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

Wednesday, October 12, 2011

5:30 p.m.

East Ballroom, Heritage Inn

803 Cranbrook Street, Cranbrook, B.C.

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

1. The Chair called the Committee to order at 5:30 p.m.

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

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

5. The Committee adjourned to the call of the Chair at 8:15 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

Wednesday, October 12, 2011

Issue No. 55

ISSN 1499-4178

[ Page 1615 ]

WEDNESDAY, OCTOBER 12, 2011

The committee met at 5:30 p.m.

[R. Howard in the chair.]

R. Howard (Chair): Good afternoon, everyone. I am Rob Howard. I am the MLA for Richmond Centre and the Chair of this parliamentary committee. I'd like to welcome everyone and thank you for taking the time to participate in this important process.

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.

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 in fiscal 2013-14. This will serve us well to protect and grow our job base.

These challenging circumstances mean difficult questions ahead, and we look forward to hearing about your priorities in these challenging times.

Print copies of the Budget 2012 consultation paper are available at the back of the room with Arlene.

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 have 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. This week we've been in Surrey and Chilliwack — today, obviously, Cranbrook — and we will be travelling to Kelowna and ending our hearings on Friday in Richmond.

In addition to the 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 the public input we receive, whether it's an oral presentation made here today, an on-line survey form, a submission in writing or an audio-video clip. The 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. 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 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, also on the committee's website.

I'll now ask the other members of the Finance Committee to introduce themselves.

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

P. Pimm: Good afternoon. I'm Pat Pimm. I'm MLA for Peace River North and live in Fort St. John.

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

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

B. Bennett: Good afternoon. I'm Bill Bennett, the MLA for Kootenay East.

D. Donaldson (Deputy Chair): Good afternoon. Thanks for coming out over dinner hour. I'm Doug Donaldson, MLA, Stikine. I live in Hazelton in the northwest corner of the province.

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

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

D. Donaldson (Deputy Chair): We do have Bill Routley, MLA, Cowichan Valley. He might think it's an hour difference. I don't know….

R. Howard (Chair): Joining us today…. I'm pleased to introduce our Clerk, Susan Sourial, and also with us is Arlene Carlson, who is manning the registration desk at the back of the room. We also have Hansard Services staff Michael Baer and Monique Goffinet Miller, who will record and prepare the written transcript of this meeting.

With that, I'd like to call our first witnesses — Orest Federko and Dianne Teslak from the College of the
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Rockies. I'm sorry; let me go back. We're still with the College of the Rockies Faculty Association — Leslie Molnar.

Sorry, Leslie. We're working off notes that are dated a little.

[1735]

L. Molnar: That's all right. I was on the wait-list.

R. Howard (Chair): As you've heard, you've got 15 minutes. At ten minutes I'll give you a heads-up. You can stop for questions or go straight through — your choice. Over to you.

Presentations

L. Molnar: Good afternoon. I'd like to welcome you to Cranbrook. My name is Leslie Molnar, and I'm president of the College of the Rockies Faculty Association. I want to thank the committee for the opportunity to talk to you about why we think education is an important budget priority for the 2012 provincial budget.

A little bit about the College of the Rockies. We have close to 2,000 full- and part-time students. We operate seven different campuses here in the East Kootenays. We're the third-largest employer in the region.

We see ourselves not only as the provider of key education and training services but also as a very important part of the area's economic fabric. We started as the community college. We started in storefronts, even above the Legion. We see ourselves as an integral part of the communities that we serve.

We have a mandate to provide comprehensive learning opportunities to students in this region, for providing educational services in a rural college is different than providing those same services in an urban centre. We have large distances between our campuses, and our population base is relatively small.

For the most part, we can't offer multiple sections or multiple intakes of the same programs. We pride ourselves on the diversity of the offerings, but it needs to be acknowledged that it costs more to maintain this comprehensive range of courses and programs. Yet the accessibility this offers to the citizens of our region is priceless.

By comprehensive, I mean a full range of program offerings that lead to degrees, diplomas, certificates and apprenticeships. For the first time, the College of the Rockies has a degree, a bachelor of business administration and sustainability. Student interest in this program is high.

We also provide more than just diplomas and degrees. We provide avenues for adult learners to upgrade, to find the necessary prerequisites they need. We have fundamental programs, literacy-level programs. We have outreach programs for young mothers.

The learning that happens at the College of the Rockies is more than just a list of credentials. It's about transformation, a process that as faculty members we get to watch in our students. We see young adults gain insights and gain confidence. We see adult learners sometimes make that difficult transition — that they have to learn new skills to gain employment.

All those transformations make a difference to the individual students and to the province as a whole. A point that has been stressed many times in research is that post-secondary education leads to higher incomes, greater labour mobility and a positive rate of return for the provincial treasury.

For the most part, students using College of the Rockies makes good economic sense. Staying close to home is a lot cheaper than moving to the Lower Mainland or moving out of province to Alberta.

A recent study also showed that students who start at a smaller institution have a better chance of succeeding at the larger institutions because they get more direct contact and guidance from their instructors. At College of the Rockies we pride ourselves on our small class sizes and the quality faculty-student interactions.

Our college has a broad mix of students, both young and old. Although we have a large number of 18-year-olds, our average student age is 26. In fact, I had an 80-year-old take my calculus class last year. With that kind of mix, our institution needs and tries to maintain the capacity to provide many different entry points into post-secondary.

Premier Clark was right when she said that education holds the key to improving prospects for B.C. It's a view that our association has long held, but it's an objective that's increasingly difficult to reach when there are access and affordability issues. Capacity has been eroded as funding has been decreased.

Let me explain. In 2011 College of the Rockies's provincial operating grant was just about the same as what we received in 2010. But the price of gas went up. The price of electricity went up. We added more space to the college that needed lights and maintenance.

So in real dollars, the amount of money that we had to provide educational services went down. That decline came in spite of the fact the number of students that we educate, our actual FTEs, increased over that same period. We added programs and courses, and as the economy struggled, more students returned to school.

Our college also receives funding from the Industry Training Authority, the ITA, for a wide range of trades and apprenticeship programs, but that funding arrangement is also stressed.

Let me quote from the college's accountability document: "The college has funding challenges with the ITA as well. We are a college located in a large region that has a high demand for skilled tradesworkers. We are rising to meet this challenge, but we're not funded by the ITA in a manner that adequately supports our efforts, our trades students or our regional industries."

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What these challenges mean at an institutional level is that we have to do more with less. Our enrolments are up, but our overall funding is pared back. Sometimes we have to rationalize or even cancel program offerings, and we make major changes to how programs are delivered. Class sizes have increased as well.

Tighter budgets also mean scaling back on student support services. We have no counsellors at College of the Rockies, and we believe we are the only college in B.C. that has no counsellors. We have over 2,000 students, yet we only have 0.8 of a position for disability services. Our resources for all of the support services are stretched thin in relation to student demand.

There is some irony in our funding crunch, because we have been on the receiving end of capital funding to expand our facility over the last five years. We have several new buildings. Our new entrance to our Cranbrook campus is beautiful, and our new classrooms are equipped with the latest in educational technology. But as I mentioned earlier, we have increased operating costs and no new money to cover these. When we don't get increased funding in the form of operating grants from the province, we aren't able to fully utilize the capital structures that we have at our institution.

We see similar challenges when it comes to affordability. The deregulation of tuition fees in 2002 was a major problem for a lot of students. Students today are expected to pay a much higher portion of their actual costs than what we had to do, which begs the question: why would we, citizens who benefit from the public post-secondary system ourselves, make our younger generation pay a higher portion of their education than we had to pay? This strikes us as out of balance.

This shift has had a major impact on student debt levels. According to the Canadian Federation of Students, the average student debt is about $27,000. Our concern is that the financial pressure will discourage students from attending and completing their post-secondary education, a change that would prove disastrous for B.C., given the looming skills shortage and the realities of an increasingly knowledge-based society.

Premier Clark also highlighted the importance of international education in both her throne speech and in several announcements that she made in September. College of the Rockies has a long history of opening its doors to international students. It's not only good for those students, but it's great for our own domestic students who are able to engage in the diversity that comes from having international students within our classrooms.

Let's be honest. There's also an interest in the revenue potential from these students. The enthusiasm for the international revenue has to be balanced, though, against the reality that international students need and deserve additional support if they're going to receive the quality education that attracted them to B.C. post-secondary institutions in the first place.

As any instructor who regularly deals with many of these international students can tell you, the needs of these students are more complex, and thus often more time-consuming, than anyone who is promoting the expansion of international education is prepared to recognize, because it does not take into account some of the new costs that need to be covered if we're going to meet the special needs of international students.

By way of a summary, our faculty association would like to suggest some priorities. We would like to address the affordability challenges that current students face. We could make a meaningful step in the right direction by reviving the student grant program, which would at least allow those with the most significant financial challenges some relief.

We'd like to see some new money provided to post-secondary institutions to ensure that they have the capacity to restore, or just to provide, student services that are being scaled back.

We need to see an overhaul in the funding relationship between the Industry Training Authority and public post-secondary institutions.

Finally, the government needs to look at a new funding formula for post-secondary institutions, a formula that would not only guard against the impact of inflation but would also recognize the unique costs that rural multi-campus institutions face in providing access to post-secondary learning in our communities.

Thank you. I will take any questions if you have them, or am I out of time?

R. Howard (Chair): We do have some questions. You're right on time.

D. Donaldson (Deputy Chair): Thanks for the presentation. It covered a lot of ground, and some of it we heard with Kwantlen Faculty Association yesterday in Surrey about doing more with less and concerns about the international student situation as you described.

[1745]

My question relates to trades training. You pointed out about the accountability report, ITA, resulting in the college not being funded in a manner that's adequate. You went on to say about having to rationalize or cancel programs.

How has that funding with ITA affected the ability to deliver the trades training? I mean, we know regionally, especially in these areas, that this is going to have a major impact on the local people for local jobs.

L. Molnar: You've asked me a question where I have very little expertise in that particular part of it. I know that…. No, I'm sorry. I don't know specifically how that's affected our ability. I know we have new buildings, and we have new programs, and we're trying to have more programs.
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But the funding is always uncertain as well. We always find out later about what programs the ITA is prepared to fund, and sometimes I've been told that it doesn't match where the demand is in our area.

D. Donaldson (Deputy Chair): Can you get back to us on that situation through the Clerk, who will give you the contact info, so that we can distribute it to the entire committee.

L. Molnar: I certainly can, yeah. I'm sorry that I didn't have more information for your question.

M. Stilwell: My question is actually along the same lines of what recommendations you would make to make sure that the colleges can be responsive to regional needs on a quick turnaround basis and trying to understand what the obstacles to that are in terms of the funding.

L. Molnar: Well, with our funding being static, when we are responding to local needs, it's always a choice. If we're going to offer something new, that means that we're not able to offer something that we have been offering in the past.

We really value being able to provide a comprehensive liberal education in our university studies program. At the same time, right now there is a lot of demand for programs in the health area. We have wait-lists in all of the nursing programs and the dental and all of those sorts of things where we would like to be able to expand capacity. But we're not able to do that with our current level of funding.

Business is another area where we have a lot of students coming into the classrooms. Right now we're able to meet that need by increasing class sizes, but that, again, is a trade-off because then we're not giving the attention that we were able to give.

Another example is the recently cancelled paramedic program that we have in our area. That was meeting a real need, being able to respond to a community need and tie in with the fire training services and not having people having to go to Vancouver to the Justice Institute to take that.

B. Bennett: The president and Dianne Teslak have shown me a chart that they have that compares utilization rates of all of the colleges in the province. My recollection is that College of the Rockies either has the highest utilization rates in the province or the second-highest utilization rates in the province. That goes to FTEs versus funding — right? So we're getting the most out of our FTEs of any college in the province, if my memory serves me correctly.

Does the faculty association work collaboratively with the executive branch on that issue in terms of advocating for more funding for the college? Is that one of your…?

L. Molnar: Absolutely, we work with the college to advocate for more funding. We have the same goals. We want to meet the educational needs of our community.

B. Bennett: Are you aware of the work that they've done to compare utilization rates?

L. Molnar: Uh-huh. Dianne is very good about sharing any documents that she has with me, and we have a good relationship. We would always lobby for more funding together. Was that your question?

B. Bennett: No. I want to get this on the record, and I apologize for maybe not asking a very good question. I think it's important as we go around the province and we hear from all these post-secondary education institutions, as we did yesterday and today.

Everybody wants more funding. That's understandable. Everybody needs more funding. But we have set up this system whereby we've asked institutions to utilize the FTEs they get funded for, and some schools have been a whole lot better at doing that than others. Our school has been really, really good at it, and I think that that ought to be reflected in the funding.

[1750]

L. Molnar: We definitely have utilized the FTEs. We've done more with less. But you get to a point where you can no longer do more with the same amount of money that you have.

You can't add more students to the classroom. You can't combine an on-line course with a face-to-face course. You can't create more student spaces. You don't have another dental chair to add, to put another person into the dentistry program.

There comes a point that…. We have utilized the equipment and the resources that we have, but in order to meet increased educational needs, we need increased funding.

R. Howard (Chair): Well, now we've used up your time. Thank you so much for coming forward this evening. We appreciate that.

Next up we have Imperial Metals Corp.

Welcome, Byng. As I'm sure you've heard, you've got 15 minutes. At about the ten-minute mark, I'll give you a heads-up. You can take some questions or go straight through — your choice.

B. Giraud: Let's see if I can burn through this and give you some more time for questions. I know a bunch of the MLAs around the table, so some of this isn't new.

