Finance and Government Services — Issue No. 69 — Tuesday, September 15, 2015 (HTML)

Present: Wm. Scott Hamilton, MLA (Chair); Carole James, MLA (Deputy Chair); Dan Ashton, MLA; Spencer Chandra Herbert, MLA; Eric Foster, MLA; Simon Gibson, MLA; George Heyman, MLA; Mike Morris, MLA; Claire Trevena, MLA; John Yap, MLA

2. The Committee considered the Office of the Ombudsperson’s supplementary 2015/16 budget request to defray the expenses of the July 29, 2015, referral of the Ministry of Health terminations file to the Ombudsperson.

3. The following witnesses appeared before the Committee and answered questions regarding the Office of the Ombudsperson’s supplementary 2015/16 budget request to defray the expenses of the July 29, 2015, referral of the Ministry of Health terminations file to the Ombudsperson.

5. Resolved, that the Committee meet in-camera to consider the supplementary 2015/16 budget request from the Office of the Ombudsperson. (Eric Foster, MLA)

8. Resolved, that the Committee recommend that the Office of the Ombudsperson be granted supplementary funding up to $773,000 in operating funding and up to $112,000 in capital funding for fiscal year 2015/16 in order to defray the expenses of the referred investigation of the Ministry of Health termination files. (Carole James, MLA)

9. Resolved, that the Committee request the Ombudsperson meet with the Chair and Deputy Chair of the Committee for further discussion regarding the issue of indemnification of witnesses' legal fees and report back to the Committee. (George Heyman, MLA)

10. Resolved, that the Chair advise the Minister of Finance, as Chair of Treasury Board, of the recommendations adopted earlier today and that the Committee’s recommendations be formally recorded in its report on its annual review of statutory office budgets later this year. (Dan Ashton, MLA)

12. The Minister of Finance, Hon. Michael de Jong, Q.C., appeared before the Committee and presented the Budget 2016 Consultation Paper.

15. 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
Ombudsperson Referral: Supplementary Budget Request	1507
J. Chalke
Presentation by Minister of Finance	1515
Hon. M. de Jong
Presentations	1519
R. Bertsch
B. Carter
P. Kulmala
S. Charbonneau
P. Lobb
D. Jarvis
H. Lindsay
J. Tupper
C. Daniell
J. Cassels
A. Eggenberger
R. FitzZaland
J. Crasta
B. Ahearn

S. Hamilton (Chair): Good morning, everyone. Welcome to our new members, Claire and Spencer, as well as welcome back, everyone else. I’m looking forward to an interesting fall, intermixed with a session of the Legislature.

For now, we’re here to discuss, on our agenda, item 1: “Consideration of the Ombudsperson supplementary 2015-16 budget regarding the July 29, 2015, referral of the Ministry of Health terminations file to the Ombudsperson.”

Just by way of some background information for members, we have provided to the Office of the Ombudsperson a copy of the special directions that were adopted by your committee on September 9. The Ombudsperson is here today with his deputy, David Paradiso, as well as Dave Van Swieten, who provides financial services to the shared services offices.

With that, if you have any information or questions or extra information that you need, please don’t hesitate to let me know.

Good morning, Mr. Chalke. Welcome back. We’ve seen a lot of each other in the last few months, and I’m glad we’ve reached the point we have. I will certainly turn the floor over to you with respect to your budget presentation.

J. Chalke: Thank you, Chair. Good morning. I’m pleased to be here at the invitation of this committee to present our supplementary budget request for the current fiscal year, 2015-2016.

As the Clerk noted, with me today are two Davids, both of whom have been before this committee before. To my left, your right, is Deputy Ombudsperson David Paradiso, and to my right, your left, is Dave Van Swieten, the executive director of corporate shared services. As the Clerk noted, corporate shared services is part of the Ombudsperson’s office but provides corporate services to our office and three other officers of the Legislature — namely, the Information and Privacy Commissioner, the Merit Commissioner and the Police Complaint Commissioner.

The need for a supplementary budget presentation midway through the year is precipitated by the July 29 referral of this committee under section 10(3) of the Ombudsperson Act, as it relates to the Ministry of Health terminations.

This committee decided to “refer the Ministry of Health termination file to the Ombudsperson for investigation and report as the Ombudsperson may see fit, including events leading up to the decision to terminate the employees; the decision to terminate, itself; the actions taken by government following the terminations; and any other matters the Ombudsperson may deem worthy of investigation. The committee trusts that his investigation can be concluded in a timely manner.”

This referral was unanticipated when our budget request for this fiscal year was presented to this committee some ten months ago. Perhaps that’s not surprising, since the exercise by the Legislative Assembly or one of its committees of the referral power in section 10 is unprecedented in the 36-year history of the Ombudsperson office.

A referral under section 10 is one of the ways in which an investigation by our office may be initiated. The others are on complaint of an individual — which, of course, is the source of the vast majority of our investigations — or on the Ombudsperson’s own motion.

What distinguishes a referral under section 10 from the other two routes into the office is that a referral under section 10 imposes a mandatory duty on our office to investigate and report, whereas the other two methods repose in the Ombudsperson considerable discretion on the issue of whether to investigate, grounds for ceasing an investigation and provide various opportunities for intermediate resolution.

Simply put, a referral under section 10 effectively displaces the discretionary work of the office. Thus the consequences of a referral, if left unfunded, would fall on the regular complainants to our office — a result I highlighted in my July 7 letter to this committee.

We will do our statutory duty and conduct this mandatory investigation, but failing funding, it would be at the expense of our critically important work for ordinary British Columbians, be they single parents on social assistance, injured workers, students or others. The avenue for redress we provide in our regular work is vital for all British Columbians and especially those who are vulnerable and thus have the greatest interaction with the state.

Fortunately, I’m heartened by what I understand to be a shared realization by this committee that the financial consequences of the referral need to be addressed so that this important regular work can continue. Right from the July 8 meeting of this committee when you first considered the request from the Minister of Health, there have been acknowledgments of the need to address this budget impact, and that ran through all of the dis-
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cussions of this committee up to and including the special directions you adopted at your meeting last week, at which time you directed me as follows:

“The Ombudsperson is directed, at the earliest opportunity and prior to undertaking his investigation, to submit to the committee for approval a detailed supplementary budget submission for 2015-2016 arising from this referral, which budget is intended to ensure that the Ombudsperson is able to conduct this investigation thoroughly without impairing his ability to carry out his other work under the Ombudsperson Act in response to complaints and in the public interest. Additional 2016-2017 budgetary funding as required shall be considered in conjunction with the committee’s regular annual budgetary submission process.”

In the months since the committee made the referral, we’ve been diligently carrying out the necessary preparatory work to get us to a position to start the investigation as soon as the committee determined the special directions to be adopted and considered this budget. We’ve been hard at work doing all the administrative tasks necessary for a successful investigation.

In addition, as we develop our approach to the investigation, we have needed to accommodate the special directions this committee adopted last week. While the special directions do not expressly amend or expand the scope of the July 29 referral, they do, in some respects, provide greater specificity about the issues to be addressed in our report, and in other respects, the special directions clarify that in the event we are of the view the evidence justifies a particular direction for the investigation, that such direction is within the bounds of the July 29 referral. In both of these aspects, it is fair to say that the September 9 special directions put upward pressure on the investigation budget.

One of those tasks that we’ve been doing over the past month has been to attempt to determine the breadth and depth of documents that we will need to review. This has helped us to develop an approach to the investigation and has facilitated our budget planning. To that end, we have inquired of the government as to the volume of documents. The government, of course, has had to compile various iterations of related documents for the various reviews that have taken place over the past few years, as well as in responding to a large number of access-to-information requests that touch on this matter.

Suffice it to say that what we have been told is that the volume of documents reported to us by government is very, very large. Of course, that will not be our only source of documents. We expect to obtain documents from other public bodies as well as other organizations and individuals. The sheer volume of records means that we are going to need to spend some not inconsiderable amount of time in a document review phase. We will also need to carry out interviews with individuals inside and outside the public service. In addition, there are procedural steps in the Ombudsperson Act that, in the event they are engaged, will take some time to accommodate. And of course, we need to write a report.

All of this will take time. How much time depends, in part, on the resources we allocate to this investigation. I am mindful of the last sentence of the July 29 referral: “The committee trusts that his investigation can conclude in a timely manner.”

I’ve determined that, barring unforeseen difficulties, we should aim to conduct an investigation and report in approximately one year from commencing our investigation. In my judgment, that duration, while very demanding, will allow sufficient time to conduct a thorough investigation, follow necessary procedural steps in the Ombudsperson Act and prepare and submit a report.

However, there are many things that could interfere with that timeline, and I would only say that my priority is a thorough, robust investigation, rather than working to an arbitrary deadline chosen at the outset with, at best, imperfect information.

There’s no uncertainty about these budget estimates for 2015-16. However, 2016-17 is less certain. But fortunately, that’s not the task facing this committee today. As the committee noted in paragraph 6 of the special directions, the 2016-17 impact of this investigation is for another day. That is consistent with the July 13 letter of the Minister of Finance to this committee.

I will address 2016-17 when we appear before you in two months’ time, and we will know more about our requirements for this investigation for that year at that time.

However, as I say, we have a high degree of certainty about the task involved for the balance of this fiscal year. This results in the request before you today for $773,000 in operating costs and $112,000 in capital costs. Most of the operating costs are related to securing the personnel required for such an investigation and the corresponding support budget needed, including space, travel and office expenses. The capital costs are related to expenditures for information systems hardware and tenant improvements.

I’m very conscious that this is a time-limited project, and thus, we are doing what we can to minimize costs. We will be using government surplus desks and other furniture where feasible. We will minimize tenant improvements to those essential for security and to create an adequate space to work. There will be no private offices. Rather, cubicles will be used for everyone assigned to this investigation, using surplus dividers. In addition, we will be leveraging infrastructure from our existing office to the extent we are able.

Before concluding, I just want to point out to the members of the committee a minor misstatement on the budget estimate page in the document that the Clerk distributed to you prior to the meeting. I understand that she’s replaced the correct version on your desk this morning. The amount we budgeted for hydro and other minor costs appears in STOB 68 when it should have been coded to STOB 69. That makes no difference to the bot-
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tom line. It’s simply a coding error. We’ve since reviewed the budget again in detail, and I’m confident in its accuracy in the overall request.

That completes my overview remarks, and I’d be happy, together with my colleagues, to address any questions the committee may have.

S. Hamilton (Chair): Wonderful. Thank you, Mr. Chalke. I appreciate you taking that time. I’ll go to the committee members for comment, for questions.

M. Morris: Thanks, Mr. Chalke. Salaries — you’ve got $348,000 for salaries. How many personnel are you looking at putting into this investigation on a full-time basis until the conclusion? You’re contemplating a year. How many more bodies are we looking at?

J. Chalke: We’re looking at a total of nine full-time-equivalents starting on October 1, so over the year, that’s 4½, annualized — but nine individuals starting as of October 1.

G. Heyman: Thank you for the presentation. I’m wondering if you could, where you think it’s appropriate, break down the different STOBs into their component parts a bit more. For instance, perhaps you could describe the nature of the roles that will be fulfilled by various staff people.

In particular, under professional services, STOB 60 — which I assume is, primarily, additional legal assistance — is that just for the investigation itself, as conducted by your office? Or does that include legal fees or compensation for legal expenditures for witnesses — in particular, the fired researchers?

J. Chalke: The breakdown in terms of the staff. Most of the staff will be individuals who occupy the position of Ombudsperson officer, otherwise known as an investigator. That would be five positions.

It has been impressed upon us the critically important step of spending some time and effort on records management, given the absolutely huge volume of records that we’re going to be looking at. As a result, we have a number of positions devoted purely to records management itself, and we’ll have a manager to, basically, superintend the group. That’s, really, the staffing complement.

With respect to some of the major STOBs, it’s correct to say that STOB 60 is really where we’ll be accessing any specialized expertise that we require during the course of the investigation. We have identified the need, as I foreshadowed in my July 7 letter, for an increase to our legal budget — for the purpose of providing legal advice to the Ombudsperson.

This is an unprecedented investigation. We’re going to be using some tools in the act — we expect to, anyway — that we don’t typically use in most of our Ombudsperson investigations. That would be where that STOB is. Most of the expenditures will be in that area.

We have budgeted witness fees. They’re not in STOB 60. We are required to pay witness fees on the same scale as a witness in the Supreme Court when we summon someone. To the degree that we actually exercise that summons power, the act requires us to pay those witness fees. We have them budgeted. I’ll undertake to report back to you, if I’m not….

J. Chalke: Oh, it is in STOB 60? Okay. My apologies. So it is in STOB 60. Those witness fees are located there as well.

STOB 65 is basically office costs. A small amount of witness travel costs would be located in STOB 65, as well as printing and other expenditures of that ilk.

G. Heyman: My follow-up is…. We have people who, presumably, you’re going to want to interview that have legal actions pending. Am I to understand that, given that they have legal actions pending, they are unlikely to want to appear or speak to you without legal advice? Is there any provision to compensate them for that?

J. Chalke: There’s no provision that contemplates, in the Ombudsperson Act, funding individuals’ private legal costs. People are free to retain counsel if they wish. We have not budgeted in this budget an amount to reimburse legal expenditures of private individuals.

We’ve conducted thousands of investigations, and we always regard those we interview as witnesses to events and to facts. As I indicated, the act contemplates that to the degree we do that, we’re required to provide witness fees at the same scale as someone appearing at the Supreme Court.

We have made preliminary inquiries with the government about its practice of reimbursing some legal fees incurred by current and former public servants. It is our understanding at this point in time that the regulation authorizing such reimbursement, in the opinion of the government, does not contemplate it for persons involved in an Ombudsperson investigation. While it remains open for the government to provide reimbursement of legal fees, I will leave it to those who wish to make that request to the government to do so directly.

However, nothing in what I’ve just said restricts me at the end of the investigation, if it turns out that it’s apparent to us that it’s a measure of unfairness that someone has had to bear their own legal expenses and has not been able to secure an indemnity otherwise, from recom-
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mending that someone’s legal fees should be reimbursed. We’ll certainly reserve that authority to do so at that point in time if that’s appropriate.

C. Trevena: Just a couple of quick ones. The nine people who will be hired, nine FTEs. Will these be people who are hired specifically for this project? I’m thinking about the Ombudsperson’s office. It has already got experienced investigators. Will you be bringing people who are already in the Ombudsman’s office into the team for this investigation and backfilling their jobs, or are you going to be hiring a team specifically for this investigation?

J. Chalke: Predominantly the former. That is to say that we will predominantly be utilizing experienced investigators that are currently Ombudsperson officers within the office. But it’s possible that we may wish to, for certain purposes, have individuals on the investigative team who come from elsewhere. Certainly, the primary intention would be to have our more experienced Ombudsperson officers assigned to that team.

C. Trevena: So many of these positions, then, are to backfill to continue the regular work of the Ombudsman’s office.

C. Trevena: My other question, if I might, Chair, is the information systems. Could you explain a little bit what that is — info systems? It’s quite a large capital expenditure, and I just wondered what’s going to be included in that.

J. Chalke: On the capital side? On the capital side, we’ll need to purchase some personal computers. It really is, probably, mostly to that and a file server. That’s really….

E. Foster: I didn’t catch the last part of Claire’s question, and I might be asking the same one.

For your nine full-time equivalents, if you’re going to take them out of your existing crew, then are we going to see a reduction in STOB 50 under the current budget? Or are you going to do infill for them?

J. Chalke: I guess it depends how today goes. The reason that I’m here is really to secure a budget so that we can keep the regular work of the office going. That would be the intention. The supplementary budget will be to fund much of the regular work of the office.

We have no choice as to whether to conduct this investigation. We’re under a statutory obligation to do so, so we’ll be setting out to do that. But our discretionary work, which is so very important, is the work that, in essence, this supplementary budget request will end up funding, because it will keep that regular work of the office going.

E. Foster: Okay, so then the answer to the question is: you’re going to infill those spots if you take someone out.

C. James (Deputy Chair): Just a couple of pieces, I think. I certainly would support making sure that we had those positions backfilled, because I think it would be unfair for everybody if you ended up having Ombudsperson work put aside to deal with a special referral. I think the reason that we’re dealing with the budget today is so that we can prevent investigations that should be occurring from being put on the back burner while this is dealt with. So I think that’s an important piece.

I think the committee may want to recognize that it’s not within your mandate, Mr. Chalke, to look at the legal costs for civil servants who are in place. That may be something the committee wants to take a look at and get more information on. Certainly from my perspective, if civil servants have their legal costs covered in investigations…. But that does not apply to a referral to the Ombudsperson because it is a unique circumstance, that again seems unfair. This is, for all intents and purposes, an investigation done in a different kind of way, but still an investigation.

I think it’s something the committee may want to take a look at, get some information on the regulation and have a discussion with the minister about that. As I said, it seems unreasonable that there would be one place that you get your legal costs covered with an investigation, and this place you don’t because it’s unique. I think we should come back to that piece.

Just one quick question around the budget. You mentioned that this is for the fiscal year ’15-16, that you’ll be through the investigation or partway through the investigation, depending on how things are going, by the time a new budget year comes forward. I just wanted to be clear that the expectation is that there may be a second piece that may need to come forward, depending on how the investigation is going for the next fiscal year.

J. Chalke: Yes, I would say maybe I might be even a bit under-positioning what I intend to convey, which is that I have no doubt that this investigation is going to go beyond March 31. We will look for opportunities to get it done as quickly as we can, and it may be that we’re able to do it a little bit faster than what we think.

Candidly, looking at all the steps that we think we have to take, we think we will be working very hard for a year,
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and that is barring any kind of unforeseen difficulties. They’re unforeseen. Who knows what might transpire?

It would be my intention that when we return with respect to our 2016-2017 budget, we would return with a component that’s attributable to this referral. I will undertake that when we do so.

We will segregate out that aspect, so you’ll know what component is attributable to this referral as opposed to the regular work of the office. I fully appreciate that when this referral ends, that money ends as well. I don’t want it to be suggested otherwise.

I am very concerned about the impact of this investigation on the regular work of the office, even given this budget presentation that we have given that we will be substituting some of our experienced investigators with new investigators. In our experience, it takes about a year for someone to get up to speed, to be carrying a fully effective caseload as an Ombudsperson investigator.

I would just foreshadow that at this time, when we’re back for 2016-2017, I’m going to be trying to assess the impact of this referral, even fully funded, on the rest of the operations. There may be some need for a little bit of double-banking at the back end, in order that we can recover.

I would say that one of my early impressions in this position as it relates to our regular work is that we are fully subscribed in terms of our regular work. I am concerned about the timeliness of the conduct of our investigations. There’s not a lot of slack there — or any slack there. We will be doing a bit of work to assess what that impact is by the time we’re back.

S. Chandra Herbert: Just back to the discussion of witnesses and legal counsel, etc. I’m just wondering. In your experience, would you say that witnesses who did not have legal representation paid for are likely to come before you to have this kind of discussion, especially when another potential legal case is going on elsewhere? Or would they be reticent?

J. Chalke: I think when you are dealing with people, you’ll see a wide variety of responses. We’ve had people already express their interest in coming to talk to us.

But I’m sure there will also be some people who are less willing to come talk to us voluntarily. That may be for a range of circumstances, one of which could be, I suppose, other legal proceedings are involved.

G. Heyman: I want to follow up on the question I asked earlier regarding legal reimbursement for witnesses, particularly ones who have legal action pending and particularly, essentially, the people at the centre of this whole inquiry, which are the fired researchers and contractors. I think it’s safe to assume that if their preferred vehicle, a public inquiry, had happened, their costs would have been covered. You’ve stated that there’s no provision under the Ombudsperson Act to cover legal expenses.

I have a number of questions. One of them is: does that equate, in your mind, to a prohibition against providing legal expenses, notwithstanding the fact that this referral was under the act, as you yourself pointed out to us? It’s the first time in 35 years such a referral has happened. It’s a unique investigation in that regard. If the people at the centre of the inquiry choose not to appear — assuming that you have not subpoenaed them, and they have no choice, because their legal costs are not covered — I can’t see…. Perhaps you can explain how the inquiry would enjoy public confidence in that eventuality.

The other question I have…. I tried to look up Hansard, but apparently the password has been changed, and I don’t have it handy, so I will stand to be corrected. But my memory is that when you appeared here with the Deputy Attorney General before the committee to answer questions, I specifically asked a question about covering legal expenses under this form of investigation for the researchers specifically. The answer that I received was: “That can be dealt with in a supplementary budget.”

I think this is a critical piece, and I’d be, frankly, loath to support a budget that had no provision to provide legal counsel for people at the centre of an inquiry, who would have a legitimate claim to have legal counsel, who have already suffered enough without being put at financial disadvantage by not having that covered, and without whose cooperation the investigation is essentially meaningless.

