Finance and Government Services — Issue No. 78 — Tuesday, October 2, 2012 (HTML)

Summit Room, Ramada Plaza and Conference Centre
36035 Parallel Road, Abbotsford, 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	2091
R. Werger
R. Driediger
R. Ens
K. McCormack
L. Perrin
J. Gosling
M. McLachlan
D. Nixdorf
E. Quinn
B. Fatkin
C. Wilson
J. Mann
J. Blake
P. Leitch
C. Nex
P. Klassen
W. Pattenden
G. Chaddock-Costello
M. Startup

D. Horne (Chair): Good afternoon, everyone. I'm Douglas Horne. I'm the MLA for Coquitlam–Burke Mountain and Chair of the Select Standing Committee on Finance and Government Services. This is an all-party parliamentary committee of the Legislative Assembly of British Columbia, whose mandate includes conducting annual public consultations for the upcoming provincial budget. I'd like to welcome everyone in the audience today and thank you for taking the time to participate in this process.

Every year in preparation for next year's budget the Minister of Finance releases a budget consultation paper. This paper presents a current fiscal and economic forecast and identifies key issues that need to be addressed by the provincial budget. Printed copies of the Budget 2013 consultation paper are available at the information and registration table at the back of this room.

Once this paper is released, the committee holds public consultations and invites input from British Columbians. Following the consultation period, the committee releases a report containing a series of recommendations for the upcoming budget. This report must be presented to the Legislative Assembly no later than November 15.

There are several ways to participate. This year the committee is scheduled to hold public hearings in 18 communities throughout the province. We've already visited Surrey, Castlegar, Cranbrook, Kelowna, Vernon, Vancouver, and Coquitlam this morning. We also had video conference hearings and heard from Dawson Creek, Fort Nelson and Salmon Arm. After today's meeting we are scheduled to travel to 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 written submissions through an on-line form available on our website. We also accept submissions by e-mail, letter and fax, along with video and audio files.

As well, British Columbians can fill out a short on-line survey at our website, which is located at www.leg.bc.ca/budgetconsultations. There you can find information on the consultation process, download a copy of the budget consultation paper and learn more about the work of this committee. All of the public input we receive is carefully considered, and the deadline for submissions is Thursday, October 18.

As we have a member who's just arriving, I'd like to have, at this point, the members introduce themselves.

J. Slater: Hi. I'm John Slater, MLA for Boundary-Similkameen, and I live in Osoyoos.

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

D. Hayer: Good afternoon. I'm Dave Hayer, MLA for Surrey-Tynehead, which is home to Fraser Valley Real Estate Board as well as the widest bridge in the world, the new Port Mann Bridge.

M. Elmore (Deputy Chair): Mable Elmore, Vancouver-Kensington, Deputy Chair of the committee.

D. Horne (Chair): Also joining us today from the parliamentary committees office is our Clerk, Susan Sourial, as well as Jacqueline Quesnel at the back of the room, who is staffing the registration desk. As well — and it's strange, as I keep moving back and forth — on this side of the room are Michael Baer and Jean Medland, who are here on behalf of Hansard Services.

Not only are today's proceedings being recorded and transcribed by Hansard Services; a copy of this transcript, along with the minutes, will be printed and made available at the committee's website. As well as the transcript, the audio webcast is being made and posted on the website.

We'll start with our first presenter, who is the Fraser Valley Real Estate Board. I call forward Ray, who's sitting at the desk now. Each presenter has ten minutes to present, and then we'll take five minutes of questions. You can begin now.

R. Werger: Thank you, Mr. Chairman and distinguished members of the committee, for the opportunity to present the recommendations of the Fraser Valley Real Estate Board. Your time and commitment to this consultation process is very much appreciated.

My name is Ray Werger. I am the vice-president of the Fraser Valley Real Estate Board and a realtor from Surrey. That's, as Mr. Hayer has said, within his constituency. I live in Maple Ridge, so I am a constituent of Mr. Dalton, and my wife is from Prince Rupert, so of Mr. Coons. We cover as much territory as we can.

I'm here today on behalf of nearly 3,000 realtors who live and work in North Delta, White Rock, Surrey,
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Langley city and township, Abbotsford and Mission.

This year Fraser Valley realtors are asking you to take action on the two recommendations presented by the B.C. Real Estate Association or, as I'll refer to them going forward, BCREA. This is an association which represents 11 real estate boards in B.C. and nearly 19,000 realtors.

I'd like to start by stating that I'm proud to live in British Columbia. Our province has a lot to offer. Unparalleled physical beauty, rich natural resources and a spirit of innovation form a strong foundation for a thriving economy. Realtors in the province support efforts to maintain and improve B.C.'s economic strength.

Since 2001 the Liberal government has made tax competitiveness a cornerstone of its fiscal policy. The one outstanding exception is the property transfer tax or PTT, which is by far the highest provincial property transfer tax in the country. In an environment of increasing labour scarcity, this negative exception to B.C. competitiveness puts the province at a disadvantage.

Many options exist to reform the property transfer tax. As you may know, for 25 years — this is the 25th anniversary of the tax — the BCREA and its real estate boards and realtors have encouraged the B.C. government to minimize the negative impact of the PTT. It has always been applied in the following way: 1 percent on the first $200,000 of the purchase price of a property and 2 percent on the remainder.

Despite the dynamic nature of the housing market in B.C., the structure of the property transfer tax has not changed since it was introduced in 1987. At that time the average home price was just over $100,000, and the 2 percent portion of the tax was expected to apply to only 5 percent of the sales. In 2011, however, the 2 percent portion applied to more than 86 percent of homes sold in British Columbia.

We feel that the PTT places an unfair burden on homebuyers, people who have likely worked very hard to save a substantial down payment in order to put a roof over their heads. The BCREA and Fraser Valley realtors ultimately support the resolution passed at the 2011 B.C. Liberal Party convention to eliminate the PTT using a phased approach.

Until elimination is possible, we ask that you, first of all, increase the 1 percent property transfer tax threshold from $200,000 to $525,000 with 2 percent applying to the remainder of the purchase price; secondly, index the 1 percent property transfer tax threshold of $525,000, using either Statistics Canada's new housing price index or the MLS home price index, and make adjustments annually.

While our recommendation to increase the 1 percent threshold will result in less property transfer tax revenue for the B.C. government, it would put the dream of home ownership within reach of more families throughout B.C. and free up money to undertake home renovations or other spending.

Increasing the PTT threshold could potentially stimulate housing demand, which we could use right now, which could partially offset the lower PTT revenue. Homebuyers throughout B.C. will benefit significantly from an increased 1 percent property transfer tax threshold. Based on 2011 assessment data, nearly 70 percent of B.C. homebuyers would have paid less PTT if the 1 percent threshold had been increased to $525,000.

Once the 1 percent threshold has been increased to $525,000, we recommend indexing it to ensure that the property transfer tax has the same impact on current and future homebuyers. Although the property transfer tax applies to sales of new and existing homes, the new housing price index or the MLS home price index provides a reasonable proxy for all home sales in B.C. A comparison of the current and our proposed structure for the PTT is included in our written submission for your reference.

We feel that homebuyers in B.C. deserve a fresh start. If the PTT is to remain, as every government since 1987 has indicated, given its contribution to provincial revenue, then it's time to restructure the tax to reflect market conditions and assist B.C. families who face the highest home ownership costs in the country.

Housing is a significant economic contributor to the overall provincial economy. The average housing transaction in B.C. generates an estimated $60,000 in expenditures. This is well above the Canadian average, and the $9,000 in taxes that results from each sale easily exceeds every other jurisdiction.

Sales of existing homes also drive job creation, with B.C. leading all other provinces. According to Altus Group Economic Consulting, the sale and purchase of MLS-listed homes in B.C. generates over 34,000 direct and indirect jobs — nearly one in 65 jobs across the entire B.C. economy, much higher than the national average of one in 109 jobs.

That concludes our presentation. Please review our recommendations and forward them to the Minister of Finance for inclusion in your 2013-2014 budget. Thanks for listening and responding to our profession's concerns.

D. Horne (Chair): Thanks so much for your presentation. We'll begin our questions with Marc.

M. Dalton: Thank you very much, Ray. Certainly, I'm supportive of reducing or removing it, theoretically, but as you know, there are revenues. I'm wondering if it's possible for you to submit information about how the loss of revenues to the government would be, going by increments of $50,000. If it was raised from $200,000 to $250,000 to $300,000 and breaking it down that way….

Of course, I know the ideal that you recommend is to $525,000. But would it be possible to submit that information and the number of units that are sold, and then
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how much the revenues would be at those increments?

D. Hayer: My question is: have you done any calculations to see, if the rate is reduced, whether the number of houses sold will actually go up, so therefore the government might get more revenue?

The second thing is: how much money will we lose from this decision, in case you don't get it this time? Obviously, make sure you don't give up on this, because this would be the right thing to do anyway.

R. Werger: Yeah. It's hard to say. It's speculative on what sort of impact that would have, an immediate impact or not. Usually these things are cumulative, as we've seen with the Bank of Canada making it tougher for mortgages and so on. So I don't know, and it depends on the economy.

We expect on the outset, but not counting any increase in sales that this might generate, that $159 million would be lost overall in government revenue.

M. Elmore (Deputy Chair): Thanks for your presentation. I've heard from other real estate boards, as well, concerns around the property transfer tax. With the amount that is in your proposal — the difference in revenue from the current system to the proposed system of moving to 1 percent up to $525,000 and then 2 percent on the remaining, about $158 million, $159 million…. Any thoughts around the recovery of revenue or other areas to match that revenue, which we'll see in the shortfall in the budget?

R. Werger: No. I mean, not at the moment. Certainly, that's a consideration. Where can we pick it up? Can we measure what that potential increase…? Or how will that spur others to purchase? I don't know at this point. We can try to do some more research on that.

I know our neighbours that migrate from immediately east of us…. It's a big deal. They come in, and they go: "What?"

J. Les: Thanks, Ray, for your presentation. It's remarkably similar to one we heard yesterday from the Real Estate Board of Greater Vancouver.

My first question. The $525,000 — is there any particular relevance to that figure? Is that the number you used, given that it was the benchmark for the HST calculations?

R. Werger: No, I think it's more bringing it up because it's been 25 years since the property tax was introduced, but it has never been brought up or measured. So I think it reflects more an average home price based on our HPI or whatever.

J. Les: Okay, so there was some actual calculation that went into the selection of that number.

J. Les: Okay. I think it would be useful if you were able to go back and maybe work with your economists or some experts of that nature to try to get a handle on the increased activity that would result with a lower level of taxation.

I think it's fairly commonly accepted that taxation does depress economic activity. Therefore, lightening the burden would tend to increase it. I know there wouldn't be a resultant explosion of home sales, but there would be some additional home sales. It would be useful if we had some kind of a handle on that. Otherwise, we're looking straight up at $159 million or some increment of that, depending on where we set the threshold. It would just be nice to know what the resultant balancing effect would be.

R. Werger: I know it is something that has to be added into the closing cost calculation for couples, especially first-time buyers. It's not something they can mortgage like, for instance, CMHC insurance costs. You can add that into the mortgage. This is something they have to bring to the lawyer's office at closing. So that's always the discussion. And it's the biggest thing if they're going over…. It's the biggest, because lawyers' fees are usually under $1,000 and this is the next one.

So it definitely would have more of an impact on first-time buyers that are struggling, while they're renting, to put together a down payment.

D. Horne (Chair): Ray, on that note, I'd be interested in maybe taking a look at one other aspect, which the real estate board in Vancouver, as well, looked at. It was part of their presentation. It's to look at trying to deal with the loss in revenue from it.

One of the things I find interesting is, obviously, at the upper end of the market. What's the impact, in order to basically make the process revenue-neutral, if you were to increase the 1 percent to 5¼ percent and perhaps put a new threshold in at $1.5 million at 3 percent? Whether or not that would be revenue-neutral and whether or not that would impact higher-end homes significantly — what would your thoughts on that be?

Basically, that would put it revenue-neutral to $1.95 million, and obviously, above $1.95 million would be higher. But it would be interesting to see the revenue and what kinds of projections you could create from that.

R. Werger: That's a good consideration, because then you're at least accommodating the working people. At
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that level — $1½ million or whatever you suggested — it's more of a luxury.

D. Horne (Chair): I'm not suggesting that's a good number. I'm suggesting maybe take a look at what number might be appropriate and what might work the best, obviously, to keep the market sustained and to actually accomplish what it is you're trying to accomplish for those that are trying to get into the market.

I'll now call our next presenter, the B.C. Agriculture Council. I believe Rhonda and Reg are here. As you've heard, you have ten minutes for a presentation and five minutes for questions. You can begin anytime.

R. Driediger: I'm Rhonda Driediger. I'm the chair of the B.C. Agriculture Council. Thank you very much for having us here today to talk about our No. 3 resource industry — agriculture. I'm actually very happy to see that every MLA here today, except maybe John, is from a riding that has significant agricultural input into B.C.

We'd just like to start off. We do have a submission which has been given to you, and rather than reading it verbatim, I'm going to go over a couple of the key points.

On page 1 we want to start with encouraging investment in agriculture and implementing a GST-like rebate approach to the PST system. This is a little something that I thought up one day. I thought, as I was filling out my GST return, then my HST return and all the other returns: "Wouldn't it be nice for our PST system, when we do have to go back…?" We understand we have to go back to the way it was, but then from that moment on we're working forward on PST. And we'd like to see a system that's a rebate approach rather than one that's trying to be adjusted at retail. It's very difficult for retailers and very difficult for farmers to administer.

This is a bit of a summary on the front, and we're also going to discuss a little bit about exempting agriculture from the carbon tax. That's a request, not something that needs to be done tomorrow, but as you probably know, other jurisdictions that have introduced a carbon tax have specifically exempted agriculture.

We'd like to go to page 2. The other issue we'd like to bring up is the competitive environment for agriculture. You know, we've dealt with a higher minimum wage. We had a 28 percent increase in 14 months that was very difficult for us to absorb. We have seen the giving, then the taking away of the HST, and now we're back to a very archaic system with the PST, which is very expensive for us.

Then the other thing that has happened over the last few years is a real reduction in the funding to our ministry. We are the third-largest resource industry, as we've mentioned. We are last when it comes to funding for our ministry. In fact, I'm not even sure if we still have funding. I think we do. As of today, we still have funding. I think we do win on the most ministers, though, and we appreciate that — for rotating everyone through Agriculture to make sure they're well trained.

But the B.C. government has consistently provided less support to agriculture than any other province is, investing approximately 2 percent of GDP generated from agriculture and food into supporting the sector. This compares to 10 to 15 percent in other provinces. We're at 2 percent. We have a significant resource. We need funding. We need funding for training. We need extension services. We need a lot of services in agriculture.

On page 3. If current provincial policies and taxation continue, over time an increasing number of farms and jobs will leave B.C. As we met with the Premier, we told her: "That's not a threat. It's just a reality." It's a reality. If the cost of doing business is cheaper in other jurisdictions, you will eventually go there. You won't expand in B.C. You may not leave B.C., but you're not going to expand in B.C. You're going to go somewhere where it's a lot more favourable for you to expand, a lot more favourable in taxation policies, a lot more favourable in labour costs and even flexibility within labour.

Let's go to page 4 on the PST. I don't think any other industry is affected by the PST like we are. You think: "Oh, what's wrong with that? Just pay your share of the taxes. Annoying, but just pay it."

The problem is that we have a system in agriculture that says: "Well, part of it is exempt, and part of it isn't." So your farmer goes in to buy something, and he's not sure if that's zero-rated or partially rated or if he does pay PST, so he says: "No, I don't pay PST on that." And the retailer says okay. He writes down a number. Then the retailer three years later gets an audit and finds out that farmer was supposed to pay that.

It's a huge administrative nightmare for the government. Really, how much money do you collect from us to pay for that administrative nightmare? That's why we're looking at a rebate system, the same way we've had with…. You've been working without the PST for agriculture, because we've been getting it back through the HST. So there's no increase in revenue when we go back to PST. There's actually going to be more cost to the government to administer and audit it, whereas right now if you're a bona fide farmer, you submit your PST for rebate the same way you would your GST. That's what we're asking for. Again, I'm not prescribing that.

Carbon tax. Let's go over our carbon tax on page 5. I think there are only two other jurisdictions — New Zealand and Australia — that have implemented a carbon tax, both of them specifically exempting agriculture. We can go into the reasons why. Some people think it's a motherhood issue.

For us, it's really limited as to what we can do as farmers. I'll read this for you: "We are examining ways of re-
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ducing carbon emissions and adapting to climate change. However, with poor economic returns and inadequate government investment in this sector, farmers are limited as to what we can do." Making significant emission reductions requires a large number of small producers to make changes. That is extremely difficult.

However, given the current carbon tax structure, farmers and ranchers, who tend to be environmentally savvy owners anyway, cannot reduce their carbon infrastructure any further.

Employment insurance. This is something that came up with the last federal changes. In the labour act there's a small…. Sorry, I think it's in regulation. For farmworkers, they're not allowed to bank any hours at all, because there's no overtime in farming. So if you have someone that's working 80 hours that week and 20 hours the next week, they're not allowed to bank it, put it into the following week. Why that was done, I'm not really sure.