We're Imperial Metals Corporation. My name is Byng Giraud. I'm one of the vice-presidents there. Normally I would appear up in Smithers, but I was away on a little holiday. I apologize to Mr. Donaldson for not appearing up there. That's where one of our operations is.
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We would like to call ourselves B.C.'s mining company. There are many other mining companies in B.C., but we do explorations, we do advanced development, and we operate mines in B.C. Almost all our operations are here, with the exception of one small one in Nevada. And while most of our operations are further north, we do have claims on this area.

I won't go through all this in depth, but what needs to be pointed out is that Huckleberry mine — which we're doing an expansion on up near Mr. Donaldson's riding, near Houston and Smithers — is 50 percent owned by a Japanese consortium. We have a project up by Clearwater which has a $20 million back-in from a Japanese consortium to part of that project. So while we are B.C.-based, we have a lot to do with the international community.

I want to get a little more into our contribution. I think that's important. This is a mining riding, as well, that we're in — Mr. Bennett's riding. He's very aware, with all his coal mines. At Imperial Metals we have 600 good-paying jobs. When I say that, at our headquarters in our mines, these jobs, on average, according to PriceWaterhouseCoopers, pay over $100,000 a year. That's not including the head-office jobs.

Mining, metal mining in particular, has a very good multiplier of 2.3. I took this from the U.S. Bureau of Economic Analysis, but it does come from other sources. So we can claim responsibility for well over a thousand jobs. And we've paid, to date, with these two mines, which have operated approximately 15 years — although there were some shutdowns in difficult times — $600 million in taxes. That doesn't include the taxes our employees pay.

One of our big projects we're working on right now is Red Chris, up in the northwest as well. That's going to mean 500 more construction jobs in the next little while and another 250-plus permanent jobs, never mind the multiplier.

The northwest transmission line, which many of you have heard so much about…. I know that Mr. Bennett and Mr. Donaldson are very aware of that and have been strong advocates. We will be the first customer.

We are active in our communities. We spend money in our communities. We sponsor hockey teams. We sponsor sports teams. We help First Nations communities. We're active in B.C., and all our earnings are reinvested in B.C. We don't give dividends to our shareholders. Our money doesn't go overseas, because all our operations are here. Every bit of profit we make goes back into the ground here in B.C. We like to call ourselves B.C.'s mining company.

I've got a few issues here. I have to say that a few things have happened since you started having your sitting. The Premier's announcements on Canada Starts Here, the jobs strategy, as well as the rate review that B.C. Hydro is going through have made some of the things we would have, perhaps, pounded the table a little harder on…. Not to say they're not still important, but we have to sort of wait and see how things turn out, I guess.

The first of these is transmission of electricity. As my chairman says, it takes a lot electricity to break rocks. It's about a third of our costs for a mine. We have to pay very close attention. I know that B.C. Hydro is doing a rate review, but our concern is the balance.

Obviously, one of the strongest competitive advantages of this province is its inexpensive energy for industrial users. It's been an advantage to us over the past decades. Conversely, our infrastructure is aging, and deferring capital infrastructure, which may be an outcome of that process, depending on the infrastructure, will be of concern.

I guess that means that the industry is maybe talking a little bit on both sides of its mouth, but we need to appreciate that there is new infrastructure that has to be built. We also need government to appreciate that competitive rates are our strongest competitive advantage.

[1755]

So how do you get around that? In some innovative ways. We're seeing some of that in the northwest transmission line where private sectors, ourselves as well as AltaGas, are contributing to the construction of the line, or will be.

If I can make a specific request, we've been told by B.C. Hydro that construction of the NTL is on schedule. But we really need them to…. This is something where, I guess, cabinet and government give approval to B.C. Hydro to begin negotiations with us as to how we will contribute to that line. It's unusual that I would come to government and say, "Tell us how we can make a contribution," but that's the situation. We'd like to get started on that.

Permitting and process times. Again, the Premier's announcement makes this something we need to sort of see the devil in the detail. Just to give you some examples of why that announcement and what comes out of it are so important. Red Chris, our flagship development project, has been in permitting. We had our first meetings with Northwest Mine Development Review Committee over two years ago. We made our formal application about a year-plus ago to continue that process.

It's still ongoing. We're hopefully seeing the end of the path there. But when you're dealing with permitting, which is not your drop-dead, not your red-flag process — that's dealt with in environmental assessment; that's where you get the game changers out — if the permitting process is taking longer than the environmental assessment process, you have a problem. So hopefully, in what we see coming forward, the government will recognize that.

I put on the second one here — Mount Polley. This is again a minor amendment, in our opinion, to our Mines Act permit, something I've been told by our mine managers we've done 22 times before. This one took nine
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months. That costs not just us money, but it costs the province money, because we're not spending the money we would do in capital expenditure.

So the government's announcement — we welcome that and welcome what it might mean. I do have a couple of questions, and hopefully, you can take it back to your colleagues.

The backlog of notices of work by 80 percent by 2012 — we'd like a little more detail on that. The 20 percent could be the difficult part, the difficult ones. The average 60-day turnaround by 2013 — that's an improvement from the current situation, but it would actually be a step back from what initially was happening in the sector. It used to be quicker than 60 days. And of course, very specifically, does 60 days mean 60 business days or 60 days?

I've put in this last point. Prices have come up a little bit in the past couple of days, but prices have dropped 28 percent since February. Now, you tell me some other sector that can still have a smile on their face when they've just lost a quarter off their revenues.

First Nations consultation. This is the Finance Committee, I realize, but these things are all related to our ability to spend money and make money and in turn pay taxes. There continues to be significant uncertainty. Again, I know government has made some commitments to address this.

Here is a good example. We are going to do some drilling down in a place called Giant Copper near Hope. The CAD, which is the inventory of First Nations assertion of territory for that area, showed 23 different contacts. That's difficult for a company to deal with — 23 different contact organizations. Even in the most sincere approach to dealing with First Nations, that's difficult.

Fandora — some minor trenching amendments took months. In both these situations we just gave up.

What we need, to be explicit, so we can spend this money. We need to be told what's being delegated to us. We need to be told explicitly what's being delegated to us, and the courts have said this. We need to be told how long it's going to take, what we should do so we can help the government fulfil its obligation to consult, because it's not our duty to consult. The courts have said that.

We can go do things, and they don't actually count. It is government's obligation. So it needs to be explicitly explained to us what our part of that is, what we should do and how we can participate so government does satisfy its duty to consult and we can get these projects moving.

Post-HST. I know we had a little bit of a discussion about this last time I presented to the committee. I won't get into my sob story about why I wish we still had it. But if we're going to go look at what's going forward — and we welcome the government's commitment to a review — the real big point here is that what the HST really did for our industry was take taxation off capital investment. Our ability to spend money on buying ball mills or equipment that didn't have the existing exemptions…. We weren't able to spend.

By spending this money, we are investing in the future of the province. By taxing investment, you're taxing the wrong thing. Maybe our taxation level is sufficient. Maybe we should just do a rebalancing of that. We just don't think it makes sense to tax productivity and tax our capital investment.

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I know the government has talked about a review of the taxation system, and I know during the opposition's leadership contest one of the contestants talked about a tax review. I believe that's something of a bipartisan approach.

Finally, this is very much out of this region, but I saw the presentation by Northwest Community College about core funding for their School of Exploration and Mining. I sit on the advisory body for that school. We think core funding is important. Again, I don't usually come asking for money as a mining company. But we think that if they were to get the core funding, as a private sector we would be able to help them leverage that money — use some of our money to produce the programs and produce the people that we need to operate our facilities.

There's some sorting out that needs to be done with the Dease Lake campus in terms of who actually owns that and who operates it and who gets the funding for it. I think that's a pretty big issue. This quote here is actually from — nice thing about the Internet — Mr. O'Leary from Northwest Community College in his presentation to you earlier.

Those are our five quick issues. Hopefully, I didn't run through it too fast. I threw in this other slide again. This is an exact reprint of last year's slide. Our opinion is that governments try to prime the pumps with deficit spending through these financially troubling times. Great job. Cut taxes — that's important too. There are no more taxes to cut, I understand, and there's no more money to be spent on priming the pumps.

What we need to do is unleash the power of the private sector to spend our money. Frankly, compared to 2008, because we're always a little more conservative with our money after once being bitten, there is a little more money in the private sector ready to go.

R. Howard (Chair): Byng, you're at 11 minutes, just so you know. You're finished?

B. Giraud: That's it.

R. Howard (Chair): Good stuff. We have questions.

P. Pimm: My question goes towards the permitting process. What do you see as the number one barrier in the permitting process that makes it take so long to get it through the process?
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B. Giraud: Qualified staff. There has been some attrition in the civil service. People move around — fair enough. They're entitled to search for better jobs. People sometimes come to our sector. But we need people who understand our sector and have been on the job long enough that they understand how to move a permit along. We've had some significant turnover in some of our big projects in terms of the civil servants responsible. The people who are responsible for us now are excellent people, but they're inexperienced or new, or they're coming from another sector.

D. Donaldson (Deputy Chair): Thanks for the presentation. I'd love to ask you some specific questions about Red Chris, but I'll ask you a question on a broader scale provincially. We have heard the desire from the Premier to open up a number of new mines in the province and some question about where the number 8 came from. We're conferring with industry associations. We're not sure where that number came from, and neither are they.

But what would be the chances of being able to open eight or more new mines without the First Nations consultation bullet points that you provide here?

B. Giraud: It's a serious needle that has to be threaded. Right now there are a couple of mines that could count towards that list — New Afton, Mount Milligan. As far as I know, other than those ones that are actually in development now, we're the only one that's through the EA. Our Red Chris project is the only one that's through the EA. Everybody else is in an earlier stage in terms of environmental assessment or permitting.

The timelines that I gave you with regards to our permitting remain the same, and that's partially related to First Nations consultation and partially related to the staffing and permitting issues we talked about earlier. If those things remain the same, those goals are ambitious.

R. Howard (Chair): Thank you, Byng. We've got a couple of questioners left on the list here, but we've run you out of time. Thank you very much for coming forward this evening.

Next up we have the city of Cranbrook — Mayor Scott Manjak.

S. Manjak: It's a pleasure to be here. First, as mayor of Cranbrook I want to welcome all the MLAs to Cranbrook. I know some of you have been here before, and I want to welcome you to Cranbrook on behalf of the community.

R. Howard (Chair): You've got 15 minutes. I'll give you a little heads-up at ten.

S. Manjak: It is municipal election time, so I want you to know that I am not running again. I've been in local government for 12 years, so I can say whatever I want. Being in local politics for 12 years and mayor for the last three, like yourselves I have a lot of unsolicited and sometimes solicited advice on how we should raise money and how we should spend money. That's not my intent today.

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My intent today is to give you a rundown on what's happening in our area and then have a quick discussion about some of the challenges that local governments face. I went through the transcripts of your previous discussions in other communities to see what other mayors or councillors or regional districts are saying. What I can say is fairly similar.

In Cranbrook over the last 12 years, in partnership with the provincial government, I think we've really been able to move this area forward. By the way, I'm also the chair of the regional district of East Kootenay, so I get to also represent the region as well.

In Cranbrook, alone, over the last 12 years we've seen investment in our spray-irrigation project, which is how we dispose of our sewage and our wastewater. That project, which has come into completion this year, was an investment from the provincial government of approximately $4 million, the federal government of $4 million. My city, the city of Cranbook, is into it for almost $9 million.

That investment, while it keeps our contractors working and is part of the stimulus plan, also benefits this area because we think the spray-irrigation project itself supports the ranch and agricultural community.

Cranbrook, as the owner of our spray fields, irrigates approximately 4,000 acres of agricultural land, which supports the ranching community and also the agricultural community. We put cattle on that land. We're also going to do different test crops and different things out there. We're also going to be doing a habitat restoration project out there as well. So that money by the province has been well spent.

The same with the airport. We expanded our regional airport approximately five years ago. The project was completed about three years ago. The province was in for $4 million, the feds were in for $4 million, the city was in for $4 million, and that is bringing regional investment to our area. Again, that's a partnership with the province.

Recently we completed our seniors subsidized housing project — again, a partnership between the province, federal government, the city of Cranbrook and the Columbia Basin Trust, which helps our seniors.

We've also seen major highway improvements in this area over the last 12 years — over the last three years specifically. The highway from this end of Cranbrook right to the other end is completely redone with the help of the province. The city of Cranbrook's been involved in that with money as well — again, moving commodities through our region. We've had quite a few improvements in the highway between Cranbrook and the Elk Valley as well, with the highway between Sparwood and Elkford recently redone as well.
[ Page 1622 ]

As a person who's in the process of relocating to Sparwood, I can't tell you how surprised I was by the amount of traffic that moves between Sparwood and Elkford. It is a huge volume of traffic, and all that traffic, quite frankly, represents the investments in this area. As you know, the mines and the coal in the Elk Valley employ almost 3,200 people. The amount of revenue and commodities that leave the Elk Valley — and that support this government and this society we have in British Columbia and health care, education and all those things — is substantial. Without that industry, we would be not very well off.

The investment in the hospital — again, a partnership. I chaired the regional district hospital board when we expanded this hospital to a regional hospital with the support of Bill and this government. We've seen an investment of almost $50 million in that hospital. What that translates into is not only construction jobs but now we have new professionals coming into the area. They support staff, which benefit this community and region as we attract more professionals to this area.

You heard the speaker from the college — again, an investment of almost $30 million in the college over the last six years. Some of those have been investments, as you heard, in new buildings and new programming. Again, Cranbrook benefits, and the region benefits from that, from new job growth, new professionals coming to the area, but also training opportunities for our youth.