J. Chalke: As I have indicated, we have had those discussions. Typically, the reimbursement or indemnity as it relates to legal expenses for individuals who are public servants is covered by government, or to the extent that it is covered, it is covered through the public service indemnity regulation. My deputy has had some discussions to date with officials of the government as to their view as to whether or not this investigation would be encompassed within that regulation. We’re certainly happy to continue that discussion with them.

The impact. In terms of our investigations, we have to be cognizant of the fact that we conduct a great, great number of investigations every year to the extent that if we were to initiate paying legal expenses, which is unprecedented for anybody coming to our office, that would certainly change the precedent, and we might be expected, or certainly be asked, to do so in future investigations.

That’s problematic for us from a going-forward perspective, and whether there’s a rational basis on which to distinguish this investigation from any other investigation, and what that rational basis is…. You know, is it that someone happens to have a piece of litigation ongoing? Well, lots of people have litigation ongoing and may have litigation ongoing with respect to matters that are not dissimilar to the matters that they bring to us.

Our view, at this point in time, is that as it relates to people who are current or former public servants, that reimbursement issue is really for the government to consider. We’ve, as I said, raised it with them, and we’re happy to do so again. As the Deputy Chair has raised the potential, I suppose, for this committee to also make that point, it is open to as well.

G. Heyman: Well, I don’t want to appear argumentative, but the fact remains that a number of us had great concerns about this particular referral. This was the route chosen by the government rather than having a public inquiry, and in that sense it is unique. The sense that this referral under the Ombudsperson Act is unprecedented in 35 years is also unique.

An amendment was made to the act very recently, at your request, in a very limited form with respect to confidentiality to only apply to the section of the act under which this referral was made. I would submit that this is a unique investigation. It’s unique in the fact that it has never happened before in 35 years and may never happen again. It is not like all the other investigations you undertake, or you wouldn’t be here for a supplementary budget.

Public confidence and, to a certain extent, justice to the people who are at the centre of this inquiry, I think, calls for some appreciation and sensitivity by all of us, including government. I appreciate that you feel somewhat constrained by the ongoing work of your office and by the act under which you’re guided, but everything about this is unique.

To approve a budget or put in place a process that has already been the subject of some significant public controversy — controversy with the fired researchers and contractors and controversy at this committee — and run the risk that people will either choose not to appear because they can’t afford legal counsel and they can’t afford to appear without it, or you subpoena them and they’re further victimized because they have no choice…. I simply don’t think it’s appropriate, and I would urge you to actively seek a solution to this if you think there are some legislative or other impediments to you providing for reimbursement for these people.

J. Chalke: The only other thing I guess I would add — and I certainly take your comments to heart — is that there is a step in an investigation, under our act, in which, where we are of the opinion that there may be sufficient grounds that we’ll be making a report that will adversely affect an authority or person, we are to inform the authority or person of those grounds and give them the opportunity to make representations.

I don’t anticipate being at that point in time in 2015-16. It’s more likely that if that section is engaged — it will be engaged in 2016-17. So certainly, that’s a possibility down the road.

I would not want to forestall for all time the suggestion that we may not be back here saying that we think there is a question of fairness and that it can’t be addressed any other way and, at least for the group of people for whom we may believe there are sufficient grounds that our report will adversely affect them, that we would at that point be suggesting that this committee authorize a budget in respect of that amount.

As I said, I don’t anticipate that being in 2015-16. And, as I said, I’m happy to and intend to carry on the very preliminary discussions we’ve had with the government on this issue further.

E. Foster: I think you sort of answered my question at the end. But just regarding the legal fees…. I think — I definitely know — that we all want this to go forward and people to have confidence in the process. So then you would anticipate that if this becomes an issue, it would be in the ’16-17 budget. I guess I would ask if you would address that when you see us in two months if, with your discussions with the ministry between now and then, you feel that it’s necessary it would be in your ’16-17 proposal.

J. Chalke: I think that we would certainly be in a position to report on the further discussions that we have with the government with respect to the application of the indemnity regulation or otherwise to the payment of legal fees. We may be in a position to consider whether section 17 is engaged. Candidly, I’d be surprised whether we would be at that point in two months, but that’s not to say that we wouldn’t be there in six months. But we can certainly report on our progress on any discussions we’ve had in that regard.

C. James (Deputy Chair): Just to add to that, I appreciate that the costs may not come until the ’16-17 budget year and that there will be an opportunity to have further discussion on that request. But I think that still leaves individuals in an untenable position of not knowing — of going forward and perhaps having to testify, and you, in your office, or others not being able to reassure them that the legal costs are there.

We can do this through an amendment; we can do it through a motion. But I certainly would appreciate an opportunity to have the Ombudsperson come back with a request around legal costs and what that amount could look like. I think the issue of whether the Ombudsperson has the ability to do that is another discussion that we still have to engage in — about where the opportunity is to be able to reimburse those.

I certainly feel, for the researchers and the contractors, for individuals who are taking part, that that’s pretty basic to have that reassurance that their legal costs will be covered and that there will be an opportunity — particularly for those who are still in court cases where the legal costs are going to be very critical; legal advice is go-
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ing to be very critical around giving testimony — that we have that reassurance there.

C. Trevena: I just wanted to know the time. I mean, talking about minimum of a year for the investigation and coming back with the 2016-17 budget, which is mentioned, in two month’s time, you’re not likely to know. How do you see the investigation breaking down?

You mentioned at the beginning that there’s going to be a lot of going through all the materials, all the documents and this. At what stage would your investigators be going out and talking to people or asking people to come — taking that investigation on? How much of the paperwork is going to be happening? Just to get a bit a sense of the time frame that you’re looking at.

J. Chalke: I think I could do what space planners call block planning and give you a very general kind of overall sense of that, because I expect there’ll be some exceptions within what I’m about to say.

We are anticipating a matter of a number of months during which we will be collecting and analyzing and reading records. As I said before, there are records that have been compiled over the past number of years on this, so there is a tremendous volume of records that will require us to either assure ourselves that they’re not relevant or to determine their relevance and their importance. That would be the first phase. We, I expect, will talk to some people during that period of time, but it probably will be more exploratory at that stage.

The next chunk of time will involve us interviewing a number of individuals, and we’ll be developing an approach that’s the most effective sequence for that exercise. And then, as I indicated, there may be some procedural requirements under the act to take certain steps in terms of notice to individuals and authorities. And, of course, we’ll have to finalize a report.

Those are, kind of, the four big chunks of time that I would see. The immediate one is definitely the collection and review and analysis of records, not just from government, but also from elsewhere.

C. Trevena: I’m just thinking that there’s the issue of being able to deal with legal fees that obviously isn’t covered in this submission, yet you’re not going to know by the submission in two month’s time. But you will likely have an idea sometime into the new year when you’re starting to talk to people.

It would be, if the procedure is appropriate, as MLA James has said, that we could be asking for you as the Ombudsman to come back to request an extra part of the budget to be covering those legal fees.

J. Chalke: Certainly, the timing of returning for our 2016-2017 budget…. At the time we come back, I would anticipate that we’ll still primarily be reviewing documents at that point in time.

S. Gibson: In terms of organization and structure to make sure that this happens expeditiously but also with great rigour, how do you see your role, and how will you ensure that accountabilities take place? What kind of internal structure, given that this is quite an anomaly and a unique challenge that you’ve been given — how are you organizing that? That’s my question.

J. Chalke: One of the advantages, of course, we have is — I suppose an advantage and a disadvantage, given our workload — we’re a relatively small organization, pretty nimble, so we’ll be able to have a quite streamlined, quite flat, to use the vernacular, kind of organizational structure. It’s certainly our contemplation that virtually all of the staff that are tasked to the team will report to the manager who’ll be assigned to this investigation. There won’t be a lot of, if I can call it, administrative structure built around that investigative team.

Of course, my role is to, at the end of the day, make certain determinations to the degree that those are required. But I also have a role with respect to leadership of the entire organization, and it’ll just be a challenge to balance that. That is the traditional role of the Ombudsperson. My predecessors have managed that, and I intend to as well.

S. Gibson: Just a supplementary. This may sound a bit esoteric, but how will you measure success? When you look back and this assignment is completed, how will you as Ombudsperson measure success and report out to us?

J. Chalke: That’s a terrific question. I think it’s probably premature to say that we’ve really defined what that looks like. I can say, certainly from an early sense, that all these things…. There’s nothing…. They’ll be pretty prosaic. The sorts of things that we’ve wanted to achieve are that we conduct an investigation that is done in a timely fashion that is and is seen to be absolutely thorough.

One of the difficulties in this particular matter has been that there have been previous attempts to get to the bottom of things, and that hasn’t happened. So I think that that ramps up the pressure on us to do that. I think anybody would say that, really, the number one thing to do is to conduct a thorough investigation.

It has to have, at the end of the day, the confidence of you as legislators and of the public that we’ve carried out our work with diligence. I think those are the sorts of things that I would think about success. Obviously, we would intend to do so within the budget we’ve been allocated. That’s something we would consider as well.
[ Page 1514 ]

G. Heyman: Just a quick question with respect to the capital budget. Do you anticipate, or will you be in a position to tell us in a future budget submission, if some of this expenditure under the supplementary budget will actually result, potentially, in some reductions of capital requests for future regular budgets?

J. Chalke: We can certainly report back to you on that, if that’s a request. I think the computers, for example, seem like a natural area where their natural shelf life won’t be used up during the duration of this investigation, hopefully. That would be the sort of thing where we would be able to offset a future capital request.

Seeing none, Mr. Chalke, thank you very much once again for coming to the committee and helping us wade our way through this. We look forward to continuing to deliberate the issue. And at some point very soon, I hope, we’ll have this concluded and you can start about your work. Thank you again. We appreciate that.

We’ll just stand in recess for five minutes and then come back to order and go in camera.

S. Hamilton (Chair): On advice from the Clerk, I’ll look for a motion to go in camera.

S. Hamilton (Chair): We are now in regular session, to consider the motion that is on the table — or not quite on the table yet. It hasn’t been read out.

C. James (Deputy Chair): I will move that the committee recommend that the Office of the Ombudsperson be granted supplementary funding, up to $773,000 operating funding and up to $112,000 capital funding, for the fiscal year ’15-16 in order to defray the expenses of their referred investigation of the Ministry of Health termination files.

G. Heyman: I move that the committee request that the Ombudsperson meet with the Chair and Deputy Chair of the committee for further discussion regarding the issue of indemnification of witnesses’ legal fees and report back to the committee.

S. Hamilton (Chair): If there’s no further business to come forward, I’ll look for a motion…. Oh, sorry. There is.

S. Hamilton (Chair): Oh, one final motion — that’s right — to the Minister of Finance.

D. Ashton: I’ll move that the Chair advise the Minister of Finance, as Chair of Treasury Board, of the recommendations adopted earlier today and that the committee’s recommendations be formally recorded in the report on its annual review of the statutory office budgets later this year.

S. Hamilton (Chair): Any new business? Any further business to come forward to the committee?

Seeing none, we can recess. But before we do, now that I have everybody together in one place, because we’re going to be kind of jammed this afternoon, let me say that we do have some concerns about our travel this afternoon. We’re going to be on a very tight schedule. Castlegar is a bit of a push. There is a remote possibility that if Castlegar doesn’t happen, we would fly into Trail and be bused up to Castlegar from there for our hearing tomorrow morning.

Having said that, what I’m looking for is to keep as tightly to schedule as we possibly can. The bus is going to be out here by the east annex, I believe, ready to go at 4:15. So if I could ask everyone to be ready to jump.

All right. We will stand in recess until 11:45, at which time we’ll see our Minister of Finance.

Welcome to our Minister of Finance to give us our marching orders as we go forward in our budget consultation process this fine fall and look forward to visiting many cities, hearing from many people and producing a document that I’m sure the minister will find fulsome and informative.

Thanks again for the opportunity to come in. I actually, over the last three years, don’t quite think of it in terms of marching orders. What I do like to think, though, as you embark upon this exercise, which is (1) rather gruelling but (2) also useful from a variety of perspectives…. I think it’s useful in terms of the information contained in the report, the observations you make, the conclusions you draw and the recommendations you make.

I think for people, as well, you represent, in a bipartisan way, an opportunity to have access to the state and the government and the budgeting exercise, and I think it’s, in this electronic age, even more important that people can still see the face of the legislative branch of government. So thank you for embarking upon that.

About an hour ago, I provided an update to the media on the first-quarter report. We’ve tended to sort of time this in that way so you have the most up-to-date information I can give you about the economic state of affairs. What I had contemplated doing is just providing the same report to you folks, if that’s agreeable.

I said to the people in the press gallery that I thought…. In preparing for this over the last couple of weeks and looking at the data and at the numbers to date and the forecasts and the adjusted forecasts, three themes kind of emerge for me. You’ll have to come to your own conclusions about whether I’m accurate in that regard based on the information.

The first thing that occurred to me is that growth projections are down. They’re down for Canada. You’ll see they’re down slightly for British Columbia. They are down in North America, in the U.S., in Asia. That is something that we need to contend with and the reality that that eventually visits upon us.

The second theme that seems to emerge is that based on the indicators and data, we are, in British Columbia, demonstrating a fairly remarkable resilience in resisting the negative impacts of that previous reality that is befalling other jurisdictions. But I don’t think we can count on that continuing indefinitely. If the storm clouds continue to gather, if China continues to slow, if the U.S. doesn’t pick up in the way that people continuously hope it will — but it has, thus far, not — then there is an impact. We’re not immune.

So some of what you’ll see and some of the adjustments we’ve made and are proposing to make, from a fiscal management point of view, are designed to take into account the possibility and the likelihood that the impact of what is taking place elsewhere in the country, elsewhere on the continent and elsewhere in the world will eventually reveal itself in British Columbia.

The third thing that I’ll spend a little bit of time on relates to debt management and a particular aspect of the debt. You may have questions about other aspects of the debt. I’ll focus on one aspect of the debt and the progress we are making with respect to significant reductions in debt.

I’ve got about 14, 15 or, I think, 16 slides that I can go through. I’ll go through them quickly. I’ll get you copies, if you like — I probably should have done that on the way in here — so that you can have the material to study. If you want to come back at some point, by all means. I’m in your hands.

I call this kind of the bottom-line slide. The line up top is what we were projecting when we tabled Legislature debate of the budget in February. So you can see the surpluses that were forecast. Then, halfway down, you see the updated fiscal plan. This takes into account our adjusted forecasts, data to date and adjustments that were made.

You’ll see that whilst we are still relatively firmly in the black, the pressure has been on the downside. The surplus for this fiscal year is decreased very moderately — slightly more in the second year of the fiscal plan.

What accounts for the changes. On the revenue front, numbers in terms of corporate income tax, personal income tax and property transfer tax are up. In the case of income tax, we rely on assessments from the federal government, and the concern within the branch is always that you cannot automatically carry that stuff forward. In the last two years, it has operated in our favour.

A couple of years ago, the adjustment worked very much against us. I think it was a $300 million or $400 million adjustment to the downside. The positive aspects of assessments on the income tax side don’t automatically carry forward, and we have to be alive to that.

Also on the revenue side, natural resource revenue and natural gas revenues are down — I can give you some numbers — from what we thought they would be.

On the spending side, most of what you see there in terms of statutory expenditures are direct fire–related. The number for this year that we are forecasting is $380 million, and you’ll recall that the budget contained about $60 million.

Now, I can tell you also that the question persists, and it’s a logical question for people to ask: “If your direct-fire costs…? If the new normal in summer fire management is $150 million or $200 million, why do you keep
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budgeting $60 million or $50 million?” It’s because next year it’ll probably go up a little bit, but people will still ask that question: “Well, you spent $380 million last year, and you’ve only got $75 million in the budget.”

This is a good forum for me to at least try to explain what the rationale is. People agree or disagree. The rationale is twofold. One is because we have, via the Legislative Assembly, statutory authority to spend, we don’t have to put the money in a vote. We spend it, and we have the authority — the government of the day has the authority — to spend it on a statutory basis.

The challenge with trying to increase the amount significantly to where people would say, “Oh yeah, that’s a realistic amount,” is if you were to put $200 million in the voted appropriation and if the number comes in at $100 million, you can’t use the money. It’s funds that would otherwise be available for health care or education, but it’s locked into that.

The combination of having the statutory spending authority and the GAAP principles that restrict movement between votes leads us to tend to lowball the figure in the voted appropriation and rely on the statutory spending authority. But I think some people will continue to query that and say: “If you had $380 million this year, shouldn’t you increase the vote?”

I do think, by the way, higher-than-historic-average fire seasons are going to be the norm. I accept that proposition, but there will be anomalies along the way.

The other thing…. That’s fine. We’ll go on. I’ve been going on too long.

Here’s a summary of the changes on that slide that you have. I talked about some of it on the taxation side. The statutory spending I’ve talked about. If people want to come back and ask questions, but I don’t want to monopolize all your time.

On the revenue side, I can give you…. These are increases over what we forecast when the budget was tabled. Personal income tax, we’re forecasting $240 million higher. Corporate income tax, $128 million.

Property transfer tax is pretty topical these days. We’re presently forecasting $200 million more from property transfer tax than we thought at budget, which takes that figure from $928 million to $1.12 billion on the property transfer tax. You’ll see the activity in the housing market that gives rise to this.

Natural gas. When you look at revenue changes to the negative, we’ve got that decreasing by $124 million and then some areas going up, like forestry and electricity sales, so it offsets it to $95 million. But natural gas is the big loser, if you will, in terms of revenue to Crown. People may have questions about that.

Net income as it relates to Crown agencies. ICBC is the agency experiencing difficulties. Two things. The rate at which claims were projected to decrease is not being achieved, and of those claims, the settlement costs are higher than the corporation forecast, so that leads to a deterioration in net income from the Insurance Corporation.

On the expense side, I talked about direct fire costs. Two other things that I should highlight for you. The $60 million that you see is the teachers pension plan liability adjustment. One of the things we should all be proud of as British Columbians….

I will say to the bipartisan committee that both parties that have governed in this province in the last, I guess, two and a half decades can claim a portion of the credit for this. The structure of our public sector pensions is such that we are one of the few jurisdictions in North America that isn’t saddled with massive unfunded liabilities. Our pension plans are 95, 96, 99 percent fully funded. You just have to go east in Canada and south to see jurisdictions that don’t even know how to get out from under the unfunded liabilities.

We adjust on a regular basis to maintain that. The $60 million isn’t a cash transfer, but it is an accounting adjustment, and it will diminish over time as contributions from employers and employees increase. That’s what that relates to.

The other area I’ll draw to your attention — here’s the good news — is that the film and television sector is probably on track to have a record year in British Columbia — like really a record year. The flip side of that coin? The refundable tax credit we are now forecasting for this year will likely be in excess of $400 million. The success of that sector reveals itself in the extent of the refundable tax credit. It’s a very easy thing to quantify. We see they are well motivated to share their data with us because it pays off to do so.

Now, I talked about debt. There are two general measurements. One has always been around — and that is the one on the right — the debt-to-GDP. The dotted line is what we were projecting in the budget over the three-year fiscal plan, where the debt-to-GDP would land. You’ll see we had it at 16.6 percent. The solid line is the new projection, which sees us doing slightly better than that.

On the left. Some of the rating agencies now have, in addition to debt-to-GDP, begun to show a significant interest in another measurement, debt-to-revenue. Again, the top line is what our debt-to-revenue numbers were forecast to be in the budget. You can see there has been significant improvement there, much of that, by the way, relating to the statutory obligation that exists in British Columbia to take surpluses and devote them to debt retirement.

Now, if we go to the next slide, again on debt, this relates to taxpayer-supported debt. Recognize that there is the overall debt, which is a combination of debt that the taxpayers are responsible for, plus what is called self-supporting commercial Crown debt. There is a firm set of ac-
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counting principles that is applied, and again, third-party rating agencies check very carefully to make sure you’re not blending the two incorrectly or in a self-serving way.

This is the graph that relates to the debt that taxpayers are responsible for. The reason I wanted to share this with you…. You will see that the rate at which the overall taxpayer-supported debt is growing is almost flattening out — not quite, but very nearly. That is an objective that we have, not just to flatten it out but to begin to replicate what happened in 2004 or 2005, where the actual amount of taxpayer-supported debt began to decline.

But the other component to this that we are focused on is that red part at the top. That is direct operating debt. The best way I can describe that is that’s the amount that governments have borrowed over the years. It’s an accumulated amount that governments have borrowed over the years to pay for services that ministries deliver.

You will see that that amount is declining. If we go to the next graph, you’ll see what our targets were in the budget in February. It was to bring it down in the third year of the fiscal plan to $4.8 billion. Our adjusted target, based on where we are, is $3.6 billion. I’m told by officials that’s the lowest it has been since 1985.

If we move forward two more years after that, which is what this next slide does, I will tell you that the government’s objective is to fully eliminate the direct operating debt. We are on target to do that, if we stick to this plan and these numbers hold, by 2019-20. That will be the first time since 1975-76 that the government of British Columbia has not had a direct operating debt. So it’s a target. It’s achievable, and it’s only four years away if we stick to this. That’s the government’s intention, in any event.

