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

Friday, October 16, 2009

9:00 a.m.

Guildford B, Sheraton Guildford Hotel,

15269 104th Avenue, Surrey, 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 8:57 a.m.

2. Opening statements by John Les, MLA, Chair

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

4. The Committee recessed from 11:59 a.m. to 1:02 p.m.

5. The Committee adjourned at 5:54 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

Friday, October 16, 2009

Issue No. 10

ISSN 1499-4178

[ Page 283 ]

FRIDAY, OCTOBER 16, 2009

The committee met at 8:57 a.m.

[J. Les in the chair.]

J. Les (Chair): Good morning, everyone. I'm John Les, MLA for Chilliwack and Chair of this parliamentary committee. I'd like to welcome everyone that's here and thank you for taking the time to participate in the work of the committee.

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

The Select Standing Committee on Finance and Government Services is the parliamentary committee that is responsible to conduct public consultations on the forthcoming provincial budget. Our all-party committee is required to report back to the Legislature no later November 15, which is the middle of next month.

This year we are holding ten public hearings in different parts of the province. Hearings have been scheduled in conjunction with the ongoing fall session of the Legislature. This being a so-called break week, we've been able to get around the province and visit several places, including, in addition to Vancouver and Victoria, places such as Smithers, Prince George, Kamloops and Kelowna. While we were in Victoria we held video conferencing sessions to hear from residents of Courtenay, Cranbrook and Dawson Creek.

We'll have another such session next week, on Wednesday morning. At that point, we will begin the work of drafting our report, which again, as I said, will be due in on November 15.

If you've not yet reviewed the Budget 2010 consultation paper, we have copies with us, and they are available on the registration desk in the back of the room.

In addition to public hearings, there is a variety of other ways that British Columbians can share their ideas with the committee. We accept written submissions, whether those be by letter or by e-mail. For the first time, we are also able to invite video or audio files. We already have some of those. That's a bit of a new innovation. They are — just like everything else — fully transcribed by Hansard. They're fully available to all members of the committee.

[0900]

Further information on how you may participate using one of these methods is available on our website at www.leg.bc.ca/budgetconsultations. Any input that the committee receives, however it is received — whether it is on line, in writing, video or audio — is given the same full consideration as any oral presentations that might be made to the committee in a hearing such as this. The deadline for the receipt of all submissions is October 23.

Today we're going to hear from a number of presenters who may each speak for about ten minutes, with five additional minutes allocated for questions from members of the committee. If there is time at the end of the day, we may also have an open-mike session for presenters to use up to about five minutes to make their presentation.

I'll ask for committee members to introduce themselves, starting with Don.

D. McRae: Hello. My name is Don McRae, MLA for Comox Valley.

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

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

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

J. van Dongen: John van Dongen, Abbotsford-South.

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

B. Ralston: Bruce Ralston, Surrey-Whalley.

B. Routley: Bill Routley, Cowichan Valley.

J. Les (Chair): Also on the committee is Michelle Mungall. I believe she will be along shortly.

To my immediate left is Committee Clerk Kate Ryan-Lloyd. At the registration desk is Stephanie Hansen, looking after smoothly getting people settled in here as they get ready to make their presentation. Hansard staff Michael Baer and Gail Swetlow are here to make sure that everything that's said here today is appropriately recorded.

We'll now get on with the first delegation, from Terasen. I believe we have Douglas Stout and David Bodnar.

Presentations

D. Stout: Good morning, everyone. Thanks very much for the opportunity to be here today. My name is Doug Stout. I am vice-president of marketing and business development for Terasen. With me is David Bodnar, who is director of our community, aboriginal and gov-
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ernment relations group. We're here to talk about some of the things we're trying to undertake and work with government on to further, we think, the opportunities within the province.

Most of you, I think, are familiar with our company. We're the largest natural gas distributor in B.C. We serve about 930,000 customers in 125 communities. In the past number of years we've expanded our business beyond the natural gas business, and we're now providing alternative energy solutions across the province — which include geoexchange, solar, thermal, biomass.

We're also developing district energy solutions for municipalities and private developers. We're pursuing opportunities in the transportation sector, particularly focused on furthering the use of natural gas vehicles in the province.

We're working with industry partners who have developed technology here in B.C., and we're currently exporting that technology across the world. We're hoping to move that initiative further in British Columbia. We're introducing lower-carbon fuel use within the province and furthering some extensive development of new uses of natural gas, focused mainly on commercial fleets, bus fleets and trash haulers.

In terms of recommendations to the panel, what we're focused on is looking for the government to find ways to encourage the private sector to continue to invest in British Columbia and develop a broader investment profile in B.C.

A lot of the recovery in the economies, I think, across the world has been driven, as most people would see, by the government stimulus that has happened over the past year. That's been welcomed, I believe, and is pushing things forward, but we think that there is still an ongoing need here to find ways to stimulate private investment in those and keep the ball rolling, as it were, from the incentives that have helped move things forward here.

So we think that, in the area we're looking at, is a focus on clean energy solutions, and we think those bring both environmental and economic benefits to the province in GHG reductions, creating jobs within the province and creating some additional revenue streams for the province.

I'll focus first on the natural gas vehicle sector. With the recent announcement of HST, we learned that natural gas as a motor vehicle fuel would no longer be exempt from the provincial sales tax, yet diesel and gasoline are. We believe that natural gas, as a transportation solution, is an important domestic market to develop in order to grow local demand for natural gas.

[0905]

The U.S. export market for natural gas is forecast to decline somewhat significantly over the next 20 years, and we believe that growing the local demand for natural gas is important for us to continue to help offset those declines in the potential export market, which helps preserve our royalty revenues for the province, which have brought in, in excess of $2½ billion annually over the past number of years.

The primary barrier to preventing the use of natural gas or bringing natural gas vehicles is a higher initial capital cost for the vehicles — probably some 10 to 15 percent, depending upon the vehicle itself. We're suggesting that the province entertain establishing a vehicle purchase incentive program, which would offset approximately 50 percent of that incremental cost for things like buses, trash haulers and fleet vehicles.

We believe that the incremental natural gas market that develops would more than offset the cost of the incentive program over the long term. The remaining premium that customers or users would pay for the vehicle is offset by fuel savings reductions, as natural gas is a lower-cost fuel than diesel fuel or gasoline.

This market-development type of strategy has been very successful in the U.S., for example, and approximately 25 percent of all new buses in the U.S. utilize natural gas. These natural gas vehicles are used around the world and are based on the Westport technology that was developed a number of years ago at UBC.

Terasen is willing to invest in the required fuelling infrastructure for that market — so to put private sector capital into place to develop the fuelling infrastructure to allow these fleets to be rolled out across the province.

We'd suggest that the government consider a provincially administered rebate for the provincial portion of the HST on the capital purchase, rather than, maybe, an outright subsidy to people — so a different way to try and manage through the nuances of that. We're working currently, in contact with the Ministry of Finance, to see how we can come up with ideas to further these types of programs and move that forward.

Additionally, in a recent filing with the B.C. Utilities Commission, we've applied to bring our call centres and billing centres, which are currently in eastern Canada and in Manila, back into the province of British Columbia. That would create a little over 300 jobs in B.C. — long-term jobs — both in the Interior of B.C. and in the Lower Mainland. So we're hopeful that we can have that operation up and running by January 1, 2012. That's an important initiative, we believe, for ourselves, for our customers and for the province as a whole.

Our economic analysis shows that that will create about $25 million per year of ongoing economic benefit to the province with those long-term jobs and the spinoffs of the benefits there.

We also believe that by encouraging private sector investment in B.C., the provincial government can look to form partnerships, assist in meeting the climate change goals, alleviate financial pressures and allow the government to direct capital to areas where it is most needed. I'm sure you've heard from many folks looking for more
[ Page 285 ]
money, as we all do, from government over the years and the challenge of where we, as a province, come up with those dollars.

As an example, we've seen an overwhelming interest from what's called the SUCH sector — so schools, universities, colleges and hospitals — in looking at ways to revamp their energy systems. We've been working with them in identifying facilities and a business model that would see us acquire existing energy assets from those entities and then integrate them into a utility structure and expand and optimize those into higher efficiency to reduce costs and to reduce greenhouse gas emissions.

This provides immediate financial return to the government or to those institutions as we acquire those systems, and the efficiencies, obviously, go to the longer-term benefits for those entities.

B.C. has an inventory of about 1,600 school district facilities, 140 hospitals and about 40 colleges and universities. We believe that we can upgrade those systems over a period of about ten years, resulting in about $1.5 billion of investment within the province for those types of facilities and reducing greenhouse gases by about 750,000 tonnes per year.

A couple of examples to lay out for you. A heating and cooling system in a school typically represents about 50 percent of their GHG emissions. We're looking at a project in the Fraser Valley whereby we would invest in a geo-exchange system for a school. It removes the need for about a $750,000 capital investment by the school district and delivers a reduction in GHGs long-term of about 75 percent from their normal operations.

In the hospital sector we've carried out some analysis in conjunction with one of the large Lower Mainland hospitals that would see us acquire a steam system and a heating, ventilation and air conditioning system for approximately $20 million and then contribute additional capital to improve efficiency and reduce greenhouse gas emissions by about 10,000 tonnes per year.

[0910]

So that would see an injection of about $20 million into the hospital authority and a long-run operation of that facility by ourselves.

We have a number of successful municipal partnerships, and we're providing community energy systems and solutions across the province, working in concert with municipal governments. Our challenge with municipalities, obviously, is that they have access to very low-cost capital. We see an issue there, just in the long run, of where that capital should be directed and also from the development of, I'll call it, a plethora of small utilities operating across the province and then that loss of efficiency and ineffectiveness in being able to roll out solutions in kind of the high grade to low grade across the province and provide benefits to customers.

Part of the uniqueness of how we operate is that we're a regulated utility. We operate all our assets within the oversight of the B.C. Utilities Commission. We believe that the types of solutions we're talking about here in working with various levels of government are dealt with in an open and transparent construct. Anyone is free to come to the Utilities Commission.

Our books are open, as it were, so the financial returns we make, our operating costs and how we do our business is open to the public. We carry on ongoing consultations and proceedings with the Utilities Commission and with our stakeholders and customers. So it's a very open and transparent way of doing business.

We believe that there are some significant opportunities within the province to stipulate further growth and spinoff benefits with the private sector and that if we can look at some new and creative ways to tackle these things, we can meet some economic challenges and meet the climate change goals that the province — not only the province — North America and the world have laid out. Those are the challenges we need to meet over the next number of years.

J. Les (Chair): Thank you very much, Doug. Questions from Norm and then Bruce.

N. Letnick: Thank you for your presentation, and thank you to Terasen for looking for new and innovative ways for us to use natural gas. Appreciate that.

Could you just talk briefly about the process of BCUC as far as reducing prices to consumers on natural gas? You know, as the price of oil and gas went up, the price of natural gas went up, especially for heating homes. And then once the price of oil and gas decoupled, and the price of gas is considerably less now, how are we passing on those savings back to consumers?

D. Stout: The gas bill is made up of two components: the cost of putting the pipe in the ground and delivering the gas, and then the cost of the gas itself. The cost of the infrastructure of the pipes and our operations is regulated and reviewed by the B.C. Utilities Commission. The cost of gas — we purchase gas from producers — is flowed through at cost to customers. Every quarter we review what the outlook is for natural gas costs and adjust the gas cost to flow through what we see to be that cost going forward.

Over the past year we've seen two to three price reductions for consumers as the price of gas has come down, as you noted, decoupled from where we'd seen it with oil previously. I think we're now at the lowest-cost natural gas that we've seen in about the past five years for consumers here in B.C.

B. Ralston: Thanks very much, Doug, for your presentation. I just wanted to briefly get your comment a little bit more expanded on what you talk about on page 5. I read a summary of your filing before the BCUC
[ Page 286 ]
making the business case that having call centres here in British Columbia was economically advantageous to what has become the practice in many companies — outsourcing it overseas. So I'm wondering if you could just briefly summarize the business case that you made to the BCUC that these call centres be established here in British Columbia.

D. Stout: We had, like a number of other folks, outsourced our operations in 2001. Initially, those operations were in B.C. and then migrated, as I said, to eastern Canada and our billing centres to Manila.

We took a look in the past year or two — the world has kind of evolved a bit — at the information systems we needed in place. Technology has improved a lot. We looked at the opportunity of bringing those back into B.C. So we took advantage, I think, right now of an opportunity with low-cost real estate. We're looking at acquiring a building in Prince George and leasing a building in Surrey for those operations.

We've also structured a new labour agreement with COPE, Canadian Office and Professional Employees Union, that's really a market-based and flexible agreement that will allow us to hit the best of both worlds in bringing those jobs back to B.C.

[0915]

So it's been the combination of technology changes, the operating agreement or labour agreement with COPE, and probably lower-cost real estate than we might otherwise have gotten that's allowed us to come forward and put down a proposal that we think is going to be about $4 to $5 per customer lower cost than what we have in our existing arrangements. That's our business case on that side. Then over and above that, as I mentioned, is that ongoing benefit of those 300 long-term jobs in B.C.

J. Les (Chair): Two more questions. John and then Don.

J. van Dongen: Doug, you talked about government and its role to stimulate private sector investment. Could you comment on the impact on your investment decisions of the competitive corporate tax climate? We have tried to have a competitive corporate tax rate. How has that affected decisions within Terasen?

D. Stout: Our business is probably a little different than some, just because of the nature of the utility business. But when you start looking at the opportunity for discretionary investments, that tax benefit is very important when attracting capital. I think that in our situation, because our customers pay the tax that we pay, that corporate tax benefit really flows back to consumers in B.C. through the utility business. I think that from the utility side of things, it's a benefit in attracting capital investment. That way it flows back to consumers.

From the other parts of our business that are not necessarily regulated, it is an important decision. You're looking for the place with…. As a shareholder, you're looking for the best bang for the buck. So it is a key thing in two ways in our business: attracting the capital and flowing back a benefit to consumers.

D. McRae: You mentioned at the start of your presentation that you are looking at diversifying. Particularly, you mentioned biomass. Could you expand on the biomass energy you may be moving into?

D. Stout: Sure. We have, actually, a couple of, we'll call them pilot projects underway right now — one in Salmon Arm and another in the Fraser Valley, looking at recapturing gas from landfill-recaptured gas and another from an agricultural facility, capturing methane from agricultural facilities.

Our plan with that is to take the biogas — call it green gas or methane — and put that back into our natural gas system. Then that can be distributed to customers as part of the gas stream.

We're also working with customers right now to develop what we call a green gas offering. That gas is more expensive than the natural gas today, and we would look for opportunities where consumers may want to pay a premium — like they do for green power, in some places, or for wind power — and have that gas then streamed directly to those end uses.

That could be in-home use. It could be in vehicles. It could be in natural gas–fuelled power plants such as on Vancouver Island — that sort of thing. We'd take advantage of, obviously, the benefits of recapturing the methane and then having this green gas offering.

J. Les (Chair): Thank you both very much for coming this morning. We're out of time. We'd like to have you longer, but we have to move along.

The next presenter is from the British Columbia Paraplegic Association. Melanie Crombie is here.

While Melanie's getting settled in, I'd like to point out that the local MLA is here, handing out business cards.

Dave Hayer, good morning.

Good morning, Melanie.

M. Crombie: Good morning, and thank you for the opportunity to speak with you today. I'm Melanie Crombie, the executive director of the B.C. Paraplegic Association. I'm here to talk to you about how the B.C. Paraplegic Association has transformed the way we do business as a non-profit and transformed our programs and to give you some food for thought on how the government can save money by using the specific expertise of non-profits like the B.C. Paraplegic Association.

For the past 52 years the B.C. Paraplegic Association has helped people with spinal cord injury get their lives
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back in the community. We've helped over 100,000 British Columbians in that 52 years.

In 2008 the B.C. Paraplegic Association engaged in a strategic planning process to transform our organization into one that was sustainable no matter what the world's economy did. That strategic planning process took us to look at what all the other organizations did who worked with spinal cord injury, what the health authorities did, what other non-profits did and what for-profit organizations did.

We looked at our programs, we looked at our outcomes, and we looked at our overhead. What we discovered was that the B.C. Paraplegic Association is unique in helping people transform themselves and their lives once they get a new spinal cord injury and move back to the community.

[0920]

We were told by health authorities around the province that they provide housing and income supports, but beyond that there was very little service. In rural areas there was no service at all. They told us that we were vital to the health of their constituents and that no one provided adjustment-to-disability counselling other than the B.C. Paraplegic Association.

When we looked at our current programs…. Our current programs focus on case management — adjustment to disability. The case management gets people housing and transportation and makes sure they have income supports and home care. But when we looked at the research, the most recent research, only 36 percent of people with a spinal cord injury go back to work.

Of people with a new spinal cord injury, 39 percent go back to the hospital in the first year. They use the emergency room a lot because they can't get the answers to the questions that they have about living with this new condition that they have. Sometimes they go back for up to two weeks because they've developed a secondary health complication.

Spinal cord injury happens in an instant, but it lasts for a lifetime, and it's not fixed by visits to the doctor or visits to the hospital. It's a lifelong challenge, and the challenge is the secondary health complications. They get pressure sores. They get lung infections. They become obese because they don't know how to exercise, and they get things like diabetes and heart disease. Urinary tract infections are really common in people with spinal cord injury.

The Health Ministry told us that spinal cord injury was one of the top two most expensive health issues, the other being brain injury. It is because people go back to the specialists over and over again and because they go back to hospital on a regular basis. Over a lifetime, research shows that the cost to government of a spinal cord injury is between $25 million and $30 million for health care and support.

A lot of that cost could be mitigated. It could be mitigated by people taking responsibility for their own health and by having the education, training and tools that they need to keep themselves healthy.

And so what BCPA did…. We recognized that the service that we were currently providing and are currently providing right now is not enough. It's not enough to really launch people into a new, healthy life. So we designed an entirely new program based on research and best practices and our experience of the past 52 years. It's called Rebound.

What Rebound will do — we're going to launch it on April 1 — is train people so that there's a significant reduction in secondary health complications. We'll teach them how to develop and maintain an active, healthy lifestyle. Our coaches and mentors will make sure that they continue on that lifestyle and that they're motivated to do that.

The program is designed so that more people go back to work. They re-enter the workforce, and they're not dependent on the persons with disabilities allowance that the government provides. The program is designed for self-efficacy so that people take responsibility for their own health, for their life and for supporting themselves.

The Ministries of Healthy Living, Health, and Housing and Social Development are really interested in this disease-prevention, health-promotion and self-efficacy program. They're particularly interested in the cost-benefit model that we've developed, based on a hundred different assumptions, based on research.

The reason they're interested in that is because there are significant savings shown when we keep people out of hospital and we get them back to work.

Rebound is a program that is an example of the new ways of thinking at BCPA. The program will significantly change the health outcomes and the lifestyle outcomes of people with spinal cord injury. It was also designed to be a contract service. Having the contract would sustain the program.

The new ways of thinking at BCPA also include business cases for each of our programs and everything we do, a three-year business plan and a 50 percent reduction in our overhead. Sustainability is the goal of the B.C. Paraplegic Association, but I believe it's also the goal of government and every MLA.

[0925]

Because our health care services have been so great, people haven't taken personal responsibility for themselves, and many of the diseases that were preventable are now straining the health care system. In the future, that will continue to increase.

The demand on health care could be reduced through prevention programs. It's especially difficult during economic downturns for health to be provided, and it's a real concern for us citizens who want to be able to count on it when we really need it. The B.C. Paraplegic Association would like to offer some suggestions which, of course, have ramifications for your committee.
[ Page 288 ]

Effective health promotion and disease prevention programs are proven to reduce health care costs. Invest in them. Prevention programs with proven track records and good returns on investment for government are worthy of becoming line items in ministry budgets. Over the long term, they will positively change the health care outcomes for British Columbians and reduce the strain on the health care system and its budget. What is required are long-term thinking and investment.

Invest in programs which increase individual self-efficacy and self-reliance so people don't need to rely on government for everything. I want to give you an example.

One of our clients is a young woman. She's a quadriplegic on a ventilator. She moves her wheelchair by blowing into a tube — a sip-and-puff tube. She works four days a week as a kindergarten teacher for the Vancouver school district. I have real difficulty with people with spinal cord injury who tell me they can't work, when I see her as an example. So we've designed our new program based on her experience and the things we did with her to help her to get to where she is.

Utilize the expertise of non-profit organizations to provide cost-effective solutions to problems that government is trying to solve. In speaking with the Health Ministry, they recognize that our organization has specific expertise in spinal cord injury that many of their staff do not have. Out in the community our expertise is of real benefit to the health care system because it's much deeper and broader than what they have. They've got more of a broad-base understanding of issues.

The Ministry of Housing and Social Development has indicated that they're willing to make an investment in the Rebound program, and we're really grateful for that. We're still talking with the ministry about the duration of the funding and the expectations.

What we have asked for is $1.2 million a year for each of the next three years. What we're going to do is prove the concept, prove the results. Then after that, what we've asked for is to be totally funded. The $1.2 million funds half of the program that we've anticipated. After three years we've asked to be totally funded as a line item in a budget so that the benefits can continue over the next many years for people with spinal cord injury and also for the government. We have 52 years of experience. We have cost-effective solutions to the expensive health issue — spinal cord injury.

Thank you so much for your time.

J. Les (Chair): Thank you. The first question is from Norm, then to Jane.

N. Letnick: Thank you very much for your presentation. Does any of your program happen, as far as education, before the injury occurs in the first place?

M. Crombie: We have a speakers bureau. We're designing a new program for the speakers bureau that goes into three areas: high schools; labour associations; and especially in construction, because a lot of our clients come out of the construction industry. It's peers who've been injured on the job, going out and speaking about how to be careful on the job and really making the impact on people, especially teens in high schools, to be safe, to keep themselves safe.

N. Letnick: What's the number one cause of spinal cord injury?

M. Crombie: At the moment it's probably extreme sports.

[0930]

J. Thornthwaite: Thank you for your presentation. As you're aware, in the tough economic times one of the main things that the government has considered is not contracting out services and doing similar or the same services in-house. I'm just wondering if you could explain to the committee how your services are unique to something that the Ministry of Health could do in-house.

M. Crombie: The Ministry of Health has limited programs in the community. So all of the health authorities….

J. Thornthwaite: Yeah, I'm talking about the health authorities.

M. Crombie: Yeah. The Ministry of Health funds down to the health authorities. What the health authorities told us was that they track people for six months. What is happening with hospitals right now is that they're moving people through much faster.

One of your colleagues, Stephanie Cadieux, used to work with us. She spent two years at G.F. Strong and three months at Shaughnessy. Last week I met with the person in charge of the spine unit and G.F. Strong, Annette Lange. What she told me was that they're keeping people for three weeks in the spine unit and 70 days in G.F. Strong.

What is happening is that people are not coming out with any kind of skill level. They can't wheel their wheelchairs. They don't remember what they learned. Research has shown they don't remember what they learned in the hospital. So they come out, they're totally lost, they don't know what to do, and they can't function in the community.

What they get from most health authorities is: "Here's a place to live, and here's some home care." So they don't know how to prevent their pressure sores. They end up back in the hospital. They don't know the answers to their questions, and if their doctor's not there, they go
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to emerg, and that's more of an expense. And we find that over and over again.

So there's a huge gap in the training and preparation for people to actually get their life back. Just having a house and home care and income is not going to do it. They will be a burden on the health care system and on the personal supports. So there's an enormous gap that we've found.

D. Donaldson (Deputy Chair): Thanks for the presentation. I appreciate the intent of Rebound. I just had a clarification, mostly for me. Your examples around the outcomes, bullet point 4, people taking responsibility for their health…. I'm sure that you've studied this, and I imagine it's more than simply personality traits about people not getting back to work.

So I was wondering about some of the barriers and whether your organization addresses those barriers — for instance, advocacy around transportation and government, creating the infrastructure and putting money towards infrastructure for people to get back to work with injuries like you described. Is that advocacy work you take on as well?

M. Crombie: Yes. We've done that over the past 52 years. You'll notice the curb cuts. They came from us. We've worked with TransLink over the past five or ten years in Vancouver. The system is almost entirely accessible. We worked with them on the trolley buses and SkyTrain. Actually, we've taken the planners of all the cities in the Lower Mainland out in wheelchairs for a day. It gave them all big blisters on their hands, but they really understood what it was like.

The Rebound program. What we found was, even though we did all the advocacy, what we needed was to really change the attitude and the way people worked. We've advocated so well for this wonderful social safety net we have that when people are in the hospital, they're actually learning dependency. Imagine waking up in the morning after you've had an accident and all you can move is your eyelashes. Everything is done for you. So the thought of leaving the hospital…. People with new injuries tell me they're terrified. They don't know what they can do when they get out there.

Our program is designed so that we have professionals who will do the adjustment-to-disability counselling, because you go through the grief and loss process, and if you get stuck in denial or anger, then you can't move ahead.

But it also has highly trained peers, peers who've been through the process, who have successfully gone out into the community and rebuilt their lives. Those are the only people who can go up to a newly injured person who is lying in bed at the G.F. Strong and won't get out to go down and do the rehab.

[0935]

They can say: "Get your butt out of that bed. You're coming with me. Not only are you coming with me to that rehab session, but we're going out in the community. We’re going to go to the restaurant, and it's okay if people stare at you." They help them to get over that, but they also teach them everything they've learned.

We've intensified that program in the Rebound and added a lot of the protocols on secondary health complications. G.F. Strong has worked with us with that. We're working with ICORD to have the best practices in wheelchair skills so people's shoulders don't deteriorate.

It's that combination of the professional and the peer, the peer holding people to task and peers who are working saying: "It's not good enough to take persons with disability allowance. It's not good enough. You need to be responsible for your income. Get out and get a job."

J. Les (Chair): Thank you very much, Melanie. Unfortunately, we're out of time. I appreciate your coming in this morning.

M. Crombie: Thank you for your time.

J. Les (Chair): Our next presenters are from the Real Estate Board of Greater Vancouver: Harriet Permut and Sylvia Sam. Good morning. Go ahead whenever you're ready.

S. Sam: We've had some good news lately: a drop in the mortgage rates has made buying a home in Canada much more affordable. But the bad news to this is that the sole exception, greater Vancouver, continues to be Canada's least affordable place to buy a home. Even worse, Vancouver now has the dubious distinction of being the tenth most expensive place to live in North America, right behind Beverly Hills, Palo Alto and Newport Beach. Who knew? We're the only Canadian city on that list.

Affordability won't be improved because of the government's decision to go ahead with the 12 percent harmonized sales tax, adding another 7 percent to the price of new homes and closing costs. The government is proposing an HST rebate scheme for new homes costing less than $400,000 and a flat $20,000 rebate on homes costing $400,000 and more.

According to the B.C. Progress Board, the HST will generate $549 million in new revenue from new home sales in B.C. Much of this tax will come out of the pockets of the greater Vancouver homebuyers because of our higher land prices. This concerns the Real Estate Board of Greater Vancouver.

I'm Sylvia Sam, and I chair the government relations committee at the Real Estate Board of Greater Vancouver. With me is Harriet Permut, our manager of government relations. We're here today to talk to you about how HST
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will hurt the affordability of home ownership. We'll also make recommendations on how the government can mitigate the HST burden on homebuyers, homeowners and renters.

First, some background information about the real estate board. We represent 9,400 residential and commercial realtors in the greater Vancouver area. Our board boundaries extend from Pemberton in the north to Tsawwassen in the south, from the Gulf Islands and Sunshine Coast in the west to Maple Ridge in the east. We operate the Multiple Listing Service, and using MLS data, we produce statistical reports used by universities, economists, businesses, industry and governments.

The real estate board and its members care about the quality of life in our communities, and we're known for our extensive charitable work. We believe that affordable home ownership is vital to the quality of life for our residents.

What do homebuyers think about the HST? Well, through independent research we know that homebuyers believe the HST to be an additional hardship which would severely limit their options.

[0940]

The message we're getting is that greater Vancouver homebuyers believe the HST will force them (a) to wait longer to buy a home, (b) to raise their children in small apartments or (c) to commute long distances to a home they can afford to buy.

Right now the average price for a detached new home in greater Vancouver has reached more than $822,000. This is 88 percent more than the average sale price of $438,000 for the rest of B.C. The average MLS home price — this is for all new homes, detached, attached and condominiums — is about $702,000.

Interestingly, more than three-quarters, or about 77 percent, of new homes sold on the MLS are priced at more than $400,000. Clearly, the government's proposed $400,000 price threshold for rebates is far too low for greater Vancouver.

A key reason that homes cost so much more here is the high land values, as outlined on the table at the top of page 2 in your schedule. We are recommending that the rebate threshold increase to $700,000 to better reflect the realities of the Lower Mainland housing market.

The second message we're hearing from homebuyers and homeowners is concern about their environmental footprint. Recent cancellation of tax exemptions for energy-efficient home products such as furnaces, hot water heaters, windows and insulation has them scratching their heads.

The third message we're hearing is from buyers of resale condominiums, who are worried that their homes will have future building envelope problems. This could be a huge cost for them. Recent cancellation of both the reconstruction loan program and the PST rebate program has pulled that financial safety net from under their feet.

Apartment building owners are worried that HST will increase repair and maintenance costs for them. They are concerned that they will not have input tax credits and can't raise rents to sufficiently cover their expenses — a financial squeeze. Renters are concerned about the rents staying affordable and that maintenance will be kept up.

The Real Estate Board of Greater Vancouver has two recommendations that will help make the costs of the HST less onerous on the homebuyers and keep home ownership affordable. We also have three recommendations that will reduce costs for homeowners and renters. The recommendations are on the last page of our submission.

Our first recommendation is to exclude the land value from HST. In the long run, we believe this is the fair approach and will help the homebuyers in the areas with higher land values. It will also accommodate significant variations in land prices across the province and changes in land values over time.

This recommendation may take some time to implement, so in the short term our recommendation 2 advocates raising the proposed $400,000 rebate threshold to $700,000 for the expensive markets in B.C. and to annually tie it to Statistics Canada's new-housing price index.

We're also recommending that the province adjust the proposed new-home rebate to $35,000 from $20,000 to reflect the higher threshold. This rebate was calculated using the province's formula.

In recommendation 3 we're asking the government to reinstate an HST rebate or a tax credit for owners of leaky condos. This will help reduce costs associated with building envelope failure repairs and will ensure that these repairs are completed to accepted standards, thus protecting future homeowners.

In recommendation 4 we're asking the government to allow input tax credits for owners of residential rental accommodations to help them maintain their property without raising rents while protecting the rental housing stock.

In recommendation 5 we're asking the government to extend the HST rebate or tax credit on energy-efficient products so that homeowners can continue to reduce their carbon footprint.

[0945]

In closing, I'd like to remind the committee members of the value that home ownership brings to our economy. Each time a home changes hands, the transaction generates $42,000 in economic output, $20,000 in GDP and $13,000 in household income. It also generates about a quarter of a job per transaction. In 2008 terms, about 25,000 homes changed hands in greater Vancouver through MLS, generating more than $1 billion in economic output — plus about $500 million in GDP, $320 million in household income and 6,900 jobs.
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We're recommending measures that the province can take to lessen the negative impact of the HST on homebuyers, property owners and renters. We want our communities to continue to benefit from economic spinoffs and jobs that result from real estate and home-building sectors. Only by making homes affordable for our children and our grandchildren will our future communities grow and benefit.

I want to thank you for your time, your concentration. Do you have any questions?

J. Les (Chair): Certainly, we do, starting with Bruce.

B. Ralston: Thanks very much, Sylvia and Harriet, for your presentation. We're also going to hear later today from Peter Simpson from the Greater Vancouver Home Builders Association, so I think some of the same concerns will be raised.

My question was: given that, Sylvia, you are the chair of government relations for the organization, are you engaged in any meetings with the Minister of Finance or ministry officials? If so, what has been the reception of the proposals that you've put forward?

S. Sam: We have been engaged in various forms through our organization and through our extended British Columbia Real Estate Association. Harriet is much better primed to tell you the details as to what that discussion has been.

H. Permut: The B.C. Real Estate Association has been working with the Urban Development Institute and the homebuilders industry to discuss these various issues with the Minister of Finance and their staff. They've been very good at talking to our industry, the staff in particular, about the transitional rules. We're certainly hoping that….

The general rules for HST transition were announced yesterday. We haven't seen anything specifically on real estate yet. I know the industry is hoping to see some specific rules attached to our industry, the homebuilding industry, for new homes in particular. I'm sure Peter and the BCREA later this afternoon with the Fraser Valley board will also talk about that.

We haven't got any commitments out of them. They're been very polite and clear that the government is intent on bringing in this tax. We appreciate that. We're hoping that there'll be some interest in moderating some of the worst effects on the margins.

There are some serious problems, clearly. We can't even estimate most of them, but we're trying. We're hoping the government will listen to some of the mitigation measures that are possible and bring them in. Like I say, we haven't seen that yet. We're hoping to see it. Real estate is conspicuously absent in the rules. I'm sure there's a reason for that.

D. McRae: Thank you for coming. I notice in your literature you mention that 24,600 homes were sold through the MLS in 2008. What percentage of homes would be new homes as compared to, obviously, resale?

H. Permut: On MLS probably…. You know, it depends on the category. Most houses are sold on MLS. A lot of townhouses are sold on MLS — probably fewer condominiums. So probably, in total, maybe 30 to 35 percent, which is the reason…. If you look in our submission, most of the numbers we got from Landcor, and Landcor has 100 percent sample of new homes. That's why we took Landcor numbers for the majority of our analysis.

There's a reason for that. We appreciate that we don't have 100 percent sample on ours, but it's fairly representative in terms of prices.

D. McRae: So 30 percent are new homes.

H. Permut: Probably — on MLS. Fraser Valley would be higher. But because we have so many condominiums, it kind of skews the numbers. Certainly, 100 percent of houses, I would think, and townhouses.

S. Sam: Nonetheless, even new condominiums would be paying HST.

D. McRae: Right.

S. Sam: That'd be the majority of them, unless they are first-time homebuyers, where they would get some exception.

D. McRae: But 70 percent would not have HST.

H. Permut: That's not true.

J. Les (Chair): I think there is a bit of a disconnect. His question was: what percentage of home transactions are in respect of new homes.

[0950]

H. Permut: Exactly, which is what I was answering.

J. Les (Chair): So, of all the homes sold, how many are new homes?

H. Permut: On MLS….

J. Les (Chair): It doesn't matter.

H. Permut: Oh. That's a different question. That's not what he asked, actually, I think.

D. McRae: I just pulled MLS numbers out of the….
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H. Permut: Yeah, we didn't use a lot of MLS numbers, though. We've only used some of them. Most of the analysis in the tables is actually from Landcor, and Landcor has a 100 percent sample. It comes right out of the Land Title office.

J. Les (Chair): I'm sure in discussion with the Ministry of Finance the question that I'm alluding to, I think, will come up: in terms of all of the home sales that are done in the year in the province of British Columbia, what percentage are new home transactions?

H. Permut: I can get back to you on that.

J. Les (Chair): Would you, please?

H. Permut: Absolutely. Sure. I'll ask Landcor. Landcor has 100 percent of everything.

J. Les (Chair): Right. I think it's an important distinction to make.

H. Permut: In any particular year? Just last year?

J. Les (Chair): Last year is good is enough for me — yeah. You might want to go a couple of years, because, you know, we've had some variation in the marketplace, obviously, in the last couple of years.

H. Permut: Okay. We'll get back to you.

J. Les (Chair): Okay, with that, we'll have to leave it there, because we're out of time. I thank you both for coming. Good to see you again, Harriet.

Our next presenters are from Amgen Canada — Jim Favaro and Dr. Lorne Albrecht.

L. Albrecht: If I could, Mr. Chairman, I can preface that I'm not with Amgen Canada. I'm a clinical practitioner.

J. Les (Chair): We'll take you whichever way you'd like to present yourself.

J. Favaro: I would like to start by thanking the committee for this opportunity. It is a privilege and honour to speak with you today. My name is Jim Favaro and I'm with Amgen Canada. I'm joined by Dr. Lorne Albrecht, who's a dermatologist in Surrey.

Amgen is a leading global research-based biotechnology company, and our Canadian research facility is located in Burnaby. Amgen's mission is to serve patients. I am foremost a proud British Columbian who believes we live in the best place on earth.

In preparing for today, I asked myself: what tangible proposals could I introduce to the committee that will truly raise the bar for British Columbians living with serious illnesses? I will share with you today my two ideas on how we can improve the lives of British Columbians with serious illnesses by adopting innovative medicines sooner.

Dr. Albrecht will share with us the views on how innovative medicines impact the lives of his patients with serious skin diseases. My two proposals for the committee's consideration are (1) the introduction of a communication conduit called the innovative medicine adoption indicator, enacted through the Minister of Health's office — cost, zero dollars; and (2) the formation of the innovative medicine contingency fund — cost, $20 million annually.

Before we explore these ideas more fully, what exactly is an innovative medicine? An innovative medicine is a previously unapproved pharmaceutical product that is the result of extensive research and development.

Innovative medicines can either be chemical molecules or biotechnology products, commonly called biologics. Whereas traditional pharmaceuticals are chemically based, biologics are large, complex molecules derived from living cells and are produced by highly complicated manufacturing processes that often span several months.

Biologic medicines affect patients at the molecular level and can often replicate the substance or process that occurs naturally in a healthy person. Many innovative medicines today are biologics.

With any new technology, there's a bell-shaped technology adoption life-cycle curve, developed by Rogers at Iowa State University. The technology adoption life-cycle curve divides the population into innovators, early adopters, early majority, late majority and laggards.

