Finance and Government Services — Issue No. 76 — Monday, October 1, 2012 (HTML)

ICBC Salon B, Morris J. Wosk Centre for Dialogue
580 West Hastings Street, Vancouver, B.C.

Present: Douglas Horne, MLA (Chair); Mable Elmore, MLA (Deputy Chair); Gary Coons, MLA; Marc Dalton, MLA; Dave S. Hayer, MLA; John Les, MLA; Pat Pimm, MLA; Bruce Ralston, MLA; Bill Routley, MLA; John Slater, MLA

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

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


CONTENTS
Page
Presentations	1973
K. Simmons
M. Horne
P. Bacchus
S. Cardwell
D. Schick
I. Bruce
B. Le Clair
L. Gadsby
R. Schnarr
S. Sylvester
J. Riley
S. Bertels
A. Montani
D. Hay
M. Smith
C. O'Loughlin
N. Olewiler
E. Sheehan
M. Schroder
H. Permut
J. Woolsey
S. Corbeil
S. Ackles
M. Gookstetter
J. Winter
J. Garson
D. Clarkson
J. Boak
K. Harrison
N. Heap
S. Lambert
L. Cornish
K. Kinloch
B. Radford
D. Callbeck
R. Collins
S. Morgan-Silvester
F. Macfarlane
G. Wong

D. Horne (Chair): My name is Douglas Horne. I'm the MLA for Coquitlam–Burke Mountain and the Chair of the Select Standing Committee on Finance and Government Services as well as the Parliamentary Secretary to the Premier.

This is a parliamentary committee of the Legislative Assembly whose mandate includes conducting the annual consultations on the upcoming provincial budget.

I'd like to welcome everyone today. We actually have a very long and full schedule today, which is fantastic. Every year in preparation for next year's budget, the Minister of Finance releases a budget consultation paper. This paper presents the current fiscal and economic forecast for the province and identifies key issues that need to be addressed in the next provincial budget. Print copies of the Budget 2013 consultation paper are available at the back of the room.

Once the paper is released, this committee holds public meetings. Following the consultation period, which will end on October 18, this committee must prepare a series of recommendations for the minister for the upcoming budget and present it to the Legislative Assembly by November 15.

There are several ways in which British Columbians can participate. This year the committee is holding 18 public hearings in communities throughout the province. I'd actually like to read the list because it does highlight all of the places we'll be.

So far we've visited Surrey, Castlegar, Cranbrook, Kelowna and Vernon. This week we start here in Vancouver, and we also go to Coquitlam, Abbotsford, Fort St. John, Quesnel, Kamloops, Prince Rupert, Kitimat, Smithers, Prince George, Courtenay, Parksville and Victoria.

In addition to the public hearings, British Columbians can also share their ideas by sending us a written submission through an on-line form on our website. We also accept written submissions by e-mail, letter, fax, along with videos and audio files. As well, British Columbians can fill out a short on-line survey which is on our website located at www.leg.bc.ca/budgetconsultations.

I'd like to start now by having the members of the committee introduce themselves and where they're from, and then we'll get started.

M. Elmore (Deputy Chair): Good morning. Mable Elmore, MLA for Vancouver-Kensington and Deputy Chair.

D. Horne (Chair): Also joining us today from the parliamentary office is our Clerk, Susan, as well as Byron at the media table and Jacqueline at the back there, as well as Michael and Jean from Hansard Services, who will be providing a broadcast of today's proceedings as well as ensuring that a transcript is available in the future.

So we'll start. The way our session works is that each presenter has ten minutes to present. We then follow by five minutes of questions. We will be much stricter than we have been in the previous weeks, unfortunately, given the number of people we have presenting.

I'll start by calling our first witness, the Canadian Bar Association represented by Kerry and Caroline.

K. Simmons: Good morning. My name is Kerry Simmons. I'm the president of the Canadian Bar Association in British Columbia. Today I'm joined by Caroline Nevin, who is our executive director. As president, I am pleased to speak on behalf of 6,800 practising lawyers, judges and law students from across British Columbia, and I'm proud to say that this is our tenth submission to this committee. I appreciate the opportunity to address you again today.

In the past we've spoken to this committee about many different initiatives and ideas to improve our justice system and the public's access to justice and to legal services. These have included changes to the student loans program to encourage new lawyers to go to smaller communities where there is a shortage of lawyers, the protection of registered retirement plans, the elimination of any tax on legal services and increased funding for legal aid. I would encourage you to review those past submissions.

We base our recommendations to you on the experience of our members but also on our established credibility as advisers to government. We're often consulted by
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ministries considering changes in law and public policy, and we've made substantial submissions on a variety of topics, including law reform, judicial and Crown compensation and regulatory matters, including the provision of legal services by paraprofessionals.

Most recently, the government issued a Green Paper in February of this year and appointed Geoff Cowper, QC, to undertake a review of B.C.'s justice system. The CBA, in response, formed an advisory panel that produced a comprehensive 60-page report offering 25 recommendations related to issues surrounding justice reform. Again, we reiterated the need for an increased allocation of funding to legal aid services in the province. This report is called Justice in Time, and it was the combined result of years of research, dialogue and outreach to all the key stakeholders in British Columbia.

One of the key elements of the CBABC is to provide a common voice for our members, to speak up on their behalf about what they strongly believe in, sometimes in support of an initiative, sometimes in opposition, yet always with diplomacy and non-partisan debate. It's with this in mind that we come to you today.

The CBABC requests that the 2013 budget makes an immediate and substantial investment in two areas: the human and technological infrastructure supporting B.C.'s courts and legal aid services.

Citizens of our province look to our elected government to provide a foundation for businesses and families that includes transportation systems, schools, health care infrastructure and a functioning justice system. It also looks to government to protect its vulnerable citizens through child protection services, income replacement, housing and legal aid for legal representation.

This is a time where governments everywhere are being challenged to do better by an increasingly informed and empowered electorate, and it's clear, from our own polling research here in B.C. and from media coverage and public dialogue over the past 12 months in particular, that British Columbians want a well-functioning court system and fair access to legal services.

Today, however, our justice system is in crisis. Over the past two years not a week has gone by without a media story about another stay of proceedings in a criminal matter, a report about delays or an article about the frustration of the public or of lawyers in trying to move a case to resolution.

Under Canadian law a criminal case may be considered vulnerable to dismissal if it takes more than 18 months to resolve, and in B.C. today there are thousands of cases that are already at or within six months of achieving that critical threshold. As Mr. Cowper noted in his report released to the government called A Criminal Justice System for the 21st Century, the reasons for this are multiple and intertwined.

However, there is one key fact that is clear, and that is that the current court infrastructure is inadequate to resolve the backlog and to keep pace with the daily volume of increasingly complex cases that require resolution. I'm not talking about bricks and mortar. Today's justice system infrastructure relies on two key resources: people and technology.

A working justice system requires court clerks, registry staff, Crown counsel, sheriffs and a full complement of judges not only for hearings but also for alternative dispute resolution mechanisms that help resolve issues before a full trial. The human sector of the justice system has been under-resourced and underfunded for many years, but the past two years in particular have seen exceptional strain as work demands have increased, and full-time position numbers in all elements of the justice system have decreased.

Equally important, there is a need to invest in technology and data collection to improve the use of the available resources and increase transparency by sharing data with all the participants in the justice system. It's essential that the data collection systems are put in place to provide accurate measures of the system's strengths and weaknesses and to measure the effect of any new interventions and reforms.

By funding legal representation through legal aid, we'll see more early resolution of problems, resulting in benefits not just to the justice system but also to social services, health, policing and other government services. A critical finding of the work of Leonard Doust, QC, the public commissioner for the 2011 Commission on Legal Aid, was that legal aid more than pays for itself.

Research from other jurisdictions, most notably in the United States and Australia, shows that for every dollar spent on legal aid, $1.70 — or a multiple of that number — is saved in other areas of government spending such as health care and social welfare and is gained back in personal income and productivity. An investment in legal aid can increase savings directly within the justice system and speed up the administration of justice.

With increased funding for legal aid, the 27,000 legal aid referrals last year would increase, and there could be fewer self-represented litigants attempting to navigate the court system. Family law applications would decrease due to higher likelihood of mediation and resolution of issues outside of the courtroom. Hours of trials and hearings would decrease because people would have the benefit of legal representation. Those who require assistance to navigate the system of income assistance, residential tenancy and legal problems related to poverty would have the benefit of real, meaningful assistance. Over time the government's expenditures on court costs would decrease.

Why does funding justice matter? Access to justice isn't just a phrase. It's a fundamental foundation upon which our society is based. Ensuring that access to justice is meaningful in practice is the responsibility of govern-
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ment. Meaningful access to justice is as fundamental to a proper functioning of our society as are access to health care and access to education. In fact, it is the rule of law, the administration of justice and the ability to access justice that are the keys to ensuring that all the other social and economic structures of our society are protected.

We are at a significant juncture in the development or the demise of our justice system in British Columbia, and the government has a make-or-break role to play at this time. The good news is that everyone involved acknowledges that there is a problem and that change is required in order to stop and then reverse the crumbling of the foundation of our justice system. Collaboration and transparency by all the system participants is required, and we have that to move forward.

The reality is, however, that change without any more funding will change nothing. Funding is needed for the people resources — the court services staff, judges, Crown counsel and legal representation through legal aid — and also for basic operational requirements such as technology and data management systems.

The current story of our justice system is that the underfunding of legal aid and the underfunding of the justice system is causing a public crisis of confidence in our justice system. A more compelling and, indeed, progressive story for our elected representatives to share would be that you are committed to stable and long-term funding of our justice system as an essential service and as a means to create financial savings that could be allocated to further improve government service throughout the province.

In closing, I hope that you will relay to your colleagues the significance of addressing these important issues. This is the tenth of our submissions to this committee, and I suggest this is the most important that we have made thus far. I ask you to consider carefully our strong message that there is an urgent and compelling need to make a substantial investment in justice now.

We look forward to reviewing your report and recommendations later this fall. Again, I appreciate the opportunity to appear before you this morning, and I'd be pleased to answer any questions that you may have.

B. Ralston: Thanks very much for your submission. I had a couple of questions on the legal aid file.

Mark Benton, who is the executive director of Legal Services, made a presentation — I think it was a presentation last year and then informally to various members on both sides of the Legislature — about some proposals he has which don't necessarily involve funding for lawyers specifically but more for paralegals and other advocates who might assist at the court level in making things work more smoothly, which would have a reduced cost. I think that was his argument. I'm wondering if you've had an opportunity to study those proposals.

Secondly, given the study and the focus that you put on the legal services system, in your analysis of it, do you have a specific dollar amount that you think would begin to remedy some of the concerns you've expressed about the Legal Services Society? As you know, the dollar amount has declined and flattened out over the last ten years. I'm wondering if you've had a chance to turn your mind to that.

K. Simmons: I'll answer your last question first, and that would be a particular figure with respect to funding for legal aid. We know and have determined that an investment of $20 million would bring British Columbia to the national standard of legal aid expenditures. We know that $50 million would return us to where we were in 2002.

With respect to some of the ideas that Mr. Benton has put forward, CBA made a response to him when the Legal Services Society in March of this year asked for comments — submissions, really — to a review of legal aid. So we've had some discussions with him about that. I think that when it comes right down to it, what Mr. Benton is trying to do is be creative with ideas, given that there isn't a lot of funding available. One of them is the paralegal idea.

P. Pimm: One of the things that I didn't see anywhere in your presentation was restorative justice. Has there been any discussion around restorative justice? I know we have that in our region, and it seems to do very well. Is there any discussion around that on a larger basis?

K. Simmons: I know that restorative justice is part of the submissions that are made. When the CBA made its submissions to Mr. Cowper, we did include in that report some recommendations regarding that, in that that is a useful means of restoring some problems. But it does require, again, further funding in order to make that work. Again, it's one of the options, but it is simply another mechanism of resolution.

D. Horne (Chair): Thanks. We'll then move to Marc for a quick question, because we're about done.

M. Dalton: Thank you very much for your presentation. I've got my son that's doing his LSAT later on this month and a sister who's a judge, and another sister is in law school at UBC.

I wonder if you can explain some of the discrepancies. You know, I think it was announced in the papers just recently that we're in a historic low as far as the crime rates — a 40-year low or even longer. We've brought in legislation — for example, with drinking and driving —
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so that you no longer have to go through the court system. That was really holding things up in the courts. So you're explaining a crisis, but in some ways the trends are going the other way. So you'd think it'd be kind of the other way. If you can explain some of the discrepancies, I'd appreciate it.

K. Simmons: Sure. Part of it has to do with the backlog of cases that are present in the system, and that backlog is significant. Mr. Cowper, for example, had recommended the immediate appointment of five judges to deal with the backlog alone in criminal matters.

The other piece of what happens in the criminal courts is the complexity of cases. That has increased. Even though the number of cases may be down, the complexity has increased.

That, of course is simply talking about the criminal side of the system. There are also family law and civil justice that go through our court systems, both Provincial and Supreme. Those cases are also not necessarily affected by things like the administrative driving prohibitions.

D. Horne (Chair): Thank you for presenting to the committee today. We really welcome your submission.

We'll now call our next presenter, who is Matt Horne from the Pembina Institute. I will start, as Matt makes his way to the front, by saying that I don't believe he's related to myself, but it's a fine name.

As you probably heard, you have ten minutes to present and then basically five minutes for questions. Please begin now.

M. Horne: Thank you very much for the opportunity, and thank you for your work in touring the province and collecting submissions. And I don't think there's any relation.

I wanted to present, in general, on climate action and specifically some recommendations that our organization has for the carbon tax and for the carbon tax moving forward.

For those of you who don't know the Pembina Institute, we're an environmental organization focused on energy and climate issues in Canada and have had an active presence in B.C. for the last ten years. I'll start with our recommendations and then sort of go into it and elaborate on it in a little bit of detail.

The first is to broaden the carbon tax to all accurately measured greenhouse gas emissions in the province. B.C.'s carbon tax currently applies to a little over three-quarters of the emissions in the province. There are some opportunities to broaden that coverage. From our perspective, that would improve the fairness in making sure that as many possible of sources of greenhouse gas pollution in the province are paying their fair share but also improve the effectiveness of the carbon tax and provide incentive to a broader base of the economy to reduce emissions.

The second would be to continue increasing the carbon tax. The carbon tax is increased by $5 a tonne per year since it was implemented and is currently at $30 per tonne with no planned changes in the rate. Our belief is that that ramp in rate should continue to increase over time to make sure there's a continued sort of strengthening of that signal to reduce emissions across the economy.

The third would be using a portion of new revenue both to protect low-income British Columbians and to invest in projects that reduce emissions. Especially as the rate continues to increase, there is a really important need to make sure that low-income British Columbians are protected from those rising energy and carbon prices. We don't want to see climate policy adversely affecting equity in society.

The second part of that recommendation in terms of investing in projects that reduce emissions — that would be departure from the way that the carbon tax is currently structured in terms of it being revenue-neutral. Our sense is that at least a partial departure from that revenue-neutral approach would be good in that it would improve the effectiveness of the carbon tax by putting money back into the projects and alternatives where it's needed. We also think it would improve public support by drawing a direct link between the carbon tax and the solutions that British Columbians do want to see.

In terms of the motivation for these recommendations, we certainly primarily come at this from an environmental perspective. I think, looking at the province's climate action plan and a few independent studies of where the province's emissions are headed, there is clearly a need to continue increasing the stringency of B.C.'s climate policies if we're going to come close to hitting the targets we set. That's sort of the environmental motivation for these recommendations.

I think there's both an environmental and an economic motivation if we look at the four years of evidence we have of the carbon tax. I've highlighted a few studies that have come out this year, and I will provide full copies of these in our written submission. But I just wanted to run through these very quickly, because there are some still fairly preliminary but interesting results of the carbon taxes working to start to push down emissions but also doing so in a way that is beneficial to B.C.'s economy.

The first is a study that we completed with the energy and materials research group at Simon Fraser. We interviewed 39 leaders across the province from large industry, small business, clean tech, environmental organizations and community leaders talking about the carbon tax in its current design and also talking about opportunities for the carbon tax going forward. I think the general take-away message from that was that the carbon tax was a positive step in the right direction, and we're starting
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to see some economic and environmental benefits from it. So there's a general sense that continuing the path set out in 2008 would be the right direction for the province.

Numbers 2 and 3 are very similar, so I'll just describe those together. The first is a report from the provincial government earlier this year highlighting its own progress towards its climate targets. The second was a piece from Sustainable Prosperity, which is a think tank from Ottawa, looking at the first four years of the carbon tax. In both cases, they're seeing a decline in greenhouse gas emissions in the province and particularly fossil fuel combustion, which they said was in part attributable to the carbon tax. Also, comparing B.C.'s economic performance with the rest of the country put B.C. near the top of the pack in terms of overall economic performance. I think that's an encouraging set of results that even with just a few years of data, we're starting to see some environmental and economic benefit.

The fourth one is a brand-new study from the University of Ottawa. It's still in draft and in peer review, but the preliminary conclusions from the authors are that…. It was a specific look at gasoline demand in the province and what impact the carbon tax has had on it. They were able to explicitly draw out the impact of the carbon tax and found that it actually had a stronger impact on reducing gasoline demand and greenhouse gas emissions than was initially anticipated when the carbon tax was implemented in 2008.

The last is a piece of research we've just completed, and it's looking at actions in local governments across the province to reduce greenhouse gas emissions and try and understand the motivations for those — things like the carbon tax, the climate action rebate, and different grants and incentive programs that are available from the provincial government.

Again, I think the conclusion here is that the carbon tax has had a positive impact in motivating those projects and making the economic case stronger. That's not the only reason some of those projects are moving ahead, but it is being seen by those local governments as a positive contributor to the business case of those projects.

The second page of my submission. I just wanted to talk in a little bit of detail about broadening the carbon tax. There has certainly been some confusion about this, and I thought it would merit a little bit of discussion. The first chart there shows all of B.C.'s greenhouse gas emissions. The blue area, from homes and buildings, transportation and industrial combustion of fossil fuels, is what the carbon tax currently covers. As I said, it's about three-quarters of B.C.'s emissions, which is probably about the broadest application of a carbon tax in the world.

The green areas, waste and agriculture and some other emissions from industries that don't come from combustion, aren't covered by the carbon tax and aren't currently accurately measured. From our perspective, it's not really an appropriate way to apply carbon tax to those emissions because there isn't an accurate measurement of them.

The last slice, at about 7 percent, is the grey slice as another source of industrial emissions from non-combustion sources that are accurately measured and not currently covered by the carbon tax. Our perspective is that those should be covered by the carbon tax because they can be accurately measured, and by applying the carbon tax, it presents an incentive to reduce those emissions.

Zeroing in just to give you a sense of where they're coming from, that pie chart at the bottom, I've presented this in terms of dollars. If the carbon tax was applied to those sources, it's what the revenue would be to the province approximately this year. There is some uncertainty in these numbers because you're trying to pull them out of the national emissions inventory, which isn't an exact instrument. You can see a biggest chunk of slightly over 50 percent would be from the oil and gas sector. The oil and gas sector provides a good illustration of the differences between the measurable and not measurable.

From the big gas processing plants in the province, we have what's called vented emissions or formation of CO₂, which is when carbon dioxide is stripped from raw natural gas and vented in the atmosphere. We have good measurements of those, and the carbon tax could be applied to them.

An example of where we don't have good measurements would be the small leaks that occur from pipelines throughout the pipeline network in the province. Those are a source of greenhouse gas emissions. We don't have good measurements of them, so it really wouldn't be appropriate or feasible to apply the carbon tax to them. In total there you're looking at about $125 million that the province is currently forgoing in carbon tax revenue.

Just to show the revenue implications of the first two of our recommendations, the table on the third page illustrates it. So the top left square, maintaining at $30 a tonne and the current status quo of coverage, you wouldn't see any change roughly in the carbon tax revenue collected by the province, which is estimated to be $1.2 billion this year.

If we were to both broaden the coverage at the 82 percent coverage and continue increasing the rate — I have used for illustrative purposes here four more increases of $5 a tonne — we'd be looking at just shy of an additional billion dollars of revenue. You can see what the implications are if it was just broadening it or just continuing to increase it.

D. Horne (Chair): Thank you so much, and we'll start our questions with Mable.
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M. Elmore (Deputy Chair): Thanks for your presentation. Just to clarify, you're recommending by the calculations that the highest percentage in terms of the coverage would be generally 82 percent, in terms of being….

M. Horne: I think we're seeing continually measurements get better. When the carbon tax was first brought in, we didn't have good measurements of those. There was a good rationale for not including them. We now have a reporting regulation in the province that gives us good information on those sources of emissions, so we're up to a potential of 82 percent. I think over time that percentage probably keeps creeping up.

M. Elmore (Deputy Chair): Terrific. Just to follow up, in terms of your recommendations from $30 a tonne to $50, you mentioned increments by $5 a tonne over that period. What kind of time period are you looking at?

M. Horne: This is for illustrative purposes only, just to give you a sense of what the revenue is. That's an estimate of what the revenue would be of four more $5 increases — so 2013, 2014, 2015 and 2016. Basically, it's continuing the trend that's been in place.

J. Les: Good morning, Matt. I don't think we have enough time to get into debate about the merits and justification of the carbon tax, so we won't go there. But in the application of the carbon tax, of course, you have to consider the impacts. You've identified, for example, the cement industry and the lime industry in the graph at the bottom of page 2.

Now, the cement industry has been particularly impacted by the current carbon tax, and we are fast losing ground to China — where, increasingly, a major portion of our cement is coming from now as a result of the carbon tax. I think the last I heard, it was 28 percent of our cement that is now coming from China, and their percentage is growing rapidly.

There is one lime plant in British Columbia. It's located between Cache Creek and Lillooet. I visited it recently, and they're being very seriously impacted by the carbon tax. Their competition from other provinces in Canada and from the United States may force them to close.

So there is, I guess, the big caution. You know, taxation can often be a very blunt instrument. It can very often have unintended consequences, and before we go off advocating one thing and another, we need to be careful that we don't stifle the industrial economy and that we don't throw people out of work, with all of the social consequences that come from that.

I'm not sure I have a question as much as I just want to put up a caution that these consequences are real for government, and we have to take them into consideration.

M. Horne: I totally agree that you ought to be cautious moving ahead, and I think there are some good examples looking in particular at Australia, which recently implemented a carbon tax. They're really taking an evidence-based approach to where there may be competitiveness concerns. Based on some studies done in Canada — and they're not B.C.-specific — the cement sector in particular is one that I think we do have to keep a careful eye on about potential competitiveness concerns.

From our perspective, that's not a reason to not apply or not continue moving forward with the carbon tax. That's a reason to look at specific ways to address those competitiveness concerns. I think you could look at models like Alberta's tech fund as an opportunity to invest directly in those sectors. So you do get the incentive to reduce emissions, but you're also making sure you're maintaining their economic competitiveness.

D. Horne (Chair): We'll now move to Gary, and we've got just a couple of minutes left, so two quick ones left.

G. Coons: Thank you, Matt, for the presentation. It's interesting to see the emissions that are not accurately measured versus the ones that are measured and the revenue that we're forgoing through that. I think it's a fine line when you start looking at climate change and being cautious, you know.

You mentioned protecting low-income British Columbians and looking at actual projects versus being revenue-neutral. What types of projects do we currently have in British Columbia, and where should we be going if we can get towards getting some concrete tax revenue from this?

M. Horne: I would put forward two sort of categories of projects, and one would be community investments. I think it's going to differ across the province what the priorities look like in different communities. So in the Lower Mainland it may very well be transit investments. If we look in northeastern B.C., I think there's probably a different set of priorities that are going to come out from those communities.

I think the arrangement around the gas tax funding is probably a good one to look at if we're going to be investing in communities where it's going proportionately back to communities based on the carbon tax they're paying. They can sort of figure out what the best environmental priorities are in those communities.

The other one, which I think could follow either Alberta's tax fund model or potentially the Pacific Carbon Trust in B.C., is investing in the projects that show the greatest returns or the lowest dollars-per-tonne oppor-
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tunities. So I think a lot of those will be in larger industry in the province, where you're seeing sort of economies of scale around projects.

I think an example might be that Spectra has continued to look at a carbon-capture-and-storage project in the northeast of the province. Based on initial studies, it isn't economic, but I think if there's a rising carbon tax and some government investment in that project, the economics probably do turn fairly quickly. That's one example of the types of large-scale projects I think would also be appropriate to look at how the province can help kick-start.

D. Horne (Chair): So looking to the northeast end of the province, I'll end with Pat.

P. Pimm: Okay, a couple of things. First off, obviously — or I'm going to assume — you've made a presentation to the Finance Minister under his new submission that he's putting forward. I've asked that of everybody. Unfortunately, I've only seen one group that's advocating for increase. Everybody else is advocating in the other direction.

But the question I wanted to make sure is: is that number one? Secondly, have you looked at this under a competitive lens at all? I think the answer to that is no, but I just want you to confirm that for me.

M. Horne: I guess, to the first point, to confirm: yeah, we have provided a set of recommendations to the Finance Minister as part of the carbon tax review.

Then on your second part, we have not conducted our own study of economic competitiveness.

We have done a number of interviews, as I mentioned, that have asked that question on what impacts people are seeing. There are some that people are seeing which I think are flags we have to be wary of going forward. But for the most part, people have not seen…. Certainly, I haven't seen a macro negative economic impact to date.

I've also reviewed most of the literature, both in a European context and a Canadian context, of what the concerns on economic competitiveness could be. Related to Mr. Les's question, I think the cement sector does pop up in a Canadian context, where there may be some concerns around competitiveness.

D. Horne (Chair): Thank you so much for your presentation today. We certainly welcome your submission.

We'll now move to our next presenter, who is from the Vancouver board of education. I believe we have both Patti and Steve here, so please step forward.

As I believe you might have heard but may not have, you have ten minutes to present followed by five minutes of questions. Once you get seated, you can begin anytime.

P. Bacchus: : Good morning. My name is Patti Bacchus, and I am the chairperson of the Vancouver board of education. This is Steve Cardwell. Steve is the superintendent of schools for the Vancouver school district.

P. Bacchus: This may be a bit of a déjà vu for those of you who've been here in previous years. Again, as in previous years, we've tried to keep our comments fairly brief. We could, as you can imagine, go on at some length about the needs of public education in the budget. Knowing the extensive input you will be getting through this process and, I'm sure, the stacks and stacks of paper, we've done our best to keep ours as concise as we can, to focus on what I think are the really key points, although we'd always welcome a longer discussion in another setting if you're ever interested.

We focused our brief this year on six key points. Some of these will of course apply to all public school districts. There is a little bit in there that I would say is Vancouver-specific.

Just as an intro, as you know, Vancouver school district is a large, urban and multicultural school district that includes some of the most affluent and impoverished urban neighbourhoods in the country. The setting does provide wonderful opportunities but also some very serious challenges.

The district is among the most diverse public school systems in Canada, with an annual enrolment of approximately 52,500 students in our kindergarten-to-grade-12 programs. In addition, we have educational programs and services for 600 adult students and approximately 7,500 registrations in our continuing education courses.

Our programs and services address the extraordinary and complex challenges associated with such a diverse district, and our goal is to serve the needs and tap the potential of each of our students so that they may achieve their unique potential.

(1) The province must provide stable, predictable and adequate funding to enable school districts to fulfil their responsibility to provide continued equitable access to quality public education. Those of you who've been here in previous years have heard this. It hasn't really changed, and most of the points here are similar to previous years. The challenges remain the same as they have in the past.

Unpredictable funding and unfunded cost increases require school districts to spend significant time and resources on balancing budgets each year instead of strategically planning the most effective use of funding to support student success. This chronic underfunding also makes it increasingly difficult to fully support success for students, as valuable programs and staff positions were further reduced in order to balance budgets.

(2) At a minimum, all negotiated or provincially man-
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dated increases — including salary, benefits, pension contributions, medical premiums and new requirements such as carbon emission calculation and carbon offset purchases — must be fully funded by the province. The province currently does not provide funding for net cost increases of employee salary increments. That's employees who are on, say…. Teachers, administrators, excluded staff have pay scales, steps in the scales. We have found in previous years that that increases at a rate that isn't reflected in the funding the school district receives — also increased costs such as benefits, CPP, EI, WCB, extended health and MSP.

In addition, inflationary costs for goods and services and new costs imposed by the province…. As we saw in previous years with the carbon emission, now we have a requirement to pay some of our insurance premiums that we didn't in the past. Those have not been funded, and that money has to come from the same budget we're trying to pay teachers, support students with special needs and buy classroom resources.

These unfunded costs represent a significant portion of the accumulated $83.34 million in operating spending reductions in the Vancouver school district since 2002-03.

These unfunded costs are projected to increase in our district by 2013-2014 by an additional $5 million and by another $5.33 million in 2014-2015. In order to meet the spending obligations on these items, school districts must divert spending from other important areas, such as the budgets that support children in classrooms. We simply cannot afford to take more funding from our operating budget to cover these costs without further reductions to support for students.

(3) The province needs to review and increase supplemental funding grants for students with special needs. Again, you've heard this for several years now.

Grant amounts should be based on functional assessments of learning needs — in other words, based on what specific supports a student needs to successfully access education. The current model, which is based on medical assessments, does not consistently reflect students' individual needs for support.

The VSB allocates about twice as much to supporting students with special needs than the province provides in supplementary funding. Despite that, service levels continue to be adequate to provide for each student's particular learning needs.

(4) We need to provide funding for increased maintenance and upgrades to address the needs of aging school facilities. The province should also increase funding for ongoing maintenance, using industry maintenance standards as a guide.

Funding for school building maintenance levels has generally been approximately 25 percent of industry standards, as set by BOMA, the Building Owners and Managers Association. The VSB's aging stock of school buildings is at risk of accelerated deterioration due to minimal maintenance levels. The district's ability to carry out preventive work has been hampered.

There's an arrow here, and you can see that we've recycled this brief, because it wasn't last year's abrupt cancellation. That was actually 2009. But we still, of course, feel the impact of the year the grant was cancelled, then partially restored and staged over time. That level has never been adequate. Then to have that additional pullout was particularly difficult.

(5) Sufficient capital funding needs to be provided by the province to upgrade or replace schools that have a high seismic risk by 2020. This one is somewhat of a Vancouver specific. Although, of course, other districts are affected by seismic upgrades, we by far have the bulk of seismically unsafe schools in this province. So 61 of our 109 schools are in need of seismic upgrading or complete replacement, five are currently in construction, 14 are in the planning or design stage, and 42 will need to be considered in annual capital plans prior to 2020.

Virtually all of these schools have high-risk buildings classified H1 or H2, which means the risk of widespread damage or structural failure after a significant seismic event. The buildings would not expect to be reparable after an earthquake.

In 2004-2005 the province announced that all schools that require seismic upgrading would be completed by 2020. The province needs to advance the pace of capital funding for the program in order to ensure the safety of students and staff and to ensure the sustainability of school buildings in the case of a significant seismic event. In Vancouver the estimated cost to complete the remaining schools is in the range of $850 million to $1 billion.

(6) We must have a real plan to eliminate child poverty in B.C. and ensure that all families have access to affordable, quality child care. The correlation between child poverty and failure to succeed in school is strong.

Despite the Vancouver school board's allocation of additional resources through our inner-city schools program and CommunityLINK, the needs of our students far outstrip the available funding to provide support. A comprehensive provincial plan to address child poverty and to make quality child care accessible and affordable would enable increased numbers of students to succeed in school.

M. Dalton: Thank you, Patti and Steve, for your presentation. I'm a public school teacher, so I definitely know firsthand the challenges being faced among teachers within the system.

I wonder if you could speak to the issue of demographics, how the numbers have been in Vancouver over the
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past five or even ten years — if it's been stable or declining.

Also, if you can speak to the ratio of teachers to students — how that's going — and possibly comment on the changes a number of years ago, where the province gave flexibility to the school districts in terms of resources being allocated — whether it be to teacher-librarians or to special needs. There's just a little bit more flexibility. If you can just make some comments on that, I'd really appreciate it.

P. Bacchus: Sure. You're talking about, in your final point, the incremental staffing levels — what we refer to as incremental staffing. That's our non-enrolling teaching staff that is assigned to schools — for example, librarians, counsellors, special education, ESL support.

That particular area has been very hard hit, I would say, over the last ten years because it doesn't have the protection, for example, of class-size legislation. So while we've maintained ratios in terms of teaching staff because we've had to meet the requirements of legislation, the area of the non-enrolling staff is where you'll see some real changes — the number of dedicated special education teachers, the amount of time students have access to ESL support.

You'll certainly hear it in terms of — and you can see numbers; I don't have them with me, but we could certainly pull them together — how much time a library is staffed with an actual librarian. Of course, it's not so much in the staffing formula but in the resources for libraries, which have significantly dropped over the last ten years.

Those are the areas where, as a board looks at a budget and has to fulfil its obligations under the School Act at balancing that budget or risk being fired…. You have to look at where we can make reductions if our funding isn't keeping up with our costs of providing the services we provided last year.

Unfortunately, areas like the non-enrolling staff tend to get hit. What we've seen is a pattern of specialized education teachers being replaced by support workers, who might have a year of post-secondary in a lower category and don't have that specialized training. We're filling in with less expertise and less specialty, and that certainly creates some challenges for students.

In terms of your question regarding enrolment trends, we have experienced about a 1-percent-per-year decline in Vancouver. We do see that picking up when we look at our forecasts and projections. We are seeing development, and we are seeing growth.

As a proportion of population in the city of Vancouver, the school-aged students are growing at a much lower rate, of course. We have seen some drift over to the private education system as the impact of the budget cuts is felt more fully by the public schools.

S. Cardwell: In addition to the declining enrolment, my understanding, in communication with all of the superintendents in the Metro region, is that we have all experienced a decline this past year. In Vancouver our projection was about 500 students down. We're down below that.

Part of it was a very challenging year last year, and that might be one of the factors. The other is affordable housing. In Vancouver the ability for young families to live and work in the city is very challenging. This, of course, impacts our potential for enrolment.

I find it interesting when we hear many school districts and teachers unions coming in and talking about the unpredictable, inadequate funding that we're seeing, especially the downloading and the unfunded costs. I can see that the $5 million projection YOY over the years is a huge hit.

You talk about the child poverty. We can see that in the province, where we have one of the highest child poverty rates in the country. That's dealt with in the school system day in and day out.

I want to get into the funding grants for students with special needs. For many years I taught special education and did alternate-type programs. Throughout the province we're seeing that. We're seeing the hit to students with special needs and the supports they have. I'm wondering: as far as your district, what boost do you see necessary in order for you to adequately support students with special needs?

P. Bacchus: Well, it could be a fairly long conversation. I would say, initially, the model itself, the medical model. For example, if you have a child who's diagnosed as being on the autism spectrum, a pediatrician or a child psychiatrist will be allocated.

The district will be allocated a grant of $18,200 per year approximately. I could be off. That will be that child's allocation that is allocated to the district. It's not necessarily a spending formula. It doesn't mean we spend that amount on that child, but it is an amount that a school district would be funded to recognize that student.

We gather up all the students, and of course there's a whole process of designating them, showing evidence, proof, which is extremely time-consuming and expensive. Based on that, the school district will receive funding.

Well, that child, as a young child, may require full-time one-to-one support, which would run in the mid-$40,000 to approximately $50,000 a year if you include all the benefits and costs of that one employee. They would also require some school psychoeducational assessment time. They may require speech therapy. They may require
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OT. They may require the support of a resource teacher to help their particular program. You can see where we're now at probably three times the cost of that grant easily, so it doesn't reflect the needs of that child.

Now, that child's needs may change over time. By the time that child is in high school, you may be able to pull back on some of that support then. If all has gone well and according to plan, independence is increased, and the cost may be significantly lower.

We may have another student who has a completely different requirement. As we know, in the autism category many of the needs are communication and social, and we have very little in terms of programming, say, for lunchtime or after school or to support those children on their communication and social plans.

So it's a blunt instrument. It's certainly an inadequate instrument in the amounts now. I would suggest that we need to review how we support those students based on what their IEP tells us. We have a team of experts who look at that child's needs. What would the plan look like for that child to be successful in school?

It also is somewhat systemic. If we're going to move to a truly inclusive school system that recognizes we have students who range from far over there to far over there as opposed to designating someone special and trying to tack on some add-ons to make it fit, we may need to take a really holistic view of how we deliver education. That would affect class sizes, how we arrange curriculum.

I think some of the discussion of personalized learning is moving in that direction, but it's going to require significant support and resources, professional development, pre-service, in-service and curriculum design in the way that recognizes the true range of students in a public school system. There's not just a typical set and some hanging off the edges. The way we're funded right now, it's very difficult for that to happen.

M. Elmore (Deputy Chair): Thanks, Patti, for the presentation. I'm concerned with the amount. Certainly, it's shocking — $83 million plus in terms of unfunded obligations that have been transferred to the school board and the corresponding need to cut from the operating side.

I think there's also an additional challenge, particularly in Metro Vancouver and Vancouver, with respect to children of new immigrants, new families coming in and the need to support those families, particularly if they don't speak English as a first language. That's a concern I have. It's important for those children to be successful and be able to transition — to be successful not only in high school but to continue their education. If you could just talk a little bit about that.

P. Bacchus: Absolutely. I would say all students belong. We are inclusive of special needs. We are also an ESL district. That is the reality of our schools in Vancouver. We know that well over half of our families speak a language other than English at home. Many are newcomers. There is a whole range of complex social needs as well.

We do have some support through our federally funded settlement workers in schools. I would say they are stretched. I get different e-mails and calls. Again, different groups are trying to access service, and there are limits to that. Our multicultural liaison workers, who do fall under our non-enrolling staffing area, have also taken some of the brunt of the budget reductions that we've had to make.