Next, just a reminder that a prerequisite to that is making sure the solid line stays above the dotted line in terms of revenue exceeding expenses.

You’ll see, if we go to the next one…. I mean, you’re going to hear…. As you fan out across B.C. — and this isn’t in any way a criticism — people are going to come and talk to you about the areas that need additional attention, and you will, I’m sure, include any themes that emerge in your report. But we are in this rather enviable position fiscally because we have exercised a discipline around expenditure control.

Just to put that in some kind of perspective. Saskatchewan did their update, I think a month ago, and are now forecasting being back in deficit. The only other province we’re aware of that had a forecast balanced budget was Quebec. They were forecasting on their budget, which is exponentially larger than ours, a surplus of $30 million. They may realize that; I hope they do. But we may well end up, again, being the only province not in a deficit situation.

The fact that there is a surplus, albeit modest, means that we are in a position to have a different conversation than other provinces. We can actually talk about some of the areas where pressures are being felt — in the programming ministries, particularly — and talk about how we might address those without pushing ourselves further in dept. That, I think, will be part of the conversation that the committee has with British Columbians on where those priority areas are.

Just in terms of the economic outlook, I won’t take too much more time. The two bars — one is the number we use, and the other is the Economic Forecast Council’s. Carole has been to the forecast council and seen those numbers come out. We take those, and we always downgrade them. We did for the budget. For 2015, the budget number was 2.3 percent. You’ll see we’ve downgraded that to 2 percent for 2015.

Private sector forecasters have still got us leading the country, I think, this year, tied with Ontario and leading again next year. You’ll see what the numbers are. I mean, this is stable growth, but it’s not spectacular growth. The reduced number is a reflection of what is happening elsewhere in the country, elsewhere in the world, and how that translates into impacts within British Columbia.

Here are a few of the areas that I think people want to see us track and are interested in. Employment trends in the right direction, growing 0.7 percent. We’re still creating jobs, not at the rate we would like. We’ve set more ambitious targets than this. We hear about a retailer like Nordstrom opening up and hiring 1,000 people or thereabouts. That’s positive, but we’re anxious to see this number improve beyond where it is.

We’ve got people…. There’s a net inflow migration again. The labour market is growing. Unemployment remains well below the national average. But our target is to see growth at higher rates than we are presently experiencing. So that — when we get to some of the questions that you’re going to be talking to British Columbians about — for us is a central one, about how government can take steps to advance that agenda.

Retail sales. This continues, folks, to be one of the big economic anomalies in B.C. It’s growing right now at about 7.6 percent. For the purpose of budget updates and forecasts, quarterly report, we’re saying 5.1 percent. But people — both with respect to retail goods and, as you’ll see in a moment, housing and real estate — are continuing to purchase. What accounts for it? Currency — probably a little bit less cross-border shopping and probably a few more people coming north would account for it.

But the growth, absent inflation, which is the case right now, and absent even larger employment growth than we are seeing…. Retail sales growth at 7.6 percent — we don’t think that’s going to sustain itself through the entire year. But people are feeling reasonably confident right now about purchasing. The one thing we’ve got to be cautious about is our debt levels, of course.

On the housing front, we sort of have this notion of a 28,000 average. Right now, the last numbers you see there
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had us well above that. We think it’s going to sort of come in for the year pretty much on the average — 29,000 is our number in the update — but there’s some pretty robust activity continuing in the market, and people are seeing the value of their homes continue to appreciate.

On the export side, there’s a little bit of cold water on our…. We’re seeing exports increase, but very, very modestly, and not at the rate we saw over the last two years. That is a reflection of slowdowns in demand for products in Asia — China, obviously, and Japan.

Although U.S. demand has come back a little bit — I think they’re up 4.5 percent — exports to the rest of the world are down 2.6 percent. So right now we’re tracking at about a 1 percent increase in export sales. But this, I think, is reflective of what is taking place elsewhere in Canada, elsewhere in North America, elsewhere in the world. This is why it’s an area for concern, because it eventually reveals itself in different ways in our economy and may already.

I’m not going to…. You folks read, and if you have any questions about numbers that we have on these various economies, I can give them to you. There is our schedule, your schedule, the budgeting schedule. Carole, we’re looking at the forecast council for late November. We’ll get you a date as soon as we know it — and all the members of the committee, of course, who are welcome to attend.

Then finally, just in terms of the work that you’re embarking upon, to the extent that you can gaze into the hearts and minds of British Columbians and provoke some thoughts around these questions and these issues, I think that’s informative as it relates to the structure and the initiatives that are included within the budget.

As I say, we are, by Canadian standards, in the unique position of being able to have a conversation about, obviously, shifting priorities — I guess other jurisdictions can do that — but addressing some pressures that exist, without compromising on the notion that government shouldn’t spend more than it is taking in. That’s not something other jurisdictions have the luxury of doing right now. But I also don’t want to overstate the extent of the room we have to move within, in terms of those parameters. We have some room but, based on what I’ve shown you today, not a lot.

S. Hamilton (Chair): Not a problem. Thank you, Minister. I appreciate your taking the time to enlighten the committee. I’ll ask the committee…. We do have a few minutes we could provide for questions, if there are any, from the committee.

None? Seeing none…. All right, well, thank you, Minister. I look forward to providing you with that report we talked about a little bit earlier.

Hon. M. de Jong: If something comes up on the background data, just let us know, and we’ll get you what we can.

S. Hamilton (Chair): Thank you very much. The committee, then, will stand in recess for about ten minutes.

S. Hamilton (Chair): Welcome to the public hearing for the Select Standing Committee on Finance and Government Services. My name is Scott Hamilton. I’m the MLA for Delta North and Chair of the select standing committee.

We are an all-party parliamentary committee of the Legislative Assembly, with a mandate to hold provincewide public consultations on the next provincial budget. The consultations are based on the budget consultation paper that was recently released by the Minister of Finance. The committee will issue a report by November 15, 2015, with recommendations for next year’s budget.

We’ve had to modify our planned schedule of in-person community meetings this year, as the Legislature has been called back for a fall session starting September 28. In order to accommodate as many presenters as possible, we’re holding public hearings in communities across the province through in-person sessions or via teleconference, video conference or Skype.

British Columbians are also invited to participate by sending a written, audio or video submission or completing an on-line survey. You can make a submission or learn more about the consultation in general by visiting our webpage at www.leg.bc.ca/budgetconsultations.

We invite all British Columbians to make a submission and contribute to this important process. And for those of you in attendance, we thank you for taking the time to participate today.

All public input will be carefully considered by the committee as it prepares for its final report to the Legislative Assembly. Just a reminder: the deadline for submissions is Thursday, October 15, 2015.

Now, with respect to the meeting format, today’s meeting will consist of presentations from registered witnesses. Each presenter will have ten minutes to speak, followed by five minutes for questions from the committee. If time permits, we’ll also have an open-mike period at the end of the meeting. Five minutes are allocated for each presenter. If you wish to speak, please register with Stephanie at the information table.

Today’s meeting is being recorded and transcribed by Hansard Services. A complete transcript of the proceedings will be posted to the committee’s website. All of the meetings are also broadcast as live audio via our website.

Now I’d like to take the opportunity to ask our mem-
[ Page 1519 ]
bers of the committee to introduce themselves, starting with Simon.

S. Hamilton (Chair): And Mike Morris hasn’t been able to join us yet, but he is the MLA for Prince George–Mackenzie.

S. Chandra Herbert: My name is Spencer Chandra Herbert, MLA, Vancouver–West End.

S. Hamilton (Chair): I’ll also take the opportunity to introduce our Deputy Chair, who hasn’t had the opportunity to join us yet either — Carole James, the MLA for Victoria–Beacon Hill.

I’d also like to introduce the people that are assisting the committee today. To my left is Susan Sourial and Stephanie Raymond from our parliamentary committees office. Ian Battle and Alexandrea Hursey from Hansard Services are also here to record the proceedings.

We could get started right away. Once again, I’d just like to reiterate that I will have to be very strict in terms of the ten-minute presentation time. If you were to go over that time with your presentation, it would just simply cut into the question period.

I would first like to introduce and ask to come up, from Island Savings, Mr. Randy Bertsch.

R. Bertsch: Good day, Mr. Chair, Madam Vice-Chair and members of the Select Standing Committee on Finance and Government Services. Thank you for allowing me to address you today to give testimony on the 2016 budget.

My name is Randy Bertsch, and I’m the president of Island Savings, a division of First West Credit Union. Island Savings has been a part of Vancouver Island life since 1951. Today, more than 420 employees serve 60,000 British Columbians in our branches and administrative centres on Vancouver Island and the Gulf Islands, and we are growing. In fact, since launching our Simply Free account in April of this year, we have seen nearly 1,500 new members join.

Island Savings is proud to be locally based, with a mission to contribute to the financial and economic well-being of members, employees and communities. Islanders feel good about dealing with us, knowing that we’re local and that their money is being invested on the islands. Today I’d like to touch on those two points: our contribution to the local and provincial economy and our contribution to local communities.

Credit unions are well placed to provide an overview of the economic climate in the areas where they operate. We can do this because we’re plugged into our communities financially and socially, and we live in the areas that we serve.

The economic outlook for Vancouver Island is mixed. The Island’s economy depends on a strong public sector, government spending, profits in natural resources such as fishing and forestry, and through the steady flow of retirees moving to the islands. Since the 2008 recession, economic growth has been sluggish. However, some sectors are anticipating gains for 2016, such as tourism, driven by the low dollar, forestry and housing.

The goal is not just to watch the economy but to help it grow. We do this by helping members of the credit union stay on track and by supporting small business, which is the backbone of our provincial economy. That is exactly what we did for Peninsula Co-op, an iconic, essential stop for gas and groceries between Duncan and Victoria.

In 2012, Peninsula Co-op moved their banking to Island Savings because of our shared values of being accountable to our members and supporting our local economy and community. At a time when the Island was seeing an economic contraction, Peninsula Co-op was experiencing strong growth and opened a new location, creating local jobs.

When our members succeed, like Peninsula Co-op, we know that we have done our part to drive the local economy.

We value local business, and that is why we stepped up to meet the needs of Pender Island residents in 2012. When HSBC decided to close their doors, we opened ours.

We’re also involved in the development of beautiful Port Renfrew, an up-and-coming value destination. When the developer of Wild Coast Cottages sought development financing, he faced high private rates. Our credit union was able to reduce his rates and offer additional funds for him to continue his development plans.

If you’re lucky enough to have visited Port Renfrew, you know that this is a small community. The local jobs in construction and day-to-day operations for the prop-
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erty’s inn and pub have provided good jobs and have boosted the local economy.

We recognize that supporting a strong economy also means supporting the places where we live and do business. In 2014 alone, we invested more than $500,000 locally through community partnerships and sponsorships supporting not-for-profit and charitable organizations.

For more than five years, we have been a proud partner with Big Brothers Big Sisters in Victoria and Saltspring Island, Cowichan Valley and central Vancouver Island. The in-school mentoring program matches at-risk children with trained Island Savings mentors, some of which are from Island Savings, and focuses on activities that support positive relationships, resiliency, social development and success in school.

Early this year, two of our staff members spent a week at Big Brothers Big Sisters’ Victoria office to apply our lean methodology to help reduce the time it takes to match a child with a volunteer mentor — a back-end issue that the not-for-profit has struggled with for nearly five years.

Rhonda Brown, executive director with Big Brothers Big Sisters Victoria, said that trying to balance customer service with child safety meant that most children are waiting to be paired with a big for more than a year. Keeping the goal of safe and quick matching in mind, our staff helped Rhonda Brown’s team create a streamlined solution that allows them to process volunteers more efficiently, ultimately connecting at-risk children with the right mentors faster.

I have shared with the committee some examples of our value to the B.C. economy and to our local communities. I want to build on that now by highlighting an issue that I know the committee members are familiar with: the provincial preferential tax rate, which is set to be phased out in 2016. The increase on credit unions will mean an extra 6.1 percent, raising the tax burden to a total of 22.6 percent.

Mr. Chair, I know that this committee is familiar with the issue, because you have been a strong support for B.C. credit unions by recommending two years in a row that the provincial preferential tax rate be made permanent. We are thankful for your support and request the committee once again include this recommendation in your final report to the Minister of Finance.

This is an issue that affects us all. British Columbia’s credit unions serve more than 1.9 million members — that is roughly 42 percent of the B.C. population — and directly employ over 8,900 British Columbians. The odds are that each of you bank with a credit union, or you know someone who does.

Credit unions need a preferential tax rate because we are unique. Credit unions and big banks compete in the same marketplace and offer many of the same services. However, banks have access to the stock market, where they can raise capital, and have a lower requirement for retained earnings.

Credit unions, on the other hand, are owned locally by members and have a higher requirement for retained earnings. Retained earnings are the only source of capital growth for credit unions and directly relate to the amount that we’re able to lend.

In this way, credit unions are more disadvantaged by a tax increase than the big banks. In fact, members of this committee may be surprised to learn that once the preferential tax rate is fully phased out, credit unions will face a higher tax burden than that of the big banks.

Another difference between credit unions and big banks is what happens to profits. When a big bank profits, shareholders — those who invest in the stock market — profit. When credit unions profit, our members and local communities benefit. That is because we are owned by our members, and when we profit, so do they by a dividend and through our growth, which enables us to create local jobs and serve our members better.

We also invest the portion of our profits directly into our communities through charitable giving. In 2014, a $2 million community endowment fund was created to support communities served by Island Savings.

Mr. Chair, the effect of a tax increase on B.C. credit unions is not about our bottom line. It’s about our ability to support families looking to buy a home, small businesses wanting to grow and hire more British Columbians, and it is about our ability to give back to the communities through charitable giving.

On behalf of Island Savings, a division of First West Credit Union, I ask that this committee consider once again supporting a recommendation to make the temporary deferral of provincial income tax rates for B.C. credit unions permanent.

C. James (Deputy Chair): Thank you very much, and thank you for the presentation. I think you’ve done a very good job of outlining the difference between banks and credit unions.

I’ve met with credit union folks, as well, who’ve talked about the tax rate and the fact that credit unions will end up with a larger burden than banks will. I wonder if you have any numbers around the impact either for Island Savings or for the credit union sector at large — around what that differential will look like.

R. Bertsch: These may not be exact but certainly in the territory, if the tax rate is done away with. In the years of 2016 through 2019, First West Credit Union will be burdened with an additional $6.8 million. Effective 2020, it would then be $3.5 million per year thereafter.
[ Page 1521 ]

S. Chandra Herbert: I would just say: don’t take the lack of questions for anything, given that the credit union movement has done such a good job informing us of this issue over many years. Thank you for presenting.

Seeing none, Mr. Bertsch, thank you very much for your presentation. Thank you for taking the time to come out and speak to the committee. Obviously, everything you have to say is being taken as much to heart as it possibly can. I’m sure we’re going to hear more about this as we continue our travels and deliberations throughout the province. Thank you again. I appreciate it.

Okay, next on our list, if I may, is the Greater Victoria Chamber of Commerce. Peggy Kulmala and Bruce Carter, welcome. Once again, you have ten minutes for your presentation. I’ll try to give you a two-minute warning just to give you an opportunity to wrap up.

S. Hamilton (Chair): All right. But if you cut into it, I’ll leave it entirely up to your discretion. It just cuts into the question period time.

B. Carter: Mr. Chair and committee, my name is Bruce Carter. I’m the chief executive officer of the Greater Victoria Chamber of Commerce. It’s my pleasure to present to you today along with my colleague, Mrs. Peggy Kulmala, on behalf of our chamber — approximately 1,400 businesses in the greater Victoria area. We have a number of advocacy items on the go. We’ve tried to focus these, obviously, on the finance-related items there. Please don’t take the lack of some other things in that regard.

You know, greater Victoria is the province’s second-largest metropolitan area, governed 13 separate municipalities and the capital regional district. We’ve got a GDP of approximately $15 billion. We have a flourishing technology sector, really, a booming tourism sector, and we’re one of the stronger economic areas, we think, in the province.

There are some areas that we’d like to present to address in the budget for 2016. But before we do that, we wanted to commend the province on its ongoing commitment to the labour force for today and tomorrow and the re-engineering of education and training so that B.C. students and workers have the skills to be first in line for jobs in our growing economy.

We also thank the province for its investments in our region’s infrastructure over the past year, such as the McKenzie interchange and Belleville Street terminal — both very important economic pieces for us.

Five discrete priority areas that we’re going to talk about today and that we recommend the province address. The B.C. municipal auditor general is one; the 2016 local governance study; subsidization of B.C. Ferries northern routes and minor routes; the Belleville terminal; and transportation planning.

First off, the B.C. municipal auditor general. To be quite honest, we expected more meaningful results from this provincial initiative as the creation of efficiencies at the municipal level is extremely important to the economic vibrancy in our area. We remain strong advocates of the office, and we’re hopeful that we’ll see greater and more meaningful results in the future. It’s an initiative that we’re very supportive of, and we think it will create positive economic benefits.

P. Kulmala: In regards to the local governance study, for many years the chamber has been concerned about fragmentation in the capital regional district, which inhibits efficiencies and diminishes the region’s competitiveness. We feel that municipal services can be delivered in a more efficient and cost-effective way, which could help draw in foreign investments and will attract and retain a skilled workforce.

During the November 2013 municipal elections, eight of the 13 greater Victoria municipalities posed non-binding referendum questions to citizens regarding aspects of amalgamation in local governance. Seven of the eight municipalities voted “yes” to some course of action. We believe this is a strong indicator that voters are aware there’s a problem with local governance in the region.

In February 2015, the chamber recommended to the B.C. Ministry of Community, Sport and Cultural Development that the province commission a study on local governance by an independent body. We anticipate the cost of such a study, which we expect to include funding to implement recommendations, to be substantive, likely in excess of $1 million. The chamber expects the province to commission and adequately resource an independent commission to study local governance within Greater Victoria to maximize efficiencies and to encourage the region’s competitiveness.

The second point is B.C. Ferries. We believe that B.C. Ferries is critical to all coastal communities. As a gateway to Vancouver Island, it functions as a major corridor that facilitates commerce on and off the Island. In 2015, B.C. Ferries has made considerable progress in measures such as rationalizing routes and adopting alternative fuels. The four major routes had over $500,000 in revenues and over $350,000 in expenses. The major routes saw net earnings of over $157,000. In the same years, the 20 minor and northern routes had over $108,000 in revenues and over $183,000 in expenses, with a net loss in operations of just over $75,000.

Although all routes were slightly more profitable in
[ Page 1522 ]
2015, the major routes are still operating at a profit while the minor and northern routes continue to operate at a loss. We believe this puts B.C. Ferries in an untenable position, leaving them little choice but to further increase fares. The chamber recommends on this point that the provincial government increase the subsidy to the northern and minor routes for the system to be sustainable and ferry travel to be affordable.

On the fourth point, regarding the Belleville International Terminal. The Inner Harbour, as you know, is one of our region’s greatest assets, and the Belleville International Terminal is a key international gateway helping to link B.C. to external markets. Bringing in more than 665,000 people each year, the Belleville terminal has an estimated economic impact of $180 million a year, supporting 4,500 full-time jobs in Victoria and Vancouver Island.

Lastly, the B.C. Minister of Transportation and Infrastructure announced a $17.4 million investment in upgrades and improvements to the Belleville terminal. The majority of these upgrades and improvements appear to be specific to critical and costly marine infrastructure — for example, new docks. The chamber believes the terminal itself needs upgrades and that the terminal is key to the revitalization of the working harbour and our regional economy.

A common ferry terminal building has been under discussion since 1993, when the temporary Clipper terminal was first installed. After many planning studies and concept plans, we are left with aging infrastructure to support a high-profile and key gateway to B.C. The chamber counts on the B.C. government to secure the funds necessary to upgrade this common-use terminal as befitting one of B.C.’s links to external markets and a key driver of the region’s economy.

In regards to transportation planning, an efficient transportation system is key to building economic prosperity. It is essential to the Island economy how consumer goods flow in and off and within the Island, the movement of workers to and from the workplace and even access to affordable housing. Improving our transportation system is complex. The 13 greater Victoria municipalities are responsible for transportation within their boundaries; the capital regional district, for transportation within unincorporated areas; and the B.C. Ministry of Transportation and Infrastructure, for highways and related infrastructure, some of which run within and through municipal areas.

Greater Victoria does not have any one entity that can lead long-term strategic planning to ensure delivery of an efficient transportation system that the region needs. The chamber recommends the province lead a long-term strategic transportation planning across all levels of government, as well as secure long-term, stable funding for transportation infrastructure improvements to meet the needs of the Vancouver Island economy.

B. Carter: Again, we thank the province for its support of the infrastructure over the past year, as well as the ongoing commitment to the labour force of today and tomorrow. We look forward to seeing positive results from the flow of the B.C. municipal auditor general’s office.

We ask the select standing committee to consider the following: the commission of an adequately resourced and independent commission to study local governance in the greater Victoria area to maximize efficiencies and encourage the region’s competitiveness.

