thank you very much for the presentation. I'm just trying to get some idea of how severe the prob-

You've used Victoria as a comparison. Are there other areas in the province that are equally badly treated, if I can say that?

M. Foot: I've just returned from the BCACL conference in Vancouver. I listened to a lot of self-advocates. In pockets, there are, but everyone realized that Smithers and area, and this northern part, are in dire need of help.

L. Krog: How does that happen? Is there some historical reason? I mean, these are pretty dramatic numbers. Can you explain that?

E. Harding: One of the problems that I really see happening here is that there have been cutbacks. Having the appropriate people, the qualified people, available to take…. Okay, if you want respite, it takes, say, one to three years to go through the ministry and get approved to do it. There hasn't been the staff available to do it.

It's the same with a group home. As a result, it goes down and down. There are people out there who haven't even been evaluated as special. We know they're special needs, but they have not been evaluated. There isn't the staff; there aren't the people to do it. Everything just keeps sliding down and down, and it's rock bottom here.

The parent group here are bitter. They are angry at what is happening. There have got to be some changes. An awful lot of people are afraid to go to our ministry staff. There is discrimination in the services that come from here. The local establishment threatens these people: "You'll get nothing. You'll be cut right off." They've got no advocates. More people are coming out of the woodwork, and they're coming to tell us. I've been down in Burns Lake. There are two families down there, and there are real problems.

We have been through…. We have been talking to Rick Moles. We have sent him letters. We've asked him to come up and look at it. We have been in contact with Stan Hagen. What has happened in this community, housing — it goes right through…. It's sad. It's sad.

When you look at the Aim High group that look after Prince George, they do a pretty good job. But when you hear that when they're in there getting their accreditation, they take all their staff and all the people that are involved in it down to Whistler for a retreat…. You hear about this, and you hear about the lower mainland going on tours, and we've got nothing. Yet there's money available for them.

Why can't we get something back up here? We're in a sad state up here. We really are. We just hope that you people can hear us and that you can go back and help us.

M. Karagianis (Deputy Chair): I'm just trying to understand. Was there previous funding in place for any of these things, historically, in the past? Or have you never actually had any kind of structure for…?

E. Harding: There's been no structure. You look at the programs that are in Victoria, for the employment. We have good contacts because we're part of the Special Olympics programs and regular programs. We have an excellent line of communication throughout all of the area.

But no, there has never been any employment program. In Victoria there are long-term programs in effect. Up here, they'll have a course or something set up at the community college. At the end of the course, three or four months, it's finished, and there's no place for them to go. There's nothing to do.

I think Community Living has sent out in their objectives…. They've got about nine of them there, and I think they all mean well. I think another problem is that people that have the special needs people, the special needs families, have never been included. If we were able to have more input into what was available, then it would make a difference. But no, there has been nothing.

M. Foot: I let Ernie answer that question, because I'm originally from Ottawa, Toronto, then Yellowknife, then Prince George and now Smithers for a year. Travelling through the country and getting services for my son, I'm appalled at what is not available here.

M. Karagianis (Deputy Chair): Now, if funding were found, is there staffing capacity here for some of these needs?

M. Karagianis (Deputy Chair): The capacity is here, should funding be available to actually begin some of these programs you need?

E. Harding: One thing that's here is a vacant school, and that would be a great resource centre for all the programs and all the associations we've mentioned. We can alleviate an awful lot of the problem.

M. Karagianis (Deputy Chair): Have you thought about an operating budget and things for that facility, if it were to happen?

E. Harding: We're working, but there is some work that has to be done. Another problem is the facilities. What happens is that the ministry takes community service and gives them so many dollars an hour for putting on that program, but there is no money in that allocation to allow for facilities. They haven't got them. They've got a small meeting room — about, maybe, from the tables to the back — and that's all they have. What can they do? They can't do exercise; they can't do fitness.

We would work with them. We're willing to work. We've done an awful lot on our own, and there's a lot more we can do, but we need help at this time.

B. Lekstrom (Chair): I do have three other members wishing to ask questions.

J. Yap: Thanks for your presentation. You've made some strong comments here about incompetent management and squandering of funds — local management squandering hundreds of thousands of dollars. Is it a case that the funding is there but because of local issues it's not going to where it should go?

J. Yap: If that's the case, are there not avenues for you to pursue this up the line to get change?

E. Harding: Oh, we have been. We're probably in the MLA's office about two or three times a week. We're trying to educate him too, and I think we're making some progress.

J. Kwan: How much money are you receiving for this sector from the government at the moment?

E. Harding: I really don't have that information. I don't know how much the community services get, because there are three service providers here, and we do not have that. If you look at the hours…. Community services have their own administration to look after as well.

M. Foot: I think we've tried to get that information, but it just hasn't really been made available to us.

J. Kwan: Just to elaborate on the question that John had raised with you, do you have a list of the issues that you can present to the committee?

E. Harding: I think we've laid out an awful lot of the issues. There are no services. Like, you take the summary of….

J. Kwan: Sorry. I meant on the issue around incompetence, on the issue around the mismanagement of spending. To use your words: "There's incompetent management directing the local ministry programs. Families have been divided, threatened with legal action and abandoned when on the verge of a breakdown. Local management has squandered hundreds of thousands of dollars that should have been used to provide much-needed services." I'm wondering whether or not there are specifics attached to the issues that you've raised today.

E. Harding: We have them. We do have them. We have asked for Rick Moles, from CLBC, to come and meet with our group. We will present each and every case that we have to him. If you people would like us to pass that on, we will do it.

B. Lekstrom (Chair): Just, I guess, a word of caution on that. I think you're going down the right path now in pursuing this with your MLA. I'm not sure it would be the purview of this committee to begin investigating a personnel issue that we're talking about, if that's acceptable to the committee.

I'd certainly encourage you to continue the avenue…. Your presentation is wonderful. The issue, the specific one we're talking about or referring to here…. I would encourage you to work through the channels you're working at. I think it would be far more effective.

G. Hogg: What I was going to say is that there are pretty serious allegations that are being made with respect to this. There's the statement: "squandered hundreds of thousands of dollars." Above that, you say that there's a lack of funds. If those funds were not squandered, are there adequate funds then? Is that a fair interpretation of points one and two?

G. Hogg: That would suggest that there may be enough money allocated to this region of the province. However, the way it's been utilized has been inappropriate or, in your words, incompetent in terms of being able to meet the needs of the area.

G. Hogg: Have you had advocates through BCACL with respect to this — asked BCACL to look into this and provide you…?

M. Foot: We've actually just discovered that we have someone in Smithers that sits on the board for the BCACL but has never come forward or acknowledged any relationship to….

G. Hogg: There are a few avenues available to you through the association that you're a part of — the provincial association as well as CLBC — to explore this a little further. And the Ombudsman's office should be available to you, to look at and review that.

It's difficult reading that and hearing the challenges you have in this area. It's particularly difficult when we understand that there may, in fact, be enough money allocated to the area but it's not being appropriately utilized to meet the needs of the developmentally disabled in this community.

I would encourage you to get a hold of, perhaps, Valerie Richmond, as well, who's in Rick Moles's office and has responsibilities for working with the community around issues such as this. I'm sure that she will be able to look at it and help you with that. The Ombudsman's office. Laney Bryenton at BCACL, and personally refer it to Rick Moles as well.

I think our issue would then be: if those issues are looked at and if there is enough money allocated, then there's that whole different issue than if the competence is there and there's not enough money. We don't know what it is. We don't know what's been allocated, and we don't know…. It sounds as though they're saying that if there are hundreds of thousands being squandered, based on this, then there may well be enough to meet some of the service delivery needs that they're talking about.

E. Harding: I can give you an example. There's a family that has an autistic child. There are extreme problems. He's really acting up. He'll be banging his head on the wall until it bleeds. The family's just divided. They're having all kinds…. They're looking for a little bit of respite. What the ministry here wants to do is take them out of the system and down to Vancouver and put him in a home there. That home costs $14,000 a month. They want to take him out there for a year, so that's a quarter of a million dollars that has to be spent.

A simple solution to the thing is a small renovation to your home and respite. What are they offering him for respite? They offer him, I think, $250 a month for respite.

It's sad. You're breaking up families. Then we've got another one we can bring forth where the child was sent initially out for three months and has been there three years — and at $14,000 a month.

B. Lekstrom (Chair): The one thing we will do, as a committee, is take the concerns that you've raised. The recommendations — I think you have some valid points here that are worthy of our consideration as a committee. For the other issue that was discussed, we will put a letter together on behalf of the committee and forward it to the minister for consideration, as soon as we get back to Victoria, on the other issues.

I'll just close with a couple of quick comments. I notice in your recreation and leisure on page three — and just a quick question from myself — that Victoria is your comparison. I come from northern B.C., so it's very similar to your area. The area's swimming pools provide weekly slots for the developmentally disabled individuals in attendance. It's free.

Do you know if the community actually donates that, or have you approached the community or the region to see if the individual communities would do that? I know many communities will work with your organizations to say, "You know what? We do have a slot available," at which point then it's not a cost factor. I'm just curious. I think it's a great idea to try and do that. I know in different areas — Dawson Creek, Chetwynd, Fort St. John — the community groups work together that way.

The other one I'll just make a quick comment rather than a question. On your recommendations, item four, I think, is a wonderful opportunity. Any schools that are underutilized right now, that are no longer needed because of the student population declining — I can't think of a better use than to put them to use on what you're talking about here. I encourage you to pursue that and pull all of the groups together. You could put together a full formal package and pursue that — and an operating budget as well.

B. Lekstrom (Chair): We'll just verify the confidentiality issue here. I believe we can. I think we're okay. We'll just confirm that, though, if we had to contact you for any reason, particularly dealing with the letter that we're talking about putting forward. If that's all right?

B. Lekstrom (Chair): Maggie, just one quick question from the committee. Can this document be shared? Do you guys have any problem?

Moving along, our next presentation comes from the Hudson Bay Lodge. Al McCreary is with us.

A. McCreary: As we just stated, my name is Al McCreary. I'm the co-owner of the Hudson Bay Lodge and a partner in Edmison Mehr chartered accountants. Our hotel is a 96-room facility and employs about 60 people. I'm also a director of the board of the BCYHA and currently serve as past president. In Smithers I'm a

member of the Tourism Advisory Board, the chairman of the Second Ice Committee, member of the Airport Runway Extension Committee and a treasurer of the Oldtimers Hockey Association.

I'd like to thank this committee as you travel the province to take public input into consideration as you plan your 2006 budget. Before I get into the details of my presentation, I'd like to acknowledge that I understand very clearly the priorities that this government has placed on the areas of health care, education and social safety net. That being said, I wish to stress to you that the issues I'm going to focus on generate additional revenue for the province — revenue that will add substantially to government coffers and, in turn, help fund the very social services that are so important to British Columbians.

Our area has lagged behind the recovery of other areas in the province. Many of the policies of your government have taken longer to create a positive business climate in this region. However, there are many positive results in progress: the purchase of the ski area; the development of mining properties such as Blue Pearl in Smithers, Red Chris at Iskut, and Galore Creek, all of which will be serviced from Smithers; the port development in Prince Rupert; the reduction in stumpage rates to allow Terrace, Kitwanga and other regional sawmills to operate.