On that $83 million, that number represents…. We do a bar chart of the last ten years and where we have been in terms of our budget — what we've been funded for versus where the costs and what the gap has been, where we've been required to either find savings somewhere else, try to locally generate revenue or cut. This ultimately is the cut — service levels. You add those up cumulatively.

If we wanted to get back to equivalent service levels of, say, 2002 adjusted for enrolment, you would have to put about $83 million back into our annual budget out of a budget that's just under half a billion dollars. So it is significant, and it has accumulated.

Parents coming into the system now don't often know what would have been there for their child — the autism team, some of the groups that have been dismantled and gone, certainly our ability to meet the needs of a very diverse population in terms of language groups, in terms of social needs.

Certainly, poverty just hits us from every direction. We feel the impact of that in schools and how it affects students' ability and our ability to reach out to communities, support families. We know students, particularly newcomer families, do well when their families are doing well. If their families are struggling, it's very difficult for students.

D. Horne (Chair): We've gone over time. I will use my discretion here and ask a question, if you'll bear with me. Actually, I understand the difficulties facing the school board and budgets. My father was the associate superintendent of schools for Vancouver before he retired and, obviously, was under significant pressure from that.

I would ask, on the $83.34 million…. The one question that was asked, which Marc was asking, has to do with the number of students that's decreased. I believe it's a few thousand at this point.

Just a comparative for the budget in 2002 to now, because obviously we hear a lot about cuts. I understand the spin on that. What was the budget in 2002, and what is the budget now?
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D. Horne (Chair): Sure, okay. In broad terms, it's tens of millions of dollars more today than it was in 2002. Is that not correct?

P. Bacchus: It would be significantly more. That — just as you mentioned, the $83 million — is adjusted for enrolment. The base budget each year is generated on the projected enrolment numbers. For example, the shortfall that we experienced this year was on a presumed 500 decrease in students. It's not based on an assumption that we would be enrolled at that level. It is adjusted for that.

D. Horne (Chair): Perfect. We'll now move to our next presenter. Thank you so much for your presentation today.

Fern and Dave, thank you so much for coming today. As I believe you've heard, you have ten minutes to present and five minutes for questions. You can begin now.

D. Schick: Thank you very much. Really appreciate the opportunity to come to the panel today and talk about some of our concerns as an organization. I'm Dave Schick. I work for the Burnaby refinery.

Chevron Canada is the leading supplier of transportation fuels in British Columbia. A thriving economy is critical to the success of our organization. We've been committed to British Columbia since 1935. It has been almost 80 years that we've been producing fuels in Burnaby, our host community.

We recommend that amendments be made to B.C.'s carbon tax to ensure that fair and equitable carbon tax treatment of refined fuels, regardless of whether they are produced in B.C. or other jurisdictions in Canada or are imported.

This gets very much to the core of a lot of the discussions we've heard around carbon tax from the competitive side of the business, where we're in a very unique situation. We're energy-intensive and trade-exposed.

A great deal of the product that comes into British Columbia, approximately 70 percent of the fuel that's consumed here, is done in other jurisdictions. About 65 percent of that fuel is from Alberta. We supply about 25 percent of the fuel that is consumed in British Columbia from that refinery in Burnaby, and we sell it directly to the consumers of retail, industrial and commercial businesses across the province.

Our economic footprint is around $3.7 billion a year, just to give you an idea about the scale of the business that we have in British Columbia. That's equivalent to something of the size of ICBC or B.C. Hydro.

We have not been particularly active in pushing our positions forward with the government relations side of things. Now we're becoming much more active because policies are affecting the long-term viability of our business.

We have about 400 people that work at the Burnaby refinery — 150 of those are specialized contractors, and about 250 of them are employees of the refinery. All of those jobs are family-sustaining jobs where people can bring up their families successfully in the economic climate of Vancouver.

Other elements of our impact. We spend about $70 million a year annually on locally sourced supplies and services. We make continuing sustaining capital investments in the refinery in order to ensure that we're meeting the latest standards for environmental performance and efficiency. We've spent about $325 million since 2003. A lot of that money ends up being spent in the local community.

The competitive element that is of concern to us is that the North American refining sector is planned to be shrinking or flat due to the improvement in fuel mileage and the adoption of biofuels. Refineries are benchmarked regularly against similar refineries of similar size. It matters if your refinery that supplies your market is there locally rather than bringing in fuels from other jurisdictions, in terms of the reliability of supply.

Our ability to garner investment for our facility has been ongoing for 80 years, but if the economic climate and policy environment is not competitive, it challenges our ability to get capital to keep making the changes that we need in order to be successful in this marketplace.

It's the sustained gap in operating costs that's the concern for us, which is, in the case of the carbon tax, about $12 million a year annually, and it represents about 10 percent of our non-energy operating costs. To put that into comparison, in Alberta, if we had a similar-sized refinery, it would cost us about $1 million. So people can speak to the model of Alberta, but the difference is we would pay 10 percent of what we pay if we were operating in Alberta, and 70 percent of the fuel that's coming into this province is either from Alberta or Washington State, where there is no equivalency on the carbon tax.

It's a concern that the economic climate becomes competitive for us due to this sustained operating cost, and over time it will impact our viability due to the competitive nature of refining in North America.

The carbon tax is intended to reduce the amount of carbon that comes into the atmosphere. We are not against the carbon tax. What we're concerned about is the equitability of how it's applied, and I think it's very pertinent that refineries consistently work to try to reduce their energy consumption as a matter of economics. It's our single biggest input of cost, so we have to be sure that we're being as effective as possible.

So in other words, the carbon tax itself doesn't change
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anything in terms of how we reduce our carbon footprint. We work on that all the time, because energy is our highest specific cost.

The refinery supports B.C.'s need for a safe, cost-effective and reliable supply of transportation fuels, and the current economic disadvantage created by B.C.'s carbon tax policy threatens the ongoing viability of the refinery. It's worthy of note that the climate action plan dealt with energy-intensive, trade-exposed industries in its development, and that part of the plan has not been implemented, as it was intended to be coming under a cap-and-trade environment.

The other comment I'd like to add is to caution the panel, as I hear a lot of people talk about carbon tax and the improvement to emissions reductions. A number that I have not seen anybody come up with, and I haven't been able to get my hands on, is how much product is being purchased in Washington State due to the differential in gasoline.

We say emissions have been reduced. I think it's important for the Finance Committee and industry to get a clear understanding of how much that 33-cent-per-litre difference between Washington State taxes and taxes in Vancouver are in gasoline as to the impact on the reduction in emissions — so that we see that. I haven't seen anybody being able to provide that number. That is sort of a side note on the competitiveness of the province rather than the specific issue at hand for us on the carbon tax.

P. Pimm: A couple of things. I've asked this to everybody that has brought up carbon, and I'm not going to change now. Have you made your presentation to the Finance Minister on his submission for competitiveness of carbon tax?

P. Pimm: Okay. Secondly, we just heard a group before you that said that we should have a complete increase of $5 per year on the carbon tax. How will that specifically affect your operation each year?

D. Schick: If we look at the analysis, up until the $30 a ton on July 1 of this year we actually maintained competitiveness with the Alberta marketplace. When we took all business environment characteristics, we were competitive up until about 2009-2010. As the carbon tax increases, now we're in a position where we're at a significant deficit across the competitive spectrum with the Alberta production.

D. Schick: The Americans don't have anything equivalent, so what we're seeking is equivalency with Alberta so that we can compete on an equitable basis. That's the goal. I should say that equitable doesn't mean that we're looking to have it removed. It's just that we need our competitive environment to be consistent with what our competitors are paying.

M. Dalton: Is the refinery at capacity at this point? You mentioned about 25 percent. That's a question…. You talked about possibly closing. Would there be a possibility of…?

D. Schick: I don't want to leave the impression that we're imminently closing, but the long-term structural disadvantage is a significant problem for us. The 25 percent of the marketplace…. We're at capacity with the footprint that we can have in Burnaby. The physical land and availability of space doesn't allow us to expand the production any more than it is today in any significant way.

M. Dalton: You've mentioned equivalency with Alberta. Can you be specific — what you're asking?

D. Schick: Sure. Under Alberta…. They pay $15 a tonne on the last 12 percent of their emissions. This is under the SGER — Specified Gas Emitters Regulation. Their equivalency is $1.80 a tonne, compared to the $30 that we spend.

M. Elmore (Deputy Chair): Thanks for your presentation. It was just a question with regards to the last point, in terms of the equitable treatment. So that's a picture in terms of what the comparison is between B.C. and Alberta. Is it also similar in terms of Washington?

D. Schick: Washington doesn't pay anything that's similar to this in terms of tax. So we're $30 to a zero in equivalency with Washington State.

D. Schick: That's correct. That's the way the numbers work out. The calculation is different. That's the equivalency.

M. Elmore (Deputy Chair): Generally. So what would that look like in terms of achieving equivalency?

D. Schick: There are a number of options. One would be to find a mechanism to ensure that the fuels that are produced in other jurisdictions have that additional cost added on to them.
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Another one would be…. The carbon taxes are on the fuel we use to make the fuel, in effect. So if the refinery gas that we use in the production of fuels — the component in the crude we use for power — was exempted, then we would be very close to equivalency, because that's where the most of the power comes from.

There's exempting this industry on the basis of energy-intensive and trade-exposed, and we work hard to try to ensure the carbon tax review has a clear definition of energy-intensive and trade-exposed, because businesses that are truly affected under the definition include us and the cement guys. But there really aren't a lot of others that have the level of trade exposure that we do.

J. Slater: Thanks, Dave. I appreciate that. I had a Chevron gas station in Osoyoos for five years in the '80s, so I know how good it is working with you guys.

Can you put this into layman's terms? The $12 million representing 10 percent of your energy cost to produce gas — how much per litre does that put you out of competition with Alberta and the U.S.?

D. Schick: I haven't figured out the numbers in that regard. I guess that if the taxes were applied to the other products coming into B.C., it would be $50 million more in carbon tax that would come in if the equivalency was there.

It's in the tenths of cents per litre, because of the sheer volume that we sell. But the $12 million is the carbon tax on the fuel that we consume on a monthly basis, so it's a million dollars a month in tax on the fuel that we use. It's mostly natural gas and refinery fuel gas that we use in the refining process.

D. Horne (Chair): Dave and Fern, thank you so much for your time today and your presentation to the committee.

We'll now call our next presenter, who is Ian Bruce from the David Suzuki Foundation.

Ian, as I believe you've heard many times, you have ten minutes to present, followed by five minutes of questions once you've sat down. Please begin.

I. Bruce: Great. Thank you very much. I want to thank the committee for your great work in travelling around the province and listening to British Columbians.

Yes, my name is Ian Bruce with the David Suzuki Foundation. I am the science and policy manager there.

Today I would like to speak to you in support of making some improvements to the carbon tax and transforming it into what we're calling a Better Future fund, where a portion of new revenues would be invested in critical infrastructure and solutions that would help not only reduce greenhouse gas emissions but improve quality of life here in the province.

Today there are numerous opportunities that are being created in the clean energy sector and in improving energy efficiency.

If we look globally around the world, the clean energy industry is growing at 30 percent per year, which is one of the fastest-growing industries in the world, especially during economic challenges that have been facing the global economy in the past few years.

It's been interesting here in B.C. The B.C. clean tech sector sales have increased about 48 percent over the last two years. From 2008 to 2010 there's been a 48 percent increase in sales in the clean tech sector. There are now about 9,000 people employed in B.C. in the clean tech sector with an annual salary of $77,000. So these are good-paying jobs. This is one of the fastest-growing sectors of our own economy here in B.C., and it has got tremendous potential.

One of the things about putting a price on carbon emissions through the carbon tax is that it has had the effect of spurring innovation and helping to grow this particular sector. It has also helped us improve energy efficiency at home, and there are numerous jurisdictions around the world that are following suit. B.C. is not alone in this sector. I would just give examples of the European Union, California, Quebec, China, South Korea and Australia, with signals from Ontario and Alberta as well, pursuing and increasing their price on carbon emissions.

One of the things we've heard this morning from several of the other presenters, as well, is issues around competitiveness. That certainly is something to consider, to help alleviate and to put in place solutions for, but we believe it's not a reason not to continue with looking at how B.C. can continue to show leadership on the carbon tax.

I would give the example of even Sweden, which has a carbon tax about four times higher than our current tax here in the province. They were rated third by the World Economic Forum on global competitiveness. There are ways in which the tax can be designed so that it's not only equitable but ensures that B.C.'s businesses are competitive and actually have an edge when it comes to things like innovation. There are certainly big opportunities, and I wanted to highlight that.

The other issue I wanted to raise is that B.C. is facing significant challenges. We are in desperate need of investment in infrastructure. You know, the budget in the last few years has been in deficit, yet there are needs with our rapidly growing population, with our aging infrastructure. Certainly, I'm hearing from a lot of different communities around the province about critical infrastructure, whether that is transit or energy — district energy systems, home energy improvements for homeowners. It's certainly something where there's a desperate need.

If we don't make these investments now, B.C. will be falling behind, not only in our quality of life but in our economy as well. This is something where we see that
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there's an opportunity here, a fiscally responsible approach, in making sure that we can invest in our future and that we can meet our needs today.

I would just give the example of the B.C. Transit plan. This was roughly a $5 billion provincial investment over a ten-year period. Right now we're making not even a third of the required investment that's needed to get that plan on track. That's just one example, and that would include B.C. Transit, which services approximately 80 communities in B.C. as well as the Metro Vancouver and metro Victoria areas. That's certainly something, just one example, about the level of infrastructure in that particular community need.

Similar to what Matt Horne from the Pembina Institute was speaking to, we're proposing that this could be done in several ways. One of the first steps could be to apply the tax more equitably, by applying the carbon tax to industrial process emissions. That would raise an additional $125 million at the current rate it is today.

Then once everyone is part of the solution and on equal ground in the province, you could consider raising the carbon tax at a similar rate that it has been raised. This would generate several hundred million dollars per year in revenues that could be directly invested into solutions, into critical green infrastructure and other community needs. This is something that we see as a huge opportunity in the province, not only helping show environmental leadership but really helping improve the quality of life for British Columbians.

That includes reducing traffic congestion. That includes improving our home energy efficiency. So we pay less when it comes to gasoline overall because we're using less gasoline. When it comes to paying our energy bills at home, we're paying less for our hydro bill. These are huge opportunities that we see as a win-win situation here in the province.

I'm not going to repeat the same presentation notes that I've heard in some presentations already, but I wanted to highlight the fact that B.C. has existing architecture in the province where we could identify community needs and community infrastructure needs.

I would give the example of the public sector energy conservation agreement, which has been a fairly impressive fund that has helped support projects throughout the province, as well as the municipal climate action charter. The community and regional plans that have been developed for that charter have identified local solutions that meet their needs as well as help show leadership on the environment. So the opportunity exists, and much of the hard work, the foundation, is actually in place.

I just wanted to end by summarizing that we see there's a huge opportunity not only in continuing with B.C.'s leadership on the carbon tax but in ensuring that we apply it more actively as well as invest a portion of those revenues in our future. That's to meet our current needs. That's to help improve our quality of life, and it will have real benefits for British Columbians. Whether that's spending less time in traffic and more time with your family or whether that's paying less on your energy bills, there are huge opportunities.

P. Pimm: Thanks, and for fear of repeating myself, did you make your presentation to the Finance Minister?

I. Bruce: I did. We did make a presentation, and we'll be resubmitting our presentation as well.

You've mentioned Sweden in here. I've done a fair amount of research on carbon tax. I'm going to go back and check on Sweden to see what all they include. But you also mentioned the EU, California, China, Korea, Australia, Quebec and Ontario. B.C. is substantially ahead of those jurisdictions — substantially. In fact, none of those places come close on the carbon tax.

My question is: how far do you think B.C. should get in front of everybody else?

I. Bruce: Well, I think one of the issues with B.C. is…. One of the things we have seen over the past few years since the carbon tax has come into place is that the economy has continued to grow quite substantially, especially compared to the rest of Canada, as well as our greenhouse gas emissions have gone down. So we've started to decouple economic growth from reducing greenhouse gas emissions, which is an incredible, very positive sign.

I gave the example of Sweden, or I could give an example of Norway, which also has an oil and gas sector. They have carbon taxes in the $50-to-$120 range.

P. Pimm: Is it on everything? Do you know? Or is it like Alberta on just the high-tech, just on the large industry? Just explain that a little bit to me.

I. Bruce: There are different rates in Sweden, so industry pays a reduced rate from what consumers would pay. Consumers would pay on the order of $120 per tonne of carbon emissions, and industry would, I would say, be roughly in the $60-to-$80 range.

G. Coons: Thank you, Ian. I loved this presentation, especially where you talk about the Sweden example where their economy has grown by 44 percent while emissions have decreased by 9 percent since the carbon tax was introduced and the initiatives they've taken to move that forward.
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I did find it interesting in one of your slides in your presentation that you look at revenues raised from the urban areas going back to the urban areas, and revenues raised from B.C.'s northern and Interior regions would go back to those regions.

When I look at the forgone carbon tax revenues that we are missing right now, as far as the ones that are accurately measured but we aren't getting revenue from, it seems that's coming from the northern and Interior areas — whether it's the oil and gas and aluminum. What do you see the benefit to the northern Interior regions if we did get that revenue, and it went back to them? The amount and specific projects.

I. Bruce: I think it's important to note that up till now much of British Columbians' households, a portion…. More or less two-thirds of industrial emissions have been covered by the carbon tax. The only portion that hasn't been of the large sector has been industrial process emission. Yet all of these stakeholders have received benefits through personal income tax cuts or in the case of corporate tax cuts as well. So there have been huge benefits that especially the industrial sector has received from the carbon tax over the last year, and I think that's something to note.

One of the things I think with the new revenue generated…. One step would be broadening the tax to ensure it's applied equitably. That revenue, I think, on a proportional basis could be reinvested within communities. We can find out the proportion coming from both the urban regions and the rural regions and ensure that roughly that same dollar coming from those same regions goes back to invest in that community in the needs that best suit them.

I think that's one thing to note. The other aspect is that certainly moving forward there are huge opportunities coming from some of the processes I mentioned before, whether it's PSECA — I apologize for the acronym — the public service energy efficiency agreement with many public sector institutions in the province — hospital, schools, universities — as well as the community climate action charter.

So for the regional governments or for the municipal governments, they've identified some infrastructure already that would meet their needs.

D. Horne (Chair): We need to move on. We've got two minutes and two more that are looking to ask a question.

J. Les: Good morning, Ian. I have some basic questions about the utility of this entire debate, but we'll leave that for another day.

On one of the slides, on page 3, you refer to carbon pollution. I think that's an unfortunate characterization. Carbon dioxide is something we can all ill afford to do without. There's an argument, I guess, that some present that too much is no good, but without it, we're all very, very dead. Referring to it as pollution is, I think, unfortunate.

We have to be careful when we talk about taxation. There was an earlier presentation this morning that advocated for increasing the level of carbon tax so that things would become economically viable. That's an interesting construct when you're talking about increased taxation so that things become worth doing.

Taxation is a very blunt instrument. It puts money and resources into the hands of government for redistribution, and you could argue the effectiveness of that.

There are carbon-trading markets in various places in the world, as you know. In Europe the emissions trading system there seems to be almost in a perpetual state of collapse. An article I was reading in The Economist just the other day tells us that the price of carbon dioxide emissions is running around $5 a tonne.

In that environment, then, isn't it difficult for us to continue to put our industries at more of a competitive disadvantage?

I. Bruce: Well, I think one of the things is that in B.C. we have a chance of being an innovator and to really drive innovation in this global economy, especially when energy prices are a concern globally and climate change has been a concern.

There are huge opportunities. I mean, it's one of the fastest-growing sectors in the world. At 30 percent per year, it's hard to find a sector that's growing faster. As far as creating new jobs, B.C. is doing a really good job at doing that so far in the clean energy sector by pursuing this type of leadership.

One of the things that the B.C. Cleantech CEO Alliance in the province has submitted to government is their support for the carbon tax, as it has helped drive innovation in their sector. That's roughly 60 companies in B.C. that employ almost 10,000 people. That's a very significant sector that's growing very rapidly.

D. Horne (Chair): John has a very quick supplemental, and then we'll move on to Mable.

J. Les: On a similar point, though, you take a country like Spain, which arguably has spent more on clean energy on a per-capita basis than any country in the world, yet its economy is in complete shambles. We have to be careful with this notion of spend enough on clean energy, and your economy will be fine. That doesn't always hold.

I. Bruce: I would agree. I wanted to make a short comment, which would simply be that in B.C. so far, we have taxed carbon emissions, yet we've lowered personal income taxes to some degree. We've lowered corporate
[ Page 1988 ]
taxes to some degree. Investing in B.C.'s economy will help drive our GDP as well.

As far as taxes go, the carbon tax is, I think, one of the most practical and sound policies as far as taxation. We're taxing pollution yet encouraging income, investment and jobs.

M. Elmore (Deputy Chair): Climate change is obviously a big issue — important to take leadership and to show leadership. I appreciate your point in terms of the importance of showing a benefit in terms of the revenues that are collected from the carbon tax and the ability to have that be invested in areas in the Lower Mainland, particularly in transit and other infrastructure. Also, I think we'll get more support as the regions are able to see the benefits of the tax. They're taxed, and the benefits they see in the local communities.

I know you did reference for communities to come up with those plans and, in terms of your recommendation in Interior and northern communities to promote energy efficiency retrofits and other solutions in infrastructure, I don't know if you can talk a little bit about that in terms of the benefits for the rural areas and outside of the Lower Mainland.

I. Bruce: As far as energy use goes, certainly Interior and northern communities in British Columbia spend a greater proportion of their household income on energy and on heating and cooling bills. Looking at investing a portion of revenues into…. In B.C. we've had the LiveSmart program. That program had renewed funding to the levels it started with. We could start to see significant improvements, especially for those homeowners in those regions.

As well, this is something that would go a long way at also spurring local economic development as far as the trades and the technical expertise and skills that are needed to do those home energy retrofits — install equipment — and the businesses that support that. It's a fairly diversified network of businesses.

We'll now call our next witnesses, who are Brenda Le Clair from Decoda Literacy Solutions, as well as Leona Gadsby, I understand. Welcome to the committee. As I believe you have heard earlier, you have ten minutes to present and five minutes for questions. Please begin now.

B. Le Clair: Thank you very much for accepting our presentation. I've had the opportunity to look at your schedule. It's rather rigorous, and maybe you want to go lie down. Good for you for visiting the various parts of the province and hearing from us.

You may or may not know about Decoda Literacy Solutions. We are the provincial literacy organization. A number of years ago we asked communities to come together and to work collaboratively together and create solutions, and that's exactly what we did. About a year and a half ago Literacy B.C. and Literacy Now, which was part of the 2010 Legacies Now organization, actually came together. We didn't merge. We envisioned what a new organization could be, and we've been working together since that time.

I'm the CEO of the organization, and Leona is our lead director for programs and services. We are going to tag-team our presentation. We have a short presentation, and we've also given you a written submission that we hope you will read with great interest.

L. Gadsby: We know that you're interested in balancing a budget and in economic growth and business growth — economic recovery. So we want to talk a little bit about the relationship between literacy and economic growth and business in British Columbia. You're probably not unfamiliar with the skills gap and labour shortage problem. It is predicted that there will be more than a million jobs open in the next decade, and currently we have about 670,000 kids in school. We're not making enough children to replace ourselves, essentially.

On top of that, we are graduating about 80 percent of those children, which is an indication of the level of reading and writing skill that some of the population has. Currently in the working population there are about 600,000 adults with not strong enough reading, writing, oral communication, problem-solving and computer skills to participate as fully as they might. On top of that, about one in five of our young people are not graduating. We are facing an increasing skills gap, and we currently have one.

We are filling our labour shortage largely by immigrating people into the country, which is wonderful, but about six in ten immigrants don't have the literacy skills that they need when they get here, so we have to help them with that when they come. On top of that, they often come with families and children who need help as they enter our school system.

It's not that people aren't trying and that our formal systems aren't doing well. Again, an 80 percent graduation rate is pretty good. We have a fairly good education system that's trying to make itself better. It's the 20 percent that aren't graduating that we're concerned about. We also know that post-secondary systems are trying very hard, creating new and more trades programs, but we hear all the time from post-secondary institutions that people are failing their entry assessments.

Federally, the drive from Ottawa is to try to help businesses to create education programs within their businesses. I was in Ottawa a couple of weeks ago and talked
[ Page 1989 ]
with the people at the office of literacy and essential skills, who are in charge of that initiative, and asked them how well that was going across Canada. Are businesses truly interested in creating education programs? What they said was: "Not really. It's not going very well. We really need people to have the skills before they come in to the job."

We know that much learning occurs outside of the formal education system. We spend most of our lives in informal and non-formal situations. That's where a lot of our literacy learning occurs. We think that we can be more intentional, and we are. We have a strategy that Brenda will talk about in terms of supporting that informal and non-formal learning that really helps the formal systems to be the best that they can be. We believe that literacy, those basic skills, is really important, because it's the velcro to which all other learning sticks.

B. Le Clair: So the solution, and we are a solution-focused organization…. Around the province we have 102 literacy task groups. You are likely aware of the work of your literacy task groups in your own communities. Those task groups serve over 400 communities, which is just about every community in British Columbia. What community-based literacy programs do is….

First of all, people come to them voluntarily. There's no requirement to go there. They assist learners right across the lifespan with overcoming barriers to education, maybe history. They respond to local challenges. Communities these days are very interested in economic opportunities. They're aware of the skills shortage. Many of the people that they're working with fall into the unemployed or maybe underemployed or the working poor that are actually working two jobs to maintain a family.

They provide non-formal, informal, learning opportunities. These actually complement the formal system. As Leona said, when you put the velcro on someone, which is all of the literacy skills, other learning sticks. It means that when you go into an employment situation and you're taught new skills, it sticks.

Those people who don't have the velcro can take the learning for short bits of time, but they can't apply it beyond the specific context in which the learning is happening. So they're forever challenged in trying to keep up with their skills.

What the community programs do is actually build the velcro. So when you go to the skills-training program, you actually are able to not only learn the skills for a specific job, but you're also carrying them around with you all the time. It provides opportunity for you to be able to choose other employment, to go to other sectors — those kinds of things.

This network that we're talking about, the 102 task groups…. Networks are a funny thing. I belong to several networks. The difference between the networks that most of us belong to and this network is that it's absolutely coordinated. There are 102 people on the ground who, in the spring, receive some dollars from Decoda Literacy Solutions, which has come from government. This past year government funded a part of it. We are hopeful that government will continue to fund, and our job is also to go out and find additional dollars to supplement that.

But that makes all the difference in the world. When you coordinate something and you've got people bringing you together, it's amazing what can happen in a very, very short time. That's been the history of what's been happening in B.C. It's actually a phenomenal story, and it doesn't cost a whole lot of money. We stay very connected with each other. We could virtually tell you, in all of your communities, who the leaders are and who is involved.

The people involved in these task groups are not the usual suspects. It's not just schools and colleges. It's citizens who volunteer. It's economic organizations, chambers of commerce. It's the service organizations like Rotary. It's social services organizations. Together they're creating joined-up solutions.

If you have a problem with health in your community or safety or poverty or homelessness or food security, joining it up with Literacy Solutions at the local level is a very, very powerful way to create multiple solutions.

L. Gadsby: You have a map that shows you all the communities that are affected by our task groups. We want to be sure you understand that we know this network is working. We have an accountability system. We worked with the University of British Columbia to develop a database which every task group reports through, to us. Last year more than 95,000 British Columbians participated in literacy programs as a result of the work of those task groups.

You have a chart that shows the growth of the network in British Columbia. On the last page you have our recommendations about investing in literacy as part of a community economic development strategy; about funding the existing community literacy network in B.C.; and, particularly, targeting instruction for those people who need a second chance to learn but also so that we can be sure that children grow up with the skills they need.

We keep asking you to support the B.C. community network because that's what's pushing things together and optimizing the resources on the ground. We really need a long-term literacy and learning strategy. The year-by-year funding that literacy currently gets is just not sustainable and doesn't really move that field forward.

D. Horne (Chair): Thank you so much. We'll start our questions with our Deputy Chair, Mable.
[ Page 1990 ]

M. Elmore (Deputy Chair): Thank you for your presentation. You mentioned that Decoda was formed with two organizations coming together. When did that happen?

B. Le Clair: Literacy B.C. and Literacy Now, which was part of 2010 Legacies Now.

M. Elmore (Deputy Chair): Right. I'm familiar with those previous organizations. I want to thank you for your work. I think it's a critical issue in terms of ensuring literacy and access to those skills and opportunities.

You mentioned that you were able to come together and network. So for each of the 102 networks in the areas, those are comprised of different representatives from organizations and community groups and services. Your programs — are they often delivered through libraries or, I guess, a variety of…?

L. Gadsby: It really varies from community to community, but yes, sometimes through libraries, sometimes at community centres, often in relation to schools or colleges.

M. Elmore (Deputy Chair): Great. You're recommending a long-term plan in terms of promotion of literacy. Do you also have a specific dollar amount that you're looking for or a budget associated with that?

B. Le Clair: At present we are funding the communities at $2.5 million per year. That means that they all have a certain amount of time to give to literacy. It's not ideal, but it's sure making a difference.

J. Slater: On that same vein, the 102 different areas all have a certain contact person, even in rural B.C.?

B. Le Clair: Right through the province, even the tiniest First Nations communities.

M. Dalton: Once again, on your budget: is it $2.5 million or is it more than that? And you mentioned contact people. Is that specifically through Decoda, or do you work through, say, someone with Success By 6? Also, what is your involvement, say, with StrongStart and organizations such as this? Just trying to put it together.

B. Le Clair: Okay. At the community level the task groups work with everyone, so Success By 6, all of those groups, are present at the task force. In terms of StrongStart, actually, Decoda provided two years of training to all of the StrongStart centres in the province, with a solid early-literacy foundation for them. Of course, as a provincial organization we partner with others, but the best partnership is really happening at the local level, where you can actually bring everybody together and create solutions together.

One thing: we've also leveraged a lot of money. If you noticed the $2.7 million that went out in grants, what we know from our database is that the communities then themselves raised almost $5.7 million. So it's a pretty powerful leverage that's happening.

L. Gadsby: And yes, the system is coordinated, so there are 102 — we call them task groups — committees at the community level. They are made up, as Brenda said, of all those interested folks, including Success By 6, StrongStart facilitators, employment centres, probation officers, others. They each have a coordinator, and that's where the funding comes in. We pay someone to coordinate the work of that table so that as they talk about what the needs are in the community and they make decisions about what's required, there is somebody whose job it is to make sure that happens.

We'll now call our next witness, who is Rita from the Infertility Awareness Association of Canada.

Rita, welcome to the committee. You've probably heard that you have ten minutes for a presentation and five minutes for questions, so please begin.

R. Schnarr: Good morning, committee members. I want to thank you for the opportunity to present today.

Misty, aged 26, from the Fraser Valley did two fresh cycles of in vitro fertilization at the cost of $18,000, opting to put back two embryos per cycle in an attempt to save money. To her surprise, both embryos took, resulting in twins. She endured a complicated, high-risk pregnancy, delivering at 32 weeks. The twins were born with low birth weight and feeding complications that required a 5½- week stay in the neonatal intensive care unit.

John from Prince George was in shock when he learned that the morphology, that is the shape, of his sperm is not conducive to fertilization. He said: "We have less than a 1 percent chance of conceiving naturally, basically zero percent. I can't believe it. This means that I may never have kids because I can't afford the treatments in Vancouver."

In Oliver, Tammy could not get pregnant because she had blocked fallopian tubes and needed in vitro fertilization to try and realize her dream of having children. But she couldn't afford treatment.
[ Page 1991 ]

These are only three examples of the one in six families in British Columbia affected by both male and female factors of infertility. They need in vitro fertilization to help them build their families.

Had these patients been living in Quebec where in vitro fertilization is publicly funded, they would have had access to the treatments that would have helped the medical conditions.

My name is Rita Schnarr, and I, too, had a medical condition which fundamentally rendered me infertile. After four unsuccessful in vitro fertilization cycles, my husband and I…. Unfortunately, we decided that it was time to move on.

I have now chosen to leave a 25-year career in management in consulting and adult education to help others in Canada who are also experiencing the anguish of infertility through my role now as the regional manager of western Canada for the Infertility Awareness Association of Canada, known as IAAC.

Families are British Columbia's foundation, and I think that we can all agree that strong families help build strong communities, a thriving economy and a more secure future for the generations. This government, driven by the Premier's families-first agenda, has committed to making life as easy and as affordable as possible for families in B.C. by placing a high priority on addressing the biggest challenges facing them today.

More than ever, families are stressed to meet the growing list of demands. Couples facing infertility are doubly challenged. Many use their savings on fertility treatments at the expense of other critical purchases that would support a family.

Publicly funding in vitro fertilization treatment gives all British Columbians, regardless of their income or geography, the opportunity to access safe planning affordably, in a way that responsibly utilizes the health system and contributes to its sustainability. The full expense of funding in vitro fertilization is $22 million to $35 million annually. However, this will lead to a net total savings of $78 million over five years.

Infertility is a serious medical condition with significant economic, social and personal consequences. British Columbians build their families in different ways, and many use assisted reproductive services.

Single-embryo-transfer in vitro fertilization is the safest and the most effective treatment for infertility. By controlling the number of embryos transferred, this method of in vitro fertilization ensures that one healthy baby is delivered per pregnancy cycle.

In particular, due to the cost of fertility treatments, many families choose to transfer multiple embryos in the hope of increasing their chance of becoming pregnant. As a result, the rate of multiple births from assisted reproduction in B.C. was approximately 31 percent in 2011, compared to rates between 5 and 10 percent in other jurisdictions where they tie public funding to the practice of single-embryo transfer.

Being pregnant with multiples is a high-risk pregnancy, and as such is associated with an increase in medical complications in mother and babies. Because the province doesn't cover the cost of in vitro fertilization, the government is spending millions of dollars every year dealing with the consequences of multiple births.

Publicly funding in vitro fertilization would result in a net savings of $78 million over the first five years. The cumulative savings in the lifetime disability costs over the first five years resulting from the reduction in multiple births with funding for in vitro fertilization in B.C. would be approximately $159 million.

I would also like to highlight that public funding of in vitro fertilization treatment is commonplace in many jurisdictions around the world. For example, Australia, the United Kingdom, Israel and almost all members of the European Union all publicly fund in vitro fertilization treatment. This public funding has resulted in a significant decline in multiple births through in vitro fertilization in those countries.

Here in Canada, in Quebec they've taken the lead by publicly funding in vitro fertilization. Since 2010 the provincial government has been fully funding three in vitro fertilization cycles, including all of the pharmaceuticals. In 2011, after just one year of publicly funding in vitro fertilization, the Quebec government reported that the number of multiple births from assisted reproductive technologies in that province dropped from 28 percent to 5 percent.

Earlier this year the now former Quebec Health minister reported that they are now saving between $30 million and $60 million annually from the reduction of multiple births and that as a result, they're now able to redirect funding to other policy program areas such as cancer research and treatment.

Manitoba — another example. As a good first step, in 2010 they also began funding in vitro fertilization through the fertility treatment tax credit.

Public funding of in vitro fertilization is a sound investment for British Columbian families. It's going to help to pay for health, social, economic and fiscal dividends well into the future. As mentioned earlier, the net total savings that will be achieved with public funding of in vitro fertilization is going to be $78 million over five years.

I point you to page 6 of our submission, which highlights the more detailed statistics around the information that we've created in this report for you. If you wish to see that, I would be happy to give you a copy of this. It basically lists out all the details. In there our health economist reported that the health savings on in vitro fertilization is, again, going to save millions and millions of dollars, well over $159 million.

I think you can agree that you are elected representa-
[ Page 1992 ]
tives who are committed to making life better for our B.C. families. To best support British Columbians in building their families safely, regardless of their income or their geography, they must have equal access to assisted reproductive services, particularly in vitro fertilization treatment.

Today, because of the cost of IVF, in vitro fertilization, many British Columbians are making choices that are not good for their health, for their children's health or for the sustainability of the health care system.

British Columbia is the home to Canada's first in vitro fertilization baby. Today we have the opportunity to be leaders again by advancing our public policies related to in vitro fertilization, to assist infertility sufferers to build healthy families for our future. We can then build strong families to then build strong communities and a more prosperous British Columbia.

I would like to thank you, the committee, for your time. I would like to now answer any questions that you may have.

B. Ralston: That's certainly an issue that I was not aware of, and I thank you for a very well researched and compelling presentation.

So that I understand then, the reason why there are multiple births is because it's simply driven by the cost of a single-embryo transfer. Therefore, people, given the cost, are transferring several embryos and increasing their odds of having a healthy baby. Is that basically the cost driver here in that?

R. Schnarr: Yes, that's correct. What happens is that a patient will transfer more embryos because they want to increase their chances of success. It's all in the math. What we're saying is that if we can provide single-embryo transfer, where there are healthier solutions for the mother and the baby, everyone will have access to treatment because it will be affordable. It will result, of course, in safer outcomes for all.

B. Ralston: One follow-up, then. Leaving aside any medical ethics concerns that may arise out of that practice, I'm interested in your example of the Manitoba fertility treatment tax credit. What's been the uptake or the effect of that tax credit?

R. Schnarr: I actually don't have those numbers, because we focused our studies more on the Quebec study. But we do know that Manitoba does offer a tax credit. Again, that does help.

