2009 Legislative Session: First Session, 39th Parliament

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

MINUTES AND HANSARD

MINUTES SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

Thursday, October 15, 2009

4:00 p.m.

Thompson/Shuswap Room, Woodfire Conference Centre at the Best Western Inn

2400 Highway 97 North, Kelowna, B.C.

Present: John Les, MLA (Chair); Doug Donaldson, MLA (Deputy Chair); Norm Letnick, MLA; Don McRae, MLA; Michelle Mungall, MLA; Bruce Ralston, MLA; Bill Routley, MLA; John Rustad, MLA; Jane Thornthwaite, MLA; John van Dongen, MLA

1. The Chair called the Committee to order at 3:57 p.m.

2. Opening statements by John Les, MLA, Chair

3. The following witnesses appeared before the Committee and answered questions:

4. The Committee adjourned at 7:46 p.m. to the call of the Chair.

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

Thursday, October 15, 2009

Issue No. 9

ISSN 1499-4178

[ Page 245 ]

THURSDAY, OCTOBER 15, 2009

The committee met at 3:57 p.m.

[J. Les in the chair.]

J. Les (Chair): Good afternoon, everyone. My name is John Les. I'm the MLA for Chilliwack and Chair of this parliamentary committee. I'd like to welcome everyone who is here this afternoon and those, of course, who have not yet arrived, as we will be meeting for four hours today. We're oversubscribed.

Each year in preparation for next year's budget, the Minister of Finance releases a budget consultation paper on the 15th of September. He did that again this year. That paper presents a current fiscal forecast. It also identifies the key issues that will need to be addressed in the next year's budget. It also provides a focus for the consultations of this committee and includes information on how members of the public may provide their views on budget priorities.

Our committee is the parliamentary committee which is responsible to conduct public consultations on the forthcoming provincial budget. The committee is required to report back to the Legislature by the 15th of next month. This year we will hold ten public hearings in different parts of the province.

At the same time, of course, we've got a legislative session going on. This is a break week. Some people apparently have the perception that we're sitting at home relaxing in break week, but actually the members of this committee are travelling around the province doing this work.

Our first hearings were held in Vancouver and Victoria. While we were in the provincial capital, we also held some video conferencing sessions when we heard from residents from Courtenay, Cranbrook and Dawson Creek.

This morning we had a hearing in Kamloops. This afternoon, of course, we're in Kelowna. We also held hearings in Smithers and Prince George earlier this week, and tomorrow we'll be holding an all-day hearing in Surrey. Next week, Wednesday, we will hold another video conferencing session in Victoria with three more communities, and then we begin the work of drafting the report to the Legislature.

If you have not yet reviewed the Budget 2010 consultation paper, we have copies available at the registration desk that you can take away at your leisure.

In addition to public hearings, there is a variety of other ways that British Columbians can communicate with the committee. We accept written submissions, whether by letter or by e-mail, and for the first time we also invite people to send us their video or audio files. Further information on how you can do all of that can be obtained from our website at www.leg.bc.ca/budgetconsultations. Any public input that this committee gets, however we receive that input, is given the same full consideration as any other. Our deadline to receive submissions, however, is Friday, October 23 — in other words, next week, Friday.

Today we're going to hear from a number of presenters, who will each speak for ten minutes. Then there will be an additional five minutes for questions by members of the committee. If time permits at the end of the session — that is, before eight o'clock — if we have time left over, then there will be time for people to make presentations on a five-minutes-each basis.

[1600]

That's the formalities out of the way. Now would be the time for committee members to introduce themselves, starting with Bruce.

B. Ralston: Bruce Ralston, the MLA for Surrey-Whalley.

M. Mungall: Michelle Mungall, MLA, Nelson-Creston.

B. Routley: Bill Routley, MLA, Cowichan Valley.

D. Donaldson (Deputy Chair): Doug Donaldson, MLA for Stikine up in the northwest and Deputy Chair of the Finance Committee.

J. van Dongen: John van Dongen, MLA for Abbotsford South.

D. McRae: Don McRae, MLA for Comox Valley.

J. Rustad: John Rustad, MLA for Nechako Lakes.

J. Thornthwaite: Jane Thornthwaite, North Vancouver–Seymour MLA.

N. Letnick: Norm Letnick, MLA, Kelowna–Lake Country.

J. Les (Chair): He's the only one who's at home right now, or sort of.

To my immediate left is Kate Ryan-Lloyd. She is the Clerk to the committee. At the registration desk is Stephanie Hansen, who is doing a great job of keeping our meetings flowing smoothly, and at the Hansard table, making sure everything is properly recorded for posterity, are Michael Baer and Gail Swetlow.

Jeannette Montgomery is our first presenter.

Presentations

J. Montgomery: Good afternoon. My name is Jeannette Montgomery. I live in Oliver. I would like to thank the committee for providing me with the opportunity to share my views through these consultations. I and many others believe it's important that our communities engage in dialogue with our elected government around the planning of British Columbia's future.
[ Page 246 ]

I wish to speak about the significant reduction in funding to the areas of arts and culture in British Columbia, and I ask that the committee and our government be mindful of the impact their coming decisions will have on our province. You play a significant role in the guardianship of our investment in self and story, and that warrants some care.

I have watched over the past few years as a small art gallery in Penticton has brought new and exciting things to the area. Along with celebrated artists of significant notoriety, the gallery provides space for middle and secondary school student works. Summer sessions are available to inspire young minds, and the limited staff challenges itself to deliver more and increasingly unique ideas to the people in and around Penticton.

While fundraising and annual auctions bring much-needed revenue to this small organization, the gallery relies on financial support from our provincial government to remain an active member in the community. Our Penticton Art Gallery is one of dozens or more that have seen significant cuts in financial support from government, support needed for them to be contributing voices to British Columbia's arts and culture.

We owe it to ourselves and generations after us to invest in arts and culture. We are what we create, inspire and envision. We are what we are encouraged to be curious about and what we leave behind for others to be curious about.

Through the arts, there are ways in which we can responsibly leave an imprint of ourselves behind, ways that we can pass on the telling of our collective hopes, dreams and lives for future peoples. We can tell the stories of our journeys and of this moment in time, tell tales which celebrate the creativity of the human mind and those which record our spectacular disasters.

As the caretakers of the now, we can share with future peoples the joy of our collaborations and the sorrow we feel for our flaws. This is storytelling and story-sharing, and it's the backbone of our arts communities. Right now it's foundering.

Through the development and support of our creative endeavours, we preserve and educate future generations about who we were and what we could have been. If the world and our people are ailing, our arts and culture communities are the instruments of measure for our collective temperature. It is the information which we use to be effective guardians of our human spirit.

Federal, provincial and local governments often ask us to choose between supporting businesses or the arts. This adversarial approach to what in reality is a multiple-bottom-line economic model erodes our very foundation by asking us to support one or the other, as opposed one and the other. We as a people are put in jeopardy of losing an entire generation or more of a vision of history.

People in the communities of British Columbia are voicing distress and fear over this decline in support in the areas of arts and culture. This address is not a complaint. It is a plea to that part of each of us in which lies the smallest of embers to kindle and the strongest of fires to feed.

I respectfully ask the committee to reflect on the level of support provided to the areas of arts and culture in the 2010 budget. We risk losing our valuable contribution to the larger arts and cultural arena, which might never be regained if we aren't effective caretakers of the voices of our people.

[1605]

I ask that the committee kindly consider the following requests on behalf of our communities when the committee and our government are planning this next budget.

First, nurture emerging talent. The emerging voice is a tenuous one. Re-evaluation of existing support mechanisms is a key part in removing barriers for emerging talent to succeed. Review existing and past financial support structures. Support the development of new resource pools and include stakeholders to participate in the construction of alternatives.

Second, sustain established arts institutions. Traditional fundraising efforts are often not enough to acquire, keep and share our collections. Collaborate with our organizations in developing appropriate budgets based on current, innovative best practices. Invest in scalable infrastructure to adequately support the growth and development our communities need to acquire, maintain and showcase our history and future.

Third, engage the community in dialogue. Our communities are where we sing our songs, paint our canvases and perform our works of art. They are the places which hold our culture. We do not ask our political leaders to own the success of our resolutions. Instead, we ask them to engage our communities so we can together perform to our best expectations.

Fourth, remain accessible. Removing barriers — physical, financial or other — for communities to participate in arts and culture is vital to the health and growth of a community. The arts inspire, motivate and engage at every level, and our collections should remain available to all, regardless of where one is in life.

Fifth, be mindful of what we have obliged ourselves to. We have a collective responsibility to ensure the success of our arts. Should we commit to an endeavour, we must hold to our task. It is our responsibility to be mindful of what we have promised of ourselves and of our government.

Sixth, empower our people to be the stewards of our own stories. Ask us to be and remain engaged. Provide us with the support we need, when we ask, to do the work we need to do, which will ensure our creative visions will come to exist beyond ourselves. Charge our people with the stewardship of our own voices and then support our efforts to do so.
[ Page 247 ]

The 2010 budget consultation paper addresses the British Columbia competitive edge, our need for sound fiscal management, the emphasis on creating jobs, the need to continue protecting vital services and the goal of building on the foundation.

Yes, there are numerous priorities for financial support in government spending. There always are, and there always will be, as long as we remain a country and a province that hold a strong belief in delivering social services.

Health care, education, economic sustainability, and arts and culture support aren't mutually exclusive endeavours. Wise investors wouldn't ask their investment specialist to select one or two areas alone to invest in. No, the wise investor acknowledges the diversity of the market and that the success of one investment often relies on the development of another.

We can educate and train ourselves and our future generations to develop, research, construct and cure. But we also need to be encouraged and supported to dream, create and express. We need our government to be strong and to provide for every area of our province's development.

I ask that this committee and this government recognize our arts and culture's contribution to the economic growth of the province by making it a priority. Wealth has more than one measure.

J. Les (Chair): Thank you, Jeannette.

Questions from anyone?

M. Mungall: Thanks very much, Jeannette. You state that health care, education, economic stability and arts and culture aren't exclusive — that, in fact, they're often very interconnected. There's plenty of research that shows, for instance, how art therapy can benefit people who have been marginalized in our society or children with FASD and so on.

Recognizing that and recognizing that one of the reasons we have the deficit that we do is actually because of declining revenue due to tax cuts for corporations, would you rather see the province of British Columbia retain that revenue source — the taxes from corporations — than, for instance, this year giving oil and gas a $120 million cut to their royalties? Would you rather see us retain that revenue and make sure that things like health, education and the arts are funded?

J. Montgomery: That is a very difficult question for me to answer without any additional information on my part. I am a small voice who represents one of a million small voices.

[1610]

I do believe that our elected officials and our government have the information in front of them to make informed decisions. I don't know if that's an informed decision that I can particularly speak to. I would speak from my heart rather than my mind, and I would like to have both present to be able to make that kind of decision right now.

I would like to see continued support on an equitable scale to as many places as possible. I do know that's very difficult. I really don't have enough information to be able to answer that. I'm sorry.

D. Donaldson (Deputy Chair): Hi, Jeannette. Thanks for the very eloquent presentation. You bring up lots of big ideas, and it's nice to have the zooming out and the zooming in.

As far as one aspect you touched on, on your second page, about often being asked to choose between supporting one thing or the other — arts or businesses…. You talk about this being an adversarial approach in what, in fact, is a multiple-bottom-line economic model. Can you just comment on that or expand on that thought a little bit more?

J. Montgomery: I think there's a lot more progression towards thinking of a multiple-bottom-line model. It is not just asking people to choose between supporting one area or the other. It's like asking to choose between industry or theatre. I like to think that we have made more progress in addressing ethical and sustainable decisions financially without just saying: "What is our net gain at the end of the day?"

I think that's becoming a little more prevalent in financial management, and I'd like to think that it's becoming a little more prevalent in our provincial government's financial management as well. I include it there to ask people to remember that there is more than just one vision or version of wealth.

J. Rustad: Jeannette, thank you very much for the passion you brought with your presentation. It's never easy to come and present, but obviously, in your heart, your belief in the arts and support of the arts…. It's great to see that come through.

I myself have spent a great deal of time in and around the arts. I know the value, the importance of that to community and to the overall health within a community. I just want to make one comment and ask a question around the same thing that Doug just asked about — the choices between industry or arts, those sorts of things.

I actually look at it more as that we have some very difficult challenges around budgets in health and budgets in education. Revenue source, of course, is one question. But I do also believe there's a balance.

The question I have for you is: what is the revenue that the organizations that you've been involved with are getting from government, and their sources — gaming grants or other types of grants?

J. Montgomery: One I know of was through gaming grants.
[ Page 248 ]

I'm not as well versed or have the information in front of me to be able to address it. I would be happy to carry on the conversation and find out more information after this and get back to you.

J. Rustad: If you could e-mail us the details on that and where those funding sources are, it gives us a chance to be able to look and be a little more focused.

J. Montgomery: Certainly.

J. Les (Chair): Okay, thank you very much, Jeannette. I appreciate your coming this afternoon.

Our next presenters are with the Okanagan Artists Alternative Association. Jennifer Pickering.

J. Pickering: Hello, my name is Jennifer Pickering. I am here to represent the Okanagan Artists Alternative Association, which operates the Alternator Centre for Contemporary Art. Thank you very much for the opportunity to speak.

The Okanagan Artists Alternative has about 134 members in the regional Okanagan area. Over our 20 years of existence in this community, we have represented…. We have a lot of members that come through our organization, and we've had about 3,000 members over 20 years.

The Alternator is an artist-run centre. We're run by artists, and our primary mandate is to ensure that artists earn a living wage from their work. We support, within the community, an exchange of ideas, and we provide a service that is free to the public. We do not charge an admission to any of our exhibitions or workshops. It's all free. Accessibility is very important regardless of age, ability, ethnicity, gender, religion or sexual orientation.

[1615]

What we provide is an alternative model to municipal and commercial galleries. Our mandate, again, is to support artists. We provide a venue particularly for local, emerging and mid-career artists to exhibit their work, to create new work and to allow them to show their work in the community, within the country and, as well, internationally. Last year we sent two young artists from British Columbia to have their first international exhibition in Chicago.

We create programming that engages and inspires the larger community. We build an audience for contemporary art in the community for the artists. That's one of the ways that we serve artists.

We serve a wide cross-section of the general public who appreciate contemporary art and think that artists can spark interesting debate around a diversity of current affairs — things like social justice, homelessness and new technologies. Prior to the establishment of artist-run centres, which began in B.C. about 30 years ago, non-traditional art was rarely produced or exhibited.

What we provide for artists is the ability to create and present their work free of commercial pressures. That's not to say that the artists do not ever sell their work. Last year the Alternator commissioned a top aboriginal B.C. artist who went on to sell her work to the National Gallery of Canada. However, unlike a commercial gallery, all of the profits that came through that sale went directly to the artist. Again, it's about artists.

In a typical year we bring in about $20,000 that goes directly to professional artists through exhibition fees. In 2008, with help from the Legacies Now fund in British Columbia, we provided over $96,000 that went directly to professional artists in B.C.

According to key statistics, a report on the arts in Canada produced in May 2005 by Hill Strategies, artists' earnings in Canada in 2001 were at $23,500 per year. This is an earnings gap of 26 percent compared to the overall labour force average. Artists are among the lowest-paid social group on the economic ladder. Over 40 percent of artists hold a university degree, yet university-educated artists earn on average only slightly more than the overall labour force of workers with only a high school diploma.

Other occupations where they earn about the same are delivery driver, customer service clerk and medical secretary. A typical artisan — craftsperson, music, dance, singer or other performer — earns about $10,000 or less a year. On average, visible minority artists earn $20,000 — 11 percent less than other artists — and aboriginal artists earn an average of $16,900 — 28 percent less than other artists. Yet we know that B.C.'s creative industries generate $5.2 billion every year and employ 78,000 people. This is from the Ministry of Tourism, Culture and the Arts service plan in 2009.

In Canada consumers spent $22.8 billion on consumer goods and services in 2003, an amount that is greater than spending on tobacco, alcohol and gambling. Culture is a growth market. Consumer spending on cultural goods and services grew by 36 percent between 1997 and 2003, which is higher than inflation and population growth. Yet out of Canada's ten provinces, B.C. has the largest labour force in arts and culture in Canada. I'm not sure if you're aware of that.

The Alternator has a diverse array of funding sources. We receive money from the federal government via the Canada Council for the Arts, the Human Resources and Skills Development program. Provincial support for operating expenses is generously provided through the B.C. Arts Council and the B.C. Gaming Commission. The Alternator also receives municipal funding through the city of Kelowna, private foundations and earned revenue and fundraising events.

[1620]

Our co-operating budget in 2009 was approximately $52,000. In 2008 we actually received a $4,000 increase from the B.C. Arts Council and a $1,500 increase from the city of Kelowna.
[ Page 249 ]

We're one of a very few artist-run centres — possibly four out of 18; I believe there are about 18 of us now in B.C. — whose funding was not cut through the B.C. Gaming Commission. Initially, when that announcement was made, we determined that within our budget the only way we would be able to keep our doors open was to lay off staff. We employ two staff — myself, the artistic and administrative director, and a part-time cultural…. He was a student. He's a young worker, under 30, and a recent graduate of UBC Okanagan with a young child as well — a young family.

That kind of layoff is going to mean that we're also going to have to cut our programming, because you can only do so much. This is the future that we face now with the announcement of continued decreased funding to the arts and culture in 2010-2011 and then 2011-2012.

For example, one of the impacts that this has had in the artist-run centres is that the Helen Pitt Gallery in Vancouver has closed its doors. They've terminated the position of their director-curator and cancelled all of their programming for the next year. So the implications have been great already.

I wanted to say a few more things. According to the Okanagan's 2009 Vital Signs report, as of 2005 there were 295 full-time, full-year workers in the central Okanagan's cultural sector. Today the growth rate in the Okanagan's cultural sector is faster than the province overall. However, this will quickly change without adequate provincial support.

If budgeted cuts to the B.C. Arts Council for the next fiscal year are implemented, our organization will face an estimated loss of $7,000. This loss will affect the job of the young cultural worker. It has been our goal to move this part-time position into a full-time one for many years, and a lot of our fundraising efforts go directly to that. We need a full-time position to ensure staff retention. We need to keep people that are knowledgable within our organization to ensure that it's stable.

According to the Socio-Economic Impacts of Arts and Cultural Organizations in B.C., which was created for the B.C. Arts Council for tourism development, tourism policy and development division, Ministry of Tourism, Sport and the Arts B.C., "for every job in the arts and cultural sector there are approximately 0.3 to 0.5 additional jobs created in this economy." In B.C. most of the spinoff jobs of an initial expenditure by the arts and cultural sector are generated in the trades, other services, professional, scientific and technical sectors.

