Finance and Government Services — Issue No. 8 — Thursday, October 13, 2005 (HTML)

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

4. The Committee adjourned at 12:46 p.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		201
	R. Catherall M. Hansen T. Hromadnik B. Clifford J. Reith D. McSkimming D. Simpson C. Gallinger R. Berdusco P. Jones M. Campbell D. Morrison F. Street A. Cohen D. Westmacott T. Parsons T. Sebastian R. Nicholas G. Jolliffe

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:

Roger Berdusco (Elk Valley Coal Corp.)
Mac D. Campbell (British Columbia Chamber of Commerce — District 9)
Roy Catherall (Cranbrook Community Forest Society)
Brian Clifford (Tembec Industries Inc.)
Andy Cohen (Resorts of the Canadian Rockies)
Peter Fisher (Kootenay Livestock Association)
Cindy Gallinger (Elk Valley Coal Corp.)
Maurice Hansen (Rocky Mountain Trench Natural Resources Society)
Troy Hromadnik (Tembec Industries Inc.)
Gerald Jolliffe
Philip Jones
Daniel McSkimming (Fernie Real Estate; Fernie Central Reservations)
Donna Morrison (Kootenay Livestock Association)
Rosemary Nicholas (CEO, Ktunaxa Nation Council)
Terry Parsons (New Car Dealers Association of B.C.; Alpine Toyota)
John Reith (Tembec Industries Inc.)
Troy Sebastian (Ktunaxa-Kinbasket Treaty Council)
Don Simpson (BDO Dunwoody LLP; Institute of Chartered Accountants of B.C.)
Chris Stagg (Tembec Industries Inc.)
Faye Street (Kootenay Livestock Association)
Dave Westmacott (Selkirk Students Association)

B. Lekstrom (Chair): Good morning, everyone. My name is Blair Lekstrom. I'm the MLA for Peace River South in northeastern British Columbia, and I have the honour of being the Chair of the Select Standing Committee on Finance and Government Services.

Today we are in our sixth meeting of eight for the prebudget consultation process. We are touring the province with an all-party select standing committee. We've been mandated by the Legislative Assembly of British Columbia to go out and talk to British Columbians and hear what their priorities are for the upcoming budget of next year. With the choices that we have with some projected surpluses, where would you like to see those funds put? If there was the ability to investment in additional services, what would the direction of our province be?

I think it's a wonderful opportunity. We hear a lot of times people say about governments right across our country that the government has done this or done that with no input. I think it is a great opportunity for British Columbians either to come out and present in person to our committee or to put in a written submission to let us know what their priorities are. It is truly the responsibility of government to represent the people of, in our case, the province.

We have a number of presenters today. The format we use is: there are 15 minutes allocated for each presenter — ten minutes to present to the committee and then a five-minute time frame for members of the committee to dialogue with the presenter, ask questions.

All of our meetings are public meetings, and Hansard staff are here. Over to my left behind the equipment are Marilyn Pollard and Adam Wang, who are joining us today. These will be broadcast live via webcast as well as transcribed and made part of the public record.

Also joining us is Kate Ryan-Lloyd, to my right, who is with the Clerk of Committees office, as well as Jacqueline Quesnel, who is at the back table.

This process, as I indicated, is one that I think is very valuable to everybody in British Columbia — government, opposition and all of the people we represent. We have been mandated to report back to the Legislative Assembly by November 15 with our final report, at which time this document will be used as one tool in the development of next year's budget.

At this time I would like to ask members of the committee to introduce themselves, and then we will begin with our first presenter. I will begin with Richard, on my right.

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

As well, before hearing our first presenter, I'll possibly…. We will move right to it. I note that we do have a guest in the crowd, but I will wait to introduce him.

Our first presentation this morning comes to us from the Cranbrook Community Forest Society, and joining us is Roy Catherall.

R. Catherall: Good morning to everybody, and welcome to Cranbrook. I hope the sun shines for you and you can see the beautiful fall colours.

I'm president of the Cranbrook Community Forest Society. It's a group of volunteer workers numbering over a hundred now who raise funds and get projects going in our local community forest, which is really an interpretive forest, and enhance and protect that valuable resource. It's about a 2,000-hectare area to the east of the city.

Today I'd like to speak to the recreation management of B.C. Crown lands. This is often referred to as a forest recreation program. They're both the same thing, and I'll probably refer to them in different ways, but that's what it is.

A brief history. The recreation program started in the forest ministry in 1939, just before the outbreak of World War II and the year before I was born — which, I guess, is another important point. The thrust was to provide stewardship on Crown lands outside of established parks. This represents more than three-quarters of provincial lands — a huge amount. There was a lapse in this management between 1956 and 1971, where it was felt that only lands within parks needed to be managed and the rest of the land could look after itself.

In 1971 it became clear that major damage was being done to the environment by the indiscriminate use of the back country, which we wish to call it. The B.C. Forest Service resumed its role at that time, when it became obvious that there was extreme danger there from fire and a really, really poor use of the land. Initially, the priority was to build facilities to address the basic safety and sanitation problems that had developed in areas with high recreation values.

About the program itself. There are now 1,244 recreation sites, 700 trails into the mountains and, I be-

lieve, three interpretive forests, of which ours is one. The campsites are rustic, with basic facilities such as outdoor toilets, fire rings or picnic tables. There's no power or potable water at the sites. The majority of trails are accessed by gravel forestry roads and are used by hikers, bikers, equestrians, all-terrain vehicles, cross-country skiers and snowmobiles. The motorized use is increasing, and there's increased pressure for motorized use of these areas.

A major part of the program is also assuming responsibility for the visual landscape, wildlife issues, meeting with other users of the land, helping coordinate wildfire issues and a whole host of public relations activities that take up a majority of the recreational management staff time. It's not only campsites and trails. At least 80 percent of the time, as I understand it, is spent on these other issues.

More than two million people a year use these sites and trails. They are heavily used. The majority are British Columbians looking for a wilderness experience that is off the beaten track. However, if you go out on these trails you'll meet people from all over the world — Australia, Germany…. It doesn't matter where — all over the world.

The status of the program. The program has been in trouble for years, as outdoor recreation slipped down the priority list and funding eroded. The entire program is in extreme trouble. A few years ago the Ministry of Forests decided it was not a core activity when it went through that core activity exercise. It was decided that recreation was not one of the things they felt was a core activity. This caused a tremendous uproar in rural B.C.

A coalition was formed locally here representing many outdoor recreationists. The coalition was listened to, which we appreciate, and the recreation program was rescued — hopefully, not in the short term — and stayed within the Ministry of Forests but with reduced staff. It did get people extremely upset.

The present status of staffing is around 27.5 FTEs. I guess there's half a person around there somewhere. They maintain the program with approximately $2 million spent on salaries and, I believe, about $3 million on operational costs.

In 2001 the government engaged in partnership with private groups, first nations, service organizations and individuals to maintain trails and recreation sites. I believe the reason for that was it was felt there were no funds to continue the maintenance of those sites and trails, so partners were looked for or sought out to do that. To date about 461 sites and 154 trails have partnership agreements in place.

The program is now in transition to the Ministry of Tourism, Sports and the Arts, despite the fact that it relies heavily on expertise and equipment from the Ministry of Forests and Range. The change was made, I believe, with no consultation — either outside or sometimes, I feel, inside government — with the public, and it does not make sense. I've talked to quite a number of people, and nobody had been able to give me a rationale of why this change was made, other than that it was higher up. I'll leave that point there.

The problem. Several years of inconsistent funding and direction have left the system in serious disrepair. Less than half the sites and a quarter of the trails have partnership agreements or regular maintenance. Speaking from our organization's point of view, we still have problems concerning liability and the actual nature of the partnership — whether it is a partnership. It looks to me, at the moment, very one-sided, so whatever you call a one-sided partnership; I'm not too sure.

Many trails have degenerated to the point where they are dangerous to use, and conflicts are arising between motorized and non-motorized users. I think we've all been through that locally quite recently. Many campgrounds are in a sorry state, with garbage strewn around, conflicts between campers and rising vandalism. Some of the more popular campgrounds are being taken over by seasonal squatters. The squatters have sensed a lack of regulation and parked campers and recreational vehicles on sites for an entire season, denying others the right to use these facilities, which is extremely annoying when you've travelled for hours and arrive at a campsite and it's full of RVs, all-terrain vehicles and you name it that have been there all summer and won't move.

There is only one staff member per district looking after huge swaths of territory, and most of their time is taken up with planning. I believe we have one staff member here who looks after the whole East Kootenays from here way up to Golden. Now it is all moving to an unfamiliar ministry, with no support staff or equipment to manage the program. Hopefully, I can give you a sense of what we and many other outdoor recreationists see as the problem.

Solutions. My view is the program should stay with the Ministry of Forests, but I understand that it's a fait accompli and it's not likely to happen, so there's no sense to hammering your head against a brick wall, I guess.

Service contracts between government and third parties must be updated and monitored to ensure that they are working effectively. New contracts should be sought with parties willing to tend to trails and recreation sites, laying out the exact responsibility of both parties. These agreements must be monitored. I believe that could be a solution. I really have concerns about those partnerships, but we'll leave that.

Additional resources need to be injected over a three-year period to bring the sites and trails back up to acceptable standards. Then consistent funding at today's level, which is just over $5 million, should be sufficient, but we need a three-year window.

Fees should be reinstated on all campgrounds to discourage squatting or to raise funds for maintenance. Fees were applied for a short time — I believe one or two years — but dropped. It's worth looking at again. I know charging fees has all sorts of ramifications and responsibilities and so forth, but I do believe that it's

worth looking at again and that a lot of people would be prepared to pay, even on seasonal-pass basis.

Enforcement personnel with the Ministry of Forests and Range should be empowered and encouraged to police campsites. I know that enforcement people have a huge amount of work to do, and it's probably not one of their priorities, but it has to be done. A smooth transition from the Ministry of Forests to the Ministry of Tourism has to occur; otherwise, the whole thing is going to collapse on us.

Conclusion. A jewel of the B.C. backcountry is at stake at a time when we're inviting the world to visit the province for 2010 Olympics. I know it's a Winter Olympics, but if we want people to like B.C. and to want to come back later on, the interior needs this program. It needs this. This is what we have to offer. It's one of our cards in the deck, and we need it to be in good shape. If action is not taken to rehabilitate B.C.'s forest recreation trails and campsites, many will be lost — that's literally true — or continue to deteriorate into unsightly squatter camps.

The work that is done by the program on cutblocks, fire protection and land conflicts is also in jeopardy. We can't afford that at this time. We can't afford it. This program should be something we are proud of. It is beloved by rural British Columbians, who are growing increasingly angry at the state of the backcountry.

Just one final word. I'd like to thank Bill Bennett for the support and understanding he has shown to us. I know that he has to work within parameters, but I and a lot of people do appreciate the work he has done to support us, encourage us and doing what he can do for this program. Thank you for hearing me out.

B. Lekstrom (Chair): Thank you very much, Roy, for your presentation. At this time I'm going to look to members of the committee for questions.

J. Yap: Thanks for your presentation, Roy. You have mentioned that additional resources would be needed over a three-year period to get back up to standards and then the current funding can continue. Would that…?

R. Catherall: I'm not on the inside; I'm on the outside, but that's the impression I have. If we can get it up to a level, then there's a chance that, you know, with everybody working together, we can keep it there.

J. Yap: Do you have an estimate, a ballpark figure, of what additional resources might be required?

R. Catherall: I must have skipped through that. I think it is in there. I was going too fast.

We believe probably the equivalent of two FTEs for about a three-year period. Whatever that converts into salary-wise, you're probably better than I…. Possibly seasonal positions full-time would be good, but I know full-time is not always the acceptable way to go. Whatever, you know…. That would be $100,000-plus a year or something like that.

R. Lee: Just for clarification, this FTE three-year period is only for your district — or the whole province?

I must have really…. Sorry; I really meant to talk about that. So two FTEs. One would look after partnerships, etc., and one would do the on-ground work of working with the trails and campsites.

R. Catherall: No, just for the East Kootenay. We're looking at this as a pilot project, to see how it works — which I think is always a good way to go. And of course, the East Kootenay is a good place to do that as a pilot project.

Maybe it's not going to work. Maybe it's broken. I don't know, but it'll be a chance to see what can happen and give us a chance to rethink it all before it's too late.

B. Lekstrom (Chair): Roy, maybe if I could just ask a couple of brief questions. You mentioned something that was interesting about the people who are taking up these spots out in the back country for the whole summer months or, in some cases, even longer. When we try and solve that issue, is a maximum stay two nights, five nights? Is there something there that you kind of think…?

R Catherall: I believe one approach could be the fee system. But a group of people need to think through that one very clearly. I know it comes down to enforcement, and I know it's difficult staffing- and cost-wise to enforce this. If at least the threat of that enforcement is not done at periods of time, it's going to be a disaster. It is a disaster right now. People cannot get into those campsites — unless they have to walk into them, and then it makes it a little more difficult. But if you can drive into them, it's game over.

B. Lekstrom (Chair): Just a follow-up on that. You've noticed that shift in the last number of years. Is it something that happened occasionally before, and now it's more prevalent?

R. Catherall: In my experience, that is the case. There seemed to be at one time a realization or an understanding that there were MOF personnel out there that were going to be checking around. Whether it's a change of the culture or the nature of people right now, I don't know. It seems to have degraded further, yes.

B. Lekstrom (Chair): You make some valuable points. I think the back country, when we talk about

British Columbia, is near and dear to all of us. Particularly for those of us that live in rural British Columbia, that is our recreation: to get out.

R. Catherall: It is. If you don't use it, knowing it's there, I think, is important too. Just knowing it's there.

D. Hayer: Your MLA Bill Bennett — he's obviously into bringing out the issues from this area, trying to explain to all the caucus members, because some of us from Vancouver live in a different type of area versus here.

D. Hayer: When you talk about the fees here, what type of fees are you looking at? What amount? Do you have any idea?

R. Catherall: I think the model that was tried before was around…. I think it was a $25 season's pass, a voluntary pass people pay for to use the back country. That would include the trails and the campsites, etc. I believe on top of that, if you didn't get a pass, there was a $10 fee charged. I think — and I could be corrected here — the situation was that contractors were used to collect those fees, and my guess is that the contractors kept the fees to pay for their work, etc.

R. Catherall: I believe it was $10 a day, but I could stand corrected there. It was in place for a year or so. It didn't have a chance to really work its way through. Was that reasonable, or was it unreasonable? It didn't have a chance to work its way through to give it a fair chance.

B. Lekstrom (Chair): Roy, thank you very much for your presentation this morning. As I indicated, we have a mandate to report back to the Legislative Assembly by the 15th, and we have to take everything we've heard….

R. Catherall: I appreciate this. Obviously, it's near and dear to a lot of our hearts.

Just prior to calling our next presenter, I do want to recognize the MLA for this area, the minister responsible for mining, the Hon. Bill Bennett.

B. Lekstrom (Chair): I was going to say that it seems strange welcoming you into your own area, but thanks for coming today.

Our next presentation this morning comes to us from the Rocky Mountain Trench Natural Resources Society. Joining us is Maurice Hansen.

M. Hansen: Good morning. Our name is almost as long as yours. I've shortened it to SSCFGS.

M. Hansen: I'll get right at it. The Trench Society's submission to the SSCFGS proposes that funding be considered for two uses, both of which could significantly strengthen important segments of the local socioeconomic fabric.

The first of the uses that we propose is a theme similar to Roy's in a way: one additional government staff, a full-time-equivalent to administer the existing ecosystem restoration program now operating in the trench. I estimate that that's about an $80,000-a-year number.

The second use that we propose is to investigate the opportunities for expansion of small wood and woody biomass utilization. We estimate the cost of that at $80,000.

The story behind this proposal is a long one. Since 1950 the state of natural resources here in the trench…. I assume you know what I mean by "the trench." It's where you're sitting, this valley that we're in. From the border to Golden, roughly 3,500-feet elevation on either side — that's the area I'm talking about. Since 1950 the state of natural resources in this valley has been an issue of intense concern by significant numbers of local citizens. In brief, the issue is the invasion of Crown rangelands, which is our royal landscape, by trees — this invasion being aided and abetted by government forest management policy.

The socioeconomic and environmental tribulations that consequently arose are well-documented, and the full story can be found in various documents in those websites that I've indicated there. If you're having a beer with Bill later on today, he can probably give you a more detailed summation of what that's about. In any event, it took 45 years and much dedicated effort by local citizens for the public distress that was engendered by the disappearance of our rangelands to be translated into a government-sanctioned remedial program — the same program that I referred to above.

The task the society is now engaged in, along with many of our colleagues both in and out of government and our MLA Bill, is to improve the effectiveness of the program. Both of these funding requests are aimed at that outcome.

The Trench Society, of which I'm the coordinator, was established in 1996 for a single purpose: to lever into place, for the benefit of the public, solutions to the disappearing rangeland problem in the trench. The society is an umbrella organization representing nine

East Kootenay citizen organizations, with a membership of approximately 2,800 individuals.

To repeat, the problem is the invasion of rangeland by unmanaged trees. For the sectors that we represent, this is a major calamity — economically, socially, culturally, environmentally. Our membership is: East Kootenay Wildlife Association; Rocky Mountain Naturalists; Kootenay Livestock Association; Wildsight — East Kootenay Environmental Society; Waldo Stockbreeders Association; Southern Guides and Outfitters; Windermere District Farmers Institute and Livestock Association; the Land Conservancy of B.C.; and the Cranbrook Archery Club. The society is a grass-roots organization. You can get a picture of the interest from the citizen groups that lie behind the theme of this presentation.

The rationale for the funding request. The importance of the range resource to the East Kootenay public really cannot be overstated and neither can the difficulty of addressing the fundamental management problems. Our local MLA Bill Bennett was heard to say that only one other issue demanded more of his time and attention in this riding, and that was health care.

The point is that disappearing rangelands are a significant problem. There is broad public support for solutions. We know the solutions and how to implement them. We have a supporting program structure. What is needed is a bigger, better, faster, cheaper program.

In attempting to discern the best fit between the problem that I'm addressing and what the SSCFGS might recommend for investment, the two priorities stated at the outset were the ones that emerged: more effective administration of the program; and the search for an economic use for the main product of restoration, which is small wood and woody biomass.