I've hit the highlights on the investment over the last 12 years in this area. I think the point is that it illustrates two things, from my perspective. The first one is that partnerships between provincial government and local government and the federal government are the only way forward if we're going to address some of the infrastructure issues we have, and I can get to that in a sec. I think that's proven over time that when you have willing partners at the table, we can serve the needs of our communities and the province as a whole.

Cranbrook's no different than all the other communities that you probably hear from in British Columbia, in that our biggest single challenge is the renewal of our infrastructure deficit. Cranbrook recently conducted a growth management study that took almost two and a half years to be completed.

It showed us what I knew, as mayor — that we have an infrastructure deficit in Cranbrook of approximately $120 million. Cranbrook in its yearly budget spends about $3 million on infrastructure replacement a year. So you can see that, at that rate, we're never going to get the problem solved. The only way we can solve that problem is working with the province and federal government around partnerships to address that problem.

The challenge is that — and I know you've heard this before — our ability, as local government, to address those problems through property taxes is no longer sustainable.

[1810]

I had the opportunity to address the Finance Committee last year. I said the same thing last year that I'm going to say today, and it's not popular. But it's time that municipalities had the opportunity to sit down with the provincial government and look at new ways to address that issue. We can no longer rely on property tax.

In Cranbrook we are property-taxed out. Our budget is lean. As you know, we can't run a deficit. The surpluses we run are very small, and they will not sustain us. Quite frankly, taxpayers don't expect local government to carry surpluses. They see a surplus; they think the money should come back to them. So we can't address that issue.

As I said last year — and I'm going to say it again — I think it's time, through the powers of the Community Charter, that we look at new ways. It might be a municipal consumer tax. It might be a municipal sales tax. I know that isn't popular, and I know that some members last year didn't like what I had to say, but I see no other way.

As an example, last year under my leadership, Cranbrook instituted a 1 percent tax increase dedicated strictly to roads. So it's a tax that goes to a specific purpose — to replace our roads — and this town accepted that. They knew that the justification in the case we made for that new tax was that they would see results and see where their money was going.

I think that if the province and the municipalities could come to some type of agreement on a municipal consumption tax, it would be my responsibility as an elected leader to sell that to my community. It wouldn't be yours; it would be mine. I would make the case to my community why that was needed, where that money would go. I would be able to make the case that we would be able to move away from property tax as the sole source of revenue for our community.

A community of my size, 20,000 — we have other means of revenue generation in providing services. But in communities in the rural area most mayors will tell you that the services that we provide to our community through recreation or whatever are all subsidized by the taxpayer. They don't make money.

A community of my size doesn't have the luxury of Vancouver or the larger urban municipalities to actually make money off their programs. We don't. So we're really in a tough situation.

I met with Minister Chong three weeks ago on a different issue, and she said: "Well, Scott, the answer is that you need to attract investment to your community. That way you can loosen your dependence on property tax." In a perfect world that's what we would do.

But I can tell you that in the East Kootenay…. I'm going to give you two specific examples of what I'm about to tell you. In this area, we are in what I refer to as an existential struggle to attract investment to this area. The protracted conflict that we have in this area between…. Those that believe in investment and growth and using
[ Page 1623 ]
the land base to the benefit of our communities are bumping up against a very powerful movement that believes that the land should be sanitized for no growth or no investment.

I can give you two examples. The first one is the Jumbo project. You're all familiar with it. That project has been going on for 20 years. From my perspective, the only reason that I see that there's not been given an answer…. The environmental assessments are done. Your government is responsible for that. They've completed all that. The only reason why we don't have an answer is because politically it's a controversial issue. But that project represents investment in jobs in our area.

I was a sawmill worker. When my sawmill closed down in Cranbrook, the CORE process said to us displaced forest workers that the government is committed to creating jobs in the recreational and tourism industry. As a displaced forest worker, I said: "It's better than nothing." Twenty years later we still haven't seen that.

I see now that there's a renewed push for a national park in the Flathead. I can tell you that in this area, if a national park is designated in the Flathead…. Tembec is really the only major forest industry in this corner, other than up in the Columbia Valley where we have, I believe, Canfor. I'm not sure if that's who they are now. But Tembec would be devastated and, basically, will stop operations in this area if there's a park in the Flathead. Again, there's no justification for that.

When I look to investment, as a mayor and a chair of the regional district, I see this continual conflict. Quite frankly, investors are telling me, as the mayor of the city of Cranbrook, that they're not willing to do business in this area because it's just not worth it.

I listened with interest to the gentleman representing the mining company. I understand what he's saying. I wish I could tell you that investors are flown into this area because this is a great place to do business. They're not, because it's very hard to do business because of this protracted battle.

[1815]

So what does Cranbrook do? Very quickly. Cranbrook says: "We'll take our own destiny in our hands." So we've been working on a biofuel project, which will be an industry that we can create ourselves. We have the blessing of the provincial government — the political blessing. The challenge we face is that within the different ministries there's a real struggle to convince some of the deputy ministers and others. They see it as a threat to the tenure system, and we know that's not the case.

Cranbrook over the last five years has done fuel-load-reduction programs to fireproof our community. With the work we've done over the last five years, we could have had five to ten years worth of fibre to fuel not only heating our buildings through a pellet-type system…. I've seen Nechako just put in a similar system that we want to do, and all that wood and waste fibre has been burned up.

I think we need to work with the province to enable communities such as mine to move past the reliance on property tax and to help us build our own industry, knowing that it's a very difficult struggle.

You know, I said to one constituent…. Then I'll close on this, Mr. Chairman. He said: "Scott, wouldn't it be great if a major industrial player came in here?" I said: "It would be absolutely awesome, because we'd create jobs. But I want you to think for a second."

Let's just say that is a major manufacturer of some product. I'm struggling for one good example. But think of the process he has to go through. The first thing he has to go through is he has to find a site in Cranbrook or in the region. The minute he located his site, he would have to go through either a rezoning or a land use decision process, which would be protracted and contentious for no other reason than that we would again pit the two sides against each other. That's the challenge we face in the rural area.

I think Premier Clark is exactly right in her focus on jobs. What I think we need to do is to make sure that the rural area is not lost in that and that the province recognizes the unique attributes that are in the rural areas and helps us work with our challenges and opportunities as we move forward together.

With that, I want to thank you for coming to Cranbrook. That is my presentation.

R. Howard (Chair): Thank you, Mr. Mayor. You're almost out of time, but we'll try and squeeze in a few questions.

B. Ralston: Thanks very much for your reflections, Mr. Mayor. I wanted to ask you a little bit about policing costs. We've heard from other mayors that policing costs are a big pressure. Obviously, the provincial contract is being renegotiated. Now, can you give us a sense just of where that is in terms of the pressure on the municipal budget that you supervise?

S. Manjak: Yeah. It's the fastest-growing item in my budget as a municipality. It's one that we have no control over, as you heard many times, and one that causes us great concern.

If I can add to that, the other issue for us is the keep of prisoners. Under the current provincial formula, my community subsidizes the keep of prisoners to the tune of $300,000 a year. So you pay me, basically, $9.50 an hour to keep a prisoner. It costs me as a community almost $40 an hour to house that prisoner.

J. Thornthwaite: Thank you very much for your presentation. Just a quick question about the municipal consumption tax. Given the fact that the last consumption tax we were talking about wasn't very popular, how do you suggest…? If you would be approaching the provincial
[ Page 1624 ]
government, I assume, to allow us to administer a municipal tax, would it be just for Cranbrook, or would it be for all of the communities? How do you suggest going forward in that?

S. Manjak: The framework would be under the Community Charter. I think if we all look back to when the Community Charter was implemented, there was lots of hope within municipalities that there would be new language in there that would give us new revenue streams. So to answer your question, it would be under the auspices of the Community Charter. I think each community, if we were to negotiate that, would either have the right to do it or the right not to do it.

As I said, I think the key to that concept — and I know it's unpopular — is it would be my responsibility as a representative of Cranbrook to sell it to my community.

J. Thornthwaite: Okay. Thanks.

R. Howard (Chair): Thank you, Mr. Mayor. We've run you out of time. Appreciate you coming forward.

Committee members, we have a typo here on our schedule, so we have a bit of a gap, but we have somebody that's willing to move up early. So we'll now hear from the Canadian Home Builders Association, Rocky Mountain. We've got Mike Delich and Brian Charlton.

Welcome, gentlemen. As you've heard, 15 minutes. I'll give you a heads-up around ten. The mike's all yours.

M. Delich: On behalf of the home-building industry in the southeast Kootenay region and the Canadian Home Builders Association of British Columbia, Rocky Mountain, I welcome everyone this evening and appreciate this opportunity to provide an update of the industry in our region.

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My name is Mike Delich. I'm a businessman residing in Fernie, British Columbia. I'm a director of the Canadian Home Builders Association of British Columbia, and I work very closely with M.J. Whitemarsh, who I believe you spent some time with today.

On my left is my colleague in the housing industry, Brian Charlton. He's the director of the Rocky Mountain region of the Canadian Home Builders Association of British Columbia. He is an owner-operator of a family business doing construction in Kimberley, Cranbrook and the southeast.

I'd like to acknowledge, before I get into my presentation, the strong advocate that Bill Bennett is for us. He understands our industry, and he has been on almost every jobsite there is in the Kootenays. So we acknowledge that.

My first presentation — I won't go through this. I believe M.J. did a fine job today of going through this, or you would have seen it. But I would just like to highlight once again — on page 3, on the pink tab — that in 2010 there were 133,000 jobs in British Columbia in the housing industry, and that industry generated $6.8 billion in wages. So we're here this evening to talk about jobs.

My next presentation is this one, entitled Presentation to the Members of the Standing Committee. It's prepared by Simon Howse, who is the president of the Canadian Home Builders, and I'm doing the presentation. If we can go to the first page, I'll just read.

On our society. We represent a number of private sector builders, suppliers and stakeholders in the Kootenays. We understand that by utilizing best practices and strategic communications, we achieve excellence in our development and building approaches. We promote well-planned communities in the East Kootenay region by encouraging the responsible and sustainable use of land and resources and promote high standards of competence and conduct in the land development and construction industry in the East Kootenay region.

To that end, within the last two years Professor Condon, from the University of British Columbia, has been up to speak to all our members and elected officials on smart-growth principles. So what we do is we take that knowledge from the Lower Mainland. He really, really helped us.

We promote cooperation and positive relationships with land development in the construction industry, with government authorities and stakeholder groups. To that end, we brought up Mr. Bob Deeks from RDC Fine Homes in Whistler. He built the award-winning net zero home, so we brought that in as well. And we educate the public and government organizations about land use and development. To that end we brought in Mayor Dianne Watts to speak about the initiatives that Surrey has been doing, and she was a fabulous speaker.

If you can go to the blue tab, towards the end on page 9, specifically this evening we're asking for, requesting for consideration, two items. The first is removing the PST portion of the HST immediately on all new homes, including secondary homes. Secondly, institute a 2 percent tax rebate on all renovations completed by renovators registered with the HST and 4 percent on green renovations.

We have a rampant underground economy in our region, and the reason is that we're in a unique situation where we're close to the province of Alberta with just the 5 percent tax and, more importantly nowadays, we're really close to the American states of Montana and Idaho that have no sales taxes. So a lot of people now are going down and purchasing their goods and wares and bringing them across and contributing to the underground economy.

Those are our two recommendations as an industry. What we'd like to do tonight is to give you an example of what happened when the HST was brought in on June 30, 2010. It created an inventory of homes in our region.

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[ Page 1625 ]

Prior to June 30, 2010, real estate sales were very strong in Golden, Invermere, Radium, Kimberley, Cranbrook, Fernie and Sparwood. Right after that date, when that HST came in, it went dormant. We have had virtually no sales in that last year and a half.

Using Fernie as an example, we have 42 units that have been on the market for 427-plus days. The average selling price — this is in this handout right here; it's a two-pager — is $360,000. The total market value of all these homes is $15.12 million.

If you remove the provincial government revenue of the 7 percent, that's just over a million dollars, at $1.058 million. If you remove the rebate of 2 percent on that $15 million, it's $302,000. In other words, the lost government revenue, after allowed rebates to the province, for the sales of those 42 homes would be $755,000. Our assumptions are listed there.

What we see is that there are strong benefits to the province with the immediate removal of the HST, specifically on these inventory homes. It would create the needed certainty in the marketplace.

The province will be able to collect the property transfer tax on those sales. We'll have increased spinoff through the taxes that would be collected on services — lawyers, home inspectors, appraisers, furniture suppliers, interior decorators, appliances — and the ability to eliminate the 427-day-old inventory, which would allow the homebuilders the necessary capital to be creative and provide new market.

As you're well aware, one region…. We're close to the Alberta market, but specifically, Sparwood is just half an hour from the Crowsnest Pass region of Alberta. Many workers now, because of the HST, are going to the communities of Frank, Blairmore and Coleman, buying houses and doing their renovations there because of the lower taxes or buying homes there that are in the higher bracket.

The mining company supplies transportation from Fernie to the mines and from the Crowsnest Pass, Alberta. That is a concern of ours.

Most importantly, if this inventory…. All the builders believe that once that HST is removed, especially on the standing inventory, we would be able to start building again. For instance, if 42 homes would be built, the contribution to British Columbia would be $15 million, as we saw.

The CMHC Altus report had a multiplier effect. For every ten housing starts, 19.2 jobs were created. Therefore, just in one community there would be 42 housing starts, 81 jobs. Incidentally, to substantiate that, right at the present time Teck is hiring 50 employees per month. That's their forecast for this year. That is a valid fact from the mining company.