Again, according to the same study, the 300 arts and cultural organizations which received over $9 million in total grants from the government of B.C. generated "a very significant stream of government revenues." The government of B.C. received in the range of $10 million to $13 million in provincial taxes in return for providing grants of $9.5 million that were awarded to arts and culture organizations in B.C. whose initial expenditures generated these government revenues.

In closing, the city of Kelowna has 71 different cultural facilities, 17 art galleries and dealers, 27 art instruction institutions, 20 performing arts venues, and seven heritage sites and museums.

Arts and culture are important to the residents of Kelowna. A clear example of community support at the Alternator, which is the organization operated by the Okanagan Artists Alternative, can be seen through total in-kind contributions of time donated by volunteers. In 2008, using B.C. Gaming's in-kind contribution schedule, we calculated that this amounted to over $22,903.

The economic benefits of investing in the arts and cultural sector have been studied and reported, and these findings are clear. Investing in arts and culture creates jobs and produces significant economic benefits.

[1625]

Based on the clear community and economic benefits of the arts and culture in our province, and on behalf of the Okanagan Artists Alternative Association, I respectfully request that the Finance Committee recommend the immediate restoration of 100 percent of gaming money to arts and culture organizations.

In addition, I ask that this committee also recommend that future funding to the B.C. Arts Council be maintained at 2008-2009 levels for the upcoming fiscal year.

J. Les (Chair): Thank you, Jennifer. I have a question from Norm.

N. Letnick: Thank you, Jennifer. I had the pleasure of sitting on the Kelowna Art Gallery board not too long ago, and my wife is now a new artist, so we're right there and big supporters of the arts.

My question to you has to do with the future. We've seen this city and this area change quite a bit over the last 20 years — things like the Wearable Art Gala, for example, this past year, which I attended. I don't think we would have seen that ten years ago — right? You know exactly what I'm talking about.

The cultural district downtown attracts a lot of people, a lot of tourists, to the area. So from an economic perspective, if you take the economic and the advent of UBC Okanagan and that into our culture…. If the funds are restored, as you asked for, if we recommend that and the minister and the government decide to do that, can you talk about where you see Kelowna and the area going five, ten years from here? We've come a long way over the last ten to 20 years. Where is the future?

J. Pickering: I actually grew up in Vernon. I did my studies at UBC in Vancouver and came back to Kelowna because of the job that was here. This is definitely one of the things that investing in arts and culture is going to do. It's going to keep young people in our communities. We
[ Page 250 ]
need vibrant culture to inspire people to want to live in places like Kelowna that are beautiful but don't always offer all the amenities of larger centres.

It's been really exciting, actually, seeing the growth in the cultural area in Kelowna in the past three years that I've been working here. I think that within five to ten years, if there is a real investment in arts and culture, it's just going to grow. It's going to be really exciting.

There are so many amazing artists and thinkers and just really inspired people who keep flocking to the arts and culture organizations when they move to town to work at places like UBC Okanagan. I've had so many people tell me that having these organizations is really important for them living in the community. It gives them something to do. It provides intellectual stimulation.

I really think it's exciting — where it's going to go. I think it can grow a lot, and I think the benefits of a small…. I mean, it's ¹⁄₂₀ of the budget. It's a really small investment, but the benefits are huge.

We have worked very hard in arts and culture to provide studies that can show how these can be measured. I think that outside of the economic benefits and those things that can be measured — like the woman before me was saying — there are so many things that cannot be measured, as well, in terms of our quality of life for people that live in the community.

J. Les (Chair): Thank you very much. That takes us right to the end of your allotted time. We appreciate you coming today.

The next scheduled presenters are from Tourism Kelowna. I don't believe they're here yet. But the person after that, Neil Cadger, I understand is here.

Are you ready to go? Okay.

N. Cadger: I have with me a written submission from Ballet Kelowna, which I will give to you. It's basically a case study, I guess you could put it — one example of how a company in this town, an arts or a cultural organization, is being affected by these cuts and, certainly, the cuts that are promised.

[1630]

That's a description of their situation. There are many of those. I think you've heard many of them. I've been looking through the documents and the recordings on line to see who's talked about what, and you've had a lot of people talk to you about how this is going to detrimentally affect their organization.

I'm not going to go into that particular example, because it's very much like all the others. They're going to lose people. Their ability to do what they do is going to be seriously undermined. They probably won't be able to do all the wonderful tours that they have been able to do recently, getting to all the different corners of the province coming from Kelowna, which is quite exceptional. There's nothing else that tours culturally out of Kelowna in the same way that Ballet Kelowna does. They have a very expansive contact. They bring a high art into the small corners of the province.

What I would like to talk about…. I teach at UBC Okanagan. I teach in creative studies, and I teach performance, theatre, acting — the creation of live art. So they touch me very, very closely — the promised cuts. So I thought: "Okay. Well, what am I going to talk about? Am I going to talk about the $1.36 return for every dollar?" I think those are…. You have that material. You have those statistics. That doesn't seem to make any difference. The cuts are still coming despite the clear indication that financially these investments are good — just financially.

So I thought: "Okay. I have to somehow try and sort out in my mind what it means to cut culture and the arts, cut support to those." I thought: "Well, what do we mean by culture?" I think that it's a word that's used quite liberally. It's frequently used to refer to the arts as well as to refer to other things — a cultural moment, cultural events. Sometimes they are arts, and sometimes they are not.

I thought: "Okay. I'll look up 'culture.' What does the word mean?" I looked it up in Wikipedia, which is, I'm sure, familiar to all of you. Culture has three basic senses: "Excellence of taste in the fine arts and humanities, also known as high culture" — I don't like that idea, but there you go; "an integrated pattern of human knowledge, belief and behaviour that depends upon the capacity for symbolic thought and social learning; the set of shared attitudes, values, goals and practices that characterize an institution, organization or group." That's the one that particularly interests me, and when we talk about culture, what are we referring to?

I will now read you a bit of what I've written here. Culture is how we behave — the behaviour that we have in common. We are distinguished from other cultures by our traditions, our predominant behaviour patterns. We are characterized by our culture. If this is true, then our culture is truly integral to our identity as a group. We only know who we are by what we do and what we permit in public.

A defining element in cultural identity could be very simply put: what do we allow in public? How do we spend our time when we are together, and what kind of behaviour is this? This is an important indicator.

In our local culture, the interior of B.C., we congregate for sports events, church services, concerts, dance, theatre and art exhibitions. There are certain behaviour patterns that are expected. We know the rules of engagement, even if they are very permissive in some ways. But if these public civil gatherings define who we are, they must be extremely important. Built into these gatherings are all the characteristics of socially acceptable behaviour — how we speak to each other, how we move with each other, touch each other. These are all culturally specific.
[ Page 251 ]

I'm sure this isn't a huge revelation to anybody, but I think it bears looking at. What kind of culture do we want to live in? We can choose to stimulate different parts of our culture by investing public money in the provision of opportunities for cultivated behaviour.

An example. I teach at UBC. I told you that already. Over the past couple of years the university has invested enormous amounts of money in the creation of very accommodating, really nice student residences. They're promising to have 2,300 students living on campus by next year.

[1635]

While the vision and mission statements of the university…. I'm sure you're familiar with those bizarre creatures that we do — those statements. They're eloquent about the campus as a community. In reality, there's a dangerous hole in the cultural fabric. There is virtually nowhere for students to gather in large groups. There's nothing to do, and there's nowhere to go in the evening.

I'm also a member of the university senate. I chair the committee for academic misconduct and discipline. The number of incidents relating to drunkenness and violence on campus that come before this committee is increasing in frequency and severity. We just had recently a really, really ugly incident of people smashing each other over the head with bottles and hitting each other with hockey sticks. This was part of what goes on in the evening on campus.

If we don't create the opportunity or support the opportunity for civilized, cultured behaviour to occur on campus, it won't. If we cut the funding that supports the culture we call ours, another culture will inevitably take its place. We've seen what happens when cultures are destroyed. It isn't pretty. If we don't practise our culture together, we lose it.

Here's where art comes in. Art is practising culture, the repetition of reflective behaviour. It's an expression of and a reflection on who we are. When we get together, we look at ourselves. Artists hold a mirror up to society. It's an old phrase. As Marshall McLuhan put it, artists are early warning radar systems. They show us where we are, and they show us where they think we might be going. Think of Margaret Atwood.

The behaviour we demonstrate while experiencing art is one of reflection. That's the behaviour. It's questioning; it's skeptical — the consideration of different points of view. This rarely goes together with violence — rarely. Sometimes it does. People have been known to fight about art, but it's usually yelling things at each other and, you know, throwing — I don't know — bananas or something.

So cutting public money to the arts will achieve two things. Artists will be unemployed, and the public will have fewer and fewer opportunities to participate in public events. Prices for events will increase, inevitably, and the poor will get poorer in financial as well as cultural terms. And when the poor get poorer in cultural terms, we get poorer in cultural terms.

We meet these people on the bus. I take the bus to Vancouver — I don't fly — and let me tell you. There's not a lot of culture going on there. It's pretty disturbing. You listen to the conversations behind you, and you think: "My God, where did these people come from? What are they doing? How did it happen?"

We try to avoid that. We take our cars if we can. But if you're forced to be with the people who do not have money, it's not always a lot of fun.

Yes, the rich may remain unscathed by the cuts to culture and the arts in the short term. They can fly to New York or Paris for cultural stimulation of the high-art kind, but they will still unavoidably come in contact with the surrounding culture, the culture they live in.

If we look at the culture we live in a little further, there is already an obvious move toward the isolation of the individual. We have no need to leave our homes to communicate with others. We have a great variety of media to communicate virtually rather than actually.

This phenomenon, added to the preferred mode of transportation of single-occupant vehicle, brings us to the possible conclusion — this may sound really flippant, but I don't mean it that way — that what we currently have is a car-and-phone culture.

We're amazingly good at driving and communicating through machines. This behaviour is a cultural choice. We fund this.

When Minister Krueger suggested that gaming money should be funding food for underprivileged schoolchildren, he was being seriously disingenuous and inflammatory. But in car culture, this polarity actually works.

We couldn't possibly cut money from the expansion and maintenance of roads. Look out here. We've got an HOV lane on both sides of this road, which is really ridiculous. I mean, nobody understands how to use it, and it can't be monitored, but it's a lot of road that has gone in there. We couldn't possibly cut that stuff. We couldn't do that. That's our identity. We are car people.

We know how to relate to each other very clearly. We know who has the right-of-way. Keeping the economy moving by spreading tar, a serious environmental toxin — they calculate that storm runoff into Puget Sound is equivalent to one Exxon Valdez every two years — is in fact supporting one form of culture: car culture. This is a choice.

The current government is making a choice about which culture to support and which culture is expendable. The culture that is expendable — dance, theatre, literature, visual arts — is the one that, even though it actually proves to be financially profitable, is still considered a soft target because it can be collected together as part of consumer choices for entertainment.

Art is, unfortunately, not just entertainment. We do hope it's entertaining, but it is not just entertainment in
[ Page 252 ]
the sense that it diverts us, for a while, from the nature of our lives. That's what I would say entertainment does. It's diversionary. It takes us away.

[1640]

Quite the contrary, art directs us to examine how we live and why. It makes us question what we are willing to accept in public. It defines who we are. It's a personal choice, but it is not a diversion.

Art can, however, be an object and a commodity, but culture is not. It is never a commodity. There is much that we can choose to do or not to do individually — there's almost nothing we can't see privately on the Internet — but culture begins with what we do together.

If we all stay in the privacy of our own homes and cars, our culture will lose the ability to be together. I'm already seeing this at that school. I teach devised performance — creation of performances. Trying to get people to work together in groups is getting extremely difficult. They're not used to it.

They get marked as individuals. They spend most of the time in front of a screen of some kind, so they don't know any longer how to relate to each other, to be creative together.

Our high school dances, for example, have disappeared in most schools. Social dances are vanishing. We don't know how to move with each other. We watch them on TV. We don't sing together much, if at all — sometimes in church. We do a number of things at the same time but not in the same place. We watch other people doing things elsewhere in the privacy of our own homes.

The arts question this behaviour. The live arts bring us together to reflect on ourselves. This reflection, this ability to be together and consider ourselves as a group, is what art does. It trains us to share, to respect each other and to value the group. It's not for individual profit.

If these cuts are realized, our culture will be moving very suddenly in a much less civilized direction. A little definition I found a couple of days ago about civilization was: what is civilization? Well, there are all sorts of theories and lots of writing about it. An easy one is: hygiene and kindness. I think that covers quite effectively what civilized behaviour is. It's clean, and it's kind. It's considerate.

That's the consideration of others. That civilized behaviour is what we undermine when we cut funding to culture and the arts.

That was my statement.

J. Les (Chair): Thank you.

D. Donaldson (Deputy Chair): Thanks very much. You covered a lot of ground and lots of stimulating thoughts. It was interesting that you covered it, rather than from the economic angle…. You're right. We have heard a number of presentations on the economic angle.

My question…. I'd be more interested in your comments on this: the communal aspect of our culture versus rampant individualism. Just in the newspaper yesterday there was an article about hockey teams in junior hockey travelling on the bus together. They all plug in now. The coach was lamenting that they're not even engaging together on the bus, where teams are built.

The communal experiences that you describe, which the live artistic events provide…. One of the essential skills in the workplace — which is a federal program that's described what essential skills are required for work in the workplace — is the ability to work together. Perhaps you can describe to me if you've seen a decline in that kind of ability amongst your students.

N. Cadger: That's what I was saying about my teaching. I've been teaching the creation of live art, not taking a text from a writer and saying, "Okay, you get this role; I get this role," but creating together — creating the visual, creating everything together, collaborating to create a performance. The ability to do that has gone over the last 20 years — I've been teaching for about 25 years — noticeably, with the iPhone, the iPod. I mean, those are just brand names. But with that kind of technology, you see that people are becoming less and less able to even listen to each other. Their attention span is reduced.

I've done the same exercise for about 15 years of getting students to create, taking a film, and with five or six students do that film. It's a comic exercise — do Ben-Hur in, you know, two minutes with five people. What I've seen happen is the actual attention span has systematically reduced.

They can digest images at one a second, whereas 25 years ago it was like you created something and, "Okay, we can spend some time with that image," and then on to the next one. Now it's like boom, boom, boom, boom, boom, boom, boom. They just get bored immediately. If it's not going boom, boom, boom, there's…. Oh yeah, it's changed.

[1645]

There's a tendency towards that speeding up of information and individual access to information. It's not about group access. It's about individuals. So people don't respond easily to each other. They're uncomfortable.

Working in a group — you all know this; committee work — there's conflict. There's always someone. You think, "Oh God, there they go" — right? Not here — no, no, no. You're the seasoned….

They don't know how to deal with conflict. Also, at university they're being marked individually — right? "So why do I have to deal with this other person? I have a good idea. It's my idea." "No, no, no. You got that idea from somebody else."

J. Les (Chair): Okay. I've got time for one more question, Neil.

J. Rustad: Thank you for your presentation. One of the challenges we face as politicians is that less people
[ Page 253 ]
are engaged in the political process. Your comment around people being less engaged, people becoming more isolated….

Coming from the educational background before going into this and being a school trustee, we're seeing in classes much more disruptive types of behaviour, less social skills and abilities. That's a trend that has gone through our society. I remember seeing an article quite recently — a picture of four young girls, teenagers, standing together in a group, all of them texting.

N. Cadger: I have a 17-year-old daughter. It's all the time. Dinner table is like….

J. Rustad: That's the way they communicate today, as opposed to…. The question I have is…. I don't want to diminish what you came to say with regards to the importance of arts, because I agree with you on that. But have you run across any research around that isolation, around the causes of that in our society that are creating those underlying trends — any kind of research and analysis on that?

N. Cadger: There are so many variables involved in that. I mean, I don't think I could say that I have a piece of research which supports precisely what you're saying. It's no doubt out there. Those studies will be out there. This is personal observation. I've seen this happen. I don't have a document that's proving what I said.

J. Rustad: No, sorry. I wasn't trying to bring into question what you're suggesting. Just for interest's…. Thank you.

J. Les (Chair): Okay. I think with that, I want to thank you, Neil, on behalf of the committee, for coming today. A very interesting little…. I'm not sure whether it was economic or psychological in nature or what it was.

N. Cadger: Cultural.

J. Les (Chair): Cultural. Mass psychology and all those things.

The next presenters are from Tourism Kelowna — Nancy Cameron, Bill Eager.

Before we carry on, I should introduce Steve Thomson, who arrived just about ten minutes ago.

Good afternoon, Steve. Keep one thing in mind: no heckling back there.

B. Eager: Good afternoon, ladies and gentlemen. Thank you for your attention today. My name is Bill Eager. I am the president and board chair of Tourism Kelowna. Seated next to me is Nancy Cameron. She is the CEO and manages day-to-day operations for Tourism Kelowna. Tourism Kelowna is a destination marketing organization that is duly incorporated as a non-profit society.

I want to talk to you today about the importance of tourism to Kelowna, both economically and otherwise, but mostly drilling down into the importance of the 2 percent additional hotel room tax that we currently collect and that flows through to us to fund our tourism marketing efforts.

First of all, with respect to the importance of tourism to Kelowna on an economic level — and this is based on an economic impact study we conducted in 2006 — $346 million are annually spent by visitors coming to the Kelowna area. It equates to 5,100 full-time-equivalent jobs, and that makes tourism the second-largest employer in the Central Okanagan, next to health care. This results in about a $320 million GDP annually. That gives you the economic broad strokes.

Just a little something about Tourism Kelowna. Our key result areas, as a destination marketing organization, are: destination marketing, visitor services development and destination management and advocacy. That is a role that we play here as the destination marketing organization.

[1650]

As far as our funding goes, 60 percent, currently, of our funds come from the additional hotel room tax, which equates to approximately $1.3 million. The city of Kelowna is also a partner, to the tune of about $360,000 a year.

The additional hotel room tax funds allow us to leverage our revenues with grants and co-op advertising. Because of that funding, we can leverage our advertising, our co-op advertising, and also apply for federal and provincial grants, which we have done in the past.

Our total operating budget is about $2.2 million to $2.3 million per year. The funds allow us to take a strategic approach to building tourism businesses for the Central Okanagan, including Kelowna, West Kelowna, Lake Country and associated tourism market areas.