Earlier Dean was talking about reviewing the rates and some of the work that was done by your government late in the term to take into consideration the fact that the Prince Rupert pulp mill, sort of west of here, was not operating and took that revenue from the chips out of the formula, which encouraged and assisted. I'm also a director of a small native sawmill at Kitwanga. Those stumpage changes allowed us to get that mill back running. The Terrace mill is now running it. It's these types of issues, particularly a lot of the issues that Dean brought up…. It's been difficult in this region over the last while.

In our region the hotel occupancy for 2004 was 48 percent, with all the above optimism. I think one of the things that….If you watch hotel occupancy, it's a real barometer of what's taking place in the region. We have had a steady decline since 1996, and this is the first year — even once, removing the movie of this spring — that we're starting to see a positive, upward swing. But we'll be lucky to break 50 percent by the end of the year. So we still need lots of work, and that's where we're headed.

To make these initiatives come to fruition, we must continue provincial government support. For Smithers, I wish to thank Minister of Small Business John Les for the grant towards the second sheet of ice — the $1.7 million — but need to encourage your support for an infrastructure grant to complete the project. 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 improve change for the better.

Government assistance is required for the following: support for the runway extension; directives to the B.C. Ferry Corporation to investigate the possibility of a daily service to Prince Rupert; monitoring of the approval process to ensure that developments take place; a review of the government room rate of $70 during peak season to ensure a reasonable rate of return for investments and that there will be rooms available for the travelling government employees; and last but not least, extension of the hydro line to provide power to the Prevost development in northwest B.C.

Hoteliers across the province are well aware that the previous government allowed transportation infrastructure in British Columbia to crumble. That being said, we must reinforce our support for this government to continue to expand its commitment to transportation infrastructure projects. To double tourism by 2010, the daily ferry service is essential to our area for bus tours and fully independent travelers. It's currently about 25 percent of our business.

More important to Smithers is the runway extension. For continued growth in the hunting, fishing and guiding business, we need a quality service from a major carrier. To service the growing mining sector, we must have the capacity to handle larger planes. As the development of the ski area takes place, we require the extra length to handle the faster jets and the larger planes. For economic development to continue in Smithers, the runway extension is essential.

The other major project in Smithers is a second sheet of ice, which we've been planning for the last ten years. The second sheet of ice project is incorporating green technologies that will assist the community with much-needed additional ice, as well as reducing the operating costs of the existing rink, curling rink and regional pool. Your assistance in bringing this project to completion is appreciated.

In addition to having adequate infrastructure in our province, we must intensify efforts to train, recruit and retain a skilled workforce. Conservative estimates project that by 2010 an additional 84,000 skilled workers will be required. Many of these will be employed in B.C.'s tourism and travel industry.

In closing, your government has implemented positive changes in taxation and regulations that have allowed investment to return to our area. With your continued support for infrastructure in Smithers, our area will return to the prosperity we enjoyed in earlier times. Thank you.

B. Lekstrom (Chair): Thank you very much, Al. I'm going to look to members of the committee — if they would have any questions of your presentation.

L. Krog: Historically, how have airport expansions been handled? Has there been a federal contribution as well?

A. McCreary: Yes. I think the next presenter has all the information on the airport. Because it's so key to the

tourism industry, I have to bring it up, but both the mayor and another couple of colleagues behind me are on the same committee and they have all the details on that.

A. McCreary: It comes every second day now. The real problem in our industry is that four days of the week you're full — this is during the summer period. You have full occupancy one night, then you drop to about 75 or 50 percent the next night, because all the schedules…. The buses are scheduled. The independent travellers — people that rent cars, and usually two couples — have a predetermined route, but everything is fixed on that ferry schedule. Basically, you're only full 50 percent of the time because of the days that the ferry isn't running.

In Quince Lake, where we're situated, the day that they come off the ferry is the same day that they're going, so we don't sort of get that spread. Other people could have a better thing, but from our point of view…. Not only that, it's not just Smithers. Everybody west of Prince George has the same problem, because all the routes through all the national carriers, whether it be John View or otherwise, sort of schedule to meet the ferry.

B. Lekstrom (Chair): Well, I see no further questions from members of the committee. Again, I want to thank you for presenting to our committee here this morning.

Our next presentation this morning comes to us from the Smithers Regional Airport. Presenting and joining us is His Worship Mayor James Davidson.

J. Davidson: Good morning. First, welcome, and we're pleased to have you in our town and in our valley. You know, before I even get into this, I would like to say this to you. Part of my presentation is about the future, but I want to say something about the now. When they come to Smithers, politicians are very, very glad to say: "Look at Eskay Creek, the richest goldmine in the world. Look at Houston; we now have the biggest sawmill in the world." We've got another one, Houston Forest Products, and one in Smithers. There's a mine called Kemess South — Northgate runs it — and one at Huckleberry.

The thing is this: they haven't been able to leave a lot of infrastructure and advantages with us. Mr. Lekstrom, you know well the fair share that the Peace River gets from its resources. But here's the crunch, before I go there: Eskay Creek is through in February. If we don't get the action so that Kemess North can open, Kemess South is gone in two years. Huckleberry will be finished at least within three, probably in two.

You know about those big sawmills and the beetle. We have to talk about the future here. Those revenues are the revenues that you now have to spend in your budget, but they're going to be gone, and it's impacting on the people. The Tahltan have worked in Eskay; they've been involved in it. That is the issue. That's more important than what I say about Smithers. It's more important that you look at our whole northwest. We've been in five years of real down. We have to look for the ups, and that's with these things contributing, but contributing to whom? Certainly, as you've heard, not that much to the northwest.

So good morning, and here I go. When you arrived here, your plane landed at our airport. The airport is owned and operated by the town of Smithers and serves the largest electoral district in the province. That airport came to us from Transport Canada when the government of Canada devolved itself of all its airports. I wouldn't say it's economic, but we make it run without taxes. We simply make it run.

This riding extends north and west to Atlin and to Alaska, east to Burns Lake. It encompasses ten towns and villages, and over 19 first nations bands and communities. This region is a significant revenue generator for the province as a result of mining and forestry resource rents — royalties and stumpage. Our region has lagged behind the rest of the province on the path of economic recovery. Although enhanced provincial policies and aggressive, innovative strategies developed by communities in the region are helping, the region still has a long way to go to a sustained economic security.

The single most important potential economic generator for us is the transportation infrastructure provided by Smithers Regional Airport. It is imperative for the airport to provide up-to-date infrastructure to ensure that it is able to support the growth in the economy and the aviation industry's move to smaller, faster, more fuel-efficient jets.

We are excited about the turnaround in the mining sector. Smithers has historically been the hub, or the jump-off point, for the mining and exploration industry for many decades. We currently provide key support services to four existing mines in northwestern B.C. and to the exploration and development activities for Kemess North, Galore Creek, Red Chris and Blue Pearl. Just these four new mining developments alone could create up to 1,700 full-time operating jobs, and 5,100 indirect community-based jobs in our region.

The Smithers Regional Airport is a vital component to the mining and exploration industry and is well positioned to play a substantial and fundamental role in the future of this sector.

Smithers is a major public and social services centre in northwestern B.C. Due to limited medical services in northwestern B.C., many emergency and specialists services require patients to be transported to larger centres for proper medical care. Air ambulance flights originating at the Smithers Regional Airport have been steadily increasing since 2001 — 239 in 2004, almost one a day.

The ratio of residents in this area over the age of 65 is steadily increasing, and the Northern Health Authority estimates that we require 8 percent to 12 percent more hospital care than the rest of the province. Without the airport and the extended runway, the medical and social services situation would be unmanageable.

The development of Smithers into a four-season resort destination is one step closer with the recent purchase of Ski and Ride Smithers. The airport is a vital component of the developer's plans for the mountain. Expansion of the runway to allow for modern jet access and reliable service is critical to the success of this venture. If there is no runway extension, there is no four-season resort development.

The town of Smithers is an active regional partner for the Northern B.C. Film Commission in their efforts to attract future filming opportunities to this area. In 2005 Smithers hosted Disney Productions during the filming of Antarctica. This initiative provided significant economic benefits to Smithers and area — $21.4 million in sales and services and $30 million in total spending in Vancouver.

Infrastructure improvements at Smithers Regional Airport are mandatory for Smithers to be a competitive location for the film industry. This industry requires daily, reliable and economical air service to Vancouver. Air Canada has been clear in their reluctance to upgrade their service to Smithers with a jet product due to airport deficiencies. Business and industry in the region are demanding an airport capable of supporting mid-sized, fuel-efficient jets. The airline companies are refitting and restructuring in efforts to address rising operating costs. The town of Smithers must respond swiftly and decisively to ensure the future economic and social sustainability of the region is supported with effective and up-to-date infrastructure.

We know that government has heard how important our airport is to the economic future of the northwest, from developers and business, and we thank our MLA, Dennis MacKay, for getting our message to cabinet.

In keeping with my comments on the importance of airport infrastructure, I would also like to emphasize how important another piece of infrastructure is to the northwest economy. That is, the electrification of the Highway 37 corridor from Meziadin Junction to Dease Lake. The development of this vital power and infrastructure corridor is crucial to the opening of the northwest to industry and investment. This type of infrastructure development will result in new opportunities for communities by creating new jobs and employment in forestry, mining, oil and gas, tourism and breathing fresh air into existing tourism and service businesses.

There are currently no forestry manufacturing businesses in this part — that's the Highway 37 part — of the province. A quarter of the province north and west of us — a quarter of it — no power.

We know that after the mountain pine beetle has completed its course through the interior, the timber reserves in the northwest will be in high demand. The economic potential offered to this area by the development of the container port in Prince Rupert will be significant for primary and secondary forestry.

Manufacturing. If access to power infrastructure is available…. We also know that the mining developments in the area — Red Chris, Mount Klappan coal, Galore Creek, Western Keltic — are projected to contribute over a billion dollars in capital investment in the province and will trade in excess to 1,000 direct jobs and 3,000 indirect jobs if they, too, can only have access to power infrastructure.

Not only that, Forrest Kerr wants to do a run-of-the-river, a green power project. It's sitting there, but there's no hydro connection to it. They could supply power, but it must be connected to the transmission line. Run-of-the-river means you've got lots of power and then low amounts, because if the river drops, you can't get it. What we're talking about is potential, and we need to realize it.

Here in Smithers and in the communities throughout the northwest, we believe that our economic objectives are closely aligned with the provincial government's own key economic strategies for mining, forestry, transportation and tourism. Please make sure that provincial budget allocations support major infrastructure so that we can begin to grow with the rest of the province and remain the best place on earth to live, work and raise our families.

I'm going to look to members of the committee if they have any questions. I'll begin with John.

Two questions. What is the capital cost for the airport extension? Do you have an idea about the electrification request along Highway 37? What would that cost? Do you have a ballpark figure or a business plan?

J. Davidson: Yes, all right, let's start with the airport. We did our engineering studies. We were at 4.2. Now, we all know what's happened with oil and gas, and asphalt is a large component.

John, what are we going to tack onto that? Another 15 percent, 20 percent probably, simply because of what's happened. Probably have to add a half million, so it's probably 4.7 or somewhere there now on the highway project, on the electrification project.

How do I put this? There are two ways of looking at it. If we do the maximum — in other words, we look up, and we say that we're going to run as highest-possible voltage line up there, — it's way up in the hundreds of millions. But if we can run 180 kVAs, which would serve us for now, and you've got your infrastructure in place — what you would have to change is your wires, not the whole idea — probably $180 million.

I also know that the mining companies are critically interested in getting this done. Their investments are worthless without hydro. You can be well aware now that with the cost of diesel fuel, they cannot go up there and generate power. We're generating it up there now for Dease Lake and Iskut.