But it's just a small change that we would like to see. It helps with the EI claim process. It helps to even out their weeks. But it also keeps them off EI for several weeks. Right now they have to be paid for every hour that they work within that pay period. They can't say: "Okay. Well, I've worked 80 hours. I want to move 20 to when we don't have as much work." Technically, you're not allowed to do that for any farmworker. So we would like to see that small change.

Conclusions. The B.C. Agriculture Council has estimated that agriculture capacity in this province can be doubled by 2020. Oh, I like that one. This is only possible, however, with provincial government policy that reduces costs, increases consumption of B.C. food, encourages innovation and environmental stewardship, streamlines the PST administration, encourages active farming while discouraging land speculation, and modifies the EI program to support farmworkers.

With these changes, the B.C. agriculture sector can have an even greater impact on the provincial economy, increasing jobs and prosperity for all British Columbians — and world peace. Okay.

D. Horne (Chair): The last part is probably the more difficult. Thank you for your presentation.

P. Pimm: Thanks, Rhonda, for your presentation. Obviously, we have lots of farming in my area. It's a big part of our area. I hear lots about the carbon tax, quite frankly.

My question — I've asked this question of all the people that mention carbon tax: did you do a submission to the Minister of Finance on carbon tax?

G. Coons: Thank you, Rhonda. Yes, I understand and acknowledge the contribution of the agriculture industry. My brother-in-law is an orchardist in the Okanagan. I hear the dilemmas that you're going through right now, and throughout your whole presentation.

But it is shocking when I read — quite often we get presentations, and we aren't quite too sure of the reality of it — that from 2006 to 2010, B.C. was the only province in Canada which has consistently had negative net farm income. You see the charts. It's eye-opening, and it really boggles the mind when you look at the numbers here in your chart — that it's consistently in the net-negative farm income.

You talked about being last in funding and less support from the government, and you compared the GDP — 2 percent to 10 percent plus. As we look forward to 2020, with your conclusion and how we need to change things, what do you think would help turn the tide and encourage agriculture throughout the province, as far as amount of money and funding compared to GDP?

R. Driediger: That's a really good question. I'm trying to prioritize how many ideas, I think, that we've looked at. Definitely taxation. I know that you're going to hear this every day, all day long: "We're taxed too much." We realize that everyone has to pay tax, moving forward, but not to the point that we want to stifle producers from going forward and especially moving into value-added products, being able to….

Once they're making some money, they can look to the future and say: "Okay. I'm making consistent revenues. Now I can look at maybe expanding a little bit. I can buy another farm. I can go into some value-added industries. I can add some other products to the lineup that I produce right now." You can't think that way if you're thinking: "Oh my god, I don't have any money left at the end of the year, so how am I going to create jobs? How am I going to get to that next level?"

I think with the ministry…. We've had some great people in the Ministry of Agriculture. We've had — I'm going to call them extension services because that's the term most people know, although technically that's not their role — people you can call up and say: "You know, I've got this insect, or I've got a pest, or I've got an issue, or there's something wrong with the plants." We have a great plant lab here, and we have some great people here and throughout the province that help us on a day-to-day basis. I'm concerned that those people are at some point going to retire and be gone, that they won't be replaced and that we will lose that information, that knowledge and the experiences that they've had.

Also, they're sharing that information throughout the province, so it's not just one person in isolation. I
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would like to see, at the Ministry of Agriculture itself, the staffing levels being increased with the type of practical, on-the-ground people, not people sitting in an office answering the phone but people who are actually allowed to come to your farm. I'm not sure if you know that. They're not allowed to come out to your farm. To have a specialist who's not allowed to come to your farm seems a bit strange.

They participate in research. They coordinate what's happening in B.C. with the rest of Canada. So we'd like to see a lot more funding go back into the ministry on-the-ground staff.

D. Hayer: Thank you very much. I'm also looking at the chart you provided which shows the net farm income from 2006 till 2010. Every province other than British Columbia has some years of income, some years of losses — right? British Columbia is the only one that seems to have losses every year.

First of all, I'm trying to figure out: how do the farmers survive if every year they're losing money? The second thing is that when I was a young kid I worked in farms here, picking berries in the Abbotsford and Chilliwack area. I remember at that time large families used to come over here with the kids, but nowadays most people don't want to work on the farms. I know that even the immigrants find work somewhere else.

Are you still having a shortage of people coming to farms, and how are you looking at that?

R. Driediger: Two questions. I'm going to let Reg answer the first one, which is: why is B.C. consistently losing money and still farming?

R. Ens: It is a more complex question, but the simple answer is: we have a significant portion of off-farm income. Many families are working multiple jobs, or multiple family members are subsidizing their farm income with off-farm income. That would be the simple or the short answer.

R. Driediger: I think what we have in B.C. is more generational farming. So you're looking at buying a piece of property, not just for yourself or just for the next five years. You're looking at it for your children, your grandchildren, great-grandchildren.

R. Driediger: Well, there are capital gains issues, but really you're looking at it as a long-term family investment. So there is the off-farm income that's supporting that mortgage right now.

R. Driediger: The workers: interesting question. I don't think we're yet seeing the labour shortage that we saw of 2002-2003, but I think we're going to get back to that at some point.

We do have the seasonal agricultural workers program, so we do bring in people predominantly from Mexico but also from eastern Caribbean states, who can come in and work under that. It's a temporary foreign worker program.

So we do have that filling in right now. There are about 4,000 workers in B.C. that come in. They are housed on site, so they're working there every day.

We still see a significant amount of contracted or day-to-day labour, but at some point we're going to see a reduction in that. Really, it's age. You're not seeing younger people coming in and taking those jobs, but you are seeing that population age a little bit more. At some point they'll retire, and we will be back in a labour shortage.

M. Elmore (Deputy Chair): Thanks for your presentation. I would agree with you that I think there is a bigger market for encouraging B.C. citizens to buy more B.C. products and produce.

Previously there was a Buy B.C. program. Are you thinking primarily it's a marketing issue in terms of encouraging the buy local and consume local?

R. Driediger: The government recently gave $2 million to industry — half a million through the B.C. Agriculture Council and $1.5 million through Investment Agriculture Foundation. That is for a buy-local campaign.

There is a meeting Friday, an initial meeting of the steering committee, to discuss how those funds will be used. I see it more as using social media, developing a go-to logo — whether it's Buy B.C. or not, I'm not sure — that can be instantly disseminated to the public. They're walking by, and they want to know who carries something.

It's not just fresh products. I mean, what you're eating there today is Brookside Foods — local company, local products, and people don't know that. We want to be able to point to those kind of things.

M. Elmore (Deputy Chair): I just have one quick follow-up. We had a presentation just this morning in Coquitlam from the B.C. Food Processors about the advantages of the Food Innovation Centre of B.C. Is that an initiative that you've been involved in and see value here in B.C.?

R. Ens: We've been involved sort of on the side. The innovation centre targets more the processing sector, so
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it's dealing with their members. We're aware of it. We've been part of sort of the steering committee setting it up, but we're not active on a day-to-day basis with them.

We'll now move to our next presenter, who is the Automotive Retailers Association, represented by Ken McCormack.

Welcome, Ken. You have ten minutes to present and five minutes for questions. Your time begins now.

K. McCormack: Thank you, Mr. Chair and distinguished members of the committee. My name is Ken McCormack. I'm the president and chief executive officer for the Automotive Retailers Association of B.C. A few of the distinguished members of this committee will be aware of our association. I've even had some discussions with you one-on-one over the course of the last year since I've become involved with the association.

A little bit about who we are. We're actually quite proud to say that we're celebrating 60 years, six decades in support of the automotive after-market retailers in the province. This is our 60th year. We have over a thousand active members in our association from a variety of different sectors within the industry, including towing and recovery; automotive recycling; collision repair; glass repair; mechanical repair; the automotive rental industry; the licensed motor dealers, which are the independent used car dealers, and the power sports dealers divisions as well.

We represent a very significant part of the automotive industry and, arguably, a very significant contributor to the economic and social fabric of this province. In fact, recent studies have indicated about one in seven workers nationally are involved in the automotive sector. In B.C. we account for roughly 34,000 family-supporting jobs within the province, and we generate roughly $3 billion in economic activity as an industry each year. As I say, we're a very significant part of the fabric of the province.

On a positive note to start, I'd like to point out some of the work that the Automotive Retailers Association is doing in support of what we understand and anticipate to be significant growth in labour demand in the province in the coming years. In fact, we've recently partnered with the labour market partnership program with the provincial government to conduct a labour market study to fully understand and to be able to articulate where the demand is going to be across the province, and the magnitude of that demand, for labour.

The average age of our entrepreneur owners and our businesses is roughly age 55. I'm sure you can appreciate the need for us to find labour, not only in terms of qualified labour to conduct the skills and the technical work that needs to be done in our shops, but also the future entrepreneurs that are going to take over those businesses and keep the automotive sector viable long term.

Due to the rapid advancement in technology, consumer demand and, certainly, economic realities, the landscape within which our sector operates is changing rapidly. The need for our members to hire qualified labour and to retrain themselves and stay ahead of advancements is quite critical.

We're very appreciative of the government's efforts and the support that we've been given through the labour market partnership program to conduct a study for the province. When we get the results of that study early next year, no doubt we'll be coming back to the government looking for further assistance to help identify the various ways in which we can capitalize on that growth.

I know discussions with Minister Bell and others within government…. As I said before, we do anticipate being a very significant contributor to the B.C. jobs strategy going forward. We're proud of our position there, and we want to make sure we're properly positioned for it.

Historically — moving on to a second point — the Automotive Retailers Association has always worked very closely with the provincial government and other key business partners and stakeholders in terms of promoting safe roads and safe vehicles for the motoring public and certainly for the transportation industry.

I should point out that our members are located in every single one of your constituencies and certainly all 85 ridings in the province. We're throughout the entire province.

One of the things our members are finding on an alarming basis is just how prevalent unsafe vehicles on the road are. I'm not going to suggest for a moment that there are easy solutions to that. I only want to go on record as saying that the Automotive Retailers Association believes, with our expertise and our members, that we can play a very significant and strong role in minimizing if not eradicating the prevalence of unsafe mechanical- and structural-based vehicles on the road.

A couple of recent studies that were done up north and then also in the Lower Mainland suggested that as high as 40 percent of vehicles that are being inspected right now are failing. These are vehicles that we believe…. Our members certainly believe that if we're given the opportunity to work with the government — and we would like to actually see some changes in the inspection processes — we can have a very real impact in reducing that number significantly.

Perhaps the most significant issue for us as an association is the conditions that we find ourselves in with the Insurance Corporation of British Columbia. We've had numerous discussions, primarily with Minister Bond and former Minister Falcon when they had responsibility for ICBC.

I suppose as an umbrella over this, one of the challenges we have had in the last four years is that ICBC
[ Page 2098 ]
has been moved 11 times within government. It's very difficult for us as an association to get traction with the government on key issues and the challenges that we're facing in our relationship with the corporation when it moves that frequently, quite honestly.

I should also point out that as an association — it may not be the popular opinion amongst the motoring public — we do believe that the model of a Crown corporation responsible for basic insurance in the province is a good model, if properly administered and working with the industry as the service providers that fuel that business for the motoring public.

ICBC is responsible for 100 percent of the basic insurance and roughly 85 percent of the optional insurance. It's very, very important for us as an industry that we have the opportunity and the ability to work with the corporation in meeting the needs of our mutual customers, and that's what they are.

Unfortunately, developments over the last two years, I would say, have significantly changed our relationship with the corporation. The net result has been that the ICBC unilaterally sets rates with limited or no input from industry. So the realities of what my members face in terms of costs and the challenges in providing services are taken very little into account.

There's no transparency any longer in how those rates are set. As a result, our members essentially have to accept what the corporation will pay. Unfortunately, it has had some very real impacts on the viability of our member businesses.

As an example, about two years ago ICBC decided they could save money by going to a preferred-supplier arrangement for automotive vehicle rentals when your vehicle is in the shop getting repaired. They went to an RFP process and essentially dictated a rate to the industry that they felt they were prepared to pay, which was significantly below retail rates. Our industry as a whole decided they could not possibly remain viable at those rates and wanted the discussions with ICBC to ensue that would come up with more reasonable rates.

One rental company out of the United States — Hertz Rent-A-Car — agreed to those rates. They don't have locations throughout the province. They had no ability to single-source the auto rental market for ICBC and the customers around the province, but as soon as the corporation had that agreement, those became the rates the entire industry was stuck with. We've lost about 60 stations. That's 60 doors, retail establishments, across the province within those last two years.

What ICBC estimates is about a $5 million savings. Again, that's the latest number I heard. Since ICBC discloses very little to us, we can only go by what we've heard. I know for a fact that that cost our industry about $15 million a year, and as I said, it's cost a lot of jobs and a lot of businesses that have gone under. In fact, we've lost an entire chain of auto rental business in the province as a result.

I was told to keep my presentation short, so I did. I'm certainly open to answering any questions that you may have.

D. Horne (Chair): That's very good. Actually, you had 15 seconds left, so it was very well done. We'll start our questions with Gary.

G. Coons: Thank you so much, Ken. It is interesting. You talk about ICBC, so my two questions…. One is going to be about ICBC. What changes would you like to see? You mentioned unilateral decisions and transparency. But if you came up with a list of three or four things, what would you like to see ICBC doing so that it's working with your industry?

And the other one is the unsafe vehicles. That's really concerning, when you talk about vehicle inspections. If you could envision a pilot program, working with government, what would you see?

K. McCormack: I'm going to really oversimplify both of my responses. In terms of what we'd like to see with the Insurance Corporation of British Columbia…. You said top three. I actually only have one. I would like to see them come back to the table and work with the industry to establish transparent and reasonable rates that reflect the realities of the industry.

It may in fact be, in some cases…. And I should point out that in some cases, at a working level with the corporation, our relationship is pretty good. When we start dealing with the policy-makers at the top is when things tend to fall apart for us, and we're not getting the cooperation that we would like to see.

All we're looking for is a return to the way things were up until about two or three years ago, when the corporation would sit with us. We wouldn't always get everything we want, but that's how a negotiation works. As an association, we represent the needs and the interests of our industry, so we're going to do our best to represent them. The corporation's going to do their part. And somewhere in the middle we come to rates that are reasonable and ensure the viability of the service providers but still make sure that the motoring public is getting rates that are reasonable and reflect a return on their insurance dollars.

Now, as far as the safety of the vehicles on the road, I suppose what we would like to see is…. We were quite disappointed, I'll point out, with the government's decision to eliminate AirCare. I'm sure there were reasons for it, and I'll accept that those reasons exist. But it doesn't change the fact that there are vehicles on the road that could be doing far more, not just for the environment but in terms of safety.

I'm not suggesting that these are the right numbers or the right dates, but if, for example, we had a situation
[ Page 2099 ]
where every vehicle that was eight years or ten years or older was required to go through a mechanical inspection every two years, that would probably have a significant effect on reducing the number of problems on B.C. roads and highways.

In addition, right now our licensed motor dealers, for example, every time a vehicle transfers ownership, are required to go through an inspection. Why shouldn't private vehicles be required to do something similar? Before they're sold to a new purchaser, they should go through an inspection process of some sort. We believe that our members can certainly participate in a program that's not cost-prohibitive.

D. Hayer: Thank you very much. A very good presentation, except that the AirCare…. Most of my constituents that have come to talk to me say that they were just stealing money from people's pockets, because the cars out now don't have the problems they had when they started it, and they never check the safety issue. Many times all they looked through were the computers — right? — and then they went away.

Then for some of the people it ended up costing $500, $700, $800 for one little piece of a gadget they have to change — right? They were saying that this was just a scam.

I agree with the other stuff, except the AirCare. I was surprised, because you are one of the first ones from your industry or somebody else to go and say you are disappointed. Otherwise, people are saying: "Thank you very much for doing it." They say it should have been done a long time ago. It took too long to get rid of the AirCare, because the cars nowadays, for the last ten years, are much different than they were before that.

K. McCormack: You're absolutely right. And if I may address that. Vehicles that have come out in recent years don't have the same emissions issues, as you rightly point out.

I'm not here to defend the ICBC or the government's AirCare program. In principle, what I'm suggesting is that properly administered inspections that have integrity to them are what is required. I'm not saying we should adopt or continue the same system, and I don't even want to get into a debate about whether it was a good system or not.

D. Hayer: But you say AirCare never did the safety inspection, so I think that's good to do with the emissions control.

B. Routley: Just following up on that, are you aware of any data…? Are there reports made by ICBC or others that indicate the number of vehicle accidents that were partly in some way caused by the disrepair of the vehicle? Is there such a thing?

I guess the second question I had was…. I am concerned that there were these huge unintended consequences as a result of ICBC trying to save money. They might have saved $5 million, but it cost your business $15 million. That's certainly the kind of unintended consequences you don't like to see.

What was standing in the way of your industry having dialogue or some kind of mediated process to resolve the problem with ICBC? Is there just no help to mediate some kind of meeting like that?