As far as a representation breakdown of businesses…. Anecdotally, most of you probably know that tourism is an important and defining industry for B.C. and, in particular, for Kelowna. We were known as peaches and beaches in the earlier days, which I'm sure we've all experienced, but tourism now is evolving into something much greater for Kelowna.

There are many international-class products being offered here, particularly in the wine and golf industry. We have 262 voting stakeholder businesses within the market area that are members of the Tourism Kelowna DMO. We have 110 accommodators, 22 restaurants, 75 attractions and activities, 21 groups in arts and entertainment, 16 golf courses and 18 wineries and breweries.

Tourism is part of our DNA here in Kelowna. It's embedded. There's just no escaping it.

Our governance model for the DMO. We have an elected board of directors from the tourism industry —
[ Page 254 ]
15 is the number of board directors — and the hotels here hold seven of 15 seats, therefore giving them the potential of a double-majority voting process for approval of our marketing plan.

This helps us ensure that the hotels support the direction that we're going, because our main goal is to get heads in beds, which generate business for all the other activities and attractions here.

We report to the municipality annually and submit a required report to the province annually. Our organization is fully audited on an annual basis, and most notably, we are regarded by other destination marketing organizations as a model of best practices for both governance and accountability.

I'm going to ask Nancy to talk a little bit about the accountability here.

N. Cameron: We're funded through various government streams — consumer-collected taxes — so we're very conscious of accountability, not only to the government arm but also to our stakeholders and those businesses that provide us with partnered marketing and that we represent and work on behalf of.

Our whole goal with those businesses is to make them more profitable, make the tourism environment in Kelowna more successful and more vibrant, which invites further economic development and investment. So the core to our accountability is to our stakeholder businesses. We have to drive results to them, as well as to our funding arms, most of which is from a government angle.

We have annual sales and marketing plans, and we set some aggressive targets and performance metrics, within that plan, that are monitored monthly. We have many targets. Every staff has some accountability targets, and they're measured against those targets.

We analyze our organization's performance against the best practices and operational benchmarks that have been devised by an organization. It's called Destination Marketing Association International. It's an association of a number of DMOs worldwide, mainly in the U.S. but expanding into Europe now. There are about 3,000 members of this organization. They do extensive research annually to develop benchmarking and some standards.

[1655]

Operationally, a percentage of our expenses is personnel. Percentages are administrative, and percentages go to marketing. So we're always trying to maximize that marketing component.

We have a continual measurement system for any of the advertising that we employ, so we're always looking at the advertising we do to see what kind of resonance it has in the marketplace, what kind of results it's generating for those businesses. We track that. Our ultimate tracking is the number of referrals, through our website, that those businesses get, so we know that we're doing a job for them. We're sending inquiries and potential travellers to them, based on the flow-through from our website to theirs — or to their phone.

We've consistently ranked in the top referral websites with many of our stakeholders, so we're very proud of that. We monitor that, as well, to make sure that that action is taking place. That's really the bottom line of our results. We have all sorts of other metrics and numbers, but that really is what determines whether we're working well on behalf of our businesses.

We also have a commercial accommodation study, which is a monthly collection of data from over 80 percent of our room base here in Kelowna. It provides us with industry statistics that, again, we use to analyze our tactics against and understand the trends, so our decisions in our marketing are very research-based.

Another one of our proud moments, I would say, was when we renewed our additional hotel room tax agreement last year with our stakeholders. We received 100 percent support from the hotels. There were two hotels that we didn't hear from, but other than that, we received 100 percent support from all of our hotels to renew that agreement. We took that as a terrific sign of their support.

We do have a very supportive group here — of the hotels but also of our other stakeholders, our other businesses. So that was a great day — whenever we were able to ratify again for another five years.

We like the accountability of that sunset clause in the legislation. We need to always have our toes held to the fire, and we embrace that concept. That is one component of that legislation that we are thoroughly supportive of, and we believe that check and balance needs to be in the system.

As Tourism Kelowna, we feel that we are critical to the tourism industry here in Kelowna. Our geographic area that we represent really is the Central Okanagan. That's where our stakeholder base is located.

The role of Tourism Kelowna really is to communicate the brand of the city. Every community has a brand and has an identity that they want to communicate, and they will communicate it all ways. Whatever systems are set up, those communities, as we all know, have great pride in themselves, and they will expand that communication about their community.

That's really the DMO's job, to communicate that brand. But we communicate it in a way that makes it consumable for tourists. We always focus on generating demand for the experiences that our community has to offer that are tourism-related.

Making that brand consumable — taking the brand, making it apply and generating that intrigue with tourists about the experiences they can undertake here in this area — is our key goal.

We increase visitors and therefore, again, that local business profitability. We also lead tourism growth. Our
[ Page 255 ]
tourism businesses are usually SMEs, so they're very focused on their day-to-day operations. It's our job to look at new market development, so we're out ahead.

We're developing new markets and advancing the tourism product throughout new areas, geographic or based on specific interests. That's one job that those individual businesses can't do. They don't have the time to do that, so that's another critical role of destination marketing organizations and one that Tourism Kelowna takes an active role in. It's always that generating of the new markets and new customers over time, trying to ensure that our tourism economy is sustainable.

We connect, also, to the grass roots. We connect our local businesses up through the various layers of the tourism system, and that's another action that we do to try and leverage their exposure and make sure that those businesses, at whatever point the consumer comes into the system, can be found.

[1700]

B. Eager: With respect specifically to the HRT, the tax, it ensures that communities are performance-based, and the better the marketing we do, the more tax revenue we receive to increase our marketing efforts.

We've seen our revenue grow, on the tax level, by 26 percent in the four years between '05 and '08, when we implemented this tax — which means, conversely, that the revenues of the various properties have all increased proportionally. It allows for further market development and growing our consumer base.

I think the other important thing from an economic spinoff is that there is a shadow-market effect, a shadow economy that shows up as a result. Many people who arrive in Kelowna for the very first time as a visitor or a tourist end up buying real estate or starting businesses here. Really, it's one of the few businesses that has such a huge potential for economic output and for sustaining the economy here in Kelowna.

It's completely accountable. It's transparent. I believe, again, that we've established some best practices for keeping the accountability.

Our growth potential. With the runway extension and our ability to get European flights non-stop here into Kelowna, it's allowing us to aggressively market into Toronto, and it allows for stakeholders here to continue to grow in diversity, particularly in the wine experiences but certainly in the golf industry, as well, with the addition of new courses. Although summer is generally a solid market for us, more hotels are being built to accommodate the growth in demand.

With that, what we're basically saying to you is that we believe this tax is a very, very useful mechanism here at the grass-roots level, at the municipal level, for us to go and increase our tourism marketing and, therefore, sustain our economy here with something that's very specific to our D and A. It's an important and defining industry for Kelowna. We've appreciated the support so far with this tax and hope to see it continue in some fashion.

J. Les (Chair): Great, thank you very much. I have two quick questions, one from Norm and then Bruce.

N. Letnick: Thank you, Nancy and Bill, for coming. We usually don't have two tables and this distance separating us when we talk.

We've been roaming the province, and one of the things that has come up is the Olympics and what benefit the Olympics will have for towns, cities, areas outside of the Lower Mainland and Whistler. Could you talk a little bit about the benefits of the Olympics to the people you represent?

N. Cameron: Well, the Olympics, as we all know, is the greatest event that we'll ever hold. The media attention that goes with the Olympics is what we really see as the tourism benefit.

Having Kelowna recognized as part of British Columbia is our goal. Making sure that the imagery and the brand of Kelowna is extended out through that media in some way in little bits, wherever we can, is what will allow us to become…. I often use the saying that many people outside of British Columbia think of British Columbia as orcas and coastal mountains, and this area, the Okanagan Valley, is quite a surprise to them when they see it. It doesn't resonate with the traditional brand of British Columbia in their minds. So it's a shock.

That's what we want to achieve with this media. We want to say: "Look at the breadth of British Columbia. Look at this great area that we have." I would have no idea that this was actually in British Columbia, that there were vineyards in British Columbia. So it appeals to more people.

Our goal is to totally become part of British Columbia, to have that traditional brand of British Columbia expanded so that more people are interested in coming to us for more reasons, so that we all benefit. So we do see that media is the critical component of the opportunity for tourism.

B. Ralston: Thanks very much, and I appreciate the explanation.

I'm wondering if you could just help me with the room tax, because one of the things the Minister of Finance has said is that if and when the HST comes in, the tax rate will be 12 percent, and that will be a reduction on hotel rooms, presumably eliminating this tax. Obviously, you've made a very compelling case for the 2 percent and the uses that you'd put it to.

[1705]

I note that in your last explanation in paragraph 6, you say: "We believe that this incremental user-pay tax is the
[ Page 256 ]
appropriate mechanism to generate tourism revenues, and it should be maintained with appropriate accountability measures in place, rather than taken out of HST revenues." I'm wondering if you could explain that and perhaps offer a different point of view than the Minister of Finance.

N. Cameron: We look at it from the consumer perspective. With the implementation of the HST, the tax rate will go down. But the consumer is used to paying an additional tax on their hotel rooms worldwide, so we see that this incremental tax is something that wouldn't be challenged from the consumer perspective. By keeping it in, you have a great revenue source that's consumer-generated, that's very accountable and that can flow to the communities to continue the destination marketing that they do, rather than having the community DMOs funded out of the HST.

I realize that there are other organizations, Tourism British Columbia being one of them, that would probably be funded in that way. But because it's an incremental tax already, the consumer is not going to notice a difference in that fee. I think if we can keep the mechanism to collect that tax, it's a great generator for revenue for tourism.

B. Ralston: Just to clarify, then. Your preference is that rather than funding your organization out of the 12 percent proposed HST, if and when it comes into effect, you'd rather have it funded out of a 2 percent supplemental tax that you talk about here, the room tax. Is that right?

N. Cameron: We'd like to be funded, I guess — period.

B. Ralston: Well, wouldn't we all.

N. Cameron: However, when we look at this from a tourism perspective, we do see that it would perhaps be a lost opportunity to fund the community DMOs outside of the 2 percent tax, by the HST. It is already something in place that is still very pertinent and wouldn't be missed.

J. Les (Chair): Okay, thank you both very much. We appreciate your presentation this afternoon.

Our next presenter is from the B.C. School Trustees Association, Connie Denesiuk.

C. Denesiuk: I'd like to thank members of the committee for giving me the opportunity to come and speak to you today.

I'm heartened by the group, because we have three former trustees amongst those of you at the table. There are also proud parents, grandparents and educators and those who have sought fairly high levels of education themselves. So I'm heartened by the group. I know that there is obviously amongst you a strong sense of the importance of public education in British Columbia.

I'm representing B.C. School Trustees Association as the president. We represent all 60 boards of education in the province. It's a membership-driven organization, and it's a voluntary membership organization. We do have all 60 boards belonging to us at this point.

There were a number of boards that also wanted to make submissions to you as you move around the province. Of course, it's a popular gig, and they didn't all get an opportunity to come before you. I'm expressing some things on behalf of the entire province, of course, and those boards. The message that I'm going to give to you today really has come from the membership and the 60 boards from all around the province.

I think BCSTA trustees are not alone in the belief that B.C.'s future is built in B.C.'s public schools. The provincial government goals for health care, environment and labour market can only be achieved if they're supported by well-educated, literate, productive citizens. All citizens, not just parents of today's students, have an important stake in B.C.'s public education system — certainly our doctors, our bridge-builders, our plumbers, our caregivers. The students that are in public schools today — we all rely on them, or we all will rely on them in the future.

[1710]

As a matter of fact, 86 percent of the public in B.C. believe that investment in public education should be the key part of an economic stimulus plan. There can be no better investment than in the resources needed to educate our children and to support our educational infrastructure. A focus on education is really a focus on the future. I don't think any dollars invested anywhere will produce greater dividends than investing in public education.

We do currently have a very good, strong public education system. The Programme for International Student Assessment, PISA, is widely stated and widely recognized around the world as a very highly reputable measure. B.C.'s students perform very well. We're usually within the top three or top five. Certainly, within Canada we're also amongst the top. So we know that we have a very good education system in B.C.

We also know that the mandate of public education has expanded to include community literacy and early learning. Boards of education have taken that responsibility on willingly. We've welcomed the expanded mandate because it seems to make sense to us. But it does add significant responsibility to our staff as we work to implement our district literacy plans and celebrate with the new StrongStart centres that we're seeing around the province.

They are positive. If you haven't had a chance to visit one, I'd recommend that you do so. Great things are hap-
[ Page 257 ]
pening inside those StrongStart centres. But it certainly does take staff time to not only implement the programs, but also, certainly at the school level, there's administrative time that's required as well.

There's also an increasing complexity and diversity in our communities and students, and that's a good thing. In B.C. that's just the way it is, and it's a good thing. But along with that, we look at significant challenges.

We have refugee students in some of our districts in the province who may be 16 years old, and they've never been to school before. You can imagine the level of support that they need as they learn things as simple as how to behave in a classroom.

Also, boards of education need more resources to improve outcomes for our aboriginal learners. We know we've made some gains with our aboriginal education success, but we know we still have a long way to go. Resources are certainly required to take that further.

Although the provincial education budget has risen, cost increases continue to outstrip the modest funding increases. Boards face increasing costs for technology, which of course simplifies and complicates at the same time. And for staffing, wages and benefits are increasing. Maintenance costs, fuel and transportation costs also continue to climb.

Boards need predictable, secure funding in order to adequately plan. Boards of education go through processes to engage their communities in budget planning every spring. This past year and, I think, two years before that, part way through the year there were funding changes that really…. It certainly didn't support funding being taken away.

The community sets priorities with the board, then partway through the year funding is taken away, and it puts the boards in difficult positions because they've already consulted with their communities. Then there is no time to go back to the community on short notice. Boards need predictable and secure funding, as I said.

Also, many boards have aging facilities in need of remediation or replacement. The recent loss of the annual facilities grant has significantly worsened the situation. Boards that were carrying a reserve for, perhaps, a roofing project or a significant heating-ventilation project — those reserves are now gone. So if there is an incident — an emergency roof repair, or a boiler blows in some cases — boards really don't know what they're going to do at this point without those reserves in place.

The percentage of provincial funding spent on K-to-12 education has declined from 19 percent of the provincial spending pie in 2001-2002 to 15 percent in 2008-2009. You might say: "Okay. Well, there's been an enrolment decline, so maybe that's part of the rationale."

[1715]

Well, in fact, the enrolment decline was about 10 percent during that period of time, and the decline in the pie is over 20 percent, 21 percent. So there is significantly less money going into education now than there was just a few short years ago.

Also, one in five children in B.C. lives in poverty. That has a significant impact on their educational and life successes. I think everyone here would love to see the elimination of child poverty. I think we all would agree that that would be beneficial to British Columbia. We know that that's a huge task, but we would suggest that we begin with a plan — a solid plan that makes sense to begin to tackle this issue.

Also, expansion to full-day kindergarten. Boards of education, again, have welcomed this initiative because the full-day kindergarten is a positive move. Certainly, if it's worth doing, we need to do it well. That means to support it well, to support our classrooms, to support the equipment that the kids are going to need. You've got double the students in the schools, double the classrooms that need to be prepared, and obviously, double the staff that need to be ready for that as well.

What we're saying is that the implementation of kindergarten should not come at the expense of the K-to-12 program. As a matter of fact, I was recently at a ministry-sponsored event on full-day kindergarten, and we were told that if full-day kindergarten isn't backed up by very strong grade 1, grade 2, grade 3 programming, then all of the benefits that have been gained by the full-day kindergarten are for nought. So it's very important that we maintain supports for K-to-12 education.

I'm going to move on to some recommendations now, because I want to leave time for questions. How much time do I have left?

J. Les (Chair): Maybe a minute or two. I have three people so far that want to ask you questions.

C. Denesiuk: Okay. I'm going to do this really quickly.

Recommendations. You can read them for yourself. Increase investment in early learning initiatives. Use the EDI, the early development index, to determine where the greatest need is. We should be hitting the most vulnerable kids or seeking to support the most vulnerable kids first. Again, the plan for child poverty.

Increase investment in literacy. Just got a report yesterday, National Strategy for Early Literacy. I'm going to read one quote. "Low literacy…costs Canada billions of dollars annually…. Raising the literacy proficiency of…Canadians…would increase tax revenues by $11 billion a year and save $5 billion a year in unemployment and social assistance payments." That's federal again, but it certainly gives you an idea of the benefits in the long term.

Other recommendations that I wanted to mention. Increase in funding for students with special needs, ESL, aboriginal, immigrant students. Also, provide boards with HST exemption. It makes sense. If municipalities are HST-exempt, boards of education certainly should
[ Page 258 ]
be too. We would hope that you'd recommend that to Finance.

Also, further increase the education block to boards to realistically cover the increased cost in staffing.

Increase capital investments in education, to ensure student safety and appropriate capacity.

Restore AFG. You've heard a lot about the $110 million that has been cut from the AFG. We ask that you restore it. We recommend that that be restored.

Develop a suitable long-term plan for implementation of seismic mitigation. We're chipping away at it, but not quickly enough.

Adequately fund school districts for the costs associated with becoming carbon-neutral.

Those are some of the pieces that I wanted to mention. Those recommendations are all listed. I rushed through them fairly quickly so that we could get to the questions.

J. Les (Chair): Thank you, Connie.

The first question is from Jane.

J. Thornthwaite: Hi, Connie. Thank you very much for coming and giving your presentation. As you know, I'm one of the past school trustees. I've asked several school board presenters similar questions.

Just be assured that you know that all submissions will be considered equally by the Finance Committee — whether or not it's by e-mail, video conference or anything. It doesn't matter. So not to worry if all the school boards didn't get here. Also, just to reassure you and the rest of the members, if there is a safety or an emergency situation that comes about because of the maintenance that was deferred, I've been told by the Minister of Education that that will be dealt with, with individual boards. So not to worry about that either.

[1720]

The question I wanted to ask, which is what I've been asking other boards, is: if you were to be consulted on the funding formulas, when would you like to be consulted on that with regards to the year, as well as any kind of notice with regards to the annual facilities grant? What recommendations would you have with regards to funding formula changes, and what is the best time of year to be consulted with regards to any kind of cuts to the annual facility grants?

C. Denesiuk: Thank you for that question. I think it's an important one. We're co-governors with the provincial government for education, so I think the earliest possible point for consultation is when those discussions are beginning. That's when we need to begin having the conversations together. If money's tight, we look together, and we say: "How can we make this work? How can we work with boards to mitigate whatever problems might be arising?" But when we're told late in the day, we don't have an opportunity to do that.