With respect to my colleague, I wish that it was only $75,000 that was lost in B.C. Ferries. It’s $75 million. We’re talking big dollars. I don’t think this is something the committee is unfamiliar with. B.C. Ferries has done a lot in the past to improve its efficiencies and to make changes. The well is dry. Essentially, that subsidy to B.C. Ferries for the minor and northern routes needs to increase.

We need to secure the funds necessary for the upgrade to Belleville Street terminal’s international terminal and use the terminal befitting one of B.C.’s links to external markets and a key economic driver.

To meet the needs of the greater Victoria economic economy, we really need to have a look at transportation planning — how we do that, how we go about supporting a modern economy with a modern transportation system.

As the voice of Victoria’s business community, we look forward to continuing to work with the province to positively affect our region and improve our economy. Once again, we’re really asking not as much for money as for support for us to be able to operate within the economy.

S. Hamilton (Chair): Thank you very much, Mr. Carter and Ms. Kulmala. Thank you very much for your presentation.

I just wondered, on your first point, around the independent commission to study local governance…. As you know, there has been an engagement from way before us, Bruce — you and I — on the issue of amalgamation and cooperation, etc.

Have you been in discussions at all with the ministry around their support for a study and what that might look like and what discussions are taking place in the region? Has the chamber been involved in those discussions?

B. Carter: We have. We’ve had considerable discussions with the ministry and the staff, looking at the scope of that study. I think probably one of the most important things is that that study needs to look at regional governance. If we only look at amalgamation, we actually ignore the regional governance, which doesn’t address those issues. The ministry is in agreement with that. It now becomes a matter of resourcing that study and per-
[ Page 1523 ]
haps any others in the province that need to be done at a level adequate to get the results we need.

C. Trevena: Thank you very much for your presentation. If the Chair will indulge me, I’ve got three quick questions, and I’ll roll them into one, if that’s all right.

C. Trevena: I’m working backwards. First, following up from Carole’s. The last issue, the transportation planning. How involved was the chamber in the government’s transportation plan that was issued earlier this year? The government has put out a transportation plan. If that wasn’t adequate, are you in conversation with the ministry on the needs of the south Island and the Island as a whole?

B. Carter: We were very involved in that consultation that took place earlier in the year. To be quite honest, we’re happy with the results, having received funding for both the McKenzie interchange and Belleville Street terminal, which were our two highest priorities.

I think the challenge is really more around regional vision — what we want, how we want to work together and to move that forward. I think if we could get that together, we as a region would become a much stronger economic entity.

C. Trevena: Secondly, working backwards through your presentation, the Belleville international terminal…. Again, there’s money going into this.

I understand that the Clipper is looking…. They’re getting so desperate that they’re going to be putting another ATCO trailer or something else there. I’m wondering where the chamber is with this and with the plans.

B. Carter: We’re very happy to see the $17.4 million investment into the Belleville Street terminal. That’s really piles and pavement to make sure that it doesn’t fall into the water, quite literally. The next progress in that is actually to come up with a common-user terminal there. That really needs to be done, both to accommodate the modern needs for customs clearance, both Canadian and U.S., and to provide that gateway that we need for our community. That’s the next piece of that project. Ideally, we would like it to accommodate both the existing users and potential new ones.

C. Trevena: My third very quick question, with the indulgence of the Chair, is the Ferries segment. It is $75 million. It’s a lot of money. I prefer to call it an investment rather than a subsidy.

But I was wondering. The question that we keep hearing over and over is…. We know how important the ferries are to the province of B.C., for both the Island and the rest of the province — the economy, communities and tourism. But I’m wondering whether the chamber has spent any resources itself or with other chambers on putting a dollar figure to that economic impact.

B. Carter: I guess with the ferries there are a number of different parts. I’d like to say we’ve done a good study around the economics, and we haven’t. My discussion with most of the economic entities throughout the province and in Canada is that we have had a collapse of the coastal forest industry that one would liken to the collapse of the Newfoundland cod industry, and we’ve seen no economic activity in order to restore that.

I think that if we saw the economic activity on the coast, we’d solve the problem of the ferries because there would be enough travellers that it would solve itself.

In the short term, the challenge that we have is that the travellers that are on the four major routes are subsidizing northern and Gulf Island routes. I think that that’s a provincial responsibility and not those for the taxpayers of Victoria.

G. Heyman: Thank you for the presentation. You made reference to the Auditor General for Local Government and that you’re supportive of finding efficiencies in local government, but the experience to date has been that the office itself appears to have cost more than efficiencies identified, as well as a number of other significant problems.

Is there a particular reason that you would favour a separate office over asking the Auditor General for B.C.’s office? It can already look at any range of public sector expenditures and has a long history and track record of expertise in this area. You’d not do this instead of the Auditor General for Local Government? Or is that in fact your position?

B. Carter: Well, you know what? I’m going to avoid the internal workings of the government, because it’s not my area of expertise, and indicate that the outcome that we’re after is actually performance audits for municipal governments, making sure that taxpayers are getting value for their money and that we’re capturing best practices. How that’s done….

B. Carter: Well, ideally, the more efficient the mechanism and the sooner the results, the better.

S. Hamilton (Chair): I have about one minute left. I’ll go to Dan and then to Simon.

D. Ashton: It’s more of a comment. It’s just that I’m surprised that sewage for the south Island didn’t come
[ Page 1524 ]
up in this. I’m just planting a seed. I’ll just leave it with you. I don’t need an answer.

B. Carter: Well, you know what? The challenge for us is that we’re in a nightmare scenario both around the costs and around that governance piece. As we talk about that review of local governance, we’re hoping that it provides the ability to do major projects throughout the region. It’s a significant nightmare. I’m not sure I need it to be in the media any more to move that file forward.

S. Gibson: Just a quick question. Is it the chamber’s view that a single governance entity for greater Vancouver would be more efficient and more representative?

B. Carter: Wow, you’re really trying to get me in trouble with my buddies at the Vancouver Board of Trade.

You know what? I think Vancouver and some other areas in the province have similar challenges to what we do. There are things that really need to be done regionally. You know, transportation, sewage treatment, water, garbage are the ones that come to mind, and probably protective services.

We don’t have an efficient mechanism to deliver those. That’s what we need to create. I think that’s true for each of those regions. As far as how that affects municipalities, I’m not really sure.

S. Hamilton (Chair): Just one quick…. Do you know if any of these discussions have been advanced regarding amalgamation since the last election, the fall election? Have any of the municipalities, districts been talking to one another?

B. Carter: Oh, absolutely. The municipalities have all actually written to the minister asking the minister to commission that study. My understanding is that the ministry is looking at it. What we believe is that right now the ministry doesn’t have sufficient resources to conduct that study in the manner that it needs to be done, and we’re looking for this committee to provide those resources so that the ministry can do that.

S. Hamilton (Chair): Okay. Terrific. Ms. Kulmala, Mr. Carter, thank you for the presentation. I appreciate you coming forward.

Next on my list we have Imperial Tobacco Canada Ltd., Mr. Sébastien Charbonneau.

Welcome, Mr. Charbonneau. Once again, ten minutes for the presentation. I’ll try to give you a two-minute heads-up, just so you could wrap up, and then we’ll go to five minutes for questions.

S. Charbonneau: Good afternoon, and thank you very much for giving us the opportunity to appear in front of you today.

My name is Sébastien Charbonneau, and I am the director of government relations and regulatory affairs for Imperial Tobacco Canada. Imperial Tobacco is the largest legal manufacturer of tobacco products in Canada, and I do want to stress before I present that we do recognize the health risks associated with smoking. We also do support evidence-based measures to control the consumption of tobacco products in Canada.

Unfortunately, here in Canada, we do have an illegal tobacco problem — trade — that is undermining all the efforts made to control tobacco, including tax measures, warning labels and youth access restrictions. As detailed in our written submission, since 2006, illegal tobacco has made up between 16.5 percent and 32.7 percent of Canadian tobacco sales. That is variable every year.

Illegal tobacco is untaxed, has no warning labels and is readily available to youth at pocket-money prices, and criminals behind a contraband trade are certainly not asking for identification.

Of direct relevance for this committee, federal and provincial governments are losing annually, on average, $1.5 billion in lost tax revenues on tobacco. And that is lost to the illegal trade, which is at record or near-record levels across Canada, including here in British Columbia.

Last summer, a survey conducted by the Western Convenience Stores Association found the average rate of illegal tobacco products in the province to be at 17 percent at the sites they surveyed. The association therefore estimated that a province is losing around $120 million in lost tobacco taxes. That’s every year.

This high level of contraband in British Columbia represents a drastic change, as the province had been previously largely immune from the worst of Canada’s illegal tobacco problem. For example, when contraband of tobacco saw rates to the tune of 48 percent in Ontario or even 40 percent in Quebec, back in 2008, the rate of illegal tobacco here in British Columbia was only 3.7 percent. Then in 2010, a study did put the rate slightly higher at about 5 percent, back in 2010, but that was still well below the levels of contraband tobacco observed in Ontario, in Quebec or even in Atlantic Canada, for that matter.

What led to the rapid spike in illegal tobacco here in the province? Well, the answer is simple supply and demand economics for the illegal tobacco trade. Excessive taxation is a factor that drives demand. Over a six-month period in late 2013, early 2014, British Columbia’s smokers were faced with two provincial tobacco tax increases, and then the federal government did increase also their tax on tobacco products.

Those totalled a $9.23 increase in just a six-month period. These drove the price of a legal carton — 200 cigarettes — up over a hundred dollars per carton.

Now, to put that in perspective, the illegal tobacco products can be found — a carton, or a baggie of 200 cigarettes — on the street for as low as $6. Then, of course, based on the sophistication of the products, they can be a little more expensive, so the range goes between $6 to about $45 max.

Consumers reacted as one would expect with all those tax increases. They sought out cheaper alternatives. It is the cost differential between legal and illegal tobacco products that is driving contraband demand. That dynamic is made worse when there is a tax shock. In short, tax shocks like those experienced in British Columbia drive contraband demand.

Then let’s look at the supply side. Based on RCMP reports, there are 50 illegal factories and 300 smoke shacks that are run and operated by 175 organized crime groups. Those groups are trafficking and profiting from contraband tobacco across Canada.

With those 50 illegal factories that are located in First Nations territories in central Canada — Ontario and Quebec — the supply of contraband tobacco is virtually limitless, especially when you consider that our company, which supplies roughly 50 percent of the legal cigarette market in Canada, would only use and need one factory to produce 50 percent of the legal market.

Then, particular to B.C., B.C. is facing an additional threat coming in from counterfeit cigarettes that are shipped directly from Asia. That is evidenced by the important and, in fact, large seizures that have been made by the Canada Border Services Agency.

Given these dynamics, it is important for policy decision-makers here in British Columbia to be aware of those risks and the potential pitfalls of significant and sudden increases in tobacco taxes for your next budget.

In this regard, Imperial Tobacco recommends the implementation of a moderate and predictable taxation model for tobacco products. With such a model, the province would move away from a tax framework that allows random shocks to the market, which only do benefit illegal operators. Our written submission details a proven model of a stable, predictable taxation framework that calls for scheduled, predictable increases of the tax that are tied to the consumer price index, for example.

International experience has shown that this model is more effective from a revenue standpoint than one that is based on sporadic market shocks. Countries that have adopted such a model have had more success in containing demand for contraband tobacco.

In Canada, a version of this model already exists at the federal level and in the Northwest Territories. Further, it is also under serious consideration in other provinces — those that have a severe contraband problem, such as Ontario and Quebec. In fact, in Quebec, a taxation review committee that was tasked to review all fiscal policies in the province mandated by the provincial government, issued in its final report this spring a recommendation to adopt such a moderate and predictable taxation model for tobacco products.

We do recommend that British Columbia work on something similar for the province. We firmly believe that such a moderate and predictable model would help the government meet its goals — namely, reduce tobacco consumption and generate tax revenues — all while helping to contain the demand for contraband tobacco.

I thank you once again for the opportunity given to Imperial Tobacco to appear, and I’m now available to answer your questions.

J. Yap: Thank you for your presentation. I read through your presentation. You talked about the methodology of how you determined the level of contraband. Could you expand further on it? Do you literally have people researching cigarette butts?

S. Charbonneau: In fact, this is not our study. We cited a public news release of the Western Convenience Stores Association, who mandated a third-party firm to do research. But yes, to my understanding and knowledge, it is based on surveying sites across the province and collecting discarded butts of tobacco products. Then, through a proper analysis, they would be able to determine whether they were legal or illicit products.

J. Yap: You can tell from the labelling on it or chemical composition? How is that done?

S. Charbonneau: Again, this is not conducted by Imperial Tobacco, so I don’t have all the information to answer appropriately on the methodology, but my understanding is that they are, in some cases, obviously able to identify if it’s a brand that is legal in Canada. But they may have other ways to account for that.

J. Yap: I would think it would be important to have a good level of confidence in that number, because if we’re going to react to a change from 3 percent to 17 percent and maybe as high as 50 percent, then we would want some confidence in the statistics, right?

S. Charbonneau: There are other ways. For example, our company would mandate firms to do some consumer research and surveys in various regions across Canada. I don’t have the results of those surveys with me, but there
[ Page 1526 ]
are other ways to measure illicit levels across Canada. We cited the Western Convenience Stores Association level because this is the most recent one that was done.

C. Trevena: Thank you very much for your presentation. It’s very interesting. One of the things with contraband tobacco, though, is it’s always going to be cheaper than what is available legally. Part of the attraction is you’re going to get it cheaper, and oftentimes smokers are not going to be able to know the difference unless it’s a very particular difference in taste.

Surely, one of the issues is not the tax rate but the enforcement in trying to stop the contraband being available. Rather than saying, “We’re going to have the taxes go up only moderately each year,” because people will still…. If they have the willingness and then the access to buy contraband — it’s that much cheaper, as you’ve cited — they would always go for that. So surely, the argument is stronger enforcement across the country in stopping the contraband from either coming into the country or being transported across the country.

S. Charbonneau: This is a very good point. We actually, in our submission, do talk about the dynamics between the supply and the demand. Our submission and my remarks today for this committee are what can be controlled within the next budget, which is to not shock the market with very sudden and important tax increases that will fuel and further expand the price gap between legal and illicit. But to your point — absolutely.

The other side of the equation is to choke supplies — therefore, stricter enforcement. There are certainly things that provincial governments can do to enforce stricter enforcement of the supply, but there’s also a need for provinces to work with the federal government and ask for federal leadership in that file. Indeed, there are 50 illegal factories that are producing cigarettes in Canada, and those products are then shipped across Canada coast to coast.

S. Gibson: My first question is…. My understanding is that the higher the cost of the product — i.e., with the addition of more taxes — is a disincentive for many people to smoke, particularly for young people to start. What’s your comment on that view?

S. Charbonneau: Well, we totally do support measures that are going to prevent youth from initiating with smoking — absolutely. Price in this case certainly could be a factor, but we don’t observe any significant change in the trend of the decline of smoking incidents when there are tax shocks. In fact, as you probably well know, British Columbia has the lowest smoking rate in Canada.

S. Gibson: …that it’s a disincentive for younger people to start smoking the more expensive it gets. Is that your understanding?

S. Charbonneau: It is certainly one of the factors, but again, you have an offer that is much cheaper, as low as $6. So there’s also a need to…. Taxes don’t apply to contraband tobacco.

S. Gibson: Another quick question, if I may. These illegal factories — why aren’t they just closed through law enforcement? What’s the problem there?

S. Charbonneau: Well, you would have to ask your federal counterparts about why they are not going into First Nation territories to close illegal factories that are clearly ignoring federal and provincial laws.

S. Hamilton (Chair): Thank you very much, Mr. Charbonneau, for the presentation. I appreciate it.

Next on our list, we have the British Columbia Dental Association, Dr. Peter Lobb.

Dr. Lobb, welcome. Ten minutes for your presentation — I’ll try to give you a two-minute heads-up, if you’re looking at me at the time — and then five minutes for questions. The floor is yours.

P. Lobb: The British Columbia Dental Association would like to thank you for this opportunity to appear before you today. I’m Dr. Peter Lobb, president of the British Columbia Dental Association and a general dentist who has practised here in Victoria for 40 years. I am head of oral oncology and dentistry at the Vancouver Island Cancer Centre and one of two general dentists providing preventive, restorative and surgical dental care in Victoria’s three acute care hospitals, much of this treatment to persons with disabilities.

The BCDA is the recognized voice of dentistry in British Columbia, representing 3,300 general dentists and certified dental specialists. Annually, dentistry contributes $2 billion to the B.C. economy and directly employs 15,000 dental professionals.

As we do every year, I’m here to share with you dent-
[ Page 1527 ]
istry’s current oral health concerns and to discuss opportunities for collaboration with government. Before doing that, I would like to thank the government for partnering with the BCDA on a number of projects in the past year that have directly benefited the oral health of British Columbians.

In March 2015, the Ministry of Social Development and Social Innovation provided $120,000 that went directly to patient care. Of this amount, $80,000 was used by 20 not-for-profit dental clinics located across B.C. to provide care to vulnerable patients such as low-income individuals, seniors and the homeless.

The remaining $40,000 was combined with $107,000 raised by the BCDA at its annual Toothfairy gala for our Save a Smile program. This program provides urgent dental care for children from low-income families, and over the years, Save a Smile has helped more than 1,700 children.

As the B.C. Cancer Agency dental consultant, special thanks for the $400,000 grant provided to complex prosthodontic program. This has allowed us to deal with growing wait-lists of oral cancer survivors who need replacement of significant portions of their dentition and defects in their jaws incurred during the treatment of their head and neck cancers. This is an extraordinary rehabilitation benefit with an ongoing financial need that we hope will receive money annually from the Ministry of Health, to support this vital program.

These are all excellent examples of how the British Columbia dental profession, working with government, can make a positive impact on the oral and the overall health of British Columbians.

The second part of my presentation will address challenges the B.C. dentists face daily in providing dental care to British Columbians. One of our biggest challenges is the underfunding of the dental plan for clients of Ministry of Social Development and Social Innovation. This plan provides funding for dental care for ministry clients, children covered by the healthy kids program and a growing number of persons with disabilities.

Dental fees for this program have been frozen since 2007 and represent, on average, only 61 percent of the current BCDA suggested fee guide. In addition, coverage for services has not changed in over 20 years. Two-year maximum funding limits and individual treatment restrictions often mean patients are left waiting for care for extended periods while their mouths continue to deteriorate.

At the same time, the cost of operating a dental practice — including rent, staff salaries, dental supplies, laboratory fees and other expenses — has increased significantly, in excess of the cost of living. With an average dental office overhead of 63 percent and some as high as 75 percent, this means dentists are subsidizing the costs of dental services for ministry clients.

For some procedures, the out-of-office laboratory bill is higher than the total fee paid by the ministry. For example, the ministry pays a total of approximately $468 for a partial denture, while the dentist has to pay a laboratory fee of $600 and receives no compensation for his services. To address this shortfall, some dentists will limit the number of ministry patients in their practice, while others charge additional fees, both of which act as barriers to care. Younger dentists, with huge educational debts, cannot generate an income treating ministry clients.

Like me, only 30 percent of B.C. dentists accept ministry fees as the full compensation for dental services, while some dentists working in areas with large numbers of ministry patients find the current fees are creating difficult financial challenges in their dental practices. This situation is no longer sustainable.

The 20 not-for-profit clinics found throughout B.C. treat both ministry and non-ministry clients. Often it is the billings to the ministry that subsidize the care for those who cannot afford to pay for treatment, such as low-income seniors, the unemployed, the working poor and the homeless. Last year not-for-profit clinics treated 42,000 patients. Without a fee increase, their ability to provide dental care will be more limited. The BCDA requests that the ministry initiate discussions to arrive at a fair fee, recognizing the complex needs of this patient group, the increasing cost of operating a dental practice and a reasonable compensation for dentists to provide this care.

Our second concern is the current program is not meeting the needs of ministry clients who are persons with a disability. Between 2003 and ’13, the number of clients registered as persons with a disability increased 77 percent, to approximately 90,000. For these medically compromised patients, their dental needs are complicated by physical and mental health challenges, including complex medical histories and multiple medications. Significantly more time is required for providing care and for consulting with their physicians, caregivers and those who give consent for care.

Many clients require general anaesthesia, usually in the hospital, due to complex health challenges, where wait-lists of up to 24 months are not uncommon. During wait time, these patients may be dealing with dental pain and/or infection that may require emergency visits to medical clinics and/or hospital emergency departments. For non-verbal patients, this may result in unrealized pain and impairment, which can lead to anguish for caregivers and, in a worst case, result in self-harm or violent behaviour.

Currently, treatment costs are being incurred by two ministries. We believe the dental program for persons with disabilities should be moved to the Ministry of Health, which could focus on both the medical and dental needs of these patients and ensure the most efficient use of resources, leading to better oral and overall health care outcomes. This is consistent with the Accessibility 2024 goal of separating disability assistance from income assistance.
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The BCDA’s third concern is the need to assist low-income seniors accessing dental care. B.C. seniors advocate Isobel Mackenzie reports that low-income seniors face hardships because they are unable to afford health essentials such as dental care. For older seniors, oral health can deteriorate quickly due to increased frailty, limited mobility, poor diets and medication. Those who are at most risk are the long-term care residents who are reliant on others for daily and professional care.