M. Dalton: Thank you, Rita, for bringing this to our attention. It's very informative.

Again, with the taxes, are you saying that this procedure is not considered to be a medical expense that goes on your income tax — the federal and provincial government? That would be my first question. I'll get my other two in here also.

With the multiple births, what is the mortality rate, if you don't mind my asking, with the twins and triplets? Do you have those figures with you too?

R. Schnarr: Yeah, I believe we do have the mortality rate. Let me see if I have it handy. If not, it will be listed in our cost-benefit analysis, and I'll be happy to show that to you.

I have the disability rates for children as approximately $65,000 in the first year. The overall lifetime costs of premature babies and of lifelong disabilities is approximately $913,000. I don't have the mortality rates handy, but I'd be happy to get that to you.

As far as tax credits, no, you can't write it off, basically, with your taxes. For the pharmaceutical drugs, some of them can be written off, but I don't have those details in front of me.

M. Elmore (Deputy Chair): Thanks for your presentation. I'm interested in terms of what the expected expenditure would be or our budget for the provision of…. So it would be the proposals for single-embryo in vitro fertilization. Also, with respect to the rates, is it the Canadian average where it's 350 per million?

M. Elmore (Deputy Chair): Presumably it would increase. And you have the comparative with Denmark and Iceland, where it's 1,000 per million.

M. Elmore (Deputy Chair): I don't know if you have the numbers in from Quebec now, or maybe it's too early.

R. Schnarr: Well, the multiple births have decreased from 28 percent down to 5 percent, and we do know that they are saving money as a result. We do have the numbers listed in our report that show…. I don't have them handy, but I can certainly get you that report so that you can see the breakdown.

M. Elmore (Deputy Chair): So it's Quebec that publicly funds the service, and Manitoba offers a tax credit.

M. Elmore (Deputy Chair): Are there other provinces that…? Or those are the two that have moved?
[ Page 1993 ]

R. Schnarr: Yes, that is it for now. Alberta is very interested and Saskatchewan as well, so this is something that is of interest to every province. Because I live in British Columbia, I'm starting here. I'm hoping that we can seriously look at this. Because we did have the first IVF baby, I think it makes sense that we become leaders in this and save money and help families who don't have access or can't afford to build their families.

M. Elmore (Deputy Chair): So if it's publicly funded, the process would still be administered in private clinics, I presume.

R. Schnarr: Correct. Yes, it would be. They do the best job, of course, of being able to handle it professionally, and they follow all of the ethical guidelines and whatnot. This would make it safer and more accessible for people to build families in B.C.

It is a medical condition, and I do want to say that. The World Health Organization does say that infertility is a health condition; it is not a choice. Many people have complications in their health that affect their ability to have children, myself included. That is why I'm here today. I would like to see us proactively be helpful to people such as myself who weren't able to have children and redirect those funds to, possibly, other health issues in British Columbia. There's a lot of money that we can save as a result of doing this — $78 million.

D. Horne (Chair): Thank you so much for your presentation today. If there are additional reports that you're speaking of or if you want to present any further information, you're welcome to e-mail it to us at financecommittee@leg.bc.ca.

D. Horne (Chair): All right. We'll call our next witness, which is Carbon Talks, and Shauna.

S. Sylvester: Thank you, hon. Chairman, and honoured members. Welcome to the Centre for Dialogue. I wish we had managed to get you a room with some windows, so I apologize. You've got a number of hours in this room.

S. Sylvester: Yes. When I heard you were downstairs, I said: "Oh, not nice for our committee members."

My name is Shauna Sylvester, and I'm the executive director of Simon Fraser University's Carbon Talks. We are part of the Centre for Dialogue, but we're also part of the Beedie School of Business, the School of Public Policy and the School for International Studies.

Our focus and our goal is to increase Canadian global competitiveness through a transition to a low-carbon economy. We do that through both invitational and public dialogues that provide a platform to discuss, define and manage the transition to a low-carbon economy. Our work is very much focused on reducing greenhouse emissions.

Therefore, we've been tracking your carbon tax review fairly carefully. We had not taken a position on the carbon tax before. But overall, over the last few years we've taken a real interest in market-based solutions to tackling climate change as much of our work focuses on innovative financing and technology and greenhouse gas reductions.

When you began your carbon tax review, we decided to do what we do best, which is to convene a group of people to really look at the issues. We consulted over the summer. We contacted 24 of our advisers, and 20 responded within days. This is over the summer months. If you look on the back of the very last page, you'll see some of our advisers. Don Drummond, Michael Adams, Mark Jaccard and Nancy Olewiler are among some of the advisers that we spoke to. We also spoke to business and academic advisers.

We asked them five questions. We asked them: what do you think are the strengths of the B.C. carbon tax, what do you think are its shortcomings, do you recommend making any changes to it, what is core to the carbon tax that can't be compromised as the B.C. government undertakes its review, and what changes have resulted from the implementation of the carbon tax?

Now, you have before you the first document, our full review. What was interesting for us is that overwhelmingly, the 20 of the two dozen people we reached out to gave their unanimous support for the carbon tax and the B.C. government's climate leadership. Some of those are hard people to convince, and they were overwhelmingly supportive of your work.

Now, some of the comments on the implementation of the tax are more nuanced and did not always align, so what I want to do is focus on the majority views. Rather than getting into detailing what's in the report — you have that in written summaries — I want to talk about them in four broad categories.

The first is the implementation of the carbon tax. First of all, people believe that the carbon tax should continue to be fair, equitable, predictable and clear in its application. It should continue to shift the tax burden from the public to the emitters. That was unanimous. The tax should remain transparent, revenue-neutral at the current rate and fairly applied to all sectors.

There was a great deal of discussion about exemptions. Overwhelmingly, everyone felt that exemptions are an inefficient way of protecting industries that would see
[ Page 1994 ]
undue harm from the carbon tax. Instead, the suggestion was that government should consider lump sum cash payments of technology funds to offset tax payments, therefore incentivizing and rewarding increased efficiencies. This would require a clear and objective set of criteria for determining which industries are being unfairly harmed by the tax.

There was general agreement that the carbon tax should continue to increase on a predictable schedule and not be frozen, although a small minority — two of the 20 that we spoke to — believe that there should be a bit of a waiting period for other jurisdictions to catch up. Once that happens, there should be an amplification and a speeding up of the tax increases, perhaps $10 a tonne annually afterwards.

Any incremental increases should be considered to go to something new that actually reduces GHG emissions — for example, funding mass transit. This will remove the tax neutrality of the carbon tax for those increments.

Public transit is in desperate need of further investment, so funding climate change mitigation projects also in rural communities, because they don't see the benefits of mass transit, also has to be considered as part of the equation. It wasn't just mass transit. It was mass transit and let's look at that increment for rural communities, as well, in a way that makes sense for them.

The second is communication and advocacy. Communication remains an important part of maintaining the carbon tax, from a political perspective, particularly in terms of the current revenue neutrality. The public remains skeptical on the revenue neutrality. There's support there. Certainly, the Pembina research earlier this year demonstrates that.

Most British Columbians don't really know that they are saving money. They don't understand that tax instrument. There needs to be further documentation and communication. If revenues from future increases are put towards GHG reduction projects, that would change the optics and communications around the tax, as it will rightly be perceived as a tax hike. That's where you need to tell the stories of where you're putting the money so that British Columbians can get behind any investments in bringing GHGs down.

The third is the economic environmental impact. More work needs to be done to determine the impacts of the carbon tax on the economy. Recently Mikael Andersen from the European Environmental Agency, through their research, has actually pointed out that many jurisdictions in the world that have a carbon tax actually experience a small increase in their GDP. B.C.'s economy has continued to grow since 2008 and outperform other provinces. That demonstrates that it's possible to decouple economic growth from fossil fuel consumption.

As well, our green economy, especially the clean tech and renewable energy sectors — I know you've heard this many times this morning — have seen some increases and some benefits from the carbon tax. I think your own Ministry of Environment in 2011 reported that between 2008 and 2010 there was a 48 percent growth in the clean tech sector sales. In terms of effectiveness, it appears that emissions and fuel use have declined significantly.

I think you've probably looked at Nic Rivers's research from Sustainable Prosperity that can demonstrate a 7 percent decrease in gasoline use directly attributable to the carbon tax. Although gasoline is usually an inelastic good, this tax is proving that people are willing to change their behaviour and are likely turning to other modes of transportation, car pooling, etc.

You've also heard, I believe, this morning from Matt Horne, who has pointed to the municipalities that are taking action because of the work that you started. Municipalities are enacting local policies to reduce GHG emissions through building requirements. Carbon Talks works with a number of municipalities. We've worked closely on a number of those issues. It's quite impressive to see the level of action that's going on at the municipal level.

Finally, climate leadership. There are great reputational benefits from the carbon tax. B.C. is globally recognized for our climate leadership, and I hope you won't underestimate this. We can leverage and attract green companies and talent, and we are going to be much further ahead of other jurisdictions in the decades to come as a result.

While others have indicated the potential challenges of being first in setting a price on carbon in Canada, B.C. is not an island. More than 14 jurisdictions have brought in a carbon tax or market system, including Australia, Sweden and Switzerland. Finland, which stands at $78 a tonne in transportation, demonstrates that their economy is doing just fine.

The tax provides clear signals for business and consumers to help them move to carbon neutrality and set schedules, and it provides predictability for budgeting. The industry knows what to expect from current and future energy costs, which allows them to make informed choices about their operations.

S. Sylvester: Your own climate action secretariat emphasized — James Mack, at a talk that we had ten days ago — the example of modelling. He used the example of California tailpipe standards being adopted in B.C. through the Western Climate Initiative, and across the U.S. and finally in the rest of Canada. Both President Obama and, later, Stephen Harper saw the rationality behind this policy, but it took California and B.C. to lead, to get that on the stage.

While there may be some minor issues of implementation that warrant further consideration, overall, the carbon tax is good policy. Carbon pricing is the most efficient and effective means that we have to act locally on climate change, and we encourage both policy-makers
[ Page 1995 ]
and politicians to continue to consider future generations and support the B.C. government's climate leadership.

D. Horne (Chair): Thank you so much for your presentation. We'll start our questions with John Slater.

J. Slater: Thanks, Shauna. It's good to see in this report that you've gone out and talked to everybody. I'm a greenhouse grower in the Okanagan. The greenhouse industry in the Okanagan is really suffering, because 25 percent of their natural gas is carbon tax. That's the cost of the gas, not delivery or anything else. It's really putting a damper on things.

I look at Ladner and Tsawwassen and the greenhouse industry back in 1993. It grew tenfold in the next 15 years. Since this carbon tax has come in, they've left. They're going down to the States, because they're more competitive down there.

I notice one of those recommendations was that there are no exemptions for greenhouse or shale gas industries. How do we compete? I mean, there are literally hundreds and hundreds of jobs that are created in the greenhouse industry. We're going to lose them, I can guarantee, because we're not competitive anymore. You can bring vegetables in from Mexico or California up to Canada now, and we can't compete. Some of the greenhouses in the Okanagan are shutting down.

S. Sylvester: I think you raise an extremely important issue. As a greenhouse grower, you know the issue well. I think the question I'd ask to you is: over the long term, as you start to see punitive tax conditions emerge because other areas begin to develop carbon taxes, what then happens to you if you've not set up? Had you been part of it and were not exempted and then had some sort of fund in place to support your competitiveness, over the long haul you would be in much better condition to compete globally.

I think we have to look at this in global terms. We have to look at what's going to happen around China in terms of carbon tax coming down the line. In order to sustain our competitiveness, we can't have exemptions. We need to protect our industries, to protect them down the line, from punitive tax conditions.

J. Slater: This is supplemental. It's just that meantime we are not competitive. Until Washington State or California or Alberta takes the same regime as we are, they're going to keep moving. That's the whole issue.

S. Sylvester: Well, I think you've got a very compelling reason to put forward a program to support your competitiveness, but I don't think that you go into it getting an exemption on a carbon tax. I think you need to move to greater efficiencies, create the kind of tax instrument to enable agricultural sectors that are affected to be able to compete. I think that if you continue to move with exemptions, you've eroded the whole concept of your carbon tax. I think that's a serious problem.

P. Pimm: I'm not going to ask the question I ask everybody, because I see that this was designed for the submission. I'll leave you to that one.

I'm interested in the makeup of the committee or the people that you've reached out to. I don't see any industry folks in that group. Were they deliberately left out of it because they would give you a different answer to the competitiveness side of this equation?

S. Sylvester: I'm certainly in consultation with industry groups, but we were looking at people who had some expertise in carbon tax and who were advisers. Now, in terms of industry, you will see Jeff Westeinde, who would have an issue with not calling him an industry man. He's certainly an industry man. We also talked to a number of people….

Our advisers, though, do come from a community that focuses in on low-carbon transition, so that is the community we wanted to bring to the table. We were not trying to speak to detractors. I think you've got good submissions from others.

P. Pimm: A real quick follow-up on that. I will be interested to see what the end results of this are. I've travelled with the rural caucus and with the Finance Committee in two different years now, and these discussions are certainly not what we've heard in the past. I would be very interested to see where that goes.

D. Horne (Chair): I think that does it for our questions. Thank you so much for your presentation today.

We'll now call our next presenter, who is Jeff Riley with the International Society for Augmentative and Alternative Communication.

J. Riley: First of all, maybe I'll explain some terms. The International Society for Augmentative and Alternative Communication is basically representing individuals across the globe — and particularly the Canadian chapter, ISAAC Canada — who cannot speak. They use alternate means of communication — hence the term "augmentative and alternative communication."

I've provided you with some background documentation. We have already provided to the government a very detailed business plan in 2010 that has a tremendous amount of information which I have not duplicated here, because it is already in the record.
[ Page 1996 ]

ISAAC Canada has been following up in B.C. for decades. In 1989 the B.C. government created Special Education Technology B.C., which provided school-age children with the ability to communicate through augmentative communication. These are augmentative communication devices, speech-generating devices that people use to speak if they cannot speak.

The reason that people cannot speak, of course, is quite varied. There are a number of different reasons for that. It may be congenital. It may be something they have acquired later in life.

The crux of the matter was that in 1989, when SET-BC was created, it started providing communication devices to children who couldn't speak so that they could complete their education. Throughout the years we have an entire generation who have then completed their education, been successful, graduated — and graduated into nothing. There was nothing.

In 2005 the B.C. government very generously and wisely created communication assistance for youth and adults, which provides communication devices on an indefinite loan basis to graduating students, at the time between the ages of 19 and 35. Of course, that enables individuals at a very acute area of their lives in terms of transition to actually have the tools to continue their schooling, to move out and live independently, to obtain employment, to do all the things that you and I take for granted because we are speaking individuals.

The technology is not simple. It's complex, and therefore it's expensive. But the number of individuals who need this technology is actually quite finite. We're very well defined in the population. It's about 0.012 percent of the population — a very, very small number — and that number is constant.

As time went on, from 2005 to 2010 we received a number of one-year grants from the provincial government to provide these devices and services. Then in 2010 there was a budget crunch, and funding was almost removed entirely. It was at that time, actually, that Minister Rich Coleman responded and some emergency money was found. He directed CAYA and ISAAC to produce a detailed three-year budget plan, and that was submitted to government.

At that time, also, the upper age range limit of 35 was removed, and all adults were included. This was very good news, because it allowed for equity across the spectrum of the age range and also allows for individuals with this very debilitating condition to retain the kind of access and independence they need to direct their lives.

The issue with that, though, in expanding the age range without expanding the funding, is that the funding has now been instituted in a three-year funding package in 2012, this year. It was instituted at a rate of about $1.9 million per year. The issue with that, of course, is that it does not meet the demographic needs, which were well documented in the business plan. Consequently, a number of people are being left behind — quite a few, actually.

If I can direct your attention to the client demographics wait-list comparative analysis, you'll see that CAYA has provided services in teams to people living in all areas of British Columbia since 2005, as I've mentioned. I've given you some statistics from 2010 to 2012.

We break down the statistics in terms of the active clients, those clients who are actually receiving services and who are being assessed for communication devices; monitor clients, those individuals who have actually received devices and are now stable and independent; and then people who are waiting to receive devices or waiting to receive assessment.

In 2010 we had a mandate to see approximately 75 to 80 people because of the funding level. You can see that between December 2010 and December '11, at the monitor we saw well over 120. We've pushed and looked for every bit of efficiency that we could find to see as many people as possible. From June '11 to June '12 we again saw in excess of the number for which we were funded.

I draw your attention to the wait-list at the bottom: "Wait-list impact of wait time for service." You can see that the wait time now is running up to about 22 months. That's the wait-list that's going up that high.

What that impact is, is that for individuals who are actually looking for stability in terms of being able to transition in acute periods in their lives such as transitioning from high school to college, from living at home to living independently and sometimes transitioning from living in an independent situation into a situation where they're going to die…. In other words, we also address individuals with degenerative conditions such as ALS and Parkinson's, etc.

At present we are doing some very difficult triaging of the people that we have before us in terms of identifying who can possibly be seen and not seen. It's within our limits. We work as hard as we can. However, we already know the demographics. They have been well projected.

I have to say that we're very, very thankful to have the funding we do have. I can say that previous to this and previous to 2005 there wasn't any funding. That brought B.C. at least in line with other provinces such as Ontario, Quebec and Alberta. That is a wonderful achievement. However, it is a bit short.

Why I'm here today is to ask for consideration for increasing the annual allotment to address this wait-list that would come up to more of a level which had been originally projected in the demographics and in the business plan.

I enclosed some stories for you to take a look at. We have hundreds and hundreds of stories from our clients, and our clients are really quite amazing people. I have to say that in 2010, when funding was cut, it wasn't anything that we did at CAYA or ISAAC. It was simply our
[ Page 1997 ]
clients and their families getting together and letting people know that this was something that had to be addressed. They were extremely effectiveness. I was very impressed with them.

The other thing I'm very impressed with is the kind of transitions and successes that they have made. I think that's it.

D. Horne (Chair): Thank you for your presentation. We'll begin our questions with our Deputy Chair.

M. Elmore (Deputy Chair): Thanks, Jeff, for your presentation. The numbers impacted by.... In terms of requiring assistance to communicate, was the number 0.012 of 1 percent? Is that it?

J. Riley: Yes, 0.012 of 1 percent. It's about a tenth of a percent in the entire population.

M. Elmore (Deputy Chair): So 4,500, 5,000. Okay, good. I wanted to get kind of the scope of it.

J. Riley: Yes, so it would be $3.9 million. That's to address the wait-list. It's also…. When I say the numbers are 4,500, they are 4,500. But we also know that in any jurisdiction we've never had everybody show up at the door all at once. It just doesn't happen. We know this from extensive surveys and documentation and research that's been done in Australia, in the U.K., in Scandinavia, in the United States. We know the presentation rate is about 8 percent per year, and we're nearing that now.

We have successfully and, I think, succinctly identified the population and the need and the success, and also the sustainability of the program in terms of the fact that we are able to deliver what we have set out to do and do that in a way that achieves success with this very difficult and very challenged population.

I think an example of someone who doesn't speak who is extremely successful, the one I use all the time, is Stephen Hawking. For instance, he's a person who cannot speak, who strictly uses augmentative communication, a speech-generating device, to communicate and work. There are many, many other people like that.

D. Horne (Chair): I want to thank you for your presentation this morning. I don't see any further questions, so thank you so much, and we'll move to our next presenter.

S. Bertels: Hello. Thank you for having me. I'm Stephanie Bertels. I'm a professor at Simon Fraser University's Beedie School of Business, but I'm here as a citizen today. My area of research is actually in strategic competitiveness and in the link to sustainable innovation. I wanted to talk to you today a little bit about sustainable innovation and, in particular, spurring sustainable innovation in the province.

I wanted to start by commending you for introducing a pioneering carbon tax that is now being viewed as a model for other jurisdictions. I won't address all of the issues today because I know others have done so.

Early numbers on reductions in fossil fuel are very promising, so I would like to propose that we need to keep and even expand the carbon tax because it's working.

Leading authorities on innovation — and this includes, by the way, Michael Porter, who is Harvard University's world expert on strategic competitiveness — tell us that the competitiveness of companies is contingent on the health of the communities around it, including the environment. Because of this, it's really necessary for us to redefine productivity in the value chain to account for environmental resources in social development.

I work with large Canadian companies on strategic competitiveness. In particular, I work mostly with companies in the extractive sector. In my conversations with senior executives, I hear repeatedly that the industry needs clear signals in order to act.

The last piece that is important to understand in terms of innovation — and it's been shown over and over — is that investments in clusters help spur innovation and are critical to strategic competitiveness.

What does this mean for this budgeting process? I encourage you to invest in industry clusters related to low-carbon energy sources. I want to stress that this means both renewables and natural gas. Frankly, folks, we're not getting there any other way. These are not competitors; these are really important partners. So we need to stop severing renewables and natural gas and think about how we're going to bring them together in a strong, B.C.-focused cluster on innovation for low carbon.

To do that, we need to invest in an electrical grid and
[ Page 1998 ]
in storage. We need to invest in efficient transportation, both for people and for goods, and most importantly, to create disincentives for inefficiency across the board.

The first thing that I would like to raise is the idea of avoiding entrenching inefficiency. Exceptions to the carbon tax only serve to entrench inefficiency. Evidence suggests that economic efficiency is best served by avoiding exemptions and having an economy-wide price for carbon. Instead, when it is necessary, you can turn to rebates that phase out over time so that early innovators are rewarded and there are clear incentives for change.

I also encourage you to invest in renewable energy. I encourage you to increase government funding and incentives for private sector funding for research and development in renewables, invest in pilot programs to more rapidly bring these new technologies to commercial scale and make strategic investments into clusters. I would also like to note, though, that without a strong and predictable carbon price, investments in renewables are simply going to fall flat. The two go hand in hand.

I would also like you to invest in using natural gas here. If you turn to page 4, the first slide that you see there are pictures of an event that I held with my MBA students last summer, where I challenged my students to develop companies of the future that make use of natural gas as part of a viable B.C. economic transition. In particular, they were looking at companies in the transportation sector.

We need to make investments to support a burgeoning ecosystem of companies that can make use of our natural gas here as a transition fuel in B.C. It's a value-added product. We need to do more than send it to Asia.

Now, the interesting thing…. When I sent these MBAs out to look for companies and to create investments here in B.C., the number one thing that came back that was preventing them from making viable companies now was that they needed a stronger price for carbon.

Finally, I would like to make a personal appeal. You will see here, on the bottom of page 4, a picture of the footings of my home. In fact, it is a picture of $40,000 of insulation that I've put under the footings in my home. The reason is because 30 percent of heat loss is through your footings. On the next page you will see my double walls. That's 12 inches of wall instead of six inches of wall, twice the insulation. My house will be 90 percent efficient. But I am at the bleeding edge.

Current rebates for efficiency are in retrofits, not for new construction. So I return to my earlier point about embedding inefficiency. I have made the conscious decision to make these investments, but it entrenches inefficiency into the building process. So I ask you to please consider introducing additional incentives for the construction of efficient buildings and disincentives for the construction of inefficient ones.

To recap, I would like to see the budgetary process reward sustainable innovation with a predictable and strong price for carbon, and make investments in the industry clusters that are going to guide us into the next century. Make the price apply to everyone to reward innovation, and expand the carbon tax to measurable greenhouse gas emissions.

B. Ralston: Thanks very much. I was interested in your comment about government funding and incentives for private sector R-and-D funding of research and development. The federal government just commissioned the Jenkins report and is engaged in some changes to the SR-and-ED tax credit. One of the premises of that was that Canadian R-and-D funding was very well funded in OECD terms, but the results were far, far down the list.

I'm interested in why you would recommend further government funding into R and D, when the existing programs don't seem to have achieved — at least according to the Jenkins report — the desired effect.

S. Bertels: I would recommend strategic funding. The issue is that we need to see complementarity in that funding. Having a whole bunch of R-and-D investments made without a strategy behind them and also without the supporting economic infrastructure….

British Columbia, having a carbon tax in place, is actually well positioned to send clear signals to an R-and-D community of the kinds of investments that we want to make and to actually create a cluster of investments that can support each other.

There are a whole bunch of technologies being developed around renewables, around the use of compressed natural gas. We have success stories in our midst, like Westport Innovations, but the problem is that all of these companies are operating in isolation. So it's the strategic nature of the investments, I think, that's really critical.

B. Routley: To follow up on your need to invest in industry clusters, what do you see are the barriers right now, and what kinds of ideas do you have on how to incentivize more and more clusters?

S. Bertels: What we're seeing in the companies that are trying to actually develop these technologies in this area is that they face what Michael Porter calls a very large barrier to entry. The barrier to entry right now is that the economic system currently, through its historical operation, basically subsidizes the price on carbon. For these new companies to be able to come in and compete, what they need is to change that playing field. Critically, I really put forward that one of the best ways that we could spur
[ Page 1999 ]
innovation in this regard is to increase the carbon tax in British Columbia.

D. Horne (Chair): Well, thank you so much for your presentation. I think John Les has one last question, and then we'll move on.

J. Les: Just quickly, I agree with you completely that we need to support and encourage the natural gas resource that we have in the province of British Columbia. I think it can really be one of the underpinnings of our future economy in British Columbia.

I said this to one of the earlier presenters this morning as well. This notion to keep increasing taxes until we get the results that we want…. I don't hear it in those kinds of words, but that is, in fact, the impact of what you're saying — the complete reconstruction of the economic system, as you've termed it. It perhaps needs a little bit deeper thought than that.

We are talking about a significant reorganization or a complete reconstruction of the economy under a completely different set of premises. That, I would submit to you, needs some pretty sober thought before we embark on that mission and on the premises that that notion is built on in the first place.

S. Bertels: Respectfully, sir, I agree with you. What I would counter is that what we've done through the revenue-neutrality of the carbon tax that we've created in British Columbia is we've sent a message to other jurisdictions in the world. They're looking to this as a model of how to do this.

I'm not proposing a shock here; I'm proposing a predictable raise to the level of the carbon price. As a result of that, it creates an avenue for companies to make decisions.

I sit in conversations with CEOs of major international companies that tell me that they have innovations, but they're waiting because they want to be able to recoup the benefit of those. They just need to see the predictability. It's not that we don't have the innovations sitting there. It's not that industry is not able to react. They just need certainty, and we can provide that certainty.

I now move on to our next presenter who is Adrienne from First Call, who I see there. I believe you've heard it many times, but you have ten minutes to present, and we'll have five minutes for questions afterwards. You can begin anytime.

A. Montani: Thanks for the opportunity to speak. Hello, committee members. You may remember First Call. We're a broad, non-partisan coalition of over 90 partner organizations and hundreds of individuals around the province. We focus on children's rights and their well-being.

We're looking today for a provincial budget that respects our treaty obligations as a signatory to the UN convention on the rights of the child to give children first call on society's resources so that they reach their full potential. Simple — we wish.

Canada's performance on living up to those conventions has just been reviewed by the UN committee in Geneva last week, and we have again been chastised as a country for high levels of inequality and resulting inequities that we not only tolerate but sustain among different groups of children through our lack of investment and our lack of action on their previous recommendations to us many years ago.

B.C., unfortunately, has the largest gap of all provinces between the rich and the poor, basically, between the top 20 percent and bottom 20 percent of earners. And that gap is growing, as you can see from the chart there on page 2 of our brief. You can see what's happened, particularly for families in B.C. over the last 20 years, where the richest 10 percent have, on average, gained about $90,000, and the poorer deciles have lost — except for the very poorest 10 percent, who made a grand gain of $800 over 20 years.

This inequality is reflected in our embarrassingly high child poverty rates. Again, I've given you a chart there. You can see we have been the worst on child poverty for eight years in a row up till last year. This year Manitoba has outpaced us, but we are still at the wrong end of the scale, and we have been above the national average on child poverty since 1999.

Our inequality is also reflected in the increasing levels of vulnerability in young children as they reach school age, reaching 31 percent for the province as a whole. This is the research out of UBC — HELP, the human early learning partnership. It's much higher, that 31 percent, in some communities and neighbourhoods. That's masked in that one statistic.

This inequality is also reflected in the disproportionate risks of vulnerability for youth living in the northern and interior regions of the province, on indicators such as rates of income assistance recipients, unemployment rates, school grad rates, teen pregnancies, unintentional injuries, etc. This is all B.C. Stats data.

It's reflected, again, in the social and economic statistics on the health and life chances of aboriginal children in this province. More than half of B.C.'s children in care are aboriginal. Urban aboriginal families have almost twice the incidence of poverty as non-aboriginal families. I've given you some other statistics there in the brief.

This inequality is driven by a combination of public policy trends that have reduced government effectiveness in redistributing income compared to previous decades. I'm referring here to things like higher percentage of
[ Page 2000 ]
low-wage and precarious jobs now in our economy and erosion of the employment insurance benefit system so fewer people are eligible and rates are lower; welfare rates that have been allowed to fall significantly below poverty lines; a growing child care crisis for parents, affecting family budgets and their ability to go to work; continually increasing post-secondary tuition fees; and the loss of grant programs resulting in rising debt for students and graduates.

The provincial government doesn't have control over all of these policies. I realize we're not responsible for the EI system. But we do have jurisdiction over child care, welfare policy, minimum wages, post-secondary fee structures and public sector contract procurement policies and practices.

I would argue that in 2012 the B.C. government cannot claim to be ignorant of the abundant evidence of the harms done to children's health and development by growing up in poverty. There's just an overwhelming amount of evidence. Nor can government claim ignorance of the data on the huge additional costs in health care, education, the justice system and the lost productivity that we are already paying, to keep poverty rates so high. There is no shortage of countries and even other Canadian provinces that are doing a better job of keeping income inequality in check and reducing poverty rates, and yet the B.C. government has failed to act decisively.

While our coalition is appreciative that government has recently announced some positive changes, such as restoring earnings exemptions for people on income assistance that may help some families, welfare rates remain abysmally inadequate to support a healthy diet and cover the actual cost of housing and other living expenses.

We are also glad to see the minimum wage was finally raised, as this decreases the depth of poverty for some families, but we remind the committee that a full-time, full-year job at $10.25 cents an hour does not pay enough to adequately support raising a family. I'm sure you're aware of the research by Dr. Paul Kershaw and Lynell Anderson at the human early learning partnership at UBC on how young families are being squeezed for time and money due to the lack of supportive public policy. There are federal aspects to that, but also provincial aspects.

The key area of early childhood education and care has suffered a level of public policy neglect for decades — plural: decades — that is having huge repercussions on our current economy and our future productivity. As noted in the Surrey Board of Trade's recent position paper, currently B.C. has the highest child care fees in the country, eroding the take-home pay of parents more than taxes do.

First Call has endorsed the community plan for an integrated system of early care and learning developed by the child care coalition and the Early Childhood Educators of B.C. This plan points a rational way forward out of the current state of crisis for parents and, if implemented, would serve as a key part of a family poverty reduction strategy.

The decade-long hollowing out of the public education system is also having consequences for B.C.'s children. Growing numbers of special needs students who can't get the supports they need in school, the empty and shuttered school libraries, growing class sizes, pressure on parents to fundraise for basic supplies and equipment, and the latest attack on adult education program funding are just some of the signs of a system under duress. If we aim to have a functioning democracy and a productive economy for the long term, we would be well advised to stop this erosion.

Similarly, the vital network of social services that government and communities rely on to deliver so much of the critical caring and support work for children, youth and families in need has been continually denied stable and adequate funding. Contracts that contain no increases for year after year…. I mean, these agencies spend an inordinate amount of time and energy chasing philanthropic and unstable donations.

First Call also hosts a Living Wage for Families campaign because we know that most poor children live in families whose parents work, many of them working full-time, full-year. So communities, including municipalities and businesses, around B.C. are starting to take an interest in this as a new strategy to tackle family policy. It targets the private sector as well as the public sector.

All of these proposed solutions are consistent with policy recommendations made by international studies on inequality, such as the OECD where their top recommendations — and I've given you a quote in there — are more and well-paying jobs; focusing on investments in education and training; suggesting that tax and benefit policies be reformed to increase redistribution; and public services such as education, health and family care should be freely accessible. These, then, are the kinds of measures that First Call would like to see in a comprehensive poverty reduction plan for the province and reflected in the 2013 budget.

In conclusion, what we're asking the committee to do is to make recommendations to government based on four things. One is giving priority to the rights of children to receive the supports they need to grow up and reach their full potential. Two, to recognize that children's development cannot wait. It will happen. It will happen well, or it will happen not well, depending on the support we give them.

Also, give priority to investments in prevention, in health promotion, in education, in reducing poverty levels, because this is the right thing to do, and it enhances social sustainability. It will also help stop the hemorrhaging of public spending on remediating the social ills that accompany inequality and neglect. Again, those are
[ Page 2001 ]
well-documented.

Fourth, we need to have an understanding of the need to reform B.C.'s tax system to make it more equitable and efficient in raising the revenue that we need to support the necessary public services and institutions that we rely on. Tax cuts have disproportionately helped the wealthy, not the poor, and have reduced government's fiscal capacity to unsustainable levels.

Our specific policy recommendations that are itemized in the brief we've given you touch on the full-fledged poverty reduction plan that we'd like to see, and of course, we discussed the elements in that.

Adopt a $10-a-day child care plan that's been presented to government, which I referenced earlier. Restore public funding to public schools. Remove barriers to access to post-secondary education through tuition fee reductions. Grants instead of loans and interest-free loans.

Index the minimum wage, and thanks for raising it. Make sure government-funded contracts pay living wages, whether it's in the social services sector or the health sector. Raise and index welfare rates and restore child-support exemptions, among other reforms.

Change clawback thresholds and tax rates for families with children in that crucial $35,000- to $50,000-a-year range, where many of these modest-income families don't qualify, then, for a number of credits like carbon tax credit, sales tax credit, child care subsidies. They are clawed back too early, and it puts them at a disadvantage. Their marginal tax rate is then effectively higher than others.

Make sure the Ministry of Children and Family Development's budget is sufficient to let them do their work with integrity. It can't always be flatlined.

Inject funding into child and youth mental health, another preventative measure, so that we can do proper diagnosis, treatment and support families in prevention.

Increase the stock of affordable housing for families with children and, particularly, work with the federal government on some of the housing needs on First Nations reserves.

We remain committed to working with government to build on the existing public support that does exist for investing more in children. We thank you for consideration of our recommendations. I'm happy to take any questions.

M. Dalton: Thank you, Adrienne. As you were going through your report here, I thought: "What country am I living in?" Sorry, I mean, are we in Africa and all that? I feel that First Call is…. If these are all of their recommendations….

There's no mention as far as the longevity of life in B.C., one of the highest in the world; the implementation of all-day kindergarten, which is $80 million a year, that has been put forward.

I think we need to keep in mind — and maybe this is just a reaction to this report — that Vancouver, this area, is one of the prime places in the world to live.

Some comments as I'm hearing these reports. You say that we have fallen behind on redistributing income to make it more equitable. To me that means tax hikes and taking from a group of people and bringing it to others, which is a disincentive that leads to unemployment and people leaving those jurisdictions.

Also, the fact that right now we have about a million people in British Columbia that are not paying any taxes at all in an effort to assist. Are these taken into consideration when you do your reports?

M. Dalton: May I make a recommendation maybe to have those things brought out rather than just say what type of a horrible place that we're living in.

A. Montani: Everything that I've mentioned in here comes out of B.C. Stats or Stats Canada. These are real numbers. We don't make them up.

Our job as a child and youth coalition is to raise expectations. We are not doing well for all children. Some children are thriving and doing very well, but many are not. Our job is to raise expectations.

That's what the UN has been telling us. That quote about redistribution came straight out of the OECD. We didn't make that one up. That's what we need to look at, what we used to do better in Canada and in some other countries. Other countries are doing it better now. Other provinces are doing it better now.

Some of it is increased taxes on high-income individuals and profitable corporations, but some of it comes from reallocations. It's all about how we spend money. We collect it, and we make priorities in spending it.

There are choices in the kinds of public policy that we put in place. Other provinces are doing things like allowing people on income assistance to go to school. It helps get them over hurdles. They become more productive later on. So tweaks like that.

Last year's brief mentioned all-day K. Sorry we didn't put it in this year, but yes, we're happy that all-day K has been added.

We have a lot of work to do in this province, and we have a lot of high poverty rates. Inequality is part of that. We're paying way too much for that already.

D. Horne (Chair): We have two more minutes left. Our next question is from our Deputy Chair.

M. Elmore (Deputy Chair): Thanks for your report, Adrienne. You mentioned in terms of absolute inequality…. I understand that in B.C. we have the highest rate of that in terms of the top 20 percent making more than
[ Page 2002 ]
the lowest 20 percent, so we have had the largest gap in Canada for the past eight years.

You've outlined a number of concerns and issues, certainly, facing the most marginalized British Columbians. Do you have an accompanying budget figure or recommendation in terms of addressing each of those areas, or have you put your mind to that?

A. Montani: We don't actually have the capacity to, but our partner organizations on different areas…. On child care, the child care coalition has costed that out, and their plan is fully costed. We rely on, basically, other research organizations to do that work. The cost-of-poverty figures we used have been produced by the Canadian Centre for Policy Alternatives. We've seen those.

Today there's a new report I was reading about income inequality across Canada that again confirms that B.C. has the highest rate. It was produced back east. We don't have it all costed out. In the poverty reduction plan that was produced by CCPA, there is a costing of what welfare rates…. We're certainly happy, once government wants to do this, to work with helping to do that. But also, it's government's job to do the costing.

M. Elmore (Deputy Chair): Absolutely. To follow up on that point, you're certainly very concerned, as well, in terms of the child and youth mental health plan. Have reports been done on that, Adrienne?