I appreciate the question, and I'd say that we would like to be involved as early as possible, and we'll work through the issues together.

J. Thornthwaite: Okay. What about the funding formula question?

C. Denesiuk: The funding formula? Well, I was around as a trustee when we went through the funding formula last time and changed it from a very complex monster, almost, into a very simplified funding formula. The problem is that it's not a simple equation, so it was an oversimplified funding formula. I think the moment that government begins to talk about funding formula, we would like to be involved in those discussions.

D. McRae: I notice one of your recommendations. I believe it was No. 6.

I'm a high school teacher as well. At least I was until last June. I'm sure I will return to the classroom at one stage.

It says here: "Increase the ability for boards of education to attract and retain top-quality teachers and leaders." I know that within the existing collective bargaining agreement there are some limitations. What kind of ideas would you have, to be able to attract and retain? I'm sure it's hugely difficult, especially in small rural districts.

C. Denesiuk: It's very difficult, and in small rural districts they're developing programs to try to sort of rush people through. They have a really difficult time, even, attracting teachers on call, to say nothing of the senior staff. We know that the majority of our superintendents have rotated in the last five years, and it's difficult to find people who are willing to step forward.

It's a challenging time in education. I think well-supported staff, well-supported…. You know, at all levels, knowing that they can do their jobs and do them well because they're well supported — that's a huge piece of the retaining. Then there are the individual rural boards that have some significant challenges, and we need to be flexible to be able to meet their needs as well.

D. Donaldson (Deputy Chair): Thanks, Connie, for speaking on behalf of so many trustees around the province. We heard from a trustee earlier today, and one of the points she was making was the mixed messages coming from the Ministry of Education.

An example she gave was the announcement of all-day kindergarten, which, she says, in her district would be $2.5 million. At the same time, costs are outstripping the ability to provide the education that we have currently.

I have a question along those lines as well. The government has declared climate action important, and
[ Page 259 ]
part of that is, as you've covered here, carbon neutrality in school district buildings. With the annual facilities grants being cut, and other capital expenditure cuts, what have you heard back from school districts and their ability to meet the carbon neutrality goals, which are less than a year away now?

C. Denesiuk: Right. In 2010 boards of education are supposed to be carbon-neutral. So with the annual facilities grant of this past year, boards of education were intending, in many cases, to replace windows, look at insulation, roofing, heating ventilation, light fixtures. There were a number of initiatives that boards of education had planned, because this is fairly new. It's not like they had ten years of AFGs to work through this.

This is a fairly short time frame. The carbon neutrality has only been, I think, two years. So this is the first chance they've got, really, to do it. Many boards had planned to use those AFG funds for initiatives that would reduce their carbon footprint. So 2010 comes, and they are not going to be able to, perhaps, meet those targets and maybe even have to pay penalties, which doesn't make a lot of sense.

[1725]

J. Les (Chair): Thank you, Connie, for your presentation.

Our next presenter is John Byland.

J. Byland: Bylands Nurseries is a diversified horticultural business started by the late Adrian Byland. It started in 1954. It has grown into one of Canada's largest nurseries, supplying plants throughout western Canada and the western United States.

Bylands Nurseries Ltd. is a leader in environmental initiatives. These forward-thinking practices were recognized when Bylands Nurseries was awarded the first-ever Environmental Stewardship Award given by the B.C. Landscape and Nursery Association.

Today Bylands remains a family-owned company with John Byland as president and Maria Byland as president of Bylands Garden Centre Ltd., an affiliated company that sells the plants we grow to the general public. Since graduating from business school, Michael Byland is a third generation of family members to work in the business.

Our primary competition is from other nurseries in B.C., although the low U.S. dollar is encouraging many of our customers to purchase products from the United States. This will remain a challenge for our business for some time.

Bylands's sales for 2008 were $15 million, of which only $600,000 were generated from U.S. exports, down from a peak of $1 million a few years earlier. Causes of this decline are a strong Canadian dollar and a weak U.S. economy. Our primary markets remain in western Canada, of which Alberta is by far the most important, accounting for over 50 percent in sales.

We employ as many as 150 people, of whom 70 are full-time with full benefits and a pension plan, 20 are seasonal full-time with full benefits, and 60 are seasonal guest workers from Mexico. We deliberately adjust our work schedule to keep our full-time staff employed year-round, even though we compromise some productivity. Because of these workplace practices, our employee turnover is virtually nil.

The seasonal agricultural worker program has been essential for our business, and we would not have been able to expand without it, as local workers willing to do manual agricultural work were not, and are not, available. Even though the cost of these employees works out to over $14 per hour, these workers are very productive, and the employment of our 70 full-time and 20 seasonal full-time employees is dependent on these workers.

We purchase many products and services from the local economy and annually spend $6 million in the province of B.C. Unfortunately, many products we use are only available in the United States.

We operate on over 400 acres of land in the Fraser Valley and in the Okanagan Valley and continue to invest in our business, which is something we were very reluctant to do in the 1990s under the previous government. In 2009, under very difficult economic conditions, we still invested over $1 million in capital expenditures.

My reason for presenting to this committee today is to talk about the positive business environment that has been created by the current government and to discuss the benefits that we have realized through changes of the tax regime in B.C. I will also present some thoughts on important issues that the government should focus on.

It is well known in today's world that capital knows no boundaries and will flow to areas where favourable conditions exist. I often think of the late 1990s, where we saw several prominent B.C. businesses move their head offices to Alberta. These companies included some of Jim Pattison's divisions and Ritchie Bros. Auctioneers. With their departure, our province lost these tax dollars — dollars that could have been used to fund hospitals and build schools.

Under the leadership of the Campbell government, provincial tax rates are now competitive with Alberta, which should prevent the loss of these businesses to our neighbouring province in the future.

The harmonization of the GST and PST is very positive for our business, our industry, agriculture as a whole and the entire manufacturing sector, which is in need of as much help as it can get these days, due to the strong Canadian dollar and weak U.S. economy. Not only is it simpler and easier for businesses to collect and remit this tax, but it will save millions of dollars in collection costs for our provincial government.
[ Page 260 ]

The HST is a true consumption tax, so a person spending $100,000 a year on goods and services contributes $10,800 more per year than a person spending $10,000 on goods and services. This harmonized tax has many potential benefits for both our retail and wholesale businesses and will save us over $30,000 a year in provincial sales tax. It also eliminates PST audits and the never-ending process of trying to determine if a purchase was PST-exempt. This was an issue that many agricultural operations faced.

There are several other areas that I would like to mention, as they all have significant impact on all business and some are very specific to agriculture.

First of all, our province has a large area with a modest population, and the ability to move goods and services throughout B.C. is important to business. I'm extremely happy to see the improvements to roads and bridges, which have already helped our company immensely. I'm also pleased to see the investment in hospitals and schools, which has been very positive for our area. These investments must continue in the future.

[1730]

Although we are very fortunate that as a company our WCB rates have been declining, I believe that this organization is not meeting the needs of both businesses and workers and requires significant reform. Its function is to be a workplace insurer, and I do not believe that we are getting full value for our premiums. It needs to apply the same rigour to its business model as other businesses do.

While I am not an expert on health care, spending in this area continues to increase at a non-sustainable rate. While none of us want a U.S.-based system, we need to look at the best practices throughout the world and bring these to our province to try to improve the quality of health care while keeping costs in line. We may need to look at things like user fees, increased premiums and allowing people to pay for procedures rather than taking these dollars out of the country.

Improved health care cannot occur without trained professionals, and the B.C. Liberals have done a superb job of increasing the capacity of our medical system.

I also feel that the small business deduction tax threshold, which will be increased to $500,000, is still too low and needs to be increased over time. My suggestion is $100,000 per year, to a maximum of $1 million.

There are other areas of significant concern to our business and other agricultural operations. First of all, access to affordable water for agriculture needs to be enshrined in provincial legislation. In many areas the needs of domestic water due to regulation imposed by health districts could make water less available and less affordable. The government needs to look carefully at water quality standards and apply common sense to situations where water quality is very good and the risk to the public minimal.

Many water districts will have to spend tens of millions of public dollars to improve water quality very slightly, and this does not represent a good use of limited financial resources. The government must also take action to implement regulations to protect our watersheds, which is the most important way to protect water quality.

The legislation governing the ALR is also in need of reform. While no one can question the importance of protecting agricultural lands, in many cases the properties within the ALR are of limited capacity or within boundaries that were not well-thought-out to begin with.

Much agricultural land is underutilized because there are not enough people that are willing to undertake the hard work that it takes to farm it. In many cases parcels are too small to farm economically or are held by landowners that have no interest in operating them as a farm but only operate on a scale large enough to gain tax exemptions. We need to strengthen the means test as to what is a farm. Laws that were passed over 30 years ago regarding the ALR are dated and need thoughtful review.

In closing, government needs to continue to improve the environment in which business operates so that they will have the confidence to invest and create wealth. With this wealth, more taxes will be paid and more jobs created.

There is a Japanese saying that states that you can only help those less fortunate if you are strong yourself. Let's keep business in B.C. strong and fight the culture of entitlement that is becoming prevalent in our society.

I applaud the Campbell government's initiatives to reduce red tape and to harmonize regulation with Alberta. While we all need government to provide certain services, overregulation will strangle the entrepreneurial spirit that we need to build a thriving economy.

J. Les (Chair): Thank you very much.

N. Letnick: Thank you very much, John, for your presentation. I just want to ask a question on health care. Health care is somewhere between 40 and 45 percent of our provincial budget spending.

You talk about user fees, increased premiums and allowing people to pay for procedures themselves. Just on the user fees themselves, user fees are contrary to the Canada Health Act.

J. Byland: Yeah, I understand that.

N. Letnick: So are you still proposing that we look at user fees?

J. Byland: Well, I think that long term, Canada as a nation and B.C. as a province have to address these things, because long term, these things are not sustainable.
[ Page 261 ]

I know those things are very uncomfortable because they sort of touch on things that are held very dear to most Canadians' hearts, but I think the health care act in Canada needs to be reformed. I do understand that many of my comments are in contradiction with that particular act.

J. Les (Chair): Any further questions from anyone?

J. Rustad: Thank you, John, for your presentation. I'm just curious with regard to your comments around the ALR and the thresholds for determining what should be considered a farm.

Over the last year I was chair of the Farm Assessment Review Panel. We made…. A bunch of recommendations came forward. One of them that kept coming up again and again in meetings was that we need to look at the ALR. We need to look at the way that has been set up and structured and going forward.

What sort of things would you like to look at in terms of a reform to the ALR?

J. Byland: Well, was your question about the ALR or the farm threshold?

J. Rustad: Sorry. My question is about the ALR, although I'd be happy to hear any comments with regards to the farm thresholds as well.

[1735]

J. Byland: I think the farm threshold is actually too low. I know there are some small producers that probably create some pretty worthwhile agricultural products and only sell a couple of thousand dollars a year of them, but there is also abuse in the system, where people sell cows back and forth just to qualify for the exemptions. I think that type of practice needs to end.

I know that's quite difficult because everybody would argue that the basic premise here is that we protect farmland, and by us having a few cows on this property and selling them back and forth, we're doing that. I'm not sure we really are protecting the farmland by doing that. We're just sort of banking it, and it's not currently being utilized to its full capacity.

ALR reform is a much more difficult thing. Again, I come back to my comments that the regulations were drafted 30 years ago. They have protected farmland in most cases, but they've also created environments where a lot of this land, for varying reasons, isn't being farmed actively. We need, I guess, to make it more advantageous for people to get going in agriculture so that they can actually afford to buy some of these properties, because it's very expensive.

Maybe these small blocks of land need to be grouped together, so instead of having four ten-acre parcels, you have a 40-acre parcel. That type of reform needs to occur to make agriculture more viable.

Little five- and ten-acre parcels in the modern agricultural world. Sure, you can raise crops on them, but they tend to be hobby farms. There aren't a lot of people that are willing to invest their lives in such a small venture. They have to be on a larger scale to make it worthwhile, so they can actually make a living doing it.

J. van Dongen: Thanks for coming in, John, and presenting on behalf of agriculture. A lot of farmers are busy working, so it's very nice that you're here and that you covered a whole range of issues.

Just a quick question. I'm interested in your comments on WorkSafe B.C. What would be the biggest issue you see from an employer perspective — I know you talked about value for money — and also from a worker perspective? What would be the biggest issue from each perspective that you see with WorkSafe?

J. Byland: I was afraid this comment was coming. I was driving over here, and what if they asked me about WorkSafe?

In a lot of ways, the organization, in my opinion, is so broken. It needs a lot of help. It seems to be avoided with every successive government that comes into power. They just don't seem to touch it, and they leave it alone.

I hear stories of…. We're very fortunate. As I mentioned, our premiums are going down, and we've had a lot of practices where…. Really, we have a very good relationship with WorkSafe B.C. I'm not harbouring any grudges, because things have gone well for us.

From a worker's perspective, the processes that they use to get people back into the workplace, I think, are not as effective as they should be. From an employer's standpoint, I really don't think they provide the kind of positive support that a lot of businesses need to improve their practices.

A lot of what they do is quite confrontational in a lot of ways. I think the whole environment in which they operate needs to change. I think that would be a big help.

Like I said, we have a great relationship with them, but I do know a lot of people that are extremely frustrated with them and find them very difficult to deal with. Some of the regulations are not well-thought-out. They're very cumbersome, and they don't necessarily enhance the safety of workers.

J. Les (Chair): Thank you very much, John. We appreciate you coming out.

Our next presenters are from the Kelowna City Band — Tim Watson, Heather Davis and Dennis Leclair.

All right, you've got 12 minutes left. No pressure.

[1740]

D. Leclair: Good evening to the Select Standing Committee on Finance and Government Services. Ladies and
[ Page 262 ]
gentlemen, my name is Dennis Leclair. It is my honour to represent the Kelowna City Band. This is my story of how important the Kelowna City Band has been to me. Imagine the hundreds, if not thousands, of individuals over the band's 115-year history who have also benefited from the musical performances and community services of this volunteer musical group.

The Kelowna City Band and its members are dear to my heart. One year ago I read a newspaper article about the maestra of the Kelowna City Band, Capt. Heather Davis, and how her band was involved in a variety of community events and free public performances, including Rutland May Days; the inauguration of Kelowna city council; musical ceremonial support for the B.C. Dragoons; Barbershop and Brass, Community Theatre; big band extravaganza; Christmas concert in support of the Salvation Army, retirement community performances; July 1 outdoor community concerts; Remembrance Day activities; and, amazingly, the long-awaited opening of the Bennett Bridge.

The variety of the event performances…. Certainly, I was impressed with the level of community involvement and support of important community activities and organizations.

But this alone is not why the Kelowna City Band is important to me. I continued to read the article outlining Maestra Heather Davis's background. I was stunned and shocked at her credentials and experiences — master's degree in music. Capt. Heather Davis, director of music, commanding officer of the Edmonton Royal Canadian Artillery Band, the first and only female in Canadian history to assume a full-time command in the Canadian Forces band branch, one of Canada's top band conductors. Very impressive.

To have access to Heather's skill set and experiences in a volunteer community band — what a unique opportunity for amateur and professional musicians to study and learn from one of Canada's best. But Heather's extraordinary skills, abilities and experiences are not alone why the Kelowna City Band is important to me.

After reading the article, I threw away the newspaper, but the impact and importance of the Kelowna City Band did not leave my mind. Then something very special happened.

[1745]

In November of 2008, I was watching a Global Television program — the faces of our Canadian fallen soldiers being shown one at a time on the screen. This was about the time of our hundredth fallen soldier in Afghanistan. The television program was gut-wrenching, moving me to write a song called To Our Canadian Troops — a song of support and recognition to our Canadian Forces members, their families and our veterans.

I worked with Kelowna's best musicians and a 63-student, elementary-school choir to record the song over the next several weeks. But who would listen to such a song? Obviously, I'm not Bryan Adams and certainly not David Foster. But wait. I remembered the article about the Kelowna City Band.

What transpired next is why the Kelowna City Band is important to me. I called at least 50 people that night to attempt to track down Capt. Heather Davis. It was actually only two. I explained the song to Heather, drove over to her house, played a CD of the song and then watched Capt. Heather Davis work her magic. Two weeks later she had written the band arrangement for To Our Canadian Troops.

I was invited to their practice to hear for the first time our song being played by the Kelowna City Band. It was an extraordinary evening. The band members had the opportunity to bring this piece of music to life — to watch it take shape, to create emotion and tell a story, to make people cry, to think, to reflect upon and consider the sacrifices made by our Canadian Forces members, their families and our veterans.

The song To Our Canadian Troops had been heard, even though I'm not Bryan Adams and not David Foster. The Kelowna City Band had supported me, a community member, a songwriter without an audience for his song. Each member of the Kelowna City Band embraced the song, playing it at public performances throughout Kelowna.

Due to the efforts and dedication of these 50 volunteer musicians, To Our Canadian Troops, our song, will be played for the Prime Minister of Canada, hundreds of dignitaries and invited guests at the True Patriot Love Foundation fundraising dinner in Toronto on November 10.

The Kelowna City Band and Maestra Heather Davis, through their support, have single-handedly afforded Canadians the opportunity for an anthem we will call our own to support and recognize our Canadian Forces members.

Our song and band arrangement now stands an excellent chance of being in schools across Canada to be played by bands and choirs at special occasions, including Remembrance Day, and welcoming our troops home at airports and other venues. The Kelowna City Band and the willingness of Maestra Heather Davis to support a community member have made this possible.

Ladies and gentlemen, that is why the Kelowna City Band is so important. Amateur musicians, after playing music as a hobby or interest in high school, college or university, often never again pick up their instruments because there is no opportunity for the development of musical performance skills under the guidance of experienced mentors and quality conductors. Amateur musicians often feel that they are not good enough to perform publicly. They quit, and the gift of music is dead.

However, the Kelowna community band provides a model of volunteer community involvement, musician-
[ Page 263 ]
ship training and public performance opportunities under the guidance of highly skilled mentors and conductors.

I commend the members of the Kelowna City Band for supporting our city and its citizens and in developing further performance opportunities for volunteer musicians who wish to give back to their community. Reductions in funding to this volunteer band will significantly impact its ability to continue their 115-year history of outstanding community service.

[1750]

Their community service, to me, has been remarkable. On behalf of the Kelowna City Band, I respectfully request that the select standing committee reinstate their B.C. Gaming access grant.

Thank you for your kind attention in allowing me to share this extraordinary story about the Kelowna City Band. I leave you with a short, one-minute chorus of To Our Canadian Troops.

[Music was played.]

[Applause.]