The other thing that's harming our industry right now, because of the state, is that we're losing a lot of the valuable trades that we have. The carpenters, the plumbers, the electricians are going to work in the mines. We don't have the work, our industry, so they're going to gain full-time employment for their families. In the Columbia Valley — near Windermere, Radium — a lot of those workers are going to Fort McMurray or the diamond mines and doing fly-in, fly-out.

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Our recommendation request and our conclusion is that the HST, the 7 percent portion, be handled immediately. We're asking for a reduction on that immediately on our inventory homes and working with the government, as M.J. would have stated today, for the future.

I'd be happy to answer any questions.

R. Howard (Chair): Perfect timing. You're at ten minutes. We have a number of questions.

B. Bennett: Mike, one of the things that we hear from the Ministry of Finance officials — not so much the elected folks but the officials — is that the downturn in sales is due, as much as anything, to (a) the global downturn generally and (b) the availability of, and you referenced it yourself, cheap real estate, cheap closing costs and so forth — lower closing costs in the U.S.

I think it would be useful for you or Brian, or both of you, to get on the record in terms of the interest that you have coming out of Alberta. It's hard for the rest of the province to understand that we live right beside this fairly healthy economic engine, and there are still buyers that want to buy in B.C.

M. Delich: That's a good question. For the record, on the Saturday of the Labour Day weekend our company had an open house and sales centre. We had eight individuals come through — eight families. They were all qualified to purchase. They all said they liked the product. They loved the East Kootenays. They loved our community because we have a ski resort and the river.

When we did our callbacks on Tuesday, they said: "No, we can't buy because of the uncertainty of the taxes and because of the HST." That is happening in Fernie. As well, it's happening in Kimberley, and it's happening in the Columbia Valley — Radium and Invermere.

D. Donaldson (Deputy Chair): Thanks for the presentation. I have a specific question on your specific example and then a general question from the association's point of view.

My specific question is: would those people that talked to you say that they'd be buying in 18 months, when the government says they'll have the GST-PST in place and the HST put aside?

My other question is…. We heard from your association president — I believe it's her title — this morning…

M. Delich: M.J., the CEO.
[ Page 1626 ]

D. Donaldson (Deputy Chair): Yeah, CEO.

…on your proposal around a tax rebate on green renovations. How did you settle on the 4 percent? Would you suggest a cost ceiling on that as far as subscription to a program like that? What kind of difference would that make to the renovations business in the East Kootenays?

M. Delich: The first question was: would those people buy now or in 18 months? Because of the strong and vibrant Alberta economy, those purchasers were purchasers now. You know what? They would wait if they had to, but they're willing and able to purchase right now.

To answer your question on the green…. That's a number that M.J. developed with Ottawa. We see that people are willing to spend…. If they're renovating, they'll spend the money on the windows, the foam insulation and other spaces in the attic, for instance.

R. Howard (Chair): One last question.

D. Hayer: Thank you very much for your presentation. M.J. did a good job. It's good to see that you're following up on the same project and providing some more information.

My question is a very simple one about your suggestion, first, and the second one on the recommendations. How much net cost to the treasury will it be? Will it be net effect zero? Will it be positive, or will it be negative? What amount might be, from an estimate point of view, the revenues lost to government if they were to follow up and accept your first suggestion and second suggestion on the PST and GST?

M. Delich: We're estimating the loss to the government initially would be $755,000. That's our estimate. If the HST was to be removed today on that inventory of homes, those 42 homes, the loss would be $755,000. Then that would start going…. The government would recoup that with the property transfer taxes and the builders out building and spending money on taxes and goods and services.

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D. Hayer: Would they be able to do it in just one region, or would it have to be done for the whole province?

M. Delich: Oh, it could be done in…. The main regions are the Kootenays from Golden down to this region, the Okanagan, Whistler and Vancouver Island.

R. Howard (Chair): Thank you, gentlemen. We've run you out of time. We appreciate your presentation.

Next up — we're back on schedule, it looks like — if we can hear from Cranbrook and District Chamber of Commerce — Sean Campbell and Jeanette Sissons.

Welcome. As you probably 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 go straight through. Your choice. The microphone is yours.

S. Campbell: Thank you. I'll start with a couple of apologies. One, I have a cold, and I may find myself in a coughing fit at some point. The second is that I am the victim of technology, and my printer decided not to cooperate with me today, so I'll be reading from my phone. I will read my presentation and then ask for questions afterwards.

First of all, welcome to the committee, and particularly to Mr. Bennett, who, in representing the interests of our area as MLA, is to be commended on the number of completed projects and millions of dollars that have been invested in the area over the past few years.

On behalf of the Cranbrook and District Chamber of Commerce, I am pleased to be here representing nearly 500 member businesses. The mandate of our chamber is to find additional ways to involve our members; enhance the value of chamber membership; and most importantly, advocate more effectively than ever on our members' behalf.

This evening we would like to bring the committee's attention four priority areas where the provincial government's focus would positively impact our business community and the economic climate locally and regionally.

First, we would like to encourage the government to continue to move forward with plans to implement the municipal auditor general office. With Auditors General at the provincial and federal levels of government, it is unclear why local governments have not yet been subject to similar oversight. The municipal auditor general is supported by the B.C. Chamber of Commerce and is imperative to the transparency of local governments dealing with its own taxpayers.

Second, attention must continue to be brought to bear regarding fair taxation at the municipal level. We realize that by closing the gap between residential rates and the various commercial rates, municipal governments and leaders risk the ire of voters who put them in office. However, the gap represents an unfair tax burden on businesses and a significant barrier to investment.

Third, we urge the provincial government to support the federal government's Senate Finance Committee investigation into the retail price gap for similar goods for sale in Canada and the U.S. Proximity to the U.S. border and a strong Canadian dollar contributes significantly to the leakage of retail spending when the same item can often be purchased at a substantially lower price south of the border. Our own retail committee is looking into strategies to change consumer behaviour. The gap that currently exists, and which often cannot be explained by higher input costs alone, makes this initiative to educate our members' customers challenging at best.

Fourth, with a new air service, Integra Air, offering direct flights to Edmonton and planned direct flights to Fort McMurray, Cranbrook is very well positioned
[ Page 1627 ]
to attract new families to the lifestyle offered in B.C.'s southern interior. The amount of existing and potential new professional and trades employment in Alberta's northern oil and gas industry is an opportunity to attract young families to live and to go to school here. The current tax climate is a significant barrier to attracting these new families.

Two tax issues in particular hinder our proposition of living the good life here while following a career in Alberta's booming industry. First, the property transfer tax. This inefficient tax should be scrapped or, at the very least, be brought in line with its original intent, which was a wealth tax. The average home sale in B.C. currently results in about $7,000 of property transfer tax obligation to the homebuyer, which is then often financed as a part of the mortgage, further exacerbating this burden over the life of the mortgage to as much as $20,000.

The revenue that would be lost by abolishing this tax, which is and will continue to be a barrier to homebuyers — particularly those from Alberta and abroad — would be more than offset by the ongoing collection of personal income tax, sales tax, fuel taxes, etc.

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Next, the transition/return to the GST-PST tax system must be accelerated and completed with a forward-looking approach. The residential construction industry locally is effectively on hold as buyers and prospective buyers wait for the PST to be reinstated. This delay must be as brief as possible, while at the same time the government should take advantage of the transition to modernize the outdated PST tax system as much as is now possible.

Combined, these tax issues cover both new construction and the pre-owned inventory. Leaving both at risk to these tax burdens jeopardizes our ability to attract new investment.

In closing, I would like to once again extend our appreciation for the opportunity to express our thoughts as the government considers its plans.

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

First, you have until the 14th, I guess, if you've got hard copy or any supplementary materials…

S. Campbell: Yes, I will e-mail this copy.

R. Howard (Chair): …to get it into the committee. That's great.

On the second point, when I hear how much MLA Bennett has done for his community, I think Richmond might have to adopt him and get him advocating for us.

B. Bennett: Hi, guys.

You mentioned the housing issue. Are your members talking to you about just how tough it is out there — the tradespeople and the contractors and the suppliers and the lawyers and the surveyors and the accountants and the bankers?

S. Campbell: Both of us being bankers ourselves, we hear it from members and from clients — significant struggles with second housing. It's effectively on hold, as the PST tax regime was more favourable to second-home buyers and recreational-property buyers from Alberta.

We understand from our developers that we've talked to…. They're hearing that there is a significant hesitation to buy in the current climate.

I know from personal experience that the property transfer tax…. When I moved from Alberta, I was not aware of it. My realtor did not tell me of it, and until my deal was closing, I did not realize that I was going to have this additional cost. At that point in time I was in a position where I had to finance it, so I know first-hand that that property tax is somewhat of a barrier to investment from Alberta.

J. Sissons: I cover the region in my role for banking, and I'm a director on the B.C. Chamber of Commerce as well. The area I come from covers from Golden through to Creston — the Elk Valley and the Columbia Valley. Through that region I do see the repercussions of the slowdown in building purchases of new buildings.

It's not just your tradespeople. It's not just your contractor. It's not just your land developer. It goes down through your whole community. The economic impact in communities like ours, like in Invermere, Fernie, Creston — they all feel it. It has an impact on who is going to the hardware store and what they have. The disposable income is severely impacted by the inability to sell the homes to new people coming to our communities.

Also, it has an impact on being able to attract other industry to our communities. When the cost of housing is seen as prohibitive for moving valued employees, it's harder to move your industry to this region or even into elsewhere in British Columbia. So it is a big barrier.

R. Howard (Chair): I was interested, just before I go to MLA Hayer, in the success you've talked about at the airport, with the flight to Edmonton and…

S. Campbell: Planned flights to Fort McMurray.

R. Howard (Chair): …Fort McMurray.

A lot of other airports right across the country that are close to the border are just being really savaged by the whole leakage thing. How has that impacted you here?

J. Sissons: I would say that we've had a very forward-thinking manager here at the airport who has gone out and looked for other opportunities. The attractiveness…. Integra Air was flying from Lethbridge through, and now they've been attracted to come to Cranbrook and fly from Cranbrook to Edmonton to facilitate the movement of distance workers at northern mines and diamond mines and oil sands as well.

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[ Page 1628 ]

So there was the opportunity there, but it also makes it more difficult for them to expand their service when the business, or the clientele base, isn't as broad as it could be.

If the plans to fly further to Fort McMurray would be impacted, as well, on making the base bigger here, for more homes here, that would allow workers to have the quality of life that they would like for their children and still have that income coming in from where they are.

D. Donaldson (Deputy Chair): Thanks for the presentation. I hope your cold gets better. The retail price-gap study that you mentioned. The federal Minister of Finance has tasked the Senate. I hadn't heard that in the presentation from the B.C. Chamber of Commerce. Do you know if that's been a request for support for that study from the provincial government, similarly as you have asked us for support in a recommendation?

S. Campbell: I'm actually not certain if the B.C. Chamber…. Perhaps Jeanette is better off answering that one.

J. Sissons: It hasn't come to that point yet. It's being brought forward from here to the B.C. Chamber of Commerce. It did come up in Prince George at the B.C. Chamber of Commerce AGM. I didn't bring the policy manual with me. It's only that thick.

D. Hayer: Thank you very much for your presentation. We've had very good presentations here today. My question. When I talk to some of the builders in Surrey, they say: "Look, sometimes we are having problems getting the financing from the bankers." I said: "Both of you seem to…bankers." How is the situation for people in the development and building and construction industry getting their financing? Are they are able to get financing, or is it very difficult ever since…?

J. Sissons: It's extremely challenging. Construction financing is done based on presales. So if you can't get presales, you can't get the financing. You may be approved. Everything may be all set up. But until you actually have someone signing on the bottom line and giving you a deposit, you can't get an advance on funds.

That goes for land development — putting in your deep services, your shovel services — but it also goes to if you want to build a house for speculation. It also goes on that too. You need to show that there's a demand before you can borrow the money. Because basically, as a banker I'm looking for repayment. I'm renting you my money, and I need to know that I'm going to get it back, because I have to give it back to who lent it to me in the first place. It is very challenging. That's part of where you feel the economic pinch, in these areas, as well.

Land developers have invested — sometimes over several years, up to a decade — to develop their land, and then they're sitting holding. They can't do anything. They can't sell a lot, and they end up impacting upon their employees. Because when you own a business, as many of you are probably aware, you don't just support one family, not just your own, but every employee you have has a family that is impacted by your slowdown. So you may cut down time or put them on halftime, or you may lose employees. So when a developer or a contractor…. They can't get financing because they don't have a presale.

S. Campbell: My sense is that the reticence of banks will outlast a broad economic recovery partially because of new regulations in the banking industry but also the speculative nature of it, of development financing. The experience of the last few years will have made banks quite hesitant to get back into that market, even when there's demonstration of a recovery.

J. Sissons: Your challenge here isn't in a homeowner getting a mortgage, someone who is employed going out and wanting to build a house and get a mortgage for that. That's not your challenge. Your challenge is the contractor being able to build that house to the next stage where they can get an advance on that construction mortgage. If they can't come up with the finances to get the foundation in the ground before they can get their first advance on that construction mortgage, they can't take the contract.

R. Howard (Chair): In closing, in the last 30 seconds, I understand you guys won an award this year. Would you like to say a few words about that, just to wrap it up?

S. Campbell: We're very proud that we, the Cranbrook and District Chamber of Commerce, did win the B.C. Chamber of Commerce Chamber of the Year Award.

R. Howard (Chair): Yeah, congratulations.

S. Campbell: Thank you very much. We're very, very proud of that.

J. Sissons: We're amazed and pleased. It is a very good, hard-working group. For the size of the region, for us to have 500 members is of great impact. When we have a monthly luncheon where we average 150 attendees, that's pretty impactful.

