2007 Legislative Session: Third Session, 38th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD

MINUTES SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES Friday, September 21, 2007 9 a.m. Strategy Room 420, Morris. J. Wosk Centre for Dialogue 580 West Hastings Street, Vancouver

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

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON 
FINANCE AND GOVERNMENT SERVICES

FRIDAY, SEPTEMBER 21, 2007

ISSN 1499-4178

[ Page 1221 ]

FRIDAY, SEPTEMBER 21, 2007

          The committee met at 9:03 a.m.

           [B. Bennett in the chair.]

           B. Bennett (Chair): Good morning, audience. It's good to see you. I'm Bill Bennett, and I'm the MLA for East Kootenay. I'm the Chair of the legislative committee on Finance and Government Services. I guess the correct name is the Select Standing Committee on Finance and Government Services.

           I'd like to welcome you here this morning. I'd like to just take a minute to have our members introduce themselves, starting with Mr. Simpson.

           B. Simpson: I'm Bob Simpson, MLA for Cariboo North.

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

           B. Ralston (Deputy Chair): Bruce Ralston, MLA for Surrey-Whalley and Deputy Chair of the committee.

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

           I. Black: I'm Iain Black. I'm the MLA for Port Moody–Westwood.

           J. Horgan: John Horgan, MLA for Malahat–Juan de Fuca.

           B. Bennett (Chair): To my left is Katch Koch, who is our Committee Clerk. He's here on loan from the Ontario Legislature. Jonathan Fershau is over here. Jonathan is our research analyst. Jacqueline Quesnel is on the registration desk at the back. Also joining us are two staff from Hansard, which will prepare a written transcript of our hearing that we're going to have here today. As well, they're streaming an audio out over the Internet for all those British Columbians who are, I'm sure, sitting there raptly at their computers listening to this hearing.

           The Minister of Finance for B.C. is required to release a budget consultation paper by September 15 of each year. The consultation paper provides a description of fiscal and economic conditions and identifies the key issues that need to be addressed by the public in preparation for the next budget. If you don't have a copy of that budget consultation paper, there are some at the back.

[0905]

           This committee is charged with carrying out the public consultations on the minister's behalf. It's an all-party committee, and we're required to report back to the Legislative Assembly not later than November 15 of this year. You can go to the committee's website, if you wish, and find out all of the ways that there are to make submissions. As a reminder, any input this committee receives, whether it's in writing or electronic form, is given the same consideration as an oral presentation that we get at a hearing. The deadline for all written and on-line submissions is Friday, October 19.

           Presentations are ten minutes in length or less. If we get done within ten minutes, we have time for a couple of questions thereafter.

           We do have a very busy day. This comment is addressed to committee members. We're going to have to really do our best to stay on schedule. We're starting late, and that's probably my fault, so I apologize for that.

           With that, we'll start with our first witness, Donald McInnes, from Plutonic Power Corporation. Good morning, Mr. McInnes, and thank you for taking the time to present to us.

Presentations

           D. McInnes: Thank you very much, Mr. Chairman. In the interests of making sure I get through my presentation, I may skip some paragraphs, but I've provided it to you in written form that you can refer to.

           This is the fifth time I've presented to this committee over the past number of years. I think this is a very good process. Much has improved in our province, as we sit here today with a balanced budget, tax reductions, take-home pay going up and strategic investments being made in health care, education, social services and infrastructure. We're well on the way to transforming the global view of British Columbia as probably one of the best places on earth to live, work and play.

           I feel I'm uniquely and extremely qualified to present to this committee. Over the past 12 months, companies I have founded have arranged and raised over $800 million in debt and equity to fund their activities, creating real, high-paying jobs.

           In July, Plutonic Power commenced construction of a $700-million power plant in Powell River, a community wrestling with the constantly eroding pulp and paper business, dropping from over 2,000 employees to fewer than 700 today. Since Plutonic commenced construction in July, we've had zero lost-time accidents and over 75,000 man-hours worked, which is the equivalent of almost 1,000 man-days. I'm pleased to report, additionally, that 19 members of our workforce are first nations people.

           This is phase 1 of Plutonic's plans. Phase 2 includes a capital investment of over $3 billion to be spent by 2015. Once completed, these power plants will generate enough electricity to meet the needs of over half a million homes, or two million people.

           While this is a highly desirable situation, the one thing that we can't afford is complacency. A friend of mine recently observed that this government is akin to a middle-aged person — definitely wiser but not as hungry as it once was to be leading edge and provocative.

           That hunger is vital to continue driving positive change. We live in a world of great global and societal change where our decisions — as individuals and companies, provinces and nations — increasingly affect each other. Capital is highly mobile, and we cannot rest on our laurels on past wins, expecting an equally prosperous future.

[ Page 1222 ]

           We've seen this government establish some very significant and laudable goals for the province with respect to climate change. The 2001 and 2007 updated energy plans in the throne speech are, without question, visionary and bold. The theme of this year's budget consultation process is timely: "What choices would you make for a greener future?"

           Broadly speaking, this government is already right on the track. We already have the boldest green energy plan in North America. That plan is all about choices. But we need better tools to get there.

           To substantially move forward on the climate change agenda, Plutonic recommends to government three specific action items. Firstly, stay the course, and build on the implementation of the bold policies of that energy plan. Secondly, add more resources in key areas of government that help harmonize and streamline federal and provincial approval processes. Thirdly, and arguably most importantly, adopt a more creative and bold public policy initiative that maximizes economic benefits.

           Fortunately, we have some excellent building blocks to base the budget choices on. A key mechanism we have available is the energy plan, and this is a policy to move to self-sufficiency in a situation where British Columbia is no longer a net importer of dirty electricity.

           Since 2000 we've gone into a deficit situation to meet our needs. B.C. Hydro, through Powerex, is importing dirty coal or nuclear power, sometimes at low prices, and selling our storage-based hydro at higher. If we can meet the energy plan goal of returning to self-sufficiency by 2016, we can halt our imports of dirty energy, a move that would be the equivalent of taking 1.3 million cars off the road.

[0910]

           But we have to be realistic as well. People like living here. In the last ten years our population grew by 10 percent — 400,000 people. In that same time, energy consumption has gone up by 15 percent from 1986 and 30 percent from 1976. That's per household. We are addicted to electricity. No matter what we do, we are going to need more of it. Even if we use less on a per-capita basis, people continue to move here.

           Power Smart can be a good program, but we will need to continue to build more new generation assets, since nothing of consequence has been built since 1984. Because of that, prices will go up.

           These power plants that I talked about at the beginning of my remarks and that Plutonic is building are green power plants. Our company alone could fill 20 percent of our deficiency gap. I started Plutonic in anticipation that electricity and green energy would be a huge, growing business and, now, because of the energy plan.

           In short, the main tenets of that plan are going back to being self-sufficient by 2016, having 90 percent of new energy coming from clean generation resources and counting on the private sector for most of the new capacity to come on. So far, B.C. Hydro has had two calls for tender as it works towards achieving energy goals. Last year 34 contracts were awarded from 54 tenders offered.

           This is where I talk about staying the course. NGOs have recently emerged that have vociferously questioned the mere existence of the private sector participation in meeting the future electrical needs of British Columbians.

           Let's be honest. Could B.C. Hydro manage 34 separate and innovative new greenfield power-generation projects? Could B.C. Hydro get 34 separate impact-and-benefits agreements in place with first nations people? Do they have the people resources required to oversee 34 different projects from an engineering, procurement, community relations and construction perspective? I think not.

           Don't take my remarks out of context, though. B.C. Hydro has some very talented and dedicated professionals, but the task of ensuring the electrical future of British Columbia is a herculean task, and we need to pull out all the stops to fix the desperate mess that we are in today. The magical thing about it, though, is that we can do this with green power and stop importing dirty power.

           Let's stop being hypocritical and put our money where our mouth is. We need to move beyond the line rhetoric of the vocal minority that would have us drown in B.C.'s oh-so-famous alphabet soup.

           We live in the Saudi Arabia of green energy solutions. We have abundant water and wind resources that are not being harvested, and we can do it in the most environmentally benign way. We have some of the world's best and brightest engineers and construction firms right here that have that ability.

           The rest of the planet is madly pumping vast resources into research and development on how to do clean coal or is grossly subsidizing corn production at the expense of lower classes who can no longer afford to eat. Yet we're sitting on our own tar sands, but it's not a depleting resource.

           As to cost, it may cost B.C. Hydro more to buy power today, but over time it will pay off in spades. The graph below shows mid-Columbian prices and the average price paid by Hydro in its last three tenders. Over the long term these contracts with new power development will ensure longer-term, low-cost, reliable power for all citizens of British Columbia. So stay the course.

           The second area that requires immediate attention is the permitting process. It is extremely rigorous; it is well-thought-out; it is very transparent; it has advertised time lines — things that business requires to achieve economic development. But we see massive duplication between federal and provincial agencies and an inability to perform and meet the time lines of these prescribed processes due to poor people resources.

           It took Plutonic almost 500 days to complete a 180-day legislative process, largely due to poor staff levels and constantly changing staff resources on our file. Our experience from this is significant. Because of the protracted permitting regime which our last two projects went through, we've got an additional $2 million annually to be paid in interest costs.

           We have a compressed construction period now that challenges our ability to meet our contractual obligation to deliver electricity to B.C. Hydro. This has

[ Page 1223 ]

generated tremendous uncertainty with lenders, partners and our shareholders. While individual government staff have been very good to deal with, there is a strong case to be made for more government resources and greater certainty in the permitting process.

           The final recommendation I have for you today will take some out-of-the-box thinking. A central consideration in moving green energy sector development forward is to have governments become more engaged with the first nations peoples. We believe that some of the most successful partnerships formed between business and first nations are coming from the green energy sector. As a result of the last call, you've got 34 different projects going forward that will all end up being an occasion where a developer is getting to yes with a first nation through an IBA.

[0915]

           We need — and encourage the committee to consider — revenue-sharing immediately. This isn't new. We need to expand revenue-sharing agreements beyond the forest and range opportunity agreements. We need to ensure that proactive engagement and accommodation occurs, to ensure that the environmental assessment process is no longer held hostage to first nations peoples looking for their share of the pie.

           In our sector we're increasingly hearing from our first nations partners about a desire for more government engagement, and we strongly encourage the committee to support an expansion of revenue-sharing policy. We believe this is something that crosses party lines, regardless of your position on green energy generation.

           These projects do need to happen to meet our energy needs and climate change objectives, which require first nations consultation and accommodation. This government and the Legislature have shown a strong desire to make significant policy shifts that address the pressing issues of our time — first nations, climate change, health care, etc. Where is the committee to provide budget support for the policies I've discussed?

           Green energy represents an excellent opportunity to achieve a broad spectrum of social policy objectives and goals. Green power generation is an emerging multi-billion-dollar industry that not only ensures our electrical future but, additionally, encompasses the climate change objectives to ensure our continued quality of life.

           There are many challenges in meeting the climate change targets set. We cannot shut down massive polluting industrial plants, like other jurisdictions have, to meet real climate change objectives. The energy plans in the throne speech have been bold and visionary. Green power is British Columbia's royal straight flush, and I challenge you to move beyond a partisanship bluff and collectively play your winning hand.

           B. Bennett (Chair): Thank you very much, Donald. A very excellent presentation.

           Committee?

           D. Hayer: Thank you very much, Donald. Good presentation. Have you had a chance to take a look at how much money should be set aside for the proposals you're trying to say the government should be putting aside for this, to make it easy?

           Also, what is one of the immediate challenges — you had three things the committee and our government could fix — that you would look for to make your business more successful or easier to achieve its goals?

           D. McInnes: For example, when we first applied for our water licences four years ago, the fee applied changed from $100 to $3,000, and that was in the name of service. I didn't object to that, but since then that department has gone from seven staff members down to one. So I don't think that we're getting service. Things like that make a significant difference.

           At DFO we had three different staffers on our file. The environmental assessment office is grossly overtaxed, as is our Ministry of Environment and Ministry of Agriculture and Lands. We just simply need more people to review these files on a timely basis.

           We couldn't meet the 180 days because the people just couldn't do the work. Bringing business certainty by staying in that advertised 180-day legislated time process I think would go a long way toward improving not just my business but any business going through an environmental review in British Columbia.

           D. Hayer: What is the dollar value for this?

           D. McInnes: I don't know the budgets of the various ministries involved, so I can't comment on that explicitly. Having the main tenure-granting agency of government going from seven staffers down to one — and this isn't just for run-of-river hydro projects; it's for any tenure the government grants — deserves a very hard look, I think.

           B. Simpson: You talked about first nations, and you talked about the whole "green energy is the royal flush card…"

           D. McInnes: Yes, sir.

           B. Simpson: …and the staff shortage. There is a whole field of green energy that's been much touted. That's the bioenergy field.

           D. McInnes: Correct.

           B. Simpson: First nations are wanting to be at the table for that because it involves land base decisions. You reference forest and range agreements, forest and range opportunities, resource-sharing. In this case, staff delivered that plan to the ministers last November. Have you seen the bioenergy strategy, and are you involved in that bioenergy call for proposals?

           D. McInnes: We've looked at bioenergy, and we've opted not to participate at this point, because we did not understand how you could get a tenure on the mountain pine beetle wood that you would obviously

[ Page 1224 ]

burn. The stumpage rates were, I think, going to be constant with what a normal user of wood resources would be.

           We didn't feel, given the risk of a forest fire and having all your fuel supply disappear very quickly, that it was worth the risk for us to advance. We are trying to stay true to our business plan. We understand hydrology, and that's the best place for us to be.

           In the first nations thing, there are some fabulous, innovative things going on. We're building a 250-man camp, and it's going to be managed and run by a joint venture between the Klahoose First Nation and Powell River school district 47. This is a win-win from two perspectives.

[0920]

           First, there's capacity-building in terms of economic resources for both the school district and the first nation. The school district will take its share of the profits and reinvest them in more training and job-training opportunities. For the first nation, in addition to the economic flows, these kids will be able to go through the school district's training programs and then, once they graduate, go into our camp in the Toba Valley and work and get experience in a live environment.

           Not all companies are the same. Everybody will not be as innovative or goal-oriented as Plutonic is, but I view that governments, federal and provincial, have a massive tax burden through INAC and other welfare and social agencies funding the first nation file. The faster that we, as citizens of the province, empower first nations by giving them fiscal opportunities themselves…. Instead of making social transfers to these people, give them a share of the revenue generated from taxes, and then let them be empowered under themselves.

           It's going to be the same amount of money one way or the other, but the new way I'm proposing and suggesting is a far better way. It gives them self-determination. It's government-to-government which they achieve, and more importantly, it takes the first nations consultation accommodation section out of the environmental permitting process if they know they're getting their share of the pie. I think that's a fundamental thing that we have to get our heads around as the citizens of this province.

           B. Bennett (Chair): Thank you very much, Donald — a very thought-provoking presentation, and I enjoyed your answers as well. So thanks for your time.

           D. McInnes: Thank you very much for the opportunity to address the committee today.

           B. Bennett (Chair): Our next witness is the Vancouver Airport Authority. Susan Stiene, welcome to the committee.

           S. Stiene: Thank you very much, everyone. On behalf of the Vancouver Airport Authority, I'd like to thank the committee for providing me with the opportunity to speak with you today.

           In April of this year the provincial government released its Asia-Pacific initiative, which sets out a strategy for diversifying British Columbia's economic ties with the Asia-Pacific. The goal of the initiative is to strengthen British Columbia's competitive position as the preferred gateway between North America and the Asia-Pacific. The airport authority strongly supports the province's initiative, as it dovetails with its own strategic objective of making Vancouver International Airport a premier global gateway.

           I'm here to ask the province to eliminate the aviation fuel tax on international and transborder flights in the 2008 budget. The airport authority is asking the province to take this step because the current tax regime puts British Columbia at a competitive disadvantage relative to other jurisdictions.

           Our closest competitors — the states of Washington, California and Alaska and the province of Alberta — do not charge fuel tax on international flights. I've attached a fuel tax chart to the copies of my presentation. You'll see that in some of those jurisdictions international carriers are exempt from paying, while in others they receive a 100-percent rebate of the tax. Like British Columbia, these jurisdictions are also trying to capture economic benefits that will flow from serving as a gateway between the rapidly growing economies of China, Japan, Korea and South Asia.

           Today Vancouver International Airport is responsible for over 26,000 direct jobs. Its total economic output tops $6.8 billion. Our most recent economic study showed that a new daily international flight from Asia to Vancouver would generate over 221 direct jobs, more than $10 million in wages and contribute over $17.4 million to B.C.'s GDP. Other jurisdictions also understand these economic benefits, hence their pursuit of their own gateway strategies.

           I'll note that Calgary has been particularly aggressive and has been quite successful. Calgary's passenger traffic has grown over 50 percent in the last five years, and by some measures, it has overtaken Montreal to become Canada's third-largest airport after Toronto and Vancouver.

[0925]

           Vancouver has a geographic advantage. It's a shorter distance between Vancouver and Asia than it is between our west coast and inland competitors. But that advantage is not enough. When making a route decision, air carriers look at costs, and fuel costs are particularly critical to them. B.C.'s provincial tax adds approximately $3,000 per flight to the cost of operating a flight between Vancouver and Taipei — a cost that the air carrier would not pay if it picked Seattle or Calgary as its gateway into North America.

           We are striving to do our part at YVR to keep costs to air carriers as low as possible. On January 1 of this year we lowered international landing fees for both Canadian and foreign carriers, and the fee reduction was approximately 32 percent for larger aircraft, such as Boeing 747, 777 and the Airbus A320. We also held our terminal fees at 2006 levels.

           From the airport authority's start in 1992, we adopted a common-use philosophy for our terminals, which allows us to build smaller facilities and use them more efficiently than if we had dedicated facilities for

[ Page 1225 ]

individual carriers. We're also working with the federal government on both policy and regulatory matters to ensure that YVR can operate as a fast, efficient and secure gateway for both passengers and freight.

           We understand that the province would be forgoing a known amount of revenue if it eliminates the fuel tax on international and U.S. flights, and we have estimated that that amount would be approximately $14.5 million annually for flights out of YVR. There would be some additional forgone revenue from international flights largely going to U.S. destinations from Victoria, Kelowna and a couple of other B.C. airports.

           However, we think that the economic activity generated from additional air services would easily make up this shortfall. The total economic impact of that single new year-round flight to Asia that I mentioned earlier is $37.2 million.

           The province's Asia-Pacific Initiative states that British Columbia cannot promote itself as a Pacific gateway without a world-class airport. The airport authority is investing the capital needed — between 2005 and 2009, $1.4 billion — to ensure that YVR has world-class facilities.

           Recently, YVR was named the top North American airport and number eight in the world by the Skytrax survey of international passengers. YVR was the only North American airport in the top ten.

           While we may be first with passengers for our service, air carriers' definition of a world-class airport is low cost. The International Air Transport Association awarded us its 2007 Eagle Award in recognition of our success in controlling infrastructure costs, reducing airline charges, and providing value and quality service.

           To fulfil the province's objective of building a multimodal gateway to provide British Columbia and Canada with an ongoing competitive advantage, we need to ensure that B.C.'s airports are as competitive as possible. The Asia-Pacific Initiative notes that the province and its gateway partners must act now in order to set B.C. apart from other west coast and inland gateways. Eliminating the international fuel tax will help us to create air connections that are a necessary piece in the expansion of Canada's economic and trade relations with Asia.

           Before I close, I'd be remiss if I did not acknowledge that the province did eliminate fuel taxes on the international cargo payload portion of mixed passenger and cargo flights as well as on international all-cargo operations. These reductions enabled YVR to attract additional cargo operations.

           Thank you, and I'd be happy to answer any questions.

           B. Ralston (Deputy Chair): Just a couple of questions to give me a better sense of the fees involved. You spoke of landing fees, a terminal fee and aviation fuel tax for international flights. For a typical flight, what would each one of those be? That's the first question.

           Secondly, what portion of the airport authority's revenue comes from the departure tax that's assessed as part of the ticket price now on individual passengers?

           S. Stiene: Okay. Two great questions. The first question, if I heard you right, is: how much is the fuel tax in relation to the other taxes that are provided? I don't actually have that answer right now on me, but I'd be more than happy to get the answer back for you.

           The second question, with regards to the amount of taxes in comparison to the…. Sorry, did I miss…?

[0930]

           B. Ralston (Deputy Chair): It was notorious for a while — the individual departure tax, where you had to pay when you left. I understand it's been rolled into the ticket price, so it's not as transparent anymore. But each individual departing passenger pays the tax, I understand.

           The airport authority has its streams of revenue, so I'm wondering what, as a percentage of the revenue, the airport authority receives. What does that comprise, the tax on passengers?

           S. Stiene: The AIF, or the airport improvement fee tax that you're referring to, of course goes completely into the capital projects at YVR, so all of the building infrastructure. It actually isn't a part of the operating tax or the operating fees that we use at the authority to run the airport on a daily basis. Quite honestly, I don't have the answer right now on the actual differential.

           B. Ralston (Deputy Chair): Could you provide that to us?

           S. Stiene: I certainly can.

           R. Lee: How much do you think the fuel taxes reflect in the ticket price of passengers?

           S. Stiene: I do know from my previous airline history that you're right. Fuel tax is considered as part of the cost of tickets because when they form the fares, they do actually do a calculation as to what the cost is to operate.

           However, it is not done by individual operation or individual route. I don't believe that they take the full fuel tax as part of that cost of building that fare because they don't know, to be honest, when they're actually building those fares as to what they're going to be. It is really driven more off the competitive nature of the flights that they're competing against, the other carriers. That's what typically generates the fare structure.

           D. Hayer: You're calling for elimination of the fuel tax on international flights with passengers. If the province was to eliminate the tax, how long do you think it will take for the province to recover the revenues through other investment? You're saying that more flights will be coming in. Do you have any idea on that? Have you done any analysis?

           S. Stiene: I haven't actually done an analysis to determine how long it would take for that to come back, but I do know that one flight will make a difference. I do know that there are carriers out there in South Asia

[ Page 1226 ]

that are considering coming to YVR, but the costs are too high at this point in time.

           We've said that one annual flight would make a significant difference and would replenish that. It wouldn't take us much to get that one additional flight, so it would be a quick response.

           B. Bennett (Chair): Susan, just in following up on MLA Hayer's question, if you could quantify the return on the investment that you're asking the province to make, it would be useful information to have.

           S. Stiene: Sure.

           B. Bennett (Chair): Thank you very much for presenting to us this morning. We appreciate the effort it takes to prepare your presentation, first of all, and then come in and present to us.

           Our next witness is the Canadian Union of Public Employees, B.C. division, Barry O'Neill and Mike Dumler.

           Good morning, gentlemen.

           B. O'Neill: Firstly, thank you for having us here. I'll get over my nervousness in a few moments.

           As was mentioned, my name is Barry O'Neill. I'm the president of CUPE British Columbia. With me is Mike Dumler, who is the legislative coordinator for CUPE.

           I really am kind of pleased to be here under the circumstances, one of the very few years when we're talking about projected surpluses. That gives us an opportunity to really make some changes. I recognize, of course, that this government has done some work around infrastructure. There needs to be a lot more done. I think that's recognized by all, but as importantly, it's an opportunity for us to actually deal with the social fabric of this province in education, social service, housing, child care, and so on.

[0935]

           I asked our staff to prepare a short brief for me, and they followed up with about 107 pages. I'll do my best to get through this, knowing that we will have a more formal, probably more legible presentation presented to you in the coming weeks.

           We represent about 75,000 members in British Columbia in many sectors, particularly one. We represent 22,000 members in the K-to-12 sector — support staff workers everywhere from tradespeople to clerical to academics to groundskeepers, and so on — people that deal with the infrastructure in school districts.

           We have witnessed, I think it's fair to say, more school closures in this province than we've seen in a very long time. This, in fact, is the fifth year in a row where school boards have been resorting more to school closures. We don't believe that to be a good thing for districts, communities or in fact the 19,000 students that were displaced as a result of those school closures.

           It has been accommodated by actually moving people from area to area in a school district. Certainly, when you look at lower grades in K-to-12 in particular and the kind of travel and the kind of time that they actually spend to get to school, it's significant. I'll go out on a limb and say it's not beneficial to those families, nor is it to the students' learning.

           We have just recently done a poll. We do a number of polls with Ipsos Reid. You'll get a copy of that poll, but I think it is important for us to recognize a couple of things. It's in some ways a reflection of what people feel about public education but, more so, how people want to actually spend more time in that kind of infrastructure.

           The poll found two interesting points. One is that 75 percent of those questioned were specifically concerned about school closures, and 79 percent supported a special government funding initiative to keep schools open. I think in the long term rather than the short term that's actually something that will benefit our communities.

           Some initiatives have come forward for using those facilities or properties as a true asset in years to come regardless of declining enrolment, which I hope to speak a little bit to a little later on.

           A specific area in K-to-12 that we're hoping will be addressed in the upcoming budget is the whole issue of special education — educational assistants or SEAs, as we call them in my organization. One of the issues that we are facing and the kinds of concerns that we get from the shop floor around the time that's actually being spent is that it seems there are more and more teaching assistants — highly qualified, highly trained people — who are, in some cases, providing more unpaid hours than paid hours.

           I think that there are some specific reasons for that. This occupational group itself is very compassionate, very dedicated, and as a result of that, they are finding themselves at a significantly higher burnout rate than we've seen in the past. I think it goes a long way in probably the more general problem in British Columbia and perhaps across the country around ways to keep employees there. The retention issue is becoming more and more difficult to deal with, in particular in the area of special needs.

           I guess one of the suggestions that we would make to alleviate some of those concerns for school districts generally is the whole issue of holdback and that $22 million that was held back by the government that is supposed to be allotted at the beginning of the year. Unfortunately, what has happened is that holdback has been held back by 50 percent, and that has created a significant hole in school district budgets.

           I think that needs to be corrected. In fact, school districts that I've talked to think that may become an even bigger problem in the upcoming budget year. We would suggest, as a recommendation to government, releasing to school boards the $45 million in holdback moneys as part of the provincial funding formula this year so that school programs have adequate and reliable kinds of funding that they can count on.

           We also represent about 12,000 employees working across B.C. in post-secondary education. Again, we represent technicians, teaching assistants, food service workers — a vast, diverse range of employees that make our post-secondary system work.

[0940]

[ Page 1227 ]

           Of course, last year the provincial government released the whole recommendation or report around 2020, with maps of the future, visions, strategies, and so on to deal with those things. Although we applaud any report that might move us forward in post-secondary education, certainly we need to understand that that needs to be funded, and it needs to be funded adequately. We suggest that the government actually deals with that report and breaks out the pieces that will be of significant cost to the government and taxpayers generally.

           Tuition fees have become, I think, and have been for some time a significant problem for B.C. students and B.C. families. We are seeing, since 2002, a faster pace of increase in tuition fees than anywhere else in Canada. With the annual tuition fee running about $5,000 in B.C. right now, students are actually having to borrow — or their families most likely, in many cases — significant amounts of dollars to make up for that shortfall.

           This brings us to the whole debate on whether or not we are doing what we need to do to make sure that the kinds of interest rates that are applied to those loans…. They certainly shouldn't be any higher than what the government is actually paying. I think there are some models out there that we could use, the Municipal Finance Authority being one, where at least we could do something around the kinds of interest being charged to those students.

           We recommend that the upcoming provincial budget pay specific attention to the problem of post-secondary affordability. Campus 2020 we think fails to provide any recommendation to deal with the problem of rising tuition fees and, of course, student debt. Specific funding should be earmarked in the upcoming budget to enable institutions to cut tuition levels by 10 percent by 2008.

           We represent about 10,000 members in universities, six institutions — UBC, UNBC, SFU, Royal Roads, Thompson Rivers University and the University of Victoria. We believe that our post-secondary education system needs to be fully funded and accessible to those if we're to move our province forward. We must ensure our post-secondary institutions are both affordable to everyone and accessible to everyone as well.

           As a part of the poll that I talked about, we understand that one of the biggest assets in post-secondary, as it is in most public institutions where we represent people, is the physical plant and the building infrastructure — and how that has been, for the lack of a better phrase, neglected somewhat over the years as a result of the paper-and-paint process, where you really don't get an opportunity to fix anything; you just need to paint over it. We all know what that creates.

           For the physical plant and building infrastructure at UBC, for example, the kind of deficit caused by deferred infrastructure maintenance and renewal is currently estimated by that institution to be about $450 million and growing. That's something we really need to deal with, and we suggest that the budget puts about $100 million — not exactly; it could $100 million plus another couple of hundred, if you wanted — to actually accelerate the efforts to bring back up to date the kind of infrastructure deficit that we're seeing in post-secondary education.

           As well, in colleges we are one of the largest combined support and teaching staff unions in the college sector. We have some expertise to actually apply to some of the recommendations we make. If asked, we certainly have no specific problem in working with the government. If in fact the kinds of recommendations that we make and the kind of input that we have, being the ones that deliver those services, are actually in place, we're more than willing to work with people to make sure that happens.

           College fees seem to be the same kinds of things, and we're seeing, as a result, the transition from K-to-12 to colleges is not being positively impacted as a result of some of the initiatives that have been put in place. There is one quote that I think is important for us to remember. It comes from Malaspina University College on gorgeous Vancouver Island, very close to Lantzville. "By 2015, B.C. will achieve the highest level of participation in post-secondary education per capita in Canada." I think that's something that we need to be proud of, but to achieve that goal there is a lot of work that needs to be done in post-secondary education.

[0945]

           I just got the one-minute sign. To close, about 106 pages short, we will, in fact, put in more detail some of the things we're going to suggest, and we really hope that we get an opportunity once again to talk to the government and to talk about the issues that are concerning.

           Contrary to popular belief, CUPE members across this province aren't flown in from another planet and then flown back to do their jobs. They are parts of communities. They are taxpayers. They do have some concerns. They aren't just there for a paycheque.