J. Les (Chair): Thank you.

M. Mungall: Dennis, we heard from Victoria community arts groups just last week about David Foster and how he got his start there. So you might be in luck, as it turns out.

My question pertains to your statement around the B.C. Gaming direct access grant. I see here in the written presentation that you were supposed to receive funds by August 31. You got the note on August 28. Now, the direct access — that was the three-year gaming fund. You didn't get that. Is that correct?

T. Watson: We weren't in the three-year program.

M. Mungall: You weren't in the three-year.

T. Watson: It was the one-year.

M. Mungall: It was the one-year. So for how many years have you been receiving that gaming grant? Continuously? Some arts groups have been receiving it for 25 years.

A Voice: No data on that.

T. Watson: No data. I believe five or six years, at least.

M. Mungall: Okay, great. Your request, then, would be that the B.C. Gaming grants be reinstated for arts and community groups.

T. Watson: Yes. Thank you.

J. Les (Chair): Thank you very much for coming this evening. We appreciate your presentation.

Next we will hear from the representative from the Okanagan Symphony — Caroline Miller and Dr. Duncan Innes.

C. Miller: Good afternoon. My name is Caroline Miller. I'm the general manager of the Okanagan Symphony. I'm here with my board chair, Dr. Duncan Innes. We speak directly for our colleagues in the Professional Performing Arts Alliance of Kelowna, for the artists who work in the Okanagan Symphony, and indirectly for thousands of artists and art workers in the province.

As the government builds the next budget, we strongly request that you reconsider the series of recent actions that threaten the viability of the arts and culture sector, which more than earns its support from the government and the community.

The spinoff effect from every dollar the symphony spends in the valley is between $7 and $13 to our economy. We employ 80 artists, two paid staff and 20 contractors each year. We also rent trucks, pay technical help, pay theatre rental to municipalities, and our audience members spend before, during and after each show in each city.

Our annual revenue budget for our fiscal year, just closed, was $860,000. We produce 24 concerts a year in three cities throughout the Okanagan — Vernon, Kelowna and Penticton.

[1755]

The Okanagan Symphony is a special, truly regional orchestral operation that efficiently presents concerts up and down our valley. The OSO is quite unlike any other orchestra in B.C.

The Okanagan Symphony must be specially nurtured for its unique ability to serve the large area that it does. Should we fail, it would be a disaster for a very large and critically important region of the province. The provincial government's own study shows the return on government funding in the arts in the form of tax revenues as $1.36 for every dollar invested. Where else could the government or anyone else get a 36 percent return on investment?

Arts and culture is an industry in British Columbia of 80,000 employees — $5.2 billion a year. For that reason alone, we hope that the members here and the ministers of the cabinet will take a deep breath and realize that it is a mistake to cut funding to the arts. There is no sensible economic reason to disable an industry which makes this kind of contribution. Why cut employment, cut tax revenue and shred our social fabric?

The loss of this funding will have a deeply negative effect in many areas of our communities and our lives. Here are some of the things that will happen if the funding is not restored.

Jobs. Many jobs will be lost. In the arts directly, since more than 80 percent of expenditure is on personnel, we
[ Page 264 ]
will lose 1,200 jobs. The Okanagan Symphony released five artists in September alone. Those artists will not be spending their paycheques in October. They will be joined by losses of jobs in subsidiary industries.

Education. Both arts programs in schools and programs offered by arts organizations are threatened by these cuts. Students involved in the arts have better grades, lower dropout rates, higher empathy and tolerance. Young people involved in the arts are far less likely to become involved in negative activities.

Social benefits. Involvement in the arts is healthful. Seniors and working adults are both proven healthier when they are involved in their society.

Strategic planning. The government itself, of course, recognizes the critical importance of looking forward and building on past strengths. Our collective bargaining agreement with our artists requires that next year's concert schedule is finalized and contracted no later than April 1 of each year.

With the provincial budget being tabled March 2, 2010, and legislated April 1, 2010, the OSO, like nearly all provincial arts groups, will not be able to budget for and finalize its contractual obligations with any degree of certainty.

We have already contracted theatre space in three cities for next year. We are near final contracts with out-of-town guest artists for next year. Subscription brochures will be sent out by April 1 of next year. Selling tickets forms a contract between the symphony, the purchaser and the ticket agent.

Minster Coleman said in September: "Never again will this province make three-year funding commitments." The B.C. Arts Council planned to begin three-year grants in April 2010. Those plans are now shattered, their funding in limbo.

We have a three-year collective bargaining agreement in place with our artists. We have three-year funding from the Canada Council. We need three-year funding commitments from this province.

The Okanagan Symphony received its most glowing adjudication in many, many years from the B.C. Arts Council this year. In part, that adjudication said that the OSO "is on solid ground with admirable leadership elevating local professional music practice, vibrant local content, a sustained practice of celebrating and featuring strong local professional soloists."

The council went on to say that they admired the orchestra's financial recovery, led by a strong administrative team and a dedicated board. The turnaround was perceived to be "quite remarkable" and "a solid achievement." The Arts Council concluded that the return to health is attributable to a broad-based, strategically orchestrated and well-executed effort. Longer contracts for key personnel contribute to stability and continuity.

Therefore, I would summarize by saying that the loss of stability — because our provincial government has returned us, quite precipitously, to one-year-or-less planning windows — certainly endangers and undermines years of effort on our part.

[1800]

I would now turn to the memorandum of agreement, 1999. Not only is the Okanagan Symphony advocating for full restoration of gaming funding and voted appropriations to the B.C. Arts Council equivalent to 2008 levels, but we ask the Finance Committee and the Office of the Premier to honour the 1999 MOA, in which one-third of net gaming revenue in the province is returned to the community to the not-for-profit organizations that keep our society humming.

Net gaming revenue for 2009 is anticipated to be $2.1 billion, according to the B.C. Lottery Corporation. One-third of that net revenue is $693 million. That is far in excess of the $156 million not-for-profits were expecting to receive this year. Only about $50 million of that was disbursed to its rightful recipients. Money from that $156 million went to the Ministry of Education, to B.C. arts, and much stayed in general revenue. Disbursement under the MOA is now at a miserly 8 percent, down from 18 percent — last year's level — and not even close to the 33 percent as agreed in 1999.

Last but not least, we're not going away. We provide deep and abiding value to this province. As I've said, $1.36 comes into the B.C. treasury in taxes for each dollar the government invests in us. Therefore, to us these cuts make absolutely no sense.

The people of British Columbia deserve the restoration of an investment that has proven its value again and again. Please restore the full funding, both gaming and the B.C. Arts Council, as agreed and under the 1999 MOA for the arts in the current and coming fiscal years. You will not regret such a decision.

Thank you. I'll now hand the mike over to our chair, Dr. Duncan Innes.

D. Innes: I'm Duncan Innes. I'm chair of the board and thus a volunteer, like so many board members.

You know, it was with some pride when this summer I was able to announce that after years of fighting deficits, we were finally having a black bottom line instead of a red one. So these abrupt changes in financing have been quite shocking to us.

I'm not going to repeat what Caroline has said. She's made an excellent presentation saying that it makes good business sense to fund the arts because you get more back than you give us.

Speaking from another point of view, I think the tragedy here is that we now have a significant lack of trust because our government does not appear to be willing to honour an agreement that was made in 1999.

Now, you must have learned that the organizations supported by charitable gaming are well organized. There is a provincial organization, which Caroline has been speaking for.
[ Page 265 ]

We were there. Nobody came to speak to us and said: "Look. You're taxpayers. We know there's a financial crunch. Can you help us out? Can we reduce your funding or come to some agreement?" That never happened. It was just a unilateral: "Your money is gone." Frankly, I don't think that in a society governed by law and contract law…. That's just not acceptable.

I have nothing to add to what Caroline said on the details affecting the symphony and arts in general. I think she put the points very well.

J. Les (Chair): Thank you very much. We have several questions.

D. Donaldson (Deputy Chair): Thank you for the presentation. I have a comment and a question. I don't know if Caroline or yourself wants to answer. I'll leave that up to you.

I come from a rural area in the northwest. I understand the Okanagan is considered a rural area by some as well, so I'll say it's a rural area. The way you travel throughout the Okanagan shows me it's a rural area, because you're servicing outlying communities as well as some of the major communities.

To me, people in rural areas deserve to hear a symphony orchestra as much as anybody living anywhere else in the province. Not just because it's a life-changing experience, but we work and pay taxes in rural areas as well, and we also generate a majority of the revenue that's going into the provincial coffers for things like what are called discretionary grants — the ones that you had depended upon.

Discretionary to me implies a frill. I'm wondering: do you see this grant that's coming to you and the service that you're providing to communities as a frill, or do you think it's something people in rural communities deserve to hear — symphonies — as much as anybody else in the province?

[1805]

D. Innes: Let me do a quick 101 on the funding of symphonies. It's very simple. One-third of our revenue comes from ticket sales. One-third comes from money that we raise ourselves through donations and fund-giving and special events, and one-third comes from grants from cultural and government organizations.

Those are the facts of funding the symphony. I think that's pretty true not only for ours but for others. No, it's not a frill. It's a one-third portion of our budget.

C. Miller: I will speak to the word "discretionary," because certainly that word has come up over and over again. As my colleagues in various organizations — not just arts and culture, but in sports, in search and rescue — have discussed these cuts, we find the word "discretionary" to be somewhat, I'm sorry to say, condescending.

Our organizations, as the Belfry Theatre in Victoria would have told you a few weeks ago, take a penny, and we squeeze it and squeeze it and squeeze it until a dollar comes out. We do that with every single penny we have.

That's not a matter of discretion. We simply rely on this funding to exist. Our funding levels, as you all know, in the province of B.C. are among the lowest in the country for the arts and culture and for some of our other collegial organizations.

As Duncan said, the one-third, one-third, one-third formula…. It's a frightening formula if, every single year, you are not entirely sure about any of the thirds, as we are not in our business.

I appreciate your question. It's very spot-on.

N. Letnick: Well, Caroline and Duncan, nice to see you again. Helene and I have our tickets for the next performance.

C. Miller: I'm thrilled to hear that. I truly am.

N. Letnick: Let's talk about B.C. Arts Council funding for a moment. You have a much greater geography to perform in. The costs, obviously, are higher than some of the Lower Mainland orchestras.

C. Miller: We are unique in B.C.

N. Letnick: Is your uniqueness adequately represented in terms of distribution of dollars amongst orchestras through the B.C. Arts Council?

C. Miller: That's a tough one. If we had more money, we would be a bigger orchestra. We would have more musicians. We would be able to perform more frequently. We would be able to go to some of the communities that have asked us, such as Oliver and Salmon Arm. We've had to turn them down.

Because of certain terms — sensible terms, I have to say — of our collective bargaining agreement, we have to provide buses. We have to provide overnight accommodation. These things add up.

You don't get the second- and third-night, as they're called, rental benefits. If you're in the Orpheum Theatre and you rent it for one night, two nights or three nights, you get a discount on nights two and three. We rent three separate theatres, three separate cities. We pay full pop every time.

We pay full pop for advertising, and for some bizarre reason, the smaller the town or the city in British Columbia, the higher the newspaper advertising rates and the higher the radio rates. It's a matter of survival. I realize that.

Again, we get no benefit from running bigger ads more frequently in one newspaper. We have to buy ads in all three papers. Personally, I don't wish to whine, but
[ Page 266 ]
I would like to see an orchestra or an organization that does travel and does provide its product across a range of geography to have a little bit of a factor to assist us in that. It's not inexpensive.

B. Routley: I was concerned about your statement about the 1999 MOA. I assume that's a memorandum of agreement. Was that actually in writing? Was it a verbal commitment?

C. Miller: It's in writing. I do have a copy here.

B. Routley: Could you share a copy of that with the committee, because as a new MLA I'm not aware of the contents of such an agreement.

C. Miller: I won't give my only copy out, but if there's a copy machine here, I would certainly share it with the committee. Perhaps I could make it available to the clerical assistant.

B. Routley: So that hasn't been….

C. Miller: It's not legislated. It is, however, in the world of contract law, some kind of contract. I'm not a lawyer, so I'm not going to define what kind.

J. Les (Chair): Bruce, you are.

B. Ralston: I'm not going to offer a legal opinion on that. That wouldn't be wise on my part.

[1810]

You've made a very specific request: restore full funding — gaming and B.C. Arts Council. I know Norm has responded by saying that he's going to buy a couple of tickets. What specific response have you got from government MLAs — you're well represented in this area by government MLAs — to your request?

C. Miller: I would say that all of the elected representatives with whom we have spoken and we continue to speak — and we do have a meeting in a few weeks with Minister Krueger, who looks after arts — have been extremely responsive to our requests.

The B.C. Arts Council, of course, is a legislated body, so it will not be going away. They have deep experience in adjudicating and judging the health of arts organizations. That's one reason that I write into my comments the fact that this year, ironically, we had probably our best grade report from them in a year when we had our poorest financial payback. So doing well appears not to have been rewarded with higher dollars.

We would like to see funding for B.C. Arts Council restored to 2008 levels at a minimum. Yes, there is the $150 million endowment that was put aside to have interest spun off to the B.C. Arts Council, but as all of us with endowments and interest and portfolios these days know, that hasn't really spun off the $7 million or $8 million a year that it was expected to.

J. Les (Chair): Great. Thank you very much for your presentations.

Carrying on with the musical theme, we will next hear from the Kelowna Community Music School — Lorna Paterson, Wendy Robertson and Gwenyth Zilm.

L. Paterson: Good evening, Mr. Chair, Deputy Chair, select standing committee members, Madam Clerk, ladies and gentlemen. My name is Lorna Paterson, and I am the artistic director of the Kelowna Community Music School. I am joined here by Wendy Robertson, the executive director of the school, and board chair Gwen Zilm. I'd like to thank the committee for this opportunity to make a short, in-person presentation to provide input into the budget.

As a small player in the arts and culture sector, we were saddened by the announcement in September that the B.C. government proposed cuts to the arts that will equate to nearly a 92 percent reduction overall. We understand how difficult it is to produce a budget in these economic times but are concerned that the government is proposing such dramatic cuts to the arts, which only represents a very small percentage of the total budget.

We do not think these small savings to the budget are worth the damage created in the community. We feel that it is important for your committee to hear the effects these proposed cuts will have on small organizations.

What do we value? Music lessons provide a workout for the brain. There are numerous studies that document the improvement in children's literacy, math, verbal memory, visuospatial processing and IQ when they have musical training. A well-known Boston study that followed six-year-olds found that those who had 15 months of piano lessons showed larger brain growth in the auditory and motor areas of their brains than those with no musical training.

Success in any aspect of life requires discipline, practice and focus. Sustained musical training can provide the foundation for this success. Studying music requires patience and hard work, which help in everyday life when coping with difficult tasks. Besides these developmental benefits, children with musical training in their lives are enriched in numerous other ways through the very nature of non-verbal communication, creativity and self-expression.

Music seems to have positive effects on health and well-being. Scientific research indicates that music lowers stress hormones, and this is critical to good health. Additionally, preliminary work suggests that performing music may increase well-being, which is linked to better physical health. In short, music may have a positive im-
[ Page 267 ]
pact on health care. Music can be studied and enjoyed for a lifetime.

[1815]

Our beginnings. Kelowna Community Music School was founded over 30 years ago by dedicated parents wanting music education for their children in the Kelowna area. This school is unique in Kelowna as it is the only conservatory-style music school in the city. We offer two streams of programming — the community music program, which is designed for students taking group music programs or private lessons only; and the conservatory program, which is recommended to students who wish to prepare for music exams, festivals and competitions.

In our enriched conservatory program we prepare students who want to take exams in music, both practical exams and theory corequisites, through the Royal Conservatory of Music and other examining boards. Fulfilment of these exam requirements results in students receiving high school credits for music in grades 10, 11 and 12.

We are a registered not-for-profit society and are in no way attached to a retail business. We educate. Our highly qualified music teachers work with students of all ages, all levels and in many disciplines. This school is open to all comers, and we try to keep our fees affordable to families and have added incentive in offering bursaries to families with financial need and scholarships to students for merit. These are awarded yearly. Part of our registration fee is used to support the bursary and scholarship programs, and additional money comes from private donations and fundraising.

From this humble beginning, the school has grown, and currently we have over 475 families actively involved. Some of these families have multiple children, and some of these children take multiple classes, so we actually have over 600 individuals in lessons and classes.

We have 31 teachers and 1.75 administrative employees and are governed by a volunteer board of directors. All of these dedicated people also contribute over 2,000 volunteer hours annually to the success of the school. Although small, the Kelowna Community Music School does contribute to the Kelowna economy.

We are proud that our teachers and students give of their time to share their music through performance at nursing homes, the hospital, community events, food bank fundraisers and other charitable organizations.

We operate out of an old converted house in central Kelowna, for which we have a mortgage. Of course, the upkeep on an aging building proves to be expensive. Although the demand for music lessons and classes is high, we have had to curtail our growth based on our small facility. Our choir, orchestras and recitals are too large to accommodate in our house, so we rent space in the community.

The largest part of our revenue base comes from lesson fees. In previous years we have been grateful to receive $38,000 annually in bingo affiliate funds. This money is used to maintain our aging building, purchase musical instruments and support the enrichment of our programs. We have now received the third instalment of a three-year program and are concerned that this funding may not be available in the future.

The potential loss of this funding will have a devastating effect on over 600 people and on the community as a whole. Fundraising has always been a part of our organization, but because so many organizations in this area have been affected by these cuts, we will all be aggressively fundraising in the community at the same time. Therefore, we cannot anticipate an increase in our funding revenue.

We would like the committee to please consider maintaining the bingo affiliate funding in the future to assist the many small organizations in your constituencies. We also suggest a five-year renewable grant with an obligation on organizations to provide an impact statement each year.

Continued long-term funding would allow the arts organizations the ability to focus on program delivery and add to the rich cultural traditions of the communities. This could serve both the interests of non-profits as well as the government.

In conclusion, I would like you to take a look around the room at the other arts groups that have been presenting this evening. They would not exist if it were not for schools like the Kelowna Community Music School training and developing young talent.

[1820]

J. Les (Chair): Thank you very much.

Anyone have any questions?

D. Donaldson (Deputy Chair): Hi. Thanks for the presentation. I am familiar with the studies that you quoted at the beginning of the presentation around achievement in more formal education linked to music. We had a situation where I live about music being removed from the public education system and how studies show that it's directly linked to doing better in mathematics, for instance. We have major issues with young people and mathematics these days. So I hear that.

