2011 Legislative Session: Fourth 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 7, 2011

9 a.m.

Douglas Fir Committee Room

Parliament Buildings, Victoria, B.C.

Present: Rob Howard, MLA (Chair); Doug Donaldson, MLA (Deputy Chair); Mable Elmore, MLA; Dave S. Hayer, MLA; Pat Pimm, MLA; Bruce Ralston, MLA; Bill Routley, MLA; Dr. Moira Stilwell, MLA; Jane Thornthwaite, MLA

Unavoidably Absent: Bill Bennett, MLA

1. The Chair called the Committee to order at 8:59 a.m.

2. Opening statements by Rob Howard, MLA, Chair.

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

4. The Committee recessed from 11:07 to 11:19 a.m.

5. The Committee recessed from 11:51 a.m. to 12:49 p.m.

6. The Committee recessed from 2:14 to 2:19 p.m.

7. The Committee adjourned to the call of the Chair at 2:51 p.m.

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 7, 2011

Issue No. 52

ISSN 1499-4178

[ Page 1471 ]

FRIDAY, OCTOBER 7, 2011

The committee met at 8:59 a.m.

[R. Howard in the chair.]

R. Howard (Chair): Good morning, everyone. We'll start up the session this morning.

My name is Rob Howard. I'm the MLA for Richmond Centre and the Chair of this parliamentary committee. I would like to welcome everyone in the audience. That would be you, Manley. Thank you for taking the time to participate with us today.

Each year in preparation for next year's budget, the Minister of Finance releases a budget consultation paper, which guides the committee's annual consultation process. The budget consultation paper presents a current fiscal and economic forecast. It also identifies key issues that need to be addressed in the next budget.

[0900]

There are well-published global economic challenges in Europe and the States, and what we are seeing is that governments who have not been fiscally responsible are being punished. In B.C. we have maintained our triple-A credit rating, and we are committed to balancing our budget by 2013-2014. That will serve us well to protect and grow our job base.

In these challenging circumstances, it means that there are difficult questions ahead, and we look forward to hearing about your priorities in these challenging times. Questions such as: how can we maintain B.C. as a preferred destination for investment? With current fiscal challenges, what measures can government take to help families? What programs and spending are your priorities?

Print copies of the Budget 2012 consultation paper are available on the information desk at the back of the room.

The Select Standing Committee on Finance and Government Services is the parliamentary committee which is responsible for conducting public consultations on the forthcoming provincial budget. Our all-party committee is required to report back to the Legislative Assembly no later than November 15 of this year.

This year we will hold 13 public hearings in each region of the province. We've also scheduled two video conference sessions to hear from residents of eight rural communities living in more remote areas of B.C. This is the third time we have tried this consultation method.

We opened our hearings in Vancouver on September 15 and then travelled to Fort Nelson, Smithers, Prince George, Williams Lake, Kamloops and Courtenay before returning to Victoria. Next week we will also be meeting in Surrey, Chilliwack, Cranbrook, Kelowna and Richmond.

In addition to public hearings, there are a variety of other ways that British Columbians can share their ideas with us. We accept written submissions by letter or e-mail and also video or audio files. Further information on how you may participate using one of these methods is available on our website: www.leg.bc.ca\budgetconsultations.

Committee members carefully consider all public input we receive, whether it's an oral presentation made here today or an on-line survey form, a submission in writing or an audio-video clip. Our deadline to receive submissions is Friday, October 14.

At today's meeting each presenter may speak for ten minutes, with up to five additional minutes allotted for members' questions. Time permitting, we may also have an open-mike session near the end of the hearing, with five minutes allocated for each presentation.

Today's meeting is a public meeting, which will be recorded and transcribed by Hansard Services. A copy of this transcript, along with the minutes of the meeting, will be printed and will be made available on the committee's website.

In addition to the transcript, a live audio webcast of this meeting is also produced and available on the committee's website to enable interested listeners to hear the proceedings as they occur. An archived copy of the audio broadcast will also be retained on the committee's website.

I'll now ask the other members of the Finance Committee to introduce themselves. We'll go around the table. I'll start with MLA Routley.

B. Routley: Bill Routley, MLA for the Cowichan Valley. Good morning.

M. Elmore: Mable Elmore, MLA for Vancouver-Kensington. Good morning.

B. Ralston: Bruce Ralston. I represent Surrey-Whalley.

D. Donaldson (Deputy Chair): Good morning. Doug Donaldson, MLA, Stikine. I'm the Deputy Chair of the committee, and I live in Hazelton.

M. Stilwell: Good morning. Moira Stilwell, Vancouver-Langara.

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

P. Pimm: Pat Pimm, Peace River North.

R. Howard (Chair): Thank you, Members.

Joining us today, I'm also pleased to introduce our Clerk, Susan Sourial. Also with us is Gordon Robinson, who is staffing the registration desk at the back of the room. We also have Hansard Services staff behind me, Michael Baer and Jean Medland, who will record and
[ Page 1472 ]
prepare the written transcript for this meeting. We also have with us Byron Plant, who is a committee research analyst.

Welcome, Byron.

With that, I'd like to call our first witness — Manley McLachlan from the British Columbia Construction Association.

Presentations

M. McLachlan: Well, good morning. Thank you for the opportunity. We're always pleased to participate in the public hearings around Finance and Government Services. If you will allow me to take a moment to introduce you to our organization.

The B.C. Construction Association now represents over 2,000 construction employers active in all elements of the construction industry across the province of British Columbia. Those members come to us through the B.C. Construction Association-North, the Southern Interior Construction Association, Vancouver Island Construction Association and Vancouver Regional Construction Association.

Construction continues to be a fundamental sector of B.C.'s economy, and I'm sure you've heard me say this before. From an economic development perspective, construction is very important, because nothing happens until something gets built.

[0905]

The best evidence of this fact is that government has used the clear and compelling need to rebuild our infrastructure as a means of reversing the impact of the economic and financial crisis that began in October of 2008.

While we've included a total of nine recommendations in our submission, I will only speak to two matters this morning, the first being the transition to PST and the second being public construction procurement. Both matters are of significance to government and industry due to their impact on costs and the way business operates.

The reversal of policy on the HST, regardless of the referendum process, is viewed as a serious setback for business in the construction sector. The industry has great concerns for the following reasons: the cost of the PST and the economic hit to the construction industry.

HST was on its way to generating $880 million of annual cost savings in the construction industry. Conversely, the reversion to PST will add significant costs, which we feel could stagnate could the entire industry and seriously impair the number of jobs in this sector. Government is encouraged to develop incentives or job protection plans to otherwise ease the transition back to PST for the industry.

There are transitional costs and pricing adjustments that are of concern. Considerable attention was paid to the residential housing sector in the transition to ensure that HST implementation did not seriously impact the overall tax cost of a new residence, at least for those at or below the average price of a new home in B.C. However, there were many instances of double taxation — PST and HST — on commercial projects and non-eligible residential projects in and around July 1, 2010, due to the long lead time between contracting and the delivery of the product or service.

Government is encouraged to address current long-term agreements by allowing them to be grandfathered under HST — for example, credits available to the builder on costs and to the purchaser where applicable because the agreements were entered into with the expectation of a net nil sales tax.

There are concerns that contractors may be expected or permitted to adjust prices to reflect the new embedded cost of PST for materials purchased after the transition, and our question is: if so, will all contractors' agreements permit those price adjustments? Regardless, the full impact of PST on any given contract is nearly impossible to quantify and will certainly hurt contractors because they will be unable to pass on the full cost of reverting to PST, at least in the short term.

We have concerns with the administration cost, particularly audits involving two tax systems. PST audits were and are notoriously difficult for the construction sector. We encourage government to instruct the taxation branch to take a relaxed approach and honour its commitment to simplifying the application of PST to construction service contracts as announced in October 2008, following the provincewide PST review.

PST for contractors involves very complex issues and requires comprehensive books and records to satisfy the tax authorities. Contractors will need to spend a considerable amount more time and resources on administration of their businesses when we revert back to GST-PST.

We have concerns with tax on the improvements to real property versus the sale of materials. The PST implications of lump sum construction contracts are relatively well understood. However, time and material agreements and similar agreements which separate the materials and labour components are very problematic.

We encourage government to clarify this issue, again in accordance with the October 2008 announcements, by treating all contractor services, materials and labour as PST-exempt construction agreements where the contractor either installs or arranges for the installation of materials.

While we recognize that government must move judiciously in the retrenchment of PST, we encourage government to do so at as quick a pace as possible to ensure that economic activities are not curtailed. Having said that, we encourage government to pursue an improved PST environment and to consult to the fullest extent with industry to ensure the new tax regime improves B.C.'s
[ Page 1473 ]
productivity and supports both existing jobs and job creation.

While the construction industry deeply appreciates the public sector investment in construction, it's important to consider the issues related to public procurement processes that have emerged on our way out of recession. While enhancing the economic security of our province and ensuring competitiveness is of primary importance to our members, adherence to the principles of open, fair and transparent access to public projects is paramount.

[0910]

BCCA has stressed the need for the construction industry in B.C., working with government, to take the time to understand why public officials are ignoring good advice and stated public policies. We want to work together to create some real dialogue between the public agencies and the industry to determine the underlying cause of continuing public procurement issues.

The B.C. Construction Association acknowledges the ongoing work by the office of the comptroller general on rewriting the capital asset management framework, in particular the recent addition of a senior construction procurement analyst at the office of the comptroller general. BCCA acknowledges the results of the B.C. Hydro review specific to Hydro procurement processes and documents and respectfully points out that the minister's review of B.C. Hydro validated the issues we have presented to this committee since 2002.

Over 20 of the recommendations from the Hydro review relate to issues with Hydro's procurement practices and processes. We concur with the reviewer's observation that Hydro pays a 10 to 30 percent premium for bad documents and bad procurement practices. And we agree with Cheryl Wenezenki-Yolland's observation that the issues identified with Hydro's procurement are, in her words, endemic across government. In this era of tight budgets a savings of 10 to 30 percent in capital costs should justify an intense effort to clean up bad policies and practices across the public sector.

The new west partnership trade agreement obligates the B.C. government and all its public agencies to conduct procurement in an open, fair and non-prejudicial manner. Non-compliance can result in penalties to the province of up to $5 million.

As a result, BCCA recommends that government broaden its review of all public agency and Crown corporation procurement processes, including a direct involvement of the industry in that process.

To that end, BCCA recommends that this government work with industry to convene a formal review of procurement practices across government and its agencies — this review to include the development of a forum where industry sits down with public officials from all levels of government, including quasi-autonomous non-government organizations that need to procure construction services, and find the best approach to solving their challenges and concerns without sacrificing best practices that have evolved over decades.

The capital asset management framework is a comprehensive document that is intended to provide assistance to public agencies in finding the best capital procurement practices.

The CAMF was introduced in 2002 and contains four foundation principles to guide all public sector capital procurement: fairness, openness and transparency; competition; allocation and management of risk and value for money; and protection of the public interest. BCCA and the industry in general endorses those four principles, and we have been working with the ministries to engage in a public-industry approach to addressing those issues.

Education and training for public sector buyers of construction services, including guidelines regarding the circumstances in which to consider various methods of procurement and the required conditions for success, have been discussed and in some cases implemented. Opportunities to enhance oversight of capital spending within the provincial government and its agencies within those projects it funds continues to be an ongoing issue. And the examination of current available industry- accepted procurement technology and the adoption of that technology is a new recommendation.

BCCA recommends that government adopt the capital asset management framework as a public policy, not just a guideline, that would require all governments at other levels, such as municipalities and, again, the quasi-autonomous non-government organizations, to comply with good tendering practices.

To that end, to ensure that sufficient resources are made available to its ministries, we recommend that government create and distribute appropriate procurement tools and sample documents that are referred to in the capital asset management framework; entrench the principles of transparency, openness and fairness, including the use of standard tendering documents in all tendering procedures funded through public moneys, regardless of the procurement method; build an education and training regime for public sector buyers of construction services, including guidelines regarding the circumstances in which to consider various methods of procurement; empower the Ministry of Finance to establish credible rigour and oversight of capital spending within the provincial government and the agencies whose projects it funds; build a consultation framework, including a primary point of contact within government, to facilitate the interaction between the provincial government and the construction industry; and finally, examine current available industry-accepted procurement technology and adopt its use across government agencies.

[0915]

In conclusion, BCCA is pleased to have had this opportunity to provide this input. We believe that the provincial government must take a leadership role to ensure
[ Page 1474 ]
that B.C. is able to maintain its competitiveness by ensuring that we have an adequately labour force to meet the demographic challenges the province faces in the immediate term and the economic growth that is projected for the coming decade ahead.

Again, we'd like to express our support for this process. We appreciate this government's open and inclusive approach to budget considerations. It's commendable.

In conclusion, I thank you again and wish you all a very happy Thanksgiving.

R. Howard (Chair): Thank you, Manley. We have a few questions.

B. Ralston: Thanks for your presentation. I've been on the committee a number of years now, and I note that you've raised the issue of government procurement pretty well every year. On page 4 your calculation is that if we take 20 percent of a $7 billion program, it's $1.4 billion in money to capital projects that's wasted, in your view. I'm wondering if you can give specific examples of how this 20 to 30 percent unnecessary premium is paid for capital projects in the province and how your proposals would save, on a $7 billion program, $1.4 billion.

You hear a lot from the government about saving money these days. It seems that this might be an area they might want to pay attention to.

M. McLachlan: The primary reason for the extra premium is around what's considered to be the inappropriate or imbalanced allocation of risk within the contract documents. For instance, in the Hydro review, Hydro's current contracts, the allocation of risk is all placed on the contractor.

Contractors are, among other things, gamblers. They evaluate the risk on any set of conditions around a project, whether they're geotechnical or related to weather or related to the expectations of the owner. The risk allocation is the fundamental rationale for additional costs. If you're looking at a contract that has unreasonable risk assigned to the contractor, there's a premium paid for that. That, basically, is the fundamental element.

This is why we've been advocates of a move to the acceptance of what we called industry standard documents. The Canadian Construction Documents Committee has created an entire array of standard documents that address virtually every element of the contract environment around every element of construction.

The CCDC committee is not a construction contractor committee. It's a national committee made up of public owners from the national level — Defence Construction Canada, Public Works and Government Services. There are representatives from the national design community — engineers and architects. The Canadian Construction Association sits there. There are members-at-large, and there are representatives from the legal community.

They operate on consensus, and not unlike government, it takes a long time for these documents to be vetted and to be accepted. But when a contractor signs a CCDC document, they know that the front end of that document won't hurt them, that risk has been assigned accordingly, that it's been vetted through courts and that they can sign it with confidence.

The documents don't handcuff government, because there's a section of the contract that's simply called supplemental conditions. Specific conditions related to an owner's needs or site conditions or whatever can be addressed in the supplemental conditions.

I'll give you one example where there's risk and then stop. Recently, within the last eight months, there was a school project put out in the southern Interior, where CCDC 2 was the document that was used. It's a 32-page document, and it came with 58 pages of supplemental conditions, which literally wiped out the entire front end of that document.

It was a turning point for us, because rather than write all kinds of letters and phone these people up and beat them over the head and say, "You're doing things wrong," we said: "Why are you doing that?"

[0920]

It was all about protecting themselves. They had difficulties in a previous contract with a contractor. They went to their legal team and said: "Make sure this doesn't happen again." The risk and other factors were skewed dramatically back to the contractor, and the standard document disappeared.

We discovered a couple of things. We have work to do with that public owner. We have work to do with the contractors to ensure that the relationship doesn't erode to that level. But the fundamental piece is all around how risk is assigned. Our approach is that risk needs to be assigned to those best able to manage it. I hope that answers….

R. Howard (Chair): That's great, Manley. Thank you very much. We have a couple of other questions from MLA Pimm and MLA Donaldson, but we've run out of time, so they'll have to catch up with you outside of this. Thank you for taking the time.

M. McLachlan: Absolutely. Thank you again, and happy Thanksgiving to everyone.

R. Howard (Chair): Next up we have the Greater Victoria Chamber of Commerce — Sasha Angus and Bruce Carter.

Welcome, gentlemen. As you're getting set up…. As you probably know, you have 15 minutes. At about ten I'll give you a heads-up if I can, and you can either stop and take some questions or push right through. Your choice. The mike is all yours.
[ Page 1475 ]

B. Carter: Great. Thank you. I appreciate it.

Good morning. My name is Bruce Carter. I'm the chief executive officer of the Greater Victoria Chamber of Commerce. With me is Sasha Angus, the chamber's manager of policy and public affairs.

On behalf of the chamber's 1,500 members and their 22,000 employees, I'd like to thank you for this opportunity to contribute to the budgeting process for 2012.

The Greater Victoria Chamber of Commerce is the voice of business in the capital region. We're one of the largest chambers in the province, one of the most active in policy development and are accredited with distinction from the Canadian Chamber of Commerce.

I'd like to start by saying that as the voice of business for the capital region, we recognize and appreciate the important role that the provincial government plays in our local economy. We would like to thank you for the family-sustaining jobs that the government generates, and as a community, we will continue to make sure that we offer an attractive environment in which to operate.

Thank you for the investments the province has made in our community, including $150 million towards the Royal Jubilee Hospital — we're encouraged to see that a P3 model was used for that project; $13 million towards the Ocean Networks Canada at UVic; $4.2 million for Royal Roads museum upgrades. These are just some of the examples of the investments in the community.

May I also say that as a vocal supporter of the harmonized sales tax, the Greater Victoria Chamber of Commerce recognizes the public's decision on the HST referendum. As the transition back to the PST-GST takes place, the chamber will continue to advocate for improvements in the old system and will play an active role in working with government to educate our members on the details of the transition as we work through those changes.

Furthermore, the chamber supports the time frame for the transition, as outlined by the provincial government. It is important to address the needs of the companies under both tax environments, allowing time for companies that have initiated investments under the HST to adapt, while also making sure that the transition does not hinder other business sectors from growing.

The chamber feels particular attention should be placed on those sectors that may experience a slowdown based on consumers who may choose to defer major spending decisions until after the transition is complete. Of particular note to our members is the home-building and renovation sector, which may be adversely impacted by consumer behaviour.

At this point I'd like to invite Mr. Sasha Angus to present the details of our recommendations.

S. Angus: Thank you, Bruce.

Good morning, everyone. I'd like to begin with the budget, please. The chamber continues to support the provincial government's policy of balanced budgets and would encourage the province to maintain their goal of returning to balanced-budget positions as soon as is fiscally prudent.

The chamber also recognizes the financial obligations on the provincial budget presented by the return to the PST-GST system and would urge the government to explore all avenues available to them in bringing provincial finances into balance.

While we support the need for quality programs and services, we would caution the province against cost-cutting measures that do not include a review of the province's largest and fastest-growing expenditures. Once the provincial budget is balanced, we will continue to call on the provincial government to maintain a commitment to reducing small business tax rates to zero.

Infrastructure funding. When it was announced, the chamber supported the provincial government's accelerated infrastructure initiative. It was the right decision, and we continue to advocate for infrastructure investment that will contribute to our economic capacity and provide a platform for future economic growth. As outlined in the Premier's announcements over the past few weeks, we know that the government also values infrastructure investment that builds for the future.

In the provincial capital there are a number of infrastructure projects that show exceptional promise for our future prosperity. Given the time allowed this morning, we would like to focus one specific project that we think is worthy of attention in Budget 2012. That is expansion of our runway at the Victoria International Airport.

[0925]

An expansion of the runway at Victoria's airport has been projected to add an additional $37 million to greater Victoria's economy annually through a ready market to and from key European destinations, including France, England and Germany. In addition, with the development of new aircraft, Asia also represents a significant opportunity that could be harnessed with this investment.

These markets have some interest in one-stop flight packages, but the prospect of direct connections is highly desired. The Victoria Airport Authority estimates the new extension will see 36,000 new international trips from London in the first year, with an increase to 48,000 in five years; 75,000 movements from France in the first year, with an increase to over 100,000 within five years.

The extension of the 1,400-foot runway to a total 8,400 feet is estimated to cost $41.2 million. The airport authority is ready with its one-third contribution, and we understand that federal dollars will match a provincial contribution.

The chamber sees this project as the right connection under the province's job plan and urges the provincial government to contribute a one-third share of this funding to this important transportation connection to Vancouver Island in Budget 2012.
[ Page 1476 ]

In recent years British Columbia has also become known as a world-class destination for opportunity, attracting new citizens to the province looking to enjoy the quality of life that we value and enjoy. Municipal infrastructure not only supports our vibrant communities but also plays a significant component of our economic competitiveness and prosperity.

The chamber recognizes the large role that the provincial government plays in municipal infrastructure investment, in partnership with other orders of government, and seeks a holistic approach to the subject, ensuring that we as a province realize the maximum economic benefit from these investments.

To those ends, the Greater Victoria Chamber of Commerce recently received the endorsement of chambers from across the province in our call for the formation of a Premier's council on municipal infrastructure to provide a comprehensive framework for municipal infrastructure finance and investment.

The goal of this initiative is to continue building on our economic capacity, further strengthen the environment for infrastructure investment and increase accountability to the taxpayer. As such, we would strongly urge the province to maintain the commitment to infrastructure investment that has been outlined in the budget consultation documents.

In 2007 the chamber, along with regional stakeholders, launched the Greater Victoria Development Agency, or GVDA, which focuses on building the region's economy and ensuring that greater Victoria remains a vibrant place to live, work and invest. Since that time the GVDA has enjoyed a strong relationship with the province's Ministry of Jobs, Tourism and Innovation, working closely to identify investment opportunities and bring them to the region.

Of particular note is the province's networks of international trade offices, which are important resources for B.C. businesses and their ability to expand and develop new export markets. Icons of our tourism sector like Butchart Gardens and world-class local technology companies like cebas Visual Technologies and Terapeak have all benefited from the services that they provide.

The new initiatives that the province is undertaking will have a significant benefit to the greater Victoria region, highlighting and supporting the region's strengths in international education, advanced technology and tourism. We would strongly urge the provincial government to provide the necessary resources to ensure these new initiatives are successful.

As a part of that, stable and predictable tourism funding is a key part of our local economy. The funding environment for destination marketing has changed significantly since the introduction of the HST and the restructuring of Tourism B.C.

As we transition back to the PST, the chamber supports a funding formula for tourism marketing that provides a stable, reliable, performance-driven pool of funds allocated specifically to tourism. It is critical that the funding for tourism marketing not be a part of the government annual appropriation cycle in terms of competing funding requests.

Rather, it is advised that the performance-based funding formula be protected in legislation, making the funding levels predictable for industry. Funding levels as per previous amounts allocated to Tourism B.C. should be committed to the tourism funding through the Ministry of Jobs, Tourism and Innovation.

The unpredictability of annual appropriation outside of a legislative protection brings a level of uncertainty to the funding stability. Such instability will jeopardize the ability of DMOs, both internal to the provincial body and the six regional bodies, to implement the multi-year marketing initiatives necessary to achieve marketplace recognition and industry growth. Funding must be predictable so that the industry can execute the marketing necessary for success and secure the highest return on our investment.

Lastly, we would like to thank you, the provincial government, for its support of the creation of an office of municipal auditor general. The Victoria chamber first developed this policy, and we were very encouraged to see it outlined in the Speech from the Throne earlier this week.

The increase in municipal spending since 1988 has been over 189 percent, while wage growth in the province has been just slightly over 18 percent during the same period. This is a trend that is simply unsustainable. Municipal governments are the only orders of government that do not have such oversight, and establishing this office is an important first step and resource to help local governments and their communities address the growth of municipal spending in the province.

[0930]

B. Carter: In closing, I'd like to acknowledge the many positive steps the province has made over the last number of years, which has helped position B.C. to weather the recent economic downturn. At this time of recovery we encourage the government to turn its attention to building on our economic capacity and laying the groundwork for our continued economic prosperity.