[1850]

R. Howard (Chair): Isn't that great? Well, we've run you out of time now. Thank you both very much for coming out this evening.

J. Sissons: Thanks for the opportunity.

R. Howard (Chair): Next up we have Tembec Industries — Chris Stagg and Andrew McCuaig.
[ Page 1629 ]

Welcome, gentlemen. As you have probably heard, 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 go straight through. Your choice. The microphone is yours.

C. Stagg: I just want to take one second to thank the committee for the opportunity to provide this input.

My name is Chris Stagg. I'm the chief forester for Tembec for B.C. operations, and this is Andy McCuaig, who is the general manager for the bulk of our woodlands operations here in the Kootenays. We have a few issues that we'd like to discuss, so I may go through this a little bit quickly. If something is not clear, please don't hesitate to stop me.

Just a quick word of introduction. Tembec, if you're not aware, is a large integrated forest products company. We're based in Quebec, but we have operations in Quebec, Ontario, British Columbia, the Maritimes and France. We're the sixth-largest major licensee in B.C., with an annual consumption of about 2½ million cubic metres of wood.

We have operations in the northeast and southeast parts of B.C. A high-yield pulp mill in Chetwynd and a kraft pulp mill, two random-lengths SPF sawmills, a value-added finger-joint plant, two whole log chippers and a bioenergy facility here in the Kootenays. We directly employ about 1,500 people in B.C. and twice that on a contract basis — two or three times that in terms of the multiplier effect.

The first issue that I wanted to bring up is really just one of awareness for the committee. Our local MLA, Bill Bennett, is keenly aware of this issue, but I just wanted to make sure that everyone had a level of awareness around our concern. This has the potential to threaten our viability, so it is a deep concern. It's with regard to the softwood lumber arbitration dispute.

Just to lay a little background and provide some context, Tembec is one of the highest-cost producers of SPF lumber in the interior of B.C., and that's primarily a function of where we operate. We have steep terrain, difficulties in delivering our logs to our facilities, steep roads, switchbacks and things like that. We also have a highly diverse forest and many other resource values that we must accommodate, in addition to high levels of competition for logs.

Although our harvesting is driven mainly by mountain pine beetle priorities, we have been very successful in mitigating the attack, and we have only experienced what are called endemic levels of damage to our stands, so very low levels of grade 4. As a result, we've had very little grade 4 in our harvest, and we haven't had the need to kiln more.

Our viability here, because of our high-cost raw material, relies on making very high-quality lumber. Unfortunately, the Chinese are not interested in high-quality lumber or paying a premium for higher environmental standards, so we're still heavily reliant on selling our lumber into the United States.

We are 100 percent in support of the province in their defence of this case. But we're just a little bit concerned that in the event of an unfavourable outcome, a border sanction could have a very serious impact on the viability of our operations here in the Kootenays. Just wanted to have a level of awareness out there for that issue. I'm not asking for anything in particular from this committee.

That also ties into the next issue that I wanted to bring up, which is funding related to the detection and treatment of mountain pine beetles. Provincially, the mountain pine beetle epidemic is over. There aren't vast new areas of pine stands that are being attacked. It's mostly come and gone from the central Interior. Here in the Kootenays, however, we do have current attack, and we're battling it on an annual basis. It's basically been the same for us for the last ten years.

[1855]

Historically and currently mountain pine beetle detection and treatment has been paid for by the forest investment account and land based investment strategy under that. For a few years the federal government also contributed quite significant funds to try to control the spread of the beetle into Alberta, which we benefited from greatly. We spent, for a number of years, upwards of $3 million to $4 million a year in detection and treatment. Those treatments were very successful, and that's evident in the low levels of current attack that you find in our stands today and the very low levels of grey attack in grade 4 that we consume when we're harvesting those stands.

Last year the province made approximately $2 million available for this region for mountain pine beetle detection and treatment, and it looks like this year will have a similar level of funding. We're satisfied with that, given the trend in the mountain pine beetle population being stable and/or even slightly declining.

This is very important for us, though. We're very concerned that if we back off at all from treatment of mountain pine beetle in this region, we will have the same problem that the rest of the province faces in terms of mid-term timber supply and the quality of that timber supply.

It's very important to us that this funding level be maintained. We really rely on it in terms of differentiating our product in the marketplace so that we can have that high-quality lumber and environmental certification that does give us the premium that it takes to offset our high costs.

Our ask, I guess, of the committee is really to ensure that the East Kootenays remain a high priority for funding for this treatment under the land base investment strategy and that the land base investment strategy itself maintain its current level.

A. McCuaig: Hi there. My name is Andy McCuaig, and I'd like to talk about two topics. One is the HST and, as
[ Page 1630 ]
well, the state of forest infrastructure — namely, bridges in the East Kootenays.

First, discussing the HST. The results of the referendum were a disappointment to Tembec. We felt it was a benefit to business in B.C., and obviously, we were in favour of the HST. Having the HST in place was a $3 million benefit to the company, so we were disappointed, and we do have a concern that there could be a potential that corporate taxes could be raised to make up for any losses to revenue.

The ask from the company is basically that in consideration of a balanced budget, it not be done to the detriment of B.C. business. We would consider it a double hit, considering that we had a benefit of $3 million under the HST system. So that is the specific ask.

Under the state of the forest infrastructure in the East Kootenays, this is a topic that our MLA, Bill Bennett, knows well about, and he has been voicing his concerns specifically about the state of the infrastructure and bridges in particular. There are approximately 90 public use bridges in the East Kootenays that are reaching the end of their useful life, and the replacement of this infrastructure could be in the magnitude of up to $6 million. I can relate to sort of specific examples where industry is being asked to bear those costs, where typically government was bearing the costs to access timber.

Quite simply, there aren't enough dollars within the stumpage system to pay for the bridges that are in disrepair. There is a process in place where the government is funding the replacement of some Forest Service structures, but it doesn't come anywhere near close to the amount of dollars that it will take to effectively replace these structures. So we would ask that the government consider this seriously moving forward in their budgetary considerations.

C. Stagg: Okay. Just a couple more real quick ones. MLA Blair Lekstrom is aware of this issue. We've met with him related to our Chetwynd operations.

Just for the committee's awareness, the increases that have been proposed by B.C. Hydro for electrical rates would seriously jeopardize the viability of our high-yield pulp mill up there. It consumes about 55 megawatts an hour. It's a considerable consumer of electrical power, and those rates would pretty much kill the mill.

[1900]

We have met with MLA Blair Lekstrom on that, but it is a deep concern to us. We are very interested in working with the province and with B.C. Hydro to work jointly on projects that would reduce our consumption of electrical power or potentially result in cogeneration of power at our facility. So I wanted to bring that up.

Last but not least, Tembec is very supportive of government's interests in public-private partnerships, and we feel that they do work very well. We see opportunities for significant capital investment in the East Kootenays and in the northeast. Our hope is that this interest will continue and that there may be opportunities to do investments in the forest industry. We'd be very pleased to work with the province on identifying and working together on projects like that.

That's all we have.

R. Howard (Chair): Good stuff. We have some questions.

B. Bennett: Thanks, guys. You raised a lot of really important issues.

I'm really glad you raised the issue of infrastructure and bridges. We can discuss this later amongst ourselves, but I hope the committee can make some sort of reference to the infrastructure issue across the province. I actually don't think most people, including most people in government, understand that we're getting to a point now where we've got all this infrastructure that is coming to the end of its useful life, and there is nothing in the budget to replace it or fix it.

Chris, I don't know if you want to get on the record with these two things I'm going to ask you.

One, if you want, I'd like to know what would happen to Tembec as a major employer here locally if it lost access to the fibre available to it today in the Flathead Valley. Two, do you want to say anything about the fact that if the judgment in the softwood debate right now goes against Canada and there are penalties, it is different for a company like Tembec than for some of the other companies, particularly in the mid-north, where they've got lots of pine beetle? Those two things.

C. Stagg: Okay. I'll try not to run us out of time, but I'll go on record on both. We're very pleased with the actions of the province thus far in maintaining the ability of our company to access fibre in the Flathead. We were quite pleased to see the announcement — I guess it was last week — regarding the introduction of the Flathead bill.

If we lost access to the Flathead…. Currently the fibre in this region is allocated at about half of the production capacity of the facilities here. So there is two times the production capacity in this region than there is annual allowable cut. The rest of that has to be made up by privately procured wood.

The Flathead is a critical source of fibre for us going forward, because it represents about 100,000 cubic metres a year worth of wood in sort of a mid- to long-term basis. But it's more than that in the short term, because we have been logging around it. It hasn't been affected by the mountain pine beetle yet, given its isolated location.

We've been sort of exhausting the pine-leading stands in other areas, where the beetle has been more active, and that has put us in a situation where the Flathead is a critical short-term need for us to do harvesting. We're very appreciative of all the work that the province has
[ Page 1631 ]
done on that one. We are actively down there developing cutting permits.

Suffice it to say that if we did lose access to that and it wasn't replaceable — like fibre available to replace it, which there isn't — we would probably end up having to rationalize our sawmills. It could result in the loss of — I won't say hundreds of jobs — a significant number of jobs.

R. Howard (Chair): Thank you. We will try to squeeze in one last question.

D. Donaldson (Deputy Chair): Thanks for the presentation. I think you're the only major forest company that has presented to the committee this year, so congratulations on making use of the opportunity.

The mayor presented earlier about the biofuel project that the town is investigating and the amount of fibre that has been burnt up in the last five years and how he felt that could have been put to better use. I'm not sure if this is part of your tenure or other companies'.

[1905]

What would your view be on receiving licences, where those slash piles could be allocated to businesses and companies that actually want to use that fibre for other purposes, rather than just burning it up?

C. Stagg: I can speak to that. We are actively involved in the bioenergy business ourselves. We have a very large co-gen facility at our Skookumchuck site here. We do consume a considerable amount of hog fuel. All of the hog fuel that's created at our sawmills and Canfor's mill, when it's running, are consumed at Skookumchuck in our co-gen facility, as well as a significant amount of in-bush fibre, which we grind through either contractors or our own grinders. So there is a lot of that material being consumed in the valley already.

That being said, there is material that is currently uneconomic for us to consume. We are very interested in getting involved in a business-to-business relationship with any other proponent of a bioenergy facility here locally. We've made that known.

Before any receiving licence would be awarded to another facility that would actually be a competitor to us, it's our understanding that it's government's intent to have business-to-business relationships established. We have yet to be approached by another business to supply them with hog material.

That would be the first logical step — to try to develop a working relationship to supply that material to another business, should one elect to proceed. We're very open to those discussions. I think it would be of mutual benefit. It would help us with our costs and would probably provide them with material much cheaper than they could get it on their own.

Failing that, for one reason or another, we're completely fine with the receiving licence concept and are firmly in favour of this material being utilized to produce electrical power or biofuel rather than being burnt up and sent into the atmosphere.

R. Howard (Chair): Thank you, gentlemen. We've run you out of time. We appreciate you coming forward this evening.

Next up we have the East Kootenay Invasive Plant Council — Marty Hafke, Sue Crowley and Chris Bosman.

Just as you're getting set up, you'll know you've got 15 minutes. I'll give you a heads-up at around ten. You can stop for questions or go through — your choice. The microphone is yours.

C. Bosman: Good evening. My name is Chris Bosman. I am the vice-chair of the East Kootenay Invasive Plant Council, and we're very appreciative of having an audience with the committee this evening.

With me I have Sue Crowley, who is the chair of the East Kootenay Invasive Plant Council, and Marty Hafke, who is the coordinator of the East Kootenay Invasive Plant Council.

EKIPC, as we'll refer to it here in the presentation, was formed in 2008 as a non-profit society. It evolved from a pilot project that the province began, one of only two, from 2005 to 2007.

We are here to speak to you folks this evening on one issue, and that is concerns we have about operational funding of invasive plant control on Crown land within the region. I will turn it over to Marty. He will be speaking to this almost exclusively tonight.

M. Hafke: I've provided you guys with two documents. One is a more detailed document. It starts with the mission statement on there, and it provides quite a bit more background. The other one is simply the speaking notes I'm going on from today.

As Chris mentioned, we want to bring up the topic of operational funding for invasive plant control. I'll touch on a couple of things. I know some of you guys are well up to speed on this. I've worked quite closely with Bill Bennett over the last year, and he's been extremely helpful.

Why should you fund operational invasive plant control? The first reason: it's a duty. The provincial government has an obligation under the B.C. Weed Control Act, just like any other landowner does, to control invasive plant infestations on provincial jurisdictions. The ministries that have jurisdictions that fall under that are the Ministry of Transportation; the Ministry of Forests, Lands and Natural Resource Operations; and the Ministry of Environment.

[1910]

Secondly, another reason is that if stakeholders see that the Crown is not meeting its obligations on Crown
[ Page 1632 ]
land, they are less inclined to meet their obligations on their own private lands. The province has to show leadership in this regard by consistently and adequately funding invasive plant management in their jurisdictions.

Another reason why the province should fund invasive plant control: value. Simply put, it costs money to not treat invasive plants. The Invasive Plant Council of B.C. put out a study in 2009, Economic Impacts of Invasive Plants in B.C. In that report, for each invasive plant studied, it was estimated that the cost to B.C. ranged from $1 million to $20 million in 2008, that cost increasing to between $5 million and $60 million by 2020.

Total expected damages in the absence of any management were estimated to be a minimum of $65 million in 2008, rising to $139 million by 2020. These impacts will be felt in many of B.C.'s key economic areas, specifically agricultural, resource extraction, tourism and property values.