The BCDA recognizes the need for a low-income seniors dental plan as a means of reducing barriers to care. In our view, the need is similar to that which led to the creation of the healthy kids program, which provides basic dental care for children in low-income families.

The 2012 B.C. Ombudsperson’s report identified administrative challenges in treating clients in long-term-care facilities. A possible solution is the employment of a dental coordinator to take on tasks such as scheduling, coordinating treatment and assisting the dentists in these facilities — tasks that often frustrate and discourage dentists who work in long-term-care facilities.

As our population ages, the number of seniors will increase and, with that, an increasing number of low-income seniors. To meet these needs, developing and funding a low-income seniors dental plan and dental care coordinators to organize dental plans in long-term facilities will go a long way.

Finally, the BCDA is a strong supporter of the government’s program to reduce the spread of human papillomavirus as a means of reducing the incidence of certain cancers, including oral cancer. The HPV virus has been clearly linked to a growing number of oral cancers of the throat and tongue which affect both men and women. The B.C. Cancer Agency estimates that 40 percent of newly diagnosed oral and tonsil cancers are caused by HPV.

Recently, the Ministry of Health expanded the HPV vaccination program to include only at-risk young men. Other provinces with this program include all young males between the ages of nine and 26. Further, young men may not determine their sexual orientation until later in life when it is too late for the vaccine to be beneficial.

The BCDA recommends that government match the HPV vaccination programs now in Alberta, PEI and Nova Scotia which provide vaccines to all boys and young men ages nine to 26, not only just for at-risk males.

In conclusion, the British Columbia Dental Association remains committed to the delivery of world-class oral health for all British Columbians and the opportunity to work with the provincial government to enhance dental treatment in B.C. I would like to thank you again for this opportunity to make this presentation before you.

S. Hamilton (Chair): Thank you, Dr. Lobb. Impeccable timing as well, right on the ten-minute mark.

C. James (Deputy Chair): Thank you for a very thorough presentation. I just want to echo your comments around the income assistance clients and the ability to be able to get dental care. I’m sure in every community — it happens here as well — dentists will provide a free or low-income opportunity for people to be able to receive dental care on a weekend, for example. It’s always oversubscribed, always lineups, always people who are unable to be served. I think there’s a huge need there.

Just a question. You mentioned the oral cancer survivors. You mentioned a wait-list. I wonder what the wait-list is right now for reconstructive or other surgery to help those individuals.

P. Lobb: At one time, the wait-list was seven to ten years. Through several opportunities and working with government — this is, I think, the second time that we’ve received a grant of money — we’ve been able to reduce that wait-list to something under two years.

S. Chandra Herbert: Thank you for a very focused presentation and great information.

I wondered: has the B.C. Dental Association ever done any research into the health care costs of untreated dental issues? Certainly, I’ve seen it in constituents who can’t afford dental care, and then the rest of their health spirals out of control because of bacteria and other things that they can’t get out of their mouths. We end up paying for it anyway, just with poor health care, in hospitals as opposed to at the front end, as you’re suggesting here.

Has there been any thought to doing a study of what the actual costs are? The feeling I get is it might be cheaper to actually address it up front rather than let the problem get out of control — not to mention, of course, just the pain that people have to live with.

P. Lobb: I think your point is very appropriate. Those studies do exist. We could certainly get that information, both provincially and nationally.

There is no doubt our medical system, through our physicians and our emergency rooms and our acute cute hospitals, ends up seeing patients that we then have to go in and treat. So there are medical expenses being involved, which never get attributed on the dental side, to actually dealing with the dental problems, never mind the social issues of people who have unrealized pain — at school, at work or whatever — who are not functioning properly or are missing days at work. That is truly a cost to the economy that would probably be far greater than the actual cost of caring for these dental problems.

S. Gibson: My understanding is that in some jurisdictions in the U.S., retired medical specialists such as dentists and others, who still have their faculties but are retired and would still like to make a contribution, are volunteering — or at least providing — services, perhaps
[ Page 1529 ]
such as your own, at very nominal rates. They’ve completed their careers as dentists or medical practitioners, and they now have a sense that they want to give back to their community.

You’re seeing — in the U.S., at least, is my understanding — that professionals like dentists are really acting in almost like a caring role as they wind down their careers but still want to make a contribution, to be more altruistic, if you will. Do you have any comment on that model for British Columbia — for dentists, for example?

P. Lobb: The model does exist in British Columbia in our 20 not-for-profit clinics. A number of retired dentists are working in these clinics on special licences that have been provided through our College of Dental Surgeons to allow this. Our national health insurer has arranged for them to have malpractice insurance which is waived, so that that issue is not a barrier.

A number of our retired dentists also travel to underdeveloped countries. There are 100 examples that could be cited of clinics around the world, in underdeveloped areas where B.C. dentists are also providing that care, often by people who are either towards the end of their career when they have some time and are willing to give back, or are newly retired and not willing to give up their handpiece, and in other ways to help the public.

S. Gibson: That’s very laudable. In my own community of Abbotsford, we have many dentists that do — as you say, sir — go to developing countries.

P. Lobb: You do have one of the not-for-profit clinics. We’re very proud of the fact that that’s grown from a couple of not-for-profit clinics to now 20. In Sidney we’ve just opened our 21st. The BCDA works hard to support these, as does the provincial government.

S. Hamilton (Chair): Thank you, Dr. Lobb. I appreciate your taking the time to present to the committee.

Next we have the Professional Arts Alliance of Greater Victoria — Mr. Jarvis and Ms. Lindsay. Welcome. As I tell everyone else, you’ve got ten minutes for your presentation. I’ll try to give you a two-minute heads-up, just so you can wrap up, and then we’ll have five minutes for questions. The floor is yours.

D. Jarvis: Thank you, Chair and committee, for the opportunity to present to you today. My name is Doug Jarvis, and I’m the administrator of the ProArt Alliance of Greater Victoria.

H. Lindsay: Good afternoon, everyone. My name is Heather Lindsay. I am the general manager of Intrepid Theatre here in Victoria and on the executive committee of the ProArt Alliance of Greater Victoria.

D. Jarvis: We work on behalf of 20 professional arts organizations that represent a spectrum of operating budgets. We also seek to be a voice for the broader arts community in the region. There is a list of the organizations that we represent, on the front of the brief.

The arts are essential to society. We believe strongly in the positive and social and economic contributions that the arts make to our society and that funding for the arts is one of the best investments that the province of British Columbia can make. Art and culture provide economic benefits.

We would like to thank the Finance Committee, which has in the past supported our recommendations. We also believe that funding from government is not a handout, but a critical investment in an industry, much like government invests in industries across a multitude of sectors in the province. Support for the arts is an investment in a pivotal industry in the province, not some kind of special consideration.

We have been seeking the following recommendations for the past few years. Not a lot has changed, and we need you to understand that not enough has happened over the last few years. We are falling behind. We’re not asking for anything substantially different, but we are still asking for these things because they are critical.

H. Lindsay: With that, I would like to state our ProArt recommendations for 2016-17.

The first one: increase the budget of B.C. Arts Council to $32 million, with a plan to increase the council’s legislated appropriated investment to $40 million over the following two-year period. A fact: in 2012 non-profit performing arts organizations in British Columbia staged over 7,000 performances, with our province’s audiences accounting for nearly 16 percent of total attendance at performances in Canada. We cannot ignore and strangle this growth. It’s a very exciting time for us right now.

An immediate example is the 29th annual Victoria Fringe Festival this year. We saw record-breaking audience numbers, including an increase in our tourists and first-time audience members, totalling over 20,000 people. The Victoria Fringe returned over $146,000 to the performing artists, yet we struggle to find and maintain venues to accommodate this growth and cannot increase our professional technician fees quickly enough to support the growth of professional art entering into our makeshift gymnasiums and halls.

The increase we are recommending is to support the current well-being of arts in our community.

Two, we propose increasing community gaming grants to organizations from $135 million in 2014-15 to $156 million for 2016-17, with a goal of increasing gaming grants steadily in the long term in accordance with the October 31, 2011, Skip Triplett report.

A fact. This ask of a 16 percent increase to $156 million
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would bring British Columbia back to what the funding pool was in 2008. So this is not asking for an increase. This is trying to still reinstate to where we were in 2008.

We sit in front of you today to express that in order to support a critical component of British Columbia’s economy and to maintain affordable access for activities in our communities across the province…. The government’s support is a cornerstone of stability and accessibility for arts and culture. We need to see this increase in this sector now.

Point 3. To provide stable, predictable funding for the arts sector, we’re asking if the government is considering reinstating the multi-year grant process that existed in the community access grant. The current community gaming grant and the B.C. Arts Council’s streamlined process ease administrative burden and help to provide stability and improve planning to organizations who receive this support.

Using this current short-form application process, we would like you to reinstate the multi-year funding pilot introduced for the community gaming grant program as an option for organizations, noting the option to use the short form for those that are doing the same work and the long form for those who are adjusting their programs and budgets annually.

Point 4. The government should develop a capital program similar to the Department of Canadian Heritage’s Canada cultural spaces fund to help arts organizations purchase, improve, maintain and expand our venues for art, culture and community.

From our own members here in Victoria, we have heard challenges of the following. Leveraging funds for new seats in the Belfry will cost over $250,000. Open Space is looking for similar costs in replacing their gallery building’s roof. The Victoria Conservatory of Music’s ongoing maintenance of their heritage building to maintain their music school’s growth is challenging their ability to grow with their programs and meet the demands of their students.

To date, Intrepid Theatre has raised over $700,000 to upgrade, technically outfit and rezone the Metro Studio into the only permanent mid-sized independent theatre in Victoria. The Metro Studio cannot keep up now with the demand for community and artistic use at the Metro Studio.

Victoria needs more venues and needs more help maintaining our venues. The need for new venues, maintaining the venues, is a crucial part in our growing fabric of British Columbia’s arts and culture sector.

D. Jarvis: Number 5. We request that the Ministry of Finance provide significant support to the non-profit sector — for example, toolkits and legal resources — over the next two years to facilitate a smooth transition to the new Societies Act. We make this recommendation on behalf of the whole non-profit sector and not only the arts and culture. Many organizations will have a hard time accessing the legal advice to educate themselves to comply with the new act. We flag this as a consideration to look at immediately, as we begin this two-year transition.

Thank you again, Chair and committee, for this opportunity to present to you today.

H. Lindsay: I would also like to note we’ve been speaking together, and we just really want to applaud some people that we know. Thank you, Caroline Spenser, for your ongoing support and work that you’ve done with us, and thank you to all of you for having open ears to listen to what we’re bringing forth to the table today.

It’s places like Prince George right now that…. We have seen a beautiful growth in the last ten years of the artistic investment into communities like Prince George, which is much needed and well received. I’d just like to specifically applaud Prince George for having a really amazing growth in their arts scene.

We think it’s a great time for B.C., and we hope you will continue on with us.

S. Hamilton (Chair): Well, thank you for taking the time to present to the committee. We’re always pleased to hear from you.

S. Chandra Herbert: Thank you very much. These recommendations sound very familiar. They’ve been going on for a while.

I’m curious. The first recommendation — to increase the budget of B.C. Arts Council to $32 million. I know this goes back to, I don’t know, 2006 or something like that. It’s been before the Finance Committee for quite a while.

Where do we stand, to the best of your knowledge, in terms of Canada in terms of per-capita support for the arts from the province? I know some provinces give a heck of a lot more investment to the arts than we do. I’m just curious if you have those figures or if those figures are even available any more.

H. Lindsay: These stats that we currently have are on the back of your document — the stats that we have in our hands right now. I don’t have those stats offhand. I do know that British Columbia is supporting more arts and growing very quickly, as opposed to other provinces across Canada.

S. Chandra Herbert: Maybe I can just jump in. The last I saw was that B.C. was last, way back in the pack in terms of per-capita support. Those stats may not exist any more, given the federal government’s attack on Statistics Canada.

Finally, I know we did manage to get a bit of a bump in the B.C. Arts Council budget prior to the last election. I wonder if you’ve seen any results from that. I know we had a massive decline, and then we kind of came back up again.
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H. Lindsay: I think where we’re seeing the results in this is for our independent emerging artists. Specifically, from my own experience, Intrepid Theatre has not received an increase. We have wonderfully gone through a streamlined process, but we cannot ask for an increase, no matter if we are adjusting our budget for the year. For instance, we’re coming up to our 30th anniversary and want to engage the community with a few larger events. We did not have the opportunity to ask British Columbia for an increase for events like that.

Where we are seeing it is it is giving opportunities to smaller companies — for instance, smaller dance companies and theatre companies in Victoria and British Columbia. That helps them finally get a grant for B.C. to start investing. We’re talking $1,500 to go to their project, which is much larger than that, but that is the first time government has been investing in these young artists. So they are not giving up. They are not going away. They are adding to our economic development of the province. That’s where I feel it’s really hitting.

D. Jarvis: I can provide the example. I also do curatorial work at Open Space. We’ve been working with France Trépanier, the aboriginal curator-in-residence. That’s funded by the Canada Council, but we’ve been working together and received some money from B.C. Arts — the youth internship and development. From that, we’ve been developing the indigenous youth arts program.

We have to say that we did it for a couple of years without any provincial government support. But this year, with that support, we’ve been able to grow the program, which allows us to bring in guests — all kinds of amazing guest artists coming from all over the world, by chance, through friends and different things. This program is growing. The opportunities that I’ve seen, the growth and development of the youth themselves, by having the chance for us to open the doors to make the space available to them so it can become their space, is amazing.

In particular, one young artist, Jesse Campbell, was part of our program starting in the first year. Through that six months, his confidence grew. He did some amazing pieces in the final exhibition that we had. Then this year we were able to hire him as the aboriginal curatorial intern for the summer. Now he’s working with the new group to kind of coordinate it. So just seeing that development….

This money is really important, and we’ve been able to make it work. To kind of just address the larger funding issues, we’ve got this great growth happening, but we need more infrastructure. We need some other moneys so that there’s something else for them to do after they finish the internships.

Interestingly, earlier today I had a meeting with a representative of the music industry talking about music tourism as an example of some of the economic benefits. I know the Motion Picture Production Industry Association has produced studies that show the benefits of film tourism, where people actually come to areas where there are productions.

I’m wondering if you have any quantification of any tourism-related benefits of a thriving arts and culture community in Victoria or any other examples of indirect and/or induced economic benefits in the region, associated with the sector.

H. Lindsay: I’ll start, right from closing our annual Victoria Fringe Festival. We do surveys, and we have our board of directors as ambassadors who hit the lineups and directly interact with our audience in the lineups. What we have learned is some fun facts. People have moved to Victoria because they love the Victoria Fringe so much and now live here. People have met in the lineups of our Fringe Festival and have gotten married.

Also, we have witnessed…. It is very true. It’s amazing. Some of these stories that we are still compiling are absolutely incredible.

As stated, we have an increase in our tourism for bringing people to Victoria for the arts. We did not witness any year prior more than we have this year the lineups of people coming from the United States and from up-Island. We have a huge percentage of people coming from up-Island and a huge percentage now coming from the United States. People make it their vacation. People actually start to plan their year’s vacation around the Island and the Fringe Festival. We have heard that time and time again, and it’s still growing. This is from direct contact with our audience in the lineups.

S. Hamilton (Chair): With that, once again thank you for taking the time to present to the committee. I appreciate that.

Next on our list we have the Art Gallery of Greater Victoria. Mr. Tupper, I see, is sitting in the audience. Welcome. I’ll give you the two-minute warning after ten minutes, and then we’ll go five minutes for questions.

J. Tupper: I won’t be that long. It’s a great pleasure to be here. Thanks to everybody for this invitation. I’m here with my board president, Ruth Wittenberg. Ruth has something she’s going to bring around and show you folks maybe a little later on.

The Art Gallery of Greater Victoria was started in the mid ’40s — 1947 — and it moved into its current location in 1951. It’s the second-largest public art gallery in British Columbia and has a collection of 18,000 works. We have about 26 people on staff. We have a budget of about $2.3 million. Most of that money is self-generated.
[ Page 1532 ]
We get support from the province of British Columbia through the gaming grants and also through the British Columbia Arts Council.

I don’t know if the folks from ProArt told you, but the arts and cultural sector in B.C. or in the capital region is 4.5 percent of employment. Also, it generates about $177 million worth of economic activity. The art gallery reaches about 200,000 people through our various programs, which includes students and youth. We have between 3,000 and 4,000 members, and about 25 percent of those are youth members. About 25 percent of our visitors are tourists.

We provide free admission to various people that can’t afford to come to the gallery. That amounts to a dollar equivalent of about $120,000.

As I said, we generate a lot of our revenue ourselves. Public sector revenue is about 40 percent of our total revenue. The national average is 65 percent, so we continue to work on increasing our capacity at generating our own revenue. Some of you, if you’ve flown in through the airport, would have seen the display that we have for art sales and rentals, another way that we can generate some revenue.

I think I said that we have a collection of 18,000 pieces, and I’m going to ask Ruth to bring around one of them. This is an ivory carving. It’s from China, from the 18th century, and it depicts what we think is a court scene, a palace. It’s carved on ivory. They used ivory because it’s thick, and then you can get different levels of depiction there, which looks like some kind of perspective. It’s like a perspective. It’s a lovely material, ivory, because as it gets older, it gets more beautiful.

It’s an example of some of the material that we have in the collection. We’ve got one of the best collections in Canada of Chinese art and the best collection of Japanese art, so we’re very strong in that area. We always have been strong, as you’ll see from this. This piece probably is worth — I shouldn’t say this — about $20,000, so it’s not hugely expensive.

Our entire collection is worth about $180 million. Some people say: “Well, who don’t you just sell your collection in order to do your activity?” We don’t because we’re legally not allowed to sell much of it. It’s the subject of cultural property certificates. It’s morally wrong, I think, because we keep this in the public trust. We don’t own it, so we’re keeping it for future generations. It’s ethically wrong because the donors that give it to us believe that we are going to continue to show this forever. In fact, this piece was given to us by a local donor, and we’ve exhibited it this year.

The gallery has been in its current location since 1951, and the building has been upgraded several times. The last upgrade was in the late 1980s, and we’ve increased the tenants by 75 percent since then. The wear and tear on the building is starting to show, and we want to — this is my pitch — renovate the space. We thought it was the most sustainable approach to what we should be doing. It’s economically sustainable after the renovations are finished and is environmentally sustainable, rather than building a new building downtown. The plan is to modestly increase the exhibit space and the storage space for the collection and provide extra space for meetings and, frankly, revenue generation when it’s all finished.

The part of the house that they call the mansion is an 1889 historical house, and the plan that we have for this is to preserve and to celebrate it for future generations. It’s an important landmark in the capital city. At the same time, we want to create kind of a signature building beside it that reflects the importance of the art and culture of B.C. to the world.

As I say, almost half of the collection is Asian art. We are very proud of that, and we have several treasures, as some of you would know. I have to tell the story where we had a delegation…. They were coming over from Japan to look at one particular screen that we have that is considered a national treasure in Japan. They took that screen back and preserved it on their own dime. We have it back, thank God. We have it back in our vaults right now, and we’ve exhibited it since it’s been back as well.

Our renovation plan is moving forward. We’re going through a rezoning process right now. We’re just wrapping that up. We’ve hired architects. We’ve got a design. We’ve got an engineer. We’re raising…. The total cost is about $21 million, and we’re looking at the typical three-legged stool, where we have one-third coming from the province, one-third coming from the federal government and one-third self-generated. In terms of our own fundraising, we’ve raised just over $3 million right now, and we’re looking at $7 million from each sector. So we’re well on our way with a capital campaign. We’ve done a consultation. We have consultants in to do a study to determine the feasibility of it, and it is indeed feasible in this marketplace.

S. Hamilton (Chair): Terrific. Thank you, Mr. Tupper. I appreciate you taking the time.

S. Chandra Herbert: Thank you, Mr. Tupper. It is incredible what you do with your facility. Anybody who goes for a tour will be shocked how much they do in such an antiquated building.

I’m very interested in this, because I understand many other provinces have capital funds for arts and culture in specific. I know that was the ProArt Alliance pitch earlier — that we should have a dedicated capital fund. Have you, in your experience, any examples of other organizations or yourself where it’s difficult to do the projects because there is no dedicated fund provincially? I certainly have heard that. Ontario and others get more federal money quicker, because they have a capital fund for culture. Does that ring true?
[ Page 1533 ]

J. Tupper: That’s a good question. The federal money that’s available…. They’re ready to give us money, but it’s matching money. They expect somebody else to come up with…. They expect some contribution from the province.

I’ve lived in Prince Edward Island. There what we did was we used the ACOA, which is the equivalent of Western Economic Development out there, and they were happy to stack that federal funding on top of other federal funding as their 50 percent contribution.