Thank you for your time this morning, and we'd be happy to answer any questions.

R. Howard (Chair): Thank you, gentlemen. We do have some questions.

J. Thornthwaite: Thank you for your presentation. At the beginning of your presentation you mentioned the fact that we are in the process of going back to the PST. You said that we should be focusing on those industries that might be negatively affected in this, and you brought
[ Page 1477 ]
up the example of homebuilders. Can you give us a little bit more detail as to what you are requesting us to do?

B. Carter: We can give you the theory. I'm not sure we have the detail. The challenge becomes that…. We're very concerned consumers won't actually spend on either homes or renovations. There'll be a loss of revenue, a loss of jobs, as an unintended consequence of taxes. So we think perhaps some changes in the transitional rules to allow for new homes that are built and the tax treatment around those. Some of those are in construction today, unfortunately — and how we deal with that.

As well, as we look at the renovation sector, the Canadian Home Builders has recommended a renovation tax credit. That may be one solution. It's not the only one. It's really quite early days for us around all the details around PST.

M. Elmore: Thank you very much for the presentation. Victoria certainly is recognized as an international destination for tourists. Your recommendation in terms of calling for a need for stable and predictable tourism funding for international marketing…. Have you noticed an impact in terms of the B.C. tourism, when that program was ended?

Also, your recommendation in terms of a proposal to basically establish an agency — can you talk a little bit about that?

B. Carter: I think our proposal is really about the goal and the funding. Once again, with the PST, there are some ups and downs on whether or not the 8 percent hotel tax is coming back. The goal is really…. If you look at this year, the advertising buy for next year for tourism needed to happen a few months ago. Without an approval in the March budget and not being able to expend that money, it simply doesn't work for the tourism industry, and that becomes a challenge.

Whatever mechanism has to be put in place to make that happen…. If that's a new agency, that's great. If there's a way that in legislation the ministry can do that, that's fine. The objective is to be able to make sure that we can do those advertising buys to support the industry.

B. Ralston: You raise the issue of extending the airport. Similar representations were made in Kamloops, for example. But one of the issues with international flights is the corresponding need to have the Canadian Border Services Agency more actively involved in immigration and clearing. Have you had that discussion? Are you confident that you'll get the support from that federal agency, should those kinds of numbers materialize in direct flights from outside the country?

B. Carter: We have had those discussions. We have gotten the support from the Canadian Border Services Agency. As well, we already have customs clearance at Victoria, and we have it at a number of terminals. So the infrastructure here in customs agents and border services is available in a combination of both the Inner Harbour services — those that are at Sidney and those that are at the airport. So we're confident that we'll be able to get the Border Services Agency to support that.

R. Howard (Chair): Excellent. Thank you, gentlemen. We're running out of time here. I appreciate you taking the time to come out and present to us today.

Next up we have the B.C. Association of Aboriginal Friendship Centres — Paul Lacerte and Rikki Wylie.

As you've heard, you've got 15 minutes. At about ten minutes I'll give you a heads-up, and you can either stop for questions or push through. Your choice. The mike's all yours.

R. Wylie: [A First Nations language was spoken.] Good morning. My name is Rikki Wylie, and I'm the youth representative on the executive committee for the B.C. Association of Aboriginal Friendship Centres.

[0935]

P. Lacerte: I'd actually like to just spend a minute introducing myself in my own language. [A First Nations language was spoken.]

I just wanted to thank and acknowledge the traditional holders of this territory, the Songhees and Esquimalt people, for allowing us to be here today. I'm a member of the Carrier Nation and the Laksamisui clan, the Caribou clan, in the north central part of British Columbia. Thank you for your time this morning.

I'd like to just do three things. We're not going to read from our presentation. We just wanted to talk to you a little bit. We just wanted to give you a bit of background and context for our request. You've been hearing from us, hopefully, around the province around the needs for aboriginal people living off reserve and the need for this government to be very purposeful in addressing the abysmal social and economic conditions that our people are living in.

I wanted to give you a bit of a background context, a short profile of our organization, and just sort of speak to the request that we've been making for the establishment of a long-term capacity fund to support the aboriginal friendship centres, and also the need for a comprehensive strategy to create a better future for our people.

Briefly, I just wanted to note that before 1961 in this country we had apartheid. This is quite a recent phenomenon that we're dealing with. Before the 1961 Indian Act amendments aboriginal people could not travel more than 100 kilometres without the written permission of the Indian agent in their community.

After those amendments we saw a huge migration of our people off the reservations and into towns and cities.
[ Page 1478 ]
The federal government recognized this and, in 1972, established a program called the migrating native peoples program. It's essentially what we're asking this government to consider, as well, recognizing that there is a very real migration of our people into urban communities.

There are very real social and economic challenges that they land up in towns and cities with. There is a need for a coordinated response to the very evident challenges and gaps in the quality of life that our people experience compared with other British Columbians.

So we had this migration. The federal government established the program. By 1972 we had 11 aboriginal friendship centres established here in British Columbia. Over the past 50 years we've been providing those services — settlement services, initially, and now the full spectrum of social and economic services designed to improve the quality of life for our people in, today, 23 friendship centre communities around the province.

You see Rikki is here with me. A significant part of our movement, of course, is also making sure that there is a meaningful place for our young people. Half of our population is under the age of 25. We're the youngest demographic in this province. I want to acknowledge my daughter as well. Raven Lacerte, Dat' San Cho, is here as part of her own leadership training process. Don't tell her teachers. They're not sure where she's at.

We have now our capacity of the 23 friendship centres. We have over 1,000 staff in British Columbia. Seventy percent of the aboriginal population now lives off the reserve. Our challenge is that while the migration is moving from First Nations communities into urban communities, your government's investment and your engagement capital is moving from urban communities into First Nations engagement.

Of course, we support the need for elected leaders, like the First Nations leadership council, to give expression to their jurisdiction through the new relationship accord and the transformative change accord and some of the commitments that the government has made. We think there needs to be a balanced approach if you're really committed to closing the social and economic gap between all aboriginal peoples in British Columbia. There's a big disconnect.

We're basically proposing two strategies. The first is the establishment of a long-term capacity fund in friendship centres. Our challenge, through the Ministry of Aboriginal Relations, is that's really a treaty ministry. The problem is that we need a coordinated space where government can respond consistently on every social and economic measure — the part of your British Columbians that occupy the bottom of those indicators.

So we're asking for a long-term capacity fund, and basically a migrating native peoples program, as the federal government recognized a number of years ago, and also the need to create and implement a coordinated strategy for aboriginal people living off reserve.

[0940]

Of course, we're very happy to see His Honour the Lieutenant-Governor make the commitment in this year's throne speech that this government is now committed to developing and implementing an action plan to address the social and economic status and to work with friendship centres, which are already designed to move our people along the continuum of poverty and marginalization through to employment and empowerment.

I just wanted to turn it over to our youth representative, Rikki, to speak to the conditions of our young people.

R. Wylie: Good morning again. I'm just going to give an example for where I'm from. I currently work at and attend the friendship centre in Nanaimo. There are things going on every day. They vary from the worst of things to the best of things, so I'm just going to share a success story with you.

We have a very involved youth population there, through our youth centre and youth support programs. There are a lot of youths coming through our doors, and we really work hard to help them, as youth ourselves, to gain the services that the friendship centres do offer.

Just for an example, we had a girl. She has been coming to the friendship centre ever since I can remember. She's only a few years younger than me and has been coming since she was a little girl. Her family has always struggled with poverty and hunger issues and a lot of things, with domestic violence and stuff, within her family.

Through the friendship centre, she's been able to gain that support in building herself and empowering herself to just create a better quality of life for herself. It started off, noticing they would come for parenting services and things like that…. Then she wasn't wanting to go to school and not wanting to leave her siblings at home with things, based on neglect and whatnot.

Because of the relationships she was able to gain with the other youth in our community and then, also, with the support workers there, she was able to get help for her family, help for herself. Now she has moved on to post-secondary school and moved outside of the area of Nanaimo. We're still in contact with her and still know how well she's doing. She's able to access the friendship centre in that community.

Those are just some of the things that we do. As a friendship centre movement, we are connected with all of our member friendship centres and are able to supply support for youth wherever they go, and we're also able to empower them and their families to create a better quality of life.

R. Howard (Chair): Excellent. Thank you. We have a few questions.

D. Donaldson (Deputy Chair): Thanks for the presentation. Congratulations on the work the friendship centres do around the province in an efficient manner, a cost-
[ Page 1479 ]
effective manner and a real grass-roots manner. I'm very familiar with the work, and the work that the friendship centre does in Smithers.

We've had a couple of presentations already this year from different friendship centres around the province and very many last year. As a result of your good lobbying efforts, we made a recommendation last year in our report around the funding issue.

You mentioned that the throne speech talked about funding for an action plan. Would you prefer to see and would it be your recommendation to see, rather than money going into an action plan, that it would be spent on a capacity fund and actually having on-the-ground results that we recommended last year?

P. Lacerte: Our request is actually that we need an action plan that has, as one component of it, a capacity investment in the activities of friendship centres.

We see the government responding to systemic challenges in the health system. We see the government responding to systemic challenges of people living with disabilities. There has yet to be that kind of investment and a response to the systemic challenge that aboriginal peoples living off reserve face.

A number of years ago a new relationship trust of $100 million was established for First Nations. That money can only be accessed by bands or tribal councils. So there has been an effort, I think, to respond at that infrastructure level to the needs and challenges facing First Nations people, but we've yet to see sort of a focused investment that addresses the socioeconomic gap for off-reserve people.

That's one component, but there's a broader effort that needs to be undertaken by a number of social and economic development ministries — with Children and Families and Education and the Solicitor General. We've been in a full-court press for 18 months, trying to raise people's awareness to the fact that there's a crisis going on in this province. There are tragedies unfolding every day.

[0945]

Our sense is that a broad strategy needs to be undertaken, and one component of that strategy needs to be an investment in the infrastructure of friendship centres to help us do the work that we need to do.

P. Pimm: Thank you, Paul and Rikki. A great presentation. Friendship centres do great work around the province. We have one in our community, and they do a great job there as well.

You did mention that we're doing a pretty good job of getting that funding, the government-to-government sort of thing, but the friendship centres are missing out in that. Can you tell me how…? Is there any funding that comes back to the friendship centres from the aboriginal communities? Are there any agreements on that front?

P. Lacerte: I'm sorry. I don't understand the question. Do our communities generate a revenue base for our own agencies, or do First Nations governments resource friendship centres?

P. Pimm: Do First Nations governments resource any friendship centres?

P. Lacerte: No, we don't have any revenue-sharing agreements of those sorts between First Nations and friendship centres, for a couple of reasons. Primarily, there's an incredible vortex of need in our villages, and First Nations governments, of course, are struggling with very much the same issues of poverty and resourcing housing challenges. So there's not…. The optics, by First Nations governments, including the leadership council, which very much supports this call on your government for resourcing…. I mean, they're dealing with many of the same challenges that we're dealing with, Pat.

Also, their funding comes primarily from the federal government, and the federal government has a clear mandate and a fiduciary responsibility to provide funding for status Indians living on the reservations. So we often find ourselves in this jurisdictional gap. You know, you move off the reserve, and you're nobody's responsibility. But we're still British Columbians, and we're still at the bottom of the indicators.

P. Pimm: I wouldn't mind talking to you more about that. I haven't got a question, but I'm sure somebody else is probably in the queue.

J. Thornthwaite: My question is very similar to my colleague here. I'm just wondering: are you giving presentations similar to this to our counterparts in the federal government?

P. Lacerte: Yes. In fact, the federal government is in the process of renewing its Urban Aboriginal Strategy. The problem is that it's just targeted in Prince George and Vancouver, so we've been pushing their national director general within the Department of Indian Affairs. Now, around the five-year renewal, they're seeking permission from the federal Treasury Board for a five-year renewal of their Urban Aboriginal Strategy.

We're asking them to broaden that, to consider it in the context of off-reserve, rather than just sort of Prince George and Vancouver, and to look at it from a strategic perspective, not from sort of a projects kind of perspective.

Our sense is that we need to plan. We need to sit down, bring a coalition of willing stakeholders around the table, including non-governmental stakeholders like the RCMP, many of whom struggle with what is the solution. What we took from the Speech from the Throne is that there is a commitment now to sit down around the table
[ Page 1480 ]
and to put our heads together and to be purposeful about a better future. The federal government is ready, willing and interested.

So the answer is yes. We've been engaging with them as heavily as we've been engaging with the B.C. government, and there's a stated willingness to work with us on their part as well.

R. Howard (Chair): That's great. Well, thank you, Paul, and thank you, Rikki, for taking the time and presenting to us this morning.

Next up we have the B.C. Government and Service Employees Union — Darryl Walker, Michael Eso and Brian Gardiner. Welcome. As you gentlemen know, you've got 15 minutes. At about ten I'll try and give you a heads-up. You can stop and take some questions, or push straight through — your choice. The microphone's all yours.

D. Walker: Thank you very much. My name is Darryl Walker. I'm the president of the BCGEU, and of course, with me is Mike Eso, one of our staff that works primarily in Victoria. We appreciate the opportunity to provide this submission to the Select Standing Committee on Finance and Government Services.

The BCGEU represents more than 65,000 men and women working in various sectors and occupations in more than 550 bargaining units throughout British Columbia.

Premier Clark has recently said she will stick with the fixed legislative election date, meaning British Columbians will not go to the polls until May of 2013. We believe that with an election two years away and a new Premier in government, it provides an opportunity to take a fresh look at some of the challenges facing British Columbia. For example, the province took a new approach in reversing a decade of opposition to the minimum wage increases. We think this is a good idea.

[0950]

We call on the province over the next coming years to rebuild public services which have been cut hard over the past decade. You will see in our submission that we have focused on suggestions that will rebuild economic-generating ministries, boost revenue to support an increasing demand for government services and, of course, grow the economy.

We need immediate action today. I'd like to identify five areas that we thought we could suggest would be areas we could rebuild. Certainly the public services, to start with, are an area we ought to look at. We believe we have the leanest public sector in the country, per capita, and we believe that there are services that go wanting because of the lack of men and women doing those jobs.

We obviously need to invest in health care and social services.

We need to fix the crisis in the B.C. forests and effectively have a look at a forest inventory so we know exactly what is going on in our forests in British Columbia.

Obviously, we need to expand government revenues, and we would like to talk about the implementation of fair taxation.

We believe that these and other issues will ensure the fulfilment of a long-term vision of healthy families, strong communities and a green economy that our new Premier has talked about.

We urge the committee to focus on four areas as a framework for action and to advocate for their implementation:

(1) Ensure that resource ministries are funded to allow them to clear away any backlog requests for services by the end of the year. We believe that permits and other service processes are being slowed down simply by the lack of staff in a large number of the resource industries. We believe that this could, in effect, increase revenues.

(2) Ensure social programs are funded to meet the increasing demand for services resulting from the economic uncertainty and demographic changes our province is facing and going through right now.

(3) Ensure that the provincial government drops the net zero bargaining mandate, and ensure adequate funding to address critical recruitment, retention and market-based issues in the process of hiring individuals that work for and do the services provided for British Columbians.

Last, ensure that the province explore revenue options that will be needed for services in British Columbia. Over the next period of time, including as we go through bargaining next year, we'd like to be able to, along with our membership, discuss some of those. We believe there are solutions that have not yet been looked into, and we believe people that work for the province of British Columbia, in the offices around the province, have some of those solutions. We'd like to have the opportunity to talk more about that.

There is a correlation between provincial government revenues and expenditures. I'm sure I don't have to tell you that. Put another way, declining provincial revenues in the last decade have been matched by a reduction in government expenditures.

On the natural resource side. While some of the decline in B.C.'s revenues may be attributed to the United States' struggling housing market, even full restoration of the U.S. housing construction industry would not bring our province's natural resource revenues back to the levels that they ought to be at.

We must ask: how is it possible, when the world is enjoying a historic global commodity boom, British Columbia is unable to reap the full benefits of our own resources? The future of our province will depend on the government's present budget discussions and decisions. We urge the committee to adopt the four areas that I've outlined as a framework for that action.

I thank you for the opportunity to speak to you and would be glad to attempt to answer questions.
[ Page 1481 ]

R. Howard (Chair): Thank you.

B. Routley: Thanks for your presentation. One of the points that you make, point No. 3, about dropping the net zero. I assume that you're talking about skill sets, whether it's various kinds of professions that are needed in the public service that are also needed in other provinces. We've got to compete.

[0955]

So is that a factor? Is competition for skill sets an issue that you see? Is that what you're dealing with there as well?

D. Walker: That's one of the large pieces. I can give you an example. The other night we met with about 50 of our members from corrections and sheriff services. The government has just recently indicated, I believe, that 37 or 38 sheriffs are being trained and will be operative, probably within the next month or so.

My understanding from meeting with folks that evening was that probably half of them are ready to move to other provinces or simply to other work within this province. So we're training people at the provincial government level and losing them very, very quickly.

Because of the cuts over the last — what? — decade, I guess, many of the experienced individuals that work for the province that would normally train new people coming in are no longer available. So we're not only losing experienced people because they're retiring and their skill sets are leaving; we're also losing people because of recruitment and retention and because of the market issue, as you've indicated.

So my answer would be yes.

B. Routley: In regards to the announcement of $24 million for additional staffing…. One of the things this committee has heard in travelling the province is that there's a shortage in the skilled people necessary to get permits done. There were a number of examples given of that in the northern part of the province.

I wondered if you had any information from government or had any discussion with government about what kind of skill sets they're talking about replacing. Or has there been any move in that regard in terms of some kind of transparency and consultation with the workers' representatives in that regard?

D. Walker: Well, to the latter part of that question, we have an FOI request in to find out exactly what the number of permits that are backlogged happens to be. We have not yet been able to attain that information, but that is a huge piece to business. People that come into offices, no matter where they are in British Columbia, would like to be able to move with their permits and get on with the work that they wish to do. If they're backlogged, we're not going to get that particular work done.

The specifics of it, I don't necessarily have. We can certainly get that for the committee, but I suspect that it's in many, many skill sets. People are required to go out to sites to have a look, whether it's mining or forestry or natural gas. A lot of the work that's being done by the NRO ministry is being backlogged.

We understand, also, that within the last six months, I believe, the Premier had asked for some kind of a review of that particular ministry. We are also waiting for the results of that.

But those are the areas that we believe we have to have a look at fast-tracking so that we can get some people in there that can actually do that work and get those permits working. The Premier's quite right. We do need to get on with the job of creating jobs in British Columbia. We'd like to identify some of the areas we believe there is a problem.

R. Howard (Chair): Darryl, are you advocating your points within the declaration we have to balance the budget in 2013-2014?

D. Walker: That's a very good question. I appreciate it. Some of our findings recently around federal manoeuvring…. I think the federal Finance Minister and, indeed, Prime Minister Harper have indicated their willingness to go a little bit farther beyond 2013-14 or '14-15 — in other words, to allow the deficit, while it dwindles down, to go a little bit farther.

I think what we're seeing is that there's a need for the money to be spent, resources to be put into the provincial system right now. We would not necessarily be against spreading it out just a little bit further, but we haven't gone that much farther into it.

R. Howard (Chair): MLA Ralston.

B. Ralston: I was surprised to hear Mr. Walker saying that they had to submit a freedom-of-information request to get the number of files that are involved in the backlog. Can I request that you, as Chair of the committee, ask that that information be provided to this committee for our deliberations? Certainly, that was an issue raised in Fort Nelson, Smithers and a number of other northern locations about delays in processing permits, which are impeding economic activity in the province.

R. Howard (Chair): Thank you, gentlemen.

B. Ralston: Well, are you going to respond, Mr. Chair?

R. Howard (Chair): Will take it on notice. Thank you.

Thank you, gentlemen, for taking the time to come and present with us today.

Next up we have Camosun College — Peter Lockie.

[1000]
[ Page 1482 ]

Welcome, Peter. As you know, you've got 15 minutes. At about ten I'll give you a heads-up, and you can stop and take some questions, or you can push right through. Your choice. The microphone is over to you.

P. Lockie: Thank you very much for the opportunity to participate in today's prebudget consultation process. As introduced, I'm Peter Lockie, the vice-president, administration, and chief financial officer for Camosun College here in Victoria.

We need to start off by saying that we recognize and are sensitive to the fiscal challenges currently facing the province and are committed to play our part in building B.C. for the future. As more people turn to our college for advanced skills and education for employment in the new knowledge-based economy, we face both financial and physical capacity issues that, if not addressed, will limit our future ability to serve our community's needs.

The current level of demand is placing unprecedented pressure on capacity at our college. In 2010 we achieved record enrolment numbers, with a utilization rate of 100 percent of our ministry target, and 2011 is expected to be similar.

Camosun College's vision, which is part of our newly adopted strategic plan, is "Inspiring lives. Canada's college of life-changing learning." I took the opportunity to give you each a copy of our new strategic plan, because it's a pretty exciting document for us.

Camosun serves over 18,000 learners in the southern Vancouver Island and southern Gulf Islands region annually, 94 percent of whom report that they were satisfied or very satisfied with their education here, according to our most recent student outcomes survey data.

We offer over 100 different programs in the areas of arts and science, business, engineering technologies, trades, health and human services, sport and exercise, access and indigenous education. We've two campuses and are one of the region's top ten employers, with over 1,000 employees and an annual budget in excess of $100 million.

In addition to having an economic impact in our service area in excess of $800 million annually, a recent study found that 86 percent of our graduates remain in the region to live and work after completing their studies and 97 percent actually stay in the province.

The economy is beginning to recover, but in some areas the recovery is slower than in others. This year our total student enrolment is slightly under last year's, which itself was a record, but we are operating at full capacity.

We do still have wait-lists for some key areas like health sciences, nursing, dental hygiene, dental assisting. Trades training this year has softened a little bit across B.C. and at Camosun. We continue to see an increase in demand for retraining programs for disabled students and training for immigrants. We continue to have strong demand in excess of the regional population rate for aboriginal training programs.

As a result of scarce capital funding, some of our students are learning with outdated equipment and technology, and that makes providing advanced skills and education for employment a challenge.

The province supplied some much-needed additional one-time funding last year for health education equipment and trades training, which was welcomed. Any additional funding in that area is certainly beneficial.

In order to deliver more cost-efficiencies, we need to modernize our facilities and upgrade our systems. The construction of a centre of excellence in health and wellness has been a top priority of the college for some years, and our vision is for a new, state-of-the-art teaching and learning facility on our Interurban Campus, adjacent to the highly successful Pacific Institute for Sport Excellence facility.

How have we responded to the budget challenges over the last few years? Flat operating-grant funding, the tuition cap policy and the reduction of the annual capital allowance by 75 percent in 2010 has meant that Camosun has had to undertake extraordinary measures to try to maintain the range and quality of programs and services that our students demand.

In the last few years we've gone through annual budget cost reduction exercises and implemented educational cuts and administrative cost savings, which have resulted in an annual savings in the $2 million to $3 million range each year.

We continue to operate within a balanced budget and are committed to financial accountability, but earlier this year we reached the point where there was nothing left to cut without making program reductions to balance the budget, so we announced that program reductions in applied communications and dental hygiene, two high-cost programs, would be effective September 2012.

Without additional funding, we expect this regrettable trend to continue in next year's budget. So our requests to government — five requests to government, essentially — are as follows.

[1005]

We require sustainable operating-grant funding. Every year our costs grow faster than our revenues, and there needs to be an increase to our operating grant to accommodate inflation and other unavoidable increases to operating budgets, or we will yet again have to face making cuts that will compromise programs and service quality at a time of extremely high demand.