Why else should the province fund operational invasive plant control? Jobs. Funding for invasive plant management in the East Kootenay over the last few years has enabled local contractors to develop and even grow their businesses during these challenging economic times. This funding supports jobs for area controller contractors, ranchers and environmental professionals in the East Kootenay.

If funding continues to decline and remain unstable, then the livelihoods will be affected and, simply put, jobs will be lost. We have experienced this firsthand this summer. I can go into some detail on that later if you want.

If these businesses fold, then we would be forced to look outside the province for these services. This takes opportunity away from B.C. residents as well as introduces a number of complications with regards to the effectiveness and efficiency of invasive plant control programs. We've had experience with that in the past too.

Why else should the province fund invasive plant control? The environment. Without adequate treatment, invasive plant infestations impact the ecological health of our region, resulting in a loss of biodiversity and associated wildlife habitat as well as impacts to our ecologically sensitive and pristine natural environments.

Impacts to these areas result in economic impacts to tourism and recreational opportunities. It also impacts typical British Columbian cultural values and activities, such as hunting, fishing, hiking, camping, wildlife viewing, photography, tourism and all of the scenery that epitomizes beautiful British Columbia.

That's some of the rationale for why it should be funded. I'll talk a little bit about some of the most efficient ways that these funds can be used to control invasive plants. That's with partnerships with regional weed committees, of which East Kootenay Invasive Plant Council is one.

The provincial government tested and supported moving to partnership delivery approaches, beginning with two successful pilot programs in 2005. That was the one in the East Kootenays and one in the northwest. Currently all but three regional districts in the province have multi-stakeholder regional weed committees in place, many of them modelled on the two original pilot projects.

These regional weed committees have the framework and capacity to deliver regional invasive plant management across multiple jurisdictions across the province. It's an optimal synergy. The province is required to meet its obligations under the B.C. Weed Control Act, and the regional weed committees are well positioned to assist the government in accomplishing this work.

Partnerships with regional weed committees are ideal for a number of reasons. They have been piloted and proven effective. They are present throughout the province as the model for regional invasive plant management. They are efficient. They have the capacity, structure, expertise and resources to deliver efficient treatment with funding dollars.

They're also able to leverage additional funds and resources from other stakeholders — and grants — to further increase the value of contributions. And they're effective. There are numerous examples of effective weed treatments, partnerships and initiatives carried out by regional weed committees.

That being said, I'll highlight some of the issues with the current way operational invasive plant control funds are distributed. Again, this is highlighted in a bit more detail in the detailed document I provided.

[1915]

Regional weed committee partnerships require stability of funding. Partnerships with regional weed committees have been proven to be very effective and efficient.

However, funding levels must be known beforehand, and funding levels cannot fluctuate greatly from year to year. If we do not know how much funding is available for each jurisdiction in any given year, the annual planning and budgeting process is hindered. Furthermore, regional weed committees will not be able to commit to contracts for local contractors until the last minute. This makes it difficult for contractors to commit to purchasing equipment, hiring and training crews, and even being able to do the work if and when funds do become available.

Multi-year planning has proven to be very efficient and effective when funding levels are known beforehand. This was shown in the pilot programs. It was a three-year program where the funding was delivered beforehand, so we had $1.2 million over three years to work with. That worked well in that regard.

Regional weed committee partnerships require timeliness of funding. Due to the nature of the work, to be efficient and effective, regional weed committees need to know what the annual funding will be at the budget and planning stage, which we usually do in February-March of the year, so that an efficient workplan and fiscally responsible budget can be created. The funding needs to
[ Page 1633 ]
be in place at that same stage so that contractors can be secured and prepared and those funds can be used efficiently and effectively for invasive plant management on Crown jurisdictions.

Effective invasive plant management programs require adequacy of funding. The province is urged to calculate what base provincial funding is required to meet its obligations under the B.C. Weed Control Act across all jurisdictions. I'm told that this is in place right now. They're working on it. This funding must be adequate for the infestation levels and management goals.

Ideally, three levels of funding should be considered. A critical level, which would be an early detection and rapid response and new-invader-only program, would be sufficient for short periods of time during periods of fiscal hardship but does not provide good control over the long term and will result in increasing invasive plant populations along with the associated increased economic, environmental and social costs.

A containment level is a program where known sites are treated and spread is contained. This is the level that government should be funding on a consistent basis.

The third level would be a restoration level, where eradication of certain infestation occurs and previously infested areas can be restored to functioning natural landscapes. Again, this is what we'd be looking at as an ideal.

Multi-stakeholder buy-in requires consistency of funding. History has shown that regional stakeholders are less willing to contribute funding and partner in projects when the Crown is not providing adequate funding in the first place. If the provincial government can consistently fund weed control on Crown lands at a containment level, then regional weed committees can work with other regional partners and stakeholders to leverage additional funds to push priority portions of the program to a restoration level.

Finally, effective invasive plant control on Crown land requires ministry involvement. The three ministries involved are encouraged to contribute funding to regional weed committees that are able to carry out invasive plant treatments on ministry jurisdictions. Each ministry is encouraged to have a budget line item for invasive plant control that is funded annually.

I think right now the Ministry of Transportation is the only one that does. FLNRO and MOE use funds that vary from year to year. That's pretty much my presentation.

R. Howard (Chair): That's great. We have some questions.

D. Donaldson (Deputy Chair): Thanks very much for the presentation. It's a huge topic of concern. I'm from the northwest and have worked with the Northwest Invasive Plant Council there.

We heard earlier today in Chilliwack from the B.C. Agriculture Council, and I think this issue is a jobs issue. In my area it's hawkweed and tansy. If we don't contain it, we're really putting another crimp in jobs around agriculture for sure.

My question to you is…. The contractors that depend on the funding to get the work done…. I understand that in some parts of the province that funding didn't come through until very late — maybe in August, actually — which again is a jobs issue. Then the Ministry of Environment — did they fund anything in your region? In the northwest there was a zero-budget line item this year under Ministry of Environment.

[1920]

M. Hafke: No. Ministry of Environment — we haven't received funding from them specifically for operational invasive plant control ever since the pilot project ended. The pilot project ran from 2005 to 2007. In 2008, '09, '10 and '11 we have not received any money from the Ministry of Environment. They have assisted with some other programs that have been carried out on a provincial scale that have been run through the Invasive Plant Council of B.C.

D. Donaldson (Deputy Chair): And the timing. When did you find out this year?

M. Hafke: This year we found out…. It was August when our funding came through. And the situation I referred to earlier…. You know, I spoke with Bill Bennett about this as it was happening. We were able to get our crews out on the ground at the beginning of the year, because we did have some funds available to do priority treatments. But after a while, once that funding dried up, we had to put them on hold.

This one operation — it's a family-owned business. He's been treating weeds probably longer than anyone in the East Kootenays. He's very well known here. He's got his kids working for him. He was sitting there waiting without any money. He was all set to go do the work on his own, hoping the money would come through. In the end he had to send both his kids away to pick up other work, and they didn't come back. It's really thrown a big kink into his successional plans for his business.

At that same point we had two other contractors who, if that funding would have been another two or three weeks late, would have just walked away from their contracts as well. So it was real touch-and-go for us this year, and it really hit home how timeliness of funding is key.

B. Bennett: Well, folks, you know the story of how the original pilot project came about. And naive me, I thought at the time that if the pilot project was successful after all the effort of getting it going, government might learn from that success and model the go-forward on that. But of course, it hasn't happened. So I'm hoping we can make…. Part of our recommendation will be around modelling
[ Page 1634 ]
the go-forward funding approach on the successful pilots, both here and in the northwest.

You don't have to answer this right now unless you've got something top of mind, but I really would like you to think about making some suggestions to us either formally or, if you prefer, informally on where you see places that the Crown could pick up some revenue, some things that we're doing that you might think we don't need to do or we don't need to spend as much money. Sue is smiling.

R. Howard (Chair): You'll have to take that one on notice and do it after. I'm sorry.

B. Bennett: I'm really interested to learn from the experience that you share there, the three of you.

R. Howard (Chair): Excellent. If you'd like to submit something to the committee, that would be good. You have until Friday the 14th to do it for this year. Not that that's your only time frame, but that's when our report has to start. That's the deadline — I'm sorry — for our material submission.

Thank you all for coming. Appreciate your presentation.

Next up we have Better Pharmacare Coalition — Rennie Hoffman and Cheryl Koehn.

Welcome. As I'm sure you've heard, you've got 15 minutes. I'll give you a heads-up at ten. The microphone's yours.

R. Hoffman: Thank you, hon. Chair and members of the committee, for allowing us to speak to you this evening.

My name is Rennie Hoffman. I am a retired Vancouver police officer. I was 29 years with that operation, 17½ of those years in the Downtown Eastside of Vancouver. For the past seven years I have been the executive director of the Mood Disorders Association of British Columbia. I recently retired from that position as well. During that time I worked with those who are living with mental illness and the people who support them.

Today we're here to speak about the Better Pharmacare Coalition. The Better Pharmacare Coalition was formed in 1997. Together our groups represent more than two million constituents in British Columbia. We are a coalition of ten national and provincial health organizations.

We are chronic-disease groups. The diseases that we represent were not bidden by the people who have them. They were not asked for. The people who have them can look forward to a life of management of those diseases and probably not to ever seeing the complete eradication of their disease. We advocate for appropriate reimbursement for safe and effective medicines for British Columbia citizens. Our groups are advised by leading clinical researchers in chronic disease.

[1925]

Our core operational activities, advocacy platform and strategic plans are funded entirely by members of the coalition. We do accept private and public funds as well as from individuals. Those funds are undirected, and we are not informed in any way as to what we need to do with those.

The reason we're here today is to speak of the financial aspects, particularly, of PharmaCare.

Generic drug prescriptions make up about 40 percent of all those filed in British Columbia. Canadian patients in drug plans pay the second-highest prices for generic medications amongst developed countries, after the United States. The province spends over $900 million a year through PharmaCare, with generic drugs accounting for an ever-increasing proportion of that amount. That amount in 2008 and 2009 was about $286 million.

Overspending on generic medications means that the British Columbia government has less money to invest in health care, including listing new medications on the B.C. PharmaCare formulary. Lack of access to new medications leads to poorly managed chronic diseases and increased use of emergency rooms, acute care beds and long-term care. These are health care's most expensive services. Make no mistake about it. The silo of PharmaCare — the financial silo, the fiscal silo — cannot be considered in isolation. Lack of access to these new medications and appropriate medications has a domino effect on the rest of the health care system.

C. Koehn: Hello. My name is Cheryl Koehn, and I'm the founder and leader of Arthritis Consumer Experts. We're one of the Better Pharmacare Coalition member organizations, and I'm the past chair of the coalition. I'm also a former Olympic athlete, now living with rheumatoid arthritis. I've done so for the past 23 years — and, I like to think, mostly successfully, but some days have been pretty brutal. I have personal knowledge of the value of a solid treatment plan and the importance that the province's drug formulary plays as part of it.

In July 2010 the B.C. government announced a reduction in the price of generic drugs from 65 to 35 percent over a three-year period, which our coalition strongly supported and applauded. But we felt then, as we do now, that the prices could be lower, such as they are in Quebec and Ontario at 25 percent.

The reduction in pricing of generic drugs was expected to create a gross savings of $170 million a year for B.C. PharmaCare. By year 3 of the agreement 7 percent, or $35 million, was to have been reinvested in new clinical pharmacy services.

At the July 2010 announcement Minister Kevin Falcon stated that part of the B.C. PharmaCare savings would be redirected to cover the costs of new medications being added to our provincial formulary. After repeated requests to the Ministry of Health over the past 14 months, the Better Pharmacare Coalition has not been able to confirm what amount of the savings would be reinvested in the
[ Page 1635 ]
provincial formulary. Last month Minister of Health Mike de Jong announced that he wishes to reopen talks on the lowering of the cost of generic drugs, including possible legislation.

The Better Pharmacare Coalition is here today to recommend to this committee that 43 percent, or $73 million of the annual projected savings of $170 million, be committed to be reinvested in the B.C. PharmaCare formulary.

This would allow the government to provide the necessary resources to (1) provide the reimbursement for innovative Health Canada–approved medications coming to the Canadian marketplace over the next B.C. budget cycle; (2) provide expanded reimbursement on medications currently listed on the B.C. PharmaCare formulary but in an overly restricted manner, such as they are for osteoporosis, where the criteria require a patient to actually break a bone before they qualify for the medication that is proved to prevent bone breakage; (3) provide reimbursement of medications on the B.C. PharmaCare backlog deemed suitable for formulary listing; and (4) provide reimbursement on medications that have received recommendation to list from B.C. PharmaCare's Drug Benefit Council but not yet on the formulary simply due to a lack of financial resources.

[1930]

R. Hoffman: We're talking about helping patients and, additionally, saving costs. Evidence-based reimbursement of new and innovative medications will reduce visits to doctors, will reduce visits to emergency wards and will prevent costly hospital admissions and the need for acute care. They will reduce the need for surgery in short- and long-term care stays, and they will preserve and improve the quality of life for British Columbians living with chronic disease.

People who have mental health issues, who have mental illness, take an average of eight to 12 years to bring their diseases under control — to stabilize, as it were. Part of that length of time is becoming acclimatized to medication. For any process to require that they take longer than that, simply because they can't get the doctor-recommended medication in the first place, is unconscionable.

This is an investment in people, and it's something that is very dear to us. Our members want improved reimbursement of medications on the B.C. drug formulary that will get them out of the hospital, back to work contributing to our provincial economy and not costing it money.

R. Howard (Chair): Excellent. We have some questions.

M. Stilwell: Hi. The question is slightly tangential, but lately in the press we have been reading about drug shortages, and I am wondering what your coalition is hearing about that particular issue, if anything.