The restoration program as it now stands has shortfalls, but nonetheless, it could be considered eligible for an innovation award, because there's no other program like it anywhere in British Columbia and there are only a few examples in the U.S. The most positive aspects of the program is its departure from set Forest Service policy and its guidance by a multisectoral steering committee chaired by the Forest Service — of which the Trench Society is an active and, I dare say, an important member. The Trench Society operates in close partnership with the steering committee, and this funding proposal is in support of the agreed-to goals of the committee.

I'm going to sort of diverge here for a minute into philosophy. Autocratic hierarchy describes normal government bureaucracy, at least in a general sense. That's my opinion. It's been noted by some that the absolute worst organizational structure you could design for managing, at least renewable natural resources, is this type of structure. It stifles creativity, innovation, ingenuity and flexibility.

The point is that ingenuity seldom, or maybe never, comes from the centre. Now, if you agree that all the qualities not found in an autocratic hierarchy are in fact the ones needed to resolve most of our significant problems, then the proposal that we're making offers elected government an avenue for indirectly supporting creativity, innovation and flexibility. The Trench Society, in partnership with the steering committee, has the capacity to foster these qualities to the benefit of our local resource management.

The issues. Achieving bigger, better, faster, cheaper restoration forestry, which is the activity that must take place to restore our disappearing rangelands, faces a number of obstacles. The first is that restoration as now practised is expensive and depends on a combination of non-government and government funding sources, thus restricting its scope. The program rests on an unstable and fragile footing, because it's considered a nice-to-do by some senior decision-makers, thus creating a risk of further staff reduction at the local forest district. More detail on that is that there are some senior people who feel that if the district has enough staff time to dedicate to the existing program, and since it's not really a necessary program in their view, they could actually get by with fewer staff.

The Forest Service administration of the program is part-time. That's the problem that the first request is aimed at. Thus, a shortage of appropriate staff time constrains the most efficient and effective program planning and administration. Our proposal addresses these issues and thus supports the grassroots need for a bigger, better, faster, cheaper restoration program.

In summary, the Trench Society proposes that the SSCFGS support (1) an allocation of $80,000 yearly funding — by the way, our program is forecast to run for about another 25 years, so maybe we need $80,000 for 25 years — to the Rocky Mountain forest district for one restoration program support staff and (2) the $80,000 to the Trench Society to investigate the potential for expansion of smallwood utilization in the trench.

Regarding (2), the Trench Society would approach the investigation thusly. We would organize and host a conference that will provide state-of-the-art knowledge for fuel-level solutions to hazardous fuel reduction and smallwood utilization. That would involve, also, a post-conference follow-up in anticipation of opportunities for implementing any goals that might emerge from such a conference. The conference would target the broadest possible audience of restoration practitioners locally and elsewhere, interested parties and potential investors.

The goal is to create a market-driven demand for currently low-value fibre. This, in turn, will facilitate what we want — the bigger, better, faster, cheaper rangeland restoration program — and concurrently address other issues that are on the table now, such as hazardous fuel reduction, the interface problem, etc.

That's the story. I have attached, as well, to give you an idea of what this conference might look like, two agendas from two different programs that are happening as we speak, actually. If you have a minute to look those over, you'll get an idea of what it is we're proposing.

I'll look to members. We have a number of questions. I'll begin with Richard and then move to Leonard.

R. Lee: Thank you for the presentation. What kind of species, you know, essentially are in this region for smallwood, and can they be made into pulp or other biofuels?

M. Hansen: There are probably three uses I can think of that it could be put to. In some places they're making flooring out of some of this small stuff, but probably the major uses are pulpwood and hog fuel.

L. Krog: Maurice, just so I understand: when you say invasion by trees, what particular species…? Is it a naturally occurring thing, or is it because of reforestation policies or…? Could you explain that a little more? It's not quite clear to me.

M. Hansen: Well, I left out a considerable chunk of context there. This used to be a fire-maintained ecosystem. If you look at historic photos, you can get a picture of what the landscape used to look like. It was essentially a savannah. That all changed with the advent of fire suppression, which changed the natural disturbance regime. Consequently, trees that would have been killed by fire lived, became thickets and essentially changed the nature of the ecosystem. The species are mostly Douglas fir but also include lodgepole pine and yellow pine.

L. Krog: So to put it bluntly, you're up against British Columbia's number-one industry, forestry, is what you're really…. I mean, I'm not trying to put words in your mouth, but essentially what you're saying is that you don't want what is now a profitable species to take over what was formerly a natural ecosystem in the savannah. Is that…?

M. Hansen: Well, there's more to the story, as well, in that we have waded through a land use planning process. We have a land use plan, we have implementation guidelines, and the program that I'm speaking about in the presentation is the outcome of that.

The forest industry is not outside of this; they're involved in it. I don't see this as particularly competitive with the forest industry. As a matter of fact, it could be a benefit. They are already, to an extent, utilizing hog fuel and pulp from some of this stuff, but it's not at a scale that's large enough to suit us. We have roughly 135,000 hectares to cover in the 30-year period that we have allotted for this. We started back in 1997, so I think we're down to something less than 30 years now, and we're not treating enough hectares per year to reach our 135,000-hectare goal by 2027.

M. Karagianis (Deputy Chair): Great presentation. I have a couple of questions here. Obviously, some aspects of this biomass management are good for the province around fire hazard management and things like that, so I would expect that your conference is really something that will benefit other communities throughout British Columbia as well, not just specifically in the trench here.

M. Hansen: Yes, it could. If the conference happens, and if it's as comprehensive as we envision it, then it would be applicable to any other area of the province that has a similar forest type.

M. Karagianis (Deputy Chair): One thought comes to mind here about your conference. Is this dependent now on your getting some assurance of funding for your request here, or is this conference going to proceed in some form regardless of funding requests?

M. Hansen: Well, if this request for funding fails, we'll look for some other funding. Yes, we'll do it anyway. I shouldn't say that, probably. Wrong thing to say.

Now, one other aspect of this. I don't know whether this fits or not, but there is sort of a new industry that is emerging of non-timber forest products, which seems to me to be something that might actually fit well with your long-term planning here. Are you aware of that industry that's emerging, and is there some representation here on those kinds of products?

M. Hansen: Yeah, I'm hooked up to the Internet. I get lots of stuff that is addressing or attempting to address this issue. Non-timber forest products is one of them. There's been a recent workshop somewhere — Nelson? I'm not sure where.

M. Hansen: Yeah, just recently on that. Let's say we're not being restrictive in our view of this.

M. Karagianis (Deputy Chair): That might be one aspect to add to your conference idea as well.

M. Karagianis (Deputy Chair): I think there are some economic benefits there.

M. Hansen: You can probably gather that I left out a lot of detail. I had ten minutes — right? This is like the 30-second talking head to give you a story that could fill a couple of books.

B. Lekstrom (Chair): Well, Maurice, I want to thank you for taking the time out of your day to come and present to our committee.

Our next presentation this morning comes to us from Tembec Industries. Joining us is Brian Clifford, Troy Hromadnik — I probably didn't do that justice — Chris Stagg and John Reith.

B. Lekstrom (Chair): Welcome, and I'll turn it over to you. Our time is 15 minutes. How we're running these is ten minutes, traditionally, for the presentation and then leave enough time if there are questions.

Chris and I are with FRM for western Canada, for Tembec. We're responsible for forestry for western Canada. Chris is our chief forester. We'll talk for five minutes, and then we'll hand it to Brian, who is in charge of pulp for our operations in B.C.

We have one theme today from forestry. It's the B.C. stumpage system — probably no surprise. What I would like to talk about is the past, present and future and where we're going.

In the year 2000 when the beetle epidemic started, the historic variance in stumpage from the north to the south was roughly $9. The average rate paid in the northern interior was $21.50, roughly, compared to our $12.50 in the south. That difference of roughly $9 was solely intended to capture the challenges pertaining to geography and steep slopes, species diversity and higher-cost logging. The system was developed around that.

Since 2000 we've seen significant changes to that gap in the stumpage being paid from the north to the south. The model we currently operate under is called comparative value-pricing. If you actually look at the model on everything being equal, it's a very sound system. The logic and background behind it, the methodology, is good. It says: "What is the average value of that stand on that slope or on that flat ground?" Generally, when you have the same tree and you have an easier harvesting chance, you pay more for that tree, and so you should.

There is one problem with the CVP system, and that's the waterbed. I think you've all heard about the waterbed, where government has a target revenue, and if they're not getting the revenue from one region of the province, they will get it from another region of the province.

Because of the beetle outbreak in the northern interior — roughly 60 million cubic metres of wood is harvested in the interior; 40 million of that is in areas with epidemic beetle populations — we're in a situation where government is not getting the revenue from that wood that we believe they should. Much of that wood — right now roughly half — is coming in at 25 cents per cubic metre. Government is not getting their revenue, and they say to operators who are not harvesting in 25-cent wood: "We want our pound of flesh from you folks." That's the way the system is derived.

To Tembec…. Right now — we've had our analysts working on it — we are subsidizing our competitors, the Canfors and the West Frasers of the world, to the tune of $5 a cubic metre. Now, to us, in B.C. alone, that translates into $7.5 million — real dollars, like wheelbarrows of money. That eroded our net income for the B.C. division by roughly 40 percent last year — that issue alone. We have a whole host of other issues to manage, and this issue alone eroded our income by 40 percent.

Our point here is that CVP is no longer reflective of the issues that we're faced with, whether they're geographic or harvesting profiles or epidemic beetle populations.

CVP, if you look at the way it was designed, was never intended to deal with catastrophic issues. It was to deal with the nominal forest, the normal forest and how to price that timber. The clear message I would like to get to the committee today is that CVP, although fundamentally a good system, is now broken. It doesn't work any more.

At the risk of sounding alarmist, the fact of the matter is that with the kind of money it's costing the southern interior…. It's costing jobs, and it's putting a number of our colleagues and ourselves at risk. What we're saying is that CVP needs to be fixed.

Looking forward, our B.C. government…. In fact, we got an e-mail today. The Minister of Forests has committed to changing the stumpage system on April 1 of next year. I'm not here today to say what that new stumpage system should be. I have my opinions, but that's okay. The new pricing model must be reflective of harvesting challenges and landscape diversity. It must reflect the challenges we have down here. It must an equalizer of the extremes.

As an example, we have cable logging where we're harvesting on slopes that are 100 percent…. There's no such terrain in the northern or central interior. It doesn't exist. As a result, our costs are higher. The new system must reflect that. It must reconcile rates paid for those low-cost systems up north versus the systems down here. The inequitable distribution issues around stumpage — i.e., the waterbed — must be eliminated. In fact, the Premier has said a number of times that he does not like the waterbed. That has to go away.

I'd like to emphasize that forestry in the southern interior of the province — not just Cranbrook but the whole southern interior — is older than 100 years. We have a very diverse forest and a very sustainable forest. In fact, our AAC determinations for both Cranbrook and Invermere came out yesterday from the chief forester's office, and our cuts were increased by 3 percent and 4 percent, respectively. So we have a very sustainable forest here.

We don't have 2,000 square kilometres of lodgepole pine. My message here is: let's get a system right. Let's focus on an area of the province where forestry is a real driver. We employ 1,500 people, and we would like to continue to do so.

My last message from my point of view is that right now, this region of the province does not need a flawed administrative system to act as a barrier to us moving forward.

B. Lekstrom (Chair): Thanks very much, Troy and gentlemen, for coming and talking to us today. We've had the opportunity to discuss some of this previously. I will look to members of the committee if they have any questions.

B. Lekstrom (Chair): Well, we'll ask questions following the second half. How's that?

B. Clifford: I'm Brian Clifford, and I'm the pulp mill manager. I'm here to share some of our story.

We have a pulp mill which is north of Cranbrook at Skookumchuck. It's been there since 1968. We produce about a quarter of a million tonnes of bleached kraft, and it's marketed worldwide. In 2001 we put in a co-gen plant. We can generate up to 40 megawatts, of which we sell 13 megawatts. We have some good agreements with B.C. Hydro on 10.8 of that.

Our competitiveness has been eroded over a period of time. It's not necessarily a question of not being able to control our costs. In fact, we've done a better job in the last year than previous. Yet our cash generated by the facilities is 1/10 of what it was the year prior. So for the same effort, the facilities producing more tonnes at less cost, we're generating 1/10 of the cash. You have to say to yourself: just how long can that continue?

If we don't function, we don't need chips, and the sawmills, of which 40 percent of the log comes in the form of chips…. We don't need the sawmills. Of course Troy is not needed then.

We employ 279 people, but there are three aspects where we need some help, where we see the government having some influence. Our coke and fuel supply…. If you look at the third-last page of what I've shared with you, our competition is able to do things cheaper. I'm just going to talk about energy costs, and I'm just going to talk on what it costs us to make power, let alone steam to generate our process.

Our total energy cost is $28. In Chile the same effort — different climate, whatever — is $12. Let's just work on that aspect. There's a $16 Canadian difference to make that amount of energy. As I said earlier, we can make our power. We can sell our power under B.C. Hydro. But we have the ability to sell more power. The structure here can take that power, but we have to say to ourselves: why would we do it?

If you look at that second-last page, it costs us about $64 a megawatt to make it. Yet with Powerex the average price that we can get, which the government controls…. We can only get $54. So we say to ourselves: why would we do it?

We can't generate enough dollars to offset our costs. Some of our costs are set. This requires more biomass, more fuel to come into the facilities. For us to go out and find that is a costly proposition.

What we're saying to ourselves is that it shouldn't be costly, because we have a concern from the Kelowna fires that municipalities want to protect themselves, and municipalities want us there. There's synergistic activity that helps us, helps them, yet the funds that have been set aside by the government to do that aren't readily available. There's no fixed template that a municipality would go to and say, "Okay, that's the cost we'll absorb, and that's where we're going to get the money to be able to absorb it," rather than us coming in and saying: "Here we are. We're here to help." In the same sense, who's going to be doing what?

We've had some great trials. The city of Kimberley has been very open-minded on it — and Cominco, because they want to protect their own facilities and cleanup. We've got some templates that actually do work, but it's costing us money to set those templates up. I think all municipalities should have the same concern as Kelowna did. That should be more organized so that we can just work from that without us incurring the cost, because it doesn't make sense for us to continue this activity.

Other aspects that we can see some help in…. You know, if we sell power, we don't have the advantage of what B.C. Hydro takes advantage of — storing that power. They take our power and market it today, whereas they won't use their hydro power and will save that for a better time.

What we're saying is that if you encourage IPPs, independent power producers, you should be saying to us: "Okay…." We should say: "Today could you store it? We'll sell it in December." Use it yourselves as a marketing board. Unless we're playing in a big façade here and you're not interested in independent power producers, we can't produce it for what you're willing to give to us for making it. If you were to put it into storage, we could take advantage of that in months that the price of power is there. We've worked well with Hydro, but I think they need some more direction to be able to say just what are the limits of what they can entertain.

The other aspect which is of interest is that provincial sales tax is put on power and on gas, which is marketed through government bodies. We're saying to ourselves: "That doesn't make sense." You're making a product, and you're putting tax on it. That tax alone for us is $1.2 million. That's about half of what we generated all last year. We're spending money on things that I don't think are really fair for the industry, let alone the consumer, to have to carry.

WCB costs. Although there is an experience factor, and we work on that, in your WCB rate, I just share on the last page that it's about $150,000 more just for WCB

overhead that we have to absorb as an operating unit. We're saying to ourselves, "Wow. Everybody else is cutting costs. What about you guys?" as far as WCB.

Those are four aspects that I think deserve some sort of attention, some discussion, when the real facts are that we're 1/10 what we represented a year ago. Thank you.

B. Lekstrom (Chair): Well, we'll try this again. Again, gentlemen, thanks very much for presenting to us.

J. Yap: Thanks for your presentation. With regard to the CVP system, for Tembec alone, it translates into $7.5 million annually. Would you have a ballpark figure as to what it might translate to for the region as a whole?

T. Hromadnik: That's a good question. I could guess. We have our competitors but at the same time our colleagues on this front. They would be Weyerhaeuser, Louisiana-Pacific, Gorman Bros., Pope and Talbot. If you look at our combined AACs, you're probably talking in the neighbourhood of five million or six million cubic metres. At $5 you're probably talking a $30 million subsidy. Make no mistake: that is a true subsidy to the Canfors and the West Frasers of the world that are competing in the same market that we're competing in.

J. Yap: And the reason for this subsidy is unintentional, because of the way it's structured?

T. Hromadnik: Yeah. It's nobody taking advantage of anybody. It's system-driven. The system says: "We want $100 million. We got $20 million from the north. We were expecting $50 million. Therefore, we're going to go to the south and get $30 million more, and we should have." That's the way it works.

T. Hromadnik: I'm not being overly critical of the system when you have a normal, healthy forest, because it was designed that way. But when you have situations that we have in B.C. right now, where you have literally catastrophic beetle infestations, the system doesn't work.

J. Yap: So that $30 million — my last question — approximately, has been the case for how many years now?

T. Hromadnik: It's been getting worse. It started in 2000, and I don't believe it was $30 million in 2000. It started when 10 percent of the wood was being underpriced, then 20 percent. We're now currently seeing in the north 55 percent of the wood coming in being charged at 25 cents a cubic metre. That wood — normally, right now — would probably be $14 to $18. So that $17.75 that the government was expecting to get off those cubic metres — we're paying it.

J. Yap: Right. So potentially, if you add up the subsidy for the five years, it could be up in the hundreds of millions.

T. Hromadnik: Oh, it's definitely hundreds of millions. I'll tell you, there's nothing…. We talk about fuel; we talk about labour costs; we talk about WCB. Those are small potatoes compared to this. This is a big, big issue.

R. Lee: In your presentation, on page 6, it says, "70 percent of our pulp goes to the Asian market," and the current cost to Asia is $600. What kind of components are there in the cost? Can you break down the costs?

B. Clifford: It would be all what I call "inside the fence" costs. It's all our labour, the materials it costs to not only have the raw material but to have the process operating. It's any of our taxes — anything to keep the lights on and operating. Those are all of our costs, any of our administration costs.

B. Clifford: It includes, also, getting it to the end user. You can see what the differential is. Not all our market is in Asia, but it's about 51 percent, as we speak.