The technology adoption curve can be applied to how our provinces in Canada adopt innovative medicines. I am concerned that our province's traditionally long time to adopt innovative medicines is not serving the needs of British Columbians with serious illnesses. That is not fair for British Columbians without private health insurance that rely on B.C. Pharmacare.

B.C. may also be sending a signal to the world that we do not support successful innovative medicine research. For many new innovative medicines, B.C. is, unfortunately, in the laggard position.

Now, I am in conflict with the following example because Amgen produces Enbrel, which is one of the four biologics currently approved in Canada for treating severe psoriasis. All provincial drug plans, except British Columbia's and Prince Edward Island's, are currently providing funding for biologics for severe psoriasis.

[0955]

The B.C. biologics review for Enbrel for treating severe psoriasis started in January 2006. British Columbians with severe psoriasis do not currently have access to any biologics through Pharmacare, even though this review is in its third year. This is only one example where B.C. is in a laggard position in adopting innovative medicines.
[ Page 293 ]

This laggard position is not true, though, in all therapeutic areas. The B.C. Cancer Agency often leads Canada and is an innovator in the adoption of new cancer medicines. As a result, British Columbians fighting cancer have some of the best chances in Canada for a positive clinical outcome. The B.C. Cancer Agency's position on being an innovator may have something to do with this.

Let's talk first about the communication conduit called the innovative medicine adoption indicator, enacted through the Minister of Health's office. This would cost zero dollars to implement, but how does it work? After four provinces have reimbursed an innovative medicine, the company producing the innovative medicine will simply contact the Minister of Health's office with an update report, including details of the provincial listings.

This proactive communication strategy between research-based companies and the Minister of Health's office is supported in the Pharmaceutical Task Force's recommendations for improved stakeholder engagement. The innovative medicine adoption indicator helps form a communication process in which the Minister of Health's office will work cooperatively with the research-based company and Pharmacare to identify the required resources to prevent B.C. from being in a laggard adoption position for innovative medicines.

It is a reasonable expectation that B.C. should be in the early majority — that is, amongst the first five provinces in Canada — in supporting an innovative medicine to help our citizens with serious illnesses.

My second proposal is to create the innovative medicine contingency fund. The purpose is to provide contingency funding annually for innovative medicines that have been approved by B.C. Pharmacare's drug benefit committee but have not been budgeted for in the current fiscal year. My suggestion is $20 million annually. However, this needs to be discussed. Pharmacare would assume budgetary responsibility for these new medicines as part of its next planning cycle.

The innovative medicine contingency fund would be managed by a multi-stakeholder committee, with membership from the Minister of Health's office; the Deputy Minister of Health; the assistant deputy minister, pharmaceutical services division; the Better Pharmacare Coalition, and Canada's Research-Based Pharmaceutical Companies. This new level of cooperation would clearly demonstrate to the world B.C.'s commitment to supporting our citizens' health by being in the early majority of provinces adopting the innovative medicine.

Now, where is the $20 million annually going to come from?

On October 7 you heard from Canada's Research-Based Pharmaceutical Companies, Rx&D, that there have been $143 million in savings from the patent cliff over the past five years. There is a real opportunity for an additional $271 million in projected five-year savings by implementing a mandatory pricing of generic pharmaceuticals at 50 percent of the innovator price.

Further savings could be realized by expanding this model to thousands of generic pharmaceutical products that went off patent before 2009. New estimates of savings from the patent cliff are actually closer to $414 million.

Now, my vision is that the innovative medicine contingency fund will be used to provide initial funding for innovative medicines for patients with serious illnesses who have failed on traditional agents. This bridge funding will provide the opportunity for B.C.'s physicians to have access sooner to innovative medicines for their patients with the most severe diseases. For example, a portion of this funding could be used to provide initial reimbursement for biologics to help British Columbians with severe psoriasis.

In summary, investment in innovative medicines should not be viewed as a liability on the provincial balance sheet. Innovative medicines are a health investment for British Columbians. It is about the right medicine for the right patient at the right time. By working together, we can improve the health of British Columbians with serious illnesses by adopting innovative medicines sooner than we have to date. Let's put British Columbia in the early majority for provinces adopting innovative medicines.

If the committee endorses these proposals, I am willing to volunteer my time to work with the Minister of Health's office and B.C. Pharmacare in the first year of implementation of the innovative medicine adoption indicator and the innovative medicine contingency fund. I would report back to this committee in one year on the progress of these initiatives to understand how many British Columbians have been served, their health outcomes and the value that these innovative medicines have provided to their lives.

Thank you for your time and attention. I will now turn the floor to Dr. Lorne Albrecht.

L. Albrecht: Good morning. Thank you, hon. Chair and members of the committee, for allowing me to share my experiences with you today. My name is Dr. Lorne Albrecht. I'm a specialist in dermatology, and I've been in full-time clinical practice in British Columbia for the past 12 years. During that time I have seen and treated thousands of patients affected by psoriasis.

[1000]

As a standing committee on finance, your concerns and priorities obviously lie with budgetary and financial considerations. I urge you, however, to set aside these considerations for the next few minutes and hear the issue from a patient's perspective.

I have a 63-year-old female patient who is diabetic, with high blood pressure and high cholesterol. She also suffers from debilitating psoriasis affecting the soles of her feet, which causes pain, fissuring and difficulty
[ Page 294 ]
walking. She has responded only partially to multiple conventional treatments and is currently on a medication that causes her cholesterol to rise even higher.

I would like to start her on a biologic therapy, because I feel it is her only option for disease control. Unfortunately, I cannot. She does not have third-party medical coverage, and I cannot access these medications through Pharmacare with the indication of psoriasis.

I also have another 20-year-old male patient who has suffered from severe generalized psoriasis since early adolescence. His plaques are thick and painful and have covered up to 40 percent of his body in the past. He was withdrawn, barely spoke or made eye contact and rarely left the house.

After failing conventional therapies, he was able to access biologic therapy through a clinical trial and, subsequently, has gone on a commercial drug through private coverage. He has shown close to 100 percent clearance and is a changed person. He is working now — he wasn't before — and has no problem making eye contact when he comes into the office.

Scientific data has shown conclusively that the impact psoriasis has on quality of life is equal to or more significant than diseases such as diabetes and heart disease. On a personal level, I have seen the profound changes that these medications can make to a patient's life.

You have no idea what it's like to have someone tell you, "This is the first time in 20 years that I've gone on a vacation with my family and worn shorts," or to have someone say: "I've almost forgotten that I even have psoriasis anymore."

The problem is when I have to tell patients that I cannot access these treatments because of cost barriers and that these treatments are not covered under a provincial formulary to treat their psoriasis. I also tell them that if they were living in Alberta, Saskatchewan, Quebec — or any other province, for that matter — or if they had a diagnosis of rheumatoid arthritis or inflammatory bowel disease, I would be able to apply for Pharmacare coverage.

Under these circumstances, I also tell them that they should write their MLA if they feel that this lack of coverage is arbitrary, discriminatory and unjust. Please don't be surprised if these letters start to show up on your desks on a regular basis. I have lots of patients.

Please be assured that physicians treating psoriasis are well aware of the cost considerations, and the decisions made to access costing medications in the public system will require specific criteria and review. Also be assured that access to biologic therapies in the public system is critical to offering optimal health care for patients suffering from psoriasis.

Thank you, hon. Chair and members of the committee, for the opportunity to present to you today on behalf of my patients.

J. Les (Chair): Thank you. First question to Norm.

N. Letnick: Thank you very much for your presentation. I appreciate you taking the time to come here.

Health care takes about 40 to 45 percent of our provincial budget currently — and later, of course, probably more, as the boomers get older.

With your experience in the health care area, I see that you'd like us to recommend expenditures on some drugs. Are there any other areas in our health care system, in the little time that we have here, where you would suggest we could find efficiencies so that we can afford to do what you're asking here?

J. Favaro: You're absolutely right. It's all about outcomes. How are we getting the best benefit for each of our health care tax dollars? What we have to look at is if we're investing a dollar — and it truly is an investment in British Columbians' health — what are we getting for that dollar?

We have to look at implementing outcomes analysis. You will find that with these newer innovative medicines, as Dr. Albrecht pointed out, not everyone is going to be using them. They're going to be used for the most severe patients, and as a result, they're going to be tracked on how they're doing, what their outcome is. Should they be discontinued on the therapy? Should they be continued on the therapy?

In summary, we have to look at outcomes to ensure we're getting, first of all, clinical value for every British Columbian on these innovative medicines. Secondly, we need financial value for taxpayers of British Columbia. Monitoring outcomes and being more diligent about how we use the tax dollars is how we can get that greater efficiency so that we can afford these innovative medicines.

L. Albrecht: If I can expand on that.

J. Les (Chair): Just very quickly. Very quickly.

[1005]

L. Albrecht: Understand that there are significant costs associated with the conventional medications as well. If I start a patient on a drug for which I have to monitor the liver function every month and I have to have them come in for phototherapy three times a week, it has significant costs.

The thing, I guess from a clinical perspective, that I want to impress is that I just feel these medications are better. I can treat patients more safely, more effectively with less monitoring and more significant impacts on quality of life.

J. Thornthwaite: Basically, then, what you're suggesting is that you want the physicians to have more autonomy on choosing the drugs that are covered.

L. Albrecht: I’m not sure if I’m really saying that. I think we have autonomy in terms of what we feel is
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the best therapy for our patients. But the problem is, in many situations — as I've just outlined in a couple examples here — really, biologic therapies form my best option.

Now, I understand there are five biologic therapies I can access, and I may choose one or the other dependent upon clinical criteria and different measures. The problem is that unless I can access them via some form of insurance — because in the vast majority of cases, patients will not be able to afford the cost of these medications on an ongoing basis — I simply don't have that option. It's not available to me. I'm limited to my other choices, which have their own limitations and costs.

J. Thornthwaite: With regards to the psoriasis issue, there are not enough of those choices available that fit under the insurance model. Is that what you're saying?

L. Albrecht: In terms of conventional therapies, you mean?

J. Thornthwaite: Yeah.

L. Albrecht: That's true, in fact. I mean, we've had conventional therapies of various types for many, many years, and patients can often respond very well. In almost all circumstances we'll start off with that. Unfortunately, you're limited by toxicities, by lack of response — all kinds of problems with them. Not to say there aren't issues with biologic therapies, but that forms part of how we monitor and treat patients.

B. Routley: You’ve raised an interesting issue. My question is: how is it that other provinces are ahead of us in dealing with these biologics? Also, if you could, Doctor, refer to any additional costs that the health care system ends up dealing with anyway. You've pointed out that by treating patients with these therapies they can be employable again and, obviously, their quality of life improves, but also there would be the potential health impacts down the road if they're not treated, and that's got a cost to it.

L. Albrecht: Sure, of course, and that's a very good point. In fact, what we've learned in the literature over the last five to ten years is that psoriasis — severe psoriasis, generalized psoriasis — is a significant systemic inflammatory disease. Controlling for factors such as high blood pressure, high cholesterol and diabetes, patients with severe psoriasis have higher rates of cardiovascular mortality and morbidities.

We know that decreasing the burden of inflammatory disease should help reduce their risks. Obviously that, it stands to reason, would spin off in terms of cost considerations and economic considerations.

J. Les (Chair): We're unfortunately out of time. I want to thank you both for coming this morning and sharing your presentation with us.

The next presenter is Patti MacAhonic from the B.C. Wildlife Federation. Go ahead, Patti.

P. MacAhonic: Good morning. Nice rainy day. Thank you very much for having me here today. It's much appreciated.

I'm here today to speak on behalf of our 35,000 members. We have a rapidly growing membership. I see some familiar faces, so I know some of you are familiar with the B.C. Wildlife Federation. We're the oldest and largest conservation organization in the province. Some of our member clubs date back 110 years.

I came on board with the federation two years ago, and in the last 18 months our membership has increased by 7,000. We're experiencing a period of rapid growth.

I have 13 recommendations that I'm bringing forward from the membership. The federation is — we're over in Victoria quite a bit — known as responsible partners and work with the Ministry of Environment, Ministry of Aboriginal Relations and Reconciliation, ILMB. We work with a lot of different ministries.

[1010]

We have 24 committees provincewide, so we have a very broad scope. Conservation is our main intent, and we represent hunters, anglers, outdoor recreationalists and recreational shooters. That's a little bit about us. I have a history in the introduction here.

We have a huge commitment to fisheries and wildlife resources. Many of our members are longtime members. Some of our committee chairs are actually founding members from the early '50s, and I know that we bring a huge resource to government when we move forward because we have a lot of the history.

An example that I like to refer to is that I was in an energy meeting last year, and one of our members, Ed Mankelow…. The ministry was sharing that they had this new and innovative approach, and up pops Mr. Mankelow, who says: "In 1958 we went down this road." They have all those documents to support that. So we bring a lot of information. We have technical people as well as the grass roots. That's a little bit about that.

I'm just going to go through here. There are approximately 500,000 anglers and 150,000 hunters in the province. Between one-half and two-thirds actively participate in any year.

In the years 2001 and 2002, after 20 years of declining participation, 86,242 hunters paid $8.4 million in licence and tag permit fees and contributed $63.23 million to the provincial GDP. This generated nearly 1,870 direct jobs. Fishing contributed another $112 million to the provincial GDP and 7,900 jobs. Partly due to recruitment and retention strategy, by 2005-2006 this had grown to 92,000 and $517 million to government coffers,
[ Page 296 ]
but only $12 million has been returned to the fish and wildlife branch of the Ministry of Environment.

I'm on page 6. With the depressed economy, the fish and wildlife branch funding amount has declined even further — these factors have created what some of our members call a false economy — causing fish and wildlife to restrict its activities and will inevitably, again, result in declines of generated revenue.

We're a little bit different than some of the other people that will be sitting before you. How we're different is that…. We do pay our taxes. I have a family. I have three children, and I have five grandchildren. I'm very clear that I'm fine with my taxes going for health and for education.

Our membership…. We pay for the services to conservation, so we are a fee payer. Our hunting licences, our fishing licences, tags and fees — those generate money, and we want to make sure that they go back to the resource. We're all about sustainability.

The BCWF cannot support the use of funds from the Habitat Conservation Trust Foundation to support the core responsibilities of the province for wildlife management. This was not the intent of hunters, anglers, trappers and guide-outfitters when they agreed to the surcharge on licences and tags.

Presently, due to the lack of moneys, the fish and wildlife regions look to HCTF in their applications to fund core management responsibilities. This is not a sound business practice for the province, and hunters and anglers strongly object to it.

At the same time we want to be really clear, on behalf of the federation, that we really commend the wildlife branch staff for the work that they are doing. It's very much appreciated. They're making the very most of what they can with limited resources. We want to make sure that we acknowledge that.

Inventory is very, very important. There's been a real lack of funding put into inventorying. It's having some serious effects, and it's going to continue to have some serious effects.

Right now there are different conversations going on with government and first nations on land, fish, wildlife and the natural resources. We need to have the inventory to do that. Right now, I'm sure you are aware, there are blockades going on in the Klappan. What's happened is that the Tahltan First Nations are saying that there's a conservation concern with moose.

[1015]

The ministry stands behind their numbers and says that there is not a conservation concern. In the meantime, for this hunting season my membership has not been able to get in. The Tahltan have been blocking B.C. resident hunters from going into the territory.

Because there's no inventory done, that puts us in an awkward situation. We believe this is going to happen more and more. We're in a difficult situation because government and first nations have a government-to-government relationship, and what's happened is we've kind of got closed out.

We're working really hard to work with first nations, because our values align very closely. We're people of the land. We have those family values, and we really have the same things.

Some of the things that we're doing to try and remedy that is we had Shawn Atleo attend our AGM last year. There was a situation, which hit the papers, on the river this year with Chief Willie Charlie being shot in the face with a pellet gun.

I've worked with the Stó:lô extensively in my past, so I picked up the phone, and we were able to start some communications. We actually have a working group now with first nations and recreational fishers. That's a fairly recent thing.

We're doing what we can. The government needs to step up and put that money into those inventories, because this is going to create more and more conflict as we go on. We cannot stress the importance enough.

Without current and accurate data, it will be impossible to ensure that this does not happen, these kinds of situations, or even to defend any government management actions from an accusation of infringement.

The federation requests that the Standing Committee on Finance review the implications of the William case. How will the province deal with the issue of infringement on first nations as provided by the William case?

There are three types of infringement cited. They are infringement on a wildlife population, infringement on the diversity of species and infringement on habitat and its impact on wildlife population numbers.

If money isn't going to be put in now, it's going to cost the province a lot more money. Inventorying, I can't stress strongly enough, needs to be done.

I'm going to move on.

What's happening to our members as a result of this? Provincially we've maintained many of — and this is on our members — the same restrictive annual allowable harvest numbers. I don't know how many of you are hunters or come from hunting families. A little bit? So some of you know a little bit about this.

There's an allowable harvest every year, and it's based on the inventory numbers. So we're getting restrictive in annual allowable harvest numbers simply because funding for current inventories is limited.

There are a few things that are happening too. This has increased wildlife-agriculture conflicts. Up in region 5 right now there are a lot of conflicts. Some of our members are meeting with Minister Penner next week. There is a lot of wildlife being hit by vehicles. There is not the inventorying done, and then what happens as well is if these aren't able to be managed properly and scientifically, then there's a big winter kill as well.
[ Page 297 ]

I'm not a scientist or a technician. I'm kind of an MBA background and love the outdoors. So I'm not a technical person.

Wildlife populations have increased without the real harvest opportunities being provided. In many cases there could be a return from limited-entry hunting to general open season, which supports the provincial recruitment and retention strategy from the Ministry of Environment.

I'm going to move to access. We're recommending that money be put back, an allocated figure from $400,000 to $1.6 million to a further increase of $3 million for each of the next five years for the backlog. Again, these are not tax dollars. We are fee payers, and we want to see the money go back into the resource.

Access to government services. I don't how many of you are familiar with the e-licensing for angling that happened this year. We're excited about that. We know there are a few road bumps, like any new technology. There are always a couple of road bumps there, but we're quite excited and pleased with this.

[1020]

We're looking forward to e-licensing for hunting. We know it's going to be a big expense, so we're patient with that.

At the same time, our members want to make sure that there is more access to Internet in rural communities. There's a low access and a high cost for people in rural B.C., and that negatively impacts our membership and the ability to use the e-licensing and for B.C. residents to get information.

I've got a section on e-licensing for hunting. I know this isn't going to happen this year. We're hoping it's going to happen in the next couple of years, so I won't go over that.

We'll go through habitat. How am I doing for time?

J. Les (Chair): You've got exactly three minutes left, including questions, so it's up to you.

P. MacAhonic: Habitat enforcement, agricultural land reserve we talk about here. Privatization of Crown lands, enforced recreation sites are some of them.

Invasive species. We commend the government for the work that has been done, and we want to make sure that that does continue.

The low salmon returns this year are a concern for everyone in the province, and we encourage the provincial government to support the federal government in the salmon enhancement program. I have something there.

We are moving towards wildlife outdoor education for kids.

Third-party engagement with first nations is critical. We think that it is.

I'm sure the B.C. Wildlife Federation isn't alone in saying that we hope that direct access funds are generated for the next fiscal year, because they've pretty much dried up. And we've asked for an HST exemption.

There are 13 recommendations here, and I've actually provided in your packages some brochures on some of the programming that we provide for people in the province of B.C.

We have a very small staff. There are nine of us. We have 35,000 members. We provide a lot of services for a lot of people in the province and very much work with government to partner as stakeholders in a lot of the work regarding conservation, fish, wildlife, hunting regs — all of those things. That's it.

J. Rustad: Thank you, Patti. It's good to see you again.

I agree with you completely about inventory in that we need to make science-based management decisions. There's no question around that. I also want to commend you in terms of the education programs that the Wildlife Federation is supporting and working towards. I think it's great that we raise that level of awareness.

You've got a very lengthy request that you have put in here with regards to this. I know that fees originally — the idea behind them — were dedicated towards these programs, but the fees end up going into general revenue. At this stage, with the challenge that we're facing with things like health and education — health, in particular — in our budgets, to reallocate fees towards some of these would mean we'd have to take away from somewhere else, or we'd have to raise taxes.

I'm just wondering if you have given any thought as to how we may do that.

P. MacAhonic: Yes. These are not tax dollars. These are generated by hunters and anglers for the resource. We need to look long term. Our activities provide health benefits. They get people out there. This isn't from here to here. We need to look long term, and these are sustainable activities to get people outdoors, to get people active. So there are a couple of different things.

We believe that without fish and wildlife resources, it's going to have huge, long-term negative impacts on health, on education and on our natural resource — our fish and wildlife and their habitat.

These are not tax dollars. We're pretty clear on that.

J. Les (Chair): Okay. We're flat out of time, Patti, so thank you for coming today.

The next presenter is from the B.C. Association of Child Development and Intervention, Bruce Sandy.

B. Sandy: Thank you, Mr. Chairman. I appreciate the opportunity to actually come and present to the group today.

I'm the provincial advocate for the B.C. Association of Child Development and Intervention. We have 12 recommendations to bring forward to you today.
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The B.C. Association of Child Development and Intervention represents approximately 30 member agencies around the province and also in the Yukon. Our agencies are child development centres — Sunny Hill Health Centre, Queen Alexandra hospital within the Vancouver Island Health Authority and a number of other agencies that provide services to children and youth with special needs.

[1025]

We have a made number of presentations to standing committees on finance in the past, and we've been very pleased that you've actually supported our recommendations around funding, assessment and intervention services, and in addressing the wait-lists that there are for these services. You'll see, within the package that I've included, the text and also the recommendations that have come forward from the previous submissions and presentations to the standing committees on finance.

The definition for children and youth with special needs that we actually use is consistent with and comes from the cross-ministry framework for children and youth with special needs. So the definition that we use is: children and youth between birth and 19 years of age who require additional educational, medical health and social environmental support beyond that required by children in general, to enhance or improve their health, development, quality of life and community integration.

At this point in time there are approximately 52,000 children with significant special needs in the province. Then there are also children in care, which is approximately 9,000 individuals, and there are estimates that as high as 80 percent of those children have some form of special need.

The latest figures that we have with respect to wait-lists for services for assessment and intervention for children and youth with special needs is over 6,000 children waiting on wait-lists. Naturally, our first recommendation will be around the funding and addressing the funding needs for those wait-lists, and especially for the wait-lists around therapy services.

The recommendation there is, again, consistent with the recommendations that have been made in the past and is: allocating a minimum of $40 million to address and eliminate wait-lists for services and programs for children and youth with special needs. The additional funding for early intervention and school-based therapies, including physiotherapy, occupational therapy and speech-language pathology, should be the priority. These funds should be allocated in a timely, equitable and consistent fashion to all MCFD regions in the province.

We were encouraged in the budget in February 2009 that there was a commitment for allocating an additional $38 million to address services for children and youth with special needs. The funding was to be distributed over three years — $11 million this year, $13 million the following year and $14 million the year after that.

The $11 million has been indicated to us from the MCFD officials, and it will be allocated this year. That is going to support areas such as medical benefits, nursing support and autism.

We have learned that the additional funding for the subsequent two fiscal years is not going to be actually coming to our contracted agencies because of fiscal constraints. We strongly recommend that that be reconsidered and that you look at funding the additional services for children and youth with special needs, especially around the therapies, which is the $40 million.

As I said earlier, there are as many as 80 percent of the children in care who have some form of special needs, so we're making a recommendation that $30 million be allocated to address the needs of these children.

Many of the children and youth with special needs also have extensive mental health needs as well. There has been some allocation of additional funds back in 2006 to address this, but it was not specifically for children and youth with special needs. So we are making the recommendation that at least an additional $10 million should be allocated for the hiring of psychologists and other mental health professionals to address the diagnostic and behavioural needs of children and youth with special needs.

Child care funding is also an issue. The child care services that are provided by our member agencies include supported child development programs for children with special needs, and a number of our member agencies also provide other child care services.

[1030]

We are all aware of the funding coming from the federal government of about $100 per month for children under the age of six. This doesn't meet anywhere near the funding costs for children in care. We are recommending that the government not only continue the current level of funding for the supported child development program, but the government should also develop a comprehensive day care strategy and funding base that protects, enhances and describes in detail all of their objectives for the future and corresponding service levels and budget commitments.

Our next recommendation is around the transfer of service for children and youth with special needs back from Community Living B.C. to MCFD. This is a recommendation that we've made in the past, and we're very pleased to know that the government is following through with its commitment. It is now six months behind schedule. It was supposed to happen as of March 2009, and the target is as of the end of October.

In recent discussions with the senior officials from MCFD, there has been an indication that all the funding has been reabsorbed, for the services for children and youth with special needs, into the MCFD budget.
[ Page 299 ]

In trying to decipher the financial statements and to follow the dollars, which is always a bit of a challenge, it looks like there is approximately $87.2 million for these services for children and youth with special needs that has been transferred back that needs to be within the MCFD budget and should not be allocated for other services. We also recommend that these funds should be easily identifiable and traceable within the MCFD service plans and budgets.

The next recommendation is around gaming funds. As you realize, a number of our member agencies actually raise funds through charitable donations and fundraising activities. In a recent provincial meeting it was indicated that our agencies receive approximately $2 million or more in funding from the gaming commission and another $300,000 from service clubs.

Our recommendation is that the Ministry of Housing and Social Development and the gaming commission should designate agencies providing services to children and youth with special needs as a top priority and ensure that all funding for these agencies be maintained and enhanced.

The next area is with respect to facility and capital costs. In the past our member agencies have received no funding around capital and infrastructure funding costs. We realize that there are hundreds of millions of dollars that are coming from the federal government to the provincial government around infrastructure costs, around buildings for the Olympics, for highways. We are making the recommendation that the government, in cooperation with the federal infrastructure funding program, should invest a minimum of $50 million for capital projects and environmental upgrades in this area. Contracted agencies should receive appropriate capital allocation grants along with their third-party service agreements.

The next area that we would like to address is actually on page 10, and it's with respect to the municipal pension plan. A number of our member agencies are actually members of the Community Social Services Employers Association. In 2006 there was a decision made that these agencies would begin to provide the municipal pension plan.

There are now indications that these costs will not be covered by the government, which will have a significant financial impact on our member agencies. So we are recommending that the provincial government should provide funding to fulfil the commitment made in 2006 to implement the municipal pension plan.

In a similar vein, around collective bargaining agreements and other costs, these additional costs need to be covered because they cannot currently be covered by the funding allocations by our member agencies.

[1035]

So we are making the recommendation that the government should allocate additional funding to contracted agencies to cover increased collective agreement and benefit costs as well as other extraneous cost pressures.

How am I doing for time?

J. Les (Chair): You have — let me see — four minutes left, including questions.

B. Sandy: Okay, good. I'll just quickly go over the last recommendations. Our recommendation around training programs for physiotherapists, occupational therapists and speech-language pathologists is that there is a need for a doubling of all those programs, consistent with what has happened with the faculty of medicine at UBC, UVic and UNBC.

Accreditation. All our agencies are accredited agencies and receive top accreditation awards. We have recently learned that those accreditation funds may not be covered by the government as they have in the past, so we're recommending that these funds for the accreditation of the agencies be covered by the government.

With respect to autism services, you have recently heard about the closure of the early intensive behavioural intervention programs. This actually took place with no consultation with our association, with our member agencies that provide the services or with families.

So our recommendation around this is that the government should be in consultation with funded agencies, our professional associations and families about how to best deliver multidisciplinary, evidence-based, quality service for children with autism spectrum disorder. Instead of simply instituting an invoice payment, we're recommending that the funding come on a global, contracted basis to service the children with autism spectrum disorder and other children and youth with special needs.

Our final recommendation is with respect to…. There has also been an announcement recently of the elimination of two provincial adviser positions around infant development and supported child development. Again, there was no prior consultation with our agency around that.

Our recommendation here is that the government should use the $600,000 in funding saved from the elimination of these positions for the development of a cross-sectoral, multidisciplinary advisory committee and professional staff structure to develop, implement, train professionals and monitor evidence-based, cross-disciplinary standards for the delivery of services for children and youth with special needs across all sectors.

J. Les (Chair): Thank you. We have time for one quick question.

M. Mungall: Thank you very much for your questions and for your presentation. With the last recommendations you answered a couple of my questions, but I do still have questions around the B.C. gaming. I do under-
[ Page 300 ]
stand that there's a list put out by the ministry of what their priorities are going to be. I see that you're not on the top priority, and of course, you'd like to be there.

B. Sandy: Yes.

M. Mungall: I just want to get some clarification, though, because it immediately made me think of people in my constituency who are parents of children with special needs. They work in the arts sector, and they're now faced with losing their job, which of course is going to negatively impact their children's well-being. So I just want to make sure it's clear that you're not necessarily, or maybe you are, a top priority at the expense of other areas that have been….

B. Sandy: You know, the government recognizes the services that we provide to children and youth with special needs, which are health and social services — vital services. We're wanting to ensure that that is their consideration in the allocation of the gaming funds, and we certainly understand and appreciate that it's impacting other areas.

J. Les (Chair): Thank you very much. We're out of time.

The next presenter is from B.C. Citizens for Green Energy — Bruce Sanderson.

B. Sanderson: I'll take this opportunity to thank the committee and say good morning. There is no run on Bruces this morning here — Bruce Sandy, Bruce Sanderson. That is my real name.

B. Ralston: What's wrong with it?

J. Les (Chair): We won't go there.

B. Sanderson: You've made a good point. We should band together and start a committee or something.

I want to thank you for this opportunity to address the Select Standing Committee on Finance and Government Services. My name is Bruce Sanderson, and I'm speaking on behalf of the B.C. Citizens for Green Energy. We are an advocacy group representing a cross-section of British Columbians who encourage a legacy of clean, sustainable electricity now and for future generations.

[1040]

Through this public consultation process, you've asked the citizens of the province to tell you what our priorities are for a better and stronger British Columbia. Should government continue to protect core services such as health and education? Should government continue to reduce taxes? The answer to both of these questions is, obviously, yes. The real question is: how can government increase revenues to pay for these services and control deficits during difficult economic times?

Our group believes that B.C.'s abundance of renewable green energy is a big part of the answer to this question. This abundance can help ensure that our province has a strong fiscal foundation as we work to build a stronger, more prosperous British Columbia.

The budget update in September made it clear that green energy is key to the province's plan to strengthen the economy and create jobs. Our group was pleased to see B.C.'s leadership on climate change and B.C.'s growing expertise in the field of green technology highlighted as key advantages we have in positioning ourselves for renewed economic growth.

One of the key questions our group has been asking ourselves over the past year, as the full magnitude of B.C.'s green energy potential became clear to us, is how B.C.'s abundance of green energy could put us in the driver's seat for a change and generate substantial new revenues for B.C. by helping our neighbouring states and provinces reduce their dependence on greenhouse gas–emitting sources like burning coal.

Clean, renewable green energy is a natural resource that B.C. has in great abundance. It's a resource that could have considerable benefits for the people of B.C., not only in terms of meeting our environmental and climate change objectives but also in terms of meeting our province's financial objectives through the revenues that this renewable green abundance could generate.

The throne speech in August spoke about opening up B.C.'s green energy potential with new vigour, and our group was understandably pleased to hear this. We have no doubt whatsoever that becoming a global leader in clean energy and energy conservation will lead to the creation of new jobs and prosperity that will benefit all British Columbians.

Along these lines, our group is eager to see the green energy task force, announced in the throne speech, begin the work of reviewing the policies, incentives and impediments currently affecting B.C.'s green power potential and creating a plan for maximizing that green energy potential, including a principled, economically viable and environmentally sustainable export development policy.

As the members of this committee are undoubtedly aware, Quebec and Manitoba are already contributing to continent-wide efforts to reduce greenhouse gas emissions through their exports of clean, renewable green energy, and they are benefiting financially from this activity.

Hydro-Québec has been exporting clean electricity to Ontario since the early 2000s and to various markets in the American northeast since 1999, providing a major source of revenue to the province of Quebec and helping to substantially reduce greenhouse gas emissions in northeast North America.

Hydro-Québec's exports total $1.9 billion in 2008, accounting for 8 percent of Hydro-Québec's revenues and
[ Page 301 ]
32 percent of its net income of $977 million. Hydro-Québec's strategic plan for 2009 through 2023 calls for substantial increases in clean, renewable electricity to be supplied to New England and New York as well as an increase in energy exchanges with Ontario.

Manitoba Hydro also has plans to increase its exports of clean, renewable electricity, and they already supply renewable green energy to over 30 electric utilities through participation in four wholesale markets in Canada and the midwestern United States. Manitoba's hydroelectricity export revenues totalled $625 million in 2007-2008, with 82 percent coming from the American market and 18 percent from Canadian markets.

[1045]

Manitoba Hydro's electricity exports typically account for more than 40 percent of Manitoba Hydro's revenues, and development of Manitoba's clean, renewable energy resources is, understandably, a major part of Manitoba's long-term vision to build the province's economy.

The renewable, clean electricity that Manitoba supplies to neighbouring provinces and the American midwest also helps to keep Manitoba's hydro rates among the lowest in North America at the same time as it helps to reduce greenhouse gas emissions in the region.

Over the past 35 years Manitoba Hydro's exports of clean electricity have reduced greenhouse gas emissions by 172 million tonnes in the region through the reduced need for thermal electricity generation from coal- and gas-fired sources.

In contrast to Manitoba and Quebec, B.C.'s enormous potential to become the pre-eminent renewable green energy powerhouse in western North America is going untapped and unrealized, even as the devastating impacts of global climate change are becoming more and more readily apparent each day. This year's record-breaking forest fire season in B.C. is just one of many examples.

British Columbia needs to take its place alongside Quebec and Manitoba, both of which are making substantial contributions to continent-wide efforts to reduce greenhouse gas emissions and dependence on fossil fuels and achieving considerable financial benefits for the citizens in the process.

If we were to fully harness our green energy potential here in B.C., our green energy resources could potentially generate enough revenue to wipe out the province's debt or even replace the revenue now raised through the provincial sales tax, as Alberta has shown can be done.

According to the September Budget Update 2009-10 to 2011-12, our total provincial debt, which includes commercial Crown corporation debt, currently stands at close to $40 billion and is forecast to increase to $52.8 billion over the next three years. By 2011-12 the taxpayer-supported portion of British Columbia's total debt is forecast to increase to $37.3 billion, which is almost as much as the province's present $40 billion total debt.

We recognize that British Columbia's debt burden is among the lowest in Canada and that a significant amount of British Columbia's debt relates to capital expenditures on vital public infrastructure such as bridges, highways, schools, hospitals and community facilities, all of which have enduring, long-term value. However, debt is debt, and it has to be paid by one means or another, as does the cost of servicing that debt.

According to the estimates in the September Budget Update 2009, B.C.'s provincial debt-servicing costs are more than $2.2 billion per year. If British Columbia was debt-free like Alberta, the money we currently spend to service our provincial debt could be spent, instead, on vital services like health care and education. For example, the $2.2 billion we currently spend servicing the province's debt would be enough to build six 300-bed hospitals similar to the new Abbotsford Regional Hospital and Cancer Centre.

If $2.2 billion was freed up from servicing B.C.'s debt cost each year, it could almost fund the entire $2.5 billion being spent on capital investments in British Columbia health care facilities over the next three years, including key projects like the new 500-bed Royal Jubilee Hospital in Victoria, the new full-service Kelowna cardiac centre and expansion of the Kelowna General Hospital, construction of a new patient care tower at Vernon Jubilee Hospital with a new emergency department and new operating rooms, the redevelopment of Surrey Memorial Hospital and the new $239 million Surrey out-patient hospital, construction of a replacement hospital and new residential care facility in Fort St. John and construction of a new northern cancer centre in Prince George.

Likewise, the $2.2. billion we spend each year servicing our provincial debt could completely cover the $1.5 billion cost of the Ministry of Education's seismic mitigation program currently making B.C. schools safer in the event of an earthquake, with $700 million to spare for other educational needs.

[1050]

Alberta's steady reduction of their debt has been made possible by revenues generated by their enormous non-renewable petroleum resources. Being debt-free has allowed the Alberta government to save around $1.5 billion annually in debt-servicing costs, which they've been able to redirect to important priorities like health care, education, tax cuts, savings and infrastructure.

Alberta's debt-free status and the financial reserves they have been able to set aside have also positioned Alberta to weather the impacts of the recent global economic downturn and the first recession Alberta has faced since 1986. Thanks to the debt elimination measures Alberta has taken over the past 16 years, Alberta has $18.3 billion in short-term savings set aside, which is helping to offset the province's current deficit. Alberta remains the only province where total financial assets exceed total liabilities.
[ Page 302 ]

British Columbia has indeed been hard hit by the global economic downturn, just as every jurisdiction in the world has. As the budget consultation paper states, "projected revenues from corporate and personal income tax have fallen dramatically." Tapping into B.C.'s green energy potential can help insulate us from future global economic downturns, as Alberta has been able to do, and also help us build a better, stronger British Columbia.

In a few short months B.C. will centre-stage in the world with the 2010 Winter Olympics. The eyes of the world will be focused on this great province and all that it has to offer. We believe that British Columbia's enormous green energy potential and what B.C. could be contributing to the battle against climate change is something the world is going to see with great clarity.

Climate change and greenhouse gas emissions do not recognize international or provincial boundaries, and our group feels that it is our international duty to put B.C.'s green energy potential to work providing clean, renewable electricity to our neighbouring states and provinces and helping them reduce their reliance on dirty coal-fired and gas-fired sources of electricity, as Quebec and Manitoba are already doing.

Everyone in B.C. stands to benefit from the development of our province's enormous green energy potential, and the benefits are ones that will be there for our children, for our grandchildren and for generations to come.