Again, a quarter of the province sits without that infrastructure. Transportation and infrastructure, honestly, are the things that have made all of us in the north grow. Without those things, you know: "Nothing beyond Hope…." It just would be true.

R. Lee: What are the processes to get the electrification of the Highway 37 corridor? What's the status right now?

J. Davidson: What's the state right now? Well, it's not on BCTC's horizon. I've talked to them. They're looking again. But if you looked at what BCTC has set out as where they're going, you won't find it there. We've got to get it.

BCTC have assured me they will come up to the north; they'll come to Smithers even. We have to get that project in the works. Maybe I should leave it at that.

D. Hayer: Thank you very much, Mayor. I just want to say that your MLA, Dennis MacKay, always gives us those badges in the caucus room. We have to wear them, and he constantly reminds us — also, about the mining. He's always talking about how important it is and your airport. You have a good MLA, who's always reminding all the MLAs — I remember from the government caucus anyway — how important it is. I think it's good.

J. Davidson: I thank you and appreciate it. We need that. When I tell you that the mines are going to be gone in three years, you ought to be concerned. I hope you are concerned. If we don't develop infrastructure, we can't go…:

What's one of the problems? Alcan is exporting its power. There's a limited capacity of that line to take power out. If you've got lakes and dams, you can conserve and then sell at the highest price, because you can literally store power in water. But when you're running industry, you need constant supply. If our connecting lines between here and the south are transporting power out, for sale, where are we going to get power in the north?

There's an issue for why we need to…. We need to generate green power in the north. The potential is there. You've seen the mountains, and it actually rains. It's the infrastructure that has to be in place. It's critical.

M. Karagianis (Deputy Chair): Mayor Davidson, we've actually had a presentation from the mining industry as well. They've mentioned some of the same things that you have — certainly, the hydro from Meziadin to Dease Lake. They have talked about that very specifically.

My question, I guess, is: what kind of partnerships are you forming with these mining interests? They obviously have a vested interest in the extension of your airport and in this further hydro extension. What kind of partnerships are they offering you?

J. Davidson: At the moment, it's not cash, let me tell you that. They are going to use our community infrastructure. Because they're working out of here, they already have made this change in our economy. This past year, 2005, we have had more people working than ever before. They say that's their contribution. Drill rigs out of Smithers are…. People are working, but that's somewhat seasonal, as you must know. You can't do much in the winter.

On the hydro line, I'm convinced that there could be a quid pro quo on that. I had the opportunity…. Let's see, three weeks ago we hosted a charter group from Japan: JOGMEC, that's the Japanese oil, gas and minerals; Simoto; Dallas; Daiwa; a Japanese bank from Toronto. They are terribly interested in this northwest. They understand that their market is shifting, that they're going to have to market into east Asia. In their minds, they have to have joint ventures that allow them access to resources or they aren't in the picture marketing to China or India. They simply have to be there. They are interested in being involved in these kinds of things.

What kind of help is there? Offers? Potential. But we're long and strong on talk and pretty short on cash.

M. Karagianis (Deputy Chair): I'm just thinking…. You prefaced your remarks at the very beginning with the legacies that are left behind by the mining industry. They seem to be not as adequate as you would like. I would suspect there's some room here for negotiations with those companies around what they need and what you need, and perhaps leaving a better legacy behind for your communities. Those two things would be significant.

J. Davidson: Blue Pearl is the mine that's coming right next to us — molybdenum. I totally agree with you. I think with the billions of dollars taken out by Barrick from Eskay Creek I should at least be able to show you maybe a….

B. Lekstrom (Chair): Your Worship, I do want to thank you a great deal for your presentation here. Your passion about your community, and not only your community but the entire region, comes through very clear. I appreciate, on behalf of the committee, your presentation here this morning.

J. Davidson: Thank you very much. And can I say this? There's no such thing as one community. We stand or fall as a region.

Blair, I think you know that the Peace is the Peace. Well, the northwest is the northwest.

Our next presentation this morning comes to us from the Smithers District Chamber of Commerce, and presenting is Sharon Robertson.

S. Robertson: Good morning, and welcome to Smithers. Again. I'm sure you enjoyed the fine facilities and hospitality at the hotel.

I'm the assistant manager for the Community Futures Development Corp. of Nadina. I'm speaking with you today on behalf of the Smithers District Chamber of Commerce. I currently serve as a member of their business development committee. Once again, I would like to thank you, as my past colleagues have done, for travelling to Smithers to hear our opinions on the budget process.

Many of my comments are going to sound familiar to the previous presenters, because we share many of the same interests — Dean Daly, Al McCreary, Mayor Davidson. Those comments you'll hear over and over again through my presentation.

The Smithers District Chamber of Commerce clearly understands the priorities that this government has set for economic development, health care, education and social services. The issues that I will address today are of critical importance to the achievement of those objectives.

As noted by Mayor Davidson, when you arrived in Smithers you landed at the airport. I know that I don't have to spend too much time talking again about the airport, other than to just emphasize to you how critical that airport infrastructure is to economic development and business development in the northwest. It's critical that that airport provide up-to-date infrastructure — namely, the runway extension.

We are currently — as an airport committee and as the airport manger, who is behind me — working to increase or improve the navigational services so ITPS and AWAS will be installed at the airport in the second quarter of 2006. It's really important for us that the runway extension be timed with the navigational aid service so that the service we provide to business and new investors is efficient, reliable and safe. We're also currently upgrading the terminal to improve baggage handling and passenger security. You can see that the town, the airport and the community have placed the airport as a high priority and have got a plan together to make sure this happens for us.

The chamber is really pleased to see the purchase of Hudson Bay Mountain and Ski and Ride Smithers by a new developer. Their investment into our community of upwards of $30 million into an all-season resort and improvement of facilities on the hill will result in increased business opportunities in our community, which the chamber supports quite wholeheartedly.

Also, as the mayor noted, Smithers is a critical supply and service hub for the mining, energy and exploration sectors. We currently provide key support services to the four existing mines in northwestern B.C., and to the new activities for Kemess North, Galore Creek, Red Chris and Blue Pearl Also as noted by the mayor, these mining developments will create up to 1,700 full-time operating jobs and 5,100 indirect, community-based jobs.

We also support the electrification of Highway 37. I told you this was sounding pretty familiar — right? Development of this vital power and infrastructure corridor is crucial to the opening of the northwest to industry and investment. New jobs in forestry, oil and gas, mining and tourism are critical to all the communities.

The opportunity for new forestry manufacturing businesses in that part of the province is immense, given what we are faced with after the pine beetle has finished its run through the interior. High-quality cedar and hemlock abound, and there are many small businesses getting set up right now to take advantage of the availability of that type of timber and the opportunity that will be provided by the container port in Prince Rupert.

Financing of new infrastructure projects and maintaining and enhancing existing infrastructure is an important priority for the Smithers District Chamber of Commerce. Without up-to-date infrastructure, economic growth in the northwest and subsequent revenues to the province will continue to lag behind the rest of the province.

In addition to maintaining up-to-date infrastructure in the northwest, we recognize the need to maintain a skilled workforce to support new investment and development opportunities. We clearly support the recommendations in the recently released report by the B.C. Chamber and the Community Futures Development Association of British Columbia, which talks about the impact of skills shortages on small business. There is currently a lack of skilled workers across the province and perhaps painfully more so in the northwest as a result of the last ten years of economic decline.

Small business must have access to a trained and skilled workforce in order to succeed. We support community-based training and urge the province to support the development of trained trades and other training programs in communities throughout the province, not just in the lower mainland.

The year 2010 is just around the corner. We thank the province for supporting the Bulkley Valley Community Arts Council and the Bulkley Valley Cross Country Ski Club by providing funding through LegaciesNow and the Olympic/Paralympic Live Sites program. This is really significant for our community in developing arts and culture and sports tourism legacies

as we approach 2010 and beyond. Linking communities outside of the Vancouver-Whistler area to 2010 opportunities is critical to ensuring that the entire province enjoys the legacies of this powerful initiative. As a chamber of commerce, we urge the province to continue supporting LegaciesNow and the Olympic/Paralympic Live Sites program.

The chamber is also concerned with the development of open-net fish farms. We understand that there is a lot of information out there, both pro and con, on this subject. However, for us it's not just the salmon that are threatened by open-net fish farms. The Skeena River system in northwestern British Columbia is home to the last remaining globally significant wild steelhead population. Avid anglers know the thrill of sport fishing on the Skeena, the Bulkley, the Kispiox and the Morice for these rare and elusive fish. Like the salmon, steelhead spawn in fresh waters of the Skeena, mature in the oceans and return to the coastal waters to spawn and complete the cycle.

The sport fishing industry in the Bulkley Valley is second to none in the province. It generates significant revenue and economic opportunity to this region and to the province as a whole. Sport fishing is the largest player in the B.C. fisheries and aquaculture sector. As an economically sustainable green industry, sport fishing contributes over $200 million annually to the provincial GDP compared to just over $100 million by the commercial fishing sector and $90 million by the aquaculture sector.

As we strive for a diverse and sustainable economy here in the Bulkley Valley, we consider sport fishing a fundamental part of our long-term strategy. So we are very concerned with moves to allow open-net fish farms.

We share the same view as the mayor. Communities throughout the northwest and in Smithers share the same economic objectives as the province, particularly in transportation, mining, forestry and tourism.

On behalf of the Smithers District Chamber of Commerce, I ask that you please make sure that the provincial budget allocations support our critical infrastructure development, education opportunities and other economic diversification options that, as communities, we work hard to be creative and innovative on.

B. Lekstrom (Chair): Thank you very much, Sharon. I'm going to look to members of the committee if they have any questions regarding the presentation this morning.

L. Krog: Just more of a suggestion. As you probably are aware, the Legislature has established a committee on aquaculture, and I invite you, obviously, to make a submission, as I presume that committee will likewise do some touring around the province.

I come back to the question I'd asked earlier. With respect to the airport, which seems to be the crucial piece of infrastructure, is there any federal funding available, do you know?

S. Robertson: We believe there is. Obviously, we've done our homework, and we have asked them to cost-share with the province and with the town of Smithers in this project. We're looking at pretty well a one-third, one-third, one-third share at this point.

L. Krog: The reason I ask is, of course, there is an impending federal election. Sometimes governments do seem a little freer with cash as an election date approaches, and it just struck me as timely that you'd be pushing the issue now.

S. Robertson: I guess that's a gentle way to put it. We have pushed the issue.

B. Lekstrom (Chair): I thought that was a cynical statement, Leonard, but….

B. Lekstrom (Chair): Are there any further questions of Sharon this morning?

Seeing none, again, Sharon, I want to thank you for coming out this morning and presenting to our committee.

B. Lekstrom (Chair): I think we're going to alter the schedule and the committee will possibly take a five-minute recess. Then we'll reconvene with the presentation from the B.C. Chamber of Commerce. Recess for five minutes.

B. Lekstrom (Chair): Good morning, everyone. I would like to reconvene the Select Standing Committee on Finance and Government Services meeting here in Smithers this morning. We are dealing with the prebudget consultation process, and we will continue on. Our next presentation this morning comes to us from the British Columbia Chamber of Commerce, and joining us are Jon Garson and John Winter.

J. Winter: Good morning, Mr. Chairman. Thank you very much. As you said, my name is John Winter. I'm the president of the B.C. Chamber of Commerce, and I'm joined this morning by Jon Garson, who is our director of policy development at the B.C. Chamber. We'd like to take the opportunity to thank you for allowing the B.C. Chamber the opportunity to present the views of our membership on what government's priorities for the 2006-2007 provincial budget should be.