A. Montani: There's an alliance, the B. C. Alliance on Mental Health and Addictions. I think the concern has been that a plan was put forward, groups were happy, but there wasn't a budget behind it. I know a fair amount of training has been done with MCFD staff on some level, but parts of it won't have any life until it has some funding.

Particularly what we hear at our coalition a lot is from youth who have either dual diagnoses or addictions or mental health issues or both. They're bounced from program to program or can't find programs, can't afford programs. That's where we're losing kids.

The rates of addiction among young people are very high in this province. It's a real concern. We're losing kids there.

D. Horne (Chair): Unfortunately, we're now done our allotted time, so thank you so much for your presentation.

I'll now call our next presenter, who is Dr. David Hay with the Federation of Community Social Services of British Columbia. You have ten minutes, and you can begin anytime.

D. Hay: Thanks for the opportunity to speak to the committee and present some information and suggestions. I am the executive director of the Federation of Community Social Services of British Columbia. I'm new to this role. I've worked for over 25 years in the public, private and non-profit sectors connecting information and knowledge generated through research with government policy-making and the implementation, practice and delivery of programs and services at the community level.

I am committed to community social care, equity, efficiency and accountability, and bring to the discussion my experience and practical suggestions.

I'll begin with a brief introduction to the federation and its members and the work that is done by those members. I hope that this will inform your understanding about why I want you to pay close attention to the community social services sector as you develop your recommendations to government. I'll then make three specific suggestions.

For over 30 years the federation has served as a provincial umbrella organization that supports community-based social services agencies in delivering high-quality services to children, youth, families and adults. Our 140 member agencies and organizations provide services across the lifespan, from prenatal supports for vulnerable mothers to seniors services.

They provide the basics of life such as food-security programs and supported housing. They support healthy child and family development through early childhood care and family support programs. They help people participate in the labour force, building their skills and capacity to sustain their families and contribute to their communities.

They serve people with developmental and physical challenges and build a more inclusive society. They provide treatment and support when people are particularly vulnerable, such as during a mental health crisis or following sexual abuse, so that people can cope more effectively with the challenges that they face. This is valuable work, regardless of how you choose to measure that value. I want to outline some indicators of that value.

First is public perception. We conducted a public opinion survey a couple of years ago. Nearly 90 percent of British Columbians agree that community social services make their communities a safer, better place to live and that such preventive services reduce the cost and societal burden of family breakdown and crisis intervention.

Two out of three British Columbians report in that survey that they feel the current level of funding for community social services is too low, including the services such as I've mentioned: child care, seniors care, employment services and so on. Less than one in ten British Columbians feels that the current level of funding is too high.

Three out of four British Columbia residents prioritize community social services over reducing deficits in tough times. In tough times people need community social services more than ever. Only 15 percent of the re-
[ Page 2003 ]
spondents said that in tough times government should focus on reducing its deficit even if that means cuts to social services.

The second indicator is community reach and influence. Our member agencies are working in over 150 B.C. communities. Our sector will directly touch most B.C. residents at some point in their lives. Most of our agencies are governed by elected boards of directors comprised of influential people in their communities who understand that community is a much better place if social care issues are addressed. These are business people, professionals, lawyers, doctors, accountants, educators, academics, parents, etc. Many of you, I'm sure, will have served on many community agency boards.

Employment. Our members alone employ over 6,000 B.C. citizens and engage thousands of volunteers to the equivalent of 4,200 full-time-equivalent positions. The broader community social services sector employs 65,000 people, more people than the forestry, mining and fishing sectors combined. So clearly, community social services are an economic force in this province.

Labour force development. Our employees are highly skilled, with over 90 percent having post-secondary diplomas or degrees. Social service jobs are career jobs, and they're not short-term jobs.

The economic value. Our members alone represent nearly $500 million in community investment. That's a lot of money, and it fuels communities. Over 80 percent of these funds are spent on wages and benefits, and because this is a relatively low-wage sector, those resources are cycled back into B.C. communities and the economy through personal spending and taxation.

Leveraging investment. The funds that support community social services primarily come from federal, provincial and municipal governments, but also about 20 percent comes from the community contributions: fee-for-service and social enterprise. This is a creative group of organizations and agencies that are trying to figure out how to do the best things they can on behalf of community and leverage government's investment.

Return on investment. The old adage about an ounce of prevention saving a pound of cure may be a cliché, but only because it's true. Community social services prevent crisis and intervene in people's lives before small problems become big ones. For example, programs for vulnerable preschool children and their families are fabulous investments. Many studies report returns of $5, $10 or more than $15 for each program dollar invested. These returns are documented as higher tax contributions and savings for crisis and intervention services such as crime prevention and response, income assistance and so on.

I hope that that outlines the value of community social care, and now I just want to move on to the three specific suggestions. We hear a lot and talk about social issues as primarily a chat from governments about health and education. We'd like this conversation to be more broadly about health, education and social care, because they are interdependent.

Health care and education services are obviously important. They have touched us all in ways that are critical to our well-being and quality of life. Social care services are equally important to creating a province that gets it right around healthy, productive citizens and a solid economy. We couldn't reach these goals if we weren't investing properly in our health and education systems, and we won't reach them without also maintaining our investment in community social services.

People sometimes have the misconception that social services are things that other people rely on, not them. They are not sure what kind of services they might be, but they are quite sure that nobody in their family will ever need them. But most B.C. citizens will rely on social care infrastructure at some point in their lives.

Broadening the conversation can change awareness and behaviour. We need to include social care in encouraging our communities to consider how we build strong and healthy communities. Communities with higher levels of social capital, achieved through a strong social care infrastructure, have lower crime rates, higher school participation and completion, better health status and so on.

Secondly, I'd like you to consider and act on the evidence. Do more of what makes a positive difference. In the federation we embrace the social determinants of health and use them as a guide in considering and evaluating where to allocate our precious public resources.

I mentioned that the federation is now in its 31st year. Thirty-five years ago Marc Lalonde, who was the federal Health Minister at the time, issued a report on health care. The Lalonde report presented evidence of key factors that determine health status and went on to say that to improve the health of Canadians, we need to improve access to those key factors like income, education and community supports.

The evidence continues to mount about how these things help make us healthy. These social determinants of health are the elements that determine our own health, the health of our loved ones and the health of our community, and thus influence health care costs.

I want to highlight just two of these social determinants. Researchers from UBC found that nearly a third — I've got 29 percent there, but you heard Adrienne say it's now up to 31 percent — of B.C. children arrive at kindergarten developmentally vulnerable, which could cost B.C. 20 percent in GDP growth over the next 60 years. The researchers note that unnecessary vulnerability in B.C. is thus costing the provincial economy a sum of money that is ten times the provincial debt load.

The community social care system builds healthy child development through connecting young children and their families with services and supports that they need as they navigate through this family stage. These include
[ Page 2004 ]
infant development programs, supported child development centres, child day care, family resource programs, young parent and new parent supports.

The second social determinant that is very, very important to health is income and inequality. Statistics Canada data shows that the gap between rich and poor, income inequality, has been growing in B.C. and in Canada generally. We need to care about that, because there is abundant evidence that shows that income inequality, more than GDP growth and other economic measures, is a greater predictor and contributor to social and health-related problems, including crime, violence, poor health status, unemployment, etc. Conversely, societies with more equality actually generate better outcomes for all citizens, including the richest as well as the poorest.

We need to make wise investments. Continual increases in health care budgets put a tight squeeze on the availability of funding for other government ministries and other programs, be that in the environment, economic development or social care. I understand that there are limited funds, but we have to spend wisely. Community social services could be your best friend. If you invest in the upstream social determinants of health, you will make savings in downstream acute and chronic health care costs.

The third and final suggestion is this. Sustain funding for social care and work with us in the sector and in our communities to explore options and encourage and support innovation. We know that difficult decisions need to be made, but cutting investments in social care infrastructure is not the answer, as you will generate additional pressures and costs that will come back to haunt us all, as is suggested by the abundant evidence. Work with us. We know the evidence, we have ideas, and we make a difference.

B. Routley: Thank you. Certainly, your comments about the growing gap between rich and poor and income equality in British Columbia…. We've just heard a presentation about that as well. It does lead to dire consequences.

I know in the Cowichan Valley, where I come from, we have one of the largest First Nations groups in British Columbia and also a serious problem with a rising number of suicides. I would say that we've already arrived at some of the key indicators of what happens when governments abandon policies that help the poorest of the poor. Those among us with the least, need to be helped.

One of the things that I don't see in some of these presentations is some of the solutions. Do you believe that we need a better tax policy to tax the very rich? Should we be looking at policies to deal with that? Obviously, corporate income tax…. We know that we've adjusted tax reductions over a number of years, and that has not resulted in the panacea in terms of job creation or in dealing with the real critical problem in the gap between the very richest and the poor. In fact, it's gotten worse.

I just wondered if you could comment on some of the solutions. Do you think that we need to be looking at additional tax rates for the very rich, or what would you recommend?

D. Hay: It's a very, very difficult area. I think that the key areas in considering are equity, efficiency and affordability. We're always looking for efficiency in the economy and making sure that we're competitive for businesses to invest in, etc.

But we also have to look to fairness and equity to make sure that people are taxed fairly at different rates across the income spectrum. I think it would be worthwhile to have an in-depth study in B.C. about those rates and how they compare to other jurisdictions. That's always what we're playing against, that the arguments from people who favour current kinds of systems would suggest that we will compromise our business investment if we change either corporate tax rates or high-income tax rates.

I don't fully agree with that. I think we can more fairly distribute the tax burden, both personally and corporately. But there's not an easy solution, to say "Tax the rich" or "Tax wealthy corporations" as the route to increase revenues. I don't think there's a lot of room to make a lot of revenue growth there, but there's the possibility to do things more fairly.

It seems that the presentation before you was a good segue to you coming and doing your presentation. I see a lot of the dilemma before us is the huge gap, as we saw, and the high rate of poverty that we've had for the last ten or 12 years. I see that the agencies and organizations that provide services that you represent tie closely into where we have been in the last ten years as far as that gap and the poverty rates.

Do you see a need for a poverty reduction strategy, and what do you think are the top three things if you agree with a poverty reduction strategy?

D. Hay: Certainly, I agree that a focused strategy to reduce poverty and create adequate incomes for all British Columbians would be very, very important. That is necessary to show the population as a whole that you believe in everybody and everybody's right to an opportunity, to a good life and engaging in life. Setting targets is import-
[ Page 2005 ]
ant. It helps to hold governments accountable to their citizens about what they're doing to achieve a better life for all British Columbians.

That's certainly not the only solution to eradicating poverty. I think that both the speaker before me and myself have talked about healthy child development. I think it's these early-years investments that are very, very critical, making sure that we think of these issues in a generational way, that we give the almost one-third of children arriving in school vulnerable and not ready to learn in the way that others are…. That creates a barrier to our systems and obviously is a detriment to those students as well.

If we can take care of those kinds of issues, then some of the issues about innovations and investments and ability to participate in society and become able and responsible taxpayers start to take care of themselves in a generational way. So it's long-term investments that are also very important.

We'll now call our next presenter, which is Tides Canada, and Merran. As you've heard many times so far, you have ten minutes to speak, and then we'll have five minutes for questions. You can begin now, please.

M. Smith: Hi. My name is Merran Smith. I work with Clean Energy Canada, which is a program of Tides Canada Foundation. We've been working on how to help transition Canada to a low-carbon economy and how to help facilitate that transition. I'm here to speak in support of the carbon tax and that part of the conversation.

To start, I just want to say that I think it's really a critical time for British Columbia to renew and deepen our commitment to the climate leadership and, in addition, to invest in critical green infrastructure and improve the quality of life for British Columbians. The carbon tax has already started to shift our use of fossil fuels and reduce our carbon pollution here in British Columbia. Studies have come out to show that B.C.'s GDP growth has outpaced the rest of Canada since 2008, so it is not having an impact on our economy here.

Critically, it's serving as a proof of concept for other jurisdictions that are considering carbon pricing. We can look to Australia, Korea, the EU, California as other places that are also putting prices on carbon, predominantly across their economy.

I think it's also important for this committee to note the impact of climate change financially to both B.C. and where the trends are going globally. This year the economic impact of climate change globally has been $1.2 trillion dollars, as reported in the Guardian just this last weekend, taking 1.6 percent of the annual global GDP. That's projected to go to 3.2 percent by 2030, which is not far away.

Here in B.C. the National Round Table on the Environment and Economy predicted that by the middle of the century climate change is going to cost British Columbia between $300 million and $3 billion a year. So taking action, doing our part — obviously, we can't stop climate change globally — and providing leadership to inspire other nations and other jurisdictions to do the same is critically important.

One thing that we did was — I think you heard about this from others — work with the David Suzuki Foundation and the Pembina Institute to talk to citizens of the province, to say: "What would your interest be in a carbon tax, and what would your interest be in how to use this and how to improve it?" In a very short three-week window we got input from over 1,700 British Columbians. Overwhelmingly, the input was to support the carbon tax. I believe they've delivered that support to your committee.

A couple of things I want to say about it. I've attached a map to the briefing I gave you just to show you where that input came from: 42 percent from Metro Vancouver and the Lower Mainland, 25 percent from the greater Victoria area and 33 percent from around B.C. So this is not just an urban-based input. There is support for the carbon tax from around the province. Again, this was only a very short window, as we were trying to work within the time frame provided by the committee. I believe that there is broader support for this across the province.

The recommendations are: one, to commit to a new schedule of increases. Increasing the cost of carbon creates an incentive to shift away from carbon-producing energy and increases the business case for shifting to low-carbon energy. So we really support not only maintaining the carbon tax but committing to a new schedule of increases.

We support broadening the coverage of the carbon tax to include process and fugitive emissions. It's really the largest-growing sector of our carbon emissions in this province, and it creates the business case for carbon capture and storage and other mechanisms to actually alleviate those carbon emissions, which is ultimately what we want.

Thirdly, to reinvest the revenues from expanded coverage to finance solutions. This is a really critical piece. Obviously it's a revenue-neutral tax right now. We're not suggesting to change that. But as we increase, if we move forward with increasing and broadening the tax, that we take that new fund — we called it the Better Future fund — and use that to actually put in place infrastructure to reduce carbon emissions…. Transportation is one there's a lot of support for — building retrofits, fuel switching, etc.

Lastly, I just want to say that there is a whole conversation about competitiveness and how to maintain B.C. as a competitive place with the carbon tax. I think we've proven that it has because our GDP is growing.
[ Page 2006 ]

In the last few weeks we were at the Energy and Mines ministers meeting in PEI with all the provinces where Shell made a keynote speech pitching that there be a carbon tax. The Canadian Association of Petroleum Producers, the Canadian CEOs group have all put forward a case for putting a price on carbon.

We know that for these carbon efficiency means such as carbon capture and storage in the oil and gas sector to work, there needs to be an effective price on carbon. So while there's short-term pain in any type of tax, there's real support for taxing pollution rather than taxing income that people are generating.

So that's a quick summary, and if you have any questions, I'm happy to answer them.

D. Horne (Chair): Thank you so much. I'll actually start with myself for a change.

Just clarification on the last point that you made. Basically, what you're saying is actually that you don't support the revenue neutrality of the carbon tax in moving forward, that you'd use it as a new tax source in order to fund transportation and other sources. Is that right?

M. Smith: Well, I would say that we do support the revenue neutrality as it is right now, but if we are to build on it that we create a new fund or a new pot of money that would go towards reducing carbon emissions.

D. Horne (Chair): Okay. So basically, from what we've done in the past, we can continue to keep that neutrality in place, but for future things, use it as a new source of tax revenue.

P. Pimm: I'm going to ask you this question. Obviously, you submitted this report to the Finance Minister. I'll take that as an assumption. Secondly, what do you say to the regional district in the Peace country that just voted to scrap the carbon tax completely because it puts the farming community at a complete disadvantage?

M. Smith: I think that we need to find unique, creative solutions for different situations. I think everybody can probably find a reason not to have any kind of tax. I'm sure that you guys don't get many people coming in and supporting any tax that you put on any community.

P. Pimm: No, I'm asking you to direct it to the regional district that just passed that motion. Direct it to them. What would you say to those folks?

M. Smith: Well, I would suggest that we sit down and we find ways to…. You know, I can't speak to that directly right now, because I don't understand their whole financial picture, which I obviously would need to understand. But I think that there are ways to find creative mechanisms to move forward. Maybe part of it is that we invest part of the fund that gets created from the increased carbon tax to actually support them to reduce their costs elsewhere.

M. Elmore (Deputy Chair): Thanks for your presentation. Could you elaborate and talk more about discussions and ideas and, I guess, proposals with respect to the third recommendation — to reinvest the revenues from expanded coverage to finance solutions?

M. Smith: Public transit is a good way to get cars off the road. Cars are one of our growing sources of emissions, one that we haven't been able to actually tackle very effectively. There is a huge need for finance, as you know, to go to things like TransLink and other public transit, which tend to be more electric-powered, and take cars off the road. So that kind of initiative.

The building retrofit initiative is something that the government has been doing, providing support for both the business community and individuals to reduce their energy consumption through retrofits. That program has had to be cut, so this would be a way to refinance that kind of program.

M. Elmore (Deputy Chair): Any other specific ideas around infrastructure supports and development that would…?

M. Smith: We could put together a whole list of ideas for you, but those would a couple. I mean, you could go to specifics around targeting schools or targeting First Nations communities still using diesel and shifting them off of diesel. There's a whole variety of things that it could go to. But I think that transportation is front and centre, because it has been one that we haven't been able to tackle effectively and will take billions of dollars.

B. Ralston: Thanks very much. I was interested in your reporting of Shell Canada's position on the carbon tax. I'm not clear, though. Were they advocating a carbon tax for the whole of the country, and included in that would be support for the existing carbon tax here in British Columbia, or was it that specific?

M. Smith: It wasn't that specific. But I think it's notable to know that they used their position of having a keynote address to the Energy and Mines ministers. At that meeting they were the only fossil fuel company that had that opportunity, and that's what they used their time to talk about.
[ Page 2007 ]

B. Ralston: If I might, just one follow-up question. There was a reference made earlier this morning. Some people consider it…. There's a wide gap between the rate of what is sometimes called the Alberta equivalent of a carbon tax. Were they referring to that, do you think, or were they referring to something more robust than that?

M. Smith: I will try to get a copy of the speech sent to you. I believe they were referring to something more robust. There was reference made to the fact that CCS cannot be effective without an effective price on carbon. I think that as a first step, one thing that B.C. should do is talk to Alberta about having their carbon tax match ours in terms of the way it's distributed.

B. Ralston: The Premiers are talking today. Maybe that's what they're talking about.

We'll move to our next presenter. Our next presenter is the Canadian Parks and Wilderness Society, represented by Chloe O'Loughlin.

I think you have probably heard several times that you have ten minutes to present and then five minutes of questions. Please begin now.

My organization is Canada's grass-roots voice for the wilderness. We believe that parks are not only good for conservation but that they are also outstanding contributors to the provincial and local economies in our tourism and business sector, in job development, and they provide significant community economic development benefits. Those are the benefits I want to talk to you about.

Because you're the financial standing committee, I'll focus my presentation on two financial opportunities for the province. One is that you could get an increase in government and community revenues by investing in our provincial parks — a small investment with a large return. You can increase jobs, provincial tax and labour revenues, visitor spending, and community economic development benefits through the establishment of new national parks at no cost to the province.

First, let me just congratulate the province on the establishment of the new protected areas that has happened over the last many years. These are really critical during times of climate change. British Columbians love their parks and have appreciated these announcements very much.

The province has the opportunity to establish three new national parks and four new national marine conservation areas. Two are already underway. One is in the South Okanagan, and one is in the southern Strait of Georgia. These would provide a short-term turnaround for new benefits. As I said before, all costs related to the establishment and the management of national parks and national marine conservation areas are borne by the federal government, so these benefits, which are significant, cost the province no money at all.

On national parks, if you establish a national park, it increases the number of permanent jobs both in the park and in the communities, which will result in new labour revenue for the province. They will increase visitor spending. That's not insignificant at all, because an existing national park in British Columbia today produces, on average, $49 million in visitor spending each year. That would increase the amount of provincial tax revenue and increase the GDP by hundreds of millions of dollars annually. It relieves the province of the financial burden of some of the parks that would become part of a national park, so this money can be allocated elsewhere. It increases visitation to provincial parks, which improves the province as well, and it increases revenue to and security for our businesses and our tourism sector both locally and provincially.

I know there are opportunities to address the fiscal challenges to the increased spending on the provincial parks, because every dollar that you invest in the parks increases visitor spending by $8.50, which produces all of the other revenues I've been talking about.

You're interested in expanding B.C.'s markets. These will expand B.C. markets by providing new international markets; bringing new visitors from outside the province and around the world; increasing the length of stay in the region and the province; extending the tourism shoulder seasons; providing new, internationally recognized services and programs; providing new services such as the nature centres in Tofino and Sidney and, perhaps, in Okanagan Falls and Keremeos if the new national park moves ahead. It increases aboriginal tourism, which is great for the tourism sector.

By working together to promote our national parks and our provincial parks together, we really increase all of the benefits that I've just talked about.

Parks increase investment in British Columbia. For example, the regional district of the Okanagan-Similkameen and its local town councils and chambers of commerce have passed resolutions supporting the proposed national park for many reasons but especially because they can attract investors and maintain important services.

I've learned a lot about this by talking to the mayors and rural representatives in the small communities. The mayor of Oliver tells me that they could attract investors for a badly needed hotel in Oliver if there was a national
[ Page 2008 ]
park. In Penticton a national park will provide security for their insecure local airport. They feel that it could possibly attract a second carrier into Penticton, which is a huge benefit for Penticton and the outlying communities.

The mayor of Osooyos supports the park for many reasons, but he believes that a national park will provide an influx of young families. His community is highly retired. They have a huge proportion of retired people, and he's afraid of losing his high school. He believes that a national park will bring in young people that can help diversify his population.

There are other examples already existing. In Gwaii Haanas the federal government provided a new cultural centre that brings in people from all over the world, while protecting the Haidas' culture in the international-class archival facility. In Ucluelet Parks Canada paid for a new sewage system, which was badly needed for the citizens and for the influx of people to the Pacific Rim National Park.

Parks create jobs that the future generation can depend on. They create new permanent jobs for future generations within the park and in the communities. They create more summer jobs and increase the length of summer and part-time jobs. These jobs will prepare people. They'll be work-ready for other jobs in the community, and these jobs will enable these young people to stay at home in their own communities and not have to travel elsewhere for work.

Parks also ensure family affordability because people can vacation in their own province, which makes it affordable for families. Plus it keeps the revenues here rather than elsewhere.

I have four recommendations for the committee. The first recommendation would be to announce the South Okanagan–Similkameen national park and move forward into the next step of the process, where all of the outstanding issues are resolved to everybody's satisfaction and park boundaries are established and things like that.

To expedite the completion of the national marine conservation area in the southern Strait of Georgia. All of the local people are very happy with that and want the process to move quickly. The more quickly it's established, the more revenues and jobs and opportunities are brought to the province.

I have four recommendations about how to invest in B.C. parks. To bring in revenue, you really need to invest in the infrastructure and the services that are provided in those parks so that they attract more people. That means you need to gradually, over time, double the budget that's going to B.C. Parks. Reinstate the really popular nature interpretation programs — the campfires that we all enjoyed as kids — that bring people into the park and bring them back again. And then establish protection between the parks, which is so important during this time of climate change.

The fourth recommendation would be to sign an agreement with the federal government to move forward on establishing the other national parks in northern British Columbia and southeast British Columbia and the national marine conservation areas. As I said before, this costs you nothing, and to do feasibility studies means no commitment on your behalf before. It's doing the research to find out whether a park is feasible and what the problems are that would need to be resolved.

Thank you all for your work to make British Columbia a better place and for your work on this committee.

One question. You've got 25 million people or visits to our parks. Is that 25 million people, or is that nights?

C. O'Loughlin: No, sorry. You're right. It is visits, and that's provincial and national parks.

J. Slater: Right. Okay. The other thing is, as you're very aware, we are moving forward on the process. The Minister of Environment and I talk on a regular basis, and right now First Nations are being consulted. The Lower Similkameen Indian band and the Osoyoos Indian band are going through their feasibility studies, their financial studies. Then once we get those back, we will be looking at it again.

C. O'Loughlin: That is great news. It's great news for your constituents, for the local communities and for the province. It's been a hard journey.

J. Slater: I know. When I was elected mayor, the senator walked into my office and said: "Look, this is what we want to do in the South Okanagan–Similkameen." That was almost nine years ago. It's been a make-work project, in my opinion, for B.C. Parks. They expanded the project by four times once, and then they shrunk it back a little bit, but it got a lot of people miffed.

C. O'Loughlin: Yes. Congratulations, and I'll keep my fingers crossed for everybody.

G. Coons: One last question. Thanks, Chloe. You talk about: to increase revenue, we need to invest in the parks system. You talked about the interpretive programming. One of your recommendations is to gradually double the operational capital land acquisition budgets. You know, when you look at what's been happening with parks over the last few years, what do you see are the major issues?

C. O'Loughlin: The major issue — number one, for sure — is the lack of people, the lack of staff, in the parks system so that there is no enforcement, there are no programs, there are no interpretation services at all. And the infrastructure is falling apart — the buildings, the water treatment, the sewage systems — almost to the extent of being a safety issue.

D. Hayer: Thank you very much for your presentation. How do you see our parks compared to the parks in other provinces, territories or states in the United States?

C. O'Loughlin: B.C.'s parks system, in Canada, is the most important parks system of all, and it's the most diverse. When you look at where the big animals like the grizzly bear and the moose and everything are going to exist in the future, it will only be in British Columbia, so British Columbia is important to the world.

Our parks system is the lowest-funded parks system in Canada by far. We pay $3.62 per hectare of park in British Columbia, as opposed to much more, $20 per hectare, in Alberta, where they really invest in their parks system, and they get lots of people out. So there's lots of room for growth. That's for sure. And as I said, if you invest in the parks system, you get more revenue coming in.

D. Hayer: Are the park numbers the same per hectare in British Columbia compared to Alberta, or is there a difference?

C. O'Loughlin: No. We have many more hectares protected in British Columbia than anywhere else in Canada, and that's been great work over the last many years from all governments. We really invested in protecting important wilderness. It's a huge accomplishment. We don't pay nearly enough money to maintain it, and maintaining it will bring in more visitors and will provide more opportunities for families to go to safe trails — you know, good water, good sewer systems and good facilities like showers and things like that in campgrounds.

We'll now, as a committee, recess until 1:20, and we'll be back at it at that point.

D. Horne (Chair): Welcome, everyone, to our afternoon session. We'll now call our next presenter, Nancy, forward.

As you probably haven't heard at this point, you have ten minutes to present, and then we'll take five minutes of questions. You can begin as soon as you're ready.

N. Olewiler: Thank you very much. The last name is Olewiler. It's a tricky one to pronounce.

Hello. I'm a professor, I'm an economist, and I'm director of the School of Public Policy at Simon Fraser University. I'm presenting on behalf of myself today, but I also, with full disclosure, should let you know I'm chair of the board of directors of TransLink. So one of my comments you might want to put into perspective as being a little bit of advocacy.

I'm here to talk about what kind of economy British Columbia should be and to build the economy for the future. In my view, the future is going to be a much more carbon-constrained world than it is today. The kinds of things we should be doing in our economy are to be putting in incentives and programs that build a low-carbon economy so we can be as competitive as possible going forward in the world.

The policy instrument we've already got that I want to focus on is the B.C. carbon tax. My question and rhetorical question are: is this tax working, and what should its future be? I would like to share with you my view — that is, that I view that the tax is working. On the second and third and fourth pages of my very brief handout I give you some evidence of why that is the case.

Going forward into the future, I believe that the tax base should be expanded to cover currently untaxed sectors of the economy. The tax currently covers about 78 percent of the emissions of GHGs in the province. And expanding that to cover more of the GHGs, where practicable, is, I think, one of the initiatives that should be taken.

I also believe that the tax rate should be increased over time and at a rate that is commensurate with actions taken in other jurisdictions and as economic conditions suggest. What this says is to announce a schedule, as was the case when the initial Carbon Tax Act came in, which was excellent policy, giving certainty to all those facing the tax that the rate will rise at such and such a rate over time.

I'm not saying when it should rise, but I'm suggesting that it should be announced that the tax rate will rise and at a rate and under these circumstances — when the economy resumes a growth rate of, for example, 2 percent.

The current tax is revenue-neutral. The tax revenues
[ Page 2010 ]
go towards the reduction of the personal and the corporate income tax, relief to rural landowners or rural people who have fewer options in reducing their carbon emissions, and to low-income people. What I am suggesting is that going forward when that tax rate rises, to keep the existing $30 a tonne, which is the current tax rate, at that level but use any increments in the tax rate to fund investments in infrastructure that promote the low-carbon economy.

I've given you a couple of examples here. One would be public transit, which is my self-serving comment. But I think it's important because public transit is one area where there are clear trade-offs in terms of reducing carbon emissions in a cost-effective way. The others might be for waste treatment.

The other use for any increment in the tax revenues could be to offset any deleterious effects on low-income people — in other words, somewhat index their benefits such that as the tax rate rises, their low-income tax rate also rises commensurate with that so they're made no worse off — and to provide a fund for those sectors of the economy that have less ability, as I noted before, to reduce their carbon emissions.

You would probably ask me: what are the risks of this policy? The argument might be that B.C. was out ahead of some of the rest of the pack when we brought in the carbon tax, and hence, that is a threat to our competitiveness vis-à-vis other parts of the economy.

That, I believe, is not the case any longer. Many jurisdictions are moving ahead with carbon policies that are often not as good as ours, so we are already at an advantage, given the way we brought in the state-of-the-art carbon tax. California is bringing in its cap-and-trade under the Western Climate Initiative. As you know, California is as big as Canada, so that's a very large economy.

China is bringing in a carbon tax. India is even talking about a carbon tax. Other provinces in Canada are augmenting their policies as we speak. It is no longer the case that British Columbia is way far ahead of others in the world. What we want to do is stay ahead in terms of providing the best incentive to reduce emissions.

Finally, the evidence to date. The second page here is rather long, and I'll leave it with you to read. I'm only going to highlight some issues, and that is that the evidence to date…. The carbon tax, as you know, came in in 2008. This is 2012, only four years of data as an economist.

I don't like to make inferences based on four years of data, but the trends are something that I think I can talk about. We have seen significant reductions in emissions in this province that are not matched by the rest of Canada, as our reference point. These reductions have been obtained at no loss in economic activity that is different than what has been seen in the rest of Canada.

Some of the examples on the next slides. If you look at the bigger change than expected on the first of the graphs, gasoline consumption has declined quite significantly in British Columbia. This is a very careful study. This is looking at all the factors that could reduce it, and the major factor that has affected that decline was B.C.'s carbon tax, because other provinces also have similar gasoline taxes but do not have the carbon tax. This is a non-trivial reduction in emissions.

Of course, where are these people going? They're not all driving to the U.S. border to buy their gasoline. Certainly, some of them are, but data that we have at TransLink suggests that that increase in gasoline consumption in the U.S. is minimal, so it's not the case that this is leakage to another jurisdiction.

If you look at the second picture, this is from a study by Sustainable Prosperity. The reference is at the bottom of page 2. It looks at the changes in GDP over the period, and this was a very challenging period in terms of the recession. What you can see from those numbers is that B.C. has done less badly in the downturn and better as we're coming out of the recession. Again, you cannot say that this is due to the carbon tax. What you can say is that the carbon tax, relative to other provinces that did not have it, has not had a deleterious effect on the economy.

Internationally…. If you turn to the last page, B.C. now has the lowest fuel use in Canada, the lowest income taxes. The middle paragraph on the one that has a lot of writing is evidence from very noted economists in Canada about the importance of keeping marginal effective tax rates as long as possible.

Everybody focuses on the leakage outside of the B.C. economy due to the carbon tax. The important point about that is there's leakage from the rest of the economy, too — the rest of the country to British Columbia — because of our very, very competitive tax rates. That is a crucial part of the analysis. Don't just focus on the outgoing. Focus on the incoming. We get investment in this province because of our very competitive tax rates, in part enhanced by the carbon tax recycling of revenues.

Finally, just some other bits of information about employment growth. If we're positioning our economy for the future, let's look at those sectors that are providing employment and employment growth relative to the sectors that are not. The last main paragraph on the second page of text gives you some evidence, again, over a very short time period. Between 2007 and 2011 employment in construction grew by 6 percent while their GHG emissions fell by 30 percent. This is the kind of sustainable economy that we want in our province. For the same period, service sector growth was 5 percent and GHGs fell 25 percent.

Now, it is true that our natural resource sector, our natural gas sector, also had employment growth, but at a commensurate level of GHG growth. That's a sector that's going to be a challenge to look at, and those are policies we're looking at now. But if we look at agriculture and
[ Page 2011 ]
forestry, where GHGs were rising, employment was falling. I don't think you can make the connection, because agriculture was exempt and forestry was exempt other than in their direct combustion of fuels.

Admittedly, the time period is short, but my message is that we should keep the carbon tax. We should enhance the carbon tax. It allows us to invest in the kinds of things that grow the economy, and the evidence to date suggests that it is having not a negative effect on the economy but a positive effect.

Again, just in summary, look at the renewable energy investment — the last slide on the last page of the handout. This is a growth sector that the British Columbia economy is well poised to capitalize on. The carbon tax levels the playing field between it and other fuels to enable this sector, which is rapidly growing, to flourish in our economy.

J. Les: A couple of questions, if I might, Nancy. First of all, at the end of the day, you're advocating a fairly robust increase in the carbon tax. I'd be interested if you would quantify that — from the current $30.

The economic comparisons that you and others are trying to draw in these very early days of the carbon tax, I think, are highly tenuous. We had probably the most significant economic recession at least in 50 years throughout the western world, and we've had other people suggest that the reduction in emissions during that period had more to do with the economy than it did with any other particular policy of government.

Drawing the comparison with other jurisdictions in Canada and how well we have done, or not, through that period of time — saying we did better than most, so therefore our policies are working — of course begs the question: what if we'd had no carbon tax? Where would we have been then? I'm sure there is no answer that we can put our finger on, but I think it is still worthwhile at least thinking of that.

N. Olewiler: Let me come to your first question. While I'm advocating a renewal of the carbon tax and a return to escalation in the tax rates, as I said, I believe this should be contingent on the economy achieving a certain level of growth. I think the past tax rate increments, $5 a year, were certainly manageable by the economy. If you want to pin me down, I would not increase the tax rate till something like 2014 or 2015, because over that period we would be able to see what is happening.

There are so many things that we don't control in our economy. As you noted, the recession was due to factors beyond our control. But I would see a return to that schedule of tax rates going out in the future so investors know where those tax rates will occur.

There are a lot of industries waiting for that information, including the fossil fuel sector. If you look at what most of the major oil companies are doing, they are basing investments on what we call a shadow price, an expected price of carbon at about $50 a tonne. So I would see that tax rate rising to that level gradually, and it could be over five years or ten years as economic conditions warrant.

As to your second question, about this is dangerous to be inferring from a short time period, I agree. The first study on gasoline taxes was done very, very carefully. They controlled for all of the other factors that may have influenced that rate of change in the consumption level, so I would be pretty confident in that one. Of course, the future may unfold differently.

On the GDP growth, you're absolutely right. I cannot design an analysis that says: "Can I redo the world without the carbon tax?" But what I'd say to you is basically that the evidence to date does not suggest that….

You would expect to see something less good had the carbon tax been having a negative effect. This is not to say that certain sectors are not affected more than others. That's indeed the point. But my belief is that those sectors are better helped by targeted policies. Impose the tax, and use other policies to offset any deleterious effects on those sectors.

Everybody pays the same price. We have a thing in economics. When the price is the same, you get the most bang, the most cost-effective reductions or activities as you can, but use other means to compensate them, such as, helping them with investments that reduce their carbon intensity. But still make them pay the tax.

Time will tell, but if the British Columbia economy is coming out of this recession in better shape than other provinces have, then I cannot in all honesty say that the carbon tax hurt it. All I can say is that there is no evidence that it hurt the economy.

M. Elmore (Deputy Chair): Thanks for your presentation. I have a question with respect to your position. You're in favour of the revenue neutrality of the current gas tax?

M. Elmore (Deputy Chair): Maybe you can just explain that. Have you considered using a portion of that to invest in needed infrastructure, as you've outlined, by supporting a low-carbon economy?

N. Olewiler: Sure. Thank you for that question. My
[ Page 2012 ]
problem with that is: where do we get the revenue to keep the corporate and the personal and the low-income and the rural thresholds constant? We'd have to either cut expenditures or raise another tax. I do not think that is, at this point, policy that I would be comfortable with. That's why I am advocating for a future increase in the rate to use those funds for those kinds of investments.

Right now we would have to raise those tax rates, and I believe that we have, you know…. The economy has adjusted to that. They're pro-competitive. They're good for British Columbians, both the people who work in the industries, who've had a tax cut, and the households who have seen a lower tax rate.

If we could find money elsewhere, that would be great, but we would have to either raise taxes or cut expenditures or raise, you know, to get those funds…. I would rather see, for example, a $5-a-tonne increase in the carbon tax rate in 2014 and use that money to fund it.

D. Horne (Chair): That brings us to the end of our time. Thank you for your presentation.

We'll now call our next presenter, Climate Smart Businesses Inc. — Elizabeth and Morten. Welcome to the committee. As you've undoubtedly heard, you have ten minutes to present, followed by five minutes for questions. Your time begins now.

E. Sheehan: Great. Thank you very much, Chair, Deputy Chair, and members of the Select Standing Committee on Finance and Government Services.