On your first point, if I may, as far as the data that may or may not be available, I would rather not talk to what data ICBC may have, because as I said, they're not very forthcoming when it comes to their own data and information. From our members' perspectives, and the vehicles that do eventually come across their shops, we know that there's an alarming number, particularly on the structural integrity side of things. We can trace some of these vehicles back to salvage purchases as a result of other ICBC decisions.

I should be careful when I say that. It's not a reflection, necessarily, of ICBC manipulating something to take advantage of the salvage issue. The fact is that salvage prices are so high right now that there are far more buyers looking for that salvage, and the prices go up as a result. That in and of itself results in more vehicles being purchased by unqualified buyers.

ICBC should be doing a better job of qualifying their buyers. They're not even, in our opinion, following their own protocols and rules when it comes to qualifying buyers. The net result is that we get vehicles back on the road that never should be on the road. Our members are seeing vehicles in their shops, and we're trying to collect that data ourselves, but it's like drops in a pond as far as the ripple.

On the second point, and the one I was hoping you would ask, as a result of changes to the Competition Act back in 2010, ICBC took it upon themselves to go to the Competition Bureau and request a decision from them on whether their relationship dealing with trade associations — like ourselves, like the trial lawyers and chiropractors, etc. — was consistent with the changes that were being contemplated in the act.

We don't know what question was asked. We don't know the correspondence back and forth. All we know is that the net effect was that ICBC said they could no longer have discussions with us around rates.

I have raised this issue, as I said, with former Minister
[ Page 2100 ]
Falcon, when he was Minister of Finance, and Minister Bond. I want to be careful about being too forthcoming about what was discussed in that room, but needless to say there didn't seem to be a whole lot of room around the table in that discussion that supported any sort of reasonable expectation that a corporation could not deal with trade associations.

In fact, one example that has been raised in a discussion with a senior official within the government was that it would be ridiculous to take a position like that, because it would prevent the government from talking to the Road Builders Association about rates. It is, obviously, to a different degree tantamount to the same thing.

We represent the industry, and we're there as their official voice. We understand that the corporation can set rates. In fact, it's their responsibility. But they should do so without abusing their position of market dominance and keeping in mind strongly what the realities for the industry are. Again, we don't accept their argument that they can't have discussions with us, and we'd just like to have them back at the table.

Good afternoon. As you've heard, you have ten minutes to present and then five minutes for questions. Your time begins now.

L. Perrin: Thank you very much, Chair. Could you please let me know when I have a minute left?

I'm here with regard to a prompt and fair settlement of a dispute between Omineca Enterprises Ltd. and the Ministry of Forests. This is the fourth time I'm making a submission to this committee on behalf of John Peterson and Omineca Enterprises with input and support from a number of B.C. New Democratic Party constituency associations, including Peace River North where MLA Pimm is from.

As is evident in their letter of April 24, 2012, which is in your package, to the Premier and the Leader of the Official Opposition demanding an immediate settlement….

D. Horne (Chair): Sorry to interrupt you. Is this matter currently before the courts?

L. Perrin: It is attached, and the package which comprises two binders I've left with the Clerk. I've submitted them by hand for this committee to use in your deliberations and recommendations for the provincial budget of 2013-2014. I'm also including a number of on-line links in this brief for your reference as well.

In 2007 my submission to this committee included research done on numerous breaches by the Ministry of Forests of the Forest Act, section 7.5 of the timber sale harvesting licence and the overall public accounts, acts, regulations, policies and procedures. This includes the shredding of Omineca's 1980-1984 account records while a Forest Act appeal and civil litigation were proceeding.

After reviewing a 2010 B.C. Auditor General's report expressing concerns regarding internal fraud and AG Doyle's statements in Hansard that fraud is always going to be in the public sector, the issue is its magnitude and how you can fraud-proof, as much as possible, the system itself and also how you can help public servants that work within the system to feel they are not swamped with red tape just because of a possible fraud that may exist. I'm not talking about the front line here. I'm talking about the higher-up DM and ADM levels.

I asserted in my 2011 submission to this committee that it appears that fraud — or as legal counsel for the Ministry of Forests termed it, an administrative oversight — is what actually took place in the administration of the stumpage and rental accounts for Omineca's two timber sale harvesting licences. There's something on tab 8 in one of the binders.

While the Auditor General has advised Omineca that his office cannot act on individual requests to conduct an audit, he may have actually taken the tip from assertions made by or on behalf of Omineca which resulted in his findings of inadequate accounting practices, which included lack of documentation. That was in about July of this year. I've left a link.

The ongoing inaction and refusal of the Ministry of Forests and the government to immediately settle this dispute and damages was caused by what Supreme Court of B.C. Judge Ruttan ruled illegal, biased and in breach of section 4(e) of the Ministry of Forests Act in 1984.

The ruling was not appealed by the Ministry of Forests, and stands today. Similarities exist between the Omineca and Carrier Lumber cases in that the Ministry of Forests has not been forthcoming with all of the documents, even after a court order to provide them to Omineca.

In a submission to this committee, Fort Nelson mayor Streeper details the current situation with regard to the need for a local tax base to support infrastructure and services. I've left a quote in here from Mayor Streeper, and I will just let the committee read that. I won't read through that. But I will say that the situation appears to be no different than it was in early 2008, according to the
[ Page 2101 ]
Fort Nelson Forest Roundtable. I'll quote them:

"In addition to the loss of 300 direct forestry jobs and the Canfor Tackama plywood plant, plus the 250 direct employees of the logging contractors group, the potential associated loss of key economic assets could be devastating to Fort Nelson and very detrimental to the province.

"Fort Nelson's ability to function as a service centre to the oil and gas industry is complemented to a large degree through associated and supplementary services to the forest industry. Despite the considerable revenues that the province derives from oil and gas exploration sales, we know those revenues would be enhanced considerably if Fort Nelson was able to attract more of the workforce currently coming in seasonally from Alberta to live permanently here in Fort Nelson."

One of the MLAs on the Timber Supply Committee advised me that the committee did not visit Fort Nelson. This was most likely due to the closure of two Canfor facilities almost four years ago. I've left links for the Timber Supply Committee final report and B.C. NDP caucus comment on the report. Each committee member has copies of two Fort Nelson News articles, the July 2012 Northern Rockies regional municipality special committee report on fibre supply and processing and the September 2012 Northern Rockies regional municipal regular meeting for this committee to understand the impacts of the lack of a settlement in the Omineca dispute on the community, which includes a lack of residential, commercial and industrial taxes for community infrastructure such as a water system and essential community services such as health care professionals. I've left a link for that.

Mr. Peterson's letter, which is included in this package, and the court documents in the package provide a roadmap for the legal process that should be used to settle this dispute. All that is simply needed is the will of the government and the Ministry of Forests to settle this with an adequate compensation that will allow Omineca or an affiliate, along with others in the community such as First Nations, to value-add forestry resources locally and thereby solve some of the challenges that the community, its local government and First Nations have been dealing with for much too long.

I've been involved with the exhaustive and expensive attempts to resolve this ongoing injustice for almost 20 years, which includes reviewing over 12,000 documents and attending numerous forest appeal and court hearings. After Omineca and the government of B.C. have spent a total of at least $5 million on legal costs, it is time to use a legal option that is much less expensive and time-consuming, outlined in Omineca's letter, in your package, of October 2, 2012, to finally resolve this conflict for the benefit of the four generations of the Peterson family, the Fort Nelson community, First Nations and the taxpayers of B.C.

Seeing no questions, I'll now call our next witness, the Council of Senior Citizens Organizations of B.C.

Jerry, as you've probably heard, you have ten minutes to present and five minutes for questions. When there's a minute left before your ten minutes is up, I will let you know. You can begin now.

J. Gosling: Mr. Chairman, members of the select standing committee, distinguished guests, fellow citizens, my name is Jerry Gosling, and I'm a director on the board of directors of the Council of Senior Citizens of B.C.

The CPR, the CNR and B.C. Rail employees, in an effort to provide an effective voice for their concerns for decent pensions and social benefits, formed COSCO in the early 1950s. The organization was registered under the Society Act in 1981 as the Council of Senior Citizens Organizations of British Columbia — otherwise, COSCO. The purpose of COSCO, as stated in its bylaws and constitution, is to assemble, coordinate and advance proposals and resolutions concerned with the welfare of senior citizens in our province of British Columbia, and our mission has remained the same for the past 60 years.

COSCO is an umbrella organization and is made up of various senior organizations and individual associate members. COSCO acts as a coordinating body and submits briefs to appropriate levels of government on members' resolutions relating to health, social and economic well-being of senior citizens in this province. COSCO currently has 82 affiliates representing 82,000 seniors in British Columbia.

Several years ago COSCO amended its bylaws to allow individuals who do not belong to an organization to become associate members for a fee of $25. COSCO has monthly meetings in the Hastings Community Centre on Hastings Street in Vancouver.

COSCO recognizes the importance of having strong allies and resources for information and adding strength and providing a loud, clear voice for senior concerns at all levels of government. At the federal level COSCO is a member of the National Pensioners and Senior Citizens Federation. At the provincial level COSCO relies on support from organizations such as the Canadian Centre for Policy Alternatives, the B.C. Health Coalition, the Public Interest Advocacy Centre, the B.C. Federation of Labour, the B.C. coalition to end elder abuse, the University of B.C., Simon Fraser University, the University of Victoria and our own University of the Fraser Valley.

Provincially, COSCO has led the fight against the government downloading on seniors and in support of the protection and enhancement of medicare. COSCO has participated in countless conferences, workshops and demonstrations in support of seniors causes and a civil society.

To deal effectively with increased longevity in the population, COSCO strongly supports the participation
[ Page 2102 ]
of seniors in all facets of public life, including participation in seniors centres and other senior organizations with seniors helping seniors.

Presently COSCO has 35 workshops, which we present to organizations in B.C. free of charge. A COSCO volunteer, trained in the applicable workshop, will travel to a location and present the lesson to a group. The lesson is on a DVD. There are always questions and answers from the group. The volunteer is only paid for mileage for vehicle expense. COSCO would appreciate any government assistance relating to this.

These workshops save health care several thousands of dollars annually as some deal with home prevention of accidents and falls. Attached please find a list of our current workshops. This evening the Council of Senior Citizens Organizations of B.C. will conclude their two-day conference relating to senior issues.

I would like to take this opportunity to thank the Finance Committee for their contribution to help fund this event. This helped bring out-of-town seniors to Richmond to participate in our conference.

In closing, I would like to take this opportunity to thank you for your undivided attention.

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

G. Coons: Thank you so much, Jerry. I understand the importance of dealing with seniors issues. Most of these workshops here I'm ready to sign up for. They look pretty good. We do get your pamphlets and information, and we read up on all the work that your organization does.

I just have one question about funding. What funding sources are available to you for these workshops, and do you currently access any government funding?

J. Gosling: Our funding is done through contributions from organizations. We get some from labour and some from the different organizations. Of course, we have funding coming in annually through our membership fees, and we get very limited funding from government. However, we just received some funding yesterday for the conference, and I thank you kindly for that.

M. Elmore (Deputy Chair): Jerry, thank you for the presentation. I had a question. You mentioned on the first page that COSCO has 82 affiliates. Are those different organizations, or are they COSCO groups in different communities?

J. Gosling: No. Those are different organizations. A seniors organization can join COSCO and sort of come into our family for a nominal membership fee. That's how we get some of our funding.

M. Elmore (Deputy Chair): So COSCO is like an umbrella, and then you have different….

J. Gosling: Right across B.C., yeah. We're always getting questions from other provinces relating to COSCO and its affiliates.

D. Hayer: Thank you very much for your presentation — a good presentation. You list in here that you have affiliation with the University of B.C., Simon Fraser University, University of Victoria and University of the Fraser Valley. Are the presidents of the universities sitting there? Do the board of directors sit on it? How is the affiliation, and what is your total budget per year for your organization? Do you get any money from gaming?

J. Gosling: That's a good question. I don't think we do get any funding from gaming.

In relation to the universities, we are always picking their brains for information relating to seniors issues. That's their contribution to COSCO.

B. Routley: Thank you for the work your organization is doing in helping seniors. I just wondered how far the outreach went. You talked about 36 different workshops. I see the interesting list that you have here. I do see that you're connected with the University of Victoria, so I was wondering about Vancouver Island. Are these kinds of courses available to seniors groups, say, in the Cowichan Valley?

J. Gosling: Yes, definitely — anywhere in B.C. We have different volunteers distributing these lessons, workshops, pretty well all year-round.

B. Routley: Just one follow-up, a point that I would make. I'm not quite ready myself, but I did go to a session on preparing for retirement. There are probably a lot of MLAs who might be interested in that. I found it very interesting, and I think more and more seniors who are reaching retirement age would really benefit from those kind of courses.

I attended one near the University of Victoria, as a matter of fact, where they had a group of folks that had already retired, and they talked about the need for some kind of plan when you retire. I did find it fascinating. I didn't see that on your list, so just a suggestion. You may
[ Page 2103 ]
want to carry that back to your group and suggest, because I think it's something that's really in high demand. I know it was when I went to it.

Anyway, thank you for the work you do. I think it's just great — wonderful stuff.

P. Pimm: A lot of my questions have been answered. You do presentations all around the province?

P. Pimm: I was interested in your budget as well, but you don't have that information. One of the recommendations I might have for you is maybe you should get a hold of Minister Sultan, the new seniors minister, and go and have a chat with him.

We'll now move to our next presenter, the British Columbia Construction Association represented by Manley McLachlan.

You've heard several times that you have ten minutes to present followed by five minutes of questions. Your time begins now.

M. McLachlan: I'm pleased to be here again. I believe this is the ninth presentation I've made to this committee in the last nine years. I only raise that because some of the long-sitting committee members may recognize some themes in this year's presentation that have been present in previous presentations.

We're making a total of nine recommendations in our submission, but I'm only going to speak to two of those recommendations. They're two primary issues related to the transition to PST from HST and issues related to public procurement, one of those consistent themes.

Again, I'm here representing some 2,000 construction employers across the province of British Columbia. Our membership works across the province, represented through the B.C. Construction Association, and the North, Southern Interior, Vancouver Island and Vancouver Regional construction associations.

We were pleased with the transition away from PST and disappointed with the results of the referendum. That disappointment was based on the fact that the PST reversal, if you will, or the removal of PST, represented a reduction of some $800 million in cost to the construction industry — a rather fat baby that was thrown out with the bathwater.

The attached document that I have to our presentation details issues specific to the construction industry, contractors and suppliers related to the transition back to PST. We urge this committee and the government to consider these matters carefully, to coordinate efforts for a smooth transition back to PST, and to promote amendments to the legislation and administrative policies that produce positive and feasible changes for contractors and the construction industry.

Primary issues are related to the administration, specifically to PST audits. The PST is a large burden for industry. The administration of PST was troublesome for the industry companies mainly due to the complexity of the PST rules affecting construction contracts and the uncertainty of how tax audits and how tax audit authorities might respond.

PST audits were and remain notoriously difficult for the construction sector. PST for contractors involves complex issues and requires comprehensive books and records to satisfy the tax authorities. Despite some administrative expediencies announced to date, contractors need much more assistance for a smooth transition back to PST.

Much of the controversy underlying PST audit issues could be resolved by enhancing the PST legislation — for instance, by listing specific conditions under which a construction contract will be taxed or exempted. Ironically, the lack of detailed rules hurt contractors because it presents opportunities for PST auditors to apply their own personal judgment and generally to issue assessments for one perceived error or another that may have been made by the contractor. The absence of specific rules means the taxpayer cannot argue his case legislatively and is left pleading for a commonsense, reasonable conclusion by the PST auditor.

In 2007 the B.C. Ministry of Small Business and Revenue conducted a PST review of real property to simplify and streamline the red tape faced by the construction industry specifically around the application of PST on labour related to work on non-real property. The government's policy announcement of October 2008 was helpful, but it did not go far enough to address the industry's problems with sales tax administration.

Further, the spirit of the new policy is not being universally employed by the PST auditors. The audit policy must be administered more diligently and respectfully, reasonably aligning the administration of the PST with the legislation that contractors are trying to comply with.

We've made a series of recommendations on how the legislation could be enhanced related to specific conditions under which the construction contract will be taxed. We recommend that the Ministry of Finance expand its study of the serious PST issues still facing the industry and work cooperatively with us and others to enhance the PST legislation for clarity within our industry.

We recommend the Ministry of Finance expand rules contained in Bill 54, which affect construction contractors, and provide clear policy announcements respecting the intent of these and other new rules. We recommend
[ Page 2104 ]
the ministry instruct the consumer taxation audit branch to relax its historical and current approach and honour the B.C. government's prior commitment to simplify the application of PST on construction service contracts, as announced in 2008 following the B.C. PST review.

The inherent difficulty in simplifying PST administration in a manner that is satisfactory to all contractors may be resolved by an approach that would recognize the distinction between small enterprises and larger sophisticated contractors. Again, we would recommend recognizing the distinction between those two, the small and the large contractors, as a means of addressing some of the streamlining of administrative issues around PST.