At this point, it is perhaps useful to provide some background as to the Chamber's constituency. The Chamber represents the views of 130 chambers of commerce and boards of trade around the province, and those chambers represent about 30,000 businesses

of every size and sector in each region of the province. As such, the Chamber truly is the voice of business in B.C.

The Chamber is mandated to advocate a policy framework that promotes a healthy and vibrant economy in which all British Columbians can grow and prosper. With this mandate in mind, we are very pleased to be able to make this submission this morning to the Select Standing Committee on Finance and Government Services in response to the 2006 budget consultation paper. We're also happy to provide you with a written presentation regarding the priorities of our members.

In answer to the first of your four questions — "Which priority areas should the government target for allocating anticipated fiscal plan surpluses?" — we offer the following. The Chamber agrees with the provincial government that the surplus must be committed to reduce the debt burden that we pass on to future generations. The Chamber feels that the way this question is phrased, however, leaves room for a degree of ambiguity, and as such we feel we would like to make it clear. The Chamber recommends that all future surpluses be directed towards reducing the debt burden. Further to this, the Chamber calls on the provincial government to remove debt management from political interference and short-term perspectives by introducing legislation that sets out a long-term debt reduction strategy.

On the second question — "What are your opinions on the government's current practice of providing both a contingency fund and forecast allowance to protect balanced budgets from unforeseen events?" — we suggest that prudent fiscal management has become a cornerstone of the provincial budgets. For the Chamber, the question is not whether building buffers into the provincial budget is a good idea. In the opinion of our members, it is essential.

The only question is how unused funds within these buffers are used at the year-end. Given the fact that we are engaging on a significant program of capital investment, the Chamber will continue to advocate that all unutilized funds, come year-end, should be committed to ensuring the debt burden remains manageable.

On the question of how to pay for provincially important physical and social infrastructure projects, we suggest that the budget update reaffirm the government's commitment to a significant capital infrastructure investment program. While this investment is necessary to address the significant investment deficit, the focus for the Chamber will be to ensure that debt reduction continues to be a priority of the government.

With this in mind, we will continue to focus on what projects are to be financed by debt, and while it is acceptable to borrow to build, this does not give the government carte blanche to spend on every project that catches a bureaucrat's eye. The Finance Minister announced that departments have been ordered to lay out their ten-year capital plans. These will then be reviewed to determine what is affordable. This is an important initiative and one on which we will certainly be keeping an eye.

The Chamber will continue to urge the government to focus on spending where a return on investment exists, in the sense of economic growth, as an essential element in determining which projects are financed. This is particularly important for the communities outside the lower mainland where communities have developed and grown on the strength of our natural resources. In order to continue growing, we will need to continue to facilitate access to and the development of our considerable resources.

Access to resources is the first step. Access from a permitting and regulatory perspective is being addressed. What we need is physical access and infrastructure. In areas where no infrastructure exists, the B.C. government needs to approach this lack of access as an investment in our future. A particularly good example is the electrification of Highway 37. We have chosen to be here in Smithers today in order to bring attention to this very particular matter.

We would also urge the government to enhance their use of P3s, or public-private partnerships. The key to P3s is their ability to transfer some of the cost of capital investment along while transferring some of the risk to the private sector. If done properly, and following best examples from around the world, there is no reason to believe that B.C. could not become a world leader. P3s are a merger between the government and the private sector over a project involving a publicly owned commodity, with both sides sharing the risk and, of course, sharing the benefits.

Now, some comments that we have relate to the budget consultation paper but are not specifically requested.

I think our goal as a chamber and as a business organization has been, for the last several years, to make British Columbia the number-one tax regime in Canada. The Chamber has long called on government to ensure our continued competitiveness with other competing jurisdictions — in particular, with Alberta and Ontario. The Chamber feels this no longer goes far enough, as a call for competitiveness does not provide the focus and goals the Chamber feels are necessary.

Indeed, simply calling for competitiveness implies that taxes can be higher in B.C. than in other jurisdictions, as long as they are competitive. The Chamber believes that the government must commit to making B.C. the number-one tax jurisdiction in Canada, and to do this, we must address the following areas.

Firstly, the provincial sales tax. The B.C. Chamber was pleased to see that the provincial government lived up to its promise by lowering the PST from 7½ percent back to 7 percent last year. Lowering the sales tax puts disposable income into the hands of consumers and encourages spending across the province on a wide range of products and services. A further lowering of the sales tax by 0.5 percent per year will allow more of an individual's earnings to remain in their pockets, while also going a long way toward helping

the many communities along the B.C.-Alberta border where, you realize, they have eliminated sales tax altogether.

Those communities are facing the significant challenge of trying to stem cross-border shopping trips that take significant money out of the local economy. The Chamber recommends the provincial government, on the expectation of a continued operating surplus, reduce the PST by a further half-point per annum with a long-term goal of reaching 4.5 percent.

There's the issue of harmonization of PST and GST. We recognize that the federal government has indicated for some years now a willingness and a desire to enter into agreements with the provinces to harmonize the GST with provincial sales tax. To date, the provincial government of B.C., more for political than economic or revenue-generating reasons, has rejected the federal initiatives towards harmonization. The Chamber recommends that the government commit itself to moving quickly to reaching agreement with the federal government for the full harmonization of PST and GST, including the harmonization of the collection, reporting and remission of the GST and PST, and the related audits.

The issue of property transfer tax. B.C. is one of the few jurisdictions to still charge a capital tax against the purchase of residential homes — namely, the property transfer tax. While the provincial government has taken steps to phase out or eliminate capital taxes, such as the corporate capital tax, the PTT still exists. The Chamber recommends that the provincial government either immediately eliminate or implement a program to phase out the property transfer tax, in order to eliminate a purely capital tax.

There are some inequities, as well, in the tax system that we'd like to draw to your attention. The first is the PST on legal fees in this province. The discriminatory nature of this tax was highlighted recently by the Supreme Court, which ruled that the PST on legal fees was unconstitutional if charged to low-income individuals. As a result of this ruling, the Ministry of Revenue has confirmed that British Columbia lawyers should exempt low-income clients from payment of the 7-percent social service tax on bills for legal services to low-income clients and has now issued guidelines in that respect. The Chamber feels that this does not go far enough and that government should amend the Social Service Tax Act to remove the 7-percent PST on legal fees in the province.

Financial institutions capital tax. This capital tax is a particularly onerous form of taxation, as it plays a direct role in hampering investment. For B.C. to levy this tax on financial institutions, in our view, is particularly challenging, as it is these institutions that in many cases provide investment decisions that are so vital to the expansion of our economy. The Chamber therefore recommends that the government abolish the 3-percent capital tax that's in place on financial institutions, as it's an impediment to B.C.'s ability to become a major financial centre.

Some closing remarks, Mr. Chairman, on the whole issue around skills shortages. Last year in its presentation to this committee, the Chamber said: "British Columbia is at a skills crossroads. The aging of our workforce, along with ever-increasing global competition, has meant that growth in this province is being directly threatened by a looming skills shortage, a problem that will be exacerbated by the significant projects associated with the 2010 Olympics."

This is now significantly behind the eight ball on this issue. We have passed the crossroads. Growth in this province is now being directly affected. In short, a skills shortage is no longer looming; it is here.

In order to garner a better understanding of the nature and scope of the skills shortage issue, particularly as it relates to regions outside of the lower mainland and the capital region, the B.C. Chamber, in partnership with the Community Futures Development Association of B.C., undertook the B.C. skills force initiative — a report that was issued earlier this week. This project was designed to serve as a mechanism to engage B.C.'s small business community in the Vancouver Island–Coast region, the Thompson-Okanagan and the Kootenays. The goal was to obtain detailed information from business at the ground level on the nature and scope of the skills shortage. A separate project to engage business in the north will commence later in October.

To say that we were unpleasantly surprised by the results would not be an understatement. Some of the more worrying results were that approximately 50 percent of the employers stated that they currently have vacant positions and that 34 percent of the respondents reported that they had job vacancies in difficult-to-fill positions. Employers are having to take what workers they can rather than those employees they want. In short, the survey tells us that the skills shortage is the number-one concern facing businesses across this province.

What the report also states is that the solution to this must be a partnership of stakeholders between government, business and educators. The business community has begun to address many of the issues within its remit, but without immediate government action, there will be a profoundly negative repercussion for the provincial economy.

Government also has a role to play in addressing the fact that in many cases, there is a significant stigma attached to the apprenticeship and vocational training in high schools as opposed to attending university. Indeed, although only 20 percent of high school graduates go on to university, the majority of the remaining 80 percent are not provided the opportunity to participate in apprenticeship and skills training.

The Chamber recommends that the government invest the necessary resources into developing a strategic program aimed at encouraging skills training and apprenticeship as early as grades six and seven as a viable alternative to academic studies. We certainly would encourage the continued increased investment in the very successful ACE IT program.

The human resource development tax investment credit is a concept that you've heard before from us. One of the key barriers to SMEs providing training and skill development opportunities for their employees is the direct and indirect costs of these types of investment. Several business organizations and many individual Chamber members throughout this province have advocated new models for financing employee training. Whenever the Chamber holds discussions on the skills shortage, we consistently get the same response.

Government must provide the tools to increase the capacity of business, particularly small business, to provide training through a training tax credit. This type of incentive has also consistently been the subject of significant interest during the provincial Select Standing Committee on Finance and Government Services budget consultation over the past several years, as I am sure it will be for individuals and businesses across the province this year.

There is precedence in Canada for such a tax credit. In the 2004 Ontario budget the government announced a tax credit that would refund 25 percent of salaries and wages paid to an eligible apprentice in one of the over 100 qualifying skilled trades. This credit would increase to 30 percent for small business, categorized as businesses with payrolls not exceeding $400,000 annually.

The Chamber sees no reason for the government not to progress on this issue. Ontario has demonstrated that this is not overly expensive and, as recently highlighted by an Ontario chamber report, is highly effective in increasing capacity. The Chamber recommends that the provincial government introduce a human resource investment tax credit program in B.C. that would include an increased level of credit for small and medium-sized businesses, administered by the ITA as the organization best placed to understand the needs of industry.

Secondly, we recommend the institution of a cooperative education tax credit. A provincewide co-op infrastructure is already well-established. Cooperative education programs exist in every region of B.C. and are currently offered at 23 post-secondary education institutions. The Chamber recommends that the provincial government introduce a co-op tax credit to B.C. business employers equal to 15 percent of wages paid to qualified co-op students for work placements, with tax credits capped at $1,500 per student for each co-op work placement. Based on 4,100 co-op placements in 2004, the maximum annual cost of this proposal to government would be about $6 million.

In conclusion, the Chamber realizes that we have laid out an ambitious program here this morning. But in the same way that the government now lays out three-year budget plans, the Chamber sees our plans as long-term. We realize that they cannot all be achieved in the 2006 budget cycle but that foundations can be laid and the principles can be adopted. It is during times of strong economic growth that the provincial government must invest in the future economic prosperity of communities across the province. It is through the program we have outlined this morning — a program developed by local chambers of commerce, the backbone of your communities — that we will ensure that B.C. is able to deliver sustainable economic growth for a generation and beyond.

In closing, we thank you for the opportunity to present our views this morning. Attached to our written submission, for your perusal, are the relevant Chamber policy papers that can add detail. I will draw your attention to our 2005 policy manual, copies of which have been distributed to each of your offices. Thank you very much.