R. Lee: Inside your cost components, which one do you think could be more efficient?

B. Clifford: Which one could be more efficient? Well, our size is not world-class, so then your period costs are not carried by over a number of units. We're only a 700-tonne mill, whereas world-class is about 1,500. I mean, that would be ideal. If the fibre were available and the capital were available, you should be at that size. But as far as manning costs, we're on the low scale. Our operating costs are on the low quartile for all bleached kraft pulp mills. The advantage we have is that we generate our power. The advantage we have is that our auxiliary fuel is a biomass, which offsets our natural gas. Size is predominantly where we could do better.

J. Kwan: On the removal of the provincial sales tax on the electrical and gas billing aspect, you cited $1.2

million annually for your organization. Do you have any sense of what that cost would be for the other companies as well?

J. Reith: That's just the pulp mill. That doesn't include the rest of the forest products group here in the East Kootenay. That's just strictly the pulp mill.

J. Kwan: Right. What I'm trying to get at is that bigger number, where you're looking at a general policy change — right? It can't be just for one sector or for one company, but rather the overall figure and what it looks like. We actually had a similar request from the mining association. I forget where we were — Smithers, Prince George, Dawson Creek, somewhere; anyway, it's in the pile here — and someone made that request as well. Just to get a general sense of what that figure looks like for the industry….

B. Clifford: There are three other sawmills, but they don't operate seven-by-24. I'm just trying to factor it up here off the top of my head — about half more. It would be about 1.7.

B. Lekstrom (Chair): If I could just follow up, maybe, with one quick question, Brian. We talked about your co-gen facility. What type of power…? I mean, you can sell up to 13 megs now. What would your system utilize internally?

B. Clifford: And the potential of our turbogenerator is around 45, so we could actually have the ability to market. We have a commitment for 11 with B.C. Hydro right now. We have just acquired our green credits, so anything additional will have the green logo associated with it. There's a potential of ten more megs.

B. Lekstrom (Chair): Just so I'm clear. When you talk about the ability to put your power into the system and store the rest, we're talking about the reservoirs, not running the turbines.

B. Lekstrom (Chair): So that people understand, storing power is not something where we generate it and store it over here. It's utilizing what we have to at the time, whether it's the co-gen plant we're talking about.

B. Lekstrom (Chair): Well, gentlemen, again, thank you very much for taking the time. You've raised some valuable points here. As a committee, we will take the information you've presented to us and give it due consideration to see what we can do.

B. Lekstrom (Chair): Our next presentation this morning comes to us from the Fernie Real Estate and Fernie Central Reservations. Dan McSkimming is joining us today.

B. Lekstrom (Chair): Good morning, Dan. How are you? Welcome to the committee.

D. McSkimming: Well, thanks for inviting me. I did have something to hand out, and I left it in Fernie. This is all off the top of my head.

I'd like to thank you for having me over here today. My name is Daniel McSkimming. I am a real estate agent with Fernie Real Estate. I also own a small retail store in Fernie that I've had for 21 years. I'm also a city councillor in the city of Fernie. I'd like to make the disclaimer now that I'm not speaking on behalf of council, because they'll get really mad at me if they think I did, although I'm sure some of that will come out.

There are three things I'd like to talk about, if I can get to them all. Once my ten minutes are up, just tell me, and I'll stop. Three issues that in the last week or two, since I knew I was coming here…. In talking to the citizens of Fernie and of the Elk Valley, that's how I decided what I was going to speak about. It was amazing talking to these people. I spend a lot of time at our arena in Fernie — the arena's in the valley — with my kids, and these are some of the concerns that came from them.

The first thing is that Fernie is doing very, very well. We're very optimistic about the future. I think some of the things that the Liberal government has done over the four years in streamlining things and cutting red tape have increased investor confidence down where we are. We're seeing a lot of money from outside the province and outside the country coming into the valley. We're very pleased about that, and we thank you very much for that. It's not to say that there are not a few things more we can do.

We're pleased that the airport expansion is going forward, and we see that as a real boon to our end of the valley, as well as up toward Radium. However, what we see is that the traffic coming into Fernie will increase. The traffic on Highway 3 is becoming much greater with the big transport trucks that are travelling through there. It's getting busier and busier, and in the summer all the recreational vehicles are coming through as well.

With the increased traffic coming from the airport, once it gets up to speed, it's going to be worse. Thirdly, the hospital in Cranbrook. Now that's up and running and the services have been changed and reallocated in the valley, more people and more ambulance services are heading towards Cranbrook.

There's an area of the highway between Fernie and Elko. It's just southwest of Fernie. We call it the rock cuts. Certainly, Bill knows where it is, if you need a look. It's a very dangerous stretch of road. It's very narrow and very winding, through some cliffs. It's a goat habitat as well.

I had a chance to speak for an hour yesterday with Cpl. Michael Casault of the local RCMP detachment. He gave me some rough numbers about the number of accidents that are happening through there and the number of fatalities every year and their concerns with it. We talked to some of the ambulance people about the increased trips they're making to Cranbrook.

The road could be closed because of accidents. It was closed two or three times this summer for the better part of a day. It can be closed in the winter, of course, because of snow. The transport trucks going through there and overturning can block it, and there's no really viable alternative to get around it.

It's certainly not an easy fix and is not an inexpensive fix, by any means, but it's something that was a continual item of concern for the people I talked to: that that stretch of road should be fixed, should be somewhere on the horizon in somebody's budget. To be straightened out, they need more passing lanes. They need it to be wider.

The police even indicated that they can't really enforce the speed limit through there, because there's no safe place even to pull people over, and they're concerned. A lot of people they're catching with the enforcement that has happened are people with their cell phones. That sort of complaint from the public has increased in the area of 300 percent in the last five years, they said, because it's getting so busy through that part. That's one of the things as far as infrastructure and transportation in our valley.

The second thing. Of course, we have the Fernie Alpine Resort. If none of you have skied there, we'd like to see you come and see how great the snow is and what a great place to ski…. We have the Island Lake cat-skiing operation, which was just purchased for $42 million. It's a 7,000-acre piece of land that has world-class cat-skiing.

It also has a 600-acre parcel that's next to the Fernie Alpine Resort. They're interested and have planners in there right now and are working on a plan to develop that. They're looking at doing in the area of a $200 million resort development that will be right beside the ski resort as it stands. They are working with the ski resort. This is not a surprise to them. They are welcoming it, and they want to be joined with some lift system.

However, their concern — obviously, we know the government would like some of these things up and running by 2010 for the Olympics — is the possibility for both the Fernie Alpine Resort and Island Lake Lodge to have the opportunity to operate under a resort community status, as opposed to through the regional district or the city of Fernie.

Being a councillor in the city of Fernie and having to work with the cumbersome system we have to work with, I can tell you that that sort of resort would not happen by 2010, or maybe in my lifetime, the way things seem to move around here. It has been very frustrating for the developers of the Blackstone Resort that are trying to get a golf course going.

I don't know if it's our end of the valley, if it's the people who live there or if it's the local politicians, but it has been very, very difficult. They are very keen. They have a tremendous amount of backing and money to do this, but they need to be able to get off the ground and move forward. So I think they're looking…. I've had conversations with Minister Bennett about that, and that's something that needs to be done if we're going to see that happen in the valley.

Continually, while we're waiting for development to happen in Fernie, and different people and players and money come into the valley…. They seem to continually get bogged down, and some of them have gone and taken their money elsewhere, because we know money is portable. They go off and invest in other areas.

We have a tremendous product. We have a tremendous opportunity with that, and we'd like to see that move forward. In talking to one of the principals yesterday…. And I'll be honest. He's my brother-in-law, so there's a little nepotism going on here, but I've also talked to the resort as well. They really feel they need that so they can move forward and not be held up.

The last thing, and it's a smaller matter in the valley, is that our summer resort business is getting better and better every year. We're really pleased with that. It's levelling out the playing field. We have a small golf course in Fernie right now called Fernie Golf and Country Club. Over the last number of years one of the things the provincial government did was sort of download or give the responsibility of flood protection to the municipalities.

We have an issue with the dike in Fernie that is ready to fall down. It's not even a dike anymore. It's more of a berm, and it's going to compromise our little golf course. It's their responsibility. They don't have any money. The city of Fernie is willing to help and provide some equipment, but we don't have the money for it either.

If there are those types of cost-sharing or infrastructure grants out there that could help with that…. To protect the golf course would be about $100,000. To fix the entire diking system would be close to $2 million. The city of Fernie has funded a study, and we now have a hydrology report and have done the science on what we need, so that is already done. What we need now is to actually get it done.

We are looking to development. We are looking to CP Rail, who have always been good to us in the valley — a very good corporate citizen — to help us. They do that by bringing things in on their tracks and dumping them where we need them and providing us with some materials, but we still need help with that.

It could really hurt Fernie, and it would really hurt the valley in general. That is an issue where our local

government, our municipality…. Well, we don't know which way to turn with that. It's a smaller item, but I think it is an important one. Those are my three points.

B. Lekstrom (Chair): All right. Well, thank you very much, Dan, and if you do have a written submission that you would like to forward to the committee, we'll make sure all the committee members get that as well.

L. Krog: Dan, you live in one of the most beautiful cities in the whole of the province. I've been there many times. My brother and his family have lived there for a long time. But let's cut to the chase. We are asking for three items. It all costs money. Do you have any idea what the cost of upgrading number three would be?

D. McSkimming: No, I do not. I know that in the past, a number of years ago, through the rock cuts — you're familiar with the area then — it slid away one time and it's starting to slide again. It's an eight- to ten-kilometre stretch of road. When you're talking to the highways people, there are a number of alternatives. There's a big fix, straightening it all out, which would be unbelievably expensive. There's adding more passing lanes, which would be less expensive. There's also straightening out some of the corners. That's not where I'm at. Again, those were concerns brought out by the citizens of Fernie of what they need to do.

J. Yap: Actually, that was one of my questions. Thank you for answering that. The alpine resort that you referred to — I seem to recall that there was an announcement fairly recently about it. Or am I thinking of another one — that it was a go?

D. McSkimming: Fernie Alpine Resort is already up and running, and they haven't done any expansion in a number of years.

D. McSkimming: Oh, Blackstone. Yes, Blackstone. That's a golf course that's going to be a Greg Norman golf course. He was here two years ago to unveil it, and they're looking at breaking ground in the spring. To give you an idea of the frustration, it took four or five years for the city of Fernie and the regional district to come to a consensus of where to move a waste-transfer station that we were told had to be moved longer ago than that, and we finally found a spot for it so the golf course can move forward. Now there are going to be protests and lawsuits and everything over that, so it's not a lock, but we're certainly hoping that it's going to move forward. Those are the types of things that have blocked the process of that.

R. Lee: Regarding the $200 million development of the resort area, you mentioned it's because of the local government having some kind of roadblock on that project. Are you looking for some provincial legislation or whatever?

D. McSkimming: I don't understand the process of being designated a resort community in British Columbia. I know that it's possible. I know that with all the things that have to be done — from the point of environmental studies and checks and balances that have to happen, and then get everybody to agree that this is a good idea to develop these lands — it just seems to take forever. You're dealing with the city of Fernie, which is on the border, and you're dealing with the regional district. The two seem to butt heads over things, and the investors are feeling that if they want to move forward with this on a big scale and do something that is worthwhile that they need to be able to move ahead and not get frustrated. So many things have been held up.

The regional district just produced something called the Fernie-area land use strategy. A survey was done, and they're making up this big policy. When we looked at the policy, it was restricting some of the developments of Island Lake, and they really didn't ask Island Lake. They didn't even ask them what they wanted to do. These people spent all this money on this land with an idea, and they weren't even really approached and asked: "What do you guys have planned so that we can fit this into our policy?"

There are a lot of people running around trying to stop things down there. What has happened as a result is the price of housing has gone through the roof in Fernie because of the lack of development, because we can't put anything on line. The demand to come to Fernie is huge, so the low-income housing…. The people who are working for minimum wage can barely afford to live there. They're having to relocate to Sparwood or further away, and we're losing families because of it. It's becoming an elite community because nothing is moving forward.

The people I'm selling product to are from Britain, with a two-for-one dollar, and it's cheap, and they're just buying stuff like crazy when they would really rather be buying resort type of condo projects. But we haven't been able to get anything going in the last couple of years because of local…. I'm on that council, and I've been beating this head against it for quite a while. It's frustrating. That's why when people like Island Lake and Fernie Alpine Resort look at what's happening in the regional district and the city of Fernie, they go: "We're a little nervous, because we want to see it happen in a reasonable amount of time."

R. Lee: In some communities they have to have a long-term land use plan involving all the communities and the people interested. Is that happening in this area?

D. McSkimming: That's what the Fernie-area land use strategy is supposed to be, but it's been in done in such a haphazard manner — a lot of people feel — because not everybody was asked. The people in Cranbrook are making the decisions about what's happening over here in fact.

B. Lekstrom (Chair): Well, Dan, thank you very much for coming and presenting here today before the committee. Certainly, if you want to either mail or e-mail a hard copy, we'll make sure the members get your presentation.

We're going to move on. Our next presentation is from BDO Dunwoody LLP, and presenting is Don Simpson. Good morning, Don.

D. Simpson: Thank you, Mr. Chairman and members of the committee. I appreciate this opportunity to present with you.

As a member of BDO Dunwoody I, of course, am a member of the Canadian Institute of Chartered Accountants and, more specifically, the Institute of Chartered Accountants of British Columbia. In following through on my professional callings, I am also an auditor of local government, both at the municipal level and the regional district level, so I have fairly extensive knowledge of PSAB and some of the issues of the budget facing you in following PSAB. As well, I'm an SR-and-ED specialist in the tax community for BDO Dunwoody LLP.

The issues that I've brought to the table today are specific priorities for the government. Following through with the four questions that are asked in the committee proposals, my presentation is going to fall in with those questions. The priorities that have been established by the Canadian Institute — and, again, we see it in local business communities and addressing local government — are concentrating on the aggregate reduction of debt.

Looking at the September policy papers that were just released with the budgetary comments and the 2006 consultation paper, there's commentary that the surpluses that are currently being generated and being seen in the budget are being anticipated to be utilized to the reduction of current borrowings for infrastructure annexations.

The concentration that the ICABC would like to ford out to the committee to take back to consultation is in the aggregate reduction of debt, not just simply the reduction of debt as a percentage of GDP. We're seeing that while the GDP on the three-year budget plan is coming down to 15 percent, which is very respectable, the aggregate amount of debt is being proposed to go from $35.9 billion to $38 billion. So there's still an increase in the aggregate debt, which means an increase in the aggregate carrying load of future generations.

While again we recognize that the debt-to-GDP is a very formidable target to go for and is applauded, we would like to see some of the concentration, if possible, moving towards the reduction of aggregate debt and the aggregate carrying costs of such obligations.

Under point two, the contingency planned and forecast allowances that we're now seeing in these balanced budgets. While we see that they may be necessary terms in coming up with balanced budgets, and we do appreciate the necessity for such items when we have forest fire issues like we had here in Cranbrook a few years ago…. I also lived in Salmon Arm through the fire there and realized the cost of bringing in the Martin Mars to run for a week — or two of them, actually — in Salmon Arm.

You cannot budget for such contingencies. However, when we look at the GAAP presentation in your financial statements under PSAB, there is no correlating line item in your final financial statements to offset for where these forecast contingencies are being allocated. As such, when you come to the clear transparency of government accounting, this is being lost or potentially clouded through the use of these forecast allowances.

What we would prefer to see, again in keeping the government's transparency, is: show the surplus for what the surplus is and be prepared to justify its utilization for other means when necessary rather than to use these other contingencies.

I spent some time this morning going through the budget proposals that were released in September and saw the forecast allowance coming in on different presentations in different areas. Although I have a strong background in accounting, I myself got confused as to: is this the same forecast allowance or is this a different value? It confused some of the judgments that I was making on there.

In looking at what a forecast allowance is, it is simply an appropriation of your surplus called with a different term, set in a different position. It's as simple as that. When we look at municipal accounting moving from the ADBA, or alternative disclosed bases of accounting, over to PSAB, PSAB served to rectify what local government was doing in setting up contingencies and reserves, calling them expenditures and effectively having the ability to adjust their surplus to come up with what they thought the taxpayers or senior government wanted to see.

PSAB removed that capacity, and in the current budget, with the contingency funding and forecast allowances, I'm seeing that being reintroduced with a different term.

The issue that I have on there is…. In seeing transparent government from the institute's standpoint and as a reader of local government and senior government financial statements, I applaud the transparency that the government is trying to achieve. They have come a long way in producing respectable financial statements and understandable financial statements that now the members of the community can read and understand. And I think this is clouding that and possibly raising questions rather than removing the opportunity for discussion.

Looking at the government debt load, the question is indicated at…. And looking at important social and other infrastructure projects, how do we finance these? When we look at the current cost of borrowing at all-time lows and being able to lock in a lot of our borrowings at longer rates than were traditionally available, it is a very attractive way of financing infrastructure. However, the caution still has to be taken when looking at aggregate debt, looking at the reduction of aggregate debt loads, that while it is attractive to look at utilizing current debt, to do so has to respect an overall plan to reduce the aggregate amount of debt and not just debt-to-GDP ratio.

When we look at our local Canadian trading partner in Alberta and some of the business leakage that we see going there, some of it is odd taxation policies going to a province that currently has no debt. This has made the competitive advantage of B.C. extremely difficult, and we do appreciate that this is a difficult task for our government to take on with this neighbour to the east. Again, that's why — to try and protect our competitive advantage — we ask that gross debt reduction be considered.

Other issues. As indicated, I have a background in scientific research and development. In following through Minister Carole Taylor's comments on biotechnology that were in her September 14 budget speech…. That kind of information coming out to give tax incentives to certain segments of our economy, I truly applaud. And when I see a lot of these members, and biotechnology clientele are part of my clientele in R and D…. I applaud the ability to be able to help these organizations promote their products, continue their development and, more importantly, hire individuals to prosper in British Columbia as employees and allow these businesses to develop and contribute back to our taxation base.