At the earliest opportunity, government needs to start to restore the annual capital allowance, which was significantly cut in 2010. We use it to renovate and maintain our facilities infrastructure, and we're asking for it to be restored back to its pre-2009 levels.

We also think government needs to look to the future and plan for our major capital needs. Our top priority at our college, as I mentioned, was the construction of a centre of excellence and health and wellness. We also
[ Page 1483 ]
think government should consider creating an applied research and innovation program that would enable colleges to access provincial funds and match those funds with existing federal government programs and contributions from business and industry in partnerships that would result in contemporary initiatives for our students and faculty and improve productivity.

Government needs to commit that any budgetary consequences of future changes in accounting standards will be mitigated and not result in us having to reduce programs or services. In addition, government should review policy changes that would enable institutions to access prior-year reserves in an accountable, managed process. No new money is required for this. Existing resources are there and could be freed up to advance provincial goals.

In conclusion, Camosun College is a top performing college in B.C., the primary provider of advanced skills and education for employment in our region. Investing in our college is vital to the region's future economic health. We're a good investment. For every dollar that comes in from the taxpayer, we'll return $3.80. We remain committed to working with our community to further the economic health of B.C. by providing programs and services that result in advanced skills and education for employment.

Thank you for your time. I'd be happy to answer any questions that you have.

R. Howard (Chair): Thank you, Peter. We do have a question.

B. Routley: Thank you for your presentation. I'm actually alarmed to hear that you're cutting important programs like dental hygiene and applied communications at a time where we're hearing more and more from industry right across the province, certainly from chambers of commerce, that there needs to be a real effort put in by the province of British Columbia towards preparing for the skills shortage that's looming.

So I'm wondering if there are any other examples…. How many students would that be that are no longer going to be trained as dental hygienists or, you know, have the opportunity to participate in applied communications? Do you have any other programs that have been cut that are also reducing the ability of students to get the skills that we're going to need for the future?

P. Lockie: The answer to that question is that these program reductions have been announced. The specifics of them have not yet been determined. But these wouldn't necessarily be program cancellations as such. There may be just lower intakes than before. We are driven by financial restraints, making reductions in programs already that are less obvious than that. These two are highly obvious because they are high-demand programs, which are almost the antithesis of what we want to do in our community. They're also high-cost programs, and that's one of the reasons they affect a smaller number of students. There's a high cost element.

Nobody's happy about this. We're looking around for every possibility to do something as an alternate, but that's where we got to last year, and our fear is that continued years of flat funding will bring more of these issues to the fore.

D. Donaldson (Deputy Chair): Thank you very much for the presentation. We've heard from other colleges around the province around drastic reduction in trades budgets. Can you talk about…? You touched on trades in your opening, especially in relation to the fact that it's such an important part of actually fulfilling our B.C. jobs plan. You touched on trades and then the aboriginal training programs as well.

[1010]

P. Lockie: Well, there is less demand coming for trades, and there are reductions, so we've got sort of two things happening together. It seems to be an across-B.C. phenomenon that the demand for this is somewhat cyclical, and it's turned down this year. Our concern is that the ITA, the Industry Training Authority, faces budget cuts which are further than that, if you like, and would potentially restrict our ability to offer some training.

Was it the aboriginal question you asked me?

D. Donaldson (Deputy Chair): Yes. The second part. You mentioned aboriginal training programs.

P. Lockie: Yeah. There was a significant aboriginal training project over the last few years, and there was great uncertainty at the end of last year as to whether there would be continued funding. But there has been some continued funding at a slightly lower level.

I think our demand for aboriginal programming is increasing, has increased significantly over the last few years, so there's a pressure there. But there has been some good news from the province in terms of continuing the support for that area. So it remains a challenge, but it's not acute at this time.

R. Howard (Chair): Thanks, Peter. We really appreciate you taking the time to come out and present to us this morning.

Next up we have B.C. Colleges — Jim Reed. Good morning, Jim. As you probably know, you've got 15 minutes. At around ten I'll try to give you a heads-up, and you can take some questions or push right through. It's your choice.

J. Reed: I think I should beat you to the ten-minute mark. I'm going to try and be quite succinct here.
[ Page 1484 ]

R. Howard (Chair): The mike's all yours.

J. Reed: Thanks very much. Just like last year, Peter and I follow each other. It's just the nature of Camosun being in Victoria and our office being in Victoria. But he did an excellent job in really reflecting what's taking place at his college, which in a lot of ways personifies what's taking place across the province.

As you mentioned, I'm Jim Reed, and I'm the president of B.C. Colleges. Thank you for the opportunity to participate in today's prebudget consultation process.

We recognize the fiscal challenges currently facing the province and welcome the opportunity to provide input at this stage. B.C. Colleges is a consortium of 11 public community colleges. We are the front-line educators in 70 communities throughout B.C. and educate more than 200,000 students annually with the advanced skills and training the province needs for employment and that they need for employment.

We recognize the importance of working closely with our communities and government to ensure the success of the recently announced Canada Starts Here, the B.C. jobs plan. We believe it's essential to the success of the jobs plan that government invests now in our college system to ensure that we have the highly skilled labour force needed for job creation now and in the decade to come.

I'd like to start with a brief overview of the job situation in B.C. As you know, the B.C. labour market outlook forecasts that between now and 2020 there will be one million job openings in B.C., and 78 percent of those job openings will require some form of post-secondary education. This shift, coupled with the impact of retiring baby boomers and the growth of the economy, will put increased strain on the post-secondary system. This is not news to you. You are well aware of this.

We know that we must invest in post-secondary education, but specifically: why colleges? The colleges prepare the highly skilled workforce needed to address the job situation in B.C. The significant labour force shortage over the coming decade will dramatically impact many of B.C.'s employers. The largest demand, 42 percent, of all openings will be for technical and paraprofessional occupations. These are typically jobs that require college or trade certification.

Plus, colleges provide access to university through our extensive university transfer programs and our baccalaureate degrees. It is estimated that 35 percent of the jobs will require this level of education.

It is clear that colleges are going to play a key role in training and educating the workers needed in B.C. Government needs to create, implement and fund an action plan now to ensure that business and industry will have a well-educated and highly skilled workforce. In order to meet demand, it's important to work together to increase participation and completion rates, especially for immigrants and aboriginal learners.

[1015]

To address this situation, B.C. Colleges proposes the B.C. College advanced skills action partnership program, ASAP for short, to work cooperatively with B.C. employers to meet their needs for highly skilled employees. This will require a $30 million annual investment by government to address the additional costs associated with the programs and services needed to support government's job growth and regional economic initiatives.

Another good reason to invest in colleges is the fact that colleges drive innovation and entrepreneurship in B.C. Over the past decade small and medium-sized enterprises have successfully partnered with B.C. Colleges to design and execute applied research applications to industry.

The federal government has recognized the importance of this form of partnership by giving colleges access to federal grants. It's time for the provincial government to recognize this too and introduce an action plan to encourage applied research. Alberta, Ontario and Quebec have plans in place to secure these matching federal dollars, and B.C. needs one too.

To address this, B.C. Colleges and our colleagues in the teaching universities and institutes propose to launch the innovation and applied research program, focusing on applied research and commercial applications that can be spun off for new, local business ventures. We call on government to invest $5 million annually for applied research at B.C. colleges and the B.C. Association of Institutes and Universities.

Finally, we believe government should invest in B.C. colleges because colleges are an excellent return on investment. Colleges provide, as Peter noted, a $3.80 return to our economy for every dollar of taxpayer financial support. Our colleges collectively, and their graduates, contribute $7.7 billion of income annually to the provincial economy.

In order for our colleges to be successful, we must be given the freedom to create new and innovative cost-sharing models. We call on government to change existing finance and administrative policies to enable greater flexibility on the part of colleges to respond to new revenue opportunities such as the expansion of international education, contract training and corporate sponsorship.

And it's crucial that government invest in student services and an increase in capacity to ensure that colleges can meet the targeted increase of 50 percent growth in international students over the next four years.

Finally, we call on government for a $5-million-a-year, three-year B.C. Colleges corporate matching fund to ensure that we can increase and take advantage of corporate partnerships and further meet demand in communities throughout B.C.

In conclusion, investing in colleges is vital to the future economic health of B.C. and will help provide the highly skilled graduates necessary to fill the one million job openings predicted during the coming decade.
[ Page 1485 ]

B.C. Colleges wants to be part of the solution by providing employers in B.C. with a labour force armed with the right education and advanced skills. We can power B.C.'s economy and grow healthy and sustainable communities in all regions of the province.

The recently announced B.C. jobs plan called for, for instance, regional workforce tables. We've already indicated to government that we think that's an important role colleges can play in each of the regions of the province. It's a role that we traditionally play in engagement with all of our communities, including business and industry. We would like to help plan and host these regional workforce tables and work with our constituencies in each of our regions to realize the education and training opportunities and requirements necessary for the success of that plan.

We must lay the foundation for economic growth by investing in the education and training so we have the job-ready graduates in place with the right skills and at the right time.

Thank you for your time. I'd be pleased to answer any questions that you may have.

R. Howard (Chair): Excellent. Thank you, Jim.

B. Ralston: Thanks very much. I would say in response to your submission that I've been impressed — I've been on the committee a number of years — by the degree to which colleges are responsive and very active in local labour markets, in assessing market demand and creating new programs to directly respond to labour market opportunities.

You mention what you call a B.C. Colleges advanced skills action partnership. You say $30 million. I'm interested in how that would dovetail or work with the industry training association. I know that colleges do some pre-apprenticeship training, but I'd be interested in that relationship.

[1020]

Secondly, your relationship with ASTTBC, which is the organization that, as I'm sure you know, represents technicians who would require much of the training that you speak of. So why $30 million? What would you do with it? And your relation with those other two bodies.

J. Reed: Well, the $30 million will address a few things. One is that we feel there's an important part of that which is to really secure the financial sustainability of all the colleges throughout the province. We have been, as Peter mentioned, operating with pretty much flat budgets for quite a few years.

We would be proposing out of that $30 million probably a reasonable portion, maybe about 40 percent of that, to really go towards securing a sustainable financial base for our institutions and recognize some of the unique challenges our institutions have, with multiple campuses in very remote areas of the province serving a different type of clientele than a traditional university would serve. That clientele requires particular, special services. So we would propose an adjustment to the base.

I do have to note that five or six years ago the research universities received a $30 million annual adjustment to their operating base to recognize inflationary costs. We did not. If you put that over five years, it's about $150 million that has been on the research universities' side that reflects their annual inflationary adjustments that government recognized.

It was a bit of head-scratcher that we didn't get recognized with that as well. And it shouldn't be a surprise that some of our institutions are very much struggling to address some of their real basic requirements. So we're saying we have a very ambitious…. We applaud the jobs plan. But we need to get on solid footing in terms of our capacity within our institutions and our sustainability.

With regard to the ITA, we would see that there would need to be some additional money put in training and to build in some certainty in terms of long-term planning so that we're not reacting on an annual basis to: up 5 percent, down 5 percent, up 5 percent, down…. We actually haven't had many ups. It's mainly been sort of hovering flat or slightly down. This last year we had a 5 percent reduction.

We said if we're going to meet $1 million job openings, we need a long-term plan that puts investment in and really starts to plan in the labour force and training requirements for the future so we're actually ready with that labour force at the right time and with the right skills.

With regard to the technicians, we work very closely, hand in hand, with them, and we're very supportive. A very big part of the need of the province going forward will be in the areas of applied education — the career, technical and trades area. That's a big part of what we are about. That speaks to that 42 percent of overall job openings that are going to come from that type of education that we provide.

We feel that $30 million, some of which could come from labour market money…. Some of it, really frankly, could be reprofiling that needs to take place. But there needs to be some financial sustainability built into our institutions, our colleges, which have really struggled over the last several years in order to keep up to their community demands.

We very much embrace a partnership and collaborative model. We would like to sit down with all those key stakeholders if we are able to get some solid funding moving forward and build the plan from a long-term perspective.

Last summer I met with the CEO of B.C. Hydro for that sole purpose. We want to meet with all the large employers and sit down and say: "What are your long-term succession and human resource requirements?" And let's
[ Page 1486 ]
build in our education and training plans so that we can meet those. I think it's very much an open, collaborative partnership approach but a long-term planning approach that will meet those million-dollar job openings.

R. Howard (Chair): Jim, you talk about the $5 million corporate matching fund. I'm wondering. Has that been used in the past? Is that a new idea?

J. Reed: It's not something that we have had available to us. There have been opportunities with the research universities over the years. They've secured large donors' contributions, and they've been matched by the government. I can't name the donors, but we have potential donors out there that are coming to our colleges, and they want to see some match to it. We're trying to grow some other revenue streams here, and we think a small amount of money can leverage.

[1025]

I think a lot of this is about leveraging, partnerships and relationships. With a small amount of money, that could go a long way in terms of securing some of those partnerships. I think there was a matching program many years ago, but it has not been in place for some period of time.

R. Howard (Chair): Excellent. Well, we've run you out of time. We thank you very much.

Next up we have Heritage B.C. — Rick Goodacre.

Welcome, Rick. As you are making your way up, you probably know you've got 15 minutes. At about the ten-minute mark I'll try and give you a heads-up, and you can stop for questions or go straight through — your choice. The microphone's all yours.

R. Goodacre: Good morning to the committee, and thank you for giving me this opportunity to speak to you for a few minutes this morning.

My name is Rick Goodacre. I'm the executive director of Heritage B.C. Heritage B.C. is a non-profit umbrella provincial organization that represents about 165 group members around the province. Group members include things such as municipal heritage commissions — I believe the Chair was a member of the Richmond Heritage Commission at one time — and community heritage organizations, historical societies, things of that sort.

We've been around for 30 years. We're celebrating our 30th anniversary this year. During that whole time we've had a very positive, very profitable, useful relationship with the provincial government. We work very closely together and, I think, quite successfully.

We also administer the heritage legacy fund. The heritage legacy fund was set up eight years ago through an agreement between us and the provincial government and was endowed with a $5 million sum that went to the Vancouver Foundation. The Vancouver Foundation now owns the money and manages it, and we get to spend the proceeds of that fund to do good works around the province and communities to support community heritage projects. Since we started actually handing out grants in 2005, we've supported about 110 projects now — about $1.5 million.

I believe a report from last year, which reflects the first five years of this program, has been handed around to you. If you have a glance through that, I think you'll very quickly get the idea of what that's all about. It's pretty obvious stuff — working on the historic building downtown; the old school; the railway station; projects of that sort, which are quite meaningful to communities. They help create jobs. This is money that's invested in the local economy. Most of it's going to repairing buildings — using cedar shakes made in B.C. to put a roof on the old Bank of Montreal, which is now a museum in New Denver, for example. Things of that sort.

Of course, heritage is a big part of tourism in this province. For the last four years we've been working on something called the Heritage Tourism Alliance, which involves organizations, including Heritage B.C. and the Museums Association and others, working with Tourism B.C. and now with the ministry to develop a marketing strategy to make tourism and heritage working partners and to bring heritage into the mainstream of the tourism industry in this province.

I think we've made great strides. However, since 2009 things have taken a rather darker complexion, which of course I'm sure is not surprising to anybody on the committee since we all know what has been going on. We understand the difficulties of the past two years and the current situation. One of the immediate effects to us was that Heritage B.C — which had had 20 years of consistent financial support from the province in our partnership relationship — funding was completely cut off, which resulted, really, in a closing down of Heritage B.C.

We did get going again in a few months, but in order to do that, we had to take the money from the heritage legacy fund. In other words, we redirected money that would have gone to community grants and community projects to get Heritage B.C. back in operation. If we had not done that, there really would not have been a Heritage B.C., I wouldn't have a job, and I wouldn't be running the heritage legacy fund itself. It's kind of like taking one leg out of the stool. It just doesn't work. You have to put that leg back.

The impact of doing this has been a 40 percent reduction in our ability to give grants. We had a very modest budget to start with. We were spending about a quarter of a million dollars a year in total for the grants that we were giving out. We reduced that to about $150,000. We now have 46 applications at the door that we cannot respond to.

[1030]

We normally — when I say normal, I mean pre-2009 for five years — had had two reviews of grants a year. We
[ Page 1487 ]
would look at incoming grants and make awards twice a year. Now we're doing it once. We've done it in May for about a dozen projects, and that's it for the year. So the 46 projects now at the door looking for some support from us we can't respond to, and by next May there will be a lot more. That's been one of the major impacts of this downturn.

We've seen other impacts, as well, into the heritage field. We have seen the heritage branch, the provincial department responsible for heritage in the provincial government, has basically lost its program budget. That's down to zero. That program budget, like the heritage legacy fund, was providing support and assistance and guidance for communities. This is particularly important because it has been a policy of this provincial government since the 1970s and particularly since the passage of the Heritage Conservation Act in 1977 to devolve responsibility for heritage conservation to the local level.

We believe in this province that the community knows best what its heritage is and how to protect it, but the province has been a big player in this program. It's a provincial policy, and it has backed up that policy with very sophisticated legislation; with programs; with advice, training and support; and, of course, funding. When that programs dries up, it's another nail in the coffin for local heritage programs.

We've also seen gaming funding and other sources of funding being cut back or disappear altogether, which is having a direct impact on community heritage organizations and their programs.

Heritage B.C. started responding to this a couple of years ago, obviously when we had this funding cut, but particularly, a year ago we published something called A Call to Renew British Columbia's Heritage Program, in which we reviewed all of these issues.

We made five recommendations, including that the province should adopt its own heritage strategy, which is developed but not so far adopted; that it put some money back into the heritage branch budget so they can do their job; return support to communities and financial support to community heritage programs and organizations; and that they deal with the ongoing devolution of provincial heritage properties like Barkerville, which is kind of stuck halfway out the door. It continues to be a drain on funds from the province, it has no long-term solution, and it always upstages every other issue in the heritage field. This is just an ongoing chronic problem for us.

Finally, we said that if the heritage legacy fund is going to continue supporting Heritage B.C., we need to see at least $5 million — a bump up into that endowment to the original $5 million. In fact, we said $10 million would be sufficient; $5 million would allow us to survive.

We have seen a lot of response to this call to renew from the local level. I have a stack of letters in my office about an inch and a half high. We saw the Union of B.C. Municipalities last week at their convention pass a resolution in support of the call to renew and the five points therein. There's just, I think, a fairly obvious degree of concern and support for this issue at the local level.

We have not had any real response from the province to date. Without a response, if we continue in this way…. I've got about another year, I think. The staff this year in our organization have taken a 20 percent pay cut. We can survive maybe another year at that level. We are actually financing our operations in part with some existing surpluses, and we're burning through those. There was a few thousand dollars in Heritage B.C. The heritage legacy fund had accumulated some surplus, and we're winding all that down. About a year from now we will be looking at a situation where we'll either have to pack in the heritage legacy fund, pack in Heritage B.C. — one or the other — or some combination.

The heritage legacy fund itself, held by the Vancouver Foundation, of course has also been hit by the downturn in the economy. We lost about $1½ million in the actual endowment value. We clawed some of that back, and I'm really afraid to look at my statement after the end of September. We all know about that problem. The rate of earnings has gone from 5 percent to 3.8 percent on that endowed fund. The Vancouver Foundation had to lower that rate of payout because they were seriously hurt, too, during the downturn. So there's an accumulation of effects here. The bottom line is that community-based heritage conservation in this province is in a lot of trouble.

[1035]

Next week here in Victoria we're hosting — I mean we, the province of British Columbia, is hosting — the International National Trusts Organisation conference. That means hundreds of delegates from around the world. I'm chairing a panel with a member from Africa, one from Malaysia, one from India and one from Australia. It gives you an idea. They're all coming here to B.C. It's going to be one of the biggest international events in heritage on the annual calendar. The Association for Preservation Technology, another international group, is holding their conference at the same time, both at the Fairmont Empress.

I'm sad to say that the condition of the host community here is really in rather a sad state right now. There was a six-page spread in Heritage Canada's magazine, which I wrote, about this current condition. Heritage Canada is the host of this conference. I'd rather be telling people a better story, but it's kind of a sad situation.

That's kind of a summary of where things are. It's actually a fairly simple story, and it's not a lot of money. I did say at our annual conference last week that if you reduced this whole issue to a family budget, and we can all understand a family budget, what we're talking about in terms of a family budget is less than $2 a year to turn this around.
[ Page 1488 ]

I'm trying to get a sense of perspective on it. That brings it's down to a reality that anyone can understand.

I do realize — we all realize — that the province is facing a lot of really difficult problems right now. You're having a lot of asks, I know, to this committee, and you're going to go on hearing for the next few weeks. But I'm just letting you know that is the situation. It's not so much an ask for Heritage B.C. or the heritage legacy fund; it really is the provincial government's own program, their own policy. It is the communities of B.C. that are affected here.

It's not that I'm here to talk about what Heritage B.C. is doing or what we need. It's really about a provincewide situation in our communities throughout the province.

R. Howard (Chair): Thanks, Rick. We have a few questions.

D. Donaldson (Deputy Chair): Thanks, again, for the presentation — always informative, and a bit distressing as well.

The heritage strategy that you mention is developed but not adopted by the province. When was that developed? If it was adopted, would it set a better framework for your organization to do your work within?

R. Goodacre: The strategy was ready to be announced a year ago last June. Our annual conference was in Victoria the first week of June in 2010. The minister of the day, Mr. Krueger, was set to announce it. We even had the stage set — where the flowers would go and so on. Then that announcement was cancelled, and we have not heard anything further about it.

The heritage branch and the ministry of the day — we've had several changes, of course, where heritage resides — had spent a lot of time developing this strategy. Now it's sort of in limbo.

One of the reasons I would like to see this strategy adopted is that I would like to see a positive action on the part of the province, to take a stand and say: "Yes, we have a heritage program, and we believe in a heritage program, and this is our strategy."

The other reason is that, yes, it would allow us to have something to speak against or speak to, because right now we're kind of a void. The province's program essentially, in my view, is just vanishing. The strategy and the fact that they were taking this proactive step…. Now that it's just stopped right at the doorway, I don't know what that means. I would like to see some action.

B. Ralston: I understand the heritage legacy fund was seeded by the province, and you live off the interest of that. But the heritage branch — that's a ministerial budget or part of a ministry. What is that budget? I gather from your comments it has gone down. Can you tell me what it is now?

In sum, you've asked for more capital into the legacy fund. Are you asking or suggesting that the budget of the heritage branch be increased, and if so, by how much?

R. Goodacre: The program budget that was basically cancelled in 2009 was in the order of, I think, between $300,000 and $400,000. Most of those dollars were going out to local governments, particularly to do things like heritage strategies, feasibility studies and things of that sort — to upgrade their heritage register.

That's the program that was eliminated. They still have pretty much the same staff level. I think they've lost a couple of positions. But it's the absence of that budget that does not allow the branch to really do things. They are still providing services as best they can, but the programs they had for community heritage planning and management are basically gone, and that was a core program.

It is a matter of a few hundred thousand dollars a year to reinstate that program.

[1040]

R. Howard (Chair): Thank you, Rick. We've run out of time. Unfortunately, I'll have to leave MLA Hayer with a question, but he'll have to catch up to you later. Thank you so much for coming out this morning.

Next up we have University of Victoria Students Society — Tara Paterson.

Welcome, Tara. As you may know, you've got 15 minutes. At about the ten-minute mark I'll try and give you a heads-up. You can stop and take some questions or go straight through — your choice. The microphone is all yours.

T. Paterson: Thank you.

My name is Tara Paterson. I am here on behalf of the University of Victoria Students Society. Today I'll be presenting about the need for a provincial student upfront grants program, which British Columbia used to have but was cut in 2004. My colleagues, who are working with me on the Where's the Funding campaign, will later be presenting about interest rates on student loans and core funding to universities.

Currently B.C. is the only province in Canada without a provincial upfront grants program. Upfront grants programs are integral in enabling students to avoid burdening debt loads and increasing the ability of low-income students to access post-secondary education.

Moreover, it is low-income students who are the least likely to attend college and university, the most likely to rely on social services and who, in effect, have the most to gain and the most to contribute from a post-secondary education.

In fact, the Association of Universities and Colleges of Canada reports that because university graduates earn greater incomes, they end up contributing more than 40
[ Page 1489 ]
percent of the Canadian tax base, despite the fact that they represent merely 24 percent of the Canadian population. There's a figure on the form that I handed out that illustrates that.

With figures like that indicating a high rate of return in government revenue on university grants, should we not be incentivizing British Columbian youth to pursue post-secondary education? A provincial grants program is the key policy provision that will improve access to education and, in turn, develop a skilled workforce in British Columbia, thus allowing our economy to prosper.

There are two main arguments that I would like to put forth today. The first is that students' need-based grants programs are beneficial both politically and economically and that they reduce the amount of debt that students incur, thus allowing graduates to invest and build our economy.

The second is that the lack of a provincial needs-based grants program is a major barrier to access to post-secondary education. Non-repayable assistance — that is, student grants programs — are economically preferable to student loans and back-end grants and can have a direct, positive impact on student finances in one of two ways.

First, grants provided to students who have borrowed the maximum provided by student loan programs reduce unmet need. That is the amount of financial need that is recognized but not covered by loans programs — such as books, food, rent, cost-of-living expenses, which as we all know are very high in Victoria, in particular.

This in turn reduces borrowing from banks, which offer more expensive loans to students than those provided by governments. Students who receive sufficient financial aid can also concentrate more on school than on part-time or even, in many cases, full-time work.

Second, grants that replace loans effectively reduce the amount of financial aid a student must repay. Some upfront grants replace corresponding amounts otherwise provided as loans. Other grants provided through loan remission programs, which British Columbia currently has, do not provide students with additional funds, even in cases where students have unmet need.

Instead, they generally make payments to loan providers to reduce existing student debt at the end of a program of study. Unlike grants that provide students with additional cash in hand, preventing the accumulation of more debt, loan remission reduces existing debt without affecting student cash flow.

Studies conducted for the Canada Millennium Scholarship Foundation describe examples of the impact of both kinds of non-repayable assistance on student debt and academic performance. In all of the cases, grants and loan remission are shown to reduce student debt, improve students' likelihood of completing their studies and, in turn, act as an economic stimulus.

The first study examines the persistence levels — that is, the degree to which students are likely to continue from one year of study to the next — of students on six Canadian university campuses. Using administrative data, the study concludes that students with large debt loads are more likely than those with little debt to abandon their studies before graduation.

Furthermore, among students who receive their financial aid in the form of a loan exclusively, those who borrow in excess of $3,000 per term are less than half as likely to complete a degree as those borrowing less than $1,000. However, students who receive a grant in addition to or instead of a portion of their loan are substantially more likely to complete their studies.

Among those who qualify for more than $10,000 per year in financial aid, recipients of loans and grants are five times as likely as those receiving loans to complete their program.

The second study focused on the millennium bursary program in British Columbia, which is the one we currently have, and revealed the limits of loan remission programs. Because B.C. students had substantial levels of unmet need, the effect on persistence of the loan remission program, which reduced debt level substantially but did not increase total student funds, was mitigated.

[1045]

Students in two-year programs who received the bursary were more likely to reach the final year of their program than those who did not benefit from the bursary. Students in four-year programs who had significant unmet need did not benefit from increased persistence. The study concludes that efforts to keep debt levels reasonable will not be effective if students cannot make ends meet during the academic year, as opposed to afterwards.

In other words, efforts to reduce debt — which affects students' medium- and long-term fiscal situations and, as a result, their contribution to the British Columbian tax base — are unlikely to have impact on their ability to pay the bills at the end of the month. Therefore, they cannot always prevent instances of students dropping out.

This analysis of the impact of grant and remission programs suggests four benefits of providing students with grants instead of, or in addition to, loans and loan forgiveness programs, which we currently have.

First, they reduce the accumulation of debt, which restricts individuals' ability to progress to much-needed professional programs such as medicine and/or make economic investments after graduation.

Currently we all know that there is a doctor shortage in British Columbia. When students have so much debt coming out of their undergrads, what's the likelihood that they are going to be willing to take on more to go to med school or to not go to the United States in order to make up the money that they have in order to pay their student debt?

Second, measures to reduce debt can help students overcome some of the financial barriers that prevent youth from accessing post-secondary education and thus developing British Columbia's labour force.
[ Page 1490 ]

Third, they encourage British Columbians to stay in British Columbia to pursue their education and prevent brain drain to eastern provinces and, in cases of professional programs, the United States.

Finally, policy-makers can use grants as a financial tool to improve academic persistence by allowing students to focus more on academics and less on finances. For these reasons, policy-makers seeking to maximize the benefits of public expenditures on student assistance should look to grants as an effective financial tool to improve success at the post-secondary level.

While instituting a provincial grants program may appear costly, it is preferable to the current program of loans and loan forgiveness. Therefore, I would like to suggest a reallocation from provincial back-end funding to an upfront grants program in addition to the prioritizing of education which, as I've already mentioned, has a high rate of return for government revenue.

I understand that a factor in eliminating the provincial grants program in 2004 was the issue of student non-completion following grant allocation or defaults. That is, when students would receive their grant money and then, for whatever reason, had to drop their classes, it would then be very difficult to pay back. However, the Conservative federal government instituted an upfront grants program in 2008 and have mitigated these problems.

First of all, default rates are actually very low when it comes to upfront grants because, as we already saw, completion rates are much higher. Secondly, the way that the federal government program works is that now, should a student have to drop their classes for whatever reason, that grant turns into a loan, which is then repaid to the government. It means that students aren't burdened with immediate defaults, and the government can guarantee repayment.

Finally, when considering prioritizing post-secondary education, it is important to remember public opinion.

For example, statistics from the Federation of Post-Secondary Educators, and some of these are also available on the form I passed out, indicate that 92 percent of those surveyed see higher tuition fees as a barrier to accessing post-secondary education; 84 percent think student debt makes it harder to complete programs and degrees; 78 percent see post-secondary education as a way to improve job prospects for B.C.'s youth, but only if governments invest more in our colleges, universities and institutes; and 73 percent make the connection between better access to and affordability of post-secondary education and a high-wage, high-skill economy in B.C.

I want to end with a story. I had a friend in high school whose name was Chloe, who was very, very bright. She came from a low-income background, but because she did very well in high school, she was able to get a lot of scholarships to go to university.

Her situation with her stepfather was not good, and she had to move out and live on her own. She did a year of university, and she did well in that year, but even with student loans, she was unable to cover the cost of living with her rent, her food and her textbooks, and she had to eventually leave university.

This was a loss of one of the best and brightest British Columbian minds from our post-secondary education system that she could have gone to had she had that money up front, instead of at the back end.

I would suggest that upfront grants programs are the key policy provision to making post-secondary education more accessible. They are the thing that every other province in Canada, including our federal government, has seen the value in and has been able to institute in an effective manner.

I'm now open to questions.

R. Howard (Chair): Thank you, Tara. We have a question.

D. Hayer: Thank you very much. A very good presentation. Actually, I have three kids in post-secondary at Simon Fraser University. They all work part-time, and they all have student loans, so I can understand some of the stuff you're saying.

[1050]

Have you looked at how much it would cost the provincial government if they were to go and implement what you're trying to say, for a year, based on your recommendations or your suggestions?

T. Paterson: The upfront costs are estimated to be between $80 million and $100 million. However, there is a lot of money in what is currently the back-end loan forgiveness program that the British Columbia government allocates, which means, essentially, if students have exorbitant amounts of debt, the British Columbia government will forgive some of that debt.

What I'm suggesting is that if we partially move that back-end loan forgiveness program to front-end grants — which improves access and increases completion, not to mention meaning that people are making more money because there are more university graduates — then I think that that is a potential economic and fiscal solution in these trying provincial times.

B. Routley: Thank you for your presentation. I certainly share the concern that we would lose a student and that potential, particularly at a time where throughout British Columbia we're hearing more and more of the needs of employers all over B.C. for skills and for skills training for our students. Clearly, one of the solutions is to break down barriers that have students not completing their education.

Do you have any statistics about the level of students not completing their education because they're either debt-burdened or -averse or have other issues that are
[ Page 1491 ]
standing in their way of them completing their education, particularly if it relates to issues of poverty or that kind of thing?

T. Paterson: I know that the instances are very high. I think there are two parts to this question. First, the non-completions rate, but also those who don't access post-secondary education to begin with. We see disproportionate numbers of disabled students, indigenous students, low-income students and parents, who are the particular groups who aren't even able to access it in the first place.

In terms of those who aren't, students who receive their financial aid in the form of a loan exclusively or borrow more than $3,000 per year are less than half as likely to complete a degree as those borrowing less than $1,000. So the more they borrow, the less likely they are to complete.

Students who receive a grant in addition to, or instead of, a proportion of their income are substantially more likely to complete their studies. Like I said, among those who qualify for more than $10,000 per year in financial aid, recipients of loans and grants are five times as likely as those only receiving loans to complete their program.

The rates are quite significant, and they tend to go higher with more debt accumulated. On average, British Columbian students are graduating with $22,000 of debt. I know several whose debt far exceeds $60,000.

R. Howard (Chair): Tara, thank you. That's all the questions we have. We really appreciate you taking the time to come out and present to us this morning.

Next up we have Gail Simpson.

Welcome, Gail. As you're getting settled, you may know you have 15 minutes. At about the ten-minute mark I'll try to give you a heads-up, and you can stop and take some questions or you can keep going. Your choice.

G. Simpson: I brought a prop, because it may take some of us back to our childhood. It certainly did me when I saw it. My name is Gail Simpson, and I'm a volunteer at Point Ellice House. I'm here to talk about the need for, we hope, restoring to the budget the historic sites that belong to the province.

There's one typographical error. I do apologize. The second sentence in the introduction should read "ten." Ten are managed.

The sites in operation are listed there on page 1. I won't take the time to speak to them now, but you'd certainly be very familiar with these priceless jewels that we have in British Columbia. I'm speaking in the specifics about Point Ellice House, but many of the issues raised have to do with the other sites as well.

[1055]

The government does own…. The people of B.C., I usually say, do own these unique sites, and they're the basis for much education that takes place, both of newcomers to the province as well as individuals who have not taken British Columbia history. Certainly, for students today, they're very important for those reasons. Anyway, the background to this is that first of all, I knew the site for the last 20 years as a customer, as a visitor, and a really special site it is. I don't know if any of you have been there, on the shores of the Gorge, but it's really quite wonderful.

We consider it a very special, unique museum, and for the last seven years two different sponsor agencies have been involved, and I have served for each of them as the volunteer manager. The reason I did this was that I knew we had to get our expenditures down and our revenues up, and I thought if I gave almost full-time during the summer and half-time during the winter to the endeavour, maybe we could find ways and means to make it possible for it to be self-sustaining without provincial grants or funding.

Really, we tried. I'm not kidding. Some weeks I was working 80 hours a week. Some weeks our other staff were donating a lot of their time as well. We only have in the winter 0.2 of a staff, but in the summer we have up to five or six full-time-equivalents, which includes our summer students — for which, thankfully, to date we've been able to get federal government funding for employment. Otherwise, we'd really be in difficulties. That was my goal: to try to achieve a self-sustaining opportunity.

What's important about this site? What's significant about it? Well, it's one of the few original 1860s houses left in British Columbia, as it was built in 1861, although it does have an addition from 1880. The important thing about that is only one family lived there between 1867, when they bought it, and 1975. So 108 years, spanning three generations, of O'Reillys lived there, and the wonderful thing was that they never threw anything out. We have the best — I'm going to go out on a limb and say the best — collection of Victorian and Edwardian furnishings, clothing, personal effects and so on.

Somebody was by last week, taking pictures, and she said: "I've never seen so many flatirons." I said: "Well, I don't know why they had so many, but they're all here." They never discarded anything, and that was to our benefit. As well, all their letters, their journals, their newspapers and magazines for many, many years were kept. We still have them, and they've all been accessed into the collection.

We had a gentleman from the Smithsonian in B.C. This I've just been told, but I was told by the person who brought him. He was brought to Point Ellice House on his lunch hour when he was over accrediting the Royal B.C. Museum, which of course is an even bigger jewel. He was doing their accreditation survey, and he was invited to come over to have a look at Point Ellice. He declared, after seeing probably hundreds of sites over the years around the world, that it was one of two historic
[ Page 1492 ]
house museums in North America with this degree of provenance and authenticity.

We're very, very proud of that, and it's unique. Every time I do any travelling for my other volunteer work, which takes me a lot to the eastern states and to Ontario and so on, I look at their nearest historic house museum, and I'm telling you that we've got them beat.

What could be the consequences if it couldn't open to the public? Well, I don't even like to think about that, but because there's nothing like it, there would be a lot lost. People just wouldn't have access, and it would be actually a terrific…. More than a shame, it would be a distressing tragedy, as far as I'm concerned, because we have all that material that people can delve into.

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We have students all the time coming to look through our papers, our journals, writing books on the basis of it and so on, because it's so detailed. The letters back and forth to Mr. O'Reilly, who was up in the Interior doing his gold commissioner job, and his wife. They wrote each day about what they were doing, so we know exactly what one family was doing for 108 years. That's pretty incredible.

Anyway, finances. As you see, we don't want to charge a lot of money, so we try to keep the admission down. But there's no way we could live on admissions — no way at all, even if we did get a grant. We're so weather- dependent and so on. All year long we have to keep up our expenditures, regardless of what we've made in the summer. As you see, our hydro heating is distressing. Last May our hydro heating, which was a pretty warm month, was like $2,000, so it's just crazy. I know there are a lot of problems with an old house, but this is beyond that.

Some people have suggested that we do rentals. We've got a real problem in terms of our neighbors. You can read about that if you want to, but I call it olfactory, auditory and kinesthetic pollution on every side of us, unfortunately. We do have supporters, but they couldn't give this much funding that we need.

So despite our best efforts, we require the annual operating funding we've received from British Columbia's government, which we do appreciate, in order to break even. Then when unusual things happen, we're kind of cooked. On average, provincial funding for operating and maintenance has been about $70,000 a year. This has been insufficient for us to operate at proper museum standards and leads to volunteer burnout.

Three years ago we got a grant, in late March 2009, for three years of funding, which was wonderful, on a one-time basis. But at that same time, our line item was removed from the heritage branch budget, and it hasn't been put back in.

So that's my main plea, is that in order to be able to plan ahead…. For example, right now our money runs out at the end of March for all the sites. Some of them are saying, and I agree: "We can't promote our site over the winter like we usually do to tour operators and so on because we don't know whether we're going to be around. We don't know if we have to change our admission or if we're even going to be open."

Every time I take a group of school kids through the house and they play with board games of the late- Victorian era…. By the way, I played with this game when I was a kid, and imagine my surprise when I found it inside the house. But then on top of that, just coincidentally, some supporters came by with a lovely box of Victorian toys that they'd found in the garage from their great-grandfather, and by George, it's the same game. So I take it around and show people. Sometimes they say: "I remember that game. I played Steeplechase. You roll the dice, and you move your little horse."

So the school kids can play with an actual thing that they're seeing in a museum, and they get the point, and they have fun. It connects them to the history. They understand it better. This is not just something you read about in history or social studies. It's an authentic educational experience that can't be duplicated secondhand, by merely reading about it. People say: "I'm seeing what Victoria pioneers lived like, where they lived." These links to the past are very important.

So I'm asking to restore the sites to the heritage branch's budget so that there's no question in future as to who's responsible for the stewardship of these unique places.

R. Howard (Chair): Thank you, Gail. We have a question.

B. Ralston: Just if I can summarize, then. The province of British Columbia owns this museum, and as of the 31st of March 2012, there will be no provincial funding to operate it. Is that what you're saying?

G. Simpson: Well, at present. We were given what was stated to be a one-time, three-year amount — our facility was — in March, as were the others. It was a different amount, of course, depending on the…. So we divided it in three, and then spent a third each time. Some of the others weren't able to do that because they had immediate needs of a repair of sort, and so on. So they're in even more…. It's more of an issue for them. At the moment we just don't know.

B. Ralston: So unless there's a commitment in next year's budget, there will be no funds to operate it, and it will close.

G. Simpson: Unless it's in the budget or it's funded in some other fashion, and I really don't know what that might be.

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[ Page 1493 ]

M. Stilwell: Thank you for that presentation and for your work. I note in the name of Point Ellice House, it says "national historic site." Is that an official federal designation? Is there any partnership? Is there anything to know and understand about that?

G. Simpson: Right. This is just my opinion, so I could be way out. I'm a social worker by trade, so I really don't know about museums.

The one thing I know about national historic sites — it's also, by the way, a provincial historic site — is that getting the national historic site designation means that you get the plaque. That's what you get.

M. Stilwell: Okay.

G. Simpson: There was to be some kind of capital fund that went with that, and there was that on paper, but it didn't seem to ever get pronounced. At least, nobody could ever apply for it. Even their own national historic sites that were…. For example, our parks like Fort Rodd Hill National Park — it's just last year and this year that they've been able to apply for that 50-50 funding. I guess, in their case, it's 100 percent funding.

We did apply twice for that 50-50 funding when it came up 2½ years ago, for our capital expenses like wood rot and painting and things like that, but we were not successful on either of those.

R. Howard (Chair): Thank you, Gail, first for coming out and presenting to us this morning, and as MLA Stilwell said, thank you for the work you're doing as well.

We'll just take a five- or seven-minute recess. We'll wait for the next presenter to show up.

The committee recessed from 11:07 a.m. to 11:19 a.m.

[R. Howard in the chair.]

R. Howard (Chair): We are pleased to have joining us at this time the B.C. School Trustees Association — Stephen Hansen and Michael McEvoy.

Gentlemen, as you may know, you've got about 15 minutes. At around ten I'll try and give you a heads-up. You can stop and take some questions or go straight through — your choice. The microphone's all yours.

M. McEvoy: Thank you very much, Mr. Chair. It felt for a moment like I was…. In grade 11 or 12, I think, I was on the Reach for the Top team, where they forced you to sit through and press the buzzer. But I know your time is valuable, and you've met with many already today and throughout the weeks preceding us.

I'm sure most of you know, but the British Columbia School Trustees Association represents all 60 school districts in British Columbia. We certainly do appreciate the opportunity to participate in the budget consultation process.

As financial stewards of school district funds, amongst other things that we do, we seek to provide informed input about education funding that is both local and provincial in scope. We trust the committee will view our input as essential and valuable insight into your deliberations.

Publicly elected school trustees navigate a complex dichotomy. We are immensely proud, as I'm sure all of you are around this table, of public education in British Columbia.

[1120]

I was reminded that I had the opportunity to sit with the Minister of Education a few weeks ago — actually a few months ago — at our annual general meeting. We heard Dr. Pasi Sahlberg from Finland. It's considered to be one of the pre-eminent school systems in the world. He talked about the things that they're doing right, but at the same time he also reminded us of what an amazing school system we have. We rank right near the top and right near Finland in many categories.

We enjoy an international recognition for a system that was built on public investment, yet we are increasingly challenged to execute our roles with the due diligence that our students and the public deserve. Increasing expectations and an expanding mandate placed on the public school system have outpaced funding. School boards tell us that they have reached the limits of financial efficiencies. Operational budgets are already under inflationary pressures resulting from rising energy, transportation, infrastructure and labour costs, just to name a few.

In addition to that, new services are being delivered by school boards, which include early learning, community literacy, distributed learning — that's another word sometimes for on-line programs that are delivered, though it's a little more complex than that. They've all placed considerable additional pressure on our existing system.

Those pressures, of course, include declining enrolment that in many areas of the province have forced boards to reduce costs by closing schools. However, the savings derived from these actions have reached their limits unless we wish to see children in rural B.C. spending even greater time on school buses and students in urban B.C. denied the opportunity to walk to their local schools.

For those of you — Pat and others — in rural areas, you'll obviously know the issues around transportation in a place…. Talking to Heather Hannaford not long ago, the chair of your board…. You know, the kids are on the bus at seven o'clock in the morning, and they often return home at 5:30 in the afternoon. For many of those children, those treks are getting longer and longer because of closures of some schools that are in fact the centres of community.
[ Page 1494 ]

I think that vision of greater busing and not allowing our kids to walk to school is not a vision that any of us share for the future of education in this province. I think the other thing I need to add is that, moreover, we cannot forget that there are areas of this province where funding is not keeping pace with the growth in student population.

I know that Bruce Ralston, who's not here today, and Mr. Hayer from Surrey will know that Surrey is particularly an area which is encountering significant growth. Chair Laurae McNally and the mayor have been making representations about those issues. Obviously, portables are not the answer to creating a 21st-century learning environment.

Committee members will appreciate, of course, that elected office — as trustees are elected along with members of the Legislature — comes with a considerable moral trust. While trustees have worked hard to elevate our provincial high school completion rates to 80 percent, we remain deeply concerned about students who do not graduate. The graduation rate amongst our aboriginal learners in particular is unacceptably low.

We know that a high school diploma is a predictor of not only future opportunities for graduates but also for their children as well. Education, therefore, as a social determinant of British Columbia's wellness is a critical financial investment.

Our boards across B.C. look with considerable trepidation as we gaze out to 2012. Concerns are wide-ranging, but they echo a common theme, and that's the need to create a safe and engaging learning environment for our kids. Seismic upgrading must continue apace, and sufficient capital funding must be provided to maintain our aging infrastructure. If not attended to now, these matters will cost us far more in the future.

Personalized learning is something that we have been working very hard on. Boards have been engaging in personalized learning and developing those programs for years. We are very pleased to be working with the Ministry of Education to further enhance and strengthen those programs, but they require, for example, technological innovation.

SMART boards — I don't know if any of you have had that encounter. They are wonderful teaching tools, but they require a couple of things. One is they require money to purchase them. I'm just giving that as one example. But they also require a significant amount of teacher training and professional development to ensure that those tools are being used properly, because that's what they are at the end of the day. They're merely tools to help educate our kids.

[1125]

I should also note…. I've mentioned things that have been added to our plates in school districts. We really embrace the challenge of the expanding mandate that we have received, but at the same time, we do insist that the corresponding funding accompany those additional responsibilities.

All 60 of our school boards are committed to ensuring the future wellness of public education. We therefore, through our resolutions and the will of our membership…. That's how we express ourselves, like other organizations, in terms of the things that we believe are important in this province.

I just want to touch on a few of those, beginning with probably the most important thing that we hear time and time again — and I'm sure you probably will, if you have not heard already — from school districts around the province: sustainable, stable and predictable funding.

The predictable piece is really important because, like any body, planning is critical. Well, boards appreciate the dollars that are sent, and oftentimes…. I know that Jane, who has sat on the school board in North Vancouver, will know that sometimes at the end of the year we might receive additional funds of money, which are great.

They're welcome, but what would be far more efficient from a planning perspective and ensuring that our kids' needs are met is to have — as we did, actually, at the outset…. I think in 2002 the government had three-year planning cycles, which were extremely helpful in terms of board planning, being able to make rational decisions around capital expenditures and on the operational side as well.

I don't want to steal Donna Sargent's thunder and company, but I know that when they present to you, I think in another week or so, this is a place where they will also make emphasis.

Seismic upgrades. There have been many good projects done already in the Lower Mainland and in greater Victoria, where the stock of our schools is much older than in many places. Much progress has been made, but we're reminded on a regular basis, when we see tragedies around the world, of the need to speed the sometimes reconstruction and sometimes new buildings in respect to the seismic issues that we face. We would encourage the government to continue those moves and to speed them up.