B. Lekstrom (Chair): Thank you very much, John, for your presentation this morning. I know we do have a number of people wishing to ask questions. I'll begin with Dave.

D. Hayer: Thank you very much, John — a very good, detailed presentation and long-term planning process there. The only thing missing in this one that I found somewhat interesting was talking about transportation in the lower mainland area. Specifically, I didn't see anything about Highway 1 widening or twinning the Port Mann Bridge. What is your view? How much does it cost the economy by not doing that? Or does it affect the economy at all now — twinning the Port Mann Bridge or widening Highway 1 from Langley to Vancouver?

J. Winter: Thank you, Mr. Hayer. We did comment on government investment in transportation infrastructure. We support the perspective put forward by the Finance Minister at a recent budget update.

The Chamber supports a significant list of infrastructure projects around the province — the twinning of the Port Mann Bridge and widening of the Trans-Canada Highway certainly being one of those — in conjunction with investment in the South Fraser perimeter road and ultimately the North Fraser perimeter road. In so doing, I think we recognize that the economic engine of this province is largely driven by the successful movement of goods and services in the province. If we strangle the lower mainland in terms of the transportation infrastructure, then we're certainly having a negative impact on the province as a whole. We would support that without having sat here this morning. We do support that.

R. Lee: You proposed a human resource investment tax credit as well as the co-op education tax credit. You also say we should reduce the tax. If we have a choice, which one would be the top priority?

J. Winter: I'm not sure we have to make that choice. It's an interesting question. We're suggesting pay down debt through surpluses. We think that the tax credits we're offering and suggestions here this morning are tax credits that will often pay for themselves. They're not necessarily going to be long-term costs.

The co-op one, we think, is particularly affordable. We're kind of concerned by the decreasing number of co-op placements. If we're going to deal with post-secondary education in a realistic fashion, then certainly the employer community has to do a better job of supporting that sector of the university and the post-secondary education sector by getting more involved in the co-op sector. By the same token, government needs to do a better job in terms of its use of co-op students.

We think that those two things are affordable. Certainly, debt reduction is a signal to investors that we are acting fiscally responsibly in this province. At the same time it will open up, I think, an environment that will encourage increased investment.

J. Yap: Great presentation. I think a recurring theme in your presentation is to take the long-term view.

One of the key indicators, of course, is debt and debt-to-GDP ratio. As your graphs show so clearly, the trend is positive. But as we know, with the catch-up in infrastructure investment that has to happen over the next ten years, there will no doubt be some pressures on these ratios. I would be interested in your opinion on what level of debt-to-GDP ratio you think would be prudent. Depending on the measure, and whether it is taxpayer-supported or total debt-to-GDP, it's in the range of 15 to 20 or 22 percent. What level would you be comfortable with over time?

J. Winter: I think it's fair to say that we're comfortable with the present rate of ratio. But looking at the infrastructure deficit, as it has been described, I don't think there's any doubt that that is going to change if we're going to address those issues.

I think it has to be something that keeps the ratio reasonably consistent, and it has to be affordable. We referenced in here the whole notion of P3s as a tool that can be used if the appropriate conditions exist that make a P3 an attractive option. Certainly, the ability to cost-share with other levels of government is an important tool as well.

I don't know that there's a magic number with respect to what is appropriate. I think it's a matter of living within one's means and making sure that we are staying consistent with economic growth and development. We've recommended to the federal government as recently as two weeks ago at the Canadian Chamber meeting in Charlottetown that they don't increase their spending beyond the level of economic growth and inflation, which would be about 3 percent to 3½ percent. I'm not sure that kind of luxury is available to the province at this stage, but it would be a good target.

J. Yap: Just as a comment, if the infrastructure investment is undertaken as a P3, the related debt still has to be recorded as a government debt under the Auditor General's rules.

J. Kwan: I have three questions, and one centres around the infrastructure investment side. Does the Chamber have a list of priority projects? Have they ranked those projects by way of priority? If so, could we have access to that? I guess that's my first set of questions on infrastructure.

Then I have another question around the cooperative side of the tax incentive that you were referring to in your presentation. Do you know why there's a drop in terms of participation from 2000-2001 to 2004 in terms of students participating in the co-op sector? What's changed? What's the difference between 2001 and now that might have caused the drop in participation?

My last set of questions centres around cooperatives as well, but around the non-profit sector side. I think it was yesterday that we received a presentation from Dr. Peter Rans, who is with the University of Northern British Columbia. He made a suggestion that somehow government could facilitate to ensure the participation of co-op students in the non-profit sector. I would just like to invite your point of view around that concept.

J. Winter: If I've got the questions correct, the list of priorities would be a very difficult question to answer, simply because of the nature of the chamber of commerce movement. As a provincial advocacy wing of the chambers of commerce, we take policy recommendations to people like yourselves — government. For us to be able to prioritize projects that could include the Okanagan, the Kelowna bridge, a hospital in Abbotsford or highway safety construction on the Trans-Canada Highway somewhere in the Revelstoke region is a very difficult thing to do.

That having been said, in the lower mainland we have made some attempts to prioritize some of the infrastructure projects that are transportation-related — gateway-related, if you like — by virtue of a panel of the 14 chambers that basically make up the lower mainland–GVRD region. There are a few others that are outside the GVRD. We've been very pleased with our ability to prioritize within that context.

If this answer is helpful to you, I can tell you what the priorities are in the lower mainland. I can't give you a sense for whether the Highway 37 — Electrify 37 — project sits in terms of provincial priorities, other than suggesting that to us it's a very high priority.

In the lower mainland there is no higher priority than the twinning of the Port Mann Bridge and the creation of the South Fraser perimeter road. I think the chambers between Langley and Squamish have acknowledged that and agreed to it, which within chamber-land is really a major feat — getting that kind of agreement.

With respect to co-ops, we too have witnessed the strong decline in co-op participation since 2001, and that moved us to develop this particular policy that we put forward this morning. As a result of a sharp decline in business participation and government participation…. I'm not sure what triggered it, but at the same time it's an alarming thing, and it's something we need to rectify and change.

The co-op tax incentive. We're recommending this for business only, recognizing that it does leave out a significant portion of potential co-op users. We ourselves, as an example of a non-profit organization, wouldn't benefit from such a tax program.

We think there are other remedies, perhaps, that need to be addressed in this area. We didn't want to bring them forward this morning, given the nature of this standing committee and what its focus is.

G. Hogg: Actually, my brilliant and insightful line of questioning has been eloquently covered by the previous two questioners. Thank you.

B. Lekstrom (Chair): John, I want to thank both you and Jon for coming to present to our committee. I think it is very commendable that a provincial organization like yours goes out to rural British Columbia, as well, to make your presence felt. I'm sure that the people of Smithers and the surrounding area are very proud, too, to have you out here. Your presentation will be given full consideration along with all of the others. Again I thank you.

We will move on this morning, with our next presentation coming to us from Western Keltic Mines Inc., and joining us is Donald McInnes.

D. McInnes: If you'd just give me a second, Mr. Chair, I've got a couple of props to pass out.

I presented before this committee at about this time last year on this very same issue. I don't mean to be duplicative, but I know there are a number of new faces on the committee. I did take the opportunity, upon reviewing the makeup of the committee, to also bring you a copy of my presentation of last year.

I don't think that today we need to go into the cyclicality of the minerals business, how important the minerals business is to British Columbia, the number of people that are employed and the benefits to the province generally. However, there is lots of information in the blue presentation, which is what I gave last year and which may be useful to you as background information.

Today I'm going to give you a presentation on the white one. This will be followed by an actual written brief to the committee. I represent a group that has informally come together over the last little while to try to coalesce the efforts of businesses, northern communities, mayors, people that live in the north and first nations groups into a group called the Northwest Power Coalition.

The purpose of this is to help make the case and have these groups work together, as opposed to independently, to try to lobby government and show you why it makes sense to spend the funds to invest in a power line extending from Meziadin to Dease Lake to, for the first time, electrify and connect this part of the province into the provincial transmission grid and to provide economic opportunities with a chance to access grid-based electricity on the same rates as all British Columbians enjoy.

That's a very important point. Up to this point, infrastructure expenditures in the province have historically been made by government, not expected by industry. We're hoping that the government will consider this for the power line up Highway 37. The specific task is to fund or to have B.C. Hydro fund the building of a line with a capacity of probably up to 287 kilovolts from Meziadin to Dease Lake. In this area we've got a tremendous number of different things going on, not just in the minerals industry. That rock I have given you represents a huge part of the future for this part of the province.

If you look at the first slide, "Communities, Recreation and Private Sector Power," it shows the physical layout of the area that I'm talking about, and it shows you a number of communities that lie along Highway 37 and the surrounding area. It also shows some other non-mining activity in the area. You've got the Bell 2 world-class recreational resort.

There are a number of independent power producer projects that are quite advanced in this area, as well, that today represent close to $400 million of investment in green energy which, once built, would operate perpetually. So we're not talking about a power line that should be viewed as a subsidy for the minerals industry. It's something that will enable a number of communities to get off of power that's generated by diesel electricity at a cost to B.C. Hydro of over 20 cents a kW, which is very high when you compare that to the rates you pay at home, which is more like six cents.

So we've got hydro power development, we've got recreational values up here, and we've got a number of communities, many of whom are first nations. The most prolific in the area, or having the greatest traditional area, are the Tahltan people centred in Dease Lake, Telegraph and Iskut.

On the next slide, development potential, we're looking at three different advanced-stage minerals pro-

jects and one existing operating mine, Eskay Creek. Eskay Creek we'll touch on a little more shortly, but right now Eskay Creek is generating electricity by burning diesel fuel on site. It's a very expensive proposition, but it's the fifth-largest goldmine in the world and a very rich mine owned by Barrick Gold Corp. It's been operating for over ten years now. It employs 150 employees on site, with 200 contractors. This is a fly-in, fly-out mine. There's no townsite here, so the employees from Eskay Creek come from all over the province. It's a great contributor to the north.

In fact, this is a key part of my message to you. In the northwest region of the province in the late 1980s, government accounted for somewhere around 12 to 14 percent of GDP. Coming out of the 1990s, government activity accounted for more like 45 percent of GDP. It's the only area of the province where the private sector participation in the economy hasn't grown; it's shrunk. A lot of this, in our opinion, is because of a lack of infrastructure, which is what we we're talking about.

If you look at the opportunity here, many of the minesites that could be developed up here will never be developed without access to grid-based electricity. If you look at the bottom, there's the Kerr/Sulphurets project. It ranges from between a $500 million and an $800 million investment. You've got two mines east of the highway, Mount Klappan and Groundhog, which are coal projects that could sustain long-life mines. The numbers that you see there are just the most-measured levels of mineralization, or the coal resources that are found. But these mines will probably be more like 50 or 60 years in length.

If you look at the next slide, we'll move slightly north along Highway 37. You can look at the Galore Creek project in the bottom left. It's estimated now to cost over a billion dollars to build this mine. It'll be an over 23-year mine life, creating well over 600 full-time, direct jobs. The minerals industry, as you may be aware, is a very good multiplier in the economy, and I think the number is something like two full-time jobs for every direct job created outside the company. So this would be a huge event for the north part of the province.

Copper Canyon has a prefeasibility study in progress, and the Red Chris mine at the top of that slide has received its environmental permit. Yesterday the board of directors of that company announced that they had given the management of the company permission to go and put financing together to build that mine. However, the whole development of that mine, which is ready to go into construction, is completely dependent on access to grid-based power delivered along Highway 37. That's for that slide.