The item that was not addressed in there is, specifically, a lot of the other SR-and-ED environments that are at the grassroots or the lower foundation levels in our province. I get phone calls virtually every week, if not every month, and I probably file in the area of ten to 20 R-and-D claims, predominantly in our area. But I turn down probably four times that amount, because the individuals I know cannot get their development to the stage of being accepted by the Canadian government under the rules of the Income Tax Act and the pronouncement information circulars and bulletins of the Canada Revenue Agency to meet the criteria to get the funding that they need. The 10-percent additional funding that the province provides to these individuals would be a very formidable opportunity for them to take advantage of and be able to take their advancement. However, the after-the-fact funding…. They can't afford to get to the after-the-fact.

The consideration that I might put out, and this is more of a personal than an institute policy, is something along the lines of preproject approvals. I know that the federal government has preproject assessment, where they'll look at a project to say that it meets the technical merits and, therefore, we feel that it will meet the criteria of the SR-and-ED program under the Income Tax Act. However, there is no ability to prefund such opportunities, which means that we are missing out on a significant number of SR-and-ED potential performers who cannot afford to hire the expertise — i.e., additional manpower — or to relieve themselves from a nine-to-five job to be able to pursue this development and develop innovative ideas here in British Columbia.

Cost mitigation is another issue that has come up a number of times through various organizations, predominantly the B.C. Chamber of Commerce and the joint taxation committee of the Chartered Accountants of British Columbia and the Canadian Bar Association, in looking at sales tax harmonization.

Again, this issue, the harmonization, keeps coming forward in bringing simplicity to the market as well as the opportunity for the provincial government to move the administration and compliance cost of dealing with their excise tax to that of the federal government and letting them administer it with the HST as they do with other provinces. Not only does the provincial government have a potential savings if such an idea were to go forward…. Being locally here at Cranbrook, so close to the Alberta border, we are losing tax revenue by people shopping in Alberta and, unfortunately, not self-assessing as is required under the excise tax here in B.C. when they're importing those goods back into our province. So there is definite tax leakage, which is part of the issue with our sales tax and our being so close to the Alberta border here in the east Kootenays.

The CICA has announced that they have proposed a project to look at this. One of the items that on there, of course, is tax neutrality, to ensure that the province is not losing funds through such a proposal. I would simply ask that the committee respect that paper — when it is available by the B.C. Chartered Accountants Association — for consideration for the harmonization of sales tax.

Small business in B.C., and predominantly in our area, is one of the cornerstones of our economy. We greatly applaud the government's move to increase the small business threshold from $300,000 to $400,000, as well as the more recent introduction to reduce the general corporate tax rate from 13½ to 12 percent. Small business does truly applaud this as we do believe that it is going to allow our small business to grow.

The other part that we would ask you to consider is that the government continue to monitor their taxation of small business — and those can be the small businesses that are below these thresholds as well — to make sure that the B.C. taxation economy that we have here is competitive such that we do not have corporate e-migration out of our province on tax principles.

The current economy in British Columbia is allowing, through infrastructure and other technological advances, businesses to become a lot more portable. I'm dealing with a lot more Internet businesses that can set up shop in virtually any town they choose. A lot of them are coming in now to say: "Somewhere in Alberta is a great place to have a permanent establishment for

The other one, to go further from Alberta into the portability, is looking at international tax rates and making sure that the province of B.C. remains vigilant in monitoring the taxation of foreign jurisdictions. Any foreign infrastructure that comes to our province to set up shop in manufacturing or other employment services is a new source of revenue to the province of B.C. Anything that can be attracted from outside of our province and our country into our province is a new revenue stream which adds to the top line of our financial statement, something we are keenly interested in bringing in. We are seeing dollars coming into the East Kootenays from overseas. South Africa and Europe, predominantly, are two very large projects that we have in our office right now. It's just phenomenal to see the value that they're going to invest in our property. We'd like to see more of that, and anything the government can do to stimulate that is greatly appreciated by our business community.

The final announcement is on the investment of infrastructure to 25,000 new seats into our post-secondary institutions. This is welcomed by students, parents and the business community. Sitting here in our environment, we are constantly looking for skilled individuals, both for our small business and our professional recruits. The one thing that we ask is that, while we're creating these new seats through infrastructure development, we also concentrate on how to get our students into these seats.

In the East Kootenays we see our students going to the province of Alberta more so than we see them going to our B.C. institutions. I don't know why that is. I'm not particularly happy with that in respect that when they've completed their education, they're now integrated into another environment and they're not coming back to apply those skills into our province. Anything that the government can do to stimulate the growth of our secondary students moving into our new seats in our post-secondary education to then come back and contribute as employees and innovators into our B.C. economy is going to contribute to our future revenue sources.

B. Lekstrom (Chair): Well, thank you very much, Don, and I know ten to 15 minutes is a very short time frame to get the amount of information out there. You've done a very good job of it. Although I believe we could probably speak at length on each issue of each presenter, time doesn't permit.

J. Yap: Thanks for your presentation. I'm interested in your opinion on the total debt. I don't know if you were sitting here this morning and heard the requests from the previous presenter about a number of investments in infrastructure. There's a fairly long list of major infrastructure projects — highways, bridges, hospitals — that will need to be undertaken over the next period of time — say, ten years. It's going to put pressure on the aggregate debt and the ratio.

From your point of view, is there a range of the ratio of total debt to GDP that you would feel comfortable with?

D. Simpson: The position that I know is being advocated by the Institute of Chartered Accountants of B.C. is at 10 percent. The target they were looking at there was to at least see a formulated plan to see that target being achieved by approximately the year 2015. Again, the commentary that I was deliberating in my research was that there was, at one point in time, such a policy adopted by the provincial government of B.C. which was then terminated shortly after adoption. Again, they're still advocating that to set such a target as aggressive as that should then facilitate the reduction of aggregate debt simply for the purpose of reaching that target as the growth of GDP is not anticipated to be, let's say, 5 percent for the next ten years.

J. Yap: But some of the debt will be for infrastructure, so would you differentiate between good debt and bad debt?

D. Simpson: Debt is debt. A liability on the balance sheet is a liability on the balance sheet. It doesn't matter where it's utilized. The issue that has to be more consciously thought about is what infrastructure projects receive the priorities for immediate adoption — those ones that are critical to the health and the viability of our citizens in our province. So when we're looking at health funding and education funding, highway safety issues where it's causing fatalities of either residents or visitors to our province…. It's the seriousness of which items must be attended to — to maintain and protect our safety versus those ones which are potentially deemed to be convenience. If it's a timely opportunity to work on such an infrastructure project, they can be delayed until such time that the debt-to-GDP has been reduced, and as such, the cost of servicing that debt can then be used to service those projects out of current operations rather than new debt financing. It's more of a critical evaluation of which ones need to be done today. Where can we defer so that we can reduce the debt, reduce the carrying costs that finance the operations?

B. Lekstrom (Chair): With that, I am going to have to draw this presentation to a close.

Don, again, I want to thank you. We are falling a slight bit behind schedule, and I want to make sure that we have the opportunity to hear from all of the presenters here today as well as the open-mike session. So again, thank you very much. If you do have a written submission, if you could forward that to the committee, we will make sure every member has a copy. It will be transcribed in Hansard, but if the possibility is there, we'd appreciate that.

Our next presentation this morning is from Elk Valley Coal Corp. Joining us is Cindy Gallinger and Roger Berdusco.

C. Gallinger: Good morning. It's nice to see everyone again. Thank you for having us back. Once again, my name is Cindy Gallinger, and I'm the community-government relations administrator for Elk Valley Coal, and accompanying me is Roger Berdusco. Roger is the manager for aboriginal and regulatory affairs, Elk Valley Coal.

Just to tell you a little bit, first of all, about who we are, Elk Valley Coal is the largest producer of high-quality metallurgical coal for the global steel industry in the northern hemisphere and the second-largest producer in the world. The corporation was formed in 2003 through the consolidation of Canada's senior metallurgical coalmining companies: Fording Coal, Teck Cominco and Luscar Coal.

At present Elk Valley's coal products account for more than 1/5 of the global seaborne trade in hard-coking coal. Our five mines in Elk Valley will be producing approximately 26 million tonnes of coal this year and will have the capacity to produce about 30 million tonnes of coal by the end of this year.

These mines generate annual revenues in excess of $1.75 billion, pay $40 million in direct taxes and employ over 2,900 people with an annual payroll of over $220 million. The economic impact from coal production is felt in virtually all sectors of the B.C. economy.

We've been making these presentations for the past few years, so we thank you for allowing us to speak once again. Some of these issues are the same as last year, but we do have a couple of new ones to add.

Marked fuel. Once again, we are requesting the province look into expanding the permitted use of coloured diesel fuel to include the transportation of all waste rock and coal in the mining process. Currently, material transported from any point other than the original location does not qualify for permitted used of marked fuel, so presently hauling of coarse rejects away from our processing plant, which we consider mining activity, does not qualify for use of marked fuel. Using two different types of fuel on the same job site is not cost-effective — for example, 0.03 cents a litre on coloured diesel fuel versus 0.15 cents a litre on clear diesel. It requires either complicated accounting procedures or dual fuelling stations. Just as an aside, we spend over about $120 million a year on diesel.

Dominion coal lands. Again, we are concerned about a possible change in ownership of these federal lands. We believe it is important that any decisions made about these deposits be consistent with the condition which the federal government originally attached to these lands, which is that coal production would be the priority resource management objective.

A report prepared by the B.C. Ministry of Mines states that there are an estimated 919 million tonnes of potentially minable coal in these blocks. The Dominion coal lands represent an important and significant future resource for sustaining the local coal industry. We request that the B.C. government remain involved in any decisions about these federal lands and be committed to making these coal resources available to the coal industry.

Once again, the Elk Valley tax-sharing agreement. The five Elk Valley coalmines pay municipal taxes into a tax pool that is shared by Elkford, Sparwood and Fernie to the tune of about $7 million. This taxation structure was developed at a time when there was a need within these communities to establish new infrastructure to accommodate the growth of the local coal industry. Today the coal industry is no longer the only significant industry operating in the region, but it continues to pay an inequitable share of the tax burden because of the tax structure that was put into place more than 20 years ago.

The tax structure needs major revisions to make it fair and equitable for all industries operating in the region today. We understand that a tax force is being established to review all property taxes in the province, and we look forward to an opportunity to meet with them.

Future highway infrastructure requirements. This is a new one. We'll be spending close to $165 million in capital equipment this year. We've upgraded the size of our mining trucks from 120- to 170- to 240- and now to 320-tonne trucks. The larger trucks decrease our costs and increase our productivity. The truck boxes for a 320-tonne truck are almost 30 feet wide — just take a look at this room, and it's pretty darn close to the size of this room — and presently require a special permit to allow for transport for repair within the north end of the Elk Valley. A D11 cat dozer without a blade weighs about 230,000 pounds. We need the ability to haul wider and heavier loads 12 months of the year. The requested infrastructure would be similar to the existing infrastructure in Alberta.

Regulations and permitting. The initiatives by government to reduce regulations and the burden they place upon the coal industry are appreciated and generally effective, but more needs to be done in this area. The timeliness of approvals is still a significant concern — in particular, the referrals and consultations required with first nations. Elk Valley Coal has several outstanding applications awaiting the outcome of discussions with first nations. We encourage government to resolve any issues relating to the process of consultation so that project assessment processes may continue without negative impacts on mining operations.

Rail taxation. We are CP Rail's biggest customer. One of the key issues facing the rail industry is the property taxation of railway right-of-way. For example, CP Rail pays over $9,000 per road mile in the province of B.C. — which is the highest in Canada — over ten times the rate paid in Alberta and three times the national average. This is due to the unique classification of railway right-of-way as a utility versus an ordinary industrial property. CP Rail has stated that any reductions in taxes would be returned in the form of capital

investment within the province. As such, this would encourage expansion of the railway industry, resulting in increased employment opportunities and assisting in the reduction of heavy truck traffic on B.C. highways.

Lastly, coal-fired power plant. Elk Valley Coal is appreciative of the efforts made by our MLA and the government to establish an energy policy and emissions objectives that recognize the potential for coal-fired power generation in British Columbia. Based on the new criteria and these positive movements, Elk Valley Coal is currently re-evaluating coal-fired power generation in the Elk Valley. The creation of electrical power from coal in the Elk Valley has considerable potential for job creation and economic return for Elk Valley Coal and this government while respecting high standards of environmental protection.

The importance of the mining industry to the future prosperity of all British Columbians cannot be understated. To date, through its actions in reducing taxation and meeting with industry representatives to discuss the state of mining, your government has shown its commitment to helping rebuild the industry throughout the province. We thank you for taking these steps and look forward to working with you on the outstanding challenges facing the coal industry.

M. Karagianis (Deputy Chair): I had a couple of questions. I'm not actually familiar with your comments here about the Dominion coal lands and possible change of ownership. Who would that be, and what is the proposal? I'm not familiar with that.

R. Berdusco: The Dominion coal lands are two rather large blocks of coal lands that were set aside at the turn of the century. They are federal lands, and there is the potential through treaty negotiation and other processes that those lands may, in fact, be reverted to other than provincial or other than individual interests. That potential is certainly out there. We're aware of that.

M. Karagianis (Deputy Chair): I would guess that you've had some communication with your federal representation in the area?

R. Berdusco: Yes, of course. And we have ongoing discussions with respect to that — yes.

M. Karagianis (Deputy Chair): Okay, so you're really just looking for the province to….

R. Berdusco: To support us and to ensure that we maintain the primary objective of those lands being for the production of coal versus some other uses.

M. Karagianis (Deputy Chair): As part of the treaty negotiations with first nations or…?

R. Berdusco: Any processes — anything. We just want to ensure that that priority objective remains.

The second question I had here. You made mention here of your municipal taxation and task force to review property taxes. I am aware that the Minister of Small Business and Revenue is conducting a provincial sales tax review, but I'm not certain I know of any property tax review. It might be something that you know about that I don't know about.

R. Lee: Will the development of the container port in Prince Rupert help coal export?

C. Gallinger: Yes, with all the mines that are going up north. We are currently evaluating one of our Quintette mines to reopen again as well. We're just looking at the feasibility of it, I guess, right now.

R. Berdusco: We don't ship any of our coal by bulk containers at all. They're all in large cargo ships.

R. Berdusco: No, just large vessels. None of our product goes by cargo-type ship.

B. Lekstrom (Chair): Well, thank you very much, Cindy and Roger, for coming today to present to our committee.

P. Jones: Good morning. I'm Philip Jones. I'm a small business person in the East Kootenays. My companies are involved in real estate brokerage, insurance brokerage, property management, development of real estate, and so on. We currently employ approximately a hundred people. We have offices in Cranbrook, Fernie, Invermere, Kimberley and Marysville. I'm also past president of the Kootenay Real Estate Board, and

currently I am vice-chair of the Real Estate Council of British Columbia. However, I'm speaking here today as a small business person in our area.

The message I would like to bring to you people…. I'd like to thank you, first of all, for the opportunity of making a presentation. I'd like to outline the problems with our economy, as I see them — some examples of those problems and some suggested solutions.

The good news first is that in our real estate market our sales to the end of September in the Kootenay area are up about 40 percent over the same period last year, a pretty well similar case as across all of B.C. In fact, the completed sales volume to the end of September is about the same as it was for the entire year of 2004. We have seen very large increases in sales volume, and that seems quite consistent with what I'm seeing across the province, which is good.

What we do all know…. I was in a meeting a couple of weeks ago with Minister Taylor, and it seems that the government is well aware of the very positive affect of real estate sales on our economy. The more property that is turned over and in private hands and that people are doing things with — building houses…. The spinoff effect is huge in our economy.

What I see as the largest challenge that we have is that even though we have to compliment the government for getting their finances in order and having balanced or surplus budgets, there is still, we believe, too much money taken out of the economy and out of the hands of private people.

The way to solve that, I believe, is one of a number of things. You can reduce spending. I'm sure that a lot of what you hear in these hearings is probably the opposite of that. People have always got more things to spend money on, but it's fairly academic. You either reduce spending, you increase your deficit — which of course we would not advocate, and I don't think anybody would any more — or you increase the tax base. I think there's great opportunity for that.

We have in our area a huge amount of land that's in the ALR. As you're probably aware, over 90 percent of the land base in British Columbia is Crown land. Most of the valley bottoms — our valley here, as you've seen, is a very large, wide valley…. Virtually all of that land is in the ALR. There's a lot of land that is not viable or not ever going to be viable for agriculture uses. The more land we can get into the hands of private individuals, the more opportunity there is to build houses, developments and all the things that create the economic spinoffs.

For example, we had a rancher last year that had the ranch for sale. Things in the ranching industry have not been great. They were able, after about a two- or three-year process, to subdivide off a little piece of their land — about 40 or 50 acres of a 450-acre parcel that was not usable for agriculture. It was sold. The effect was that they were able to stay on the ranch and maintain their agricultural operation. The more of that sort of thing we can accomplish the better.

The other big factor is Crown land. There are huge amounts of Crown land that are not in private hands that could be. They're not necessarily usable for forestry. We know there are a lot of demands on those parcels. The wildlife people would like them all preserved, I suppose. The fact is that wildlife uses the land whether somebody is living on it or not, for the most part, especially in our area.

We would like to see a greater amount of Crown land released to the private sector. That alone would generate huge amounts of revenue for the government not only on the first-time sale but also on an ongoing tax base. The spinoff to the economy, again, as we've already demonstrated in the last few years with the real estate market, is very, very large.

The effect of taxation is something we hear a lot about. It's very real. I have an example that I'd briefly go over. It goes back to the days when we had corporate capital tax. That was taken off in 2001, phased out; in 2002 it was eliminated. I know in our little business we had plans to hire about eight people. We had to put those plans on hold because of corporate capital tax issues. My calculations, based on our corporate capital tax bill, which was very small compared to previous people and others…. I believe it probably cost the economy of B.C. between 8,000 and 10,000 jobs.

I believe that if that level of taxation had been reduced earlier, the job creation would have happened earlier, and the economic recovery of the province would have probably happened a year or two earlier. That's a direct affect that we see in our little business in this area.

The other part of Crown land that is a huge supply of revenue for the government is lakefront property. We have many, many lakes that are not being very well utilized, that are in the hands of Crown. Lakefront property prices are astronomical here, driven mainly by the Alberta market. There's a huge opportunity there, if those lands were put in private hands, to create many more jobs and economic opportunity and a broader tax base without having to spend more money.