As president and founder of Climate Smart Businesses, I would like to start, actually, with an appreciation for British Columbia's leadership on the carbon tax. We work with small and mid-sized businesses to increase their profitability by reducing their energy-, waste- and transportation-related costs and carbon emissions through training, software and coaching. We've had the privilege to date of working with close to 700 businesses and organizations from Prince George to Kelowna, from Saanich to the city of Surrey, measuring about 650,000 tonnes among them.

These organizations across that geography represent over 51,000 employees. That means 10,000 more employees than the forestry, fishing, mining, oil and natural gas sectors, according to B.C. Stats in its latest report, in February 2012.

Climate Smart has been recognized as economic development leaders, as a key program for contributing to green jobs growth, greening existing jobs with new carbon accounting skills and greening existing businesses with new tools to focus on building internal capacity for tackling emissions. Our partnerships span across the province with 25 local governments, three major utilities and 20-plus business and industry professional associations.

The carbon tax, in our view, has served to discipline within the market, signalling us that we need to prepare for our future. The evidence has been compelling: lower consumption, growth unaffected and emissions in decline. I've submitted to you a report we just released. We believe this is the first study of its kind, called Beyond Big: Small Businesses, Greenhouse Gases and Competitive Advantage.

The report is drawn from our database, our experience with hundreds of businesses, and offers a small sample of the leadership that we're seeing in B.C. among small and mid-sized businesses, taking the steps to reduce unnecessary energy waste. It's no surprise that businesses are responding well. The report was funded by the Business Development Bank of Canada, Metro Vancouver, the city of Vancouver and the city of North Vancouver. I thought I would just take a minute to highlight three key findings.

The first is that the B.C. businesses are demonstrating that reducing emissions has both a top-line as well as a bottom-line benefit. If you turn to page 10, you'll see that that's actually true across a wide diversity of sectors. We have over eight sectors here represented by the North American industrial classification codes. Our top sector is really professional service, which is including property managers and waste management, trade and transport of goods, and manufacturing. That's our first finding. This is that there's a top- and bottom-line benefit across a diversity of sectors.

On pages 16 to 17 we track what the motivations are driving businesses in a voluntary market to do this. What we've reported and been able to note is that the leading motivations continue to be cost savings and a sense of community leadership, contributing to something that they care about, their values and their brand. But interestingly enough, more recently we're tracking a growing trend in staying competitive, keeping ahead of the curve, meeting in some sectors, like printing, current expectations of clients and stakeholders and in others meeting anticipated future expectations.

If I could turn your attention to page 33 to highlight a third finding: 81 percent of the businesses are pursuing multiple strategies — fleet efficiencies, paper reduction, shipping, landfill waste diversion.

We've provided throughout the report 11 case studies. We want to illustrate, on the one hand, the diversity and ingenuity of efforts. Whether you're a retail cooperative, a multiservice non-profit, a security solutions firm or financial services, there's something for you to do. They've been taking a range of actions — actions that actually have zero up-front capital cost — from behaviour change to looking at your operations and finding efficiencies to actually redesigning your product and service from the very beginning. The tool for getting there is a new analytical accounting framework to assess your business with an environmental lens.

The fourth point is that carbon management is actual-
[ Page 2013 ]
ly a new skill for what we need in our new clean energy or low-carbon economy. We teach to a greenhouse gas protocol, which is in international accounting standards. Accountants use this training towards their professional development credit. It's a new job skill.

It turns out that when you take an existing job — an operations job or an accounting job — and you add responsibilities for tracking and managing and reducing your greenhouse gas emissions, according to the UN, you're basically creating a green job. It's well documented that prospective employers are looking for companies that are genuinely addressing environmental impact.

In conclusion, we believe businesses and entrepreneurs are central partners in meeting the challenges that we face, and they have a lot to bring to the table. Ninety-eight percent of our economy is entrepreneurs from small and mid-sized businesses. A million of us are actually employed by them. They are nimble. They're the source of the highest job growth in the province. We believe moving forward means tapping that entrepreneurial power and seeing the strong policy signals, like the carbon tax, as essential. I'd also suggest, maybe self-servingly, that they need that additional support.

As a business with a social mission to reduce carbon emissions, we support broadening the use of revenues generated by the carbon tax to help drive green jobs, innovation and collectively meet our provincewide economic development and carbon reduction targets.

I'd like to offer the rest of the time to Morten Schroder, who's the VP of B.C. operations for Van Houtte coffee services, to talk a little bit about his experience.

M. Schroder: Personally, I'm a student of Climate Smart — the training part. Just a little perspective of Van Houtte's coffee services, a typical small business in B.C. — $30 million in annualized sales, 10,000 customers being served throughout B.C. by us, 100 staff, six branches throughout British Columbia. That's the perspective of who we are.

The experience we had through working with Climate Smart is really dealing with one issue that a small or medium-sized business has, and that is that we don't have dedicated people to take on these initiatives and deal with sustainability, so we need help.

So we turned to Climate Smart, and the two things that really stand out to us are effectiveness and efficiency. It's an overwhelming topic, sustainability, when we don't have dedicated people. By having effective training, we get just enough information that we can take initiatives in a business immediately, so that we don't drown in information.

The other part is efficient. Three half-day sessions put us in a position as a business to take action immediately. Not months, not weeks, not weekends — three half-days. It's very efficient, very effective.

Then, how do we make it so we're transparent? We need a tool to benchmark our greenhouse gas emissions, and Climate Smart has that tool. So we have a third party verifying our benchmark and our progress.

Then the staff. We need somebody to call, somebody that can answer our questions, because we feel very much alone. Two years ago we didn't know how to get started. I've learned over that two years that a lot of businesses are in that position. They want to do something, and they just can't get going. The solution for us was Climate Smart. It got us going.

Just a few interesting results to share with you. In these two years by getting the education, having the direct contacts to get some assistance and measuring the emissions, we have in British Columbia reduced our direct greenhouse gas emissions by 14 percent and reduced the kilowatt hours that we use for our operation by 20 percent.

We are now almost zero waste to landfill. That's one accomplishment we're very proud of. There's packaging material for our coffee equipment, for instance — hundreds of machines per year, lots of styro or EPS. As of today, actually, we're 100 percent recycling all that material. Zero of that is going to the landfill.

It took help by Climate Smart. We need experts to help us, steer us in the right direction. We're at that point now. And 98 percent of all these coffee machines have a lifespan. Water coolers and coffee machines by the hundreds every year tend not to end up in the right place. Today 98 percent of those in British Columbia from our company are being recycled, and we're shooting for 100 percent within the year.

Fifty percent of our delivery fleet are on propane — 24 percent less greenhouse gas emissions and also good for the bottom line.

FortisBC renewable natural gas. We were the second company in B.C. to sign on with that, because we really believe that's a good thing. Only 10 percent today; we hope we can buy 50 percent some day in the future.

One hundred percent recycled paper, that type of thing, we've been at for almost two years now. Using electronic statements and whatnot to reduce…. We probably have about 50,000 statements and envelopes that are not in circulation today because of what we learned, and other things like cardboard and plastic and whatnot.

At the end of the day, also, our business has saved over $100,000 permanently on operating expenses. What we did with that…. We believe in self-funding, so we took the money and bought an electric vehicle immediately. Now we're experimenting with an electric vehicle to see how that can work in our operation.

We established a new position — a dispatch role here in the Lower Mainland. That person is basically dispatching our fleet, trying to be more efficient. We're installing, as we speak, GPS units on all our vehicles in British Columbia. We're giving ourselves the type of challenge that we want to recover the cost of having that new pos-
[ Page 2014 ]
ition, and then we'll reinvest again and again and again.

To think that two years ago we couldn't get started. So our company and certainly me personally are very supportive of Climate Smart. It is kind of the formula. It is the package that's needed. We just need, not hundreds of companies to get in touch with Climate Smart…. We need to scale up Climate Smart, and we'd be very much in support of thousands of companies getting the three half-days, getting access to what we had. We did this in two years. We just need thousands of companies to do the same thing.

D. Horne (Chair): Thank you so much. That brings us to the end. We'll start with our questions and Bruce.

B. Ralston: I noticed that your organization is also on page 15 of the report — for those members of the committee that want to look at that at their leisure.

I suppose the point that I want to stress and see if you agree with it is that really regardless of the climate objectives that you achieved, which are all a good thing…. Supposing that you had no concern about those, the fact is that what you're doing is good business practice because you've saved money in every part of your operation, and those savings compound going forward.

For those businesses that aren't really that concerned about their carbon impact — if there are some, and I'm sure there are — this is still basic, good business practice. Isn't that another conclusion that one could draw from this?

M. Schroder: Absolutely another conclusion. We tell both stories because if people aren't quite ready to do it for the right reason, we have the business case. We try to talk to as many people as we can — companies — to join us and do the same thing because we want to reduce the emissions. But it is definitely financially also a very good thing to do.

B. Ralston: Just if I might, one further question on Climate Smart itself. I see in the front of your material you call yourself a social enterprise. So you're self-funded in the sense that you're not an agency of government, receive no support directly from government at all. Is that correct?

E. Sheehan: That's right. We were a program of a non-profit, Ecotrust Canada, in 2008 and then launched as a stand-alone company half owned by a non-profit — yeah.

D. Hayer: Thank you very much — a very good presentation. My question is greenhouses. In my constituency in Surrey there are quite a few greenhouses. Some agriculture people have been talking about how challenging it has been — they're not competitive — and maybe shutting down the businesses here, moving just south of the line in Washington State and then maybe supplying the U.S. and then supplying Canada again.

Have you had the business owners from the greenhouses come talk to you and ask how they can be more competitive so that they can stay afloat — or some of these other business that are having challenges because of the carbon tax that is making their business not very competitive?

E. Sheehan: Right. Thank you for that question. We've had, I think, perhaps 7 percent of the businesses that we've worked with come out of the agricultural field, although we've been working more steadily in the Okanagan area so our number of agricultural-based businesses…. We have not had any greenhouse gas companies come through, so I can't speak to the issue there.

I know that we reached out a bit, and I know there was some creativity around one company using some new technology around blanketing and efficiency and allowing the cost of that to be covered through an offset mechanism through Offsetters. I'm happy to follow up and give you that example.

B. Routley: Yes, thank you for your presentation. I was extremely impressed, Morten, by what you had to say about the experience. I wondered if your reach goes beyond the Mainland. Do you have any of your folks coming over to Vancouver Island? Obviously, you're starting to spread the good news about what you've achieved and, I'm sure, what's possible for a number of other companies who engage in this as well. I wondered if you are meeting with the chamber of commerce. How are you going about outreach?

E. Sheehan: Our main partners in our region are through the regional government. We're working with the capital regional district and city of Victoria and the district of Saanich to do a pilot. We have, I think, about 50 companies so far in the capital region and about 400 in the Lower Mainland. We partner directly with communities because we're able to sort of give them reports on progress that's happening within their local economy. So Metro Vancouver we're working with and the capital regional district and now in the Okanagan and Interior.

D. Horne (Chair): Thank you so much for your presentation. We'll now call our next presenter, who is from the Real Estate Board of Greater Vancouver.

While we switch over from our current presenter to our next presenter, I'd like to welcome the Standing Committee on Finance and Economic Development for the Western Cape Provincial Parliament in South Africa, who are now joining us.

We have the Hon. Eugene Von Brandis, who is the chairman of the committee that has joined us; the Hon. Michael Walters; the Hon. Archibald Figlan; the Hon. Tracy Mbalo; the Hon. Tozama Bevu; and Ms. Shareen Niekerk. We welcome them to the committee today, and we will have an opportunity later, as well, to spend some time together and chat more. You're welcome to stay for as long as you'd like.

Now that we have our next presenter in place, we'll call upon Harriet and Jim to start out.

H. Permut: I'm Harriet Permut, government relations manager for the Real Estate Board of Greater Vancouver. With me is Jim Woolsey, chair of the real estate board's government relations committee. Jim is a longtime and experienced realtor in Vancouver. We're here today to talk to you about taxes and regulation that are helping to close the door on homebuyers in the greater Vancouver area. We're also making several recommendations which will lessen the tax burden.

First, I'll give you some background on the real estate board. We represent more than 11,000 licensed residential and commercial realtors in the greater Vancouver area. Our board boundaries extend from Pemberton in the north to Tsawwassen in the south, from the Gulf Islands and the Sunshine Coast in the west to Maple Ridge in the east. We operate the Multiple Listing Service, and using MLS data, we produce statistical reports used by universities, economists, business, industry, governments and the media.

The board and its members care about the quality of life in our communities, and realtors are known for their extensive charitable work. We're also known for placing the interests of homebuyers first and for speaking up on their behalf.

We're here to talk to you today about the grave situation we're seeing for homebuyers. Greater Vancouver residents want to own their own homes. Whether they're single and living alone or they're a family of three generations living together, they have jobs, they work hard, and they want to own their own homes. They're being priced out of the market because of two specific issues. The first is taxes associated with buying a home, and the second is government regulation.

The most onerous tax on buying a home is the property transfer tax. The PTT now adds more than $10,000 to a home priced at $609,500. This figure is the MLS home price index composite benchmark price for a greater Vancouver home. For your reference, benchmark means a typical property and is more accurate than an average or median price, which can be skewed by a very few high-priced homes.

If you look at the table on the front page of your handout, you can see that we're not talking about high-end Vancouver west side homes here. We're talking about modest, middle-class family homes in places like Coquitlam or Squamish or Maple Ridge.

In Coquitlam the PTT now adds $12,300 to the benchmark price of a modest detached home, which is valued at $715,000 in Coquitlam today. To purchase that home, the buyer must have an annual household income of $120,220.

If the buyer heads out to the more affordable community of Squamish, that modest detached home will cost $502,700. The PTT will add about $8,100. The homebuyer will be required to have an annual income of $84,426 to buy that home. If the buyer heads to the even more affordable community of Maple Ridge, that modest detached home will cost $470,260. The PTT will still add a whopping $7,260 to the cost. The homebuyer will be required to have an annual income of $77,732 to service that mortgage.

Homebuyers also face a range of other taxes, including the harmonized sales tax if the home is new, to be replaced by the goods and services tax and the provincial sales tax in April next year. These taxes also add to the cost of renovation, remediation and indirectly on rent charged by landlords, which brings us to the second issue, which is government regulation.

On July 9 this past summer the federal government tightened mortgage rules for the fourth time in four years, with the aim of halting rising household debt. We know the provincial government is in no way responsible for this. This is just one more example of how homebuyers are getting battered from all sides.

As a result of new federal mortgage finance rules, homebuyers with less than a 20 percent down payment had their amortization, or payback period, reduced to 25 years from 30 years. What does this mean for a family buying a modest detached home priced at $609,500 — the benchmark price? It means that their mortgage payment has increased by just over $270 per month. The annual household income they require to service that mortgage has jumped by more than $10,000 per year to $100,748.

To understand how grave the situation is, we need only look at what has happened since the new mortgage rules were implemented. The number of first-time buyers requesting mortgages declined by 15 percent over the summer, according to Mortgage Brokers Association of B.C. In turn, home sales fell overall by more than 30 percent just over the summer. Our fear is that these negative ef-
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fects will be long-lasting.

First-time buyers are the foundation of a healthy real estate market. When first-time buyers buy homes, sellers are able to trade up, which generates more sales. This builds momentum leading to a healthy and sustainable economy. Without first-time buyers, the market stalls.

In the Lower Mainland home sales are key to economic prosperity, generating an estimated $60,000 in economic spinoffs per transaction. In 2011, 32,968 homes changed ownership in our board area, generating a total value of MLS sales of $25.7 billion as well as $1.98 billion in economic spinoff activity and 9,231 jobs. Declining home sales have widespread negative effects throughout the economy, including a reduction in jobs, which stalls economic recovery.

Home ownership is so expensive that a family with a new baby in 2011 can expect to spend $295,560 to raise their child to age 17. Housing costs are the largest expense, averaging at least 30 percent of that outlay. Government initiatives such as the B.C. first-time new-home buyers bonus certainly help offset those costs.

Our first recommendation focuses on the property transfer tax. The tax is currently charged at 1 percent on the first $200,000 of fair market value and 2 percent on the remainder. We are asking the government to increase the 1 percent PTT threshold to $525,000 from $200,000. The current $200,000 threshold has been in place since 1987. This requested change is in keeping with the B.C. Real Estate Association's recommendation, which I believe you've been sent.

We are also asking that the government increase the threshold to $609,500, the benchmark price in expensive markets such as greater Vancouver. This amount, as we've already noted, is our benchmark. The government could then continue to apply the 2 percent on the remainder of the fair market value of the home.

We're also asking the government to index the new higher PTT thresholds, using Statistics Canada's new housing price index, and to make annual adjustments.

Our second recommendation focuses on the provincial sales tax, when it comes back into force in April of 2013. We're asking the government to reinstate the PST credit for leaky-condominium repairs, which was phased out on June 30 of 2010. This program significantly helped condominium owners to repair and remediate their homes. There are still considerable numbers of leaky-condo owners who require assistance with the cost of repairs. A new PST credit program would ensure that these repairs are done appropriately and in a timely way.

We're also asking the government to allow PST input tax credits for owners of residential rental accommodations.

Our third recommendation concerns federal taxes and regulation. We're asking the provincial government to lobby the federal government to (a) allow zero rating of rental housing, so that the rental landlords can claim input tax credits on GST paid on operating expenses when the HST ends; and (b) to roll back the amortization period for new government-backed insured mortgages to 30 years from 25 years.

Our fourth recommendation concerns the B.C. first-time new-home buyers bonus. This program is slated to end on March 31 of 2013. We're asking the government to extend this bonus to March 31 of 2015 to continue to encourage first-time buyers to enter the market.

In closing, we're asking the government to recognize that home buying is vital to our economy, and we ask for your support.

J. Les: Thanks, Harriet. Always good to hear from you. I'd go a little further than you. I'd wish the property transfer tax gone — period.

In any event, you've advocated moving the threshold up. The problem that I and my colleagues have to deal with as we put our recommendations together is: where do we replace the revenue? Where do we get that?

I've heard you make this presentation a number of times. Do you have any suggestions as to where we could find more money in the economy — finding a good way to extract another feather from the goose without doing her too much damage?

H. Permut: We generally view this as over-taxation in the first place. We question the purpose of the tax and always have. It's always been revenue-based, but there's no benefit that comes back into the economy from the tax. Really, it becomes over-taxation when there's no benefit seen by the people paying it.

J. Les: If I might, what you're suggesting is there's no benefit directly to that homeowner that is paying the tax.

J. Les: Government, writ large, would normally say: "Well, you're getting health care, education and those kinds of good things."

Just on the other thing — I know it's a federal issue —
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in terms of the amortization of mortgages going from 30 down to 25. I believe that for a while it was actually 40 years they were allowing. I don't really want to get into a discussion about whether 25 years is better than 30 or vice versa, but if we're talking about suggesting 30 as opposed to 25, you're really suggesting an expansion of credit.

Isn't this one of the larger discussions that we ought to be maybe focusing on: are we building an entire economy on credit and perhaps too much of it? I don't know what the answer to that question is, but it seems to me that particularly in the British Columbia economy there are suggestions that we have a higher per-capita level of debt than most other Canadians. I don't know what the ramifications are, but I think it is something that we need to think about and understand.

J. Woolsey: I guess that we as an industry would view mortgage debt on the purchase of a home as better debt than, say, borrowing to buy a new TV. That's really the difference — to allow people to get into homes. Where we've seen the big drop is in that first-time homebuyer. They don't have that 25 percent or 20 percent to put down to get the CMHC rules. If you've got more than 25 percent, you can still get longer-term mortgages — right? We're only talking about the low-down-payment person that is affected by this.

I'm actually shocked by your comments, because I believe the property transfer tax was implemented by a Premier who purports to be an expert on tax policy. But I digress.

B. Ralston: Thanks for the presentation. I know this is a position that the real estate boards, both yours and across the province, hold.

I guess John is a little bit more frank now that he's not in cabinet. He'd like to abolish this tax. The concern, and the same one that he raised, is that depending on the year, it raises $800 million to $1.1 billion. The Finance Minister has just told us in the quarterly report that he's going to have to chop a billion dollars out of the next three years of the fiscal plan.

So I think the question is about alternate sources of taxation if this were to be abolished. If you think it's a bad tax, what are your suggestions as to how that amount of revenue might be raised — even just to balance, never mind to expand programs? If you were here for a while, you've heard that people want other services.

J. Woolsey: Well, I guess part of the question is…. If the sales do drop — and we've seen them drop by 30 percent — that tax base is going to drop by 30 percent as well. If we can encourage to get a portion of that, we're not looking at the same kind of reduction. You know, it's not that full 30 percent reduction. If we can actually increase sales, then there'll be an offset of that.

I'm not going to sit here and say that you should raise taxes on somebody else to offset this tax, but this tax is unfair to first-time homebuyers.

D. Horne (Chair): Unfortunately, that brings us to the end of our time. Thank you so much for your presentation. I'll now call our next witness, Serge Corbeil from the Insurance Bureau of Canada.

Serge, welcome to the committee. As I believe you have heard, you have ten minutes for presentation and five minutes for questions thereafter. Please begin now.

S. Corbeil: Thank you, Mr. Chair, committee members. We appreciate this opportunity to contribute to your important task. My name is Serge Corbeil. I am the government relations manager for the Insurance Bureau of Canada.

IBC is the national trade association representing Canada's private home, business and auto insurance companies. Membership is voluntary, but our member companies represent 90 percent of the property and casualty market in Canada. Our industry is one of Canada's largest employers, providing over 115,000 jobs.

In 2010 P-and-C insurers paid over $7 billion in taxes across Canada, of which $255 million was paid to the province of British Columbia. In addition, last year insurers paid over $1.7 billion in direct claims to British Columbians.

As you are well aware, the global economy continues to face a volatile environment. Despite economic uncertainties, British Columbians are navigating through these headwinds.

The P-and-C insurance industry is also navigating an uncertain economic environment. One reason is that the industry's investments are concentrated in government and highly rated corporate bonds. As such, investment returns tend to reflect yields on the government of Canada three- to five-year bonds, which have been falling with interest rates over the past 20 years and have been at record-low levels for the last four years. This continues to be a challenging situation for the industry.

Against this background, there have been positive signs. The industry's underwriting profit improved in 2011 over 2010, and return on equity moved from 7.6 percent in 2010 to 8 percent in 2011 — still below the industry's long-run average of 10.5 percent, but an improvement nonetheless.

As for Budget 2013, the B.C. government's priorities of putting families first, creating jobs and managing through these difficult economic times are central to IBC's recommendations in this submission: strengthening the province's resilience in the face of severe weather events, supporting a strong B.C. economy through a
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fair tax regime, and enabling competition and choice for consumers in the optional automobile insurance market.

The first area I'll touch on is severe weather adaptation. We've all witnessed events that show our weather patterns have changed. Our industry sees this firsthand. We are, in a way, the proverbial canary in the coal mine on this issue.

What we've seen is, for the first time, three consecutive years of near or above $1 billion in insured losses. So far this year Canada has already experienced close to $700 million in insured losses from natural catastrophes. This doesn't include millions of dollars paid out as a result of smaller weather-related events such as we've seen in B.C. over the last few months.

Looking ahead to 2050, a recent study commissioned by IBC shows that B.C. can expect to experience extreme weather. On the one hand is a forecast of an increase in intense rainfall events. I don't know if you noticed, but this morning there was a high stream flow advisory issued for the north and central coast, where in some areas they're calling for up to 110 millimetres of rain in just a few hours.

On the one hand is too much rain. On the other hand, our report forecasts summers that should be hotter and drier with the corresponding enhanced incidences of severe wildfires. While some of those events include losses deemed uninsurable, thus creating pressure on government finances, others trigger many insurance claims.

Such is the case when sewer backup happens following significant rainfall amounts. Old and inadequate infrastructure is often to blame for much of the damage and losses from heavy precipitation when older municipal storm and sewer infrastructure cannot handle the increased pressure.

This is why the industry supports the investments that the federal, provincial and municipal governments have made over the last few years in upgrading the waste and stormwater infrastructure.

The insurance industry recognizes that it is a challenge for governments to identify and give priority to infrastructure that is vulnerable to severe weather. IBC is working to help municipalities make strategic investments in priority areas by developing a municipal risk assessment tool that should be available in 2013.

Investing in infrastructure is important for handling changing weather, but so is investing in knowledge and leadership, which the government is doing through the climate action secretariat. The positive impact of the secretariat's work on adaptation continues to be seen across the province. A recent example is the city of Vancouver's decision to approve a climate change adaptation strategy.

In light of this, we recommend that the government continue to invest in programs to enhance the municipal storm and sewer infrastructure and continue the government's leadership through the climate action secretariat with a renewed focus on adaptation.

Our second area of focus is the taxation regime. As in other provinces the P&C insurance industry is subject to a range of fixed and variable taxes.

Of the $255 million paid to the B.C. government in 2010, close to $150 million was for the insurance premium tax — a 4.4 percent that is added to property and automobile policies, a product-specific tax. The IPT is particularly unfair since there is a cascading double-taxation effect associated with it, as it is applied on top of sales taxes on business inputs. It is a tax that makes insurance products more expensive for families and businesses.

It should also be noted that B.C. has the highest insurance premium tax among all the provinces. The budget consultation document seeks ways to make life more affordable for B.C. families. The document goes on to state, "That means keeping taxes low," among other things. We couldn't agree more and would suggest that the insurance premium tax be closely looked at with a view of reducing and ultimately eliminating it.

A bright spot on the tax front is B.C.'s corporate income tax rate at 10 percent. The industry supports the federal government's initiative to achieve a 25 percent combined federal-provincial corporate income tax rate and welcomes the B.C. government's leadership in this regard. It should be maintained at that level.

The last area of focus goes to the heart of what we believe is a fundamental aspect of the free enterprise economy. The government certainly has a role to play in the lives of its citizens. However, we firmly believe that where a product or service is widely available through the private sector, the government should have a limited role, perhaps through its powers to regulate.

Such is the case with auto insurance. Another way to spur private sector job creation and encourage a strong foundation for a free enterprise economy is to move towards a more competitive auto insurance market. Currently ICBC has a legislated monopoly on the distribution of mandatory auto insurance coverage and a quasi monopoly on optional insurance, where it controls 90 percent of the market.

ICBC wants us to believe that their rates are low and stable. This is simply not the case. B.C. drivers pay the second-highest average automobile insurance premiums in Canada. Interestingly, in optional insurance, where it faces some limited competition, it has lowered its rates. There is no doubt that B.C. drivers and their families could potentially benefit from a system in which competition and choice are made possible.

Moreover, a recent study by J.D. Power confirms that B.C. drivers are deeply dissatisfied with their government-run insurer. In fact, ICBC was rated last overall in Canada in the firm's latest customer satisfaction survey.

While some private insurers are operating in the optional-coverage market, others would like an opportunity to offer more choice to B.C. drivers. However, major barriers to entry and the lack of a level playing field
[ Page 2019 ]
are hindering their ability to do so. But remedies are readily available.

The government could move to strengthen the province's private sector economy by proclaiming the sections of the Insurance Corporation Act, as modified in 2003, that would give the BCUC, the current regulator of ICBC, the power to ensure that ICBC does not engage in anti-competitive behaviours. It would be a natural extension of the current role of the BCUC.

Another easy step the government could take would be to confirm the creation of a B.C. automobile statistical plan. While section 71 of the Insurance (Vehicle) Act has provided for the creation of such a plan since 2003, we have yet to see it become reality. All that needs doing is to sign an agreement with the General Insurance Statistical Agency. We believe that the renewed focus on the importance of a private sector economy opens the doors for these recommendations to be acted upon and spur the involvement of private sector insurers in B.C.

This concludes my remarks. I'll be happy to answer any questions you might have.

P. Pimm: Well, thanks a lot. My question goes towards the ICBC portion. Maybe you could expand on that a little bit. At this point in time the extended coverages are all set up on a competitive basis, but the initial amount is not. What would you see that would have to be done there to make it so that that initial would be the same level as the expanded side?

S. Corbeil: Well, the whole thing would be to allow competition on dollar one — to allow B.C. drivers to make the ultimate decision on where they want to buy their auto insurance, whether ICBC or a private insurer. In the current environment, though, you're right. The law allows private insurers to sell only the extended coverage. But to do that and to make the investments needed in B.C. to do that, they have to be assured that there is a level playing field out there. It doesn't exist right now. ICBC, because of its monopoly on basic insurance, does have a number of important advantages that allow it to hold on to 90 percent of that market.

P. Pimm: Just to follow up on that a little bit, there are a lot of people that say ICBC is wonderful, and that's all good. Do you see getting rid of ICBC, or do you say just open up the competitive marketplace so that everybody can compete on the same level?

S. Corbeil: It hasn't been our position to get rid of ICBC, but it's our position to allow competition, put all the companies on the same footing and let B.C. drivers decide where they want to buy their insurance.

M. Elmore (Deputy Chair): Thanks for your presentation. I'm familiar with the recent report out on ICBC identifying some of the challenges, particularly around fiscal responsibility. I think the basic premise of ICBC, to provide affordable public insurance to British Columbians since it was established in 1973, has been upheld. I think that that's been the record, that it has proven to provide that. I think that is also the sentiment of British Columbians.

My question specifically is with regards to your first and second recommendations with respect to being able to respond to climate change and incorporate adaptation responses and how that reconciles with your second recommendation around the economic development and taxation regime calling for lowering the insurance premium tax.

We recently got out of the Union of B.C. Municipalities and heard that very common refrain of the need to invest in and upgrade infrastructure. So just how you reconcile those two — the need, amounting to several billion dollars in infrastructure improvements. Just thoughts around revenue to support that development.

S. Corbeil: : I've read some of the transcript, and I know your committee is always challenged in terms of where we find the revenues for all those requests for tax cuts. It's a fair question. The insurance premium tax is one of those rare product-specific taxes. I can think of alcohol, tobacco and insurance product. I would argue that for a family to buy insurance, having to buy insurance if you're going to drive a vehicle…. I wouldn't consider insurance to be one of those sin products like, some might argue, tobacco and alcohol.

I'm not here saying that one…. Insurance premium tax goes into general revenue, so it's not specifically targeted to anything within the government. Governments across the country — B.C. government, the federal government — already invest in infrastructure. There are already some programs. What we are saying is over time, the finances actually make it possible to make sure that we invest in that invisible infrastructure — that is, sewer and water, wastewater infrastructure.

Our tool that we're developing will actually help municipalities identify the infrastructure that is most at risk of failure. We totally understand that we cannot fix all the infrastructure out there. It's $100 billion that the FCM has said, so we know it's not going to happen over just a few years. When there are dollars available, they should be invested, we believe, in that invisible infrastructure, in part.

D. Horne (Chair): Unfortunately, that brings us to the end of the time that we have. Thank you so much for your presentation.

We'll now call our next witness, which is the B.C. Sport
[ Page 2020 ]
Agency — Scott Ackles and Moira Gookstetter.

D. Horne (Chair): I think you've heard several times now that you have ten minutes for a presentation and five minutes for questions. You can begin anytime.

S. Ackles: Thank you very much for allowing us this opportunity today. We are formerly the B.C. Sport Agency, now viaSport British Columbia. We just announced our rebrand ten days ago now at the B.C. Sports Hall of Fame dinner, as well as to our sector.

We are the organization that represents amateur sport in B.C. I'm just going to give you a bit of a background. Why is viaSport British Columbia such a great opportunity for this province? Certainly, in the past sport has been perceived as being complicated and an ineffective sector where there was not a coordinated effort with all sports working together. The silos weren't connected. Today we are.

We have a process where we are connected, and we are working very closely together. In fact, through collaboration and support from over 80 funded sport organizations, viaSport is transforming how sport is delivered in this province. ViaSport leads the sport sector by providing centralized leadership, unity to the sport sector and a bold vision with measurable strategies to assist the province to reach its health benchmarks.

Essentially, viaSport is the league office for amateur sport in British Columbia and allows for streamlined funding as well as accountability attached to that funding. It focuses on provincial and sport sector priorities. As a result of viaSport, B.C. now has fewer administrative organizations with more dollars to the sport user. Our goals are to develop strategic partnerships, improve financial stability and increase efficiency of sport delivery in British Columbia.

Our name reflects our philosophy that sport is a powerful agent of change for ourselves, for our families and certainly for our community. ViaSport reminds us that through sport we learn, we grow, we gain confidence, and we build life skills. Through sport we become healthier and better citizens of the province. We are game changers who are passionately committed to unleashing the full power of sport to transform every community in British Columbia.

The essence of what we do is captured in our tagline as well: "Changing the game; changing lives." Our vision is to have an active, healthy British Columbia, where sport inspires a field of possibilities for all and is driven by three strategies. The strategies are sport development to create opportunities for all to access sport and increase participation; sport engagement, the promotion of sport and activity through partnerships with health, education and recreation — very important; sport investment to engage corporate and philanthropic partners in very important and meaningful causes to help us raise more money outside of government to support sport.

The impact will be very significant. ViaSport will deliver efficiency, more money to more people more effectively under one strategy — remember, there wasn't a strategy in the past; there is now — increased participation at all skill and age levels, and high-performance results. As a result of high participation, we will increase high performance and certainly excellence, as we saw in the previous Olympic and Paralympic Games.

Investment in research and analysis shows the positive effect of a coordinated and strategic approach to increase participation, as well as identifying sector gaps and new opportunities for growth in sport.

Financial stability is crucial. Although many provincial sport organizations, or PSOs, have been very successful in leveraging each government-funded dollar — every $1 to $4.77 — leveraging that government investment of other funding outside of government is very important. We're developing innovation in technology to engage the sector and create opportunities for funding partners of both the corporate and philanthropy sectors and to continue to build and leverage that government funding.

Partnerships and shared strategies with health and education and recreation will be developed. We'll develop those partnerships outside of our own sector to talk about the healthy benefits of sport and the effect that it has on health, education and recreation and how we can work together. Connecting the dots and having a coordinated goal between these sectors will benefit everyone and certainly help us achieve our long-term goals.

Communication is key for our success. Technology and innovation as the key drivers to transform this historic approach is very important. ViaSport will promote, educate, activate and expand the reach of sport across the province by creating a production and media centre, integrated within our website.

The creation of this new communications portal will be interactive. It will connect sport to all communities in this province. This will allow any sport, anytime from anywhere, to broadcast an amateur sporting event; host an educational seminar for volunteers — development of coaches, development of officials, certification; or to simply share and distribute news and content within our sector and certainly to promote what we're doing outside of our sector as well, from a public standpoint.

In closing, on behalf of sport in British Columbia, viaSport is asking for three things. With a better-coordinated and results-based system in place to measure growth and program successes, viaSport is asking for the continued support of the province of British Columbia. We would like the committee to review and consider the following request: to ensure the continuation of a more effective sport delivery model and a coordinated investment
[ Page 2021 ]
in sport throughout the province. This request includes three components of that ask.

The first is the continuation of the sport legacy fund. It's a $10 million investment to increase sport participation, podium performance, high performance, economic development and tourism. The second component is a longer-term investment to provide leveraging and enhance partnership opportunities. The third component is the centralization of the gaming grants to ensure an alignment of all sport funding — again, under that one strategy that we now have created with viaSport, formerly the B.C. Sport Agency.

That was shorter than probably you had imagined, but I think I got to the point. Thank you for this opportunity to make this presentation, and certainly thank you for the outstanding support this province has put forward to sport over the past number of years. At this time I would like to open the floor to any questions.

Your reach is…. I mean, you're throughout the province. Do you have personnel in all the regions of the province? That's the first part.

Secondly, your budget. I know you received the $10 million, but do you have other sources of income? Do you get any federal assistance also?

S. Ackles: Very small federal assistance — from a budgeting standpoint, very small. We do reach throughout the province. There are five regions where we have regional centres. We want to expand that to potentially seven centres as well, to reach all areas of the province — seven, potentially eight.

The very small percentage of the revenue we get from the federal government is…. Is it $100,000, Moira?

M. Gookstetter: Yes, for us personally. But when you talk about the sector in general, there's about $3 million federally that is going in to high-performance sport in British Columbia.

B. Ralston: Thanks very much. My question is about your relationship to two other organizations that are active, at least in my community in Surrey. One is Right to Play, the KidSport initiative.

The second thing. Canadian Tire has a foundation that assists in purchasing equipment, I think, for kids to get into organized sports. Do you have any formal relationship with them, or is it a working relationship? Maybe you could describe that.

S. Ackles: Definitely KidSport. Certainly, they are funded by the province of B.C. through viaSport. We have a fantastic relationship with KidSport, and certainly there was a program that began a number of years ago with Canadian Tire as well. Moira, do you want to talk about the details of that?

M. Gookstetter: I think that at the community level Canadian Tire, in their JumpStart program, is working hand in hand with KidSport. Where KidSport is reaching out into the community, they're doing so together, jointly.

As for a formal relationship with Right to Play, we don't have one as of yet. Our domestic strategy here in British Columbia is KidSport.

D. Hayer: Thank you very much for your presentation and the great work your organization does. How many volunteers would you have in your organization? If you were to put some value to the time of the volunteers, how much do you think they help out, if they had to be paid for the work they do to help out in sports?

S. Ackles: Volunteers. I believe there were in the range of 400,000 volunteers. I think the average number of hours that a volunteer puts in typically is about 140 hours, which obviously is very significant for this sector. Certainly, without volunteers, sport would not occur in this province.

The value that we bring to that, obviously, would be several million dollars in terms of support for development of sport in this province.

M. Gookstetter: Just that federally we know that sport is the biggest volunteer sector in the country. So replicate that in British Columbia. Approximately one in ten.