Funding for inflationary costs. Funding of capital projects. There was a point at which the annual facilities grants that districts use to maintain and upgrade their buildings was suspended. We said at the time that it's not a sensible investment, because the infrastructure, of course, erodes, and then it costs more, at the end of the day, to fix those issues.

Funding to maintain closed buildings. As you know, there have been a number of schools closed across the province. It's not always possible to have those buildings allocated for community use, because sometimes there just isn't the demand or the need. However, we still have to carry those buildings, for the most part, and that costs money.

We're funded to make sure that kids' learning needs are met in schools. I think there has to be some recognition
[ Page 1495 ]
of the fact that a number of these buildings which are not being utilized…. Nonetheless, they have to be heated, lit and all those things, at least to maintain their integrity. That's something I think the government needs to recognize in their funding structure.

Carbon trust funds. I do need to say something about that. The BCSTA has spoken out publicly on numerous occasions about that. We share, I think, with all parties the desire to reduce our carbon emissions and our carbon footprint. However, we're very strongly of the view that the present system in place…. I've spoken at length with Minister Abbott about this. I've had the opportunity to sit down with Pacific Carbon Trust CEO Scott MacDonald to talk about some of the things that they're doing.

The notion of exacting money from public institutions — and, in this case, our public schools — and to reallocate those funds to the private sector in our view just does not make any sense. Those funds are much needed in our own school districts to make our buildings more efficient and also to reduce our carbon footprint.

Those moneys are reinvested and at the end of the day save us money that can be used on the operational side. So we strongly urge, as part of the budget process, that changes be made to the Pacific Carbon Trust and the carbon tax funds to allow those funds to remain in the public school system.

[1130]

Finally, the British Columbia School Trustees Association recognizes that our schools cannot do the job of creating a proper learning environment in isolation. Far too many children come to school without proper nourishment. Many students require family supports, both physical and emotional.

It's with that background in mind and that reality in British Columbia that the B.C. School Trustees Association has called in the past and continues to call for government to create a plan to reduce child poverty in this province, because it's our view — and, I'm sure, one that is shared — that every child in British Columbia must be included in our future.

That concludes the written and oral presentation. I'd be happy to entertain questions that anyone may have.

R. Howard (Chair): Excellent. Thank you. We've got a long list of questions, so I'm going to ask members to keep as brief as possible, and be mindful to keep the answers as brief as possible to try and get through the list.

J. Thornthwaite: Thank you very much for your presentation, and yes, I'm very familiar with all of your points.

Question. One of the questions that we did ask folks that were presenting to us is: what suggestions — in addition to, obviously, increasing funding here, there and everywhere — do you think boards could make to actually assist not just the school boards generally but also individual school districts to generate revenue? In other words, where do you think we could get some efficiencies going?

I get what you're saying about the carbon trust. I tend to agree with what you're saying there.

Where could school boards go to generate revenue to actually assist all levels of government? Have you considered discussing and having forums with your municipalities in order to share services — and share buildings, for that matter — to allow efficiencies but also to prevent all the transportation problems you're talking about — in rural schools, for instance?

M. McEvoy: Thanks for the question. It's a very good one. Districts across the province, wherever they have the opportunity to raise additional revenues, do so. Those of us in the more urban areas I think are fortunate. British Columbia is a wonderful location for kids from around the world to come. International student programs have been developed, actually, right across the province. But the revenue that's generated is far more pronounced in urban areas. We're talking in the millions of dollars.

I certainly know that in greater Victoria and in Vancouver that adds significantly to the revenue side for school boards. We hire very good people to go out and recruit and to make our presence known in countries around the world. It does something for the school system, but it also does something in terms of promoting British Columbia generally.

All kinds of ways of utilizing our buildings, through the rental of those in the evening, to shops facilities…. All those kinds of things, at a cost-affordable level, open our buildings to the public but also generate some revenue. Districts certainly undertake that wherever they're able to.

Shared services is always an area where districts are working. When we can share services with the municipalities, we absolutely do that. There are opportunities, as well, between school districts — for example, on purchasing. Many districts take advantage of that so that they increase the volume of purchases, therefore, obviously, discounting the purchases they make.

Members of the committee will probably know, if you haven't already heard it, that there are some impediments to some of the shared-services issues. Those primarily emanate from the collective agreement obligations we have, where issues arise around contracting out and those kinds of things. That is a restraint, if I might use that term, in terms of the shared services we're able to provide. But whatever avenue exists for those opportunities, you can be assured that boards are on top of them and carrying through.

B. Ralston: First, I just wanted to correct the record. I have been present here in this committee hearing since nine o'clock this morning. The Chairman called a break,
[ Page 1496 ]
and I gather proceedings started before I returned. I just wanted the record to show that I heard the bulk of what you had to say, Michael.

My question is on capital. You mentioned Surrey. There's a very broad-based coalition, including the Surrey Board of Trade, that has advocated for new capital funding for schools, at Lord Tweedsmuir and Earl Marriott. What's the position of your organization on that request?

[1135]

M. McEvoy: Our position is…. Generally, as you can appreciate, at the British Columbia School Trustees Association our view tends to be more provincial and global, but certainly, we support our members where there is a need — a need for learning for those kids and to ensure that it is a proper learning environment.

There's demand in Surrey. I would also add that there are demands in other areas of the province, not too far away from here in Sooke, for example — also a growing district.

One of the aspects of the funding as it is now prescribed is it doesn't often take significant account of those growing areas. There are significant needs in Surrey as there are in other areas of the province. Of course, we support our members in obtaining the funding for those projects.

R. Howard (Chair): Gentlemen, thank you. We have still a long list of questioners, but we're out of time. So we'll thank you for coming before us this morning and presenting. MLAs Stilwell, Donaldson, Elmore and Hayer will have to catch up to you outside of this forum.

M. McEvoy: Thank you very much for your time. I appreciate it. It was all too brief, but again, we appreciate you hearing us out.

R. Howard (Chair): Next up we have the Elders Council for Parks in B.C. — Colin Campbell.

Colin, as you're getting organized, undoubtedly you've heard that you've got 15 minutes. At about ten I'll try and give you a heads-up. You can stop and take some questions or go straight through — your choice. The microphone's all yours.

C. Campbell: Good morning, everyone. I hope you have lunch soon.

We're a group of retired British Columbians, elders who have spent most of our lives working for Parks Canada, B.C. Parks, regional park agencies or non-profit organizations supporting parks. In our group we have a remarkable range and depth of experience in all matters relating to parks. It is our belief that B.C.'s provincial parks system, the third-largest in North America, is one of the best parks systems in the world. It is comparatively and debilitatively underfunded and really needs your support now.

Later we will provide some examples of how park investments will help you achieve your budget priorities, but first a little context is in order.

This year we've celebrated 100 years of provincial parks. Each of you may have enjoyed some of those celebrations. No doubt, as MLAs, you have also heard the stories of trails in decay; of part-time, temporary park rangers trying to manage large areas the size of small countries; of rangers using public transport to reach parks, etc., and the like.

The Auditor General's report highlighted many serious stewardship shortfalls. Today I won't add to this litany of decay and dysfunction. However, I will cite a few figures to give you a picture of the scale of funding shortfall that has been created through 30 years of underfunding.

In the table on page 2, I just want to highlight, actually, the right-hand column slightly. I just point out the fact that if you adjust the amount of money that was provided to parks in 1977 to 2010, there's a $30 million shortfall in simply the inflation adjustment to deal with the system.

If in fact $30 million were provided, it would simply rectify that inflation adjustment, but it would not start to actually deal with the 635 parks that have been added but have not been funded or the 8.5 million hectares that remain unfunded or the 9.3 percent of the area of the province that remains unfunded.

The proportion of funds to B.C. Parks has gone from 50 cents of every $100 of budget allocated to 7.5 cents of every $100 of budget allocated over the last 30 years.

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To summarize, this year provincial parks received half the funding, in real dollars, that it had in 1977 to manage and operate a system that has since then tripled in size and complexity. In 1977 the provincial government, for this much smaller system, allocated 50 cents for parks for every $100 of taxpayers' money it received, and this year the provincial government allocated 7½ cents per $100 for our expanded and enlarged system.

Both elected political parties are equally culpable for this unfortunate state of affairs. There has been a relentless pattern of consistent neglect of this world-class resource.

In reality, though, people vote; parks don't. As MLAs, it must be hard to resist the constant pressure to serve electors daily fighting to get support for life's immediate challenges. Yet leadership is about more than responding to immediate pressures. Investing for the long term is crucial. This requires strategic thinking and action.

Two weeks ago the Elders Council, in collaboration with the Ministries of Health and Environment and others, hosted a forum called Healthy by Nature. The overwhelming evidence from the physicians and health industry experts is that increased regular activity by people in the outdoors can have a huge impact on reducing health
[ Page 1497 ]
costs. It is becoming increasingly obvious that over the last 30 years we have invested too much money in pills, prescriptions and infrastructure and too little in building lifestyles of activity in green, outdoor environments that can prevent disease and foster good health.

Disease investment funding streams must now be redirected, and parks offer one of these opportunities for a new investment with a much higher rate of healthy return. We have to change course. Pity we didn't 30 years ago. Had we done so, that would have been strategic.

On the bright side, over that same 30-year period both elected parties can take enormous credit for greatly expanding and enriching our provincial park system. Thanks to your collective efforts, B.C. now has a treasure house of world-class ecological wealth.

Job No. 1, building the system, is mostly done. Job No. 2, looking after it and capitalizing on this world-class asset, deserves your immediate attention.

As some of you know, this is not the first time that we have come to seek your support and attention. In 2007, when we presented the case for funding for parks, the committee responded by including this statement in their recommendations to the government of the day.

"Our expanded provincial park system of 893 parks and protected areas needs an immediate infusion of funds in the amount of $30 million annually. This will provide for the immediate care and attention necessary to restore ecological systems that function within parks and begin to create a management regime to manage our parks and protected areas scientifically to world-class standards. This will ensure their long-term health for the economic, environmental and social benefit of current and future generations."

What happened to that recommendation, generously supported by your committee? Who knows? But the ancient pattern of more parks and less funds continues unabated.

Despite this, we are optimistic and continue to believe that parks represent a real opportunity for government to invest and advance its priorities. Here are some examples.

Provincial parks are distributed evenly around the province and could provide many rural jobs through infrastructure improvement and ecological management initiatives. Let's create more jobs in rural areas.

Parks can host far more tourists to boost tourism. The ten-times multiplier of parks investment to economic return is real, and this opportunity has yet to be realized. Anyone who travels the world knows that we have undiscovered places to visit in this province that could compete with the world's best. And we do need to compete.

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Getting more people active in parks is a proactive, affordable and now a scientifically supported strategy to increase health and well-being and reduce current and future health costs. Personal good health preservation is likely our primary tool to cope with future challenges from a health delivery system that is financially on an unsustainable track. The ecological wealth in our parks can mitigate the impacts of climate change, which will progressively become a budget issue. This issue gradually will emerge, and we can build some degree of protection.

A healthy ecosystem is crucial to a healthy population. Parks over the years have been the places where families of all income groups come together to share family bonding in the outdoors — a crucial ingredient in raising healthy, happy kids. Our kids are spending more time indoors, inactive, in cities, with devastating results on their health outcomes and life expectancy. This must change.

So our case is simple. The B.C. Parks system has been chronically underfunded, and that must be fixed. This investment will further government's priorities.

In conclusion, we have two asks. The first is directed to you individually, for we need each of you to act. Please talk to your colleagues in your respective parties, and ask yourselves the question: are there votes to be had by adopting a pro-parks platform and developing a long-term vision and resourcing strategy for B.C. provincial parks? I know that some of you on this committee are strong park and outdoor supporters, and I urge you to consider this action. Start the conversation. We believe there are many British Columbians who would vote for a party willing to place the long-term well-being of parks on the top of their priorities.

The second ask — and I will stop here — is to repeat the same request that you proposed four years ago, only updated to the now 997 parks that we have and the inflation-adjusted $38 million that would be required.

Thank you very much for listening to our submission. I appreciate it a lot.

R. Howard (Chair): Thank you, Colin. We have a question from MLA Thornthwaite.

J. Thornthwaite: Thank you very much for your presentation. You probably know that I've spoken with your counterpart….

C. Campbell: I do, thank you. Mel says hi.

J. Thornthwaite: Yes, thank you, and hi to Mel too.

My question is more general, though. What sort of suggestions could your parks elders suggest to government to assist us in helping with your vision and what you want as far as generating your parks initiative but also assist us in generating revenue to pay for it?

C. Campbell: I think the truth of that is that this is a broken system. It doesn't have the energy within it yet to actually re-establish itself. It's kind of dead, really. Fundamentally, it's now at the point of underfunding that it's just not functional. It's difficult for it to actually energize itself to generate resources into support. But the bigger question is that we really have to…. The time when government should be funding and doing everything to support parks alone is gone.
[ Page 1498 ]

The issue is really that we have to reach out across the communities in all kinds of ways and give them much more opportunity to become engaged in the parks system. I don't mean downloading. I mean actually developing either cooperatives or working with community groups, providing a decent environment for volunteerism. I mean establishing youth groups that work through this.

Really, we have lost the place. Parks, for one reason or another, have lost their connection to communities. We talk about kind of, you know, a hundred miles of eating. Well, if you talked about a hundred miles of the landscapes that we grow up in and start to bring our citizens closer to those landscapes and enjoy them and appreciate them, then I think we would start to develop the processes that would generate support in resourcing. There's no one simple answer. It's just a question of taking this on and trying to make it work for the next century.

R. Howard (Chair): Thank you. One last quick question.

D. Donaldson (Deputy Chair): Thank you very much for your presentation. We had a presentation earlier in Smithers from an internationally certified mountain guide who has built a small lodge in an area that's become a provincial park — the Burnie Lakes house and peaks provincial park. One of his suggestions is a way to get at what you, I think, rightly typify as a debilitatively underfunded parks system.

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He's created a trail network, for instance. It's open to the public to use, but he used his own capital dollars to create it. He was looking for solutions such as getting some kind of breaks on his lease fees for having created the infrastructure at no cost to the government, and yet the public can use that. I don't know if your council has considered those kinds of recommendations as well.

C. Campbell: I think there are all kinds of possibilities. I mean, you look at what New Zealand and other places are doing with their system. They've really thought it through, and they've really built it. They've invested in it, and they're now getting a return for it.

We don't have that. At the moment we're just pushing the odd permit, as far as I can see, really, and that's what we've come to. It's kind of sad.

R. Howard (Chair): Thank you, Colin. We've run you out of time. We very much appreciate your passion and you taking the time to come talk to us today.

We'll recess now for lunch and reconvene at 12:50 p.m.

The committee recessed from 11:51 a.m. to 12:49 p.m.

[R. Howard in the chair.]

R. Howard (Chair): First up this afternoon we have the Rick Hansen Foundation — Colin Ewart and Mark Aston.

Welcome, gentlemen. You may know you've got 15 minutes. At about ten minutes I'll give you a heads-up. You can stop and take some questions, or you can push right through. It's your choice. The microphone is yours.

C. Ewart: Thank you, Mr. Chair. Good afternoon, and thank you for the opportunity to present today.

My name is Colin Ewart. I'm with the Rick Hansen Foundation, and this is my colleague Mark Aston from the Rick Hansen Institute. We're here today to present information on the 25th anniversary of Rick's Man in Motion Tour, to highlight how Rick's leadership has created a world-class research and practice centre of excellence — that's the Blusson Spinal Cord Centre in Vancouver — and how our future plans, with further support, will continue to significantly impact the people of B.C., our economic well-being and quality of life.

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As you know, Rick started a journey 25 years ago with drive, determination and a dream to find a cure for spinal cord injury and to make our world a more accessible place.

Over the last two decades his foundation has driven initiatives that have accelerated breakthroughs in research and care, as well as achieving greater accessibility and inclusivity for those with disabilities. Rick and the foundation are known for having spearheaded the formation of UBC's International Collaboration on Repair Discoveries, known as ICORD, and the Rick Hansen Institute, independent organizations collaborating with the Vancouver Coastal Health spine program inside the Blusson Spinal Cord Centre in Vancouver.

In addition, Rick's leadership and contribution have extended into many other areas of social change and building a civil society. We've led initiatives that have made our buildings in cities more accessible, shaped public awareness about those with disabilities and mobility challenges, built accessible playgrounds, financially supported dozens of not-for-profit and research organizations, funded sports and recreation for those with disabilities, protected salmon and sturgeon in B.C. waters and inspired young people to make a difference through leadership and action in B.C. and, indeed, around this country and world.

Today Rick is in New Brunswick, supporting our national relay of difference-makers, a nine-month, 7,000-person journey from Cape Spear to Vancouver along his original route. The relay will enter B.C. on March 19 near Valemount and will finish in Vancouver on May 22, after visiting dozens of communities where progress and citizens will be recognized.
[ Page 1499 ]

In Vancouver we will be hosting a homecoming celebration focused on youth, and holding Interdependence 2012, a global conference on opportunities, challenges and developments in accelerating progress towards accessible communities for all and a cure for paralysis after spinal injury.

All of these activities involve and need partners to be impactful. We're very grateful that the province of B.C. has been a vital partner by providing critical funding at many points along Rick's journey. This support is a testament to what can be achieved when partnerships and funding are strategically leveraged. As a result, British Columbia has become a national and, indeed, global leader in SCI research and care and has established the province as the best place in Canada for people with disabilities to lead healthy, active lives.

Thanks to past investments in capacity and infrastructure, B.C. is now contributing to some of the most important discoveries in this field of spinal-cord-injury research and is indeed leading Canada and many parts of the world in treatment, research and services.

This year we're seeking a further $100 million as a legacy investment over the next five years to continue the work of the partners at the Blusson Centre and to sustain the future leadership of Rick's foundation. Of this $100 million, $75 million will be directly applied to programs that support the Blusson Spinal Cord Centre partners — namely the institute, the International Collaboration on Repair Discoveries and the Vancouver Coastal Health spine program — and $25 million will be used to support the foundation and its future leadership, focused on initiatives related to accessibility, youth, active health and conservation.

While a detailed proposal will be submitted to the Premier next week, Mark will now share information specifically on the current and future impact of the Blusson centre of excellence.

M. Aston: Thanks, Colin.

As I know you all realize, the impact of a spinal cord injury on individuals and their families can be devastating. In addition to the physical challenges, the person with an injury and their families experience significant biological, emotional and social challenges as well.

Spinal cord injury is also a major challenge to the health care system, since it contributes a disproportionate amount to health care costs. Approximately 200 people experience a traumatic spinal cord injury each year in British Columbia, which costs the province an estimated $477 million. Unless we continue to advance progress, these costs will only escalate as injuries with the aging population increase.

British Columbia is on the leading edge to advance improvements, due to the Blusson Spinal Cord Centre, a facility that is unique in the world. Opened in 2008 and located on the campus of Vancouver General Hospital, it brings together ICORD, the Vancouver spine program and the Rick Hansen Institute under one roof, where we accelerate the discovery and implementation of cures after spinal cord injury.

ICORD, a UBC centre, focuses on the discovery science, as well as validating potential discoveries around the world to determine which are most likely to have the greatest impact. With 28 principal investigators and over 250 trainees from a variety of disciplines, it is one of the most interdisciplinary SCI research programs in the world.

The Vancouver Spine Clinic provides a multidisciplinary care model for spinal-cord-injury patients, which is ideal for clinical investigation and the identification of best practices. As the vast majority of spinal cord injuries in British Columbia are treated at VGH, and due to the integration with research, this provides a clinical and research environment that is unique.

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Extending the expertise further is the Rick Hansen Institute, which works to advance research to develop clinical therapies and accelerate the development of best practices. At our core is our clinical research platform, which was launched in 2005 and is today in over 30 sites across Canada. It collects information and data on 85 percent of new traumatic spinal cord injuries in the country.

That information and data is invaluable in our ability to be able to track injuries and to report back on interventions and their outcomes across provincial jurisdictions to improve clinical practices. It enables the optimization of the use of resources at health care facilities by helping ensure that the right patient receives the right care at the right time and at the right location. In addition, the technology platform enables recruitment of participants into clinical trials, which has been a major obstacle in Canada in advancing research in spinal cord injury.

The Rick Hansen Institute is spearheading the development of the first-ever multicentre clinical studies in Canada for acute spinal cord injury, and we're in the process of supporting two such studies at this time. One of those studies is on a drug called minocycline, an off-patent acne medication that has been shown to reduce inflammation at the point of injury. Initial basic research conducted by ICORD showed that this drug might prove to be a useful treatment for spinal cord injury.

The Rick Hansen Institute then funded a single-site clinical study, which showed positive results, and is now establishing a six-site trial with a much larger patient population to show that the results can be replicated. If proven, this would be the world's first neuroprotective drug treatment for spinal cord injury that could be applied immediately at the accident site to reduce the severity of injury.

That reduction in the level of disability will also reduce the length of stay in hospitals, readmissions to hospitals
[ Page 1500 ]
and the economic burden associated with these, as well as home care services.

One of the six sites for this study will involve one of our partners in Brisbane, Australia, who have invested $1 million in our technology to collaborate with us on clinical studies. That's one example of some of the success that we've been able to achieve to this point in time at a fraction of the cost and a fraction of the time that new drug therapies would take.

We're in the process of expanding our clinical research platform internationally to other countries as well, including Israel, China and the United States. Additional international expansion is planned when we showcase our work to 2,500 delegates from around the world at the Interdependence 2012 Conference in Vancouver in May.

International engagement is critical. It will allow the Rick Hansen Institute to access much larger volumes of data to help us in improving clinical practices. It will enable ICORD to scour the world and help us determine the best of the best — the most promising research to advance through clinical evaluation.

As in the example of Brisbane, it will enable others to share in the costs of running clinical research trials, which can also be advanced more quickly through coordination at the Blusson Spinal Cord Centre due to access to larger populations to recruit into clinical studies. It will allow development of best practices to be first adopted here in British Columbia and then spread throughout Canada and the world.

To establish an international clinical trials network with the centre of excellence headquartered at the Blusson Spinal Cord Centre requires additional investment to support translational research projects, partnering internationally; to advance best practices of care; and to attract the best and brightest scientists, clinicians and highly skilled technical staff to B.C.

Through the investment requested by the Rick Hansen Institute alone, it will create 142 jobs in B.C. directly and at least an additional 88 jobs indirectly over the next five years.

As well as benefits to people with spinal cord injury, many of the advances are applicable to non-spinal-cord-injury populations as well. For example, our focus on pressure ulcers and urinary tract infections will have a much broader impact than on solely people with spinal cord injury.

A new study cited: "Interventions developed by the Rick Hansen Institute will lead to a reduction in the incidence of secondary complications and associated costs in the spinal-cord-injury population. However, these interventions would be effective in reducing the incidence of complications and the associated costs in the non-spinal-cord-injury or general population as well."

It went on to say: "By reducing the incidence of pressure ulcers and urinary tract infections alone by 30 percent, it is estimated the reduction in costs in British Columbia in the spinal cord injury population would be $17 million per year. However, applying the same interventions to the general population in British Columbia, the impact would be an estimated cost reduction of $300 million per year."

The investment we are requesting in the Blusson Spinal Cord Centre is $15 million per year over each of the next five years, which we aim to leverage severalfold, with additional other fundraising efforts to support the centre of excellence. While we realize the investment request is significant, in the current fiscal environment everyone, including government, needs to select key priorities to support.

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We are confident that the return on this investment is well worth it — improvements to the quality of life for people with spinal cord injuries and their families, new interventions that can be applied to non-spinal-cord-injury areas, large reductions in health care costs in the province, job creation in highly skilled areas and establishing the Blusson Spinal Cord Centre as the centre of excellence in this field internationally and as a model for others to follow.