In regards to that, there have been cutbacks in the Ministry of Education as well. I see here under the theory that transcripts could count towards music grades 10, 11 and 12. At any point, did you have any formal relationship with the secondary school system and funding through them towards your programs?

L. Paterson: No.

N. Letnick: As a parent of a daughter who takes piano lessons, thank you to all the teachers. It's a wonderful
[ Page 268 ]
thing to come home after a week in Victoria to listen to piano, I tell you.

Did you get…?

D. McRae: It's better than bagpipes.

N. Letnick: I'd just like Hansard to record that it wasn't I who said that.

Did you get your funding cut this year?

L. Paterson: We're in our third year of the three-year funding program, so we're not sure what's going to happen next year when we reapply.

J. Les (Chair): Thank you very much for coming this evening. We appreciate you taking the time to do that.

The next presenter is John Drope.

J. Drope: I appreciate the opportunity to speak to the Select Standing Committee on Finance and Government Services. I just have a little PowerPoint handout if you choose to follow along. It might make it a little simpler for my short ten-minute presentation.

I'm a fund manager of two private equity funds based in the southern Interior, the Okanagan Innovation Fund and the newly launched Southern Interior Innovation Fund.

What I wanted to talk about today was economic development issues in the southern Interior, because that's where I work and live and do business. Economic development, of course, is the thing that drives revenues for the government and helps you fund some of the presenters here today that are looking for funds.

One suggestion I have that I'm going to make is that you may be able to achieve greater economic development, certainly in this area, without having to spend any of your budget for next year or any of your capital budget. I'll talk to that in a second. That's going to be the focus of my presentation today.

When the economic tsunami hit the world last fall and governments around the world were looking at what they should do — should they bail out the banks? Should they bail out the auto industry? — and at stimulus packages and all kinds of things, one very prominent private equity fund manager in the United States said the best thing that governments could do was provide $100 million in private equity to every city in the United States with 100,000 people or more.

Well, I run two private equity funds here, and I can tell you that we don't have $100 million, and we have a population base in the southern Interior much greater than 100,000 people.

So I just want to give you a quick background on myself and the two funds I manage, starting with the Okanagan Innovation Fund. The Okanagan Innovation Fund was launched in April 2005 at the Premier's economic summit, when Gordon Campbell was here. Some of you may have been here for that.

[1825]

We were seed-financed by the Prospera Credit Union with an initial investment, and they presented a cheque to us that day. The rest of the money came from our directors and other people in the community that felt that in the southern Interior — and the Okanagan in particular, with that fund — there was a void of private equity capital. They wanted to put their money where their mouth was, and they all wrote cheques, created a fund and happened to hire one person to run it, which is me.

We capped that fund at $3.5 million. We wanted to get the money working. Over the last three years we've made 20 investments. You see from the slide there that we have ten companies in our portfolio right now.

We're very active investors. We take board seats. I think most of our companies would say that we've been very helpful in helping them grow. It's one thing to write a cheque; it's another thing to make sure that the companies that receive financing are able to carry out their business plans. A lot of them need help as much as they need money — sometimes more help than money, but they both are very important.

For some of you that aren't from the southern Interior, and even for some of you that are, you might be surprised to learn the quality of the kinds of companies that exist here in the southern Interior.

This slide is called the "New Ventures B.C. competition." This is a competition that is done throughout the province, and there's a jury of venture capitalists, bankers and angel investors that look for the next best startup in the province. There's funding that goes along with it if you win the first prize.

So just about every startup company enters that nomination process and goes through the evaluation criteria. Then they pick three winners each year — first, second, third place. Obviously, with the population base of Vancouver, you'd expect the majority of the companies to be from there. In fact, all of the companies that I've listed here are based in the southern Interior — either the winner, second place or third place. So there's a surprising amount of technology companies based in the southern Interior.

Yet the next couple of pages are out of a BCIT White Paper done in 2004 that was commissioned to determine why there is a lack of private equity, both, actually, in Victoria but also in the heartlands. Of course, we are in the heartlands, despite the fact that here in the southern Interior we have technology companies generating $200 million a year. That was back four or five years ago.

It says:

"These regions have promise, but without an enhanced and more active private equity investment climate, B.C. may not be able to harness new opportunities or fully capitalize on existing ones in the heartlands. The Okanagan and Interior regions' technology sectors could be characterized as boutique versions of the
[ Page 269 ]
Vancouver technology scene: vibrant, young and growing companies with global client bases" — which is very true.

"Compelling locales have aided employment, recruitment and retention, as have committed local entrepreneurs and government officials."

Our innovation economy — that being the Okanagan's — encourages the formation of new businesses; 20 percent of our technology companies are less than three years old. The region also fosters businesses that develop market-ready and revenue-generating opportunities, key drivers for growth of an economic engine.

A common challenge facing not only Victoria companies but companies out here is their inability to attract sufficient amounts of private equity investment capital. That's right out of the B.C. White Paper. We knew that, and like I say, we formed a small fund to start addressing those needs.

One of the reasons that private equity funds based in Vancouver, Toronto, New York, Seattle, and on and on, don't come — I didn't copy that out of the paper — is simply the due-diligence costs of coming to a small area. It's not worth it for them to do when they have all kinds of companies in Seattle and Vancouver to invest in. They estimate that to come to the Okanagan you'd be spending at least $25,000 to $30,000 in due-diligence costs.

Secondly, many of them are active investors, as we are, and we're just too far away. You don't see any teachers pension fund investments here. You don't see Ventures West investing here. It just doesn't happen.

[1830]

The following page that I wanted to talk about…. This is out of the Venture Capital Monitor, a government of Canada publication that tracks venture capital in Canada. The reason they do that is that the venture capital industry is important for the growth of small business enterprises. They track investment trends.

If you go to the next page…. This just came out at the end of August. Venture capital invested in Canada reached its lowest level since 1996. That's 13 years. With inflation and everything else, it's not much money. So it's the lowest level we've seen in 13 years.

We know the banks…. We're trying to get the banks to lend, but we don't have private equity funds to make investments. So you think it's tough for established companies. Try the growing companies that have the debt-equity ratios that don't attract the banks, or they've got revenues, but cash flows don't lend themselves to traditional lending.

The government of Canada has looked at this issue, and so have provincial governments. There's a recognition that if achieved, a mature and functional Canadian venture capital, private equity market will play a critical role in nurturing high-potential firms that can transform ideas and research into new products and services and drive our economy.

What did the government do specifically? They invested $350 million into the Business Development Bank of Canada. The BDC has taken $90 million of that and invested it in third-party funds, like ourselves. If you're on the same page as I am, at the very bottom, one of their criteria is that the fund size has to be $75 million for them to invest in a third-party fund, so de facto, you won't see any regional companies or funds ever getting that money. It's just self-fulfilling. It's all going to go to the big cities.

The government of Alberta has started a hundred-million-dollar fund which will invest all in third-party funds — so they don't manage it themselves; it's all done through third-party managers — targeting investment in firms operating in priority underserved sectors.

Here in the province, as some of you may know, you have the Renaissance Capital Fund, the old Immigrant Fund, which has $90 million, and this is a fund of funds. I'll come back to that in a second.

This next slide is about the British Columbia Investment Management Corporation, which manages a lot of the pension funds in the province, including B.C. Fruit Packers and some of the local pension funds that might have an interest in partnering with us. It's all managed by the Investment Management Corporation. They have $75 billion of pension fund money under management.

They have $4½ billion invested in third-party funds spread out between about a hundred limited partnerships. None of those limited partnerships have invested in any company that I know of in the southern Interior — not one. I should mention, too, the Renaissance Fund, which I think has invested $45 million with venture capital fund managers. I think their managers have invested in one B.C. company with those funds.

That segues me back to the B.C. Renaissance Capital Fund and how, maybe, the province could consider spurring economic development in this area without a new budget item.

The Renaissance Fund did an RFQ, closing on April 3, 2009, and this is with money — of their $90 million — that they haven't allocated to venture capital fund managers. Actually, they did, but the fund managers they allocated it to didn't meet one of the criteria. And one of the criteria of the B.C. Renaissance Fund, to manage some of their money, is that you've got to go out and raise $85 million of outside money yourself. There were a couple of fund managers that weren't able to do that. So they put the RFQ out.

Again, we're back to the same issue, at least for the southern Interior. Our fund wasn't going to put it even into the RFQ, because we're not going to go out and raise $80 million. You're just not going to raise that kind of money around here.

I've put out a news release about our new fund, which brings me to the Southern Interior Innovation Fund, which is the second private equity fund that exists in the southern Interior. It exists exclusively to invest in the southern Interior.

[1835]
[ Page 270 ]

We've received $2 million from the Southern Interior Development Initiative Trust. We've received $3.6 million in five credit unions which are investors in our fund, which is great to see them investing back in their community. They've hired us to run that money, and our directors have all put $100,000 in.

We are at $6.2 million, and we want to raise that capital base up. Like I say, between the two funds, that puts us at $9 million. It's a very, very small drop in the bucket for a private equity fund from deal flow–wise, and I've been at this for four years here in the valley. There's tremendous deal flow and definitely an underserved market here.

One suggestion that I had was for the government to consider an investment of $2 million to $3 million in our fund. The nice thing is that we've already got matching money — more than that. We've already raised $6.2 million, and we'll probably raise some more too. So we've gone out and found investors to invest in our fund.

Where the $2 million to $3 million would come from.... Whether it came from the Renaissance Fund — if they would consider adjusting their RFQ so that some of this money does find its way into some of the communities outside Vancouver; actually, even if it found itself in B.C. would be great — or whether we could approach the pension fund managers, the B.C. Investment Corporation, about them investing in the fund; or whether the government itself decides that this is a good investment of their funds.... We'd be happy either way, any way.

J. Les (Chair): Thank you, John. We have a couple of questions, starting with Don.

D. McRae: Just a question about policy. I'm not an expert on venture capital, but how important are policies like HST and competitive corporate small business and personal tax rates in regards to attracting venture capital to a region or a province where we're competing on a national or international level?

J. Drope: I would say it doesn't have much to do with it. No.

D. McRae: No. It's the idea?

J. Drope: Yeah. It's the opportunities that exist. Certainly, a favourable economic environment — and I would say that we have one here in B.C. — is conducive to attracting companies and helping our companies grow and prosper.

Some of you might know the Club Penguin story. It got bought out by Disney for $365 million. Whether you had a harmonized HST or not, that transaction was going to take place. But they've kept their offices here and the people here because they like doing business in B.C. In fact, they've doubled their office space. They didn't move them to California. So clearly there's a business climate here that they appreciate.

D. Donaldson (Deputy Chair): Thanks for the presentation. It strikes home, based on the work I was doing before becoming elected. I was on the B.C.-Yukon leadership council for the Canadian Community Economic Development Network. We had over 200 members in B.C. and 600 across the country. One of the impediments our members found to developing things like social enterprises was a lack of capital — venture capital being, possibly, one of the tools to fund the expansion of social enterprises, so they could carry out the non-profit side of their activities through a social enterprise.

On a volunteer basis, colleagues of mine on that leadership committee went to the government to see what kind of incentives could be created for people to invest in a venture capital structure. They didn't get very far. So I'm wondering if you have some suggestions. You had a suggestion about the government becoming directly involved by funding the regional body, but if you have some suggestions around tools to make incentives and make it more attractive for people to put money into regional venture capital organizations….

J. Drope: Sure. The one vehicle that the B.C. government does have is the investment capital branch and the venture capital program and the venture capital act that provides 30 percent tax credits to either companies or funds that invest in eligible companies.

[1840]

That is a terrific program. I would encourage the government to continue with that program, because it's a very successful program. For a fund manager like us, it provides some of that seed capital to the companies that tend to come see us once they've gone through the seed capital and they've advanced to the level that they now need more advanced funding and more help.

From an individual investor point of view, from an angel investment, early-stage investment point of view, you guys have a great program already. I'd encourage you to continue funding that tax credit program.

B. Ralston: Good to see the credit unions involved. When I was on the Vancity board, Vancity started the Vancity Capital fund, which has similar objectives within the regional economy of the Lower Mainland and the lower Island.

I just want to understand your specific suggestions on the Renaissance Fund. Are you suggesting that the criteria be changed so that an investment could be made into this fund? Is that what you're suggesting?

J. Drope: Yes. That's my suggestion. There was in the RFQ a kind of what they call, not an exception but…. It
[ Page 271 ]
wasn't based on being a smaller size. It was an alternative suggestion, I think. But if you go along there, the alternative didn't meet what our requirements were. But that's what I'm suggesting, yes.

B. Ralston: If I might, one follow-up. I would expect that one of the objections might be that given the regional focus, there'd be a perceived lack of diversification. My sense would be that it would depend on the individual deal, but what would be your response to that kind of objection?

J. Drope: Well, I think there's lots of diversity. If you look at our portfolio in OIF, I think you'll see diversification with what we've really done with our money in the past. Secondly, we're not asking for $20 million, like they're doing with other funds.

B. Ralston: Not yet, anyway.

J. Drope: It's $2 million, $3 million out of $90 million. So diversification…. At least you're guaranteeing that some of that money is going to end up in B.C. companies.

J. Les (Chair): Thank you very much, John. We appreciate your coming out tonight.

J. Drope: Thanks for the opportunity.

J. Les (Chair): Our next presenter is Peter Wannop.

P. Wannop: Thank you, Mr. Chair and members of the select standing committee. This is going to be really brief. This is a question I've been asking for about 15 years now, and I've never actually had an answer. So hopefully, one day we'll get an answer to this.

I have met with a number of health care professionals just for some background in health. Of course, health is our biggest budget item. It really concerns me. A number of these questions were questions that I was asked to sort of pass along, so I'm hoping you don't ask me any questions about health care, because I really don't have much knowledge at all.

The one question — basically, my starting point. Since 1994 I've been inquiring why, when a patient visits a physician, is there no requirement for a patient to sign any kind of invoice or sign any kind of record of visit? I'm sure maybe some of you could talk about this. I understand the provinces…. I've heard they're looking into it.

Whenever a person receives any other type of private service, there's always an invoice or a billing record. As public money is being spent, this is an unacceptable gap in accountability, both for the patient and for the physician or the medical service provider. I know — you get your car fixed, you pay a bill.

I think it would be great for myself as a taxpayer to know what those costs are when I visit the doctor, whether it's to take a splinter out or to fix my knee. I mean, people just don't know, and I think they need to know.

As previous Minister of Health George Abbott had stated last year, the future costs as the baby boomers age over the next 15 to 20 years are going to be astronomical. We were going to accept that. The Ministry of Health Services tells us that today those over 65 years of age make up 14 percent of the population, yet this population accounts for the highest percentages of health-related spending — 33 percent of physicians' services, 48 percent of acute care, 49 percent of Pharmacare expenditures, 74 percent of home and community care and 93 percent of residential care.

We know that the 65-plus population of B.C. is projected to increase from 14 percent of the population today to over 23 percent of the total population by 2031. If we continue to deliver our health services that we do today in British Columbia, we can expect health care spending to grow proportionately.

[1845]

We need the Ministry of Health Services to take the need for accountability for health care spending seriously. The budget, of course, for this upcoming year is $14.15 billion. I have consulted with several health care professionals and from those discussions would respectfully request answers. Obviously, I probably won't get at the answers today.

Could MSP premiums be based on a percentage of income as, I understand, they are in Australia? I do seem to see some adjustments coming up in 2010 in the September budget update.

How are B.C. physicians being held accountable for the services they provide? How does the Ministry of Health hold those delivering health services accountable for the results that are expected by the ministry? What are we doing to constrain the costs of health care spending while working on ensuring that the best patient outcomes are still available?

What are we doing to explore other models of health service delivery from other countries — those countries that have similar populations but have less cost per capita and better health outcomes for their populations that could serve as models for us?

As B.C. experiences age-related population growth, so will B.C. experience growth in the number of people dying from age-related causes. Natural causes are expected to increase by one-third between now and 2031. What is being done to ensure that those dying will have access to the services they require in their last days?

My first note I'd like to make as my last note: is there a plan to institute a medical service delivery invoice?

J. Les (Chair): You were right. You were very brief. You've asked some very significant questions.
[ Page 272 ]

P. Wannop: I could go on for a few more minutes, but I don't need to.

J. Les (Chair): I suspect you could.

I suspect we have a few questions. Doug, why don't you start?

D. Donaldson (Deputy Chair): Thanks for the points you've raised. I'll tell you what I've heard, and I'm sure people that you're in touch with have heard this as well. But I'll just tell you what I've heard, and then I'll pose a question to you as part of that.

The premise, I believe, that you are proposing here is that once people find out how much it's costing, they'll voluntarily reduce their use of the system, and that'll save us all more money. If you would have, through your connections, any kind of empirical evidence of that kind of premise, then that would be helpful — for me, anyway. If you could submit it to the committee, that would be helpful.

The concern I've heard is that if that premise isn't backed up by empirical evidence, then why are we issuing this information and collecting this information? Some of the concern I've heard is if that is then leading to a road where there would be people making decisions about: "Well, you've used the service enough this year, Peter. You're used up, and therefore, you're cut off."

Those are some of the concerns I've heard. I haven't got an opinion either way, but that's what I've heard.

J. Les (Chair): Any comment on that?

P. Wannop: I guess, certainly from my perspective as a taxpayer, I'd like to know what those costs are. I know that just recently I received an e-mail showing off…. It was, I guess, part of the Freedom of Information Act. We were allowed to look and see what physicians were earning.

I'm not saying there's any slippage in the system, but when there's no accountability at the front desk, it leaves some questions to be answered.

I think it would be great for people to know what health care really costs. They just look at this big budget, and they say: "We need more health care. I need my knees fixed, my ankle fixed, my teeth fixed, my everything fixed." I'm just saying that people need to understand what those costs are, and I think it would help in some way to doing that.

Also, for the doctors to be accountable for those visits. You know, are we being billed extra bills? I'm sure there are audits done on the medical profession, and I'm not saying that doctors are being immoral or illegal or anything. But with the barn gate open like that, with no sort of record, how do you check it? Anyway, that's my spiel.

J. Les (Chair): Sure.

J. Rustad: Peter, thank you very much for your presentation and the questions around health care, because those are certainly questions that we are struggling to deal with ourselves in terms of the future of health care funding.

Your first question, though. I just want to try to give you perhaps a part of an answer to the very first question that you've been asking since 1994, which is for the requirement for a patient to sign some kind of invoice or record.

[1850]

It costs the health care system. For example, we have more than two million visits a year to our emergency rooms. Just adding a single piece of paper to that system would cost about $25 per piece of paper. Just the hospital visits alone would be over a $50 million hit to the health care budget in order to issue an invoice or a receipt of some kind that would actually go into a record. When you multiply that — the impact of the number of visits to doctors, etc. — it quickly adds up to a very large bill.