I understand the organizations that you represent play a significant role in the development of kids and of communities.

You're looking for a couple of things: the commitment to continue the $10 million investment that we put into the programs and a longer-term investment. If something happens there where you don't get the $10 million — let's just say for some reason it's reduced by 10 percent or 20 percent — what impacts will that have?

S. Ackles: I think the impacts that'll occur, Gary, are that…. We gained a lot of momentum over the past few years since the Olympics. Certainly, with where we are now — with viaSport now coming into play with a new strategy, a coordinated strategy, with the sport group — to lose that funding would be pretty impactful to the momentum that we've gained and certainly to what we're doing moving forward.
[ Page 2022 ]

Now, having said that, we do have strategies in place to, obviously, generate revenue outside of government. The $10 million is going to be a very significant hole to plug, which is going to affect sport in this province.

J. Slater: Just one question. What percentage of your clients are kids — like, youth sports? You don't supply men's hockey with money, or soccer, baseball, or anything like that — right? I'm assuming that the majority of the funds would go towards helping kids' sports?

S. Ackles: That is correct. The exact number — Moira, do you have that demographic?

M. Gookstetter: I think we're probably in around the 80 percent mark, with children under the age of 18. But having said that, we do want to be able to have a strategy that does deal with the other age group that's very significant in British Columbia, which is our aging population, and engage in strategies that are going to provide them with opportunities to be able to participate in healthy programs, so that will mitigate other health issues that they may incur later in life.

J. Slater: Right, so that basically helps them get organized and gets the teams together and the volunteers to help them out as well.

We'll now call our next presenter. It's the British Columbia Chamber of Commerce — John and Jon.

As you get ready, I'll actually note the presence of Jane Thornthwaite in the back of our audience there, who is the member for North Vancouver–Seymour and spent many years on this committee. I think she's just disappointed that she's not still on this committee, so she has come to join us.

As I'm sure you've heard several times at this point, you have ten minutes to present, followed by five minutes of questions. You can begin now.

J. Winter: Thank you, Mr. Chair, lady and gentlemen. Thank you very much for the opportunity to allow the B.C. Chamber of Commerce to join you today and to present the views of our over 30,000 members — businesses around the province of every size and in every sector and every region of the province — and to talk to the government's priorities of the 2013-14 budget coming forward.

As time is not our friend today, a written submission with much more detail with respect to our recommendations will be forthcoming. In addition, all members of the committee have received copies of the B.C. Chamber of Commerce 2013 Policy and Positions Manual, which catalogues the issues of concern to chamber members from across the province.

Our written presentation will address a number of issues we don't have time to address today, including skills and education, transportation and the role of Crown corporations.

The news that the province's revenue has taken a $1.4 billion hit as a result of a drop in natural resource revenue is yet another reminder that B.C. is subject to the vagaries of a global economy. We are, and will remain, price-takers on the world stage, not price-setters.

Further to this, we have seen signs that many of the challenges to B.C.'s economy identified in the first quarterly report are moving from a risk to a reality. We have seen China almost certainly suffer a seventh straight quarter of slowing growth. China has posted its slowest growth pace in three years, as investment slowed and demand fell in key markets such as the U.S. and in Europe.

A third round of quantitative easing in the U.S. will continue to apply pressure to the value of the loonie, which will leave companies in our export and resource sectors having to address a high loonie for the foreseeable future.

In addition, we have seen the federal Budget Officer state that provinces will face increasing pressure to provide core services such as health and education without additional revenue or tough cuts in other areas. All of these point to the critical importance of government maintaining a focus on fiscal responsibility and caution as we approach Budget 2013.

The chamber believes that the starting point for government is the need to ensure that we achieve balanced budgets as a forecast in 2013. Not only is it the correct approach for government to only spend as much as it earns but a requirement for a balanced budget holds the government's feet to the fire and sends a clear signal to international investors that B.C. is a safe haven in a troubled global economy.

For the chamber, fiscal responsibility requires a focus on several core areas that we'll address in more detail, including taxation, debt and public spending. As for taxation, British Columbia has one of the lowest tax rates for both personal and business income in Canada. The government is to be commended for these actions, often taken in the face of significant criticism and opposition. Indeed, when we look at the business tax rates, B.C. currently has the joint lowest corporate tax rate and the fourth-lowest small business rate.

In terms of provincial tax rates, B.C. has the lowest rates for incomes below $120,000 annually and the second-lowest for incomes above that figure. This positive picture has led many to begin calling for increases in the corporate rates, claiming that a one or two point raise will still place B.C. in a very competitive position in the Canadian context. The chamber believes this is not an accurate position, as it fails to recognize the significant
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increase that many businesses will see as a result of the move back to the PST.

One of the key reasons our members supported the move to the HST was that it would greatly enhance our competitiveness and our ability to attract new investment to this province. Federal Finance estimated that B.C.'s marginal effective tax rate fell from 34 percent in 2006 to just 16.8 percent in 2012. While there were several factors, including corporate tax cuts, which contributed to this drop, the core reason was the replacement of PST with HST.

Due to the return of the PST, we will see B.C.'s marginal effective tax rate increase to be the highest in Canada, placing B.C. at a significant competitive disadvantage and hampering our ability to attract new investment in key sectors. In this context, the chamber does not believe that now is the time for any further tax increases on business.

In addition, our members have sent a clear message that there is no expectation or call for any decrease to the corporate or small business tax rates in Budget 2013. The marginal effective tax rate calculations do not capture the full impact of the PST on B.C. competitiveness.

While we respect the democratic process, it must be stated that the decision to scrap the HST was the wrong choice by British Columbians — full stop. This bad decision has been compounded by the fact that not only are we scrapping the HST, but even worse, we are reverting to an effectively old PST system, a flawed system, a hybrid system of exemptions.

The chamber believes that the loss of the input tax credits to business will significantly hamper B.C.'s ability to compete against key jurisdictions. This will place B.C. companies at a significant Canadian competitive disadvantage, as we will only be one of three provinces that do not have a value-added tax system. The chamber therefore believes that the government should undertake an open, transparent public discussion on a made-in-B.C., value-added tax.

The one taxation area where urgent attention is required, in addition to this, continues to be in property tax. The chamber agrees with the local governments that say they don't have the financial means to address the pressures they're facing, particularly in regards to infrastructure.

However, a call to simply provide new, unconditional revenue streams is unacceptable without reform. The chamber now believes that the provincial government must step in to undertake a fundamental review of the local governments' financial sustainability, with a view to establishing a funding system that is fair and equitable and reflects the cost of service for each taxpayer group.

Now a few comments on spending. The chamber commends the government for its focus on spending restraint as a key mechanism in ensuring that we return to balanced budgets in 2013-14 in the face of declining revenues. Over the period of the current fiscal plan, government expenditure will result in an average annual growth in spending of 2 percent, fulfilling a recommendation of the chamber to maintain spending at no more than the rate of growth of the economy.

However, limiting increases in the amount of public money put into programs does not address the question of whether a program is necessary and effective. In our ever-changing world, we need to assure taxpayers that their dollars are being appropriately allocated to our province's most critical and current needs. The chamber believes that now is the time to take a close look at all areas of government spending to ensure that they're delivering the priority programs and services to British Columbians as efficiently, effectively and affordably as possible.

Nowhere is this more important than in the area of health care, which now represents 42 percent of all government spending. The chamber has consistently stated — in fact, this section was copied from our presentation last year, which was copied from our presentation from the year before — that we must realize that simply pouring more money into this seemingly insatiable black hole of health care spending is not the answer. No matter the size of funding increase, it is never enough, and it simply leads to an unsustainable cycle of increased funding, leading to increased expectations, leading to calls for even more funding.

Therefore, the chamber recommends that any recommendations regarding health care spending must be tied to a clearly defined ability to measure improvements and outcomes and must be dependent on a clear blueprint for reform.

As for debt, if we look at B.C.'s debt picture, we can see that while B.C. fares very well compared to other jurisdictions, it's perhaps worth looking at how the debt picture has changed from previous years. If we look at debt in '07-08, before the global recession, we see that B.C.'s debt has risen dramatically.

The chamber recognizes that B.C.'s debt levels are low by international standards, and it is a debt level that is manageable for an economy such as British Columbia. Further to this, we obviously recognize that this increase was driven by truly unique circumstances as the global economy shifted and government had to act to protect services and the B.C. economy by spending far more than they were generating in revenues.

However, our members have been clear. When economic conditions permit, we must mitigate costs for future generations. Therefore, the chamber recommends that once balanced budgets are achieved, we legislate a requirement that the provincial budget dedicate at least a minimum of 50 percent of all surpluses directly to debt repayment.

A few comments on carbon tax before we close. As a final issue, we'd like to spend a moment on this issue of
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carbon tax. While we recognize that the government is currently undergoing a public consultation process on carbon tax, it's a critical element of the government's budget and warrants some comment in this forum.

At our recent annual meeting in Penticton the carbon tax was again a very controversial topic of debate. We ran the full gamut of opinions, with delegates debating everything from reform to scrapping the tax entirely, and while we were not dissimilar to the public in that there was no consensus on the tax, several important points were clear.

The first and most important point to note is that the carbon tax is having a negative impact on certain sectors of our economy. Of primary concern to the chamber is that our exporters are facing competition from jurisdictions where such a tax is not imposed and are therefore faced with a significant competitive disadvantage, as they must pay the tax but are unable to pass these costs on to their customers.

In terms of the economy at large, the negative impact of the carbon tax is offset by the fact that the carbon tax represents a tax shift, which has seen B.C.'s business community benefit through reductions on a range of tax fronts. In addition to reductions in general corporate and small business tax rates, the carbon tax is also responsible for an increase in the small business threshold and a range of tax credits that benefit business, including school property tax, the digital media tax credit, the training tax credit, SR-and-ED, and the film incentive credit.

When the chamber supported the introduction of the carbon tax, we did so with a couple of caveats. Firstly and most importantly is that the tax be revenue-neutral. While we recognize that the current tax is revenue-neutral, we have watched with growing concern the nature of the discussion regarding the carbon tax in the public realm.

The second is that with no other jurisdictions having followed B.C.'s leadership, it's incumbent on the government to review where negative impacts can be determined and discussions undertaken with these impacted sectors to find way to mitigate the impact of the carbon tax itself.

The chamber therefore recommends that any changes introduced to the carbon tax must be introduced under the auspices of revenue neutrality and must not represent a tax increase. Further, the chamber recommends that the carbon tax be frozen at its current rate.

In conclusion, the chamber recommends that Budget 2013 focus on returning to balanced budgets, instil discipline in public spending, review the fiscal sustainability of local government, introduce a plan for tackling the provincial debt load, and review the role of Crown corporations to ensure effectiveness.

As B.C. looks to emerge from deficit, the pressure to increase government spending will increase. Indeed, it has been a feature of these hearings that presenter after presenter appears before this committee to ask for new spending, as often as not, with no indication as to how these asks should be paid for. We've been clear. This is an unsustainable way of thinking and one we think must change. We must learn to do more with less. We must learn to spend money more efficiently, and more importantly, we must learn to innovate in service delivery.

We are already seeing this in some areas, whether it's per-patient funding in health care or changes in the nature of our K-to-12 education system. These are innovations that have virtually no budget implications but will deliver significant improvements in terms of outcomes. The chamber believes that this must be the foundation for both the recommendations of this committee as well as for government decision-making.

As you have probably seen and have heard, some of the politicians and some people in the community and public are sort of saying we have decreased the taxes to too low in British Columbia over the last ten or 11 years. They're saying the corporate tax should go up — and maybe even personal income tax they'll be saying next to go up.

Do you know from the history how long it takes once you increase the corporate taxes before it starts affecting the jobs, and the provincial revenues, instead of going up, actually start going down? Once they do decrease the corporate taxes, how long does it take to increase the jobs and the total revenue the province generates — from the past history that you've been living here in British Columbia?

J. Winter: It's difficult to comment on the time frame, David, but it's certainly evident that as taxes go up, the level of services and the level of business activity will decline. Employment is likely to fall off as a result also.

I think that what we are really seeing here is a tax regime in British Columbia, both corporate and personal, that is very competitive. It's something that I think British Columbians can be very proud of. It is something that attracts investment to the province in its current form. Any negative changes to that will in fact have a negative impact. The extent of those is really difficult to describe.

As I mentioned in my remarks, this year in particular coming forward, the business community is going to be particularly hard struck by the increased cost of converting back to the PST. Estimates of $1.9 billion have been presented that would suggest this is the cost that businesses are actually going to incur, in terms of making that reversal.
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As a result of that, to increase taxes on top of that would probably be a very detrimental impact.

I was interested in your comments on corporate income tax. As you know, the previous Minister of Finance, on page 5 of the 2012 budget, said that if it were necessary to balance in 2013, he would implement a 1 percent increase in the general corporate income tax. I take it from your comments that you don't agree with that.

Secondly, the Expert Panel on B.C.'s Tax Competitiveness addressed the issue of the transition back to the PST and recommended, costing about $500 million, a refundable tax credit for purchases of machinery and equipment. But their terms of reference were that they had to balance. They recommended, in order to balance, increases in oil and gas royalties and an increase in corporate income tax.

J. Winter: I'll leave the expert panel to my associate, Jon Garson, who I'm sorry I neglected to introduce at the outset.

With respect to the balancing of the budget and the commitment by the former Finance Minister, I can only say that maintaining balanced budget legislation is an important concept of this government in a sense that it at least provides the opportunity for the government to be held accountable and to go back to the House to pass legislation that will allow it to incur increased debt and to operate in deficits.

I think that from that perspective we recognize that maybe things go on in the world around us that are external factors that are really out of the control of any government here in British Columbia, given the export nature of our economy and the fact that we are dependent on prices being set elsewhere. I think the natural gas situation that we're facing at the moment is perhaps a good illustration of that.

J. Garson: In terms of the recommendation of the expert panel, that's certainly a good recommendation — the input tax credit. We have not had a chance to review all of their recommendations in terms of where they have looked at increases to offset that revenue loss.

From our perspective, as we've pointed out, we want the government to begin a dialogue on how we can actually improve our sales tax system, but in the same way that we encourage government to balance their budget, we try and balance our presentations to not ask for significant cost to government that we can't actually fund.

We think that's certainly a good recommendation, but it has to be part of a broader discussion as to how that can be funded and what other changes to the PST system need to be made so we don't go quite back to such a poor system as we had before.

D. Horne (Chair): Unfortunately, we've reached the end of our time allotted, so I want to thank you both for your presentation.

We'll now move on to our next presenter, being the Capilano University Students Union and David Clarkson.

David, welcome to the committee. As I believe you've heard several times now, you have ten minutes to present and five minutes for questions thereafter, and your time starts now.

D. Clarkson: Thank you very much. My name is David Clarkson, and I'm here from the Capilano Students Union. Our role as a student society is to present the views of our members, which are the 7,000 undergraduates at Capilano University. It has three campuses in Squamish, Sechelt and North Vancouver. We also provide a range of services and events to students on campus that embraces the undergraduate life experience.

What I'm here to discuss with you today is a way that we can increase the efficiency of the service delivery in post-secondary education through improvements to student financial aid.

Presently in B.C., students are supported through the B.C. student loan program. This provides up to $9,600 for two academic terms for eligible students. Upon graduation they repay that interest and the principal of the student loan — a 2.5 percent interest rate above prime.

What many provinces are doing across the country — most notably in Newfoundland and Labrador; I'll use it as an example today — is implementing a program of non-repayable financial assistance for students. What this program does is ensure that students are able to afford school and don't drop out of school prior to graduation.

Just for some background numbers to provide context, in the 2013-14 year the Ministry of Advanced Education expects to have 202,000 full-time-equivalent students in the system. This will involve a $1.99 billion investment from the province and will have total operating costs of $5.1 billion when you include tuition and other sources of revenue.

What happens to these funds is they basically go to operate all the costs, as you guys know. The way that student grants will work into this is that when a student doesn't complete their degree program, the investment is not as efficiently used as it could be.

I understand the committee has heard from other institutions, such as Kwantlen, about how there is a challenge for these institutions to meet the demand for enrolment under current circumstances. Now, one of the challenges there is that many students they will take in will not finish their programs. A study was finished in
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2005 by the Canada Millennium Scholarship Foundation that studied persistence, which is the phenomenon of how many students start and how many students finish their program.

This survey involved 1,659 students from Simon Fraser University and found that over 20 percent of students that started their program did not finish the program. Looking at the reasons for that, one of the measures they looked at was persistence as a function of the type of financial aid that students received and how much financial aid they received on an annualized basis. What they did find is that the likeliness of graduation decreased as the amount of financial aid a student required would increase. It also was dependent on the type of financial aid.

For instance, a student who only used loans as a method of financial assistance and accumulated approximately anywhere from the range of $3,000 to $9,999 per year only had a 30 percent chance to graduate their program. That's compared to a student who took on the same amount of debt but had a combination of non-repayable grants and loans. They had approximately a 60 percent chance of graduating from their program. Basically, the argument I'm trying to illustrate here is that when you provide non-repayable financial assistance, you're going to increase the effectiveness of the system.

Based on the data from that survey and the numbers provided from the ministry, we can see that there is a relative difference in financial aid for students receiving a combination of grants and loans of a 25.6 percent increase in their persistence to graduation over time. What I would suggest…. The proposal I have here does not come with numbers attached to it. The nice thing about these kinds of programs is that they're fully scalable and work within the current infrastructure set up by StudentAid B.C.

Coming back to Newfoundland and Labrador, which I mentioned earlier. What happens in Newfoundland and Labrador is that if you qualify for a student loan, you also automatically qualify for a supplementary grants program, and that grant actually is equivalent to $80 per week. This money is used to help pay for tuition, books, rent and transportation — the full spectrum of costs. As we know, tuition is not the only expense associated with going to school. When tuition goes up, yes, it does make it more expensive, but it's also the cost of living that has a substantial effect.

Coming back to numbers within this province…. Based on the study, if we were to invest $1,000 in grants for every full-time-equivalent student…. Again, this is not what I'm suggesting — that we do that. It would work out to about $200 million per year. That would have the effect of providing a return on investment of about 15 percent. Roughly speaking, it's a 10 percent increase in cost but a 15 percent increase in efficiency of the system to graduation.

Moving away from grants…. I can provide those numbers and the studies to you guys electronically. I didn't want to clutter everybody up with paper. Moving over, more anecdotally, to student loans, there are other things that we can also do to improve the system. There's a phenomenon called risk aversion, which is basically when a student estimates that their risk in taking on a student loan may not be worth it to them over time.

What we see is that instead of being a student and working through their studies, becoming an engineer or a nurse or an accountant — many of those kinds of job areas that we need to fill in B.C. — these students are working at coffee shops through their studies. This is causing their studies to take much longer in time, and instead of having someone graduate in four years, they're taking five or six — in some cases, even seven years — to complete their studies. There's a real opportunity cost associated with that.

A few measures that can be taken to improve the loans program and make it more accessible to students is to actually all in all eliminate interest on the student loans. Eliminating interest would cost only $34 million per year, according to a recent article in the Vancouver Sun.

The real impact here is the psychological effect that this has on prospective students and loan applicants, in that the idea that their debt will cascade over time and accumulate and become unsustainable for them is effectively disarmed. This does increase access to that program. It is a very good program to finance your education.

Other areas that should also be looked at in this kind of review are the application requirements. What happens right now…. This may be different for somebody in Vancouver than it may be for someone in Prince Rupert or Fort St. John or Dease Lake or the Okanagan, for instance. When you apply for a student loan, it takes into account what we would call necessary assets. These are things like your car, for instance. I'll use that as an example.

In Vancouver I can use the bus quite easily. It's nicer to have a car, but I don't really need a car so much as I would if I were living in a rural area of B.C. However, the student loan program doesn't take these things into consideration, and many students may be disadvantaged because of their geographic location of study when they apply.

Other considerations are also parental income contributions. These are expected up to 48 months post graduation from high school. In theory, parents would be helping to finance an education for their children. In reality, many parents don't have the funds to do so or, for whatever kinds of reasons, choose not to. This creates an awkward situation for the students that are caught in between that 48-month period where they may not be able to access financial aid from the province but may also not be receiving it, as we might expect, from their parents.

Just in conclusion, what I’m trying to present here is ways that we can improve the efficiency of our cur-
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rent system. All of these proposals can be administrated through StudentAid B.C. and hopefully would accompany methods that we can look at how the decisions we make about investing in post-secondary education could be tracked over time.

In 2009 the federal government did discontinue the Canada millennium scholarship program, which was monitoring things like student loans and the studies I've mentioned today. Unfortunately, that research is not being done on a federal level anymore.

I think that is a third point that I'd like to make. It's that we do need to find ways to make sure that the investments of taxpayer dollars are accountable and to make sure that the spending that we do is made carefully.

D. Horne (Chair): Thank you, David, for your time. It would be interesting, I think, for the committee members if you could pass copies of those studies to us. You can either e-mail them to us at financecommittee@leg.bc.ca, or if you do have copies of them here….

I'll start, myself, before I pass to John. There was a recent study that was done in Ontario and Quebec on completion rates and, also, financial barriers to access to post-secondary education. The most interesting thing…. Quebec obviously has the lowest tuition rates as well as some of the most vibrant programs that have to do with grants and other things for students. They actually have one of the lowest completion rates in Canada for post-secondary education. So it's interesting to see that unfortunately, while I understand what you're saying, statistically that doesn't necessarily match up.

J. Slater: On that same vein, have you done any studies on other provinces where they make it a lot easier to go to school, less financially a burden? Like, what is the percentage of a B.C. student's tuition on his or her overall costs per month?

D. Clarkson: Yeah, that's a really good question, because I think what we do see very publicly is talks about tuition and the maybe more immediate costs that we see.

D. Clarkson: Yeah, these are maybe additional costs that we would consider. But if you're studying full time…. I had a prof tell me on Friday: "For every hour you're in class, you're spending three hours doing homework." Now, just doing the math on that, that's actually more than a full-time job with five classes.

When you do work, it cuts into your performance at school or the amount of time you're taking to graduate. As I mentioned, the really significant costs, and most of the costs, are those associated with simply your cost of living while you attend school.

If we look at provinces, we do see a disparity in tuition prices. Tuition is one thing that will affect accessibility. B.C. has the fourth-lowest tuition in Canada. In an ideal world, maybe there would be no tuition. But I think if we're to look at it pragmatically and try and find a way to maximize the effectiveness of spending, we would want to look at a targeted-needs-based financial system.

I can't say that I know the specifics of all the other provinces in the completion rates with respect to tuition and financial aid, but the studies we have looked at have shown a positive correlation — studies that have looked at multiple provinces — in all cases.

J. Slater: Just a supplemental to that. In your study, have you looked at the percentage of tuition compared to the actual cost per student for the infrastructure, for the staff, for all the rest of it?

D. Clarkson: It would depend. For instance, in B.C. it would depend on the institution that you did study at and the program of study. I could prepare some numbers for you. I don't have them here, unfortunately.

I can say that it may cost more to live in Vancouver, for instance, than it may in some other parts of the province. If you were studying at maybe UBC compared to Langara College, there again may be differences in your tuition. I can try and prepare some numbers if that would be helpful.

G. Coons: Thank you, David. We are hearing from other students. I'm sure all members here have heard all of the issues and concerns out there, especially in this day and age where post-secondary is so important.

Coming from the north…. It isn't only tuition you're looking at. You're talking about the needs-based targeting for funding and grants. You're looking at books, accommodation, meals, transportation, travel back and forth, and support networks if you have to travel away from home.

Now, you did mention student loans. What's your opinion of the prime plus 2½, and what's your opinion of grants currently in the province?

D. Clarkson: I do have some concerns with the amount of interest. B.C. does have the highest interest rate on student loans in Canada. Financing your education through students loans is a good way to go. The challenge is that there's an access problem with that, associated with the interest.

The bigger thing to it is…. There's a challenge associated, I think, when some students have to take student loans on and some don't. That's where the interest is especially problematic.

I think that it's one thing to say that everyone has to
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pay for their education on the same basis, but when we are charged 2½ percent above prime, we aren't paying on the same basis anymore. We're paying on an upfront basis with wherever we have money from or on a basis where we have to take the debt on in the first place and maybe pay significantly more because of interest payments.

Now, compared to grants…. I think that grants are in their whole own ballpark. They're significantly better than student loans. Studies have shown that on amounts over $2,000, grants are actually in every case a better method of financing with respect to persistence.

What grants do…. They're really able to ensure that the full costs are met. You did mention that there are a lot of costs. If student loans are only paying for $9,600 and you have $14,000 of cost but because of the loans program you are penalized for work and your own income, it does create this sort of — they're using the term donut hole a lot in the States — donut hole in your financing, where it's hard to find where to make up that money. You can work, but that work affects your eligibility, and your eligibility only covers you up to $9,600.

D. Horne (Chair): Thanks so much. We've reached the end of your time, so thank you for being here today.

We'll now call our next presenter, which is UBCC350.org. You have ten minutes, and you can get going right now.

J. Boak: Good afternoon. My name is James Boak, and this is Dr. Kathryn Harrison. We're here today on behalf of UBCC350, a unique partnership between students, faculty and staff at UBC brought together by our common concern for global climate change.

We're speaking today on behalf of our members, not on behalf of the University of British Columbia. Our focus is on B.C.'s contribution to climate change, both due to our greenhouse gas emissions within the province and our growing exports of fossil fuels.

Until a few days ago I was a student at UBC. I've just completed my master's thesis in mechanical engineering. I'm now beginning my search for a job, and I can tell you that there's a lot of opportunity in Canada if you want to go into natural resource extraction — in particular, in oil and gas. It's much more difficult to find work that is environmentally sustainable, yet it is only a sustainable economy that will create prosperity for Canadians now and in the future.

B.C. is my home. I want to make a life here, and I want to work on our transition towards a clean and 100 percent renewable energy system. The B.C. government has taken important first steps to reduce the greenhouse gas emissions within the province, yet at the same time we continue to pursue economic growth through production and export of fossil fuels. That includes potential construction of the Enbridge and Kinder Morgan pipelines, increasing our coal production and exports, and expanding shale gas production and LNG exports.

It's hypocritical to pursue emissions reductions at home even while we prosper from economic activities that contribute to much greater increases of greenhouse gases in other countries. As a recent graduate, I find this deeply disturbing on two levels. First, I don't want my career to be dependent on harm to others. Second, while the fossil fuel industries may be profitable today, they will soon go the way of the horse and buggy. We should be investing in the clean industries of the future, not those of the last century.

It's often said that these are investments in our future prosperity, but if we invest in fossil fuels, it's my generation that's going to have to deal with increasing floods, droughts, global food shortages and wars caused by climate change. As the intended beneficiary of those investments, I respectfully decline.

K. Harrison: Good afternoon. As James indicated, my name is Kathryn Harrison. I'm a professor in the department of political science at UBC, where I conduct research on climate change mitigation policies.

British Columbia showed genuine leadership when it adopted North America's first revenue-neutral carbon tax in 2008. At the Global Conference on Environmental Taxation last week, there was great interest from participants in many countries in B.C.'s experience. Since then I've been asked by the OECD to write a paper and give a presentation on the B.C. carbon tax. The world is watching us, and this is a critical moment for B.C.'s policy.

I will offer three recommendations concerning the carbon tax on behalf of UBCC350, but I want to stress first that there is already evidence that the carbon tax is working. Since 2008 B.C.'s use of all fossil fuels has declined, and it has done so by more than in other provinces. The single exception is aviation fuel, which is mostly exempt from the carbon tax.

University of Ottawa researchers Nic Rivers and Brandon Schaufele have conducted a very detailed statistical analysis of gasoline demand over time within British Columbia and also in other provinces. They conclude that at $30 per tonne of CO2, B.C.'s carbon tax is already reducing gasoline demand by 7 percent.

It's noteworthy that that's a much bigger impact on gasoline demand than you would expect from a regular non-tax increase in the price of the same magnitude, so the carbon tax is working even better than economists would have predicted in the transportation sector. B.C. now has the lowest per-capita fuel use in Canada and the lowest personal income taxes, and our GDP trend since 2008 is better than the Canadian average.

As the old adage goes: "If it ain't broke, don't fix it." B.C.'s carbon tax is a well-designed public policy that is working. One of the reasons it's so effective is that un-
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like most other jurisdictions' carbon taxes, and there are many countries that have them, ours is not riddled with loopholes.

The B.C. tax applies evenly to all users of all fossil fuels within the province. Any departures from that will undermine the incentives for emissions reductions, increasing the cost of meeting our provincial targets or preventing us from meeting them altogether. At the limit, a convoluted tax can provide a perverse price signal for investment in dirty fuels or greenhouse gas–intensive sectors.

Exemptions from the carbon tax also undermine the long-term price signal that is essential in driving investment toward a clean energy economy. It's not the $30-per-tonne tax bill in a given year that is transforming investment decisions. It's the expectation that that price on carbon is here to stay and will grow over time. If the province starts bowing to political pressure by granting exemptions, you, our legislators, will weaken that price signal even for the sectors that don't get a tax break or tax exemption, at least not this round.

It's also important to bear in mind that a carbon tax is supposed to cost more for those who are polluting more. That's the source of the incentive to reduce emissions. It's the whole point of the tax.

UBCC350's first recommendation to you is that you resist the temptation to grant exemptions from the carbon tax on grounds of competitive disadvantage. The mere fact of political opposition from aggrieved sectors of the business community does not mean that concessions are in fact warranted.

In a limited number of cases where reforms really are justified by thorough and dispassionate economic analysis, there are smart policy alternatives to exempting the tax, ones that can protect local jobs more cost-effectively while maintaining incentives for emissions reductions. For example, lump-sum payments, as have been built into Australia's carbon tax, can compensate for lost profits without undermining incentives for emissions reductions.

Second, although it is laudable that B.C.'s tax covers all fossil fuel combustion, it is the case that 25 percent of the province's greenhouse gas emissions still are not covered by the tax. With B.C.'s participation in emissions trading through the Western Climate Initiative on hold, it's critical to extend the carbon tax to fugitive and process emissions as soon as possible, and that is especially important given the significance of fugitive emissions in our growing shale gas sector.

That brings me to our third recommendation. B.C.'s natural gas strategy is not only projected to increase emissions within the province by up to 25 percent by 2020 — a development that demands increased commitment to, not abandonment of, our greenhouse gas target for 2020 — but those who model global energy use predict that LNG exports from British Columbia will increase global greenhouse gas emissions by much more than that impact within the province. That is just the tip of the iceberg.

Even as we struggle to reduce our emissions within the province by one-third by 2020, our growing exports or projected growth in exports of bitumen, coal and natural gas will undo that progress by more than tenfold, increasing global greenhouse gas emissions.

UBCC350 thus calls on the province to extend the carbon tax to natural gas exports until such times as our customers in other jurisdictions face a comparable price on their carbon emissions. Even better, let's have a public discussion in British Columbia about whether we want to pursue those fossil fuel development projects at all.

The transition to a sustainable clean energy economy will affect existing economic sectors in B.C. and Canada. That's unavoidable. The sectors that are the worst polluters must change how they do business, or they will go the way of the buggy whip manufacturers. Now is the time to make a transition to a clean energy economy.

One of the great obstacles to this transition is that those who currently profit from producing or consuming fossil fuels know who they are and what they have to lose. They will invariably raise the spectre of lost investment and lost jobs. The people who will gain jobs in a new clean economy don't yet know who they are or how much they have to gain, so they're not making as much noise in support of policies like the carbon tax as the fossil fuel–dependent sectors are making in opposition.

If we make concessions to allow greenhouse gas–intensive sectors to continue to thrive in British Columbia, we are forgoing other jobs and other investments in clean and renewable technology. If B.C. backtracks on our climate change goals, if the province waters down its world-leading carbon tax, if B.C. continues to build an economy that relies on fossil fuels production and exports, it's harming my future job prospects and the prosperity of my entire generation. I think we can and must do better.

J. Slater: We talk about the economy and how it's hurt, and how there's a possibility that if people aren't working they're not driving, so gas consumption would go down in a poor economy.

The second thing is those LNG plants that we're proposing. That stuff's all going to go offshore to India and China to — guess what — replace coal, so that analogy doesn't work. That's why we're trying to do it.
[ Page 2030 ]

J. Slater: …from the coal-fired burners — right? That'll be eliminated. As far as the world goes, that's going to really help.

K. Harrison: Mr. Chair, may I respond to both points? They weren't questions, but I would like to comment.

K. Harrison: The statistical analysis that was done by the U of O researchers did take into effect the economic recession, which does cause a reduction in gasoline use in all provinces. What they're looking at is the relative prices, the relative economic impacts, and how B.C. is doing compared to other provinces. They've controlled for the recession and still find, given that, that there's been an additional 7 percent reduction because of the carbon tax. They're very sophisticated. They took that into account.

There's no question that natural gas burns cleaner than coal, but it does not necessarily follow that our LNG exports will displace coal. A lot depends on the relative prices of different fossil fuels.

If, in the countries to which we're exporting, it's cheaper to use coal than natural gas, what natural gas we'll export is actually the cleaner product. If we export natural gas to Japan, it's going to displace nuclear. If we export natural gas to other Asian countries, it's going to displace investment in renewable energy, because that's what's more expensive.

Until such time as that is the case, those who do global energy modelling predict that expansion of the natural gas industry will actually increase, not decrease, global emissions, even though it's true that natural gas, in theory, is a cleaner product than coal.

B. Ralston: Thanks very much. I was interested in your comments on extending the carbon tax to natural gas exports. I did ask the then Minister of Finance in the spring about what kind of royalty regime would be devised for the LNG that was going to be exported, and he said that that was being worked on.

Would the carbon tax, in your view, then be blended with the royalty regime for LNG exports, or would this be a separate imposition of that tax in addition to the royalty regime that will go on the LNG that was exported?

K. Harrison: : On that one I'm going to admit that I am not an expert on what the best mechanism to blend the taxes is. I personally don't have an opinion on how best to take into account both things.

B. Ralston: Looking at the potential relationship between a royalty on natural gas exports, the LNG that's being spoken of. The Minister of Finance says that that's being worked on. Australia has one, and the eastern United States. I think those were the examples that he chose. This element that's been introduced by Professor Harrison is the relationship of a carbon tax to that export. I'm wondering what thoughts you might have had on that. If that's a question you haven't considered, I completely understand.

J. Boak: I have to admit I don't have expertise in economics, so I'm speaking from my own experience and just my opinion, but it seems to me that whether the fossil fuels are burned in Canada or whether they're burned in any other country in the world, it really doesn't make a difference to the environment. It really doesn't make a difference to the atmosphere.

Until such time that we have a comprehensive global agreement that would create a condition for global absolute reductions in carbon dioxide emissions, it's our moral responsibility to tax and reduce carbon emissions as much as we can.

J. Les: It's interesting, the notion that taxation is a moral responsibility. I hadn't heard it put in those terms before.

I gather from your comments that if you'd had your druthers, no natural gas liquefaction industry, thanks. Probably no coal industry and maybe a few others as well. How, then, do we generate an economy in a province like British Columbia? That's essentially what this committee has got to try and help figure out over the next number of days.

You might say: "Well, we'll invest heavily in clean energy." There are lots of examples around the world of countries that have done exactly that and have ended up with rather disastrous economic consequences. Spain is a good example of that — massive investment in clean energy, and rampant unemployment and other issues. The province of Ontario has experimented a lot with clean energy, and the bills are coming due as we speak. They're not pretty.

Just a caution. It's easy and sometimes somewhat flippant to say: "Oh well, we'll go clean energy, and everything is going to be grand." It doesn't always pan out that
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way. I think we need to be careful, even if we do believe some of the premises upon which your suggestion that these other industries should be phased out....

K. Harrison: We did not propose: "Let's shut down all uses of fossil fuels in British Columbia, starting today." In fact, one of the things I think was brilliant about B.C.'s carbon tax is that it was introduced at a low level, and it's being gradually increased. It's providing incentives for economic actors to look to the long term.

The question is: what signals are we giving economic actors to change their patterns of investment over the long term? The things we're doing now, and in particular the ways in which we're promoting development of fossil fuels, are incompatible with that long-term vision.

It's one thing to say: "Here's where we are, and here's where we need to go — gradually." It's another thing to go in the other direction. The International Energy Agency has said that we've got five years to turn this around. Those are not radicals. Those are not people who have proposed getting rid of fossil fuels.

One of the big issues they focus on is investment in infrastructure. To the extent we put a lot of money into big-bucks infrastructure right now that's predicated on fossil fuels, it makes it that much harder to make the transition, because nobody wants to build a pipeline, a plant, with a 25- or 30-year life and abandon it in five years.

We need to be thinking long term. We need to be thinking of moving from where we are now. We're not crazy, wide-eyed, "Let's all grow flowers," but that doesn't mean that we shouldn't be making really fundamental changes, starting now.

D. Horne (Chair): We'll have to move to our next presenter now, so thank you very much.

Our next presenter is the Canadian Wind Energy Association, represented by Nicholas Heap. Thank you for being with us today. You have ten minutes to speak, five minutes for questions, and you can begin now.

N. Heap: Terrific. Thank you for the opportunity to address you today. My name is Nicholas Heap, and I am the B.C. regional director of the Canadian Wind Energy Association, or CanWEA. CanWEA represents 420 member organizations and promotes the responsible and sustainable growth of wind energy in Canada through policy development and advocacy, and through public outreach and education.

Let me start by saying this. Wind energy receives no production subsidies from either the provincial or federal governments. I'm here today to say that in B.C., wind energy doesn't need incentives to compete with other energy sources when considered on a life-cycle cost basis. Not only that, of course, our fuel is free, making future generation costs much more predictable than fossil fuel–based sources. We can compete head to head with any other generation technology, but what we need is a level playing field and an open opportunity to compete.