On behalf of ICORD, the Vancouver spine program, the foundation and the Rick Hansen Institute, Colin and I thank you for your time and for your support.

R. Howard (Chair): Thank you, both. We have a few questions.

D. Hayer: Thank you very much for your presentation. It was a very good presentation. My father was a paraplegic from '88 onwards, so I have some firsthand experience.

My question is: do you have some sort of system where you work with other countries that also have a research facility, where you share the latest information from there, then maybe the latest research you have, yourself, from here and there, so you can go to the next level much quicker? Or do you sort of wait on a monthly or yearly basis sharing the information? Or is it shared in a real-time basis, almost?

M. Aston: That's a great question. It's not shared in a real-time basis right now, but that's what we are aiming to do with our international development of our international network — that we can create a network where we can collaborate with other partners. We've got numerous partnership agreements around the world currently, with research institutions, where we're gathering information periodically right now. But once we get our technology platform established in these other countries, we'll be working routinely with them as part of this international network, which we will coordinate.

B. Ralston: Thanks very much. I was also looking at your written material. On page 15 you talk about minocycline. You say that's an off-patent drug. In other words,
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the patent has expired, I take it. But you say that public investment is critical, as pharmaceutical companies have little incentive to invest in new applications.

Could you explain that? If the public investment is made, is there any opportunity, then, for your foundation or the government to create a revenue stream for your institute that might help you in the future?

M. Aston: Yes. Because the drug is off-patent, it's much harder for companies to sort of grab intellectual property related to the drug, because we're not changing the drug. It's not a new drug. It's a drug that's been around for a long period of time. What we would hope, though, is that it actually proves to be an effective treatment, that we get it into the system.

There may be a possibility down the road to have the revenue stream there, but there are other commercial opportunities as well, potentially. There are a number of local companies that are working in the pressure ulcer area, for example. As one example, there's one company that we're talking to right now about a partnership. They have a technology that, you know, we may work together on, and that could become a commercial opportunity.

We have one example right now of a project we invested in that has become a commercial entity. That's based out of Alberta, but they're looking to have a distribution centre in British Columbia.

B. Ralston: Just if I might have one follow-up, then. What's your split? I know that different universities have a different way of dividing up the revenue, but what would be your percentage of that opportunity in Alberta that you spoke of?

M. Aston: Sure. Our opportunity in Alberta…. We actually don't have a split of that at this point in time. But what we are doing, we have got a consultant that's developing a plan for commercialization for us right now. As part of our international network, we will be looking at linking investors with ideas. As part of that we'll be developing our intellectual property procedures for future investments.

R. Howard (Chair): Thanks, gentlemen. We still have questioners on the list — Thornthwaite, Donaldson and Stilwell — but we've run out of time, so they'll have to catch up with you after the hearing or outside of the hearing. But we want to thank you very much for coming forward this afternoon and presenting to us.

C. Ewart: Thank you. We would welcome any follow-up anybody would have, and we'd be very happy to take personal meetings in Victoria, if that works for people as well.

R. Howard (Chair): Excellent. Thank you.

Next up, we have United for Public Education — Dylan Sherlock.

Welcome, Dylan. As you probably know, you've got 15 minutes. At about the ten-minute mark, I'll give you a heads-up. You can stop for questions or go straight through — your choice.

D. Sherlock: Great. Thank you very much, Mr. Chair.

R. Howard (Chair): The mike's yours.

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D. Sherlock: I'm here representing United for Public Education, which is a grass-roots organization in greater Victoria made up of teachers, students, professionals, tradespeople, all who are concerned about issues of public education in our city and our province. What we envision, hopefully — and I would like to discuss with you today — is an idea that we can have a British Columbia which has some of the highest levels of funding in Canada for public education, which can provide a bedrock for a prosperous society.

What we're asking is that we can have the government look at, first of all, how it funds public education, and also really consider that we're in a situation where we do need to invest properly and fully in public education.

To start, I'm going to talk about, first of all, the issues that we face within the public education system right now. Myself, I'm a university student. That's the background that I come from. I'm one of the executives of the student society at the University of Victoria.

At the University of Victoria right now we're currently facing shortfalls in revenue, with the cap on tuition but the freeze on operating funds. We have the university which is moving through cutbacks over the next few years. Over the three-year period that we're in, that'll be a 5 percent cutback of services, even as tuition for students increases by 6 percent over the same period.

I don't know about you, but myself, I feel that it's unfair to make students pay more for less. We would hope that there would be more coming out of it.

When we look at the situation in universities, and I think the same holds true for other levels of education, we can see that where the money has been going over this past decade is that it has increasingly been sucked into a large bureaucracy. So while we have freezes in operating costs for front-line staff, for teaching staff, we have bureaucracies whose salaries have doubled over the same time, where there's a tremendous amount of weight put on the top and not nearly enough focus put on the bottom, at the level of where young people are interacting with the education system, the level which I think I would say is most important.

Second, I think I would point our attention towards capital expenditures and how the balance between capital expenditures and operating expenditures is going
[ Page 1502 ]
out and being distributed through the public education system.

At Camosun College just now, just quite recently, the brand-new library, which has been paid for by this government, has been completed. I think it's a wonderful project, and I really salute the government for investing the money there. But because of the shortfalls in operating costs, which are in many ways coming out of the cuts to the maintenance capital budgets that previously would not have come out of operating budgets at Camosun, Camosun College students can no longer use the library on Sundays.

So we've built this beautiful multi-million dollar new installation, and now it's unusable on a single day. A single day is one thing, but it has a huge impact on those students that are lower income, don't have computers, can't work from somewhere other than that library.

In terms of the K-to-12 system, we can see this as a problem that goes throughout the entire system, where again, the government is investing millions into beautiful libraries, beautiful new facilities, computers, high-tech equipment, but in the meantime slashing teacher-librarian hours to a third of what they were a decade ago.

I think you can see that this is really dangerous, because we cannot simply have beautiful buildings. We need to have beautiful minds coming out of them. It's the teacher-librarians, the quality of education, that really matters here.

This is where I say I really salute the government in investments which do matter quite a bit in terms of capital investments. But I think we're falling really short on that front-line delivery of education. We've got the second-highest teacher-student ratio in the country. I don't know about you, Mr. Speaker, but I think that's a problem, and I think that we need to be addressing that head-on.

I think part of the problem is that throughout our ideas of how we account for funding in the education system — whether it's K-to-12, whether it's in university — we're looking purely at quantity. We're trapped in this paradigm of the last century, where we're looking at how many butts we can put on seats, how many people we can hand off diplomas to, and we're not looking at the fact that we live right now in an incredibly globalized, competitive society in which quality matters.

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Where I'm going here is that I think we really have two core recommendations that we'd like to make to this committee. The first is that there's a real need to change the paradigm by which we think about how we measure success. When this committee looks at the reports from the Ministry of Advanced Education and holds that ministry accountable, what is the standard to which that committee is held?

I'd put before you that I think the standard should be, as recommended by the OECD, the return on investment of education. It's a little bit more complicated to measure than putting people on seats in an institution, but I think it's a much more smart way of measuring what's going on. And it's a way in which we can align funding goals, making programs cost-efficient, with being able to deliver a high quality of service.

It's when we look at what comes out on the other side. Education is a means to an end; it's not an end unto itself. Getting somebody into university or a college program — that doesn't matter. The program does matter, and it is important. But what we're really interested in is the result. What does it look like for our society after someone graduates? What kind of job do they get? How competitive are they in a global marketplace?

Those are the questions I think we should be asking. That's why our first recommendation is to put forward to this committee the idea of moving to a return-on-investment benchmark as being the way in which this government measures the success of education, both K-to-12 and the post-secondary level.

Second of all, the question of: how do we deal with our current issues? I think this idea that if we move into this return-on-investment model…. What does that mean? I think it means that we start thinking about the students that we're investing in, in the same way that we think about other capital investments, except the capital investments here are not to provide a space for meetings or a space for classrooms but to provide the future of this province.

The future economic prosperity of this province is based on the quality of the education that students are receiving. That's why our second recommendation is that we need to fund it now. It's really up to the minds here to come up with a way of how to do that, but I think it's so critical that we fund it now, because making a misstep here can be catastrophic in the future.

It's a hard thing to look at, because we're stuck in one-year budgets and three-year fiscal forecasts. But this is not a three-year fiscal forecast; this is a ten-year forecast and a 15-year forecast of what it looks like when they get out on the other side and what the economy looks like here.

I know that's a hard thing to ask because it requires moving into a new mindset and being able to convince voters that it's important to adopt this long-term mindset. But I think this is really the way that we need to move in education.

I think I've outlined some of the key areas where improvement is really needed in the short term. Increasing operating subsidies at the preschool level. Really target those lower-income families. I think that's a thing this government has already done a fairly good job on, but we need more work, and I think it fits well with the goals of this government.

The K-to-12 level — we need to fix those problems. If we have a bill saying that there's a maximum number of students that there can be in a classroom, the system
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needs to be funded so that there's a maximum number of students in the classroom. The language of the bill which was voted on by members here says that principals may decide the classroom size based on what is appropriate for the students. That's not the current way in which this policy is being interpreted though.

Making the decision based on meeting a budget that's constrained by what's given to them by the government is not an appropriate measure for the students. That needs to be addressed. I think the government should meet its commitments there as a bare minimum and should think carefully about how we can go beyond the words of Bill 33.

Finally, at institutions such as my own at UVic and other universities across British Columbia, which I think are really the jewels of this province as far as innovation goes, we need to make sure that they're not making these gradual cuts. We can't have the universities dying a slow death of teaching hours being rolled back, because these things do have long-term implications.

I thank you very much for your time.

R. Howard (Chair): Thanks, Dylan. We have a few questions.

J. Thornthwaite: Thank you very much for your presentation. I like what you're saying about changing your mindset to long-term goals as opposed to short-term goals. I'm hoping that you'll be able to assist us when we say things like that, that there is a long-term goal ahead.

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My question is about your comment about quality versus quantity. We've heard numerous speakers over the last few weeks talk about personalized learning and 21st-century learning and trying to make it so that, for instance, special needs kids get the help that they need. But we've also heard that the class size or composition numbers are actually a negative with regards to having to focus on the personalized learning, because they're so rigid. We also heard from the B.C. School Trustees Association that a lot of the barriers to what you're saying and personalized learning are actually collective agreements. I wonder if you could comment on that.

D. Sherlock: I don't really feel super comfortable commenting on an ongoing negotiation between government and a union.

J. Thornthwaite: I'm not talking specifically about what's going on. I'm talking in general.

D. Sherlock: I think that, really, the government needs to take steps to figure out these things and negotiate a way out in which we can have a good place for children with special needs, youth with special needs, and design that into the classroom. I'd say the government knows far more about the way out of negotiating their way through collective bargains than I would, so I don't know if I could comment on that to your satisfaction.

M. Stilwell: Thank you for your presentation. Like you, I think we are all interested in the idea of return on investment for post-secondary education. Given that post-secondary students are consumers at those institutions, what if anything do you think is the role and responsibility of the post-secondary institution to help students navigate a course of learning that will help them attach to the labour market, specifically?

D. Sherlock: I'm really glad you asked this question. I was just discussing it with your successor in the portfolio, just yesterday. It's that question of how we balance the needs of bringing people through what the labour market requires and also, at the same time, having a liberal system of education. I think it's a really complicated policy issue, but I think it's one that it's worth the government having time for.

One thing that we talked about with Minister Yamamoto was discussing and having student consultation and having a longer conversation about that topic. I think that it's a really important one.

At the same time, too, we need to balance how we understand the labour market with the fact that, to be honest, what might seem like a good investment in education today might not turn out to be a good one tomorrow. I'm sure, three years ago, if I had told people that today Google and Apple would be hiring tens of thousands of fine arts graduates, you'd laugh me out of the room. But today that's the case.

So that's a very difficult question. But I think it's one that I'd be very happy if the government spent good time on and if people supported having a better consultation with students and universities about that particular topic.

R. Howard (Chair): Excellent. Thank you, Dylan. Good of you to come out today. We appreciate you taking the time.

Next up we have Where's the Funding — Jaraad Marani.

J. Marani: My name is Jaraad Marani, and I also am an undergraduate executive at the University of Victoria Student Society. I am representing the Where's the Funding campaign.

To give a little context about the Where's the Funding campaign, it's the first time in UVic's history that we've ever worked with UBC and SFU on collaborative campaign goals around reducing barriers to education. Our three campaign goals that we are asking for are…. This is the one I'll be talking about today — the reduction to elimination of interest rates on
[ Page 1504 ]
student loans; re-establishment of a provincial grants program; and then, as Dylan was just talking about, increasing core funding.

To give you some of the background on interest rates and student loans in B.C., as you probably know, we have the highest interest rates, in B.C. provincially, and share that distinction with only one other province, which is New Brunswick. The current borrowing rate that happens is that the government actually borrows at 1 percent below prime, but we do see that students are paying 2½ percent above prime on their provincial student loans.

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I guess for a little bit of context, also, in 2009 the Newfoundland and Labrador provincial government, under Progressive Conservative Premier Danny Williams, actually eliminated interest rates on students loans. So it is something feasible, and it is something that students see as hopeful.

I guess, just basically, my main argument that I want to make today in regards to asking for the reduction to eliminate interest rates on student loans is that the current system of interest rates on student loans is detrimental to B.C.'s economy, to both students and non-students. This is because the current loan system is inequitable. It creates a barrier to access post-secondary for low-income people.

British Columbia faces a demographic shift in which a larger number of older workers are leaving the workplace, leaving a skills shortage of younger workers without the training to fill that position. According to the Minister of Education, approximately 70 percent of jobs in Canada require post-secondary education, and that number will soon reach 75 percent in British Columbia.

For the provincial government to address the need to educate a large, demographically diverse cohort of young workers, the framing concept of guaranteeing equal access to education is key. Student loans allow students without pre-existing savings or high family incomes to access post-secondary education. Evidence shows that rising tuition in Canada has negatively impacted the trends towards post-secondary participation in the form of what we call debt aversion. That's something that I'm going to be talking about a lot today.

High interest rates on student loans disproportionately deter those low-income students, as they are most likely to have had negative experience with debt in the past. The prospect of graduating with, on average in B.C., $22,000 in loans and then the interest compounding after that is easy to be seen as undesirable.

Therefore, for every student that has a student loan, it is impossible to ignore those that choose not to enter post-secondary because of the higher-than-average student loan interest rate. Simply put, the long-term effects of high-interest debt do not equal potential for education for a lot of people in B.C.

Debt aversion is also difficult to measure for high school graduates who never enter. According to one longitudinal study, it showed that 20 percent of high school graduates from 1989 delayed entry into university an average of four to six years.

We can also measure another facet of debt aversion by the number of students who work part-time or full-time to pay for their studies. Working while studying has the effect of extending the length of study and, therefore, limiting the economic potential of that student worker and negatively impacting both the economy and the tax base. The rising amount of students forced to work through their education has a large negative impact on the job market because they are taking away low-skilled jobs from those that need them, further increasing unemployment and general poverty levels.

Those student workers are not paying additional interest on loans. Through debt aversion, they end up deferring increased income that they would have otherwise had by finishing their degree faster.

Another measureable effect of debt aversion is on transitions from one degree or diploma to another, where holding debt from one degree or diploma makes a graduate twice as likely not to pursue further studies.

A reduction on student loan interest rates helps graduates participate in the economy by reducing their debt burden and allowing for more spending. Talking to a lot of post-secondary graduates that still have student loans, they tell me that having the high interest rates on student loans inhibits their ability to invest in RRSPs, houses and other luxury items, such as cars and those kinds of things. One report shows that college graduates can, on average, make $394,000 more over their lifetime — and bachelor's degrees by $745,000.

So while this is all well and good, after graduation they still have to overcome their student loan and the high compounding interest rates that are racking up year and year, taking away money from being invested directly in the economy after they graduate.

Many different sources have pointed out that the reason for such high interest rates is to offset the fact that we have high default rates. Yet if you talk to any student that has defaulted on their student loans, it is not because they couldn't find a job. It was because of the high interest rates on payments that they were not able to make.

Further to this, the high default argument is less of an issue, as university students, on average, are defaulting only 7 percent. College graduates are 12 percent, and private institutions around 20. Even more telling is the fact that average defaults have dropped dramatically, from 28 percent in 2003 to 16 percent currently, so this argument of high interest rates because of high default rates is no longer applicable.

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The current loan system is inequitable because it creates a barrier to access to post-secondary for low-income people. When low-income students already have access to post-secondary with no fear of major debt, they enter
[ Page 1505 ]
the system. The demand on social services is reduced, and they pay more taxes over their lifetime.

Overall, I have tried to make the argument for the current structure that marginalizes low-income people to the point that it makes it harder for them to initially even access education and, in the long run, not able to participate fully in the economy as they are paying off their high interest rate loans for years to come.

In conclusion, after meeting with the staff of StudentAid B.C., they told us that it would only cost $30 million to eliminate interest rates on student loans. This is a staggeringly small effect compared to the huge adverse effect that it has on student lives.

Now you ask: where does this money come from? There are two sources that our campaign has seen as equitable and highly favourable in public opinion. A first is a transition towards the system of taxation on banking institutions, which was taken away. From the research and news coverage that we have seen, the effect of not taxing the banks hasn't been seen, really. We haven't seen an increase in the amount of jobs; we've actually seen a decrease in the amount of jobs.

On the flip side, there's also the popular method of increasing corporate taxation. We have some of the lowest taxation in Canada, and an increase would be good for public opinion and could help pay for the action to eliminate student loans.

For this small cost, we can boost B.C.'s economy while, at the same time, reducing barriers to access colleges and universities for B.C. students.

R. Howard (Chair): Thank you. We have a few questions.

M. Stilwell: Thank you for your presentation. I am, like you, aware that poor students tend to be debt-averse and underestimate the benefit of post-secondary education and overestimate the cost. Also, I want to tie that back to your comments about default. I don't think you should skim over the fact that default in private institutions is still very high and costing students. Most university students who start, stay and succeed in university get a job and pay off their loans.

So the question related to that is: what do you think is the role and responsibility of the high school system and post-secondary system to help students successfully navigate financially and academically so they do finish their training and education in the most cost-efficient way?

J. Marani: Are you referring to the StudentAid B.C. system, the loan system?

M. Stilwell: Yeah. Do you think the universities should have a role and responsibility for incoming students — to make sure students understand what courses they have to get to get where they want to go and how to get those courses in the least possible time and manage their student loan portfolio? Do you think there is a role for that?

J. Marani: I think that if you look across B.C., there are different amounts of percentages of people who take out loans. At UVic it's over 50 percent of students that have student loans. Most of those students really don't know how to navigate those student loans, especially with the amalgamation of the student loan system that's happening right now. There's a lot of bureaucracy and a lot of problems with students.

I think it is a number of different institutions' responsibility to help the students navigate. I think one of the big problems that we're seeing…. I also facilitate the food bank on campus. January and September are the number one times for students to access the food bank. It's because most of them don't get their student loans until September or February. That's a really, really big problem, because students are having to choose between books and food. Most of the time it's books, which means that you're having most students not being able to feed themselves.

I think it is a big problem. Hopefully, with the amalgamation of the student loan system, we can see an alleviation of bureaucracy and people being able to navigate it a lot better. But I think it is something that has to happen from high school.

D. Donaldson (Deputy Chair): Thanks for the presentation and your ideas about access. We're talking about access. We had a presentation earlier about a needs-based grants system from one of your colleagues, and we've heard that before throughout the province.

In looking at the interest-free loan mechanism to deal with access, I've heard some drawbacks to it. For one, the criteria of the ability to get a loan being a filter. And as well, that once a student graduates then the interest is due once graduation…. Are those drawbacks that you've heard as well?

J. Marani: That's already in the current system. We have a six-month grace period, which I would hope for an extension for. A lot of institutions in B.C. are asking for an extension because it's not easy to find a job after you graduate, especially for students like me that are in liberal arts programs.

But no. Maybe I'm not understanding your question.

D. Donaldson (Deputy Chair): If you had a preference, would you prefer a needs-based grants system or an interest-free loan system?

[1330]

J. Marani: That's an interesting thing. Needs-based grants systems are really awesome because they immediately reduce barriers to access to education, especially for those students living in marginalized communities. So
[ Page 1506 ]
right now we have the back-end program, which is good, but I think a front-end program would be better.

If we were to take…. Out of both, even though I am talking about interest rates, I think a needs-based grants program would benefit a lot of students.

R. Howard (Chair): The committee thanks you for taking the time to come out this afternoon. We appreciate your presentation.

Next up we have ASPECT — Norma Strachan.

Welcome, Norma. As you get set up, you probably know you've got 15 minutes. At about ten I'll give a heads-up if I can. You can either take some questions at that time, or you can go straight through — your choice. The microphone is yours.

N. Strachan: I'll try not to talk too long because it's Friday before the long weekend. Thank you very much for being here on a Friday before the long weekend.

ASPECT is the provincial association of community-based employment training agencies. We have about 175 members around the province that have been delivering service in approximately 120 communities. They've been doing this for years — in many cases, decades. They've been doing that by cobbling together funding from both the federal government, through HRSDC, and the provincial government, mostly through the Ministry of Social Development.

This year the employment and labour market programs are moving through a period of transformation in British Columbia. It started in 2009 when the federal government transferred responsibility for employment training over to the province, under the labour market development agreement, along with about $300 million. So this was some money that was contributions from EI clients, and it's for EI responsibilities.

About the same time — we're in 2009 — the budget for the Ministry of Social Development for employment programs was around about $70 million. We've noticed since that time, since the federal money transferred over, that the province's investment in employment training programs has been consistently diminishing. The forecast for the next few years is that it will continue to do so.

The responsibility for the delivery of all the programs now under the labour market development agreement is with the Ministry of Social Development, and they've done a yeoman's job of doing consultations around the province for the last three years. However, as you'll know, with all consultations you hear a variety of voices, and one is never sure exactly what the outcome is going to be.

So the ministry subsequently made a fairly, we thought, right-minded decision to combine the moneys from the federal government and the provincial government so that there would be more efficiencies in the delivery of their service.

What caused a few concerns in our sector is that they also decided to collapse the number of programs. Where a total of ten different kinds of contracts, if you combined the federal and provincial contracts…. They decided to combine it into one new model called the employment program of B.C. It's essentially a one-stop-shopping model where in every community there will be an employment skills centre called an ESC, and clients will go there.

Now, my organization thought long and hard before we decided that we were going to support this model. The reasons why we decided to support it were that it's a one-stop-shopping centre. It really removes a lot of confusion for clients. In the past, clients have had to wonder whether or not they're EI-eligible or IA-eligible or what kind of programming they should be going for. Under the new model, they'll go to an employment skills centre, they'll be assessed, and they'll be referred to the kind of menu of services that they may be eligible for. So we endorsed it for that reason.

The other reason is that the minister put a lot of effort into coming up with a community-based model, rather than a prime contractor model that in the past has been prone to being bid on by large corporations, sometimes from the United States. So we were very supportive of the fact that they went for a community-based model.

There are 73 catchment areas around the province. It's pretty difficult for anybody, even a large corporation, to bid on 73 different proposals, especially when the RFP was 756 pages long. It was humongous. It was a very onerous process to bid on it.

Secondly, our organization is always committed to greater efficiencies in service, provided that it doesn't impede the services to clients. However, the process has also come up with quite a few problems, because in order to deliver a one-stop shop in every community, the ministry has asked that there would be partnerships formed amongst agencies and communities.