J. Les (Chair): Thank you.

J. Thornthwaite: Thank you very much for your presentation. I just have a question. You said on page 3: "In contrast to Manitoba and Quebec, B.C.'s enormous potential…is going untapped and unrealized." Can you tell us why?

B. Sanderson: Well, I think there are a number of areas where we seem to be facing some opposition on a number of projects — run-of-the-river or wind power, these sorts of things. Looking at it from a distance, what we see is opposition to the process that is already there. We have an excellent process to address the concerns of all of the areas — the environment, the native community, the economic communities, and the impacts that it has on different areas.

The policies and procedures that have been put in place are there to address these concerns. There seems to be just a tremendous amount of opposition to that, and I think that's one of the holdbacks.

M. Mungall: I actually have a tremendous amount of questions around your presentation, but I only get to ask one. I'll preface it with my having been on Nelson city council. Of course, Nelson has its own hydro utility, publicly owned. When Nelson was realizing a deficit in its revenue-to-expenditures ratio — we had less revenue, more expenditures, more demand in the community; Nelson as a community has very little industry, focusing mostly on arts and small businesses, so we've lacked a big tax base like the Celgar pulp mill and so on — we always said, "Thank goodness for Nelson Hydro," because the public owns it, so that generated revenue for the public.

Now your organization represents a considerable amount of private power production. How would private power production generate greater revenue, when we know that the public system already does, to deal with the debt claims that you make here?

B. Sanderson: Well, it's an interesting situation. I think each area of the province has unique requirements, so each area needs to be addressed individually. As you say, Nelson had an opportunity to address certain things, and it worked out very well for them. I don't think that's necessarily true of all areas of the province.

[1055]

What we're promoting is not that this be taken over by private industry but they'd work in partnership with B.C. Hydro, a public institution that has done a good job of running things. But we see the private industry as being a big benefit to enhance that ability.

M. Mungall: How would it create bigger revenue is my question.

B. Sanderson: Well, I think in a lot of cases, the issue as far as creating greater revenue is that the private industry is able to do it less expensively. There seems to be a lot of mixed information there. I see B.C. Hydro — or the opposition to the private sector — referencing the cost of electricity in old standards.

We know that Site C dam…. The cost of electricity from that is going to be tremendously higher than what we currently spend now. The private industry has shown they can do it for as little, if not less.

J. Les (Chair): I'll give you one more question, because I've got a bit more room on the agenda.

B. Sanderson: Sure.

M. Mungall: How do we as a province make money when we are paying private power developers above market value, above what we can generate ourselves? So essentially, we're operating at a loss.

B. Sanderson: I don't think we are. The other issue is that private power is bringing the opportunity for these facilities and these construction projects to be built at their expense. It's not being a burden on the taxpayer to
[ Page 303 ]
build those facilities. It's a very long-term return. It's an expensive proposition to build those facilities.

J. Les (Chair): Okay. We will leave it at that. Thank you for coming in, Bruce.

Just so committee members are aware, we've had one delegation that dropped out just a few minutes ago, so I'll be a little bit more relaxed.

A Voice: Who dropped out?

J. Les (Chair): Well, the Surrey Board of Trade was in there once as the board of trade and then again as the chamber of commerce, so they're coming as the board of trade this afternoon.

The next presenter is Avtar Mann.

A. Mann: My name is Avtar Mann. I'm just an ordinary guy — just walked over here from a couple of blocks. I don't have any speech. I don't have any notes. But I have a concern, and that's why I'm here.

When the HST was introduced, I went to my MLA's office and conveyed my concern to him. He suggested to me to come down here and, whatever concern I had, to present it to the committee. Me and my brother have a construction company…. He was a professional engineer for 20 years. We build affordable homes, more likely in the Surrey, Langley and Chilliwack areas.

This year we sold around 50 homes in Surrey. Our home that we sold, I think, is the most affordable home in the Lower Mainland. We sold around 50 homes, and the price tag is around $350,000.

The people who buy those homes…. I'm standing in front of them when we told them that, and they are buying it. The minimum requirement is to pay 20 percent down. None of them have 20 percent down. The majority of them barely have 5 percent down payment. Where we discuss and….

People have concerns, and we have to explain to them that a quarter of the price that they're paying for their home is going to taxes — all levels of government: the federal, the provincial, the municipal, the HPO and other taxes. Almost 25 percent — the total aggregate of the taxes that a consumer pays when they buy an affordable home. The new tax, HST, comes….

You know, I had a big concern. As a society, everybody talks about affordable homes. What are we doing for it? Instead of making them affordable, I think we are going in the opposite direction. That's my bigger concern.

[1100]

So being in the same industry for more than 22 years, there are a lot of guys around us. We are all like small business men. They came, and somebody does painting, and somebody does that. So we are all creating and making. Take their door to their homes. Make their living out of that.

The average family that came to buy an affordable home has a $60,000 income. Income is good. But how come they don't have a down payment? That's my biggest concern, because it's heavily taxed. At the same time, when I think about my kids, my own kids…. As a society, what are we creating by putting a heavy burden on our taxes?

They pay heavy taxes. Whatever money they earn, they pay taxes. They save some money. Now they want to buy a home — right? Especially a young kid. You know, like 30 or early 30s. They want to buy an affordable home in the Lower Mainland. I think they'd normally find it on this side of the river in the Surrey, Langley or Abbotsford area.

When I see them, I feel sad, because all levels of government, including the municipality, raised the DCC fee. It more than doubled in two years, because they think — the builders and developers…. They're not a world bank. The general public don't have a mandate for that, so increase as many taxes as you want to. What we are creating is….

Everybody talks about affordability in the downtown area only, but most of the people who make their honest living live all over the Lower Mainland — not even in downtown, most of them. We have 400,000 people living in Surrey. That's also the second-largest municipality.

We have the responsibility — all of us — for future generations to come, to give them a healthy environment and an affordable home, because a single-family home is the key to society. The home is the strongest bond you can create in a person's life.

That's the single most important buying anybody does in their life too. That's what I learned in my 22 years of selling real estate. For the majority of the people, that's the biggest decision they make in their lives. As soon as they enter into an agreement and buy a home, their lives change. It's not only materialistic. There's a lot of value to that, and by introducing this heavy tax….

I present myself to you, if you guys have any questions, because I am dealing with the public on a day-to-day basis, the public who save their money to buy a home after paying you all their expenses. That's my concern. That's what I'm presenting here today.

There are a lot of fancy things to talk about. There are a lot of things that I can talk about — HPO, the tax implications…. I could write a book on it. But I just have only one concern: a fair tax, an affordable home and an ordinary family — and ordinary people, like me.

J. Les (Chair): Thank you, Avtar. Are there any questions?

D. Donaldson (Deputy Chair): Thanks for your presentation. It's nice to hear real life examples of how the HST is impacting people's ability, for instance, to afford accommodation for homes and things like that.
[ Page 304 ]

My question to you would be…. We hear from people who aren't in favour of the HST pointing out — what they call it is a regressive tax — that it doesn't matter if you make $60,000. As you pointed out, the family making $60,000 or $160,000 — you pay the same rate.

Is it fair to say, then, that you would be in favour of seeing people who make less money, like the $60,000 people, paying less tax so that they can afford homes like the ones you build?

A. Mann: Yeah. If you see the total families in the Lower Mainland and how many families make $60,000 and how many make $160,000, I can bet the majority of the families make only $60,000.

[1105]

Those are the families who have concerns about affordable homes — not the $160,000. I think the $160,000 ones are okay. I'm not against HST. It's just the implication on affordable homes that ordinary people can buy.

N. Letnick: If I can just verify something. You said that most of your homes that you sell are under $400,000.

A. Mann: Yes.

N. Letnick: To my knowledge, according to what's been proposed for HST, those homes under $400,000 would receive the full HST rebate.

A. Mann: That's right.

N. Letnick: So won't that actually help people that you're selling homes to?

A. Mann: That's right. But the homes that my company builds or I build…. We normally focus on affordable homes. But there's a lot of other people, there's a lot of other…. They also work on homes in the Surrey-Langley area. Those are the starting-level homes, single-family dwellings. They sell for around $700,000.

N. Letnick: Okay. Thank you.

J. Les (Chair): Anyone else?

Thank you, Avtar, for coming this morning and presenting to us.

The next presenters are from B.C. School Sports — Raj Puri and Sue Keenan.

R. Puri: Well, thank you, first of all, for giving us the opportunity. My name is Raj Puri, and I'm a principal just down the street here at North Surrey Secondary. I also wear the hat of being a volunteer with the organization B.C. School Sports. Sue Keenan is the executive director, and I'm in the role of president of that organization this year.

I wanted to, without reading the handout that you have, highlight a couple of points in that and then kind of just take a couple of minutes to elaborate on a few points, if I could.

We are sort of — and I've started to use this analogy a little bit — the glue that kind of holds school sports together. We're the governing body. We're very membership-based, and we oversee the governance of a number of school sports and programs that are in our schools.

There are approximately 425 schools at the junior and secondary levels that are member schools. From that, about 100,000-plus student athletes are registered with us and competing on about 19 different sports and one additional one that's been added — so 20 sports. There would be the grade 8 level, the junior level…. There are even grade 9 structures that are separated in certain school districts as well as our senior tournaments.

We have a number of sports commissions that fall under our umbrella, and each of them represents a different sport within the school. They are involved with sort of the intricacies of the technical aspects of the game as well as overseeing the championships that exist in our province for all of those sports.

All together, all of this is possible because of the number of volunteers that participate. We have had up to 13,000 teacher-coaches, volunteer coaches from the community that participate and allow our students to have the opportunities to be able to, in some cases, participate in something that they normally wouldn't get a chance to try. And we have the other extreme as well.

Actually, it's not just all about participation. There's a balance with competition, as well, and developing the skill set in a number of those student athletes to go on to bigger and greater things. Steve Nash, Larry Walker — those are two examples locally that have done very well.

Our mission is on the handout for you. It's about increasing the participation and promoting that and extracurricular activities within schools, assisting students in developing and delivery of sports programs and so on.

In addition to that, I'd like to add the fact that it is really about embracing our culture and lifestyle that people in our culture value these days, and that is the healthy and active lifestyle.

[1110]

We understand that obesity has been an issue and is increasing. As a high school principal, I see that on a regular basis. I look at what the curriculum is doing in terms of better education that comes down the line. This is a very nice compliment to assisting with the curriculum in terms of providing opportunities for students to be active and, ultimately, making good choices throughout their life.

We have, like I said, about 7,000 teams in about 20 different sports, and they are listed on there for you. Again, I'm not going to go over that with you.
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I want to talk a little bit about our organization as a whole, in that…. What we do is we look after student eligibility — the rules and regulations that govern the particular sports. There are 48 provincial championships that we coordinate — in terms of making sure that they are in place, that they're equipped in terms of the banners, the medals, the officials. So there is funding that goes from our organization to the individual sports commissions to be able to make those events happen.

We have an on-line registration system that tracks all of the student athletes.

Obviously, insurance is a big issue as well. Whenever we have volunteers, as well as our teacher coaches, participating in everything from B.C. Place as a venue to the local field in the neighbourhood, insurance issues for all of those volunteers are covered, as well the governing body of the board for B.C. School Sports.

We have a legal services plan, as well, that we offer for our memberships in our organization.

We have been…. These are things that I'm going to hit right now that are currently not in place because…. I'll get into that in a few moments. But in the past what we've done is that we've promoted student leadership through participation in sport initiatives, and that's happened in U.S. conferences, Canadian conferences, local conferences and workshops.

We've had an extensive student athlete scholarship program. We have supplemented travel for some of our rural districts where it is difficult to travel to.

I used to be vice-principal and basketball coach in Oliver. Every weekend was a road trip. You know, going to Trail for a tournament or a league game was part of the norm, and it gets to be fairly costly in order to be able to sustain something of that nature.

We also have a number of publications that go out, in hard copies as well as on-line material, that look at everything from informational material for parents, students, coaches, in terms of coaching development programs — just an endless resource bank that the organization oversees.

We also had an office in Burnaby, which is on the brink of being…. Well, that lease is being terminated.

Student leadership conferences I've mentioned, generally, in terms of building capacity within our system and promoting leadership with our coaches, with our students and parents together.

All of those things that I just mentioned in that little bit are things that are in jeopardy. The reason for it is that, generally, our organization as a whole has been victim to the $14 million that has been cut from sport. We operate — and I'm going to use ballpark figures here — with about a $450,000 to $490,000 budget on a yearly basis. The majority of that comes from fees that our individual schools will pay to register their teams and student athletes with.

As we know, it kind of trickles down to fees that in the school are charged to students as athletic fees. Of that budget, a third of it was a cut that occurred in the form of $130,000. In addition to that, we were also down $50,000 from gaming and $45,000 that was given to us as funds to cover liability insurance for us.

So there is a significant amount that has been cut from our budget, which has, obviously, put a hold or caused us to really look at streamlining our organization.

[1115]

Over the years, we have done that. We have been conscious of the way that the economy has been going. We've even taken steps — decreasing our board from 23 members to 13, reducing the number of travel opportunities or any expense items that would be unnecessary.

So it's a streamed operation going in. To get a large cut like the one that we received has then started to have an impact on things. The scholarships are gone. The office space in Burnaby is gone. All of the things that I mentioned that are on hold are pretty much in jeopardy at this point.

What that means now is that we cannot continue to operate until, well, the end of the school year. So we've had to go and look at coming up with creative solutions around trying to address some of the shortfalls that we've perceived in our budget. But ultimately, the impact comes back down to the individual school districts, the schools, students and parents.

From a school perspective, if I put on my hat as a high school principal, there's been a shift, again, in terms of promoting healthier lifestyles with what's in vending machines, and a significant portion, if not all, of vending machine funds were dedicated to running school athletic programs. When there have been up to 75 percent decreases in that kind of funding, that has also had an impact on what schools are able to generate to continue to operate, in terms of the sports programs and opportunities that they have for students.

You go back down the line to: if schools can't do it, then do you go to the user-pay mentality and go to students? What we all know, particularly in Surrey — and Bruce, you'll recognize this as well — is that in some of the schools that we have, it's very difficult to go to students. I mean they are barely coming up with enough to get to school, to be able to meet the needs in terms of even…. At some of our inner-city schools breakfast is an issue, and there are a number of programs that we have in place to assist students that way.

Those are the vulnerable students that really could benefit from participating in sport. I know as a fact that the research is endless on the value that exists in terms of what students receive from sport and participation in those activities. A number of students that, as a coach, I know I've been able to hang onto and keep in school because that was the carrot or the motivator that kept them involved.

So these are the kinds of things, in addition to the fact that preventative health benefits exist. I don't have the
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particulars of, you know, the amounts that we spend as a province on the health aspect of things. But healthier people out there are definitely going to have an impact on what choices they make in terms of nutrition, their physical activity, their choices in terms of even smoking and things like that. That is going to reduce health costs.

The benefits to youth. Like I've mentioned, you know, keeping them involved in something and active is way better than having idle time on your hands to get into possibly negative issues.

What we're asking is for the funding, the $14 million, to be reinstated and, also, to our organization…. It would be consistent with what exists throughout the country. All of the provinces and territories have structures that are supported financially by governments. It would keep us in line with the legacy that we're trying to promote even from the Olympic side of things.

J. Les (Chair): Thanks very much, Raj.

First question is to Bruce.

B. Ralston: Thanks very much, Raj and Sue, for what you do and the explanation you've given. I think many of us were shocked by this very shortsighted cut. I think it's pretty clear that it's cheaper to have kids participate in sports, whether it's for self-esteem, social integration or just…. It's cheaper than paying for police, probation officers and Corrections.

I guess my question is on your budget. Given that your school year starts, obviously, in September, what kind of notice, if any, were you given of this cut to your budget, which looks like, when I add it up, almost about a 40 percent cut?

[1120]

S. Keenan: We were notified on July 24 of the operating cut of $130,000. We were just notified about ten days ago about the gaming cut that we received. We still have not heard anything from the Minister of Education with respect to the insurance, but we're not anticipating we're going to get that.

D. McRae: I was very active in B.C. School Sports as a coach and athletic director.

You mentioned, Raj, about travel supplementary policies. You mentioned it very quickly there. When I was athletic director there were no dollars I was aware of from B.C. School Sports that we could actually use to travel around the province. Has that changed?

R. Puri: Well, when SportsFunder was instituted, we were able to access some funds through that initiative. Again, that's no longer existing for us, but that was something that we used to support schools travelling to championship tournaments.

D. McRae: Okay. Could you give me a rough idea of how much money would be generated by that?

S. Keenan: The first year of the program we got $250,000, with the major criteria being that it would be to benefit isolated and rural communities coming from the north, say, down to Vancouver. The second year we got just under $200,000, and last year we got $100,000, but it didn't come from SportsFunder. It came from the Ministry of Sport, because SportsFunder was in trouble at that time.

D. McRae: And the other question, if I may?

J. Les (Chair): Quickly.

D. McRae: When I was athletic director, there were huge issues around eligibility, and we had to keep paying more and more dollars because of court challenges. Has that been sort of reined in now, or is eligibility and dealing with appeals still a major impact on your organization?

S. Keenan: I’m happy to report that’s changed significantly over the last few years. We've made it a little bit more student-centred in terms of the benefits to students. I mean, that's what we're in the business for. And to the best of my knowledge, I think we've only had one court case in the last three or four years. So it's been good.

J. Les (Chair): Good.

D. Donaldson (Deputy Chair): Thanks for the presentation. Talking about remote rural communities, that's where I live — in Hazelton. As you probably know, it was the high school of Carol Huynh, our gold medal winner in the Olympics in Beijing last year — the first gold medal winner that Canada produced last year.

Anyway, she was in wrestling, and Joe Sullivan, her wrestling coach at the high school, said to me that if it wasn't for the $130,000 grant, Carol would not have been able to achieve what she achieved fully, because it helped pay for the tournaments and the exposure to a higher level of athletics that all entails.

So I get your point around the higher calibre athletes and the examples you gave. But Joe also said that — and this reflects a bit on what you were saying as well, Raj — he never had a student drop out of school while they were involved in his wrestling program. We're talking about a high school that did have rates of only 30 percent completion at some points when Joe was there.

My question to you is…. Joe was alluding to the discipline, the self-worth, the confidence, the sense of belonging that participation in high school sports creates, and you alluded to that around the value that exists in terms of participation. Anecdotally, we hear a lot of this,
[ Page 307 ]
and I'm sure both of you have stories about that. How about empirically? Are there ways that you've looked at of working out how $130,000 in cuts can cascade into a huge impact of students not completing school, not doing well in school and then subsequently perhaps not doing as well in further life?

R. Puri: Short of looking at your individual schools' honour rolls and super G, which is the work habit marks, and correlating the number of those students that are involved in various activities…. And it's not just sport. Whatever other extracurricular activities they're doing, you'd notice there was a significant overlap of that.

But short of that, I don't think we've tracked, ever, students that have been at risk, saying: "All right, how many of them stayed in school because of sport?" But we know, anecdotally, that that is a huge motivator. Just the number of students who come back and remember that connection with that coach, that personal relationship piece, is significant. That's something we can very easily pose to our individual coaches and say: "How many of them come back to say, 'Hi coach' and 'Remember what you did? It made a difference'?"

D. Donaldson (Deputy Chair): If you come across — either of you — studies not just in Canada but other jurisdictions as well that make that connection and…to the committee, that would be helpful.

J. Thornthwaite: Thank you very much for your presentation. As a soccer mom — and gymnastics mom, for that matter…. My kids have been involved in school sports since the beginning of time.

[1125]

Anyway, I wanted to ask you a couple of questions, but the main one is: your organization is not going to preclude students from conducting and being participants in school sports. They still would be doing school sports in their schools — correct?

S. Keenan: Yes.

J. Thornthwaite: Okay. So your organization is responsible for some of the tournaments — right? — but not for the actual conducting of the sports in the schools.

S. Keenan: Well, yes and no. We have 25 local athletic associations under our umbrella along with the 18 support commissions, and it's those local associations that are responsible for all of the league play — the scheduling, the officials, that kind of thing. We do provide administrative support to them as well.

J. Thornthwaite: Now, is there any way, in this particular year where we've had to restrain many, many different organizations, that you can get funding from partnerships, like clothing manufacturers, running shoe manufacturers or anybody, to help you with the tournaments this year?

S. Keenan: We have had incredible support from the corporate sector in terms of our 47 championships, and more of the bigger championships than the smaller ones.

As you know, there's a whole different marketing realm with sport. What we're talking about is not necessarily the championships, because we've got the TELUS, and we've got Subway Bowl, and we've got the big guys on board that have been absolutely brilliant.

What we're talking about is the centralized administrative service that our organization provides so that all of these things can happen. You can't get a corporate partner for that, unfortunately. So it really means going back and either increasing fees and/or cutting and cutting services.

J. Les (Chair): Thank you both very much for coming this morning. Committee members will note that I allowed a fair bit of extra time for this presentation.

The next presenter is from the Pembina Institute, Karen Campbell.

K. Campbell: Good morning. Thanks for having me. I'm really pleased to be here this morning. My name is Karen Campbell, and I'm with an organization called the Pembina Institute. I'm pleased to have the opportunity to present to you.

We are a sustainable energy think tank, and one of our many interests, in terms of energy and climate issues, is the transition to a low carbon economy. I'm here to talk to you a little bit this morning about some recommendations that we have for shifting us toward a low-carbon economy in British Columbia and how the budget can be used to do that.

To date, B.C. has demonstrated real leadership in moving toward a low carbon and a clean energy economy by implementing North America's most ambitious carbon tax. The tax is expected to help the province reduce pollution by sending a clear signal that investments in choices that are good for the planet are good for the pocketbook.

We think we've established some real leadership with the carbon tax, and there's also more that can be done. We've got five key recommendations for the 2010 budget to support the transition to a low carbon economy.

First, we'd like to talk to you about broadening the carbon tax to cover 80 percent of B.C.'s greenhouse gas emissions. Second, we want to talk about increasing the carbon tax above the $30 per tonne that is set for 2012. Third, we want to talk about increasing protection for low-income families. Fourth, investing in energy effi-
[ Page 308 ]
ciency retrofits. Fifth, talk to you a bit about the idea of alternatives to the carbon taxes, a revenue-neutral model.

I've got a few comments on each, so what I'll do is just quickly go through this presentation, but I won't go word for word.

The first thing I'd like to talk to you about is the idea of broadening the carbon tax. Right now the carbon tax covers approximately 72 percent of British Columbia's greenhouse gas emissions, but there are improvements in measurement technologies and ways to now cover emissions that were previously not covered. These would include cement, lime, aluminum production and natural gas venting emissions.

If you look on page 2, you'll see there are these lovely pies. What I draw your attention to is not so much the pies, but it's the black circle around the pies, because if you're looking, say, on the left-hand column, it shows that the coverage of the carbon tax is 72 percent of emissions, and we think we've got ways to help B.C. cover over 80 percent of its emissions through the carbon tax. Those are outlined in appendix 1, which is the chart that shows where we think we've got abilities to collect further carbon tax revenues from cement, lime, aluminum and natural gas venting.

[1130]

If we were to do that, we think it would be a good thing. It helps send the message that all pollution has a price, regardless of the source. We think it will also help B.C. move more quickly toward meeting the emission reduction targets that are legislated in the Greenhouse Gas Reduction Targets Act. We think it will also give us an early possible advantage in the event that a cap-and-trade system goes ahead, and we know that some work has already been done in that regard.

The second recommendation we have for you is to increase the carbon tax above the $30 per tonne after 2012. Right now that is the cap. That's where it has been set at. The national round table on economy and energy says that the price on greenhouse gas emissions needs to reach $75 per tonne by 2020. It's our recommendation that we'll need to increase that after 2012, and we'll also need three years' notice, because the legislation currently requires that prices be set three years in advance. We're hoping that the B.C. government will consider setting another price for 2013 in the 2010 budget.

The third recommendation we have is to increase protection for low-income families. It's important that the carbon tax be fair. The Low Income Climate Action Tax Credit is in place to protect low-income individuals right now. We're pleased to see that it's there, but the increases in this credit are not fully calibrated with the increases in the carbon tax. We think that the 2010 budget should consider increasing that tax credit in 2010 to make sure that it's calibrated with the carbon tax.

We'd also like to see the 2010 budget specify the amount of this credit for 2012, because there's no amount specified for 2012. We'd also like the government to consider specific incentives or programs that are going to address energy poverty issues — things such as retrofits, increasing energy efficiency and conservation — so that low-income families, often those who rent and have no individual incentive to increase in energy efficiency, can find a way to do so.

The fourth issue we'd like to speak to is investments in energy efficiency. We think investments in energy efficiency are very important because it's actually a way to avoid paying the carbon tax, and it's an essential component of a low-carbon economy.

Right now in British Columbia, homes and buildings account for 12 percent of our greenhouse gas emissions. The majority of these emissions are attributable to the use of natural gas. We've done some internal number crunching, and one of the things that we figured out is that every $1 million that is invested in grants for retrofits for homeowners could have the following impacts.

They could leverage about $750,000 in support from federal programs. It can create anywhere between 116 and 238 job-years of employment by working on the retrofits, save over $600,000 of carbon tax, save over $3.5 million in energy costs and reduce quite a significant amount of greenhouse gases — over 2,000 tonnes. So we would like to see the 2010 budget include specific spending targets for retrofitting homes and buildings.

The final issue I'd like to bring to your attention is that we consider alternatives to a revenue-neutral model. Right now the carbon tax is revenue-neutral, which means that all revenue collected is recycled back to taxpayers through tax cuts. I know that bringing the carbon tax in was an edgy move for the government to do, and I think that the revenue neutrality was a very good way to start.

Over time — consistent with the polluter-pays principle — I'd like the government to consider using carbon tax revenue to help the government meet its commitments to the climate action plan or use that for additional commitments that we will need in order to reduce our greenhouse gas emissions.

On the last page here, on page 5, you'll see we've got a table which shows the potential revenue from emission sources that are not covered by the carbon tax. If you go back to the recommendation that we had earlier about broadening the coverage of the carbon tax, you'll see that if we include a number of these different emission sources over time, they'll actually increase the revenue that we have available to us. By 2012 it could be an additional $424 million. If it was done next year, it would generate over a $1 million in new revenue.

I'd like to conclude by saying that we'd like to think of the carbon tax and budgetary and tax mechanisms as a way to help us pursue climate change as an economic opportunity and not a burden. Over time we're hoping that it becomes a reality, and we're hoping that in the budget process we're able to start doing that.
[ Page 309 ]

J. Les (Chair): Thank you, Karen. We have several questions.

J. Rustad: Thank you very much, Karen, and thank you for your presentation. As you know, of course, there are some that feel that we shouldn't have implemented the carbon tax, and that it wasn't a way to go for us in the province.

[1135]

Having said that, however, your presentation talked about raising the carbon tax or increasing the expansion of carbon tax on the cement and lime industry in particular.

Are you suggesting on the fuel associated with that industry, as they're a very energy-intensive industry, breaking down their core product, or are you suggesting for the additional emissions that come through that breakdown of the product?

The reason why I ask that question is that in No. 5 you say: "The carbon tax sends a signal that using fossil fuels has a cost." Right now I believe those industries are charged a carbon tax on using the fuel. However it's the other components….

K. Campbell: It's the process emissions that….

J. Rustad: Right. But here you say that the carbon tax is used to send a signal, and so I'm just wondering whether or not a cap-and-trade system around carbon emissions that are not directly related to using the fuel but as emissions as part of the process that doesn't come from the fuel itself would be a better process to go.

I have one follow-up, if I may, after.

K. Campbell: In our view it's not cap and trade or a carbon tax. It's a combination of both. If there was a way by which a cap-and-trade system that was operating in 2010 would be capturing those emissions, then we'd be quite open to that. But the likelihood of a cap-and-trade system operating in British Columbia in 2010 is not nearly as high as a budget being presented in 2010.

So our recommendations to you this morning are to make that change and include process emissions through the carbon tax. Over time, if a cap-and-trade system does come into effect, our B.C. businesses will have already made those changes, absorbed those costs and will be learning how to do things with less emissions and, hopefully, put us in a more competitive position in years to come.

J. Rustad: The follow-up question I have is along a different track. You're suggesting that we should consider taking some of the revenue from the carbon tax and use it to fund various projects, as opposed to being revenue-neutral and going back in terms of tax incentives to incent activities that are not fossil fuel–consuming.

All of the studies that I've read and the models in Europe are all based on revenue-neutrality or actually negative revenue in terms of trying to incent activities that you would like to see happening and using this as a disincentive. All of the models that I've read, all of the reports that I've read have suggested that if you go away from that model, it actually becomes a punitive action on your economy as opposed to the opportunity to be able to enhance your economy.

So I'm just wondering why you're suggesting that we should actually go away from those models that have been proven in Europe with regards to using that tax revenue for something other than revenue-neutrality and the tax incentives.

K. Campbell: What I'm suggesting this morning is that where there are unmet commitments under the climate action plan that we can't meet currently, over time with increases in coverage, we might want to consider using some of that revenue to meet the government's climate change commitments. I'm not suggesting that we do it writ large across the board. I think that that's something that needs to be looked at further, but where it could be applied against climate change commitments is where I'm suggesting that that be considered.

D. Donaldson (Deputy Chair): Thanks, Karen, for the presentation and the recommendations. There's lots of detail here, and I look forward to reading it all, line by line.

I have a question regarding the recommendations though, and I'm curious as to why, in the recommendations, Pembina wouldn't have included encouraging a review of all government policies and legislation that actually hinder our move towards a low-carbon economy and hinder significant action on climate change. I give examples like policies that give royalty breaks on production of carbon-intensive fuels like natural gas or in exploration for coalbed methane or policies around farm-gate sales that lead to increased transportation costs and further increases in carbon emissions or support for oil pipelines and offshore oil supertanker traffic in our inland shores.

Would you support a recommendation along those lines for a full review of all government policy and legislation? In addition to that, whether the…. We know that the government has eliminated half the funding for the climate action secretariat, which would be a natural fit for that kind of review. Would you like to see funding restored for that?

[1140]

Also, would you include in your recommendations a review of government policies that hinder?

K. Campbell: We would not be opposed to that at all. It's a really good question, actually, and I think be-
[ Page 310 ]
cause we're a think tank and a research institute, we tend to come at these things by hoping to provide solutions. Because we as an organization are not anywhere near capable of undertaking a fulsome review of government policy, we probably neglected to make that a recommendation. But I certainly wouldn't disagree with that as a good idea and something that we'd love to see happen.

N. Letnick: Thank you for your presentation. I talk to builders who are trying to reach lower greenhouse gas emissions with new homes, but what they find is that a lot of the new home buyers aren't interested because of the long-term payback on geothermal or other technologies.

I've heard of some companies that have provided a separate funding mechanism, so you get your regular mortgage for the house, and then you get a separate funding source for the greenhouse technologies over a longer term. Have you heard of this, and is there anywhere we can get more research on that?

K. Campbell: I have not heard of that, but if you are very interested, what I would say is that my colleague Matt Horne, who is co-author — although he is not here today — is relatively encyclopedic on these issues. I'd be happy to get back to you.

N. Letnick: Well, if you can ask the encyclopedia to send us some information prior to the end of next week, I think that would be great.

K. Campbell: Let me see if I can do something on that.

N. Letnick: Thanks very much.

J. Les (Chair): We always appreciate encyclopedic individuals.

K. Campbell: Believe me, I wish the encyclopedia was right here, but he's on parental leave.

J. Les (Chair): The next question is from Michelle.

M. Mungall: Actually, Doug stole most of my thunder. I had pretty much the same questions. As an environmentalist one of my biggest concerns with the carbon tax has always been revenue neutrality, and I see that you address that here. And I was a bit concerned about the carbon tax–centric nature of the presentation, knowing that there are all these other things that the provincial government can be doing to create a low-carbon economy. So that was my question as well.

We're looking at things like Buy B.C. programs, reinstating that, to have a more localized food system as well as looking at our taxation system on industry, just in the royalties — for instance, the $120 million cut to royalties for oil and gas this year — and so on. Is that…? You already mentioned that's something you'd be supportive of — broader analysis of how we're functioning as a whole.

K. Campbell: Again I would completely agree with that as an assessment. We've stayed, I think, primarily with the carbon tax just because it was a very ambitious measure, and it was actually a fairly controversial measure that we've adopted.

So from our organization's position we're actually really pleased to see that that it is in place in B.C., and that's been our focus here today, in part because we haven't done all the homework we'd like to do to make this suite of recommendations that we'd make in an ideal world, and also in part because we'd like to just sort of keep focused on the carbon tax for the time being and some of the mechanisms we can use.

M. Mungall: My understanding is that the carbon tax has been…. The success on its own in other jurisdictions has been quite limited, without all the broader analysis. Can you comment on that a little bit?

K. Campbell: Yeah. We've got some work, actually, that we've done internally looking at the carbon taxes in Scandinavian countries and how it's starting to show changes in consumer behaviour and in industry behaviour.

M. Mungall: Is that in conjunction with other activities that Scandinavian countries are doing, though, as well? Like, in the research you're doing, have you isolated the carbon tax out of all the other activities they're doing, to say that this situation A is impacting this situation B?

K. Campbell: We've been able to do some research so far. We actually haven't been able to publish it yet because it has not concluded. But we have looked at what Scandinavian countries are doing in terms of what their carbon tax is accomplishing, and we're also starting to see some behaviour change in British Columbia from the carbon tax, so we can point to a few situations where some decisions are being taken differently now because of the carbon tax.

From a long-term perspective, we'd like to see that increase over time, but we also see it as a little bit of a baby steps things. It's a "walk before you can run" situation. We'd like to see B.C. stick with the carbon tax, incrementally increase it and strengthen it, and then over time, once it becomes more settled — because I think it was a pretty controversial move — then we can talk about some of the broader things. Our focus today is more on the carbon tax than on everything across B.C. government spending.

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J. Les (Chair): Okay, we're going to have to leave it there, Karen. I allowed you to ride the puck for a while because our last delegation for this morning just walked in. Thank you for coming, and thank you for spending a little extra time with us.

Next we will hear from the Emily Carr Students Union. I suspect the person who just walked in is Lori MacDonald.

L. MacDonald: Yeah, and Miles Thorogood is on his way.

J. Les (Chair): All right. Do you want to start without Miles, or are you waiting for him?

L. MacDonald: He's got the notes, and he's actually first in this section.

J. Les (Chair): There you go. All right.

Miles, if that's you, come on up. We've been waiting for you, and Lori said she didn't dare start without you. Whenever you're ready, go ahead.

M. Thorogood: Thank you for seeing us today. My name is Miles Thorogood. I'm the financial affairs representative at Emily Carr Student Union, Canadian Federation of Students, Local 33.

L. MacDonald. And I'm Lori MacDonald. I'm the organizer for the Emily Carr Students Union.

M. Thorogood: We're also here as representatives from the One Pass Now campaign, which is calling for a $25 U-pass for all Metro Vancouver students.

As students' share of the cost of post-secondary education in B.C. has increased and public funding for student financial assistance has been reduced, our members have prioritized seeking government measures to reduce student debt. Our presentation today touches on the democratically established priorities of our provincial student organization, the Canadian Federation of Students, and highlights the One Pass Now campaign and the need for a U-pass program.

These priorities are to see the B.C. government commit to progressively reducing tuition fees to 2001 levels, restoring operating funding to universities and colleges to 2001 levels, establishing an upfront and need-based provincial student grants program, eliminating interest on student loans and expanding the U-pass program at $25 per month to all students in Metro Vancouver.

B.C.'s universities' tuition fees have increased from an average of $2,530 in 2001-2002 to an average of $5,040 per year last year. In just two years B.C.'s tuition fees went from 30 percent below the national average to surpassing the national average. They now stand at 7 percent above that average. In the last eight years B.C. students have experienced the steepest tuition fee increases of any province.

It is clear, then, that there are two detrimental effects of B.C.'s tuition fee increases. These are a barrier to participation for families from lower-income backgrounds at a time when most new jobs require some post-secondary education. For many of those who are still able to access education, fees have caused student debt to skyrocket higher than ever before at a time when consumer debt has been identified as a major economic problem.

Reducing tuition fees is one key component of a larger strategy to ensure broad access to post-secondary education in British Columbia. Studies show that the combination of reducing tuition fees and investing in upfront grants significantly enhances access to post-secondary education.

In discussing tuition fees, this government has routinely cited B.C.'s status as being roughly in the middle of the pack amongst provinces as the appropriate place to be. Yet when it comes to the provision of non-repayable financial aid, not only is B.C. not in the middle of the pack, it is dead last amongst the provinces — 60 percent below the national average.

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In short, there is an extreme disconnect in provincial government policy on tuition fees and on financial aid — a disconnect that has caused student debt to skyrocket.

The federal government, after hearing from members of the Canadian Federation of Students, established Canada's first national system of student grants, which took effect this fall. The B.C. government has an opportunity to maximize student aid in British Columbia by establishing its own grants program to complement the new federal program. The government should immediately begin providing interest-free loans to student borrowers, as the Newfoundland and Labrador government has recently done.

Inflation and enrolment increases have caused real per-student funding to decline by 15 percent over the last eight years. Each year that per-student funding remains below inflation, which then in turn creates a greater funding gap. The B.C. government's 2008 budget figures show a projected collective college deficit of $30 million by 2010-2011. As a result of the funding gap, many institutions are facing difficult choices. Students are experiencing cutbacks in their programs, spending more and getting less.