In the past few years there has been a dramatic increase in wind turbine productivity. A reassessment of 121 onshore wind energy resources in B.C., a study completed this summer, indicates that with new turbines, the average B.C. onshore wind energy resource will produce 27 percent more electricity than B.C. Hydro's own estimate in the current draft IRP.

While this technology was being introduced, the price of wind turbines actually dropped as competition between suppliers increased around the globe. The cost of wind turbines is now 20 percent less than assumed in B.C. Hydro's draft IRP.

Worldwide the wind energy industry has grown at an exponential rate since the mid-1990s and now supplies 2 percent of the world's electricity supply. To understand what this means, consider that Canada consumes just over 2 percent of the world's electricity. Yes, wind energy worldwide generates as much electricity as the entire Canadian economy consumes.

With the third wind farm in B.C. expected to begin commercial operations by the end of the year, B.C. will have just under 400 megawatts of wind turbines producing power. That's 87,000 households, as many as there are in the Central Okanagan or in Kamloops and Prince George combined. That said, B.C. will still be the province with the least amount of wind energy relative to population and to total generation.

All that said, wind energy sees tremendous potential in British Columbia so long as we can compete on a level playing field. Here's what we know. We know, and you know, that B.C. is facing a huge, in fact unprecedented, predicted demand for energy to power new shale gas operations, new mines and new LNG terminals, all of which are key components of the B.C. jobs plan and the economic future of our province. There is a huge amount of onshore wind energy resources in B.C. to meet this demand, and our offshore resources are greater still.

Because hydroelectric dams with large reservoirs, like those operated by B.C. Hydro, are the most efficient and effective way of integrating variable generation like wind, B.C. could easily generate 17 percent of its total electricity demand from wind by 2025 using our existing dams, at almost no incremental capital or operational cost to B.C. Hydro and ratepayers, by integrating that variable power from wind. To the best of my knowledge, the number of places on earth with a comparable advantage in terms of integrating large amounts of wind can be counted on the fingers of one hand.

Moreover, unlike our large and small hydro-generation
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projects, B.C. wind farms produce most of their electricity in the fall and winter months when we most need it and least during freshet, when demand is at its lowest. This is to say that if we build a lot of wind power to meet our increased energy needs, we will actually end up with an improvement to the great electricity system that we already have, one better suited to the needs of British Columbians.

Wind energy development brings development and jobs to B.C. communities. Supplying 17 percent of B.C.'s electricity through wind power will generate $16 billion of investment in B.C. and over $3.7 billion of direct benefits to B.C. A conservative estimate of job creation found that this would also generate 30,000 person-years of employment, including 7,500 person-years of ongoing operations and maintenance jobs over the first 20 years. These would be well-paid, reliable jobs based in small towns and in rural and First Nations communities across the province.

Moreover, if the provincial government were to encourage the development of a manufacturing sector for wind, direct economic benefits could increase by as much as 50 percent. Employment totals could double.

Wind energy jobs are the true evergreen jobs for our new century. It's splendour without diminishment, to coin a phrase.

I'm sure many of you are aware of the many environmental benefits wind energy provides. It produces zero air pollutants, toxic liquid or solid wastes in generating power. It neither consumes nor diverts water. Its environmental footprint is minimal. Between 95 and 99 percent of the area required for a wind farm can continue to be used as it was before, whether that's as agricultural land or as a timber licence, or what have you.

Of course, wind energy emits virtually no greenhouse gases, even when the manufacturing, maintenance and decommissioning of the turbine is included.

I will say this. To the extent that pollution and emissions impose real costs now or later on British Columbians, any decision to protect a polluter from paying these costs grants the polluter, in effect, a subsidy.

I'll be more specific here. For example, exempting upstream oil and gas from the carbon tax is a subsidy. Additionally, any move to exempt electricity generation in B.C., whether for LNG plants or not, from the existing obligation in the B.C. energy plan to purchase sufficient offsets to render the electricity carbon-neutral would also be a subsidy.

To provide these subsidies is to assume that British Columbians attach zero value to greenhouse gas emissions. I think you would agree that if there is anything that British Columbians have been very clear about for a long time now, it is that there's a real value to clean air, to reduced impacts on our water resources and to reducing greenhouse gas emissions.

We feel that it is in the provincial interest to invest in your civil service for the benefit of ratepayers and citizens. Wind energy projects and the electricity we generate cost more the longer it takes overworked staff to process applications and approve permits for development. Rather than call for less bureaucracy, we're calling for increased resources in the environmental assessment office and elsewhere in government so that staff are able to efficiently review projects and, equally, so that the people of British Columbia have full confidence that the approved projects are in the public interest.

Finally, we'd ask you to support continued investment in our electricity system. I've already noted that B.C. already has a great electricity system. It does. It's one of this province's greatest assets. But having been bequeathed our great infrastructure system, our own task is to maintain and improve it. This work requires real money, and it is essential to B.C.'s continued prosperity.

These investments are in wind energy's interests, of course. But more importantly, keeping our dams in good order and our transmission grids strong and reliable is in the economic interests of all British Columbians, whether you live in Vancouver and work downtown or in the Interior and work in a mine or a mill.

I'll conclude by reiterating that wind power is now a fully competitive technology. We don't need government subsidies. We just need a level playing field, one in which the people of British Columbia are not obliged to subsidize the pollution costs of other technologies. That means protecting and expanding the carbon tax and upholding the B.C. energy plan's requirement that all fossil fuel generation in B.C. be offset as of 2016.

We urge the government to provide adequate resources for permitting and to enable policy stability. This will enable timely turnaround of projects as well as bolster public confidence in the government's oversight of development.

Finally, we urge you to make sure that our existing generation and transmission system is maintained and strengthened to meet the needs of British Columbians and the province's economy now and in the future.

Thank you for this opportunity to address you, and I'd be pleased to answer any questions you might have.

B. Routley: Thank you. I'd be interested in what you see as the potential increase in the coming number of years. Also, I certainly take your point — it's an interesting one — on the fact that there's a de facto subsidy now to the oil and gas sector and others by not paying their carbon tax.

I also wanted to know if you're aware…. I'm sure you are. I was in Dawson Creek and saw the wind farms there, actually, with Alberta Energy signs on them. That bothered me. I wondered why that didn't say B.C. Hydro. Have you got any comment about that? Should be B.C. Hydro be directly getting involved?
[ Page 2033 ]

N. Heap: I think you've got three questions there. I've forgotten your first one already. I'm sorry.

N. Heap: AltaGas is the operator. Or I think they're a co-operator of the Bear Mountain facility. They're an equity investor in the project, so they get their name on the side of the turbines. If B.C. Hydro were an equity investor in the project, I imagine the same would be true of B.C. Hydro.

N. Heap: I think there is the potential for B.C. Hydro to be an equity investor if there is a change in policy. At the moment I don't believe that's a possibility.

Your second question was…. You had made a point about the subsidy. Was there a question involved in that?

B. Routley: No. The total potential increase in wind farms that you see in the province right now.

N. Heap: Oh yes, of course. We actually did our wind vision, which I've included in the materials you have, last year. When we were developing this, we were looking at demand going forward. B.C. Hydro's load forecast as of the beginning of last year showed very little growth in electricity demand, which didn't make sense given all of the announcements we were starting to see about shale gas development, about LNG facilities, about new mines opening everywhere.

All of these are extremely energy-intensive. So when we took a look at the kind of development that was coming forward — this was in the middle of last year — we took a conservative guess as to what would actually go forward but were aggressive in thinking that we would want to electrify as much as possible because of the huge greenhouse gas benefits thereof. That's how we figured we could easily build over 5,000 megawatts of wind to 2025 to meet this energy demand that's coming to the province.

By aggressively electrifying it, we could hugely increase greenhouse gas emission reductions. We actually then commissioned the Pembina Institute to take a look, saying: "If we were to follow this plan and aggressively electrify this new energy use coming to the province, what kind of greenhouse gas reductions would we get relative to business as usual if they were supplied by natural gas or diesel?"

The answer that we got from Pembina was that by 2025, we would reduce our greenhouse gas emissions in the province by 8.8-something megatonnes a year in 2025. So it's almost nine megatonnes, and right now the province as a whole only emits 64 million megatonnes. It's a huge, huge emission reduction opportunity. In fact, I actually can't think of a larger single measure that one can take to reduce greenhouse gas emissions than to aggressively electrify the huge amount of energy demand that's coming to this province.

P. Pimm: A couple of things. Obviously, most of the wind opportunities are right in my region. You mentioned a couple of things. The total amount of power you're producing now — could you bring that back? Is it the total capacity? How much are you actually generating? Those two things.

N. Heap: I think I talked about…. By the end of this year we'll have just under 390 megawatts. Right now we have 247 megawatts, but we've got the Quality Wind project coming on near Tumbler Ridge.

P. Pimm: So 390 megawatts of total power. You're running at a capacity of about 17 to 25 percent, something like that?

P. Pimm: Okay. Now the other question I had. You talked about the permitting side of things. I'm interested in this. You're saying that there's a problem in permitting? My understanding is that permitting is well under control. I'm sorry. That's facetious.

N. Heap: My understanding, hearing from my members, is that more resources in permitting and policy development would result in faster processing and moving forward on projects.

P. Pimm: Can you tell me how long, from start to finish, for you to get a permit to get one of your facilities up and running?

N. Heap: It's a bit of a moving target. Ideally, what people bank on is one year for permitting and applications and so forth, and then three years from the award of contract to the commissioning of a project. But the actual timelines are different from that. I can get back to you with a more detailed understanding of what they currently are. It's a bit of a moving target.

D. Horne (Chair): We've reached the end of our time, so I want to thank you for your presentation.

We'll call our next presenter, which is the British Columbia Teachers Federation. Susan and Larry, welcome. You've probably heard it a million times now, but you have ten minutes to present and five minutes for questions, following that. So anytime you're ready, please begin.

S. Lambert: Thank you for this opportunity to present to the Select Standing Committee on Finance. Our brief boils down to a request to you to recommend to government that we adopt a plan to bring public education funding in B.C., at the beginning, to the national average in Canada. So I'll give you the business case for that. I'm going to start on page 1, and I'll rapidly go through this brief to summarize it for you.

Yes, enrolment has declined in B.C. over the last decade. And yes, the number of dollars spent on education has increased. But that narrative doesn't tell the whole story. StatsCan data shows that all provinces experienced declining enrolment between 2005-06 and 2009-10, except Alberta. Yet over the same period the number of full-time-equivalent educators increased, on average, by 5 percent in Canada and decreased by 2 percent in B.C.

How have those decisions affected students in schools? If you turn to page 3, you'll see the first chart. British Columbia had the worst student-educator ratio in Canada — the worst — in 2009-10. Those are the latest figures that we're able to obtain. The student-educator ratio is the number of students per educator — not per teacher but per educator. That includes administrators.

In Canada that was reduced over the same period to 14. Here in B.C. we went really high about five years ago to 17.7, but we've maintained at 16.6 at this point — above, as I say, the national average and the worst ratio in Canada. That translates into an inability in classrooms in schools to offer students the services they require.

So despite the declining enrolment numbers, we've actually had an increase in the number of students with special needs in B.C. — about 1,560 more students designated with special needs. You would expect, then, that there would be more teachers for those students. But instead, we've had a decline of 752 teachers who teach to students with special needs.

At the bottom of the page — English language learners. There's been about a 17,000 population increase in English language learners, and that's been met by a decline of 340 English-language learning teachers.

We've lost counsellors, about 117 over the decade. We've even lost teachers of our aboriginal student population, and we've had a significant increase in the number of students of aboriginal background from about 46,000 or 47,000 to about 61,400 today.

I'm a teacher-librarian. We've lost 30 percent of the teacher-librarians in this province, and this in a decade which has been characteristically marked by one that's trying to achieve literacy goals, trying to achieve the most literate population — well, variously — on the continent, and so on. The presence of a teacher-librarian in the school outside of the socioeconomic area of the school is the key indicator — the key indicator — of literacy success.

Of course, we've been saying over and over again that class size and composition have suffered.

The losses of the services identified here are the inevitable consequences of increasing demands and inadequate resources. Each unfunded demand means the sacrifice of another program. So when you mount an ERASE Bullying program or you adopt an education plan for the province or you suggest that children should be taught about safety on the Internet or healthy eating habits or any of these critical programs…. When they're unfunded initiatives, that means there's a sacrifice on the other end.

We ask, we urge, that you recommend to government to make a plan. We know that we're not going to get back to where we were magically overnight. So we suggests that this plan, as a start, get us up to the national average spending and resourcing of public education that is the norm in Canada.

We would obviously like to be above the norm. We would obviously like to be one of the best public education systems in the country, and parents in B.C. expect that. They expect us to be one of the best. But as an initial realistic goal, we're suggesting that the national average is a good benchmark.

On page 7 you'll see what it would cost us to match some of those key indicators of funding support. For example, the percentage increase in operating expenditures as seen between 2005-6 and 2009-10…. If we brought that up to the national average, that would cost about $377 million.

If we brought our K-to-12 funding as a percentage of the GDP from our current 3.3 percent to the 3.6 percent which is the national average, that would cost about $609 million. If we reduced our student-educator ratio to the national norm, we would have to hire 5,800 more teachers. If we reduced our student-educator ratio to the national average, we would have to hire 5,800 more teachers in this province, and that would cost about $500 million.

We understand that what we're asking for is costly, and we don't want to ask for it at the expense of other public services. We believe that we need to bring in the taxation necessary to support the plan. We call for improvements in education funding not by reducing other public services but by increasing taxes to generate the necessary revenue needed to adequately meet the needs in the range of public services and, obviously, in public education.

We are supported in this by a series of national and provincial polls that say that parents and the public in
[ Page 2035 ]
this province want a high-quality public education system. Public education is a public good. It provides economic, social and cultural benefits to our society as a whole.

We urge the committee recommend to government a plan to increase the funding support for public education in B.C., initially at least, to the national average and to make taxation decisions that would support that plan.

I'm going to take you through three of the charts in the appendices. The first one, on page 9, shows you that in B.C. in 2005-6 we spent $131 per student above the national average. But now, in 2009-10, the latest figures that we have, we spend $412 less than the national average per student.

If you go to page 14, I'd like to show you once again — and I've done this before — the amount of services that we've lost. Library services, 29 percent. So 29.7 percent of teacher-librarians in the province lost to the system. Counsellors, 11.9 percent or 12 percent. Special education specialists, 18.6 percent. English language learners, 33.7 percent. Even in our aboriginal education teacher cadre we've lost 1 percent of those teachers when we've had such an increase in aboriginal students.

Then at the very back, once again, what I think is probably the most telling statistic: if B.C. achieved the same student-educator ratio as the Canadian national average, it would create 5,800 more teachers in this province to meet the needs of the students of the province.

D. Horne (Chair): Thank you for your presentation, and I'm sure we have a number of questions. We'll start off with John Les.

J. Les: Thank you very much for your presentation. I think you're very clear and to the point. You're looking for another half a billion, give or take, and you say that should come from additional taxation. Again, that's very clear. Help me out. Where should we impose that additional taxation, and what effect would that have on whatever sector of the economy that you would recommend?

S. Lambert: Well, I think we looked at the history of taxation in the province, and we had a 25 percent all-round tax cut about a decade ago. That reduced your revenues by 25 percent, obviously. But it also set up a huge disparity between the rich and the poor. It increased the disparity between the rich and the poor in the province.

So what we would suggest is that you look at the top end, you look at corporate taxes, and you increase those proportionately so that we can afford the public education services that we need in this province and the other public services that we need.

G. Coons: Thank you, Larry and Susan, for the presentation. It's very in-depth. Being an ex-teacher and travelling to schools and school districts and hearing the same story, we start looking at library services, counselling, English language learning, special ed, aboriginal ed — the cuts that we've seen. We hear it, and we've been hearing it for many years.

I do acknowledge that you see a plan being developed, so it isn't an all-out ask of $1-point-whatever billion. But at the start of a plan….

S. Lambert: Well, if it were up to me, Gary, yes, it would be that kind of ask. But we're talking about….

G. Coons: Yes, but I notice the specific language — the start of a plan to work towards bringing up to the average GDP spent by the percentage that Canada spends. What is the difference between the two — between what we're spending as far as GDP and Canada?

S. Lambert: What we spend is 3.3. The 3.6 is what's spent nationally, on average. You'd think that 3.3 or 3.6 would be a tiny little bit — wouldn't it? But in fact, it's hundreds of million of dollars.

M. Dalton: Thank you, Susan, for the presentation. Like Gary, I'm a teacher. If you can help me with the figures, one is that the decrease in the number of teachers is about 2 percent. But my understanding from what….

M. Dalton: I thought you mentioned that the number of teachers overall has decreased by about 2 percent.

S. Lambert: I said that in specific categories, there have been decreases in the number of teachers.

M. Dalton: Oh, okay. Right. Obviously, there's a correlation with the enrolments. There have also been, I believe — maybe you can address this — changes as far as how school districts can use the resources, the pot. Beforehand it used to be designated to whether it be a teacher-librarian, which I was before, or special needs. Now there has been more of a mix. If you can make a comment on that and perhaps also the fact that last year there has been an increase of $80 million a year for full-day kindergarten.

S. Lambert: Yes. There used to be targeted funding for categories. I think in our last brief we talked about targeted funding last year. We didn't go there this year, but I think we are developing an understanding that if you don't have targeted funding, you do have the vagar-
[ Page 2036 ]
ies of the needs in a district, especially when there's tight funding, which lead to the diminishment of services that are critical for students, especially students with special needs. That's what's happened with that flexibility that this government brought into the funding formula for boards.

But what the result of that is — and it's been exacerbated by the tightness of funds — when you take away the targeted ratios and formulas that we used to have and you decrease funding overall because the needs have been increased, the demands have increased…. What has happened is especially our most vulnerable students have been left without programs that they need.

It's not in our funding brief, but I think that a look at some targets is also something that would be beneficial for public schools.

D. Horne (Chair): Sorry, Marc. We're running out of time. I need to move to Bruce. Sorry.

B. Ralston: I think just an unstated assumption that you've made in your presentation is that more funding will improve outcomes, both academic and social. Can you give some examples? I think that's an assumption that you've made. I think it's the right assumption, but you haven't explained that. You've simply focused on an increase in funding. So to those who might make that objection, what would you say?

S. Lambert: Well, I would say that it's just common sense, and it would be counterintuitive to think otherwise. Having more one-on-one time, smaller classes, does mean that children have better opportunities to succeed in schools.

We have OECD results which I find very concerning. It seems to me that ten or 12 years ago we were vying with Finland for No. 1 in the world. We're now down to No. 8, vying with places like South Korea and Singapore and so on. So I think there has been a drastic decline in what we're able to offer children, especially children who require the most attention. The morality of that is something that's very, very troubling. But if you wanted to see the scores, then you have to look at the OECD comparisons and our decline in that arena.

D. Horne (Chair): Unfortunately, we're over time. I used my discretion as the Chair to allow us to have a little bit extra time. But I thank you for your presentation. A really quick last question that I have just on the one graph, and that is on the student-educator ratio. Does that include teaching assistants as well, or not?

D. Horne (Chair): I'm well, thanks. I think you've heard it a couple of times now. You have ten minutes to present and then five minutes for questions, and you can start right now.

L. Cornish: Well, ladies and gentlemen of the committee, good afternoon. My name is Laura, and I'm a resident of Vancouver. I work in the clean technology sector, but I'm here speaking as a private citizen, and I'm passionate about the opportunities to strengthen climate's leadership.

I'd like to thank you for this opportunity to address your consultations with British Columbians for the 2013 budget. I appreciate that as your job, you spend much of your time listening to all the different ways that people think B.C. should spend more money on their programs.

Today I'm here to speak on behalf of the climate and to express my support for increasing the carbon tax. For me, I think the science on climate change is clear, and all governments, including the province of British Columbia, have a responsibility to both mitigate and adapt to its impacts.

Leading economists around the world all recognize that a price on carbon is an efficient and effective way to reduce greenhouse gas emissions. Where other jurisdictions, such as Sweden and Norway, have implemented carbon pricing, the policy has worked as planned. For example, Sweden has grown its economy 44 percent since 1992, the year it introduced the carbon tax. Meanwhile, greenhouse gas emissions in that country have fallen nearly 10 percent.

We have very good examples from around the world of the carbon tax working, and I believe we also have evidence, so far, of the carbon tax working here in B.C. We haven't had negative effects on the economy, but we have seen our greenhouse gas emissions go down.

I'd like to make three recommendations today. These recommendations are informed by research that I undertook to prepare for this meeting, including reading the joint submissions from B.C.'s labour and environmental organizations, as well as my own experience.

My own experiences are drawn as a young person in Vancouver — I'm a resident of Vancouver — as a re-
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searcher at UBC studying how to engage people and communities on climate change, as an employee of a B.C.-based clean technology firm that sells on the global market and as a former employee of the climate action secretariat with the province who conducted a significant amount of public outreach on B.C.'s climate action plan across the province and specifically with you.

Based on this, I would strongly encourage the province (1) to commit to a new schedule of increases while increasing the credits to low-income households; (2) to broaden the coverage of the carbon tax to include process and fugitive emissions in the industrial sector; and (3) to reinvest the revenues from an expanded carbon tax to finance and fund the transition to a clean energy economy, including renewable energy, public transit, energy efficiency retrofits, district energy, fuel-switching and other infrastructure as examples.

I'll now address some of my reasons for these recommendations in sequence. Again, I recommend that the province maintain and increase the carbon tax, at the same time increasing the credit for low-income households.

Modelling by Simon Fraser University professor and Nobel laureate Mark Jaccard suggests the price for carbon needs to be $200 by 2020 for Canada to do its part to keep global temperature from increasing beyond 2 degrees. While this is an impractically ambitious target under the current circumstances, B.C. has shown already that we can make significant progress towards our 2020 goal without inflicting any measurable damage to our economy. We should be continuing the steady progress on a schedule that can become more ambitious as other jurisdictions begin to catch up.

B.C. should retain its carbon tax and commit to a new schedule of further increases. This will provide certainty to the private sector and allow businesses and industry to plan far enough in advance to avoid unnecessary adjustment costs.

As low-income households both contribute the least to climate change and are disproportionably affected by increasing fuel and food prices, the rebates offered to low-income households should continue to increase so that the effect is always progressive and never regressive for these low-income households.

For my second recommendation — that you broaden the carbon tax — I would encourage you to expand the coverage to include process emissions from the cement, lime and aluminium production and also fugitive emissions from flaring, venting and leaking in the oil and gas sector. Broadening the coverage to include all sources of emissions both makes the tax more effective and addresses issues of fairness that, in my opinion, are very important to British Columbians.

For my third recommendation, which is to reinvest at least a portion of revenues from the expanded tax, I recognize the efficiency of the revenue-neutral design of the carbon tax. But I still think there are benefits to directing at least a portion of the revenue or the additional revenue from the expanded carbon tax into on-the-ground solutions.

Reinvesting at least a portion of the revenue could provide a sustainable funding stream for public transport, fuel-switching and building retrofits, as a few examples. These investments would create green jobs, ease the transition to a green future and give British Columbians a tangible sense that the carbon tax is doing its job. British Columbians need to feel like they are not acting alone. They need visible evidence of action in order to feel like progress is being made.

Further, based on my experience talking about B.C.'s climate action plan in the north and interior of B.C., I would strongly urge the province to really think about what British Columbians want and need to prepare for a low-carbon future. We need to think about what a low-carbon future looks like for rural B.C. so that when we implement taxes like the carbon tax, it's not felt that this is only something for urban British Columbians.

I recognize that in Vancouver I have alternatives, such as car-sharing and public transit and bike lanes. These types of things aren't available in rural areas, but that does not mean these areas cannot also be part of a prosperous low-carbon future.

Revenues from an expanded carbon tax might also be used to create an innovation fund to ensure carbon-intensive industries remain competitive in the global marketplace. I recognize that B.C.'s industry operates in the global marketplace and that this would place some industries in B.C. at a global disadvantage. But I think we can design policies that would address this, while still making the tax overall more effective.

I recognize that these recommendations are bold and that the carbon tax has not been popular in B.C., but I still argue that we could have done a better job of talking about why we need the carbon tax in B.C. and why the carbon tax can actually be a good thing for British Columbians.

Responding effectively to climate change requires bold action, and this province's leadership serves as an extremely important example for other jurisdictions to follow, though I recognize that other jurisdictions have not followed as quickly as we might have hoped. It is not a reason to stop. This leadership has garnered B.C. an excellent reputation abroad, and this reputation is one that many companies, including mine, benefit from.

In conclusion, I would strongly urge you to be forthright and transparent about what the province hopes to accomplish with the carbon tax and why. Today the government is making significant investments in oil, gas and coal infrastructure. This sends the global community a mixed message that undercuts our commitments and weakens our credibility.
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I urge you to think about prosperity with a long-term lens. We have a lot to work with in B.C. We have abundant renewable energy resources, a skilled workforce, a strong engineering and knowledge sector, and a small but growing clean tech sector.

With the right policy moves, we can leverage these assets to begin to create a different economy — one that is less dependent on the whims of the global commodities market.

I'd like to thank you very much for the leadership that you've shown so far in adopting a carbon tax. As a young person who's very aware of the risks our province and our planet face from climate change, and of the opportunities available to us in the growing clean tech sector, I sincerely hope the province continues to show leadership and innovation on this issue.

All right, we'll now call our next presenter, which is Vancouver Community College — Kathy Kinloch, I believe.

Kathy, welcome to the committee. I don't believe you actually have heard this so far. You'll have ten minutes to present and five minutes of questions. You could start at any time now.

K. Kinloch: That's great. I'd like to introduce my colleagues who are joining me here today. In the course of the few minutes we might have for questions, they would be able to amplify any points I've made. On my left is Bill Radford, who is vice-president, community and advancement at Vancouver Community College. On my right is Doug Callbeck, who's the interim CFO and vice-president, administration at the college as well.

Thank you for the opportunity to make this submission to you today. I'm sure you're tired toward the end of the day, and I'll try and make it as brief as I can. I do respect and honour the fact that you're garnering the public input into the 2013 budget process.

We recognize the many challenges you face, because we face them on a micro level, compared to you, on a daily basis. Before us collectively, the challenge is: how do we maximize the limited resources to address public policy needs and public expectations, to take opportunities and current challenges and turn them into opportunities?

As you consider and deliberate these challenges, we encourage you to support the critical role that post-secondary education plays in increasing productivity and addressing the distribution of income in B.C., as so aptly noted recently by my colleague Dr. Don Wright, president of BCIT. I actually agree with Don's conclusions in his recent op-ed that we as a sector have to do better. We know there's work to be done. We want to start the conversation with government and, within the post-secondary, to continue that conversation.

VCC actually takes great pride in our role within the system for our students, many of whom are marginalized in this urban setting.

Our goal? Simply, student success. Essentially, VCC is about access — providing bridges and career laddering for a broad student base in the downtown and East Vancouver areas. Our 2011-14 strategic plan, which actually heard over a thousand voices from students, faculty, staff and employer, sets out four strategic themes: student access and success, operational excellence, partnerships and collaboration, and building our brand.

This plan is simply a statement of our commitment to our students, who include new immigrants and urban First Nations students, to provide opportunities that will increase their knowledge, skills and competencies — all ingredients, we believe, for successful employment.

Let me give you a very quick highlight of our college. We're one of 11 B.C. colleges, and we're the only public sector community college in the downtown and East Vancouver side. We're uniquely positioned on two campuses: downtown and Broadway.

We offer, like others, certificates, diplomas and bachelor's degrees in a wide variety of career disciplines, including health, hospitality, applied business, transportation, culinary and other skills training. We welcome over 23,000 students annually, including a growing number of aboriginal students and over 600 international students from more than 42 countries.

It's important to note that nearly two-thirds of our students come to VCC having completed some form of post-secondary education, ranging from college certificates to postgraduate degrees. Our key message is that our students are a diverse group but they all have a common ultimate goal: meaningful employment in the workplace.

I'd especially like to note that VCC is the largest provider of English-as-an-additional-language — English as a second language, it's called — programs in the post-secondary system. Of that segment, VCC's English language services for adult programs represent approximately 37 percent of that portion.

As the federal immigration policies come toward us in 2014, VCC dearly wants to ensure that we remain well positioned. We need the continued support of the provincial government to ensure that VCC continues to offer access to students who are in ESL.

VCC, like other B.C. colleges, will require a strong provincial voice to ensure that learning opportunities remain in the public sector during this shift. At a time
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when the province is predicting that between 2016 and 2020 the demand for workers will outpace the supply, when 78 percent of job openings will require some form of post-secondary education and when jobs require increasing levels of skills and training, the significance of ensuring a sustainable public sector college system in B.C. has never been more important.

There is an opportunity to work together with others, not only in post-secondary but in K to 12 to leverage existing opportunities. I believe we must work collaboratively with our partners alongside government to take a systems view in providing relevant post-secondary education to make sure our students have the necessary skills to pursue their economic goals.

VCC is a place that has asked the challenging questions and will continue to do so. How can it be done better and smarter? How can we work together to achieve our shared goals?

We ask for your support in targeted incentives from government to build capacity and collaboration within the sector to produce more graduates annually in key market segments that are needed, such as health, applied business, hospitality and skilled trades. VCC strives to increase access for immigrants and other marginalized groups in areas that are labour market–critical. We welcome these opportunities, and we look forward to profiling more in the future.

We're also willing to work with government on provincial policy development that will promote and celebrate our unique difference. For example, VCC will continue to ensure best practice in areas such as essential skills programs, all aimed at improving access and student success. We recognize our role, our differentiating factor, and we are not striving to be anything other than creating a pathway for success.

Because we offer applied education and training, our job placement rates are high. In fact, they're among the highest in the province. We place 85 percent of our graduates in a work setting within two months of graduating.

Post-secondary institutions really can and do play a leading role in increasing productivity and performance and in strengthening the economy. VCC strives to be a key driver in ensuring that productivity is increased and to address the skills shortage. Our connection to industry, community engagement and commitment to producing highly skilled graduates mean that we can directly contribute to B.C.'s prosperity and can do so by being relevant.

One example of our commitment is our focus on strengthening our collaboration with community and industry student experiences, curriculum laddering, and addressing shared capital interests with a shared view to maximize the training of sufficient persons with job-ready skills to meet B.C.'s future demand for skilled workers.

An example of laddering is the opportunity we are exploring with BCIT in laddering, for example, our licensed practical nurse students to the BCIT BSN program. There are many other disciplines and areas we can look at to ensure students are successful academically and can find the employment and salaries that support them to live in an urban environment.

We believe that capital ventures in the downtown core, such as the development of what I'll call a collaborative campus, would encourage sharing and partnerships and acknowledge that students have the skills they need as they enter a world of access.

We encourage government to support key organizations in the Lower Mainland and B.C., such as the Immigrant Employment Council of B.C., that involve focusing on the link between employers and education, connecting the workforce needs with the immigrant talent pool and providing a strong voice for employers in the development of policies, programs and services.

Education is really just one way that VCC affects the area in Vancouver. We take great pride in our collaborations and our commitment to community engagement. For example, we partner with several Lower Mainland school districts to provide career exploration and skills training to high school students. We need to do more.

Our trades programs are an essential part of that skills development and include culinary, hair design, training in automotive from all ends, and commercial transport industries.

Our culinary program is actually internationally renowned. When you hear the word "VCC," you often hear of that program. In 2009 VCC student chefs won the right to represent the school, the province and Canada in the 2012 Culinary Olympics actually happening right now. Why is that important? They have jobs in Vancouver, they'll transfer that knowledge by example, and they're already doing that by hiring other graduates.

We have strong ties to the Downtown Eastside community and are engaging very seriously in creating field experience for our students in social enterprises such as Coast Mental Health and businesses such as Save on Meats, where VCC culinary students have daily opportunities to apply their skills while helping to support residents of the Downtown Eastside.

We also work closely with the city of Vancouver and are pleased to be hosting the upcoming Downtown Eastside local area planning group, a post-secondary education round table to determine opportunities for post-secondary institutions and how we can support the Downtown Eastside area.

Those are samples, and as I said at the outset, we are about access — I hope you've heard that from us — providing bridges for new Canadians and marginalized population groups, and about career laddering.

We trust that we demonstrate that we are interested
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in building human capital rather than merely filtering it, and looking at the real value-add as time well spent in post-secondary education. VCC needs to, and will continue to, ask that we are adequately focusing our resources to ensure quality post-secondary is broadly accessible for everyone who will benefit from it. Thank you for the opportunity to speak.

D. Horne (Chair): Thank you so much for your presentation. We'll start our questions with Dave.

D. Hayer: Thank you very much for a very good presentation about Vancouver Community College. The success of VCC, especially for students getting jobs, is really appreciated. I think most British Columbians will appreciate how successful you've been.

My question is: do you have very many foreign students also attending your college? Also, over the last ten or 11 years have the numbers increased or decreased for foreign students attending? Is it a positive for the college to have foreign students, or is it a negative? I have heard something on both sides of the argument, and I was just wondering about your perspective on that.

K. Kinloch: I'll just make one comment and then ask Bill Radford, my colleague to my left, to respond. Our student population is mainly new Canadians and immigrants. We're very proud of that, and we welcome that. We don't see foreign students as being any different than our student population. They represent the demographic of the downtown Vancouver area — not just the downtown but the Lower Mainland — and we're pleased to serve those students. That's what we believe our mandate is.

B. Radford: At present we have about 250 full-time-equivalent international students, which is about a 600 head count. That has been pretty steady over the last few years. There has been a downturn about five years ago with English-as-a-second-language programming, when private colleges came into that particular domain.

I should point out that for us, international students, as the president says, are no different than other students. In fact, unlike the universities, our international students mostly immigrate. Our process is to assist them in doing that and becoming part of the community and becoming part of the labour force. Our processes are intended to do that. They're not, for us, a cash cow at all. They're part of becoming British Columbians.

B. Radford: No, international students pay the full fee until they become permanent residents.

B. Routley: In terms of accessibility for students, I wondered if you had any data in terms of the number of students that had been turned away or actually been on wait-lists for various programs, and whether or not you could identify for us some of the areas where there's not enough opportunity for students.

Also, a second question. I was very impressed with the 85 percent placement of students. I wondered how that worked in terms of apprenticeships. Were you having the same kind of success with apprenticeships?

K. Kinloch: I'll start, and then Bill will probably chime in. In terms of wait-lists, I'm always a little skeptical about wait-lists, because we don't measure consistently between institutions, and wait-lists mean different things to different people.

I can tell you what I believe, over my years of experience, the nudge is. It's in the health areas. It's in key trades areas. Even though we have increased access announced recently, there are still issues there. I want to go over to our largest wait-list in a minute to Bill. But basically, to your question of apprenticeship, yes, the system…. I'm on the Trades Training Consortium. I'm a member of that, as are the other presidents who offer trades training in the post-secondary sector, and we're all experiencing issues with apprenticeship.

The real challenge is the need to make the pathways into the skilled trades area as simple as possible, and that includes employers providing apprenticeship sponsorships so that that avenue is open to all of our students. That continues to be a key issue for the trades sector.

B. Radford: Our largest program is ESL. It's also our largest waiting list. We applaud the government for introducing tuition for ESL, which we think is a positive move, but we do have waiting lists. For example, right now we have waiting lists for students who can't get into our program, even in January, for ESL.

G. Coons: Thank you for presenting, and thank you for the visual, Kathy. Coming from Prince Rupert, with Northwest Community College, I know the issues and some of the concerns. We've heard from Selkirk, College of the Rockies and Okanagan College about the vital role they play as we move towards trying to get the skill development that we need as far as employment in the province.

Are there any issues? Some of the other colleges talked about having key issues with their targeted annual funding. Is that adequate for your needs? Also, there are issues with inflationary costs and that not being covered. How is that being dealt with, and is that a concern with you guys at the table? I can see a little smile coming there.
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K. Kinloch: I don't think you've ever probably met a public servant who hasn't smiled at the thought of answering a question like that. In a minute I'll give it to Doug, on inflation.

There is a challenge. Budgets have been flat in post-secondary and have not been adjusted on a regular basis as they have in the system, because there are lots of pressures on the budget. We understand that.

In terms of planning, we always encourage and welcome early budget issuing so that we can plan our year. It's a part of the system. We recognize that. Having working in government, I fully appreciate that challenge.

At the same time, we are looking at and developing three-year business plans. We're anticipating where government might be heading, and then we're planning. We'll adjust accordingly, because we have to get on. Enrolment cannot wait for the seasonal release of enrolment.

D. Callbeck: Sure. With respect to inflation, obviously it's an annual event and something that none of the post-secondary-sector institutions receive funding for. Those are the facts. We deal with it on an annual basis. We cover our increased costs through our base budget.

We'll now go to our open-mike time, which is a little bit different than our presenters. I understand that Rosemary Collins would like to present, so if you would come forward now.

With our open-mike time, we allot five minutes for a presentation and then a briefer time for questions, usually one or two questions at most.

I'll let you get started now. You have five minutes, and then we'll go from there.

R. Collins: I'd like to begin by thanking everyone here on the committee for the opportunity to speak today — I managed to slip my name in at the last minute — as well as all of the hard-working people who are making these hearings happen.

As you're all aware, my name is Rosemary Collins. I'm employed as a community advocate at Wilson Heights United Church in southeast Vancouver. Advocacy is a lay paralegal position, wherein legal assistance, usually in the area of administrative law, is provided free of charge to people who are having difficulties navigating such systems as income assistance, residential tenancy and even federal programs like CPP.