You mentioned a number of collections that you have within the art gallery. I think when people hear “Victoria Art Gallery,” they often think “Victoria-centric.” Remind people Victoria is the capital city, so it is the capital of the province. But there are some collections that are bigger than simply Victoria that I think are important to mention as well.

J. Tupper: At the front desk, what people most want to see is Emily Carr, of course. Beyond that, we have a great collection of B.C. art. Because we’re the capital city, we think it’s important that we have that.

Then we have a fairly representative collection of Canadian art. We have art from this region — you know, the Cascadia region — and then some international. But where the collection really shines, where it’s outstanding and beats everybody else, is the collection of Asian art. It represents — I think, physically — this province’s connection with its Asia-Pacific community.

M. Morris: I’ve had the pleasure of going through, and they have terrific displays in there.

Perhaps you answered it with Spencer’s question. I’m just not sure. You’ve got a commitment from the federal government? Did you say that?

J. Tupper: Well, they have a program there called cultural spaces. It’s one of the programs. It’s going to be multiple programs that we go after. I probably shouldn’t say this on air. I mean, it’s on record. But from the bureaucrat’s perspective, there is a commitment there — not for the entire $7 million we’re looking for but for a good whack of it.

We’re fairly confident. Again, it’s matching money, so there’s that. It’s kind of complicated lately with the election, and there are no announcements permitted during that period.

C. Trevena: Two quick questions. One is on the capital. Vancouver Art Gallery is looking at moving, and it’s had a commitment, I believe, of $50 million from the province. I’m wondering what sort of percentage equivalent you’d be looking for compared to what the Vancouver Art Gallery has received from the province.

J. Tupper: Well, I’m not sure. I would totally support the Vancouver Art Gallery because I think a healthy Vancouver Art Gallery means a healthy Victoria Art Gallery, to be honest with you. So it’s important that they get their support.

They got a $50 million commitment from the provincial government many years ago, and they’re using that to, I guess, work their way through this project that they’re developing. Now it’s a large project. I think it’s a total of $300 million. I suspect they believe that the provincial government will contribute more than $50 million to that.

C. Trevena: So you’re hopeful that there would be likewise a commitment to the Victoria Art Gallery as there is to the Vancouver Art Gallery?

J. Tupper: Yes. I am not going to point my fingers and say: “We want that money. Look what you did to them.” But you know, it’s there. There are other regional art galleries in the province that have also received provincial funding.

Presentation House in North Vancouver, for example, just received funding for their project. It’s funny. It’s money that was given by the province to the city, then from the city to the organization for their capital project, which we also support. I think they’re both great institutions.

C. Trevena: This is coming completely offside and not what you’ve been talking about, but it does interest me a lot. It’s the admission fees. How much admission fee do you charge? Is there ever — not just for yourself but generally — art gallery discussion to try and lower them or remove them?

Originally coming from Britain and being able to go into the National Gallery at lunchtime and looking at Rembrandts, it’s just a joy. I’m wondering if there’s ever any discussion on the issue of admission fees.

J. Tupper: Well, if you knock out the big ones, like the Museum of Modern Art and some of those big international ones, you’ll find that roughly between 8 and 9 percent of your revenue comes from admission in museums in North America. That’s not a lot of money. Certainly, it’s replaceable with the certain types of funding and that type of thing.

But if you’re looking to get into our gallery, for example, you can go to the Greater Victoria Public Library and borrow an admission pass that will allow you come into the gallery, so you can get to the gallery for free. That’s when I say we give $120,000 worth of admission for free. It’s one of the most popular things at the library right now. There are huge holds on these passes, and we’ve just doubled the amount that we’ve given to them.

It’s really an important area. I could go on about admissions, because it’s also tourism. If you look at tourism….
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If the tourists pay, if you look, they’re paying 10 percent of the value of their visit. Where’s the rest of the money going to come from? They’re not taxpayers, and they’re not donors, typically.

I could write a book on this stuff. I’ve studied this to death. But it’s a great question. I like talking about it.

Seeing none, thank you Mr. Tupper. I appreciate all the hard work you do on behalf of the Art Gallery. You do important work, so we do appreciate you taking the time to present to the committee as well.

Next on the agenda, we have the BCSPCA. Mr. Daniell, I’ve seen you sitting back there patiently for some time. Welcome. With ten minutes for your presentation, I’ll try to give you a two-minute heads up so that you can have time to wrap up, and then we’ll have five minutes for questions and go from there.

C. Daniell: Thank you, Mr. Chairman and members of the standing committee. It’s great to see you all again. As you know, my name is Craig Daniell, and I’m the chief executive officer of the British Columbia Society for the Prevention of Cruelty to Animals — the BCSPCA. With me today is Melinda Mennie. She is our stakeholder relations officer.

I think many of you will remember that I presented at the committee in Kelowna last year. This was on our facilities development and services plan, which is a plan that our organization will replace a total of ten of our oldest and busiest facilities across the province over the course of the next eight years.

Just briefly again, those facilities in question included Nanaimo, the West Kootenays, Surrey, Vancouver, Kelowna, Kamloops, Prince George, the Peace region, the Fraser Valley and Shuswap. We had estimated that the cost to replace and/or improve these facilities…. We projected it at about $51 million. You will recall that the BCSPCA fully committed itself to raising half of this capital funding through a combination of capital campaigns, reserves and borrowings if necessary.

At the same time, we were seeking support and a commitment from the provincial government for the balance of that funding that will be needed to complete this ambitious project. Recognizing that our plan took place over an eight-year period, we had proposed that the government of British Columbia provide funding for that plan in three distinct phases.

As you’re aware, our Finance Minister, Mike de Jong, announced $5 million of funding for our facilities development and services plan on budget day, February 17, 2015. With that in mind, I wanted to take this opportunity to present to the standing committee again. But unlike last year, I’m actually not here to ask for additional funding — well, at least not yet. Rather, what I’d like to do is provide the committee with an update on the progress that we’ve been making over the past six months since receiving the $5 million in funding.

Before I do that, I do want to acknowledge and sincerely thank the standing committee for its recommendation in support of funding for the BCSPCA last fall. I know that you receive many requests for funding from worthwhile organizations right across the province and that the task of deciding which requests to recommend must be a very difficult one, especially given the need to ensure fiscal responsibility and discipline.

We truly appreciate the work undertaken by the committee, which I’m sure had a very positive impact on the final decision made by the government of British Columbia to help fund our capital plan. Again, thank you so much for that.

In the time remaining, I would like to just briefly update you on the progress that we have made in implementing our facilities plan.

On September 1, we officially broke ground on a 7,500-square-foot community animal centre in Nanaimo. Joining us at the groundbreaking was Minister of Social Development and Social Innovation Michelle Stilwell and Nanaimo MLA Leonard Krog.

This new facility, which is scheduled to open in the summer of 2016, is being built at a cost of $3.6 million and really represents a shining example of cooperation between provincial government, local government and the BCSPCA. Of the $5 million in provincial government funding, $1.3 million will fund this particular project and will be supported by financial and in-kind contributions from the city of Nanaimo, and the balance from BCSPCA donors.

In Kelowna, we have constructed a large-animal seizure facility immediately adjacent to our existing animal shelter at a cost of $250,000. In light of the increasing number of large animals we’re having to take in, this large-animal seizure facility is certainly essential for our organization.

In this case, we’ve utilized $100,000 of the $5 million in funding to ensure completion of the project, which will be officially opened on October 14 by Agriculture Minister Norm Letnick.

We’ve also been active in Surrey, where we have opened a new adoption and education centre, constructed a second large-animal seizure facility, and are currently in the process of completing a cat-intake facility on the property. A total of $400,000 in provincial government funding will support this particular facility and will help ensure that our organization has the necessary capacity to handle the increasing number of large animals we are taking into our care, as well as effectively managing the large number of cats that traditionally come into our care
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every year. We anticipate that an official opening of this facility will take place sometime in the late fall. Hopefully, we’ll have good weather for that.

In addition to these projects already under construction or completed, we’ve also made significant progress in the planning process for two other facilities — namely, in the West Kootenays and also in Dawson Creek. In both cases, we have tentatively allocated $800,000 in provincial government funding for each of these projects and are hopeful that this can help us leverage additional local government funding for these two projects. We anticipate being able to be in a position to break ground on both of these projects sometime in mid-2016.

Finally, we are also actively searching for suitably sized and zoned land in Prince George, Kamloops and Vancouver so that we can begin the process of planning for these new community animal centres in these cities. We have made progress already in Prince George and hope to secure the land there in about six months. The one challenge, I will say, that we’ve already encountered is in Vancouver, where the cost of land has risen so dramatically over the course of the last couple of years that that’s resulted in an increased cost for that particular project.

Summing up, I would note that as a result of receiving the $5 million in funding, we’ve made a very positive start in implementing our capital plan. Over the next 18 months, we anticipate completing a number of projects that I mentioned earlier and also getting a lot of the preparatory work done on a number of others, including Vancouver.

It will be our largest and most ambitious project. That’s because it will also include a full-service veterinary hospital to replace the existing hospital on the site, which provides a wide range of services, including free and discounted services to low-income residents in Vancouver and the surrounding communities. I will say that as we go on, I’d like to come back to the standing committee and brief you again next year and, hopefully, ask you for some more funding for that particular project.

Thank you again for your time this afternoon. I’d be happy to answer any questions you have.

E. Foster: Good to see you again, Craig, and congratulations on all the projects that you’ve got underway.

I’ll refer to your Vancouver challenges on this land. You’re sitting on a pretty valuable piece of property there now. Are you still going to be in a shortfall for your land purchases?

When we originally looked at our Vancouver project, what we were hoping to be able to do was to sell the land that we currently sit on and be able to take some of the proceeds of that and put it into the new facility. That would be able to cover the cost of the land as well as some of the construction costs. We actually sit on a very valuable piece of land.

What we’ve found, quite honestly, is that the price of property in Vancouver has gone up just so dramatically even in the last year that that’s becoming even more and more difficult for ourselves. But that is certainly our hope: that we’ll be able to purchase a cheaper parcel of land and sell our land at a higher price.

S. Chandra Herbert: Thanks for the presentation. I just wondered: how many more animals will you be able to help, given the capital funds that did come through? Do you have a ballpark of…? You know, will you be able to help more cats, more horses, more…?

C. Daniell: Thank you, Spencer, for the question. I think there are two areas that I’d like to stress. The funding has really helped us in the area of large animals.

Up until a year ago, we had no facilities to house large animals ourselves. Every time we took large animals into care, we’d have to actually board those out privately. Having the funding has allowed us to get two of those facilities already. Our long-term plan is to have one in Prince George as well as another one on the Island.

The other area I’d like to say is that it’s not so much, also, about numbers. What we really want to do at each of these new facilities is stress the need for education, being able to get to the youth around the importance of empathy development — ensuring that there’s compassionate care for animals.

Not all of our facilities have multipurpose rooms where we can run summer camps and things like that. As we build these new facilities, that’s going to be a major emphasis for us: making sure that it’s not just about reacting to the issues but also being very proactive in terms of our mandate.

Thank you very much, Mr. Daniell, for coming forward and presenting to the committee. It’s always a pleasure to hear from you. Good luck with all your efforts. We appreciate it.

Welcome. Ten minutes for the presentation — I’ll try to give you a two-minute heads-up when the time is running short — and five minutes for questions. The floor is yours.

Good afternoon, everyone. My name is Jamie Cassels. I’m the president of the University of Victoria. I wel-
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come the opportunity to address you about B.C.’s post-secondary system as you begin your consultations.

I’ve got the good fortune to be able to tell you a success story about B.C.’s universities, one for which the province can take a great deal of credit. British Columbia has supported the creation of a superb post-secondary system, highly differentiated, that offers multiple options and different pathways for different students towards success and contributes to economic and social prosperity.

I’m not going to go through the entire presentation slide by slide, but I’ll refer to it as I make my remarks. Slide 2 simply outlines how I plan to proceed. I want to highlight some of the social and economic contributions of the system, draw attention to the need to continue to invest in this important provincial asset and then offer you a few suggestions and recommendations for you to consider as part of your deliberations.

As president of the University of Victoria, I think I am speaking on behalf of the system generally, and particularly on behalf of B.C.’s research universities. But the examples I will offer are largely drawn from my own experience at the University of Victoria.

Slides 3 to 5 provide a little bit of background on UVic. I won’t cover them off. Student numbers, budget figures, employee figures — economic impact of roughly $3 billion.

Slides 6 to 8 are important, however. They do show how UVic, like the other research universities, continues to educate growing numbers of students. This helps to attract young people to our province. It creates the talent that we need for the future prosperity of the province. Additionally, you’ll see that our students are increasingly diverse. You’ll see the tremendous success that we’ve had at the University of Victoria in enrolling and supporting aboriginal students and in beginning to close that education gap. Our success in attracting international students, as well, is quite notable and aligns with the provincial policy.

You’ll be pleased to hear that our students rate their educational experience as very, very high. Ninety-five percent satisfaction rates are pretty good, don’t you think?

We also care about affordability. Slide 10 shows that half of our students graduate with no debt at all upon graduation, and with those who do have debt, generally it’s at manageable levels and is paid off relatively quickly.

That transitions to the data that I have provided about labour force success. Why are students able to meet their debt obligations? It’s because our students are very successful in the labour force. Slides 12 and 13 show how UVic’s program mix aligns with the B.C. jobs plan and is responsive to shifts in student interest and also labour market signals and labour market needs. Seventy-eight percent of job openings over the next decade will require a college or a university qualification.

Slide 11 shows the employment outcome figures for University of Victoria students. Overall, 94 percent of our students are employed two years after graduation and 95 percent after five years. I’ll leave you to examine that slide in more detail later.

Yes, of course, rates of employment and salary levels differ by field of study, but what’s fascinating and important about that slide is that across all forms of study, our students are enrolling in and thriving in the workforce.

A university education is clearly both inherently valuable but also the best preparation for fulfilling students’ ambitions towards career success. At the University of Victoria, we enrich our students’ education through what we call experiential learning.

Roughly 50 percent of our students are enrolled in a cooperative work study type of program or some other form of work-integrated learning — practica, internships, clinical experiences and so on. One of our goals as a university is that with appropriate support, we would be able to offer that type of opportunity to 100 percent of our students — the very best bridge from university into the workforce and into society.

Let me say a few words about university research. Slides 14 to 20 provide some interesting data. B.C. can be very proud to have some of the country’s — in fact, some of the world’s — best research universities. Slide 14, for example, shows where the University of Victoria stands in international assessments. Have a look at some of those data: third, fourth, seventh in the country, according to our international peers and international rankings.

Research is vital to the future prosperity of the province, both socially and economically. Slides 16 and 17 show how UVic brings in approximately $100 million a year to support research and innovation and training the next generation of innovators. Slides 18 and 19 show how some of that research is mobilized and launched into the marketplace through entrepreneurship and commercialization, one of those slides showing simply the recent data on start-up companies coming out of our faculty of engineering.

I want to pause just for a second and emphasize the very important role that graduate students play. They are the ones who help to move knowledge from the university into society and into the economy. They are tomorrow’s highly qualified people who help to catalyze social, technological and economic innovation, both in the public and the private sector.

All of this, as I said, is a good-news story. The importance of continuing to support this success bridges me to my final comments and some of the specifics that are relevant for your consideration.

As you’ll see on slide 21, while we’ve been enrolling ever-increasing numbers of students over the past years, we’ve been doing that with declining levels of grant support, of direct government grants, throughout this decade — a roughly 10 percent increase in student enrolments, accompanied by a roughly 2½ percent decrease in grant funding, before even adjusting for inflation and cost pressures.
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After the economic crisis of 2008, the universities clearly did their part in trying to reduce the pressure on the public purse, and we’re happy to have been able to contribute that way. However, it is absolutely critical that we not make more trade-offs against quality. I’m here to emphasize the importance of reinvestment in the system.

There are six very specific recommendations set out in the slides, so I don’t need to go through each of them in any kind of detail.

First, maintain the operating grant and increase it to cover cost pressures. The fact that the institutions will be funded for mandated salary increases in future years is a great first start, and we are grateful for that. Secondly, stable and predictable funding for the B.C. knowledge development corporation, which is what helps us to lever that $100 million in research support into the province.

Third, the reintroduction of a provincial graduate students scholarship. As I emphasized, graduate students are absolutely critical to innovation and mobilization of knowledge. Other provinces have a scholarship program, and we’re at a competitive disadvantage.

Fourth, the province is appropriately mindful of students’ financial burdens, However, the universities have a number of professional programs where the tuition levels do not support the level of quality of those programs. So some limited flexibility on tuition in professional programs.

Fifth, we need a green light to proceed with self-financed projects. In order to support this huge interest of students and this surge in enrolments, we need to provide much-needed student housing. We could do that ourselves. We could have the cranes swinging tomorrow at no cost to the taxpayer. But it’s considered provincial debt, and we therefore need some assistance in getting a green light to finance those projects.

Finally — and I’ll conclude my remarks here — we have a significant and growing problem of deferred maintenance because of the very significant reductions in capital funding over the past years. It’s critical that we support that valuable infrastructure that we have put in place over the past years.

So a great success story. Thank you to the province for building that success, and let’s make sure that we continue to support and invest in that asset. Much appreciated.

S. Hamilton (Chair): Thank you, Mr. Cassels. I appreciate you taking the time to present.

I’m a graduate of UVic. My major was undecided. I say that maybe frivolously. But I noticed that a lot of students, when I had the privilege of going to university and being able to teach at a couple of universities here in B.C…. So many students are floundering because they don’t know what they’re supposed to do with their credential.

At the same time that you’re overenrolled, we have other universities up north and in the eastern part of our province that are underenrolled. So it seems to me that the paradigm is kind of flawed in a way. A lot of students really don’t know what they want to do with this credential. At the same time, many of them are not able to access your university and some others in the Lower Mainland, even though there are a lot of opportunities up north. I’m wondering if you want to comment on those two remarks.

I know when I got my BA from UVic, I really didn’t think I got that good of advice. I just floundered, got a BA, and now what am I going to do with my life?

J. Cassels: The issue of creating clear student pathways is absolutely critical. I think many universities, since the time that you and I may have done our undergraduate work, are very attentive to that.

I mentioned the importance of cooperative education. Getting students into the workplace early so that they can see that connection to what they’re doing in the classroom and begin to envision the pathways that are open to them is making a huge difference, combined with something that’s, again, very different from what it was even ten years ago — increased levels of student support around career counselling and program choice so that you can see the outcomes. The data I provided shows that our students now are finding very successful pathways into the workforce.

On the issue of balancing out enrolments, I’m not here to suggest moving money from one place to the other. And this system is fantastic. Students need to have access in different parts of the province. They need the different options that are provided by technical training institutes, colleges and universities. So it’s not an us-versus-them or an either-or, but it is a question of getting the balance right so that all of our students who want post-secondary are able to find their right pathway.

S. Hamilton (Chair): I’m going to skip to the next question. We only have two minutes left.

J. Cassels: One more year of work. It’s semantics. Six years of work and then a year of pure research work.

J. Cassels: A sabbatical, yes. So a sabbatical is a year of teaching release to focus on your research.

J. Yap: Thank you, Jamie, for your presentation. On the second-last point that you had, in regard to capital projects — for example, for student housing. One of the issues which you alluded to is that it becomes part of provincial debt. Has there been any progress on reclassifying that, to find a creative way to do it off-book so that it will meet the requirements of the Auditor General and you can go ahead and do your self-sustaining funding?

J. Cassels: The answer to that is: yes, there has been a lot of effort. I think you used the word “progress.” We have not yet found a solution. We’ve looked at the government business enterprise approach. We’ve looked at the triple-P, the various partnerships and so on. At this point, there is not a way clear, at least for my institution, to build, except for receiving a green light for some debt room from the province.

C. Trevena: Thank you very much for the presentation. A couple of quick questions. You mentioned you want to reintroduce the scholarship program and that this is in other provinces. Do all other provinces except B.C. have such a program?

Secondly, the issue about flexibility on tuition for professional programs. How would that work? Is that just for professional programs? Is that for after your initial degree, for your secondary degree? How would that work if you want to study history? So just a little bit of explaining there.

J. Cassels: The first question, on how many other provinces have a provincial scholarship program: all of our significant competitors. I’d need to get back to you on the exact amount, but Ontario, Quebec, Alberta — the big players in this world — are at a competitive advantage. They have scholarship programs that are attracting the most talented graduate students to those provinces rather than this. Whether there might be one or two other provinces that are in our same boat, I’m not sure. I’d have to get the details there.

In the absence of time to sketch out all of the details around differential fees for professional programs, I’ll keep it at a relatively high level — again, I’m happy to provide greater detail — simply by giving an example. I’m not talking about general undergraduate programs in the traditional arts and sciences. I’m talking primarily about second-degree programs.

The most obvious would be programs like law, for example, where tuitions have been capped at a very low level in order to meet the quality expectations of students and compete with other law programs out of the province. We’re at both a serious quality and competitive disadvantage because we’re not able to charge the kinds of fees.