One of the clear looming issues is the transition from HST back to PST and the rules governing how that transition is going to take place. The federal and B.C. governments have adopted a relatively simple approach to date to the transition. The general rule will be that where tax becomes payable before April 2013, HST will apply. Where tax becomes payable after March 2013, GST and PST will apply.

The government has suggested that there will be special rules with regards to the application of PST to goods used in the improvement of real property, but to date these rules have not been announced. I point that out because contracts are being signed today that will transition that time frame. As most people recognize, it may take 18 months or more for a contract to be closed out.

There are a number of questions that we're asking that need to be clarified around long-term agreements being grandfathered under HST. There needs to be some real clarity put in place — and the sooner, obviously, the better.

I won't go into this in a great deal of detail, but there are also a number of issues around what we call reasonable interpretation of various forms of contract. When you get into these sophisticated multi-million-dollar projects, there are a variety of contract conditions that apply that all have an impact on the interpretation of how tax may be applied.

There is a recommendation we're putting forward that CTB should take into consideration the type of agreement based on the legal nature in terms of a contract and not on whether the transaction is for a single price or component pricing or another discretionary decision.

A perceived discrepancy should be resolved reasonably with reference to the above priority of available documentation respecting the contractor's intentions. In every case where the contractor performs or makes arrangement for the installation, the agreement should be treated as a PST-exempt contract.

Again, we recommend that the ministry recognize the distinction between these types of contracts as they move forward. And again, I would reference the attachment at the back of this presentation, which provides much more detail.

I want to move on to the second priority issue. This one has been a fairly longstanding issue, and it's all around open, fair and transparent access to public procurement. The construction industry deeply appreciates the public sector investment in construction. It's important to consider the issues related to public procurement that have emerged, even on our way out of recession.

While enhancing the economic security of our province and ensuring competitiveness is of primary importance to our members, adherence to the principles of open, fair and transparent access to public projects remains paramount.

We stress the need for the construction industry in B.C. working with government to take the time to really understand why public officials are ignoring, in our opinion, good advice and stated public policies. It's our goal to work together to create some real dialogue between public agencies and the industry to determine the underlying cause of continuing issues with public procurement.

We acknowledge the work on the capital asset management framework by the office of the comptroller general in rewriting the capital asset management framework. It's a document we agree with. We agree with the four principles in that document.

I'd like to reinforce that it's not just about the interests of the suppliers of construction services that we pursue these interests. It's in the interests of taxpayers receiving the best value they can for construction dollars.

Last year we identified the results of the B.C. Hydro audit, where it became clear that the reviewers observed that Hydro was paying a 20 to 30 percent premium for bad documents and bad procurement practices.

M. McLachlan: Perfect. I obviously won't read through…. I want to identify issues that have been related to governments mandating one particular type of procurement process or a preferred type of process — which, again, is an issue that we've raised with government.

The pursuit of design-build is a primary process. In fact, we're now aware that the Ministry of Education is reviewing recommendations to bundle new school construction and seismic upgrades. The argument being put forward is that this will enhance efficiencies in procurement as well as increase competition from offshore or global companies.

Now, we warn of the unintended consequences of that kind of action, specifically to what we call the local industry. The bundling of those types of projects literally has a direct impact on local or medium-sized contractors in the communities that you all live in. We would recommend that that process be reviewed carefully.

M. Elmore (Deputy Chair): Hi, Manley. Thank you very much for your presentation. I'm very interested and also concerned in terms of your second priority that you raised with regards to procurement. I also see the benefits of supporting local businesses and businesses in our community — construction businesses — certainly ensuring that they have access to public procurement projects.

Does the B.C. Construction Association have an official position on the design-build model? Can you talk a little bit more in terms of concerns with regards to the school projects you specifically mentioned?

M. McLachlan: Certainly. I want it to be clear that we do not endorse one process over another; we don't oppose one process over another. We believe that one size does not fit all. That's the reality of the construction process and the reality related to the varying types of projects that are out there. In fact, we've recently published a guideline for evaluation of all of the processes, whether it is design-bid-build, design-build, construction management, even the P3 process. We have that available. It's published on our website.

In fact, we're neutral when it comes to what process is being used. It's how the process is determined that's of importance to us. When there is a message delivered to the public sector that one process is preferred over another where it's interpreted as being a mandated process, then we have concerns with that.

It's no different than the Wood First policy. We understand the importance, and we understand the effort behind Wood First, but on a principle basis, we have concerns with a mandated use of one material, much the same as we'd have the same concern with a mandated use of one particular procurement process.

Procurement is something, as you know, that I've been interested in for some time. I appreciate you highlighting that in your document.

It's a pretty serious issue, I believe, when you identify, as the panel did some time ago, that there's a 20 percent to 30 percent premium being paid for bad practices. Could you comment on what some of those bad practices are?

M. McLachlan: The limitation of access to projects, where your competition is narrowed down — single-sourcing, if you will, of a particular supplier or particular contractor. The issue, I believe, where the most cost is associated is in the transference of risk within the contract documents. When risk is downloaded to a contractor, the only way the contractor can manage that risk is by building a premium into the cost.

In the Hydro audit, that's what was identified — that the risk was being transferred to the individual or the organization least able to manage the risk. That's been an issue that has been a point of contention for quite some time, and it's a result, we believe, of a number of things: the advice of legal counsel, the advice of the insurance industry. It, as you know, has been an ongoing challenge.

It's the use of non-standard documents. We promote and we support the use of the Canadian Construction Documents Committee's documents. Now, a lot of folks think that those are contractor-friendly documents. The reality is that they're put together by a national committee that includes public sector buyers and representatives of the national organizations from the design community and the Canadian Construction Association, an independent council.

The value of those documents is that a contractor can read that front-end document and know that it's consistent with the last one he signed. But when a school board creates their own construction document and loads the risk in the front end of that document onto the contractor, then your costs are going to go up correspondingly.

The beauty of the CCDC documents is consistent front end with the ability to add, at the end of the document, additional supplementary conditions to that document. That allows you some variance in how it's applied.

The advantage there to those who are studying the document or about to sign the document is that they know the front end is a relatively safe place to go. Definitions of liquidated damages and those types of things are all included and recognized in the front end. You go to the back-end supplemental conditions to determine where the risk is now on this particular project.

The drift away from the use of a standard document we believe was the result of an effort to reduce red tape. The reality is that while that red tape may have been reduced inside government, it actually layered on red tape, if you will, for the industry.

In the past a contractor could bid on nine different projects within the education system, and the provincial government had a standard contract document. You knew where you stood. Today you could have nine different contracts from nine different school districts. It creates a lot of apprehension, and the risk factor goes up. Therefore, your costs are going to go up accordingly.

Contractors are gamblers. The best way to manage risk is to put a premium in place. It's as simple as that.

D. Horne (Chair): Thank you so much for your presentation. Unfortunately, we've reached the end of the allotted time.

I'll now call our next presenter, the British Columbia College of Chiropractors and the British Columbia Chiropractic Association, represented by Dr. Don
[ Page 2106 ]
Nixdorf.

Welcome. You have ten minutes for presentation, five minutes for questions, and your time begins now.

D. Nixdorf: First, on behalf of the British Columbia Chiropractic Association, I'd like to thank the Chair and the committee for the opportunity to present.

In the past we've presented to the Ministry of Health and, of course, the minister, as well as the Ministry of Finance and the minister. In many of our presentations to Health some of the issues we would talk about would be deferred to Finance. In turn, when we talked to Finance, many of the issues would be deferred to Health. Subsequently we're accustomed to bringing a fairly unified message to both ministries, because they're both inextricably tied to the welfare of British Columbians and the economy of British Columbia.

My name is Dr. Don Nixdorf. I'm the executive director for the British Columbia Chiropractic Association and the College of Chiropractors of British Columbia, which share administrative staff, not the regulatory boards.

It's no surprise that B.C.'s health care system is stretched to the limit due to the aging issues, costly and existing technologies, treatment options, costs to operate hospitals, increasing costs of physicians and nurses and, of course, increasing costs of drugs. The annual increase of the government portion of health costs consumes almost 50 percent of the provincial budget and is projected to reach 70 percent by 2017. I think these numbers are all familiar to yourselves.

The relationship of the Ministry of Health to the other ministries and the province is becoming a little bit like Greece and its economic problems to the eurozone and the economic problems in Europe. The consumption of moneys and the expenditures and the deliverables are a mismatch.

Clearly, this is an economic crisis today, no less than any being forecast for other provinces or countries we regularly hear about. Legislators can overcome these fiscal challenges, we believe, by proactively partnering with health providers to implement regularly demonstrated evidence. This crisis affects both the health care of British Columbians and the ability of government to fund the ministries and public services.

While legislators are not responsible to diagnose or deliver actual patient care, you do determine the delivery model that the public relies upon, influencing outcomes and costs. More than ever the British Columbia Chiropractic Association is eager to assist the Ministries of Finance and Health in finding new ways to make our health system more sustainable for current and future generations.

Promoting prevention programs is one of the things we focus on. We recognize that there are short deliverables in funding for prevention, but I think the time has come where we're seeing more interest in that both from organizations like WorkSafe and ICBC and, as well, various initiatives of government.

The BCCA believes the key to sustainability is prevention. All British Columbians, young and old, can benefit from more targeted prevention programs. These programs, with proper allocation, not new funding, may be profession-based or partnered, with the goal of increasing awareness of the important resources and tools to help individuals and families make informed choices that improve outcomes from daily practice-based evidence.

BCCA developed and supports a number of highly effective prevention programs that are designed presently for children and young workers. These were partners with ActNow and WorkSafe B.C. More importantly, the objective of these programs is geared towards raising awareness of the benefits of better health habits, which include, of course, regular physical activity, eating, sleep and practical advice as a way of maintaining wellness.

For example, in the past few years the BCCA partnered, as I mentioned, with the Ministry of Health and ActNow to promote the developmental issues around children and backpacks — wearing them incorrectly and the effect of too much weight — as they go to school. As a follow-up we did an Ipsos-Reid survey, demonstrating that 73 percent of British Columbians recalled the joint B.C. government and BCCA initiative.

This program costs just over $100,000 to conduct, demonstrating that significant public awareness and direct benefit is possible with minimal funding of prevention programs. Our recommendation includes that the BCCA recommends to the province that we partner and allocate specific funding for prevention programs, of which this is only one example.

The other one we feel strongly about is empowering health care consumers. This is critical. Informed choice and informed consent lead to better care and outcomes for British Columbians themselves — available health care resources and prevention programs, the better choices they will make. This reduces dependency and the cost of services while promoting better personal health.

The success of government planning will be achieved when government awareness and actions follow the Ministry of Health 2007-2008 service plan statement, which I'd like to read: "The greatest untapped resource in health care is the consumer. Well-informed patients get better care from their doctors and provide better care for themselves. The issue at hand is how to get the right information into the hands of the right person at the right time."

Our recommendation includes that there is establishment of education programs K through 12 that support awareness of health needs and the necessity of being empowered as health care consumers. We recognize that health care in education is a certain resource, but some-
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where in grades 10, 11 and 12 we have to provide something other than just the bit of sex education which gets thrown out every now and then.

There has to be some meaningful identification of the very person that is going to use their body throughout the rest of their life. We're not trying to make them dentists, physicians or chiropractors in grades 10, 11 and 12, but we have to give these people some empowerment and knowledge about the body to carry on through life.

Not only do we not have any meaningful information for these students as they graduate each year, but even worse, we don't empower them. What do I mean by that? Most people get their headlines about news from radio, television and newspapers. We don't even empower our students when they graduate to think critically, ask questions and take responsibility not just for their health but the health resources available.

Health provider resources and training. The government's 2009 health legislation reform facilitates and promotes choice for British Columbians. Arising from this we should examine the opportunity to nurture B.C. students who wish to become health care providers, as we cannot rely solely on other jurisdictions to train B.C.'s practitioners to meet the demands of the population in terms of volume and spectrum of conditions. This is complementary to the current process for nurses and physicians.

The BCCA continues its efforts to establish a school of chiropractic in an association with a B.C. university. To currently earn their doctor of chiropractic degree, students in this province must attend schools in Ontario, Quebec and the United States. A B.C. school will provide British Columbians seeking a career as a health provider with the opportunity to stay in B.C. and will support local economic growth while emerging as a leader in education, science, research and evidence-based care.

The BCCA recommends the establishment of a B.C. school of chiropractic to support education for B.C. students and research for spine and spine-related conditions that are a major burden of illness for society, as well as supporting the primary care objectives of the Ministry of Health.

The current model of chiropractic education is in primarily private and some affiliated universities that are in Australia, Europe and the United States. In Canada, of course, we have Toronto and Quebec. There are approximately 500 Canadians that seek their education in this profession outside of Canada. In British Columbia the College of Chiropractors registers, on average, 40 registrants each year, of which ten to 15 are graduates of the Canadian system.

We have historically noted the strong demand for the education. We've noted that Canadians and British Columbians consistently have to go outside of British Columbia and Canada, and we see that in the returning doctors that are coming to register in British Columbia.

Of note, however, is that unlike nurses and physicians, chiropractic doctors graduating from schools around the world graduate from what we refer to as an accredited school. The profession in the 1950s — I'm not sure if they were terribly brilliant or just thought this was the right way to do it — modelled an international accreditation formula where Europe, Australasia, Canada and the United States entered into reciprocal agreements where those documents mandated a core, set, standard of education.

If any of your students or yourselves went to a chiropractic school anywhere in the world, you didn't go there unless that school was accredited. The reason was simple. No one was going to accept your application for registration.

Today, whether the school is in Durban, South Africa, or in New Zealand, Australia, Denmark, Great Britain, Canada or the United States, all of the schools are mandated to subscribe to what we call the Council on Chiropractic Education and those set educational standards. This assures the portability of students around the world and avoids the problem of having unqualified people applying for registration.

The BCCA is very concerned and committed to working to protect the future of health care in B.C. As stated in the beginning, we urge legislators to proactively partner with health professions to allocate resources more effectively. There is enough money for health care in the system, when allocated appropriately. We look forward to finding solutions with you that address the fiscal crisis, ensuring the sustainability of our health care system.

The severe pressures repeated and documented in the Conversation on Health and each previous B.C. commission are today's reality. The current health accord, 2014, seeks to find a new delivery framework under the Canada Health Act. These submissions, however, are ultimately about transfer payments and whether user fees will be allowed and where. The real model for delivery of health services still remains at the provincial level and with the health professions, where we recommend more transparent partnerships.

I'll close by saying that we applaud the B.C. government's continued efforts and dedication in this ambitious undertaking to build a more effective health delivery system for the future. The strategy of central policy and political stances taken by government must be questioned by government and, where necessary, altered.

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

M. Dalton: Thank you for your presentation, Dr. Nixdorf. I'm wondering if you could inform us of how many chiropractic doctors there are in the province.
[ Page 2108 ]
What's the trend? Are they expanding — the practices? Also, is there a business model that's provided for the doctors as they are trying to get established?

We have approximately 1,100 registrants practising throughout all the communities in British Columbia. The business model is really something that's a component of the last year of the doctor's education and is supported in this case by the B.C. Chiropractic Association and their peers.

D. Nixdorf: The trending is that about a third of the demographics of our doctors are female, and I think the age of the practitioners is approximately in their 50s. We have a profession which is not aging. It's sort of growing on a steady basis. As I mentioned earlier, we register about 40, average, per year. That's been relatively constant.

M. Elmore (Deputy Chair): Thanks for your presentation. I'm interested in your recommendation to establish a B.C. school of chiropractic. Just wondering what that would entail and a possible budget around that startup and how big a project you envision that would be.

D. Nixdorf: We've been looking at this since, in fact, 1989, when it was then a two-year initiative with the University of Victoria. That one didn't conclude. We then looked at it again at the invitation of BCIT and SFU in 1997. That one didn't move forward.

We're currently re-examining all of the economics and the patient demands around this. We're recognizing, as does everybody, the economic problems we face today.

What we're proposing is that the profession will be developing a curricula and a model of education which will continue to be tuition-based. In other words, we're not going to come to the Ministry of Advanced Education and ask for per-capita funding for the entry of students.

We see this as the profession's self-funding project at the outset, and that may well be the case for ten, 15, 20 years down the road. Chiropractic education today is…. All the schools have about 90 percent funding by tuition-based. The other 10 percent comes from various continuing education, research and alumni interests.

Our model looks to take advantage of existing infrastructure in the province of British Columbia and find opportunities with existing universities that are looking to expand their research capacity and also their deliverables to British Columbians. But we do see this as a profession-funded initiative and a student-tuition-based.

D. Horne (Chair): We have about a minute left, so we'll end with a question from Gary.

I liked your line: "There is enough money for health care…when allocated appropriately." That's something we all have to go towards and look at. I think the education programs, one of your recommendations, are significant. Being a teacher for many years, I believe that we need to reinvigorate programs like that to ensure health issues are looked at.

I do have a question about the backpack campaign. It was a brilliant campaign and at a low cost. I'm wondering what other type of campaigns could be out there — one for the back, like the backpack one. What other ones would you suggest?