Finally, still on the question of funding, an accessible post-secondary education system with lower tuition fees, grants, non-predatory student loans and more robust public funding will increase incomes, diversify the economy and benefit the corporate sector even further. Our hope is that you would recognize the tremendous sacrifice in terms of financial hardships and personal debt that students of this generation are faced with, and
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start to give back to today's students the same level of opportunity that many of you had.

L. MacDonald: Miles touched on some of the principles that have been democratically established through the Canadian Federation of Students. Some of the work that we've been currently doing is around the One Pass Now campaign and expansion of the U-pass program at $25 per month.

I know that there has been a backgrounder that has circulated, and it looks like the poll that we brought out. It was just one large 135-page poll. It may have been split up into single pages for each of you. I can forward on another one, a formal copy, so that you have….

Our final recommendation is about the expansion of the U-pass program to all of Metro Vancouver students at a price of $25 per month. The Emily Carr students have joined with the Students Unions of Vancouver Community College, the Douglas Students Union and the Alma Mater Society of the University of British Columbia to launch the One Pass Now campaign.

The One Pass Now campaign is calling for a $25-per-month U-pass for all Metro Vancouver students. The facts are simple. For the past five years students at SFU and UBC have been paying about $25 a month for their transit because they're included in the U-pass program. Meanwhile, over 20,000 students have been excluded from the U-pass program and have been paying $73 a month, which we're aware is also now going up to $81 per month.

Students were thrilled to hear that our government was planning to end TransLink's discriminatory policy of differential pricing based on where students studied. Yet since the Premier's announcement, the formal correspondence from the Ministry of Transportation has stated that there is no money for new programs and that our recommendations are being considered.

Both the Minister of Transportation and Infrastructure and the Premier have recently stated in the media that the U-pass program will be expanded by September 2010. Students were encouraged by these statements, and they're now waiting for the details of the U-pass, which is the price. A fair and standardized price can only be achieved through the expansion of the $25-per-month price that 65,000 students at SFU and UBC currently pay.

To illustrate this point, we worked with McAllister Opinion Research, a professional polling firm, to conduct an on-line survey of 1,750 students about the U-pass. According to the polling company, the survey methodology has a margin of error of plus or minus 2.25, 19 times out of 20.

Survey results, which are available for distribution in single pages, show that students in Metro Vancouver are virtually unanimous in expecting the government to make good on their promise. The poll shows that 90 percent of our students are in favour of a $25-per-month universal transit pass for all students in Metro Vancouver. Interestingly, the survey found that for most of those students who stated opposition to the $25 pass, it was because they thought $25 was too much and that, indeed, it should be less.

On behalf of the students unions at Emily Carr University, Douglas College and Vancouver Community College, we are here to deliver the message that students are hopeful that we will be able to very soon congratulate our Premier and the B.C. government for announcing the details of a pass at $25 per month for all students in Vancouver.

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Now, I thank you for hearing us today, and we look forward to any questions.

J. Les (Chair): Thank you. First question, Michelle.

M. Mungall: Thanks very much, Lori and Miles, for your presentation.

We've spoken in the past about the importance of the U-pass. In the written presentation, you talk about the environmental benefits, of course, and comparing — this is something I didn't know — Metro Vancouver with the Toronto and Montreal metropolitan areas. We only have 12 percent of all trips in the GVRD being done by public transit, whereas in these other cities it's 22 percent.

Right now, do you know how many students are using transit and how many are driving cars? Have been able to do any analysis of what the likelihood is of getting people out of their cars and into transit with the U-pass?

L. MacDonald: We haven't done the statistics specifically ourselves, but there's a graduate student from Simon Fraser University, Elizabeth Cooper, who got front page of the Georgia Straight over the summer. Her study found — off the top of my head, I don't have the specific numbers — that once students were using the U-pass during post-secondary, they had an increased rate of using public transit after they were graduates.

How many students are using the U-pass now? Of the students at Emily Carr, 73 percent are currently using transit, which is why we had such a struggle in the past to get a fair price. It was based on high ridership equals higher price, until there was a commitment made in the election for a common and fair price.

N. Letnick: Thank you for your presentation and getting involved with student leadership. I really appreciate that.

I'm not familiar with the U-pass situation in the Lower Mainland. Could you explain to us how UBC and SFU are able to offer a U-pass at $25 a month? Is it subsidized by someone? By which groups?
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M. Thorogood: The history of the U-pass campaign was started at UBC, as a matter of fact, getting UBC students a fair price for using public transit so they could travel to school.

We have found some interesting data on how the costs are figured for the U-pass by TransLink and what that relates to in real numbers as far as students and the U-pass being a revenue-neutral kind of program. Maybe, Lori, you could deal with that?

L. MacDonald: Yeah, sure. It was a TransLink initiative to start with. SFU and UBC were, I guess, the pioneers of the program. It was easier to implement at the larger institutions. It was based on a revenue-neutral model of pricing by TransLink. That's where we've been unable to get a different price, because SFU and UBC have very, very low ridership. They are farther away from the centre of Vancouver.

I don't know the percentage of their ridership, but because it was so low, the lump sum of income that was being generated to TransLink was low. Once the cost was distributed amongst students — to all students — that price was low.

They found that within one year after implementation of the program, ridership increased by 53 percent, which is, I think, maybe the problem of the program, but it's also how popular the program is for students and now what we have to deal with. We're sort of working forward and getting a fair price for everybody.

N. Letnick: I understand.

J. Les (Chair): Thank you very much. I don't see any further questions. Thanks for coming in this morning and making your presentation to us.

At this point we'll recess for an hour so that we can grab a little lunch.

The committee recessed from 11:59 a.m. to 1:02 p.m.

[J. Les in the chair.]

J. Les (Chair): All right, we are going to reconvene the meeting.

Our first presenter this afternoon, I believe, is here. That would be Amir Ali Alibhai. Come on up.

A. Alibhai: I have some moral support.

J. Les (Chair): You have some moral support. Maybe just take your seat and then introduce them so that we can hear you on the microphone.

A. Alibhai: Good afternoon. Paul Gravett from the Kay Meek Centre in West Vancouver and Naomi Singer from the Secret Lantern Society, based in Vancouver.

I do have a written submission, and what I'll speak about today will just be from some of the highlights from that submission. It may look even a little bit familiar. We've been working with ProArt, who I believe you heard from previously in Victoria as well. But some of this bears repeating.

"British Columbia is the place for local arts and culture. People agree emphatically that funding for the arts should not be left up to private business and foundations. It should get a boost from local governments.

"Ninety-one percent of B.C. residents praise the selection of arts and cultural events and activities in our community. It's the only region in Canada where there's complete agreement for the idea that a vibrant cultural scene is great for the local economy."

This is from a book called We Know What You're Thinking by Darrell Bricker and John Wright of Ipsos-Reid.

My name is Amir Ali Alibhai. I'm the executive director of the Alliance for Arts and Culture in Vancouver. While we have about 350 member organizations in the arts and cultural sector — all the disciplines — we also represent many other artists and independent workers who aren't actual members but who we work with on a daily basis.

This membership has an incredible scope and reach. All the arts disciplines, as I mentioned, are included, and their combined audiences number well over a million people a year.

These members employ artists and cultural workers in the hundreds, maybe even in the thousands. They employ volunteers who put in thousands of hours of work. They have boards made up of volunteers in the community from all walks of life, including very many influential community leaders and business leaders.

Their combined budgets represent tens of millions of dollars. Usually these are leveraged from very small but critical investments made by different levels of government, including the province.

Right now, with the cuts to the gaming grants that we've just experienced and with the anticipated cuts to the B.C. Arts Council, according to the ministry plans for next year, which are quite astounding — down from $19.5 million last year to about $3.6 million for next year — there's a lot of fear and instability in our sector.

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There are examples of organizations shutting their doors, organizations that have been in our community, like the Pitt Gallery, for 35 years. There are job losses that I'm aware of and drastic reductions in programming. We're just compiling the information now, so I don't have total numbers for you. You know, in the end, it's British Columbians that lose out too, as their access to arts and culture is severely affected.

We feel it's a time of crisis for our sector and that action must be taken to correct the situation. We have some recommendations. These are as follows.

That our government restore arts and culture funding to the $19.5 million level of the 2008-09 budget. This is a
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level that's much less than what previous standing committees have actually recommended. We realize that in the current economic crisis it's not possible to hope for those increases but, certainly, not cutting back on what is available.

That the British Columbia Arts Council's arm's-length relationship with the province be maintained through funding by the Ministry of Tourism, Culture and the Arts — not through gaming funds, as is currently happening, but rather through legislated appropriations, as in past practice.

Direct access gaming grants should be fully restored and the 33 percent allotment for arts, culture and other not-for-profit and charitable organizations be honoured. Right now we have a lot of allies in the other sectors, as they have also been hit very hard.

We also would recommend that one-year funding commitments to arts and culture organizations through the gaming policy and enforcement branch at the Ministry of Housing and Social Development that were rescinded this year be restored.

Finally, maintain the multi-year funding program beyond the current fiscal year, because it's a very valuable tool. It's very valuable to the arts and cultural community to have that stability. They know they've got that core funding.

Now, a popular misconception circulates that arts funding supports obscure programs that otherwise would have no audience. In truth, most presenters, most companies, most art galleries have large audiences and a great number of sellout performances. The overall attendance at cultural events just in Vancouver alone — that's where we're based, so I have this number — easily tops a million annually.

The challenge that a market economy presents is not insufficient demand but rather that live performances and high-quality artwork by respected professional artists cannot be offered at affordable prices without that investment. Government's role in this scenario is to keep excellent live professional arts performance and the work of artists and cultural workers within reach. Make them accessible for the public.

Naomi presents a free festival in Vancouver where many thousands of people attend. It could not be free if it didn't have the sort of support that it does.

BCAC funding is not a subsidy of the arts but of the public, which demonstrates its desire and demand for arts and culture by coming out in the hundreds and hundreds of thousands to performances in communities large and small across British Columbia.

In addition, arts and culture reinforce and serve in measurable and meaningful ways the core values of British Columbians, as evidenced in your government's strategic plan — prioritizing education, literacy, healthy living, support systems and employment and economic health. The written submission that I've put in has detailed information and some good footnotes and links to support some of those ideas.

I'll just speak a little bit about jobs and the economy. Cultural spending is the ultimate economic stimulant because you get so much for so little. Every dollar goes a long way.

I have a friend, Hank Bull, who came back from Nuit Blanche — I spoke to him yesterday — in Toronto, an investment of $2 million. A million people came out to participate in Nuit Blanche in Toronto. It was estimated that each one of them spent about $13. That's $13 million in one night for a $2 million investment.

There is an understanding now that you must have an ability to build a cultural component into development to retain talented and mobile workers. Culture is the key to economic development now. Look at any trend analysis and data. Investment follows human capital, and human capital, to a surprisingly large extent, follows the arts.

When a dancer, musician or actor takes the stage, it triggers a cascade of seen and unseen dominos. That million or so people that come to Vancouver to see live performances? Well, they buy meals and drinks, take taxis, buy parking, get manicures, see their hairdressers, use the dry cleaner and pay babysitters.

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The presenter pays sound technicians, set designers, lighting designers, builders, stage hands, stage managers, caterers, ushers, box office and stage door staff and janitors. Together the arts organizations keep a small army of contractors employed. Sponsors purchase marketing and promotion opportunities and entertain clients.

It's important to consider…. Has this government measured the loss of jobs, tax revenue or economic activity occasioned by the current cuts or the future cuts — the broken leases and vacancies in commercial real estate? Has the government factored in the value lost to corporate sponsors when programs are scaled back?

I'm going to quote from someone I never thought I'd be quoting from, but here goes. "There's a strong fiscally conservative argument for supporting the arts," says Canadian Heritage Minister James Moore, explaining that writers create things of social and economic value out of little more than their own knowledge and imagination. Moore said that the cultural sector employs 650,000 people in Canada, twice the number employed in either forestry or agriculture. He declared that infrastructure without the kind of activity that artists provide is culturally and economically soulless.

Tough economic times are exactly the times when we should be supporting our communities and investing wisely. Einstein said that during times of crisis, imagination is more important than knowledge. I think that's been something that I've thought about quite a bit lately.

Every dollar invested by the province in arts and cultural organizations returns between $1.05 and $1.36
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directly back to provincial treasuries. Now, this was based on a report that was on the government's website, but it's not there anymore. It was there before, and I found the original document.

The HST is also going to increase that because all of a sudden there'll be 7 percent added to the cost of tickets and admissions. As well, and you probably know this, the arts and cultural sectors in B.C.'s creative industries generate $5.2 billion each year and employ 78,000 people.

One little thing — and I hope I'm not running over. Global Tourism Watch, a Harris-Decima research poll of Canada's major international tourism markets, has issued some dire findings respecting our image in the U.S. To summarize the Global Tourism Watch report, our market share is declining, and our unexciting profile increasingly deters U.S. travellers. The report concludes that "all of the general product weaknesses in the U.S. market were linked to culture."

The Standing Committee on Finance has traditionally supported increasing funding to the B.C. Arts Council. Given the social and economic returns that the arts sector has clearly demonstrated, we urge this committee to strongly recommend the 2008-09 levels of funding through the council and gaming be maintained.

Creativity counts. Children, seniors, the poor, the rich, indigenous people, settlers and immigrants, rural, urban and suburban — all of us need culture and the arts. They are basic human needs and rights — like access to health, education, water and air. Creativity counts. Art is for everyone.

J. Les (Chair): Thank you, Amir. Any questions from anyone?

D. Donaldson (Deputy Chair): Thanks for the presentation and the thorough document. It presents some new material. Of course, we've heard from a number of arts groups, and it goes over material we've already seen.

I had a question for you that wasn't directly related to the economic benefits of the arts, because you've made strong arguments there. To me, it deals with the issue you discussed around affordability and exclusivity — if we aren't able to provide the opportunities for people at an affordable price to participate in the arts as consumers.

I say this, coming from a rural region of the province that doesn't have as many opportunities for that, and yet people in my area pay taxes and generate revenues from the work they do on natural resources. So I believe they should have the same opportunities.

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Can you just comment a little further? You touched on it briefly in relation to Naomi's work — about how the cuts that you're experiencing are going to lead to people, perhaps of lower-income, not being able to afford or access live arts.

A. Alibhai: Well, it's not just about live arts, but it's about artists working with communities. I worked at the Roundhouse Community Centre for 12 years and was a programmer there. I started a program called youth theatre, which was a free program for kids — youth at risk, largely. They wrote and made their own plays, and we allowed them to, and we provided the resources so they could present these professionally to their parents and their communities.

I remember on several occasions, but one particularly sticks out…. There was this young fellow whose parents came in to see me and said: "You know, so-and-so was going to…. He'd be in jail if he hadn't found this program. It changed his life. It took him off the streets." This was a free program. This was a single mother. She was estranged from her husband. They were struggling. This program allowed an opportunity for their son to keep out of trouble.

Then I got curious, and I sort of figured out how much it would cost for this person to be in prison or in a detention centre. It was about $75,000 a year, or something like that, if I recall. That program cost $12,000 to run. You just do the math.

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

The next presentation is from the Canadian Cancer Society, B.C. and Yukon Division — Ashley Duyker and Kathryn Seely.

Good afternoon.

K. Seely: Good afternoon, Chair, co-Chair, Madam Clerk and members of the committee. My name is Kathryn Seely, and with me is Ashley Duyker. We're here today to present, on behalf of the Canadian Cancer Society, B.C. and Yukon Division, our recommendation with respect to next year's provincial budget. You have a written submission before you. I will mostly just be speaking from highlights to that.

Thank you for permitting us to express our views today, and thank you for the work that you do. The Canadian Cancer Society, British Columbia and Yukon Division, is not unlike Members of the Legislative Assembly. We act provincewide, but we are also in our communities. Thank you for the support that you provide us provincewide, and thank you also for the support that you provide to the Canadian Cancer Society in your local communities.

We are present in over 80 communities in British Columbia. We have over 20,000 volunteers and 22,000 event participants helping us to prevent cancer and support those living with cancer.

We have five recommendations before you today. Four of them are economic policy recommendations, and the
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fifth is a capital spending recommendation. Before we move to the five recommendations, we just wanted to touch on cancer statistics for a moment.

Cancer is still the number one premature cause of death in British Columbia. This year some 19,000 people are expected to be diagnosed with cancer in British Columbia, and some 9,000 people are expected to die from cancer. The good news is that British Columbia has the lowest incidence and mortality rates of cancer across Canada. Right now some 80 percent of women are expected to survive a breast cancer diagnosis. In honour of Breast Cancer Awareness Month, we'd like to thank you for allowing the B.C. Cancer Agency to do the good work it does.

We've brought you some boob-a-grams, which the Clerk or the administrative assistant will hand out later, as I know that they can be distracting. They're for the women on the committee and for the men on the committee with women in their lives. Thank you very much for your support of breast cancer.

The bad news is that if left unchecked, cancer rates are expected to rise by some 60 percent over the next 20 years, and that is due to our growing and aging population.

So herewith are our five recommendations: we respectfully urge you to recommend to the B.C. government that it increase tobacco taxes, subsidize nicotine replacement therapies, implement a trial of taxation on soft drinks, implement cosmetic pesticide legislation and help us fund the Prince George cancer lodge.

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Turning to tobacco. Tobacco is still an epidemic. It is still responsible for some 6,000 British Columbians dying each year. It's responsible for 30 percent of cancer deaths and 85 percent of lung cancers. Evidence indicates that the number one most effective policy intervention is to increase tobacco taxes. Studies show that a 10 percent increase in the price of cigarettes will drop consumption rates by as much as 3 to 5 percent, particularly among our youth, who are price sensitive.

You've been sympathetic to our tax recommendations around tobacco in the past. Two years ago you recommended a tobacco tax increase, and last year you recommended that the B.C. government close the tax loophole on roll-your-own cigarettes. We commend you for those recommendations and respectfully ask that you make them again this year.

We urge you to recommend to the B.C. government that it increase tobacco taxes by $3 per carton of 200 cigarettes. This would bring us in line with Alberta's tax rate and would raise money for the B.C. government in the amount of some $60 million a year. We've done the calculations in our paper. It's popular public policy, and it's healthy public policy, as it would prevent smokers from starting and help smokers to quit. We also recommend that you close the loophole on the roll-your-own tobacco tax products.

Now, with that, we recommend that you recommend to the B.C. government that it earmark some of those increased revenues to nicotine replacement therapies. Nicotine replacement therapies, or NRT, can be quite helpful in helping people to quit if people want to quit, if they can afford the products and if they're provided some assistance with counselling to do so.

Next year it's particularly important that all British Columbians who want to quit are offered the opportunity to provide nicotine replacement therapies at a subsidy, because effective July 2010, nicotine replacement therapies, which are presently PST-exempt, will no longer be HST-exempt.

Turning to our third recommendation, that you recommend to the B.C. government that it introduce a trial of taxation on soft drinks, we know that obesity and overweight are responsible for chronic diseases including cancer. We know that some 30 percent of our youth in British Columbia are either obese or overweight, and we know that some 23 percent of our youth are not getting enough physical activity to promote health benefits.

We also know the evidence indicates that healthy foods such as fruits and vegetables typically cost more than unhealthy foods or energy-dense foods such as fats and sugars. The evidence indicates that as the price of healthy foods goes down, the consumption of those products goes up. As well, as the price of unhealthy foods goes up, the consumption of those products goes down.

Two things must be done in order for this trial of taxation to be effective: it can't be an insignificant amount, which is why we've recommended the trial of taxation be 15 to 20 percent on the purchase price of a soft drink; and in order to prevent it from being regressive, it has to be accompanied with somehow lowering the price of healthy foods such as fruits and vegetables. Some good work is being done in the U.S. right now with some European countries in this regard, and we've made this recommendation to the Minister of Health Services.

Fourthly, we would be remiss if we didn't talk about pesticides, and that's because for the last two years this committee has recognized that environmental protection means more than climate action and reducing greenhouse gas emissions. We thank you for that.

The government, in its throne speech, recognized that we must do things differently if we want to preserve the environment, and it also committed to commencing a public consultation on chemical cosmetic pesticides. We would ask you to encourage the B.C. government to begin that consultation quickly, that it be widespread, but that it be given, in terms of the Ministry of Environment, enough money in its budget through the policy development phase and through implementation of any legislation which is going to require education and outreach.

I'd like to take the opportunity…. There have been some misconceptions and misunderstandings in the
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media about what we mean by a chemical cosmetic pesticide ban. We've met with Mr. van Dongen on this before, and he knows that we mean a ban on cosmetic pesticides as they apply to lawns and gardens. We don't mean a ban on forestry pesticides, nor do we mean a ban on pesticides that are applied to farming. We just mean those products that are used to pretty our lawns and gardens.

We know that studies show that there are links to cancer — those cancers include adult and childhood cancer — and that our children are more vulnerable to the effects of pesticides because their organs are immature in developing and they play so closely to the ground.

We know that it's the international agencies that are world-renowned, such as the International Agency for Research on Cancer and the U.S. national toxicology program, that are telling us that the body of evidence is showing that there are links to cancer.

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You may have heard from industry that the Pesticide Management Regulatory Agency studies these products and that they're safe. I'd like to bring your attention to some of the criticisms that have been levelled against the Pesticide Management Regulatory Agency.

Firstly, those studies are provided by industry. They're old. Each pesticide is only re-evaluated every 15 years. They are short-term toxicological studies on rats. Those studies are not being performed on rats in utero or rats that are being weaned. Those are two periods in a neonatal and newborn's development that are particularly potentially harmful.

Studies are conducted on individual chemicals, not chemicals in multiplicity, which we know can have synergistic effects. The studies are not done on the inert or the inactive or the formulants in pesticides. We also know from evidence that it is the inert ingredient in Roundup called glyphosate that is particularly toxic to frogs and tadpoles.

Health Canada doesn't claim that pesticides are safe. They say that they pose an acceptable risk when the directions or instructions are followed. Well, we were just in Minister Penner's office a few months ago, and we were hard-pressed to be able to find — let alone open — the label on the back that showed what kind of directions and instructions one must apply. Now, if that's us having a hard time, imagine the proportion of British Columbians that have English as a second language or low literacy levels.

We know that organic or biopesticides can grow the green economy, and the paper speaks to the magnitude of support that there is for this type of legislation. We know that provincial action is necessary to protect all British Columbians from exposure to cosmetic chemical pesticides, not just the 24 municipalities in B.C. with bylaws in place. Those citizens are protected.

We urge you to recommend to the B.C. government that it commence its public consultation quickly, that it be widespread and that it be given the budget to be able to develop the policy and implement the legislation by 2011.

Lastly, we request your assistance in recommending to government that it help us fund the capital cost of the Prince George cancer lodge. We were partners with the organizations that helped to develop the strategy for northern cancer control, and we were very pleased in 2007 when the Premier announced that a cancer centre would be opening in Prince George by 2012 and that it would include a cancer lodge in Prince George.

We know that transportation and accommodation are big issues in the north. We were there when studies were conducted before the northern cancer control strategy was announced, where people said that unless they had accommodation at the regionalized cancer centre, many of them would opt to not undergo treatment or to go to their local hospital and have a mastectomy rather than to the regionalized cancer centre to undergo chemotherapy or radiation.

We've got the land. It's been donated by the city of Prince George. We've got a seven-figure cornerstone gift available to us, but we now need the commitment from the province that it will be able to help us build the capital cost of the lodge. The Premier has indicated his interest in funding the bricks-and-mortar cost of the lodge if we will fund the furnishings. We've conducted a feasibility study. Donors are ready, but they've also said that they want to see commitment in the terms of funding from the Ministry of Health.

In conclusion, we're pleased to present these five recommendations — just five recommendations, we think, that if you were to help us make them, would help us to prevent cancer in British Columbia, support British Columbians living with cancer and help us to have a stronger and healthier British Columbia. Thank you very much.

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

N. Letnick: Thank you for the well-organized presentation and the articulate way in which you delivered it. I appreciate that. Obviously, it's very important for government to find ways of preventing medical situations like cancer if we are going to keep our health care system sustainable. So these are excellent recommendations that we will have a look at.

Since there are so many people with questions, I'll just keep mine to one. Right off the bat, the cigarette proposal — to raise the taxes. What does your organization believe will be the black market implications of such a recommendation?

K. Seely: Contraband is a big problem in the Atlantic provinces and Ontario and Quebec. It's not been a prob-
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lem here. We say it's a myth that if you raise the price of cigarettes, you will raise the chance of contraband.

In the early '90s, when Ontario and Quebec did lower their cartons of cigarettes, it didn't stop contraband. Right now, if you look at the income tax rates on page 4 of our report, you'll still see that Ontario and Quebec are at the lowest level of income tax rates, and yet they're still the highest level of contraband rates.

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J. Thornthwaite: Thank you very much for your presentation. I just wanted to qualify, before I ask this question, so you know where I'm coming from, that I'm a dietitian by trade. So I'm going to target the food issue.

I'm wondering why — given the fact that with regards to food-related cancers, it's really the fat or the type of the fat that we're consuming, not really the sugars per se — you're picking on soft drinks. Not that I like soft drinks, but just why you're targeting soft drinks.

The next question is: why not tanning beds or something that we already know for sure causes cancer?

K. Seely: I'll take the soft drinks, and I'll let you take the tanning beds.

We chose soft drinks because of the amount of sugar in soft drinks. Because it's an easily definable food, you can say: "Let's tax 15 to 20 percent of any soft drink which has sugar-sweetened additives in it or which is sweetened by sugar, and that will impact the obesity." We chose soft drinks not because of the type of fat but because of the impact on obesity rates.

A. Duyker: I'll just respond to the tanning bed question. Actually, earlier this year we did recommend to the province during the election that they do implement a ban on using tanning salons for people 18 years of age or younger. That is definitely on our radar and something that we are advocating for, but we didn't include it in this recommendation because we didn't want to add to the already long list.

D. Donaldson (Deputy Chair): Thanks for the very specific recommendations. It's nice to deal with and digest those items. I just have two quick questions. I'll ask them both at once.

On the subsidizing of nicotine replacement therapies, I wanted to make sure that I heard you right. You said that now these are PST-exempt, but they won't be HST-exempt. In other words, the HST will cause an increase in cost for people who are trying to quit smoking. I just wanted to be sure that I got that right — the HST part.

The second part of my question was on the introduction of the trial taxation on soft drinks. In the final paragraph you mentioned quickly about the taxation and subsidization topic and that there were other jurisdictions that had that in place. You mentioned Europe or something. If you could supply that study, that would be very helpful for myself and the committee.

K. Seely: I will. We have a good summary on the work that is being done in the U.S. and across some European countries that we can provide to the committee and will before the final date of October 23.

You are correct. That is what I said about the HST on NRT. Our best knowledge at this point is that point-of-sale rebates for PST products next July will not include NRT.

J. Les (Chair): The last question is to Don.

D. McRae: Actually, my question was answered. It was on the tanning beds, so thank you.

J. Les (Chair): Excellent. Thank you both very much. We appreciate you coming this afternoon.

The next presentation is by the Surrey Board of Trade. I believe we have Eric Wilson, Ray Hudson and Anita Huberman.

E. Wilson: Good afternoon. As you can see, my name is Eric Wilson. I am the chair of the finance and taxation committee of the Surrey Board of Trade. I'm also a partner with BDO Dunwoody LLP chartered accountants and advisers.

With me today is Anita Huberman — she is the CEO of the Surrey Board of Trade — and Ray Hudson, who is policy communications manager for the board.

I'd like to start with a little context about us. Our organization represents over 3,600 business contacts in and around Surrey. In terms of population Surrey is Canada's 12th-largest city, the 35th-largest city in North America and is projected to surpass Vancouver as the largest city in British Columbia.

The South Fraser region is now home to 850,000 residents and represents about 19 percent of the British Columbia population. A major part of the forecasted increase of B.C.'s population is from immigration. Among all Canadian cities Surrey had the fastest-growing rate of growth of foreign-born persons over the last five years, growing by 31 percent from 2001 to 2006.

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We are very pleased to speak with you this afternoon. You may remember us from last year around this time — or not. When we met last fall, we were just at the start of the economic collapse. This global event was certainly beyond the power of any provincial or even national government to control. We were very fortunate that the B.C. economy had already engaged in preparation activities in support of the 2010 Olympic Games as well as the major infrastructure projects of the Pacific gateway.
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Today we wish to speak to some important economic matters within the purview of this government to address.

Firstly is revenue and revenue allocation. We support the government's move to level the playing field with Ontario by introducing the HST, but in doing so, we ask the government to remain particularly sensitive to those sectors and businesses that would be most impacted by the implementation and work to mitigate these impacts.

We have supported the government's diligence in reducing the provincial debt over its previous mandates, but given the scope of the economic collapse, we challenge the government to be creative and sensitive in working through the funding of social programs operated by non-profit organizations. Many of these carry an enormous social responsibility to support or assist our seniors, our homeless, our young people and others who are disadvantaged.

We are pleased with the commitment of $32.9 million in Surrey to mitigate homelessness and help at-risk women and children. These programs and many other community programs — including sports, arts, education support and so on — have been funded from the proceeds of gaming. Many have had grants reduced or requests denied, despite the province's move to increase gaming funds by increasing betting limits in on-line gaming.

There has evolved a social compact of sorts, where the public has come to expect that gaming money will be used to fund these programs. Reducing or cutting these funds while diverting more of these dollars to general revenue is seen by many as an abrogation of the social compact itself. Although the government restored some program cuts, many are seriously impacted. We feel that despite these financial times, we must find ways to sustain these important contributors to our societal well-being.

Many other organizations providing these services play a major role in our economy. I think a great example of this is a comment that Tony Blair made about ten days ago in this hotel. His comment was: "I think sport is one of the best anti-crime policies and one of the best health policies" for young people. Please don't lose sight of that.

I would like to comment on health care. We feel it's time to take a bold step toward resolving the issues that are choking our health care. We simply cannot continue to pour more money into a system that is dysfunctional.

We must explore the two-tier model of a private system operating in parallel with a public system. The dearly held principle of universal access does not need to be compromised in the process. With the right checks and balances, access, quality and delivery of medical care could be vastly improved. We've got a system in place now. It treats injured workers, military, police and professional athletes, to name some.

We're aware that it means taking on the Canada Health Act, but this is the same government that developed TILMA and workable changes to the agreement for trade. It was said that that couldn't be done. Quite honestly, it's far beyond the scope of this presentation to expand on this now, but we would welcome the opportunity to dialogue at any time.

We in Surrey are eagerly awaiting the completion of the acute care medical centre at 140th Street and Fraser Highway, and the new emergency care facility at Surrey Memorial Hospital. This is a very good start toward addressing the imbalance of such facilities in the South Fraser, but we're concerned that in the face of the rapid population growth here, there will be an ongoing program to properly assess and meet those demands.

Now I'd like to talk about education funding. This point was raised at the meeting last year as well. In 2016 one in three B.C. students graduating from high school will be from the Surrey school district. It is B.C.'s largest.

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The essence of sustainable communities is the principle of live, work, learn in the community, and it's particularly important to educate our young people in the community. We're pleased to see the attention being paid to education in the budget process. We must point out that there are some serious imbalances in funding education in Surrey in particular, and we're concerned about unintended consequences that may arise from the newly announced all-day kindergarten program.

The government correctly says that additional moneys have been applied to education. But if the increases fail to meet the requirement for funding, the result is still the same as a cut.

This fall Surrey grew by 900 students, and there were 200 for kindergarten alone. When the brand-new Hazelgrove Elementary school opened for business, it did so with four portables on the property, and a second school planned for Cloverdale was shelved.

Surrey already has serious space issues in its schools, and we're concerned that the all-day kindergarten program will exacerbate that. The question is: will there be the funds to create the additional space needed in Surrey?

Last year we brought to you the logical per-student funding formula from the CommunityLINK grants, which saw Victoria receiving $192 per student. Vancouver received $158 per student, and Surrey received $50 per student. Quite frankly, it is incomprehensible and unacceptable.

South Fraser cities have lower university transition rates than other Lower Mainland cities and fewer than 100 seats per 1,000 of the 18- to 29-year-old population versus the provincial average of 244 seats. As the second-largest and fastest-growing city in B.C., this ratio really makes no sense and needs redress.

In keeping with the sustainability concept, we need additional training in both the trades and the profes-
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sions at both Kwantlen Polytechnic University and Simon Fraser. The MOU signed in 2006 between SFU and the Ministry of Advanced Education and Labour Market Development to expand from 2,500 to 5,000 full-time-equivalent students is the capacity boost that's needed. Unfortunately, the recession has slowed the timeline for this expansion. But there is no doubt that this is the medium-term vision of the capacity boost that is needed.

We support the expansion at SFU Surrey's research in areas such as health and energy, along with the construction of a health science and technology building to house research and teaching labs and the addition of further graduate programs. We also recommend that Kwantlen's Cloverdale campus be viewed as an ideal venue to house architectural and engineering programs as well.

The key to a successful future lies in meeting the training and educational needs of our children, our youth, adults, professional and skilled trades and the newcomers who also bring vital skill sets to this country.

In conclusion: redress, reinvest and recover. We have pointed out some of the major concerns held by the Surrey Board of Trade and appreciate the economic issues facing all of us. But there remain those serious inequities between Surrey and other comparable communities, both north of the Fraser River and elsewhere, particularly in education and transit services. These must be redressed by investment in these shortcomings so that we can more quickly return to growth mode when those gas and other resource revenues come back on stream.

It's an ideal time to plant the seed, not to hoard it or to eat it. Our future depends on it. The Surrey Board of Trade is prepared to assist in any way we can, and we look forward to the opportunity.

J. Les (Chair): Thank you, Eric. I've got a couple of questions from John van Dongen.

J. van Dongen: Thank you, Eric, for a comprehensive and well-researched presentation. You talked about the support of the HST and the sensitivity in implementation for certain sectors. But I'd appreciate your comments, particularly from your background as an accountant, on what you view as the efficiencies gained from HST from a businessman and a government perspective and also, probably more importantly, the overall net benefit to the economy and all the players in the economy when you look at the major gains for industries such as agriculture, forestry, mining and others under the HST program. So those two things.

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E. Wilson: Well, the major win to businesses from an HST perspective is that what was previously a dead cost is now a recoverable one. Those items that had PST in them as an input, either an article that was used in producing outputs…. It is now recoverable to the business. So its operating costs are lower. Its operating profit will increase, which generates further tax revenue to the province itself in terms of corporate taxes, regardless of the size of the business itself.

A caution. As the releases are coming out, there is an ever-changing opinion as to the extent of the benefits or the potential pitfalls, and I'll use gasoline as an example. There was some confusion as to whether or not bulk propane or bulk diesel fuel was going to have an HST component in addition to the motor fuel tax. It would appear from the media releases that it's not the case, but there's a little uncertainty in terms of assessing that.

I note with interest today that there was a release that referred to transitional processes to provide rebates with respect to PST previously employed in building materials prior to the implementation of the HST. So I'm cautioning my comments as these press releases are released.

We haven't the legislation yet, obviously, but from a conceptual point of view, I think where there was once PST in an input cost, it is now going to have a direct reduction on the cost of doing business and providing these by virtue of becoming a recoverable input tax credit. I hope that answers your question.

N. Letnick: Thank you for your presentation. A question on health care. You've proposed an expansion of a two-tier health care system in British Columbia. The challenge with that is twofold — well, many, but two specifically that I want to ask you questions on.

One is that the funds that we get currently from the federal government…. They will hold back dollar for dollar any expansion into that area. Also, how would you mitigate the impacts of our human resources — nurses, physicians — moving from a public health care system into more private provision of health care and therefore having less capacity for those that are left in the public health care system?

E. Wilson: Well, the first thing that comes to mind is that I believe there's a cap in the number of patients that doctors can treat on a daily basis. I think it's currently set at 25. In terms of encouraging physicians to migrate into British Columbia, for example, it might be something to be looked at. I'm not aware of the background as to why this limit was put in place to begin with.

I'm not saying it's an easy solution. There have been previous apparently unworkable arrangements with the feds that have since been resolved, and you can refer to that in the speech itself.

With regard to the capacity of the medical profession to treat the existing patients that are accessing the public health care system, a couple of things come to mind also,
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as increasing facilities…. The private clinics, the walk-in clinics that currently have these patient caps in place have to shut down, forcing the burden on the emergency rooms and the local hospitals, which are already operating at capacity. If the economic incentives to the medical profession at all levels were increased, I think you'd see an uptick in the available resources to provide it.

I'm going back about 25 years. There were restrictions on doctors as to where they wanted to practise when they came to B.C. "Wanna be a doctor? You've got to go to Merritt. Or, yep, we can get an opening in Ladysmith." In my profession I had clients say: "I'm leaving Canada, I'm going to the States, and I'm going to practise medicine in a more economically viable environment." This is many years ago, so there's a little bit of empirical evidence as to what the impact of that is.

In terms of replacement funding, I don't have an answer. I don't propose that I've got the perfect solution pointed forward, but certainly we'd like to promote dialogue in the area, promote further exploration of possible solutions to it.

J. Thornthwaite: Thank you very much. With regards to the school and education, I think the intent of the all-day kindergarten program is that it is voluntary, so not all students have to go. It's up to their parents to decide, and obviously the Ministry of Education will be working with the school boards to ensure that the schools actually have room. I mean, some schools will; some schools won't. So that would be a reasonable partnership between those two groups.

But my question is with regards to the CommunityLINK grant. This doesn't make sense. Can you explain this to me?

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E. Wilson: No, I can't. It's incomprehensible and inexcusable. I have never had a clear answer as to why Surrey gets $50 per child, Victoria gets $192, and Vancouver gets $158.

R. Hudson: In fact, it goes even further than that. Burnaby gets $83. Langley gets $100. There just doesn't seem to be any rhyme or reason for this.