R. Hoffman: From my experience with mental health, I know that drug shortages have been a considerable issue over time. As you can understand, people who have mental health issues are by nature anxious, and when they're told by their pharmacists that the one medication that they know to be working is not going to be available to them, they become very anxious, and that puts their own health in jeopardy.

I've spoken to drug manufacturers back east on a number of occasions. They have told me that they have different issues about providing these medications in a timely fashion, and I understand that. The bottom line is: there is nobody that actually oversees those medications and makes sure that they are on the formulary and that they are available to patients who need them. I think that it would be a very timely investment to ensure that the people we represent and the people who are your constituents had the access to the medications that make them better.

I don't know if that answers your question, Dr. Stilwell.

B. Ralston: Thanks very much for your work on this issue. I know that you say on page 5, quoting the Competition Bureau: "In British Columbia alone, appropriate lowering of generic medication prices would result in potential savings of approximately $350 million over five years." Obviously, the government has left tens of millions of dollars on the table. You do say that you want to…. You hope that the next round of negotiations will be truly collaborative and transparent, after patient groups were shut out of the previous negotiation process.

What prospect do you see for that kind of negotiation this time?

C. Koehn: We highlighted that in our presentation because, as it says, we were not invited to the table when the initial pharmacy agreement was negotiated. We were told by government that it was due to legal considerations and confidentiality. I don't know; I can hold a confidence. Our organizations sign confidentiality agreements with the federal government when we participate in patient consultations with them. So I think, surely, we could do that here with our own government and live up to that promise.

There has been no word to our coalition or any of our member organizations around an invitation to participate in a second go-round if in fact that's what happens. But we were very encouraged by Minister de Jong's remarks to the media that the savings aren't coming quickly enough or as projected, and that legislation was now being considered, which is something they did in one phase in both Ontario and in Quebec. They are, obviously, better able to care for patients, in that they are accruing those savings and reinvesting them appropriately.

J. Thornthwaite: Thank you for your presentation. I seem to recall…. Maybe you can or cannot answer this question about Ontario or Quebec. Did their move to
[ Page 1636 ]
their generic pricing structure have any negative effect on the availability of pharmacies across the provinces?

[1935]

R. Hoffman: I don’t think so. There was some press coverage regarding some statements by some of the members of the pharmacies back there that that could be some fallout, but I've heard nothing officially on the disease front, that that ever happened.

C. Koehn: I think that's an excellent question, MLA Thornthwaite. We have heard that there were programs put in place to assist rural pharmacies and pharmacists. I think that's something that certainly could be considered and would be reasonable to do here. Clearly, I don't think any stakeholder group would like to see a move made, especially through legislation, that would harm patient care or the availability of pharmacists serving patients anywhere in our province.

There would be, I'm sure, appropriate strategies to address a potential threat. As my colleague Rennie said, there was a lot of media attention drawn to rural pharmacy by big chain store pharmacies, and I don't think we've seen many disappear.

J. Thornthwaite: Okay, if you have any more information on the mitigation that those provinces did to prevent that, it would be very appreciated by the committee.

C. Koehn: We'll be happy to provide that to the committee.

R. Hoffman: In our discussions with the pharmacists and pharmacy groups, sort of post this last negotiation on generics, we were informed that in fact rural pharmacies would receive more attention. I'm not aware that that has happened, but that was part of the negotiation.

R. Howard (Chair): Thank you both. We've run you out of time. I have two questions left. MLA Donaldson and MLA Hayer will have to catch up to you outside of this and get their questions answered.

C. Koehn: We'd be happy to be available.

R. Howard (Chair): Next up we have Arnor Larson and Meredith Hamstead. We're going a little out of sequence because we're a little ahead of schedule, I guess, and we're waiting for one presenter to show. Welcome to you both. As you have surely heard, 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 yours.

A. Larson: Thank you very much. My name is Arnor Larson. I'm a private citizen, and I do not represent any organization. I'm here and will be sharing this slot with Miss Hamstead. She will take the second part.

First, let me thank you for allowing me to share my thoughts with you. The topic we have chosen here is the financial implications of licences of occupation and other provincial land use agreements. Second, I am pleased to note this committee's title: Select Standing Committee on Finance and Government Services, for — while my theme will be licences of occupation — how the province handles these licences and at what cost to whom is my concern.

The greater portion of B.C.'s land mass is held in trust for the people of British Columbia and should be managed in their greater interest. Elsewhere known as the commons, land held by the province here is referred to as Crown land. The number of licences of occupation on this land base must be vast. There is a lot of room to administer them more appropriately and with less cost to the people of British Columbia.

Since time is limited and the paper that I've presented is sort of long, I'm going to go through the summary first, just to make sure that it is covered. I'll read a fairly long statement with several numbered items with it, and you'll have to listen closely or follow along in your printed copy.

[1940]

A provincial licence of occupation should not download costs onto B.C. residents, either through increased taxation or leaving the volunteer public to do the necessary work themselves, while seeing that the following necessary actions in regard to the licence of occupation are carried out, namely, (1) having frequent and enough on-the-ground inspection to see that the terms of the licence of occupation are adhered to and environmental damage prevented or remedied, (2) having sufficient knowledgable staff administering the licences of occupation who also have the time and resources to communicate logically with concerned members of the public, and (3) requiring security deposits ample enough to cover worst-case scenarios.

Thus, in administering the licence of occupation, a full cost recovery condition prior to the commercial success of the licensee should be instituted so that the licensee is not subsidized by those B.C. residents least likely to be able to withstand further financial pressures.

Before going further I want to mention one particular clause that is standard in most of the licences that the province issues, and that is in regard to article 3, "Fees." It states that the province will give written notice to you specifying, in our sole discretion, the fees payable by you under section 1.3 for the subsequent year of the term and that we will establish such fees in accordance with our policies applicable to your use of the land under the agreement. So that means that the term, the payment, annual fees can be changed at any time during the licence of occupation.
[ Page 1637 ]

So what I am proposing is that the province should have a policy that allows the annual fee to be changed to fulfil a full cost recovery program, depending on what happens on the licence of occupation. For example, fuel spill, big issues, environmental problems, lots of communication, staff involved — the cost to the province goes up. You want to recover that cost. If the licence of occupation is very smooth-flowing, no problem whatsoever; maybe the fee can actually go down in the second or third or fourth year.

I have lots of documentation in the other three pages that we don't have time to go through, but it's as a result of my personal experience with several licences of occupation in the area up near Invermere where serious issues have arisen, and the province is in a very negative position in regard to some of these things that have taken place.

M. Hamstead: My name is Meredith Hamstead, and I'm a resident of Invermere, British Columbia. In addition to presenting public concerns with the specific case that has occurred over the last few years at the Farnham Glacier, I wish to present to you the future implications of the Farnham scenario as a template for what we might expect to see with the proposed Jumbo Glacier resort, which, as many of you will be aware, has been a leading land use issue in this region now for over 20 years.

Mr. Larson has presented a failure of cost recovery based on his experience with the Farnham licence of occupation. The Farnham licence is minute in comparison to the scope of the proposed Jumbo Glacier resort, but not only do many of the conditions which led to the Farnham scenario apply equally to Jumbo, but these conditions are exacerbated by a host of other unique economic conditions which apply to the Jumbo case.

The 1999 economic feasibility assessment, which was part of the Jumbo Glacier resort environmental assessment process, which was conducted by Sno.Engineering, drew some stark conclusions about this proposal. That analysis concluded that total capital costs for the project appear to be understated and that it appears doubtful that the resort can achieve economic break-even, given the financial structure proposed by the proponent.

According to that assessment, the proponent's cost estimates for road construction are inadequate, and no consideration whatsoever has been given to a laundry list of critical four-season resort items, including a proposed fleet of 26 buses, nor for construction of maintenance facilities, snow groomers, snow removal equipment, avalanche control, etc.

I am not personally aware of an independent economic feasibility assessment for the proposed resort that provides a positive picture of its viability. Some time ago, when I personally asked staff at the then Land and Water British Columbia about the significance of this negative assessment in their decision-making process, I was advised that the economic feasibility of the resort is not the business of the province.

[1945]

But it is also my understanding that if a ski resort developed under the commercial alpine ski policy goes bankrupt, the province of B.C. is obligated to take it over and run it until a buyer can be found. Hence, economic feasibility, it would seem, should be of clear concern to the province.

To make matters worse, under the commercial alpine ski policy, the province subsidizes the cost of resort development — for example, by selling Crown land at extremely low rates, starting at $2,500 per acre up to just 5 percent of appraised land value. This translates into a purchase price of just $5,000 for Crown land valued at $100,000.

This might be reasonable if there were a significant return to the province on this investment. However, in return for this permanent investment of Crown land, the province asks for just 2 percent of gross lift revenues, which in 2008 and '09 generated just $4 million from all ski resorts in the province. This is hardly a windfall, and it can hardly be considered cost recovery.

As far as I can tell, the scenario in B.C. is that a ski resort developer need not prove the feasibility of their project in order to get approval, but the province of B.C. is on the hook if the project fails, and the province's ability to generate a positive return on investment is significantly hobbled by a system of resort development subsidies that is overwhelmingly favourable to developers.

In closing, you've asked us members of the public, through this public consultation, to answer the question: what are your priorities? I'm here today as a private citizen to ask this committee to address two issues. Especially during this time of economic recovery it is imperative that the financial picture for the use of Crown land in British Columbia be revised to require full cost recovery so that the province is not subsidizing tenure holders through either the permanent liquidation of Crown land at grossly undervalued prices or through failure to adequately account for and bill back the real cash costs of ongoing tenure administration.

Specifically, I ask this committee to carefully assess the potentially negative financial implications of the proposed Jumbo Glacier resort because one day it is possible that your government will ask you for your support to roll out the funds to help make this resort happen. Should that day come, instead of supporting a substantial gamble of public funds, consider carefully the alternative: that it might be wiser to invest provincial dollars in the existing and very real ski resorts and communities of British Columbia, many of which would be more likely to provide a positive return on investment and to offer a surefire boost to our province's slowly recovering economy.

Thank you very much for the opportunity to present to you today.
[ Page 1638 ]

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

B. Bennett: Thanks, folks. I'm going to stay away from the merits, the pros and cons of the project itself. Arnor, this might be question for you. Farnham Glacier has the potential to serve as a training site for the national Canadian ski team. There's actually a gentleman sitting behind you, just coincidentally, that knows a fair bit about ski training and so forth — Mike Delich. Right now our Canadian ski team goes to South America and to Europe. They could be training on Farnham.

So in terms of what I think is a very good point — that the Crown needs to make sure that it at least gets cost recovery, if not more, from the issuance of a land use permit — would it not make sense to facilitate the development of lifts at Farnham so that we could bring the Canadian ski team in and some of the other ski teams around the world that would like to train in Canada?

A. Larson: Not necessarily, and I won't answer that at length, because there are a number of coaches at the Olympic level that suggest that other things than on-snow skiing could be done in the summer system period which could be just as valuable to them in their training.

What I would more like to point to is that the cost recovery that you need, in the particular instance that we have already had with the CODA — the Calgary Olympic Development Association — operating there for a number of years actively with their camp, was such that they were going in the hole on it.

[1950]

Because of the uncontrolled conditions of fuel spills and other things that arose during their tenure and continued during the tenure of the Glacier Resorts Ltd., the province itself was not able to respond in terms of inspectors to the site; clear communication between those, such as myself, who brought these spills to the attention of the province; and so on, that this is where we're at.

The cost recovery I'm talking about is needed because I didn't get service from the people I talked to in government about these issues, because they didn't have the time. I understand that. You're understaffed, particularly in the Ministry of Environment, in the type of people that can make these investigations.

It was an entire year before they got to this site after I approached them with the fuel spill issue. It took another year for a plan to be set up on how to deal with it. And then the people who were supposed to do the remediation were another year behind in meeting the deadline because of not following up on the procedure.

So my suggestion is that the cost recovery needs to take into account all of these facts so that you can get more people in the field and in the administration of these licences of occupation to make sure that they run smoothly and have things properly addressed.

M. Hamstead: May I also respond to the question?

R. Howard (Chair): Sure.

M. Hamstead: Very briefly, as I stated in my presentation regarding the notion that the province may have opportunity to invest in the existing ski resorts in communities of British Columbia, nearby Panorama Resort is an absolutely exceptional first-class ski training facility. While it does not offer summer training, it does have snow-making, which provides absolutely stellar shoulder season training for teams from all around the world. The investment that those teams make in Panorama is directly returned to the community in the Columbia Valley.

I was once a young ski racer. I ski-raced for 12 years and have intimate involvement in the ski-racing industry. I can tell you that Panorama Resort has the capacity to become a leading training facility for Olympic-calibre athletes in Canada.

There is a clear opportunity for the province of B.C. to invest in sport development in Canada right in this region. A new resort and a new glacier facility are not required to make that investment in winter sport, alpine sport, in British Columbia.

R. Howard (Chair): Okay. Thank you. We've run you out of time. We have a question from MLA Donaldson. He'll have to catch up with you outside of this. We appreciate you coming forward.

M. Hamstead: Thank you very much for the opportunity.

R. Howard (Chair): Next up we have the Community Connections Society of Southeast B.C. — Gwen Noble and Patricia Whalen.

Welcome. As I think you've heard, you've got 15 minutes. At about the ten-minute mark I'll give you a heads-up, and you can either stop for questions or go straight through — your choice. The microphone is yours.

G. Noble: Good evening. My name is Gwen Noble. I'm the executive director of Community Connections Society in Cranbrook. We provide services to children and families throughout the entire East Kootenay region and currently manage a budget of approximately $2.3 million in government contracts. And this is Patricia Whalen. She's the manager of Children First, which is a contract under our agency as well.