D. Nixdorf: Well, fitness and exercise are paramount. Everybody recognizes that if you initiate programs that promote exercise and fitness, it has a whole cascade of things from diabetes right to arthritis — the whole body. We'll be looking at not just children and workers, as we have with Act Now and WorkSafe, but we'll also be working with the seniors programs and the general population.

Your point earlier about cost and things like that is very timely. The profession's enabling legislation was in 1936, so we've been in British Columbia since that time. As a result, through the statistics from the Medical Services Plan, Workers Compensation Board and ICBC — for example, the Medical Services Plan to deal with spine and spine-related injuries — we know the consistency on utilization of care. We could say that in today's dollars, to treat spine and spine-related problems there's an average of $340 per capita.

When we saw these numbers in both WorkSafe B.C. and ICBC, it resulted in long-term contract agreements which were based on bulk model funding because of the stability of utilization. This will also translate into our safety and prevention programs.

We'll now call our next presenter, which is the B.C. Association of Farmers Markets — Bruce and Elizabeth. Welcome, both, to the committee. I think you've heard several times now that you have ten minutes to present and five minutes for questions, and your time begins now.

E. Quinn: The B.C. Association of Farmers Markets appreciates the opportunity for input into the provincial budget. I've met a few of you before. We were here last year, and some of the recommendations that we offered were adopted and have been of benefit to our members and many B.C. residents, so thank you very much.

Our association represents over 100 farmers markets,
[ Page 2109 ]
and we are a voice of 3,000 small businesses, including 1,000 farmers, across the province. Our organization facilitates communication between a very broad group of farmers, food processors, artisans, various ministries and the corporate world.

Farmers markets are gaining popularity. In 2006 direct sales at B.C. farmers markets was $46 million. Preliminary results from a study of the economic and social benefits of farmers markets from the University of Northern B.C., funded by the Investment Agriculture Foundation, Agri-Food Canada and Vancity, has found there has been a 21 percent increase in the number of farmers markets in B.C. since 2006. Direct sales have increased 136 percent, from $46 million to $108 million.

Overall, farmers markets are strengthening local economies and offering fresh, healthy food to British Columbians. All this money is staying in these communities. That's what we want. We want strong communities.

Last year we appeared before this committee and talked about the farmers market nutrition and coupon program. Not long after we were thrilled to receive three years' worth of funding. I don't know if it had anything to do with this committee, but I'll give you the credit.

We're thrilled we have three years of funding from the B.C. Ministry of Health. We sincerely thank the provincial government for this support and would like to describe the impact that this program is having in the province.

This year the farmers market nutrition coupon program is operating in 21 B.C. communities. In a number of your communities — Courtenay, Surrey, Vancouver, Coquitlam — you have this coupon program. It involves 25 farmers markets that are matched with 30 community agencies that offer nutrition and food skills programs to their clients. More than 500 farmers and over 1,000 low-income pregnant women, families and seniors are directly benefiting from this program.

This investment is extremely beneficial to farming in B.C. Many farms have been facing financial challenges such as debt and low profitability. In 2010, B.C. farmers had the lowest average net income in Canada. The extra revenue that the farmers market nutrition coupon program brings to farmers supports farming families so that they can continue to produce food for British Columbians.

It's also reintroducing families to the many benefits of locally produced food. This healthy families B.C. initiative offers coupons to low-income pregnant women, families and seniors for the purchase of fresh B.C. food at farmers markets.

Low-income participants who demonstrate an interest in improving their health by participating in nutrition and hands-on cooking classes are provided with coupons to support their newly acquired knowledge and skills to eat healthy. So it builds on what the other person was talking about — health. We're helping to improve the health of people who are interested in improving their own health. We're building on their enthusiasm.

While visiting participants in various communities, we've heard so many heart-warming stories about the impact that the farmers market nutrition coupon program is having on people's lives.

There's a story of a woman who's 80 years old and who volunteers at her local neighbourhood house, a shelter and a women's centre. This woman is 80. Her doctor recommended that she eat only food prepared at home in order to lose weight. The farmers market nutrition coupon program has helped her to do that, and she has happily reported losing 40 pounds just by changing her diet. She now leads a community kitchen for seniors in her community.

Many other participants with medical conditions have reported how this program has helped them buy the foods that their health care professionals recommended to help them improve their health.

Critics of the farmers market nutrition coupon program say that farmers markets are too expensive. In our visits to participating communities we compared prices at farmers markets to the prices at large grocery chains. In nine communities we found that the prices of conventional B.C.-grown fruits and vegetables at farmers markets were equal to the prices of the same products at the grocery store over 80 percent of the time. Strikingly, even local organic fruits and vegetables were either the same price or less at farmers markets.

We impart this message to you all today in the hope that we can work together to dispel the myth that B.C.-grown foods purchased at farmers markets are more expensive. By doing so, we can educate British Columbians to buy local, assuring them that they do not have to spend more. Vancity is one of our funders.

Last year we recommended that the Buy B.C. program be renewed. This year we're happy to hear that the B.C. Ministry of Agriculture will be providing $2 million in matched funding to a buy-local campaign that will help B.C. farmers and food processors. That's terrific news.

Farmers market societies will now be able to double their marketing budgets to promote buying local. So it's a win-win for everyone.

A goal of the 2012 B.C. agrifoods strategy for growth is to increase domestic markets. In fact, despite a growing market for locally produced food, the growth of farmers markets, the hundred-mile diet and local food movements, less than half of the food grown in B.C. is consumed locally. There is tremendous room for growth in our province alone.

Two years ago we recommended that the government support partnerships that allow farmers markets to have permanent locations in their municipalities. This
[ Page 2110 ]
recommendation prompted a letter to the president of the Union of B.C. Municipalities from the Minister of Agriculture.

Since this initial recommendation, we have published a best practices guide for municipalities on how to support farmers markets through policy. This guide will be ready for distribution in the coming months, and we would greatly appreciate any assistance you could provide in raising awareness and encouraging its use. We will be pleased to share it with you once it's ready.

We celebrated the third annual Farmers Appreciation Week this September. We are pleased that the Minister of Finance, Mike de Jong, and our Minister of Agriculture, Norm Letnick, raised awareness of Farmers Appreciation Week and farming in B.C.

This year our theme was "Young people in agriculture, for the long-term profitability of farming operations." We need to support young people in agriculture to ensure that we continue to produce enough food for British Columbians, to decrease our reliance on imported produce and to have enough farmers at farmers markets. As farmers markets grow in popularity and then there's an interest in having local food available in your communities, we need enough farmers.

Buying local products enhances our economy and supports our communities. Farmers markets provide low-cost, effective marketing channels and act as incubators for small producers and new farmers.

I'm not sure if you've heard about this couple on the Sunshine Coast. They have a granola; it's called Holy Crap. They had another name. It was a really healthy name, and they sold, like, two every market. Then they changed it to Holy Crap, and they were selling a hundred at every farmers market — a hundred of these things. They now have a multi-million-dollar business on the Sunshine Coast, and they started at the farmers market. They were on Dragons' Den.

It started at the farmers market, so it's a great place for people to test their product. I think I mentioned this last year, but it's such a good story that I had to say it again.

We hope the government can help us raise awareness and appreciation for farmers throughout the year and during Farmers Appreciation Week.

Recommendations. Encourage municipalities to adopt best practices to strengthen local food and farmers markets in their communities, help dispel the myths surrounding the price of fresh produce at farmers markets, ensure adequate funding is available to the Ministry of Agriculture to continue recent efforts to support farmers markets, and promote Farmers Appreciation Week 2013.

Thank you very much for hearing us and for your efforts to receive input into the 2013 budget.

D. Horne (Chair): Thank you so much for your presentation. We'll start with a question from John Les.

J. Les: Thank you for your presentation and for what you do to promote farmers markets.

My question was going to be the definition of "farmers' market." In my own community we see fairly limited traditional farmers' markets, but we have quite a few, I guess, what I would call farm markets. I'm wondering whether they kind of fall under your wing as well, and what your position is on that. I have noticed, having taken a bit of an interest in it, that some of them do very, very well. They really encourage people to buy local product produced on the farm and add a bit of a tourism element as well.

I just would like your thoughts on that — whether you're thinking a little bit beyond the traditional farmers' market and including farm markets as well.

E. Quinn: You are, okay. I know that you have about 800 farmers in Chilliwack. You have an incredible number. I know that the farmers market in Chilliwack has been trying to happen, but they're having a hard time because there are so many farm markets. People want to go to the actual farm to buy their food.

During Farmers Appreciation Week we promote buying food off the farm, at the farmers market and at retail. Like, we know that if we just depend on farmers markets for supporting B.C. farmers, that wouldn't be enough. So whenever we can, we promote all farmers.

That said, our mandate doesn't include people who sell direct off their farm, and the Fraser Valley Farm Direct Marketing Association does that with their guide. A lot of the farmers who are in the guide are also at farmers markets, so there's definitely an overlap. Also, many of the farmers who sell at farmers markets use direct farm marketing on farms as one of their marketing channels, so it's just one of the mix. But definitely…. I mean, I live in Ladner, and I go to the farms — right? — as well as my farmers market because it's fun.

M. Elmore (Deputy Chair): Thanks for your presentation. Yeah, that's a lot of farmers and small businesses in the farmers markets — and seeing the successful expansion. I know in Vancouver they're very popular as well.

Obviously, there's direct produce that is available there but also the value-added products and the products that are produced locally. What's the percentage of those products that are available?

E. Quinn: I survey our members all the time. I like stats and numbers. About 30 percent of all the vendors at farmers markers are small-scale food processors.
[ Page 2111 ]
Another third are the farmers, and then the other third are crafters.

B. Fatkin: In Abbotsford it's a little higher in terms of farming. I wouldn't be surprised to find out that it was a little higher at the markets in the east end of the valley as well.

Where there is a supply of farmers readily at hand who don't have to travel too far to markets, that tends to enhance that number a tiny bit. So it could swell at some markets to 50 percent farmers and another 25 to 30 percent food processors, or value-added, as you suggested.

D. Horne (Chair): We have 30 seconds left. A question — a quick one — from Marc.

M. Dalton: Thank you, Bruce and Elizabeth, for your presentation. Farmers markets are obviously good for farmers, but they're also good for our communities. I know that they just bring life and help to re-energize our communities.

I'm just wondering if you can comment on the farmers market nutrition and coupon program. What's the value as far as what the government is putting into it? If you can just say how it works.

E. Quinn: Well, we got a one-time grant for $2 million, and we'll be rolling out the program for three years. This year, like I said, we're in 21 communities. Each family gets $15 worth of coupons. That family — one of their participants — has to be taking a nutrition or skill-building program of some kind. So it's a health initiative to support people who already have an interest in their health, because the Ministry of Health finds that people who've already demonstrated interest…. There'll be more benefits.

They get it every week — the money — and then they shop at the farmers market. Then they experience the fun. A lot of them, too, are leaving their…. Some of these people who are low income have never been to a farmers market, so at first it takes time to get used to it, and then they really enjoy it.

D. Horne (Chair): Thank you so much for that. I know that the Coquitlam Farmers Market is a huge success. It's a wonderful place, and having the towers around it is great. For the people that live in those towers, I think it's a great opportunity. So thank you so much for working on this.

I'll call our next presenter — KidSport's Tri-Cities chapter, represented by Chris Wilson.

Chris, welcome to the committee. You have ten minutes for presentation, five minutes for questions, and your time begins now.

C. Wilson: Thank you very much. I appreciate the opportunity to speak to all of you, and I appreciate the effort you're making to hear such a wide cross-section of views from around the province.

I'm here today representing not just KidSport Tri-Cities but KidSport B.C. as well, and I'd like to talk a little bit about community development and a healthy society through sport. I realize in times like these there are huge demands on the government for increased spending in all ministries and sport may seem a little bit frivolous, but I truly believe that sport is a very important piece of the puzzle when it comes to many of our larger issues.

Like you've heard already in the previous presentation to the last one, prevention is extremely important, and that's also where this fits in.

I was very lucky as a child to have had the opportunity to play a variety of sports. They taught me a lot about commitment, competition, teamwork and discipline. I learned how to set a goal and work with a group of people to reach that goal. I met friends from outside of my school through sport and had the benefit of regular physical activity.

As I got older, I started to specialize and focused on the sport of wrestling. Through wrestling I've had the opportunity to travel around the world, get a university education and represent my community, our province and our country at the Olympics, Commonwealth Games and a number of world championships.

I also had the opportunity to use my experiences and the lessons I learned from sport to try to make a difference in my community. For ten years I had the privilege of speaking to students in more than 150 schools a year throughout the province, talking to young people about how they could become successful at what they were passionate about.

I also had the opportunity to start a program called the ESTEEM Team, which is a role-model program made up of a number of athletes who do the same thing. Most athletes want to be role models, and today the ESTEEM Team is still going strong.

I benefited truly from the provincial funding framework when it comes to sport. But I've also been extremely fortunate to have had all these opportunities at the national and international level. I've also been lucky to be involved in my community, and this is the level of sport where I believe sometimes we forget about it.

Community sport is all about community development. I've experienced this over and over, as I'm sure many of you have too. Volunteers organize provincial associations, leagues and local associations. More volunteers coach and manage teams. Parents get together and split the duties to run the teams, and they get to know each other better. New families to the area or new families to the country are welcomed, and a sense of connectedness develops. People get engaged and start to car-pool, take turns bringing oranges or other treats
[ Page 2112 ]
for the players, team get-togethers happen, and the community becomes even closer.

This gets repeated thousands of times throughout the province. A small investment of resources gets leveraged a thousand times over. The result is a sense of belonging in the community. Families start to support each other, and a sense of community grows. All kinds of great things start to happen. Resources are shared. People do business together. Lifelong friendships are started.

At the kids' level they learn all the great things sport teaches them, feel a sense of belonging and get regular exercise. They learn to do their homework better. They often eat better and sleep better. In terms of adult sport, the benefits are just as great for both physical activity and a sense of community.

Unfortunately, one of the challenges that we have today with community-level sport, though, is the increasing cost for kids to play and the difficulty many families are having in covering these costs. This is where KidSport comes in. KidSport raises money to subsidize the registration fees for low-income families so that all kids can play. It's a true success story, as it was started in B.C. in 1993 and is now a national organization.

I'm very proud to be involved with KidSport as the chair of the Tri-Cities chapter and have seen firsthand not only how tough it is for some families to afford to play but also the incredible impact having the opportunity to play can have on a child. I've coached in the community of Coquitlam for a number of years and had the benefit of seeing the impact that it's had on all kinds of kids.

I was just going to relate one story here. I coach lacrosse, and I coached this one girl in lacrosse for about four years. She was a very shy, quiet girl who wasn't very confident. She came from a single-parent family, so the mother couldn't afford to enrol her children in sports. Then the mother found out about KidSport.

Her daughter wanted to play lacrosse, so she was ecstatic that she was going to get the opportunity to play lacrosse. In the span of about four years this girl went from being very shy and quiet with not much confidence at all to being the captain of our lacrosse team, and I know that it was because of her experience in sport.

That sort of thing happens all the time in sport. That's why programs like this are so important to keep strong, because all kids deserve a chance to play and potentially become leaders in their community, like this girl is.

When I got involved in the Coquitlam chapter in 2006, we were a small committee, and we were able to raise about $2,200 for about 20 grants to families that year. We were very proud of this, but we also realized that there was much greater demand. This year we'll give out more than 600 grants worth more than $130,000, and this is just in the Tri-Cities.

I think it's extremely sad that there's this much demand and this much need in our community, but we're also extremely lucky to have a strong group of volunteers and supporters who truly believe in the benefits of getting kids involved in sport, and a group that are willing to work their butts off to make that happen.

We're also very lucky, though, that we have a provincial government that also believes in giving all kids a chance to play. Your annual contribution of $400,000 to KidSport B.C. is making a huge difference in communities, and this investment leverages almost another $1.2 million in community donations throughout the province. In the Tri-Cities the leverage is closer to 16 to 1.

Sport is an essential part of the community, a driver for community and economic development and a great source of wellness in the community. Investment in sport pays generous returns, especially in the long term. The sport community thanks you for your support and also recognizes that today's fiscal environment is extremely challenging.

We are not here to ask for more funding. We are seeking the status quo funding within the next three-year budget plan. As well, the $10 million annual legacy fund that government has created is a very effective and efficient investment in health and in community development. We understand that government revenues have softened and that there is a need to keep spending under control. Your job is extremely difficult.

However, sport is an essential part of our community and culture. A recent nationwide study found that after family, Canadians rank sport as the most positive influence in the lives of young people. Please help us continue to keep our communities connected, engaged and healthy and provide role models for our youth to look up to. Please do not cut funding for sport in your upcoming budget.

D. Horne (Chair): Chris, thank you so much for your presentation. We'll now move to questions, starting with Marc.

M. Dalton: Nice to see you again, Chris. I worked in the gym when you were a wrestler at SFU years ago, and then I saw you a few years later with the ESTEEM Team in the high school I taught at, so I know that you've just been committed to kids for many years. I know you have made a real difference in many lives, so thank you for that.