J. Thornthwaite: I know with the PAC funding, we're giving the same amount of money per student all across the board. So I'm not too sure exactly….

R. Hudson: We asked the question last year. It wasn't resolved, and we've brought it back.

J. Thornthwaite: All right. Thanks.

J. Les (Chair): Good. Thank you very much for coming today. We're out of time, unfortunately, so we'll probably see you again next year. You're one of those repeat customers that we like to see.

The next presentation is from the Alma Mater Society of UBC Vancouver, Timothy Chu.

T. Chu: Thank you, all. My name is Timothy Chu, I'm the vice-president external of the Alma Mater Society. We're the student union at UBC, and we represent over 45,000 students. We offer a wide range of services, like the universal bus pass, a health and dental plan and other services such as peer counselling.

I'm here to talk to you today about education. In uncertain economic times, it presents opportunities to invest in skills retraining and education. That is why the AMS, the Alma Mater Society, has six recommendations for the committee.

The first is to reinvest in B.C.'s knowledge economy through stable and inflation-indexed funding for institutions. The second is to restore multi-million-dollar cuts that happened in the 2009 B.C. budget for student aid and infrastructure. The third is to end government profiting from student loans and the interest rates. The fourth is to implement a better StudentAid B.C. program that uncouples grants from student debt. The fifth is to improve transit for students, and the sixth is to improve child care for students on campus. I'll go into each one more in depth.

Our first recommendation is to reinvest in B.C.'s knowledge economy. We're calling on the provincial government to restore funding to post-secondary-education students — funding for education and skills training through a restoration of per-student funding levels back to the 2001 levels.

We also want to see provincial grants to institutions indexed to the rate of inflation, because otherwise a flat grant essentially is a cut. We also want to see fully funded graduate programs, because graduate programs are currently underfunded.

Our understanding is that the university has been pushing the government to deregulate professional fees. Students do not want to see that, and students oppose that. So we do not want to see the deregulation of professional fees.

We also want to see tuition-fee levels reduced back to 2001. We also want to make sure that the provincial government is funding our institutions so that it makes up for the lost revenue. These are real ways that we can make sure that the provincial government is investing in our knowledge economy in B.C.

The second recommendation that the AMS has for the committee is to restore the cuts. In the 2009 budget that was released in September, $17 million was cut from student aid financial assistance and StudentAid B.C. Entire programs were abolished. Students who had permanent disabilities — programs like that were cut.
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Health care bursaries cut. Nursing bursaries cut. Early childhood educator loan assistance programs were cut. We feel that these cuts are not the best because of such a shortage of workers in these fields to begin with.

In order to make sure that we have our nurses, we have our doctors, we have early childhood educators, we need to make sure that these programs exist. We're calling for the reversal of the $17 million cuts and the reinstatement of these programs.

The third recommendation that we have is to end government profiting off student debt. Currently the B.C. government borrows at a rate of prime minus 1 percent to finance these student loans. However, they lend these loans to students at a rate of prime plus 2.5 percent. Essentially, they're profiting off student debt. The need for students to take on debt shouldn't be an opportunity for the province to profit off it.

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That is why we're saying that we want to see the interest rates on student loans decreased to the point where it's at the cost of government borrowing plus an administration fee, which should not be over the rate of prime. That is our third recommendation.

Our fourth recommendation is to uncouple grants from student loans. Currently, in order for students to be eligible for grants, they need to take on debt. They need to take on debt in order to be eligible for these grants to help them. Essentially, the province is driving them into debt before they get assistance. We want to see that changed. We want to make sure that students have that access to grants without having to go into debt. Currently, the average debt load for students is $27,000.

Our fifth recommendation is to have a better transit system. UBC is a commuter campus. We want to see more buses. We're currently around 800 buses short in order to actually reach the capacity of what students need in the Lower Mainland. There have been over 9,000 pass-ups in the last year. We also want to see representation, because the UBC area is not a municipality. It's not incorporated and, hence, gets no representation on the Mayors Council and the TransLink governance structure.

We also want to see a universal bus pass for every single student in the Lower Mainland, at a rate of what UBC is paying, which is roughly $25. By doing so, we're able to improve the transit system for students at UBC, and that's our fifth recommendation.

Our sixth recommendation is child care on campus. Currently at UBC alone, the child care wait-list is around three years. There are over 1,500 people waiting on that child care list to get in. Essentially, what this is forcing students to do is to choose between either a space in their child care and going to school or staying at home and taking care of their children.

The AMS has actually shelled out $1 million over the next ten years, which we have given to the university to build the spaces, but we feel that the provincial government needs to step up over this issue, and they need to fund $500,000 to build more spaces so that students have access to child care and can hence go to school.

In conclusion, we had six recommendations. Again, they are (1) to commit to properly fund the post-secondary sector, (2) to reverse the cuts that were done in B.C.'s budget in 2009, (3) to reduce student loan interest rates, (4) uncouple grant funding from student loans, (5) improve transit for students and (6) improve child care on campus for students.

I want to thank the committee for your time in hearing me out. If you have any questions, feel free to ask me.

The Chair: Thank you, Timothy. First question to Don.

D. McRae: My question was on student loan defaults. Does your group have any studies that have any percentages of student loans that go into default?

T. Chu: We don't, but students do recognize…. When they do take on debt, they try really hard to repay these debts. What we know of is that average student debt is $27,000. The real issue here is making sure that the upfront costs of education are reduced so that we don't have students graduating with this huge burden. I know of students who have $94,000 in debt. There are many students who have quite a bit of debt.

J. Rustad: Thank you very much for your presentation. As with many presentations that we've heard from the student union groups throughout these hearings, I want to ask you a similar question. Just as sort of a little preface to it, you suggest we should roll back tuition rates to the 2001 level. Post-secondary education has seen a 40 percent increase in funding since 2001. Should we roll that back to the 2001 level as well?

Obviously not. It's because we value post-secondary education. We value investment in post-secondary education, but we have to make some very tough choices here. In the very near future — five, ten years — you and the people who graduate from university will be in these chairs and asking the same types of questions as to how they're going to manage the need for a competitive tax base in our economy and the increasing demand on health care costs, and where those dollars are going to come from.

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So I'll pose this question to you, as I have to others: where do we find the dollars that you're suggesting for post-secondary education, in the context of trying to balance all the other needs that we have? Are you suggesting that we raise deficit financing for this? Are you suggesting we raise taxes for it? Or are you suggesting
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we try to find the dollars or move the dollars from other programs such as health?

T. Chu: Definitely. Education is a long-term thing. Like I said, education is a form of investment. You throw in money now, and you'll get way much out at the very end, when people are graduating. They have these professions, and they build up that tax base to pay for these services.

Like I said, in uncertain economic times, now is the time to invest in education. By investing in education and building up that knowledge economy, we make sure that our economy is resilient, that we are sort of more protected — the whole globalization and the forces that happen.

It's a really small cost up front, but what you get out of it is very much. That is why…. It's such a long-term kind of thing for education.

B. Ralston: Thanks very much, Timothy. That's a lot to absorb in a short presentation.

I did want to just ask — and I'm not sure if it's entirely in your jurisdiction — about graduate programs. You did mention the knowledge economy. I think the Universities Council and Don Avison…. I'm not sure he's presenting this year, but in the past he's said that it's important to fund graduate spaces and provide adequate income and bursaries and scholarship support for graduate students.

I'm wondering if you could state your position on increasing graduate spaces, particularly in the research-intensive side of academic curricula.

T. Chu: Definitely. UBC is a research-intensive university. We focus a lot on graduate students and the research that they do. That is sort of what makes us at the forefront of the province and makes sure that the research that we do is carried forward and is able to build up that knowledge economy.

We support funding our graduate students. They're students nonetheless. Graduate research work is incredibly important. Our university has been increasing, over the past years, graduate students. But we also want to make sure that, yes, graduate students are funded. The research work that they do is great. Let's also make sure that the undergraduate side is funded as well, and that the barriers are removed.

It's sort of both sides. In order to have a comprehensive education system, we need to fund our graduates. We need to fund our undergraduates.

D. Donaldson (Deputy Chair): Thanks for the presentation, Timothy. We've heard similar recommendations, but you've put some more meat on the bones of those recommendations, so I thank you for that. I would hope that you could give us a written summary of your comments.

T. Chu: Yes. We'll be submitting it later.

D. Donaldson (Deputy Chair): Thanks. Tough choices were alluded to earlier. I always feel that when making tough choices, it's best to consult with the people most impacted by those choices, because then sometimes the people most impacted can come up with creative solutions that reduce that impact.

My question to you is around student aid in B.C. and the cuts that you alluded to that were made. What kind of consultation was done between the government and your organization, which I assume represents quite a few students — the Alma Mater Society? Can you briefly describe the consultative process that occurred before those cuts were made?

T. Chu: We were actually unaware that these cuts happened. We were unaware that they happened until students started approaching us, saying that their programs did not exist. I ended up calling StudentAid B.C., and I asked them about these programs and whether or not they existed. I was told that they do not, and that is how we found out.

It's incredibly troubling that way. But at the same time it really provides for an opportunity to reverse these cuts to show students that they've cared. We've been rallying our students, asking them how they feel about the cuts. There's an overwhelming response.

That is why we're here — sort of pushing for the reversal of these cuts.

M. Mungall: Thanks very much for your presentation today. This isn't my question, but just following up on Don's question around default rate. When I was a student advocate in Alberta, what we found…. There are quite a lot of studies — this is about 2001 — that show that the larger the debt students incurred, the greater the default rate. In fact, if you reduce the amount of debt that students have to take on, they happen to have a better repayment rate than mortgage holders.

Maybe I'll connect with Adrienne there, and I can let her know where she can get that information.

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But my question is about the child care. You said $500,000 to build child care spaces. Now, are you looking just for capital funding, or are you looking for operational as well?

T. Chu: Capital and operational funding. I think what we need first is the capital. We don't have the spaces on campus, and the university doesn't have the capital to build these new spaces.

Currently what's going on is the operational costs of child care are being off-loaded onto the users. A student can pay up to $1,040 per month, per child, in order to get that space, and this is after their three-year wait-list or such.

If you think about it, with $1,040 per month, per child, on top of your tuition fees, on top of your ancillary fees,
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textbooks and everything else — it's incredibly hard. What we want is we want to make sure that we have that capital cost to create these spaces, reduce that wait-list so students don't have to choose between: should I go to school, or should I stay home and take care of my child.

J. Les (Chair): Timothy, thank you. We're out of time. Sorry about that, but we appreciate you coming today.

Our next presentation is behalf of the Kwantlen Faculty Association. I believe we have Joel Murray and Phillip Legg.

J. Murray: Good afternoon, and welcome to Surrey. My name is Joel Murray, and I am on the executive of the Kwantlen Faculty Association as the member at large. In addition to representing the KFA, I am an instructor at Kwantlen, where I've been employed for almost ten years. I teach academic English-as-a-second-language courses.

The KFA's 800 members work at the four different campuses of Kwantlen Polytechnic University, located in Surrey, Richmond and Langley. We're glad that the committee made the decision to come to Surrey and gather public input directly from citizens and organizations in this community.

On a personal note, as an instructor and a former chair of the English language studies department, which delivers ESL at Kwantlen, I would like the committee to know that according to the 2006 census, 44 percent of those living in the Vancouver census metropolitan area from which Kwantlen students originate speak a mother tongue other than English.

Many are students who are immigrants, and many of those are professionals seeking to return to their professions. This fact speaks to the importance of a comprehensive approach that reflects the real needs of the communities we serve.

I would like to begin, too, by emphasizing for committee members that funding for post-secondary education has been problematic for most of this decade. In real terms, after accounting for the impact of inflation and changes in the number of students that we have in the post-secondary education system, real per-student funding has dropped by 8 percent since 2001.

What that means at an institution like Kwantlen is that we are forced to do more with less. Complicating our funding problems even more is the fact that Kwantlen became one of the five newly designated universities in B.C. in 2008.

However, that new designation came with no additional funding to support the activities that are part of providing a university education. In order for Kwantlen to become the teaching university envisioned by the provincial government, an increase in funding is needed.

Indeed, the lack of proper funding support from the provincial government undermines the important mandate that Kwantlen has, which is to provide comprehensive post-secondary learning opportunities for the communities in which we operate.

Our campuses are located in culturally diverse communities. We deliver programs and course offerings designed to meet the needs of students, employers and the broader community. We have developed a strong track record on all these fronts. However, when funding fails to keep pace with the growing demands of the region Kwantlen serves or even the basic costs of operating a post-secondary facility, our ability to maintain the commitment to the community starts to diminish.

Part of that commitment is to people like Anne, a single mother who is a student at Kwantlen. Anne's story was related to me by one of her colleagues, who teaches in the criminology department.

Anne is a single mother of two in her late twenties. She has two jobs and at the same time is trying to study part-time for her associate of arts degree. She came to my colleague at the beginning of the semester to ask about her flexibility concerning exam writing and so on, as getting a babysitter, for her, was very difficult.

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She often came late to class because of late caretakers and clearly struggled in balancing the many duties in her life. Nonetheless, she was very committed and often stayed after class, which ended at 10 p.m., to make sure she did not miss anything at the beginning due to her tardiness. Her struggles were many; her supports, few. For example, she said that having the opportunity to have a child care service at the university would not only give her more flexibility in the course times she could commit to, but it would provide an extreme relief of stress in trying to track down steady day care options.

She said that she felt she could take more than one or two classes per semester if this resource were available, which would significantly cut down the length of time it would take for her to complete her associate of arts degree. She said that she would even consider a bachelor of arts if such an opportunity were to present itself.

I cannot think of a better story than Anne's to push for these kinds of resources that support our students and their learning. These resources are not just for staff. They're a necessity that students at Kwantlen deserve as well. With more and more mature students coming back to university in the recession, the need will only increase.

One of the arguments that we often hear from government is that the fiscal cupboard is bare, and services will have to suffer through this period. This begs the question: how will the underfunding of post-secondary education position B.C. to deal with the looming skills shortage, a shortage that previous budget documents have noted as a risk to future economic growth to our province?

We know that demographic as well as technological changes require B.C. to significantly increase the number
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of post-secondary graduates. The TD Economics Special Report of August 24, 2009, makes clear that greater attainment of higher-quality post-secondary education will become increasingly important to Canada's economic progress.

When you underfund post-secondary institutions, you make it more difficult to increase the number of graduates. Underfunding means that we offer fewer programs to our students. It means often that completing a degree, certificate, diploma or apprenticeship program takes longer for our students.

I should add that the decision to deregulate tuition fees also undermines our goal of increasing post-secondary graduates because we are making post-secondary education more expensive for our students. However, at the same time that access and affordability are becoming barriers, the provincial government, this past summer, cut $16 million to student aid programs — programs that, for example, provided bursaries to nurses in training and loan forgiveness for the disabled.

I should point out as well that in some of the specific areas where we need to do more in terms of training, areas such as our apprenticeship and trades training programs, the funding problems have been doubly complicated by the Industry Training Authority's approach to funding trades programs in our institution. It also doesn't provide the full cost for infrastructure needed in trades training, such as machinery, equipment and shops.

More and more post-secondary institutions are forced to cover the administrative cost of trades programs, costs such as those related to counselling and curriculum development, that had previously been covered by ITA's predecessor, the Industry Training and Apprenticeship Commission.

In other words, although the ITA has returned to the Ministry of Advanced Education, trades training still faces funding challenges.

We hope that this committee will consider the following solutions and incorporate them into its final report. I would like to summarize some of the key changes that we need to see for post-secondary education.

Affordability is an issue across the entire public post-secondary system. We have burdened students with more debt because we deregulated tuition fees in 2001. That creates an enormous access barrier at a time when our province needs to be training and educating more post-secondary students, not fewer.

The skills shortage is real, and post-secondary education is part of the solution. But that won't happen with current funding commitments. Students need and deserve much more affordable tuition and far more generous financial aid than currently is the case. You need to address that problem in the 2010 budget.

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Post-secondary institutions need to see a significant overhaul of the funding formula. Operating grants have not kept pace with inflation. Provincial funding has not kept pace with the demands that we know are there for programs. It has not closed the gap that exists in the funding of rural versus urban post-secondary institutions. Rather than add band-aids to the problem, the committee’s report should seriously consider a recommendation to bring all the stakeholders together to revise and renew the funding formula.

In closing, the Ministry of Finance has asked what choices to make and how to increase revenues to pay for services such as health and education. The answer is clear. Invest in education. Why? The TD Economics Special Report that I quoted earlier states that educational attainment has a direct impact on individual earnings and that schooling yields substantial social rates of return. In fact, according to StatsCan figures, for those with a post-secondary certificate or degree, unemployment rates are lower than average.

An education has proven to be the best solution to poverty. With access to post-secondary education, the poorest members of our communities will see their options improve greatly, resulting in an increase in contribution to the tax base.

Thank you for the opportunity to speak to you this afternoon. I would be happy to take any questions you have.

J. Les (Chair): Thank you.

D. McRae: When I went to university, which was a long time ago, tuition was an issue then.

N. Letnick: It wasn't that long ago.

D. McRae: Longer for some.

Tuition was always an issue, but the biggest thing in my time was the actual cost of living. Living expenses, if you come to the big city from a small community, were a big crunch, I thought, for myself and for other people from my community.

One thing I like to see now is on-line learning. It provides some flexibility. Obviously, for certain trades programs it's not an option. Does your faculty association have an opinion or a statement on on-online education and its ability to provide flexibility and cost-savings for students?

J. Murray: The faculty association does not, but on-line delivery of courses does happen at Kwantlen in my own department. For example, we have courses that are not offered full-time because it is language — especially speaking and listening, which can't be offered easily on line currently. But many of our courses are offered on line. In my own department, it's 25 percent on line, 30 percent on line. Of course, throughout the university, yes, there are courses that indeed are offered a hundred percent on line.
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N. Letnick: The goals that you've stated were also stated by others during the last couple of weeks. I would say that most of the people around this table agree with the goals that you stated: to have more affordable post-secondary education; more programs, more accessible, attainable.

But in the short term, until we reach that return on investment that you're talking about, where people with higher education will be able to get more money and then pay more taxes, what do we do for the next five or ten years until they reach that? Would you support higher debt loads for the province or higher taxes or a reduction in health care or something else? What solutions do you have in the midterm?

J. Murray: I shall defer to my colleague.

Phillip Legg: Norm, I don't think it's a zero-sum game, as you've portrayed it. I mean, you have to start looking at a whole array of tax strategies. I think everything should be on the table. Your government, for most of its two terms, brought in a variety of tax cuts. Maybe it's time to re-examine those. Your government is about to bring in an HST, which is a significant cost shift for a lot of people. Maybe it's time to have that put on the table and have a broader public consultation on that.

Joel makes reference to the investment in post-secondary education and the benefits that it has going out in the mid- and long term. It's no different than deciding to build a bridge. Certainly, there are costs up front, but they are costs that benefit the broader economy over the long term.

J. Les (Chair): Okay. Thank you both very much for presenting to us today. We appreciate that.

We will move on to our next presenter: on behalf of the B.C. Construction Association, Manley McLachlan.

M. McLachlan: Good afternoon, and thank you for the opportunity to make a presentation to this committee. I think we're also one of the regular contributors to this process.

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I think I should say at the outset that we appreciate the fact that we not only have this opportunity but that this committee actually does listen to recommendations that have been made in the past. We've seen evidence of that in the reports that have been created.

So very briefly, I'd just like to take a moment to explain who I'm here representing. The B.C. Construction Association represents now over 2,000 construction employers across the province of British Columbia. They become members of our association through four regional construction associations: the B.C. Construction Association North, the Vancouver Regional Construction Association, the Southern Interior and the Vancouver Island association.

Not only are we the largest and most inclusive employers' organization in the industry; our membership spans the entire construction process — suppliers, literally from insurance to gravel and everything else in between. So we generally bring about seven or eight recommendations. Today we want to present seven recommendations, but I'd like to speak to just three of them.

I'd like to speak to the impact of HST, the implementation of the HST on the industry. I would like to speak to some issues around public procurement and, finally, comments on continued investment in infrastructure, particularly maintenance of current infrastructure.

On the HST issue. It has been very clear, and has been stated very clearly, that the construction industry is one of the industries that is going to benefit in a significant way from the implementation of the harmonized sales tax. That impact is attributed to some $880 million in savings, and I think that speaks for itself.

There are other issues that the HST will resolve for the industry. PST has been a very large burden for the construction industry and BCCA's members. The administration of PST has been troublesome for many construction companies, mainly due to the complexity of PST rules that affect construction contracts.

HST represents the optimal PST simplification measure for contractors. Compliance with one tax, especially a larger GST, will be easier than trying to deal with two different sales tax systems and taxation authorities.

HST will reduce the taxation red tape for contractors. Let me give you one example in this regard — one of the significant challenges for those elements of the industry that deal with service work. There is an ongoing issue that is central to the interpretation of non-real property and the application of PST on non-real property.

In very simple terms, if you are not an electrical service company, and you go out and service a pizza oven…. If that oven is not built into the structure of the building, a tax auditor can interpret that as being a free-standing element — non-real property. For any service work that is conducted on that, PST needs to be applied.

That's a small example. The danger to contractors in that regard is that it's an interpretation left to an auditor, and for those of you that have been audited by the PST department, you know that a failure to remit tax results in an immediate fine equal to the amount of the tax that is determined to have been collected, and interest accrues from the date that it should have been collected.

So based on an interpretation — and I used the example of a pizza oven, which is rather small — you can imagine, then, when there are differences of interpretation around something as significant as standby power systems for a hospital.
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A number of years ago we had an issue that arose around the upgrade to the Vancouver General Hospital standby power system, where one contractor carried the PST, and his competitors didn't.

Now, that project was valued in millions of dollars, and the PST was equal to close to a million dollars. So the contractor who was deemed to be in compliance with the rules was non-competitive, and it was a significant issue.

Our presentation to a committee that was put together by the Ministry of Small Business, I believe two years ago…. Our solution, our recommendation to resolve this complex interpretation issue was to move to a harmonized sales tax. So it has a very real day-to-day impact on the operation.

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There are also elements of increased competitiveness. The introduction of HST and the elimination of PST will provide B.C. contractors, literally, with a level playing field on outsourced construction projects, allowing fair competition on bid processes with contractors in Alberta, Ontario and other jurisdictions outside of Canada where PST does not impact their cost of doing business.

Now, this is an issue if you're an electrical supplier buying supplies in Edmonton and bringing them into British Columbia. We're told that there are provisions for audit and the rest of it, but we know in practical terms that that's a very difficult thing to do. So the element of competitiveness and levelling the playing field is significant.

Now, despite being generally in favour of the implementation of HST, there are some issues for our industry — in particular, transitional issues such as the contracts that span the July 1 transition date, and inventory that has PST embedded in it.

I listened to one of the previous presenters reference an interpretation that was released. Unfortunately, I haven't seen that, but we've certainly had this issue flagged by our members. How do you treat inventory over July 1 that has PST embedded in it? We're anxious to work with the Ministry of Finance officials on that discussion to determine how that's going to be resolved.

We would also encourage the Ministry of Finance to be fair and reasonable to those elements of the construction sector that are going to be impacted in a significant way, particularly the residential sector. We're suggesting that consideration should be around increasing the threshold beyond any increases that may have been already applied for new housing rebates, speeding up the phase-in of restricted input tax credits for large businesses. We think this is critical on the competitive side.

Because we know this is a tax shift to consumers, certainly the feedback we've had from across our membership is the consideration of, perhaps, a reduced amount of PST that's blended into the HST. Now, we know that has big implications for the actual number of dollars, but we think that that's something that could assist in mitigating the impact as that shift occurs.

The second item that I wanted to deal with really deals with issues around fair and transparent procurement practices. I presented to this committee in the past in this regard. We continue to work with folks in the Ministry of Finance to deal with issues associated with the lack of standard process and standard documents.

We encourage this committee to recommend that sufficient resources are provided to ministries to assist in the application of the capital asset management framework's four principles of fairness: openness and transparency; assistance with competition; the fair allocation and management of risk; and value for money in protection of the public interest. Those are four items embedded in the capital asset management framework that we support 100 percent. There is a need to ensure, through oversight, that those principles are not compromised as agencies engage in the public sector procurement of construction processes.

In that regard — the oversight requirement — we'd like to reference back to the Competition Council report to the Premier, specifically a report that was prepared by the housing and construction advisory committee to the Competition Council, where one of five recommendations dealt with the need to develop a central point of contact in government for the construction industry. There are some 248 different entities across the province of British Columbia that represent some element or other of the construction industry.

BCCA is probably the largest of that group, and there are other very specialized groups that are involved in some aspect of the construction industry. It's a wide-ranging industry. There are 48 different government agencies, ministries and entities that those groups interact with. It creates a very complex situation, and the recommendation, which we support, that was made to the Competition Council was that we would improve competition in the economy and we would enhance the industry's relationship with government if there was one single point of contact.

The recommendation was bold enough to suggest that there should be a ministry of construction created. We know there are other similar entities across other jurisdictions, including Alberta, which has Alberta Infrastructure — which actually handles a large measure of the infrastructure requirements in the province. We'd suggest that is a model that certainly could be followed here in British Columbia.

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The third item that I did want to speak to is around infrastructure investment. We know that a lot of folks consider that the construction industry advocating for large infrastructure investment is self-serving. We
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would point you in the direction of the need for a very strong backbone in this economy, and that would be roads and bridges and the other things that keep our economy moving.

We applaud what's been done in the past. I think it's more than significant to note the fact that governments have turned to the construction industry as the means by which to stimulate the economy and to pull us out of the recession that we have been involved in. I would just like to encourage that continued investment beyond the recovery and specifically speak today around the need to support the maintenance elements of the current infrastructure needs.

When maintenance isn't completed, it has a compounding effect. While we recognize that the big infrastructure projects are going to contribute to new employment and continued employment, the fact of the matter is that those are the big projects, and they do prop up one element of employment in the industry.

But as government cuts back or agencies are forced to cut back on maintenance budgets, that affects the heartland of this province. That's where the smaller companies are involved, whether they're maintaining heating ventilation systems or IT systems in government agencies, schools and others. When those budgets disappear, they literally lose their employment opportunities. We're seeing some impact of that across the province. We would encourage government to continue the support of those infrastructure maintenance needs over the short and the long term.

I do recognize the ten-minute timeline. As I mentioned, we have seven recommendations. I am embarrassed to say that I did bring the actual wrong report with me. I was going to distribute it today. We'll ensure that that gets distributed to the committee electronically.

I guess, finally, that we just want to express again our appreciation for this opportunity to speak to this group. We respect the process and the work that you do. Despite the fact that I travelled here from Victoria to Surrey today …. I know it's obviously a large and tough agenda to get onto. We do appreciate the opportunity to speak to you here today in Surrey.

J. Les (Chair): Thanks, Manley.

First question, Michelle.

M. Mungall: Thanks very much for your presentation. My question has to do with the HST. Now, I don't want to belabour the point about whether the HST system or the PST system is better. I hear a lot of complaints around the PST system. But for me, when I think about the HST, I think about how on a broader scale it's going to impact all the industries and then how they'll impact each other — so this ripple effect, since we're all interconnected.

What I hear from other industries, like, for instance, real estate, is that they're very concerned about affordable housing and how the HST will further increase the lack of affordable housing, especially around new builds. And then I think: "Well, jeez, isn't that going to impact the construction industry and the forest industry down the line?"

Have you done any analysis at all? And if not now, do you plan on doing some analysis — not just the HST on paper, in how it's going to impact your industry with the legislation, but how the ripple effect on its impacts and under other industries it might impact yours?

M. McLachlan: We're involved in that evaluation, literally as we speak. It's clearly a complex environment. When you remove costs throughout the supply chain, which the PST is…. It's a compounding tax. When I supply you with railings for the stairwell in your home, I pay PST on the components that go into that. You pay PST when you buy it from me. So when we remove the PST out of the supply chain, the impact, we believe, is positive. It will have that reduction because (a) it's not there, and (b) it's not compounded as it makes its way through the system.

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There is no doubt that this is a tax shift. It's a tax shift down to the end consumer, or it's a tax shift down to those who cannot flow-through the tax credit. That's why in our recommendations we've encouraged the best efforts that can be made to mitigate that, particularly in the home-building sector.

The majority of our members are involved in the institutional, commercial and industrial industry, but as we get out into the rural areas of the province, our members build houses. Our members are involved in the construction of the product that real estate people sell. So our customers' customers are impacted, and we recognize that this is a challenge.

Certainly, we've had the Canadian Construction Association's advice on the experience in other jurisdictions across Canada, where there was eventually a trending-down of cost when the full impact of the blending of the taxes makes its way across the construction system. That's why we support this process. We think it eventually will be a positive impact — again, noting that we do need to do the best we can to mitigate the impact on the end consumer.

B. Ralston: Thanks very much, Manley. I do recall your recommendations from previous years. Creating a ministry of construction was a fairly dramatic way of making the point.

You do mention that there are 48 points of contact, and perhaps some of those points of tendering and procurement are less than transparent now. Obviously, if you were to bring this about, there would be huge bureaucratic resistance at maybe many of those 48 points.

Can you give a little bit more detail about how the Alberta infrastructure authority works and why it would
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be advantageous? I think everyone is in favour, at least in principle, of more open and transparent tendering, but that isn't always the case in practice, as you know.

M. McLachlan: If you're okay with this, let me just speak first to my comment around 48 points of contact. There are far more than 48 points of contact in the procurement process in the province. I was referring specifically to the regulatory elements, and the issue around having such a diverse range of points of contact, if you will, is….

You know, if this was a machine that had 48 different gear sets in it and we tinker with one in this corner, it has a direct impact at the bottom end. So in terms of process — regulatory development, regulatory implementation and oversight on those regulations — it's a congested area. We're suggesting that that could be clarified with a move to some central point, and as you say, we were bold enough to call it a ministry.

Now, Alberta Infrastructure is tasked with the major infrastructure components across advanced education and education, and others. It is a centralized approach to not only the design and implementation but the procurement process. What's really required, which is something that is embedded in the Alberta process, is a standard approach, a standard set of documents.

While we agree with the capital asset management framework as a policy document, it's the actual implementation…. It's the removal of the capital division of finance, where the end users or the end spenders of those dollars — the public agencies, school districts and others — used to run through the capital division or filter that looked at what they were doing.

The responsibility for how they spend that money is now with those school districts, but there is no accountability for how they do it. Now, the impact that that's had on the industry…. While this was a move recognized as an effort to reduce red tape, it reduced a lot of red tape inside government, but it put a tremendous burden back on the industry.

You could be bidding on nine different schools in nine different school districts, and the reality is you will have nine different contracts that you have to examine. You have nine different approaches. It has, over time, created a significant burden, I think, on the industry and also on the system.

Compounding that — my final point — is the fact that we're inside demographic change, and we've recognized that those folks who used to be the experts in many of those agencies have moved on through retirement or through reorganization or downsizing. There's a distinct — and I refer to that in my report; you'll see it — lack of capacity in many areas and of competency in others.

J. Les (Chair): Okay, we're going to have to leave it there, Manley. We're more than out of time, so thank you for coming today.

M. McLachlan: Great. Again, I appreciate this.

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J. Les (Chair): The next presentation is from the B.C. Food Processors Association, Robin Smith and Nico Human.

R. Smith: Thank you for listening to us today. I'm Robin Smith. I'm the president of the B.C. Food Processors Association, and Nico Human is our CEO and executive director. We're a young association. I think you've heard from us a couple of times before. We've been around since 2004. We have 142 members, and we represent about 27,000 jobs in this province and generate $6.7 billion of manufacturing activity every year.

I'm going to just touch on a few of the points in the presentation that we've handed out to you. One is, of course, the HST. The Food Processors Association, in principle, supports the HST. Of course, we've got, amongst some of our members, those who perhaps don't agree with the association's viewpoint, depending upon how closely related they are, perhaps, to the restaurant industry. But as an organization, we believe it's going to be advantageous to economic activity.

A look at needs assessment. We've done a number of needs assessment surveys to prioritize our industry's needs. One is on food safety beyond HACCP. We have very active committees on food safety. We're very concerned about it, and we're working closely across various sectors of our food processing industry.

We have land use issues and a disturbing trend towards NIMBYism. That, in particular, has an effect on the meat industry and the new processors coming up and the problems of disposable waste. I'll touch on that later. Nobody wants waste disposal, but it has to go somewhere, and we're going to have to deal with that.

We have a problem with capacity to deal with all the areas that we're requested to, often by other government departments, and many events that we need to attend. We're an organization that has some trouble raising funds to do that kind of thing and to have staff to be able to carry out all the issues that we'd like to address and work with the provincial government on.

We know that we have to add value around the abattoirs in the province and the processors and do some value chain development with market-focused approaches.

The Food Processors Association, along with the B.C. Agriculture Council, was very much leading the charge for a provincial branding program. I think we share with them the disappointment that that key commitment in the B.C. ag plan was not funded. We feel, particularly in a year when the Olympics are coming, that to be able to have a funded program to brand British Columbia would have been a good thing. Hopefully, that will be something that will happen in the future so that we are not the only province left without such a program.
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The B.C. agrifood technology and commercialization hub and centre — you've heard about it in presentations of the last two years. We're now on another stage of funding from Investment Agriculture to try to bring that together.

We're looking at what we would call a hub-and-spoke system that is not bricks and mortar, not a building, but the opportunity to have an approach to the food and agriculture industry to help them solve technical problems and product development problems while we utilize all of the facilities we have in this province, from universities to technology centres, and so on, so that we're not just reinventing the wheel. We want to see a centre that is self-standing.

We were hoping to get some assistance through the Growing Forward money for research, but I think, for the time being, that is being used in the Ministry of Agriculture and Lands for that purpose.

Meat industry support. I want to point out that we have been involved in two major programs related to meat inspection: the meat industry enhancement strategy and the meat transition assistance program.

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You know, from 14 provincially licensed plants in 2004 we now have 36, with about 30 more working towards licensing, so the meat products will be properly inspected in this province. We've got a lot of commentary on the next page on that. I don't want to get into all the details, because I realize we've got time constraints.

The work that needs to be done on that file — our piloting some compliance models for remote sites, places like the Queen Charlottes, and so on…. You just can't send an inspector over to the Charlottes on a regular basis, so we have to have a different approach for remote places. Powell River is another one. We're working closely with the Ministry of Healthy Living and Sport on those problems.

We need to deploy and manage prototypes in various places, things like mobile slaughterhouses. We have four or five livestock meat chain, value chain developments underway, looking at how we carry this right the way through from small abattoirs to the consumer.

We really need to work further on licensing of proponents who are on their way to getting licensing. We need to work with them a lot.

I'll touch on what we request of government. I think one of the things is a renewal of the funding for the provincial branding program — we hope to see that one of these days; I think we've talked about it a lot, year after year — and probably some funding for partnerships to support the agrifood technology and commercialization centre. It is supported by all of the agrifood associations, large and small, in the province.

In the area of the meat industry, which is a major item, we need continued support for the MIES team and related projects. That will need to continue, because those 30 potential licensees…. We can't just cut them off. We need to make sure that they get their licences and that we get everything inspected in the province.

We need to continue the rather costly inspection service after 2010, either a service provided through provincial agencies, preferably — preferable to CFIA — and we need to improve the interagency work necessary at the provincial level.

It's not just one ministry. There are many ministries involved in what has to happen in the meat industry. We've got Agriculture. We've got Healthy Living. We've got municipal affairs — we've got all the problems of NIMBYism — and Environment. It's a multiministry task to make something happen. That's why we need to develop those links. The concerns over the waste management programs are very severe. You cannot have an abattoir if you can't get rid of the waste, and you have to separate out what's called the specified risk materials, which are the parts that could possibly cause what you might call mad cow disease.

We would also hope that the level of support for B.C. agriculture in British Columbia could be consistent with the sort of support you get in other provinces.

We'd be pleased to answer questions.

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

B. Ralston: I just wanted to ask a little bit more about the technology and commercialization. In the past one of the comparisons has been made to Alberta, where there's a specific physical building and institution that handles this, and I think it's quite well funded. If you're going to develop niche markets and new products, then that seems like a good step.

You seem to be talking about a more diffuse and complex network, which sounds appealing but sounds also a little vague. I'm just wondering if you could explain a little bit more what direction this is taking and how that will result in an effective solution.

R. Smith: I think there are two sides to that question. The answer to one is that to set up a bricks-and-mortar research development centre is an expensive proposition and is heavily subsidized by government. It has been in Alberta. It's continuously under subsidy. It's an excellent facility. If I want to do meat research, I can go to Alberta and do meat research, because I've done it. They've got great facilities there.

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In Guelph, for instance, there's another example in Ontario which was very heavily funded, an excellent research centre. But we feel that we'd like to see a research centre concept that can be self-funding, something that…. We've got facilities in British Columbia. They're not tied together. They're not linked. People don't know where to go and to use those facilities.
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We feel that the first step is to…. We're inventorying those facilities. We're making sure we know who's there, what can be done there, and then we would have a central office, if you will, that you can help direct an inquiry. So we can make something practical work without costing tens of millions of dollars.

D. Donaldson (Deputy Chair): Thank you for the presentation. It's some of the work that I was involved with before I took on this aspect of contributing to communities, so I appreciate the information.

I have two questions that I'll ask at once. I believe that the agricultural sector, which food processing is part of, is undervalued and underappreciated. I think that when you talk about resources to the Ministry of Agriculture, for instance, I think we're in the middle of the pack in provincial funding towards the Ministry of Agriculture as far as the provinces go.