B. Lekstrom (Chair): Thank you very much, Philip. Are there questions from members of the committee?

Philip, if I could ask a brief one. You raise an interesting topic: the releasing of additional Crown land for sale. With the amount of Crown land held in British Columbia, do you have a number in mind, like percentage-wise overall?

P. Jones: I haven't done the math. It wouldn't be too difficult to do, but I would believe that a small percentage of Crown land released, maybe 10 or 15 percent

into private hands, would be an exponential increase in revenue for the government.

I know it's always a trade-off. I know that talking to the Revenue Minister at the time about corporate capital tax, I said: "Well, if we were not to do that, we're going to lose $400 million in tax revenues." What I'm saying is that the lost jobs were far greater than the $400 million lost revenues.

The other issue that goes along with that is the property transfer tax. Property transfer tax has been proven by the B.C. Real Estate Association for many years now to be a killer of new home buyers. If that tax were removed, it would be a revenue-neutral proposition because of the increased first-time buyers it would bring into the market. Those numbers are in the Ministry of Finance, and they've agreed with them, but nothing has been done.

B. Lekstrom (Chair): Thank you very much again for taking the time out of your schedule.

We're going to move on to our next presentation this morning. I will call on Mr. Mac Campbell. Good morning.

M. Campbell: Morning. Thank you for the opportunity to present again. I'm here this time with a different hat, as director of the B.C. Chamber, and the district that I have responsibility for is Golden through to Elkford, which is basically the B.C. trench of the Rockies that you've had described to you before.

Each year the B.C. Chamber, responding to initiatives from their member chambers, prepares an annual resolution policy book, which I believe has been presented to all of you people as MLAs. I'm going to presume that that's all been read and understood, and I won't dwell on that. I expect you may also have had presentations from John Winter already.

This region has not been, in the recent past, a large initiator of these policy resolutions. That is changing, and we will be having meetings in January and March, preparing recommendations for our annual meeting, which this year is actually being held in this district, in Panorama at the end of May.

What I've found this past year, attending my first AGM as a director, was the sheer volume of resolutions that had to be taken out of the previous year's resolution book because they had been adopted by the provincial government as policy and initiated into various forms of action. So, thank you very much. It's very gratifying to know that this is a productive process.

In terms of over all, our advice would be to stay the course of fiscal responsibility and economic development and growth that the government has adopted in the last four years. Again, it's gratifying to see this progress leading to the deficit elimination, with surpluses now and the choices that then are faced by you people as politicians.

Looking at what our current requirements are, please keep a very sharp eye on the competitive forces, be it tax rates or regulations relative to our neighbours, in whatever industries we have and where we have to compete. Secondly, take a look at infrastructure — not only new infrastructure, but the condition of existing infrastructure. In many municipalities, there are deficiencies in these areas, and to ignore them is false economy. To have to deal with them at a much later date, when they're having to be replaced as opposed to repaired, your capital cost increases exponentially.

Now, last week we had a district conference of the eight chambers from Golden through to Elkford, and that included Radium, Invermere, Kimberley, Cranbrook, Sparwood and Fernie. We took an economic development thrust on this. We dealt with Cranbrook as the regional service centre and the importance of the expansion of the airport, now to be called the Canadian Rockies International Airport.

Secondly, we addressed the mining sector and the substantially increased exploration, development and now, gratifyingly, production expansion that's taking place, particularly in coal. These are major factors in our area.

The third area that we addressed was tourism development, and we had a fine presentation on the Jumbo Glacier Resort, and how that can actually interrelate into the economics of the airport and other things that are taking place within the region.

We had three primary recommendations that we'd like to present to you now. Some of these ideas aren't original. You've already heard from one or two people, as I've sat through their good presentations this morning.

One is the graduated PST. The tax leakage, revenue sales leakage, into Alberta is extreme in this area of the province, the whole area of the Rockies trench, forestalling retail development that could be taking place in this area. As well, it impedes the retention locally of sales that otherwise are taking place in Alberta, whether it's vehicle tires or gas, whatever. Those are common factors in this area. They're real, and they are impeding the development of our local communities. Interestingly enough, as we have so many substantive resorts now, the bulk of the owners of these strata properties are Albertans and, of course, they're hauling in their consumptive products as opposed to purchasing them here, when that might be more convenient for them if there wasn't such a distinction on the sales tax. That's one item.

The second item is with respect to the Cranbrook airport and its expansion. Northern access to that airport is important. I understand the right-of-way actually does exist for that northern access. Rough numbers, which I guess I really only have as hearsay…. It's about a $10 million number. It would knock off the travel time from that airport to the resorts to the north. Whether you're talking Lake Windermere, Panorama, Golden, Radium or Fairmont or any of those, it would knock 30 minutes off the travel time, as opposed to people having to come down through the south exit at Cranbrook and back on up. That impairs the competitiveness of the airport now and its expansion relative to

the alternative of continuing to service those areas to the north from Calgary International Airport.

Of course, the whole objective here is to make this Canadian Rockies International Airport the primary source of air travel — especially from overseas, as well as eastern Canada — to this region, and to maximize the return on the present commitment from the provincial government and the one still awaited from the federal government on this airport expansion. It will be enhanced if that northern access is provided.

The third topic was…. You're perhaps aware that the Alberta government has announced plans to double the lane widths of the highway in southern Alberta into the border. Of course, that is going to add to the congestion and the dangers referenced earlier, especially in that segment of Fernie to Elko on Highway 3. We need to be now planning to expand that from the Alberta border to Cranbrook. That's basically our task force's initial recommendation.

Obviously, with the capital costs involved, it will be done in phases, so we would support the earlier recommendation that you address Fernie to Elko first. As you move from four lanes at Crowsnest Pass into our narrow two and all the dangers involved, the lineup is going to start right at the border. So we'd better plan ahead for that. Also, making the airport that much more effective from Cranbrook to Fernie, Elkford and those areas is another justification to start the planning and the planning of capital for those improvements.

Those are my comments. I'll follow this up with a letter to the committee. I welcome your questions, and thank you for the opportunity to present.

B. Lekstrom (Chair): Terrific. Thank you very much. We have Dave wishing to ask a question.

D. Hayer: Thank you very much, Mac. One question is: how many chambers are in your district? I used to be district rep myself for the B.C. Chamber back in '95-96.

D. Hayer: What's the total debt worth — debt-to-GDP ratio? We had one of the presenters this morning saying maybe we should look at total debt and forget about the infrastructure until we have the money there to improve it.

If the economy is growing, your debt-to-GDP ratio is decreasing, and you can borrow some money to look at transportation. For some of them you need to have a strong economy. Otherwise, your economy will start collapsing on itself, because transportation is another improvement. What is your opinion on that?

M. Campbell: Frankly, I've supported the provincial government's view, which has been to move it towards 15 percent on a planned basis, I think, but I stand to be corrected on that.

I'm from the school that looks at what expenditures led to the debt. If you've got expenditures that are producing investment returns — saving costs, saving lives and saving health — some of those capital costs that produce cost economies can justify debt. I don't think the consumption kind of expenditures can justify debt. You have to have a pay-as-you-go program on those portions. Partly, this reflects my real estate and corporate finance background, but I'm always looking at how you will service debt on a sustaining basis and whether it's economic.

R. Lee: In terms of debt reduction and tax reduction, which is your priority? For example, how do you see service evolve?

M. Campbell: I'd like to see the debt-to-GDP ratio going down. I think it's nice to see aggregate debt going down. I do know that there's a lot of false economy going on with infrastructure, health and preservation. You know, looking at the Pakistan earthquake now and understanding the commitment of the province to structure enhancement in the school system, you can't help but think that maybe that program could even be accelerated, as opposed to…. Right now the plan is getting it done over 15 years. I'd hate to have a problem hit in the 12th, when you might have been able to do it over ten. For those kind of capital expenditures, I think, debt can be justified for reasons of safety and economics.

R. Lee: If you are rating the priorities for tax reduction and debt reduction, which one is higher?

M. Campbell: Well, defensively as well as offensively, we've got to be conscious of what the competitive forces are that we're impacting. As an example, we're held back in this region in terms of its retail development by lack of a graduated-tax situation relative to Alberta. That is competition.

I think you're ultimately going to have to probably balance them and do balanced portions of both. I don't think you can do one exclusively to the detriment of the other.

B. Lekstrom (Chair): Well, thank you very much, Mac, for coming and presenting to our committee.

We're going to move on to our next presentation this morning. It comes to us from the Kootenay Livestock Association. Joining us is Faye Street, Donna Morrison and Peter Fisher. Good morning, and welcome to the committee.

D. Morrison: Good morning. My name is Donna Morrison. I'm the finance committee chairperson for the Kootenay Livestock Association. Today I'm speaking to you on behalf of the umbrella organization, which represents the ranching industry in the East Kootenays. KLA's membership includes grass-roots organizations from Golden to the Montana border and from Creston to the Alberta border. Our members col-

lectively run approximately 13,000 head of mother cows, 2,000 head of yearlings and 450 head of bulls. The ranching industry, historically, has been a stable resource-based industry directly contributing approximately $350 million to B.C.'s economy annually.

The ranching industry has now endured several years of extreme hardship. Our members have worked very diligently to maintain their ranching operations. Your government has listened to our concerns and has helped to support our industry, and for this support we say a very sincere and heartfelt thank you.

My submission to you today will outline the areas where the cattle industry has received your support in the past and is looking for continued support in the future. I will also outline crucial areas where government financial support will be necessary to address the many challenges that the ranching industry continues to face.

First, I want to thank you for your government's response to our continued concern to replace substandard and decadent highway fencing along Highways 1 and 2. Some of these fencing projects are being done as we speak, and it's been a real boost. These fencing replacement projects need to continue until all highway fences provide the motoring public the safety that we all expect and deserve.

Second, noxious weeds have long been a huge concern for ranchers. Finally, other land base users are recognizing the importance of the weed infestations and their devastating impact on our rangelands and forage. Your government has increased funding for noxious weed programs and has provided the Kootenays with a $1.2 million pilot project over three years. We are proud to say that the pilot project went very well this year and will be even bigger and better next year. We thank you again for the support. KLA recognizes a need to have a continued financial commitment for this war against invasive weeds. This is not a war we can afford to lose — not in this part of the province — at all.

The agriculture industry appreciates the government of B.C.'s contribution to the federal CAIS program — that's the Canadian agricultural income stabilization program. Ongoing improvements to this program could include the reality of negative margins in their calculation of program benefits, especially in crisis times like the industry has been experiencing.

The recent hiring of a position for the director of range in the Ministry of Forests has many in the cattle industry excited. Although this is a temporary position at the present, we would ask for your support in funding this director's position for the long term. The cattle industry has long been advocating for some strong leadership within government to address the pressing and important issues of our valuable range resource.

The optimism that comes with this position is the hope that the range department will be generously funded to address the critical issues on range that B.C. cattlemen, KLA and others have long recognized as being sadly neglected — issues that have brought the range resource to the state that it is in today.

Pressures and challenges still impact the success of the sustainability of the cattle industry. Loss of forage due to forest ingrowth and competition with increasing numbers of wild ungulates continue to be challenges at the top of the list. Forest ingrowth, up to 15 percent per year, is reducing the forage available for cattle and wild ungulates alike. Grasslands are being damaged by heavy recreational use, and noxious weeds continue to spread by replacing good grasses with weeds that no animal will eat or that, if eaten, are often poisonous to them.

Our fifth concern is forest ingrowth. Forest ingrowth also presents a concern for extreme wildfire hazards. The KLA supports the use of controlled burns as an effective management tool to eliminate non-merchantable forest ingrowth and to improve the forage on our land base. In previous years there has been little or no funding available to carry out these desperately needed controlled burns. Burning index issues also need to be relaxed or more flexible so that planning and implementing of these burns can take place in a timely and efficient manner.

Enhancements for the recovery of our natural grasslands need to be funded. Other management tools — like mechanical harvesting, thinning projects and grass seeding, for example — need to be funded so that the present mandate of treating 3,000 hectares a year is accelerated to the point of restoring the grasslands.

Cattle ranchers have been cut back in the AUMs that are allowed on range as a result of decreasing forage available. There aren't too many industries that can support a 20-percent cutback, often. This is from forest ingrowth and increased wildlife populations. The cattle industry is being severely impacted by the lack of results in forage improvement.

Our sixth concern is urban growth expansion. This also impacts the range resource. Parcels of private land that are bordering on Crown range need to be fenced to a forestry standard that is capable of holding cattle. What is happening now is that people are building in these areas, for many different reasons, and bringing with them urban expectations without understanding the responsibilities of fencing out cattle. The new landowners usually do not embrace their obligations to provide and maintain a proper fence to keep cattle off their property, often allowing the cattle to get onto highways or into more populated areas, where the problems increase with cattle at large.

We believe it could be mandated that before property is sold, the property must be properly fenced to forestry standards, similar to having to have a proven water source or a well. We strongly urge your government to pursue our suggestion, as it is also vital, in many cases, to the safety of our motoring public.

Our seventh concern. The development of water sources on Crown range is an ongoing challenge for producers. Proper funding of these developments is needed. At present ranchers have to find the water source, plan for the changes, find the funding for the changes, do the majority of the physical work, imple-

ment the changes and also maintain the developments. Ranchers have experienced frustration when trying to drum up any funding for projects for water developments.

These developments cannot be carried out without sufficient and available funding. It cannot be expected that the rancher will foot the bill for projects that support the good of all. Please consider reinstating the grazing enhancement fund that your government deleted. This was a very good program, and we desperately need it back.

Our eighth concern is provincial health legislation which has made changes in regulations that impact farm-gate sales of meat. KLA has been proactive in trying to establish a local abattoir and a proposed local processing facility so that meat producers can be in compliance with these new regulations. We need financial assistance to get this facility up and running.

With this facility in operation, agriculture producers will have an opportunity to overcome some of the ebbs and flows of U.S. politics that have impacted our industry these past, and possibly future, years. The facility will also provide a means to comply with the new health regulations and offer locally grown produce to local consumers. When we produce great-quality products locally, it makes little economic and environmental sense to truck it back and forth from where it's consumed.

After September 1, 2006, we will be unable to offer these great products without breaking your government's new law. We agree with the new legislation, but with present steel prices and increased standards for abattoirs, we must have financial assistance for the capital costs.

Our next concern is that interior Crown range fences — fences are a big issue for us — are in a deteriorated state. These fences are well over 30 years old and are in bad need of replacement. Interior fences are used as a means to rotate cattle from one pasture to another so that grass utilization is maximized.

These fences have often been damaged by heavy wildlife use or cut, pulled out or destroyed by recreational users — ongoing. The costs for repairs have been shouldered by our industry with no inputs from the other users of the land base. Funding needs to become available to replace the interior fences as soon as possible. These fences are critically ill, and when they die, our industry faces a serious challenge that we have no way to overcome.

We believe that many of the very issues we are bringing forward to you have strong environmental benefits to the land base and are in the best interests of all the people in the province. It goes without saying that being a lifetime rancher requires you to care passionately about the land base, both private and public. A rancher must be a good steward of the land.

The land is our lifeline, and it allows us to provide you, the consuming public, with clean, healthy, nutritious protein. On that subject, we would like to compliment your government on the new healthy eating initiative, striving for the goal of healthier British Columbians. In today's world, where there is never enough money to cover all the health care needs, it's very encouraging to have a government that recognizes the importance of healthy food for a healthy population, which is why KLA always recommends that your Minister of Health and your Minister of Agriculture sit side by side in the House and converse on a regular basis. Healthy food creates a healthy population, which reduces health care costs. That's what agriculture is all about — right?

I have addressed today the many issues that our industry is challenged with on a daily basis. We've recognized many of our needs and ask that you set aside funding for the following issues: to continue the war on noxious weeds, to reach the goal of restoring our forage base and Crown land, to gain control of the forest ingrowth, to improve our water resources, to replace interior fences on Crown rangeland, to support our effort to establish a local abattoir, to include negative margins into calculations of CAIS benefits, to address fencing concerns about urban growth near Crown range and to support the range manager's position.

We appreciate this opportunity today. Thank you. We're really pleased with the good job you are doing. We want to thank you for your support in the past and look forward to your support in the future. And I just want to say that a big thank-you needs to go out to our local MLA Bill Bennett, on behalf of all our members, for his efforts. He's really been adamant, and he brings all of our issues to the attention of the Legislature, and we really appreciate it.

B. Lekstrom (Chair): Well, thank you very much. I think your presentation was very well-thought-out and -put-forward. I appreciate that. As well, I'll echo your comments on your MLA: he does represent you very well down in Victoria.

With that, I'm going to look to members of the committee, if they have any questions regarding what you've brought forward today.

Possibly, if I could start on the issue of rangeland and so on and — something you didn't touch on in here, but I'm just curious if it is a concern — the issue of wildlife intrusion. It's a huge issue for us in the Peace area right now. They're multiplying significantly, creating havoc for our ranchers, particularly, and our farmers. Is that problem here as well?

D. Morrison: That has been just a longstanding problem. Our wildlife problems have increased. We've tried many different strategies to overcome it. We're still experiencing what we call homestead wildlife problems. Homestead elk are elk and deer that don't go anywhere. They don't go up to the higher lands in the summer. They stay all summer in our irrigated fields, in the places where everybody else grazes.

F. Street: If I could just add to that, I would like to compliment your government on the pilot project they

initiated in this area, the East Kootenay wildlife pilot project. We have run that for four years now, and it has been extremely successful. The initial ideas of that were prevention, mitigation, compensation.

We look first for prevention in order to keep the wild ungulate pressures off the private ranchlands, and we've done that by fencing. That has been hugely successful and has really offered huge economic boosts to some ranchers — as much as up to two tonne per acre per cut. We take three cuts in this area, or two cuts and an aftermath grazing. So when you sit down and put a pencil to that, it calculates out to thousands and thousands of dollars that were actually saved by this project.

Now that the pilot is over in the Kootenays, it's being allowed to be moved all over the province. It's something I'd really recommend that your agriculture industry in the Peace look at, because it has been very successful here.

We have also offered compensation, but I firmly believe that compensation is sort of the difference between offering someone a job or offering them a welfare cheque. There's nothing wrong with the welfare cheque if it has to be and it's the only way. But if there's a job available, then that's the best way to go. It helps the tax base in this province — right? It helps stop that ongoing bleeding from the financial coffers.