In Maple Ridge and Pitt Meadows we recently had a KidSport set up in our community, and that's going well. Can you speak maybe a bit to the expansion, how KidSport is doing right now across the province? Is there momentum being built upon this? Where are things at with KidSport?

C. Wilson: I believe there are currently 41 community chapters across the province. I'm not sure how many large communities are unserviced right now. Those areas that don't have a community chapter are serviced
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by KidSport B.C., and that's where the funding that the provincial government has provided is so important.

But yeah, there's been a large expansion over the last three or four years in terms of community chapters developing. We just got one started in New Westminster as well. That was the only community in the Lower Mainland or the Metro Vancouver area that didn't have a chapter, so all areas in Metro Vancouver now are covered. I'm not totally sure about the rest of the province.

G. Coons: Thank you, Chris. I'm from Prince Rupert. Thank you for the work that you do, both internationally and nationally, especially in the community where you live. It's so important for the kids today, because there are so many Kirstas out there that have gotten where they are due to the work of volunteers and coaches and programs that you talk about.

I'm just wondering. You gave some figures there about KidSport B.C. How much do you get locally here for your funding from KidSport?

C. Wilson: In the Tri-Cities area we received $8,000 of the $400,000 that the provincial government gave KidSport B.C. The benefit we have is that we have a good, strong group. Most community chapters have strong groups of volunteers to do fundraising.

KidSport B.C…. It's impossible for them to be able to raise enough money to satisfy the demand in all the areas where there aren't chapters. So we totally understand that we receive a smaller portion of the funding from the provincial government because KidSport B.C. doesn't have the same opportunities that we have.

B. Ralston: I gather it hasn't been done yet. I just wanted to recognize the presence in the audience of the member for Abbotsford South — another alumnus of the Finance Committee back, perhaps, to keep an eye on us. I just thought the record should reflect that he was here.

D. Horne (Chair): Now we'll move to our next presenter, the Alzheimer Society — Jean Blake and Jim Mann.

Good to see you again. As you have probably heard several times now, you have ten minutes to present and five minutes for questions. Your time begins now.

J. Mann: Mr. Chair and members of the committee, it is once again my privilege to present to you the prebudget consultation submission from the Alzheimer Society of B.C. My name is Jim Mann, and I am a volunteer board member. As this is at least my third time in this chair, I am honoured to have the opportunity to introduce the society to new committee members and am pleased to renew acquaintances with others on the committee.

B.C. has made strides in addressing dementia care. The Alzheimer Society of B.C. appreciates that this committee has recognized dementia as an important health concern requiring government attention and resources. Your recommendations for ongoing funding for First Link have provided critical support to B.C. citizens affected by this devastating disease.

The Alzheimer Society of B.C. asks that the Select Standing Committee on Finance and Government Services endorse our request for a comprehensive, funded and accountable dementia plan that provides strategic direction to the province to plan for and manage the needs of the 70,000 people who are today living with dementia and the thousands more who are their families, friends and caregivers.

Dementia is quickly becoming a true health crisis in B.C. The number of people being diagnosed is increasing faster than previously believed, according to a new report just released by the Alzheimer Society of Canada. This means that the number of spouses, families and friends providing service as caregivers has also increased exponentially. For every person with dementia, commonly, at least three others take on increased responsibilities often with deleterious effects upon their own health.

The effect dementia has on the health care system is not well recognized, although in 2007 the B.C. government's Ministry of Health prepared the dementia service framework in partnership with our society, BCMA and the five regional health authorities. While a number of dementia initiatives were funded by the government of B.C. and the regional health authorities, including the Alzheimer drug therapy initiative and First Link, delivered by our society, these have ameliorated some of the issues. But the gaps in care identified in the dementia service framework remain.

Dementia is a devastating illness with profound negative effects on all those impacted. However, it is clear that there is much that can be done to improve quality of life in those affected. By making dementia a health care priority in B.C., all people with dementia and their families and caregivers would have the opportunity to be better supported throughout their journey with the disease.

With a strong, comprehensive, funded and accountable dementia plan, B.C.'s citizens, communities and the health care system will be better prepared to care for the close to 200,000 people predicted within the next generation who will be living with a diagnosis of dementia. Our vision is for a system where all people with dementia and their families and caregivers have access to the care and support they need, when and where they need it.

By implementing a comprehensive and funded dementia plan, B.C. will be a province where the public, health
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care providers and health leaders are all well informed and where the stigma associated with dementia is erased.

It will be a system where families affected by dementia know where to go for help and what services to expect. It will be a province where the quality of care is high and accessible no matter where people live. It will be a place where people are encouraged to seek help early on for problems with memory.

With an early diagnosis, people with dementia and their families gain an understanding of the journey, prepare their affairs, and the person with dementia is able to take control of those choices. Early diagnosis will mean a greater chance to prevent future problems and crises with more positive, less intrusive and less expensive interventions.

We at the Alzheimer Society of B.C. partner with the families we serve, with the government and health authorities, and with donors and health care providers to improve the lives of people affected by dementia.

Since the release of the groundbreaking Rising Tide report in 2010, which revealed alarming statistics on the economic and social costs of dementia, this society has almost doubled our services to families. It served 8,500 new families in 2011 alone, which is a 34 percent, year-over-year increase, expanded First Link to seven communities across B.C. and provided more support by phone and increased one-to-one support.

The Alzheimer Society of B.C. asks that the Select Standing Committee on Finance and Government Services recommend the development and implementation of a comprehensive and accountable dementia plan that would include support for family caregivers to help reduce government spending by delaying the need for people with dementia to move to publicly funded care facilities.

It would include policies and programs that support early diagnosis and intervention, because early diagnosis and intervention can reduce overall health care costs; include standards of care and tools for health care providers so they can give the best care possible, as many health care workers have little or no training or education in caring for those with dementia; and include access to the society's First Link program so all affected British Columbians can access the benefits of information, education and support when and where they need it, because our First Link program is an innovative and proven program.

For the past three years the Ministry of Health has provided a contract for $1 million to the society to operate First Link in six key areas in the province. Vancouver Island Health and Vancouver Coastal Health authorities have supplemented this funding to enable further expansion in their regions. Our vision is to increase the access to First Link throughout the entire province so that every one of the 70,000 B.C. families affected today by dementia is connected and has the opportunity to benefit.

Members, some of you may recall that I have Alzheimer's, having been diagnosed in 2007 at the age of 58. So I ask you personally to consider seriously the society's request for this dementia plan. If ever there was a time when focused planning, education and support were needed, it is now, as the baby boomer tsunami begins.

I missed the First Link program, but the other elements of the plan, as I just referenced, are critical for me and my wife, Alice, as we move forward in this journey. But there are lots of Jims and Alices around the province, in cities and in rural locations, that will be relying on families and friends as caregivers. They will also be looking for assurance that their care providers will be sensitive — and given by an educated workforce, for example.

Now, Mr. Chair and committee members, I end our presentation, thanking you for this opportunity to hear from the Alzheimer Society of B.C. in your prebudget consultations.

D. Horne (Chair): I thank you so much for your presentation. We'll begin our questions with Pat.

Dementia is something that I think does hit a lot of us. In fact, my family is going through it now — not with myself, but my father-in-law is going through it as we speak. It's a heck of a burden on the family. They're really troubled to try and find a way to struggle their way through it.

You talk about the implementation of a comprehensive, accountable dementia plan, but have you looked at what kind of a plan you'd be wanting to do and how much funding you'd actually need to develop that plan properly?

J. Blake: We're talking about a plan that would be implemented across the provinces by the health authorities. Part of it certainly includes what we're doing at the society through our information, education and programs. But it's much broader than what we can manage. It's something that the health authorities would really have to take on.

We know that there is a dementia action plan in the works. We've been waiting to see it for a little over three years now, so we hope that it will culminate sometime this fall. It will be a start, but we know that there's much more that needs to happen.

For example, we're doing a pilot right now with WorkSafe B.C., because they have traditionally looked at interventions, and we're looking at prevention. We know that person-centred care can help in terms of things like avoiding incidents within the health care system. So there is going to be a cost avoidance process as well as ensuring safety for both residents and for the health professionals
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who are providing the care.

It needs to be something that engages the health authorities across the provinces. We're asking that direction come from the Ministry of Health and that there be some dollars behind that.

M. Elmore (Deputy Chair): Thanks for your presentation. You mentioned that you're awaiting the dementia action plan. Is there a current framework in use?

J. Blake: There is the dementia service framework, which Jim mentioned, but it has 130 recommendations. We know that you can't do 130 recommendations all at once.

There was some work done a few years ago to start a process in terms of choosing seven key gap areas, and then the economic downturn hit. The only program that really survived that was the society's First Link program, which has been generously funded now for the past three years. We would really encourage not only continuing that funding going forward into the future but expanding at least that piece of it.

Hopefully, as I said, there are some pilots going on in terms of educating health care providers. That is just really essential. We know that there are many problems. It's a quality improvement issue for the health system.

In particular, Jim, I saw you come in today. Good to see you again. I see that you're doing well and still able to make a very good presentation.

First Link has been implemented now in six areas. Could you maybe expand a little bit on where those six areas are? I'm just trying to get a bit of a grip on where we need to go next.

J. Blake: Each of the five health authorities has at least one location, and Vancouver Island, because it piloted First Link in the Victoria area, put some additional funding in so that it covered the entire Saanich Peninsula area. So when we did get the Ministry of Health funding, we were able to start a second location on Vancouver Island. It's based out of Nanaimo and covers the central to north.

In Vancouver it's a partnership, so they really help us in terms of partnering with the health professionals. Vancouver chose to go with Richmond as the first location, and this year the health authority has given us funding for three years so that we could start a seventh location in Vancouver proper.

In the Interior we're based out of Kelowna. We cover Vernon, into Salmon Arm a bit and some of the smaller locations as well.

In the north it's based out of Prince George. We've had a very innovative partnership there with the health authority. Because they have such a dispersed population, they've been working with us not only to link First Link but then to allow us to use their video conferencing so that we can provide our education and information to, usually, around seven to eight smaller communities at the same time as we're delivering a session in Prince George.

J. Blake: There's a big geographic spread that is not covered. We have had discussions, obviously, with each of the health authorities. We've got a lot of support and champions. It always ends up being a funding issue.

People see the value of it, and they know…. Again, it's a very hard diagnosis to receive, as you can imagine. It's a pretty tough diagnosis to give as well. If you as a physician or a nurse practitioner can refer the family to First Link, it's something that will then help them to start moving forward through the journey.

G. Coons: Thank you, Jim and Jean, for your presentation. It was very well done.

Most of my questions have been asked here, and answered. I do have one thing about First Link. You talked about how for the past three years there has been a contract for $1 million from the province. So you're hoping, from this session, that that will continue into another three-year contract?

J. Blake: It has been year by year. That's one of the things we had asked — that it be multi-year. It's pretty tough for a small non-profit like us to be planning, to have staff in place, to have additional facilities, and so on, and not know year to year if we've got that funding going forward. So we would ask that it be a multi-year contract going forward, and we would ask for an expansion so that we can in fact reach those 70,000 British Columbians across B.C.

D. Horne (Chair): I want to thank you so much for your presentation and for being here today.

We'll now call our next presenter. Our next presenter will be the Motion Picture Production Industry Association of British Columbia, represented by Peter Leitch, Cheryl Nex and Paul Klassen.

Welcome, all. As you've heard many times, you have
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ten minutes for a presentation and five minutes for questions. You can begin now.

P. Leitch: Good evening. Thank you very much for seeing us. We're here from the British Columbia Motion Picture Production Industry Association. My name is Peter Leitch. I'm the president of North Shore Studios and Mammoth Studios, which represent about $100 million worth of infrastructure in the industry.

We're very proud to say that the government investment over the last 25 years in the industry has created a world-class screen-based production industry in British Columbia. It's a real success story to celebrate. We'd like to, first of all, thank you for the investment in this industry and what it has built. We think it's a major contributor now to the B.C. economy, and screen-based industries are now a trillion-dollar industry worldwide.

I think you can see that with anyone you see with a mobile device or their television at home or at the theatres. We have become a world-class content provider here, and the opportunities for growth are really incredible.

We've had successes, being the third-largest provider in North America, after Los Angeles and New York, for the last number of years. We're really here to sort of thank you for your contribution to that industry and, again, the potential for growth here. We think we can be a real pillar in the economy here.

I'd like to now pass it over to my colleague Cheryl Nex to talk about some of the numbers with respect to the industry.

C. Nex: Thanks, Peter, and thank you very much for having us today. My name is Cheryl Nex. I'm the vice-chair of MPPIA and CEO of Entertainment Partners Canada, Canada's largest payroll and employer-of-record services here. We are a national company with offices in Vancouver and Toronto.

I just have a brief presentation for you today, really just to highlight some of the great things that we've done together. The B.C. industry really has the potential to be a leading player in the global creative economy. In 2010 and 2011 the industry generated more than 27,000 jobs, paid out more than $1.2 billion in wages and generated $1.8 billion in GDP.

Our industry, in partnership with government, has more than doubled since 1996-97, when it was $500 million, to today, over $1 billion in spend. The joint investment by industry and government is working.

Historically B.C. has led Canada in terms of growth in film and television. As you can imagine, the Canadian dollar and some of the cost-competitiveness challenges across Canada and other jurisdictions present interesting opportunities for us to continue to work together.

Today the challenges we have are creating some mixed effect on the street. Specifically, we've seen a noticeable absence of feature films and B.C. domestic productions. On the other side, our foreign-service business has shown some real resiliency, and we anticipate a strong showing this fall.

Shows like Emily Owens M.D. and The Cult have upcoming high-profile season premieres this fall. They put an important focus on the great number of people that we have working in our industry.

P. Klassen: Hi there, and thanks again for meeting with us. My name is Paul Klassen. I'm the business representative for IATSE Local 891. We are an organization which represents artisans, technicians and craftspeople in the entertainment industry in British Columbia. The bulk of our 5,000 members and additional 5,000 permittees work in film and television.

About 50 years ago IATSE Local 891 began with a show that you maybe remember called The Beachcombers. We have been an instrumental part, working with the other stakeholders in the industry and organizations and governments, in growing that industry from its humble origins to the third-largest production centre in North America. We've recently slipped in place, but we're hoping to fight back and regain that third-largest centre after, like Peter mentioned, Los Angeles and New York.

We are at the point now where we can crew up to 40 productions simultaneously at all levels of budgets and scope — everything from the small movies of the week and new media productions that you might be seeing directly to your mobile device, to the multi-hundred-million-dollar blockbusters, which I'm sure that a lot of your kids and maybe relatives and stuff like that see in the theatres today.

The workers that we have in the industry started out a lot as part-time technicians filling in some extra work when they could. Because of the expansion of the industry, it's really grown into an industry that creates full-time jobs for thousands of individuals in British Columbia who have invested heavily in their time and their dedication, and also providing equipment that they rent out and use in the industry. Ultimately, they contribute well-paying jobs for families from across the province who practise their crafts on the world stage.

We want to continue to build the industry for the next round of graduates from all of the film and television programs that are being held at the educational institutes across the province and continue our success story that we've brought in the province here.

P. Leitch: Our vision for the future, I think, is very positive. We've experienced some challenges, as Paul and Cheryl have outlined, with our tax credits not being at the level of what Ontario and Quebec are offering, but we've shown real resilience in still maintaining a really strong business here.
[ Page 2117 ]

We've had some hiccups. Especially with the labour unions, where they've developed a number of tiers to offer a variety of productions, depending on their budget…. They've been a huge part of the success of the industry here, and we've worked together to make sure that we continue to be competitive and are selling globally.

I think that's the biggest thing. With the aggressive tax credit regime in other jurisdictions, it's become, as I say, a little bit more challenging. But I think if we can kind of weather the storm for a while and there's a rationalization of tax credits on a North American basis, we will be a winner in this industry or will continue to be a winner in this industry.

We also now are working very closely with digital media in terms of the game producers. Now when you produce a movie, you're generally producing some apps which are associated with it. You're producing games that are associated with it. We've got all that infrastructure and human capital right here to be one of the most successful players in the world. I think we can be that.

I sort of look at it that five years from now we could have 100,000 people employed in the screen-based industries. If we don't look after it — and I think it's up to the industry associations and the industry itself to be the leader in this — it could go the other way. But we're confident that, continuing to work with government to make sure that we stay competitive on the incentive platform, we're going to be winners in this.

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

M. Dalton: Thank you very much again for your presentation. I know that the industry's important in my neck of the woods, Maple Ridge–Mission, and I know it is throughout the province.

Yesterday we heard from the Expert Panel on Tax Competitiveness. They really were hesitant about deepening any subsidies toward the industry. They felt that in some ways, because of all the competition elsewhere, it was like a race to the bottom and that the amount, the increases that we're seeing with regards to production, was directly related almost dollar for dollar to the increased subsidies and the burden upon taxpayers.

Anyway, those are the comments from them. I just wanted to give you an opportunity to maybe speak to that.