           They really are concerned about their communities. They're concerned about education. They're concerned about public service. I think that they need to be paid attention to. They really are the front-line workers that can actually make a difference for any government who chooses to ask.

           With that, I'll close. Of course, you'll get a copy. I'll make sure that it's at least four times as long as the one that I tried to get through today. Thank you very much for having us.

           B. Bennett (Chair): Thank you, Barry. That was actually quite a cogent summary of 107 pages. You did good.

           Members, we probably have time for two questions. Iain, you go first.

           I. Black: Barry and Mike, thank you for being here. That was a very comprehensive view on the state of the nation within B.C., and I want to thank you for that — and very humorous as well. When you hear dozens of these presentations a day, that certainly keeps our attention more.

[ Page 1228 ]

           You touched a lot on the importance of education, which is a huge priority for us. I wanted to touch on a few things.

           You talked about the importance of infrastructure within the post-secondary system where we've seen about $1.2 billion of infrastructure put into the post-secondary arena in the last four or five years, after an absence of that for some time. We agree with you on that point.

           What I want to focus on is the tuition fee piece. We have a policy and an approach in this government of trying to focus the resources towards those in most financial need. Last year we saw about 8,000 students, for example, have their student loans completely forgiven for that year, to the tune of about $72 million.

           My question for you is: when you talk about doing something in the area of student fees and what not, is it a needs-based approach that CUPE is advocating, or is it more broad-based?

           B. O'Neill: In fairness, I think that needs to be applauded — the actual work that government did in eliminating some of that.

           I would suggest that there are priorities. Certainly, needs have a lot to do with it, but I don't think we can stop there. I think that we really need to expand on that program, because the benefits at the end are so significant. The kind of initiative that was taken around completely eliminating some loans and the needs-based process that the government put in place last night should be applauded. I think that's a step in the right direction.

           I'm hoping what we don't do is shelve that as something that we did, that we actually move it forward. If we truly do believe that education is what's going to build our future…. If we are of that mind, which most of us are, then we need to proceed to implement more programs such as that so that at the end of the day, probably long after I leave this world, those people, everyone in British Columbia — all students, regardless of where you live or how you live or what your socioeconomic situation might be — will get there.

           It's a step in the right direction. I guess my only concern about those kinds of things is that when you move in the right direction sometimes and satisfy enough people, people tend to shelve that program.

           It needs to be expanded. There needs to be much more work done there. There are small things that can be done, but at the end of the day, small things are better than not moving at all.

           B. Ralston (Deputy Chair): This may be coming in the longer presentation. You were referring to the Municipal Finance Authority and then an idea about how interest on student loans might be dealt with in a different and better way. The Municipal Finance Authority is very successful in helping municipalities finance their infrastructure.

           I was interested in that idea. If you can't answer it now, I certainly encourage you to explain it fully in the written presentation.

           B. O'Neill: I will, Bruce, but given an opportunity to speak, generally you know I'll give you some kind of an answer.

           Some of the things that I didn't talk about, of course, are the whole issues around social services and public-private partnerships and the kind of relationship between us and other governments in Canada, internationally and otherwise around trade agreements and what they really do.

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           In regards to the Municipal Finance Authority and other things, I think they can and should play, and have played in the past, a better role in making sure that municipalities and local governments get the kinds of funds they need to be accountable to keep that kind of public, public, public thing going — accountability, ownership, accessibility.

           My comment around that is it seems to me that there are some ways for us to actually move a program in place that models something like what municipalities have done. Perhaps it's got to do with post-secondary education, whether it be colleges, universities, vocational schools, and so on and so forth. They could put together, with some help from the government, the same kind of model that allows students to borrow from an organization that has the means to make things happen and to give — as the Municipal Finance Authority gives significant breaks to municipal governments — at lower than what others can get that rate at, for the purpose of education.

           It's a model that we've certainly looked at. I don't propose to be an expert in finance. That's an actual fact: I am not an expert in finance. But those kinds of models are worth us looking at. I don't think that anybody would disagree that the Municipal Finance Authority, the model itself, is a good one. Not perfect, but certainly a good one.

           B. Bennett (Chair): Thanks very much, Barry and Mike, for coming out this morning. It's good to see you guys again. We'll probably see you somewhere, at the UBCM.

           B. O'Neill: You absolutely will. You know that. I know you're looking forward to it.

           B. Bennett (Chair): I am. I actually misplaced my CUPE cap, so I'm looking for another one.

           B. O'Neill: We'll see if we can get you another five or six.

           B. Bennett (Chair): Our next witness is the Vancouver Community College, and you are Linda Martin. Welcome to the committee.

           L. Martin: I'd like to thank you for the opportunity to address this committee this morning. I'm the interim president of Vancouver Community College. I've been in the chair for about a week in this position. This is an important presentation.

           Vancouver Community College, as you know, is B.C.'s number one college. We are very proud of our

[ Page 1229 ]

organization that we have, serving over 26,000 students on an annual basis. We have huge programming in health, hospitality and English as a second language.

           I'd like to open my comments this morning by recognizing the recent decision by the government to make adult basic education free at post-secondary schools around the province — including, of course, at VCC. This was a major announcement, an announcement that we at VCC were excited to host and that we are even more excited about implementing, given the importance of adult education and the impact it promises to have on supporting the literacy of British Columbians.

           It was an important change and a significant step in helping to make our province the most literate in North America, yet it has created a great inequity. To address that inequity, we need to make all English-as-a-second-language education free as well.

           Let me share with you a story. It's a story that we come across every day at VCC and our work in literacy. Each year, thousands of people immigrate to Canada from overseas — from China, Russia, India and many other countries. The individuals are skilled in information technology, engineering, medicine, accounting or a host of other skilled professions and trades. Yet here in our province many of them end up in low-wage, unskilled jobs, perhaps in fast-food outlets or convenience stores, all because their English skills are inadequate to allow them to pursue their professions or skilled trades in Canada. That's a terrible loss of knowledge, experience and expertise from people keen to participate in the workplace, a loss that our society and economy can ill afford.

           For immigrants, learning the English they need to prosper in Canada, in our community, in further education or in their professions is a challenge — a financial challenge to be sure. Every research study conducted indicated that the greatest barrier to the integration of immigrants in our communities is the lack of English-language competency.

[0955]

           British Columbia is a province with a long history of accepting and embracing diversity. Indeed, Canada as a whole is recognizing that a strong economic future depends on the contributions of newcomers to the country — immigrants. We need to make sure that literacy includes them all.

           We believe that all English-as-a-second-language training in British Columbia should be free to the grade 12 level. But costs, tuition fees, are of course just one component of the larger public debate over a sustainable approach to financing post-secondary education. Issues of fairness, justice and equity are an important part of decision-making and serving the public in distributing services and benefits and in formulating and implementing public policy.

           This is particularly important in education, which is key for social mobility and the alleviation of inequity. As you know, many immigrants have modest means and, we would suggest, are as deserving of consideration as adult basic education students, based on their social conditions.

           Immigrants have been invited to come to Canada to contribute to the social and economic fabric of the province, yet they find their way filled with many barriers — cost being just one — to that being fully realized. Settlement and integration of immigrants is critical to the economic development of our province. There are tremendous social costs for the students, for their families and indeed for all of society in delaying their full integration into the community and the workforce.

           Earlier this week the B.C. college presidents group released a major research report discussing the economic impact of colleges in British Columbia. I hope you've had a chance to look at that.

           Those of us who work in education have always been able to talk about the impact and value of college programs. We see that with our students and the success we foster in them every day. But now we have some numbers to put to that impact, and the impact is significant.

           Overall, the provincial government — taxpayers — saw a 14-percent return on the investment it made to colleges. That's an impressive return and one that largely rivals the best of the financial markets. Today that's probably quite a true statement — even more true.

           Government has an opportunity to boost its investment even further. As part of its literacy initiative, it recognized the value of adult education and last week made all adult education free. That recognition should and can go further, with free ESL up to the grade 12 level.

           We have put out the welcome mat for all immigrants. Let's ensure that the door is fully open.

           D. Hayer: A very good presentation. As the Parliamentary Secretary for Multiculturalism and Immigration, I think you have hit some of the issues right on the head.

           One of the things we find is that ESL is part of it. We are spending more money to bring people's English up to level.

           The second part is that some of the professional organizations…. When some of the immigrants come in, they speak perfect English, but their experience is not recognized. Sometimes to get acceptance in professional organizations can be difficult, so we've been trying to work with the federal government and professional organizations on how to integrate our new immigrants here.

           Over the next ten years we expect to create over one million jobs. If each student graduating from high school takes one job, we will still be about 350,000 short of persons to fill those jobs. We have to rely on immigrants. There's no choice.

           We want to make sure they are actually using their education and expertise so they're making sufficient income but on the other hand helping British Columbia and Canada by working in the field they were trained for.

           What are your thoughts on how we get the professional organizations…? Sometimes they're teachers. They want to get into a teaching program or a nursing program or a doctors or other programs, and the professional organization makes it more difficult to get their credentials recognized. How can we utilize your help to make sure the credentials are recognized easily?

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[ Page 1230 ]

           L. Martin: It's certainly a complex problem. Our president, Dale Dorn, has been working with the federal government on a number of initiatives. Certainly, our deans and directors work with professional organizations to see how we can assist with the quicker integration of immigrants into the workplace. I know that the B.C. Business Council…. It's certainly top on their agenda, and we are working with the B.C. Business Council to see how we can assist with that.

           With the presidents from B.C. and Alberta…. It is one of the main issues for them as we look at collaborative work with Alberta, and to that end, we're looking at some best practices to assist immigrants to meet some of those skills shortages that have been recognized.

           Post-secondary institutions working with the service providers for settlement is a really important aspect — working collaboratively. I think we need to take small, best practices and look at those and then make sure that they have the right funding in order to be done.

           I think we've analyzed the problem to death. I think we know what the problem is. We just have to find some of those practices that work and make sure they're funded properly so that the students we see leaving our college with new English skills…. They are physicists or doctors or pharmacists from other countries, and they're not working in the jobs that I have mentioned here. We see it every day. So we're working with the professional associations.

           D. Hayer: One thing I find is that when they go to the United States or Europe, they can quickly get recognition from the professional organization. When they come to Canada, it seems to be backward. I'm happy to see that we're all working together — the province, the private sector, the federal government and the professional organizations — to find solutions so that we can learn from other countries, like the United States and Europe, how to integrate the immigrants.

           L. Martin: It's much faster.

           B. Ralston (Deputy Chair): Just a couple of questions on your proposition. First of all, what would be the average fee per semester for an ESL student? Secondly, given that immigration is a split constitutional jurisdiction between the federal and provincial governments, what would be the federal contribution, if any, to relieving the obligation of immigrants to pay this fee for ESL?

           L. Martin: Certainly, there are a number of ESL learners that have free education. Those are new learners to Canada. If you come directly to education as soon as you arrive in Canada, then through the federal government to the Ministry of Attorney General, it's called ELSA instruction. That is free.

           Unfortunately, most immigrants coming to Canada also need to work. As soon as they start working, then we must start charging tuition. They're no longer eligible for free language instruction.

           The average tuition payment for a student in ESL? Most of them study part-time. They can pay as much as $500 a month, but many of them are part-time because they must be working and supporting their families.

           R. Lee: Thank you for the presentation. My question is on the specialized ESL programs — for example, the professionals, physicians, and skilled trades. Different kinds of skilled trades use different kinds of languages. Do you see any success in some of your programs? How can you expand those programs so that each skilled trade or profession can benefit from some specialized ESL program?

           L. Martin: We have some very successful combined skills programs and language training specific to various sectors. For instance, in engineering we work with large engineering companies such as Sandwell to have specialized English-language upgrading programs for their own employees.

           We also have students coming to the college directly for specialized programming in health and in various other professional areas. We are expanding in that area and looking to work with the various sectors such as health, engineering and business to make sure that our language programming fits that specific profession.

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           We also have faster-track programming, where they take English and the program at the same time. In health, it's been extremely successful. We were the first ones to develop it in Canada. It's called combined skills, where we have a language instructor and a skills instructor in the same class. This means that the program, although a bit longer, is much more focused on the actual skills that the student is learning. Therefore, their language comes along faster, and they get out into the workforce more quickly. We have huge success in those program areas.

           B. Bennett (Chair): Thanks very much, Linda. That was a great presentation.

           L. Martin: You're welcome. I will send an electronic copy once I've added a few things.

           B. Bennett (Chair): Next witness for the committee is the Canadian Centre for Policy Alternatives, the B.C. office.

           Mr. Klein and Mr. Lee, welcome.

           S. Klein: Thank you, Mr. Chair, and good morning to the members of the committee. It's a pleasure to be back before you.

           Incidentally, I took the bus here this morning, and Marc biked, as he does almost every morning. We're encouraged in this by an innovative but taxable eco-transit benefit that we negotiated as part of our office collective agreement last year. If you want to know more about that, we can talk about that in discussion.

           Our presentation first picks up where we left off with you last year, and focuses on the loss of credibility in B.C. budget estimates in recent years — something that we think is of utmost importance and should be of utmost concern to this committee.

[ Page 1231 ]

           Our senior economist, Marc Lee, will walk you through some of the numbers, including our revised estimates of the likely size of the surplus this year and in the next two years — estimates we believe to be more credible.

           Then I'll look at some of what can be achieved in meeting our most pressing social and environmental needs, once one appreciates the full size of the surpluses. I will also provide some guiding principles that we think need to be at the heart of an ambitious provincial climate change plan.

           M. Lee: Thank you to the committee for having us here today.

           We feel the B.C. budget in recent years has lost a great deal of credibility by consistently ending the fiscal year with massive surpluses. We recognize that budgeting is a challenging task under the best of circumstances. No one should expect perfect accuracy in forecasts, but the degree to which year-end numbers have differed from those tabled at budget time is truly striking.

           The core problem is that the government has deliberately underestimated revenues by billions of dollars each year. In fact, estimates of revenues bear little resemblance to the underlying economic assumptions of the budget. We think it makes little sense for the provincial government to convene an economic forecast council if those very economic projections are ignored when making the budget's revenue forecasts.

           Similarly, the great deal of time and money expended by this committee to gauge the budget priorities of the public is essentially wasted if those recommendations are left off the table due to overly conservative budget forecasts. We believe that this practice of lowballing revenues undermines the work of this committee and reduces the responsiveness of the budget to democratic consultation. This charade must stop, and we urge this committee to make this a core demand of your report to the government.

           Budget credibility concerns have also been raised at the federal level over the past decade, led by the CCPA's alternative federal budget and later by a broad community of budget watchers. These concerns have led to the creation of a new parliamentary budget office modelled on the Congressional Budget Office of the United States. The mandate of this new office is to provide independent forecasts of the federal budget position, and we believe it is time for a similar legislative budget office to be established in British Columbia.

           In terms of the numbers, if you look at figure 1 on page 3, you can see the problem of abnormally large year-end surpluses that if anything has gotten worse over time. If you take the past four budgets together, from 2004-2005 to the current year, the cumulative error of the year-end surplus relative to budget time is $12 billion.

           We see the same pattern happening again this year. Last week the first quarterly report was released with a press release claiming that the province's fiscal position had improved, even though the essential underlying economic projections in September were essentially unchanged from those made at budget time. We anticipate that the surplus will be revised upwards yet again in subsequent financial reports.

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           Our technique in terms of estimating revenues is to use a fairly straightforward but effective assumption that in the absence of policy changes, the share of own-source revenues relative to the province's GDP remains relatively constant from year to year.

           We use the ministry's own economic forecasts and simply apply this technique. It has proven to be a highly successful one, with our budget estimates being much more accurate than either the federal or the provincial Ministries of Finance.

           On this basis, we estimate that the current-year surplus will be approximately $3.4 billion. That's itemized in more detail in table 1. That is about eight times the size of the surplus stated in Budget 2007 and almost three times the available surplus in this committee's budget consultation document.

           Based on the expenditure framework set out in the three-year fiscal plan, the provincial surplus will grow to over $4 billion in 2008-09 and almost $5 billion by 2009-10.

           We also find that revenue projections in the budget are now so conservative that the province would only run a deficit if a catastrophic economic collapse occurred. In addition to our central estimates, we stress-test the budget for the possibility of an economic slowdown.

           We present three scenarios in table 2, each of which is successively more pessimistic. But even in the third scenario, which is a two-year recession in 2008 and 2009, the surplus only drops to $1.7 billion in the 2009-10 fiscal year.

           More than just undermining the work of this committee, the opportunity cost of these large surpluses has been a failure to address pressing social problems, particularly in the lead-up to the 2010 Olympics.

           We realize that managing public debt is an important priority for the government. But even if recent surpluses have been fully allocated to social and environmental spending, you would find that the provincial debt-to-GDP ratio would have continued to fall and would only be slightly higher than under the current fiscal plan and down substantially from the peak in 2003-04.

           S. Klein: Focusing on priorities for that surplus, in table 3 of our brief, which you'll find on page 7, we look at expenditures relative to GDP. They have fallen significantly since 2001-2002 and, based on the current fiscal plan, will continue to fall. The table demonstrates how program spending has been falling relative both to our collective needs and to our capacity to pay.

           Despite repeated concerns about health care, spending in that area has actually declined relative to GDP, as has education. The largest relative hit is in the area of social services. The health care figures should put to rest the false alarms about unsustainable increases in spending in that area.

           For budget 2008 there are a number of priorities that must be addressed through the available surplus

[ Page 1232 ]

route. These are spelled out in more detail in our annual solutions budgets, and all are attainable within the three-year budget plan if credible surplus estimates are used as your starting point.

           The associated costs of these proposals are detailed in our submission. You'll find that on pages 7 and 8. We have costed out our recommendations, as we do each year.

           Last year at this time we presented a broad-based anti-poverty strategy that would see an increase in social assistance rates and eligibility, an increase in minimum wage, significantly expanded social housing, child care, training and education, and transportation allowances.

           The need for such a strategy is as urgent as ever. We urge the province to follow the leads of the governments of Newfoundland and Labrador and Quebec and to adopt a comprehensive poverty-reduction strategy with clear targets and time lines. If tackling climate change takes clear time lines and targets, then surely, so too does eliminating poverty and homelessness.

           We also cost out a comprehensive early learning and child care program, another high priority for the province, which would make a huge difference in the lives of young families and in the educational prospects of children as they enter the K-to-12 education system.

           Homelessness and housing affordability must remain a top issue. The reality is that the market fails to build sufficient affordable housing for low- and middle-income families and for vulnerable populations, so public solutions are required.

           To give one example, the cost of building 3,200 units of supportive housing, which is what was recommended to VANOC by the inner-city inclusivity table, is approximately $640 million. But put another way, that is less than 1/6 of last year's $4 billion year-end surplus.

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           We have the financial capacity to virtually eliminate homelessness in the next three years, but thus far the government has refused to take decisive action.

           The brief also details what is needed to sustain current service levels of health care, K-to-12 education and post-secondary education.

           Turning attention to the final section of our brief, which looks at an equitable and sustainable climate plan…. Like other British Columbians, the CCPA is excited that B.C. is in the process of developing an overarching strategy on climate change. More work is needed on a detailed fiscal plan tied to targeted reductions in greenhouse gas emissions. Much can be achieved through regulatory measures and changing incentives through eco-taxes and subsidies for sustainable alternatives. But as we contemplate these new fiscal measures, we need to seriously consider the inequality impacts of those measures.

           By themselves many of these green taxes would have a regressive distributional impact. So green taxes should move forward, but they need to be offset by income transfers to the least well-off, public spending on transit, etc., in order to head off a regressive impact. Just as progressive taxation is based on the ability to pay, so should the climate change plan.

           In addition, just transition strategies for workers in affected industries will be of utmost importance. This is important. If the public feels that policy measures are inequitable, that the burden is not being fairly shared, there is a high risk that public support will wane, and this is to be avoided. So equity design considerations must be built into the solutions to climate change.

           Already measures at the federal level, such as the creation of tax credits for transit passes or rebates for fuel-efficient vehicles, have been designed in a way in which the poor do not benefit. They don't have taxable incomes enough that they benefit from the credit or the incomes to afford the car. Instead, refundable credits would be a better policy move to mitigate inequality impacts while addressing core problems.

           The CCPA will have more to say on the topic of addressing climate change in an equitable manner in the months leading up to the 2008 budget, including a forthcoming paper on reforming the royalty regime for the oil and gas sector and phasing out subsidies.

           In conclusion, B.C. has the resources to make a huge difference on all of these fronts. But current budgeting practices are biased against making the investments that British Columbians want and need. Deliberately understating surpluses removes from the table options that would dramatically improve our quality of life and the health of our communities.

           B. Bennett (Chair): Thank you, gentlemen. I did let you go over a couple minutes there, so we may not be able to get in more than one question. We'll see how it goes.

           I. Black: Gentlemen, good to see you again. I always enjoy your eloquent presentations.

           I'm going to start by thanking you for your concern about the use of the committee's time. I was gratified to see the previous presenter make reference and acknowledge the fact that adult basic education is now free. You'll note that that actually was one of the specific recommendations of this committee last year. So we'd like to think that the recommendations and the time spent by this committee are taken into account.

           It's of no surprise to you that my perspectives differ greatly from your own. I happen to believe surpluses are a good thing in the same way I believe in paying off credit cards every month.

           My question to you is this. You spent a lot of time talking about the surpluses and casting them in a rather negative light. Back in 2003, I believe, the alternative budget proposed by your organization called for a 27-percent tax increase and proposed running deficits through 2010.

           As you put the surplus concept into the negative light in which you placed it at the beginning of your remarks, is it still the stance of the CCPA that deficits are the way to go on a go-forward basis when we're at a time of relative economic wealth that will ultimately, as economic cycles go, come to an end?

           S. Klein: All of what we've presented to you today and in past years is in the context of a balanced budget

[ Page 1233 ]

framework. That's why, as Marc explained, we stress-tested our budget assumptions and offered you the scenarios in which you see what the budget room would be even in the event of a major economic recession over a two-year period.

           It's true that we differ on how to spend the surplus. Our urging to the committee is this. We can have a legitimate and important debate about how to use the surplus — about how much of it should go to debt reduction or tax cuts or, as we recommend, toward spending in these priority areas — but the point is that we should have that debate about a number that is not a fiction.

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           You have invited people to engage in a dialogue with you about a number that will be systematically and, as it always is, massively larger than what everyone is discussing and where the policy priority of the government will become debt reduction, because that's what happens with the year-end surpluses. When I read your reports and look at what everyone has said to you, nowhere do I see that the top priority of what you have heard from people in the last few years is debt reduction.

           M. Lee: I would just like to add that our recommendation at the time, which was referred to by the member, was essentially to roll back the 2001-2002 tax cuts, which had thrown the budget into a recession, contrary to arguments made during the election campaign that tax cuts would pay for themselves.

           Our point in terms of the debt and deficit was that there was no overriding need to balance the budget through spending cuts on the backs of the poor in the short term, and that the province did have the financial capacity and had a very good, relatively low level of debt relative to GDP that it could potentially run deficits to 2010.

           B. Bennett (Chair): Gentlemen, thank you very much for your presentation. We appreciate it. We'll see you again next year.

           The next witness for the committee is the Child Care Advocacy Forum. I think we have two presenters this morning, Sharon Gregson and Rita Chudnovsky.

           Morning, ladies. Welcome to the committee.

           R. Chudnovsky: Thank you very much. We're here this morning on behalf of the Coalition of Child Care Advocates B.C., and we're pleased once again to make our annual visit to this committee. We'd like to start by saying that we couldn't actually agree more with the Ministry of Finance budget consultation paper 2008 when it states: "When times are good, it is important to use the surplus in a way that looks to the future and generates benefits for years to come."

           This year in our annual submission to this committee we aren't going to try and convince you that public resources are best invested in long-term public services and assets. We all seem to agree on that now. This year we're here to make three simple points: (1) while child care has made a significant contribution to B.C.'s revenues, child care in B.C. is still being cut; (2) while child care is essential to B.C.'s economic and social well-being, regulated child care in B.C. today is in crisis; and (3) while there are many worthwhile ways to use B.C.'s surplus, building a child care system that meets the needs of children, families and communities should be B.C.'s next major project.

           Let's have a look at (1). Child care generates revenues for B.C. but is still being cut. The Minister of Finance projects a $1.1 billion surplus in '08-09, and if her past record is any indication, this estimate is likely low. She attributes this surplus to a number of factors, including federal transfer payments.

           Let's review B.C. child care's role in generating these transfer payments. In 2001 B.C. started to receive federal funds that could have been used to improve child care. But starting in 2002, B.C. cut $50 million from its own annual child care spending. These provincial dollars have never been replaced, and families and child care providers across B.C. have paid the price through higher child care fees and lower wages.

           As a result of decades of community and family advocacy, by 2005-2006, B.C. received $122 million in federal transfer payments specifically for improving regulated child care services. By 2006-2007, $125 million came to B.C. through these federal transfers. Even with the cancellation of the federal-provincial agreement on early learning and child care as of March 31, 2007, federal child care transfer payments still account for $79 million in provincial revenue this year and next.

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           Given the significant contribution that child care transfer payments have made to B.C. revenues, one would assume it would be a top priority for the Minister of Finance and her government. Wrong.

           B.C. was the only province not to speak out publicly against reduced federal transfers. One would then assume that B.C. would protect children, families and child care providers from the loss. Regrettably, wrong again.

           B.C. was the only province to make further cuts to the limited operating funds that are provided directly to licensed caregivers across B.C., cuts that only worsened the child care crisis. B.C. went one step further and, without a public tendering process, spent $95.6 million, the remaining federal child care dollars on its books at the end of '06-07, on one-time-only grants that do not generate long-term benefits.

           Our question is: how is it that child care, a major contributor to B.C.'s federal transfer revenues, is the only service to face cuts in good times as well as bad?

           This brings us to our second message. Child care is essential to the economic and social well-being but is in crisis. As everybody knows, B.C. has a labour shortage that is only expected to get worse. As a large body of research proves beyond doubt, children's early years matter. Quality early years promote healthy childhood development and have long-term benefits. Poor quality care does harm and costs us all more in the long term.

           Given that employers, families and communities all benefit from quality child care, one would assume that

[ Page 1234 ]

B.C. would have established targets and time lines for lowering fees, raising wages and creating more spaces. Wrong yet again.

           Lack of access to affordable child care is still the biggest barrier B.C. parents, particularly mothers, face in getting or staying in a job. Wait-lists for licensed child care in this province are years, not months, long.

           This fall B.C. parents and community members who operate child care services had no option but to raise fees to cover the cuts imposed by the province. B.C. families now pay more for quality child care, if they can find it, than for post-secondary education.

           The quality of care is also being eroded, as qualified early childhood educators leave the field because the wages are too low, not even high enough for them to support their own families. New people are incredibly reluctant to enter the field, no matter how much they would like to, because the field is so underpaid and undervalued. Increasingly, desperate parents have no choice but to use unlicensed or illegal care, where quality, which is so critical to healthy childhood development, is unknown and unmonitored.

           Our question is: how is it that child care, which is essential to B.C.'s short- and long-term economic and social well-being, is being so ignored?

           This brings us to our third point. While there are many worthwhile ways to invest the surplus, building a child care system should be our next major project.

           According to the '08 budget consultation paper, this coming budget will focus on protecting our environment for future generations. Perhaps we should warn our allies in the environmental movement that, based on our experience of the 2006 so-called children's budget, they should start worrying now.

           The same might be said for seniors, whose needs were apparently met in 2005, and the homeless, whose needs were apparently met in 2007. To date public relations budget titles have promised much, delivered little and allowed government to move on as if the problem has been solved.

           In our written submission, which you'll get next week, we will share a number of ways in which community-based, publicly funded child care contributes to B.C.'s environmental sustainability. The reasons for making child care system–building our next major project go beyond this. The arguments are not new. Investment in quality child care reaps strong economic returns.

           A pioneering Canadian cost-benefit analysis demonstrated a return of two to one for every dollar invested in a universal, quality child care system. Since that study was done, more studies, including some from the U.S., show that if anything, that rate of return was conservative. As the long-term stewards of B.C.'s public resources, I would expect government to leap at an investment that offers returns like that.

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           Investment in quality child care also reaps strong social benefits and returns. Children who attend and participate in quality early childhood programs have better emotional, linguistic and health outcomes. Child care builds communities and promotes social cohesion.

           Finally, as recent headlines make clear, B.C. families have changed. Mothers of young children are in the labour force, and we are there to stay. Yet B.C. and Canada lag far behind other developed countries in responding with sound public policy and stable funding. B.C. has made no commitment to child care system–building and has no plan.

           Our question is: how is it that we are concerned with protecting the environment for a future generation that this government is not prepared to invest in?

           Each year we appear before this committee. If we're lucky, we're politely told that while our cause is worthy, we are one of only many groups appearing before you today asking for more funding. This response assumes that child care is already a developed, funded system like education, health or highways, and like all of these other systems, needs more resources to fully deliver on its accepted mandate.

           Once again, this assumption is wrong. The fact is that child care is not yet a system. Rather, it is a patchwork of isolated services that depend on user fees, undervalued caregivers and community goodwill to keep their doors open.

           In '08-09 B.C. has an unprecedented opportunity to invest its surpluses in building a system. So we have just one recommendation to make to the committee today. Make building a quality, affordable child care system B.C.'s next major project. The good news is that B.C. has the fiscal ability to do it.

           We'll give you the details in our written submission next week, but in a nutshell, the estimated annual net incremental cost of a universal child care system for all children under 12 in B.C. is $1.2 billion. Building on the Ministry of Finance's current three-year plan, this investment could be phased in over the next five years and funded entirely through the projected surpluses and forecast allowance.

           The Coalition of Child Care Advocates B.C. and our members and supporters across the province believe that there could be no better way for B.C. to generate benefits for years to come.

           B. Bennett (Chair): Thank you very much, Rita and Sharon. We're going to start with one question and see how our time goes.

           J. Horgan: Thank you, Rita and Sharon, for coming again to make your case. It's fitting that you would follow CCPA and the suggestion that we have underestimated our revenue so grossly over the past number of years. A sector so important to our future has been neglected as a result.

           We've heard from other providers in other rural communities as we've been travelling around, and they've talked about the low wages that have restricted younger people entering into early childhood education. Now that we're in the centre of the universe, downtown Vancouver, the prospect of making a living and a career at $12 or $13 an hour is fairly unreasonable.

           Could you give us a story, for my benefit, if not the whole committee, of how early childhood educators

[ Page 1235 ]

could actually live, thrive and survive in Vancouver based on the current salary framework?

           S. Gregson: Well, as a person who works in the field and who has staff making $14 an hour, I can tell you that people are not surviving. People are leaving the field in unprecedented numbers. There is a recruitment and retention crisis.

           When we talk about crisis, it is about staffing. Centres are closing because there simply are not the staff to employ to care for children. Often it's people who are new immigrants who use child care as a way to get into the workforce and then quickly move on. So it is a crisis in the very true meaning of the word.

           R. Chudnovsky: I would just add that I don't think we can share a story because it's not possible. That is why we have the crisis in the workforce that Sharon suggests.

           The coalition, though, is very clear that the dilemma playing out in rural and urban communities across this province is that the only way to raise the wages is to raise parent fees, in the current regime. That is why we have called for long-term public funding because, on the one hand, parents cannot pay higher fees and are having to resort to care that is even more patchwork and not quality, but there is not the public funding coming into building the system that can pay the fees that the caregivers deserve.

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           D. Hayer: Thank you very much for your presentation. Looking at the presentation made before you by CCPA and your presentation and when we go around the province, everybody says the surplus is $1 billion or $2 billion or $3 billion, depending on whose number you're looking at.

           On the other hand, you take a look at the requests to spend the money. When you add it up from all the communities we'll visit, which is probably 15 or 16 around the province, it adds up to maybe $15 billion of $20 billion of expenditures they're asking for. Even if you say the whole money was spent, that would probably run into a $7 billion or $8 billion deficit.

           How do you think, from your point of view, government should look at it when requests are coming from community groups such as yours? They're saying, "Please put money into this and this," which might be maybe ten times larger than the surplus that is expected. How should they choose? Which one is more important, and which one should be left off the table?

           R. Chudnovsky: Our fundamental message today and our recommendations are based on our experience of sort of being told, as we said: "Well, yes, it is worthy, and we have all of these other needs."

           We really are trying to encourage the committee to realize that early childhood and child care in this province are not yet treated, in public policy or funding, like other systems are. Yet we're always added to the list of increases that might be made to other existing systems in order for them to better deliver on their mandate.

           That is why we're taking the pretty bold step this year of recommending that B.C.'s next major project should be to use our fiscal strength and our surpluses to build a child care system. At that point we will be oh, so happy to come before you and to take our turn in allocating possibly limited future resources to improve that system.

           We are not a system like the K-to-12 system. We are not a system like the health care system. We are a patchwork of services doing the best we can to keep the doors open, to provide the best care we can for children.

           Given the long-term commitment to use the surplus to reap benefits for generations to come, we can't think that there is frankly any better project to take on than to finally address the lack of good public policy to support young children, their families, employers and the community. So that's our case.

           B. Bennett (Chair): And very well put. Thank you very much. We appreciate you coming here today.

           The next witness is the Vancouver Community College Faculty Association, Frank Cosco.

           Good morning, sir.

           F. Cosco: Thank you for this opportunity. To go off my notes for a minute, I was struck by the speakers list. You're getting our administration. I'm representing the faculty union. I see the students are speaking later from Vancouver Community College. I don't see many other colleges or education there. Maybe they are.

           I think that really speaks to something. Your work makes a difference for a place like Vancouver Community College. In the post-secondary system — I know it's not a fair caricature — you have ivory towers that we hear of in the universities and stuff. VCC is the opposite, if that's fair, of an ivory tower. It's a place where equity work happens, where people who aren't fully part of the system can become part of the system.

           But they need your kind of work. Mr. Black alluded to your work on pushing the ABE thing over the last couple of years. They need that kind of work. So your work is important.

           Just another personal remark. It's great, I think, to be speaking to the Finance Committee of one of the richest provinces in one of the richest countries in the world. This summer I had the chance to go to Cambodia, where I met a Canadian immigrant who had gone back there to start a family business. He was speaking to me about the differences between Cambodia and Canada, and it's just so amazing.

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           We just have so much wealth and so much ability to do so much for people. And the kind of things that you heard from child care and stuff — we really can do better. VCC, I think, is one of the places where we can do better.

           You heard the introduction from our administration about what we're like. I think many of you know about us. We're down on the streets. We're a place that does the kind of programming that makes a difference in this society. We have the largest developmental sector in the province of ESL and ABE and adult special education.

[ Page 1236 ]

           As I said, I congratulate the government on the ABE move. It has been very important. A little side note, though: I wish it had been done two weeks earlier, because we have registration in ABE in September that got a 2-percent increase. Then the people in January are going to have no fees. I think the people in September have a case for a refund. I hope in the future that those kinds of decisions are made in enough time for college boards to react properly.

           We fully support and applaud the administration's advocacy for extending that to the other sectors of the developmental sector. We would add ESL and adult special education as well. That will make, as I was saying earlier, another huge difference to the equity part of our work, and it would make huge differences in investment in those very, very talented immigrants.

           Hopefully, with that ABE decision behind us…. That's a sign of Victoria wanting to put more investment into post-secondary. As many people have probably told you, we have the skills gap, and we have the age gap, and we have a ton of problems just around the corner that need those kinds of investments.

           We feel, unfortunately, that the reliance over the last six years on tuition to make up a larger and larger portion of that investment is misguided. When most of our generation was going to post-secondary, the fees amounted to about 15 percent to 18 percent of the cost of the education. Now it is going up into the 25-percent to 30-percent range.

           That is a quantum leap that is not helping the equity projects we're engaged in. It hurts individual students around those edges, who fall off. They have to prolong their training, which delays its benefit, or they rely more and more on debt and borrowing. Too many drop out, and too many decide just not to bother.

           Unfortunately, at VCC we've seen the real result of that, where our participation rates now are the lowest I've seen in the 30 years I've been around the college. That's a shame. We think the root of that problem is underfunding. It's been sort of capped at the '01 level and hasn't gone up to match inflation and other costs. We've been relying too much on tuition. The projections now are that they won't get up to the '01 levels until 2008, which is too late.

           There are three examples I have here for VCC about how this has hurt people. Our college is trying to build a new building on Broadway, and we have, thanks to the government, a $44 million contribution from the government. But the building and the related costs are $55 million. So how is the college supposed to make up that $11 million? We have very high-paid administrators going around begging for money from corporate entities, which I think is a waste of their skills and talents and their salaries.

           We also at VCC have extra fees put on students, which go directly into capital projects. A student comes and thinks they're paying tuition, and they need to pay tuition for a course. Why should they become a special taxpayer paying an extra fee for a capital project? It's like a surtax for the benefit of the whole province and the individuals in the province. This particular small group of students has to pay a surtax. It has amounted to $2 million over five years at VCC. That is not appropriate, in our view.

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           Another example is the whole ESL issue. VCC felt that because of the underfunding it had to cut its ESL programming. So in 2002 and 2003, about one-third of our ESL programming…. We used to have over 3,000 students. It's now down in the 2,000-student range. Now that's crazy.

           We all know…. You've heard it from six different presentations, probably, that immigrants need to be integrated in the society. Why would VCC, the largest provider of ESL, cut about one-third of its ESL programming? Because it's underfunded.

           We're calling for a reinvestment in that kind of programming, and to allow the programming to go up — but without fees, without tuition fees, without assessment fees.

           Students have to take a test. Students who have to pay hundreds of dollars a month for a class — immigrants — have to pay a $50 test just to get their English level assessed. That is a barrier to access. And without the building fees that I was telling you about — they shouldn't be paying for the capital projects.

           The government, for your information, supports tuition through the adult basic education student assistance program, which we call ABESAP, to the tune of $5 million to $10 million. I think it's $5 million or $6 million. That kind of money, if you had a tuition freeze…. It would be a big start in making it tuition-free. Recent studies from StatsCan about the unemployment rates of immigrants being two or three times higher show you that those kinds of fee issues make a real difference.

           By the way, we are of the strong opinion that the private college sector is not the answer. You've heard — all of us have heard — about Kingston College and what we used to call fly-by-night colleges. Fiascos around the province are basically ripping off students — students who go into loans, get debt to pay for that tuition. That dismal record of accountability is shameful. So we're saying if you're going to invest in this, it should be in the public sector where it's completely accountable and transparent, and you get the best value for your investment.

           One other example is that the college…. Like I said, we're a street-level college. We need to support our students with support programs, counselling, etc. Those also were cut because of underfunding, and we need to reinvest in those.

           Just quickly…. I don't want to step on the toes of the child care advocates. Make them a priority of your next budget, but make all education a priority, from them up to post-secondary. Give the funding necessary.

           We would advocate a hard number — at least $200 million as a 10-percent lift. We would, for all tuition — the non-developmental tuition — support the Canadian Federation of Students in their 10-percent reduction advocacy, and bring back the student grant program to make it easier for the people really on the edge to get into post-secondary.

[ Page 1237 ]

           B. Bennett (Chair): Thanks very much, Frank. We have at least a couple of questioners here for you.

           H. Bloy: I guess you really caught my attention when you got to the private schools. You can't brush some private schools with the broad brush and say that's it. You know, part of government…. I don't believe government should ever build another building. I think the private sector should build it, because I believe that they can do it better.

           You have some great schools in British Columbia, like Sprott-Shaw College that's been around for over a hundred years serving them. There are a number of great independent colleges in British Columbia that work fully. There's Coquitlam College. There's another college that teaches the first-two-year programs and has a great working relationship with the University of British Columbia and Simon Fraser University. I just find the attitude that public is the only way….

           B. Ralston (Deputy Chair): Is there a question, Mr. Chair?

           H. Bloy: That's a question.

           F. Cosco: Where's the question? But anyway, some of my colleagues work in the private sector as well, and they do have good schools in the private sector. I'm just saying the way self-regulation was approached in the last five to ten years didn't work. Those good schools that you related to aren't afraid of regulation.

           B. Bennett (Chair): Fair enough.

           I. Black: I have Douglas College in my riding — very, very proud of the work they do. I've got good relationships with the folks over there.

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           We've had lots of conversations over the last several years. Very often our conversation inevitably centres around a series of factors that are at play right now, and I wanted to ask your opinion on one of them. I'll just quickly run you through the other three, just so you understand the full context.

           The first factor is the phenomenon that takes place in that when the economy is very, very good, you see a decline in post-secondary enrolment across the college system, across the university system. It's a broad-based factor that takes place. When the economy is not performing as well, typically the university and college numbers swell.

           One of the first student groups that presented to us actually gave us a really nice graph that showed student enrolment through the late '90s going up, and then it's been coming down since the early part of this decade — it reinforces that point very, very well — and the economy doing the inverse, of course.

           The other factor at play right now that makes things challenging is that you've got in B.C. the fourth-lowest tuition fees in the country, leading to a phenomenon — which is what I want to ask you about — where colleges are actually competing for students. I wanted to get your perspective on this.

           In talking with some of the presidents and the faculty association reps in my area of town, not just with Douglas College but with a few others, they talk about this phenomenon of competing for students.

           Now, I understand that factor out in the Coquitlam, or Tri-Cities, area which I represent. How are you seeing that here downtown with respect to the downtown campus and the challenges that you have, the ethnic diversity that you're facing and the immigration populations that you're facing, which could provide the committee — me, at least — with a little bit of a different context on that? How are you seeing that impact the student enrolment and some of the challenges you're seeing as an instructor?

           F. Cosco: As I said, we haven't seen the participation rates as low as this in 30 years. We've had booms and busts over that 30 years. We have to point to tuition as being part of what's different this time, what's causing that really low participation rate. There are targets set by the Ministry of Advanced Education. Colleges are getting desperate to get people in because they're not hitting 100 percent. We used to be 105 percent. Now we're 20 percent lower than that. That's where the desperation for competition is coming in.

           Plus, as you mentioned, the private sector in our thing is competing for some of those students as well. Students are taking out huge loans to get into the private schools, so we're competing with them as well. If they're regulated, fine; we can compete. But if they're unregulated and not serving their students well, we can't compete with that.

           I think we have a problem as a society. When we go down next time in the economy, students aren't going to be able to flock back, because they're not going to be able to afford it. Also, we can't just depend on the economy going up and up.

           I. Black: I agree with that.

           F. Cosco: There are other problems about the skills, about the retirement of our generation. We're going to have to do something to try to pull people into school — maybe part-time, maybe co-op programs with industry, maybe a lot of different options so that people are working and studying at the same time. It can't just be you're working or you're not working, 100 percent.

           We have to start thinking of how to entice people back into school and get businesses on side, as well, to support that training. This simple "oh it's a high economy" answer isn't good enough, because we're going to hit a wall at some point. We have to start planning for that wall.

           I. Black: Thank you for your thoughts.

           B. Bennett (Chair): Frank, I agree that it's quite impressive to have three different submissions from Vancouver Community College here to this committee today. I'm certainly impressed with that. It's good to

[ Page 1238 ]

see. We appreciate your submission, and thank you very much.

           F. Cosco: Thank you. As I said, it's because you guys make a difference for us.

           B. Bennett (Chair): The next witness for the committee is First Call B.C. Child and Youth Advocacy Coalition, Adrienne Montani. Good morning.

           A. Montani: Good morning. I'll start with my thanks, as you've heard from everyone. Thanks for the opportunity. We just found we were off the wait-list a day ago, so we rushed to be here, and I'm happy to be here.

           I am Adrienne Montani, First Call's provincial coordinator. We're a provincial child and youth advocacy coalition. I believe in the package distributed to you there's a page that lists our coalition partners, so you'll see who they are. We are non-partisan. We're a cross-sectoral coalition of organizations and individuals committed to strengthening support for the well-being of children and youth in B.C.

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           Our coalition believes children and youth should receive first call on society's resources, hence our name. Our work is founded on the UN convention on the rights of the child and a host of research evidence, some of which I've also given you in your package — a recent literature review that we've produced looking at some of the outcomes of the impacts of income inequality and poverty on children's well-being.

           We focus our advocacy around what we call a "four keys to success" agenda for children and youth. Again, you have a list of that in your package.

           Those four things are: a strong commitment to early childhood, because the research tells us that's incredibly important for children's long-term success; strong supports for youth in their transitions when they're most vulnerable, whether it's from elementary to secondary school or the transition into adulthood from adolescence and other transitions as well; increased economic equality, because we know that poverty and income inequality are one of the strongest social determinants of health for children and youth; and of course we want to create safe and caring communities.

           [B. Ralston in the chair.]

           Today I'll be outlining the key points First Call would like government to consider in making choices in next year's budgets. We also will be submitting a more detailed brief with further evidence to you later on, by the October 19 deadline.

           We realize the consultation paper questions that you've put out are largely directed to seeking advice on reaching goals around a sustainable environment. We fully support investments and incentives from government that lead to a healthier physical environment for growing children and youth.

           In my remarks I will focus on the equally important social supports and investments children and families need in order to reduce long-term costs to the health care system, the child welfare system, the education system, the justice system. Well-supported children who are able to reach their full potential are the best guarantee we have of a bright and sustainable future for B.C.

           In our submission to the committee last year we made six general recommendations. I'd like to start by acknowledging where government action occurred in relation to our recommendations.

           Firstly, we appreciate the increased funding directed to English-as-a-second-language training for immigrants and refugees. I know that's federal funding, but some of it's gone to the right places, and we're thrilled about that. We understand that free adult ESL training is now available for newcomers, up to levels 4 and 5. We applaud this move. We recommend funding be extended to level 6 as well. Again, this is about helping parents find and keep jobs that are able to support their families and keep them out of poverty.

           Secondly, we appreciate the increase made to income assistance rates, even though, I will say, the increase was so small as to have little impact on reducing the abject poverty of the people affected. We would like to again urge this committee to recommend to government that welfare rates be increased and indexed annually to the consumer price index.

           Our partner the Dietitians of Canada, B.C. branch, has produced an excellent report every year — it's called The Cost of Eating report — for several years now, outlining the inadequacy of welfare incomes for a healthy diet for families. To our shame, 26,000 B.C. children needed emergency food from food banks in 2006 — an increase of 10 percent from 2005. Food insecurity is linked to childhood obesity and other poor health outcomes. Again, you'll find some references and some research evidence in that report you have in your hands.

           This can frustrate the achievement of government's goal to improve the health of children. Income assistance rates must be set in relation to the reality of living costs for families, as opposed to the arbitrary way they are now determined.

           We cannot be complimentary in reviewing the impact of this year's budget choices on our other recommendations. As the B.C. Progress Board noted in their December '06 report on social conditions, this province had the second-worst poverty record of any province in 2005; 17 percent of all family units were living below Stats Canada's low-income cutoffs after income taxes.

           For the fourth year in a row — between 2002 and 2005 — B.C. has had the highest child poverty rate in the country. The most recent data shows a child poverty rate after income tax of 15.2 percent, or 126,000 children in B.C. Children living in lone-parent, female-led families are significantly overrepresented in these figures.

           [B. Bennett in the chair.]

           Over 60,000 B.C. children live in families with at least one full-time, full-year worker, but they are still poor. This reflects low wages. The minimum wage in

[ Page 1239 ]

B.C. hasn't been raised since 2001, and families' earning power is being eroded. We recommend that the minimum wage be raised to at least $10 per hour, again indexed annually to the CPI. The discriminatory $6 training wage should be eliminated immediately.

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           Thanks to healthy revenues, B.C.'s government now has greater room to make spending choices. Our coalition calls upon government to acknowledge the persistent poverty faced by too many B.C. families and take bold action to define and commit to a poverty reduction strategy, including specific targets and measures of our progress.

           We need comprehensive poverty reduction strategies at both the national and the provincial levels. B.C. could join Newfoundland, Labrador and Quebec in showing leadership by putting in place a provincial plan. Again, in your sheets there you have a web link if you're interested in looking at those two provinces' plans and commitments.

           The cuts this year to child care funding have been devastating and have raised great concern among our coalition partners. We note that B.C. is the only province to respond to the federal child care program funding cuts with cuts to child care funding here. A mere $15 million was needed to sustain child care operating funding at previous levels, a sum easily found in the multibillion dollar surplus at the end of the last fiscal year.

           It has been absolutely incomprehensible to the community why these cuts were made at the same time that about $96 million was being hastily spent on one-time-only expenditures and new StrongStart programs that are largely inaccessible to working parents.

           The result has been, as you heard before, that child care operators are raising their fees, child cares are closing, and low-income families can no longer afford quality care for their children. Even before these cuts there was a crisis in B.C. for parents desperate to find quality, affordable child care so they can re-enter or stay in the workforce and support their families.

           It is long past time for this province to develop and implement a plan for child care that respects all children's right to quality care and early learning environments, their parents' right to work and child care providers' right to wages that they can support their families on.

           We urge you to recommend to government in the 2008 budget that it include restoration of all child care funding cuts, significant investments in building new spaces and a removal of the cap placed on access to operating funds for new spaces. The plan must also address the issue of compensation for child care workers, as recruitment and retention problems are rampant throughout the province.

           Our continued neglect of this basic support for young families and children is inexcusable and flies in the face of all the research evidence about the importance of the early years, much of it provincially funded. A child care strategy that supports all children and families is a key component of a poverty reduction strategy as well, because when children get a good start, it has lifelong effects for them. They become better workers, use less health care, need less intervention in school, etc.

           The more we support young families with universally accessible services and programs, the greater will be our savings in public expenditures in all those health, justice, education, child welfare services.

           Child apprehensions of aboriginal children right now are directly linked to the poverty of their parents and lack of supports and services. Again, we're looking at some of the intergenerational issues for aboriginal families from residential schools, etc.

           In some recent studies, which I think will be coming out shortly, I think you'll see a lot of apprehensions of very young infants and young children are happening not because they're being abused in their families but in that grey area of "unable to." They're being judged unable parents, unable to care for the kids, and it's directly related to their poverty.

           It's very expensive to take kids into care, and the outcomes are poor. It would be much better to keep them with their parents and support those families and impoverished extended families — give them more support to care for their own children. I urge you to look at that.

           One of the things to do is to look at the Ministry of Children and Family Development. Fund them according to need and not just give them a capped budget. They need the money to be able to beef up the preventative services, not just pay for children in care and those kinds of late intervention services but help parents in the early years and with the supports. Those preventative services are really less expensive in the long run. They have better outcomes for families.

           I'd also like to quickly touch on some education investments that we've noted in the summary sheet. Public schools have been struggling with supports for vulnerable children, particularly ESL children, aboriginal children and children with special needs. For years many of the support services that used to be — and I'm a former school trustee — in the schools are no longer there. Child care workers, nurses, extra helping teachers — a lot of those have been pared away over the years.

           Teachers really can't do it all. We can't keep loading up on them, expecting them to do it in their classrooms. We need to restore some of those support systems in the schools, because that's where children are. Again, the return on a proper investment in the K-to-12 sector is lifelong and benefits the economy. The dividends for our society and economy are huge.

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           Similarly, we recommend that government follow the advice of the B.C. Progress Board in reinvesting and removing financial barriers for low-income students so they can access post-secondary education. Some of that's ESL; some of it's other, just access. I haven't touched on all the recommendations that we've listed there. I hope you'll look at all of them. Again, we'll put in a longer brief later.

           We thank you for your attention. We trust that you share our concern to make B.C. a more just and equitable place for families to raise their children. We think

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everybody shares that goal. We argue over how we get there sometimes. So we're making our recommendations in good faith that you'll listen to that.

           We want B.C. to be a place where no child is excluded or denied the help they need to be the best they can be, because we will all benefit in the long term.

           I welcome any questions you have. Thanks for your time.

           B. Ralston (Deputy Chair): Thank you for your presentation. I want to respect what you've said about the coalition being a non-partisan group. However, the minister responsible for this area has said, in defending the actions that the provincial government took in the spring, first of all, that there were no cuts; secondly, that the federal contribution of a hundred dollars per month per family has more than enabled families to pay increased fees for child care, should they be imposed this fall.

           I wonder if you have any comments on the position that the minister has taken publicly.

           A. Montani: Well, there were cuts. I don't know what else to say except that they're verifiable — the cuts that were made. There were cuts to the child care resource and referral programs and actual cuts to the operating funds and caps placed on it. So places around the province that want to build new spaces…. There's a cap on how many of those spaces will be subsidized under the child care operating fund. That cap is new as well, so that's, in effect, another kind of cut.

           Child care providers are raising their fees, more than a hundred dollars a month in some cases. That $100 a month per child is only for children under six, so any child seven, eight, nine and up isn't benefiting if parents aren't getting anything to help them with the increased fees. So they're being ignored by that suggestion that they use the hundred dollars, and a hundred dollars doesn't go very far for child care costs. If any of you are paying them, you might know that.

           B. Simpson: Thanks, Adrienne, for the presentation and the supporting materials.

           My question goes to the implications of not addressing poverty. You've spoken to that from a number of different angles, but it strikes me that when we say, "What are the real costs to government of not doing the early intervention?" we often get ratios that are bandied around that out of a dollar invested, you get a $3 or $4 benefit.

           In some of the literature work that's done, and some of the research that you've indicated will be forthcoming, has anybody actually begun to sit down and say: "Okay, for British Columbia, if we truly have one of the highest child poverty rates, what are the disbursed long-term costs to both government and society from that?" The business case for the investment earlier on — are you aware if that's forthcoming?

           A. Montani: Well, the B.C. Progress Board report talks about some of the costs. I don't have that figure, but you can pick individual things like the cost of…. If we fail a young person and they end up in the criminal justice system, that costs $40,000 a year or something. The cost of a child in care…. I don't have those figures.

           I actually think it's government's job to do their own costing on that. Your ministries can give you those figures of what the cost is of a child in care. I know you're in opposition in asking the question, but I really think government should be looking at this. There is the research — the child care advocates have spoken earlier about it — about the costs of investments in child care.

           I think that we as a society long ago realized the cost of not educating people, so we decided we'd have a universal education system at least up to grade 12. We know people aren't employable in today's society.

           I'm not an economist, and I don't have those figures. But when you layer them on, all of the different areas, it's quite significant.

           B. Simpson: That's what I was trying to get at. We've had some numbers bandied around — of $1.5 billion investment in the child care system and so on. People have individual figures of somebody who ends up in the justice system or ends up illiterate or whatever. But it strikes me that one of the things we may need to do is actually roll that up and say: "Against $1.5 billion, this is what you may lose in disbursed long-term costs."

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           B. Bennett (Chair): Adrienne, thank you very much for presenting to us. We appreciate it.

           The next witness is Ameresco — Mr. Wall. Good morning, and welcome to the committee.

           D. Wall: Thanks for the opportunity to speak with you today. What I wanted to talk about is an issue that I think is quite topical these days. It's funding for climate change, in particular climate change initiatives with the government's own operations.

           I present a little presentation here to follow. Hopefully, you can follow along. On page 1, first point. As we all know, the government has set aggressive emissions reduction targets for the province. Vaughn Palmer was kind enough this morning to remind us just how aggressive they are.

           In achieving those, the changes that we're going to see across the province will potentially impact everyone, whether that's legislation or policy. So the government has an opportunity to demonstrate leadership by effectively tackling its own emissions, and it has in fact committed to do that. The devil is in the details of how they go about doing that.

           The decisions that the government makes in terms of deciding how much to invest in its actual emission reductions, as opposed to offsets and things like that, will set the tone for similar decisions by other entities like municipalities, businesses and homeowners.

           What we need to do is increase the amount of actual emission reductions in the province if we're going to get anywhere near the targets that we've set for ourselves.

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           Switching to page 2, when it comes to funding reductions in government operations, there are basically three policy questions that come up. What's the appropriate level of capital investment in emission reductions for the government's own operations? How do you determine what that true net investment is? In other words, there is more to it than just the upfront capital. Finally, what policies are needed to ensure reductions actually happen and taxpayers receive an appropriate return on that investment?

           The next page is a pretty chart. There are basically three steps to becoming carbon-neutral. The first one is establishing what your baseline is, what your footprint is. All entities, whether they be the government or companies like ourselves — we're going through this ourselves — have to take that as a first step.

           The next step is to make investments in actual emission reductions where they are economical. No matter how much you invest in reducing actual emissions, you'll never get your footprint down to zero. So you then, finally, invest in carbon offsets to take the effective emissions down to zero. What carbon offsets look like for government as opposed to a private entity…. A lot of that hasn't been determined yet.

           On the next page, determining the appropriate level of investment when it comes to actual emissions in the government's operations. If you know you're going to have to invest in offsets to get down to zero, it doesn't make a lot of sense to invest in actual emission reductions if those are more expensive than the emissions themselves. That's the whole point of having access to offsets. It just makes sense that you invest in anything that is cheaper or the same price as the market price for offsets.

           A little example. If you could spend $400 and that would generate one tonne of avoided carbon dioxide for a period of 20 years, you could do the same thing by buying one tonne of offsets for a 20-year period at $20 a tonne per year — just to put the math together.

           The difference, though, is that the investment actually reduces emissions locally. The offset purchase may not, depending on how it's structured. For a private company like us, when we buy an offset, we could be investing in a rain forest in Nicaragua, for example.

           What we need to do is have policies in place that encourage people to make actual emission reductions within the province. One of the differences is how you do the math. It's important, when you're investing in your own emissions, to determine what the true net investment is.

           As I said before, it's not just the capital cost that comes into play. You take the $400 example from the previous slide. When you determine what the true net investment is, the initial capital cost is one element of it. But most of these projects that you're going to invest in will generate utility savings, so it's appropriate to take the net present value of those savings stream out to the end of the project and subtract that from the initial cost.

           In addition to that, a lot of the investment you're going to be making represents avoided future capital expenditures. The net present value of that avoided capital should be subtracted.

           In government buildings — schools, hospitals, colleges, etc. — where most of the government's footprint is…. It's in these buildings as opposed to…. I guess the next largest component would be the fleet. Most of those emission reductions are going to come from replacing existing equipment — boiler systems and things like that.

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           These are things that need to be replaced anyway, and there's already a fairly significant deferred renewal backlog in all the public sector. B.C. is no different from other institutions and geographies. That needs to be addressed anyway. So when we're replacing a boiler now to generate greenhouse gas emission reductions, we avoid having to do it down the road. That should be factored into the decision criteria. While you're doing that, you're making the facility a better place to learn, heal, work or live.

           Hypothetical example. Take a typical school district, perhaps 45 schools. If you could invest $25 million into that school district in emissions reductions measures, you might reduce the emissions by approximately 30 percent — a little over 1,800 tonnes per year.

           You could make the case that those emissions would be in effect for 20 years. If you just looked at the $25 million, the amount of tonnes and the 20-year figure, you'd be looking at an upfront capital investment that's equivalent to $686 a tonne. Nobody would make that investment when you compare it to what's expected for the carbon market, which right now is probably closer to $20 a tonne.

           However, if you look at that investment and say, "Well, I'm going to save over half a million dollars in utility costs per year at current prices for that investment," and you factor that into account, and you also say that 80 percent of that investment represents upgrades you would have had to do to the school board anyway at various points over the next 20 years, you could make the case that the net investment is closer to $32 a tonne, which should warrant the investment. When you do that, you're also addressing the deferred renewal backlog in that school district, and you're enhancing learning effectiveness.

           If you take that school district example, and you extrapolate it across the entire portfolio of the government, you could make the case that an appropriate level of investment in reductions in the government's own portfolio could be well over a billion, perhaps several billion.

           Theoretically, the utility savings that are generated from that could be recovered — clawed back is another term — to help offset some of that cost. When we're talking about how to spend a surplus, the concept of covering debt services costs may be moot, but again, the point is that this can pay for itself to a certain extent. When you do that, some of the performance risks are addressed, and I'll talk about that in a minute.

           A couple of quick examples. The Alberta government has huge surpluses too, but they're mandating the schools and telling them: "We have no more capital until you create as much of it as you can by capitalizing operating savings and dealing with your facility renewal that

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way. After you've exhausted that, then come back to us and we'll talk about capital."

           The city of Vancouver is another example where they're using guaranteed utility savings to finance their corporate climate change action plan. It may not be practical to actually recover these operating savings from the various ministries and organizations. It may be better to just let them retain the savings. If you do that, the taxpayers still benefit because they're going to get enhanced services as a result of the improved operating budgets of these organizations, in theory.

           No matter how you do that — whether you just let the organizations retain the savings or you try to recover it back into treasury — it still is a performance issue in terms of making sure that taxpayers get a return on that investment, which brings us to the next slide on risk transfer.

           The school district example I showed you before. A lot of things can go wrong with these projects. If there is no entity that's guaranteeing the upset cost of the project or the savings performance, things like cost overruns are sure to come in. You could easily have a case where the emissions reductions are 25 percent less than originally estimated, particularly if they run out of money and just stop before they're finished.

           You could make the case under those circumstances that what was initially going to be a $32 investment could be well over $200 a tonne, in which case in hindsight one would not have made the investment, and it would have been better to buy offsets.

           Fortunately, the risk associated with this can be transferred to the private sector, both on the cost side and the savings side of the equation. This would ensure that taxpayers get the return on their investment that was originally expected.

           There is actually an existing government program to that effect called Green Buildings B.C. retrofit program. It's intended for all provincially funded institutions. It's based on an energy performance contracting model, and it provides the institutions with government-approved standard documents for procurement and contracts, and it guarantees both the upset cost limit and the savings performance of these projects.

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           Finally, we would encourage the government, when deciding how to fund emissions reductions projects, to lead by example in terms of maximizing investment in actual emissions reductions and therefore encouraging others to do the same thing so those investments and emissions reductions occur in B.C.

           When determining how to roll out the funding to the various institutions, the business cases and the analysis should be done based on the true net investment and comparing that to the market price, or expected market price, per tonne of CO₂ — recognizing the additional benefits such as the operating savings, the facility renewal aspects and the avoided capital.

           Finally, where appropriate and cost-effective, to ensure that existing programs, such as the Green Buildings B.C. retrofit program, are used to provide risk transfer.

           That's the formal part.

           B. Bennett (Chair): Thank you very much. Very interesting.

           J. Horgan: We've been travelling around the province with a specific mandate to look at these very issues, and you're the first to bring a comprehensive report to the table, so I really appreciate that.

           One of the questions that I would pose, and I think it's probably on the tip of other people's tongues, is the notion of actual reductions versus a cap-and-trade system or a way to capture and reduce emissions in real terms in British Columbia rather than investing in Nicaragua forests and so on.

           Can you expand on that a little bit, with some background on the context of what's happening in Europe with the trading in the market versus what's being proposed for the western states and British Columbia.

           D. Wall: Okay. There are basically two markets when it comes to carbon offsets. There's the voluntary market for entities — whether it's a government or a firm like ourselves — that want to be carbon-neutral. They can buy offsets to achieve that. The quality runs the full spectrum from B-minus to triple-A, and it's buyer beware.

           Then there's the legislated market, which falls into the cap-and-trade as you described. Those are two separate markets, and they're both still evolving. The costs for high-quality offsets in both are going up.

           When it comes to somebody making the decision whether to do actual emissions reductions or to invest in offsets, they should go through that analysis that I went through. "Here's the price of offsets. I should do everything that I can in actual reductions, and then anything that's too expensive, I would do offsets."

           Then you have to make the decision on what kind of offsets. What quality of offsets do you want to do, and do you want them to be local? I would imagine that as far as the provincial government is concerned….

           I'm sure the secretariat has been working on this for a number of months now, but I would imagine that most of the emissions offset structures that they're going to have in place — that they'll have access to, that they'll be able to claim are carbon-neutral — will result in projects outside of government but in the province of British Columbia.

           If not, there could be a bit of a debate about that. But I would imagine that's where they're going to go, and I would recommend that's where they go.

           Does that answer your question?

           J. Horgan: Yeah, well, it gives it…. I'm sure there will be other questions.

           D. Hayer: Doug, I'm looking at your page 3 at the end of the presentation, and it shows natural gas versus electricity and then the savings involved.

           D. Wall: Oh, on the written submission. Okay.

           D. Hayer: Are you saying that we should not be using electricity for a heating system or that we should

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be? Somebody had told me if you have an electric heating system in each school, each classroom could adjust the temperature as they needed and if it is not needed, they could keep it down. Therefore, it would be better for our environment rather than using that natural gas furnace heating system.

           D. Wall: There isn't a lot of electric heating in this province, period, because of the requirements of the energy plan. A big component of that is electrical reductions. Converting from gas-fired to electric probably won't work economically, and it's not a good idea for the province, in my opinion.

           What that chart shows is that when you save a dollar of electricity versus a dollar of gas, the emissions on gas are about tenfold. On the graph that's to do with household emissions, you'll notice that only 1 percent of a typical household is on appliances and electricity, and that's because of the low-carbon intensity.

           I'm not advocating that we not do electrical savings measures. All the projects I'm talking about would have large amounts of electrical reductions, and that would contribute to the energy plan. They just don't have a lot of impact on the emissions.

           I wouldn't advocate converting to electric heat to reduce emissions, though, because that would fly in the face of the requirements and the objectives of the energy plan.

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           B. Simpson: Thanks for the presentation. I echo John's comment that this is some good food for thought. I also wanted to go to where John was going, but from a slightly different angle.

           You've done a more detailed assessment of how to do the calculations around actual target reduction so that you get — I'm assuming; I don't want to put words in your mouth — to a more level playing field between an easy purchase of a carbon offset versus the actual realized reductions from doing emissions reduction.

           D. Wall: Absolutely.

           B. Simpson: So that's what you're trying to do there. One aspect that I know we've been chatting about and struggling with is the whole risk associated with the offsets. It never seems to be factored in. You know, it's easy to go out with 20 bucks, buy a couple of thousand tonnes of offsets and then say: "Thank you. I'm done."

           Is there anybody starting to do some risk calculations on offsets?

           D. Wall: Not so much a risk, but there is starting to evolve a rating system and a standardization on quality. There's one standard out there called the gold standard, which has the best prospect for rating offsets. For example, they don't do the sequestration through forestry. That's not part of what they advocate.

           That is growing. I think we'll see it's a market in the making. That is an absolute requirement we are talking about — to have not so much a risk but just an independent registry system that allows everybody to know that those reductions actually took place.

           B. Simpson: And you're purchasing them one time. They're not being resold as well, which is the other aspect of it.

           D. Wall: That's correct. So we're not double-counting as well. Absolutely.

           B. Bennett (Chair): Doug, thank you very much for the presentation. It was very interesting. We appreciate all the time it took to put it together, and it will go in the hopper.

           As John said, it's the first concrete presentation we've had on some of the questions that were asked in the budget consultation paper. We appreciate it.

           I understand that the Pembina Institute is here. Matt Horne, welcome to the committee.

           M. Horne: My name is Matt Horne. I'm a policy adviser with the Pembina Institute. We're an environmental organization focused on energy and climate issues in Canada. We have activities in B.C., Alberta, Ontario and federally. This is our first opportunity to present to the budget process in B.C., so I thank you for the opportunity.

           What I want to do is just communicate some of the opportunities to use B.C.'s budget to provide a price signal on carbon as part of the province's overall climate strategy.

           To start with, the rationale on why the budget represents a critical opportunity. I think there is clear evidence in the Canadian experience and outside of Canada that we do need strong price signals in place to make a change in the carbon intensity of our economy. We can look at past efforts in Canada which have been largely based on the voluntary or information types of approaches, and we haven't seen a change in the trend of rising greenhouse gas emissions.

           Recent work done by the National Round Table on the Environment and the Economy has looked at 65-percent reductions in Canada's emissions. To achieve that, they are looking at prices on carbon starting at $10 a tonne today and increasing to $270 a tonne by 2050. Really, the B.C. budget offers one of the key opportunities to put those signals in place.

           First of all, I want to clarify what Pembina means by a price signal. I think there's a tendency to jump automatically to carbon tax. A carbon tax definitely is a form of price signal, but in general we would see a price signal being a broader form of policy.

           The first would be market-based regulation, where we're using a regulation but providing flexibility through the market to signal the price on carbon. Probably the best example is the cap-and-trade system that B.C. is engaged in developing through the western climate initiative. There's a cap set on emissions, but emitters are able to trade amongst themselves to find lower-cost ways to reduce emissions.

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[ Page 1244 ]

           The second on my list is tax-shifting, where we're putting a price on goods or equipment to reflect the relative carbon emissions of those goods. Carbon taxes would be one of the primary ones but also feebates on vehicles, where you're putting a higher price on less efficient vehicles and a lower price or a price incentive on more efficient vehicles.

           The third one, which is in the list but with some important caveats, would be incentives, which is what has been the core of Canada's climate policy for the last ten years, where we're trying to encourage more efficient homes or more efficient vehicles. They definitely do provide a price signal. I think that given the relatively high cost of achieving emissions reductions, they're not capable of providing that broad and significant signal across the economy that we're going to need to see a significant change in emissions in the province.

           Next section: what would Pembina like to see in B.C.'s climate policy and, specifically, through the budget? As a foundation, where the province has already signalled and which we're supportive of, is a mix of traditional and market-based regulations. It really provides that foundation and certainty before emission reductions are going to occur.

           Building on top of that, and in areas where the regulations can affect, is that strong price signal — and getting that in place to drive innovation beyond where the regulations can get us to.

           Then, above and beyond that, the third tier would be the strategic use of programs, information and incentives to direct the change that is going to be spurred by the price signals so that you're not getting a situation where someone is paying more for heating fuel and their reaction is to turn off the heat and live in a cold home. There are programs in place to get them into more efficient homes.

           I realize it's not particularly prescriptive at this point. The reason is that these are issues we're still hashing through in terms of what the specific balance between those should be.

           I did also want to use this as an opportunity to invite members of the committee to a conference we're holding at the end of October, which is specifically geared at looking at carbon pricing. That'll be October 29 and 30 with folks across Canada in industry, government, academia and NGOs. If you're available, it should be a good opportunity.

           I did want to provide just a few examples of carbon pricing both in B.C. and beyond, just to show that it is out there, it's feasible and it is having an impact.

           B.C. Hydro has been using a carbon liability in their calls for power to assess the carbon price and to put a price on carbon for projects that are considering providing power in B.C. That will change, going forward, with a new policy in the energy plan, but that has been used over the last calls for power.

           Dawson Creek in the northeast has been using a carbon price in their own decision-making processes. When they're looking at buying vehicles, they're evaluating what the carbon emissions of those will be over their life cycle. They're looking at doing that for buildings as well.

           One of the longer-serving examples to look at internationally is Sweden, which has had a carbon tax since 1991. They've been using that to drive down the carbon intensity of their economy. Also, at the same time, with the revenues they're collecting from that…. It's an opportunity to reduce taxes on labour.

           The final piece there is a bit of information provided to you to put in context what a carbon price in B.C. might look like for the average household. If we're looking, for example, at a $50-per-tonne carbon tax, the graph just shows what the implications would be for the average household in B.C. You can see it would be about $650 a year — not massive, but a substantial price signal.

           You can see the breakdown in that graph, so 265 of those dollars would be attributed to personal transportation. The breakdown so far is for air travel, space heating and cooling, and water heating.

           That's all I wanted to present on today.

           B. Bennett (Chair): Thanks very much, Matt.

           J. Horgan: Matt, I have to say, that's back-to-back presentations on the focus of everyone's attention, certainly in the areas that I travel in.

           One of the challenges, of course, for public discourse is that the climate change secretariat meets in rooms without microphones and without Hansard Services. So spreading the word, or the religion, on climate change and the need to reduce emissions and on ways that we can do that in a cost-effective way is really…. This is a good forum for that, and I greatly appreciate your effort and time to come here and do that.

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           What I wanted to focus on is your pie chart at the back. One of the things that many of us know, and certainly you would know, is that in British Columbia the greenhouse gas emissions from the electricity sector are minimal. I fully embrace and, in fact, was criticized for giving a high grade to the energy plan with respect to conservation. It's vital, and it's important to change mindsets, but not so much as demonstrated by your chart — not so much to reduce emissions but to reduce consumption or the notion of consumption of energy products.

           We see the biggest chunk is on personal transportation. That's an issue that resonates with the general public instantly, yet they don't make the association because in some communities they're dependent on that single-occupancy vehicle. They don't have transit options and so on.

           If you were to advise government on how to assist individuals in meeting that largest personal obligation, how would you do it?

           M. Horne: I think that the government has already signalled a good path in terms of committing to adopting California's emission standards. There are ways they can go beyond that in a regulatory approach, looking at some of the regulations in Japan and the European Union, which are even more stringent than California.

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           Going beyond that, and driving that innovation through the budget process in particular, I think the feebate model, which we have in place in Canada already in a less than perfect model in the federal system, is a really nice example of fiscal policy that can be used to further drive more efficient vehicles.

           You would set up an average litres-per-100-kilometres efficiency. Let's say eight litres per 100 kilometres. For every litre per 100 kilometres a vehicle is above that, they'd pay a penalty of $500 or $1,000. For every litre per 100 kilometres they are below that, they would be incentivized by $500 or $1,000.

           You're keeping it confined to the automobile sector, so it's not coming out of the general coffers of the province. It's fairly tight, in that sense, and it does provide a strong signal that we don't want to see inefficient vehicles on the road and we do want to see efficient vehicles there.

           R. Lee: Carbon in gas form is damaging to the environment but in solid form is not damaging at all. So the carbon trading, I guess, is all gas. Planting trees is one of the ways to get a carbon sink into solid form by some process. It could be less damaging to the environment.

           All those carbon-trading ideas…. Is tree-planting one valid way to reduce greenhouse gases?

           M. Horne: I'm not an expert on carbon offsets, but I know there are limited applications where tree-planting can be a valid offset, where you're sort of converting land that's already been turned away from productive forest use back to forest use. There are lots of cases where tree-planting is considered business as usual. We cut down a forest for forestry purposes, and the assumption is that we will be replanting it, so we cannot claim credits for those sorts of uses.

           There are limited applications. I don't know to what extent they exist in B.C. By and large, they are a smaller chunk of the opportunities, from what I understand.

           R. Lee: Yes. I think the policy and the criteria are still evolving.

           M. Horne: It's a careful one to keep an eye on to make sure we're rigorous about it and that we're actually achieving reductions through what we do. In the limited number of cases where we do allow offsets and credits for tree-planting, those are actual real reductions, and it's not a shell game.

           B. Simpson: Your final comments on tree-planting are interesting because the Canadian Forest Service didn't register our forests under Kyoto for that very reason — that it's business as usual and shouldn't be credited.

           My question goes to the $50-per-tonne greenhouse gas emission and the pie chart, which I think is interesting. Has the Pembina Institute done anything on what the CCPA called the just transition work? If you start to go down that path, how do you then allow people who are in the lower income brackets to come along with that, and it doesn't become a punitive tax on them?

           I come from a rural community, and of course I get a lot of push-back when we get one-size-fits-all tax regimes, where some of our folks still actually need a truck to work and then they get a punitive tax on it because it's a high-emission vehicle. So the rural community just transition as well….

           Has the Pembina Institute done any work on that aspect of moving in this direction?

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           M. Horne: We've done a little bit. The pieces I would comment on…. Any direction B.C. goes in terms of carbon pricing…. You don't want to just jump in with a particularly large carbon price. The work that the national round table did looks at a very small carbon tax at the beginning and sort of increasing it over time.

           A really important part of that is not just to start it at, say, $15 or $30 a tonne in 2008 and not to signal anything beyond that but to signal exactly where it's going in three, six, ten years, so that if you have a particularly inefficient vehicle or an inefficient home today, you're not penalized for that strongly but are given a signal that in five or ten years down the road…. That signal, which is small today, is going to be bigger in the future.

           We have programs in place and opportunities to let you adapt so that you're not going to be paying a significant carbon tax in the future. That's one of the better ways to do it.

           The other piece on just transition is that carbon pricing is a flat tax. There are opportunities through that revenue direction not to funnel it all directly into carbon reduction programs. In the Sweden case, for example, where they're looking at reducing labour taxes, they're also reducing income taxes and changing their brackets there. So there are certainly ways to work around that.

           D. Hayer: I'm looking at the chart for B.C. household costs for our greenhouse gas emissions — $50 per tonne. You talk about a space-heating-and-cooling system at $78. Under the water heating system, it's $46.

           What about geothermal heating? Any analysis on that? Would you recommend, according to your chart, using a hot water heating system over the electric heating system? The geothermal heating system, especially with a lot of construction of large houses in the lower mainland area….

           M. Horne: This chart takes average numbers for B.C. It's not indicative of any one household. It looks at the blend of electric and natural gas and some geothermal heating that's used throughout the province. You couldn't say that this is one person's home, for example.

           If we look at geothermal opportunities in the province, we would certainly be supportive of that as a strategy, where you're looking at efficient homes run on geothermal systems or sort of a combination of homes run on a single geothermal system. The economics seem very attractive, in new construction particularly.

           The environmental benefits seem very substantial, especially when you're looking at places like the interior

[ Page 1246 ]

or the northeast, where you have significant heating and cooling loads. The economics are not as strong in places like the lower mainland or Vancouver Island, where we don't have the cooling loads in the summer.

           B. Ralston (Deputy Chair): You've spoken of a range of market signals, but at least as I understand it, to some extent the cap-and-trade system and a carbon tax are not reconcilable. Many economists express a preference for the carbon tax because it's simple, transparent and generates revenue for government. And if it's phased in, you send the signal over a long period of time, whereas the trading system doesn't offer those kind of benefits. Certainly, the European example would suggest that there are some inherent problems if it's not structured right at the outset.

           Providing you mitigate the inequality effects of the carbon tax, it seems to me that at least at a very preliminary level, that might be a preferable policy direction. Do you have any thoughts? You're certainly not making a choice in what you've presented here.

           M. Horne: As an organization, we've made a choice to try to remain open to both because the province has already committed to the western climate initiative, and there is a developing federal system, as well, in terms of looking specifically at large final emitters.

           The U.K. example is shown, where there has been a case where you've got a cap-and-trade system in addition to carbon taxation on their large final emitters. So it's not impossible that the two can mix together.

           My own sense personally is that as we move forward, we are going to have a bit of a piecemeal approach as we try to figure this out. The national round table work, for example, is modelling based on how we think this will work.

           We're looking, in a lot of cases, at breaking new ground here moving forward, so for one person to say, "I know this is the better approach," or "This is the better approach…." For me, I think we do have some experimentation to do, essentially, in figuring that one. A combination of approaches, in that sense, probably isn't a bad idea.

           B. Ralston (Deputy Chair): If I might, just one follow-up. What about the revenue result for a carbon tax? It seems to be, from a perspective of government, that you do get an immediate result in terms of revenue, which you can apply to other goals.

           M. Horne: You could certainly get the same through a cap-and-trade system if you're auctioning your permits. So you're saying: "Here are the emissions allocations we're allowing, and instead of just giving them to the large emitters, we're going to auction them." It is a much purer market system in that case. The revenue generation potential exists from both systems.

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           B. Bennett (Chair): Thank you very much, Matt. It was very interesting. We took a little extra time with you because we had a little extra time, and it was an interesting submission.

           Our next witness for the committee is the West Coast Environmental Law group. Margot McMillan, I believe, is here.

           M. McMillan: I work with West Coast Environmental Law, and we're a non-profit, public interest environmental law association. We've been working in partnership with all levels of government to try to develop proactive law and climate change solutions. I want to thank the committee for the opportunity to speak today. We're very pleased with the focus on climate change for the next budget.

           We know that the government recognized the challenges around climate change and the need for solutions in the 2007 throne speech and has committed B.C. to addressing these challenges. In order to make these throne speech commitments and these laudable goals real, we need a world-class 2008 budget.

           We have a variety of measures that we're suggesting should be included in such a world-class budget. I'm going to go through four of them really briefly today, and I'm going to focus in particular on the last two, which are going to centre around a renewable energy and oil and gas policy in B.C.

           To begin with, this touches a little bit, I think, upon what Matt was talking about, or some of the questions I heard at the end around carbon taxes. We recommend some kind of clear tax-shifting measure being central to a climate change budget.

           A carbon tax would be something that would start to shift public behaviour towards more climate-friendly behaviours. We would suggest that it be an upstream carbon sales tax on all fuels based on the carbon content. I can go into more detail on that in the questions, if you'd like to. As I'm focusing on renewables and oil and gas policy, I'd rather just leave it there for the carbon tax at this point.

           The second is that we know that transportation is the largest source of GHG emissions in B.C. So we would really like to see a budget that follows through on some of the existing commitments on funding to public transit in the lower mainland and at the same time provides additional funding to develop and implement a transportation strategy for the province that puts B.C. on a path towards at least a 90-percent reduction in transportation-related GHGs by 2050.

           Thirdly, we'd also like to see direct new expenditures on GHG-reduction measures of a magnitude sufficient to reduce GHG emissions to a level that will avoid dangerous environmental and economic impacts of climate change.

           On those direct new expenditures, we would recommend that B.C. at the very least follow Sir Nicholas Stern's 1-percent recommendation. For B.C. that would mean approximately $370 million on new climate change commitments, which would be in addition to the pre-existing commitments that I spoke about around transit.

           I know I've gone through these measures really quickly, so I could go into them in more detail after.

[ Page 1247 ]

But what I'd really like to focus on is how the government itself could shift its behaviour to address some of the inconsistencies between some of its throne speech commitments and its current fossil fuel policy. We recognize that this type of shifting is going to pose some challenges, and we have two suggestions to ease this shift.

           One is relatively simple. It's well known, and it's fairly widely used. It's a legacy fund, essentially, for oil and gas revenue. It would entail a legislated requirement in the budget that an escalating portion of oil and gas revenues be removed from the general revenue and set aside as a climate solutions legacy fund or some other title similar to that.

           Half of these revenues would be set aside for a rainy day. The other half would be used to fund climate change solutions, particularly the transition to renewable energy sources. Many other jurisdictions that produce oil and gas have funds like this. Alberta does; Alaska, Norway. Even Chad has a legacy fund in place.

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           Simply put, B.C. is a bit of a laggard when it comes to oil and gas producing jurisdictions and legacy funds. We know that fossil fuels, particularly oil and gas, are finite. These other jurisdictions have recognized that and the need for a fund to be put in place for future economic diversification when these resources run out.

           From a climate change point of view, we know that fossil fuel production itself, oil and gas production, is a significant contributor to GHG emissions. It's important that part of the revenues from that production be explicitly earmarked to ease the transition to renewables and to provide some kind of solution for climate change and the impacts.

           From a shifting behaviour point of view, in order to increase the chances for meaningful action on climate change, I think we do need to start weaning ourselves and the government off oil and gas revenues and creating other sources to replace these revenues, like renewables. The escalating nature of this fund will help to lessen the government's reliance on fossil fuels and ease this transition.

           The second oil and gas policy–shifting behaviour measure involves, again, a focus on renewable energy, this time through a reduction in fossil fuel subsidies. It would also entail a legislated requirement to reduce subsidies that promote the extraction of fossil fuels, like oil and gas, over time with a savings from these reductions to be used to fund research, development and other incentives for energy conservation and renewable energy sources.

           We would suggest that starting in 2008, oil and gas subsidies be reduced by 40 percent, with additional reductions in subsequent years. Why we think this will work is that subsidies to the fossil fuel industry will cost the government on average about $266 million per year over the next three years. That doesn't include subsidies to coal. That's oil and gas.

           With oil and gas corporations making record profits in the multi-billions of dollars, and with oil and gas prices at near-historic highs, the economic rationale for direct subsidies, especially at a high rate, and royalty reductions is questionable. The government's own studies show that oil and gas supplies are peaking while demand is increasing, which seems to effectively eliminate the need for the government to continue to subsidize the industry at a high rate.

           It also shows that since these supplies are dwindling, we do need to be looking at other sources of energy in order to be prepared for when oil and gas supplies run out and we're looking for other energy sources.

           I'd just like to conclude by saying that we are very pleased that the government has made significant commitments to the public to fight climate change. We know from the polls that that's what British Columbians want to see. They didn't really see this with the 2007 budget. There was no significant funding for climate change.

           At the same time that these climate change commitments are being made, the government is also designing ambitious plans for doubling its oil and gas activity by 2011, despite the obvious GHG implications of that. I think this inconsistency between what was promised in the throne speech, the lack of adequate funding in the previous budget, and the increase in oil and gas activity isn't lost on the public. There is a legitimate expectation now that this next budget will provide a clear mechanism for addressing this inconsistency and providing some climate change solutions.

           The measures we've proposed today, particularly the legacy fund and the oil and gas subsidies reduction, will show the government's commitment to climate change solutions through this world-class budget.

           That is the end of my submission. I thank you very much, especially for listening to me go through them at a rapid-fire pace. I appreciate the opportunity to talk to you today.

           B. Bennett (Chair): Thanks, Margot. I would assume you're going to have a full written submission to the committee.

           M. McMillan: We will have a written submission as well, yes.

           B. Bennett (Chair): I think, Clerk, it has to be in by October 19 at the latest? Yeah.

           M. McMillan: It does, so we'll be following up on that. I went through particularly the first three measures around the carbon tax and the direct expenditures in transit very quickly, but I anticipate there will have been already today, or there will be, more submissions that go into more detail on those by other organizations, as well, in the coming weeks. So there will be some more detail to flesh that out for you.

           B. Bennett (Chair): I think that would be a correct assumption.

           B. Simpson: Thanks for the presentation. I look forward to the more substantive one, because there are some good ideas in there.

[ Page 1248 ]

           Your comments about the budget and some of the major plans that are in place being out of keeping with the language of the throne speech. We're here to do the prebudget consultation hearings, but some of what you talked about with respect to oil and gas expansion, with respect to subsidies, etc., is actually in the energy plan.

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           The energy plan has already been committed to by the government. Whatever comes out in the budget, is it your expectation that maybe the government would revisit the energy plan to take a look at what their promises and commitments are long term for oil and gas and for subsidies and all of the things in that — that the two of them would be rationalized?

           M. McMillan: I would think that the government would need to revisit oil and gas policy as set out in the energy plan and how it's going to achieve its climate change commitments from the throne speech. There are some obvious inconsistencies between the two plans, and there needs to be a reconciliation.

           B. Bennett (Chair): Thanks, Margot. We appreciate your submission.

           Committee members, we're jumping ahead one witness. This is the B.C. Federation of Families Society, and we have with us this morning Anita Dadson and Judy Carter-Smith.

           Did I fail to introduce somebody?

           J. Carter-Smith: No. We have a couple of board members who have come to be part of the audience.

           B. Bennett (Chair): You brought your own cheering section.

           J. Carter-Smith: We did.

           B. Bennett (Chair): Well done.

           A. Dadson: Actually, we are called the B.C. FamilyNet Society now. We changed the name. It was originally, I think, the way you introduced us.

           B. Bennett (Chair): Okay, thank you for that correction.

           Ladies, we allow ten minutes for your oral submission. Of course, you can make your written submission as long as you want. It has to be in by October 19.

           J. Carter-Smith: I'm going to start by introducing myself and then turn it over to Anita.

           I'm Judy Carter-Smith. I have a sister with a developmental disability, Barbara. She lives in the L'Arche home in Burnaby. I was a previous executive director of the B.C. Association for Community Living, which is the coordinating body for about 80 or 90 group homes around the province. For three years, up until 2002, I was special adviser to the Ministry of Children and Family Development on community living issues, reporting to the deputy. And I have a cute dog. [Laughter.]

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           A. Dadson: I'm Anita Dadson. I'm a parent. Actually, our daughter Sydney passed away six years ago, but she did get incredible support through the ministries. The names change constantly. She went into a group home at age 12.

           I'm a founder of the North Shore Disability Resource Centre. It's over 30 years since we got that organization going. It is, I think, a very good agency, which is offering some incredible support across the North Shore for people with developmental disabilities.

           I'm also the president of the FamilyNet Society. This was organized some 12 years ago by parents, self-advocates, siblings and family members, because we felt there really needed to be a voice from families to speak up about some of the serious problems that families face when they are suddenly faced with having a child with a developmental disability. It can be a very devastating reality for many families, and it doesn't change. It doesn't get cured, sadly, in many cases.

           I'll turn it over to Judy to give you a bit of the background in terms of the whole question of why we're here. I should add that this is the third presentation that FamilyNet has brought to this body, and our concerns really have not changed. In fact, they have increased.

           J. Carter-Smith: I'm not going to read what we've given you, but I think we just want to touch on a few of the high points.

           Specifically, with regard to the background, what we've tried to do is give you some idea of the services that we're talking about. Essentially, it's residential services and services that support a loved one in their home. That would be day programs, essentially.

           Residential services are composed of non-profit group homes; home-sharing, which is a new word being introduced now; private care; family model homes.

           Partly the background is just to point out that Community Living B.C. was inaugurated a couple of years ago. They are the Crown corporation responsible for delivery of services. Prior to that, it was the ministry itself. There's a lot of background we could get into about the formation, but maybe some of you are aware of it.

           Part of the point we want to make in the background is the number of people requiring services and the number of people actually receiving services. There is a huge gap there.

           We have about 36,000 adults in the province who have an IQ of 70 or less, which is the main criterion that is used for eligibility for services. Very few of those are being served right now. It's the same for children with special needs. We'll talk about the wait-lists a little bit later, but I want to turn it over to you to do the "hitting the wall."

           A. Dadson: It's hitting the wall, or the black hole. This is something that actually precipitated our society getting organized, because families came to Judy and myself — I happened to be president of the B.C. Association for Community Living at the time — because the kids were out of school, and they were suddenly at

[ Page 1249 ]

a stage where they could not…. The planning and the day programs suddenly dried up.

           In those days there was very little planning happening, and families just suddenly hit a wall. It was almost as though their kid had been cured. That was when we felt families had to start speaking up.

           At this point in time, with the new authority, there is planning going on, and there's some awareness now that once you're out of school, once you hit 19, the services that have been in place for children are suddenly not there. They disappear.

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           Some good planning is going on. We are hearing from many families that because of a lack of funding, they have not been able to implement the plans that have been made.

           This is devastating for families, because as you know, in so many families the mom has to go to work now. It's not like it was in my day, when I was able to stay home and look after my daughter, who was very severely disabled.

           Their whole world changes. The gains that have been made through the school system and having integration and all that are suddenly drying up, because it's related to lack of funding ability. I believe the B.C. new authority has certainly alluded to that as one of the big concerns.

           Also, I should point out that for children, even in the early stages of kids who are identified early and are introduced to the infant development program, there are wait-lists there for the families to get the support and so on.

           J. Carter-Smith: You were going to talk about the wait-lists, I think.

           A. Dadson: Just that there are many wait-lists. I think every one of you received a jar of candies last February 14, and it clearly indicated at that time that they represented all the number of people on a wait-list. This is tough for families. I've got to tell you that it's tough. I've been there, done it.

           J. Carter-Smith: One of our recommendations, of course, is to address the wait-list.

           To go back a little bit to the black hole, or hitting the wall, Anita and I were president and executive director of BCACL when we prepared a brief called Hitting the Wall, and that was in 1995. We worked with a whole bunch of families and community groups, etc., and that was presented to government. Anita dug it out and reread it, and nothing, or very little, has changed. That was 1995.

           To allude to or talk briefly about aging parents, it's a huge issue, as is aging clientele. We're on page 2. There are many parents who kept their relatives at home throughout their whole lives. Those relatives are sons and daughters. I say relative because I'm a sister. Their parents could be in their 80s. The so-called children are 60 or 70, so there's a huge pent-up demand for services and supports for those folks.

           We've attached an article from the Vancouver Courier which talks about only one situation of a family whose greatest fear is what's going to happen to their family member when they're gone. We have to deal with long-range planning on this issue. Everybody talked about it for years, and really, nothing has been done.

           I can cite myself. My mom is in a home; she's 89. My dad is gone. I am the only support for Barbara right now, even though she is in a home, thank God — and Barb is 60. I mean, I'm getting tired too. I've been doing this for ten years. It's a real issue.

           You can read about the restructuring. Everybody knows there's been constant restructuring, and it's really taking its toll. There have been operational shifts, etc.

           We have our recommendations here. One of the things we need to say is of course everybody is going to ask you or say they need more money. What we're saying is that we need the funding restored. We were cut tremendously when the government was looking for cost savings — $150 million. That base has never been restored, and now the government is looking at a billion-plus in projected revenues.

           What we're saying is: please take a hard look at this. We have made specific recommendations — address the wait-list, and take a look at the funding that Community Living had and what it has now, and in the Community Living B.C. service report what they're projecting. It's nowhere near what's needed, and there will be a crisis.

           We're talking about people who have tremendous needs, and if we don't plan for it, we're going to have deaths, and we're going to have all kinds of things — not to end on such a bad note.

           B. Bennett (Chair): Thank you very much. You are both very effective advocates, and we appreciate you coming out today.

           Are there questions from the committee?

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           J. Horgan: Thank you both very much for coming again and making this presentation. I've been elected for two years now, and I remember very well meeting people on the campaign trail. We get away from that when we get into rooms with no windows, and one of the advantages of this travelling committee is that we actually get to reconnect with people and hear again that some things have not changed.

           My question is kind of unrelated to the committee work and more directed to your interactions with the new minister, Minister Christensen. Has there been no commitment from government to respond to "hitting the wall" and particularly planning for the aging demographic shift from those parents who are no longer able to care for their now aging children? No response?

           A. Dadson: We're meeting with Tom on Monday, as a matter of fact. We have met with him once before. We did meet with Mr. Hagen. We met with Christy. We met with, you know, you name it. There's been — what? — ten of them over ten years.

           J. Carter-Smith: Essentially, no.

[ Page 1250 ]

           A. Dadson: The bottom line is no. Of course, Mr. Hagen really said the ball is in the authority's court. We've met with them, and they have said the families are the ones that have to put the pressure on the government. That's what FamilyNet has been doing, certainly, and many other family groups. It's not just us. There are other family groups that are out there.

           J. Carter-Smith: I mean, essentially, no. We referred to 1995. It's 2007 right now. In the 2007-2008 budget there's only an extra $19 million that's actually going to service us, so no. The authority, Community Living B.C., gets its money from the ministry.

           I also believe that just saying "more money" is only part of it. Restore funding, a little bit more money, but target those areas that really need it and ensure that the money is well spent. And use families. We know what we're talking about. We've lived it.

           It's amazing to me. Any other organization that has been talking about these issues and seeing it on the horizon for at least the decades that I've been involved, and nothing has happened…. I think it's partly the lost vision. When we closed institutions, we had a vision of community living. We had a joint government-community task force that was co-chaired by myself and the assistant deputy minister. It was a five- or six-year process. But it was driven by vision. We shared it.

           Now the vision is, "How much money can we save? Let's close a few more group homes. Let's put people in family model homes" — or what they're now calling home sharing. I have no idea what that means, but it means less money, probably, with no safeguards — nothing. Sorry to rattle on, but I just don't get it. B.C. Ferries wouldn't get away with this, or maybe they would. Let's try another example.

           B. Bennett (Chair): We have time for one last question.

           R. Lee: Thank you for the presentation. My understanding is that this year's budget is about a 6-percent increase in the Community Living B.C. budget. Did you find those increases helpful? In another three years there will be a 15-percent increase.

           A. Dadson: Well, there was a 20-percent cut, I believe, at the time when the Liberals came into power and when the whole idea of the authority came to pass. I was on the board on the North Shore. We got an across-the-board cut. It was very difficult for us to pick up the pieces, because we were already a very cost-effective organization. We didn't have some surplus sitting hidden behind the wheel or wherever.

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           A lot of us parents feel the restructuring, which it was promised would not happen when this government came into power, did start, and a lot of money has gone into restructuring. Sadly, that's the frustration for families. We feel the money has gone the wrong way. It hasn't gone to the wait-list or to the early help for kids and families whose children are being diagnosed with lifelong threatening disabilities and so on. So that's the frustration there.

           I don't want to take away from Community Living B.C.'s board and the people who…. They're people that I've worked with over the years too. Restructuring has taken a lot of money out of the system, and it's frightening and frustrating to families.

           J. Carter-Smith: The increase in '07-08 in a dollar amount was $36.5 million. You're saying that's 6 percent. I can't calculate that fast, but of that $36.5 million, only $19.5 million is going to services to adults, hopefully. The rest is allocated to CLBC's own operations and some adjustments in contracts and stuff. That cuts down the percentage actually available for service considerably. And no, that's not enough.

           R. Lee: In the three-year budget, the rolling budget, that would be another 15-percent increase in the next three years. I guess there would be some increases, but we don't know how the allocation would be internally that Community Living B.C. would be allocating for actual service.

           A. Dadson: I don't think we know that either.

           J. Carter-Smith: We don't. But if you look at their service plan, you can see…. Again, I don't know. From '08 it's $682 million, and it goes up to $707 million in '08-09. That's just to keep operating the way they are.

           In the budget notes, if you look at those for CLBC, you'll see what the risks are. The risks having to do with safety and safeguards in the community, a backlash from the community…. It's all here; it's in their report.

           I think what we need to do is sit down and look at it and get a real picture of what the wait-lists are. We're closer to that now — and work out how this can be addressed. It's not going to happen tomorrow. We have a plan for 2008-2009. We have a plan for "hitting the wall" for 2008-2009. What's here isn't enough. It's not even enough to keep going.

           B. Bennett (Chair): Anita and Judy, thank you very much.

           J. Carter-Smith: You're a very good Chair.

           B. Bennett (Chair): The Chair's job is actually the easiest job of anyone in the room. I do want you to know that government members don't find it easy to sit and listen to presentations such as yours, but it's enormously important for you to come here and tell us these things. We're glad that you did. Thank you very much.

           J. Horgan: Opposition members really appreciate it too.

           B. Bennett (Chair): But it's harder for us.

           I understand that Dawn Steele is here. Would you like to present next? The opportunity presents itself. Dawn, you're here representing an organization by the name of Vancouver Parents for Successful Inclusion.

[ Page 1251 ]

           D. Steele: That's right. I thought I'd get here and collect my thoughts, so hopefully this won't be too rough. A little bit about our group first.

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           Vancouver Parents for Successful Inclusion is an informal parent support and parent advocacy group that has worked with parents and Vancouver school board officials to address barriers to the successful inclusion of students with special needs in Vancouver since 1993. The group sort of fizzled out and almost disappeared around 1999-2000, when we thought inclusion was behind us. It has sort of been resurrected in the last couple of years as there's been increasing concern about the erosion of inclusion in our schools.

           We're currently represented on Vancouver's special ed advisory committee, SEAC, by parent Patty Bacchus, who couldn't be here. I serve as an alternate.

           Basically, what this talk covers is underfunding of special education, which is an issue that goes back a long time, but we feel it's becoming a crisis.

           A few months before our Finance Minister announced yet another huge multi-billion-dollar provincial budget surplus, the Vancouver school board announced $6 million in budget cuts, most of it directed at front-line, special education, ESL and aboriginal supports. As parents, of course, we were outraged, noting that services for our most vulnerable students were already severely underfunded.

           Education Ministry figures document the erosion of teaching support to our most at-risk students provincewide. Key ministry stats recently compiled by the BCTF, the teachers federation, are consistent with SEAC's March 2007 budget brief. This is one that we all worked on — that's the Vancouver parent and advocacy groups — which was also based on ministry and VSB data. Both show a disproportionate impact of budget cuts on at-risk students, with ongoing erosion of front-line supports to these students.

           The 2007 SEAC budget brief to the Vancouver trustees stated:

           "Staffing levels from 2000 to 2006 show a worrying and consistent trend. The number of special ed teachers has dropped by almost one-quarter from 451 to 362, while the number of students with special needs in most categories has grown. This means that the number of students per special ed teacher has climbed from an average of nine per teacher to 13 per teacher. This reflects an extremely worrying decline in the capacity to recognize, understand and accommodate special needs in our public schools. It also feeds misperceptions that successful inclusion is not a realistic goal for many students with special needs. If we continue to cut supports for these students, of course they will fail."

           These losses go even further back. The VSB budget documents reported 162.9 — I'm not sure who the 0.9 was — special ed staff lost between '97-98 and 2003. These included speech language pathologists, psychologists, behaviour consultants and the entire district autism team — which was there when my son arrived in the school system in '98, by the way. An excellent team that has just vanished from the school board.

           As the SEAC budget brief stated: "Without sufficient understanding of their needs, it becomes increasingly difficult to integrate students with special needs successfully. Parents are frustrated by the lack of academic progress, while teachers and classmates face added stresses. Frustrated, demoralized, hurt and often increasingly socially isolated, it is however the students with special needs who pay the greatest price all around."

           Let me skip over some of these figures, and you can always come back to them. I'm trying to back up. This is not just something we pulled up off the top of our head; it's ministry stats, Vancouver school board stats, compiled by the BCTF. We did our own thing as parents, and we found the same results.

           Just to show you, B.C. has lost 15 percent of its special education teachers and 18 percent of ESL teachers in the last five years at a time when student numbers overall declined by just 6 percent. So we're seeing a disproportionate decline in these specialist teachers, way over the overall enrolment decline.

           At the same time, enrolment in most of the special ed and ESL categories has actually increased. We're losing specialist teachers at a time when the number of children who require those specialist supports is actually increasing. They're bucking the trend of overall declining enrolment.

           Enrolment of ESL students has actually increased provincewide from 59,000 in 2001-2002 to 61,000 — an increase of 3 percent. Enrolment of low-incidence special needs students — that's students with autism, Down's, moderate to severe intellectual impairment and others who require significant support levels — has increased provincewide from 18,358 in 2002-2003 to over…. Basically, it's an increase of over 15 percent.

           Meanwhile, we have a bunch of missing students. This is a little bit technical, but the high-incidence students are the ones who occur in greater numbers — learning disabilities, gifted, that sort of thing. They have dropped by almost 7,000 provincewide.

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           This rate is more than double the overall rate of decline in student enrolment in B.C., and it's not consistent with studies that show these diagnoses are on the rise. So where have these kids gone?

           In 2002 the Education Ministry stopped supplemental provincial funding for gifted and learning-disabled students, claiming that their needs would be covered in future under the general student funding. But when supplemental funding disappeared, so too did the incentive to identify and serve them. In Vancouver, ministry data show the number of identified gifted students dropped by 50 percent in four years, from over 3,000 to 1,500. No funding, no students, no problem.

           The dramatic drop in Vancouver's gifted category drowns out a steady increase in almost all the other special needs categories, and thus, the ministry dismisses round after round of special education cuts as simply due to declining enrolment.

           I'm sorry if this is a little bit heavy on the stats, but we're fighting a battle to unspin and really show what's been going on in Vancouver and to show why we as parents see declining services on the front lines when we keep hearing: "Well, it's declining enrolment. Increasing

[ Page 1252 ]

funding shouldn't be happening." I just want to add that this is happening in the context of the Premier's commitment in goal 3 of his great goals for the golden decade, which is to build the best system of supports in Canada for those with special needs.

           In assessing the translation of that goal into practice, it is telling that the Education Ministry's 2007 service plan contains not a single performance measure specific to students with special needs. In fact, I went on their website, and you can no longer even find a link directly to special education or special needs on the front page of the Education Ministry's website. You have to dig and dig and investigate and search the website to find anything to do with special education.

           I'm going to skip these, but basically, the next section is showing that when you look at the stats for Vancouver, the decrease in front-line special education teachers and ESL teachers is even more extreme than the provincial average is, while the increase in ESL and special education students has actually increased more than the provincial average, which is why we in our district are particularly feeling the squeeze.

           Just to give you one telling figure, we have 26.4 fewer special education teachers since 2002, despite a 26-percent increase across all other special needs categories apart from gifted. This explains why our kids aren't getting educated.

           Basically, it's now rare for a special education student to receive any direct one-to-one instruction from a special education teacher. These impacts echo throughout the whole school system. It places more stress on the regular classroom teachers, classmates, families, administrators — the whole thing.

           Why are front-line special education and ESL services being cut? Supplemental ministry funding for these categories falls far short of what's required across the services for these kids. Vancouver alone spends about $25 million more annually on special education than we receive from the ministry. That's almost half of our special education budget.

           Further, the districts have faced unfunded inflationary costs, new demands and economy-of-scale issues due to declining enrolment. Faced with the early budget shortfalls, Vancouver has had to cut somewhere. It has become increasing difficult for the district to justify huge subsidies of unfunded special education costs, so that's where the cuts end up coming.

           I'll just take an individual student example — my child, any other child with autism. Vancouver district would get another $16,000 annually for each identified student with autism, for example. But most of these kids require, at minimum, a full-time aide, who costs $35,000, plus services from a teacher, which could double that cost, etc. So for every student with autism who enters the system, the school board is paying the price.

           Just to skip over, students who don't generate extra funding — kids with ADHD, FAS and things like that — are often simply denied service. They're told: "We don't get ministry funding for your category, so you don't get service."

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           I'll go through some exacerbating factors. For example, Bill 33, passed with a lot of good intentions to address class size and composition, has actually aggravated the problem. Vancouver has had to shift these non-enrolling and specialist teachers to man some of these extra classrooms. With declining enrolment, as the numbers go down, it gets increasingly difficult to max out every single class in every single school, so you get increasing pressures, and you have to pull the non-enrolling teachers to man those classrooms.

           I just want to very quickly go through some feedback from parents. I sent out a quick e-mail a couple of weeks ago when we found out we were doing this and said: "Parents, what's the kind of stuff you are experiencing?" These are just a few of the e-mails we got back.

           A Burnaby parent e-mailed to say that her autistic son is in a class of ten with no teacher, just an aide, after they all had to stay home for the first week of school due to no staffing. Another said her child is going home at recess because there is no expertise at the school to address his behavioral issues.

           A Yaletown mom who has just found out her son is autistic is describing battles to get a preschool spot. So this is not just in the schools. This is happening at the preschool level, with day care and that sort of thing.

           A veteran teacher e-mailed me from somewhere way in northern B.C., explaining the futility and frustration of trying to adequately serve eight severely impaired students on her caseload. And on and on and on.

           Basically, just to conclude, we can't afford not to educate these students, as so many have the potential to become independent, productive, taxpaying members of society but may instead be condemned to lives of dependence if their learning needs are not met. Investing in our students will bring great returns.

           We can do better. We all know we must do better, and there is no excuse not to do better — not with billions of our tax dollars sitting around in the provincial treasury. Thank you for hearing us, and we hope that you'll convey this urgent appeal to Victoria and to your colleagues and constituents around the province.

           B. Bennett (Chair): Thank you very much, Dawn. I gave you a couple of extra minutes there. We can apply that to our Q-and-A session here, but we probably will only have a chance for one or maybe two.

           J. Horgan: Thank you, Dawn, for your presentation. You mentioned Bill 33 and the best of intentions. There was a significant discussion at the time of passage of Bill 33 that there was no associated funding to go with the new requirements at the school board or board-of-education level.

           I represent an area that has suburban families and rural families and two school districts, one with a declining enrolment and one with an increasing enrolment. The challenge that I hear in both cases is a problem with the funding formula in general.

           Could you perhaps speak to us about how you as a parent of a special needs child look at the existing funding formula, not just for special needs but right across the board?

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           D. Steele: I think it really needs revisiting. There was a special education review commissioned under the previous government, I think, in 1999. It examined the funding formula among other things and identified some of the problems. It was way too complicated, and it was problematic in terms of special ed funding.

           When Christy Clark was minister, she made some revisions. She simplified it, but I think that in simplifying it, we kind of went too far the other way. It has created a lot of problems for schools, I think, in the context of declining enrolment, because you no longer have that per-school cost. But additionally, the bottom line in terms of special needs is that we are not funding anywhere near the amount required.

           As I said, for my child with autism, from kindergarten on he has required a full-time aide. He's like the nurse's assistant. It's like putting someone under medical care with a nurse's aide doing all…. There's no doctor. There's no nurse. There's just the nurse's aide.

           Aides are good implementers, and they're useful, but they can't act without the direction of a professional. We've lost all those professionals. So you're looking at a cost for a child like mine of a minimum of $30,000. You're only paying the schools $15,000, so the more kids with special needs, the more of a bind they're in.

           This is not new. BCCPAC has been raising this issue. They pass a resolution about every other year. The Teachers Federation has been raising it. The School Trustees Association has been raising it. All of the partner groups in the school system have been raising this issue for ten years now and stressing that it's putting this enormous stress on the rest of the school system and not allowing the rest of the school system to be doing what it should be doing.

           H. Bloy: Thanks for your presentation. Last year one of our recommendations was to have increased funding for the testing of children. They call it the grey area or whatever. Has that helped at all?

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           D. Steele: We haven't seen a huge difference in Vancouver. Ultimately, you can test them, but if you don't have the resources to serve them, it's not going to help. Having the money to test them is a good first step, and I think that was much appreciated by school districts.

           At the end of the day, when I would go and argue for moral support for my son, our principal said: "If I give in to your requests, I'm going to have to take it away from some grey-area kid who's getting nothing already." It's not fair. It's really not fair that my kid should be getting it and some kids shouldn't.

           B. Bennett (Chair): Thank you very much. We appreciate your coming this morning.

           We have the Mining Association of British Columbia with us, represented by Michael McPhie. We'll ask them to come forward, please.

           Good morning, Michael.

           M. McPhie: Good morning, Mr. Chairman. Thank you for the opportunity to appear before the group here today.

           There is a package in front of you that you can refer to. I'll try and focus on a few of the highlights. I know that the committee has heard from other members of our industry — Mr. Dan Jepsen — and I understand that Lyn Anglin from Geoscience B.C. will also be presenting. I'll try and focus on the areas that are particular to our organization, which represents the larger producers and organizations involved in the development of mines in the province.

           I would like to acknowledge that in the past I've always given these presentations in the regions in which we're operating, not necessarily in downtown Vancouver. But it was convenient for me to be here today, so again, I appreciate the opportunity.

           B. Bennett (Chair): We forgive you for showing up in Vancouver.

           M. McPhie: There are one or two people involved in the industry down here too.

           I would also like to acknowledge, just in keeping with what's been happening this week, that it's been a busy week for our business, and a lot of press has been going around, as I'm sure everybody is aware.

           I'd first like to touch on the safety issue. We met with the Minister of Mines yesterday, along with the Aggregate Producers Association. Our former Minister of State for Mining knows, Mr. Chairman and others, that we take that very seriously. We're supporting our colleagues in that industry and doing what we can to help improve and, hopefully, prevent anything like some of the fatalities we've seen over the last few months, certainly in our business, which is the large open-pit and underground mining operations.

           We have one of the best safety records anywhere in the world. Our organization spends a lot of time looking at that. I just wanted to acknowledge it.

           In terms of the state of the industry, I saw the comments from Mr. Jepsen earlier. I won't spend a lot of time on that. The news is fairly well known. I would like to say, though, that in order for us to remain competitive, I think we need to keep our focus on the ground. There are a lot of input costs.

           It's interesting. As I listen to the news over the last little while and I hear the talk of the film industry and the forestry industry hurt by the rising dollar, nobody ever seems to consider that the mining industry is equally impacted, in some cases quite dramatically so. We sell our products in U.S. dollars, and we pay for everything in Canadian dollars, just like any hockey team or anybody else, but for some reason, we seem to get left off the discussion.

           The thing that's allowing us to deal with that right now, of course, is that commodity prices remain strong, and it's shielding us from some of the impacts. But when that starts to turn — which inevitably, it will — we get quite concerned.

           There is a lot of activity on the ground. There are some 30 projects on the books. I think our key now

[ Page 1254 ]

remains trying to bring some of those projects into production.

           There was a set of recommendations that came out of a panel hearing in northern B.C. this week from the Kemess North project. We're concerned about that, and we hope to continue to have a lot of dialogue with the government.

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           We think the implications of whether they agree fully with the panel recommendations are quite significant, not only to our industry but to many industries in this province, because it creates a lot of uncertainty.

           One of the issues is on approving new mines. I'd like to acknowledge the government for adding a fair bit of resources in the last budget to address permitting issues under the former minister. That was an important thing. We know that'll take time.

           I keep hearing comments from some that the industry is hiring people out of government, and then it's hard for us to be critical of you guys when you don't have the people you need on the ground. I know it takes people and cooperation, and there are a lot of strains on the system. We acknowledge that. We empathize with it.

           We think a big portion of getting new mines into production will be focused on addressing some of the aboriginal concerns and rounding out the policies that exist on the ground. The Premier, showing great leadership, brought forward the new relationship document not so long ago, but it's time to actually start implementing that on the ground, in our view, and providing some boundaries.

           We refer to it as the Wild West out there right now, and we don't think that's an appropriate way to run a modern economy. We respect the need to sign benefits agreements and be a part of that discussion. However, we also think that we need to operate within a policy framework that actually allows you to know on which basis you're having those conversations. Currently there's no policy direction being given on that.

           Near the end of our presentation we talk about our budget 2008 issues. We rank four or five ideas here, and these are all about the competitiveness of our industry with respect to other jurisdictions, which we're very much in competition with.

           The first one on this is first nations, and you may ask: "Is this a budget issue?" I think it is a budget issue because one of the things we think is that government programs need to be oriented towards the recognition that for industries like ours to thrive, we need much stronger policies in place. In particular, something we've called for — and nationally, it's been called for by the mining industry — is developing a revenue-sharing program.

           It's not all about revenues, of course, but it's part of the equation. Some predictability of the future benefits of a mine or any resource development project and the confidence within those communities…. They would know that at least a portion of that is coming directly to them, and they can do their own predictions on it. We think that would help move the discussion forward. It's by no means all of it, but it's part of it. We think government has a role there.

           The next issue is on mine development taxation. We brought forward some of these recommendations in the last budget consultations, last year.

           What we've tried to do in the remainder of your presentation, which I don't have time to go into in any detail here, is provide some explanation for each of these — why we think they're a good idea, how they compare to other jurisdictions in the country and how these are not things that haven't been done elsewhere in Canada. We think they would help to continue the momentum we're seeing in the mining business, which we think is a good thing for all British Columbians.

           Infrastructure — Highway 37 power. This is about the third year in a row we've talked about that. I won't spend any more time on it, but certainly, we're hopeful that the government will consider the positive nature of that investment and will find a way to bring the funding forward.

           Geoscience B.C. Long-term funding is critical, whether it's Geoscience B.C. or within the Ministry of Energy, Mines and Petroleum Resources, in the geological department there. That's our foundation. That's our research and development, and it's money well spent.

           Water monitoring. I know that's been brought up by other panellists. I'll tell you that in our country, in the very hydrologically dynamic area we're in, we need to invest. That's a core part. That's no different from the weather, in our view. We need to invest the money to make sure that water monitoring goes forward.

           The last thing I'd like to touch on — although it's not well developed here, and it will come forward as much more of a formal policy position from the mining industry's perspective — is in terms of the government's intent to implement the climate change plans. Our big issue is not to debate the merits of the science but to debate how we achieve the objectives of the government that have been set out. We're very concerned and interested in how that's going to go forward.

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           We will come forward with very formal presentations. I learned a long time ago that you can't just complain; you have to find a way to provide some suggestions for solutions. Our biggest concern, I guess, is that the Joint Industry Electricity Steering Committee, which represents all the major energy users in the province, has come up with an estimate of an over 6-percent increase in energy costs going forward year over year.

           When you combine a par dollar with higher labour costs, higher import costs, higher everything and then add in on top of that a 6-percent increase in energy costs year over year because of our need to meet our Kyoto obligations, you start to get to that tipping point where, if commodity prices begin to come off, our mines won't be successful.

           It wasn't so long ago, under the previous government, that they brought in the Job Protection Commission to keep mines like Highland Valley open. It seems like a distant memory, but it was actually only seven or eight years ago.

           As we bring these new ones into production, we have to keep our focus on the fact that their ROI, return

[ Page 1255 ]

on investment, might be high now, but it may not be that high in three or four years. That's our big concern, and we need to focus on that.

           Mr. Chairman, that's all I have for you. I'm happy to answer any questions that the committee might have.

           B. Bennett (Chair): Thank you very much, Michael. I'm going to take my prerogative as Chair and ask you a quick question. I don't usually do this, but I think everyone knows I'm interested in the industry.

           Had the provincial government had a revenue-sharing policy in place such that first nations would know what there was to be gained in terms of jobs and revenue and so forth ahead of the conclusion of a permitting process, do you think that the Kemess decision would have been any different?

           M. McPhie: I think it could have shifted the conversation quite significantly in the sense that…. I know that the Chief of the Tsay Keh Dene stated very clearly that it had nothing to do with the financial parts of it. But what I've found in these discussions is that the lack of any policy is a real problem.

           When the two parties sit down across the table from one another, when it comes strictly to the financial part — and that isn't the whole part of the equation — the lack of being able to have any predictability in the financial equation except for what the company is willing to offer is not a healthy way to run a discussion.

           Maybe the way to flip that question back is that if ten years ago we had a revenue-sharing policy — well, Kemess has been in operation since 1997 — and those communities were receiving direct royalties or taxation, whatever it might be, from the mine over this time and if that relationship had developed over this time, I think the outcome would have been different. If it had been in place last year, maybe not, because there's too much water under the bridge.

           Going forward on all these new projects, I think it would significantly help the discussions move forward.

           B. Simpson: Earlier this year the New Relationship Business Group came together. COFI signed on; the tourism association signed on. I wonder if you could give me an update on the status of that. Did that engage the government in conversations around this issue of addressing the implementation of the new relationship?

           A second question. When we talk about revenue-sharing…. We're hearing from rural communities that we need to find a different wealth-sharing formula for them — that somehow they have to have a little bit more control over what happens with their own infrastructure and so on. We're seeing that up in the Peace as they get this great development, but they're all saying: "We can't keep our infrastructure up with that."

           Has the mining association taken any kind of position on broadening wealth-sharing or revenue-sharing beyond first nations communities to those rural communities that have to live with the consequences of the development?

           M. McPhie: It's a good question. Let me answer the first one. We are part of the B.C. Business Council and part of that new relationship committee. My view on that is that it's not making any direct progress at this current time.

           We have appeared with the new relationship management council, led by the three grand chiefs and the major political organizations within the province. We've engaged in that discussion. We've always found this idea of revenue-sharing as possibly an area where we could work together.

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           To my knowledge, they have not made a lot of progress on much of anything that has any direct impact on us. That's our view of it at this point. We haven't met for more than six months, to the best of my knowledge. Certainly, I haven't sat at the table.

           On the broader idea of revenue-sharing more locally, I am personally supportive of that idea. When you're working in a lot of smaller communities and you talk about revenue-sharing with just one group of that community, the challenge is that it then can create some antagonism from others. I'm very sensitive to that.

           We haven't put a formal position forward, although I'd be more than willing to engage in that kind of discussion.

           R. Lee: Thank you for the presentation. On page 5 of your presentation you identify the labour shortage and costs as one of the storms on the horizon. Also, the overdependence on Southeast Asia's supergrowth. Can you clarify those, please?

           M. McPhie: What do we mean by that? I didn't spend time on the labour issue specifically. I think it's been discussed a fair bit by many. We've launched a human resource task force, supported by the province and the federal government. We're in the midst of a very aggressive…. It's with the full spectrum of the industry, including the labour movement. The unions are all at the table with us. We're defining a strategy for moving forward on that.

           Currently that's an extraordinary challenge for us — finding people. It's no different than any other aspect of our economy right now. We look forward to working with the government on that.

           When you talk about aboriginal people, for example, that's a huge potential labour pool. But it's going to take a number of years to get there to allow that to really move to the level it should.

           On the overdependence on Southeast Asia's supergrowth. That only means that on the demand side…. If you look at the price of copper, it's currently sitting around $3.40 a pound. Seven or eight years ago it was about 70 cents a pound. It's a big difference.

           I think you could rephrase that as being the overall dependence on just this high level of demand internationally. If that starts to wane on us, then we could start to enter that point where our input costs and our costs of production are higher than what we're able to sell it for.

           As China goes, so do we in many respects. That's a concern for us. There's nothing we can do about it, but it's certainly something we watch.

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           J. Horgan: Thank you, Michael, for your presentation. I think it speaks to the maturity of the leadership in your sector that a more cooperative, consensus-based approach and building relationships, not just with first nations but with communities, government, opposition and everyone…. That speaks well for you and for your sector.

           I wanted to touch on the Kemess North decision just for a moment. I think that when we look at the success Galore Creek has had…. Their leadership has gone into the community, not waiting for government to do the groundwork but charting territory on their own. They've been successful.

           I hear from your comments that certain players in the industry are prepared to go that route but would benefit greatly from something substantive from government beyond rhetoric. I think that we can certainly pass that on to the government.

           In your comments around Kemess North, were you saying that you would want the government to override the panel in this instance? Or would you not agree with me about perhaps going back to the drawing board and, rather than putting forward the least-cost option for waste rock, maybe trying to find some common ground that the first nations could agree with and then, in the process, find some revenue-sharing agreement that may seal the deal without calling on government to interfere in what was a fairly open and transparent process?

           M. McPhie: There were a number of questions within what you asked there.

           J. Horgan: You only get one, so….

           B. Simpson: Only one question: do you agree with him?

           J. Horgan: The "agree with me" part is fine.

           M. McPhie: There were a few things I didn't agree with there.

           First off, it's our opinion that the panel changed its terms of reference as it went through without direct guidance from government as to how it should move through that.

           Secondly, I don't necessarily agree with the comment that the companies picked only the lowest-cost option. In fact, there was an extensive alternatives analysis that included some 24 different combinations of how to undertake the project they wanted to undertake. I've seen that comment made, and I don't believe that's true.

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           We're not calling on government to do anything in particular, other than to consider the recommendations that come forward with the panel. We don't agree with the conclusions they reached. I'll state that on the record, and I have publicly. We think that the main test of environmental assessment…. It's right in the panel report itself, where it says that all the federal and provincial agencies came to the conclusion that this project meets the test of environmental stewardship. It's stated in plain language.

           The issue on the first nations relationship with that panel and the considerations there are, simply, that with Galore, they were working with one group — well, the Tahltan and Iskut nations — under the management of the Tahltan Central Council. They were quite…. We've been the first to applaud them on what they've been able to achieve.

           In the case of Kemess, there were four bands involved, and they were never able to come up with a way to satisfy the interests and demands of each of those groups. At the end of the day, that seems to have been the determining factor. That's a difficult place for a company to be, because there are a lot of historical aspects to the claims that are overlapping there.

           My hope is that over time you can look at the conclusions the panel did provide, and said that if the ministers decided to move forward on the project, they should consider these 37 — I think it was 37 or 32 — recommendations. Maybe it's time to look at what those are. Maybe there is some time to relook at the project and see how to make it work. But they've made it difficult to get there, so we'll just have to see what happens.

           B. Bennett (Chair): A final question from Dave Hayer.

           D. Hayer: Thank you very much for a very good presentation. Looking at page 11 of your presentation, where you talked about 20 major mines operating currently, compared with 30 in 1980…. I'm just trying to get the picture.

           How do you feel as the Mining Association? Have things since 2001 onwards changed compared to what it was in the '90s? Have they made a really big difference, or is the government…? Do you find that it is much easier work for you to do your mining business in British Columbia now?

           M. McPhie: I would offer that it's a very strong environment we work in now. That doesn't mean there aren't issues, and we've got to continue to work through those issues. But certainly, there has been a combination of….

           I always say — and I'll make it a quick answer, Mr. Chair; I know my time is up — there are two things you need for this industry. One is a good market and strong demand for our products, which is what we have right now, and you need a consistent and a certain policy environment within which we work. We have that to the greatest degree we can right now, but there are some issues that we need to work for.

           Certainly, the focus on geoscience spending, the improvement in the taxation rates we've had, the cutting and the permitting time lines that we've had and also the very overt support publicly that the government has shown for our industry is helpful, and that attracts investment.

           B. Bennett (Chair): On that positive note, thank you very much, Michael, for presenting to us this morning. We appreciate it.

[ Page 1257 ]

           Before we adjourn, I'd like to call the Better Environmentally Sound Transportation group one last time. They don't appear to be here.

           We're going to recess until 2:15. If we could have everyone back at 2:15, that would be swell. Thank you very much.

          The committee recessed from 12:58 p.m. to 2:16 p.m.

           [B. Bennett in the chair.]

           B. Bennett (Chair): Welcome, ladies and gentlemen to the second half of the committee's hearing here in Vancouver today.

           This is the Select Standing Committee on Finance and Government Services. I'm not going to go through the spiel that I give in the morning, but essentially, this is your opportunity, the people from British Columbia, to make input into the budget process for the province. That's why we're here, and that's why you're here, so let's get started.

           Our first witness is the Students Unions of Vancouver Community College, and is it Vijaya?

           V. Krishnan: Yes.

           B. Bennett (Chair): Vijaya, are you the only presenter?

           V. Krishnan: Yes, I am.

           B. Bennett (Chair): Okay. Well, you come on up here and have a seat.

           V. Krishnan: Good afternoon, everyone. My name is Vijaya Krishnan, and I am the adult basic education representative of the board of directors of the Students Unions of Vancouver Community College, Locals 73 and 76 of the Canadian Federation of Students.

           Our students unions represent approximately 9,000 full- and part-time students on three campuses. Our members come from diverse backgrounds, including a large number of immigrant, English-as-a-second-language, aboriginal and lifelong learners.

           I'd like to begin my submission by thanking the committee for their support to make ABE free. Only weeks after the Minister of Advanced Education announced the elimination of adult basic education fees, I can report that VCC students are changing their study plans to register in full-time courses in January.

           Student after student has told me that they are taking ABE part-time simply because they could not afford to take full-time courses. Students are telling friends and family who they know want to return to VCC that they can afford to come back again.

           On a personal note, I was one of the many ABE students that could not afford full-time study, and now that the announcements have been made, I'm continuing to pursue my nursing studies. I would like to thank all the members of the committee for clearly supporting this important policy.

           Students at Vancouver Community College have four priorities for this coming year, and these priorities are shared by post-secondary students throughout British Columbia. These priorities are in order of importance: reduce tuition fees by 10 percent for the 2008-2009 academic year, implement a system of non-repayable grants in B.C. that provides up-front funding which is accessible for part-time students, eliminate interest on all B.C. student loans and increase funding for B.C.'s post-secondary education system and account for inflationary funding.

           Today tuition and ancillary fees remain the most significant barrier to acquiring post-secondary education. In B.C. the average university student pays nearly $5,000 in tuition and ancillary fees, while college, university college and institute students pay an average of $3,400.

           The current tuition-fee policy, which caps annual fee increases to 2 percent, has done nothing to reduce the cost of post-secondary education studies and has instead sent the message to potential students and families that post-secondary education will remain out of reach for the foreseeable future. Students at B.C. public post-secondary institutions will pay $963 million in tuition fees this year, of which $18 million is a result of the 2-percent increase in tuition fees.

           The government should feel confident in adopting a policy to reduce tuition fees for post-secondary education. The policy continues to receive widespread support, with public opinion polling showing that 80 percent of British Columbians support reducing tuition fees. In addition, numerous academic studies conclude that post-secondary education spending is a wise investment in our region's economy.

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           At Vancouver Community College the deregulation of tuition fees for continuing education and professional programs has caused skyrocketing fee increases. For example, a student in the hair design program at VCC today will pay $7,200, making it more expensive to earn a hair-styling certificate at VCC than two years of a law degree at McGill University.

           Though the VCC hair-styling program remains well below the cost of private colleges, its fees are increasingly prohibitive for low- and middle-income students, who make up the majority of students enrolled in the program.

           In British Columbia the average student debt upon graduation has increased dramatically, from the lowest in Canada at $18,500 in 2001 to today's record high of $27,000, the second highest in the country. Rising tuition fees, coupled with the absence of a needs-based grants program, has proven to be disastrous for those on student financial assistance. This past year B.C. Budget 2007 included a $23-million cut in funding for student financial assistance.

           While the number of available college and university seats has risen over the past four years, student loan applications in British Columbia have fallen by close to 40 percent, which students understand to be a clear indication of the socioeconomic impact of rising tuition fees. The moneys for the B.C. loan reduction program funded by the Millennium Scholarship Foundation will

[ Page 1258 ]

be discontinued in 2008. If these moneys are not replaced by a federal grant to the province or direct allocation of B.C. moneys in Budget 2008, the effect will be a significant increase in individual student debt.

           As a trades-based institution, we know that the B.C. government has made trades training a priority in their economic strategy for the province. It should be noted that trades students do not have access to the loan reduction program, because the programs are shorter than the two-year minimum requirement. These students need more funding in order to complete or, better yet, upgrade their studies and fill the widening trades shortage.

           We believe that a more equitable and efficient use of student financial aid would be funding to expand the loan reduction program into a full grant program, including trades and other programs less than two years long in public post-secondary institutions. We also believe that the government implement measurable targets to mandate the Ministry of Advanced Education to reduce student debt.

           While it is well known that students in B.C. face the highest student debt levels in the country, a lesser-known fact is that student debt statistics leave out the interest paid on these loans. The B.C. government charges students between 3.5 percent and 6 percent in interest over its own cost of borrowing. If borrowing at a floating rate, students currently pay 8.5 percent per annum on floating loans and 11 percent per annum on fixed-rate loans. Incidentally, the interest on student loans is compounded daily.

           For a student with an average student debt upon graduation, they are expected to pay nearly $400 a month every month for 9.5 years before they'll be able to retire their student debt. Of the amount repaid in this example, more than $15,000 of the total costs of borrowing is interest on the loan principal. I know that was a lot of numbers.

           The key point I would like to make really focuses on the impact of debt. We know that low- and middle-income people have a greater aversion to debt because of the socioeconomic experience. We also know that the B.C. government expects that higher tuition fees are financed by higher loans. We also know, by the B.C. government's own numbers, that as tuition fees have risen, fewer and fewer British Columbians are now applying for student loans.

           It is important for the government to send a signal to lower- and middle-income British Columbians that our colleges and universities are not restricted to wealthy British Columbians.

           In a poll conducted in August 2007 by the widely regarded Mustel research group, 92 percent of British Columbians felt that student loan rates are too high. Of particular note, 39 percent of British Columbians favour the complete elimination of interest on student loans. In addition to a reduction in student fees and a non-repayable system of grants, we request that the B.C. government eliminate all interest on student loans.

           In a January 2007 provincial poll by Mustel Group, almost 60 percent of British Columbians said they would rather see investments in post-secondary education than a cut in personal tax rates. Despite this clear support for post-secondary spending, B.C. Budget 2007 resulted in a decline in real purpose per-student funding of 0.3 percent.

           Over the three years projected in the service plan, per-student funding increases by about 1.3 percent per year. Inflation over that same period, according to the budget document, will increase by 2 percent. In real terms, the post-secondary education system is falling behind as a result of the allocations made in the last budget cycle.

[1425]

           In addition to our four priorities that are the two locals' issues, these are very important to VCC students. I would like to underscore how important it is that funding announcements for adult basic education include the elimination of tuition fees for all English-as-a-second-language programs. Students, faculty and administration at VCC universally agree that ESL fees are prohibitive. The proof of this is in the steady decline of ESL FTEs since 2002.

           Our students unions have been lobbying for a universal transit pass for almost seven years. Students on a fixed income often depend on public transit to get to school. Time after time students tell me that the cost of transit is just too high and ask me why university students have a universal transit pass and pay almost a third of what college students currently pay.

           The government has prioritized a green budget, which we believe should include increased transit funding. We recommend that a system of initiatives, including service expansion and fare reductions, be put in place to encourage and expand the use of public transit and curb reliance on personal automobiles.

           I would like to thank you on behalf of our 9,000 members for the opportunity to speak to the committee.

           B. Bennett (Chair): I'd like to congratulate you for getting through that in less than ten minutes. You did very well. Many others have failed before you. You've left a few minutes for some questions.

           Members?

           J. Horgan: Thank you, Vijaya. Very well done.

           I have two questions. One is on the notion of no interest on student loans or perhaps the cost of borrowing. We've heard from other student unions and other presenters that there are mechanisms, like the Municipal Finance Authority, whereby municipalities use the credit rating of the province to borrow money at a lower rate. Rather than have that 5- or 6-percent increase above the cost of money to the province going to you, do you believe the student union would support the cost of borrowing, rather than no interest at all?

           The other one is whether you could expand on the transit pass. I didn't realize that college students didn't have access to the transit passes. Those are two questions.

           V. Krishnan: I can comment on the transit pass. The only students that have the U-Pass, as we call it

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here, are UBC and SFU. College students across the lower mainland have no transit pass whatsoever.

           J. Horgan: Is that a result of no relationship with TransLink in the college system? Why would the university students have access and college students not? Do you know why that is?

           V. Krishnan: Like I said, we've been lobbying for close to nine years with TransLink, trying to negotiate this. They just haven't negotiated with us.

           For the first question, I'd like to defer to my staff member to speak about that.

           T. Kalanj: My name is Tiffany Kalanj. I'm the organizer for the Students Unions of Vancouver Community College.

           On your first point, of course that would be far more acceptable to students than the current system, which depends on student poverty to generate income for the province. While we would prefer a system where there is no interest collected, the system you're suggesting would definitely be an improvement and a step in the right direction, particularly because a number of students at VCC have indicated to us that their debt levels are so high that they've been dropping out. From our students union point of view, and I'm sure also from the student movement point of view, it would be a big improvement.

           On the transit issue, the response from TransLink or the Minister of Transportation has been that there's a very high ridership of transit by VCC students. It's close to 60 percent. The result of that would be what has been deemed as the loss of revenue.

           We're arguing that transit is a public service and that our members depend on transit not only to go to class and to go to work but also to live their daily lives and that we should be encouraging more students to use transit, particularly when our members are riding the exact same transit, sometimes the same buses, as students who are attending university.

           I. Black: Vijaya, let me start by thanking you not just for your presentation but also for your career choice. There is a dramatic shortage of nurses right now. My sister is a nurse, and I can assure you that you will be welcomed with open arms into that profession as soon as you've completed your studies. I'm glad you're taking advantage of some of the expanded seats that we've put in place for that.

[1430]

           You're right. Towards the end of your remarks you made reference to the fact that your presentation had a lot of numbers. It gets you a little bit dizzy sometimes when you're both presenting and listening to the presentations full of numbers.

           Within the numbers are also, sometimes, contradictions. I wanted to ask you your thoughts on one of the contradictory numbers that also exists out there. It goes like this.

           In the last three years you've graduated, in either certificate, degree or diploma programs in B.C. about 50,000 people on average. That's about a 17-percent increase over the same three-year period from about 1998 to 2001. So over the same three-year comparison there seems to be an increase in the people graduating. That flies in the face of some of the logic with respect to inaccessibility of education, fewer people enrolling, fewer people graduating. Do you have any comments on that?

           V. Krishnan: Again, I'd like to defer to Tiffany to answer that.

           T. Kalanj: At VCC we've seen enrolment rates increase in certain programs; in certain programs it's decreased dramatically. For instance, in adult basic education, which feeds into a number of the trades programs particularly, we've seen a 60-percent reduction in enrolment. In ESL, as well, we've seen nearly a 70-percent reduction in certain programs; in other ones, an increase. Then in some programs, such as dental hygiene, we've seen an increase.

           I think that speaks to the socioeconomic divide that's happening with the tuition fee increases so that students who aren't able to show upfront fees for the programs are dropping out of those programs. The students who do have those resources are still enrolling. I think that's a sign that students want to be at VCC, they want to be registering in classes, and once those barriers are removed, they will come back. The low- and middle-class students who are dropping out of school or going part-time will come back and join the rest of the students at VCC and across the province.

           I. Black: Do I have time for a follow-up, Chair, or do you have another one waiting?

           B. Bennett (Chair): Well, we do, but we're out of time, actually. Sorry about that, but I have to keep things rolling along here.

           We appreciate it, Tiffany, Vijaya. Thank you very much for your submission.

           The next witness for the committee is the Emily Carr Students Union — Meghan King and Philippa Mennell.

           M. King: Good afternoon. I'm Meghan King, a third-year student and an elected representative at the Emily Carr Students Union.

           P. Mennell: I'm Philippa Mennell. I'm a fourth-year student, and I'm also an elected rep for the Emily Carr Students Union. I'm also a co-chair of the Emily Carr sustainability working group.

           M. King: Thank you for providing the opportunity for us to speak about the priorities of the Emily Carr students in the 2008 B.C. budget. Our students union represents 1,630 students doing undergraduate-level work on Granville Island, at UNBC and at North Island College, as well as 30 graduate students who are studying right here in Vancouver.

           We would like to reiterate the importance of the recommendations made by the students at Vancouver

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Community College. These four priorities of students across the province significantly affect the students of Emily Carr, and investments to meet these recommendations would greatly improve B.C.'s diverse economic potential.

           What the presentation by Vijaya highlights is the need for the provincial government to make an investment in the system of high-quality public post-secondary education. Many of the students who have chosen to go to Emily Carr have done so with the looming fear of unmanageable debt levels upon graduation. Unfortunately, there are countless potential students who have been unable to choose post-secondary education as an option.

           I'll be proposing four recommendations for the upcoming B.C. budget in order of importance. I believe that the following strategies are completely in accordance with the fiscal capacity of the B.C. government.

           Our first recommendation is that the B.C. government allocate funding in the 2008 B.C. budget to reduce tuition fees by 10 percent. One of the primary concerns for students attending Emily Carr is the high cost associated with accessing post-secondary education. Research from Statistics Canada, the Canadian Association of University Teachers and the Canadian Federation of Students continually shows that tuition and ancillary fees are the number one barrier to accessing post-secondary education.

           Since the tuition fee freeze was lifted in 2001, an average Emily Carr student's tuition fees have risen from $1,795.50 to $3,300 this year. This represents an 84-percent increase in just the past six years. Public opinion polling by Ipsos-Reid shows that 80 percent of British Columbians are in favour of reducing tuition fees and that 60 percent of British Columbians would rather see the government invest in post-secondary education than receive a personal tax cut.

[1435]

           The cost of a 10-percent reduction in tuition fees this year would be approximately $93.8 million in 2008. This contribution would save each student across the province hundreds of dollars next year and could be the deciding factor for potential students in whether they could or could not continue with their studies.

           Our second recommendation is that the government allocate funding in the 2008 B.C. budget to create an upfront, non-repayable, needs-based B.C. grant program. This program would be accessible for both full-time and part-time students and would provide upfront funding.

           Only three years ago in 2004 the Liberal government cut the $80 million B.C. student grants program. This cut and the subsequent lobbying by students, parents and the general public led to the creation of the loan reduction program. While this program does offer some financial aid to students with the highest financial need within the province, it is funded by approximately $15 million to $20 million less than the former grants program.

           As well, even if you are a student who is eligible for the loan reduction program, the amount for which your loans are reduced is determined at the end of the academic year, meaning that all the upfront costs associated with school — such as tuition, books, supplies, rent and living expenses — become impossible to budget for or to potentially afford.

           We request that the committee recommend that the B.C. budget include funding to expand the loan reduction program into a full grants program and mandate the Ministry of Advanced Education to reduce student debt.

           Our third recommendation is that the government allocate funding in the 2008 B.C. budget to eliminate the interest accumulated on B.C. student loans. The current interest rates are making it extremely difficult for students to pay back their debt.

           When they graduate from Emily Carr, many students are embarking on a new career in the arts. The cultural sector, which is one of the most vital to B.C….. However, that area is not necessarily one of the ones that easily lends itself to financial prosperity.

           In a province that truly understands the importance of the arts, the financial barriers present in studying in that field are unfortunate. Anyone who is brave enough to subject themselves to the average $27,000 loan to acquire a Bachelor of Fine Arts has to constantly deal with the fear of being unable to start paying it back within the six-month deadline.

           The current funding system clearly streamlines potential students into career paths that, although perhaps more financially viable, are not always the most culturally viable. Students in B.C. pay more interest on their student loans than students in most other developed countries, and that includes the U.S.

           The current interest relief program does not adequately meet students' needs. The student loan appeals committee, which reviews interest relief applications, only examines a handful of requests each year. That's not because all recent graduates have high-paying jobs that are in stable financial positions allowing them to repay their loan. More often than not, they are unable to meet the requirements to receive interest relief because the program itself is outdated.

           The government advertises interest relief as an option to help reduce the stress of student debt but, at the same time, has established rules that are so stringent that the program is almost impossible to access.

           Our fourth recommendation is that the B.C. government increase funding for B.C.'s post-secondary education system in the 2008 budget and that they account for inflationary funding. Emily Carr Institute of Art and Design is proud to offer a master's degree; however, it receives no funding for these spaces.

           This equates to a $756,000 budget shortfall that is reflected in the lack of space throughout the institute and in an extremely high faculty workload. Research time for faculty is critical to provide the highest-quality education possible, and the institute desperately needs this recommended increased funding.

           At Emily Carr, what students notice the most when there's a lack of funding is how that translates into a shortage of studio space. To make work at a fine arts school, class sizes have to stay small, and your workspace becomes one of your main priorities.

           Because of underfunding mixed with a surplus of unfunded FTE students, currently our workspaces,

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studios and even our gallery areas have become overcrowded and are being used out of the capacity that's above and beyond what they were originally intended for.

           Emily Carr has the advantage of being a school that turns away one out of every four eligible applicants in first year. We are not short of people wanting to attend our school. What we are short of is the amount of funding needed to create the space for those students wishing to attend as well as the space needed for the current student body.

           Fast?

           H. Bloy: Take a breath, a big breath.

           M. King: Yeah. Sorry.

           B. Bennett (Chair): You've got about three, three and a half minutes left. Is that it or…?

           M. King: No. That's why I went fast.

           P. Mennell: First of all, we wanted to say that we value the emphasis that the government is placing on environmental concerns for the 2008 budget. This resonates very strongly with students at Emily Carr, who are increasingly active in promoting carbon reductions and developing systems to improve the sustainability of their campus community.

           In support of these efforts to effect meaningful change on campus, we'd like to suggest four priorities for the budget. One is to provide funding for all post-secondary institutions to engage in sustainability audits with the purpose of identifying areas for improvement in reducing carbon emissions.

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           In order to carry out such assessments, institutions will require on-site sustainability coordinators and/or leadership teams. This may include setting up offices. These would be individuals with expertise in conducting sustainability assessments and implementing carbon reduction programs. They would be able to advise on different initiatives such as green building and facilities retrofits, developing local food systems and waste reduction programs. Larger institutions in the province have already begun to make greener transitions toward the coming sustainable campuses.

           At Emily Carr we have an emerging sustainability working group which is made up of students, faculty and staff who are providing leadership for change at the institute. There are many active groups such as this working within institutions throughout the province, and huge steps have already been taken.

           However, it's extremely difficult, particularly for smaller institutions with fewer students and fewer resources, to undertake the kind of large-scale institutional assessments and transition programs that are required.

           It's our second recommendation that the government properly fund sustainability offices and/or coordinators on campus who can oversee the process of making these important changes.

           Third, we would suggest that the government provide funding to support more academic and applied post-secondary programs geared towards sustainability education and research. Post-secondary institutions, as you are well aware, are unique sites of interchange between students, experts and the wider community.

           In order to take full advantage of their capacity to provide education and promote development of new sustainability systems and technologies, more funding is required in the areas of curriculum development and applied research grants.

           Fourth, we would like to voice our concern about the current state of transit in the province. Providing people with real transportation alternatives to the automobile means developing a transit system that's more extensive, more efficient and more accessible than what's currently available. It means supporting city planning strategies which favour bicycle transportation and public transit above automobile use.

           This translates into the development of more bike paths and laneways within the city, as well as incentives for people to use transit as a primary mode of transportation. We recommend incentives such as fare reduction for students using public transit, and this would include increased funding to make the U-pass available to students across the lower mainland.

           In closing, we would like to applaud the work of this community in calling for the abolition of student fees for adult basic education in the 2007 B.C. budget. We would like to support the provincial government's goal to make B.C. the most educated jurisdiction on the continent.

           This is an admirable goal that will require renewed investment in all sectors of our post-secondary education system. It's our hope that the recommendations today will help move the province toward this goal and our belief that they are all within the bounds of B.C.'s fiscal reality.

           Thanks again for the opportunity to speak on behalf of the students from Emily Carr on their priorities for this budget.

           B. Bennett (Chair): Thank you very much, ladies.

           D. Hayer: Thank you very much for a good presentation. I sometimes get students in my office saying: "Why don't you allow students to write off their student loan from their income?" Many of them say that because the economy is really hot, lots of people are working and paying taxes.

           Maybe the money they're supposed to pay in taxes, they could deduct from there. That's a different approach from what you were saying in here. I didn't hear anything here, but I've had many groups of students from different universities and colleges come and talk to me.

           What is your opinion? If you have a $20,000 loan and you're able to write off maybe $5,000 per year over four years from the income once you start working…. That way you get an indirect benefit rather than not having to pay interest at all.

           M. King: Sorry, what's your question? It gives them some sort of time break afterwards?

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           D. Hayer: After you finish university or college, if you have a $20,000 loan, you write off maybe a quarter every year over the four years — that loan from your income when you're filing income taxes.

           M. King: To my knowledge right now, when I do my taxes I can actually move forward the fact that I am a student and the amount of money I've been paying into my loan. I think there's already a system in place in which I can save money for the first couple of years. That's to do with my taxes but not my interest rates on my loans.

           D. Hayer: You defer your interest rate. When I was a student, I had the same program. We were allowed to defer our interest rate for a period of time — right?

           I was saying that you take maybe one-quarter of the student loan per year and write it off against your income tax. So when you're filing taxes, if you have a $30,000 taxable income, maybe you take $5,000 off your income tax. You only pay tax on $25,000.

           M. King: That would be better.

           D. Hayer: That's another option that some students have approached and said…. But I haven't heard from any of the student societies saying the same thing.

[1445]

           M. King: Yeah, I will definitely research more into my tax categories and how I could fit those against my interest rates and how I could start overlapping some of those programs.

           B. Ralston (Deputy Chair): My question is about the U-Pass. The original U-Pass was a joint project of TransLink and Vancity credit union. I was on the board at the time. The plan was that it would be expanded out to college students and other students. It was initially targeted at university students with the view that it be expanded. It is, as you know, a very successful program. I think it's the single biggest increase in transit ridership of any program in North America in a single year.

           Is there a concerted effort by college students to lobby TransLink to expand the program, and are you part of that?

           M. King: To my knowledge of roughly nine years ago, when everything started up, it was actually Vancouver Community College and Langara that were going after this idea of having a universal bus pass across Vancouver. They were the ones who initially pulled in UBC and SFU. It was the four of them lobbying together. It was because at the time there was some green grant funding Canada-wide that they were trying to get.

           Then what happened was that within the lobby process and within the negotiations with TransLink, the two colleges were actually pushed out of the room because it was easier to work with just the universities. It was after that point that Vancity then came in and supported it with funding.

           Vancity does cover $3, I think it is, or a little bit more than that, of every U-Pass going through UBC. I don't think it actually supports the SFU U-Pass. Instead, the school itself supports a couple of dollars on theirs so that their U-Pass can remain quite low.

           In regards to whether we're still negotiating, we're definitely still negotiating. I've been trying to negotiate with them for a couple of years now. TransLink maintains this idea that cost-wise, to have the U-Pass you need to be able to spread the cost among all the students of how much the school was paying into the bus system before.

           With Emily Carr, the last time they were evaluating us, we had about 1,500 students. Through surveys, they decided that about 1,200 of those students were riding the bus regularly, so the cost at Emily Carr is actually the price of what they'd be making off 1,200 divided through the 1,500, which is actually much too high for any of the Emily Carr students to be paying. It is less than the $69 they would currently be paying, but it's around $40 if you average everything out.

           We just can't go to referendum with that, especially when you've got other schools that only pay $20 and $25. What we believe is that all students are equal, whether a university student or an institute student or a college student. All the students across the province should be paying an equal amount.

           In an ideal world, and this could happen with SFU and UBC going back to renegotiate their plans in 2008, we can hope that if their plans go up a little and the rest of the college plans could possibly go down, we could all agree on a price of around $30.

           To do that, though, TransLink might need more funding from the government itself — that could be a way of pulling that program together — or more adequate funding, just for students to be able to pay. If we have to pay $40 or $50, then have more funding going straight to the school so that we can get it lower than that — I guess, in the place of what Vancity was doing. Does that make sense?

           B. Ralston (Deputy Chair): It's a very complicated answer, but I think I got it. We are gathering input for what the Minister of Finance says is going to be a green budget, so maybe this is an idea that the minister might want to listen to. Although maybe she hasn't chosen to reduce tuition fees, she might want to reduce some costs for students.

           M. King: Yeah, even if there were a program in place where students could somehow get money back from the fact that they buy regular bus passes. I think we could really look into how bus passes work within the city and get that moving.

           B. Bennett (Chair): Thank you very much, Meghan and Philippa. We appreciate the effort that it takes to put together a submission like that. It was excellent.

           The next witness before the committee is the Vancouver Board of Trade, Bernard Magnan and Al Sello.

           Good afternoon, gentlemen.

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           A. Sello: My name is Al Sello, and I'm chairman of the Vancouver Board of Trade committee on government budgeting and financing.

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           B. Magnan: My name is Bernie Magnan. I'm the assistant managing director and chief economist at the Vancouver Board of Trade. Thank you very much for allowing us to speak to you this afternoon. On behalf of the more than 5,600 members of Vancouver Board of Trade, we welcome the opportunity to present our recommendations for the 2008-2009 provincial budget.

           In general, the board has been pleased with government's fiscal performance since entering office in 2001, and we have reflected our judgment by assigning an overall rating of A to the government's budgets in each of the past five years. These grades reflect the government's practice of prudent budgeting, tax reductions and conservative debt management while recognizing the need for infrastructure investment.

           As a summary, the board would recommend the following for the B.C. government.

           Limit ongoing spending increases to the combined rate of increase in population and inflation, which is about 3 percent.

           Implement health care reforms to improve productivity and limit the need for significant increases in health care spending.

           Continue to reduce the taxpayer-supported debt-to-GDP ratio by applying unused budget surpluses towards debt reduction.

           While paying down the debt, provide sufficient funding for key infrastructure and other priority investments.

           Improve tax competitiveness with Alberta by reducing corporate income tax rates by at least 1 percentage point, beginning in 2008 and 2009.

           Reduce the B.C. tax disadvantage with Alberta for higher-income earners effective in 2008.

           Reduce or eliminate certain aviation fuel taxes over a two-year period.

           Eliminate the capital tax on financial institutions over a three-year period.

           Now we'd like to discuss these recommendations in a little more detail. You have some charts before you, and I will be referring to them as I go through the presentation.

           On chart 3, on page 4, we talk about prudent budgeting. We recommend that ongoing spending increases be limited to the combined rate of increase in population and inflation, as we said before. Since the government assumed office in 2001, provincial spending has increased somewhat above the board's recommended 3-percent annual limit.

           Moving to page 5 of the exhibits, "Health Care and Education." These excess increases have been driven primarily by the increase in health care and education expenditures, with health care up by 51.8 percent since 2001 and education by 36.2 percent for the same period. The increase in health care funding in the past several years was funded by both the provincial and federal governments.

           The board would like to see a more cost-effective health care system and one that delivers services on a timelier basis. We believe that the status quo is unacceptable, despite recent improvements in aspects of health care performance in British Columbia. Our governments must look to other countries and jurisdictions for ideas on how to improve our system.

           In particular, the health care systems in leading European countries, including the United Kingdom, should be studied. Some European countries deliver publicly funded health care with good outcomes at lower cost and without wait-lists. However, in Canada as a whole, including British Columbia, a great deal more remains to be accomplished to improve the management and efficiency of the health care system.

           Our governments should consider opening the health care system to more competition, particularly for our centrally planned hospitals. The board believes that experimentation with fee-for-service within the context of a publicly funded system and alternative models of service delivery could result in performance improvements and yield cost savings. Canada is the only developed country where the private sector is not involved as an alternative or in conjunction with the public system.

           Moving to slide 6, "Taxpayer-Supported Debt." The board recommends that the taxpayer-supported debt-to-GDP ratio continue to be reduced opportunistically. The board is pleased with the continued reduction in the taxpayer-supported debt to GDP ratio, as shown in the slide, and with the prospects of further reductions in this ratio. Within this parameter, however, we support reasonable increases in absolute debt levels to fund much-needed infrastructure investment to contribute to economic growth and provincial competitiveness.

            Moving on to the next slide. With regards to personal income tax rates, the board recommends that the tax disadvantage for higher-income earners in B.C. vis-à-vis in Alberta be reduced. In the 2007-2008 budget the government implemented meaningful reductions to personal income tax rates so that residents of the province earning less than $108,000 annually will pay the lowest income taxes in Canada. However, British Columbians earning over that threshold continue to pay 14.7 percent on the additional income compared to 10 percent in Alberta.

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           The heavy burden placed upon higher-income earners impedes our ability to attract and retain highly skilled personnel and to retain managers who control higher levels of investment capital. The board recommends that this large tax disadvantage be reduced by either a reduction in the top marginal rate or, alternatively, that the income level at which this tax rate is applied be raised to at least $150,000 in 2008-2009.

           Proceeding to corporate income tax rates, the board continues to recommend that the government include in its physical projections provisions for reductions in corporate income taxes to ensure competitiveness with Alberta. While the government did reduce corporate income taxes by 1.5 percentage points in 2005, Alberta subsequently reduced its general manufacturing and

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processing tax rates, thereby restoring their previous 2-percentage-point advantage.

           To remain competitive, the B.C. government should reduce the corporate income tax rates by at least 1 percent in 2008 and 2009. Such a reduction is particularly important for B.C.'s small- to medium-size businesses, which need the additional cash flow to fund their growth. I might add that it is very much in keeping with what's happened recently with the Canadian dollar coming to par with the American dollar. It makes it even more difficult for those manufacturers.

           The next slide deals with the aviation fuel tax. We recommend a reduction in this tax. As shown in the table, the levels of tax charged on aviation fuel in British Columbia are significantly more than in most jurisdictions with which we compete for aviation business, especially as related to passenger carriers.

           The Vancouver Board of Trade recommends that the British Columbia aviation fuel tax be reduced from two cents per litre to 1½ cents per litre. In addition, international passenger and cargo flights, including U.S. flights, should be exempt from the aviation fuel tax.

           The provincial government would receive significant offset tax revenue from the implementation of the recommended reduction in aviation fuel taxes. Aviation industry sources indicate that there would be more flights to and from British Columbia as a result.

           We believe that the proposed elimination of aviation fuel taxes for flights within British Columbia would also have a significant economic benefit to the less densely populated parts of the province, which would be reflected in additional economic activity and tax revenues.

           We would also recommend that the capital tax on financial institutions be eliminated over a three-year period. For many years we have advocated the elimination of this capital tax. This tax is a disincentive to investment.

           In a situation where British Columbia businesses and institutions are competing with those in other provinces to secure needed capital, the reduction in the yield as a result of capital taxes will have an impact on rates offered. In addition, eliminating this tax will reduce the overall cost of doing business and hence improve economic efficiency.

           In recognition of the disadvantages of capital taxes, the federal government introduced an incentive in Budget 2007 for provincial governments to eliminate their capital taxes. The amount of the incentive equates to the increase in federal corporate income tax resulting from the corresponding provincial capital tax reduction. This incentive commences in 2007 and will end in January 2011 so that there is a premium on prompt action on the part of the province.

           In conclusion and in terms of an economic vision, the board has consistently encouraged the provincial government to stay the course in controlling spending, prudent debt management and tax competitiveness. With this course of action we would also expect to see increasing real GDP per capita, increasing real disposable income per capita, continued increases in employment, rising productivity and growing private sector investment.

           Thank you for allowing us to present to you today.

           B. Bennett (Chair): Thank you very much, gentlemen. I'm sure we'll have some questions.

           B. Ralston (Deputy Chair): The Minister of Finance has directed that one of the things for the committee to consider is what incentives might be built into the budget to reduce greenhouse gas emissions — in its so-called green budget.

           The issue of aviation is a controversial one. I know that in Europe, where there are a number of discount airlines, the volume of air traffic has gone up. The minister of the environment in Britain has publicly rebuked CEOs of airlines for not doing their part to reduce greenhouse gas emissions.

           I'm wondering how relief of taxes on fuel is consistent with the direction that the Minister of Finance appears to have given this committee and the government in general.

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           B. Magnan: Let me answer that in two ways. One is that many of the airlines that are looking to come in here to Vancouver are long-range airlines, and many of them have new equipment. The engines on that newer equipment are much more fuel-efficient and produce fewer greenhouse gases than the older aircraft which they presently have to use. In that sense, there would be a savings in terms of producing fewer greenhouse gases within this particular region.

           We have to be very careful in dealing with greenhouse gases, because there are unintended economic consequences that may arise from them. The caution that I would provide is that yes, we can say we want to reduce greenhouse gases, but we must look at the unintended consequences as well, especially some of the economic impacts. The cost of putting in some measures for greenhouse gases may far outweigh the economic benefit of spending that money in other areas.

           D. Hayer: Thank you very much. A very good presentation.

           I'm looking at your page 5 here, which seems to be contradicting some of the information presented by some people from other organizations to do with health care and education. Your chart is showing, for 2001 to 2008, an increase in health care of 51.8 percent and in education, 36.2 percent. I'm just wondering how you came to these figures, because they seem to be contradictory to what some of the instructors from some of the colleges and universities have said. I think the Centre for Policy Alternatives has mentioned that. Can you explain that?

           The second part is: what's the total cost — a dollar value — of the suggestions you have made in this presentation?

           B. Magnan: First of all, the numbers on this chart on health care and education come directly from the public accounts. They are the accounts that are released by the government, and that's what these numbers reflect. That would be my response to that.

           As far as the costs of the measures that we have discussed…. I was prepared for that question. First of

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all, in terms of the personal income tax, it would be somewhere between…. That is page 7 of the charts. The cost would be somewhere in the range of $25 million to $35 million. That is the cost. That does not factor in the increased revenue that would come into the government by reinvestment of that money into the economy.

           We would submit that that is the maximum cost and that it would most likely be less than that because of the offsetting revenues that would occur.

           A. Sello: You're talking personal here.

           B. Magnan: This is personal income tax.

           A. Sello: That's for brackets 3 and 4. For the top bracket it's a lot more. It's $100 million, according to the Department of Finance. That's for a 1-percentage-point change, by the way, in each of those brackets.

           B. Magnan: As far as the corporate income taxes, reductions in those corporate income taxes would be a cost of $160 million — to reduce it by the amount we've suggested. Again, I would reiterate that this is the cost. It does not take into account the potential revenues that would come into play with reinvestment and spending of that money within the B.C. economy.

           The third one is the aviation fuel tax. The cost of that is $21 million. But if you have more frequent flights into the area, you will recover that from the increased number of flights, and that will offset that cost.

           J. Horgan: Just quickly in my head, that was about $300 million in revenue, then, for those initiatives — the personal brackets, the corporate and the aviation.

           B. Magnan: If the maximum was put into place. But that is the cost, not including revenue that would come from putting those into play.

           A. Sello: In addition, the capital tax to eliminate it is $112 million, but we're saying to do it one year at a time. And again, as Bernie said, that's just gross.

           J. Horgan: That wasn't going to be my question. My question is more relating to….

           B. Bennett (Chair): You're sneaking in a second question, John.

           J. Horgan: Well, it was just clarification on the first part. It's falling on MLA Ralston's comments with respect to the direction we were given as a committee.

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           You will know from reading the papers that there seems to be a move afoot to focus this year's budget on green initiatives, particularly greenhouse gases and reduction of greenhouse gases. My question to you as representatives of the Board of Trade…. In terms of a carbon tax or other tax-shifting initiatives that may well come forward, do you have a position today, or are you going to wait and see the details?

           I assume you're going to say that you're going to wait to see the details, so my third question is….

           B. Magnan: If I may answer that question, I would say we'll wait and see the details, but with the proviso that investment in R and D and new technology to help reduce greenhouse gases in our existing equipment would not go amiss. If there was some sort of benefit for companies to do that, it would help to reduce greenhouse gases.

           As we have seen in the car industry, where it's technology that has helped drive the lowering of greenhouse gases…. A car that we had 15 years ago put out a lot more emissions than the ones that we have today, and if we use cars with smaller engines, then you do have a real benefit that has occurred in that period of time.

           Now, you had another question?

           J. Horgan: I think the Chair will probably give me all the latitude I need for now.

           B. Bennett (Chair): I think, John, I'll give your colleague Iain one quick question, if we can get as quick an answer as possible.

           I. Black: I want to start by saying that I think you are the only organization that's ever given me straight As in everything. So to get straight As for five straight years of prudent fiscal management is something we'll take and run with. Thank you.

           My question is this. You talked about a variety of infrastructure investments, and I want to build on your last remark because it's a suggestion that I think we should take away, with respect to investment incentives for technology to reduce greenhouse gas emissions for existing investments that are in place. That's great, but my broader question was towards public transportation.

           We've had a lot of conversation, a lot of presentations about the importance of that. I wanted to know if you had a view as the Board of Trade as to transportation infrastructure investment — what that might look like both in the short- and the long-term.

           B. Magnan: Where in the province?

           I. Black: Take your pick. You're the Vancouver Board of Trade. I would suspect the lower mainland.

           B. Magnan: There is a need for investment in transportation infrastructure. You have to remember that buses run on pavement as well. If you want to improve the transportation infrastructure, you need to put some investment back into pavement, not just into the buses themselves. They have to have a place to run, and you can't just push cars off the road.

           One of the difficulties in this region is that we have people that are spread out all over the place. We don't have the density in certain areas that would warrant putting in high-speed transit. We do in others.

           Building up of density is one of the important issues, but at the same time we still have to deal with the issues

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that we have today, and we have to have the necessary roads to move goods and services around, as well as people.

           B. Bennett (Chair): Gentlemen, thank you very much for your presentation. We appreciate it.

           The next witness before the committee is from the Canadian Parks and Wilderness Society, B.C. chapter — Chloe O'Loughlin.

           C. O'Loughlin: I understand that you've probably had a lot of recommendations around your climate change action plan that are related to mitigation and other things. I want to say that what's been achieved over the last year around mitigation of carbon emissions has been absolutely remarkable.

           I'm here now to talk to you about what I believe you should be planning for once your mitigation strategies are in place. No matter how successful your mitigation strategies are, they're only going to impact and start reducing or stabilizing temperatures 100 years from now. In the meantime, temperatures are going to continue to rise and climate is going to become very unstable.

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           It's got enormous implications to life in British Columbia. Its impacts on biodiversity are going to be immense, so we are here to recommend that money be put into your budget to start planning for the next step in your climate change action plan.

           When you look internationally, the scientists are looking at both issues: how to prevent or reduce carbon emissions, and what to do currently about life on the planet to make sure as much biodiversity stays alive in the next 100 years until the impacts of your mitigation strategy start to take place.

           The next 50 to 100 years is my children's lifetime. My children will be seeing what happens around adaptation.

           We know climate change has already started to impact on life in British Columbia. Already we're starting to see plants and animals changing their range and their abundance, their life cycles, their behaviours and evolution. We are seeing them already starting to evolve. An increase of one degree in temperature will cause animals to move 300 metres up in elevation or 150 kilometres north. We're predicting a lot more than a one-degree change in temperature. That caribou herd that's in your constituency is going to be moving 750 kilometres north of you over the next 50 years.

           The impacts of that are going to be enormous, because normally animals, insects and plants can change their habitat at a rate of about six kilometres per decade. Temperature and climate are changing at the rate of 40 kilometres per decade. So a lot of species are actually going to become extinct — a lot. About 30 percent of life in British Columbia will be extinct in the next 50 years.

           Fifty percent of our alpine is going to disappear, and forests are going to move up into the alpine; 40 to 60 percent of our glaciers are going to disappear, and this will cause huge changes to fisheries, tourism, agriculture and forests.

           If you fly-fish or you care about the fish in the local streams…. We have no idea what's going to happen to them, because they have nowhere to go. Their habitat is small. They probably can't migrate.

           Warmer temperatures and sea temperatures will expand the oceans, and the oceans are going to rise. That's going to be significant because the oceans are going to come across our coasts, and there's going to be altered habitat. A lot of those trees are going to sink underwater and impact on the fish. There will be lots of different storms that are going to happen. So in the marine environment we expect 20 to 30 percent of life in the ocean to become extinct in the next 50 to 100 years with just small degrees of temperature change.

           The ocean currents are going to change. That could be drastic. People are not really looking at that. That could plunge us into an ice age.

           Right now 50 percent of the carbon that was released by humans in the first 95 years of this century is stored in the oceans; 30 percent of the carbon we've emitted since 1994 is in the oceans right now.

           The effects of rapid climate change, with the already immense stresses of overfishing and pollution, are leading to really negative results in the oceans.

           All of these changes are going to happen in a single century, instead of over thousands of years. They're going to lead to temperature changes which we haven't seen for millions of years. So as I said, adaptation to climate change is actually a misnomer because about 30 percent of species in British Columbia are not going to survive and are not going to be able to adapt to the rising temperatures.

           It's going to be absolutely unpredictable. If, for example, we lose the salmon, what does that do to the grizzly bears? What does that do to the whales? What does that do to our tourism industry? What does that do to our forests? What does that do to the first nations? What does that do to our culture, and what does that do to our economy?

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           There's a period of time, about 75 to 100 years from now, which we call the big squeeze or the bottleneck. What we're hoping to do is to reduce the stresses on biodiversity. They've got stresses from climate, and they've got stresses from other things. We're trying to keep as much life as possible alive in the next 50 to 100 years so that when temperature does stabilize, we have biodiversity here in British Columbia.

           The impacts are going to be felt by the Ministries of Environment; Forests; Agriculture; Aboriginal Relations; Tourism, Sport and the Arts; Energy, Mines and Petroleum Resources. It's going to be felt by the Ministry of Finance.

           Let me just illustrate a few things. Right now when we talk about adaptation, we talk about: "How does the fishing industry adapt to having less fish in the future?" If you actually put large marine protected areas in place, more fish will survive. They will be bigger. They will be more diverse. Unless you address the issues of biodiversity, you won't have the fishing industry.

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           The Premier made a recent announcement about his agreement with California and Washington to focus on ocean health and developing a network of marine protected areas as part of his climate change agreements. This is enormous news and needs to be funded. That kind of funding needs to be put in the upcoming budget.

           If we look at the pine beetle epidemic, that's only just the tip of the iceberg. Already we're seeing our maple trees in Vancouver having hundreds of holes in the leaves, which is another form of insect that's attacking the maple trees. We don't know which species we're going to lose. When you lose one, it has implications for many. It will have implications financially for the next 50 to 100 years.

           We are recommending that there be a budget to look at developing staff capacity amongst all government staff so that they can make recommendations about what their ministry needs to do related to the immediate effects of climate change.

           Already the Premier has made an announcement about ocean health and marine protection areas. That needs to be funded. Right now there is no funding to achieve the Premier's goals. Ministries like the Ministry of Agriculture and Lands need to look at all of the land use plans in light of climate change, consider what the landscape will look like 50 to 100 years from now, and back-cast.

           When the Premiers meet to talk about climate change and adaptation in January or February this year, this issue needs to be front and centre. Our recommendation is that this cabinet committee recommends that $20 million be put into the budget to achieve the Premier's recent announcements and to start to plan for the next step in your climate change action plan, which we are very supportive of.

           B. Ralston (Deputy Chair): You mentioned what you called the Premier's focus on ocean health and marine protected areas. How do you reconcile that with a possible policy of expanded offshore oil drilling?

           C. O'Loughlin: Our organization focuses on protected areas and wilderness. We are not opposed to mining and oil and gas in the right places. Marine protected areas are the same. We believe that industry is waiting for those marine protected areas to be put in place, to provide security for them.

           It is different in the oceans. Seismic testing, for example, has implications for fish and things like that, but it's not inconceivable that they could be compatible.

           D. Hayer: A very good presentation. Good job on that.

           I have some people that tell me that in the past, when you look at history, long-term temperatures have gone up and down. I think we need to have a good environment for all of us to survive.

           Has your group looked at, in the past, how the temperature over the last 500,000 years, from the research available, affected here, when you're trying to look at the future?

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           C. O'Loughlin: That research has been done internationally. All the scientists have looked at that. They are saying that normally those temperature changes occur over a thousand years, and these temperature changes are going to occur in a hundred years, and the temperature changes are going to be more significant than we've seen for millions of years. So it will have major financial implications for the government and all of the government's great goals. The service plans are going to be impacted by the climate changing over the next 50 years.

           B. Bennett (Chair): Chloe, thank you very much for your submission today. We appreciate it.

           Our next witness is from the Greater Vancouver Alliance for Arts and Culture Society. I think Roger Chilton is here somewhere, and Adrienne Wong.

           Sorry to get you when you just came in the door, but we're unfortunately right on time. Thank you very much for coming out, folks.

           A. Wong: Before I begin, I would just like to ask a question of the group here. Who here is coming out today in support of the arts and culture in British Columbia? So this is just a representative sample.

           My name is Adrienne Wong, and I was asked to speak to you today from my perspective as an artist living in B.C. and as the artistic co-producer of NeWorld Theatre.

           NeWorld is a professional theatre company based in Vancouver, and in any given season we do the following. We write, create and produce new Canadian plays. We produce important national and international plays. We present the work of established and young, emerging artists. We tour our work to smaller communities outside of the lower mainland as well as nationally and internationally.

           We collaborate with community groups on issues of mutual importance. We work within the arts community to promote arts partnerships, collaboration and cooperation. We strive to create work that embraces challenging ideas artistically, socially and politically. We are by no means alone in these activities.

           Through our work at NeWorld we create dialogue about diversity in its broadest sense. We create space where B.C. residents can encounter charged issues like war, racism and exclusion. We create spaces where our audiences can come together and laugh, be inspired and feel important. We believe that a healthy, vibrant arts and culture community contributes directly to the health and vibrancy of a society. We're by no means alone.

           NeWorld is one of over 900 organizations across British Columbia whose work is created in our province, whose work tours around our province and whose work directly benefits our communities by creating jobs, by promoting diversity and dialogue, by encouraging healthy lifestyles and by creating strong community ties between individuals. These diverse and important activities exist with the help of core operational funding from the B.C. Arts Council.

           In 1994, when NeWorld was founded, we operated project to project on a budget of $20,000 per year. We

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got a lot of Air Miles on our Visas, and we worked as volunteers. Now, in 2007, we have grown by 200 percent. We employ upwards of 25 artists, technicians and administrative staff throughout the year. Core funding support through the B.C. Arts Council has allowed us to leverage additional funding from civic and federal bodies, and we continue to grow.

           As you may know, in June 2008 Vancouver is hosting the Magnetic North Theatre Festival. This is Canada's premiere English-language theatre festival. Last night at a theatre event the artistic director of this festival said that Vancouver has the most exciting theatre community in Canada right now, and we're not alone.

           B.C. is home to some of Canada's most innovative and exciting artists in all mediums. This interweaving of arts, culture and society is part of what makes British Columbia one of the best places in the world to live, and it is incumbent on us to foster this quality of life for all B.C. residents.

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           Arts and culture can do that. I look forward to your support.

           B. Bennett (Chair): Thank you.

           R. Chilton: My name is Roger Chilton, and I'm on the board of the Downtown Vancouver Association and chair of the arts and culture committee.

           I'm speaking on behalf of Arts Future B.C. That's a group that represents the interests of the Assembly of B.C. Arts Councils, the B.C. Museums Association, the B.C. Touring Council, the Canadian Artists Representation of British Columbia, the Greater Vancouver Alliance for Arts and Culture, ProArt Alliance of Greater Victoria, the Professional Association of Canadian Theatres and the Citizens for the Arts. These are the people who represent the arts future for British Columbia.

           In the Speech from the Throne last year the government observed that the new world is a truly global economy driven by information, ideas and discoveries. It's a creative economy where art and culture are the building blocks of innovation, invention and understanding. We need to invest in this new world economy and create a province where innovation, invention, ideas, culture and understanding grow and thrive.

           Here is what we have. This is the good news. British Columbia has the highest number of artists per capita in the country. Vancouver has the largest concentration of any major city in Canada, and Victoria has the second largest. North Vancouver, Saanich and New Westminster are among the top ten cities with the highest concentration of artists.

           British Columbia has the highest growth rate of artists in the country. The number of artists grew by 47 percent in B.C. between 1991 and 2001, compared to 29 percent nationally. These are our cultural resources.

           On the other hand, government spending per capita on the arts and culture is below average. B.C. government funding makes up an average of 7 percent of the operating budgets of performing arts organizations. This is the lowest in Canada. Our investment per capita in our creative resources is lagging behind all the other large provinces in Canada. Ontario, Alberta and the other western provinces are planning to increase their investment even more over the next few years.

           The provincial government articulated five great goals. I'm not going to repeat them, because I know that you all know them, but here is what the arts contribute. The arts enhance education. Research has conclusively demonstrated the connection between arts exposure and academic performance. Participation in the arts contributes to the development of academic skills in reading, language development and mathematics. It contributes to our reasoning ability, intuition, perception, imagination, inventiveness, creativity, problem-solving skills and expression.

           It promotes growth in positive social skills, self-confidence, self-control, conflict resolution, collaboration, empathy and social tolerance. It's everything we need for a civil society. Furthermore, the arts nurture a motivation to learn, particularly with those at risk and students with special needs. That's the first great goal.

           The arts also promote health and healing. Research has shown that the arts improve the health and well-being of both individuals and communities, and promote individual and community healing following traumatic experiences. Cultural activity contributes to the health and well-being of citizens, improved community identity and social cohesion, community revitalization and the development of inner cities. The arts are most effective where health care and social system costs are the greatest — with our oldest citizens, with the disabled and with youth at risk. Second goal.

           Third one. The arts create connections in communities. Participation in arts activities has proven to reduce youth violence, help prevent drug addiction, support rehabilitation and be a critical element in mental health treatment. The Canadian Council of Chief Executives concluded that artistic and cultural creativity has a direct impact on the quality of life and on the competitiveness of communities in attracting people and investment.

           The arts contribute to our understanding of our common interests and our appreciation of the value of our differences. They contribute to creating a society that respects and appreciates one another and to creating communities that work together to make our communities strong. The arts build community engagement, especially for those who feel marginalized, isolated or alone.

           The arts contribute to our economic strength and employment growth. The economic impact of the arts and our creative resources is far greater than the employment economic multipliers. When we think of famous travel destinations, we think about the vibrancy and significance of their arts, culture and heritage. Cultural tourists spend more per day, stay longer at a destination and use more commercial accommodation. Cultural tourism is growing annually at a rate of 15 percent globally.

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           The creative economy is leading the growth of all economic sectors in British Columbia. Between 1991 and 2001 people employed in the arts grew by 57 percent in

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Vancouver — more than five times the 10 percent overall growth of the labour force. Communities in British Columbia including Kelowna, Nelson, Chemainus and Langley have developed strategic plans that use the creative arts to drive their economies and the social health of their communities.

           Our creative industries need creative people, and creative people are attracted by opportunities to engage in and experience the arts and the creative expression of others. This is why the arts.

           Finally, the arts stimulate discussion and creative thinking. We're passing from the information age to the creative age. The world is wrestling with environmental and human sustainability issues, and there is a great need for creative problem-solving. The arts stimulate creative and divergent thinking and discussion. They provide a forum for communication, and they build communities around common concerns.

           Our cultural development contributes to our community development, to our social development and to sustainable economic development. The health of our society largely depends upon our ability to improve our intercultural relationships; to learn how to connect, communicate and understand one another; and to create new ideas and new ways of dong things.

           Finally, we're going to be on the world stage in two years. It's a terrific opportunity. We'll be attracting the attention of the entire world, and we'll be showcasing British Columbia and Canada leading up to that. We've got the opportunity to attract attention to our cultural and creative resources, to demonstrate the benefits and contribution of being a culturally diverse and creative community.

           I could go on about that, but we've got a terrific opportunity to make British Columbia a cultural mecca. Making it a cultural mecca, we can share our innovative ideas with the rest of Canada and with the world, and we can create connections, new ideas and opportunities.

           The interest of Arts Future B.C. is to encourage the province to invest in the shortest, most rapid response mechanism that we have for stimulating the investment in our creative resources. More detail of that will come in a brief that will be presented in Victoria. That investment is in the B.C. Arts Council.

           I won't tell you about the B.C. Arts Council, because obviously you know about that. But the B.C. Arts Council will get that money into the community as rapidly as possible, and we'll get the return as rapidly as possible from there. Arts Future B.C. is recommending that this committee consider recommending that the budget for the B.C. Arts Council be increased from $14 million per year to $32 million per year — definitely over the next period of time between now and the Olympics and, if we're good about it, as soon as possible.

           B. Bennett (Chair): You're not the first group to bring your own cheering section, but you've definitely brought the most enthusiastic, and the largest by far. Well done — an excellent presentation, both of you.

           R. Lee: Thank you for the presentation and for showing what are supports for arts and culture.

           You mentioned that the funding should be for the B.C. Arts Council, but we also heard some individual artisans saying that some of the funding should go through the artists individually and also probably to support infrastructure such as theatre and other infrastructures, and maybe to funding of arts education.

           In your view, what are the most effective funding models? Also, we know that direct access funding is actually providing a lot of support to individual organizations. Can you give us some thoughts on what the most effective models are?

           R. Chilton: Yes, I think there are many, many things that we can do in this province to invest in our cultural resources and move us from where we are to where we could be. But the B.C. Arts Council is the only stable source of direct, ongoing, long-term, sustained core funding for arts organizations: museums, performing arts companies and community arts councils in the province.

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           The flow into the B.C. Arts Council immediately goes throughout there to core funding to support all these organizations, and it also goes out directly to emerging artists, new projects, new ideas and creative development of new initiatives that contribute to our cultural development. It's the fastest response and the highest-leverage return on investment that we could imagine. Infrastructure takes a long time. It's very, very important. It will cost a lot of money, but it will take far more time than this immediate injection.

           A. Wong: May I add to that? Speaking as an artist who has worked as a freelance artist and also as part of a company, the B.C. Arts Council does support all of those streams of funding that you're talking about, so you can apply to the B.C. Arts Council as an individual, as an individual playwright, for instance, or as an individual visual artist. Larger companies in terms of theatre, music or dance also apply as organizations for operational funding.

           The B.C. Arts Council is actually very well organized and very well designed to serve not only all the disciplines but all of the strata of variety of work. Some people work very individually; some people are working in very large organizations.

           B. Ralston (Deputy Chair): Thanks very much. That was a very eloquent statement of the economic impacts of the creative economy, and Richard Florida and other theorists are well known, and I hear echoes of that in what you've said.

           Last year you made a similarly eloquent presentation, and the government was not moved to change. So what else are you doing, besides presenting here, to persuade the government of the power of these kinds of arguments?

           R. Chilton: I think that the arts community, the Arts Future B.C., gathering of the many interests and the many people in this province…. It's not simply the people that are engaged in the arts; it is the audience for the arts. When you look at the people that are engaged in

[ Page 1270 ]

the arts, as audience, as artists, as presenters, as creators, it really represents a huge segment of the province.

           The arts community, because it's small and disparate and, quite frankly, creative…. It's not a natural thing for all of those people to come together and to recognize how large a force they are and how important they are as a body.

           I think that Arts Future B.C., and many of the other initiatives you could see gathering now, will come together a little bit more over the next period of time. Certainly, a little more interest that's excited in the public at large and in audiences will help make that happen so that people get to understand how significant and how important the arts are and the role they play, not simply in our economy, but totally, in even more important areas: in community development, social development and in sustainable economic development.

           D. Hayer: Thank you very much for a very good presentation.

           Can you maybe give me how many different organizations are involved with your Greater Vancouver Alliance for Arts and Culture? Also, is there any idea how many different cultures are represented, because British Columbia is made up of many, many cultures from all over the world?

           R. Chilton: You're absolutely right, and all of the cultures in British Columbia are represented in it. It's interesting, when you delve in a little deeper, to sort of see how many of our cultures are embedded in our cultural expression and in our creative expression.

           But to answer the question, Arts B.C. represents 903 organizations. That's this body. The Alliance for Arts and Culture — it's membership is over 300. Each of these organizations…. What we're doing is taking the kind of large macro level of organizations.

           Arts B.C. represents 903 organizations that consist of 423 museums; 98 community and regional arts councils, which are at the community level; 123 community presenters; 183 professional arts organizations; 27 educational institutions; and 51 arts service organizations, of which the Alliance for Arts and Culture is just one. It represents a huge body of interests here in Vancouver and in British Columbia as one organization alone.

           So it really represents thousands of individual artists, but it also represents all their students, and more importantly, it represents the audiences for our arts and creative expression in British Columbia.

           A. Wong: There is also increasing incidence of intercultural work that is working specifically with communities to create dialogue, to create collaboration. It's from those collaborations that personal bonds are made, that more understanding is made.

           While there are specific cultural groups represented, like South-Asian arts or the Cantonese opera, there are also companies like NeWorld, like Theatre Replacement, who are working with different cultural backgrounds, bringing them together in theatre, dance, music and visual arts.

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           That's just in Greater Vancouver. It obviously grows if we look at all of B.C.

           B. Bennett (Chair): Folks, thank you very much. We appreciate your submission here today. It was very powerful. We also appreciate everyone who came out to support you here today. I hope you all used public transit to get here.

           Can we have the North West CruiseShip Association, John Hansen, come forward please?

           A Voice: Where's your cheering section, Mr. Hansen?

           J. Hansen: Well, I'm sorry I didn't bring a big cheering section like this.

           I'm happy to be here this afternoon and spend a few minutes with you and members of the committee. I have a written brief that I won't read for you, but it does cover a number of aspects of the cruise industry.

           What I thought I would just do very briefly is give a little snapshot of how we're doing right now and some of the areas of close cooperation between the cruise industry and governments — not only the government of British Columbia but also the federal.

           By way of background, the cruise lines this year have 27 ships in the fleet here in British Columbia. Although we haven't seen the end of the season yet, I expect we'll see a million cruise guests this year for the first time.

           The economic impact of the cruise industry in this province is significant. We have done some analysis of that in the past, and we're updating some of those studies now. It ranges between $1 billion and $1½ billion in terms of economic impact. We're proud to be part of the economy of British Columbia.

           I mentioned the million-guests mark that we'll probably reach this year. This is twice what we saw ten years ago. We've doubled in the last decade. We expect that the industry will continue to grow with strong prospects for the future in terms of the growth of the cruise sector here in British Columbia and Alaska. We feel that that's an important ingredient, where we can contribute to the objectives of the province in growing tourism in the future.

           Operationally this year, I wanted to say that we had no significant issues in terms of health, safety, security or environmental issues. We're happy that we saw a very smooth year.

           This year for the first time the Port of Campbell River opened their new cruise dock, which was in part funded by the province of British Columbia. Those kinds of investments are certainly appreciated.

           We'll see a number of cruise ship refits in Victoria this year. We estimate that the total impact of five refits is in the order of $60 million this year.

[ Page 1271 ]

           One factor that is important to the growth of our industry is a predictable and positive working environment with the government agencies that we work with — national, state and provincial, in the case of British Columbia. We have such an environment here in B.C. It's been steady and supportive for a long time. We appreciate the government's support for the kind of investment in new facilities in Prince Rupert and Campbell River and so on.

           I want to just talk about two major initiatives that we know are high on the priority of not only the national government but British Columbia as well. One is the Pacific gateway development. Even though we're a small player in terms of movement of ships and freight and so on through the ports, we still are a player.

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           The investments in the rapid transit line to the airport and that kind of thing is very important. We'll certainly see the benefit from those, and we will continue to work to support the Pacific gateway initiative.

           The second is the priority on environmental practices, including climate action. Later in October I will be meeting with the Premier's committee on climate action.

           We have had, over the years, a very aggressive program in environmental upgrades on the ships and operational practices. A lot of money has been spent, and a lot of new technology has been developed. We're really proud of where we are in terms of environmental practice and environmental protection by the cruise lines. We will continue to work with the province of British Columbia in meeting the objectives of the future and continuing that trend.

           With that, let me conclude by just saying thank you for the opportunity to be here. I'm pleased to answer any questions.

           B. Bennett (Chair): Thanks very much, John, for making the time to come in and talk to us this morning. There are probably some questions here from the committee.

           D. Hayer: Thank you very much, John, for coming out again and giving a very good presentation.

           You talked about one million guests on the cruise ships that visited British Columbia here. Any idea of approximately what type of impact that those one million people have made on our economy, and also, probably, the number of countries that are reflected by the tourists you get on the cruise ships?

           I know that many countries — I haven't seen that many before — are coming in, even India. I've seen lots of people coming in from India lately. I was in one of the hotels, and they said: "Yeah, we come regularly."

           J. Hansen: Mr. Hayer, the economic impact is a combination of spending by the cruise lines, by the companies, by the crews on board the ships and by the passengers. As I said, when you add all that up, the total impact of the roughly million people and these 27 ships is somewhere over a billion dollars a year to the provincial economy.

           I haven't got the numbers specific to how much the passengers leave behind, but I can get those numbers for you.

           I guess there's another impact too, and that is, a lot of the visitors that come here on a cruise.... This is the first time they come here. They see what a beautiful city it is. They visit Victoria, Prince Rupert and other places.

           Our experience is that once people visit a place on a cruise ship, a lot of people come back and say: "Man, I want to spend some more time there. I'm going to bring my family and spend some more time." So it leads to a lot of repeat visits. That's kind of an intangible in terms of impact.

           On where the guests are coming from: it's still about 80 percent who are American citizens, but we are seeing a growing population of Australians, people from Britain, a few people from Asia — from India, China and so on. They're still a pretty small number, but we are seeing it grow.

           J. Horgan: I am a Vancouver Island MLA, and I'm very pleased to hear about the refits slated for Naden, I guess, in Victoria. I wonder if you could expand on that.

           I also wanted to ask if the frequency…. I know that at Ogden Point in Victoria there seems to be, from July to September, almost a…. I don't believe the berths are empty. I don't know how you can increase visits there. But the new facility in Campbell River…. Could you quantify what impact that's having on the central Island's economy — so central Island economy and a bit more detail on the refits?

           J. Hansen: I've said there'll be five ships that we're aware of that will have significant — like major — refits, haul out in the graving dock. Each refit, on average, would be between $6 million and $10 million in spending. We actually have a very unusual one. We have a refit in December, a ship coming up from California for a December refit, which I think is good in spreading the work at the graving dock around the other months of the year.

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           In terms of the Campbell River dock, this was the first season that it was open. There were a number of calls. I don't have the numbers in terms of economic spending and so on. We are collecting that now. But for a first year that a new dock is open, it was a great start in terms of the ships that called there. Next year we're hoping that there'll be more of that.

           In terms of Ogden Point, if you have noticed, the ships tend to come into Ogden Point on Fridays and Saturdays. So yes, on most Saturdays during the season they are full. But if you can move it into Sundays and Mondays and Tuesdays — midweek and so on — yes, there's still a lot of capacity in Ogden Point.

           H. Bloy: We talked a few years ago, and you had some concerns about them picking up supplies and

[ Page 1272 ]

passengers in the States and just bypassing. By your enthusiasm today, you're still growing. Do you think you can grow at a faster rate?

           J. Hansen: The industry as a whole is still growing. In fact, I think we're going to be growing. By the end of the year we'll see about 5 percent this year overall. That includes growth out of Seattle and San Francisco home ports, as well as Vancouver. Vancouver this year actually was able to attract a ship that had been home-ported in Seattle, so to some degree we are seeing a little bit of that turnaround.

           The other thing that's interesting this year is that for the first time ever we will have a ship here into November doing three-, four-, five-day cruises — Seattle, Victoria, Nanaimo, Vancouver. It's a great sampler for people who have not cruised before and who want to see what it's like.

           B. Bennett (Chair): Sounds like a good idea to me. Thanks very much, John. We appreciate your submission.

           Retail B.C., Mark Startup. He's eager. He's getting to the chair quickly.

           Welcome. It's good to have you here.

           M. Startup: I heard on the radio coming down that everyone was heading for the border, but I followed someone from California into Vancouver looking for a store to shop at. So I guess you can't believe everything you hear on the radio.

           Mr. Chair, Members of the committee, thank you for the opportunity to speak with you today about my favourite industry: the retail industry of British Columbia. My name is Mark Startup, and I am president and CEO of Retail B.C.

           Actually, I will not be reading from my submission. I will be referring to points of the submission, but I hope to highlight very quickly the most important points, which I hope will allow for more time for Q and A and discussion.

           The retail industry in British Columbia is a growing industry. Last year we generated $52.6 billion in total retail sales. We are the province's largest private sector employer, employing just over 250,000 British Columbians. We also surprise many British Columbians when we tell them that we are the fourth-largest GDP contributor in our province.

           We're enjoying very strong retail sales growth. The numbers for July were published by StatsCan today, and we're pleased to note that retail sales are up 6.2 percent in the month of July in British Columbia in '07 compared to '06. So we indeed have a very positive economy. Consumer confidence is very high, and according to government forecasts, we expect to see continued growth in total retail spending of about 5 percent over the next two or three years.

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           Our members are B.C.-owned and -operated retail companies, mostly one-location companies. About 80 percent of our members are local owner-managed operations. We also represent several medium-sized companies and a handful of large B.C.-based companies.

           I'd like to acknowledge and commend the committee for recommending in last year's report our key recommendation this year to reduce the PST from 7 to 6 percent. We note in reviewing the public accounts numbers this week that we're heading to a $2 billion surplus, in comparison to a budgeted forecast surplus of $1 billion.

           We also note that to the end of the period, government had collected about $200 million more in PST revenue than had been budgeted. As we've felt now for the past three years, we feel that the time has come and that there is room in our fiscal capacity to reduce the PST to 6 percent in this year's budget.

           We think that part of these surpluses have indeed been generated through consumer spending. Given some of the competitive issues that we're facing this week, at least symbolically, with the Canadian dollar reaching par with the U.S. dollar, we feel that anything we can do to improve our competitiveness on the taxation front will be a good thing for both the consumer and for investment.

           There are three other issues that I'd like to highlight. Two of them are in relation to PST regulation. These are not new issues to this committee. We've talked about these issues before.

           One of them is the exemption for youth clothing. For many years we have been urging government to streamline this particular exemption, to take a look at it, to review it.

           Our preference would be to eliminate this exemption while not eliminating the benefit to the consumer who is the recipient of the benefit of the exemption. We would rather see the exemption replaced with an income tax credit and offered to families in a different way.

           Another regulatory matter that causes concern to retailers is the exemption on school supplies. There are myriad regulations and complexities that create unneeded or unliked moments at the point-of-sale, when the consumer's interpretation of the exemption is one thing and the retailer's interpretation is another. Retailers don't like to have problems and disputes with customers at the point-of-sale.

           Again, we'd like to see an opportunity to streamline this tax, to simplify it, perhaps eliminate it, and then perhaps tie this to a look at the overall rate of the PST and maybe find a revenue-neutral way to solve the problem from that perspective.

           In following the format of the discussion paper, we canvassed our members and asked them about what steps they're taking on the environmental front. I note that we have been working with Hydro for quite a number of years to work with our members through the Power Smart program, to help our members take advantage of any incentives through Hydro to introduce energy efficiency into their operations through power consumption or lighting or what have you.

           Once again, I thank you for the opportunity to present our issues today. I welcome any questions.

[ Page 1273 ]

           D. Hayer: Thank you very much, Mark.

           When you talk about streamlining the taxes to make them easy…. Has your group tried to get the public on side so they think that instead of having an allowance for the kids at school, when they go to storeroom…. Maybe they can get child tax credits — some extra funding there?

           Or a second part is also…. Instead of getting into discounts for our schools, no taxes or PST on school taxes…. Maybe government could also put some tax credit for kids in the school system, maybe using the age factor.

           Have you tried to educate the public so the public can be on side, so that if the government looks at it, they don't start getting careless, saying: "Why are you doing this?"

           M. Startup: I understand the challenge that a government faces when removing an immediate tax relief measure to a consumer and replacing it with something else. It's a very slippery slope, I guess, from a political perspective.

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           I guess the best I can say is that the retail industry would proudly stand at any podium with any Finance Minister or Revenue Minister to announce these changes.

           The short answer to the question is no. The consumer probably likes the situation the way it is. My remarks are based more on the incredible headaches, red tape and bureaucracy, and also audits, audit fines and penalties that retailers incur when they're found by auditors to be offside when it comes to compliance.

           We feel that the thrust for these measures comes more from the streamlining of a regulatory burden perspective and trying to introduce some common sense for the retailer rather than creating a public campaign to support it.

           D. Hayer: Just a follow-up to that, if the Chair doesn't mind.

           What about doing some marketing in advance before the government does it, rather than waiting till after? Maybe explain to the public that these are some of the challenges. You might get more support from the public. By the time government comes in, the public is saying: "This is something good, acceptable."

           B. Ralston (Deputy Chair): It would seem to me the ideal time to announce that would be at the point that a reduction in the sales tax overall was announced.

           M. Startup: There is a compelling argument to take a look at all of the exemptions that exist entirely within the purview of the PST and consider reducing the PST and absorbing the hit of removing those exemptions at the same time. We are looking at that.

           B. Ralston (Deputy Chair): Other than those two you mentioned, are there any other ones that particularly bug retailers?

           M. Startup: No. These are the ones I've heard the most about most frequently over the years. Let me qualify that. I must say that the work of the Revenue Ministry over the past number of years has been tremendous in eliminating many of the problems that we've had in other categories. There's a lot of progress there. Also, to commend government, we calculate the elimination of 113,000 regulations, which is a tremendous accomplishment and much appreciated by retail.

           B. Bennett (Chair): I think those two exemptions have come out through Minister Thorpe's Small Business Roundtable. You would know that, I guess.

           M. Startup: As a member of the round table, I can tell you that, at the aggregate level, we look at PST regulation and the elimination of complexity and burden. Specifically, these issues have not been identified and currently are not part of the round table's discussion. These issues are advanced by Retail B.C. to the Minister of Revenue and to the Finance Minister as a specific issue for the retail sector.

           B. Bennett (Chair): Well, not as Chair of this committee but as the MLA for East Kootenay, right along the Alberta border, I'm very partial to the idea of a sales tax cut, because I can see what it does to our retailers there.

           M. Startup: Very good timing.

           R. Lee: If you had a choice between the reduction of the PST or the small business tax, which one would you prefer to reduce?

           M. Startup: Well, come on. You know the answer has got to be both. I don't mean to be flippant. We would defer to the Finance Minister and this committee, based on all the evidence that you hear in this process, to choose the reduction that you feel will have the most impact on our economy, on consumers and on investment.

           Most importantly, we're looking for a competitive tax regime. I can't really judge which one is better or worse, but I'm sure that you'll continue the process of recommending improvements in our competitiveness on that front. Tough question.

           B. Bennett (Chair): Thank you very much, Mark. I appreciate your submission.

           M. Startup: I hope you get a chance to do a bit of shopping before you leave the city.

           B. Bennett (Chair): Well, UBCM is on next week, so there should be lots of shoppers coming from the hinterland.

           M. Startup: Well, shop wherever you go.

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[ Page 1274 ]

           B. Bennett (Chair): Our last preregistered witness is the Georgia Strait Alliance, Christianne Wilhelmson.

           C. Wilhelmson: I know it's been a very long day, so I'll try to be as concise and as engaging as possible. I am Christianne Wilhelmson. I am the clean air and water program coordinator with the Georgia Strait Alliance.

           If you're not familiar with our organization, we are a charitable public interest organization formed to protect and restore the waters of the Strait of Georgia, its adjoining waters and communities. We are active on a range of educational and advocacy efforts aimed at safeguarding the marine environment and the health of the human and non-human inhabitants that make this remarkable inland sea their home.

           Just a note about the packages you're receiving. There is a DVD that I strongly encourage you to take a look at, and it will make more sense as I go through my submission. I'll be reading portions of my submission, just for clarity.

           In the past year our global attention has been drawn to the challenge of climate change. With the February throne speech the provincial government laid down the gauntlet, and the 2008 budget is the opportunity to show if the government is really serious about tackling climate change. The changes we must make are incredibly difficult, but they're very doable. In the coming months you have the opportunity to create a world-class climate budget with achievable goals in a variety of different areas.

           We know the key goals to climate change are reducing our reliance on fossil fuels, so we need to do things like improve funding for transit to get the cars off the road, particularly in the lower mainland. We must also be looking at alternative fuels — in particular, bioenergy and biofuels — so that we can achieve a greater-than-90-percent reduction in transport-related greenhouse gases by 2050. This would be a mark that would exceed the goals of the European Union.

           According to some estimates, particularly Sir Nicholas Stern's, B.C.'s direct expenditures on greenhouse gases will have to be in the area of $370 million to have a measurable impact. But I do want to flag something. Though we hope that we'll see this as a climate change budget, we cannot ignore the fact that other environmental issues are not taking a holiday. The resilience and health of our environment are critical, actually, to the ability to handle climate change. You need a healthy ocean and you need healthy forests to be able to fight back against climate change.

           We can't follow the lead of the federal government, as we heard this week, where they're cutting back on Environment Canada's budgets and freezing their budgets to allow them to do other work, because they're now focusing on climate change. This is like cutting off your nose to spite your face.

           Therefore, as we develop a climate change plan, we need to be also developing and funding biodiversity strategies to allow our environment to be resilient. We can also do something more, and this is what I'd like to present to you today. We can find innovative ways to tackle climate change and provide solutions to other environmental challenges.

           As we look to alternatives to fossil fuels, we've been hearing a lot about ethanol and using wheat and other crops as an alternative fuel, but we're also starting to hear about the social impacts of that. This is making people a little more nervous about this as an alternative fuel. I would like to recommend to this committee that you turn your attention to funding the creation of a biofuel from one source that is very renewable and whose use can also help us tackle our coastal water pollution issues. That source is sewage.

           On both coasts our historical approach to dealing with sewage has been to dump it into our oceans — sometimes untreated, sometimes undertreated — with devastating effects. But communities around the world are looking at sewage in a different way. It's no longer something to get rid of; it's actually a resource that we can use.

           When we address issues like sewage, municipal solid organic waste, air pollution and climate change in these separate silos, we're limiting our scope, and we're limiting our creativity. It's through integrated planning of all these things that we're going to have the greatest benefit to our province and be able to handle and take on the challenges of different problems.

           European municipalities are showing how green energy can be derived from several waste streams at the same time, and how waste-to-energy infrastructure can effectively treat sewage, which is a growing problem, and reduce inner-city air pollution and greenhouse gases. Sewage treatment plants designed for resource recovery — and by resource recovery I mean the recovery of water, heat and biofuels — are less expensive to build and to operate. They're more compact. They need less electricity and fewer chemicals than traditional treatment plants. For example, Sweden runs 5,300 vehicles and much of its transit system on biofuels from sewage.

           Examples of resource recovery can be found closer to home. Dockside Green in Victoria has a sewage treatment system that will allow it to use the heat to heat the buildings and the condos in the structures. In Vancouver, at False Creek in the Olympic athletes village, they're going to be using heat from sewage to heat part of the building. The innovation is here, but we just need to take it provincewide.

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           I'd like to flag this for the committee. This October the Ministry of Community Services will be releasing a report on the benefits of resource recovery from sewage, with attention paid to climate change. Though it's going to be focused on the capital regional district, on Victoria, I strongly encourage you to take a look at it, because I think it's something we can take provincewide.

           I would recommend to this committee that the budget have in it: provide money to allow for communities across the province to review their liquid waste management plans, looking at resource recovery.

[ Page 1275 ]

           I have two more issues that I wanted to talk about, but I will try to do them as briefly as possible. One is our request for funding for a comprehensive waste disposal system for boaters. Municipalities are not the only source of sewage pollution on our coastal waters, as 54 million litres of raw sewage are dumped into Georgia Basin every year by boaters. Untreated, this is actually more toxic than municipal waste. Basically, in a weekend the fecal coliform level from boating sewage is about the same as a city of 10,000 people as far as their treated sewage.

           There is now a new law, the Canada Shipping Act, which limits the ability to treat sewage, but unfortunately, there's nothing in the law that has any money for infrastructure. You have boaters who want to do the right thing and want to go to pump-out stations and pump out their sewage responsibly, but in the Georgia Basin region, there are only 40 pump-out stations for 350,000 boaters. We are woefully underproviding our boaters with the ability to obey the laws of the land.

           The solution is there. We've got a project called Ocean Solutions. It's a series of floating eco-docks, solar-powered, that could be put across the province and would have a boat that would go to empty them out. It's economically viable, and it's something that has received support from a lot of groups, including the Ministry of Environment provincially.

           We would like to propose to the budget committee a contribution of $750,000 over three years, beginning with $250,000 in this budget, to help fund this project. It's a $3½ million project, but this would help get things started. Hopefully, we'll see funds from other levels of government.

           [B. Ralston in the chair.]

           Finally, before my time is up, I'd like to bring up one last issue. It's an issue that I'm sure will be presented to this committee, so I won't spend too much time on it, but I just want to flag it. That is the issue of fish farms. As with boats and as with municipal sewage, fish farms, if you design them correctly, can actually be another source of biofuels for your community.

           The threat posed by open-net-cage salmon farming to the health of wild salmon populations should not be underestimated. The threats to wild salmonid survival from sea lice and from all other threats are quite high.

           This past May we saw the special committee propose that in five years there should be a transition to closed containment. This is very much in line with what the public is thinking. Nearly 81 percent of British Columbians want to see the fish farms transitioned over to closed containment.

           Now we have a possibility of seeing how this works, because there is a project that has just been launched near Campbell River, the Middle Bay–Agrimarine project. It's a closed containment system. Right now, today, they're growing fish in closed bags, and they'll soon be replaced by floating permanent aluminum tanks. We would like to propose that the government launch and financially support two more commercial-scale closed containment systems.

           I should note that this project in Campbell River has been supported by the federal government to the tune of $2 million so far, so there is support. The public wants it. The federal government is supporting it. We'd really like to see the provincial government doing the same.

           Just as with boaters, this is another source of biofuels that we could be using. The technology is there for resource recovery, and we could again stop another source of pollution in our communities.

           To conclude, we have a unique opportunity to stop polluting the ocean while putting sustainable fuel into vehicles and green energy into our buildings. In Budget 2008 the province can be a leader on climate change and environmental protection at the same time. It's a great two-for-one. We encourage the government to take on this challenge.

           B. Ralston (Deputy Chair): Thanks very much, Christianne. We have at least one question.

           I. Black: What a great presentation. You talked about keeping it compelling and keeping our interest at the end of the day, and you've done that. You had some real meat on the bones, if you will, in what you were saying. I for one, and I suspect I speak for the committee, say that that's much appreciated.

           I wanted to ask you about one thing in particular. You mentioned the notion of a floating sewage receptacle for a lot of the boats that are on the water right now, and I think those stats were pretty compelling. You suggested $750,000 over a three-year period for a project that tops out at about $3½ million, if I'm not mistaken.

           The cautionary note that I always think of when I hear that is: what happens if you don't get the other money? Has that $750,000 been squandered? As the stewards of the public's money, one has to be cognizant of that.

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           Could you comment — I want to pursue that because you brought it up — on where you would get the other money from? What are the safeguards that we would have in the back of our minds, as we go forward, to contemplate encouraging something like that, or not, in our deliberations?

           C. Wilhelmson: We have a budget which does put about 44 percent of the money coming from Transport Canada…. We've been in conversation with them for over a year now. There was a great deal of support. We'd actually been short-listed for the VanCity $1 million award. That indicated a great deal of interest at the community level in a project like this.

           Sadly, we didn't make the final cut. But when we did get short-listed we started talking with a lot of stakeholders, and there was interest everywhere, but I think there was a little bit of….

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           If you can get a little bit of money, then everybody else will throw some money in. The Ministry of Environment actually provided us with some seed money to help us do those kind of stakeholder discussions and presentations. It was very helpful to allow us to do that work. If we'd been able to make it on the final shortlist for VanCity, then we would have really been able to tie that up.

           At the staff level, there is interest within Transport Canada to fund this. But I think it just needs to be a discussion. Probably what we need to do is get everybody around the table because everybody acknowledges that it's something that's needed, but it seems that there is a hesitancy for anybody to go first and put their money in the pot.

           I. Black: There always is. First money is the hardest.

           C. Wilhelmson: There is. Even the not-for-profits…. We are putting our own money on the table as well — both ourselves and the T. Buck Suzuki Environmental Foundation, who are our partners in this project.

           J. Horgan: You were here when the cruise ship industry was at the table. So I thought I'd take the opportunity to ask you the question that I decided not to ask the director or the proponent. That is: does the Georgia Strait Alliance continue to monitor and track the activity of cruise ships through the Inside Passage? If you do, what are the results in terms of their compliance with federal regulations with respect to dumping?

           [B. Bennett in the chair.]

           C. Wilhelmson: Unfortunately, we don't have the capacity to actively monitor what they're doing. But we do monitor what's happening worldwide with the cruise ship industry. Unfortunately, they have a reputation for often violating the laws of the land.

           In Canada we don't have any specific laws for cruise ships. There are guidelines. They must abide by the shipping regulations, but there is no specific monitoring for this industry. I would like to believe that they are abiding by the laws and that there is no dumping of sewage or any other materials into our oceans.

           But since they do it in other countries and have been caught, especially in the United States…. We have a variety of examples. I would like to believe they are not doing it, but it's not hard to believe that they are. Unfortunately, we don't have any monitoring, and once you get up the coast, there's no one there to see.

           It's not to say that the cruise industry is wanting to do the wrong thing, but there are situations where, if you don't have monitoring of an industry…. You certainly don't have laws that are specific to them. Cruise ships are so different than recreational boats and tankers. They're floating cities. They have photochemical materials, dry-cleaning fluids, all those kinds of things.

           They need special rules and regulations, and until we have those, it's very difficult to monitor them specifically, which is a great concern to us.

           B. Bennett (Chair): Thank you very much, Christianne. We appreciate it.

           Ladies and gentlemen, members of the committee, that ends our committee in terms of the preregistered witnesses.

           Did you want to speak?

           H. Kolenko: I'll take two minutes if you like.

           My name is Henry Kolenko. I'm here as an independent. I'm an independent producer of the arts and culture. I was here with the other group, so I won't hold your time.

           I just wanted to say thank you very much, everybody, for taking the time to listen to the arts and culture presentation. I don't have any meat on the bone, I'm sorry to say, but thank you very much. I thought that was a fantastic presentation. I just wanted to sit through. I've never been to any of these.

           I have a great vision for Vancouver and for B.C. in general. I was born here in this country, in Vancouver. I've grown up. I've lately come to the realization that culture is probably one of the leading gateways to the future.

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           What the industrial revolution did a little while back, I think culture and creativity will do for the future. I think B.C. is standing in a fantastic position. Harry Bloy worked on the Korean festival for Festival Vancouver and did some great work.

           I think we're the gateway to the Pacific Rim in culture — what Toronto was to the east, to Europe and beyond.

           I'm going to invite you guys…. I'm working on Paul Anka right across the country. You're all welcome to get a couple of tickets for yourselves. I don't want to do this in any kind of a bribe way, but we just have tickets in Vancouver and Victoria if you wanted to come out.

           I'm eventually going to come back to you at some point and say that we need to start what I call a billion-dollar cultural alliance fund, which will give B.C. a very coveted position of strategically positioning itself with cities around the world. I see a network of cities developing these kinds of independent cultural alliance funds. From the interest of that, we can then create and bring the best of culture here to this country.

           That's what I'm looking forward to. B.C. and Vancouver, I think, can lead the way. Thank you very much for your time.

           B. Bennett (Chair): Thank you very much, sir.

           With that, committee, we're adjourned.

          The committee adjourned at 4:21 p.m.

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