If you look at the next one, we're at the north part of the Highway 37 area, up into the Dease Lake area. We've got four or five other projects, including Kutcho Creek, which is owned by a company that I'm the founder and president of — Western Keltic Mines. Like the others in the area, we really do need to get access to grid-based power for us to go and build our project.

If you go to the next slide. In summary, you've got a whole lot of different development opportunities here for the minerals industry, in both base metals and in coal. You've got four different run-of-river hydro-electric green power projects that could be built but, I would suggest, probably don't work unless they have access to that main line going up Highway 37.

You've got numerous communities that are currently having electricity fed to them through burning diesel — burning dirty diesel fuel to provide electricity to the inhabitants up there. You've got a situation at the Eskay Creek mine which shows us that there is opportunity up here, and you can build a mine and permit it and act responsibly. However, Eskay's life is coming to an end.

On the next slide called "Developing the Northwest," it's just a quick little summary of some of the things I've talked about. We're looking at over $2 billion worth of investment for six of these projects, which would create over 2,000 full-time jobs. These jobs would last some 20 to 25 years, and the minerals industry is quite well-known for being one of the highest-paying, best-safety-record natural resource industries.

On the next slide, I want you to know that we're just touching the tip of the iceberg here. I've talked about some very advanced-stage minerals projects. There's also, as you can see in this list, many other projects that have had budgets spent, as shown on that slide, this summer, and maybe these will be the mines of next year. There's much more to this than the immediate thing I'm talking about — the advanced-stage projects — but there are many things that could come in the future.

To talk about the direct effect on the economy, let's look at the next slide titled "Eskay Creek." The main message I want to deliver to you here is in the year 2000, this mine paid $49 million in taxes to the provincial government. This is over a ten-year mine. So in round numbers, let's say it paid $500 million in taxes. The cost of electrifying Highway 37 is estimated by B.C. Hydro at being $300 million. So if we get just one more of these mines operating, the government will get back its investment in the electrification of Highway 37 in spades not only from direct taxes but also from the high-paying jobs and the spin-off benefits to the north.

You've also got a huge social issue currently coming when the Eskay Creek mine shuts down. There are approximately 150 direct employees, 200 contractors, and somewhere north of 40 percent of the workforce there is Tahltan people. When the Eskay Creek mine shuts down, you're going to have a huge number of first nations people living in the communities of Dease Lake, Telegraph Creek and Iskut, who will become unemployed. They're used to making, on average, $90,000. So where's the cash flow going to come from to sustain their way of life? They want to live in the north. They want to keep their families up here. They want to continue to make truck payments and car payments, etc. But if the minerals industry and other economic opportunities are not afforded to the people of the

I also want to, on the next slide, just give you an idea that these fly-in, fly-out mining opportunities are not just things that are good for the north of British Columbia. If you look at this slide representing the year 2000 for the Kemess mine, we see $25 million in payroll for the year 2000, and you can see from that pie chart that many of the workers at that mine site live all over British Columbia. So an investment in electrifying Highway 37 will not just benefit the north.

If you look at the next slide, it also doesn't just benefit workers living all over British Columbia; it benefits businesses located all over British Columbia. As you can see, the Kemess mine in the year 2000 bought over $100 million worth of goods and services, and it was spread throughout various regions of the province. Again, another compelling reason that this is good for all British Columbians.

The next slide talks about taxes payable to the government just from the Kemess mine. We'll skip through that. I now want to talk about equitable infrastructure development. We heard about the ring road and the doubling of the Port Mann Bridge. A lot of people suggest that the electrification of Highway 37 is a direct subsidy to the minerals industry.

I think if you look at some of these things on the equitable infrastructure slide, if you look at the wonderful piece in the Vancouver Sun today about convention centres located all around the province, these are investments in various aspects of the economy for many different people involved in different businesses in British Columbia. There's no convention centre in our province that makes money, yet these things are good drivers for bringing tourists to our province, who fill the hotels, travel around and use the services.

The electrification of Highway 37 would be a commitment by the government of British Columbia in the north. As you can see from this list of infrastructure developments, we've got a lot of things in the lower mainland. We have the Kicking Horse Canyon upgrade, things in the Okanagan, but there's a distinct lack of infrastructure investment by the province in the north.

A few key principles. This is not asking you for something that is difficult to achieve. There is the infrastructure program between Canada and British Columbia that can be brought to bear on this, so it's not something that should be burdened just to the provincial government.

We also have the British Columbia government's mining plan of January of this year. Action item 35 said: "Pursue strategic investment opportunities in unserviced areas to secure long-term delivery of energy supply and transportation infrastructure."

Well, what I'm here to talk to you about today fits quite neatly within that special action item 35 from the mining plan. If you look at a quote of just two weeks ago by John Godfrey, the Minister of State for Infrastructure and Communities, in a speech given in Toronto…. He's talking about the problems that we have coming to grips with urban versus rural realities and the challenges around spreading out the wealth: "While many things are very urban in Canada, the drivers of our economy are predominantly rural." Again, this furthers the argument for making investment in the northern part of our province to sustain economic activity.

Finally, committee members, I think that we've got a wonderful opportunity to sustain a way of life in the north, to contribute to the economy and to create business certainty. The opportunity is really a responsibility of the government not just to investigate but to act in a very timely fashion on the delivery of electricity at the same rates that most British Columbians take for granted and enjoy, which would clearly be for the benefit for all British Columbians.

I will go to members of the committee that may have questions. I'll begin with Maurine and then John.

M. Karagianis (Deputy Chair): Great. Thank you very much for a great presentation, Donald. In reading through this, I see you're talking exploration here for some 20-odd different opportunities.

D. McInnes: There are many, like 50 other smaller $100,000 exploration programs going on. But for brevity….

M. Karagianis (Deputy Chair): Sure. We had a presentation earlier by Mayor Davidson here, talking about the obvious need for this infrastructure upgrade, on electrifying the highway. You know, it's common in local government, when large projects come into a community, that they, in fact, bear some of the burden of infrastructure costs. So I had asked the mayor and had a little discussion during the break about partnering with the mining industry in making this project happen as a partnership.

I think you prefaced one of your remarks here early on by saying you believed that it was government's responsibility to put this infrastructure in place. In fact, given the nature of your business and sort of aggressive exploration here, do you not think there's a possibility of partnering with the communities here in making this infrastructure investment?

D. McInnes: We've done a lot already. I'm not saying there's not more the industry could do. A lot of the big money has already been spent on infrastructure to facilitate this. For example, there are huge sheds in the port of Stewart that have been sitting empty for years, not being used, which are already there, that could facilitate the movement of copper concentrates out of the northwest part of the province.

The government, through the department of highways, is doing a massive upgrade on Highway 37 to make sure that road is in good shape. A lot of the money spent up there already has directly come from the minerals industry, whether it's logging companies or mining companies spending money on Highway 37 or the Bob Quinn airstrip or the facilities around Bell II.

We've already been spending money, and for a long time. A lot of the roads into, for example, Forest Kerr were built by Barrett when the Eskay Creek mine was being built. There are partnerships between the chamber of mines and BCIT on further training opportunities….

There are all kinds of different ways you can talk about and measure infrastructure. I think the minerals industry's perspective would be, though, that we are creating wonderful opportunities with extremely high-paying jobs and paying very high levels of tax.

The government should, in this time of wonderful growth — and we all see B.C. is doing well — be using some of that money on behalf of the taxpayers for the future of the province and putting it back into the industry. The government is doing a lot of this in the oil and gas industry, on building roads into the northeast part of the province.

I think it only makes sense that an investment in electricity by the government gives the industry a chance to sustain itself.

J. Yap: Thanks for your presentation. I really appreciate the clarity of the proposal here. It looks like a compelling case. When you meet with…. I assume you've met with the B.C. Transmission people. What's the response you got from them?

D. McInnes: They are a Crown corporation, and they're charged with managing the transmission infrastructure in the province on behalf of B.C. Hydro, which currently owns it. The discussions, really, have been occurring with Hydro. BCTC is just costing it and producing the document.

D. McInnes: Hydro up to this point says: "It's not our business to be involved in nation-building." The business case on how much revenue we will get from building this line by selling electricity is unclear at this point. There are no guarantees the mines will be built. There are no guarantees that those green energy projects will be built. The only thing we can completely guarantee is that there will be no copper mine built north of Meziadin without electricity going up Highway 37.

D. McInnes: It is. Now, there was a lot of criticism posed when the railway was built into Tumbler Ridge. It was called a huge subsidy to the industry, but it helped develop the coal areas in there. Yes, the coal industry failed in that area for a while due to global pricing on coal. However, that line now…. They're looking at upgrading it, because there's so much demand. Coal mines are opening in the area, and the opportunity afforded British Columbians was only there because the infrastructure was already there. The companies could move quickly to take advantage of good metal and coal prices to go and build the mines and start shipping the coal right away.

When you add the uncertainty of who's going to pay for a $300 million transmission line and how long is it going to take to permit this thing and get it in place, it's another huge unknown for any minerals company to try to manage that on their own. Another big problem that I think BCTC and Hydro have acknowledged is: if Coast Mountain Power builds the transmission line up to Bell II on their own account, and then a mine wants to tap into that line, you now have a situation where you've got a minerals company having to pay a wheeling charge for the energy it's buying from Hydro through another company.

I don't think B.C. Hydro wants to get into the business of discounting against your hydro rates what you're paying a private sector company to move energy along their private grid. What works in B.C. is that we have one grid owned by the government for the benefit of all British Columbians to buy energy at the same rate. If we end up having a disparate system of independently owned transmission lines all over hell's half acre, it's going to become a completely unwieldy system. It adds a further layer of complexity when you have to go through the BCUC to get applications to figure out what you can charge — what's fair and not fair.

It is Hydro's and BCTC's responsibility to go and build this and manage it on behalf of the people. I hope that I've shown you that this is not something just for the mining companies. It's for all of us.

J. Yap: Sort of a last follow-up question here. You've looked at or you've thought about partnering or P3s sharing the risk, and your last statement suggests that it's not practical.

D. McInnes: Well, it is, and it isn't. I mean, the mining companies will build their own connector lines from the main highway out to their projects, and do those kinds of things, but to ask the minerals companies to start cost-sharing for the main line…. You know, if the first two mines cost-share, and in 20 years another mine is built, are they going to send a cheque to the mining company that originally built the thing 20 years ago? No. Up to now in British Columbia, B.C. Hydro has built these things for the benefit of everybody, to pay the same rate for electricity.

B. Lekstrom (Chair): All right. We have a number of questions. I will go to Dave and then Jenny.

D. Hayer: Thank you very much, Donald. I've read your presentation, and you have a good argument, but

I think we have to look at the partnerships. At the end of the day natural resources and mines provide billions of dollars to the province so we can fund our education, health care and social programs. I think we have to find a way to find some sort of common ground where we can all work together to find solutions for here. Just a comment.

J. Kwan: As we know, so much of the industry depends on global demand that drives the commodity prices, and so on. I'm wondering whether or not your association has done any work around the forecasting of what that demand might look like into the future?

D. McInnes: Our association is not in the business of metal-price forecasting. There are lots of brokerage firms, analysts and others that do that kind of thing. Most longer-term forecasts…. Terry Lyons, speaking after me, can talk a little bit more about this with you, because he represents a company that actually produces copper. Most people forecast that we're in quite a long-term, robust period of metal prices. There's been extremely low investment globally in new mine building, so there's very little capacity coming on stream. Consumption is dramatically up, largely in Asia. So most people consider that we're in a long-term period of sustained, good metal prices.