[1335]

Those partnerships come with a whole area of problems on their own. There are different organizations, particularly non-profits, who have missions and mandates that may be in conflict with each other or with this one-stop-model design. Some organizations are particularly organized to deal with certain client groups — for example, new immigrants, youth, persons with disabilities. So while they're focusing on one group, they may not be quite so interested in a one-stop-shop model.

However, ASPECT…. As a membership organization, our role was to try to work, one, collaboratively with government to sort of make some tweaks to the model to see if we could make it more workable; and secondly, to work with the community-based agencies around the province to see if we could help them be more successful. So we put on seminars and symposiums to help them develop partnerships. There are not just prime contractor part-
[ Page 1507 ]
nerships. There are co-ops. There are consortiums. There are memorandums of understanding.

The process of tendering also downloaded a huge expense to the agencies in the province — as I said, a 756-page RFP. Partnerships come with legal expenses, meeting expenses that went on and on ad nauseam.

ASPECT conducted a survey of our members following the tendering process, which ended in May. Literally millions of dollars in time and wages were spent by mostly non-profit organizations preparing to bid on this model of programming. They also reported that, overall, more than $2 million was expended by a total of 72 employment agencies that responded. So this was in wages and time and proposal preparation. That's a lot of expense to put onto the community social service sector.

In November 2010, last November, ASPECT formed a financial advisory panel comprised of representatives from the banking institutions and accountants that are working in some of the employment agencies — quite high level people — who did an analysis of the model, because there was an awful lot of financial risk in the new model.

The new model presumed — it's a performance-based contract — that agencies would take on the risk of delivering the contract for the first three to six months before they would get a cash flow going. Fortunately, as a result of our financial advisory panel and some really direct feedback to the ministry, they looked at it.

The banks had said that there was no way that any of them would be willing to loan money to an organization based on the contract that the ministry was putting forth — the performance-based contract. Also, if you take a look at the overall cost to the organizations, as well, just in interest rates let alone risk that boards are seldom willing to take on….

The ministry reconsidered, and they made a wise decision that they would guarantee funds for the first six months based on a projected cash flow and that they would pay the monthly cost at the beginning of each month so that agencies wouldn't even have to be carrying the cost for the full month.

So the Ministry of Social Development, under Assistant Deputy Minister Allison Bond, has paid attention. They've tried very hard to listen, and they've tried very hard to respond. However, there are still a number of concerns that are coming up.

The contracts are in the process right now of being awarded. It's quite an interesting process. They're being invited to go and do presentations, and we expect the awards will be made known by the end of October or the beginning of November. The new contracts are expected to start April 1, 2012, so there will be a wind-down period for old contracts and a windup period for the new ones.

The contracts for the employment program of B.C., as it's called, hold a 90-day termination clause, which is standard in most of the employment programs today. But it's not doable in the new program, and the reason is that in the past, as I said, agencies may have cobbled together funding from a number of different sources. They may have held four or five different kinds of contracts. Now there's only going to be one.

If the ministry decides, in their wisdom, at some point that they wish to cancel that contract, 90 days will be the end of most organizations that are bidding on this model or are taking part in this model. That will be the only contract they have.

Also, there is still considerable financial risk to the organizations, and there's no opportunity built in to the contracts for organizations to have the reciprocal right to decide that this is no longer a model that they can deliver and that they would like to opt out.

[1340]

So we're asking the ministry to not only increase the termination clause to 180 days but also to allow organizations the right to say: "We need to opt out. Our organization can't continue to carry this financial risk for the government, and we would like to opt out." So far, that hasn't been included.

The new model also divides clients up into tiers — tier 1, 2, 3 and 4. The tiers will determine the eligibility. The model's going to be managed almost entirely by an integrated case management system, which brings up fears of its own. I won't get into that because that's outside the realm of this.

So there are clients that would be deemed EI eligible who in the past have been allowed under federal legislation to have access to targeted wage subsidy or to get involved in self-employment programs, sometimes even to purchase training. That's no longer going to be a part of the allowable expense for those tier 1 clients.

That's an issue we're taking up with the federal government. They're interested very much in making sure that the labour market development agreement is adhered to and that EI clients continue to get the services for which they have already paid contributions.

R. Howard (Chair): Norma, just so you know, you're at about ten minutes.

N. Strachan: Thanks. I thought I wouldn't talk so long.

We're finding that the model is overly prescriptive. The government has also determined that there would be…. They've set a $30 service fee, and that is to do a complete assessment of a client. Each fee has already got a predetermined payment rate and a predetermined amount of time that an agency can spend with a client. That doesn't even sufficiently cover the cost of doing services for the client nor the actual time that's expected nor the cost of paying for a professional employment counsellor.

We're asking that that overly prescriptive model be eliminated. Strangely enough, we're not asking for any
[ Page 1508 ]
more money to be included. There's a fair amount of money included in this model, but if there was more flexibility allowed in the model, where it wasn't so case-managed and so prescriptive, it would be a model that's easy to deliver — all of my members tell me.

Ironically, at the same time — I find this very bizarre — the government/non-profit initiative is working very hard on implementing a full-cost financial model. The government/non-profit initiative is under the jurisdiction of the Ministry of Social Development. Apparently, they don't talk to each other very often.

The reason for the full-cost model is that they want to recognize the contributions that the non-profit sector gives to the government, to services that are being delivered. They want to emphasize the need to put in sustainable funding models for agencies delivering services on behalf of the government.

We've been working for…. I've personally put in probably over thousands of hours into the government/non-profit initiative. We discuss regularly how valuable non-profit services and community social services are to the government, yet they're being constantly undermined and eroded. This model is no different.

We've asked for inclusion on the advisory committee for the employment program of B.C. We've asked for inclusion on the advisory committee for the integrated case management system. We're going to continue working collaboratively with the Ministry of Social Development to try to make this model work, as well as working with our members to try to help them deliver the services without experiencing financial bankruptcy.

R. Howard (Chair): Thank you. Just a few minutes left, and a couple of questions, if we could make them quick.

M. Stilwell: Thank you, Norma, for that great presentation. I have been hearing a lot from the not-for-profits, and I was aware of the financial report. So it was good to hear a very balanced….

I'm interested in the federal compliance issues, because I know how important that is for the province to get its money, and would ask: could you relate back to the Chair when there is more information about that issue? Would you be willing to send the Chair information just with a kind of follow-up after the contracts are awarded in November and December? It would be helpful to hear the end of the story.

N. Strachan: Certainly. I would like to do that. Thanks.

R. Howard (Chair): Excellent. The Chair will make sure that gets to the committee.

D. Donaldson (Deputy Chair): Thanks very much for the presentation. I just want to note that I think the name "community-based" is in name only around this initiative. I mean, there might be 73 catchment areas, but the reality in rural areas, especially in remote rural areas like where I'm from, is that the risk is impossible for a community-based organization to handle on its own. We're going to see amalgamation and deterioration and elimination of services.

[1345]

My question around that is that under this model, I understand that… There are a number of clients, if we're looking at performance-based, who have many barriers to employment. There's a worry that those clients will get left behind under this new model, because agencies that have the contracts are going to have to be judged on performance-based. There's a worry that they'll have to be picking off the people who are more likely to gain employment more quickly, therefore widening the gap and disparity between those who have and who have not.

Are you hearing those kinds of comments? How does your association address those comments in, for instance, the tendering process?

N. Strachan: Well, definitely that's always something we're concerned about, because the whole community-based group arose from working with the most multibarriered clients. There are other groups that will deal with the cream of the crop all the time and take the most amount of money, too, when possible.

Under the four-tier system, the tier 4 clients are allowed…. That's another switch that the ministry made following our payment report. The tier 4 clients will be given more money. They're allocated more money for services. But it's still very much controlled, and it doesn't recognize the true level of services that multibarriered clients need. If it's being managed by a database where you are only allowed to, according to the client's eligibility…. You tick this off, and it goes: "Bing! You've got $75 to spend on helping this client find a job." I think that works out to about an hour and a half.

If you can't help a client find a job in that period of time, then it's going to be very difficult. A lot of those clients need to come back repetitively. They need quite intense work. Our concern…. I've heard it from our members too. The concern is that they're not used to turning down clients. They don't want to be in that position, and if they're doing it, they'll be doing it on their own backs. They won't be reimbursed for it.

R. Howard (Chair): Thank you, Norma. We've run out of time. We appreciate you coming out this afternoon and making a presentation.

Next up we have ProArt Alliance of Greater Victoria — Peter Sandmark. Looks like we have Peter and Ivan.

Welcome, gentlemen. As you know, you've got 15 minutes. At about the ten-minute mark I'll give you a heads-up, and you can stop for questions or go straight through. Your choice. Microphone is over to you.
[ Page 1509 ]

P. Sandmark: Thank you very much. I'm Peter Sandmark. I'm the executive director of MediaNet, and we are one of the member organizations.

Ivan and I are here today on behalf of the ProArt Alliance, which includes groups like the Art Gallery of Greater Victoria; Ballet Victoria, with their new Ballet Rocks thing, and you can see all about it in the arts guide that we've handed out; Belfry Theatre — of course, Ivan is here; Blue Bridge Theatre; CineVic; Intrepid Theatre runs the Fringe festival; Kaleidoscope; MediaNet; Open Space, one of the oldest artist-run centres in Canada; the Other Guys Theatre; Pacific Opera; Story Theatre; Theatre SKAM; the Victoria Film Festival; the Victoria Conservatory of Music; the Victoria Jazz Society, which runs the jazz festival as well as the blues festival; and, of course, the Victoria Symphony, which you probably know runs the Symphony Splash every year.

We represent the professional arts organizations in Victoria, and we want to talk today about the positive contributions that the arts provide our city, as well as how the arts benefit all parts of B.C. society. We've brought along, and you should have also, a copy of a recent economic impact activity study.

This study, the 2010 Greater Victoria Arts And Culture Sector Economic Activity Study, was conducted by Dr. Brock Smith from the Peter B. Gustavson School of Business at the University of Victoria. It was a joint operation between Dr. Smith and the CRD Arts Development Service, the Victoria Foundation, the Greater Victoria Development Agency, Tourism Victoria and ProArt Alliance as well.

This study shows us what many of us already believed and knew: that the arts and culture sector is a significant contributor to the general economy, as well as an important source of jobs. The study concludes, or estimates, that the total economic activity generated by the greater Victoria arts and culture sector is $170 million. That is equal to 1/5 of the economic activity generated by tourism in the same region. This amount, $170 million, suggests economic activity supporting an equivalent of 5,400 person-years of employment and $21 million in property tax revenue.

[1350]

You can read the methodology and how it's done. It's based on standard methodologies for economic studies. It is a conservative approach — for example, not exceeding extrapolation standards. In our opinion, it's under what the true economic impact really is.

In short, what we're saying is that government investment in the arts is more than returned by the tax revenues generated. I should talk about the tax revenue of $21 million of property tax — it's only property tax. This study does not cover sales tax, goods and services or income tax generated by this contribution.

Economic contributions are only one part of it — one part of the benefits, if you will. Obviously, there are social benefits, educational benefits for school children — Art Gallery of Greater Victoria running educational programs — and health benefits for senior citizens. We refer to a study. The arts are a key element in making our cities attractive as destinations for investment — for example, especially the high-tech industry.

If we want to attract international investment, and I do see that that is one of the priorities in the guide handed out, especially high-tech, then B.C. communities should be attractive places to live for the creative class. This is a whole concept that's been popularized by certain books showing how certain cities attract the creative class and companies. We're seeing that somewhat in Victoria now, with the high-tech industry.

The arts contribute, therefore, to our quality of life, making our cities attractive places to live. They also help young people build discipline. Students involved in the arts excel in achievement in their studies. Organized artistic programs offer positive alternatives to unstructured hanging out that often leads to trouble. It attracts professors, and it attracts international students as well.

Finally, we feel, in addition to these economic and social benefits, the arts play an important part in inspiring us, defining who we are as a society, connecting us to each other and to our cultural heritage and offering us transformative experiences that make us better people.

I. Habel: It's not quite time, but I'll take over from there.

As Peter said, we believe that the arts are key to making British Columbia a great place to live, visit and work. We also believe that the arts are one of the best investments made by the province of B.C.

What the arts and cultural community needs is dependable, dedicated, multi-year, secure core funding so that artists and arts groups can plan prudently and effectively over the long term. Stable core funding ensures sustainable arts and cultural activities that contribute positively to the economic and social well-being of our communities.

What we have seen from the greater Victoria economic impact study is that provincial support serves as seed money, creating enormous spin-off benefits. Increasing provincial investment in the arts will produce significant economic and social returns, so we come forward with our recommendations.

We are urging the committee to recommend an increase to the B.C. Arts Council's funding to $32 million. We believe that the B.C. Arts Council, on behalf of the government and people of B.C., remains the best stable source of direct, ongoing, long-term, sustained core funding for artists, arts organizations, museums, performing arts companies and community arts councils.

We also recommend that the provincial government use its arm's-length relationship with the B.C. Arts Council through the Minister of Community, Sport
[ Page 1510 ]
and Cultural Development to ensure that the distribution of funds are based on artistic excellence, the needs of the people of B.C. and the strategic goals of the Arts Council.

We recommend that the B.C. government offer the B.C. Arts Council stable funding so that the B.C. Arts Council can begin offering multi-year grants to arts organizations, increasing stability for arts infrastructure.

The uncertainty of the extent of government support to the arts has shaken the arts and culture community. What is needed is stable funding and a renewed vision for arts and culture and heritage. The uncertainty and instability caused by the swings in the B.C. Arts Council and gaming funding have made it almost impossible for arts organizations to plan forward or to fully meet their mandate.

[1355]

With respect to gaming funding for the arts, we ask the government to honour the original memorandum of agreement on gaming policy between the B.C. Association for Charitable Gaming and the government of British Columbia, wherein the province committed to a disbursement guarantee of one-third of government net community casino gaming revenue, indexed to inflation.

We believe that funding to non-profit and charitable organizations should be at those levels — and if not fully, then at least at 20 percent of net gaming proceeds.

Most importantly, on gaming funding we urge the government to restore funding for adult arts programs. Since arts programs for adults were made ineligible in the gaming grant criteria, many arts organizations have suffered, resulting in lost jobs and reduced programming and activity for their communities. Supporting all activity of arts and cultural organizations allows them to present more and better programs for youth.

In the 2007 report for the ministry — A Case for Investing in Arts, Culture and Heritage Infrastructure — that study concluded that there is a serious shortage of arts and heritage infrastructure in the province and that what does exist needs to be upgraded.

Finally, we ask the committee to recommend the government create a capital infrastructure investment program for arts and cultural organizations so that they can own, maintain or upgrade their facilities and venues.

In support of this request, we note that that 2007 report went on to comment that in other provinces, such as Alberta, a $280 million investment over two years, and Saskatchewan, a $100 million program…. Each of these made significant investments in infrastructure. The report also pointed out that Ontario partnered with the federal government to invest $600 million between 2008 and 2011 on cultural infrastructure. This is in comparison to the total investment of $123.8 million invested by B.C. over 30 years ending in 2007.

That's really the end of our presentation. Again, we want to highlight the primary request, not only from ProArt but from many arts organizations and communities across the province, that the B.C. Arts Council's funding be increased and that it become a stable source of funding for arts and cultural organizations across the province.

D. Donaldson (Deputy Chair): Thanks very much for the presentation. Two questions — quick questions, with the permission of the Chair. The $32 million — is that representative of the recommendation we made two years ago to restore to the '08-09 levels? The second question: under 2.1, the recommendation you made there, did you make that recommendation to the review committee on gaming grants that's underway right now?

I. Habel: Yeah, there were several recommendations made to gaming in respect of the ask for the B.C. Arts Council. It reflects a current-needs ask and is based on previous asks and requests to this committee, and it also follows on previous recommendations from this committee. Going back as…. I first made a presentation to this standing committee, I think, in 2007 or 2006 as we were leading up to the Olympics, and those requests have been fairly consistent since.

D. Donaldson (Deputy Chair): Thanks for your perseverance.

P. Sandmark: We made the same recommendation to the gaming review chaired by Skip Triplett. At that we also showed…. Surveying our members, we had estimated a loss of over $1 million over three years in Victoria, like two arts organizations that were talking about the loss of gaming funding to arts organizations in Victoria, mainly due to the fact that they were no longer eligible because of adult arts programming being excluded.

J. Thornthwaite: Yes, that was my question. If you had presented to Skip Triplett's gaming…. Okay, you answered that question.

P. Sandmark: Yeah, we did. We're sending him the economic study, too, because if we can underline, we really do think the arts are a good investment and will bring back the tax revenues that they cost.

R. Howard (Chair): Excellent. Thank you, gentlemen. We really appreciate your taking the time and coming to visit us this afternoon.

[1400]

Next up we have the Victoria Real Estate Board — Dennis Fimrite.

Welcome. You'll probably know you have 15 minutes. At about the ten-minute mark I'll give you a heads-up, and you can stop for questions or go straight through. Your choice. The microphone is all yours.
[ Page 1511 ]

D. Fimrite: Thank you for giving us this opportunity to speak with you today. The Victoria Real Estate Board currently represents over 1,300 realtors in greater Victoria who work with buyers and sellers of homes and other properties located from Sooke to Sidney and north as far as Mill Bay and including the southern Gulf Islands.

We would like to begin with some good news about our local economy when it comes to our real estate sector. The good news is that when you review our single-family-dwelling sales on our board's MLS system for the last 90 days, from July 1 to September 30, total sales equal 745 homes. The 2010 sales for the same period equal 667. So we see a slight increase.

In addition to that picture, there's separate data from some builders who marketed their own properties but still in many cases relied on our profession to bring them buyers. While those sales take place with the help of our members and add to the economy, they don't get reported in our sales numbers.

Total local MLS condo sales in 2011 for July to September equal 400, compared to 2010 — 348 for the same 90-day period.

Even though it's been a slower start this year in our marketplace, we would like to leave the impression with you that at a minimum, we're experiencing a stable market. And for the last 90 days we're actually feeling a bit more optimistic.

The other good news for the Minister of Finance and some economists is that the single-family-dwelling median sales price for September 2010 to September 2011 showed a slight decrease, from $547,000 to $535,000.

Please understand we're not using these statistics to be overly optimistic about it, but there is some strength in our sector that needs to be recognized. Our own assessment continues to be that the southern Vancouver Island marketplace for single-family detached homes is remaining stable, with good momentum despite the global economic situation.

Today our board would like to focus even more on our local marketplace and how the housing sector here could contribute to greater economic stimulus if the government took a look at proactive steps.

We know from previous research the Altus Group, based in Toronto, conducted that for each residential MLS transaction in B.C., an average of $60,200 in additional consumer spending was generated between 2006 and 2008. Even though our own real estate board experience is somewhat off the high number of sales that we experienced in '07, the 6,000 total sales we are likely to see for 2011 still represent a $360 million contribution to our economy, using this multiplier. And that's just the post-transaction expenditures.

One can begin to easily see from this small regional example the positive impact that the housing market has on the Canadian economy as a whole. Just remember that when you last read a story about the national economy falling slightly, the main reason for the analysis was likely that the housing sector was in trouble.

Last year we quoted to you an article appearing in the Globe and Mail headlined "Slowdown in Housing Activity Threatens Recovery." This article noted: "The housing sector that helped Canada pull out of the recession now threatens to derail the recovery, as a slowdown in sales and construction acts as a drag on economic growth." The article goes on to quote CMHC to show that the housing-related activity, including the rental market and the sales of existing homes, now accounts for almost 20 percent of the gross domestic product in Canada.

This year we want to build on that argument about the importance of both the sales side of the housing market, represented by our profession, and the construction side of the housing sector, while addressing a couple of critical questions that you have raised in your committee's Budget Consultations 2012 discussion paper.

The paper asks what is important to us when it comes to taking steps to addressing the challenges ahead. Here the paper suggests that presenting groups might want to suggest how British Columbia can find new ways to support private sector job creation.

[1405]

Here we bring your attention to an idea that is gaining traction from coast to coast, with support now from the Federation of Canadian Municipalities; the British Columbia Commercial Council of Realtors; the Canadian Federation of Apartment Associations; the Canadian Home Builders Association, B.C. chapter; Rental Owners and Managers Society of British Columbia and of Canada; and the newly formed Metro Vancouver rental housing supply co-op.

The single idea is that the government of Canada be persuaded to allow for a change in the federal Income Tax Act that would allow for capital gains rollover to spur reinvestment in the purpose-built rental apartment sector.

Yes, this is a federal issue in that it relies on a change in the federal Income Tax Act to bring the idea into force. However, examine with us the direct and immediate benefit to the British Columbia provincial revenue picture. On every sale, the province receives the unpopular provincial property transfer tax. In its current budget, this year, it generates an estimated $810 million.

When a residential multi-unit apartment owner sells his property, in order to qualify for the proposed rollover or deferral of federal tax, he would be required to reinvest the proceeds in another property — more property transfer taxes generated for British Columbia. There are also all the other services — mortgage broker fees, assessment fees, inspections, legal fees — that all get added onto that as well.

Also with regard to our proposal, when it comes to renovations on older buildings and the newly purchased
[ Page 1512 ]
buildings that vendors of the first building must acquire within one year to be eligible for the rollover, provincial sales tax will be payable on all those materials.

It certainly looks like there are a lot of good reasons this year to recommend strongly to the British Columbia Minister of Finance that he commit to working closely with his colleague the Minister Responsible for Housing to build a provincial coalition of the interested to include the official opposition, the private housing sector and other groups in this province who think the time has come to push this issue and encourage the private sector to provide some of the jobs this province is capable of producing.

On October 13 our real estate board is host to a national workshop of interested parties to share ideas on a common front to advance the topic. This will be a positive approach to build a private sector coalition of the interested, and we'll be looking for creative ways to encourage Ottawa to take a first step, while all in the room will recognize that the government of Canada is also looking for ways to attract new revenues and not look for ways to defer existing revenues.

The committee might even want to make sure that an appropriate policy person or two from the government is there to observe.

We know that B.C.'s Minister Responsible for Housing has many of his provincial counterparts already committed to action on this topic, and we propose that all in British Columbia aware of the impact this could have on the construction and upgrading of apartment units begin to unite and work together towards finding a way to making this more attractive to Ottawa.

Your paper also asked what we would like to see government do to create the conditions necessary for jobs and economic growth. In a way, our discussion on capital gains rollovers answers this question, too, in a major way. However, we offer three additional comments.

Listen to our British Columbia Real Estate Association on October 12, when they present their thoughts on beginning to reduce the burden of the property transfer tax on the overall economy. By finally showing government a credible example of a new source of revenue through capital gains tax change, we believe that it now allows us to continue the argument to reduce the overall burden of property transfer tax or to index it.

Allow municipalities in the province to have the authority to waive development cost charges when certain types of more affordable housing projects appear before them. And importantly, work overtime as a Legislative Assembly to help reduce uncertainty in the housing marketplace as we all transition back from the harmonized sales tax to the old tax regime of the provincial sales tax and the goods and services tax. This is extremely important.

Like others in the housing sector you'll be hearing from in these consultations, members of our real estate board are also concerned about the real impact of uncertainty and unnecessary periods of delay in the transition back to the old provincial sales tax. We believe strongly that as the transition deadline time of March 31, 2013, draws close, the buying public for newly constructed properties will move to the sidelines to avoid paying the present harmonized sales tax on new properties, meaning less revenues for the provincial treasury for several months.

Because builders and developers of housing projects sense this too, they simply won't start construction on some projects while they, too, wait for the magic day in 2013. Evidence of this was seen on September 26, when one of the largest developers in the province announced their decision to delay their fifth condominium project in greater Victoria, known locally as the Era. The reason cited for the delay in their news release was uncertainty related to rules of transition.