There are only two solutions, at this point, to that. Either you cross-subsidize, which is where the history student ends up…. Part of those fees go to pay the higher costs in those professional programs — which doesn’t seem terribly fair, but that’s how it’s working — or you reduce quality in the professional programs. Neither does that seem like an appropriate solution. So we’re looking for some room to try, in those programs where students go on to very, very successful careers, to have some room for tuition increases to pay the cost.

S. Hamilton (Chair): Thank you very much, Mr. Cassels. We’re out of time, but thank you for taking the time to present to the committee. I appreciate your efforts and all the work that you do.

Next we have Camosun College Student Society — Andrea Eggenberger and Michael Glover. Welcome. I’ll give you the same spiel. We’ve got ten minutes for your presentation — I’ll try to give a two-minute heads-up, just so you have time to wrap up appropriately — and then five minutes for questions. The floor is yours.

A. Eggenberger: Good afternoon, and thank you for the opportunity for us to speak here today. The Camosun College Student Society represents nearly 9,000 students united in the fight for affordable and accessible high-quality post-secondary education.

You’ve often heard us speak to you about government funding for colleges and universities, reducing tuition fees, bringing back student grants and eliminating interest on student loans. But today we’d like to speak to you specifically about the funding cuts to ABE and ESL programs. Adult basic education and English second language programs are the essential stepping stones to breaking the cycle of poverty.

These courses are required not only by those seeking to complete high school but also by those whose high school courses have become outdated due to the ever-changing Canadian curriculum and no longer meet the requirements for post-secondary education. We also see students that need to upgrade their basic literacy and numeracy skills just to maintain the job they currently have.
[ Page 1539 ]

ABE students are also some or our most marginalized groups: 58 percent are women, 18 percent are indigenous people, and 20 percent are parents during their studies. At Camosun, we see many of our ABE students continue into the post-secondary programs that we offer directly following their ABE completion. Adding tuition to these essential programs is a direct reversal of government policy.

In 2007, the Minister of Advanced Education said: “We are helping people upgrade their education so they can take advantage of our growing economy and enjoy rewarding careers by offering free tuition for adult basic education, whether students have graduated from high school or not.” Unfortunately, the $15 million funding cut for ABE courses has only been partially replaced with the adult upgrading grant.

While we, at some level, appreciate that the grant also applies to and is designed to provide a solution to the ESL funding cut as well, the base thresholds for this grant are well below the poverty line. Currently, an individual working full-time at minimum wage barely qualifies for the grant, and it does not take into consideration the actual cost of living in the major centres of British Columbia.

It is the low-income demographic that we should be trying to support in order to improve their skills to better contribute to British Columbia’s economy. The new tuition on ESL and ABE is already discouraging potential students from registering at Camosun College. Preliminary numbers suggest that Camosun student enrolments in ABE and ESL are down at least 7 percent compared to last year. These numbers are revealing when one considers that ABE and ESL are normally high-subscribed programs, especially at Camosun College, and that Camosun College, to its credit, has gone to great efforts to help students access the new grant.

We recommend that the government restore full funding to ABE and ESL programs in order to break the cycle of poverty and ensure that everyone has the opportunity to meet the admission requirements of post-secondary education.

S. Hamilton (Chair): Well done. You had a message to communicate, and you went right to the point. I appreciate that.

S. Chandra Herbert: Thank you so much. Certainly, comments I’m hearing in my own community, too, back in Vancouver….

I’m interested in what kind of stories you are hearing from students these days in terms of either the shock of losing programs like ABE or, potentially, ESL. I know it’s hard. Maybe you don’t hear the stories because they’re not showing up anymore. But as it was revealed, what kind of impact do you think this is having on people’s day-to-day lives?

A. Eggenberger: I think it has a huge impact. I remember when the ESL funding got cut initially. We had a big meeting and asked all our ESL students to come and talk about it. It was a really moving experience, because people said, you know: “I don’t know how I’m going to take care of my children if I can’t finish this nursing program. My qualifications from this other country I came from don’t stand here. I don’t know how I’m going to continue living and support my children.”

We also saw the same sort of thing for ABE when that funding cut arrived as well. People said: “This program saved my life. I was on a bad path that I just could not break out of. This is the change.”

G. Heyman: I think leaving it at that is probably not adequate. I want to especially express appreciation for you noting for us the drop in ABE and ESL enrolment. I attended a very large public meeting in Vancouver that had close to 20 speakers of people who both benefited from the program and were worried about the impact on others — and, in some cases, themselves, because they still needed the program — and how that would impact their ability to participate productively in both the community and the economy.

I think this bears that out. There are costs associated that I’m sure it’s too early to quantify at this point, but it’s hard to imagine that they don’t exist. I think this is something we should look at.

Thank you for coming with a short, succinct presentation with some useful statistics.

C. James (Deputy Chair): The other thing…. I don’t need to let you know this, because you know this as well as anyone. There’s always a debate when people say, “Oh well, grade 12 is covered” — that the courses are free for up to grade 12 so people shouldn’t worry. But I think it’s important — I just want to put on the record how important it is — to recognize that many people haven’t taken the courses that they need for careers now.

You could graduate without grade 12 math. You could graduate without grade 12 English. You need a grade 11 English to be able to graduate, for many people. Now you need grade 12 math and you need grade 12 English for many courses, including apprenticeships and trades training, including nursing, including other programs.
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I just wanted to make sure that that was clear for folks — that there is a difference here between grade 12 and getting your graduation, and getting those upgrading courses to be able to get a job that actually provides you with an opportunity to better your life and better your support for your family.

Seeing none, thank you very much for taking the time to present, and thank you for the work that you do on behalf of the people you represent.

Mr. FitzZaland, good afternoon. I’ll give you the same spiel: about ten minutes to present, maybe a two-minute heads-up to let you know it’s time to wrap up, and then five minutes for questions. The floor is yours.

R. FitzZaland: Good afternoon, all of you. The Federation of Community Social Services of B.C. is a group of community-based social service organizations that seeks to influence decision-making to improve the well-being of communities. We represent 140 member agencies offering 685 programs in 160 communities around B.C. Our members employ more than 6,000 British Columbians and represent almost $450 million of community investment in the social services sector.

Our members support communities through a wide spectrum of services such as support for those with disabilities, employment programs, early childhood education, homeless outreach and family programs.

For years we have said that one in five British Columbians will use a social service in their lifetime. Then we realized that every time we said that, people started looking around the room — one, two, three, four, five — trying to figure out who that is. That’s not the point. The point is, it’s all of us.

Community social services include programs like child care and drop-in programs for families with young children. It also includes programs for older adults, activity programs for young people with special needs, programs that help people find jobs, help people find affordable homes or deal with an addiction or a mental health challenge.

Think about you, your family, your neighbours, your community, and know that you are impacted by the fact that skilled professionals, supported by caring volunteers, make your community and your family healthier.

For the past several years, we have spoken to this committee about the importance of community social services and the need for government to wisely invest in services for community members. We have noted the ways in which spending on social services is a wise investment for the economy and for the impacts such services have on our health and education systems.

All these things are still important and still true. But I’m going to speak to you today about another impact that is facing our sector: workplace violence in the community social services sector. The impacts of workplace violence have been garnering much attention recently.

We believe there is a relationship between this health and safety problem and three factors: (1) the flatline funding of our sector since 2009; (2) the increased complexity and volume of people needing our services; and (3) the difficult labour market in which we operate.

We have obtained data from WorkSafe B.C. on workplace violence in our sector. Workplace violence makes up 2.7 percent of all claims in B.C. For the subsector that includes health and social services, the rate is 10 percent to 11 percent.

But for residential social services, workplace violence represents over 25 percent of all claims, and this rate has increased year after year for the past several years. No other classification unit has such a high claim rate.

The flatline funding is a matter of record. While there have been some slight increases to account for caseload growth in CLBC and income support, the fact is that funding for services for children and youth, families and families dealing with domestic violence has not seen any real change in over a decade. Coupled with the increase in the cost of doing business, this essentially amounts to a cut in funding levels.

The increased complexity and volume of people needing our services is also a matter of record. Last week, the federation put out a series of snapshots that pull together some of the current knowledge about how well British Columbians are doing. That’s in the handout package that we gave you. In that, we note certain trends, such as intimate-partner violence being on the increase, that our track record on child poverty has not improved and that food bank use is on the rise.

Income assistance and disability benefits have not kept pace with the increasing cost of living. For example, disability benefit rates have only increased $120 a month since 2001, but the cost of basic essentials has increased by 17.2 percent. A recent report by the Auditor General noted that the ministry “would benefit from an enhanced understanding of its clients’ circumstances to better inform decisions about the amount and type of assistance it provides, as well as the impact that the program should have on people’s lives and their standard of living.”

We hear increasingly about the high rate of police involvement for our citizens with mental health challenges and the high rate of hospitalization. Our members report seeing an increased demand for their services, an increased demand for services that fall outside of their mandate and increased complexity related to mental health and substance use, poverty and arriving for help after experiencing situations in which others are unable to help them.
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The labour market challenges I refer to are…. Of the six public sectors, the compensation package for social services is the lowest. Recruitment and retention in our sector is the worst of all sectors due to a combination of low wages and challenging workplace conditions. This results in significant turnover and, thus, a need for more frequent and costly training, which is difficult to provide given the flatlined funding and the required qualifications of entry-level workers.

The sector is working collectively to deal with this problem and to reduce claims and duration of claims, to make our workplaces safer for our workers and to improve conditions for our clients because of better training. But many of the factors listed above contributing to this problem require support from government.

We are requesting a partnership with government to address this issue. We will do our part. Government can do theirs by addressing the flatlined funding, the compensation gap and the issues that are combining to increase the complexity and volume of people needing our services.

This is a good investment, not just for our sector and the people and communities we serve but for everyone. Healthy, supported communities make good economic sense, and this investment is especially important for the children and youth that the government has taken into its care.

Industry leaders are recognizing this. The Conference Board of Canada, in their report Success for All: the Economic Case for Investing in the Future of Canadian Children in Care, makes the following statements about the value of investing in children aging out of foster care. “Investing in the education and mental health of children in foster care is costly, but the long-term economic and financial returns on such an investment are considerable. With better education and mental health, young adults are more likely to find employment and earn higher wages.”

This is true, but current practice identifies around age 16 as the point to begin preparing children for aging out of care. As a parent, I know that preparing children for living a successful, healthy life begins before the age of 16. It begins when they’re toddlers. And I know that we don’t stop caring about our children at the age of 19.

We applaud, support and await with bated breath MCFD’s recent efforts to implement the recommendation out of our joint report on the system of care for children living outside of the parental home, more commonly known as residential care.

Efforts to improve permanency for young people in care, especially through the recruitment and retention of skilled foster parents, is work we wholeheartedly support.

The final report was released in 2012, and MCFD and their partners are working hard to implement these recommendations. However, they are doing so with nominal funds. Help us help you to build stronger, healthier and more economically diverse and sustainable communities. The Fed will help you to understand alternative strategies that will achieve your broader policy goals while meeting the needs of your constituents.

We live in a wonderful place. Compared to many places in the world, we are free from war and oppression. We have an abundance of food, clean water and a largely compassionate and tolerant society, but not everyone shares in this abundance.

We have whole communities who live in Third World conditions with inadequate housing nor access to clean drinking water. A growing number of people, including children, live in poverty and are dependent upon food banks to have access to healthy and safe food, and sectors of our population experience violence on a regular basis. We can do better, and we should.

S. Hamilton (Chair): Thank you, sir. I appreciate you taking the time to present.

C. James (Deputy Chair): Thank you for the presentation. Most importantly, thank you for your work, and thank you to all of the not-for-profits that I describe as the fabric of our communities, which really keep the community together when it comes to all of the supports that are needed and all the pressures that are there.

One of the areas — you didn’t mention it, but it’s certainly something I hear a lot from the community social service agencies in my community, and I’m sure others hear about it as well — is the pressure around the lack of support for admin funding that comes in government contracts. When contracts are let, the lack of recognition of any kind of support that’s needed for an agency to run a program, to be able to provide that service and support, the constant rewriting of grant applications and the hours and the energy that goes into that, which could be better spent providing services and support. I wondered if you wanted to share anything from the association on that issue.

R. FitzZaland: There is, with the contracts with the various government agencies, always a cap on how much can be claimed for admin — 10 percent in many cases, 9 percent in some.

The reality of what it calls for to set up and run a program that is effective within a community, particularly in the increased needs that we have and the complexity that we see, is usually well above that. Those administrative costs — they don’t go away just because they’re not funded — are funded by the agencies through other strategies, frequently through community fundraising, through gaining savings in other revenue streams — whatever they can do to pinch pennies to provide that service.

It’s not invisible. It can’t go away. It has to be done. So that is a problem. It causes increased strain on the agen-
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cies, and it’s not getting better. I will commend government for its innovation and sustainability initiative, which allowed us to look collectively at ways in which we could make the system more efficient.

Certainly, for a lot of the inefficiencies, while they’re in the sector as a whole, many of them are where the contracting process takes place between government and the agencies. So you may have…. We’ve seen it recently in some of our pilots, where you’ve got a single program worth less than $250,000 that is covered by ten different contracts. Every one of those contracts has different reporting requirements and has to be renegotiated every year. It consumes a tremendous amount of resources.

S. Chandra Herbert: There’s so much in here that it’s hard to figure out which direction to take from it, because there are so many different areas that we could look at.

I had two questions, one very specific, but the other, I guess, may be more general. If there were one, two or three things that you thought we as a committee should take out of your presentation as the most important things…. I understand you’re a federation, so I’m sure each agency or non-profit has a different perspective, but if there were things we could change immediately, what would be the two or three things that you think we should change or put more money to?

R. FitzZaland: The 2012 report on the residential review that was jointly done and signed off by the Ministry of Children and Family Development and the federation had a long list of recommendations for things that needed to be done that everybody agreed should be done. At the foundation of that is the assumption that you have adequate numbers of foster parents.

When you don’t have enough foster parents and you don’t have foster parents with the right skill sets and the right training, then what happens is that because there are not enough, the ministry, under the pressure, will put children into homes that are not the right home for them. They’ll put them into circumstances. It’s the wrong circumstance. Siblings get split up because there’s just not enough space for them.

The children already are traumatized. Now, if they have special needs, they’ve got that trauma, but being taken away…. You know, they’re not with their families. They’re in the care of government. That’s a trauma. Then we re-traumatize them. They have to move from foster placement to foster placement because there are not enough homes there, there are not enough placements there, and there’s not the skillset or the training and the support that’s necessary.

If you fix anything, fix that. Give the Ministry of Children and Family Development enough resources to be able to properly compensate and properly train foster parents, recruit foster parents and build up the cadre that we need. We’re not asking, and I’m not suggesting at all…. We know that children belong with their families. That’s where they should be. But the reality is that there are a number of children that end up in the care of the ministry for their own safety and other reasons. We should be prepared to care for them properly, and we’re not.

S. Chandra Herbert: Just a tiny follow-up. This one is very specific. You mentioned having to renegotiate contracts every year. An earlier presenter talked about how great it would be to have multi-year contracts or multi-year funding so that they didn’t have to do that. They could just focus on their work.

R. FitzZaland: Yeah. I think there are…. Through the process we’ve been going through over the last year, we’ve identified a number of areas where there can be some administrative efficiencies.

I would caution. I think those administrative efficiencies are important. We want to do it, and it will make life a lot simpler. But you’re not going to capture enough savings in administrative efficiencies to be able to meet the need in the sector. The need is greater than whatever efficiencies you might be able to gain.

S. Hamilton (Chair): Thank you again, Mr. FitzZaland. I appreciate you taking the time to present to the committee, and good luck with all the work that you’re doing.

J. Crasta: Thank you very much for having me, Members. I’m the vice-president, external affairs, of the 106th council of the Alma Mater Society of UBC Vancouver. My name is Jude Crasta, and on behalf of the AMS, I wish to thank you for providing our society with the opportunity to present to the all-party Select Standing Committee on Finance and Government Services regarding B.C.’s 2016-2017 budget.

Just some introductory remarks about the AMS and what it does. The AMS is a non-profit society incorporated under the B.C. Society Act and strives to improve the lives of the nearly 50,000 students who study at our Vancouver campus.

The society’s activities are overseen by an elected team of student executives — I’m a part of that team — and councillors and are entirely funded by membership fees, investment returns and business revenues. In return, the society provides various services, organizes several social events and promotes high-quality academic activities for UBC Vancouver students. In addition, we advocate for the interests of our members, and post-secondary studies in general, to the university and all levels of government, which is exactly what I’m doing here right now.

Going to the general remarks about the benefits of post-secondary education, I will touch upon general comments and a background on our research and recommendations from that area and will then touch upon public transit and investment and some of our recommendations on that as well.

For post-secondary education, studies demonstrate that post-secondary institutions are essential to the local, provincial and national economy in a variety of ways. First of all, universities contribute to economic growth by providing thousands of well-paid jobs to faculty, administrators, staff and students. In this regard, I should point out that UBC is the third-largest employer in the Lower Mainland.

Universities also provide major infrastructure investments throughout the province by building state-of-the-art teaching and research facilities. The activities of B.C.’s universities also contribute a great deal to the development of inventions, new processes and patents and, more generally, play a key role in establishing and nurturing an innovative and dynamic economy.

Aside from improving workforce training, post-secondary education allows people to lead productive, healthy and socially active lives. Aside from enjoying higher incomes, individuals with post-secondary degrees are less likely to be unemployed — the data is illustrated in the table provided — find jobs more quickly if they are laid off, even during economic downturns; are less likely to engage in criminal behaviour; tend to lead healthier lives; and have children who are more likely to succeed in school. Canada’s most recent census, conducted in 2011, confirms these earlier findings with respect to employment in British Columbia.

The individual economic benefits described above are of special interest to lower- and middle-income families. But the rising cost of living in general in British Columbia, and especially in Metro Vancouver, makes it increasingly difficult for many students, including myself, in these income brackets to attend a post-secondary institution, even when they are willing to take on high levels of debt.

Although experts might be divided on the role played by high tuition fees on overall university attendance levels, studies have shown clearly that increasing tuition fees discouraged participation in post-secondary education by certain groups that are at greater risk. In other words, the group of students that benefit most from a university education are being priced out of the system.

The B.C. government plays a crucial role in making university education more affordable for students in the lower-income brackets, thereby giving them a better chance to become productive members of society and earn more than their parents. Making post-secondary education affordable and accessible is not only a question of equity; it is an essential part of creating the diverse and flexible workforce B.C. will need to ensure its continued economic and social prosperity.

The need is especially urgent since the province may soon face important labour shortages lasting into the next decade. The trades will certainly play an especially important role in this regard, as indicated in B.C.’s skills and training plan. In this context, it might be tempting to focus all spare resources on applied post-secondary programs, but it should be noted that the province will also need as many, if not more, non-specialized workers who possess the general knowledge and critical thinking needed to meet the challenges of a rapidly changing world.

For this reason, all post-secondary academic disciplines, including the social sciences, arts, humanities and natural sciences, play a crucial role to support the province’s overall economic health. In fact, having a sufficient number of graduates in these fields is the only way to create the nimble workforce we will need to face a changing economy and complex social challenges.

We therefore strongly urge the government to provide improved, targeted and sustained investments to all academic disciplines, because the graduates they produce will sustain the province’s economy and improve our society.

We are also deeply concerned that the government’s determination to control public spending, combined with uncertain economic growth and a commitment not to raise taxes, makes it highly likely that funding for post-secondary institutions will continue to decrease in real or relative terms. These assumptions seem to be confirmed in the Ministry of Advanced Education’s 2014-15–2016-17 service plan.

The resource summary indicates that in 2014-15, higher-education institutions should receive $17.6 million less than in 2013-14. And in 2015-16, cuts are projected to reach $25 million. Both years add up to a 2.3 percent drop. In 2016-17, the budgets will be frozen. For their part, budgets for student support programs — that is, loans and bursaries — and institutional executive support services will remain the same for the next three fiscal years.

We are of the view that although efficiencies may be used to mitigate these real or relative budget cuts, they will eventually lead to decreased support for services to our students.

With the information mentioned herein, the following recommendations are presented by the AMS. In order to increase access to and maintain the quality of post-secondary education, we believe the government should decrease the cost of going to university by maintaining or reducing the 2 percent tuition cap and extending it to all programs; regulating international tuition rates through a similar inflation cap as domestic students; implementing needs-based, upfront student grants; reducing student loan interest rates; and increasing student aid allocations to reflect the cost of living.

Also, we recommend increased or, at the very least, indexed core funding for all disciplines in post-secondary
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institutions, including the social sciences, arts, humanities and natural sciences.

We are aware that both of these recommendations will require additional financial commitments from the government. We are of the view, however, that the government has the capacity to develop innovative and sustainable ways to fund these proposals. Such investments would lead fairly quickly to important dividends from the province in the form of lower indebtedness of young people entering the workforce, including improved training for workers in all sectors of the economy and greater support for the knowledge economy.