As far as improving the interagency work, would you feel it would be beneficial to have additional resources, for instance, allotted to the Ministry of Agriculture to improve the role of coordinating between the different ministries, similar to what the integrated land management bureau does for the resource extraction?

That was one question. The second was in the climate action plan that we saw released a few years ago by the government, transportation around food was not addressed, the carbon emissions associated with that. To me, B.C. food processors should have a big beneficial role to play in that, establishing more food processing in this province.

Have you done any assessments or studies or have recommendations around how support and incentives around processing food in B.C. would reduce carbon emissions, our carbon footprint, lead to a lower-carbon economy and perhaps even have some input credits around a cap-and-trade system for producers?

N. Human: I'll do the first part about the awareness of agriculture and food. I think in the first paragraph you'll see that this past year we've actually overtaken, as a manufacturing industry, the wood and pulp industries. We're the biggest manufacturing industry in the province now.

The good news of the bad times is that people still have to eat. They just eat differently. They won't go out for the steak, maybe, but they'll buy the steak and take it home and maybe do it at home. So we're still processing, and some of our members are having a great time at this stage. It's a good time for them.

But the appreciation for the work that's being done is really not there, and the awareness isn't there. We made the case last year that we think the Ministry of Agriculture and Lands should have "food" in the title somewhere, because that is the awareness — food is part of it.

It used to be called Ministry of Agriculture, Food and Forestry at one stage.

A Voice: Fisheries.

N. Human: Oh, fisheries. Yeah, that's right. But there was food in it. That's the point — so that awareness is there.

One of our biggest challenges, and you've hit it on the head, is to work with all these different agencies, especially when you get to something like NIMBYism or some of these regulations. It's so different if you go into one regional district from another one — for a landfill application, for example. The public consultations are different. Everything is different. Most of our work is working with five or six ministries at the same time. Something like that would definitely be beneficial.

R. Smith: We have worked with the deputy ministers, at the deputy and assistant deputy level, so that we can make sure we can address some of these issues, but it's a little informal.

D. Donaldson (Deputy Chair): The climate…?

N. Human: Oh, climate and transport. We're in the process of developing something. We're struggling a little bit with capacity.

I went down to see what the people in Portland are doing, the Northwest Food Processors Association. They actually came up with a very good model that addresses energy needs as well as climate action and their transportation industry, where they've started helping people to transport together to cut down on transport. It's very good for the processors, too, that their trucks are full when they go.

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We're studying their policy, which they're in the process of developing, and we want to take that forward. But it's a matter of getting to all the points and getting to them all at the same time.

J. van Dongen: Thanks, Robin and Nico. I know that your organization works very hard on behalf of the industry and does a great service to government as well.

With respect to your request No. 3, some additional funding for MIES and MTAP with a view to underscoring the dependency of the processing plants — I’m thinking in particular of the 30 plants that are still in transition — I think it's important for you to emphasize how all of our livestock industry in rural British Columbia depends on successful implementation of waste disposal strategies. With due respect to all of the new requirements that have been put in place, I think it'd be important for you to emphasize that for all of us on the committee — that interdependency.

N. Human: Maybe I'll start with an example, and then I'll give over to Robin for wisdom. Before BSE most of
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the processors or the abattoirs actually had an income stream from their waste. It was money into the bank. With BSE it changed around totally. First, they had to start paying so much per pound and then so much per pound, and it just got worse and worse. At this stage, the material is carted off to Calgary, where it's incinerated, so they have to pay the transportation cost.

One person, one of our members, has given us the example where he used to get $50,000 a year in. He was at $300,000 that he had to pay out two years later. This is a small abattoir. It's Pitt Meadows Meats. It changes the industry. It closes down some of the abattoirs.

R. Smith: I think, John, that what you said is absolutely right. It isn't just food processing. It goes right back to the ranches and the ranchers. If they have nowhere to have their animals slaughtered except to ship them to Alberta, they're at the mercy of whatever the price will be in Alberta, and that's that.

So having local abattoirs is a very important aspect of the entire cattle industry, right the way through the cattle value chains — when we mention cattle value chains. To have an abattoir, you have to dispose of waste. It's either incinerated, it's buried, or it's composted in some way. Nobody wants it.

What Nico said…. It's amazing to think that you can have an abattoir in the Okanagan, and they send a truck from Vancouver to pick up the waste and bring it to Vancouver and put it another truck and send it to Calgary. It's an absurd waste of money. It's exactly what you're talking about — carbon emissions.

If we had an incinerator or a disposal system here, then we wouldn't be doing that. Every time somebody comes up with one of those suggestions — they're not asking the government to pay for it; it's a matter of putting it in place — you've always got municipal regulations that don't allow it. They don't want it. Nobody wants it.

But it could be done in a clean manner, whether it's incinerating, or it could be biodigesting. We have biodigesters in Europe that get rid of animal waste right in the middle of the city, and they look just like an ordinary office building. We can generate, from that, electricity and natural gas.

There are ways to do it, but everybody says it's the other guy's thing, so it goes around from Environment to municipal to Agriculture to Health, and nobody gets anywhere.

J. Les (Chair): I'm sure there are lots more things we could discuss, but we are out of time. Thank you for coming.

Our next presenters are from the Planned Lifetime Advocacy Network, Jack Collins and Jack Styan. Good afternoon, gentlemen.

J. Collins: I was the founding president of PLAN. This was founded about 20 years ago by parents, like myself, who were concerned about the future of their children with disabilities.

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I'd like to thank you for letting us speak, and in particular, I'd like to thank all members of the provincial Legislature for accepting the idea of a registered disability savings plan set up by the federal government and not penalizing the recipients of that fund. This is the first recognition in the history of disability that allows parents to contribute funds and have them matched by government — more than matched, in this case — and allows the recipient to spend them as they wish.

This, of course, has brought certain things into conflict. Families, surprisingly to some people, want to support their children with disabilities. Present regulations in British Columbia prevent that happening. If I as a parent want to give my daughter a couple of hundred dollars extra per month so she can afford to live in an apartment, this is clawed back by government under present regulations. It's unearned income and is clawed back by government.

Families will help their children, whatever the government regulations are. I have been guilty of cheating the rules many times before my daughter died. In other words, we cannot permit our children to suffer because of government regulations which are inherently stupid.

It is important for parents to be involved in the support of their children with disabilities, and they want to be involved. They are frustrated, and they get into conflict with financial aid workers and their superiors when they support them because of this rather stupid regulation which says that this type of support is unearned income and comes off the disability plan.

There are similar silly regulations about money coming out of trust. I was forced to set up a discretionary trust for my daughter, and I did all sorts of things so that I could use money from that to buy her an apartment in which she lived. I was saving the government money, but it was costing me. I must have spent about $5,000 on lawyers just to be able to assist government by providing an apartment in which my daughter lived. I didn't have the money. It was an inheritance from her grandmother.

Again, I had to go through all this unnecessary rigmarole to set up a discretionary trust so that I could fund the money to her and get this apartment. It was a very difficult thing to do so.

There is a rule about trusts that money coming out of them — $5,484 a year — is supposed to be for activities that promote independence. I strongly believing that eating promotes independence. Apparently some of the ministry people don't.

One really bad thing about this regulation is that it establishes the financial aid workers as sort of spies. It establishes a conflict between parents and financial
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aid workers. Basically, it costs government money to pay these workers to do this, and it accomplishes very little. It costs the parents money, and that money accomplishes very little that could be accomplished if it was being spent on the person with the disability.

Families will support their children, whatever regulations you like to go with.

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Jack will talk about these regulations in detail, but basically, if you adopt these recommendations — or if the parliament adopts them or, actually, the minister adopts them — it will save this conflict. It will improve the relationship between parent and staff, and it will not cost you a cent. We're not asking people to spend more money. We're telling you ways in which you can save money and benefit both the parent and the person with the disability.

J. Styan: Great. Thanks, Jack.

So we've submitted a brief, and I won't take your valuable time today going through it in great detail, but I wanted to just highlight the four recommendations that we've made. The four recommendations are all recommendations to change rules within B.C. disability benefits.

The first one is to encourage family contributions by eliminating the current restrictions. Jack has outlined that, I think, fairly effectively. Basically, what we want to do is change the rules so that families are actually encouraged to assist their relatives — removing the situation where, in fact, we know that families are going to assist their relatives, but they are forced to break the rules to do so. It seems somewhat un-British Columbian, perhaps un-Canadian, to have to do that.

The second recommendation is to remove the restrictions on the use of funds that families set up in trusts. Jack outlined some of the current limitations. One of a family's real concerns is that they'll put some of their valuable family assets in a trust to benefit their son or daughter and that it's left in trust after the parents pass away. Their concern is that with vague rules, trustees will err on the side of caution, and the concern is that these funds actually won't get spent to benefit their sons and daughters the way they're supposed to.

Ontario is probably just a little bit ahead of us in this particular area in terms of time. They're beginning to see this happening — where there are thousands, perhaps hundreds of thousands, perhaps millions, of dollars in trusts that are designated for their loved ones with disabilities, and they're not benefiting the people with disabilities. So Ontario has taken the step of saying: "We'll remove those regulations and allow the family funds to be used to assist their relatives in whatever way they would like."

Jack also alluded to the fact that some of these rules create administrative workload. We know that as time marches forward there are going to be fewer government resources to manage these programs. Certainly, taking off the restrictions where someone has to monitor every expenditure made from a trust will save time on the part of financial assistance workers. It will also remove some of the discrepancies in interpretation.

We see, because we're in constant contact with families, where some of the fuzzy areas are interpreted one way in one region and another way in another region. But we even see it interpreted different ways within an office by two different workers. So we think that the clarity will provide a more solid footing for families to assist their relatives, but it will also make it easier for workers to administer the programs.

The third recommendation is to increase the current limit of $100,000 that's permitted in discretionary trusts to $200,000. This is primarily…. I guess our rationale would be twofold around this. One is certainly equity with the RDSP. So as Jack said, we applaud the Legislature for their foresight with respect to treatment of the registered disability savings plan. Treating trusts in the same manner would make a lot of sense in terms of creating equity.

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One of the reasons for that is that there are some limitations on who can use a registered disability savings plan. For example, if you're planning, with your assets — because they're not liquid — that you're going to leave them to your son or daughter through your will, and your son or daughter happens to be older than 60 when they receive them, they won't be able to put them in an RDSP; they will have to put them in a trust. If they do that, the asset limits are different. So it seems unequal.

The other reason is simply that…. If we have these different mechanisms with which families can plan for the future, and there are different rules around each one of them, it makes a really complicated planning environment for families to deal in.

One of the things that we do for families is to help them understand the system. It takes us about two hours to explain to an average family the way to set up a will, a trust, and how it works with disability benefits. It takes us about an hour and a half to explain the registered disability savings plan and how it works in relation to disability benefits.

Now, with two of them, we're talking about a full day to assist families to try and understand it. The simpler we can make the regulations, the easier we can make it for families to understand. Of course, if something becomes too complicated, then the easiest thing for all of us to do is to simply set it aside and say, "We'll do it tomorrow," and it doesn’t get done.

In conclusion, I guess I would like to just say a couple of things. We think that if you are to adopt these reforms, it would send a strong message — several strong messages: that the B.C. government values families, that the
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B.C. government encourages families to assist their relatives with disabilities, and that it supports a vision that people with disabilities ought to be able to live good lives like the rest of us.

As Jack said, we think there is very little cost involved. In fact, we think there are some cost savings involved. We communicate monthly, directly, with about 10,000 families across the province — probably 25,000 families, indirectly. We're confident that families would stand up and applaud the B.C. government for making it easier for them to help their relatives with disabilities.

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

A question from Bruce.

B. Ralston: I'm pleased to meet, even in this context, Jack Collins. I think I've heard from Al Admansky over the years, on talking about PLAN. I think it's one of the genuine, great social innovations of the last generation. It's a very powerful idea.

What you seem to be talking about here is…. Given that the registered disability savings plan has now been set up, you're in a period of transition where that will become the dominant form of administering these affairs financially. Do you foresee in the long run that the trust — if the registered disability savings plan is tweaked a bit — will fall into disuse, and that will become the dominant method of funding?

J. Collins: The registered disability savings plan is a 30-year plan. If you set up for someone who is 20 years old, and you want to get full benefit of it, you probably can't take anything out until he's 50. In other words, it is one thing, but it is modelled on the registered retirement savings plan. You're going to get the money when you're old.

What if your daughter wants to live in an apartment? It's no help. So it will not be dominant. In other words, part of the problem is all of these complicated plans which are devised to defeat these stupid regulations — putting it bluntly.

I used to do wills and estate planning — a fairly simple thing. I've done a hundred workshops, with and without lawyers, around the province and spoken to a few thousand people individually.

This medley of things that are now available is getting almost impossible for anyone but a lawyer to understand, and half of the lawyers don't understand them either. We need to simplify it.

[1515]

The registered disability savings plan is a retirement plan for people with disabilities. Full benefits — a minimum of 30 years. But if you start one when the kid, say, is 15…. It'll probably be 33, because you can't get the bond till they're an adult. I don't know if any of you know these regulations — some of you — but they're asinine. They prevent parents helping their children, and we want to alter that.

Now, I've learned ways to defeat them. In other words, you set up a savings plan, a trust, but then you don't give them money. You give them, as I do, a no-interest loan. There are all sorts of ways of trying to get around these regulations, and each one costs you a fair bit of money with lawyers.

B. Ralston: I understand the point you're making. I suppose the difficulty I'm having is that I understood that PLAN advocated for creating the registered disability savings plan, so I'm a bit surprised, given that that's the history of advocating for it, that you have such strong objections and are so focused on its limitations.

Just before it was introduced, I think there was a presentation to the Finance Committee where PLAN did advocate very strongly for this. I'm having difficulty reconciling those two positions.

J. Collins: I'm not opposed to the registered disability savings plan. I'm not opposed to my registered retirement savings plan. But it's not available to people until they're near retirement age, so it's no help in the situation of someone wanting to rent an apartment in Vancouver tomorrow when they're age 30. It's a great plan.

A Voice: Bruce, just very, very briefly….

J. Les (Chair): Hang on. We're running over time here. This is obviously an area of some considerable interest. We'll have to dig into it in some more detail. We will do that.

I think you've brought it to our attention very effectively, and we thank you for being here this afternoon.

The next presenters are from the B.C. Real Estate Association — Moss Moloney, Christine Caldwell, Robert Laing.

The floor is yours.

C. Caldwell: Thank you, Mr. Chairman and distinguished members of the committee, for the opportunity to highlight the recommendations of the Fraser Valley Real Estate Board and the B.C. Real Estate Association. Your time and commitment to the consultation process are appreciated.

My name is Christine Caldwell. I'm a director of the Fraser Valley Real Estate Board, and I'm a realtor in Abbotsford. I represent over 2,900 realtors who live and work in North Delta, White Rock, Surrey, Langley city and township, Abbotsford and Mission.

I'm here with representatives from the B.C. Real Estate Association, including Robert Laing, chief executive officer; Moss Moloney, Surrey realtor and vice-president; and Cameron Muir, chief economist. He's sitting behind me.
[ Page 335 ]

BCREA represents 12 member real estate boards, including the Fraser Valley Real Estate Board, and approximately 17,500 realtors across B.C.

We'd like to start by thanking you for announcements in the past year which improve the quality of life for British Columbians. We are pleased when government choices support growth that encourages economic vitality, provides housing opportunities and builds better communities with both good schools and safe neighbourhoods.

We in particular applaud you for investing in major local transportation improvements and for funding the new Abbotsford Regional Hospital and Cancer Centre and the new out-patient facility and critical care tower in Surrey. We recognize the steps the B.C. government has taken to keep the economy growing in light of the recent global economic downturn.

This year the Fraser Valley Real Estate Board asks you to consider taking action on four issues: illegal drug operations, post-secondary education, capital gains tax rollovers and housing affordability.

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As you may know, our board promotes high ethical and educational standards. Our members have the knowledge and expertise to help the public make one of the most important decisions of their lives. However, we're concerned about the negative impact illegal drug operations, or IDOs, such as marijuana grow ops and drug labs, are having on housing and the public's health and safety.

Last year we hosted a forum for local stakeholders to raise awareness about our concerns, and 125 individuals representing local police and fire departments and municipalities came out to hear from experts in crime, health and safety, and administration. A copy of the White Paper that we shared with our guests is included in our pre-budget submission. We are pleased with the success of our forum. However, we know our work isn't finished.

Details on IDOs are difficult to obtain from some local authorities, and remediation standards aren’t consistent, making it tough for realtors to protect the public. We have now formed a stakeholder task force to explore developing consistent standards of reporting and remediation of IDOs across municipal boundaries.

We recommend that the B.C. government review the research in our White Paper and work with our task force to find ways to enhance the ability for homeowners and tenants and the realtors who represent them to determine the health and safety risks for particular properties.

Another priority for us is supporting access to post-secondary education south of the Fraser Valley. In 2006 our board and the Real Estate Foundation of B.C. provided $500,000 to the new SFU campus in Surrey. The funds were used to sponsor the campus library — which became known as the Fraser Valley Real Estate Board Academic Library — and to help facilitate a lecture series on topics such as sustainable development in the Fraser Valley.

We value the positive contributions post-secondary institutions make to local communities. We'd love to see the capacity of local institutions grow to accommodate more students and, in turn, help our communities to grow. However, we're concerned that the need for post-secondary education opportunities in the region far exceeds the capacities that can be accommodated.

In fact, South Fraser communities have less than 100 post-secondary seats per 1,000 citizens aged from 18 to 29 years old. The B.C. average is 244 seats. It's also difficult for institutions to plan for the future when funding from the B.C. government can vary from year to year and from one government to another.

We recommend that the B.C. government develop a system to offer stable and long-term funding to post-secondary institutions to help them plan more effectively and enable them to meet increased demand for post-secondary education.

The last topic we'd like to touch on is capital gains tax rollovers. For years realtors have asked the federal government to provide a system to defer the tax on the recaptured capital cost allowance when an income property is sold and the proceeds are reinvested in another income property within one year.

This move would allow more properties to change hands in communities that need to be redeveloped or grow and would assist the struggling commercial real estate sector, which has yet to rebound from the global economic recession. We recommend that the B.C. government join realtors in lobbying the federal government to allow capital gains tax rollovers for the benefit of all communities.

At this time I would like to ask Robert Laing to share the B.C. Real Estate Association pre-budget recommendations with you. The Fraser Valley Real Estate Board supports these recommendations, which would help to make housing more affordable in B.C.

R. Laing: Thank you, Christine.

Thank you for allowing me to speak this afternoon. We'd also like to echo my colleagues in terms of thanking the government for its efforts to strengthen B.C.'s competitive advantages.

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Our major concern, as you'll see from our brief, is with respect to the taxes that buyers are having to pay or will have to pay with respect to buying property. We're concerned that what is happening is that with the introduction of the HST, combined with the effect of the property transfer tax, we are seeing housing attainability becoming further and further away, particularly for first-time buyers, young people and people who wish to move up as their family situation changes.
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You'll see in our notes that a recent Ipsos-Reid poll showed that 40 percent of British Columbians who actually say they expect to buy property in the next few years are now holding back or plan to hold back until after they see the effect of the HST next July. And we do certainly expect that, hopefully temporarily, there will be a downturn in the market come July 1 next year.

As you can imagine, once the announcement of the HST came out, we tried quickly to meet with Ministry of Finance staff and the Minister of Finance himself and have met several times. As such, we've modified our initial recommendations accordingly. There were some recommendations that we initially made that clearly just weren't going to get past the post due to the circumstances of the agreement between the province and the federal government.

So we have modified our requests. Our major ask, as it were, is with respect to the thresholds. We acknowledge the extreme differences between home prices around the province and modify the thresholds to make them regional thresholds. In our brief you'll see how we recommended that those thresholds be modified.

We're also asking that those thresholds be indexed so that we don't have, as in the case of PTT, the property transfer tax, a tax that stays basically static while inflation takes a toll on the price of homes. We would certainly ask, in consultation with all our other real estate sector groups, to be part of the process in determining those thresholds. Our recommendation is certainly consistent with those of the Urban Development Institute and the Home Builders Association and other real estate sector groups that have either come before you or will be coming before you.

There are several other measures that we are recommending as not our major ask but win-wins on HST. First, we are recommending that we reinstate the rebate or tax credit for the HST on condominiums that leak due to the building envelope failures. As of May 2008 there are still 42,000 apartment-style condominiums that have yet to be repaired.

We also would encourage you to work with the federal government to provide input tax credits for landlords who will have to pay HST on goods and services but won't be able to collect those from their tenants.

Finally, we are asking that you extend the HST rebate or tax credit on all energy-efficient products that are currently exempt from provincial sales tax. This is, again, a recommendation also made by the Canadian Home Builders Association, and it certainly will help the government achieve its own climate change goals by encouraging British Columbians to take action.

Our final recommendation today is probably not new to you at all, and that is with respect to the property transfer tax. Our major concern with the property transfer tax is that it was first introduced by a Social Credit government and introduced as a wealth tax. It was intended that the higher portion of the tax affect only 5 percent of the homes that are sold in the province.

As of 2008 only 14 percent of the homes sold in the province qualify for the lower rate on the property transfer tax. If it was in fact a wealth tax, it is no longer a wealth tax. It affects entry-level buyers as well as medium-income earners.

So this year…. And I hesitate partly because every year we come to you with yet another suggestion on the property transfer tax. This year we are suggesting that starting on July 1, which would coincide with the HST introduction, you increase the 1 percent tax threshold to $500,000.

In the second year eliminate the property transfer tax on homes of under $500,000, and then in the third year remove the property transfer tax entirely. Clearly, we would be delighted if any one of those phases were started in the next year.

I think that's all I have to say, Christine.

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C. Caldwell: This concludes our presentation. Please review the information that we've provided for you. If you have any questions….

J. Les (Chair): We probably have a couple of questions.

N. Letnick: Thank you for your presentation. I'll be very quick. In your years of discussions with the ministry over the property transfer tax, did you get an idea of what the impact would be to the treasury if it was removed, and do you have any ideas of how we can make up the shortfall to pay for all the other services that you said you'd like to have?

R. Laing: In our many briefs we have discussed the impact of removing the property transfer tax. In past years when the property transfer tax has brought in a billion dollars, considerably more than what was actually forecasted in the budget, it was difficult to make any movement, because quite frankly, once you have that kind of money coming in, it's hard to see it go.

We have over the years suggested that if you cap the PTT at what you budgeted for in terms of property transfer tax, that is an approach. There are various approaches we've taken, and our chief economist, Cameron Muir, has actually sat with the ministry — more ministry of revenue staff — to talk about ways that this could be worked at.

We would still wish to do that, but the answer often coming back from government is: "Well, if you get rid of the property transfer tax, what services do you want to cut as well?" Our position is that the real estate sector is one sector that is not being treated neutrally by the HST, so there is some room, as it were, for some adjustments
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there. If you are going to make more on the HST in the real estate sector, perhaps the adjustment can be made on the property transfer tax accordingly.

D. McRae: Do you have any stats as to what percentage of homes sold are either new or used?

R. Laing: We don't keep specific stats that way. We can tell you that the rule of thumb is that in the urban areas you have more new homes than in the rural areas. But we don't keep that particular statistic. B.C. Assessment doesn't ask for that statistic.

D. McRae: Is there a place one could find that out?

M. Moloney: Are you asking new homes and new condos?

D. McRae: Just homes in general.

M. Moloney: Single-family houses or apartments?

R. Laing: The biggest difficulty is that a lot of the new developments you find in an urban area come on by private developers and don't necessarily come through organized real estate. The statistics we could give you would be skewed to only those ones that come that route. But certainly, our economics department would be quite happy to give you what statistics we do have, with that caveat — that you know they're going to be skewed somewhat.

J. Les (Chair): I would suggest to you that it's critical we get that information.

R. Laing: Well, I think Cameron might actually respond.

J. Les (Chair): We don't have time, but you and others make presentations about the HST and its effect on the real estate industry as if it affects the entire industry, and clearly, it doesn't. It affects the new homes and the new homes only. We need to have some kind of assessment. Is it 10 percent of all of the homes that trade every year? Is it 5 percent, 15 percent? I don't know.

M. Moloney: In terms of new product is what you're talking about. You're talking about new homes — right?

J. Les (Chair): New homes versus….

M. Moloney: Well, 52 percent of all starts are multifamily or higher. How many starts are there?

J. Les (Chair): Yeah, but of all of the homes that trade every year in British Columbia, what percentage of those are new? Whether they're single-family or condo or whatever, I don't care. That would be an interesting number to know.

R. Laing: I think the best that we can say at this point is that our economics department will give what information we have back to you. We can give it to Ms. Ryan-Lloyd.

J. Les (Chair): I'm sure the Ministry of Finance would want to have that number, too, so that we have some kind of a grip on what the extent of the issue is here. Right now I don't know that.

M. Moloney: I think we can get that information for you. Pretty close to accurate is 95 percent of where we're at with it.

J. Les (Chair): Yeah, I would think that if all you did was put together all the new building permits that are issued by city halls around the province, you'd have a pretty close guesstimate. You'd probably need several years' worth to take out the fluctuations.

R. Laing: I think between ourselves and the Urban Development Institute, we should be able to get you that information.

J. Les (Chair): But then again, you'd need to have the number of sales of used housing as well.

M. Moloney: We can get that really easily.

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J. Les (Chair): Anyway, a little bit of homework for you. We appreciate you being here today. Thank you.

Our next presentation is from the Canadian Mental Health Association: Beverley Gutray, Bill Wright, Dr. Suzanne Gessner.

B. Wright: Good afternoon. I'd like to introduce myself. I'm Bill Wright, chair of the Canadian Mental Health Association, B.C. division. On my left is Beverley Gutray, who is the executive director. On my right is Dr. Suzanne Gessner, who is our director of public policy and community-based research. In addition to our British Columbia division office, we have 19 branches across the province that serve 85 communities. Our organizations provide a wide variety of health services, including supported housing to the public.

We understand that the current financial climate has put considerable pressure on the provincial budget and hope that we can provide useful input on where dollars should be directed within the area of mental health and addictions. In the interest of time, we will not go through the full document this afternoon. We will
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focus on three main areas: supported housing, mental health and addiction services, and ways to fund these services.

In each of the years we have presented at the annual budget consultation, we have identified the issue of housing and homelessness as one of our top funding priorities for people living with a mental illness or drug addiction. While progress has been made, suitable, supported, affordable housing continues to be out of the reach of many people in British Columbia who are living with mental illness or addiction.

We are not alone in calling for the end to homelessness. Prior to the last provincial election, we commissioned a Mustel Group survey asking British Columbians what they thought about the priority for supported housing. Nearly eight in ten British Columbian adults agreed strongly or somewhat strongly that supported housing should be an urgent priority following the 2009 provincial election.

Housing Matters, the province's provincial housing strategy, has taken concrete steps towards solving homelessness. However, while substantial, the current investment will not be enough to meet the need. We recommend that supported housing for the people living with mental illness and/or addiction be given top priority while allocating budget funding.

This includes the following areas: continued and sustained capital investment for permanent supported-housing facilities; continued funding for temporary shelters until permanent options are available for all who need it — we need to set targeted dates for completion of permanent housing that will reduce our reliance on temporary housing; increased funding for support services, such as homeless outreach, as an interim strategy until housing is in place; increased funding for upstream preventative measures and supportive transition points; and collaboration with the federal government to ensure the realization of a national housing strategy with concomitant funding.

As health authorities around the province struggle to balance their budgets, we've seen a range of health care cuts over the last few months, particularly in the area of mental health and addictions. We will highlight a few here.

In August the Fraser Health Authority cut funding to nine agencies providing mental health and addiction services. In September it was Vancouver Coastal Health's turn. Richmond Addiction Services' contract was terminated, effective February 2010. Several mental health and addiction services on the North Shore were also cut. This included West Coast Alternatives Society, winner of the 2009 provincial award of excellence in addiction, which lost approximately 80 percent of its annual budget.

Vancouver Island Health Authority announced comprehensive cuts in mental health and addiction services on October 13. These cuts mainly affect the Victoria area, including reductions of acute care beds, clinical counselling reductions and case management reductions. While savings are to be redirected to other underserved areas of the Island, we do not believe this should be done at the expense of people with mental health and addiction issues living in Victoria.

In October we also learned of a 5 percent across-the-board cut in every mental health and addiction contract in the Interior Health unit.

We believe these cuts to mental health and addiction services are shortsighted and should be considered unacceptable, particularly during recessionary times when we know that the demand for such services actual increases. We urge the provincial government to ensure that current levels of support to mental health and addiction services are maintained.

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Our full report also outlines ways that non-profits are consolidating services and saving money. They also look at some recent provincial and federal studies with respect to the state of the British Columbia mental health and addictions services.

Our recommendations in this area are as follows: maintain current levels of support to mental health and addictions services; in future budgets we would expect an increase to support the implementation of the ten-year mental health and addictions plan; involve non-profits in decisions affecting mental health and addictions services; provide incentive grants to organizations for shared services and co-ops; establish a system to track mental health services; implement tax incentives for workplace mental health strategy; and continue to provide resources to enhance physician training in depression and other mental health issues.

In building a stronger British Columbia, we are asked several questions, including whether government should continue to protect core services such as health and education. If so, how should government increase revenues to pay for these services? We believe core services should be protected or increased, as we know that during difficult financial times there is a greater need for many of these services. In the remainder of this section we will make suggestions on how to address the remaining questions.

With the introduction of the HST in July 2010, some goods and services that are currently subject to no or limited PST will be subject to the HST, including increased taxation on new housing. The provincial government stands to collect a substantial amount of new tax revenue from the sale of new housing. We recommend that that revenue be allocated directly into supported housing.

Although the income projections for the provincial government Lottery Corporation are down from the February fiscal plan, net income growth is projected
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over the next three years. In August on-line gambling limits were increased from $120 a week to $9,999 a week, which is sure to result in even more revenue.

This summer many groups who depend on gaming had their gaming funding cut. Given the growth in gaming revenue, we urge the government to ensure that organizations supported through gaming are able to maintain their current levels of funding. With increased limits on on-line gambling, we anticipate a greater need for services to treat gambling and other addictions. We recommend that additional gaming revenue be directed to organizations actually providing these services.

In the September update to the budget and fiscal plan it was reported that the Ministry of Health Services and the health authorities are aiming to save dollars through shared services. We recommend that policies be put in place with each health authority to track the tax dollars saved and that the health authorities be directed to ensure that every dollar saved is redirected to patient care in the underfunded area of mental health and addictions.

The deinstitutionalization process at Riverview is still ongoing, but to date, there are still not enough replacement beds or community supports for the population of deinstitutionalized individuals, the next generation who will need them. In the meantime, no final decisions have been made concerning the Riverview lands. In spite of the recession, the price of real estate in Metro Vancouver is currently not much lower than the pre-recession level.

In these difficult economic times it is time to consider the sale of a portion of the Riverview lands for development of market housing. We recommend that revenue from sales of the lands be specifically designated for a citizen-managed trust for the ongoing development of mental health and addictions services within a community-based system.

Continued investment in supported housing and mental health and addictions services are our key recommendations for funding in Budget 2010. We have offered some ideas in where funding for these initiatives may be found. While some progress has been made in the last few years to address the longstanding issue of homelessness in our province, we still have a ways to go, and we call on the government to work with community partners in helping to provide homes and supportive services for all British Columbians who need it.

Thank you for your time today, and we would welcome any questions you may have.

J. Les (Chair): Thank you very much. The first question is from Michelle.

M. Mungall: Thank you very much for your presentation. I'm well aware of your organization. I'm in the middle of a phone-tag game with Janice Bradshaw, your colleague from the Kootenays.

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When we talk about the issue of affordable housing, something that Nelson-Creston area — that's my area — is dealing with quite a bit, one of the things that we're looking to…. One of the solutions — not to preclude, of course, the necessary solution of increased social and supportive housing — is also secondary suites, to increase the number of secondary suites at affordable levels in private homes.

I'm just thinking right off the top of my head. The HST — what kinds of implications do you see that having on people developing affordable-level market housing for people with mental illness and addictions?

B. Wright: I think, in terms of taxation, anything that increases the cost reduces the possibilities. If it's going to increase the cost, then it will certainly put pressure on the budgets of those kinds of projects, which are very worthwhile.

N. Letnick: Thank you for your presentation. I've been working on affordable housing most of my adult life. I appreciate the fact that you came here today to bring up these issues.

On the HST. One thing I find with a lot of people who are of lower income is that they don't understand that in their particular case the HST will be a financial benefit to them, because most of their outlay in cash is for either food, which is HST-exempt, or rental accommodation, which is also HST-exempt, and they're going to be getting $230 a year in additional HST rebate, I assume, if they file their tax returns.

What can we recommend to government to do so we can get to that population group that are low-income, so they can understand the benefits of the HST to them?

B. Gutray: Well, I would say it's exactly the kind of outreach that comes from housing support workers for mental health — community mental health workers, addictions workers, etc. But all that depends on an infrastructure being there to provide that service.

In addition, I think, in our brief what you'll find out is that another area we're concerned about with the HST is its impact on non-profit housing providers. Just to think about that and maybe calculate some benefit to those providers.

B. Routley: Thank you for your presentation. My question would be: have you done any studies in regards to the impact of not having sufficient housing to deal with homelessness and programs to help the addicted and mentally impacted? Are there any studies that talk about the impact, for example, on crime and those kinds of things? Obviously a cost is involved.

S. Gessner: Yeah. We haven't done a specific study on that ourselves, but there's quite extensive literature
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both nationally in Canada and internationally on all the spinoffs from providing housing to someone, such as reduced crime, greater employment and engagement in the workforce — things like that.

B. Gutray: Yeah. And some of the other studies show that for not providing services, it's as high as $55,000 an individual in corresponding other costs. When somebody is distressed living in the community, what you have are also those additional policing costs. You have additional times when people are moving from one place to another. There is a range of health services. There is excessive use of emergency services. So those have been tracked, not by ourselves but certainly, for example, at Simon Fraser University. There has been a good research study that's come out of there.

M. Mungall: I just want to let committee members know that if they want any follow-up on the answer to the last question, I wrote my master's thesis on this very topic, so I'm happy to provide my thesis for any reference.

B. Gutray: Well, maybe you'd like to answer the question as well, then.

J. Les (Chair): Last question from Jane.

J. Thornthwaite: Thank you very much for your presentation. I'm from the North Shore, and I have been approached by the West Coast Alternatives people as well as had discussions with Vancouver Coastal Health. We're still talking, so we're not finished with this issue. What I understand from Vancouver Coastal Health is that it was not a loss in services direction to clients but just where it was and an administrative issue. What do you have about that?

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B. Gutray: I would suggest that it's more likely about time that there be some independent study done around the cost of these kinds of cuts. There are a lot of assumptions done, as if apples equal oranges — for example, the cuts to a non-profit service provider and exactly what that dollar is worth when you cut the service and people take it inside. It's assuming that there's capacity inside.

With every health authority that I work with and every front-line service provider I've seen, they're fully busy. I don't know how you cancel contracts and take services inside to an already stretched system. That's often what it's referred to.

J. Les (Chair): Okay, we're out of time — 15 minutes doesn't last very long.

B. Wright: No, it doesn't.

J. Les (Chair): But we appreciate you making the effort to give us some insight. Thank you.

Our next presenters are from SPARC B.C. — Nancy Henderson.

N. Henderson: I thank the committee for allowing us to attend and present to the standing committee. I am here to mark the concern of SPARC B.C. with the directions and to try to encourage you to consider a shift in direction for the next budget. SPARC B.C. is an organization. We are the Social Planning and Research Council of British Columbia.

We are a well-established organization. We do a number of studies with community organizations and with federal and provincial government on a variety of issues, mostly around the issues of income security, which involves everything from income assistance to housing and homelessness.

We also work on community development and particularly offer community development education throughout British Columbia, especially to rural and northern communities, helping communities build their capacity to deal with social issues and also on accessibility and social inclusion, particularly for people with disabilities.

We are concerned that the narrative being presented by government is that heavy cuts are necessary to control the deficit and debt situation. We want to challenge that narrative on behalf of the well-being of communities and particularly the protection of the vulnerable and marginalized in communities.

We have, I think, a situation of real concern in British Columbia. We have extremely low income assistance rates in this province as compared to the cost of living in British Columbia. We are again the highest in the country in terms of the rate of child poverty. This is for the sixth consecutive year.

We are the only province without some form of a comprehensive poverty reduction plan. We are definitely seeing a widening gap between rich and poor in this province. I think that all of these issues are of great concern.

I would suggest to you that we have now clear evidence that we are now into this part of the recession, and we can look back over the last ten years in terms of the kind of economic growth we have. The narrative that has been a part of this province has been that the rising tide would carry all boats and that we would see improvements for the poor and vulnerable through the economic growth.

That has not been the case. I think that, particularly, the child poverty numbers that we're going to see come out later this fall, which are from the 2007 numbers where we were in a period of unprecedented economic growth and economic strength — and considering that B.C. is still the highest of any province in the country in
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terms of our rate of child poverty — are demonstrable evidence that we have a structural problem around poverty in this province, which desperately cries out for a comprehensive plan to reduce poverty.

We would submit to the committee's consideration that, really, B.C. is a wealthy province still; that the deficit and debt that we are incurring at the moment are manageable; and that cuts will actually exacerbate the impact of the recession, again particularly for the poor and vulnerable but for people of low income in this province.

[1555]

Supports to low-income people, alternatively, actually can have a stimulus effect, particularly in local economies, because people of low income will spend their money at home. They will spend their money in their communities making small purchases. The kinds of supports that come to them are really the most translatable for the economy, because they're not shifting to investments. They're actually spending the money that they are receiving.