[1410]

We hope that all members of this committee can see the picture clearly and that they will make the consequences of a long transition period and further uncertainty known to the Minister of Finance.

In closing, we appreciate the opportunity you've given us to present our thoughts and recommendations and trust that you'll give them careful consideration. I read fairly fast, so we've got time for any questions.

R. Howard (Chair): You did very well. Just a question. Have you or your coalition of the interested…? You've made the approach federally? Is that ball started?

D. Fimrite: Yeah, it is an issue that we've been approaching, both through the Canadian Real Estate Association and working with other groups nationally. They're certainly very aware of it.

B. Ralston: Just a further question on the capital gains rollover. I know it's difficult to assess future intentions, but is there any study about what would be the takeup of this kind of a provision, were it to be enacted, that you're aware of?

D. Fimrite: Yeah. It's vitally important for areas like Victoria, where there's a tremendous amount of what we call locked-in property. And you probably know people that have bought an apartment building 20 or 30 years ago and can't afford to sell it because of the tax that gets paid.

In terms of a formal study, that might be something that comes out of our working group.

D. Donaldson (Deputy Chair): Thanks for the presentation, and thanks for the Real Estate Board's different presentations over the years that always have ideas in them about suggestions for the budget. So it's interesting.
[ Page 1513 ]

The capital gains rollover…. You described it as a deferral of federal tax, a reinvestment of that. And one of your points here is a stipulation that it be invested into another property, another residential multi-unit property. Can you explain that a bit more? Also, has this been adopted? You said that it's gaining traction from the Federation of Canadian Municipalities. Has it been adopted as a resolution by the FCM?

D. Fimrite: I'm not sure if we know that answer.

Interjection.

D. Fimrite: The last answer is yes. The first part of the question…. There have been other programs, like the federal MURB program, that have spurred a tremendous increase in rental housing across the country. Something like that could be worked even on a provincial level, whereas if you sell one property, maybe you don't pay the property transfer tax if you reinvest in rental accommodation.

R. Howard (Chair): Excellent. Dennis, thank you very much for a thoughtful presentation. We appreciate your taking the time.

Next up, we have the B.C. Sustainable Energy Association — Tom Hackney and Guy Dauncey.

Committee, we're just waiting for the second half of the next presenter. We're a little ahead of schedule, so we will take a quick recess for five minutes.

The committee recessed from 2:14 p.m. to 2:19 p.m.

[R. Howard in the chair.]

R. Howard (Chair): We have in front of us the B.C. Sustainable Energy Association — Tom Hackney and Guy Dauncey.

Gentlemen, as you probably know, you'll have 15 minutes. At about the ten-minute mark I'll give you a heads-up, if I can. You can stop and take some questions or proceed — your choice. The microphone is yours.

G. Dauncey: Thank you very much, and thank you for this time. I know that the mental patience on your part is considerable, having to listen to so many delegations and so many new ideas.

The one driving principle or the concern that motivates us in the Sustainable Energy Association is global warming. It is actually a continuing problem. It continues to be extremely alarming to the world's climate scientists.

[1420]

The arctic ice fell to the lowest on record this summer when it was at the peak, in mid-September, although it continued melting. We are currently, because of the failure of the global treaty process, on a track to a temperature increase of between 4 and 7 degrees Celsius by the end of the century, which would spell absolute mayhem for British Columbia's forests. The last time the world was 3 degrees Celsius warmer, the sea level was 25 metres higher — not inches but metres higher.

The recent report that came out just two weeks ago from the National Round Table on the Environment and the Economy put the cost to British Columbia way up in the billions — the cost of diking, the cost to keep out the sea. We've got to think about future budgets. We've got to think about the impact on future budgets 20, 30, 40 years down the road, when we'll have to say: "Because we as a world did not act fast enough at this time, we have to live with the consequences of that rising sea level."

British Columbia is extremely vulnerable. The whole of the airport, the whole of the marine shipping infrastructure, the whole of our import-export game is at sea level, and we'll all need to be protected by major seawalls. It's possible that the tunnel under the Fraser River is also vulnerable when you have increased water weight on top of it.

All of the recommendations we're bringing forward are designed to address changing the province to sustainable forms of energy, no longer being dependent on fossil fuel, which is the number one cause of climate change.

Just as interesting, back up today there was a report that came out from Europe, the Eurobarometer, looking at the way European people are thinking about this. I think that overall, most Europeans — 51 percent — think it's the world's most serious problem and the second most serious issue facing the world, after poverty and hunger and before the economic situation.

They find it more serious than the economic situation, but 78 percent of Europeans believe that it can boost the economy and create jobs. Two-thirds support taxation to a greater extent on energy use to address this issue, and 88 percent believe Europe will be using more renewable energy.

We're looking at how we manage the shift to renewable energy, for transport and for buildings in particular. But it starts with the carbon tax. We have the carbon tax. Australia has recently adopted the carbon tax. It's up for renewal and for rethinking next July. The current legislation for the carbon tax ends next July.

Interestingly, The Economist magazine wrote this summer under the heading "We Have a Winner: B.C.'s Carbon Tax Woos the Skeptics." They said:

"At $25 a tonne, B.C.'s carbon tax already exceeds the price of carbon in Europe's emissions-trading scheme. But it's still too low to prompt radical changes in behaviour. It adds just five cents to the price of a litre of petrol.

"Getting the most energy-intensive industries to make big cuts might take a tax four times as high. Even so, British Columbia has shown the rest of Canada…that a carbon tax can achieve multiple benefits at minimum cost."

We are believing that the carbon tax should be widened to capture the greenhouse gas emissions from cement production, lime, natural gas production and aluminum and the fugitive methane emissions from the natural gas industry.
[ Page 1514 ]

Over 20 years methane traps a hundred times more heat than carbon dioxide, but it's not often talked about. It's a very powerful greenhouse gas, and there is evidence coming in that natural gas from fracking is more greenhouse gas–intensive than the coal industry because of the methane that escapes during the fracking process. We need to address this very seriously. B.C. cannot be a leader in continuing on climate change while simultaneously subsidizing and supporting the production of fossil fuels, yet our budget revenues are dependent on $2 billion to $3 billion from the fossil fuel extraction business.

As well as recommending that the carbon tax be continued; that it be updated to ensure that low-income people are protected; that some or all of the new revenues actually not be made carbon-neutral, but use that revenue to invest in the very actions that can reduce greenhouse gas emissions and make the positive difference; and that we continue to increase the tax by at least $5 a year from 2013 to 2015 — our preference would be $10 a year — so as to keep British Columbians getting used to the idea that gas costs more…. If they don't drive, they save, because it's revenue-neutral for most people.

Sweden — which has a carbon tax of $150 dollars a tonne, compared to ours at $25 to $30 — had a 9 percent fall in greenhouse gas emissions, while their economy grew by 44 percent. They didn't find that it impeded the growth of their economy.

[1425]

The second area where we really believe that action on climate change is important is around our buildings. Our buildings produce 12 percent of the greenhouse gases in British Columbia. Because we as an association are very actively engaged with the city of Vancouver in working to retrofit condominiums and with the B.C. Apartment Owners and Managers Association to retrofit apartments, we know how many small, frustrating difficulties there are in this realm, like having to get every apartment, every condominium owner….

You've got to get a 75 percent voter support to do the necessary investment for an energy-efficient retrofit. Some of them don't live there. Some of them are overseas. They don't really care about this stuff.

The mayor of North Vancouver spoke to me recently and said that 80 percent of their residents live in apartments. They live in condominiums. And a lot of them don't even psychologically own up to the fact that they're living in a shared-ownership situation. They're not investing in roof renewals. They're certainly not investing in things like the necessary stuff for organic waste recycling.

The work needed to overcome these initial barriers around retrofitting condominiums and apartment buildings is very important.

We'd like to see a major commitment to energy efficiency upgrades of all B.C.'s buildings over a 20-year period. This would attract $1 billion to $2 billion in largely private investment and create 12,000 to 24,000 skilled, well-paying jobs that cannot be exported. You know, you can't offshore a job retrofitting somebody's attic and windows. It's local labour. It is skilled local labour. It's good for the economy, it saves the building owners money, and it leads to more efficient, healthy housing.

There are a number of recommendations. It's really important to continue funding the very successful LiveSmart home grants program. And including the $150 support for the home energy assessment process is important, to extend LiveSmart to condominiums and rental apartments, to ideally link LiveSmart to an energy retrofit revolving loan fund so that the loans are there available and then tie the loan repayments into the utility bills or to the municipal tax base.

If you take out a loan and you've got to repay a thousand bucks a year, it's on your utility bill, which shows up the savings as well. So your utility bill is lower and is then repaying the funds. This is a very well-established way of doing the loan repayment that the whole of Britain is embracing in its Green Deal program to do the same process around building retrofits.

We also think that the process of subsidizing fossil fuels is really the wrong way to go — that even though we get $2 billion to $3 billion a year in royalties, we don't need to subsidize the industry, which is extremely profitable, on top of that.

We should phase out this dependence on subsidizing and establish a sovereign wealth fund, the same as Alberta and Norway. Norway's sovereign wealth fund is to the tune of $350 billion now, because they take the revenues from oil, and they put them in a fund for the future. They don't just spend it on everyday expenditures on schools and education and stuff like that, so they aren't hooking their core economic dependency on the windfall from the fossil fuels.

We'd like the 2012 budget to begin phasing out all the tax breaks and other incentives that go to the fossil fuel development. If we're going to do incentives and tax breaks, feed them towards renewable energy for transport, for heating for buildings.

The fourth part of this is around the provincial transit plan. It's a 2008 plan. It's three years old. We believe it needs re-energizing, accelerating, with increased funding to transit, rapid transit, light long-distance bus services. We're pleased to see that just today the Metro Vancouver mayors voted to add a two-cent gas tax to pay for the Evergreen line. That's the kind of initiative we need to see more of, and it's going to be needed here in Victoria with the light rail transit.

I was pleased to see that in Vancouver now you can have bus shelters that have electronic signs so that you can know when the next bus is coming. Nowhere on Vancouver Island is that the case. You stand at the bus stop. You haven't a clue when the next bus is coming, except for a timetable that's in 2-point typeface and covered
[ Page 1515 ]
in dirt. It's that kind of transition — to bring transit up to speed with consumer expectations so that you know when a bus is coming.

Priority measures such as busways. Feasibility planning for electric bus servicing and rapid battery charging. Now, there's a bus service in Sweden that can run the entire day on a purely electric bus, with fast recharging at the turnaround at the end of the route. So that's doable.

We want to see a freeze on highway expenditures, because more highways actually encourage more commuting. People then just travel further out, and the roads will fill up. It's a sort of black hole you suck into more highways. When you put the investments into transit, into light rail transit, into cycling routes….

The electric bicycle revolution is just beginning. If you've been on an electric bicycle, it eliminates the hills and costs one cent for every 20 kilometres you travel. Again, we need to have more facilities for commuters to use electric bicycles.

We'd like to see as a permanent source of funding…. I know this is going to be controversial to do, but road pricing is actually the way to go. We need to look in the long run that even if we shift revenues to carbon tax…. As we eliminate our carbon fuels, that won't exist. As we move to electric vehicles, the revenues of oil won't exist. Electric vehicles are going to be dominant. So how do you get taxation based on use of electric vehicles?

[1430]

If you move to road pricing — road usage is what brings in your income, as is being done in London, in Singapore, in Stockholm quite successfully — you've got a long-term revenue source based on transportation usage. Instead of funding the hydrogen highway, which we spent $89 million on…. The hydrogen revolution is dead. It is stone cold dead in the water. Nothing's happening with hydrogen except forklift trucks. All of the energy is around electric vehicles now — electrification of vehicles.

We need to put a similar investment into electric vehicles, because we have two really big advantages globally. We could lead the electric vehicles revolution. One, we have the third-cheapest electricity in North America. It's the third-cheapest to run an electric vehicle. Secondly, our electricity is already 90 percent green, and it will very soon be 100 percent green, so people can't go around saying: "Oh, they're coal-fired electric cars."

We have the real thing here. We have, you know, electric vehicles powered by the powers of nature, and we should be promoting B.C. as a leader in this realm, with the kind of support for a provincewide electric vehicle strategy, planning assistance for electric vehicles in municipalities. Smart cars are bringing out the smart electrics in Victoria and Vancouver next summer. If we don't have the fast-charging stations for them, there's going to be a public backlash. How can we use these cars if we haven't got the charging infrastructure?

R. Howard (Chair): Guy, you're at about 12 minutes, just so you know.

G. Dauncey: Okay. Perfect. I'll let Tom address the final item, on the dividend from B.C. Hydro.

T. Hackney: Our final item is basically a plea that the government ought to be more transparent in addressing the costs that B.C. Hydro's facing. The rate increase that B.C. Hydro applied for earlier this year was based on actual costs for infrastructure and expansions of generation that are required.

The review of B.C. Hydro resulted in essentially a politically motivated pressure on Hydro to reduce its rate increases, and the net effect of that is really to off-load those real costs onto the future. We believe that government ought to be putting those real costs into the present rather than putting them as debt onto future generations.

The flip side of that is that you're artificially depressing prices. Nobody wants to pay more for electricity, but when you push the price down, you're encouraging waste and you're encouraging people not to confront the real issues. So if the government is going to force Hydro to reduce its prices, it ought to reduce the dividend that it's requiring from B.C. Hydro so that B.C. Hydro has a legitimate way, actually, to reduce those prices rather than cutting capital costs.

G. Dauncey: So we're done. We can take five minutes for questions.

R. Howard (Chair): No, I'm sorry. We've run you out of time, or you've run you out of time.

G. Dauncey: Oh, that was the whole 15, was it?

R. Howard (Chair): Yeah. Sorry about that, gentlemen, but we do appreciate you taking the time to come and visit with us this afternoon.

Last but not least, we have the Private Forest Landowners Association — Rod Bealing.

R. Bealing: Thank you. Last again, eh?

R. Howard (Chair): Welcome, Rod. Last but not least, you'll notice I said. As you probably know, you've got 15 minutes. At around ten I'll give you a heads-up. You can stop for questions or go straight through — your choice. Over to you.

R. Bealing: Thanks so much for the opportunity. Some of you recognize me, I hope. I recognize some of you. How do you do.

I've given you some bedtime reading. I brought quite a bit, in fact. This is quite a complex issue I'd like to get into, but I'd like to think I can make some distinction between me and some of the other presenters throughout
[ Page 1516 ]
this process. I've actually got some money for you. I don't have my hand out for money.

Before I get to that point, I'd really like to just do a quick overview of who we are as the Private Forest Landowners Association. I'm going to focus most of today on one particular policy item that has a huge impact on our business and on the B.C. economy.

[1435]

If I could draw your attention to the presentation entitled "Shooting Ourselves in the Foot: The Impact of Self-Imposed Trade Restrictions on B.C.'s Finances and the Opportunity for Positive Change." I'll just walk you through it, if I may.

B.C.'s private managed forest land owners represent a small but economically significant portion of the B.C. forest industry. However, private land log export policy is dated and is no longer achieving intended results. The policy is costly to administer and adds no value. It's also a policy that restricts international trade and will continue to get the attention of both the U.S. lumber coalition and members of the World Trade Organization.

A bit of a highlight on our association and private managed forest land in B.C. It represents about 2 percent of the land base of the province, but it generates around 10 percent of the timber harvest. There's a reason for that. The land is typically valley bottom, fertile land, and it's managed quite intensively. This land belongs to about 20,000 owners across the province.

If I could draw your attention to slide 5. There's a large pie chart. It shows the provincial land base. The private part is that little sliver. We've very small by B.C. standards.

We're very proud of our performance on the land. We're certified. We're regulated. We protect water quality, water supply, fish habitat. We reforest. We protect critical wildlife habitat. We conserve soil.

We have a different regulatory model than Crown land, but we've demonstrated over the last 11 years, since our regulation has been in place, that we've earned the right to have a different model.

My association represents individuals, families and investors. We have coast and interior, large and small members. Our largest member has 320,000 hectares. Our smallest member has 12. They each have one vote. I'm a forest owner myself.

I'm just going to skip through the background stuff here. Our challenge, to maintain this good stewardship that we do on our land, is that we need good prices for our logs. It's very difficult to obtain good prices for our logs in British Columbia. We have a market that's dominated by public land timber supply, which is influenced by stumpage policy and log export policy. The one that really hits us is log export policy, which effectively limits what we can get for our final product.

If I could draw your attention to slide 10. It has a table with a direct comparison of log species and prices on the B.C. coast and Washington State. The interesting thing here is that in all cases the final destination for the lumber is China. These Washington State mills were cutting for China at the time. You can see very marked contrast between the domestic log prices in B.C. and Washington — huge differences there.

Why is this an important thing for the government to look at? My message is that hundreds of millions of dollars are being left on the table at the moment — millions of dollars that are much needed to run our province and provide goods and services. There is opportunity to meet the needs of our domestic sawmills. They're obtaining the wood they need. But there's also a strong demand from Asia, particularly China, currently for logs. This is something that has direct impact on private land, but of course, the principles also apply to Crown land.

There is a surplus testing policy in place at the moment that enables domestic mills to manipulate the price and pay prices way below the international price for logs. That's where we really get caught up in the grinder, as private land owners.

We're not opposed to selling our logs to local mills. In fact, the more we can do in the community the better. But we need to be able to get a fair price for our logs.

[1440]

I've got quite a bit of information in all these presentations, and I've also brought along today a presentation from the Ministry of Forests, Lands and Natural Resource Operations. It's got some really good statistics in there about timber supply, about employment, about the state of our forest industry. Some of the high points of it are this. Basically, it goes that we have a low stumpage, restricted log export regime in B.C., and we have done for many years, and yet our domestic mills are still struggling. That's a very sad thing. It hurts all of us. Mills are closing, despite log export restrictions and despite a surplus of timber available.

So the question isn't so much: do we need log export restrictions? But it's: should we have it or not? If we're serious about harvesting the undercut, which is the difference between the allowable harvest in B.C. and what is being harvested, and if we're serious about capturing some of that value — and that's what I'm talking about, bringing new money today; that value is out there; it's been approved for harvesting — then we need to look at alternatives in terms of marketing.

We have a hot market currently in Asia. Asian buyers love our sawlogs. They love our timber. They are prepared to pay a good price for it.

Just to illustrate that a little bit, back to my presentation, slide 12 looks at the timber supply situation for 2010. On the right-hand side it shows that we have 85 million cubic metres of timber available on public land as part of the annual allowable cut. The next column to the left of that shows the undercut. That's the difference between what we did harvest that year and what was available.
[ Page 1517 ]

So I'm saying: "Look, there's 27-plus million cubic metres of opportunity there." The challenge is to figure out how to harvest that wood, how to market it economically and capture some of the value. There is a lot of opportunity there — taxation revenues, stumpage revenue, economic opportunity.

Just for colour, I've put in the private land harvest on the far left — 5½ million cubic metres — and the private land exports next to that, which is two million cubic metres.

As an association, we are very proactive in advocating for open markets for our logs. We would like to be treated like owners elsewhere in Canada and farmers and producers of other commodities. Our costs are escalating constantly, and we need the opportunity to get fair value for our logs.

There's a lot of detail in here. How am I doing for time?

R. Howard (Chair): Let me just check. You have six minutes to go.

R. Bealing: Six minutes left.

Some of the numbers that are being thrown around…. I know, as a forest owner myself…. I'm a small-scale logger. I've done a lot of small-scale logging for other forest owners both here and in the U.K. I know how important it is to…. Whenever you're doing something small-scale, your costs are off the scale anyway. They're crazy. But if you're trying to do something creative and do some low-impact harvesting, again, it drives our costs up.

I had to park my equipment some years ago because the business model just wasn't there to support it in B.C. The log prices are so low. Part of my message today is that because we have this artificially low log market, low log price, it's suppressing a lot of potential economic activity. People could be managing their woods. They could be managing the fire hazard. They could be managing fuels in the interface. They could be doing a lot more and putting a lot more people to work.

I think we all agree that forestry and sustainable forestry and responsible forestry is a good thing. It's something we're very proud of in this province, and we've made a lot of progress towards making it a good place to do that. However, the big monster that we have to face here is low log prices. It's a huge impact.

[1445]

There's so much detail to go into around this whole topic area. Not only does the current export process add cost to our wood, but it adds a lot of uncertainty. Let's say that as an industry, we've met the needs of domestic mills. They can use the surplus test to acquire all the wood they want. Then the question is: how do we address the needs of our overseas customers and get the best bang for our buck?

Well, the current process…. The delays and the uncertainty in it all add up. If a foreign buyer is sending a freighter to B.C., they have to manage that risk. So they offer us less for the wood, we become a less preferred supplier, and it all impacts our ability to compete.

I'd like to jump forward a little bit. I've got another pie chart. On No. 22. it shows a pie of Japan log imports in 2008. I've put this in the presentation package because there are some arguments that if we stop selling our logs, people will be forced to buy our lumber. I think this demonstrates that if we stop selling our logs, our customers are just going to get their logs from somewhere else.

As you can see — sorry, it doesn't translate very well in black and white — Canada is the 14 percent, so we're actually less than New Zealand. The New Zealand forest industry is based on radiata pine planted on old grazing land. So they've created an industry. Not only have they created it, but they're beating us in Japan.

Another graphic I'd like to draw your attention to is No. 21. This is something that we hear a lot as private owners: "Well, you're just being greedy. You just want to get a fortune for your logs and starve the local mills and starve the local workers."

This is based on real log values, real costs. Essentially, that sliver of this pie that doesn't have the dollar signs on it is the portion that goes to the owner when we get the harvest and sell some logs. The rest of it goes to the community, to local businesses, to people that sell us goods and services, taxation revenue — things like that. Again, I'm using this to illustrate that when we go to work, everybody benefits.

I'm just going to use up the time that I've got left. There is a lot of detail in here.

Essentially, the Ministry of Forests is doing an export review at the moment. They're looking at export policy and trying to make sense of it all. This presentation from the ministry really sums up the picture quite well. I would encourage the folks in this room to take a keen interest — I know you do — in that process. There is an opportunity there for revenue. There's an opportunity to find balance.

It's a very complex issue. We've talked about it a lot. I'm talking about it a lot today. I've done a one-pager, which we used recently to try and address some of the misinformation around this issue. We're not making this stuff up. That's what I want to really drum home. I'm not spouting rhetoric here. These are facts. I'm in the industry, and I use government figures and real market prices for this kind of thing.

If you have a moment, I'd really appreciate if you would just have a look through this, because it really goes to the heart of the issue.

I want to end up on a light note. I'm sure you've had a grinding process, and there's nothing worse than being the last guy in the crocodile. We're trying to raise awareness of this issue. It's a very prickly issue. It's politically quite charged. You're all aware of that.

I was thinking the other day: "How can we do this in a way that's easier for people to digest?" This is an idea
[ Page 1518 ]
we're playing with. I'm talking about this T-shirt logo that we've come up with here.

[1450]

It's a little bit flippant. It's a little bit tongue in cheek. But really, we're just saying: "Look, nobody wants to pursue log exports as the sole solution for our forest industry, but the fact is we need it. We need it to keep our operations going in the woods. It keeps thousands of people at work. It actually keeps fibre flowing for domestic mills. It's not something we're trying to be flippant or cheeky about. It's something that's hugely important to us."

Thanks for your time today and your attention.

R. Howard (Chair): Thank you, Rod. We did have a few questions, but we're just flat out of time, and members have to get out and meet flight connections.

R. Bealing: I'm sorry. Anybody that has an interest, please contact me and I'll do what I can to help you.

R. Howard (Chair): Sounds great. Thanks for coming out this afternoon.

We will adjourn now and reconvene Tuesday, October 11, in Surrey, at nine o'clock in the morning.

The committee adjourned at 2:51 p.m.

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