On to the remarks regarding public transit. Basically, the information mentioned over here on public transit targets a lot of the information that has been mentioned in the Mayors Council’s plan on regional transportation that was outlined in the Metro Vancouver transit plebiscite. Although we were disappointed by the negative result of the recent Metro Vancouver transportation and transit plebiscite, we believe that the provincial government possesses the resources necessary to provide its portion of the funding for critical new public transit infrastructure projects.

We present the following recommendation. Given these considerations, the AMS believes the government should support short-term fixes for the Broadway line by changing the appropriate provincial regulations to reduce bus travel time and providing funding as required, and provide the leadership to approve and fund a long-term, robust and reliable rapid transit solution on the Broadway corridor, which must extend all the way to UBC’s Point Grey campus.

In summary, I am convinced that post-secondary education contributes to the development of a vibrant, innovative society and is a key driver of B.C.’s economy. I also believe that the B.C. government plays a key role in maintaining and improving access to higher education.

I would like to thank the committee members for their attention in these matters and invite them to contact myself directly if you have any additional questions.

S. Hamilton (Chair): Thank you, Mr. Crasta. I appreciate you taking the time to present to the committee.

S. Chandra Herbert: One jumped out. You mentioned the need to fix regulations so that buses could travel faster on Broadway as an interim step before better transit options are available. I’m unfamiliar with what those regulations are and what you’re referring to.

J. Crasta: Basically, the context behind this ask targets the current need for improved service levels with respect to bus service along the Broadway corridor and along other service routes that enter campus. There are a lot of funding deficits to the transit system, essentially in Metro Vancouver, that prevent the service levels from reaching the capacity required to meet the demand. The Broadway corridor itself is the most congested motorway in North America.

S. Chandra Herbert: I’m familiar with all of that. You had talked about the need to change some regulations provincially, and I’m just curious. What are the regulations? What regulations are holding up the buses?

J. Crasta: The regulations that we’re talking about mainly target the funding that’s being provided to transit.

M. Morris: I’m curious. The government puts a lot of money into advanced education in the province here. We’ve got capacity at UNBC, the University of the Fraser Valley and North Thompson. All these other places are available. Would it not be more prudent for government perhaps to look at ways to fill those vacancies, bring some of the excess capacity from UBC?

Come up and have a look at what we have in the province. There are excellent employment opportunities up there. Transit is easy to get around. Housing is easy to find.

There are solutions rather than government pouring millions or perhaps billions of dollars into the Lower Mainland.

J. Crasta: And that’s absolutely appreciated. A lot of our counterparts who do attend these institutions, including some of my friends at the University of the Fraser Valley Student Union Society, are appreciative of the government support in these areas.

However, a lot of students who do apply to B.C. schools and a lot of international students who do come to this province choose to attend institutions like UBC, Simon Fraser University, Kwantlen Polytechnic. A lot of the demand does exist. The ask that we’re making of the provincial government is to match where the population is moving to, rather than to hope, essentially, that people will start moving to these other areas.

M. Morris: All I’m suggesting is that we have to utilize the resources that we already have to the best ability that we have.

S. Gibson: I taught at UFV for quite a few years. I guess my query is…. This is my anecdotal observation, and this is my experience. Often students that are bankrolled by their parents and have really no money problems don’t do very well, and they even drop out. But it’s the students like myself, who struggled financially…. I ended up finishing.
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I don’t know. It seems like there’s a disconnect there. I often hear the lament from folks like you — and I do get it: “Oh please, we need more money to make this happen.” Yet those students…. I can tell you that some students that I knew that were totally bankrolled by mom and dad — even got a nice car to drive — didn’t graduate. Me, I had an old beater, and I used to eat Mr. Noodles and Kraft Dinner. I finished. I don’t know whether you have any comments about that.

J. Crasta: A personal anecdote. I count myself gracious to be born to parents who are able to bankroll my education all the way from Ontario. I can’t comment about the car. I use Evo and car2go car-share. That’s my mode of getting around.

The perception is not necessarily true, I would say, knowing a lot of the students, at least those who attend our campus. A lot of students who are there with support from their families oftentimes, I find personally, have a greater obligation to their families to complete and achieve graduation with their education. Surely that might be the mindset of certain students, but I don’t think that’s necessarily very representative of the general population.

C. Trevena: Thank you very much for your presentation. I come from a completely different point of view, having gone to university in Europe and grown up in Europe, where I was actually paid to go to university. We all got grants, and you got paid to go to university. That no longer is the case, even in Britain. I was very fortunate, and I know I really benefited from that.

I’m very, very concerned about tuition rates for students across the board, whatever level of education. I’m wondering. When you’re talking about maintaining or reducing the 2 percent tuition cap…. That’s already above the rate of inflation, 2 percent. You’re already expecting to be paying more than the rate of inflation if you maintain it. Is there any push to bring it down that much further? If so, at what level?

Secondly, are you talking for right across the province or specifically for UBC on this? Thirdly, thank you very much for referencing the arts and humanities, because I quite agree that you do need a well-educated society for the benefit of everyone.

J. Crasta: Thank you very much, and that’s something that we do recognize. Targeting the question about UBC and the specificity of our request, a lot of these problems do affect UBC students on the Vancouver campus. But they are analogous to issues faced by students across the province.

When it comes to the push for funding even below the current levels, that is always something that we mention in the conversations with different members and different elected representatives at levels of government.

The ask that we’re formally making is cognizant of the fact that the government has certain limitations. However, if it is within the government’s means to provide further support, that is always appreciated by the students, at least from UBC.

G. Heyman: I want to express appreciation for your submission. Many of the comments are very similar to comments that we heard many times last year and that I’m sure we’ll hear many times again this year.

They are significant issues, notwithstanding valid comments about making sure that we’re utilizing our post-secondary spaces in other parts of the province as well. I think the two go hand in hand.

I’m sure we’ll have lengthy discussion about doing the best we can to ensure that young people in British Columbia have the opportunity to get the education they need to, ultimately, contribute to building our economy and making us a richer province by doing that.

I also want to express appreciation to the UBC Alma Mater Society and student groups across Metro Vancouver for the significant role that you all played in trying to ensure the passage of the plebiscite on transportation funding, which unfortunately failed. My assumption is that when you were talking about regulations that might impede the development of transit, one of them might well be the plebiscite requirement.

My office is on the Broadway corridor. I’ve waited in line with students and others for the B-line. I know the frustration. I also know that while there are frequent buses, they are jammed at the times that people need them the most. It’s a pretty untenable situation and one that, hopefully, we’ll address with some interim measures as well as some long-term rapid transit solutions.

S. Hamilton (Chair): Thank you once again, Mr. Crasta, for taking the time to present to the committee. We appreciate the work that you do.

Finally, this afternoon, we have the Canadian Fuels Association — Mr. Brian Ahearn.

Welcome, Mr. Ahearn. You have ten minutes for your presentation. I’ll give you about a two-minute heads-up, just to wrap up. We then will go into questions for five. The floor is yours.

B. Ahearn: Good afternoon, Mr. Chairman and members of the committee. My name is Brian Ahearn, and I’m the vice-president, western division, of the Canadian Fuels Association. I’d first like to thank the committee for the opportunity to input on the B.C. 2016 consultation.

As a way of introduction, the Canadian Fuels Association represents the downstream petroleum industry encompassing all aspects of refining, distribution, transportation and marketing of petroleum products. The industry does supply 95 percent of Canada’s trans-
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portation fuels. Our members include Chevron, Husky, Imperial Oil, Shell Canada, Suncor, Irving Oil, Federated Co-op and Parkland Fuel.

Transportation fuels are a vital component of the energy system. Canadians consume close to 90 billion litres per year of fuels, primarily gasoline and diesel. These fuels are provided through a comprehensive network of 15 refineries across Canada, more than 50 distribution terminals and nearly 12,000 retail and commercial sites.

Refineries are complex and capital-intensive manufacturing facilities. The refinery sector does contribute $5.5 billion towards Canada’s GDP each year, with over $3 billion of annual capital investment. The sector does employ 17,500 highly skilled workers at the refineries and a total of nearly 100,000, including the distribution and retail network.

B.C. is home to two of Canada’s 15 refineries, located in Burnaby and Prince George. B.C. refineries do employ highly skilled workers, who typically earn wages and salaries that are 50 percent higher than the overall Canadian manufacturing average. Overall, they contribute $200 million in direct GDP to the province and generate another $630 million in indirect GDP.

The petroleum refining industry has a very strong focus on process safety management, resulting in a strong safety culture. The Canadian Fuels Association refineries work to ensure the safety and health of all workers and neighbours. Safe, secure operations that are injury-free and incident-free are vital to maintaining a successful refining industry.

In terms of fuelling the economy, petroleum refining does fuel B.C.’s economy. Petroleum fuels play a critical enabling role in the transportation of people and goods, directly impacting British Columbians’ quality of life, and petroleum fuels account for 45 percent of British Columbians’ energy use. Refineries also produce asphalt, heating oils and feedstock for chemical and lube manufacturing facilities.

Refineries continually improve environmental performance. Canada-wide, the refineries’ CO₂ emissions are down 16 percent over the last ten years. CO₂ reductions have been accompanied by significant reductions in conventional air contaminant emissions as well. Furthermore, water intake and discharge have dropped by nearly 25 percent over the last decade, and refinery water effluent quality is far better than required by regulation.

At the same time, fuel quality has continuously improved. Since 2000, sulphur content in gasoline and diesel has been reduced by up to 98 percent, and as a result, vehicle emissions of key smog precursors have greatly been reduced.

By 2020, new light-duty vehicles using a newly mandated 10 ppm sulphur regulation will essentially emit no smog-causing pollutants.

In terms of meaningful consultation with industry, it’s definitely needed on key issues before the government does announce any newer changes to policies or tax measures in this upcoming budget in order to avoid any negative consequences for refining or manufacturing.

On climate change, Canadian Fuels members do support B.C.’s commitment to implement an enhanced, comprehensive climate change policy. Canadian Fuels and its members also support a carbon-pricing mechanism. Meaningful greenhouse gas reductions will require an engagement of consumers, business and society. The climate change file requires a broad government approach and the full engagement of economic and environmental ministries.

However, maintaining sector competitiveness is key. The refining sector is classified as an energy-intensive, trade-exposed industry. We do face flat to declining demand for refined petroleum products across North America, and our members do not have the scale and the cost advantages of many of the U.S. and offshore competitors.

Going forward, we do seek a climate change policy environment that is transparent and predictable. Policies must maintain a level playing field between jurisdictions, between sectors and within sectors and support capital investment in technology solutions that will reduce emissions and increase productivity. Policy approaches must be supported by rigorous cost-benefit analysis and avoid carbon leakage at the expense of B.C. businesses and the B.C. economy.

Furthermore, compliance pathways must be feasible and achievable. We urge the government to take a look at the cumulative impacts of the regulatory agenda for B.C. refining and implement an approach that does pace, stage and prioritize the agenda in a more cohesive and coherent manner. This will give manufacturers the best chance of competitive success.

In terms of the role of transportation fuels in transportation, meaningful greenhouse gas reductions will require an economy-wide measure. Thus, our industry does support B.C.’s goal to reduce the GHG emissions from the transportation sector. Given the role that transportation does play in underpinning economic growth and the high standard of living for British Columbians, reducing GHG emissions from transportation is a very complex challenge that requires comprehensive approaches that address three main areas: vehicle fuel efficiency, fuel choice and mode choice.

Consumers’ behaviour is a significant factor in driving GHG reductions from transportation. Achieving material reductions will require British Columbians to think and act in new ways. A 2013 series of public policy forum round tables sponsored by our association highlighted the central role that consumers play and that efforts to reduce emissions from transportation must generate action through consumer choices. The degree to which con-
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sumers respond will dictate success or failure in reaching those reduction objectives.

Certainly B.C.’s low-carbon fuel requirements regulation and the carbon tax will drive gradual adoption of both lower-carbon fuel and vehicle options. But widespread consumer acceptance in adoption of these technologies will take time.

An appropriate economy-wide mechanism will enable and empower markets to drive towards the most cost-effective carbon reduction solutions. This is a preferred approach to regulated solutions, in particular those that impose disproportionate burdens in some sectors. A carbon-pricing mechanism can also act as an important demand-side management tool.

In summary, looking ahead, B.C. refineries do compete in a very global fuels market. North American and European refineries are experiencing long-term declining demand, causing refinery closures, and the cumulative impacts of federal and B.C. regulations initiatives does represent significant costs. Refineries are committed to cleaner fuels and cleaner refineries. However, prioritizing and managing emissions reductions, pace and cumulative costs of regulatory initiatives are essential to long-term viability.

B.C. deserves credit for having one of the lowest energy costs in GHG emissions per capita in Canada, and progress towards reducing the GHG footprint of transportation is being achieved. We want to work productively with all levels of government — federal, provincial and municipal — to reduce global GHG emissions, keep B.C. refineries competitive in delivering economic benefits to the province and to ensure that British Columbians have access to convenient, competitively priced and sustainable transportation options.

E. Foster: Thank you for your presentation. I’m going to ask a question that I get asked pretty much on a weekly basis. The question is: why, the other day, was gasoline $1.01 in Chilliwack, $1.24 in Vernon and $1.20 in Prince George, where there’s a refinery five miles away?

B. Ahearn: I probably get asked that same question on a weekly basis as well. The pricing at the retail level involves four different factors. Crude oil is one of them; taxes is another; the refinery’s pricing or wholesale margin; and then finally the dealer’s margin as well. Each of those four factors doesn’t operate in the same supply-demand balance, and they do operate differently. I’m not giving you a straight answer in terms of exactly what causes it, but I can tell you that it’s four different factors that are interrelated that do cause the price fluctuations.

I would also recommend a third-party, independent firm by the name of Kent marketing — nothing to do with the oil industry — which does monitoring of price calculations at the retail level. They’re a great go-to source for information, right down to specific locations for pricing at a local level.

E. Foster: One of the things you spoke about was the price of crude. At $45, we certainly didn’t see any, as the consumers…. We take the heat for this. They come to…. You know, it’s the taxes. The taxes are the same, other than the Lower Mainland, which pays a TransLink tax. The price of gas in the Lower Mainland right now is lower than it is in some other parts of the province.

The price of crude is way down. So I guess the question then would be…. Pick one: one, two three. Oil companies are not making it on what they’re taking out of the ground, so they’re making it out of what they’re selling us gasoline for at the pump. This is what comes to me every single day. I can defend the taxes, because they’re the same everywhere — other than the GST, which is a percentage — but I just don’t have an answer. I can’t defend it.

B. Ahearn: Again, it’s those four factors that I mentioned to you. I would recommend possibly sending constituents to Kent marketing as an independent source for information. Often we do send consumers to both that location and other media, and they seem to be very satisfied with the answers they do get.

M. Morris: Talk about competitiveness. We’ve got 15 refineries in Canada. You were also referencing some of the policies that our government has imposed on the refineries here to make sure that they’re cleaner and greener, less greenhouse emissions and whatnot.

We’re competing right across the country. What I’ve noticed is that when you shut down a refinery in eastern Canada that’s producing diesel or whatever it might be producing…. The cost of diesel seems to be going up. We’re getting diesel from all the other refineries across the country. The refineries that we have in British Columbia don’t produce enough product to supply the entire population of British Columbia. So where is that competitiveness? How are we edging our refineries out? I would imagine that any of the product coming into the province has to meet the same regulatory requirements that we do locally with our two refineries here.

B. Ahearn: Right. A good point about the transportation fuels in the province. The local refineries in the province supply about 25 percent of the fuels. The majority of the fuels, close to 60 percent or 70 percent, come from Edmonton, in terms of fuels from the Edmonton refineries and the balance of our imports coming into the province.

In terms of regulatory issues between the provinces, and then Canada versus the U.S., that’s where the requirement is in terms of watching how the regulations are in
[ Page 1548 ]
terms of the pace that they’re coming in or the levels that are coming in.

I know that some of the refineries are looking at the climate change policy that’s underway in B.C. versus the climate change policy changes that are being talked about for Alberta. It’s just understanding the cost impacts of the new regulations coming forward and what that means to the local refineries, because they are subject to competition from Alberta and competition for imports coming in as well.

S. Chandra Herbert: I think you answered one of my questions, which was around how much, what percentage of gas or diesel that we’re actually using in B.C. comes from B.C. So thank you for that.

I’m just curious about — you don’t need to go into the specifics, but just in general — the economic health of the refineries we have in B.C. I hear about the Burnaby refinery, and I see it in the news. Sometimes they have a really hard time getting product to be able to process, and that in itself might be enough to shut them down. Even if that Kinder Morgan proposal ever went ahead, that’s not for them. That’s not product that would help their refinery. Any thoughts?

B. Ahearn: As an association, we can’t necessarily speak to one member versus the other members. So my comments are more from a total member perspective. I think it’s back to that general comment, the first comment that I made, about the fact that refineries are…. It’s a very mature industry. We face declining demand of fuels. Most people don’t realize that. I think, actually, that’s good, in a lot of respects, from a GHG perspective. That’s a very good reflection of smart policy by government to get fuel-efficiency standards in there.

Population is going up, people are driving more, there’s industry happening, but at the same time there are very smart fuel-efficiency regulations. The demand for products is tough. The threat of imports from the U.S. is another factor that has to be thought about. Those are the general factors when we’re looking at the competitiveness of refineries.

Just as a general statement, refineries that are on a coast, whether it’s east coast or west coast, are susceptible to imports and, again, threatened, or at least the competitive nature of fuels coming into Canada would threaten them.

S. Chandra Herbert: I just wanted to say thank you for your commitment to pushing for stronger greenhouse gas emission reductions and action to do that. That’s certainly something we all need to get our heads around, and I appreciate….

B. Ahearn: We sure do. It’s a very complex challenge, and we’re very anxious to work with government in contributing towards that very smart discussion around the table.

S. Hamilton (Chair): We’re very short on time. We’ve got Dan and then Claire.

D. Ashton: Just quickly, I want to thank you for your presentation. Greatly appreciated. I know there are a whole bunch of variables, but just to follow up on what Eric had said — I think, if I remember correctly, it’s referred to as the crack spread — what I see, and I think a lot of people that I represent see, is that as oil prices decrease — or plunge, which is what they’ve done — oil companies are making it up on that crack spread.

It’s a little bit difficult to swallow sometimes. As prices go up on oil, oil quickly ratchets up the cost of the commodity. But as oil prices go down, that commodity price does not come down in the same relationship. Just passing it along. I just want to…. I do appreciate your coming today.

C. Trevena: Thank you very much again for your presentation. I’m going to pick up on what Dan and Eric have mentioned. It’s not so much the fact that it doesn’t come down as fast as it goes up, which is…. I, too, hear from my constituents on this very regularly.

The other question is: why is it always the same price in one community? I represent the north Island. In Campbell River, it’s always the same price. It’s always the same price in Duncan, which is usually the cheapest on the Island. It’s the same price wherever you are. You go south of the border, and you go from corner to corner, and you choose which is the cheapest gas. Why is this?

B. Ahearn: Well, in terms of the same price or very close to the same price, I think that’s a reflection of commodity business. One retailer cannot afford to move his price much different than the competition because of the fact that it’s commodity pricing. In terms of different communities, we mentioned the four factors. The transportation cost to get into those communities is typically the same. That’s why you’ll have communities that have different pricing at their level because of transportation costs to get to that community.

S. Hamilton (Chair): Seeing no other questions, thank you very much, Mr. Ahearn. I appreciate your taking the time.

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1) Island Savings	Randy Bertsch
2) Greater Victoria Chamber of Commerce	Peggy Kulmala
	Bruce Carter
3) Imperial Tobacco Canada	Sébastien Charbonneau
4) British Columbia Dental Association	Dr. Peter Lobb
5) Professional Arts Alliance of Greater Victoria	Doug Jarvis
	Heather Lindsay
6) Art Gallery of Greater Victoria	Jon Tupper
7) BCSPCA	Craig Daniell
	Melinda Mennie
8) University of Victoria	Jamie Cassels
9) Camosun College Student Society	Andrea Eggenberger
	Michael Glover
10) Federation of Community Social Services of B.C.	Rick FitzZaland
11) Alma Mater Society of UBC Vancouver	Jude Crasta
12) Canadian Fuels Association	S. Brian Ahearn

Chair:	Wm. Scott Hamilton (Delta North BC Liberal)
Deputy Chair:	Carole James (Victoria–Beacon Hill NDP)
Members:	Dan Ashton (Penticton BC Liberal)
	Spencer Chandra Herbert (Vancouver–West End NDP)
	Eric Foster (Vernon-Monashee BC Liberal)
	Simon Gibson (Abbotsford-Mission BC Liberal)
	George Heyman (Vancouver-Fairview NDP)
	Mike Morris (Prince George–Mackenzie BC Liberal)
	Claire Trevena (North Island NDP)
	John Yap (Richmond-Steveston BC Liberal)
Clerks:	Kate Ryan-Lloyd
	Susan Sourial

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