P. Leitch: I think it's pretty complex. I did the presentation to the expert tax panel. There are a lot of factors. I just think that we need to be engaged. I think we've taken up the challenge of the tax credits not being on par with other provinces. I think we've done it very well and been very resilient that way.

We are concerned. Are we concerned about the additional burden of the PST coming on? Of course we are, because that's another competitive challenge. But all in all, I think that this is an industry where we're creating a lot of jobs, a lot of decent-paying jobs that people can raise families with. I think it's extremely important for the province to stay engaged, because I think a lot of the opportunities for future job creation are going to be different from what they are now.

We've seen the technological changes in the last couple of years. We've got now maybe the strongest visual effects group anywhere, located in Vancouver. That's now attracting these feature films. It's now attracting intellectual capital that we never had here before, which is creating new technologies. I think we are very well-positioned, and the investment in this industry has really paid off that way.

B. Ralston: You've responded to some of what I was going to ask the expert panel. Certainly, they were not inclined to recommend any increase in the tax credit.

You do have two recommendations on page 5 that I wanted to give you an opportunity to perhaps explain the rationale for. One is to reduce the competitive gap to 5 percent or less to enable the B.C. production market to compete with Ontario and Quebec. The second one is on the domestic production side — to restore original funding of $5 million to B.C. Film and Media.

I'd like to give you an opportunity, perhaps, to explain those two recommendations.

P. Leitch: Let's start with the investment in domestic. I think owning our own IP is going to be a real positive step if we can sort of build those companies that are creating intellectual property here. That's how we're going to build those companies for the future — making sure they're competitive.

They cobbled together financing, both federally and provincially, and also with private investment. The additional investment we're asking there is very modest in some ways in terms of attracting additional capital to expand that part of the business. I think we were talking $5 million, and that would be leveraged significantly with other financing if we did that.

In terms of the tax credits, I sort of liken us to being on the margin a little bit right now. We've seen, as a result of Ontario increasing their tax credits dramatically over B.C., the work that they get from Los Angeles increasing fairly dramatically. But as I say, we've been pretty resilient in maintaining…. We've got some other competitive advantages here, and we've certainly taken advantage of those to make sure we've sustained the business we have.

I just don't want to see any of the infrastructure erode. There's $1 billion worth of investment in infrastructure in British Columbia. Also, I don't want to see the talent migrating to Ontario. Then, a year later, they decide to
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renege on their tax credits because they just find that they can't afford it anymore. That's one of the risks we're seeing.

How close do we have to be? We're probably within 10 percent now. We just want to work closely with government to make sure it continues to work. That's the most important thing for us.

J. Les: One of your final comments here I found interesting — Ontario perhaps realizing at some point that they can't afford what they've embarked upon. Can you maybe just elaborate on that a little bit? I've heard a little bit about that already — that they're in too deep. What are the expectations there?

P. Leitch: Well, we don't want to engage in the race to the bottom. I think that's the last thing we want to do. We want to have the appropriate level of investment that's going to create jobs and build an industry that's sustainable. It's really tough when they raise the bar to a level where we're sort of going: "Wow."

It's very awkward to ask for the same as what Ontario has. You look at Don Drummond's report, where it says their annual deficit now is crippling that province. We certainly don't want to copy them that way. But we do want to have the right level of investment, and we think it really pays dividends and can build an industry that's really world-class here.

D. Horne (Chair): Thank you so much for your presentation. It's certainly an industry that's near and dear to myself. I know we all share the understanding of the importance of it as we move forward.

We'll now call our next presenter, Canadian Sport Centre Pacific, represented by Wendy Pattenden.

Wendy, welcome to the committee. As you've probably heard, you have ten minutes to present, followed by five minutes for questions. Your time begins now.

W. Pattenden: I'm Wendy Pattenden. I'm the CEO of the Canadian Sport Centre Pacific. We're a not-for-profit organization operating here in British Columbia with the mandate to deliver on the sport excellence policies of the governments of Canada and British Columbia.

We work to ensure that athletes and coaches have every advantage to compete on the world stage. We are what we like to call the pit crew or the team behind the team, providing world-class services ranging from sport science and innovation to life and career guidance for athletes and coaches.

I would like to start by thanking you for your continued investment in sport. Whether it was the recent Olympic/Paralympic Games in London or the Vancouver 2010 Games, this government's commitment to sport has helped British Columbia lead the nation and provide a culture that values sport excellence and, most importantly, sport as a vehicle for health.

From the playground to the podium, a strong and vibrant community sport program is an important element in community-building. Participation in sport is critical to foster healthy families and communities in B.C.

To ensure we create a long-lasting sport system that supports our citizens to be active for life, the Canadian Sport Centre Pacific encourages the government to continue funding the sport and arts legacy fund. Over the past three years this $30 million initiative has made an important impact. The next step is to cement this funding into the baseline ministry budget for sport and truly reinforce an enduring legacy for the Vancouver 2010 Games.

Sport has the power to unite communities and break down social barriers. Sport and sport hosting have great economic benefit, as we've seen here in B.C. Sport has the power to inspire people to pursue excellence and live a healthier lifestyle.

We believe that high-performance sport is a key part of this continuum. Our Olympic and Paralympic athletes are vivid examples of excellence. I'm certain that many dreams were born in young Canadians during the recent London 2012 Games.

To give an example of those games and how we did, B.C.-based athletes made up 40 percent of the Canadian Olympic team. In total, 110 athletes were from this region. Sixty-seven were born and raised in B.C., and the other 43 received substantial training and support in our province.

The impact of the B.C. sport system led to B.C.-based athletes bringing home 50 percent of Team Canada's Olympic medals. This marked the fourth Olympic Games in a row that B.C.-based athletes have increased the percentage of Team Canada's medals. Back in 2000, when we started our centre, the percentage was 21 percent, so a rapid increase in the four games since then to, now, 50 percent of the Canadian team.

On the Paralympics side we made up 29 percent of Team Canada — 42 athletes, 38 of which were born and raised here and the others training here. The Team Canada medal haul over the past 12 years was 29 percent of the medals garnered — again increasing on the Paralympics side as well.

Our goal this summer was — and we were very public two years out — to bring home 50 percent of the medals in London. With the province of B.C. supporting our team, we achieved this goal and continued British Columbia's tradition of excellence.

With these impressive high-performance results, it is paramount that the Canadian Sport Centre Pacific is armed to capitalize on the momentum built by our athletes' successes in London as we prepare for the next games in 2014 and 2016.
[ Page 2119 ]

To ensure that the athletes and coaches have access to world-class daily training environments and the staff and facilities needed to ensure success, our organization supports an evolution to multi-year funding commitments. This step would enable planning to be more efficient, as we would be able to concentrate efforts on programs and services rather than funding applications.

This evolution would also enable organizations like ours to leverage funds from other sources. We've been able to secure federal funding over the past couple of years as a result of previous provincial multi-year commitments. The most successful initiative to date has been our talent development programs, where we partner with Own the Podium and the government of Canada. Canadian Sport Centre Pacific is committed to the identification and development of athletic talent and coaching and leadership talent.

This national funding that we leveraged through the province's matching of funds means we've been able to create programming for coach development and partnerships with six sports: rowing, swimming and triathlon in Victoria; and snowboard cross, freestyle moguls and the sliding sports in Whistler. This is the pipeline, the development program directly underneath the national team programming. This partnership is overseen with the provincial and national sport-governing bodies. Together, our goal is to help athletes progress along this development high-performance pathway, as well as to develop coaches into world-leading experts.

In addition to leveraging federal funding, sport can be used as a vehicle by other ministries to influence outcomes and achieve priorities. It is well known that active youth achieve higher marks in school. A healthy body is a healthy mind. Children who are involved in sport are also less likely to participate in illegal activities or get involved in drugs.

Sport innovation has also proven to be an excellent cross-sector avenue, offering opportunities for the technology and health industries to benefit from sport findings. Canadian Sport Centre Pacific partnered with Camosun College a few years ago to develop the Sport Innovation Centre — SPIN is the acronym — which has gone on to research and develop a number of products that were originally intended to benefit high-performance sport but then ended up having everyday applications.

One example I could highlight is our thermal blazer, which is a cooling vest that we developed to aid athletes competing in hot climates. Through collaboration with the health sector, we discovered that the thermal blazer was beneficial for people with multiple sclerosis when dealing with summer weather. As well, we just launched some new technologies we used in London, which we'll be making public very soon. I can't actually talk about them right now, but very soon, now that the games are over.

We're also funded to deliver sport services, yet we promote a culture of innovation amongst the scientists on staff to ensure that our athletes are supported with leading-edge knowledge and technology to maintain a competitive advantage. We are recognized as a lead technical agency for sport in Canada, despite the lack of direct funding for innovation. With further support in this area, we would not only raise the bar for sport performance in B.C. but have the capacity to maximize synergies with the technology and innovation sector and further drive the sport economy. Synergies are important in innovation, on the playing field and in how funding is allocated.

As such, we would like to encourage the government to consider centralizing the strategic decision-making for funding that is currently allocated to sport through the community gaming grants. It is understood that it would be difficult to increase the current levels of funding, but we believe that the funds could be used more effectively and that B.C. could put more athletes on the podium with centralized decision-making.

The idea of watching athletes — B.C.-based Olympians and Paralympians — compete at home in 2010 and step onto the podium in London this summer is something that we know inspires young people to pursue their own pathway to excellence. As a result, we are helping up-and-coming athletes become complete champions through the IGNITE athlete development program, built by our organization's strengthening, conditioning and physiology experts, all of whom have earned master's and doctorate degrees in their respective fields.

This curriculum aims to build well-rounded athletes from the ground up. Together with the PacificSport Centres, we're working with targeted athletes between the ages of 14 and 17 to ensure that they have a solid foundation of explosive power, balance, strength and speed needed to achieve podium performances.

Through funding from the province of B.C., building champions and creating vibrant communities on the playing field and at school has been possible this past year, as we completed the pilot of the Canadian sport school program in Kelowna and Victoria. We just recently expanded to a third location this fall in Prince George.

The Canadian sport school program is helping introduce athletes to a high-performance daily training environment while building champions who will not only become leaders in their sport but also in their communities.

This model is working on ensuring that young high-performance athletes can both excel in their sport and excel academically. To help ensure that high-performance athletes in every region in B.C. are better prepared for the demands of sport at the highest level, we would like to see the sport school model expand across the province after the second year of pilot locations. British Columbia is a leader in Canada when it comes to recognizing the
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power of sport and investing in a culture of excellence.

Thank you for your continued support for sport. Together we will help athletes win medals for Canada, inspire our citizens to use sport as a vehicle for health and excellence in their own lives and build vibrant communities from the ground up through sport for life.

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

B. Ralston: Thanks very much for the presentation. It's a very thorough view of what you do. I guess I'm just interested in what your budget is and what the sources of your funds are.

I think you said there's a $30 million initiative over three years. Are you asking simply that that commitment be continued? Are you asking for an increase? Are you hoping to achieve efficiencies and work with a bit less? Sometimes people volunteer that — not too often. I'm just interested in what your approach here is in financial terms.

W. Pattenden: Yeah. That was the sports and arts legacy fund that was set up. It's just expiring in March of this year. It was $30 million — $10 million times three years. So we are asking for that not only to be renewed but actually locked in to the base ministry budget.

D. Horne (Chair): Thank you so much for your presentation. I don't believe we have any other questions. That's great.

I now call our next presenter, the Langley Teachers Association, represented by Gail. As I believe you've heard several times at this point, you have ten minutes for your presentation, followed by five minutes of questions. Your time begins now.

G. Chaddock-Costello: Great. I'm just going to turn on my phone and time myself so that I have an idea of where I'm at. Thank you very much for having me here this evening, and I look forward to your questions at the end of the presentation.

The presentation this evening is actually based on the work of the Canadian Centre for Policy Alternatives, A Decade of Eroding Tax Fairness in B.C.: Time for Progressive Tax Reform.

Reducing inequality means tax increases at the top end. Currently in B.C. the more income you make, the lower your overall tax rate. That's not the tax system British Columbians want or support. We need tax reform to ensure that everyone pays their fair share. People at the top end can afford to pay their fair share. Upper-income British Columbians are doing very well. Their incomes have risen sharply in recent years. The province should increase the tax rates that apply in the upper-income tax brackets and introduce new upper-income tax brackets for those making more than $100,000 a year.

We all need to pitch in. It isn't just those who are wealthy who can and should contribute more in taxes. Most of us can contribute a little bit more as a share of our income to pay for the public services like home and community care for seniors, affordable housing, child care, environmental protection, public transit and affordable post-secondary education. B.C.'s taxes are very low compared to other provinces. Our economy will benefit from investments in areas like education and poverty reduction.

Most British Columbians would agree that everyone should pay their fair share of taxes, and most assume that the wealthy pay more, not only in straight dollars but also a higher tax rate as a share of their income. So most would probably be shocked to learn that in reality, that is no longer how our provincial tax system works.

A 2011 CCPA report, B.C.'s Regressive Tax Shift: A Decade of Diminishing Tax Fairness, 2000 to 2010, upon which this summary is based, examined changes to the provincial tax system over that ten-year period. It considered the total provincial tax rate for households at different income levels, the actual tax bill as a share of household income for all personal provincial taxes combined — income, sales, carbon and property taxes, and MSP premiums.

Using a Statistics Canada database that draws on tens of thousands of tax files, it found that B.C. now has a tax system where the rich pay a lower provincial tax rate than the rest of us. In 2000 most B.C. households paid about the same total tax rate, with the richest 10 percent paying a little bit more. By 2010, however, the tax system had become out and out regressive: the higher your income in B.C., the lower your overall tax rate. The results can be seen in figure 1. How did this happen?

The B.C. personal income tax system remains mildly progressive, meaning as household income rises, so too does the tax rate. The problem, however, is that in the wake of income tax cuts B.C.'s public treasury is now much less reliant on income taxes, and those tax cuts benefit primarily upper-income earners. Indeed, the provincial treasury's reliance on income taxes dropped by one-third between 2000 and 2010.

The other taxes we pay — sales, carbon, property, and MSP premiums — are not progressive but rather cost middle- and lower-income households more as a share of their income. Amazingly, as you see in figure 2, the provincial treasury now relies more heavily on sales tax income than it does on income tax and, even more shockingly, collects more from MSP premiums than it does from corporate income taxes.

The net result is a profoundly regressive tax shift. For example, as of 2010 a household in the bottom 20 percent of the income spectrum pays total provincial taxes of about 14 to 15 percent of their income, a middle-income
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household pays taxes of approximately 13 percent, and the wealthiest 20 percent pay a total provincial tax rate of about 11 percent.

While total taxes are down for all British Columbians, we have not all benefited equally. Tax cuts between 2000 and 2010 delivered an average $9,000 per year to the richest 10 percent of B.C. households and a whopping $41,000 to the top 1 percent. In contrast, middle-income households received an average tax cut of about $1,200, and lower incomes got approximately $200 per year, savings that are most likely wiped out by increases in hydro and other fees.

A big reason for these huge differences is the growing gap in earnings and income. The wealthiest 1 percent of British Columbian households now have an average annual income of about $820,000 and, consequently, have benefited greatly from tax cuts. Our provincial tax system, instead of helping to offset the growing income gap, is now contributing to the divide.

These tax cuts come at a price: forgone government revenues and reduced public services. In short, tax cuts equal service cuts. Between 2000 and 2010 B.C.'s tax revenues fell by 1.7 percent of the GDP. That may sound like a small change, but it's equivalent to approximately $3.4 billion a year, money that is no longer available to reduce the deficit or to spend on much-needed public services.

It's time for the provincial government to restore fairness to our tax system. A fair-tax commission should be initiated. Such a commission should engage British Columbians in a broad, deliberative approach, such as occurred with the Conversation on Health or the Citizens' Assembly on Electoral Reform, and examine (a) how much money we need to raise in order to fund the services and infrastructure we want to pay for together and (b) how to raise these revenues in an equitable and efficient manner. We need to look at the system as a whole and figure out how to make it fair.

What could be done with $3.4 billion a year if tax revenues were restored to 2000 levels, increasing by 1.7 percent of the GDP, which would add approximately $3.4 billion a year to B.C. tax revenues? As Susan Lambert, president of the B.C. Teachers Federation, stated in her submission to this committee, it would take an increase of $609 million annually to B.C.'s education system to bring B.C. in line with the Canadian average spending on K-to-12 education.

The Coalition of Child Care Advocates of B.C. estimates that it would cost $1.5 billion annually to fully implement the early care and learning system for children under the age of six. We could also restore funding to Community Living B.C., the $20 million that was removed, to reopen closed specialized care homes to foster independent living for physically and mentally challenged adults.

We could increase the funding for social and cooperative housing projects, which have seen no growth in the past ten years. Many are about to see their subsidized housing agreements expire, leaving the residents vulnerable to the market pressures of Vancouver rental rates. Increase social assistance rates to address the crushing effects of long-term poverty. The Raise the Rates statistics state that it costs twice as much to maintain poverty in B.C., $8 billion to $9 billion, as it would to end poverty, $4 billion.