The consideration in terms of investment in social infrastructure. We need to consider that investment in social infrastructure gives a better rate of return to the treasury than paying down debt. We should be considering the long-term costs that the impacts of poverty bring. These are costs to education and health in particular and, ultimately, to the long-term labour productivity of the province.

We all pay for poverty and the increasing gap. My colleague from Canadian Mental Health mentioned the $55,000 a year that we pay for people who are homeless, according to the CARMHA study. But we also pay, particularly for children and families living in poverty, in terms of the long-term impact that poverty has on children.

I think that in this province with the wealth and prosperity that we still have, despite the recession, we can afford to take care of each other. I would suggest to the committee that it really is the desire of communities that this happen. SPARC works throughout the province. We are frequently at community meetings. We are frequently there to support communities to look for solutions to social issues.

What we are hearing is the desire of communities to take care of the poor and vulnerable in their communities. They do not want to see the widening gap. The widening gap concerns and frightens them, and people would actually rather pay taxes. There is a true appreciation, I think, in communities now that taxes pay for services and that people are willing to pay taxes in order to have the services that will make their communities healthy and will increase the well-being of everyone in their communities.

In terms of assistance to communities, I would ask the provincial government to consider relooking at the issue of social capital in communities — social capital being the way in which communities work together. The network or web of associations, individuals and organizations that serve to strengthen communities is being eroded by the actions of the current budget cuts.

We are seeing a considerable erosion of civil society. Gaming funds, for example, are a critical support for a range of associations that are so important to the fabric of civil society.

Local organizations allow people to become active in their communities. They become engaged in citizenship, and that fabric of community works to increase the social capital of communities to make them resilient, to have them make livable communities that improve the quality of life for all.

The cuts to the gaming funding are one issue, but there are others. The way in which the provincial government has supported not-for-profit agencies has not been consistent and has not allowed not-for-profit agencies to be able to work on their own resilience. So we have had the issue of what for years we have called the drive-by funding, where funds are provided on a very short-term basis. They're single grants. They're single-year projects. We fund multiple projects. We don't fund anything in a sustained way.

The concern over the loss of infrastructure built was also raised by my colleagues from the Canadian Mental Health Association — for instance, the West Coast Alternatives association. There is a long-term community organization which is not only providing services but is also part of the fabric of the community. The 80 percent cut to its funding is going to be a loss of that social capital to the community, and that erosion to civil society has long-term effects.

[1600]

I would ask that this committee consider more investment from the province to social infrastructure. We need social infrastructure such as child care. We need support for families. We need supports for children. We need better education supports and better health supports.

I would ask, secondly, that we not dismantle existing infrastructure through the short-term view on deficit and debt and that instead, the longer-term view be taken that this is a temporary recession we are experiencing. We are already seeing signs of recovery. The deep cuts will not allow us to retain the kinds of infrastructure we have built as we come out.

Finally, I would ask that the province look to the adoption of a comprehensive poverty reduction plan with identified, measurable targets and commitments to reporting on performance. We have an issue in this province where the depth of poverty has increased over the last ten years significantly. The gap between the rich and the poor has also increased.

There are a number of studies — international studies, Canadian studies — that show that when the gap
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increases, the outcomes for everyone decrease, even for the rich. I think that it is time for B.C. to catch up with the rest of the provinces and the country and commit to a comprehensive poverty reduction plan.

Prosperity in B.C. should not include a society in which we have a permanent underclass, and I'm very concerned that this is where we are headed in this province.

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

D. McRae: I am very interested, too, in that gap between the rich and the poor. Unfortunately, those are two definitions that are hard to define easily. Is it possible that you could supply this committee some data that would show how we compare — data that goes between different jurisdictions?

N. Henderson: Absolutely. There are reports out there that do that, and we can certainly forward those and include those in the written submission.

B. Ralston: You do mention poverty reduction programs. I know that across the country it's not really a partisan issue. You have the Tory Premier of Newfoundland, the Liberal Premier of Ontario and, I suppose, the Liberal Premier of Quebec as well. I don't know if you've had an opportunity to compare the plans. Certainly, in Newfoundland the Premier has made that a…. It's on his own personal home page. It's a high priority with him as the leader of the government, and he's taking his whole government in that direction.

Have you had a chance to compare the relative strengths and weaknesses of those different plans, and which one would you recommend is the best one? Were the government to have a stunning change of mind and actually institute one, which one would be best to follow?

N. Henderson: The factors of success for comprehensive poverty reduction plans are, based on both the Canadian performance and also the international performance — because again, Britain was an early leader in this kind of plan — the idea of identified and measurable targets; to have a cross-ministry horizontal approach, if you will, to ensure that all ministries look to see the way in which they can impact on the poverty reduction; that there is strong leadership in terms of a commitment from government; and the commitment to transparent and frequent reporting.

J. Les (Chair): Good. Thank you very much. And with that, time's up. I appreciate you being here today.

The next presenter is Dr. Mychael Gleeson.

M. Gleeson: Good evening. I guess it's not evening yet.

J. Les (Chair): Not quite.

M. Gleeson: Oh, it's been a long day.

What I thought I would do was to bring files, but I'm lazy, so what I did was take a look at what's on my dayplanner for this week and tell you about these stories.

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All of these people do not have any funding. They don't have legal aid funding. They don't have funding from social assistance or any of the services that are out there. Legal aid historically picked up these people and cared for them, which made my job delightful.

Richard, as we will call him — and I spoke with you about him last year — was stuck in a situation where…. He is mentally ill but delightful. His wife had a psychotic episode and decided that he had assaulted her. She called the police. What the police found was that it hadn't happened, but not before they took my guy away and threw him in the jug, kept him for awhile and really upset him.

A year later what's happened is that the two children of this marriage have moved in with their dad. Richard doesn't have the money to get a lawyer to go to court to get custody. He doesn't have the wherewithal to understand how to make an application to FMEP. So there he sits in a bachelor apartment with two teenage sons and no assistance — except my office, and we're running woefully shy.

One of the other files on my dayplanner for this week is a little girl I've decided to call Sally. Sally is an interesting kid. She's 12. On Christmas Day last year her mother overdosed and died. Sally moved in with her dad, who is a Percocet addict. He takes 200 Percocet a month. We won't discuss where he gets them.

Be that as it may, Sally needs to get her name changed so that she has her father's name. There's no mechanism in place to do it. There's no mechanism to pay for the notarization of the document. Unfortunately, I'm a doctor, not a lawyer; therefore, I can't notarize. I can certify; I can't notarize. That's a whole other discussion.

We can't provide that for this youngster. Historically, we'd go in to some lawyer who does legal aid. I'd say, "Stamp this, and I'll give you a free report in two years' time," and they'd go: "Done." It's not there anymore, because legal aid isn't there.

On my book this past week, two kids I shall call Philip and Margaret. Father is a drug addict; mother died of cancer. These kids didn't leave day care two and a half years ago. The day care provider simply didn't return the kids because dad's a drug addict. Every time there's been an access visit, 911 gets involved because these kids phone 911: "My father's overdosed. Something's wrong. It looks like soda pop coming out of his mouth."

I can't go to court for the day care provider for these children because I can't find a lawyer who can take the time off their schedule to do it pro bono, even though
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I will do the custody and access report without cost. A report, by the way, if I lived with any of my colleagues, would cost 8,500 bucks. So don't let anybody rip off your kid, because it'll cost you $8,500 to get a custody access report to get your child back.

I did an interview of a delightful guy who was actually charged with assault because he threw a tuna can at somebody — not an overreaction by the New Westminster city police, because this guy is very special.

He believes that tuna, having watched a special on television, is permeated with phosphorus. Therefore, he climbed into a dumpster to open the tuna can with a can opener — unfortunately, provided by my office — to find out if there was phosphorus in the can. Someone decided to look in that can for soda pop tins. There was an altercation. My guy got locked up. I had to go down and get him. Surprisingly, I'm having a really tough time finding a lawyer to take that one.

It was a great interview, and he really liked my dog. On the docket — also surprisingly — this guy doesn't pay for his sessions — surprisingly.

[1610]

Also this week — a good week — an eight-year-old. I'll call him David. David's parents are very well-to-do. David does not want to go through the regular channels of custody and access because there are only eight people who do the reports in British Columbia. Because his father is an incredibly well-known lawyer, Dad knows all of them. So this youngster wants outside counsel. Historically, legal aid would have provided that, even if legal aid had to do something in order to bill the well-to-do parents to make sure that this child had adequate representation.

The way that I got this kid was that he was brought in by the child I will call Sally, because they're classmates. So now I'm getting referrals from other 12-year-olds in the community.

Roy — I can call him that; his real name is Jack, but that doesn't matter — has a colostomy. When I saw him the other night at Tim Horton's, he asked me if I would save his seat for him, and I said that I would, because he was going into the washroom to change his colostomy bag. So I said: "Okay." He said: "Ya know, it will take me some time because I have to wash them out." I need not say anything about Roy.

Lastly, I sent off a letter to Revenue Canada's community volunteer income tax program, because there is currently a form that must be filled out by persons who are special, persons who are colourful, and they have to sign this form in order for my office to do their taxes for free. As soon as I offer a special needs individual or one of the microcompany clients who I've taken care of for 20 years a form that they have to sign in terms of their income tax — and remember, they have to file income tax in order to get GST or the climate credit — they freak out.

So when you talk to them about understanding how these things work, they don't understand. Historically, I have taken little wads of paper out of my mailbox or things stuck to my car — someone actually pinned a note to my dog — because these are how I get their slips from welfare in order to do their taxes so that they can get their GST. Now Revenue Canada wants them to sign a form? I don't know what I'm missing, but all of these things…. That was what my week looked like.

If I look just now at what I can bill, it's like, nothing. There's no legal aid — no legal aid to help my people. The number of lawyers who will take phone calls from me has diminished greatly since lawyers mostly now have call display. You'd be surprised how many people aren't home to my calls as soon as they get call display.

My pitch is that we have to put legal aid back in place. I'm sure you've had many lawyers through here. I'm sure you've heard from the Law Society. Every time there's a federal burp…. We get 16 bucks a piece, but what it costs children in the province of British Columbia for the lack of services is enormous.

In August I start getting requests from teachers who know that we're a soft touch, and they want wax crayons, paper, pencil crayons, the 19-cent BIC pens, because they have kids coming to school with nothing. I have teachers who phone me in October telling me: "So-and-so is in grade 2 and continually comes to school without underwear and without socks. Can you do something about it?"

Our resources are dwindling. My time is getting shorter, and legal aid is diminishing. I can no longer represent somebody in court unless they're facing jail time. So I'm thinking, "Well, I either have to have people who up the ante of their crimes or are smarter and don't get caught" — not advice that one says out loud.

We need legal aid. We need it put back in place, and unless we do, the people who pay for it are the children. I've said this five times before, and I'll be back, and I'll say it again next year. Sorry, Bruce. I miss Harry. Where's Harry?

That's it.

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J. Les (Chair): All right. Thank you very much. We have time for one or two questions, if there are any.

J. van Dongen: Thanks for your presentation — obviously, right from the front lines. You know, the issue you raise is an important one in terms of having some kind of backup service, but I've also had the experience…. To counterbalance your story, I've seen some stories as well. I think it points to the problem of how to use legal aid dollars in the public interest. I've seen divorce actions where the taxpayer was funding both sides of the divorce action…
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M. Gleeson: Absolutely true.

J. van Dongen: …and the parties were fighting over a garden hose and a wheelbarrow — literally. I think that's the trouble. We have to do a better job of evaluating what should be eligible and what shouldn't be. There have been lots of abuses of legal aid, as well.

M. Gleeson: Absolutely.

J. van Dongen: I appreciate your position as a professional providing a medical service having to deal with, say, other aspects of a child's life.

M. Gleeson: But even historically, in order to make sure that that didn't happen, there was a great overseer. So any lawyer that I've ever worked with would say to me: "Okay, we want a custody and access report."

My best story about this is…. There was a wonderful young lady from UBC who had taken a four- or five-year BSW, and she came to court driving a Mercedes, which really choked me.

Be that as it may, she talked about the five children of this family, and I'm going through my notes, going: "Oh, my god, I've missed a kid." She went down the list — while evidencing — and she talks about the youngest child, Sandy. And I'm looking at my notes, and I'm looking at the report that I've tendered as an expert witness — and by that time, I'd probably been in business for 25 years — and one of the kids had drawn a picture of the family, and Sandy was the family dog.

What I found out was that this young woman never even met the family. It drove me crazy. It was Bill Selby on the bench. Selby thought it was hysterical. I chose for the next four years to park really close to his Mercedes so it would scare him. A 1982 Subaru with rust is a scary vehicle.

M. Mungall: Thanks very much for your presentation. I really appreciate the stories coming right from the very front lines of social service work, which I used to be on myself.

M. Gleeson: So you know.

M. Mungall: I know. When you talked about tuna, I used to run a food bank, and it's all about the tuna.

M. Gleeson: That and tinfoil. My budget for tinfoil, since psychotic medication has been diminished, is up like 25 percent. I have guys coming over…. My father was actually visiting once. My dad's a psychiatrist — it's kind of curious — so he sort of knows the other half of this.

This guy came in, and he wanted new tinfoil for his hat, and my father took him to the kitchen, sat him down, made him a sandwich, gave him a glass of milk and relined his hat. I was never as proud of a parent as I was that day.

M. Mungall: I actually do have a question, though — kind of following up on what John was saying about the amount of abuse in legal aid, of course. What my concern is…. We always look at this small percentage of abuse in any social service system and use that as an excuse to cut back. We've seen that in social assistance, where we know that 96 percent of people were not frauding the system, so the fraud rate was only 4 percent. It's the same with any, like, social housing, and so on and so forth. I am wondering if you know of any studies of the abuse rate — let's use that loosely, that term of the "abuse rate" — of legal aid?

M. Gleeson: The federal government has studies. Provincially, Simon Fraser has several studies out. There are several MA — masters of criminology — students who have theses, and the Fraser Institute, charmingly, has several studies, which I think are really quite important.

My problem is that even a child of a wealthy home, when not represented, is abused. There used to be a specialist in this town who…. He's dead at the moment, but he used to believe that if you bused every kid from New Westminster to Kerrisdale, you would eradicate child abuse.

[1620]

We usually ended up testifying on all the same trials, just to counterbalance, but the abuses are there, absolutely. The great overseers, judges, are wonderful. In the old days of Bill Selby, Bill Selby would point to some lawyer and say, "You're billing this privately," which really shortened the process, and they were out of there within four minutes.

J. Les (Chair): Well, actually, in a funny sort of way I found the presentation enjoyable, but on the other hand, it reflects some pretty grim realities. There's no doubt about that. Unfortunately, our time is up.

M. Gleeson: If there wasn't a comic twist, I'd be living at Riverview. Oh, it's not there anymore.

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

Our next presentation is Rob McGowan.

R. McGowan: Man, I'm sorry. That lady's really nice and charming and stuff, and I'm just like a white bucket of paint. I've got nothing to compare to that. Plus, I'm not really dressed the way that I should be. I'm, like, a shorts guy. I'm like an all-year shorts guy, yet I just transitioned to administration with the Vancouver school board, and now I've got to wear pants all the time, and it's driving me crazy. I'm just not used to doing that kind of thing.
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Just so I can make it clear for Hansard: I don't go to school naked. You know, there are always shorts. It's just that people hear, "I don't wear pants to school," and they're like: "What are you doing?" The next thing you know, I'm being investigated.

When the little notice of this sort of thing came around, I put my name on, and I thought I'd ask all my neighbours and friends what I should say because, for lack of a better expression, you can learn a lot about a community by walking the dog. In my neighbourhood where I live in North Vancouver, there are a lot of people with dogs and a lot of people with opinions who walk dogs.

What I did was that I decided to keep my fancy clothes on. I thought I would write down the five things that people had. I'd phrase them in such a way so that I could explain them as best as I know them, because I'm a bit of a selfish person as well. If I don't know what I'm talking about, I can't really explain it. So I've put it in terms I can understand, and I hope everybody can understand it too.

The first thing is that, hopefully, you can find a way to increase the tax deduction percentage for charities — in other words, the money that's donated by individuals to charity. I know a lot of people who donate to charity. I donate to charity myself. I volunteer every Christmas for the Sally Ann and ring bells outside Save-On Foods.

The thing is, the pissy little amount that you get on your tax return for whatever you donate really doesn't make it worthwhile. I know this dates back to the '80s and the elimination of the dollar-for-dollar tax credit, but when you donate a hundred bucks and you only get $25 back as a tax credit, it doesn't really make it worth it to the individual. They don't see an end result from donating their money.

You feel warm when you give someone 20 bucks, but at the same time, if there's no measurable return for somebody at the end of the day or at the end of the tax year, people don’t really see a financial incentive to giving more of themselves as opposed to the odd $10 or $15.

I think, actually, a recession is a great time to increase the percentage allowable for a tax deduction for donations to charity, simply because of the fact that people who were already going to donate to charity can manage the money that they're going to donate. Then when times get better, they've already managed their money well enough that they could actually work on improving that donation. Once other people are able to get back on their feet, they're able to increase or even start a donation program, which can do nothing but help the charities that are clamouring for more and more dollars, especially during this hard economy.

Just before I go further with that, are you guys having fun doing this during a recession? I know it must be okay when times are all right, but realistically, it's got to suck. Everybody comes up here and goes: "Where's my thing? Give me my thing." I'm trying to be charming like that lady. I don’t have stories.

The other sort of reason to look at the tax donation thing is simply…. You know, I get all these hospital donation packages in my mail. I don't have the little red dot up on my mailbox saying, "No junk mail," but when a hospital has got to ask for $200 or $400 or $600 and they have to spend $3 million to make $10 million, that kind of defeats the purpose of what they're doing for their fundraising in the first place. It should be all about the money they're trying to bring in. They shouldn't have to devote a certain element of time and energy to gross fundraising, not just general fundraising.

[1625]

The second thing. As I said before, I work for the Vancouver school board. Can we please have our facilities grants back? Or in some way, can we get some of the money to fix things? Or — and this is the sort of way I wanted to look at it — if you can't give the facilities grants back, because as we know, times are tight, could you change the School Act? That way, in times of economic crisis like the one that we're in right now, school boards would be given permission to run a deficit.

Right now the people who are in charge of the Vancouver school board are wonderful folks. I know that Jane up there has been on the North Van school district, so she's been in this position as well. It's hard to make cuts when you know that no matter what you do, someone's going to get hurt. If it's going to be one or two years until the economy recovers, maybe it's time for a sea change in the thinking that school districts have to balance the books every year.

Governments run levels of deficit all the time. Hopefully, school boards would be able to do that too. You could make it a bond issue. You could withhold funding in good years to pay back the money that was not returned during bad periods. I don’t know. I'm not an economist. I teach history 12. That, to me, seems like something else that could be done. Again, it's just finding a different way to work with the same money that exists. That's all I'm trying to throw out there.

The third one. This is not because I have to; it's because I enjoy it. I still work as a bartender. I like getting out. I like serving drinks. If you've ever been to a baseball game at Nat Bailey Stadium, chances are I sold you a beer in the stands and probably yelled at you in the process, without really knowing who you were. The exception was Wally Oppal. I would always ID people when he was sitting in the stands — force of habit, I suppose.

Working in bars and working in restaurants has taught me that maybe it's time to rejig the B.C. Liquor Distribution Branch a little bit to allow corporations and restaurant licensees that buy large denominations of alcohol to get a bulk discount.
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The HST is coming in. It's not a fait accompli, but let's be real. It's going to come in. Even though the average price of a drink in a restaurant or bar will drop, the price of that actual meal will go up.

If you can find a way through a measure like that to give restaurants maybe a little bit more of an advantage to keep attracting people to come out, that can't help but be a good thing. Even though the government will theoretically get more money off of an HST, which goes onto the bill for everything that's consumed, at the same time, fewer people will go out because they will look at the cumulative effect of that sort of service over the course of a year. Maybe that will cost them one or two different trips to a restaurant.

You build that up over time. You take a greater metropolitan area of two million people. That's a fair number of businesses that will not survive on the one or two people who won't come extra per year. Plus, in order to save money, some bars have gone from a 20-ounce pint to a 16-ounce pint, and that's just not right, damn it.

The fourth one. I live in North Van. I like what you guys are doing with the film and TV credit. I'd like you to keep going with the film and TV credit. I'm not handsome enough to be an actor nor wordsmith enough to be a writer, but my house has been in three productions, and those $500 cheques that come out each time help pay for things like roofs and basic yard maintenance. So if you could work on that, I'd be very happy.

The last one — again, because I live in North Van. I love North Van. I've been there since I was four. Yes, I was born in Ontario, but that's because my parents moved out here. You can't blame me for that. But if you could force the federal government or coerce them in some way to pony up their end of the money for the national maritime centre, that'd be great. I think it would look really good at the bottom of Lonsdale to have that facility there. I know the provincial government is on board. I know the city is on board. But if you could sort of squeeze the feds to pony up their end, I think that'd be fabulous.

I'm done.

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

M. Mungall: Yes, that was very charming. A couple of things. First, just when you're out walking the dog, you might want to let your neighbours know that the tax credits for charitable donations are a federal issue. So that's something to write to your MP about.

R. McGowan: I realize that. They just said: "Since you're going to speak to the provincial people, and it's also on that return, could you ask them to try and work them next time there's a federal meeting or something?"

M. Mungall: We've got a lot of that on our plate too. I'd go talk to the feds about those.

Another question is the tax credits for the film industry. Ontario has just beat us with a better tax credit for the film industry, and the concern is that the film industry is going to start moving to Ontario. Would you suggest that maybe we should be on par with Ontario at the very least?

R. McGowan: I would think on par at the very least or at least competitive. I did put in my notes that…. I refer to them as pirates. It's the idea that, again….

[1630]

We've got a very well-worn industry here. I've had many students at my school. I teach adult education in Vancouver, and so we get a lot of part-time students. I had a number of students working on movies like Tron 2, which was just shot here over the summer. I've had students who've worked on Smallville. My dog accidentally interrupted a shoot of Smallville and ended up in a small scene — didn't get paid for it, though.

The idea is that we should be competitive because of the simple fact that we've got a large industry here, and if the dollar is not going to go down for another couple of years, we have to try and make sure that whatever we have doesn't go away.

We may not be able to attract very much that's new, simply because of the value in the exchange rate. But if we can hold on to what we have and make it more attractive for those people to stay and, in fact, expand their enterprise — like, for instance, to find people who shoot Stargate…. They just added another version of that series, so again, Bridge Studios in Burnaby will have another series of productions that will go on there for two or three years, given the viability of that franchise. So it's something like that.

I think matching it or at least being competitive enough where it causes people to decide not to leave….

J. Thornthwaite: Rob, with regards to your comments about the AFG, we have had several presentations from many school boards, as well as your school board, the Vancouver school board. I really liked your comment that you said about…. I'll paraphrase. We've got to find better ways of doing things with the same amount of money.

How do you suggest we, as a provincial government, approach the stakeholders — like, the teachers — and say that, with regards to getting a very fruitful and moving-forward response?

R. McGowan: Well, the problem is you're not going to be able to do anything with the teachers until 2011 when that collective agreement runs out. By the way, thanks again for the raise. I know nobody says that often enough, so I just wanted to be the one to say it.

I don't know how you approach the stakeholders. Like I said, when I was a teacher, it was always: "Give me; give
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me; give me." Now that I'm working in administration, it's a little more difficult. You have to prioritize where things go. Now I'm starting to sound like a talking head, but like I said, that's where I was looking at….

You know, if you can't do anything different because the money is just not there for increases…. That's why I brought up the idea about potentially allowing districts to run deficits. They're not evil things. Governments don't collapse because they run a deficit. We see that. This province was run under a deficit since the late '60s, yet we're still viable. We're still in the top two of the economies in Canada. It's not for lack of trying — that we haven't tried to get rid of the deficit — but deficits exist.

School districts should be allowed flexibility during times of economic crisis. You know, in terms of directing where money should go, obviously if a school is collapsing, the money should go there. But again, when districts are counting on money to be spent — they've got money allocated for projects, and then the money disappears halfway through — there has to be a way for them to find new ways to generate revenue or at least produce revenue that will allow them to complete the projects that have already been undertaken.

J. Les (Chair): Okay, Rob. Your time is up. Thanks a lot.

R. McGowan: Well, thanks, everybody. It was a blast.

J. Les (Chair): You were at least as charming.

The next presentation is from Sports Break B.C., David Bassett.

D. Bassett: Hello. Thank you for having me come forward here today.

As you can see, my presentation is fairly brief and direct. I think that's because the concept that I want to talk to you about is very basic and easy to comprehend. I want to see the province restore the funding that they cut through the direct access programs to the same levels they had a year ago in the next budget, and I want to see them three years after that go back to the original commitment of one-third of gaming funding going to community activities.

In this past year the government cut the funding to community groups 70 percent. That's way too much. That's not fiscal restraint. That's: "Go away. We do not believe in anything that you people do." I find that offensive.

I spoke to you, or this committee, five years ago. That time I was encouraging and advocating that the province of B.C. look into a fitness tax credit, because the cost for many parents to have their children involved in sports was too high. I had some very positive comments from some people on the committee at the time, and nothing was done.

The federal government and two other provinces did bring in a fitness tax credit, and actually because of the activities of myself and another person, I was one of the people on the panel that looked at the details of that federal tax credit.

[1635]

Today, out of 29 OECD countries, we rank 27th in childhood obesity. That's a terrible statistic. As you all know, childhood obesity is going up. It's kind of interesting, just before I came here I see the Sun — it made the front page last Saturday — talking about it as being an epidemic.

It's not the first time it's been in that publication or many others, because it is an epidemic. It's increasing dramatically, and physical activity is one of the best ways to reduce it. Proper diet is another. Genes are something we have a lot less control over.

Certainly, with the prevalence of child obesity we need to be doing something to encourage a change, not discouraging it. In 2001 obesity in Canada is estimated to have cost us $4.3 billion; $1.6 billion in direct costs. The $77 million I'm trying to save — not only sports but arts and other groups — helps contribute to improving the health and fitness of many of our young people and our adults. And I think over time, as other governments have found, it actually does save you money.

The Canada Health Guide recommends 69 minutes a day of physical activity. It was interesting that in 2001 a study done by McMaster University for the government of Canada found that approximately 280,000 children and adolescents couldn't afford to participate in sports. The province of B.C. has now made it more expensive and more difficult, not easier.

I guess one of the things you have to keep in mind when some people say, "Well, you can just go out and play and do this and that," is the fact that human beings, like all animals, are built for physical activity. A hundred years ago, and forever before that, just living created lots of physical activity. We're all sitting here today. We'll all go to whatever our jobs are tomorrow, or Monday, and we'll be sitting again. We're at computers, we're doing things. We don't do the physical activity, and the problem is that doesn't work very well for our bodies. We need it.

So we have to structurally build it into our day. We need to start with our young people to get them doing it, to start thinking about it being part of the day. We have to plan for it. It was automatic before, and now we have to think differently and behave differently. Therefore, I think it's terrible that the province has actually made this much worse.

Now from a value point of view, as per my last page…. Basically, anybody who gets these grants — I'm talking mainly about the sport and fitness area, but I know it applies also for the arts — gets ten to 50 cents on the dollar. That means a community group goes out; they raise the
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rest of the money. In addition, they have thousands of hours of volunteers, be they coaches, team parents, administrators. These groups take a lot of time and effort.

I've done many direct access applications. I think the last one was about 30 pages long, and it's about five or six days of work going through, verifying, checking everything and so on. That alone takes a lot of time, which I and others are not paid for.

I would strongly encourage you to have the government go back to the funding levels that we had before. Certainly, if you'd actually done a 10 percent cut, maybe I and most others wouldn't complain. But as I said, at 70 percent that's not a cut. That's just saying: "Go away. We don't believe in what you do."

Yet this is one of the few activities where the community comes together. They decide what they want to do. They follow the guidelines the province sets out, and they put out a lot of work, a lot of effort and as much or more money than the province is doing. They're exercising their wishes. If the community doesn't want what they do anymore, they fold. They go away.

So the province doesn't have to have things in terms of, "What should we do? How do we allocate the money? And gee, do we need to have it anymore?" This is a community-based organization. This is what you affected. You're hurting communities, be they big or small, and you're hurting particularly — for most of these organizations — children in their activities, particularly for sports, that I'm concerned about, but also arts and other areas.

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

Any questions from anyone? It appears not.

Thank you very much. It's probably slightly because it's getting a little late in the day.

D. Bassett: Yeah I know. I didn't get here in time.

J. Les (Chair): Very good presentation, however.

The next presenters are from the B.C. College Presidents, Jim Reed and Peter Legg.

[1640]

J. Reed: Thank you for the opportunity to participate in today's prebudget consultation process. I'm Jim Reed, president of B.C. Colleges. B.C. Colleges is a consortium of 11 community colleges, serving more than 250,000 students annually in close to 60 communities throughout the province.

You will have already heard from some of our colleges in your travels throughout the province, or electronically, I believe, last Friday. Today I'll provide you a provincial perspective. Joining me today is Peter Legg, interim president of Vancouver Community College, the province's oldest and largest community college.

Let me first begin by saying that B.C. Colleges recognizes and is sensitive to the fiscal challenges currently facing the province. The government is to be commended for giving British Columbians a voice in shaping the 2010-11 provincial budget and for committing to protect vital services such as health and education, despite falling provincial revenues.

Like the province, we recognize the importance of sound fiscal management. For the last few years, through necessity, we have worked hard as a consortium to contain our costs through collaboration and partnership. We continue to look for innovative ways to keep our costs down while fulfilling our mandate to prepare a well-educated, highly skilled, job-ready workforce. B.C. Colleges recognizes a critical role as front-line educators and service providers for people in communities affected by the economic downturn, and we will be a key driver in the economic and social recovery of B.C.

As the recession drives more people to colleges for education and training, the college system faces both physical and financial capacity issues, which if not addressed will limit our future ability to properly serve British Columbians. Together with Peter, I would like to take this opportunity to talk to you about B.C. Colleges and the role we play in building a stronger British Columbia.

Now, we all know B.C. is facing difficult economic challenges. The impact is being felt in all communities throughout the province. The provincial unemployment rate reached a high in August of 8 percent, with unemployment rates even higher amongst aboriginal and immigrant workers. That rate was hit last August. This has resulted in many more people turning to B.C. Colleges for education, training and retraining.

Unlike the K-to-12 system, which is experiencing decreasing numbers of students, our colleges and the rest of the post-secondary system are experiencing significant increases in student demand. This fall total enrolment in B.C. Colleges is up approximately 10 percent overall from 2008. Every one of our 11 colleges is experiencing increased demand, with increases ranging from 3 percent to as high as 17 percent.

This increase in demand is across the board, from recent high school graduates, aboriginal learners, immigrants, workers and the recently unemployed requiring training. There is increased demand across the board in the areas that we provide programs and services, from university transfer, career technical, developmental, adult literacy and the trades. This increased demand is creating both physical and financial capacity challenges that strain our ability to effectively respond to the needs of industry and communities throughout B.C.

Colleges throughout the province are working with local government, industry and community organizations to address the increasing requirements of their communities. Inevitably, though, all our colleges have wait-lists. We have significant wait-lists in health sciences, including nursing, several trades areas — welding,
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carpentry, electrical, heavy-duty mechanic, to name just a few — and the technology areas and business as well.

The tendency in tough economic times is to cut capital and equipment funding. While this may be considered discretionary, it is critical that we properly equip our learners with the technology or equipment used by industry. Many of our students are learning with outdated equipment and technology, which makes providing a skilled, job-ready workforce challenging.

We are cognizant of the need for efficiency. For some time we have looked for innovative ways to catch up, to stretch our dollars so we could continue to offer our communities those programs and services that are needed most. We are stretching our capacity to respond to the increased demand by double- or triple-shifting, overloading classrooms, running late-night or weekend classes. We're not complaining. It's a fact of life. We're doing what we need to do to provide the education and services to our communities.

Of the $22 million of targeted administrative savings for the entire post-secondary system that was part of the 2009 budget, colleges have introduced innovative savings amounting to approximately $10 million. These savings have been redirected to other programs and services in high demand.

[1645]

In the past year our colleges have collaborated on innovative cost-saving initiatives to reduce costs and improve efficiencies. Post-secondary institutions from around the province, along with the K-to-12 system, have worked collaboratively in purchasing cooperatives, with collective tendering processes for select goods and services. This has realized significant purchasing savings throughout the system.

Several of our colleges have formed partnerships that commit to joint planning and collaborative programming. We have the Vancouver Island accord, involving three institutions on the Island — Camosun, North Island and Vancouver Island University.

We have the northern collaborative, involving three colleges — Northwest Community College, Northern Lights and CNC, as well as UNBC.

We have the Okanagan-Kootenay agreement, which involves Okanagan College, Selkirk and College of the Rockies.

All of these partnerships are intended to add more efficiencies and greater effectiveness in delivering education and training. In order to deliver more cost-efficiencies, we need to continue to modernize our college facilities and upgrade our systems.

An example of the efficiencies that can be achieved is demonstrated by Vancouver Community College. VCC has implemented a very leading-edge new digital control and energy-efficient lighting system. This enhanced technology allows the college to more effectively manage their building systems. The upgrades — including heating, cooling, hot water and high-efficiency lighting — are yielding solid savings. This type of initiative is being taken by many of our institutions across the system.

I want you to know that we have also taken the step of forming consortiums across the system. We've formed a consortium of 14 training institutions called Trades Training B.C. Most recently we formed a consortium of 15 institutions called the labour market consortium. These consortiums enable better coordination, collaboration of programs and services for trades and labour market programs. Each of these areas, you would be aware, is absolutely critical to B.C.'s economic recovery.

Is there more we can do? You bet. There is, and we are committed to making the improvements.

Our recent strategic plan includes strategies to achieve more efficient and effective education planning throughout the college system by leveraging our resources through collaboration of partnership, and to implement a set of performance measures that measure the college's value-add to the province, as well as measure student and institutional success.

So how vital are we in preparing B.C.'s workforce? Our colleges support and strengthen every community in B.C. by providing well-educated, highly skilled, job-ready graduates. The province's system of community colleges enables the education and training of workers close to homes and thereby contributes to the vital economy and healthier communities throughout the province. Students receive a better education at a more affordable price and remain in their community to work.

In addition, the colleges play a key role in educating and training the workforce with specific strategies targeting traditionally under-represented groups, such as new immigrants, aboriginals, the disabled and the functionally illiterate. This education and training, and getting these groups into the workforce, is critical to B.C.'s economic recovery.

Now, as noted earlier, our enrolment is up 10 percent, and we're experiencing those increases across the board. In 2009 we graduated thousands of job-ready graduates. Provincially, we have thousands of students enrolled in retraining programs.

We have increased the number of students because of the downturn in the economy, and you will have heard an awful lot of this in your travels. These workers are being retrained in programs such as computer technology, the various trades, environmental technology, nursing and others.

Remember, it wasn't too long ago that labour market forecasts projected a 400,000 to 500,000 shortage of skilled workers. An estimated 42 percent of anticipated skill shortages are in occupations requiring a college education.

We can't afford to take the eye off the ball. We will face the same shortage, and the speed of B.C.'s recovery and the growth of the economy will depend upon
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whether we have the required numbers of well-educated and highly skilled workers ready to enter the workforce. By having the physical and financial capacity to serve students, B.C. colleges can ensure that the future labour market requirements are met, thus avoiding another skills gap in the province.

[1650]

Despite our current economic challenges — and we're very aware of those — we must find ways to invest in colleges.

I'd now like to turn it over to Peter, who will give you just a few quick examples of what's happening at VCC that pertains to this presentation.

Peter Legg: Thanks, Jim, and I'd just like to add my thanks for this opportunity to address this committee. I'm Peter Legg. I'm interim president of Vancouver Community College, and I'd like to address how colleges and VCC specifically are responding to the changing needs of our students and our communities.

At VCC we work closely with local high schools to prepare students for careers in trades. One of our key initiatives is called the ACE-IT program, and ACE-IT stands for accelerated credit enrolment in industry training. This program lets students earn high school credits and valuable VCC trade training credentials at the same time.

Additionally, VCC is an innovator in developing programming for typically under-represented groups, including aboriginals and immigrants. We offer a specialized aboriginal music camp and Canada's first aboriginal culinary arts program. This culinary arts program was developed in collaboration with the Four Host First Nations and will graduate its first class next month.

VCC also serves immigrants at nearly three times the rate of the rest of the province's post-secondary system. Accordingly, we offer a wide range of programs targeted specifically at immigrant learners. For example, our Worldbeat program is a partnership with SUCCESS and the YWCA, and it offers learning in music literacy, language and essential workplace skills to marginalized immigrant youth.

The Canadian immigration integration project is a program where VCC connects on line with new immigrants with details on settlement and integration services, career planning, professional licensing and skills in language.

At VCC we are constantly looking for programs to meet the ever-evolving needs of the communities we serve. We are partners with the Salvation Army at its Harbour Light mission on the Downtown Eastside. Together we provide a referral program, providing literacy skills and academic upgrading for career entry for people recovering from addiction.

We also realize the importance of partnering with the business community. VCC and Capilano University are the lead agencies in LinkBC, which works to connect the resources and expertise of 20 colleges and universities to promote, strengthen and support British Columbia's tourism and hospitality sectors.

All of the programs mentioned above are not only relevant to the communities that we serve, but importantly, we've been able to implement these programs in a timely manner to quickly meet the changing needs in our communities.

I'm now going to turn the presentation back over to Jim.