R. Lee: My understanding is that, essentially, to export mineral ore that we don't mine…. Are there any plans for secondary industries using the ore or the mineral or the metal to do manufacturing? Along the highway without the electricity, would that be impossible?

D. McInnes: In British Columbia today, to the best of my knowledge, there are no producers of primary metal except aluminum. There's nobody producing actual copper, for example, or lead or zinc. We're producing concentrates that are sent overseas for further refinement. Now, a better debate to have is: why is the government of British Columbia not using the cheap energy we have — the third-lowest-priced energy in North America — for economic development?

Why are we not stimulating Intel to come here and build a chip plant? There was an opportunity in the 1990s for Intel to build a chip plant that would have employed north of 500 people in a nice plant in suburban Vancouver somewhere, and I was told that the government of the day decided not to give them a tax break on municipal tax on the land there. You know, manufacturing chips is a huge consumer of electricity. Copper smelting is a huge consumer of electricity.

We had a stab at this in the '90s, I think it was, when the second SkyTrain was built. Bombardier got the contract, and they had to assemble the cars in British Columbia, as opposed to manufacturing them here. Look at Ontario and the brownouts they've had this summer, because there is not electricity, let alone affordable electricity. You have a unique, singular opportunity to compete with the economic heartland of manufacturing in Canada to get businesses to locate here, but it's not happening.

Now, the investments that come from this. If you want to build a copper smelter, you're talking about a billion-dollar-plus event. That's a lot to do. I think it would be a wonderful thing for the province, but none of the companies I'm talking about that are developing opportunities along Highway 37 have the ability to go do that. They're not smelting companies. They're mining companies or development companies. The power companies that generate the power that's helping B.C. become sustainable….

D. McInnes: Oh yes. I mean, it all depends on what the metal prices are that you use and the cost of money, but at Galore Creek alone, in Schaft Creek, you've got north of 20 billion pounds of copper.

J. Kwan: I think you're sort of heading into the direction of the questions I'm going to ask you, and that is on the issue around value-added in terms of your industry. What kind of programs or initiatives could government embark on to encourage value-added in this industry for British Columbians?

D. McInnes: Long-term guaranteed electrical rates to consumers like a copper smelter would be a very important first step. You know, Alcan located here because they could get cheap long-term electricity, and that has sustained some fabric of life in Kitimat for a long time. There is a company…. I don't know if they're still doing it, but Teck Cominco spent a lot of money developing a process to make copper without having to send it to a smelter.

That process hasn't been fully commercialized, but it is, I think, being…. There is a joint venture between Taseko Mines, which operates the Gibraltar project near Williams Lake, and Teck Cominco to further work on that technology to see if it could be commercialized. So there are some things going on in terms of pure science to see if we can make copper here, and once we're making copper, to build a wire plant. The whole point of the rock is…. I'm talking about building copper wire. I'm talking about copper tubing.

These are things that we need each and every day — for your car, etc. You can't live without the stuff, and I think that most people in the minerals industry would love to see further value-added things happen here, but it's simply a different business than the process of mining and developing.

J. Kwan: Thank you. Yes, and I guess that's the point, because the demand is there in Asia and in other

places. But the question, of course, is as we ship our rock over, can we actually retain some of that processing here, locally? And never add value to it?

D. McInnes: We don't ship copper rock out. It all does get processed, but….

J. Kwan: I know. I'm exaggerating. I'm just wondering in that process whether or not there's something else.

D. McInnes: Unfortunately, we're not making copper wire yet, or copper tubing or copper anything at this point.

B. Lekstrom (Chair): Well, Donald, just possibly a quick observation in closing. In looking, then, for clarification on your one graph that you put on the payroll for Kemess mine, 2000 total, I believe my eyes are seeing the colours right — 7.1 million to Alberta residents of which no payroll tax is paid in British Columbia. At that point I see that as an issue of concern for me.

Although I'm not a protectionist person, I mean, there is a realization…. I believe there are some jurisdictions that look at payroll taxes. The contribution of that is a net benefit to the Alberta side in the issue, especially on a fly-in, fly-out operation.

D. McInnes: I think the problem would be even more exaggerated if you look at the oil and gas sector in the northwest or northeast part of the province.

D. McInnes: I think our money going into Albertan payroll is probably a rounding error, if you look at the oil and gas sector.

D. McInnes: Thanks. I'm on a 1:20 flight if you want to talk further, after the formal part is over.

B. Lekstrom (Chair): We'll move on to our next presentation this morning, from Northgate Minerals Corp. Joining us is Mr. Terry Lyons.

T. Lyons: How are you? We do own the Kemess mine, and we do operate it, so I can tell you a little bit more updated stuff, and I can tell you a little bit more about Alberta when we get to the questions.

T. Lyons: Thank you very much, ladies and gentleman, for allowing me to make this presentation this morning. My name is Terry Lyons. I'm chairman of Northgate Minerals Corp. and also chairman of the Mining Association of British Columbia. Northgate owns and operates the Kemess mine, which is about 200-and-some-odd kilometres, as the crow files, northeast of Smithers. The mine produces about 300,000 ounces of gold a year and about 75 million pounds of copper. We employ about 350 direct jobs, plus 150 direct contractors on site and probably represent another 1,200 or so jobs in British Columbia.

I have a great concern for B.C.'s economic development because I believe economic development is the way we can pay for the things that we need to pay for, such as improved health care, education and other services. But I'm going to confine my comments today to predominantly mining-related issues, although there is an interrelation with many of the topics I'm going to talk about with regards to other economic development in the province.

I just want to reiterate something. It's not in my presentation, but it's something I said on Mining Day in Victoria a couple of weeks ago. A lot of people don't recognize it, but 50 percent of everything we utilize in society, whether we conserve it or not, is extracted. Mining is just not about digging copper or iron ore out of the ground; it's extraction. Salt from sea water, salt from salt beds, industrial minerals, aggregates, gravel, oil and gas — that's extracted. And 50 percent of everything we use in society is grown. So it has to come from somewhere. Our job is to, I guess, try and take some advantage of it and, at the same time, ensure that we have some sustainability in the future for our subsequent generations.

The Mining Association of British Columbia did present a paper to the legislative Committee on Finance and Government Services entitled Strengthening B.C.'s Mining and Minerals Industry. I have attached a copy of this presentation to my speaking notes, and I'm going to highlight a couple of issues again that were raised on page 4 of the report.

Our key messages include the following: modern mining is all about innovation, sustainability and good practice. We consider ourselves among the most technologically advanced and also among the most environmentally sensitive industries in the world, and certainly, we are the safest industry in British Columbia, recognized by the WCB and other industrial measurements.

There are two prominent factors that determine the attractiveness of B.C. to mining and mineral investment. Firstly, it is a balanced and stable policy environment. Secondly, it has access to affordable and reliable infrastructure, including road, rail, power, geoscience data and world-class educational institutions.

As a little sidebar, many years ago I was going up the Whistler gondola, and the then Premier Mike Harcourt was on the same gondola. I know Mike a little bit, and we had a little chat about how the mineral industry had been devastated in the province by a number of factors. One of my colleagues who was in the business said to the Premier: "I'm a geologist, and I haven't earned a dollar in British Columbia in over 15 years." His comment was: "Isn't it great that we're exporting some of our educational expertise around the world?" I was a little annoyed at that, because we really want that educational expertise to be put to work here in British Columbia, where we train the people and we can take advantage of it.

The third issue is a positive relationship with the people in communities of British Columbia. It's the key to our future and current success, and we fully support the Premier in his efforts to build a new relationship with B.C.'s first nations people.

We believe the province must invest in infrastructure that will return dividends to the province in the years ahead and make policy decisions that will make B.C. more competitive and attract further investment.

On behalf of the Mining Association of British Columbia, I'd like to reiterate our key industry recommendations, which include as follows…. I'm not going to belabour this. I thought Don McInnes made a very, very good presentation, as did John Winter of the chamber of commerce.

Electrify Highway 37 by committing the financial resources to extend the B.C. Hydro power grid along Highway 37 from Meziadin Junction to Dease Lake. Secondly, remove provincial sales tax from industry electricity purchases. This is a big issue for companies like ourselves. We pay about $20 million a year to B.C. Hydro for electricity. We're the eighth-largest single buyer of electricity in the province, and we turn around and pay 7-percent provincial sales tax on that alone. So we recycle the same dollars many times.

Thirdly, regarding the Britannia earth and minerals discovery centre commitment, we request that the government commit $10 million in matching funds to support the development of the Britannia earth and minerals discovery centre to enable these funds to be matched by $10 million from industry and $10 million from the government of Canada.

Those initiatives were reiterated in the position paper by the Mining Association. I'm going to talk about three further specific issues that I'll bring forward with regard to northern British Columbia, specifically Prince George and the areas north of that.

Firstly, a further infrastructure project, which has in the last provincial budget received $2.5 million for a feasibility study, is the Stewart Omineca Resource Road connecting communities in an east-west direction from the Omineca area to the port of Stewart. The inability to market resources to the rest of the world and lack of access to potential resources severely inhibits the economic viability of many of the north's projects, including our own Kemess North. It's estimated that the funding to tie together the existing roads into a cohesive network would be approximately $40 million.

This province is severely limited. The geology runs north-south, and it is very difficult to move goods east and west. The southern corridor is there. There's a road into Bella Coola, and of course there are roads to Prince Rupert, Stewart and Kitimat. After that, there is nothing. We have the third-largest province in Canada by land area, and we cannot move our goods and services on an east-to-west basis to access many of our ports.

Secondly — and this is a theme that's been talked about in the other presentations — is to restrict B.C. Hydro's desire to move towards world market rates for industrial power. We go back before, hopefully, some of us were born. I was a youngster in this province, and I was absolutely amazed by W.A.C. Bennett's vision for the province: "If you build it, they will come." He never looked upon the Columbia power project or any of the other major infrastructure developments as a subsidy to anybody. In fact, if you look at a presentation that was made in 2000 or 2001 to these very committees, the Mining Association put together a layered map that showed infrastructure and then subsequently the mines that developed afterwards. At one time we had over 30 mines in the province, and they basically followed the routes. Nobody knew that the Highland Valley project was going to be there when they electrified and ran the wires up the various valleys. Because there was infrastructure nearby, the geologists went to work and discovered many of the mineral deposits in this province.

Currently power rates provide a competitive advantage to British Columbia industries, especially in the mineral sector. Access to inexpensive and reliable power creates cost certainty and long-term job stability. Many of B.C.'s mineral projects are low grade and require a low-cost environment.

In the case of Northgate's Kemess operations, stable, long-term power rates count for over 500 direct jobs with spinoffs equalling approximately 1,200 to 1,500 jobs. Direct purchasing in northern B.C. is over a $100 million annually. Stable power rates, we believe, will enhance the viability of our Kemess North operation, which provides employment for the next 15 years.

I'm going to talk about one issue that doesn't have a lot to do with budgets and finances, but it does probably have a bigger bearing on it than almost anything else I'm going to talk about. We work in a government regulatory environment that requires a lot of interaction between various government bodies, both provincial and federal. I believe it's very important that we have a cohesive approach to our regulatory environment, including the federal government. I believe this is very important.