The program has been very successful here, and Bill Bennett, again, was very influential in helping us get it going. The Kootenay Livestock Association has administered it. I think we administered it very well. Our administration fee at this point is under 9 percent, which we're very proud of. That is a program that has been just great, and I would like to see it go as far and wide in this province as possible.

B. Lekstrom (Chair): All right. Thanks very much, Faye. We do have another question. I'll go to Dave.

D. Hayer: On page 8 you have a summary of money you want to set aside for the nine items. Do you have any idea how much money altogether you're looking at for those nine items?

D. Morrison: Things like the forest ingrowth and…. It's just definitely ongoing, but it needs to be done. It's going at such a slow pace right now. We've got enhancement projects that are being done, but they're being done in such a small package that by the time it makes any impact, there's nothing. The elk come right to the new, improved areas, and boom.

F. Street: We're losing more acreage to ingrowth every year than what we're gaining by the ER work, so it's a program that's running way behind, and it really needs to catch up. If you're asking about priorities, the Crown range fencing is certainly a priority. At our meeting tonight I'm going to do the budgeting, and we're going to ask for a pilot project for the Kootenays, because these types of fences are in excess of 30 years old, and they're falling down. You have new FRPA legislation, which was introduced two years ago, that puts us in serious trouble if our cattle are in the wrong pastures at the wrong time. Without these fences that's exactly what's going to happen. To expect the ranching industry to rebuild all these fences on Crown land is like asking you people to do all the repairs on the legislative buildings out of your wages. It's just not possible. So that is a huge priority.

R. Lee: Do you have a large meat-processing plant in your area? Would there be any potential for establishing a big plant to process cattle?

F. Street: You're referring to the abattoir. We have nothing here, sir. We have no processing facility here, and we never have had. We've been basically an open area. But now that the new meat legislation is on your books and becomes effective September 1, 2006, all of the farm-gate sales in this area will come to a screeching halt, or we will be breaking your law. I don't know if you know, but there are significant penalties for breaking that law.

It's not that we disagree with your new law. I think it's a good law, because the food safety program Canada-wide is extremely important. We need to maintain…. Canada is known as producing one of the cleanest, healthiest food products in the world, and we need to maintain that. However, in order to do that, we have to have a licensed kill facility. We don't have one here, and we never have had one here.

The new regulations require mostly stainless steel, galvanized steel with baked-on enamel. The costs are huge. You can no longer go out and put up an abattoir for what you used to be able to put up an abattoir for. It's sort of like me saying to you: "If you want this job, you must drive a Rolls-Royce, but I'm only going to pay you what you can afford a Volkswagen for." There's a huge difference there. We have to have some help with the capital, or we can't do it.

That, again, is going to really reduce the income ability of the local ranching industry. Many, many ranchers in this area sell farm-gate beef, but there's also a huge small-lot agriculture in this area that sells everything from lamb to pork to chicken. We have a huge, growing number of consumers out there who want to buy locally produced product. It helps save fuel, it

helps reduce environmental pressures, and we have the local product. There are a lot of people out there who prefer locally raised on a mom-and-pop operation, the way they believe food should be raised, rather than the large-factory food. It's something that we need to do. It's something that's going to help the economy, but we have to have an abattoir to do it.

R. Lee: I would like to clarify my question. My question is: is there any capacity in this area to have a large processing plant?

F. Street: We have crunched our numbers on the capacity for this area. We're running, as Donna said, about 13,000 head of mother cows right now, which gives you approximately 12,000 head of calves. The abattoir we're proposing to build will do 4,000 head of animals per year on a one-shift basis. We've calculated it out so that if we need to grow, we will double-shift or triple-shift rather than build a larger capital facility.

We've crunched our numbers on beef, which I've just explained to you. There is also a huge number of pork out there, as well as lamb, etc. We feel that the size of the abattoir we're proposing…. Yes, we can sustain in this area. That's the way we crunched our numbers.

B. Lekstrom (Chair): Faye, Peter and Donna, I want to thank you for coming to present to our committee here today.

Our next presentation this morning comes to us from the Resorts of the Canadian Rockies. Joining us is Mr. Andy Cohen. Good morning, Andy.

A. Cohen: Good morning. Firstly, I'd like to say that I'm happy to be here. I just got your little brochure on how to do the written submission. I didn't quite do it to what was in that brochure. That's because I did it on the plane this morning coming from Kelowna. I've been travelling about seven hours so far — to go to Vancouver, then to fly back here so I could be here today, which has somewhat to do with tourism, actually.

The other thing I'd like to start with is that I'd like you guys to assure me that you can talk to the Premier and make sure that there's abundant snowfall this winter.

A. Cohen: I live in Kimberley. I'm the general manager for both Fernie and Kimberley Alpine Resorts for Resorts of the Canadian Rockies. We employ approximately 1,500 people on a seasonal and year-round basis. I'm also the owner of a small development company called Tall Pines Development that builds and sells — hopefully sells — resort townhomes in Fernie and Kimberley.

Basically, I have four points that are a little bit bigger picture. The fact that you guys can go from debt reduction to agriculture to tourism is amazing.

First and foremost, access to southeastern B.C. is still the number-one issue for increasing economic development, in our view. Huge congratulations for your support of the Cranbrook airport expansion. It's going to be a fantastic addition to the region and, obviously, to the city of Cranbrook. But we understand that the work has just begun. We still need to go out and find the air service and create the connections that will be critical for the success of the region and of the airport itself. We still need your support. Highway improvements and transportation infrastructure have to remain high on the priority list for sustainable development to take place in this part of the province.

Number two is a concept that we've been discussing for a long time. It's a difficult one, but it's a critical one, I believe. It's a tourism-related end-user fee. We have to create a model for local revenue collection from tourism guests, basically — the end users. The way it works now, the tourism operators can't compete on a regional, international basis without the ability to collect fees from the guests that actually come here from away. Our current system requires operators to bear the burden for many tourism infrastructure costs, and the market is absolutely too competitive. Our reality is that we can't afford to pay for local shuttle systems, transportation systems, long-haul marketing campaigns, signs — all the different things that the rest of the world is providing to that guest on a competitive basis.

In most other parts, regionally — and I'm talking about the Pacific Northwest and the States — our competition has the ability to charge up to 25 percent in additional tax on top of the guest's bill, and they use that money to pay for a lot of these services. We strongly believe that if we don't address that issue long term, we won't be sustainable in the tourism business, not only in B.C. but, we think, in Canada. It's a system that has to be looked at.

A third issue is a fair and competitive property tax assessment system. We've had a lot of issues with inconsistency and perceived unfairness of the assessment system, and it is cause for great alarm. There is a serious potential for the loss of hotel taxes, property taxes and sales taxes if the resorts become non-viable due to today's practices. For continued growth in employment and tax revenues, this issue must be addressed.

Resort closures due to excessive and non-competitive costs will cause dramatic economic gaps in rural communities. This issue is a lot more real in most of the province than it may seem. It's a big one.

Lastly, the one-size-fits-all model. Rural economies must develop localized policies for every aspect of economic development. While the government has done much in the way of deregulation, we must continue to work on the entrepreneurial success of small, rural

business. Unrealistic costs and compliance with lower mainland issues causes great strain on rural business. Policies need to be continually reviewed for their commonsense application in rural parts of British Columbia.

B. Lekstrom (Chair): Thank you very much, Andy. I'm going to look to members of the committee. I'll begin with Maurine for questions, and then Leonard.

M. Karagianis (Deputy Chair): Andy, could you maybe just clarify a little bit more your point four, here, about one size fits all? Can you talk about what kind of compliance you're referring to here?

A. Cohen: Specifically, there are issues with the home protection office, development, actual construction statutes that have been put in place for issues that may have happened in the lower mainland.

As an example, I had to add a rainscreen to a three-unit building because of the leaky-condo debacle in the lower mainland, and it rains here about 11 inches a year. That added about $30,000 to a building.

I know you folks have heard this before, but there are a lot of things that we have to do out here that don't necessarily make sense in this environment or this economy. That's a good example of one.

M. Karagianis (Deputy Chair): It would probably be helpful for us if we had a list of some of those things, because again, it's not something that's readily apparent from your remarks. That might help a lot — to have a bit more clear and concise list of what these issues are.

B. Lekstrom (Chair): Andy, if you could get that to the committee, that would be much appreciated — through the Clerk's office — and we can make sure that every member gets a copy as well.

L. Krog: I just want to clarify, in item two, when you talk about your competition charging up to 25 percent to pay for this infrastructure, you're talking about things like hotel taxes and things to support local marketing initiatives in tourism.

A. Cohen: Yes. The surcharge is when you charge $100 for a package and $100 for a package. Here we get the 8 percent and possibly the 2 percent additional on top of that. You can go to other markets, and you can pay an additional 25 percent. That money gets pooled and used for very complex and massive systems that our guess…. It's difficult. We end up having to do it and pay for it. The only way to recover it is through price, which again makes us less competitive.

J. Kwan: In your second bullet you talk about tourism-related end-user fees, and then you highlighted a number of items, such as the local shuttle systems, the long-haul marketing campaigns and other tourism facilities out of the operating funds.

What are the long-haul marketing campaigns? One question. And then the second question is: have you brought these issues to the tourism association, where they actually got a lift from government, I presume, to do advertising campaigns around tourism? And what's their response?

A. Cohen: First question. Long-haul marketing campaigns are just an example of what tourism businesses in B.C. need to do to sell more than just people who drive around. So people, basically, if they're going to fly in — whether it's from Ontario or Quebec, whether it's from points in the States or from the United Kingdom or Australia — the cost, obviously, of those campaigns goes up exponentially. If you have to take that out of your pocket as a business, obviously, your margins shrink.

Our competition funds many of those types of campaigns. So when we sit side by side in a booth at, let's say, the ski show in London, we're paying for it by writing an additional cheque. Our competition is paying for it by the collection of these fees.

J. Kwan: Sorry. Just on that thing. I'm wondering: why can't the B.C. tourism association pick up that cost? Because part of their campaign in terms of boosting tourism in British Columbia, I would assume, includes activities as such. Do they not?

A. Cohen: Yes, which leads into your second question. There has been a lot of dialogue on that basis. Sometimes the campaign is not effective. Sometimes the use of those funds isn't what you need to do as a business or as a region.

For instance, if we solely relied on our local regional tourism district, the campaigns that they're embarked in…. We have input, and we're part of that, but it doesn't necessarily create the results that we have to have as a business to survive.

That's a different issue, I guess, but it is a real issue. Did I answer the first part of your question?

J. Kwan: Yes, you did. Thank you. You clarified it for me. You answered the second part too.

B. Lekstrom (Chair): Andy, thank you very much, certainly, for taking the time out of your schedule to

Our next presentation this morning is from the Selkirk Students Association. Joining us is Dave Westmacott. Good morning, Dave.

D. Westmacott: Good morning. Thank you for the chance to sit in front of you today and participate in the prebudget consultation process.

I'm the president of the Selkirk Students Association, David Westmacott. This is an important process for students to be able both to give the province information on how past budgetary decisions have affected students and to offer our recommendations on how to use the 2006 budget to improve B.C.'s post-secondary education system.

The Selkirk Students Association represents approximately 800 full-time and 500 part-time students at Selkirk College in Castlegar. The students we represent are diverse. Most students are from the Kootenay region, but a large proportion of students are from across B.C. and Canada as well as from across the world.

Selkirk College is one of a number of post-secondary institutions throughout the province where enrolment figures are declining. Tuition fees in British Columbia have, on average, doubled over the last four years, and students at Selkirk College have been affected by this as well. While average tuition fees at Selkirk College for students in an undergraduate degree transfer program have gone from $1,422 per year in 2001 to $2,448 per year this September, fees in many other programs are even higher. For example, a nursing student pays, on average, $3,562 per year. Pharmacy technician students pay $3,877 per year, and aviation students pay a whopping $20,000-plus per year.

With tuition fees this high, really it's no wonder that post-secondary education has been priced out of reach of the average resident of the Kootenays. Figures show that enrolment at Selkirk College has declined by approximately 5 percent per year since the tuition fee freeze was lifted. This drop in enrolment has been particularly significant in university transfer programs as well as aviation, computer information systems, early childhood education, forestry and integrated environmental planning.

It's not just enrolment at Selkirk College that's declining. Per-student funding has dropped as well. According to the 2004-2005 institutional grant letter from the province, per-student funding at Selkirk College was $9,457 per full-time-equivalent in 2003-2004, down to $9,439 in 2004-2005 and has dropped to $9,259 this year.

In a time when it's more important than ever to have a post-secondary education system that is accessible for ordinary British Columbians, fees continue to rise steadily and per-student funding continues to drop. This means that fewer British Columbians are able to get the education they need to obtain stable, long-term employment and that our public institutions are far less able to cover the costs of high-quality education or the kind of comprehensive program that today's job market calls for.

Student debt is also growing rapidly in Canada. Tuition fees present a financial barrier, especially for students coming from lower- or middle-income families. Because of this, many students have to borrow to cover the costs of their education. Student debt grew by an average of 30 percent between 1995 and 2000 according to Statistics Canada, meaning that more students have to borrow to cover their costs and that individual students are borrowing more. Scotiabank also recently put out a study showing that more students are working while studying, which is not surprising to students at Selkirk College, considering the recent dramatic climb in tuition fees. I'd also like to note that this also extends the period during which students are seeking an education and reduces their opportunity to gain a higher level of wage and to contribute more to the economy in the long run.

Because these factors are affecting the ability of average British Columbians to get an education in the Kootenay region, as well as elsewhere in the province, students at Selkirk College would like to see the province take the following steps to improve accessibility and quality. Increase the per-student level of funding from the province, reduce tuition fees, and take further steps in providing student financial assistance that reduces debts, such as grants.

Increased per-student funding will ensure that institutions can continue to offer high-quality programming without the need to increase tuition fees or ancillary fees. This funding will allow institutions to offer a wide range of programs such as high school upgrading, vocational and technical training, and university transfer programs and still cope with the differing costs of offering these programs.

At Selkirk College tuition fees vary between programs of study. By increasing per-student funding, these differential fees can be eliminated, ensuring that students with modest financial means are not priced out of some programs. As well, increased per-student funding could incorporate sustained funding for programs with higher operating costs, such as trades training, to ensure that fees in these programs do not have to go up.

Students at Selkirk College are concerned about the implementation of fees for adult basic education, as well, as these courses have a very real impact on whether people have the chance to pursue further education. We encourage the province to keep ABE free and eliminate tuition fees for ABE, where they exist, for all students.

Increased funding for skilled-trades training is also necessary. B.C. faces an impending skilled-trades shortage, and the province has said it will expand seats in the trades. But those seats need to be funded at a

If students in the Kootenays can't afford the tuition fees for these programs, they will lose out on job opportunities in the long term. That is especially of concern because unemployment in the Kootenay region has stayed between 9.4 and 11.5 percent in the last three years. You'll note that that's several points higher than the provincial average and much higher than the lower mainland and southern Vancouver Island.

Tuition fees in any program present an impediment to access for students from average backgrounds. Reducing tuition fees will let those students from average families get an education, whether it's at Selkirk College or elsewhere in the province. Also, a reduction in tuition fees will mean a reduction in student debt, allowing new graduates to focus not on paying back loans but on buying homes, starting families and starting a new life in this province.

This year the government of B.C. can truly make tuition fee reduction a priority by dedicating B.C.'s share of the federal budget amendment to post-secondary education. The government also needs to make non-repayable student financial assistance a priority. Financial assistance that reduces student debt will enhance participation, especially amongst students from lower-income backgrounds. Financial constraints are the number-one barrier keeping lower-income people from participating in post-secondary education.

Recently the province announced that it would fund a loan reduction program that will forgive $65½ million this year in student loans. However, in the same breath they took away the grants program. Without an upfront system of grants, many potential students from lower- and middle-income backgrounds will choose not to access post-secondary education because the upfront costs will be too high. It is a frightening prospect for many students to wait until the end of the year before knowing if they are several thousand dollars more in debt or if they've won the loan reduction lottery.

In conclusion, students at Selkirk College feel that it's vital that government policy on post-secondary education include an increase in the per-student level of funding from the province, a reduction in student fees and further steps for providing student financial assistance that reduces debt.

Thank you for the opportunity to present to you today. I can now take any questions.

Possibly just a quick one from myself to start, if I could. You stated that unemployment is between 9 percent and 11 percent in this region. Obviously, I believe I have some different numbers. I think the Kootenays led in job creation in all of the province in 2004, so if it's possible to forward us some information so that we can cross-reference, I would very much appreciate that. Numbers are important when we talk about 9- to 11-percent unemployment versus 6 to 8 percent. I mean, those are significant differences. If that's possible, we would very much appreciate that.

J. Kwan: I'm also interested in the studies that you referenced. You referenced a couple of studies, I think — one from Scotiabank, for example. I wonder if you could forward that at a later time to the committee as well. It would be very interesting, of course, to look and see what other people in different sectors might have reviewed and what they found around the education sector, for information. Thanks.

D. Westmacott: Is there one address that I should send these to, or should I be….?

B. Lekstrom (Chair): Certainly. Jacqueline at the back at the desk will set you up with that.

L. Krog: I just want to say to you, Dave, briefly, that that was a very articulate and first-class presentation. We've had presentations from other student associations, not surprisingly. I'm just surprised that none of you have called for the complete elimination of tuition fees. Ireland is one of the most successful economies in the world, with no post-secondary tuition fees. It just strikes me that you might want to add that to your list of requests of government, and I encourage you to do so.

B. Lekstrom (Chair): Well, you know, as a committee, I think we're supposed to receive submissions, but…

B. Lekstrom (Chair): All right. Are there any other questions of Dave? If not, Dave, thank you so much for taking the time to come and present to our committee here today.

B. Lekstrom (Chair): Our next presentation this morning is from the New Car Dealers Association of British Columbia, Alpine Toyota. Representing Alpine Toyota, as well, is Terry Parsons.

T. Parsons: Good morning, everyone. I'd just like to say thank you very much for allowing me some time to speak to you folks today.