It would be great, but I would also be cautious in terms of where those dollars could be spent.

P. Wannop: I understand, but there must be a billing system in place now to pay those bills. I'm just saying that…. I'm not accusing anybody of anything. I'm just looking for maybe ways to…. Is there a better way to make people understand what the health costs are? That's really what I'm trying to get at.

N. Letnick: Thank you, Peter, for your presentation. It's good to see you again.

Your first number or bullet says that you look at putting the MSP premiums on a percentage of income to get more revenue — right? Would you propose, then, that we look at measures to reduce the demand on the health care system at the same time that we look at measures to increase income? Are you saying that you want to see more income in the health system, and if so, are you then supporting higher personal taxes or business taxes to do that?

P. Wannop: Well, only that. This actually became a question. My brother-in-law was here from Australia. I was just sort of quizzing him on how things are handled there. It's interesting to see what's going on in other jurisdictions, to see how they do things. It's based on a percentage of income, so the wealthy are paying more premiums and the people that can't afford it are paying, obviously, a lot less.

I'm a capitalist. I don't mind paying taxes. I'd rather pay taxes than not have to pay them. So to me, it was…. I see that there's a new schedule out for next year showing some changes to those MSP premiums, so maybe that's already on the way.
[ Page 273 ]

N. Letnick: So the answer is yes, you're okay with raising funds through higher taxation if it's targeted at health care.

P. Wannop: Absolutely — and used wisely, thank you.

N. Letnick: Of course. That goes without saying.

J. Les (Chair): If it goes without saying, it goes better with saying.

J. Thornthwaite: Thank you very much for your presentation. I know that my family, and my father in particular, has been asking the types of questions that you were asking for years.

I'm just wondering how you would answer the question that comes back — if in fact with the Canada Health Act there are many, many things, procedures that are getting funded right now that weren't even imagined way back in Tommy Douglas's day. We're funding a lot more than was even expected that we could possibly even conduct, let alone afford.

What would you say with regard to your presentation…? A lot of people feel that they have a sense of entitlement, because they don't know how much these things cost: "I pay taxes, and I don't want to pay any more taxes, but I still want everything paid for within the health care system."

If we did come back to the public and say, "Now we have to raise taxes to pay for all of this," then we would get a significant amount of backlash. What would be your suggestion to tell your friends, your neighbours and the rest of the public that considers everything an entitlement?

P. Wannop: Well, I think health care is a privilege, not a right. You know, I think it's a privilege that we have, and we should never forget that.

I'm also a businessman, and government cannot continue to just pour money into things without having accountability for them. You know, you need balanced budgets. I understand that the province of British Columbia has done a great job in the last eight, nine years. I'm just saying that we need to be accountable for this money, and people need to understand what the costs are. I don't think the majority of people do.

J. Les (Chair): Okay. Thank you very much, Peter. We appreciate your participating in this process.

Our next presenters are with the Kelowna Joint Water Committee — Toby Pike, David Stirling and Bob Hrasko.

[1855]

D. Stirling: Good evening, ladies and gentlemen. Thank you for the opportunity to speak. My name is David Stirling. I'm a trustee with the South East Kelowna Irrigation District. I'm also the chairman of the Kelowna Joint Water Committee. The Kelowna Joint Water Committee is the overseeing body for the five purveyors that provide water to the citizens within Kelowna.

Sitting with me is Toby Pike. He's the manager at South East Kelowna Irrigation District, and he's also the chair of the technical committee. Between us is Bob Hrasko, who's the administrator for Black Mountain irrigation district. Bob has a presentation, which I believe has just been handed to you. Bob's going to hit a few highlights in it, and then I hope that there are some questions from you to the three of us.

I'd also like to point out that in the audience behind us there are several elected trustees from the other improvement districts, and also the managers of the various improvement districts in the city of Kelowna.

B. Hrasko: Mr. Chairman, the public utilities in Kelowna are unique in the fact that we have very large combined water systems. They provide both domestic water for drinking and irrigation water for agriculture, and they are on the same pipeline, usually.

Combined with that, we have a very hot and dry climate, and the amount of water that you need to keep this place green and to grow anything is substantial. It's higher than anywhere else in the province. What has happened is that right now we're at a crossroads where we have some serious system upgrades that we have to attend to.

What has happened in the recent past is that the health regulations have increased. Our regulator, the Interior Health Authority, has set a higher standard and wanted to provide filtration right across the board for all systems.

We have convinced them that technically, this is not absolutely necessary and that there are other ways in which we can achieve the necessary goals and provide safe water that meets the national guidelines and their regulations. They've agreed to that, and we've agreed to that. We know what the projects are. So the bar has been raised, and we're working to reach that bar with the four surrounding improvement districts within the city of Kelowna.

The agricultural land is another issue that we're facing — the ALR. Much of our service area is in the agricultural land reserve. What that does is that it results in a much lower population density and a much lower ability to pay for upgrades because you're servicing such a large area with such a large volume of water, and you don't have the unit cost ratios with which to pay for it.

We agree with protecting the agricultural lands. It's sound public policy to do so, but the province, we believe, has to invest in the ALR and in agriculture to maintain, protect and service those lands. We have this double hit that's happening with us right now.
[ Page 274 ]

Combined with that, we also have a Ministry of Community and Rural Development that does not support any kind of grant funding to improvement districts. The reason for that is that there are probably almost 300 improvement districts in the province, and the majority of them are very small. What we have in Kelowna is four very large — probably the four largest remaining — improvement districts in the province here.

They're very effective bodies. They have the economies of scale to operate very efficiently, and right now the policy is that we have 55,000 people in the province that haven't received any substantial grant moneys from the province for 40 years.

The last go-round of major infrastructure involvement in Kelowna for water was the ARDA program in the late 1960s. We're basically looking for funding support at equivalent levels with other utilities in the province. We've invited all of the MLAs. They've seen our systems, the local ones, and we're quite proud of them. Our ratepayers are quite happy with the level of service.

On the second page we have a brief description of the utilities. We service 15,000 acres of agriculture and approximately 55,000 people, just under half of the service population within Kelowna. The city water utility services the other half of domestic water, but basically, in the outlying area we provide 70 percent of the total water that's provided within the city boundaries.

There's a map in figure 1 on page 3 that shows the service area and all of the surrounding areas. There's the Glenmore-Ellison improvement district, Black Mountain irrigation district, Rutland waterworks district and the South East Kelowna Irrigation District.

[1900]

We work collectively on all sorts of issues within the city boundaries together. We've formed partnerships. We respect each other's utilities. We're not trying to take each other over. We support each other. There are cross-resources. It's a very healthy situation between the utilities.

Collectively, we're the third-largest water supply region in the province, behind the capital regional district in Victoria and the greater Vancouver water district. That surprised us. I went through the numbers, and on page 7 we've got a summary of the populations and the annual volume of water provided.

On page 4 we've listed what our proposed water treatment projects are. We've had that peer-reviewed by one of the most respected water quality treatment engineers in western Canada, a fellow named Ian Wright, and that happened earlier this year. The projects are separated into highest priority, on the left of figure 2; medium priority, in the centre; and lower priority, which is filtration. Basically, what we're trying to do is get to the level where we meet all of the regulations, even though we aren't filtering all of the water.

We're not trying for a Cadillac solution here; we're trying to do what's right for the people most economically. That's what the $65 million in projects that we've identified will do. To add filtration to that, we're adding another $165 million on top of the first $65 million. We're not trying to build Cadillac systems here. We're trying to use the money effectively.

The way that we're proposing to do that is to use the cleanest sources of water, protect those sources of water, add the additional barriers of disinfection and then split our irrigation and domestic systems over time so that we treat less. It has been peer-reviewed. It's a solid approach, very defendable. We're not compromising anything that might happen in the future by doing these projects.

What we've got on page 5 is the project costs and timing. Because the projects are so large, it's going to take us years, basically, to do these projects. We're figuring that we can get it done in four to five years. We've been working on them, with approvals and processes and land acquisition and that, for two or three years already, very subtly.

The summary of all of our comments are listed on page 6. We are large water providers. We haven't received any funding for 40 years from the province. We have received water metering grants from the federal government, but we would really appreciate support from the province on our initiatives.

We're not interested in governance. I know that issue keeps coming up: why isn't there one water authority in Kelowna? From our point of view, it's not broken. It's working. From other points of view, other people may think that you have to combine them all. It's the same philosophy as how the Lower Mainland operates with 13 or 15 district municipalities and cities, where they want local attention and control of their land use where they live. That's a good model, because if you make the utilities too big, you lose that on-the-ground feel for your community.

What we have here with our four districts is we've got 20 elected officials that look after water in Kelowna. The city of Kelowna, for their utility, has a council that has nine elected officials, which spends far less time. We're all focused on water, these 20 elected officials, some of them present here today.

The projects that we're proposing are preventative. They're to stop waterborne disease outbreaks. They benefit the residents directly, right in the pocketbook. If we have funding, we don't have to raise water rates as high. Any kind of funding support that we would receive would directly affect 25,000 homes in Kelowna.

With that, the last couple of pages are supplemental information. I think I'm going to end there and open it up to questions, because we want to hear any concerns that you may have on this issue.
[ Page 275 ]

J. Les (Chair): Thank you very much, Bob. We have several questions.

M. Mungall: Thanks very much for your presentation. Unlike the Okanagan, I come from a very water-rich area, so we deal with water a heck of a lot. I'm familiar with the 4-3-2-1-0 protocol by the IHA, of course. That's a guideline, not a standard, although they are trying to implement it as though it's a standard. This is something that I've met with my local government reps, as well as the Deputy Minister for the Ministry of Health, about.

I understand that getting to the 4-3-2-1-0 protocol, though, is quite costly, which also brings us to the funding support. As you know, we're not an adjudicator of funding programs here. Rather, we're providing recommendations for the 2010 budget.

[1905]

I just want to kind of pull something out from that that could be a recommendation. Are you looking for us to possibly recommend to the budget process for 2010 that we undertake a kind of review of how we do funding for water infrastructure so that it is more equitable?

B. Hrasko: That could be one of the recommendations, yes, because there is an inequity.

With our regulator, it assesses utilities based on how large the utilities are. Then they have a higher standard for those utilities that have the expertise to handle these technologies. Also, they have the larger population base.

So you're trying to provide a higher quality of water for a larger population base, whereas the smaller 200-connection, 50-connection and five-connection systems don't have the same standard to meet. But those are the improvement districts they're trying to amalgamate into larger organizations. Yeah, I do think that's a worthwhile recommendation.

N. Letnick: Nice to see you gentlemen again. So 4-3-2-1-0. I thought that we were still working with IHA to try to iron that out. From your presentation, it sounds like it's been ironed out. Is this news?

T. Pike: Well, that's certainly the standard that they have set, and that's where the bar is for us to meet.

N. Letnick: What I mean, Toby, is that they were prescriptive in saying it had to be filtration. We were trying to come up with alternatives whereby you use source protection and the rest of it. You could still achieve their standard without having to go specifically through filtration. But from your presentation, it sounds like….

B. Hrasko: It's on the operating permit.

T. Pike: They have a process called filtration deferral. If you can show that you can meet the 4-3-2-1-0 standard without filtration, they will consider giving you a deferral on filtration. In our proposal, I think, what we're proposing to do with it, for $65 million, is to try and clear that bar. Then, of course, the other $160-some-odd million would be if we were all required to filter.

N. Letnick: Okay. If you wanted us to take any specific recommendation back to the Finance Ministry, would you say that you want funding programs based on utility size, starting at 10,000 or 15,000? Do you have a number that you would like to shoot out there, or do you just want us to consider a process?

B. Hrasko: There's an interesting table with population and with volumes on page 7, which nobody has done on the province — that I know of — except for what we did in the last few days. It puts things into perspective of where the large populations are and where the large water supplies are.

N. Letnick: So help me out. Where's the line?

T. Pike: IHA's line is actually…. They classify systems based on the number of connections. Anything over 500 connections is called a WS1. That's the highest standard. Below that, as Bob referred to, there's less stringent urgency to comply with those regulations.

N. Letnick: Understood.

B. Ralston: Thanks very much for what's a very clear and thoughtful presentation.

One question, two parts. Infrastructure funding seems to be the order of the day. Do any of the proposals that you have on your last page, page 8…? Is there any possibility for those to be shoehorned into any of the infrastructure categories, either federal or provincial or joint federal-provincial, that are in existence at the moment?

I haven't had a chance to review all of your five options there — they're all fairly detailed — in the couple of minutes that I've had it, but is there an option that you prefer and recommend?

Finally, what's the option for borrowing? Do these districts collectively have the legal capacity and authority to borrow, to finance the kind of improvements that you're talking about?

B. Hrasko: In answer to your first question with the options, we prefer option 1. We put it at the top. That's the one we prefer. Flow-through funding through the municipality is also very acceptable to us. All of these options are acceptable to us.
[ Page 276 ]

D. Stirling: Except the last one, I think.

B. Hrasko: That's a last resort. It's acceptable to us as well.

What was the second question?

B. Ralston: Do any of these options that you've suggested fit into any of the existing infrastructure programs? There is certainly lots of chatter about infrastructure programs this year.

B. Hrasko: They would through the municipal one. We would have to have flow-through money and be sponsored through a municipality or a regional district, and the regional district would have to be okay with having the money flow through.

B. Ralston: So you're obviously not at the stage where you've made an application.

[1910]

B. Hrasko: We have not made an official application, because we're trying to work with the regional district and the city on issues. The issue keeps coming back. Instead of flow-through money and just doing the projects, it keeps coming back to governance.

B. Ralston: Oh, I see.

B. Hrasko: Right. So the politics enter the equation, and that becomes very awkward and difficult because the ratepayers have told us quite clearly not to go there.

D. Stirling: Further to that, we've met with Minister Bennett quite recently, and he made it very clear that the funding for the current round of infrastructure projects has been allocated, and therefore, these projects wouldn't qualify because there's no funding available.

B. Ralston: What about your capacity to borrow?

B. Hrasko: We have substantial capacity to borrow. The districts have reserves built up. They can quite easily cover their third with minimal borrowing requirements. We have to go through the same process as a municipality to approach the ratepayers for a borrowing bylaw.

B. Ralston: So it has to go to referendum to pass?

B. Hrasko: Yeah. It could go through the alternate approval process or a direct referendum — either/or.

T. Pike: If I could just add to that as well. We're actually, as improvement districts, governed under part 23 of the Local Government Act, so we have access to the Ministry of Finance borrowing and other opportunities such as that. We're not eligible for MFA borrowing.

The last time — and Bob referred to it in his presentation — there was a one-third, one-third, one-third funding opportunity, which was done under the ARDA program in the 1960s. Most of the local contributions were done through sinking fund debentures arranged through the Ministry of Finance. So there are a number of different opportunities, in addition to simply paying through rate increases.

J. van Dongen: Well, my questions, I think, follow up on what Bruce was asking about. Thanks for a comprehensive presentation.

Do you have a positive working relationship with local government, with the regional district, so that if in the future a similar infrastructure program is available, a federal-provincial program, you would be able to work through your local governments, regional government, to apply for that funding?

That would be my first question. Do you have a good working relationship, or is there an issue there?

T. Pike: Yeah, I can address that. We have a very tight relationship within the city of Kelowna. As Dave referred to, we have something called the Kelowna Joint Water Committee. All five utilities servicing the city, including the city of Kelowna water utility, participate in the Kelowna Joint Water Committee. Out of that, a number of innovative, province-leading initiatives have arisen.

What is unique now is…. One area that we haven't really addressed is the opportunity for funding support. To be quite frank, I think the city likes its position now that we're not eligible to get direct infrastructure grant funding, because that gives them an opportunity to access those funds as well.

But we are in discussions with the city about those kinds of opportunities, and that was part of the reason why we did this comprehensive value-engineering study on all of our projects, just to make sure that there was no redundancy there. From a citywide servicing point of view, it made sense technically.

J. van Dongen: In asking my next question, I think I should say that, coming from my background in agriculture, I appreciate the fact, first of all, that the four water boards, improvement districts, that you represent are collaborating. I think that there's probably, from the point of view of agriculture, an interest in maintaining some of those entities. So in principle, I would support what you're doing.

My second question, then, is: the issue of governance, which keeps coming forward — where is it coming from? Is it coming from the ministry in Victoria, or is it coming from your local government partners?
[ Page 277 ]

B. Hrasko: It's coming from our local government partners.

When we went down this path — page 4 has all the projects — we went to city hall with the city utility beside us. I'd prefer that the city utility was right beside us asking you the same question today. They weren't, because they wanted to use the leverage of us not getting the grant money — it was politics — to do a governance study to see….

From our point of view, there's nothing broken with the governance of the improvement districts. They're very effective. They're very efficient. They have not asked for money for 40 years.

[1915]

J. van Dongen: To get some precision around your request…. I have an independent water utility in my own community facing exactly the same issue. In some respects, local government doesn't want to take them over, because they have a lot of older infrastructure.

What you're asking this committee to consider recommending is eligibility for federal-provincial infrastructure projects for independent water utilities like yourselves. That's what you'd be asking.

T. Pike: Yes, that's it exactly. It's only fair to point out that the current Ministry of Community and Rural Development's policy is that improvement districts are not directly eligible for infrastructure grant funding.

J. Les (Chair): Thank you, gentlemen, for coming this evening.

Moving right along, we're now going to hear from the Okanagan-Kootenay Cherry Growers Association, represented by Christine Dendy.

C. Dendy: Good evening. Should I proceed?

J. Les (Chair): Yes, please.

C. Dendy: I'm sure you have a tight schedule.

Thank you very much for allowing us a few minutes of your time to talk to you. The Okanagan-Kootenay Cherry Growers Association is an organization of about 60 of the major commercial cherry growers in the Okanagan and Kootenay regions. It was established in the 1990s, primarily to invest grower contributions to fund research, to improve horticultural production and management practices and to share information to assist our growers in producing and marketing better cherries.

Through the development of export markets with premium-quality cherries, the industry has expanded very rapidly in the past 25 years but is facing very tough economic times, given factors such as the growing competition from rapidly expanding production in the U.S.A.; a weakening U.S. dollar, which negatively impacts our export sales; concerns of the carbon footprint and fuel costs in air freight, which we use a lot; the need to identify methods to decrease our energy costs, given the looming impact of carbon tax, despite the fact that we are growing cherries on thousands of acres of nice, green, leafy trees; water shortages and concern over security for water for agriculture, given the increasing urban demand — and there is a lot of urban development coming into our area; in my own water district, as you've just heard, exorbitant costs for new system requirements imposed by new regulations on water quality by the Ministry of Health; the lack of skilled and unskilled labour and the dire shortage of extension and professional advisers to assist new growers as well as established growers; and an aging base of growers with concerns of succession.