Increase support for seniors, reducing rising residential care rates, reducing the number of surgeries cancelled and reimbursing them on an income-prorated basis for the $800 to $1,000 that the HST takes out of their out-of-pocket expenses annually.

We could also consider a reduction to B.C.'s post-secondary tuition fees, which are at the highest level on record. We also have the highest student loan interest rate in all of Canada. We could add more funding for health care, and not from further increases to the MSP premiums. That, in effect, becomes a further tax on the poor.

We could reinstate funding of $26 million, which was removed last year, to income assistance of all kinds that addressed women living in poverty, particularly to rape crisis centres, so that women are not forced to stay in abusive relationships as a result of having no safe houses, crisis centres or adequate legal aid services to provide the counselling support they need to start new lives for themselves and their children.

We could also restore the cuts of approximately $50 million this year to existing child care and support for children with special needs, and legal aid. That will further B.C.'s reputation of not adequately caring for its children. Without this we will remain, for the sixth year running, the province in Canada with the highest child poverty rate in the country.

It should be obvious to all that there are ample social and community obligations that are in dire need of additional funding. Increasing taxes to address these needs, and not on the lowest- and middle-income earners, is a necessity if we are to reduce the inequity gap between the top 10 percent and the bottom 20 percent of income earners in British Columbia.

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

M. Dalton: Gail, I guess I would beg to differ with a lot of your comments here. For one thing, the average family in British Columbia — their salary is approaching $80,000. Raising the taxes is taking money from their needs, whether it be food and clothing, whether it be a variety of things. At the debt level that British Columbians are currently facing, especially with housing costs, a rise in taxation is a really difficult situation.

Now, I'd like to say that there are about one million British Columbians that do not pay taxes right now and
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a similar number that do not pay MSP. There is also little appetite for increased taxes. We've seen that with the HST, with property taxes. It's a direction…. Your recommendation for, essentially, increasing taxes is something that there's a lot of public resistance to right here.

G. Chaddock-Costello: Yes, I do, thank you very much. I understand that people who are middle-income earners, and if you're saying the average is that…. I think I was very specific that lower- and middle-income earners shouldn't be taxed. I think we're talking about raising taxes for those earning over $100,000 and those earning $150,000 and those earning $250,000. We're looking at the percentage of income, not an actual in-dollar account of those who are at the top income-earning level — the top 10 percent, the top 5 percent — in British Columbia and seeing that that's not an equal percentage of their income that's being paid for taxes.

When you look at low-income working families and middle-income families, they're paying those MSP premiums, they're paying their taxes, and they're looking at paying out-of-pocket money when they're paying property taxes. When you're talking about your middle- and low-income earners, they don't have the same kinds of tax breaks that those do at the very upper end.

Yes, there's never an appetite for taxes, but I'm also saying that there are modest amounts that everyone can pay that wouldn't have a significant impact.

B. Routley: Thank you for your work on this. I am familiar with some of the work that the Canadian Centre for Policy Alternatives has done.

You make the point about sales tax, carbon tax, certainly MSP premiums — that they're not progressive. Even the lowest of wage earners pay their tax on sales taxes, carbon taxes, MSP premiums — that kind of thing. Although there are some benefits, there are a number of taxes.

It's clear from the evidence right across the country that there is this growing gap between the poor and the very rich. I think that the point you are making is that the very rich are actually getting more of a tax break. Do you have any idea of the kind of taxes they are suggesting would be fair? What kind of incremental tax increase would help to close that gap?

G. Chaddock-Costello: According to the Canadian Centre for Policy Alternatives, they gave a for-instance figure of…. If people making over $150,000 to $200,000 per year were to actually pay 20 percent of their income in taxes, it would generate a significant fund. I think it was approximately $20 million per year, which could then be used for any number of different sources. So 15 to 20 percent would put them more in line with what the middle-income earners are paying, instead of the 11 percent, which is currently what they're paying at the moment.

The graph. I think it's figured too. If you look at that, that shows the disparity between the percentage of income earned and what they pay in taxes between the highest-income earners, middle- and lowest-income earners. It's quite interesting. For those at the lowest income level, it stayed fairly stagnant between 2000 and 2010, but it has markedly and very noticeably decreased for those at the upper end, particularly the top 10 percent.

B. Routley: Just on the MSP premiums that are paid that are greater than corporate taxes. Do you know how much of a spread or gap that is?

I had heard before that students were paying tuition that was actually greater than what's paid in corporate income tax. But I'm wondering if you'd know how much more is actually paid in MSP premiums than corporate taxes.

G. Chaddock-Costello: No. I don't have a definitive number for you. I just know that you are right on both accounts — that student tuition fees and MSP premiums both outstrip the income that the government gets from corporate income tax, which I think shocks most British Columbians when they're made aware of that fact and the fact that we have the lowest corporate tax rate in Canada.

I think a modest increase for corporate taxes, as well, is not going to drive businesses out of our province.

J. Les: I am mildly confused. I think in your description of what all needs to be funded and could be funded by tax increases — that's about a $3½ billion bill, somewhere in that neighbourhood.

J. Les: Then, in response to Bill's question, you suggested the extra taxation coming from the rich would be about a $20 million fund.

G. Chaddock-Costello: No. They are two different things. The question was specifically: if we were to look only at the income increase for high-income earners, how much money could be realized? What I had said is the overall tax structure for income was to be reduced back to 2000 instead of the current rate as far as the study goes for 2010, we would see an increase of 1.7 in the gross domestic product tax, which would be $3.4 billion.

The total overall tax increase, as opposed to just one particular group at the upper end, is two different questions with two different answers.
[ Page 2123 ]

J. Les: All right. Maybe I'll put the question in a different way then. Let's say someone making $100,000 a year. What kind of tax increase would you suggest at that income level to begin to generate…? I'm assuming you're not interested in deficit budgets. If we're to balance the budget, you need another $3½ billion, you've suggested. What kind of increases in taxation would you suggest would be necessary and desirable?

G. Chaddock-Costello: Well, if we go with the medium right now, the upper end is paying around 11 percent, the lower end is paying 18 percent, and the middle-income earners are currently paying 15 percent.

Even if we moved to 15 percent for the upper income and we look at the entire tax structure, one answer, one group, is not going to generate $3.4 billion. You have to look at everything in its entirety.

You're asking me for a very specific answer, so I'm going to give you one to that question. But that's not the sum total answer to the whole positional problem that's presented here.

D. Horne (Chair): I think we've reached the time allotted for questions, so we'll thank you for your presentation.

We will move to our next presenter, the Retail Council of Canada and Shelfspace, the Association for Retail Entrepreneurs. Mark, thank you for being here tonight. As you've heard several times, I'm sure, you have ten minutes to present, followed by five minutes of questions. Your time begins now.

M. Startup: Great. Thank you, ladies and gentlemen of the committee, for allowing me to present to you this evening.

My name is Mark Startup, and I'm president and CEO of Shelfspace. Shelfspace is a regionally based association representing, primarily, independent retailers in B.C. and Alberta. We represent approximately 4,500 storefronts.

Tonight I'm also speaking on behalf of Canada's national voice of retail, the Retail Council of Canada. My colleague Shafiq Jamal, who many of you probably know, western VP for Retail Council of Canada, is in Edmonton tonight, so he gave me permission to speak on his behalf as well.

Retail Council of Canada represents over 45,000 small, medium-sized and large storefronts across Canada. The retail industry is the largest private sector employer in the province, employing approximately 12 percent of our workforce. That's about 300,000 British Columbians. Retail's success in British Columbia is driven by increased investment, strong consumer demand and sensible and focused policy and regulation.

It is often overlooked that retail business is essentially small business. The majority of retail businesses in British Columbia employ fewer than four people and have sales of less than $500,000 annually.

The issue of greatest concern to retailers in advance of the 2013 provincial budget is the transition from HST to the PST-GST.

We have reviewed the expert tax panel's report. As you all know, tax policy is very complicated and has a profound effect on the B.C. economy, retailers and consumers. To this end, we continue to consult with our members with regard to the report. Thus, we will not be submitting our final submission to the committee until October 16.

This evening I would like to provide the committee members with our preliminary response to the report and discuss some of the recommendations.

While several of the panel's recommendations will streamline administrative processes, we are concerned with the observation that with the return to the PST, B.C.'s taxes on new investment will become the highest among all the provinces. The single most positive decision the B.C. government could make would be to implement changes to both PST policy and administration, rather than restoring the PST as it was prior to the introduction of the HST. Otherwise, retailers believe that B.C.'s economic growth will be threatened.

We concur with the expert tax panel's recommendation that the PST can be improved substantially and that the recommendations contained in their report will make a positive contribution to the ability of businesses to invest and expand their operations in B.C. and, in doing so, sustain and create jobs for British Columbians.

We are pleased that the panel adopted several of the recommendations proposed by RCC, and overall, we believe that the panel's recommendations will improve B.C.'s competitiveness and ease the administrative and financial burden on retailers.

RCC supports the immediate introduction of the following measures: a refundable investment tax credit equal to B.C. sales tax paid on all investments in machinery and equipment, including computers and software classified as capital under the Income Tax Act; a full review of alternatives to replace PST; a reduction in duplication by tax administrators and compliance costs for businesses, including coordinating their registration, education and audit efforts; electronic documentation and storage of records of exempt transactions; the development of a benchmark to track the time and cost to comply with provincial taxes, with results published regularly.

We feel this one is very important: the initiation and measurement of taxation benchmarks at the municipal level and implementation of remedial steps when local tax rates move outside established benchmarks.

RCC further supports the following recommendations that have a direct impact on retailers. Change the point of sale exemption for adult-size clothing purchased for chil-
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dren under 15 years, with a system under which parents keep their receipts and claim a refund of the PST paid on these items. Replace the exemption for school supplies with an increase in the sales tax credit for lower-income families. Finally, increase the sales tax credit for low-income earners by $15 per adult and $25 per child to help offset the additional PST that results from removal of PST exemptions.

RCC believes further consultation is required before implementing the recommendation that food items other than basic groceries, as defined by the federal Excise Tax Act — primarily candy, confectionaries, snack foods and beverages — should not be exempted when the PST is introduced. We believe if the B.C. government intends to tax certain food products which were not taxed under the previous PST regime, an attempt should be made to mirror the federal tax on such foods, as is the case in Manitoba.

Manitoba has also stated that it would follow the administrative guidelines of CRA when it comes to the taxation of these products. The Manitoba legislation states: "If GST applies to a particular food product, the Manitoba RST should be added as well."

RCC invites Ministry of Finance officials to consult with retailers on PST policy and the transition rules in order to ensure a successful return to the PST for government, retailers and consumers. To this end, we will be providing information to our members and offering a series of webinars in partnership with the Ministry of Finance.

Other issues that impact retailers include the significantly increased costs that arise from Family Day and minimum-wage policy; the expansion of the training tax credit to include retail; deregulation; and credit card transaction fees. We will provide detailed recommendations with regard to these issues in our written submission.

In closing, we urge the provincial government to do the right thing for B.C.'s economy, tax collectors and taxpayers by implementing both the policy and administrative changes proposed by the expert panel as outlined in this submission. The current government in B.C. has a unique opportunity to take the steps necessary to streamline and implement efficiencies to ensure that in returning to the PST we create a more competitive tax environment and make the PST a more effective tax to fund services for British Columbians.

A more competitive tax system will enhance B.C.'s prospects for economic growth and job creation, contribute to improving the quality of life in B.C. communities and help sustain a rising standard of living for British Columbians. Thank you.

P. Pimm: I have a couple of questions for you. I want to make sure I heard you right. You're saying to implement the expert panel's report in whole?

M. Startup: No. For the general recommendations that I specifically outlined and the specific recommendations related to retail, we recommend immediate implementation. The recommendation that you would tax certain food items we would like to examine further, and we would like to suggest that we look at the legislation in Manitoba. So we don't at this time support the recommendation that you would tax those products wherein in the previous PST regime they were not taxed.

Going back to the panel's recommendations, they were in a bit of a dilemma of trying to make it revenue-neutral. They suggested that the government should consider increases in revenue raised from the mining and oil and gas sectors. They also suggested considering an increase in the corporate income tax rate.

So all of a sudden those would probably go up if other taxes are not considered. Do you agree with those other two recommendations — the corporate income tax and the other sectors being taxed?

M. Startup: Well, we looked at the 0.5 percent increase in corporate tax as a measure that had already been announced in the previous budget. I mean, as tax collectors and investors, we would understand the challenge and the balancing act on the revenue-neutrality front. But we haven't looked at those ones specifically and rendered a position yea or nay.

J. Les: Thanks, Mark, for your presentation. I'm just trying to understand the different treatment of a couple of issues here. First of all, on adult-sized clothing, you're suggesting that folks keep their receipts and claim a refund. On the other hand, for school supplies, you're suggesting a tax credit. Why wouldn't we treat both the same? I would suggest that a tax credit would be the simpler mechanism.

M. Startup: Yeah. Our position papers and in my meetings with Finance ministers that go back probably 25 years on the youth exemption….

M. Startup: Not that I'm frustrated. That is the direction we would have proposed — that you tax the pro-
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duct, and then you offer an income tax credit at the other end. We see the tax panel's recommendation as, certainly, a step in the right direction. If this is the direction we take, we'd rather have that than have nothing at all. Our members looked at this, and they felt that this is a solution that could work.

In relation to the difference in approach on school supplies, the products that we're dealing with and the motivations behind buying them are so radically different, and the impact of purchasing the product in a retailer's store is so different between the youth exemption and school supplies, that our members in the school supplies area said: "This is ridiculous; tax it all. If there is going to be an offsetting credit needed for the consumer, then provide that credit."

B. Ralston: Doubtlessly, the 25 years that you spent lobbying Finance ministers are related to the frustration that your members feel in the obligation to have that direct interaction with the customer on the sale of both of those types of items. Is that…? These proposals, however you structured them, would eliminate that confrontation or contact in terms of trying to determine, in the case of clothing, whether the person is entitled to it and having to keep the record and having people sign it — the same with the school supplies.

M. Startup: Oh, gosh, yeah. Well, I think that the retailer becomes the collector, the enforcer and the party accountable if the regulation isn't complied with. So when the auditor comes by to audit the retailer, and they haven't complied with the regulation, based on the declaration process you've described, they can't win. This is something that will streamline, will make simple the process of point-of-sale transactions. We feel that the consumer will benefit, the retailer benefits and government benefits.

That brings us to the conclusion of our program for today. I'd entertain a motion to adjourn.

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1) Fraser Valley Real Estate Board	Ray Werger
2) BC Agriculture Council	Rhonda Driediger
	Reg Ens
3) Automotive Retailers Association	Ken McCormack
4) Lynn Perrin; John Peterson
5) Council of Senior Citizens’ Organizations of BC	Jerry Gosling
6) British Columbia Construction Association	Manley McLachlan
7) British Columbia Chiropractic Association;	Dr. Don Nixdorf
British Columbia College of Chiropractors
8) BC Association of Farmers’ Markets	Bruce Fatkin
	Elizabeth Quinn
9) KidSport Tri-Cities; KidSport BC	Chris Wilson
10) Alzheimer Society of British Columbia	Jean Blake
	Jim Mann
11) Motion Picture Production Industry Association of BC	Peter Leitch
	Cheryl Nex
	Paul Klassen
12) Canadian Sport Centre Pacific	Wendy Pattenden
13) Langley Teachers’ Association	Gail Chaddock-Costello
14) Retail Council of Canada; Shelfspace	Mark Startup

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:	John van Dongen (Abbotsford South Ind.)
Clerk:	Susan Sourial
Committee Staff:	Jacqueline Quesnel (Administrative Coordinator)

Witnesses:	Jean Blake (CEO, Alzheimer Society of B.C.)
	Gail Chaddock-Costello (president, Langley Teachers Association)
	Rhonda Driediger (chair, B.C. Agriculture Council)
	Reg Ens (executive director, B.C. Agriculture Council)
	Bruce Fatkin (B.C. Association of Farmers Markets)
	Jerry Gosling (Council of Senior Citizens Organizations of B.C.)
	Paul Klassen (Motion Picture Production Industry Association of B.C.)
	Peter Leitch (chair, Motion Picture Production Industry Association of B.C.)
	Ken McCormack (president and CEO, Automotive Retailers Association)
	Manley McLachlan (president and CEO, B.C. Construction Association)
	Jim Mann (Alzheimer Society of B.C.)
	Cheryl Nex (vice-chair, Motion Picture Production Industry Association of B.C.)
	Dr. Don Nixdorf (executive director, British Columbia Chiropractic Association; College of Chiropractors of British Columbia)
	Wendy Pattenden (CEO, Canadian Sport Centre Pacific)
	Lynn Perrin
	John Peterson
	Elizabeth Quinn (executive director, B.C. Association of Farmers Markets)
	Mark Startup (Retail Council of Canada; president and CEO, Shelfspace, the Association for Retail Entrepreneurs)
	Ray Werger (vice-president, Fraser Valley Real Estate Board)
	Chris Wilson (KidSport Tri-Cities; KidSport B.C.)

REPORT OF PROCEEDINGS (Hansard)

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON
FINANCE AND GOVERNMENT SERVICES