My name is Terry Parsons. I am here on behalf of the New Car Dealers of British Columbia. First, I would just like to welcome you all to Cranbrook. I hope you're having a good time in the time that you've been here, and I thank this committee and its members for visiting our community to hear about the priorities that matter to the people that live here.

Anyway, considering the hour, and so as not to bore you with the same verbatim speech that you heard from my colleague Jim Inkster in Dawson Creek on Tuesday, October 11…. I was talking to Jim, and he told me that he basically read the speech that you have copies of. So I thought I wouldn't bore you with too much of that this morning, and in light of the hour, we might want to break for lunch shortly.

I would just like to say that we, the New Car Dealers of British Columbia, are very pleased and impressed with the many changes that you have made relating to our industry, which not only benefit our industry but, more importantly, benefit our customers. The changes you have implemented to date are very positive, and we are heading in the right direction. However, there is still much work to be done, as we still have a number of important issues to address that negatively affect our industry and, most importantly, our customers.

Tax simplification is one of the items. New vehicle luxury tax and the trade-in tax credit on leases are all areas of concern that we need to have more dialogue on. We feel strongly that these issues deserve the committee's attention. Basically, our message to you is simple. I think you've heard these words before. When it comes to issues of taxation, we need to make the system as simple for business as possible and to make it as fair for the consumer as possible.

Simplify the rules around PST collection, and don't punish small business people for providing this valuable service. Make the purchase and lease of a new vehicle more fair for the consumer by eliminating what we call the unfair luxury tax, and extending the trade-in tax credit to leased vehicles, not just to purchase vehicles.

Other than that, that's about all I have to say to you folks today. I appreciate the time, and thank you for your attention to these matters.

J. Yap: I have one. Can you give an example in terms of your point on tax implications. Give us an example of a complicated aspect of tax….

T. Parsons: Okay. Basically, the PST rules, as they stand now, are very complicated and convoluted for small and medium-sized business operators, and they're hard to interpret sometimes. It leaves us vulnerable to government auditors, and their interpretations of PST regulations can vary from region to region and, sometimes, auditor to auditor.

We talk about shop supplies. I mean, we pay on shop supplies…. We shouldn't be paying tax on shop supplies because when we do a work order up for somebody, we charge them tax on the shop supplies, so it's double taxation, in effect. We'd kind of like to simplify that so that we're all on the same page and it's all very clear to us so that we don't get taken advantage by auditors — well, not taken advantage of. We don't understand it properly, so if it's clear to us and if you could simplify the rules a little bit better, it would be better for all of us.

Seeing none, thank you very much, Terry. You're right: you're coming after a previous speaker. I think we did grill Mr. Inkster quite well on some of these issues.

Our next presenters are Troy Sebastian and Donna Kraus from the Ktunaxa-Kinbasket Treaty Council. Welcome.

Welcome to traditional Ktunaxa territory. It's great to see the committee come to town and provide us with the opportunity to present to the province on issues that are important for the Ktunaxa Nation as well as other citizens from the region. We have a written presentation which is being provided to the committee, and I'll go through the presentation. Obviously, if there are any questions, etc….

I should start by saying that my name is Troy. I'm the director for the Ktunaxa-Kinbasket Treaty Council for treaty lands and resources, so most of the things I'll be talking about today are related to those issues.

A backgrounder on the Ktunaxa Nation. We've occupied this land here in the East and West Kootenays for well over 10,000 years. Our traditional territory within the province covers some 70,000 square kilometres, which is a huge area. Our traditional territory goes into Alberta, Montana, Idaho and parts of Washington as well. Citizens of our nation reside within the following communities — and you can see that in the presentation: Akisqnuk in Windermere; St. Mary's Indian band Yaqan, which is where I'm from here in Cranbrook; Lower Kootenay Indian band down in Creston;

Tobacco Plains band near the border with Montana; Shuswap Indian band, also in Invermere; and the Kootenai Tribe of Idaho; and Elmo. We also have a band in Montana and Idaho.

Many of our citizens, as with other first nations communities, live off-reserve, and presently the Ktunaxa Nation is represented by the treaty council. We represent the citizens in B.C. in the treaty process. We're currently in stage four of the treaty process. That's sort of the background.

In the September 12 Speech from the Throne, Lieutenant-Governor Iona Campagnolo set out the provincial priority for ending the inequities facing aboriginal paper. She stated that "innovative strategies are required to reverse the trends that have left too many aboriginal people behind in education, health and economic opportunity." As you're aware, the Speech from the Throne called for the establishment of a new relationship with first nations, working with aboriginal leaders to achieve a vision of eliminating within ten years inequities facing aboriginal people — certainly, a very admirable goal for all people in British Columbia.

The nation appreciates the government's acknowledgment of the need to establish a new relationship with first nations founded on reconciliation, recognition and our respective aboriginal rights and title, and the initial steps taken toward building this new relationship. Due to time constraints I'll focus on three things: the New Relationship fund itself, revenue-sharing in economic development and Ktunaxa interest in heritage conservation in British Columbia. Following, we also have a presentation from the executive director or our CEO of the nation council.

On September 14 in the budget update the Finance Minister stated: "We are moving forward to deliver on the government's commitment to build a new relationship with first nations." Ms. Taylor continued by stating: "Too often available funding from all levels of government is focused on short-term priorities and needs…. We need to invest in first nations communities…create lasting growth, prosperity and true self-reliance. This is the key to improve social and economic well-being for first nation communities." Then a $100 million fund was announced for the new relationship strategy.

We're certainly very encouraged by the new relationship fund and the engagement that's having with the larger organizations in the province. The Premier as well as Minister Christensen have made presentations to those various organizations — the summit, etc. — and have presented a consultative framework to hear back from first nations on where we think the funding should be put.

To be clear, however, these broader consultation approaches, while they are effective in dealing with I suppose provincial issues, in particular to the Ktunaxa Nation which has issues that are very particular our region and to our communities…. A cookie-cutter or one-size-fits-all approach is not necessarily going to work for everybody.

Our communities are not as large in numbers when compared to other communities, but as I said, our traditional territory is immense. Our culture and history — in particular, our language — are unique. There actually isn't another language like the Ktunaxa language in the world, and it would certainly be great to see some of the resources put towards sustaining our language, which currently has something less than 34 fluent speakers left. I'm not one of them, unfortunately.

Our main point here is that while we are developing our plan for how we'd like to see the funds used, we certainly would encourage the government to take an approach that would enable local first nations like us to utilize and access the funds that we need for our communities, rather than a one-size-fits-all approach.

Secondly, on revenue-sharing, this is essentially verbatim of the presentation we made last year. The Ktunaxa Nation has spent the better part of a decade developing the St. Eugene Mission Resort. It's located just outside of Cranbrook on reserve lands. It's a first-class hotel with 125 rooms. It has a casino as well as a golf course. Unfortunately, I don't think any of you have time to spend there today, but it's a wonderful golf course if you have the opportunity to check it out.

The reason why we raise it today is that the casino is unique. It's the only casino in the province that exists as part of a larger destination tourism attraction, owned and operated by local first nations. The province needs to recognize that the structure of this development is different from other casinos and other developments within the province. We believe that in order to realize the economic potential, the province needs to be innovative and make changes to existing processes on revenue-sharing.

I should preface this by saying that most revenue-sharing is the province's interest in talking about resource-based revenue-sharing — so forests or water or mining or what have you — but not in terms of gaming. We believe that the province must have the courage to engage in a new relationship in this regard. Currently we retain less than one-quarter of the casino net income, and more than 75 percent of the casino net income is taken by the provincial government and spent elsewhere.

Currently our communities are the most, if not one of the most, impoverished communities in the province. The capital infrastructure for our government consists of rat-infested trailers that don't really provide the type of environment that most governments need. We believe that in terms of the revenue-sharing, this is an area where the government can really take a leadership approach that could really impact our communities currently.

We need to see more revenue from the casino put towards the SEM, which a year ago was just going through the difficult process of bankruptcy protection. We're trying as best we can to sustain the organization.

The last point, a point of particular interest for myself as director for lands and resources, is our interest in heritage conservation in British Columbia. To put it

bluntly to everyone, the protection for heritage and archaeological sites in our territory is not at a sufficient level that we believe it should be. The destruction and degradation of these sites throughout our territory is, as the presentation states, a source of increasing social, political and potential legal conflict between our nation, your government and private property owners. We don't see a reason why this has to continue.

Currently the legislation within the Heritage Conservation Act has provisions which allow for the involvement of first nations in heritage conservation management. However, the government has not provided the initiative or resources to make this a reality. As I stated, we find the current management of these sites unacceptable.

We believe that building a greater shared decision-making role for first nations to address aboriginal rights and interests in the protection and management of archaeological heritage sites is a key opportunity for the provincial government to meaningfully reconcile first nations. But I must inform you that it's much more than that. These archaeological sites are not simply just sites that have first nations or Ktunaxa interests. It's something that has interest for the heritage of the province.

I think that contrast that I'd like to illustrate for you…. I'll use the Olympics for an example. We believe that the 2010 Olympics represent a unique opportunity for the province to address this issue. The Lieutenant-Governor stated recently that the Olympics "offer a once-in-lifetime chance to showcase the best of British Columbia to the world as we reach out to one another for common pride and purpose" and went on further to say that the games would be "a Canada-wide catalyst for excellence in athletics, the flourishing of artistic talents and untold economic opportunity."

We believe that the province should take a lesson from the 2004 Athens Olympics. The preservation of archaeology is a matter that has national priority in Greece. It's not something that's really debated. The development required for the games had to carefully mitigate impacts on archaeological sites. For Greece, protection of archaeological sites is important for cultural heritage values as well as for tourism potential.

That's not what we're seeing here today. We are constantly seeing…. The limited scope that the act provides does not look at broader impacts to current archaeological sites. These, as I said before, must be understood as a heritage not only of indigenous people but also for the province itself. We believe that the 2010 Olympics must be the catalyst to build a new relationship of respect and cooperative archaeological heritage management within the province.

With the untold economic opportunity that will come through this development through the Olympics…. This will result in more disturbance of Ktunaxa burial and archaeological heritage sites. It's really difficult to sit in our office day in and day out and see all the different referrals of both the Crown agencies and ministries, as well as private developers — the cumulative impact that they're having on all this heritage. When we say that we've lived here for 10,000 years, it's not us just saying that through our oral history. There's evidence out there. This evidence is consistently being eroded by the allowance that the province provides to developers.

We believe what better way to demonstrate to the world the province's new relationship with first nations than by committing to heritage archaeological conservation and co-management with first nations throughout the province — by actively involving first nations, which the current legislation allows, to actively manage this material. I think this kind of goes to the core of whether or not this is a new relationship with the province. This has a very dear importance to our nation.

In closing, I'd like to thank you for the time. Hopefully, we've provided you with a presentation that you appreciate. Thanks.

B. Lekstrom (Chair): All right. We very much do appreciate it, Troy. We appreciate your taking the time to come and present before our committee here today. I'm going to look to the members of the committee if they have any questions as to what you've brought forward.

M. Karagianis (Deputy Chair): I'm impressed with the part of your presentation where you make a correlation with the Athens Olympics, because I think it's actually a really good example as far as heritage priorities. I think it's kind of a new point that's been brought forward, and it's a really good example.

Troy, I wanted to ask you a little bit about conflicting priorities of government. We had a presentation here earlier today from a coal interest, Elk Valley Coal Corp. They talked about Dominion coal lands. I'm not sure where that physically lies and whether or not it is within your nation's regional jurisdiction, but they've talked here about concerns that they have about changing ownership of federal lands, specifically around first nations land settlements. That's a bit of conflict here for us. Do you want to make any comments on that?

T. Sebastian: Well, the first comment is that it is within our traditional territory. It's an issue that's been up at the treaty table for a few years now. We've had certain projects related around the Dominion coal block. We have some involvement with management of that land currently. I think the bottom line is that there needs to be a balance of interest for all parties who live within our traditional territory and within British Columbia. I think our position is that, certainly, there are conflicting priorities. The priority currently is for development. Elk Valley Coal Corp.'s balance sheet for the last year, I'm sure, was not in the red at all. They probably made a lot of money. They did very well, and that's great for the local and the national economy.

What we want to see is meaningful revenue-sharing so that our nation doesn't have to come to gov-

ernment on an annual basis, hat in hand, asking for contributions. We need to see core funding, either through a taxation agreement or revenue-sharing, so that we can actually have access to the royalties from that or what have you. Our mutual interest is to see the economy benefit and flourish. Right now there isn't any incentive, because we do not have access to any economies. Our economies are limited intentionally through our presence on reserve land, our inability to access capital, our inability to do any number of things.

I don't know if that's really answering your question directly, but I think what we need to do is just to recognize that the interest within this region…. There's a fundamental basis for having mutual interests reflected, and currently that's not really the case. While we have had some agreements with some companies like Tembec, etc., there are other organizations out there that don't share that mindset. Certainly, leadership from government would be appreciated in that regard.

G. Hogg: I've recently been working with the Semiahmoo First Nation on some of the issues of archaeological sites and digs there. I just wondered if there are parallels to that with what the Ktunaxa are experiencing. What the Semiahmoo people are experiencing is that while archaeological sites are designated and registered by the province, there's no connection between that registration and the actual development that takes place through municipalities or those people approving a development or a house if it's within a city — whatever it may be. The Semiahmoo First Nation is doing some of the reviews, issuing certificates and having to charge people for those certificates, independent of government structure.

My first question…. Because I'm only allowed one question, I'm going to combine all of this into one question. Our Chair is a very difficult person to live with. We've had to put up with him for three days, and you only get a few minutes. You're so fortunate.

With respect to that, then, that's my first question. Are there parallels to what you're experiencing? Is that sort of pan-provincial?

My second question is: is it a naïve assumption to believe that the solution, or a possible solution, to that might be that each of the approval agencies — be they regional districts, the province or municipalities — should be required to ensure, or have registered against the land, the fact that it is an archaeological site? Therefore, an approval certificate would have to be issued with respect to any type of development that might take place. Does that make any sense?

T. Sebastian: I think I understand the nature of the question. First of all, the parallels with other first nations…. I think there are many first nations who are raising this question, at this point, on heritage conservation management throughout the province. I haven't heard of that first nation in particular, but I know of others who have made the presentations also through the First Nations Summit, who have argued for the same thing. I think the frustrations are held broadly.

The capacity that first nations have to even understand the scope of the development as well as the impacts on archaeological sites is essentially dependent on whether or not you actually have people in your office dealing with this. I'm sure there are first nations out there that don't have that capacity at all. We do, because we're involved with the treaty process, so we have the numbers of staff. We can look at that. I guess the similarities, in the first question, are true.

On the second question, the requirements for approvals, what I can tell you is…. For example, the Columbia Lake east side is an area that is currently up for development within our territory, and we've publicly stated that we're opposed to it. It's an area called block 48 on the east side of Columbia Lake. It's an area of private land that is entirely surrounded by protected area, either through a wildlife protection zone or through a park. The road that goes through the park is being proposed to be opened up so that they can develop block 48 and have hundreds of lots for people to live there and a golf course, etc. But the only aspect which the archaeological impact assessment is considering is whether or not this road is going to actually impact any archaeological sites. It's not looking at whether or not a quarter-billion-dollar development in that area, which currently is 80 percent protected by the provincial government, is going to have any impact on any of the archaeological sites up there.

The fundamental answer to that is that it will. So the scope for the archaeological studies and the impact, how it is being affected, needs to be broadened. I would think that if that was included as part of the approval process, it would certainly be a good thing. I think the main thing, though, is actually the engagement of first nations within the process. That's the problem. All the nuts and bolts of how things work out are all subject to whether or not we're involved in the process, and currently we're not.

G. Hogg: Because there isn't a Sergeant-at-Arms, you can't throw me out quite yet.

It seems to me, as I understand it, the information does exist as to what constitutes an archaeological site. There is some agreement across the province with first nations around what those are, and those are registered in Victoria. Victoria, according to my understanding, does not communicate those to municipalities or to people who give the approvals.

I appreciate your comment that many of the first nations don't have the financial capacity to be able to do the assessment necessary. Would it not be a simple solution to have those registrations go to all of the municipalities or the approving agencies — require the

approving agencies, when somebody makes an application, as part of their development cost permit, say to them…. Give the money to them so that the first nation can do the assessment, as well, so it's funded through that process. It seems to me that starts to tie the whole process together.

So while you talk about engaging, there's the way you're required, on a case-by-case issue, to engage the first nations in decisions around the archaeological sites. There's also a much bigger table where that must take place.

But it seems to me that at the bigger table we start to lose the impact of one lot on one site in Surrey where somebody wants to build a house, but it has archaeological significance. So when that person applies to the city of Surrey to get their building permit, the city of Surrey issues the building permit. The Semiahmoo First Nation says: "But it's an archaeological site." They know in Victoria, but Surrey doesn't know about it because Victoria doesn't tell Surrey, and this first nation can't afford to do it, so they go to the individual and say: "It's going to cost you $500 for us to give you a certificate." The individual has no idea where that's coming from. It seems to me that if the city of Surrey had that registered against them or at least the knowledge from Victoria, then they would charge the person for a development permit so that the first nations could be funded to do their assessment. That would make more sense.

T. Sebastian: Well, two things. One is that not all the sites are known. I think it's an incorrect assumption to state that all the sites are known, for example, in that area.

G. Hogg: But those are known and agreed upon. There are a number that are registered that are known and are agreed upon.

T. Sebastian: Sure, but there are potentially more that are unknown. There isn't really an imperative to go and find those, because those are impediments to development.

In terms of the approving agencies, we envision that the Ktunaxa Nation would be the approving agency within our territory. I mean, that's how we envision it. We don't want to be sort of a third party involved with that. As we are the authority on children and family development within our region — we're the lead agency with that; it's a similar thing — we would see our nation being the approving agency.

R. Lee: Recently there were some agreements signed between the committee and your nation regarding the timber licence — for example, the fire-damaged wood — and also the coalbed methane project. Are those helpful to you in terms of economic development for your people?