Ladies and gentlemen, despite the seemingly constant pleas from farmers for help and the opinions of some that fruit production in the Okanagan is doomed, I would like to assure you that we are very much still alive and a significant factor in the regional economy.

Just by personal example, our farm has just completed a huge season, packing over 640 tonnes of fresh cherries with the help of over 150 Canadians employed for the summer with a six-week payroll of about $800,000.

We've added $1.5 million to the balance of trade from our export sales. We've spent half of this locally on capital improvements this year alone, along with a wallop of other input costs, including increasing costs of regulations, certification audits, U.S. biosecurity fees, fuel and power increases and taxes, etc. — you name it.

Our farm is just an example of other farms around this province that keep on going during economic upturns and economic downturns, collapses in the U.S. dollar, labour shortages and fuel crises. As reliable as the practices of undertakers and doctors delivering babies, farmers keep on farming, as you can't temporarily shut the farming factory down and wait for better times.

But I will get on to the main points of my presentation. Firstly, I would like to thank you very much — particularly, I think, John van Dongen for his previous efforts on the provincial sales tax with agriculture. I'd like to thank you for having the guts to harmonize the provincial sales tax with the GST.

The agriculture sector has been struggling with an archaic system that was designed to exempt agriculture from PST in the production of food, but the system was piecemeal, pathetically out of date and bureaucratically impossible to fix.

Retailers and wholesalers were saddled with a confusion of exemptions, and auditors were obsessed with making sure that a 30-ton compressor was not exempt, as it might somehow be used for personal use. Refrigeration repairs were exempt for milk but not deemed necessary for cooling fruit. And five-ton trucks should be taxed, as they might be used for pleasure rather than business.

[1920]
[ Page 278 ]

We know you are facing opposition from some sectors, but business is business, and the HST implemented like the GST is a welcome improvement. Thank you.

Our industry is facing shortages of skilled as well as unskilled labour, and many new growers and growers who have switched from apple production to cherries are struggling to learn the horticultural and management skilled required. Advisory extension services to agriculture were basically wiped out as a policy move ten years ago, and our small industry is in dire need of qualified professionals to advise us and young entrants with the skills to manage and work on our farms.

To learn anything about fruit production, it's almost necessary to go south to Washington State, as our horticultural programs in B.C. educational institutions are pretty much limited to turf management and landscape architecture. Please, please, please, we need programs to train advisers, employees and ourselves.

We also need increased budget allocations to agriculture and the renewed delivery of extension services in all regions of B.C. I think with the renewed interest in local agriculture and the 100-mile diet and everybody's return to the land, everybody is asking questions and needs a lot of help. So please, reconsider upping the budget a little bit for agriculture, which has had diddly-squat, and put this in your policy.

We need to learn how to assess our farms and to identify how we can reduce our carbon emissions, reduce our fuel and power requirements and reduce the outrageous impact of the carbon tax on our sector.

You've saddled us with a great tax, both in the size of the tax and the principle of the tax, which in principle I do agree with. But giving it all away to everyone in the form of a general income tax reduction does nothing to help us farmers deal with the problem. Either take the tax off agriculture, as I understand even the UBCM agrees you should do, or please give us back some of it to help us become more efficient.

We need resources, and we need funds to help us assess our farms and figure out how we can do it better. This, I think, is something that is not going to come through carbon trading or anything like that. The prospect of money from carbon trading is nonsense. It'll all get spent on auditors and brokers. We actually need assistance in assessing our farms and learning how to do things better.

Water shortages and competition for limited resources between urban and farm use is a huge concern. On top of this, in our own water district, as you've just heard, we're about to the saddled with a huge and nonsensical cost to redo our entire water system to meet a marginal improvement in water safety.

The cost is the equivalent to us of $100 per month, per household and for each connection for a cabin for our employees. It doesn't matter who's spending this money, whether we only spend a third of it and get grants from somewhere else, it's still a huge, huge cost for a very minimal reduction in the risk of our water.

We have an extraordinarily efficient system that's professionally managed with a safety record which is second to none. But as it is neither municipal nor government, we fall through the cracks in eligibility for government grants and funding. This is absolute nonsense, and it's going to fall heavily on the shoulders of the farmers to pay for an upgrade that essentially I don't think we really need.

It's interesting, when you look at this. I've lived in this area all my life. I've never had any issues with the water. The whole system.... Thanks to a very nice ARDCorp system that was put in, in the early '80s, both our domestic water and our agricultural water is chlorinated, and it's monitored full-time. So if there is any increase in the turbidity, the chlorine is increased. You can drink out of any tap in the region, and it's healthy, potable water.

If we go to a new system, to go into pumping from wells and distributing with pumps instead of our gravity-feed system, it's going to overlay a whole new domestic system on top of everything else that we already have, and the rest of the water system will no longer be chlorinated. It really just doesn't make any sense. It's a huge cost for a minimal reduction in the risk. However, if that's the case, please help us with the funding.

Thank you very much.

J. Les (Chair): Thank you, Christine. We have a couple of questions.

M. Mungall: Thanks very much, Christine. I come from Nelson-Creston. You may know, Creston has a lot of cherry growers. I've been speaking with many of them over the last while, and you bring up some points that they've also been talking to me about. The carbon tax and its revenue-neutrality, and that actually being a problem, is one of the issues that they've also brought up. So thank you for putting that in your presentation.

[1925]

The other point is the educational, the learning, having training advisers, having support and so on. One thing that's been identified by the Creston cherry growers is a district agriculturalist. I was wondering, maybe, if you could comment on that — if you would find that someone in that role would be beneficial for your area as well.

C. Dendy: Absolutely. We used to have one.

M. Mungall: Great. Thank you for the quick answer.

J. Les (Chair): And Doug.

D. Donaldson (Deputy Chair): That's me. Thanks. It's getting late for all of us.
[ Page 279 ]

Again, I think we're undervaluing our agricultural sector in this province, so I appreciate your comments that deal with that.

You said that in principle, you agree with the carbon tax, but from the tone of the presentation I deduce that you don't agree with how it's being applied. I have two questions around carbon.

One is: would you see a solution to that being that the revenues collected from the carbon tax be more targeted towards, for instance, practices in agriculture that could reduce carbon emissions, and is that one of the recommendations that you would give to us?

Secondly, on the carbon trading issue, you alluded to the green in the leaves of the trees at the start of your presentation. I deduce from this, then, that you wouldn't be in favour, under a cap-and-trade system, of the trees that you use to produce the fruit being designated as carbon sinks and being given a credit for that.

C. Dendy: Well, I think that's the approach that Alberta has taken in fixing its system, but they're doing it by retroactively giving credits for trees or things that have been there for a long time. I don't think, in principle, that you can do that. You have to start from now, and our trees are already in the ground.

Really, in the cap-and-trade system, in assessing everything, when you look at the money that's going to go on doing the assessments and trading it all around, there's not going to be much left in terms of credits that actually go back to any farmers.

J. Les (Chair): Thank you very much, Christine. A very good, plain-spoken presentation.

Our next presentation was from the Thompson Okanagan Tourism Association, but I don't think they're here.

That means we've come to the end of our scheduled presentations, but as I said earlier, we will allow a bit of time for five-minute presentations for those who wish to take advantage. The first one would be Tony Stewart from Quails Gate.

T. Stewart: Who says government officials don't work hard? I've been sitting here with you all day, and it's been very enlightening. I do want to thank the committee for its time, and certainly I won't take very much time to go over a few points that I have.

My business is Quails Gate Winery, a family-owned business with $13 million in annual sales. Some $11 million of those sales occur in the province of British Columbia and $2 million within the rest of Canada and in export.

We have 70 full-time employees, and we have an additional 130 seasonal employees that come and work with us through the tourism season and through the growing season.

The winery was founded in 1989, but since 2003 we've invested $11 million in capital infrastructure at our facility. We've continued to do that because we feel the business climate here in British Columbia is outstanding. It is the best in the country. We're leading the way with respect to the incentives with carbon tax and the legislation on lowering of greenhouse gases. Overall, the tax environment is excellent.

A demonstration of this is that we've just invested in a new wine agency. We had the opportunity of investing and locating that business in Calgary or Vancouver, and we chose Vancouver, which resulted in an immediate five positions that went with that new firm. We expect that number to double within the next two years, and that business will potentially grow ourselves considerably.

I want to comment on a couple of the items that the committee is facing. HST — it will benefit the wine business. It provides a lower tax rate for the wine sales. It lowers our cost of investment. This business, the wine industry, is extremely capital intensive. The tourism facilities that were mentioned that we need here, the infrastructure for attracting visitors, is essential. The lower the cost of doing that, obviously the incentive it creates for us to pursue investment.

[1930]

It also simplifies administration, as John Byland pointed out — what's exempt and what isn't exempt. This is a good move for the province, so we're in favour of it.

I also want to point out that we run a restaurant. I know there's been a considerable amount of opposition to this from the Restaurant Association. For ourselves, when we look at this, we see this as actually a neutral effect on our restaurant business. We're actually looking forward to it, in that it does provide us incentive, again, to upgrade some of the capital investment that we have within the facility.

The HRT, the hotel tax that was mentioned earlier by Tourism Kelowna. The one key element here is that the funding mechanism in that tax rate now provides accountability to the stakeholders within the region. You can't underestimate how important that is. Tourism Kelowna is a very effective organization because they listen to the stakeholders here. They're dependent on the stakeholders' funding. It's a really, really effective model. I wouldn't give it up.

Now, I have one last item that I'll touch on, and then if there are any questions…. Health care. You've heard a lot of things about it today. I just would suggest to this committee that you have the ability to incentify a healthy lifestyle and prevention within a number of areas. Only one suggestion I'll make is that fitness or fitness training is something that could be considered as tax-deductible on income tax.

It certainly goes a long way to addressing some of the things we're faced with in our society, with obesity and
[ Page 280 ]
inactivity. It will have a long-term effect on improving our health and lowering your costs for the $15 billion that you're going to be spending in health care.

If there are any questions, I'd be happy to take them.

J. Les (Chair): Thank you, Tony. We have at least one from Norm.

N. Letnick: Thanks, Tony. Two questions, since "at least one" means I can do two.

J. Les (Chair): No, no. I've since got another one.

N. Letnick: Oh, did you? Okay.

The HST. You did say that for the restaurant it's going to be a neutral impact. I imagine for the winery it's going to be a positive impact?

T. Stewart: Yes.

N. Letnick: You said it was going to lead to more investment. Could you elaborate a little bit on that?

T. Stewart: Well, restaurant equipment and restaurant products that we're buying with PST costs in them right now will obviously be exempt, or you'll get the ITC credits back. That would therefore allow us to lower the cost of purchase.

There have been a number of tax reductions in PST on specific equipment for the wine industry, but this is broader-based and will help us as we look forward to our investment spending. It'll be a lower number, so we'll say: "Great. You know, it makes more sense to go ahead with it now."

B. Ralston: Thanks, Tony. I thought you were going to suggest, perhaps, that a glass of red wine a day would have a reasonable health effect.

T. Stewart: Well, that too, but I didn't want to go there.

B. Ralston: Just for the record, what's your relation to Ben Stewart, who's the Minister of Citizens' Services?

T. Stewart: I'm a brother.

B. Ralston: Oh, I see. Okay. Thank you.

D. Donaldson (Deputy Chair): A couple of questions. Can you give me a sense of the equipment that you mentioned you would be purchasing, possibly, from the savings that you're going to accrue with the HST — whether it's in the restaurant business or the winemaking business. How much of that equipment is manufactured in Canada and in B.C. versus in the States or overseas?

T. Stewart: In our restaurant we follow the 100-mile diet if we can. We have our own garden. We employ a staff member to grow produce that we can't get from the producers here.

Wherever possible, when we buy equipment, we try to buy local. If we can't buy within the Okanagan, we buy within British Columbia, and then we go outside to Canada. Our focus is to maintain Canadian businesses. We're family-owned, and we definitely want to support the country and the province.

Specific to the items within the restaurant or within the winery, there's a constant need to be upgrading facilities. People are not looking for the cheapest experience they can get. They're looking for a great experience. They want a nice environment where they can enjoy this beautiful province we have.

[1935]

But it costs a lot of money to maintain, whether it's upgrading the furniture we have in the restaurant or increasing the size of the range we have in order to handle more customers. Those are the types of capital investments that I'm looking at. Even though we've made such a large investment over the last five years, it is ongoing. There is still a lot more to do.

J. Les (Chair): Okay. I think that's it for questions, Tony. Thanks for coming out.

We have, I think, one more presentation, from Wes Kmet.

W. Kmet: Good evening. This is my first time to be here. I'm going to kind of jump around a little bit, so bear with me. I will be hitting on lots of different points.

I'm not going to try to be too political, but I think we're all trying to do the best in our community and in our world. What I do personally is hand out business cards with all our local politicians' phone numbers, because our democracy isn't working very well.

Hardly anybody calls our politicians, in my mind. I've talked to over 20,000 to 30,000 people, so I can talk with a little bit of experience. Even though I know your offices do get calls from individuals, it's probably when they're in difficulty but not talking about many of the other things.

I guess that leads me into education. The idea of teaching our young people and doing anything where money can go to help people learn more about politics…. In talking to a lot of people on the street, I find they're not very knowledgable.

That also ties into things like too much monopoly in newspapers, in media, which doesn't give enough independent voices. I know there is the Internet currently, which is helping in that regard, but I don't really see that many young people, to my mind, going into politics or being very active on the ground level.
[ Page 281 ]

We've had about seven or eight different meetings with a group called Community Minds. What they're finding is that there are a lot of organizations in the community that do various kinds of work, but there isn't the cohesiveness. Obviously, the only other representatives are the city politicians.

I've been a member of two neighbourhood associations, so I know how many people are members of them and what the nucleus is of those organizations, and it's very weak. I've even been to meetings where there have been all of the neighbourhood associations there.

Health care is probably the big one, because that's the bear in the room. I come from Tommy Douglas country, and that is something very sincere, very deep in my heart.

Prevention. Tony stole my line. We were talking about it before. I don't know if he actually had it on his mind or not. But obviously, their business is tied into a quality product, and I very much believe in agriculture. I was born on a farm. We've dropped the level of funding for that. It's a crime. All kinds of agribusiness and big business have been going into that field, and I very much worry about that.

I think we have to get away from and be really careful…. As government, you have big responsibilities. Look at our world. I don't see anybody really doing big changes. I really don't. And I'm really fearful. You guys are the ones that can do a big job here as province representatives and really influence the federal government. I don't see anything.

[1940]

I hear comments from the Bangkok climate conference, and people are walking away because of Canada's stance. Things move so slowly. I don't know how you can spend money on getting things addressed much more quickly, but we've got to. Your kids are going to be — I don't know what — maybe in a leaky boat somewhere in 50 years' time. I don't know. It really is scary. There are more people dying all the time. I can go on into all of these problems, and I know you know them.

Cooperation. There have been many good commissions — Romanow, etc. — community clinics, lots of different things. There has been some progress. I talked to one of the main people here in the city, and he mentioned efficiency. Well, I guess that's okay, but I don't really see any major changes. You go back to what Tommy Douglas and the pioneers, who had no money, who did incredible things…. So I offer the challenge to you people to do some things.

There was a person who came with Artscape and made a presentation, part of the UBCO series, who talked about incredible things that were being done in the world, in Albania, to transform, obviously, a poor city and get some enthusiasm and people working. They did incredible things.

As well, Toronto is an example of how we can redo our cities with planners, money people — all kinds of people working together to improve our cities. Kelowna is one big example of how…. The city has been working at it a little bit, but I don't really see any bigger improvement in the downtown core. There has been a little bit, but there's a challenge there as to how….

I'm sure there are other areas in the city — Vancouver's east side — that need some big-time working by a lot people to make it go. Toronto has been a big example of how they just did incredible things. Anyway, just one example of how we can do things even when in times of not much money.

Gardens were mentioned. I think that's a great one. We're probably going to go back in the next ten years or more to very much where we came from, which is rural gardens. We're going to have to be doing many more of these things.

Energy. Where are we in energy? I mean, the idea of what we're doing and how we can spend…. The idea of a carbon tax and a little bit of the money was a little step forward, but it's just very little. I don't see anything really going on very much.

It's really, really sad when you look at Germany, which has been doing these things for 30 years, and we're talking about jobs and things like that. Anyway, this is going into opinions, I guess.

Minimum wage — you can see my button here. That could be balanced off with….

For instance, there's all this talk about taxes in our province. "We'll drop the corporate tax. Oh, we'll drop the small business tax." Everybody is going to the, not the quality of our life.... "We're going to try to get business. Therefore, we're going to get more jobs." Blah, blah, blah. Anyway, small business tax could be lowered a little bit to make them happy, because they're always talking about how we can't make money, etc.

J. Les (Chair): One or two final points, Wes?

W. Kmet: Corporate taxes, I guess, is a big issue to me. From what I've seen of corporations around the world, they have been very terrible in the environment. I also don't really believe they do that great of a job when they look at what they do around the world. We have mining and oil and gas and things like that. We've got a so-called pipeline across northern B.C. that is going to have a lot of impact there — possibly tankers going down. Tar sands is our biggest polluter in Canada, and on it goes.

I would like to see the idea of them being more responsible, obviously around the world, but here.

[1945]

I see the laws and things like that being to their benefit, because a lot of money people — money families, things like that — have made a lot of the rules both provin-
[ Page 282 ]
cially and federally. I don't think they put their fair share into the money pot. All these people who came up here are saying: "Well, you've cut and cut." That's because you don't have the money in the pot.

J. Les (Chair): Can we leave it there, Wes? I said five. I gave you ten. So I think that's a pretty fair arrangement.

W. Kmet: I could always put some other thoughts in a submission.

J. Les (Chair): Sure. Send us an e-mail. We'd appreciate that. Thank you.

Just before we shut down, you'll see some bags of apples that have been left behind by the B.C. tree fruit growers association. I'd like to acknowledge them for giving us a little sustenance.

With that, we'll conclude the meeting for tonight, and we will reconvene tomorrow in Surrey.

The committee adjourned at 7:46 p.m.

[ Return to: Finance and Government Services Committee Home Page ]

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

Copyright © 2009: British Columbia Hansard Services, Victoria, British Columbia, Canada