Our submission today is on behalf of the Kootenay Child Development Centre. We would like to thank MLA Bill Bennett for his ongoing support of our child development centre and for his encouragement to bring our recommendations forward to the select standing committee. We appreciate the opportunity to do so.

It is our understanding that the committee has heard submissions from child development centres across the
[ Page 1639 ]
province. These are centres that have been providing coordinated services for many years using a co-location or single-point-of-entry model of service delivery.

Our situation in the East Kootenay region is unique, however, because we are one of the only remaining regions in the province that does not have a child development centre. Our not-for-profit society, along with community partners, initiated the development of a child development centre approximately two years ago because we believe that children and families in our region will be better served if they are able to access services in our region in one easily accessible location.

[1955]

It has been demonstrated over and over again that better outcomes are achieved when services come together to achieve common goals and provide children and families with seamless services without repeated intake procedures, excessive travel, waiting periods or other administrative barriers.

We also believe that in our current economic climate of limited and dwindling resources, it is incumbent upon all of us to use practice models, such as co-location, that will help us achieve efficiencies in overhead costs that can then be reinvested into direct services for families.

We have raised — and we're very proud to say this — $900,000 in our region for the Kootenay Child Development Centre. We are very close to our fundraising goal of $1.1 million and have an anticipated occupancy date of April 1, 2012. It has been no small task and has taken over two years and thousands of dedicated hours to raise this money.

Based on this experience, we respectfully submit the following recommendations. Patricia is going to go over those for you.

P. Whalen: Our first recommendation is to urge that all budget and policy decisions support the integration of services through the development of a comprehensive policy and funding framework for early years' services. That includes collaboration between all parties involved in the provision of support and prevention services for children and youth with special needs and their families.

Our second recommendation. We further recommend that the B.C. government support the infrastructure costs of such integration with a focus on projects that can improve accessibility for families, demonstrate improved outcomes for children and families, achieve efficiencies in overhead costs and decrease energy use.

Our third recommendation is that the B.C. government immediately reinstate the availability of major capital grants through the community gaming grant stream.

We also support recommendations previously made by established child development centres in the province. We recommend the B.C. government continue to support children and youth with special needs as a core service and should maintain or increase the funding levels of all MCFD contracted services for children and youth with special needs.

Our final recommendation is that the funding for early intervention services be increased and sustained. We believe that deficit reductions go hand in hand with early intervention. Investments in our children in the early years continue to accumulate in later years, reducing the need for costly supports and interventions in the school systems, in health care systems and in criminal justice systems.

We thank you for this opportunity to provide input on government financing and policy directions that impact children and youth and their families. In making your budget decisions, we urge you to consider these recommendations, sincerely made, from those of us involved in direct service delivery and working very hard to help our most vulnerable children become successful and contributing members of our communities.

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

M. Elmore: Thanks for your presentation. We have heard from a number of child development centres across B.C. Have you experienced rising numbers, increasing intake, with improved screening into your programs?

G. Noble: I'm not sure that we have improved screening at this point. There is a children's assessment network that comes to our community every few months to do assessments. Currently there's a wait-list of assessments, so I can't really say that we've had improved screening. We hope that will be an outcome of a child development centre in our region.

M. Elmore: Right. And just with your recommendation for the integration of services. In terms of a framework, are you seeing to consolidate the programs under MCFD — education, health care administered under one ministry — or just improved collaboration with a framework?

G. Noble: I think improved collaboration. I think we see that a lot at the front line — you know, those of us that are providing direct services. We collaborate quite a bit. We're not seeing that so much at a ministerial level. I think there's still quite a bit of competition for contracts. So if government supports co-location or integration of services, then I think that will happen more and more on the front line as well.

[2000]

B. Bennett: Hi. I wonder if you can say something about how these other child development centres were created around the province and how this region ended up, somehow or other, without one. Most regions, I think, do have one. How did that happen?
[ Page 1640 ]

G. Noble: I think some of them have been around for 20 years, so I think some of the funding structures may have been different then, and I think there were some infrastructure grants at that time that they have been able to access. There were other service clubs that supported child development centres at the time that don't necessarily do that now — for example, the Lions Club.

I think they also had some services in their communities that it's taken a while for us to catch up — for example, pediatricians — right? So then, it's kind of natural to build a support team around pediatricians because you've got them doing the diagnosis and the assessment. We've just recently had two pediatricians move to our region. We've been without them for almost ten years, I believe.

B. Bennett: Just a quick follow-up, Mr. Chair, with your indulgence.

Can you confirm, Gwen, that when this project is completed that your business plan shows that you'll be able to sustain the operating costs? You're not looking to add a new level of operating costs from any of the ministries. It's capital that you need. You've got the services and programs and lessees and so forth that will sustain it.

G. Noble: Yeah, the child development centres are self-sustainable because programs are funded through government contracts, for the most part. So it's really the capital infrastructure dollars that are difficult for us to raise in our community. We're a not-for-profit agency. We're not in the business of making money, and we don't have the resources or time to raise a lot of money. It's the capital infrastructure that really is a barrier for us.

R. Howard (Chair): The $900,000 that you've raised — that's a lot of money.

G. Noble: That's a lot of fundraisers.

R. Howard (Chair): I'll say. Over what region? What kind of population base generated…?

G. Noble: Well, Cranbrook is around just under 25,000, and the entire region is around 75,000.

R. Howard (Chair): Okay, so it was the region that got together or got behind this, then.

G. Noble: That's a combination of fundraising, writing grant proposals. We've had grants from various sources, including people from out of province, agencies from out of province.

R. Howard (Chair): Excellent.

D. Hayer: I was very impressed with the fundraising you have done so far. In Surrey we have a child development centre, and before this life I was involved there. I helped through our Rotary Club of Surrey. So you said Lions are helping. How about other service clubs like Rotary and that? You haven't approached them to see if they can help with capital funding too?

G. Noble: We have approached many service clubs, and we are getting some support from Rotary in our region. We've had support from Variety, The Children's Charity. All of those have added up to the $900,000. Like I said, it's fundraising, and so we've had various service clubs help us with fundraising as well.

D. Hayer: Good program. Good job.

G. Noble: Thank you.

R. Howard (Chair): Thank you both. We appreciate you coming forward this evening.

G. Noble: We appreciate your time.

B. Bennett: How much are you asking for?

G. Noble: How much were we asking for?

B. Bennett: Yeah, did you say? I'm sorry if I missed that.

G. Noble: No, I didn't. Oh, I said that our goal is $1.1 million, and we've raised $900,000.

B. Bennett: Right. I can do the math.

G. Noble: So $200,000.

R. Howard (Chair): Thank you again.

Next up we have Resorts of the Canadian Rockies — Andy Cohen.

Welcome, Andy. You've got 15 minutes. At about the ten-minute mark I'll give you a heads-up, and you can stop for some questions or go through. Your choice.

A. Cohen: Thank you. First I'd like to say welcome to the Kootenays. We hope you have had some downtime, some quiet time while you enjoyed our version of BlackBerry holiday week.

I'm the general manager of Fernie and Kimberley Alpine Resorts. Just a little bit about my background. I'm also the chair of Tourism Fernie. I had two years on the minister's advisory council for tourism, and I think I'm still the chair of the Fly YXC Alliance, which is the group that raised money and brought Delta Air Lines into Cranbrook from Salt Lake City.

The first thing I'd like to say is thank you and thank government for the predictability and the sustainability of the HRT and the fact that that's being looked at to be
[ Page 1641 ]
renewed. That's a big issue for us and our ability to run our local DMOs.

[2005]

I have several issues that I'm sure you've heard as you've gone around the Columbia Valley. One that is critical to tourism and, we believe, to our economic development is access. Obviously, Highway 3 coming from Alberta still needs a lot of work to be a viable way for people to come and spend their money here.

The airport. It's awesome. I hope you guys get to see it, if you haven't flown in and out of there. The Cranbrook Canadian Rockies International Airport is a stunning facility. We really appreciate government support to make that happen. It was…. Well, it's just great, and it's a huge opportunity for us. So anything that government can do to open up the skies and keep supporting infrastructure and the future of air service is critical.

The HST on second homes. While the issue is no longer under debate, we still ask that the HST on second homes…. There's a huge population of liquid, keen people in Alberta that want to buy real estate in this part of the world, and they're just waiting — we hear it every day; it's just a fact — and the sooner, the better, because it is a huge issue.

In some cases we have ten to 15 years of standing inventory that needs to be cleaned up, and it's a big issue. People are waiting. They love it; they want to be here. That's a big issue.

There's no doubt, just to reiterate, that tourism through small business is a huge diversifier and driver of economic development in rural British Columbia. Thank goodness we have coal at…. What's it at now, Bill?

B. Bennett: It's over three hundred bucks a tonne.

A. Cohen: Yeah, $370 or so a tonne. That's keeping us all hopping in the Elk Valley for sure.

Another consideration. Minister Bell has definitely heard this from me as well. In the new structure in moving the tenure management of tourism tenures into the Natural Resource Ministry…. It would be better if it was back in Tourism.

The management…. We have a completely different agenda than forestry and other land management issues. We deal with tenures specifically to run our business and to sustain our business — for no other reason. We're not in the resource-extraction business. We're not in the forestry business. We only sell logs if we have to because they're going to hurt somebody or they're going to burn the forest or they're going to transmit disease.

That's tourism in the Kootenays.

R. Howard (Chair): Good stuff. Andy, could you expand? I was making notes, I think, when you talked about the success you had with the airport and an American airline. Could you just expand on that?

A. Cohen: Well, of course it was easier in the summer of 2008 to raise money, but we put together a group. We had a lot of help from Minister Bennett. We went around regionally, very regionally, and raised enough money to sign a deal with Delta Air Lines. Of course, you had to have a revenue guarantee. They decided to do the deal, and they flew for two winters and a summer into Cranbrook from Salt Lake City.

They had other plans, and when the recession really kicked in, the use of their aircraft and their math just didn't work anymore. They made it too difficult to continue. And of course, dialling for dollars in the last couple of years has been not that easy to do.

But it's possible. We did it. We did it without…. Obviously, we had tremendous support from on the capital side. And we had support from the Columbia Basin Trust and in the interior…. What's it called again?

B. Bennett: Southern Interior Development Initiative Trust.

A. Cohen: Yeah, right. Thank you. It's late.

By the way, I'm wearing a hat — not out of disrespect. It's just that I have an eye issue, and the lights are bright, so thank you for that.

[2010]

We had, actually, pretty good success. There's no doubt that having Delta Air Lines in Cranbrook had the other carriers, on a competitive basis, stand up and take notice. There's no doubt that we received price-matching from Ottawa, Montreal and Toronto into Cranbrook through Calgary — same price now as Kamloops and Kelowna.

You have to start somewhere. You have to make the investment. You have to be in the game, even though it wasn't sustainable in the recession and, also, in Delta — their business model. You know, it's the future. It's the future of the region, and it's critical.

R. Howard (Chair): Excellent. We have some other questions.

D. Donaldson (Deputy Chair): I have a question for you, wearing your tourism hat, so to speak, versus your position with Resorts of the Canadian Rockies. We've heard from a number of owner-operators of destination resorts and from associations so far this year around the need for a dedicated, industry-led, arm's-length-from-government, destination-marketing organization like Tourism B.C. happened to be.

What are your thoughts on that, regarding that kind of organization and what it was able to bring to this area?

A. Cohen: Before I was on the minister's advisory council, I was also on the board of Tourism B.C. — actually, when the transition happened, when it was brought into the ministry. I think that as far as spending the money….
[ Page 1642 ]
As you guys know, the money has continued to flow and continued to be spent. It really becomes: how does industry support how the money is spent, and what is industry's role in making those decisions?

I believe that any change will create some discomfort, I'll say, within different groups. But I think tourism itself needs to become more united. I think that whatever the issue, we definitely need a provincial organization. In my mind, it already exists. How you end up getting the support of industry is, I think, what this is about.

I think that the $59 million or so that was being spent in the old model is still being spent. I believe that the six regions are still being funded to almost the same level. I believe that the initiatives and the strategies and the campaigns are all underway, whether or not people feel comfortable that they have input. But you're talking to the choir, a little bit, you know — being involved in that whole transition.

I think it's time for industry…. It was Olympic everything, and now we have to grow up a little bit more. We have to work together, and we have to spend our money wisely.

I do believe strongly that duplication…. There are tens of millions of dollars that are sitting out there because of duplication. When the federal government goes to a ski show or to Japan and it sits next to the provincial government, which sits next to a regional organization, which sits next to a community destination-marketing organization, they're all trying to do the same thing. I believe that there's an opportunity there to become more efficient and to use our money wiser.

I don't know if I answered your question.

D. Donaldson (Deputy Chair): Sounds good.

P. Pimm: Thanks a lot for being here. My question goes to: what's your organization's opinion and stance on Jumbo?

A. Cohen: Whenever you have to give an opinion on a fellow industry person, it's obviously difficult because, if you're a capitalist, you respect risk, and you respect the hard work it takes and the ability for people to make those decisions. I do believe that it's wise to come to a place on the issue.

We don't profess to have…. I mean, officially, I don't believe any tourism organization in this valley or the Elk Valley is going to have an official position. We're not geared for that, we're not set up, and that's not within our mandate. But you know, we could talk about it.

R. Howard (Chair): That's it, Andy. Thank you so much for coming forward. We appreciate that. We've run ourselves out of questions.

That draws us to a conclusion this evening. We will adjourn and reconvene tomorrow morning in Kelowna.

The committee adjourned at 8:15 p.m.

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