R. Lee: Yes, it's the $1 million for the coalbed methane and, I think, the research project.

T. Sebastian: Yeah, the coalbed methane fund. It's been interesting to manage that fund through our nation because coalbed methane…. We have the second-largest reserve in the province in our territory, the largest being further up north. We're not at a position right now where we're necessarily saying we're generally in favour or generally opposed to it. Certainly, we are more…. Our capacity to actually understand the issue as well as the bureaucratic framework as well as the private interest involved with that, and all those processes, is certainly far more expanded. For the limited funds that were available through the economic measures fund for coalbed methane, it did achieve that result over the last three years. So that definitely was something.

The other side to that, though, is that that was a priority of government. It wasn't necessarily our priority to understand whether or not we're in favour of coalbed methane. But we take what's available.

R. Lee: How about the…? I think it's 255,000 cubic metres, under the licence about two years ago. Is that fully utilized?

T. Sebastian: Our main challenge within forestry, as with most other challenges, primarily is a challenge of capacity. We are struggling to develop our own ability to harvest that timber. That's the one thing. The other thing would be the actual tenure of those licences to the nation. I think we're…. Again, certainly far more than what the coalbed methane program was, we're more…. We've moved ahead far more in forestry. There's certainly more of a community interest in terms of forest development. One of our communities recently signed on to the forest and range agreement, an initiative which took about three years to figure out how we're going to deal with that.

It's still in its initial steps. But certainly, in those two areas I would say that cuts by the forestry industry and mining industry…. We have more understanding and wherewithal within the last three years than we had previously of how that industry works and our engagement. But there are still multiple barriers that are established by government that other members of my staff could probably talk ad nauseam to you about.

I think there's a general belief that it's been beneficial, but we still don't have a…. It's still not to the degree that we like it.

B. Lekstrom (Chair): Well, Troy, thank you very much on behalf of the committee for your presentation. I can assure you, as with all presenters, your presenta-

tion will be given full consideration in the development of our report, which is due to be presented by November 15 to the Legislative Assembly. Again, thank you.

B. Lekstrom (Chair): We'll move on to our next presentation. From the Ktunaxa Nation Council, Rosemary Nicholas.

R. Nicholas: Good afternoon. My name is Rosemary Nicholas, and I am the chief executive officer of the Ktunaxa Nation Council. The Ktunaxa Nation Council, formerly the Ktunaxa-Kinbasket Tribal Council, currently represents the Ktunaxa Nation as governed by the four Ktunaxa bands located within our traditional territory. Although we no longer represent the Shuswap Indian band, many of the members of that band continue to exercise the rights of citizens of the Ktunaxa Nation.

The Ktunaxa Nation has occupied the lands adjacent to the Kootenay and Columbia rivers and the Arrow Lakes for the past 12,000 years. The language of the Ktunaxa is an isolate in that it is not similar to any other language group. Our language is endangered with only a handful of fluent speakers remaining.

I am pleased to stand before you today to provide you with our views on the questions put forward by your committee. British Columbia has stated that it is leading change that has the potential to reshape our social and economic landscape to create a more inclusive and prosperous future for all British Columbians.

The B.C. government has developed a strategic vision which addresses five main points: to make B.C. the best-educated, most literate jurisdiction on the continent; to lead the way in North America in healthy living and physical fitness; to build the best system of support in Canada for persons with disabilities, special needs, children at risk and seniors; to lead the world in sustainable environmental management with the best air and water quality and the best fisheries management bar none; and to create more jobs per capita than anywhere else in Canada.

Strategic vision is an important step in formulating and achieving one's goals. However, a vision must be given wings through action, or it will just continue to be words on paper. The vision that the province has developed is very similar to the vision that we, the Ktunaxa Nation, have developed for ourselves, which is as follows.

As a nation, we are striving to achieve strong, healthy citizens and communities, speaking our languages and celebrating who we are and our history in our ancestral homelands, working together and managing our lands and resources within a self-sufficient, self-governing nation. As we, the Ktunaxa Nation, move ever closer to achieving self-governance, we must begin to think about our infrastructure needs to operate that government.

Currently speaking, within our own situation we continue to operate out of rat-infested trailers, which probably do not meet the health and safety codes. Access to capital dollars for developing a minimally adequate infrastructure is basically non-existent due to the current legal status of reserve lands and the reluctance of financial institutes to finance without guarantees.

The infrastructure of the Ktunaxa government is key to building the economic and fiscal frameworks required to support government activities. It has been documented that those individuals who have a solid educational background and strong belief in family support systems are more successful in becoming contributing and productive members of society. Currently the participation by aboriginal parents and caregivers in their children's education is minimal. Providing resources to programs such as the first nation education steering committee's parent club would be one example of how to enhance support systems and bridging programs between students and home, students and school.

First nations children continue to be left behind in the education system. It is true that graduation rates have increased over the past years. However, if you take a closer look, you will find that in many cases those graduating students are leaving school with a school-leaving certificate rather than a Dogwood or are graduating with the minimum graduation requirements, usually being streamed into alternative math and English programs. In either case, it is necessary for those students to upgrade their academic requirements before entering mainstream post-secondary programs.

The B.C. government needs to really listen to what first nations communities are saying in regard to the lack of success of their children in the education system and provide the resources to assist first nations in being part of the vision of being the best-educated and most literate jurisdiction on the continent. Students across B.C., regardless of their economic status, should have the opportunity to leave school with a well-defined plan for their future, which may include the achievement of the first year academic or occupational requirements already behind them.

It has been well-documented that as the economic status of a person increases, so do their health and wellness. First nations individuals continue to live below the poverty line, which influences their nutritional and lifestyle choices. Diets of low-income earners tend to be high in starch, carbohydrates and fat. The cost of organized recreational activities — such as hockey, baseball, etc. — are financially out of reach for many first nations families, which severely limits the opportunity for organized recreation and exercise. The government needs to assist first nations in gaining the resources to implement programs to encourage and support first nations children in becoming more physically active.

In regards to sustainable management of our environment, as first nations people we are inherently stewards of the environment. The government has

made a commitment to assist communities in building the appropriate capacity to provide effective input and participation in the management of lands and resources. The new relationship fund may assist in building the capacity. However, the question remains of how ongoing participation will be sustained. The sharing of revenues realized from extraction of resources within our traditional territory will be a positive step towards achieving meaningful participation by first nations in sustainable management of our environment.

Water quality in first nations communities is typically and quite frankly unacceptable in this day and age. The case can be made that water quality in first nations communities is under federal jurisdiction and not the concern of the provincial government. However, I would offer that if the government of B.C. is sincere in including first nations in its strategic vision, then the issue of jurisdiction is irrelevant, and the issue of water quality for first nations communities within the broad boundaries of the province of British Columbia should be a valid concern of the B.C. government.

Support systems for persons with disabilities, special needs, children at risk and seniors are drastically underresourced in first nations communities. Federal dollars are provided through Indian and Northern Affairs; however, the dollars provided do not adequately meet the needs. Home adaptation for items such as wheelchair ramps — accessibility — is hard to access and limited in availability. Resources to transport individuals to and from medical centres is an issue, especially from remote areas.

Fetal alcohol spectrum disorder is an issue that's severely underestimated and underresourced in first nations communities. Some resources exist for children. However, when those children become young adults and are of the age when they should be entering the labour market, the supports are non-existent. Those who are affected by FASD need support throughout their lives. Our jails are full of those young adults who are living, breathing products of that lack of support. The provincial government, in its pledge to all British Columbians, should be working with the federal and first nations governments to enhance the programs and services available to first nations.

The Ktunaxa-Kinbasket Child and Family Services is an agency that operated under the administrative umbrella of the Ktunaxa Nation Council. KKCFS provides services to all aboriginal people on and off reserve throughout the Ktunaxa traditional territory. KKCFS has formed close working relationships and partnerships with the Métis nation and the urban aboriginal peoples. The Ministry of Children and Family Development has been transitioning its mandated services — i.e., child protection — supporting aboriginal peoples of the Kootenays to KKCFS. This transition is complete in the Cranbrook area, is partially completed in the rural East Kootenays and is in the planning stages for the West Kootenays.

The Ktunaxa Nation is a leading nation in the province of B.C. for such transition. KKCFS has transitioned approximately 60 children from the ministry's care to KKCFS's care. Many of these children are placed away from their communities in high-cost foster and residential care settings. Some children have been successfully transitioned to extended family placements and others to aboriginal foster homes. These new placements, with adequate supports, are effective not only in meeting the children's needs but also in providing culturally relevant care.

The reality is that for many children to transition to family and community placements, capacity-building is required. By increasing the capacity within the community, the quality of care will improve for displaced aboriginal children. This not only is in the children's best interests but is also financially prudent. The cost of care for children in their own community, even with the provision of supports to caregivers, is significantly lower than high-end, level two and level three foster homes or residential care settings. It is recommended that support be given to building community capacity that will, in turn, lower the cost of care for aboriginal children in care.

In regard to creating more jobs per capita than anywhere else in Canada, the participation of first nations in the labour market is increasing; however, it is nowhere near parallel to that of the mainstream. I truly believe that the problem is not so much the lack of jobs as much as it is the lack of qualified individuals to fill those jobs. Most trades today are searching for skilled labour. It is necessary to invest in building a skilled labour force to ensure that the demand for skilled labour is met.

The current mainstream population trend is experiencing a larger segment exiting the workforce due to retirement than are entering the workforce. The first nations population trend is the exact opposite which, in my mind, provides the perfect opportunity to increase the participation of first nations in the workforce. However, without better preparation in the school years, better access to training and skill development programs such as apprenticeships, the opportunity will be lost. The recent announcement of provincial dollars to create more apprenticeship spaces within the learning institutes is of little value to our people if they do not meet the minimum entrance requirements for those programs.

The province may consider the impact strategy developed by the B.C. aboriginal and human resource development society. That strategy was developed in cooperation with the then Ministry of Community, Aboriginal and Women's Services. Investment by the province of B.C. in this strategy would go a long way in increasing the successful participation of first nations in the trade sectors.

The B.C. government is investing a significant amount of financial and human resources in preparation for the 2010 Olympics with the rationale that the economic returns will be well worth the investment in both the short and long term. However, if a skilled labour force does not exist to provide fuel to realize

In regards to the government's current practice of providing both contingency funding and forecast allowance to protect balanced budgets from unforeseen events, given the vision that the provincial government has developed for itself and given the current state of B.C.'s social and physical infrastructure, it is my opinion that the government should not be focusing so much effort on a balanced budget until such time as the social and physical infrastructure issues have been adequately addressed. A balanced budget is a noble and idealistic notion. However, with so much investment needed in improving basic living conditions, providing much needed programs and services, and developing the supply side of the labour market, the balanced budget should not be the priority of the government at this time. If the B.C. government is to effectively work towards its stated vision, resources must be freed up.

B. Lekstrom (Chair): Well, thank you, Rosemary, for your presentation before our committee today.

J. Kwan: When you suggest that support be given to building community capacity that will, in turn, lower the cost of care for aboriginal children in care, can you be more specific around the capacity-building component?

R. Nicholas: Sure. The capacity for aboriginal families to become foster homes, to become fostering families, is the capacity that we're talking about — so helping aboriginal families to become that supportive environment that those foster kids need.

J. Kwan: And then a question around apprenticeship and doing something to ensure that the aboriginal community has access to be trained, to meet the demands of the skilled labour shortage…. You make a very good point that if the aboriginal community doesn't meet the minimum standards to get the training, then this is obviously not going to serve the aboriginal community in getting into that piece of the action, so to speak. So to that end, what suggestions might you have to bridge that gap, to ensure that the opportunities are there for the aboriginal community?

R. Nicholas: Well, more emphasis needs to be put on supporting individuals. For instance, one of the ways that that can be done is through the school system — making sure that kids aren't falling through the cracks, that they're not being pushed through the system merely to get them out of the system, and that they're leaving school with a good idea of where they're going and a good foundation for going there. For instance, in some school districts you can take your first-year apprenticeship in cooking or carpentry or those kinds of things and then move on to your second year after that, and you've already got a good foundation when you're going out of school.

A lot of our kids are getting out of school having no plan and nothing to really build on. I'll use my daughter as an example. She graduated from grade 12 and is now going to have to go through two years of upgrading before she can even begin to work on her post-secondary goals. If more support and more emphasis had been put on helping her formulate those goals and work towards getting the foundation of those goals to begin with, she might not have to waste that time and money doing that.

A lot of our people are still struggling with issues in regard to family dysfunction, alcoholism, drug abuse and those kinds of things and are not what we would call job-ready. They are not ready to go into the workforce. If they go into the workforce, they're not going to succeed, because they have all these other issues to deal with.

In assisting us in assisting those individuals to work through those problems, to address their own capacity needs and their own developmental needs…. Then we can help them get ready to go the next step into being in the job market.

J. Kwan: Last question. On the impact strategy developed by the B.C. Aboriginal Human Resource Development Society, do you have a copy of that report? How can we get access to it?

R. Nicholas: I don't have it. I have access to it, but I don't have it with me.

J. Kwan: Is it possible for you to send us a copy or give us the information so that our Clerk's office could contact the society to get a copy for this committee?

B. Lekstrom (Chair): Rosemary, just a comment more than a question from myself. You raised some valuable points, particularly about our children coming through our school system. I think the indent of the new dual-credit program where our children in grades 11 and 12 can begin a focus based on the trades and apprenticeship they may want to go into….

For many years first nations or non–first nations…. We're seeing many of our children dropping out of school to go into the workforce. In today's world grade 12 is a minimum. I think that's a progressive step. Making sure it's inclusive is the key issue that I think I hear you talking about. We can make sure all of our children can make the decision and look to their future. It's a valuable point.

R. Nicholas: If I can just comment on that a little bit. I think simply achieving your grade 12 is not good

enough. If you don't have the knowledge…. If you're not leaving school prepared, even though you've got your grade 12, it doesn't mean anything. We have a lot of kids that have their grade 12 and really are not ready to take the next step.

B. Lekstrom (Chair): Rosemary, thank you for taking the time to come and speak to our committee here today. We appreciate it.

That concludes the registered presenters portion of our public hearing. We now go to an open mike session that allows people to have the opportunity to come and address the committee. I will at this time call on Gerald Jolliffe.

G. Jolliffe: Thank you for this opportunity. Before I start my presentation, I wanted to answer your question, John. You asked what it would cost to upgrade the highway between Elko and Fernie. Basically, I've driven that highway quite a few times. I've driven the Sea to Sky Highway lots of times. I would say that the industrial traffic on that highway is twice as much as on the Sea to Sky. The passenger traffic would be about 25 percent of what is on the Sea to Sky, and it would cost 1 percent of what you're spending on the Sea to Sky. That's my estimate.

What I'm here to address — and I thank you for the opportunity — is that there has been proposed a new cost-share for policing costs. This is going to affect the rural residents way more, and it seems to me that once it happens, we get the 80 percent of the population from the lower mainland telling us 20 percent up here, who are busy making 70 percent of the revenue for the province, how to do things. I find this all the time, and I don't like it.

You know, when you look at all the revenue generated on Crown land, there should be another way to raise this revenue other than going to the residents and the regional districts. You've got stumpage from the forest land; royalties from oil and gas; range fees from the cattle industry; and licences, fees and permits from all the recreational users. It all goes to the provincial government, and yet you're proposing that we, the rural residents, pay all the policing costs now. In the rural area in which you are generating this, there are always more people from industry than there are residents. If you look at that fact, it doesn't make sense.

The other problem with this is that if you put this tax in on the rural residents, the ones it will really affect and cause the most problems for are the small portion of the people that are living on the land and growing their own vegetables and that have a few chickens, or the residents with fixed incomes. They just won't be able to stand this, because they've used up their homeowner grant and, also, their old age pension grants on their housing, so this new tax would be totally paid by them. There would be no actual supplement from the government to it.

I can see, being that some municipalities figure 40 percent of their taxes goes to police protection, that this is going to be a huge blow to all of these people. What will eventually happen with it is that a lot of these people are going to have to move off the land into the city. When they're on the land, they're a great asset to the province and to the country and to all of the people that know them. If you move them into the city, instead of having an asset, we'll have an actual liability.

I stress that you should really look at these proposed policing costs one more time, because you're going to affect a lot of people, and I don't think it's fair at all.

B. Lekstrom (Chair): Thank you, Gerald, for your presentation. We go back a number of years — certainly, to my involvement in local government — and this is an issue that probably has been around as long as I was involved — going back to, I guess, the early '90s. It is scheduled to come on stream in 2007, I believe, with the regional policing initiative that is going to come into place, but your issues have been heard by this committee. I can assure you of that.

B. Lekstrom (Chair): All right. You take care, and thank you. You sat through our entire hearing here today, and it certainly shows your interest in British Columbia and in your area.

G. Jolliffe: It was very rewarding for me to sit and find out these issues. I just moved down here. I'm actually from the Cariboo, and I represented the Chilcotin for two terms on the regional district. I moved down here three months ago. This is where I was originally from, so I'm back home.

B. Lekstrom (Chair): All right. Well, again, thank you so much for coming before our committee today. Take care.

We have no further presenters under the open-mike portion of our hearing today. Seeing none at this time, I will adjourn our committee meeting today here in Cranbrook and thank the people that came to present to our committee. 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.

Other MLAs:	Hon. Bill Bennett (East Kootenay L)
Clerk:	Kate Ryan-Lloyd

1)	Cranbrook Community Forest Society	Roy Catherall
2)	Rocky Mountain Trench Natural Resources Society	Maurice Hansen
3)	Tembec Industries Inc.	John Reith Brian Clifford Troy Hromadnik Chris Stagg
4)	Fernie Real Estate; Fernie Central Reservations	Daniel McSkimming
5)	BDO Dunwoody LLP; Institute of Chartered Accountants of British Columbia	Don Simpson
6)	Elk Valley Coal Corp.	Cindy Gallinger Roger Berdusco
7)	Philip Jones
8)	British Columbia Chamber of Commerce — District 9	Mac D. Campbell
9)	Kootenay Livestock Association	Faye Street Donna Morrison Peter Fisher
10)	Resorts of the Canadian Rockies	Andy Cohen
11)	Selkirk Students Association	Dave Westmacott
12)	New Car Dealers Association of B.C.; Alpine Toyota	Terry Parsons
13)	Ktunaxa Kinbasket Treaty Council	Troy Sebastian
14)	Ktunaxa Nation Council	Rosemary Nicholas
15)	Gerald Jolliffe

Committee Staff:	Jacqueline Quesnel (Committees Assistant)

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