The current inability of the province of British Columbia to work with a dysfunctional federal system — i.e., DFO and other departments — in a cohesive manner is a deterrent to investment. The resulting extra costs and time delays can render many projects uneconomic, thus costing jobs and revenue to the province. I

draw your attention to such projects as the Tulsequah Chief project. Economic or not, it's taken 11 years. Kemess North now has been in the process for two and a half years, and we have just now got to the point where we can have public hearings on our environmental impact.

I commend the province of British Columbia for doing a good job when they have projects that only require provincial regulatory approval, such as Western Canadian Coal's development. It took about 90 days to get approval.

The environmental laws are the same. Nobody's trying to cut corners. We respect the environment, because we live with it every day, and we are certainly very cognizant of our obligations. But the inability to work with the federal government will cost this province, in my opinion, more economic development than economic opportunities.

I travel around the world. I speak to a lot of investors. I speak to a lot of funds that have…. For example, Fidelity manages just under a trillion dollars of moneys, including moneys for the province's pension funds here on behalf of the B.C. Investment Corp. The first question they ask: what's it like doing business in British Columbia? Can we rely on government certainty and government policies to provide a stable environment? Capital is very fleeting, so I urge you to at least look at that when you debate policy and issues with regards to stability.

I want to leave you with one last thought, which is not in my speaking notes. It's something that gets talked about a fair bit, and that is there is a myth that high commodity prices solve all problems and create economic good times and that government has no direct impact in this area. I disagree, and I believe this is inherently naive. Resources belong to the people of the province. Price cycles come and go, but government policies last forever. I argue that how governments regulate, tax and provide services and infrastructure has more to do with economic success than commodity prices.

With that, I thank you very much for the opportunity to present Northgate's and the Mining Association of British Columbia's view to the legislative committee, and I'm prepared to answer any questions.

I'm going to look to members of the committee, if they have any questions regarding what you put forward here this morning.

L. Krog: Thank you very much, Mr. Lyons. You commented specifically about DFO. The most commonly heard spokesperson for the fishermen of this province happens to be my constituency association president…

L. Krog: …and I must say he agrees with you entirely. DFO doesn't seem to be working for anybody. I'm just wondering: have you made specific approaches to the federal government on this to indicate your dissatisfaction as an industry?

T. Lyons: If you would go to the Mining Association's website…. Yes, we have. We actually have a subcommittee. We have employed external consultants to work with industry, and we have prepared a number of position papers. We're in the process of just completing a review of fisheries regulations and the minerals industry. It will be presenting that paper. It's in draft form — about the third draft form. We'll be presenting that paper, I believe, by about the middle of November.

We've also categorized our relationships with DFO, and we have also dealt with a number of issues to the point of briefing the Premier all the way through the various ministries; of course, dealing with Intergovernmental Relations and MLAs; talking on an ongoing basis to the respective bureaucracies; and dealing with the minister responsible in Ottawa.

We push as hard as we can. I really don't want to see our industry rely on political interference to get things done. I think that's dysfunctional. I think it wastes your time, and it wastes the Premier's time, but sometimes that's the only way things get done. It's unfortunate.

L. Krog: I take from your remarks and Mr. McInnes's previously that a publicly controlled B.C. Hydro is, for you, a key element in the success of the mining industry. Is that fair comment?

T. Lyons: It is. We're a little different. Northgate acquired the Kemess mine out of the bankruptcy of Royal Oak Mines. Royal Oak built a power line connecting the Kennedy substation. We are the only load on the power line. It goes up 360 kilometres from the Kennedy substation which, for people that haven't been in the area, is the main substation for the Bennett Dam. It goes straight up the Omineca Service Road — or just off to the side of it, but straight up. It goes about six kilometres past the Kemess mine, and we pull off the loads.

We own that line. We've offered that line to Hydro for $1. Hydro won't take it. Their view is quite a bit different than industry's. It's evolved over many, many years, and we get very nervous about what we perceive as a growing instability within Hydro from a policy point of view. They're running out of power, so their solution is: "Well, let's go to market rates." But then when they go to market rates and you say, "Well, we want to do a deal with you, so we can give you a $75 million power line so that you can use it for other power demands in the area, predominantly first nations," they back off. They're very nervous, about what I don't know. I don't really want to interfere with their debates.

I believe it's no different than the highway. We don't charge tolls on Highway 1. Yet we have this wonderful infrastructure and low power rates, which is

a terrific long-term benefit to the province. I believe we should be utilizing it to create a greater form of economic certainty. If we went to a six- or seven-cent kilowatt hour…. Right now we pay 3½ cents on a sliding scale to four. If we went to 6½-cents per kilowatt hour at Kemess Mines, we'd be shut down. We'd shut it right down, and that's 500 jobs, plus the $100 million–plus of purchasing, plus the multiplier effect, etc.

So yes, in answer to your question, I do believe in the long-term stability of a publicly owned…. There is opportunity here for lots of private power if you concentrate the private power on the generating side and feed it into the grid. But as Mr. McInnes said earlier, it'd be a hodgepodge if private power wound up owning part of the grid as well. You either privatize it 100 percent, or you have it as a public service to industry.

R. Lee: Terry, you proposed some commitment to the Britannia earth and mineral discovery centre. Can you tell us more about the centre? What's the benefit to you?

T. Lyons: In the paper there is at the back a substantial description of the Britannia centre. It's appendix four, pages 14 to 16.

Essentially, I think everybody here has at least driven once on the road to Whistler, or at least the road to Squamish. You recognize that the Britannia mine is, for lack of a better word, a bit of an eyesore. It was developed over 100 years ago and was the largest copper mine in the British Commonwealth for a number of years.

Some of the original companies have gone out of business. This is an initiative to clean up the site, turn it into an interpretive centre, turn it into a showcase, a museum and, basically, an icon of sustainability in the minerals business. There are already funds raised to clean up the site in terms of water quality. We're out in the process of raising funds. The federal government has committed funds. The provincial government has committed some funds. We're just suggesting — the project is about $35 million — that the best way to fund it is $10 million from the province, $10 million more from industry and $10 million from the federal government.

The feds have indicated some desire to fund a portion if they can get matching funds. This has been raised many times with Richard Neufeld in the Ministry of Mines, and they are very supportive of the initiative. The classic question is, "Where do we find the money?" because there are so many priorities.

J. Kwan: In the summer I just visited Britannia mines, in terms of the site, and took a tour through there with children. It was actually very informative from an educational point of view for younger people. I look forward to the ongoing work around that initiative.

I do have a question around the notion of certainty. You mentioned the importance of certainty and stability, if you will, for investors particularly. From that perspective, I think one question was touched on around what creates such certainty for investors, Hydro being one of them in this industry. I suspect that aboriginal issues, as well…. We've certainly heard that from other business sectors around that front.

I just want to probe that a little bit more. From your perspective, what are the key issues in terms of certainty around investments?

T. Lyons: Well, it's kind of: how long is a piece of string? I guess if you are going to make an investment of substantial capital…. Take Galore Creek as a good example. It's going to be a billion dollars. If we're talking Kemess North, it's going to be a $200 million investment. You look for timeliness of decisions. The Canadian way…. It's unfortunate that I have to say this, but Canada is known around the world as the perpetual maybe. You really don't recognize it until you look at the country from outside, where there's lots of capital.

I'll give you a good example of the perpetual maybe: the Mackenize pipeline. I entered the business world in 1974, and the Mackenzie pipeline was a developing project. I wound up running the marine side of the versatile shipbuilding business for a number of years. If you ever want to talk about ferries, I could talk about ferries. We built six icebreakers for northern development, for Gulf and Dole and various others. Those icebreakers have all been now decommissioned. That's 30 years ago. The Mackenzie pipeline — where is it today? It is still in a series of perpetual government studies.

When I talk about certainty, what we have to really say is, "Look, if you don't want something, tell them," because certainty means the money can go elsewhere. The capital will go elsewhere. If you say, "Look, we don't want to approve such and such," and it comes back to the deal, "We don't want your mine because it doesn't meet the environmental standards we have set," then tell them. Certainty is not just saying yes to everything. It's saying no in a timely manner so capital can go and be productive and invest elsewhere.

That's part of it: effective regulations that are managed effectively. I know you guys are trying to put together your budget and ideas for budgets, but the cost that goes into time delays is very costly. I'll give you a good example: Kemess North. We've been at this three and a half years. We should be over by now. I should be getting this thing ready to fund. I'm going to start laying people off next summer. I've got seven trucks to park and a shovel to park. We're just going over the hill to mine the second pit, but we've been through two and a half years. So does it cost? Sure, because if I shut the Kemess mine down in four years, your provincial revenues will suffer by $18 million a year, or $20 million by this time — the hydro, the payroll taxes, etc., etc.

Timeliness is really important. Consistency in government rules and regulations. I encourage you to keep cutting the red tape. There's a whole series of duplications that are…. Stability in…. You know, when you do a feasibility study, when you have an agreement with Hydro that it won't be changed by some political whim…. Political interference is the bane of anybody that's in the large capital projects that involve politics.

We talk about our country being a wonderful place with a high quality of living, yet the single biggest political interference, besides Chavez standing up in Venezuela a couple of weeks ago and saying they're going to confiscate all developing mining projects, was Brian Tobin standing up and saying: "If you, Inco, do not put a refinery in Newfoundland, then I won't let Voisey's Bay go ahead." You know what that did to the nickel business and the business around the world? The money just left. It just left this country.

Those are the sorts of things that we worry about. Stability is…. It's involving timeliness. You know, you get a mining permit. You live by the permit; you die by the permit. You have rules and regulations that are tough, fair and honest and administered properly. When you get a permit, you believe in the permit. You stand by the permit. You don't let a bunch of….

You know, you've gone through the process, you've heard all the NGOs, you've heard all the disputes, and you're still prepared to grant the permit. Then don't stop the process and say: "Oh well, what about this group over here? We didn't hear them." That's what happened to Tulsequah Chief. They got a permit, and then nobody stuck by their guns. They all got scared.

When I talk about certainty, those are the issues that are really important. Most important is to get on with life and stick to the timetables, because it costs you over and over and over again — the ability to create economic development in this country.

Sorry to be a bit of a soapbox, but I'm very passionate about that, because I live with it.

B. Lekstrom (Chair): Well, Terry, again, I want to thank you for coming and presenting to our committee here today. The mining industry is certainly an important part of the economy of British Columbia.

That concludes our registered presenters. We do have an open-mike session that begins at 11:35. This committee will stand recessed until 11:30.

B. Lekstrom (Chair): At this time we will reconvene our public hearing here in Smithers. We are in the open-mike session. We have heard a number of presenters this morning that were put on the list as they had called to get a time slot.

Seeing no speakers for the open-mike session, at this time I would move that this committee now adjourn its hearings here in Smithers. We stand adjourned.

Hansard Services publishes transcripts both in print and on the Internet. Chamber debates are broadcast on television and webcast on the Internet.

6)	British Columbia Chamber of Commerce	Jon Garson John Winter
7)	Northwest Powerline Coalition; Western Keltic Mines Inc.	Donald McInnes
8)	Mining Association of British Columbia; Northgate Minerals Corp.	Terry Lyons

1)	Federation of British Columbia Woodlot Associations	Dean Daly
2)	Smithers Parent/Caretaker Coalition	Maggie Foot Ernie Harding
3)	Hudson Bay Lodge	Al McCreary
4)	Smithers Regional Airport	Mayor James Davidson

Committee Staff:	Jacqueline Quesnel (Committees Assistant)

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