J. Reed: We'll quickly get to the end here, because I know you've had a long day and a long week, I'm sure.

As I've mentioned before, colleges provide communities with a well-educated and highly skilled, job-ready workforce. Our graduates of our colleges are an important means of deploying and applying new knowledge in the provincial economy, and 86 percent of former students are employed; 96 percent of B.C. college graduates stay and work in B.C.

Our colleges and past graduates contribute $7.7 billion to the provincial economy and provide a 14 percent return. We return $3.80 to the economy for every dollar invested.

So what is our ask? We have three things that we're asking you today. In order to continue to provide a highly skilled, job-ready workforce, we require an increase in base operating funding for 2010-11 to support the increased demand for our programs and services. We require restoration of the annual capital allowance funding to provide equipment and technology to meet the education and training needs of our students and their future employers as well as to provide continued operational efficiencies for our facilities.

Finally, we require funding for programs and services to address training for people traditionally under-represented, such as adults requiring increased literacy; our aboriginal population, which is the fastest-growing adult population in B.C.; new immigrants; and the disabled. These groups have been identified as being critical to advancing B.C.'s labour force and, ultimately, the province's economic recovery.

In conclusion, we play an important role in building a stronger British Columbia and are critical to the economic recovery of the province. We are a great investment. B.C. colleges provide responsive education and training close to home and are at the front-line of people and communities affected by the economic downturn.

[1655]

B.C. colleges are committed to working together with our 11 members, the rest of our post-secondary system and our communities to further the economic recovery by providing a skilled, job-ready workforce, helping to build a stronger British Columbia.

J. Les (Chair): Okay, I've got five people on the list here, so we'll make them short, quick, snappy questions with equally short, quick and snappy answers.
[ Page 351 ]

D. McRae: My quick question is about partnerships with school districts. In my small town we have North Island College, a very good institution. We also have a high school with fantastic shops, labs, cafeterias, computers that really don't get used anytime after four o'clock. It seems a shame that we have such resources just sitting there.

Do you guys ever explore with partnerships that would be beneficial to both groups?

J. Reed: Absolutely. There are two things I can say there. We’ve really expanded a model in terms of a partnership model that was developed in southern Vancouver Island with Camosun College and five school districts, where there's a very clear integration of the students, starting in grade 10, into the college. The instructors actually in the high school are working with the college instructors together so that there's a real smooth transition for the students. The shops are being used in both places. The students are moving back and forth.

We've explored that model with other school districts throughout the province. We created yet another consortium of school superintendents and presidents — six presidents, six school superintendents — to specifically look at how we can leverage better the capital and human resource assets that we have in this province.

We have more work to do there, but we have a model there where we've actually jointly partnered on transition coordinators in several school districts in several parts of the province, where it's a joint partnership between the college and the school district. Those transition coordinators are specifically there to transition students more effectively into post-secondary education.

J. van Dongen: On page 2 you make reference to significant wait-lists in trades — you enumerate a number of them there — and other technical professions. The first question is that there is a labour market demand in each of those trades.

Secondly and more importantly, my question is: do you think, given a limited amount of dollars that we can put into post-secondary in any particular budget and point in time…? Are we doing a good job of prioritizing the trades in terms of funding out of the total post-secondary envelope?

J. Reed: The first question, the labour market demand — a good question. It depends on the trade area. Some trades are in very high demand, and other trades have softened in some of the construction industry trades just as a result of the downturn. In other areas of the trades there is a high demand. So it varies.

The province, I know, through the Ministry of Advanced Education and Labour Market Development, is working on a new model for labour force forecasting. This is absolutely and critically needed in order for us to make better decisions in terms of investment of resources. The labour market demand is there, will be there, as we come out of the recession. The worst thing that could happen as a province is that, as we come out, we have a significant skills shortage and we're not able to fuel the economy as a result of that.

We also have a fairly significant challenge around retirement and people moving out of the marketplace. That hasn't gone away, and it's going to be more compounded….

J. van Dongen: My main question is allocation of dollars.

J. Reed: Allocation of dollars prior to…. I think we could do a better job in terms of allocating dollars into the applied education area, including the trades. Where are we going to get the biggest return over the next two or three years? We need to look at where we allocate those dollars better.

J. Thornthwaite: Quick and snappy. I just wanted to know: how much of your annual capital allowance funding grant did you get this time around?

J. Reed: I think we have…. Peter, you would probably answer it better. But I think every institution received about a 30 percent reduction.

Peter Legg: Yeah, that's right. We got about two-thirds of the normal grant.

B. Ralston: I know the federal government has devolved a lot of labour market training to the provinces, so I'm interested in…. On page 3 you talked about this consortium of trades training institutions, and then there's another one called the labour market consortium.

[1700]

Do those include the former colleges that are now called universities, like Kwantlen Polytechnic and Fraser Valley University as well?

J. Reed: Specifically, the labour market consortium involves all the new universities and the colleges. There are a couple of new universities that have chosen at this point not to participate, but most of the new universities and the colleges are involved in that.

B. Ralston: A lot of the PCTIA members, the private colleges, I've found, have certainly been…. Their main interest seemed to be getting the students to apply for the loan and having the loan channelled to the institution. Then their interest in actually doing anything in training people seems to fall off after that.

What kind of competitive pressure are you getting for students who are looking for trades training with pri-
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vate institutions, as opposed to the public ones that you represent?

J. Reed: Certainly, at the institutions that we represent our biggest challenge right now is addressing the demand that is at our door. It's as a result of people who just are out of the workplace, are out of the workforce, and are coming back for retraining.

We're not really under any pressure on the private side per se, because we really feel that we provide a better model from an accreditation and overall development point of view.

M. Mungall: Thank you very much, especially for making the link between our labour market, our economy and post-secondary education. Of course, they're all very much interrelated.

My question is a bit off the information you provided, hearing your presentation. It's concerning a question I've been bringing up to several post-secondary, primary and secondary institutions. That's the increase of MSP. You're already facing budget pressures, as you mentioned in your presentation. With increases in MSP and then, of course, with the costs of HST coming on, is that going to further impact your budget pressure?

Peter Legg: You're right. The MSP rate increase will have an effect on us. In the overall scheme of things, it's a relatively minor effect, but it does have an impact on our operating costs.

J. Reed: On the HST — we're looking at that. We're studying it very carefully and having a lot of discussions with our ministry about the potential implications and trying to understand it a little bit better. I really can't say too much more than that, other than that we're certainly in sync with the thinking in terms of trying to come to a determination of what the overall impact would be.

There's one other quick thing I'd like to say about the labour market. I think there is a great opportunity in the province and, being very sensitive to the downturn, a lot of competing demands.

I think we need to look at the labour market money that's been devolved from the federal government and really make sure that we're making good, wise allocation decisions in that area, because it can go a long way to addressing some of the human resource development requirements that we need to ensure we have that kind of job-ready workforce coming out. The worst thing we could do is try and spread it out all over the place and not really hit the mark strategically in terms of what's going to be needed overall for the province.

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

Our next presenters are from the B.C. Greenhouse Growers Association. We have Peter Cummings and Mary-Margaret Gaye.

P. Cummings: Thank you very much for allowing us to present today. I'm Peter Cummings, and I'm the president of the B.C. growers association. Mary-Margaret is our executive director. I'm also the CFO of Houweling Nurseries group. I've been in the industry for about 13 years now. I'm delighted to see a couple of other farmers. I know you folks are dairy. You're on the other side of the road.

J. Les (Chair): We milk it for everything it's worth.

P. Cummings: Anyhow, we've distributed a little briefing paper. I'll try to avoid reading it, but I will give you a bit of a background. We have 41 members in our association. Collectively, we represent almost the entire vegetable greenhouse industry in British Columbia.

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Our total sales are around $220 million farm-gate, and that's about 11 percent of the total ag sales out of the province. We employ 4,000 people. The multiplier effect, I'm told, throughout the B.C. economy is probably close to a billion dollars. That's when you take into consideration the retailers and all of the different companies that provide goods and services to our industry.

We consider ourselves to be a very dynamic part of the ag industry in British Columbia, and we think that we're a fair driver in the economy as a whole.

Our industry had explosive growth towards the end of the '90s and into the early 2000s. More recently it has collapsed, largely as a consequence of explosive growth throughout the whole continent, particularly in Mexico and to some extent, also, in the U.S.

I think that one of the trends that perhaps should be a bit concerning to British Columbia is that two of us are in fact investing relatively heavily in southern California now for a variety of reasons, which I may expand on a little bit later. We're choosing to essentially maintain operations in British Columbia, but our expansion activities are headed south of the border, so we're taking investment dollars with us and jobs that might have otherwise remained in British Columbia.

That said, we are a world leader in terms of efficiency. We waste very little in terms of energy — about 4 percent, by our calculation. We were doing a lot of this before the carbon issues became heightened on the agenda of the various governments around the world.

With that backdrop, a few things that we want to talk about today. We want to talk a little bit about the HST and the carbon tax, which is a very thorny issue for us, then talk momentarily about our wood initiatives and, finally, about government programs. But the gist of our comments will be on the carbon tax.
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First, the HST. We've been working for quite a lengthy time period — and John may be aware of that — through the B.C. Ag Council to see the provincial sales tax harmonized with the GST, so we were delighted when that happened. It represents a huge administrative simplification for us. The cost impacts aren't that significant because it affected mostly capital purchases. Since we're not expanding in a large way, the savings to us as a consequence of this measure really are not that significant. But at least on an operational basis, it does represent a tremendous simplification for us, and we are delighted that this program was moved forward with.

The carbon tax is a particularly onerous tax for us. I think, to put it into fairly simple terms, most of our businesses, because of the competition, are lucky if they have a year where their operating income is about 5 percent of our farm-gate revenue.

This year the carbon tax…. If you're burning exclusively natural gas to heat your greenhouse, the carbon tax represents about 1 percent of our overall revenue. As the carbon tax gets notched up, it's going to be equal to about 2 percent of our revenue. So in a really good year we're lucky if we see 5 percent in net income. Most of us are hovering around break-even to the 1-percent-to-2-percent profit margins. In a bad year we're showing losses of 3 percent to 5 percent.

If you take our farm, for example, which is a 50-acre facility, this year we're paying about $223,000. By 2012 we'll be paying close to half a million dollars a year. That essentially wipes out our profit. Our typical profit would be about half a million bucks on $22 million in sales.

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The carbon tax is something that our competitors do not have. Our competitors in the United States and our competitors in Mexico, beyond having lower energy costs in general, do not have a carbon tax, so when we go out to markets that are close to us in the U.S., we're at a huge disadvantage, to the point of rendering us somewhat uncompetitive. Essentially, we're having to absorb that cost in our prices. It's making us more marginal, and that's one of the things that's causing some of us to look south of the border as we expand.

The other insult on this whole tax is that many of our competitors are making incursions into the B.C. market. You see tomatoes from Arizona — from Eurofresh, one of the bigger competitors. They're not paying that tax, and they're marketing in Safeway, in Save-On, in all of the off-price retailers in the Lower Mainland, and we're losing. They're able to take a lower price as a consequence of not paying that tax.

We're not against these initiatives. We think they're the right thing to do in the long run. The problem with the carbon tax as it exists for British Columbia producers is that nobody else in North America is levying this tax. We think it's the right thing to do, but we would like a level playing field throughout the continent. We believe that this tax, for exporters like ourselves, was very inopportune, particularly given the kinds of other competitive pressures we have throughout the continent.

Another thing that I would just say is that the Union of B.C. Municipalities, in their recent spring meeting, basically endorsed a resolution to lobby the government to eliminate the carbon tax for farms in general. I know some of the other farm commodity groups that are big exporters and have significant carbon usage also strongly support that measure. What we're asking for is that the rates…. Preferably, we'd like to see it eliminated — a full exemption for farms — but if that's not possible, we'd like to see the rates frozen at the 2009 rates.

Another idea we had. Due to the fact that we use carbon dioxide, which is sourced from burning our wood boilers, we thought another possible option was to simply not charge us the carbon tax during the summer months, when we really don't have any other viable sources of obtaining carbon dioxide.

Carbon dioxide is a major input into growing tomatoes, peppers or cucumbers. We burn natural gas during the day, take off the flue gas and inject it into the greenhouse. That increases the CO2 concentration in the greenhouse, and that promotes higher yields of produce. Then we take the heat that we made, save it and draw it back into the greenhouse at nighttime to warm the greenhouse. It's one of the things we do for efficiency. Roughly 43 percent of our gas usage is actually to create CO2. We use the waste heat to heat the greenhouse during the nighttime.

That's our position on the carbon tax. Many of us, as a consequence of the carbon tax, have moved into biomass. Some of us have been burning wood waste, wood products, in advance of the carbon tax, over the last couple of years. Roughly half of us are burning wood, and that has allowed us to displace our burn of natural gas, but the economics of wood have, unfortunately, shifted rather dramatically.

With the downturn in the forest industry, there's not as much waste wood around, so the cost of waste wood has gone up. There's a lot of the pine beetle wood that we've been utilizing, but it's actually quite a bit more expensive than burning gas now, with the collapse of international energy markets. We would burn more wood, but the economics of burning more wood have sort of collapsed, along with the price of gas and the diminishing supply of wood.

[1715]

Most of the B.C. wood supply from the pine beetle kill is going into Europe. It subsidizes their wood costs for various producers.

Another possibility that we're looking at is: are there any ways that the government can create incentive programs that would promote increased use of pine beetle wood kill from the Interior? Right now I believe it's
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around $7 to $8 a gigajoule-equivalent, when we can buy gas at around $5 a gigajoule.

The final point we wanted to talk about was just preserving the very good government services that we currently enjoy through the MAL. There are some good programs that have been rolled out: the B.C. ag in the classroom school fruit and vegetable program. We think this is a very positive program to encourage our children to consume healthy food, and the school boards are buying our fruit, so we're very pleased with that program.

Another thing that we wish to promote is the government continuing to act in a collaborative fashion with the federal government's Growing Forward program — with all of the programs that are wrapped around that. So we're generally quite pleased with what's going on with the Ministry of Ag and Lands.

With those comments, I will conclude our presentation and open it up for any questions that you might have.

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

D. McRae: I was just wondering. Obviously, not a huge factor in your industry would be the exchange rate with U.S. dollar. Back in the late '90s and early 2000 you were probably 62 or 63 cents on the dollar. Now we're close to 96 or 97 cents.

How is your industry responding to this pressure?

P. Cummings: Well, it's been a really aggravating part of our returns. We're plugging into international — well, essentially U.S. — markets, and I would say that generally, we've coped with it fairly well, but it has pinched margins. It has forced us to look inward to eliminate costs and increase yields wherever we can. But in the summertime we're generally the only player in the U.S. market, because Mexico has cut back.

We're dealing with domestic producers, which are well known to us, but the Canadian share is the main player in U.S. markets. So we're able to move up our prices, typically in the summer, which kind of compensates for the erosion in the exchange rate.

But ag is always kind of uncertain. It's very much a commodity play, so the prices that we get are really a function of how much product is in the market.

We do get incursions into our market from Europe, and that can sort of shift the balance around. It's a very difficult thing to call. I think we've adapted reasonably well to it, but it is a continuing problem, particularly as we move back to parity again.

M. Mungall: Thanks very much for your presentation. I'll make it quick, because it is rounding up to the end of the day and we've had a very long week.

My question is about the harmonized sales tax. You note that it will be beneficial for your sector. Government often works in silos, and we often have sectors in our economy. But in fact, we're quite interconnected, and there are ripple effects.

For instance, the HST, we're hearing, is not going to be good for some other sectors. They're very concerned that it's going to have negative impacts — for instance, the restaurant and food processors, as well as the tourism industry, and so on and so forth. I'm wondering if you've broadened out your analysis of the impact of HST to look at if you're going to incur some of those ripple effects.

Before I finish, I also just want to say that I've been hearing a lot of assurances that the kind of trickle-down effects of the HST…. "Well, you know, it will reduce your costs, and it will eventually go down the line." I'm wondering if you can also comment on that, because we know, through empirical evidence, that in the last 30 years trickle-down economics have not been as beneficial as they are always claimed to be in theory.

I'm wondering if you can tell me that broader analysis of how the HST might impact you from other angles.

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P. Cummings: The first question. We have not tried to extend the effects of this out to other sectors, so I can't…. In some ways, I think it's probably quite a bit beyond our expertise. I've read a little bit about what went on in the Atlantic provinces. At the time, the GST got rolled out. I realize this isn't the same.

I was in retail, actually. I thought it was quite remarkable at the time how prices did actually adjust quite quickly over about a six- to eight-month period. There were a lot of dubious thoughts at the time that retailers and manufacturers would simply gouge consumers and retain sort of windfall profits. I don't really think that. I know it didn't happen. We repriced all of our stores at the time. The consumers saw an immediate benefit.

I know, in this case, that there is not as much PST in products at retail, but I think that as business people, we're all very competitive, and you're always looking for that angle to have a lower price. So I think that competitive imperative will ultimately translate naturally in the markets into lower prices. But business people, being business people, are always looking to try and augment their profit. I think the market will not let you cheat forever, if that's what you're trying to get away with. I'm not an expert in this, so I'll just leave it at that.

J. Thornthwaite: Yeah, I've even gone for a tour of some of your facilities, and I really support the Buy B.C. and the B.C. Hot House.

My question is about the carbon tax. Is your comment on page 2 with regards to all farms, or are you talking specifically greenhouse farms?

P. Cummings: We'd be talking about greenhouse farms.
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J. Thornthwaite: Okay. It says all farms. I just wanted to clarify that — that it was the greenhouse. I'm assuming that you've got talks. Are you dealing with the Ministry of Agriculture with regards to possible offsets or discussions?

P. Cummings: We've had discussions with the Minister of Agriculture and his staff. As well, we've been talking to various individuals in the finance department. So we've been kind of getting the lay of the land.

B. Ralston: Two quick questions, one on the impact of the carbon tax on the natural gas that you use. I take it that the decline in price in the States, with the shale gas coming on…. It's the disparity that's brought about by the carbon tax, rather than the overall decline in the price, that's crucial.

P. Cummings: Yes, the issue is…. The price of gas is the price of gas. People's cost of production will ultimately adjust to reflect that cost. The problem for B.C. producers is that we have an extra cost on top of the market price of gas. That's what's causing the competitive disadvantage to our growers.

B. Ralston: The climate action group — the budget's been cut back, obviously — had, I understood, various industry circles where there was an opportunity to make representations and pitch the case of your individual industry. I take it you've met with a stonewall there.

P. Cummings: We have not specifically. There is a representative in the floral group that has in fact met with that group, but we have not directly participated in it. In fact, we were talking about that today earlier — that we need to get representations made through that committee.

J. Les (Chair): Okay. Thank you both very much for coming.

Our next-to-last presenters are from the B.C. Chamber of Commerce. We have 35 minutes left. I'm going to give 17½ to the chamber of commerce and 17½ to Peter Simpson.

J. Winter: Thank you, Mr. Chairman. I'm John Winter, the president and CEO of the B.C. Chamber of Commerce. Jon Garson is with me. Jon is our vice-president of policy development. Thank you for the opportunity to meet with you here today.

Just by way of better describing our constituency, perhaps, at the outset, we represent the views of 126 chambers of commerce, boards of trade, which in turn represent over 32,000 businesses of every size, sector and region of the province. As such, the chamber truly is the voice of B.C. business.

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Given time restrictions on our presentation today, we're unable to address each of our recommendations, but full details of these will be included in a full written brief that we will be submitting. We'd like to begin by providing comments and recommendations on B.C.'s fiscal situation.

Firstly, government spending. The government should be commended for its focus on controlling and reducing spending. The government is to be congratulated for its record of controlling public expenditure over the period of 2008 through to the period of 2012, which has seen an average annual growth in public spending of 3 percent, equal to the combined impacts of inflation and the increase in population during that same period.

Further to this, achieving $1.9 billion in savings in the face of significant public opposition is commendable. The public outcry on some of these savings has clearly demonstrated an entrenched entitlement culture that gives no credence or thought to the balance that government must undertake when making tough choices.

To counter this trend, the chamber believes the government must undertake an ongoing review of all direct program spending and operating costs on a four-year cycle, which will determine where the payoffs are the greatest, to identify areas where spending can be reduced or even eliminated.

While the chamber recognizes that British Columbians cherish health care and the services that come with health care, spending in this area must be the subject of the same review process that I've outlined earlier, above. Indeed, in the area of health this process is of particular importance, given the year-on-year increases provided in this area with no apparent focus on outcomes or reform.

We must realize that simply pouring more money into the seemingly insatiable black hole of our health care system is not the answer. It is a recipe for disaster. Health care spending must be tied to a clearly defined ability to measure improvements and outcomes that is underpinned by a clear blueprint for reform.

In terms of debt reduction, the government has committed that once we return to surplus, every surplus dollar will be directed to eliminate the direct operating debt that is incurred as a result of our operating with a deficit. While the chamber welcomes this announcement, we don't believe this goes far enough. The chamber believes that the current economic crisis demonstrates the need for focused attention on debt repayment during good economic times that will protect future generations.

As such, the chamber recommends that legislation be introduced that will provide a legal requirement that no less than 50 percent of all anticipated or planned surpluses and one-third of unanticipated surpluses funnel directly into debt repayment. The benefit of debt reduction is that it actually frees up sustainable revenue
[ Page 356 ]
streams that government can reinvest without risking the economy.

In the area of taxation, the chamber is pleased to see government continue to focus, in the consultation paper, on reducing taxes. The chamber's been consistent. The government has a fundamental responsibility to reduce taxes whenever fiscal conditions allow. Tax cuts stimulate investment, growth, savings and innovation, the keys to long-term economic growth and prosperity.

Under our current tax regime, B.C. compares very well against other provinces in terms of personal and business taxation. Indeed, we would go so far as to say that the tax cuts at both the personal and business levels that we've enjoyed over the past eight years are the primary reason that British Columbia is weathering the current economic challenge better than most jurisdictions with which we do business.

B.C. has already committed to a number of tax cuts. Most importantly for the chamber are the commitments to reducing the general corporate income tax rate from 10.5 percent to 10 percent effective January 1, 2011, and, secondly, the reduction of the small business corporate income tax rate from 2.5 percent to zero percent effective April 1, 2012.

The chamber believes that these announced and budgeted tax cuts must be implemented. However, given the current state of B.C.'s finances and the already-committed-to tax cuts, the chamber does not believe that any further tax cuts are appropriate until B.C. returns to a surplus position.

In terms of reform, the one area where urgent action is required continues to be property tax. We've heard from a number of sources that there is a need to address the challenges that face our major industrial taxpayers. The chamber strongly agrees that there is a need to address the fact that many municipalities have for too long viewed major industries as a cash cow. This has undermined our competitiveness and our attractiveness as a jurisdiction in which to invest, and it must be addressed.

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However, our members have also been clear that the challenges presented by the current property tax regime in British Columbia present challenges to businesses of all sizes, not just the large industrial operations.

The chamber now believes that the provincial government must step in to undertake a fundamental review of the local property tax system, with a view to establishing a system that is fair, equitable and reflects the true cost of service for each taxpayer group. This review must be done in conjunction with all stakeholder groups as participants. Clearly, local governments are as frustrated with the current system governing their revenue streams as we are.

Now, for the HST. As you know, the chamber has been a consistent supporter of the need for B.C. to move to a harmonized sales tax system, and we congratulate the government for taking the decision to move towards harmonization. While this decision has been unpopular, what cannot be ignored is that HST will help greatly as the province looks to come out of the current economic climate stronger and more competitive.

Indeed, we would go so far as to say that the opposition to HST must answer the question: if we do not harmonize, how do we expect our resource industries, our technology sectors and our manufacturing industries to compete in the global marketplace — or in the Canadian marketplace, for that matter — let alone attract investment?

However, we do recognize that some sectors will be required to increase prices that they charge to customers as a result of losing a tax exemption that they currently enjoy under our fractured PST system. Many sectors — food services, tourism and homebuilders, in particular — have already begun to develop a range of measures to mitigate the impact of the tax on their sectors.

As such, the chamber believes that it is critical that government partner with these sectors to look to solutions, outside granting exemptions, to enhance productivity and efficiency in the long run, allowing them to increase revenue and thereby offsetting the negative impact of this tax.

The chamber believes that one of the key issues of concern is regarding the transition rules that will govern how we move into HST. We recognize that the general transition rules have been made public as recently as yesterday. We're currently in the process of assessing these and will provide comment and any additional recommendations in our written submission.

The last item we would like to raise before concluding has to do with skills. Skills must continue to be the focus of government. You've heard a previous presentation here this afternoon from the community colleges. We certainly would concur with the sentiments that they have expressed.

The chamber has been a leading voice calling for the introduction of a training tax credit that was introduced in Budget 2006. The chamber's recommendations were clear: that the tax credit needed to be focused on small business and preclude any training already funded by the federal or provincial government.

Given that some SMEs do not use apprentices, there is a clear sense from the SME community that the government's focus on apprenticeships is at the expense of the need to enhance SMEs' formal and informal training needs. The chamber recommends that the provincial government immediately review the training tax credit with a view to expanding the credit to training besides apprenticeships or introducing a new small business training tax credit in its stead.

In conclusion, the chamber recognizes that we are facing challenging economic times. As such, we believe
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that the cornerstone of Budget 2010 must be stability. To ensure the province comes out stronger and more competitive will require focus on the importance of strong fundamentals of efficient government spending, competitive taxation at all levels, streamlined regulation and a commitment to debt reduction.

J. Les (Chair): Thank you, John. Are there any questions?

M. Mungall: I'm just wondering. As, of course, one of the largest B.C. organizations representing business, when did you find out about the HST? Did you find out at the same time as the rest of the public?

J. Winter: When we found out about it? About 9:30 on July 23.

M. Mungall: So you had no consultation? The government didn't talk to you about their proposal to put forward an HST?

J. Winter: I could show you bruises from being thrown out of the Finance Minister's office since 2002 when we tendered this opportunity as something that government should do. No, we were given no insight whatsoever. It took us completely by surprise.

As a matter of fact, a number of business organizations had met earlier in July to try and develop a strategy that we could take forward to convince government that harmonization was, in fact, a good idea. This largely was driven by the fact that Ontario had just announced that they were going in that direction.

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B. Ralston: Thanks very much, John. Good to see the two Johns here.

You mentioned the property tax and the industrial property tax class 4 and 5. This was a subject of fairly heated debate at the Union of B.C. Municipalities, as I'm sure you're aware.

You've proposed, essentially, a review. I don't think anyone disputes that. Obviously, Catalyst has taken the matter into their own hands, done the calculation of what they figure they're paying for and withheld the rest of the taxes

Has the chamber of commerce taken a position on the Catalyst action or not?

J. Garson: The simple answer is no, not directly on the Catalyst position. We certainly have taken a position, as John mentioned in our comments, that for far too long the tax burden placed on major and industrial property tax payers has been far too high. But no, with specific reference to Catalyst, we have not taken a position on the court cases that are in front of the courts.

J. Winter: That having been said, we appreciate the fact that they've raised the profile of the issue to the extent that they have, which I think will enable all the stakeholders to come to a table and say: "We need to find ways to reform this."

We've been meeting with municipal governments all over the province for a number of years, all of whom share a frustration at the property tax as their sole source of revenues. It's something that really is not a sustainable form of funding. We all need to have some relook.

J. Les (Chair): Okay, thank you both. I appreciate you hanging out till late in the day.

Our final presenter today is Peter Simpson from the Greater Vancouver Home Builders Association.

P. Simpson: Well, I have no entourage. I have a hard enough time getting my wife to go anywhere with me.

J. Les (Chair): Join the club.

P. Simpson: Thank you for taking this opportunity. I know this has been a week-long ordeal for you. I understand I'm the last on the last day.

J. Les (Chair): That's right. Make it interesting, however.

P. Simpson: That's right. It'll soon be over.

I just want to talk a little bit about some of the challenges our industry is facing with taxation, specifically the HST. I also found out about it on the 23rd, and it kind of screwed up my summer, I'll tell you that — dealing with it and having to listen to all of my members.

We represent 720 companies involved in homebuilding and renovation. We deal with issues ranging from homelessness up to market housing, of course. What we're concerned about is the impact on housing affordability with the HST.

When the GST came in, in 1991, we were promised by the federal government that they would review those thresholds and bring them into line with current realities as needed. Nothing was done about it. The level of GST is exceptionally high, particularly in the areas of high housing costs like the Lower Mainland.

The HST — I can give you an example. First of all, I should say that we're not against the HST. We understand and respect the concerns of other industry sectors, particularly around issues of productivity and investment enhancements. We understand that. We get that. It's just that we believe more needs to be done on new homes and home renovation to make it more equitable.

We took a house in Maple Ridge that your firefighter or nurse or any normal employed person would purchase, a single-family home. We boiled out of that all of the tax and levies and fees imposed by all four levels of
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government. That's, of course, the federal government, the provincial government, the regional government and the municipal government.

This is an actual number. It was for sale at $572,000 — not an extraordinary price for where we live. The tax load on that house was $83,000 and included the $7,500 increase that HST effected. That is taking into account the input tax credits and the $20,000 one-time rebate above the $400,000 mark.

[1740]

Even with that, it was $7,500. This is a concern that I have — what it's going to be doing — and that's kind of an average-price house.

We're seeing housing starts increase because of increased sales that started to happen around June. As the standing inventory was being sold, enabling builders to have more confidence in starting new projects — with the blessing of the bank, of course — they did so. They launched — some builders — multiple projects and found great success, and those sales translated into housing starts. When I visited the sites I saw all the guys working, and to me all that noise that was going on was the sweet sound of jobs. We haven't seen that for the first part of the year.

So it's just getting back to normal. I know that the real estate board has today announced an increase in sales, but we just hope that this is not going to be stalled. We might see some rush of people that buy homes before HST is in, and that's always a possibility too.

The layering of tax, where one level of government taxes a product that is already taxed by another level of government, is a concern for us as well. It all kind of speaks to this whole thing about the HST and what it will add to it.

I'm hearing a lot from our builders about their impact on them and what they plan to do or — more disturbing to me — what they don't plan to do. They're rethinking some of the projects they have. They are very upset about this. I know there has been a beaten path to the Premier's office, with a lot of our leadership, to talk about the inequities of this on new homes. I've always been concerned about housing affordability and what threatens that. I believe this is a serious threat to that.

When I was in Toronto years ago and ran the Greater Toronto Home Builders Association, we developed a program. It was, very simply put, one question: where will your children live? My two kids were very young when we developed this, and I actually brought with me this thing that's hung in my office forever. It shows two little children, and it simply asks the question: where will your children live? These two kids today are probably 26, 27 or maybe 28, and I often wonder if they were able to buy a home of their own and get started.

I know, if your websites are correct, that amongst the ten of you on this committee, you have 22 children, and you have 17 grandchildren. I wonder if you've ever asked the question: "Where will my children live?" I certainly have. I have one daughter who managed to get into a home. She's a professional, so she could afford it, but the other daughter is not a professional, and she's struggling. She is always worried about what her prospects will be.

I know that the industry has responded, over the years, very well to different forms of housing. We've intensified. We've made this chunk of land this size and built up and tried to make it more affordable that way while designing homes that will still be attractive to our folks.

We put on a seminar once a year. It's the largest of its kind in North America for first-time home buyers. Last April we thought, because of where the economy was, we would have a drastic drop-off. We did not. We actually had an increase. We had 900 young people come to a two-hour seminar right here in this hotel. I think we kind of squeezed the fire marshal's laws a little bit on that one.

But we asked them the question: "What is the single biggest impediment that you believe is preventing you from buying your first house?" And they said: "Housing prices." It was the same answer for years, but these kids are still: "Housing prices."

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We asked them what type of home they want to live in, and even though they know that — if they're really serious about themselves — they're not going to be able to start in a home like mom and dad did. They're not going to be able to get that single-family home. Yet they still aspire to. That's the dream they all have. So I urge you to do what you can to try to mitigate the impacts of the HST on new homes.

Again, I have to stress that there are some sectors out there that this will benefit. We understand that 100 percent. It's just that we need to have some assurances that when this thing rolls out on July 1 of next year, homebuyers will not pay any more under HST than they currently do.

I think we have to find ways to try to mitigate that impact through this or other forms of taxation. The property transfer tax has been around since 1987, if I'm not mistaken. That's a big chunk of money. I believe the government has taken in about $9 billion from that tax just on the residential side alone.

We're almost a $20 billion GDP in this province. In our industry in 2008, which was a good year, we employed about 155,000 people in B.C. in residential construction.

If I can just switch gears a little bit to the home renovation side. When they brought in the GST, it sent a lot of the renovation underground. When they brought HST into the Atlantic provinces, it sent the home renovation industry underground, and it took almost a decade for the legitimate industry to recover from the impacts of that — of lost jobs, of lost contracts.
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This will seriously impact home renovation, where people will try to find ways around doing the right thing — like getting permits and getting the proper inspections — by dealing in the cash economy. They are really placing themselves at risk. If anybody gets hurt on their jobsite, they're liable in the eyes of the law for the consequences.

As an association, we're trying to convince consumers not to deal in the underground economy. But I think the urge is already there, and it will certainly be exacerbated when this thing comes in. It really will be. I've talked to my neighbours. I see trucks at my neighbours' homes. I see work being done, but I don't see any permits on the windows. It's already a big concern for us.

Of course, the loser there too is the government, because they're not getting any tax revenue from these legitimate jobs. You've got WorkSafe B.C. running around all over the place trying to ferret out these folks, and it's just a never-ending job for them to do this.

I could go on forever, but I've got a big whack of papers I've dropped off for you, with a lot of studies on the HST on both new homes and renovations. I don't really want to talk about any more numbers, and I know this is the last of your work. I'll stop here.

J. Les (Chair): That's very considerate of you, Peter. We do have a couple of questions.

D. McRae: Thank you for articulating your industry's concerns very well.

Just for some clarity. Oftentimes we're quoted that there is between 2 and 3 percent PST sort of embedded into the cost of a house now. Will you agree that those numbers are legitimate?

P. Simpson: No.

D. McRae: How much PST would you say is embedded?

P. Simpson: It's 1½ percent.

D. McRae: That's what you're working from?

P. Simpson: If you take that 1½ percent, then there's an extra half a percent floating around somewhere. The folks who are buying the $400,000 homes, which would be exempt, are really happy to be paying an extra $2,000 on that.

B. Ralston: Thanks very much, Peter. A couple of questions. There has been some discussion about mitigation measures — assuming that the government gets the legislation through and the MLAs supporting it don't fall to recall. Just thought I'd wake them up.

The real estate people have come forward with one proposal, which is to eliminate the land cost as the base on which the HST is calculated. Again, I'd be interested in your views on that.

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I noticed, looking through the material that you've provided…. You think that the $400,000 threshold is too low, and it's because the average price in a house in British Columbia, particularly the Lower Mainland, is not comparable to Ontario. The average price is quite a bit higher here. So on those two measures, I'd be interested in your views.

P. Simpson: Sure. On the land part, from what I understand, they took the Ontario model and just kind of brought it here. We don't think that works. We don't like their transition rules.

For the land component here, particularly in the Lower Mainland, the cost is probably in at 50 percent. In Ontario, specifically in the 416 area code, 915 perhaps — you know, the Toronto area — it is probably closer to 30 percent to 35 percent. So there's the disparity there as well.

As far as the threshold is concerned, I think in our brief to government we asked that the threshold be increased from $400,000 to $600,000 to more adequately reflect the costs of housing here.

J. van Dongen: Peter, thanks for your feedback on the Maple Ridge $572,000 house with the layers of taxes, including provincial taxes, in it.

If I could just ask you a question about the big-picture market price trends — you know, looking at the affordability issue, looking at price trends — over the last two years. It's been amazing to me the resilience in the face of a pretty serious recession of housing prices. I wonder if you have any observations about that. Certainly, there's a school of thought that says there may be another shoe to drop yet in terms of some kind of correction. It's just been amazing that prices haven't dropped more than they have, and I'm wondering if you have — I mean, you're a real student of the market — any thoughts on it.

P. Simpson: Well, somebody referred to this the other day as a dead cat bounce. I don't think it is. I think the prices certainly moderated this past year. They went up very, very quickly.

I had a fellow phone me up who bought a house in White Rock in 2001. He paid $395,000 for it, and he had it for sale at the height of the market in 2008 for $1.085 million. Then he dropped it to $1.035 million and phoned me up to begrudge the fact that he was losing $50,000 on that house, where in fact he actually made $100,000 a year for seven straight years. He could be sitting at home on his duff, and he got 100,000 bucks in tax-free money. That's just one story.

But I think prices have ramped up very high. I can only speak for homebuilders, but I know that when they were
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faced with these challenges, with standing inventory unsold and the bank on their heels, they worked with their trades and suppliers. I thought it was very inventive actually. They worked with all their trades and suppliers, and they got them to sharpen their pencils and be part of the team so that when it did finally recover, they would get the work again, and they'd be loyal to them.

Some builders dropped their prices by almost $100,000. They weren't making too much on that, I'll tell you. The margins were razor-thin, if at all. They were kind of just selling them off in order to start new projects and keep the folks working.

Prices have moderated. I don't think they're going up. I spoke to some other folks the other day who say that in their neighbourhood, the prices are creeping back up to where they were before. But guessing prices is a mug's game. I wouldn't be sitting here if I knew what was going to go on with prices. I'd be doing something else on a beach.

J. Les (Chair): Thank you very much, Peter. We'll stay in touch.

P. Simpson: It's always a pleasure. I know you all work very, very hard, and there are a lot of challenges. I really respect what you do and what your chosen profession is. Thank you for all your work. I appreciate it very much.

J. Les (Chair): With that, the meeting for today concludes.

The committee adjourned at 5:54 p.m.

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