Wilson Heights is located on East 41st Avenue, between Victoria Drive and Knight Street. Back in the late '90s our church began to note an increase in the number of people in the area who were coming by to ask us for emergency financial assistance. Often they were approaching us for assistance with food or prescriptions.

The minister who was seeing these people and hearing their requests learned that most of the people who were approaching us were already on income assistance, yet they were having difficulty accessing the benefits and the services that they were entitled to. So the church began by asking: "Why are these people, who are already receiving assistance, coming to see us for more assistance?" This led the church to respond to the community's need by instituting an advocacy program in 1999.

We also provide emergency groceries to over 20 families a month as well as serving the community with a free monthly community meal, which falls shortly before the welfare cheque issue day. We vary the date in order to keep up with the cheque issue dates.

I've been doing advocacy in this neighbourhood since 2003, and I've observed a worsening of circumstances — not an improvement — for people who are living on income assistance.

Consider the hurdles involved in merely applying for income assistance. First, you have to have access to a computer and a telephone, because those are the means by which your initial engagement with the ministry will be mediated.

Since I began working at Wilson Heights, there has been a concerted effort by the ministry to reduce in-office contact with clients. Millions of dollars have been spent installing telephone and computer systems that are designed to reduce the need for direct person-to-person contact with income assistance applicants and recipients. Even if you dial the number of your local office, your call is routed to a call centre rather than the office you are trying to reach.

It has been about five years since workers were assigned to specific files. Now each time you have a dealing with the ministry, you're talking to a different worker who is likely unfamiliar with your situation. This slows down service delivery, as the worker then must get up to speed with your situation — which may have been ongoing for some time and become quite complex — before they can even begin to attempt to help you.

The elimination of dedicated caseworkers and the installation of the new phone and computer systems are likely due to an effort to save money on staffing costs. But the outcome is poorer service and greater inefficiencies that result in the system providing less bang for each buck that is spent.

Many of the lapses in service are being picked up community agencies, churches and even public libraries. I'm aware of cases where librarians employed by the city of Vancouver have assisted patrons with the income assistance on-line assessment and application tool, which means that the provincial government is downloading these services onto non-profit agencies.

Our community meal and emergency food programs
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at the church see a significant increase in demand in the infamous five-week month. If you're paid on a two-week basis, you understand exactly what I'm talking about. Every so many months you get three paycheques because of that extra week.

We don't do this with our income assistance recipients in this province. In the months where there are five weeks, you get a cheque for the same exact amount of money as you did in the month that was four weeks, and you're required to make that cheque stretch farther. So again, this is downloading onto the backs of the absolutely poorest, most marginalized people in British Columbia the cost of providing services to them.

Now, let's hope if you need to apply for income assistance that you also have access to a telephone, because if the income assistance office can't reach you within five days to give you an in-person appointment for your application interview, the on-line application that you submitted is automatically deleted from the system, and you have to begin the whole process again.

Even if you make it through these two hurdles, you are now required by law — as of today, actually — to wait five weeks before being granted an appointment for an interview, for the purposes of processing your application. This five-week wait is up from the past three-week wait, and you are already destitute.

The ministry's rationale for this waiting period is that they are encouraging your independence and self-reliance by giving you one more chance to find a job so that you won't have to apply for income assistance. All such a punitive policy accomplishes is a savings for the ministry of one month's worth of meagre benefits, and this saving is achieved, again, on the backs of our most desperate and destitute citizens.

M. Elmore (Deputy Chair): Thanks for your presentation, Rosemary. I appreciate it. A very clear picture in terms of the challenges of folks on income assistance. Can you talk a little bit about the individuals that you help? Are they individuals? Are they families? Have you seen any trends developing?

R. Collins: A vast majority of my clients are people who are either in receipt of or in need of disability benefits. That's a very complicated application process. It's a 22-page application. You need three people to fill it out for you. Often the people themselves who are trying to apply have disabilities that interfere with their ability to do that. That is a lot of my work.

Then just ensuring that the benefits they're getting are correct in terms of their entitlement. This changes when they go from employable to disabled.

I also do work occasionally with families that are having their family maintenance — usually child support — clawed back by the ministry. That causes a lot of difficulties, because there's a two-month lapse.

There are three different government agencies that are dealing with clawing back child support payments. There's the ministry itself, there's the family maintenance program, and then there's the family maintenance enforcement program. They're spread over two ministries.

The ministry itself is usually about two months behind on any information that family maintenance enforcement has. What happens is parents — often single parents — are having moneys deducted from a cheque in one month based on a payment that was made two months earlier in a month where they didn't receive a child support payment at all.

To unravel that cluster and try to figure out whether or not the recipient actually got the correct amount of money is quite a nightmare. That is a growing problem.

Again, I really don't see the savings in deducting child support moneys from families when we're increasing the hardship of those families. We have added expenses of investigation and administration for those clawbacks, and quite frankly, there's the ethics of asking children of the poorest families in the province to subsidize the income assistance system through their child support payments.

D. Horne (Chair): Okay. We'll go to Bill now — one quick question. We're sort of over time.

B. Routley: I guess my question is: where are these folks supposed to go when they have the five-week waiting period that you talked about?

By the way, I would add that as an MLA from a region that has a large number of folks that are living on supports, our office does a lot of the same work that you're doing. We do find that you have to be almost a Philadelphia lawyer to complete all of the paperwork, which sounds really outrageous, particularly for folks that have any kind of a disability whatsoever. The onerous…. I would go so far as to say it's absolutely backward and draconian — the approach that's taken by this province in trying to help those least advantaged. It's outrageous.

Anyway, what are they supposed to do during this five-week wait? I've been asked that by my own staff.

R. Collins: Well, there are some exceptions to the rule. I don't want to completely vilify the policy. If you can demonstrate — I believe the correct term is — "an immediate need" for food, shelter or medication, the ministry can expedite your application. But with the fact that the ministry itself is understaffed…. Even for people on the five-week wait, it might be six weeks before they get an appointment. If you're getting an expedited appointment, which you're supposed to get in 24 hours, you
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might get it in five days.

If your need is shelter, you have to ask your landlord to give you an eviction notice. You could have a wonderful relationship with your landlord, and now you have to knock on their door and say: "Please give me an eviction notice — but don't really evict me — so that I can take this notice to the ministry and be able to pay you your rent this month."

The fact that the first of the month is pending is somehow not enough indication to the ministry that there might be an immediate need for shelter here and that this person might need a rent cheque sooner rather than later.

D. Horne (Chair): Thank you so much for your presentation and being here today at the committee.

We are going to take about a two- or three-minute recess, and then we're going to reconvene with the Expert Panel on Business Tax Competitiveness, which will take a slightly different format than our last bit, given the fact that it was the report of this panel that was referred to this committee by the Ministry of Finance.

D. Horne (Chair): We now have the Expert Panel on B.C.'s Business Tax Competitiveness about to present.

As I alluded to prior to going to the break, you'll have about ten minutes to present, but I will allow a longer period for questions from the members so that any members that do have questions can have those answered. Please begin now.

S. Morgan-Silvester: Thank you very much, Chair, members of the committee. My name is Sarah Morgan-Silvester, and I am the chair of the Expert Panel on B.C.'s Business Tax Competitiveness. I'm a past senior financial services executive, and I'm now an active community volunteer and corporate director.

With me today are two of the panel's members: Fiona Macfarlane, who is managing partner, western Canada, Ernst and Young; and Grace Wong, who is senior adviser, international, University of British Columbia.

Thank you very much for making time for us to present and discuss our report. I believe that Minister de Jong has previously provided the committee with a copy of our report. I would like to make some very brief opening comments, and then we'd be very pleased to answer any questions that you may have with respect to the report.

The committee began our discussions in January of 2012 at the request of then Finance Minister Kevin Falcon. We produced our report, which includes 45 recommendations, as at the end of August of this year.

Our mandate was to consider how to enhance B.C.'s business tax competitiveness in the context of the referendum decision to return to the PST and to identify administrative improvements to streamline the PST. During our review the panel consulted with a considerable number of industry organizations, companies and individuals, and our recommendations are a reflection of what we heard.

I'd like to start with business tax competitiveness. The panel's key recommendation in that regard is to introduce a refundable investment tax credit equal to the PST paid on machinery and equipment, claimable over two years.

With the return to the PST, the tax paid by B.C. businesses will increase by about $2 billion. This is a number almost equivalent to all of the tax revenue collected through corporate income taxes. It's a large amount, and it's a major, although not unexpected, change.

The panel heard that the single aspect of the return to the PST that was of most concern is the PST applied to machinery and equipment, including cutting-edge computing and communications technology.

These kinds of investments are tightly tied to job creation. So the reason tax on new investment is of concern is because it has a negative impact on productivity, innovation, and job preservation and creation throughout B.C. It's the most damaging aspect of the return to the PST.

To put this into perspective, the panel looked at Finance Canada's calculations of marginal effective tax rates. This is essentially a measure of the tax on the last dollar of investment made by a company. The marginal effective tax rate is forecast to increase from just under 17 percent, where it is today, to just over 27 percent with the return to the PST. This will make it the absolute highest in Canada. This means there will be a strong incentive to make investments of machinery and equipment, and the increase in jobs that go along with those investments, in other provinces over British Columbia.

The investment tax credit recommended by the panel will keep B.C.'s marginal effective tax rate competitive with other Canadian provinces. The cost of the credit will amount to roughly $500 million per year.

The second part of our mandate was with respect to administrative improvements to streamline the PST. The cost of compliance and administration associated with the PST represented another large concern from those we consulted with. This concern was particularly voiced by small business.

There will, of course, be significant one-time transition costs for all businesses, but the panel focused on the annual ongoing cost of compliance. The annual costs of compliance are estimated to be between $100 million and $200 million, with those costs being disproportionately borne by small businesses as a percentage of their sales.

The panel received numerous recommendations and
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suggestions to reduce the complexity and costs associated with the administration of the PST. Some of the most problematic areas include exemptions for adult-sized children's clothing and footwear, school supplies, basic telephone and cable services, and documenting the allocation of uses between taxable and exempt activities at manufacturing sites.

There are significant opportunities to streamline the administration of the PST, and I should note that a small number of the panel's recommendations on streamlining have already been introduced by government when the PST legislation was introduced in May of this year. Those changes were very positively received during our ongoing consultations.

Now, inherent in our mandate was the requirement that our recommendations be revenue-neutral. That means that some taxes must be increased by the same amount as the cost of the investment tax credit — roughly $500 million. So this is really about enhancing the mix of taxation to improve the efficiency and competitiveness of the economy.

Revenue recovery recommendations include applying PST on basic telephone and cable services, snack foods and school supplies; increasing the tobacco tax; increasing revenue from the mining and oil and gas sector; and increasing corporate income tax by one-half of 1 percent.

The panel recommends that the sales tax credit applicable to lower-income individuals and families be enhanced to help offset the PST applied on items that were not previously taxable. I'd like to give you a little bit of background as to why the panel selected the areas we did for revenue recovery.

Firstly, both individual consumers and businesses contribute to the revenue needed to achieve revenue neutrality for the panel's recommendations. This is because companies benefit by maintaining and growing market share, but there are also jobs provided, so both businesses and consumers benefit.

We selected areas we heard caused large administrative burden — for example, school supplies. We heard that the exemption is based on a concept of school supplies that no longer reflects the conditions in modern classrooms and that there are arbitrary distinctions in the rules creating disputes between customers and retailers' employees.

We selected areas we heard had issues of fairness — for example, cable versus satellite TV. Basic cable TV is exempt but not available in all areas of the province. Satellite TV is not.

We selected areas with broader social outcomes — for example, tobacco and junk food. Many jurisdictions have moved to tax similar areas.

You may think it's somewhat counterintuitive that we even selected corporate income taxes. However, unlike the PST, which is a tax on investment paid up front upon the purchase of equipment, income taxes are paid only after an investment in equipment begins generating a profit. The panel would like to emphasize that the recommendation to slightly increase corporate income taxes is directly linked to the recommendation to provide an investment tax credit.

The panel reviewed a number of special purpose provincial tax incentives for specific sectors and activities, including apprenticeship training, scientific research and development, screen-based industries and the international business activity program. In view of the importance of providing B.C.'s investment climate across all sectors with improvements through the implementation of an investment tax credit, the panel recommends that these other credits be maintained but not increased.

The panel was also asked to review B.C.'s municipal taxes and their implications for the province's competitiveness. The panel engaged Canadian tax researchers Dr. Enid Slack and Dr. Harry Kitchen to undertake independent research on this topic. Rather than prescriptive recommendations, we've provided what we hope will be a useful road map for ongoing dialogue and joint action on containing municipal costs.

The panel believes that it's important to have a meaningful discussion about managing municipal cost drivers, whether at the direct municipal level or those created by federal and provincial regulatory requirements.

The final point I'd like to mention is the panel's recommendation to explore long-term alternatives to the PST. The proposed investment tax credit will reduce the effect of the PST on the cost of investing in machinery and equipment, but it will not eliminate all tax-cascading, which is the payment of tax on tax.

Additionally, the PST will remain a complex and costly tax to administer. Many industry groups asked the panel to explore alternatives specifically designed for the B.C. economy — a made-in-B.C. value-added tax. The panel suggests that one option worthy of further consideration is the business transfer tax. The business transfer tax is a form of value-added tax that is not calculated on each sales transaction but rather levied on the basis of the difference between businesses' total sales and purchases.

The tax system in New Zealand provides an example that is close to the business transfer tax. Because the business transfer tax has a much broader base, the panel estimates that the business transfer tax rate could be between 4 and 5 percent to raise the same revenue as under the PST. Now, this is a longer-term discussion that requires full and meaningful input from the people of British Columbia and industry stakeholders.

In conclusion, B.C. has so many advantages provided by our geographic location and the talents of the people who live and work here. We are the gateway to the Pacific, we have access to natural resources, and while far from perfect, we have a relatively stronger economic position
[ Page 2045 ]
when compared to the rest of the world.

We have an opportunity for B.C. to capitalize on its unique comparative advantages by doing everything we can to encourage B.C. businesses to invest, expand and create the jobs that are needed to build prosperous and healthy communities in our province.

We hope that you find our report useful in your deliberations with respect to next year's provincial budget.

P. Pimm: Thanks a lot for the presentation. I did go through that report. I don't have it with me today. Can you explain a little bit? Looking at the new value-added tax that you're talking about and how that would play out with the existing PST, would it all be combined into one? Or would it be, kind of, two rolling side by side?

F. Macfarlane: We heard loud and clear that the provincial sales tax was an inefficient tax, but we recognize that there's a commitment to bring it in. So we suggested that an alternative in the medium term be looked at. We recommended that a business transfer tax be explored and, after consultations, that it — or something like it — replace the PST. We recognize that that wouldn't happen next year.

B. Ralston: Thanks very much. I want to first begin by looking at some of the material you have on page 22 and page 23. I think the report tends to minimize the previous exemption for machinery and equipment. It was quite extensive and, beginning in 2002, was about $120 million a year. I did ask the Minister of Finance — I think it was Colin Hansen at the time — if any studies had ever been done on the efficacy of removing that and what investment effects had been garnered by removing that tax, and he said that there had been no studies.

But I notice that you quote the Fraser Institute as saying that the PST applied to capital input such as machinery and equipment. In fact, there were very extensive exemptions. Again, you minimize the ones in logging. Any machinery used on the cutblock was exempt, and anything in the mill was exempt. There are some where if the machinery travels on public highways, then it wasn't exempt. I'd just invite you to comment on that first.

Secondly, given the figure that you put out about the refundable tax credit and your costing of it, does that include the previous exemptions on machinery and equipment, which were in the hundreds of millions of dollars, or is the $500 million in addition to those exemptions?

F. Macfarlane: The additional tax that would be caused by the removal of an HST and the replacement of the PST, including the exemptions, is $2 billion. The investment tax credit would remove about 1/6 of that, so about $500,000. That's assuming that the provincial sales tax, the exemption, would have remained.

B. Ralston: Just so I'm clear, then, the existing or the previously existing exemption on machinery and equipment — which was much more extensive, I contend, than is given credit for in this particular version of tax history — is not included in the $500 million, or it is?

B. Ralston: Were you prepared to…? I see you had assistance from the Finance Ministry, and there were figures released to you. Those aren't available, at least to members of the opposition, at this point. So are you prepared to share that costing with myself and other members of the committee?

S. Morgan-Silvester: We are certainly happy to share any information that we may have. However, I'm not sure of the protocol involved with respect to that.

As far as the committee goes, we are independent. We're happy to share information.

B. Ralston: I would hope that would be the end of it. I understand there is a freedom-of-information request in for just that material. I'm not sure….

B. Ralston: It's not mine, but someone else has put it in. But your commitment is to release that, then, as an independent panel.

S. Morgan-Silvester: We're happy to release information that we have been provided as a panel.

F. Macfarlane: Could I, perhaps, just add that the exemptions under the old social service tax, the machinery and equipment exemptions, applied to, as you so rightly point out, many pieces of machinery and equipment in manufacturing plants. But there are many other examples of capital expenditures in other businesses, service businesses and others, that wouldn't have been covered under the old provincial sales tax. So those are
[ Page 2046 ]
subject to capital cost allowance and would, therefore, under our recommendations have the provincial sales tax removed.

B. Ralston: There were a lengthy series of interpretation bulletins, sector by sector, so I just chose forestry as an example. But I don't think other sectors were excluded. I have some of them, which I printed out. I think many of them are no longer available on the ministry website, because they're perhaps no longer convenient to be referred to.

I don't, again, agree with the premise that this was focused on a few industries. It was across the board on machinery and equipment. I think either the advice you got or the advice you chose to take or chose to ignore doesn't reflect what the tax history was in relation to those exemptions.

F. Macfarlane: This was my area of practice. I can assure you I made a lot of revenue out of consulting on provincial sales tax. There were lots of grey lines and inefficiencies and, therefore, a lot of litigation around this. I think it shows how hard it was to apply.

D. Horne (Chair): Why don't we just continue? That's why we said that we'd have a longer period of time here.

B. Ralston: Then, looking at page 44, your comments on the SR-and-ED tax credit. I'm not quite sure what you're recommending here. It's a bit vague. You talk about better alignment. I'm not sure what that means. As you know and as you comment, the Jenkins report pointed out the deficiencies in the federal SR-and-ED. The B.C. contribution to that is a 10 percent top-up on the same application with the same exemptions and the same application process.

You do say that you anticipate that there may be some additional revenue available, I believe, some savings in the provincial SR-and-ED credit. So can you explain or expand upon what you mean by better alignment?

S. Morgan-Silvester: Our predominant recommendation on the SR-and-ED credit is to remove the sunset clause, which is creating a great deal of uncertainty about whether or not that credit will continue.

As you point out, there has been work done at the federal level in response to the Jenkins report, and it's in that context that the panel is recommending alignment. Because there have been changes at the federal level, there needs to be a further look at how the provincial credit will link in with that. So that's the context behind that comment.

B. Ralston: Well, you've referred to the next recommendation, but recommendation No. 20 deals specifically with alignment. I understand the sunset or no sunset. That's pretty straightforward. I'm wondering if you have any further comments on alignment, or are you just simply suggesting that there be negotiation?

What I understand is that the drift of the Jenkins report was to focus more on a labour-style tax credit and, given the background of Mr. Jenkins in the software industry, that was perhaps an influence on his outlook in these matters.

There is great concern in some sectors, such as the clean tech sector, about how that might impact on capital investment in leading-edge clean tech industries where there's an element of capital spending as opposed to labour in terms of developing the research.

I'm wondering if you have any…. I mean, this is the expert panel, so I look to you for the expertise. If you could help me with that, that would be appreciated.

S. Morgan-Silvester: : In general, the discussions that the panel had with respect to tax credits, where they can be linked to jobs, we were more in favour of those tax credits.

Recommendation No. 22. This is an area which has attracted a lot of discussion lately, particularly in digital media. As you're aware, Ontario and Quebec have both gone for an all-spend credit, whereas B.C.'s was, in the past, a labour tax credit.

You don't make…. There's certainly pressure, I'm sure, on the government and certainly representation was made to members of the opposition from the film industry about not necessarily matching Ontario and Quebec but being within the range in order to halt the bleeding, I think is a way in which some people have put it.

I think we're hearing from Mr. Leitch from the motion picture association tomorrow, and I expect he'll make a pitch that'll be similar to that. You have said that you recommend no change at all. I'm wondering if you could explain the rationale behind that.

S. Morgan-Silvester: : I will have a go, and then I will ask my panel members whether or not they have any other comments with respect to that.

This is an extremely large tax credit, and it has grown very rapidly. We had many discussions about whether or not this was a race to the bottom. We concluded that it was.

There's no doubt that other jurisdictions have taken a very aggressive stance with respect to trying to attract these industries. We're not debating whether or not they are good industries to attract. They certainly do provide
[ Page 2047 ]
good jobs, but the reality is that there comes a point where you sort of have to draw a line in the sand and say: "Enough."

There are other priorities, and the panel has outlined what those other priorities are, I think, very clearly. So the panel would not support, under any set of circumstances, putting more money into those kinds of tax credits.

G. Wong: I think the other interesting thing one of the charts shows is that over the period of time that the chart shows, the actual spending of the companies has actually not increased that much. So it's the actual tax credits that they receive that seems to be increasing and increasing. It's a very challenging area, because they do come up and make these presentations. But as our expert panel chair has said, it's that balance between how can we allocate these.

B. Ralston: I appreciate that your terms of reference were that you had to balance as well. I'm not disputing that. I understand equally that Quebec and Ontario, particularly Ontario, have been very, very aggressive in this. Some people say they're simply buying the business by virtue of being in a position where their fiscal position is such that one wonders what ultimate goal they have in their long-term fiscal plan by doing that.

An aspect of this is the digital media credit, where the disparity is quite extreme. I think it's 17½ percent in B.C. and about 38 percent, somewhere around there, in Ontario.

Did you look specifically at that, or did you not? Were you prepared to acknowledge that that might be one where the disparity was such that some movement by the province might be advantageous?

S. Morgan-Silvester: We did look at that tax credit, but once again, we felt that the priority was on providing an investment tax credit which would be much more broadly based. That was also the area during our consultations that we heard the most broad support for. This wasn't about a specific group coming in and asking for relief or consideration in some area. This was about all groups coming in and supporting this kind of a tax credit. All of those industries, digital media included, would benefit from the investment tax credit.

D. Horne (Chair): We may have a couple more. I was going to try to wrap up at 5:30, so maybe I'll go to Bill and then Dave and then back to you, Bruce.

B. Routley: Just on the investment tax credit. In fact, I remember reading the December 2008 Premier's Progress Board report where they came up with the recommendation on moving to an HST, partly to deal with the problem of investment and attracting investment for machinery and equipment.

I guess my question to you is…. We should be able to see a dramatic increase in investment in machinery and equipment during the window where the HST was actually being applied. Will we expect to see a dramatic increase in investment in machinery and equipment during that time period?

F. Macfarlane: If you look at the numbers for British Columbia relative to the average for Canada, investment in capital expenditures, we lagged the average up until 2010. Since 2010 we have outperformed the rest of Canada. So you could draw a correlation to the introduction of the HST.

Our recommendation on the investment tax credit was to try and remediate what would probably be the negative effect going back — lagging — being one of the only provinces without an HST.

B. Routley: What sectors would they have invested in? Is that primarily oil and gas, or do you have a list? Is that material that's in the report?

S. Morgan-Silvester: That material actually comes out of a recent C.D. Howe report, and that would be a publicly available report as well. It would be available through their website.

D. Hayer: Well, thank you very much for making your report. It's never easy to make those types of reports.

I remember sitting on this committee back in 2008 and making recommendations on November 15, 2008, to the House. That included a recommendation that the government do a cost-benefit analysis of harmonizing the PST and the GST, but nobody in the media picked it up because it was supported by all of the committee, all of the House. Nobody voted against it.

Sadly, when the HST was introduced, nobody really referred back to what the committee was sort of saying. The government didn't do a very good job of explaining it, and we ended up being where we are.

On the other hand, with your report, there are a couple of questions I have. One is with school supplies. One of the things people didn't like about the HST was that they said: "Oh, for school supplies that are for kids, they're going to charge extra PST." Now, is there any way for you to calculate it, if the government was to look at what your son would save — maybe figure out how much PST you'd pay on school supplies, provincial sales tax, and maybe add that extra credit for the families that have children? If you're under 18, you get the tax credit, so you could
[ Page 2048 ]
probably add whatever the amount was.

The second thing with that was that you talked about the corporate tax going up by a half of 1 percent. In your opinion, if it were to go up by 2 or 3 or 4 percent, will that have a positive effect on the economy or a negative effect on the economy? Would it create more jobs or create less jobs? Any suggestions, or any understanding, from your expertise?

We are not chartered accountants here. We all seem to read the numbers from our perspective. We don't, probably, update our education on that. I think you have more understanding of this, because that's the expertise in your field.

S. Morgan-Silvester: I'll start off with the school supplies. Indeed, we actually did look at seeing whether or not we could simply rebate every family that had children by way of their income tax returns. The amount was very small. I can't remember offhand what we were talking, but it was really small change.

I'm not suggesting for families that are under economic stress that every penny isn't important. This is why we thought that we were far better off focusing on families of lower income and increasing the sales tax credit than on the administration that would be engaged in refunding a very small amount to every family within British Columbia. It was really about a focusing of the dollars, but we did look at that.

Now, your second question, I believe, with respect to increasing corporate income tax and the, I guess, sort of elasticity about: if we increased it a lot, what would happen? Would this be a positive thing for stimulating the economy or not?

We certainly heard during our consultations that businesses were not in favour of increasing corporate income tax. In fact, the half of 1 percent to fund, in part, the investment tax credit is probably not something that businesses would jump up and down and say: "Oh, this is great." Now, in the panel's opinion, we believe that it is by far and away better if the investment tax credit comes with it.

In general, to increase corporate income tax rates…. We are dealing with a competitive environment, and B.C. needs to be in that competitive mix. There's very limited room to increase without being seen as a high-tax outlier, and there's no doubt that that would not contribute to the prosperity in B.C. It would cause organizations to move operations elsewhere, to invest elsewhere. Just in general, it would be viewed as a negative thing by the business community.

D. Hayer: Har Singh. He was an assistant deputy minister in Victoria. He had done a report on that. He said that every time, looking over the last 35, 40 years, B.C. had a higher tax rate than the average of Canada, our economy went down. Every time our tax rate was lower than the rest of Canada on average, our economy went up. It took about two to 3½ years for it to show the effect. That's something he had showed me, and he was an ADM under Social Credit, under the NDP and our government. I'm just going to add that to my comment.

D. Horne (Chair): I was going to try to finish up about 5:30. I know Bruce has got a bunch more questions. Maybe a couple more, and then we'll conclude.

B. Ralston: I think perhaps we didn't allocate a long enough time, and it's too bad that we're doing it at the end of a day in which we've had 28 presentations before this.

I'm looking at page 50. What is now called AdvantageBC and formerly the International Financial Centre — in the text you seem to be relatively skeptical about the benefits of this regime. I think it has really had difficulty attracting a lot of interest from those that it was intended to interest. Yet you do recommend expansions.

I remember there was a report which spoke very boldly. For certain designated sectors, the tax rate would be lower than Singapore and lower than Beijing and lower than Hanoi. I'm not sure whether that's the competitive note it's necessary for us to strike.

I'm wondering why you recommended, notwithstanding that you say, bottom of page 49: "As in the case with many incentive programs, the amount of activity that would not have occurred if the IBA program was not in place is difficult to assess. It does not appear, however, the program has achieved the level of added activity and employment that was hoped for when the program was first introduced…."

G. Wong: I think that when we looked at how B.C. can be more competitive, one aspect of that was, of course, attracting international investment. As part of our consultations, we had the opportunity to meet with the entire group of B.C.'s trade reps. We also had some feedback from one of the consulates in Asia.

Through that, I think it appeared that we do not have that many tools that we can use to attract international investment. This is one of those tools.

I think that the uncertainty of what you refer to as the potential expansion…. But then, some of that has not been implemented yet. We saw potential in that. We also heard from people — ranging from people who represent us overseas as well as from industry associations — saying that they would like to have the advantage of that. So
[ Page 2049 ]
that's why we're recommending that the government actually implement some of that, as much as possible.

S. Morgan-Silvester: Fiona, I think you've got an added comment about the industry support.

F. Macfarlane: We were quite encouraged by the fact that the organization is funded by industry. They pay a fee for AdvantageBC to operate, and it's almost a one man show. We thought that that was an indication that it was of value to industry.

One of the things we did hear, as well — it was actually a theme throughout — in many of the presentations was the real plea for some certainty and decisions being made. Some of the activities in AdvantageBC were on the books but hadn't been enacted. The very fact that they hadn't had caused some doubt as to whether there was commitment to the program. So people weren't relying on it.

Page 59. You quote from someone from the CFIB about the tax rate between the small business rate — I think that's what's referred to — at 2.5 percent and the general corporate tax rate. I know the Progress Board has commented on the gap between those two generally and so has Don Drummond.

In his view, and I think in the Progress Board's review, what you create particularly with the $500,000 of income taxed at the small business rate is a disincentive to grow and become a medium-sized firm. I think that's what you're referring to here.

You seem to, I think, address the issue, yet your recommendation seems to be a little bit vague, if I could put it that way: "Address the role of taxation as a barrier to small business growing into mid-size and large firms."

Did you agree with that point of view, that that creates a barrier to growth? It creates business for, I suppose, accountants and lawyers — proliferating a number of entities to keep the income of their clients inside the $500,000 to get the benefit of the lower rate — and not an incentive to grow to a mid-sized firm, whether it's export-oriented and maybe going to grow more aggressively into the future.

S. Morgan-Silvester: The panel did have discussions about this. There definitely is a view of the panel that, in particular, B.C., which has a very high proportion of small businesses, needs to do everything it can to encourage those small businesses to grow and thrive. Sometimes we do things inadvertently that cause there to be an incentive in the opposite direction.

The panel did not have the time during its mandate to explore this area thoroughly, but we did feel that we should note it, as we have done. There is more work that should be done throughout an assessment of our taxation practices — the small business tax rate being one — where we should be looking for those disincentives to growth. Are we rewarding people for doing the opposite of in fact what, in a perfect world, they should be doing?

So more work to be done, and yes, we don't have, perhaps, a crystal-clear recommendation in this regard.

B. Ralston: Before I'm cut off by the Chair, perhaps we could have one more. Once again, I regret that the time is short here.

I just wanted to give you an opportunity to explain. On page 25 and page 26 you talk about the business transfer tax. I think it's a new concept. You give an example, I think, of Michigan and the way in which it's calculated, which is on the total sales of the organization in the tax year. I'm wondering if you could walk us through how that would work. I appreciate that it wouldn't be integrated with the federal GST, but how would that work, and why would it be an advantage?

F. Macfarlane: The business transfer tax isn't a tax that applies at every stage. It's on individual purchases and sales. A business, either through the income tax system or through a separate indirect tax system, would look at their sales for consumption in the province, and they would subtract from that any purchases on which they had paid tax. If they had imported something and hadn't paid tax — imported from another province — they wouldn't get a credit for it. Then they would pay the tax based on the net amount.

There would be one rate, like there is in New Zealand, like there is somewhat in Japan and, recently, in Michigan. By having one rate across a very, very broad spectrum of goods and services, you could have a lower rate overall. If you look at the New Zealand goods and services tax, the act is about so big, and if you look at the Canadian GST, it's this big, because we have different rates and lots of complexities in it.

That would be a system that would be far broader, far simpler to administer and would be at a lower rate. It would also remove the cascading of taxes that exists currently under the provincial sales tax and would therefore make us more competitive with exports, because there would be no tax inherent in our exports.

D. Horne (Chair): I'm guessing, Bruce, that you have more questions. For other members of the committee, as well, given the fact that the Minister of Finance has basically given this report to this committee as part of its deliberations…. Any further questions that members
[ Page 2050 ]
have, if they could put it in writing, I'm certain that the tax panel would be happy to answer those questions and get back to the committee.

D. Horne (Chair): Given that we've gone over the allotted time already, I'll look for a motion to adjourn.

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1) Canadian Bar Association – British Columbia Branch	Kerry Simmons
	Caroline Nevin
2) Pembina Institute	Matt Horne
3) Vancouver Board of Education, School District No. 39	Patti Bacchus
	Steve Cardwell
4) Chevron Canada Limited	Fern Tom
	Dave Schick
5) David Suzuki Foundation	Ian Bruce
6) Decoda Literacy Solutions	Brenda Le Clair
	Leona Gadsby
7) Infertility Awareness Association of Canada	Rita Schnarr
8) Carbon Talks	Shauna Sylvester
9) International Society for Augmentative and Alternative Communication – Canada	Jeff Riley
10) Stephanie Bertels
11) First Call: BC Child and Youth Advocacy Coalition	Adrienne Montani
12) Federation of Community Social Services of BC	Dr. David Hay
13) Tides Canada	Merran Smith
14) Canadian Parks and Wilderness Society – BC Chapter	Chloe O'Loughlin

15) Nancy Olewiler
16) Climate Smart Businesses Inc.	Elizabeth Sheehan
	Morten Schroder
17) Real Estate Board of Greater Vancouver	Harriet Permut
	Jim Woolsey
18) Insurance Bureau of Canada	Serge Corbeil
19) viaSport British Columbia	Scott Ackles
	Moira Gookstetter
20) British Columbia Chamber of Commerce	John Winter
	Jon Garson
21) Capilano Students’ Union	David Clarkson
22) UBCC350.org	James Boak
	Dr. Kathryn Harrison
23) Canadian Wind Energy Association	Nicholas Heap
24) British Columbia Teachers’ Federation	Susan Lambert
	Larry Kuehn
25) Laura Cornish
26) Vancouver Community College	Kathy Kinloch
	Bill Radford
	Doug Callbeck
27) Rosemary Collins

Chair:	* Douglas Horne (Coquitlam–Burke Mountain BC Liberal)
Deputy Chair:	* Mable Elmore (Vancouver-Kensington NDP)
Members:	* Gary Coons (North Coast NDP)
	* Marc Dalton (Maple Ridge–Mission BC Liberal)
	* Dave S. Hayer (Surrey-Tynehead BC Liberal)
	* John Les (Chilliwack BC Liberal)
	* Pat Pimm (Peace River North BC Liberal)
	* Bruce Ralston (Surrey-Whalley NDP)
	* Bill Routley (Cowichan Valley NDP)
	* John Slater (Boundary-Similkameen BC Liberal)
	* denotes member present
Other MLAs:	Jane Thornthwaite (North Vancouver–Seymour BC Liberal)
Clerk:	Susan Sourial
Committee Staff:	Byron Plant (Committee Research Analyst)
	Jacqueline Quesnel (Administrative Coordinator)

Witnesses:	Scott Ackles (CEO, viaSport British Columbia)
	Patti Bacchus (Chair, Board of Education, School District 39 — Vancouver)
	Stephanie Bertels
	James Boak (UBCC350)
	Ian Bruce (David Suzuki Foundation)
	Doug Callbeck (Interim CFO, Vancouver Community College)
	Steve Cardwell (Superintendent, School District 39 — Vancouver)
	David Clarkson (Capilano Students Union)
	Rosemary Collins (Wilson Heights United Church)
	Serge Corbeil (Insurance Bureau of Canada)
	Laura Cornish
	Leona Gadsby (Decoda Literacy Solutions Society)
	Jon Garson (Vice-President, B.C. Chamber of Commerce)
	Moira Gookstetter (Vice-President, viaSport British Columbia)
	Dr. Kathryn Harrison (UBCC350)
	Dr. David Hay (Executive Director, Federation of Community Social Services Society of British Columbia )
	Nicholas Heap (Canadian Wind Energy Association )
	Matt Horne (Pembina Institute)
	Kathy Kinloch (President, Vancouver Community College)
	Larry Kuehn (British Columbia Teachers Federation)
	Susan Lambert (President, British Columbia Teachers Federation)
	Brenda Le Clair (CEO, Decoda Literacy Solutions Society)
	Fiona Macfarlane (Expert Panel on B.C.'s Business Tax Competitiveness)
	Adrienne Montani (First Call: B.C. Child and Youth Advocacy Coalition)
	Sarah Morgan-Silvester (Chair, Expert Panel on B.C.'s Business Tax Competitiveness)
	Caroline Nevin (Canadian Bar Association, B.C. Branch)
	Nancy Olewiler
	Chloe O'Loughlin (Canadian Parks and Wilderness Society, B.C.)
	Harriet Permut (Real Estate Board of Greater Vancouver)
	Bill Radford (Vancouver Community College)
	Jeffrey Riley (President-Elect, International Society for Augmentative and Alternative Communication)
	Dave Schick (Chevron Canada Ltd.)
	Rita Schnarr (Infertility Awareness Association of Canada Inc.)
	Morten Schroder (Climate Smart Businesses Inc.)
	Elizabeth Sheehan (President, Climate Smart Businesses Inc.)
	Kerry Simmons (President, Canadian Bar Association, B.C. Branch)
	Merran Smith (Tides Canada Foundation)
	Shauna Sylvester (Executive Director, Carbon Talks )
	Fern Tom (Chevron Canada Ltd.)
	John Winter (President and CEO, B.C. Chamber of Commerce)
	Grace Wong (Expert Panel on B.C.'s Business Tax Competitiveness)
	Jim Woolsey (Real Estate Board of Greater Vancouver)

28) Expert Panel on BC’s Business Tax Competitiveness	Fiona Macfarlane
	Grace Wong
	Sarah Morgan-Silvester

REPORT OF PROCEEDINGS(Hansard)

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES