2001 Legislative Session: 2nd Session, 37th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD
SELECT STANDING COMMITTEE ON
Tuesday, October 9, 2001
Present: Blair Lekstrom, MLA (Chair); Tony Bhullar, MLA (Deputy Chair); Jeff Bray, MLA; Ralph Sultan, MLA; Harry Bloy, MLA; Barry Penner, MLA; Brian Kerr, MLA; Lorne Mayencourt, MLA; Ida Chong, MLA; Joy MacPhail, MLA
Unavoidably Absent: Kevin Krueger, MLA
1. The Chair called the Committee to order at 1:02 p.m.
2. Opening remarks by Blair Lekstrom, MLA, Chair, Select Standing Committee on Finance and Government Services.
3. The Committee heard the following witnesses on the matter of prebudget consultation:
1) Canadian Bankers Association:
2) Confederation of University Faculty Associations of British Columbia:
3) Canadian Centre for Policy Alternatives:
4) B.C. Nurses Union:
5) Chartered Accountants of British Columbia:
6) Canadian Federation of Students:
7) Business Council of B.C.:
8) B.C. Persons with AIDS Society:
9) Sheila Puga
10) Marilyn Young
11) B.C. Coalition of People with Disabilities:
12) AIDS Vancouver:
13) Vancouver Board of Trade:
14) Stephen LeBlanc
Blair Lekstrom, MLA
The following electronic version is for informational purposes only.
The printed version remains the official version.
TUESDAY, OCTOBER 9, 2001
Issue No. 7
|J. Van Luven||220|
|Chair:||* Blair Lekstrom (Peace River South L)|
|Deputy Chair:||* Tony Bhullar (Surrey-Newton L)|
|Members:||* Harry Bloy (Burquitlam L)
* Jeff Bray (Victoria–Beacon Hill L)
* Ida Chong (Oak Bay–Gordon Head L)
* Brian Kerr (Malahat–Juan de Fuca L)
Kevin Krueger (Kamloops–North Thompson L)
* Lorne Mayencourt (Vancouver-Burrard L)
* Barry Penner (Chilliwack-Kent L)
* Ralph Sultan (West Vancouver–Capilano L)
* Joy MacPhail (Vancouver-Hastings NDP)
* denotes member present
|Committee Staff:||Jacqueline Quesnel (Committee Assistant)|
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TUESDAY, OCTOBER 9, 2001
The committee met at 1:02 p.m.
[B. Lekstrom in the chair.]
B. Lekstrom (Chair): Good afternoon, ladies and gentlemen. I would like to welcome you to the public consultation hearings with the Select Standing Committee on Finance and Government Services. This is our fifth meeting in a grouping of 16 that we will be hosting throughout the province. Last week the committee travelled to Dawson Creek, Prince George, Williams Lake and Kamloops. Following today we will be in Chilliwack tomorrow morning, and tomorrow evening we will be in Surrey. Following that, in the next two weeks we will cover another group of communities throughout the province.
It's certainly a privilege to have you out and to hear from you. Today our mandate as a select standing committee of the Legislature is to hear your input on next year's budget and to submit our report and recommendations to the Minister of Finance in his preparation of next year's budget.
We have a number of people. Today's hearings will be recorded and transcribed by Hansard staff, who are sitting to our left. With us we have, on my immediate left, Anne Stokes, the Committee Clerk. Also with us today we have Catherine Schaefer and Wendy Collisson as well as Jacqueline Quesnel, at the back of the room, at the table. If you haven't had an opportunity to see the prebudget consultation report, there are copies available in the room, so please make them available to yourselves. It's a very valuable document and lays out quite clearly the position of the province of British Columbia.
Without taking up too much further time, I would at this time ask the remaining members of our committee to introduce themselves. Then we will begin the proceedings.
J. Bray: I'm Jeff Bray, MLA for Victoria–Beacon Hill, the riding that holds the Legislature.
B. Kerr: I'm Brian Kerr, Malahat–Juan de Fuca on Vancouver Island.
B. Penner: I'm Barry Penner, MLA for Chilliwack-Kent.
R. Sultan: I'm Ralph Sultan, West Vancouver–Capilano.
L. Mayencourt: My name is Lorne Mayencourt. I'm the MLA for Vancouver-Burrard. I welcome all the members of the committee to God's country.
J. MacPhail: I'm Joy MacPhail, MLA for Vancouver-Hastings.
I. Chong: Good afternoon, everyone. I'm Ida Chong, representing Oak Bay–Gordon Head in the greater Victoria area.
H. Bloy: Good afternoon. I'm Harry Bloy, the MLA for Burquitlam. I'm looking forward to these meetings to hear positive suggestions on where the business community is going and what they hope to see in the coming years.
B. Lekstrom (Chair): My name is Blair Lekstrom. I am the MLA for Peace River South, in the northern part of our province, and also Chair of the Select Standing Committee on Finance and Government Services.
Once again, welcome. Our format will be 15 minutes for the presentations. If it's possible to wrap it up within ten minutes and then allow questions, if there are any, of the committee members….
With that, I would like to welcome you, Paul. I see you have a delegation with you as well. Good afternoon.
P. Griffin: I'd like to thank you, Mr. Lekstrom and other members of the committee, for allowing us to make this presentation to you this afternoon. I should mention that we've given your staff a formal submission. We encourage you, if you have an opportunity in your busy schedules, to take a peek at that. My comments this afternoon are going to try to encapsulate that submission.
My name is Paul Griffin. I'm the director of provincial and community affairs for the Canadian Bankers Association. With me this afternoon I have Rob Bakos, who is the vice-president of strategic planning and financial planning for HSBC. Then there's Gail Cocker. Gail is a member of the B.C. committee of the CBA and a senior vice-president of B.C. division of the Bank of Montreal. Immediately to my right is Catherine Smith, the senior counsel with TD–Canada Trust.
We're here on behalf of the Canadian Bankers Association, as I mentioned, and our members here in British Columbia. Perhaps before we get into the main part of the submission today, I can use this opportunity to tell you a little bit about our industry here, the role that it plays in B.C. and its importance in the B.C. economy.
Canada's banks take very seriously our commitment to British Columbia and its communities. We have a formidable presence here. We provide economic strength and vitality to nearly every part of this province. The banks employ 26,000 British Columbians. They have over 900 branches with more than 2,400 ABMs and thousands more debit terminals in almost every community across this great province.
But our impact on the economy is much more than our physical presence. B.C. banks provide crucial financing and credit to British Columbians and B.C. businesses, which has spinoff effects throughout the economy. When we advance a mortgage, for example,
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it allows a B.C. family to invest in a new home, which in turn provides new capital for and work in the housing industry, the construction industry, the retail industry, etc.
At the end of last year banks had over $48 billion outstanding in residential mortgages here in B.C. and more than $18.6 billion in personal loans. B.C.'s banks were also the leading source of credit provided to B.C.'s companies, totalling more than $48 billion last year. B.C.'s banks also made over $10.4 billion in financing available to 114,000 small and medium-sized businesses here in B.C. So this type of financing not only supports our customers but also changes hands and fuels the economy and job creation in almost every industry in the province.
Our impact in communities goes beyond that. We also support hundreds of local charities, community groups and non-profit organizations. We gave almost $7 million in B.C. to charities last year. In 2000 the six largest banks invested $3.2 billion in high technology and new equipment in Canada. We outsourced a significant amount of that, so that in turn created jobs and economic opportunity. Finally, the six largest banks paid over $180 million in taxes in B.C. last year, over $57 million of that in capital tax alone.
This is significant when you consider that even though 46 percent of the largest banks' total earnings are generated from outside of Canada, 78 percent of all our taxes are paid here in Canada, and 90 percent of all banking jobs are here in Canada. So we're a net importer of wealth.
I concluded our contribution list with taxes on purpose, because the CBA and its members feel that this is an area which needs reform. In particular, the CBA is advocating the need for fairness in taxation. The banking industry is one of the most highly taxed industries in British Columbia and indeed in Canada. As you will note from our submission when you do get a chance to have a look at it, experts recognize that the banking industry presently carries a disproportionate tax burden and that this burden will ultimately hinder the strength of the industry in today's global economy.
In B.C. the capital of general corporations is taxed at a fraction of the rate of large financial institutions. Canfor is taxed at a rate of 0.15 percent, just as an example — I don't mean to pick on them, but they're one large industry — whereas banks are taxed at 3 percent and pay the full 3 percent on all taxable capital.
Unlike a bank, Canfor or B.C. Gas or any large company such as that is currently entitled to a capital tax exemption of $5 million and is eligible for an investment allowance. I'll touch on that a little later. Furthermore, Canfor, to use that example, like all general corporations in B.C. will be completely exempt from paying capital tax in 2002. We don't think that's fair.
The banking industry is particularly concerned at the extent to which governments rely on capital taxes, which ultimately cut into profitability. They are unrelated to profitability. They are not like income taxes, which depend on profitability. Capital taxes are a fixed cost. They create a competitive disadvantage for the Canadian industry, because no other major economy in the world levies an annual capital tax on its financial sector.
Capital tax is problematic from a number of perspectives. One, unlike corporate income taxes, which are related to profitability, as I mentioned, capital taxes are not based on earnings. It is therefore payable whether a company is profitable or not. Two, it taxes investment, including information technology, which inhibits growth. Three, capital taxes are particularly punitive to financial institutions, which are required by regulation to maintain high capital levels to support safety and stability. Then they're taxed. We're told to carry this amount of capital, and then we're taxed because we do.
In my Canfor comments earlier, if you want to use that example, I touched on the fact that under B.C. capital tax rules, a financial institution does not receive an investment allowance for its investments in any corporations, not even other financial institutions. Now, this is unlike the general corporate sector in B.C., which currently benefits from an investment allowance until it benefits, of course, from the elimination of the capital tax next year.
Banks are diversified financial institutions which provide a wide range of financial services to their customers. As I mentioned before, the financial services industry is highly regulated with minimum capital requirements and therefore may not have the option of consolidating its various business functions under one corporate entity to minimize this double tax.
Bank capital is taxed once at the parent level, and then it's taxed again at the subsidiary level. This is essentially a double taxation. It causes double taxation, and that costs the banks millions of dollars. We're the only province to do that. Taxing the same capital twice is not logical, and it's not reasonable.
The importance of the business tax reform cannot be overstated, especially for the financial services industry. Financial capital today is more mobile than ever before. Regulatory reform, globalization of financial markets and advances in technology have made it possible to deliver financial services from just about anywhere in the world.
In order to remain competitive, Canada's banks are seeking out more attractive investment locations. With advances in new banking technologies and a rapidly changing marketplace for financial services, banks can increasingly establish the necessary infrastructure to provide services to the customers from other jurisdictions.
Today many jurisdictions from around the world have recognized the key role played by business taxes in creating economic prosperity, attracting investment and creating jobs. Ireland, Britain and Australia are just some of the countries that have recently taken steps to reduce business taxes.
At home here the federal government recently announced a schedule for reducing corporate income tax and capital taxes. In Alberta the provincial government has eliminated capital taxes and has announced that it will reduce its corporate tax to 8 percent by 2004. In
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Ontario we've seen likewise. They're reducing the corporate income tax to 8 percent by 2005 and have committed to getting rid of the capital tax.
The CBA is very pleased with the recent announcement that B.C. will reduce its corporate income tax rate from 15 percent to 13.5 percent, effective January 2002, with its promise to keep the corporate income tax competitive in the future. We think that this promise is important in light of the rate reductions in Alberta and Ontario.
As you will see from our report, numerous studies have confirmed that the financial sector as a whole bears a disproportionate tax burden relative to its contribution to GDP, to international competitors and to the general corporate sector. The current financial sector tax regime in B.C. leaves large financial institutions poorly positioned to meet the challenges of increasing domestic and international competition — competition which will become increasingly intense as the federal government moves ahead with regulatory reform of the financial services sector.
High corporate income taxes and the existence of a profit-insensitive capital tax levied only on the financial sector do not contribute to the competitiveness of this important sector. Investments in this province will be disadvantaged compared to those in other jurisdictions with more favourable and less discriminatory business taxes.
As an industry which provides over 26,000 well-paid, knowledge-based, high-value-added jobs in B.C., we're simply asking for fairness and parity in taxation policy. We're pleased that job creation, economic growth and diversification are priorities for the B.C. government. These objectives are more readily achieved on a sustainable basis through the creation of a hospitable business tax.
The CBA therefore makes the following recommendations to ensure business tax fairness in B.C. One, eliminate discrimination in the capital tax policy in B.C. to ensure parity with the general corporate sector by removing the capital tax on financial institutions. Two, announce a firm schedule of corporate income tax cuts to be competitive with other key provinces in Canada.
Mr. Chair, committee members, thank you again for providing us with the opportunity to make this presentation today. We'd be pleased to answer any questions you may have.
B. Lekstrom (Chair): Thank you very much, Mr. Griffin. I appreciate your recommendations at the end. That is what the committee is here for — that is, to listen to the public and the business community as to their recommendations on how we move forward as a province. I thank you.
B. Penner: I have a question for Mr. Griffin. Thank you for your presentation. What is the total amount of taxes collected currently by the province from financial institutions through the capital tax?
P. Griffin: Last year it was approximately $57 million. In total financial institutions or just in banks?
B. Penner: Banks.
P. Griffin: It was somewhere around $52 million to $56 million, I think, from banks. I'm not sure of the total for all financial institutions.
B. Penner: Do you have any suggestions or recommendations as to how the government would curtail spending if it were to eliminate the tax that you propose?
P. Griffin: I know that this government has established priorities for itself. The two priorities, it seems to me — and forgive me if I get this wrong — are that you do want to create a business-friendly environment to increase revenues, to increase competitiveness in B.C. and to create jobs and investment. That's one side. The other side is to reduce costs.
I wouldn't propose to suggest ways in which you can reduce costs. I think that's something for you to decide. But I can lend our industry's voice to the issue of how you create a more competitive business climate, and there's no better way to do that than to address the issue of unfairness in taxation or an uncompetitive situation in B.C. The financial services sector is definitely in that situation right now. We're simply not competitive with other jurisdictions right now.
H. Bloy: Would you agree that small and medium-sized business is the largest employer in the province?
P. Griffin: Yes. From everything I understand, they are definitely a major employer and creator of new jobs.
H. Bloy: If taxes were lowered, would you loan more money to small business? When you look at your portfolio, only 20 percent of your loans go to small and medium business, and they are the backbone of British Columbia. When I had my opening statement I didn't want to make it directly, but I would like to know what the banks are going to do to support small and medium business. There's a big discrepancy there.
P. Griffin: Actually, I'm glad you raised that, sir. In fact, there is a bit of a misunderstanding of just how important banks are and what kind of key role banks do play in the provision of business loans to small business. We approve well over 97 percent of all business loan applications that come before our members. We're very proud of that fact.
Businesses today seek credit from a lot of different sources. Some of them use credit cards. They have other parties, other institutions. We do approve a great deal of credit here in B.C., and we have a very low denial rate. We do have responsibility for prudence, and we believe that we exercise that.
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On the issue of what a tax reduction to banks might mean for small business, there is reference in our report to an independent study that was conducted on the cost of interest loans. Capital taxes account for 12 to 13 basis points in the cost of loans. On a typical loan to a small business you could save $1,700 to $2,000 over the course of a loan. So that would affect small business. It would be a beneficial result for small business.
H. Bloy: I'd be very interested in seeing those figures and how it works. My understanding of small business loans is that it gets harder and harder for small and medium businesses to get loans. And once they're in business for a while, it becomes even more difficult. I'd be interested in seeing your backup support. You do have a monopoly, we'll say, in the business of loaning money and in supporting small businesses.
P. Griffin: I'd certainly be very pleased to send you some information, and I will as soon as I get back to the office. We do make regular submissions to the industry committee at the federal level. We monitor our small business lending very, very closely. We have a lot of data that shows that we are providing a great deal of resources to small business.
J. MacPhail: Thank you very much for coming. It's nice to see you again. You mentioned Canfor. Of course, I'm sure you're aware that Canfor's taxation, plus Canfor's access to a public resource, is linked to job creation. That may change in the future, but currently the cutting rights of companies such as Canfor are linked to sawmills in the community and therefore to jobs.
What is your view on linkage between taxation and headquarters operations? I think that HSBC is the only one that is headquartered here. Are you still headquartered here? In the last two weeks you haven't changed or anything?
R. Bakos: We're still here, Ms. MacPhail. No intentions to…. We're here.
J. MacPhail: Good. So HSBC is the only institution headquartered here. I expect that would be of interest to any government.
P. Griffin: We are national and international organizations. We do recognize that HSBC does have its Canadian headquarters here in Vancouver. Our banks also have regional headquarters here.
If we're talking about national head offices and you get into that sort of situation where you make tax breaks dependent upon organizations having their head offices in a certain location, if you follow that through, would you limit it only to banks? You might consider going to all types of enterprises.
In today's market, today's environment, from our perspective it wouldn't be practical to tax organizations differently based on where their headquarters are. The main headquarters can only be in one location. Essentially, you'd be in a situation where you'd have a whole range of provinces competing against each other in terms of headquarters, and only one could possibly be the winner.
What we're talking about here is not just headquarters. We're talking about basic investment, basic activity, call centres, back-office operations — all these support mechanisms that banks need today. It's not just headquarters. They're all affected by capital tax. To have a higher capital tax on everything that a financial institution does affects all its investment decisions. It's not just its head office.
J. MacPhail: Would your position be that the amount of assets held within a province not be relevant to the taxation level?
P. Griffin: I think that right now it becomes a moot point if you don't have any capital tax at all. You've got a situation where Alberta does not have capital tax. What we're saying is that there should not be a capital tax.
When you don't have a capital tax, the issue of assets isn't an issue anymore. It's income. It's your profitability and how much money you're making and how many jobs you're creating through your profit, let's say. That's something that is reasonable and that one can rationalize, because if you have a good year you'll pay your fair share of taxes. And believe me, there'll be no complaining. But capital taxes are like a fixed cost. They're like the cost of bricks you put in a building. They're there year in and year out, good years and bad years. It affects investment decisions when banks decide whether they're going to put a facility here in B.C. or somewhere else.
B. Lekstrom (Chair): There is one more speaker; then time is running out.
R. Sultan: Thank you, Mr. Griffin. I think the committee does appreciate your strong words of support for the tax cuts we've already made. I'm also struck by your comments that the banks are paying a capital tax rate 20 times higher than other firms in this province — sounds like discrimination to me — and the corporate income tax reductions in Ontario and Alberta result in a corporate income tax 40 percent lower than ours. My question is: if we maintain this level of differential and discrimination, what is the outcome down the road? Could you speculate?
P. Griffin: The fact is that the banks are going through an evolutionary process now. Investment decisions are being made. In fact, decisions are being made as to where investments are made. Banks are making decisions now to place investments in certain areas outside Canada and within Canada. All I can say is this. I don't have a crystal ball, and I can't say what will happen if there's no change in taxes. I think one can fairly say that if you remain competitive here in B.C. on the tax environment, you know you have a lot
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of other good things going. We know that we do here in B.C. We have a tremendous climate. We've got a multilingual, multiracial community. We've got that west-coast access. We've got this synergy with Asia and with the western United States. There are lot of pluses here. If we could make ourselves business competitive in terms of taxes in the financial services sector, there's no reason why B.C. couldn't compete with any other jurisdiction in the world.
B. Lekstrom (Chair): Mr. Griffin and other members, I would like to thank you for coming out this afternoon and presenting. Certainly 15 minutes is not a great deal of time to put the presentation forward, but I do appreciate the effort you've put in. We certainly will take the information you've put forward, consider it in our deliberations as a committee and carry it forward from there. Thank you very much again.
P. Griffin: Thank you.
B. Lekstrom (Chair): Our next presenter this afternoon is Robert Clift, with the Confederation of University Faculty Associations of British Columbia. Good afternoon, Mr. Clift.
R. Clift: Good afternoon. I do hope the presentation we're going to be giving has been passed out to you. There are some figures at the back of it that I'll be referring to.
I'd like to thank the committee for allowing us the opportunity to present today. I've met with some members of the committee already, and I hope to meet with others of you. I have meeting requests into all of your offices, so hopefully you'll see me again in the near future.
The thing that struck us in the request for prebudget submissions, of course, is the issue of economic growth: that is, how are we going to grow the economy? One aspect that your government has addressed already has been with respect to stimulating the economy by reducing taxation. That has an effect to a point, but beyond that we need to have the trained individuals and the new knowledge being created in the province in order to be able to take advantage of that new economic stimulus. That is, we need to have well-trained people generating new ideas and new ways of doing things.
The primary stimulus for that in this province — and, I would argue, in the country as a whole — in fact comes from the universities. The universities are the primary source of our trained professionals. They are the source of our well-educated people with transferable skill sets that go on to work in industry or in fact create industries or become entrepreneurs. The universities are also the seat of where research and development are taking place not only in economic matters, dealing with new products and new processes, but also in new ways of looking at the thorny problems that we have as a society.
The next ten years will be crucial to our economy and our province in making a transition from what has been primarily a resource-based economy to the so-called knowledge economy — or you might call it the service economy. That infrastructure essentially is people. We have to have people in order to make that transition. Even in the resource economy, where there has been structural change, a lot of it is focused around different ways of working, different ways of utilizing our resources — value-added manufacturing, for one. For example, I might point to the work that's been done for many years out at UBC at the forest products research centre in creating new ways to use wood products. We're not just talking about dimension lumber. We're talking about ways to use waste wood, wood pulp and those types of things to more effectively use a limited resource.
Fortunately, we have a very comprehensive post-secondary system in British Columbia covering not only the universities, four general-purpose universities. We have two specific-purpose universities, the university colleges, colleges, training institutions, some first nations institutions, the Open Learning Agency. In effect, we are able to provide publicly supported educational opportunities throughout the province both in the classroom and at the worksite. Because of that, we're able to take advantage of this transition to the new economy, but we need to have the resources necessary to make that transition. That requires an investment on the part of government.
Certainly, there has been a growing investment on the part of not only the previous government but also the past governments. I remember that as a student activist — and Mr. Bhullar, when we were up at SFU together, will remember some of this — we had Mr. Hagen at the time, who is now a member of your cabinet. He was Minister of Advanced Education at the time and oversaw a tremendous expansion of post-secondary education in British Columbia. Unfortunately, that was from a starting point that was dismally low in the country. We continue to lag behind the rest of the country. Our growth has been tremendous, but we started from ninth or tenth place. We are not in the position where we can offer the same opportunities to British Columbians for education and training as other provinces. As some of you may know, B.C. only produces about 81 percent of the annual national average of university graduates. We lag behind the rest of the country. I believe we're number nine on that statistic.
We need to provide opportunities to our young people. It's more important if we consider that in this knowledge economy, in the service economy, we have traditionally imported the educated people we've needed in the province. For Mr. McGeer, when he was minister of universities, this was his explicit policy: to keep the university systems small and to import the people we need. It was a good decision at the time and certainly saved in the government's pocketbook, but we're unfortunately reaping the blow-back on that now.
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We're in a situation where those people that we used to be able to import into the province have opportunities available not only elsewhere in the country but also internationally. The highly trained people we need can stay at home, do as well as they do in British Columbia and have as many opportunities or in fact can go globally. We've seen this in recent years, having to do with CEOs and financial managers and such for startup companies, but we also obviously see this in information technology. This is the particular area that the government has already addressed.
It's not just information technology. We know that well-educated people — that is, people who've gone on and had a college program, a university degree or possibly even a post-graduate degree — are net contributors to the economy. They are more likely to be employed. They have higher-than-average salaries. Calculations have been done over a number of years indicating that the payback on the total subsidy of their university degrees or college diplomas is amply paid back through increased taxation revenue. Certainly, having an educated and adaptive workforce available makes opportunities for business to grow or for business to even begin in the case of entrepreneurs. It's invaluable. You can't do it without it.
That was a long first rant, wasn't it? Fifteen minutes isn't a lot of time to get all this in.
The problem, as I said, is that we have a historically small system. We've been playing catch-up for a lot of years, and we're still not there, so it's not going to surprise you when I say that one of the resources we need coming up is more investment in post-secondary education. I think we should be in a position where we can provide the same opportunities to young British Columbians as the governments of other provinces do. Part of the difficulty is that our growth strategy has not been based with an end-point in mind. We've had growth here and there. It's certainly welcome, but it has never been with an idea as to where we're going and whether we're providing enough money to get there.
In this respect, we certainly need the investment in universities and the post-secondary system in general in order to get there. We have to have the money to increase the student numbers. The comment has been made that we should be working more efficiently. I would argue that we have been doing so.
If you turn to the back of the presentation you've been handed, graph No. 1 will indicate to you the cost of educating a typical undergraduate indicated both in constant dollars — that is, in 2000 inflation-adjusted dollars — and in current dollars, indicated by the dotted line. As you'll see, in fact we're doing more with less money on a per-student basis at this point than we had in the mid-nineties. Historically we're certainly behind the curve.
The observation has been made — I would say over the past several years, during the term of the tuition freeze — that this is the fault of the tuition freeze. I think that's an easy whipping boy. It's not just the tuition freeze that's going on. Tuition accounts for about 20 percent of the income the universities get, 70 percent comes from government operating grants, and the remainder is from investment income and other funds.
If you turn over to graph 2 in the presentation, you'll see that the operating grants being provided to us by government have certainly been slipping in terms of inflation-adjusted dollars and have even been slipping in terms of the actual dollars on a per-student basis.
Although tuition may be an easy source of revenue in the coming years to deal with the difficulties we have in the system, I would suggest to you that if we're to rely on this alone, it's not an equitable treatment. Hopefully, somebody in your presentations will have more exact numbers, but I think in excess of 50 percent of students rely on student financial aid of some sort. Any increase in tuition fees is certainly going to affect the demand for student financial aid.
Moreover, if, unfortunately, we're looking at a three-year funding freeze — in light of the statements made by the Minister of Finance in the past weeks — then in order for us to keep our level of funding available to do our work at today's level, it will mean that student fees will have to rise at five times the rate of inflation each year that there's no increase in government funding. I think this is excessive.
While there will certainly be students who will pay these fees — I have no doubt of that; parents, students and re-entrant learners will find the money — the question is: at what cost? Certainly there's a personal cost in terms of these people putting out the money. I think the bigger cost, and the one that we haven't come to grapple with, is the whole issue of what the opportunity costs are for those people who choose not to enter post-secondary education.
The answer for those people not getting into the system is not money alone. Low tuition is not going to do it alone. Mr. Mayencourt and I have had an extensive conversation about this already. I have to tell you that re-entrant students — adult learners — are more price-sensitive, and students from low-income families are more price-sensitive. Certainly the research is very clear on this, and this may have a dampening effect on their desire to enter the system precisely at a time that we need to be able to develop the full human capital of everyone in the province.
There is great opportunity available to us. Unless we allow our people to gain the skills and the education they need to use that opportunity, this is something that is going to hold back our economy.
Just to go to graph 3 to explain that to you quickly…. Ten minutes runs very quickly indeed. There's been a proposal, and certainly the government has been suggesting, that future increases in education and health funding would be tied to increases in the provincial economy. Thinking about that, I just threw together this graph. This is changes in GDP versus changes in per-student funding. There's been virtually no correlation, which was an interesting observation. But given that this is a policy that's been articulated, I thought you may be interested in that.
It would seem to me that that alone, tying funding increases to GDP, is probably not the solution for us.
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First of all, it presumes that we're at a state now where we only need to deal with growth, and as I've said, we're behind the curve. We have a situation where we need to play catch-up. Were we at the point where things were well, then the GDP policy might work. Right now I don't think that's going to work.
Second is the typical inverse correlation between demand for post-secondary education and performance of the economy. That is, we've seen over the past several decades that when the economy goes bad, people tend to come to post-secondary institutions or, in some cases, adult basic education institutions to upgrade their skills, to retool themselves for a changing economy and such. If we're tied only to the GDP as our growth on funding, precisely at the time that more people are at the door is the time that we can't provide those opportunities.
As we said in the brief, were we in a situation where the system was fundamentally healthy, we could probably weather some of those demand increases at those times when the economy dropped and the demand increased, but right now things are very tight indeed in our sector.
Your problem, and the problem of government, is trying to reconcile the very legitimate need for post-secondary education investment versus your revenue situation. This is clear. As I was alluding to earlier, the biggest problem we've had in dealing with these issues — and not only the previous government; the governments before that are the only two I have experience with, since about 1985 — is that these decisions about funding and tuition fee levels and all these types of things seem — well, more than seem…. I know they've been made independently of what the big plan is in the system. In fact, there is no big plan. We make the funding changes; the system adapts. This has been an ongoing theme since I've been involved in student politics. It was back in 1984, Tony, that we were up at SFU.
If there's going to be a change and if this government is looking for change, probably the biggest change we can make is to set some goals for ourselves in the post-secondary system. We have articulated six goals in this document that we think ought to be the things we're looking towards. Let me go through those very quickly, as time is running out.
By 2007 B.C. will become a national leader in degrees awarded.
By the 2003-04 fiscal year B.C. universities will have per-student revenues equivalent to the 16 most profitable universities in Canada.
By 2003 we'll have strategies to retain our current faculty members and attract new faculty to sustain our education and research enterprise. This is much less controversial than when I first wrote it during the summer.
By 2002 we'll have an established capital infrastructure plan for the universities and colleges.
By 2003 provincial investment in university-based research and development will increase such that we'll receive a proportion of federal funds equal to our population. I haven't had time to get into that, but I know that the University Presidents Council will make that submission to you on the 23rd.
A recognition that changes in tuition policy are going to have some negative effects, and we can't look at just the tuition policy end of it. We have to look at the other side: what those effects are and what type of mediation we can take to address those problems.
These are suggestions. We recognize that we may be optimistic as to the time lines for these things to be accomplished. But I think, most importantly, that if we can set these goals and then continually measure ourselves to make sure we are going towards these goals — as a province, these are the things we are trying to achieve — we will be able to make decisions about resource allocation in a much more rational manner. Thank you.
B. Lekstrom (Chair): Mr. Clift, thank you for your presentation. We do have time for one quick question.
J. Bray: Robert, thank you very much. It's a good brief, and I appreciate the passion with which you speak about post-secondary education. I was heartened to hear that you'd read the prebudget consultation, so you also know that part of it talked about: should we change nothing on either the revenue or expense side while the structural deficit is upwards of $6 billion by 2004-05?
In your call for increased investment in post-secondary, can you offer a suggestion on where that investment may come, given the fact that we are required by law to balance the budget by 2004-05?
R. Clift: Well, if I were elected to the Legislature, I suppose I would have to answer that question. Fortunately, I wasn't, and that thorny task rests in your hands.
We understand very well what the pressures are here. The choices are exceedingly difficult; there is no doubt about it. Historically, the cost per service unit in the colleges and universities has been dropping, whereas they've been increasing in other areas. This is not to argue that those other areas should be cut, in the least. We have some very serious problems dealing with demographic shifts, particularly with our aging population.
Another serious demographic shift we're dealing with in the post-secondary community is that the 15-to-24 age group is growing at a faster rate in British Columbia than it is in the rest of the country, and the demand on us is going to increase even further. We're certainly not looking at the double-cohort problem that Ontario has, but we are having increasing demand from a growing young population also. Hopefully, you'll have these things in mind when you make those thorny decisions.
B. Lekstrom (Chair): Well, once again I'd like to thank you for taking time out of your schedule to come and present to our committee this afternoon. Your in-
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formation will be taken into consideration in the development of our report.
Moving on to our next presenters, we have Marc Lee and Seth Klein with the Canadian Centre for Policy Alternatives. Good afternoon, gentlemen.
S. Klein: Thank you, Mr. Chair, and thank you to the committee for this opportunity to present some of our centre's research findings and recommendations concerning the 2002 budget. My name is Seth Klein. I'm the director of the B.C. office of the Canadian Centre for Policy Alternatives. With me is Marc Lee, our research economist. The Canadian Centre for Policy Alternatives is one of this country's leading progressive economic and social policy research institutes.
We are tabling quite a substantial brief. We're just going to walk you through the main recommendations. The brief addresses most of the questions that you laid out in your consultation document. It also builds on a submission we made to the fiscal review panel earlier this summer, and I have copies of that with me as well. The centrepiece of our brief is an economic forecasting model that was provided to us by Informetrica Ltd., the Ottawa-based forecasting firm which we have used to test different spending and taxation scenarios. Marc is going to be walking you through that.
Just by way of introduction, we are here to urge you to seriously reconsider the government's fiscal strategy. The world has changed since the election, and given the situation, nobody should fault the government for thoughtfully re-evaluating its plan. Given the economic context we are now facing, now would be the worst time to cut spending.
The first main section of our brief we called "The limitations of tax cuts." It's now clear that the tax cuts will not be paying for themselves. In fact, provincial revenues will decline this year and next year for the first time in decades as a result of the tax cuts. Why are tax cuts a weak stimulus? In a word, it's what economists refer to as leakages. This is particularly problematic and acute here in British Columbia because of our weak manufacturing base. You see, to the extent that people spend their tax cuts, the goods that they buy aren't, for the most part, made in B.C. This is laid out in table 1 of our brief, which is on page 3. We estimate that the $2.1 billion tax cuts that the government is bringing in will create approximately 25,500 jobs. However, fewer than 9,000 of these are actually in British Columbia. Fully 31 percent of the total domestic GDP boost and 30 percent of the job creation as a result of the tax cuts go to Ontario. This compares to a 35 percent GDP boost in British Columbia. In short, Ontario gets almost as much of a fiscal boost from B.C.'s tax cuts as B.C. does.
The other leakages relate to the fact that people don't spend all of their tax savings. They save it, they put it into personal debt reduction, they take vacations abroad, and they invest overseas. These effects are compounded when people are worried about the economy as they now are. It's also compounded when tax cuts are directed primarily to upper-income earners, which is what's been done. That's laid out in table 2 on the next page of our brief. We've always recommended that tax cuts…. The priority should be turned on its head, and tax cuts should be directed primarily at the low-income people who don't have the luxury of saving, who spend almost all they have in their local economies.
The next section of our brief we called "The costs of spending cuts." The view that government spending in B.C. has been spendthrift is simply not supported by the evidence. It is ironic, I have to say, that as the world faces down the possibility of a recession, economists are encouraging — begging — consumers to spend. Many of the same economists and pundits are telling the government to be restrained.
There are only two meaningful ways of measuring government spending. You can measure it as a share of GDP, or you can measure it in real per-capita dollars. The reality is that both have been in steady decline since 1992. Outside of health and education, we have already seen significant cuts. That has put a tremendous strain on services like forestry, environmental protection, child protection. The upshot is that cuts cannot be made easily without painful consequences in terms of lost services and eroded programs. I'm going to pass it over to Marc now to walk you through those scenarios.
M. Lee: Thanks, Seth, and thank you to members of the committee.
As Seth noted, we use a fiscal framework model from Informetrica, a leading economic forecasting firm, to assess the employment and GDP impacts of four different combinations of tax and spending changes. These scenarios are summarized in our brief as table 3, and all start from a baseline of British Columbia prior to the business and personal tax cuts announced earlier this year.
Scenario 1 shows the impact of the government's tax cuts with no corresponding spending changes. The model predicts that the tax cuts will provide a modest economic stimulus of over half a billion dollars to the provincial economy, or just under one-half of 1 percent of GDP. They will also lead, other things equal, to an increase of about 8,800 jobs in B.C.
Scenario 2 shows the same tax cuts but this time offset, in part, by spending cuts. In this scenario, spending cuts of just over $1 billion — about half the value of the tax cuts — are implemented and include areas such as public sector layoffs, reductions in government purchases of goods and services, cancelled capital projects, reduced purchases of machinery and equipment and reduced transfer payments to individuals. While the numbers we've chosen here are somewhat arbitrary, we feel that they paint a fairly realistic picture of what spending cuts might actually look like.
In scenario 2 the stimulative value of the tax cut is effectively cancelled out, and then some, by the spending cuts. We find that GDP actually falls by $162 million, or 0.014 percent, and that provincial employment drops by 2,650 jobs. This is due to the fact that there are
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greater leakages from tax cuts than from public spending.
More radical spending cuts are considered in scenario 3, which essentially doubles the spending cuts that we have in scenario 2. Scenario 3 is what we call a balanced-budget tax cut, where the value of tax cuts and spending cuts is exactly the same. The result from this scenario is a much steeper drop in GDP, by about $870 million, or a decline of 0.73 percent. This corresponds to more than 14,000 job losses.
Finally, in scenario 4 we change the terms of the discussion. In this scenario we reconsider the tax cuts, keeping only the personal tax cuts for the bottom two brackets and only for 2001. This scenario rolls back the upper-income tax cuts that were granted by surprise when the tax cuts were announced in June and does not proceed with the 2002 personal tax cuts. On the corporate side only the elimination of the provincial sales tax on machinery and equipment is carried forward, while the other corporate tax cuts are rolled back.
In effect, this scenario includes an increase in spending of more than $1.3 billion. However, the combined tax cuts and spending increases amount to exactly the same total budgetary cost as the full-blown tax cuts as set out in scenario 1. The difference is that the money is reallocated from tax cuts to spending in order to boost the stimulative effect on B.C.'s economy.
The differences between scenario 1 and scenario 4 are telling. The fiscal shift outlined in scenario 4 increases the GDP impact to almost $1 billion, or 0.83 percent of GDP. This effect is much stronger than the tax-cuts-only scenario, which was just over half a billion dollars. In terms of employment impact, scenario 4 creates more than 16,000 jobs, compared to 8,800 in scenario 1.
Like scenario 1, scenario 4 poses fiscal challenges in terms of the impact on provincial deficits and debt. However, the case is included to demonstrate that the government does have options that would be more beneficial to the provincial economy. If such a proposal for large-scale spending increases is not taken seriously by the government due to its fiscal implications and despite a stronger stimulative effect on the economy, then surely the same must be true for the already-announced tax cuts.
We believe that the results of our model are not unique. While the specific numbers may vary somewhat, similar models by other forecasting firms or even by the Finance ministry itself would likely arrive at broadly similar conclusions. Matching tax cuts with spending cuts is a recipe for increasing unemployment and lowering provincial GDP.
Given the shaky nature of B.C.'s economy right now, we urge that the government be guided by the principle of do no harm. Dramatic tax cuts were reckless before the economic turmoil; further tax cuts and spending cuts now would be irresponsible. The best way to help the economy and create jobs is with a significant increase in spending, even if it increases provincial debt in the short run.
In the last part of our brief we make a number of recommendations for where we feel the priority areas for spending are, the main one being an anti-poverty strategy. We feel that this would be the most appropriate response, given the current state of the B.C. economy.
S. Klein: Our recommendation is laid out in scenario 4. We are urging you to scale back the tax cuts and to repeal the deadline for balancing the budget. Spending cuts will result in the opposite of hope and prosperity for all. We think that's what these numbers show fairly clearly. A fundamental rethink is needed. The government ran on a program of tax cuts paying for themselves, and to say, four months into the term, that the experiment isn't working and now spending cuts are needed seems a little harsh. We are saying that if that is the case, then the experiment needs to be called off.
B. Lekstrom (Chair): Mr. Klein, Mr. Lee, I thank you.
R. Sultan: Thank you for the presentation. I'm very interested in your model describing the leakages of our spending out of the economy. I'm sure those leakages occur. I wouldn't doubt that perhaps even Mr. McCracken and Informetrica have a bit of a fix on the magnitude of those leakages, but it seems to me that you and he have not considered two other rather large leakages out of the economy: the leakages of personal taxpayers and business taxpayers. It's a very static model, assuming we seal the border so people can't go to Alberta or move to a friendlier tax environment.
My question is: how do you in Informetrica account for the fact that in a high-tax strategy, which we've followed in this province, we managed to drive the growth rate and the economic performance of this province down to the cellar? You're advocating a return to that regime. Can you explain how that adds up?
M. Lee: I'd actually dispute the claim that B.C. was a high-tax province prior to the tax cuts. If you look at the tax rates that were being paid by most British Columbians — right up to, say, about $100,000 worth of income — they were among the lowest in the Canada. If you add total taxes together so you're including property taxes and payroll taxes, only Alberta has had a major advantage over B.C. If you look at the corporate side of the equation, B.C.'s taxes were perfectly in line.
I think the leakages aspect of the model is quite accurate. It's based on historical trend data on interprovincial trade flows, and we know we are a net importer when it comes to our interprovincial trade with the rest of Canada.
S. Klein: Incidentally, the leakages are actually greater than what you see in the model there. The model only considers within Canada. If we incorporated leakages internationally, they would probably be greater.
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Just to add one thing to what Mark said. Overall, revenues relative to GDP in British Columbia were already the third lowest before we began this exercise. Even in the migration trends, for the last few years there has been what I actually call a brawn drain, rather than a brain drain, primarily to Alberta for employment reasons. What we know about interprovincial migration of the university-educated people that Rob was just speaking about is that British Columbia over the 1990s was by far and away the single largest net beneficiary of a brain gain.
J. MacPhail: Thank you, gentlemen.
Later today the board of trade is going to come before us and make a presentation. They've already released that presentation, which is to say that the Liberal government should not cut program spending. I expect that they will only agree with half of your presentation, which is to not cut program spending. Is there an arithmetic way that you can look at one of your scenarios here to say how the combination of full-blown tax cuts and zero cuts to program would affect the GDP?
S. Klein: That is scenario 1.
M. Lee: Scenario 1 is sort of a status quo, assuming that all of the tax cuts go ahead but we don't actually go ahead with any spending cuts next year.
J. MacPhail: Okay. So that's basically what the board of trade's argument is.
S. Klein: Yeah. I heard about their brief on Friday on the news. They were recommending, as we are, that you push back the balanced-budget date. I found it heartening to hear that not all business groups are prepared to fall on an ideological sword on this one. They, like us, are saying that if you cut spending to the extent that is being talked about in the open cabinet meetings, it is a shock to the economy that a lot of businesses may well regret.
B. Lekstrom (Chair): Thank you very much, Mr. Klein and Mr. Lee, for your presentation. Again, I apologize for the time frames. We have a large number of presenters today. I thank you for taking the time and putting your submission forward.
M. Lee: Thank you for having us.
B. Lekstrom (Chair): Our next presenter this afternoon is Debra McPherson, with the B.C. Nurses Union. Welcome.
D. McPherson: Thank you. Should I start or wait for Mr. Mayencourt?
B. Lekstrom (Chair): I think we could begin.
D. McPherson: Too bad, because I was going to begin by acknowledging the presence of my own Member of the Legislative Assembly.
B. Lekstrom (Chair): We'll mention that when he comes back.
D. McPherson: Yes, a particularly pointed remark.
Thank you very much, ladies and gentlemen. Good afternoon. I'm here representing more than 25,000 unionized registered nurses and registered psychiatric nurses across the province. Our members provide vital health care services in hospitals, long-term care, nursing homes and in the community across this province.
Our members have had many ideas about priorities for the next provincial budget and ways to use that budget to make the health care system in this province more effective for the patients we serve. Our members are in some of the best positions to develop those ideas and make these suggestions because, unlike the people who manage and administer the system or the politicians who make the ultimate decisions about health care delivery, nurses are the people who are there with the patients 24 hours a day, seven days a week, 365 days a year.
I'm afraid I have serious misgivings about giving you these suggestions that nurses believe would make a difference. That's because I believe the government has chosen a course that will not make health care services or any other public services in this province more effective, no matter what good suggestions you receive, because that's not really what your main priority is. Every British Columbian who listens to the radio or reads a newspaper knows that the government's main objective in this budget-making exercise is to cut public spending and to cut even if arguments can be made that more public spending is needed.
British Columbians know the government wants to slash public spending so it can cover the gaping hole it created in the provincial treasury when it enacted its huge tax cuts, the biggest beneficiaries being the wealthiest British Columbians and big business. I believe this course of action will cause more hardship for nurses and their patients. It will make the jobs of nurses and other front-line health care providers much more difficult if the government persists in this approach.
Widespread massive cuts in public spending and government services were not what your party promised during the election campaign at all. Your party said that tax cuts would increase government revenue, not cut it. I have it here in my union's magazine. They published a letter during the election that Gordon Campbell himself wrote to us. "Health care is a priority for British Columbians, and if necessary, we will increase the budget to meet patients' needs…. Cutting personal income tax does not reduce government revenues. Every jurisdiction in North America that has cut income taxes has seen an increase in revenues to government, even here in B.C."
Now you're telling us we've got no choice. The tax cuts are coming, so you want British Columbians to tell
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you how we think you should do the cuts to services. What you've presented us with is really a false choice. You want us to choose which bad medicine we prefer to take, when we know full well that none of these remedies you're allowing us will make things better for British Columbians. Well, as a nurse and somebody who cares deeply about the welfare of this province, that is not what I'm going to tell you. I'm not going to tell you how to cut or where to cut; I'm going to tell you what should be in your next budget if you're really interested in improving services to British Columbians.
Before I go on, I'm going to issue a challenge to you and your government. The challenge is this: assess honestly the impact of the cuts you're planning on the health and well-being of British Columbians, submit that assessment to an unbiased panel for review and, if it is shown that the course you are following is foolhardy and reckless, commit yourself to changing course and doing what really needs to be done to improve the health of British Columbia and British Columbians.
We believe our patients and all other British Columbians would be far healthier if the government's budget addressed four major areas. One, a major emphasis on improving the social determinants of health, enhancing the overall health status of British Columbians with direct measures to increase the incomes and enhance the living conditions of our society's most underprivileged and economically deprived citizens.
Secondly, there should be a major emphasis on illness prevention and health promotion through the development of community-based health care initiatives controlled by citizens where they live.
Thirdly, a major expansion in the role of nurses and other health care providers working as part of the team with physicians to improve first-contact or primary health care services.
Fourthly, continuing efforts to address the retention and recruitment of nurses and other key health care providers by ensuring competitive compensation, improved working conditions and expanding available education spaces in B.C. colleges and universities.
These initiatives will require more, not fewer, resources. They will require increased spending not only on health care but also on social assistance, government-led employment initiatives, public housing, child care, environmental protection, transportation and other programs.
For many years now the B.C. Nurses Union has been calling on those controlling the provincial government to sponsor the development of community health centres, where nurses and other health care providers would work as part of the team with physicians to enhance first-contact and preventive care across the province. We have copies of the briefs we submitted, and I believe we've given you those as well.
B. Lekstrom (Chair): Yes.
D. McPherson: We can provide your committee and your government with exhaustive research and case studies that show such centres are effective in keeping people out of hospital through follow-up phone calls from nurses and home visits, thereby reducing the inappropriate use of the more expensive prescription drugs — expensive, by the way, because of the federal government's 20-year patent protection given to big business — and enhancing the social and emotional well-being of patients.
In our brief on the previous government's regionalization scheme, we argued that community health centres should provide the focus for any restructuring of health. Unfortunately, the move to regionalize health care was more concerned with changing governing structures than delivering services to people.
We have also been calling on the province to greatly increase the use of nurse practitioners and support the use of registered nurses and registered psychiatric nurses to the widest scope of their practice. The use of nurse practitioners and RNs working to the full scope of their practice would help encourage nurses to keep working in B.C. and provide badly needed assistance in the rural areas of British Columbia where medical personnel are frequently in short supply.
When doctors are reporting shortages of general practitioners even in urban and suburban areas of British Columbia, nurses working to a full scope of practice or trained as nurse practitioners would contribute to sensible cost-effective solutions in health care.
Once again I have to say that these suggestions are ideas that cannot be implemented successfully in the context of the government's agenda. They cannot be implemented when the government is committed, above anything else in this budget consultation exercise, to cutting public spending.
They are ideas for making life better for ordinary British Columbians, when we believe the government's agenda will make things much worse. The fact of the matter is that you cannot implement new ideas for improving the delivery of health care or any other public service when your main priority in composing this budget is finding ways to cut spending.
The ideas I am presenting involve long-term changes, long-term improvements. They are improvements that could, over time, provide better service for less cost in this province. But initially, to implement these measures without cutting existing services, you must be prepared to accommodate increased spending. We know from previous attempts to restructure health care that you cannot implement long-term improvement when your priority is short-term cuts, especially when those short-term cuts are designed to pay for the hole created by ill-advised tax cuts.
Even some of the government's strongest supporters have termed the tax cuts implemented this summer as extremely reckless. Some of those supporters are pleading with government to go slow on slashing and burning the public service. Those tax cuts were reckless indeed, and in the next budget the government should revisit them.
I was in Victoria for the government's budget presentation on July 30, and I was stunned that the Finance minister gave away about another $500 million in tax
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cuts to business on top of the $1.5 billion already announced. The decisions appear to have been taken without much regard to the weakening U.S. economy or the looming softwood lumber decision, not to mention proven needs for improvements and enhancements in public services, many of which were promised by the Liberals themselves during the election campaign.
I heard the Minister of Finance justify those blows to the provincial treasury by predicting economic growth of 2.2 percent this year and 3.8 percent next year. Scarcely one month later the minister was forced to backtrack on those predictions by at least 1 percent, and a couple of weeks later he was forced to admit the deficit would be another half a billion dollars larger — almost $2 billion. The factors that gave rise to those revisions all occurred before the events of September 11.
I ask you: where is the sound business plan that the current government was fond of accusing previous governments of never having? Where is the sound business plan in the government persisting in its course, now thinking about cuts of up to 50 percent in ministries other than Health and Education, which will get no money to cover inflation, population growth or other needs?
In health care, that means health authorities are being forced to close beds and cancel services around the province to meet their budgets. The government is also planning major cuts to Pharmacare. Then there's the delay in implementing the ban on secondhand smoke in the hospitality industry, leaving workers exposed to a proven health hazard.
This is only the beginning. We are quite convinced that what's motivating the government here is not a sound business plan but ideology pure and simple — an ideology of the purest and most simplistic type that motivates the government to proceed in a direction that can only be considered the ultimate in recklessness and irresponsibility.
What is fuelling this reckless and ill-advised looting of the provincial treasury and these harmful cuts to public services is a desire by this government to hand over the delivery of those services to the private sector. The government's motive is quite simple and quite diabolical. By refusing to increase funding to health care to cover inflation and increased costs due to an aging population and other demand pressures, the government is starving the public system, cutting it through neglect and setting things up so that it can be privatized with ease.
Privatization would be highly advantageous to the few wealthy investors running private health care companies, but it would harm the vast majority of the population who rely on the public system. Privatization is something else the Liberals promised they would not do. The Premier was quite clear on that. Now that he is in power, he is doing it anyway. We will have more to say on this whole issue when we appear before the Select Standing Committee on Health later this month.
You asked in your budget document for suggestions for re-establishing B.C. as an economic leader. I'll tell you what you should not be doing. You should not be creating the conditions for a made–in–British Columbia recession through reckless tax cuts which are now causing you to cut spending and jobs to accommodate them. Instead, you should be allocating the necessary spending to ensure that we have a top-notch public health care and education system, not one struggling to survive.
In fact, I should not have to remind you that the key to a strong economy is a well-educated and healthy population. I ask you to heed the words of Charles Baillie, head of the TD Bank, who argued that Canada's single-payer public medicare system gives this country a key competitive advantage compared to companies operating in the United States, where the cost of employee health care premiums through private insurance is so high.
The tragedy is that we have seen what the provincial government is setting in motion all before. The current crisis in health care has its roots in the great campaign for spending cuts and tax cuts that raged across this country and abroad starting in the 1980s, in which powerful and privileged voices convinced governments everywhere to tighten the screws on spending while they made war on the deficit the number one priority. The result in Canada was the federal budget of 1995 that stripped billions of dollars from the health care system, a blow our health care system is still reeling to recover from.
I do hope your committee considers some of the suggestions we've given you to improve health care delivery and the well-being of British Columbians. We have others, and we'd be pleased to discuss them with you, but I won't hold my breath. Improving the lives of ordinary British Columbians is not what this budget consultation exercise is all about.
You asked for suggestions about what performance measurements or targets should be established. Nurses across this province will be holding this government accountable for its health care promises. We will establish our own performance measures and targets against which to judge you.
First, how many new nurses will you attract and produce in British Columbia? How many nurses will leave British Columbia while hundreds more nurses reach retirement age and leave the system? How many more procedures and surgeries will be cancelled because of the lack of nurses in the public health care system? How much more effective will be the use of nurse practitioners and registered nurses working to their full scope of practice? What will be the impact of public spending cuts and public service cuts on the overall provincial health status? I am speaking here of cuts to things like public housing, cuts in assistance to tenants in resolving disputes with the landlord, and benefits to seniors, the disabled and other people living on fixed incomes or with chronic illnesses.
I end by repeating the challenge I issued earlier to your government: assess honestly the impact of the cuts you're planning on health care and the well-being
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of British Columbians. Submit that assessment to an unbiased panel for review. If it is shown that the course you are engaging in is foolhardy and reckless, commit yourselves to changing course and doing what really needs to be done to improve the health of British Columbians. Thank you.
B. Lekstrom (Chair): Thank you very much, Ms. McPherson. I would look to members of our panel for questions.
R. Sultan: Ms. McPherson, I would begin by observing the good news that this government is already implementing the four major areas you've recommended on page 2 of your presentation — in particular, a major emphasis on improving the social determinants of health and, as you pointed out, the overall income and well-being of British Columbians. We're trying to repair the ravages of ten years of destruction on this economy to provide the tax revenue that can support the sort of health system that British Columbians need and deserve.
Certainly in point No. 1, I think we're foursquare on your side, and we're glad that you agree with the government strategy and similarly on points 2, 3 and 4. This is squarely what this government is doing. We won't take credit for all of them. Many of these are longstanding policies of the government under the previous regime, and they're being continued.
I have to suggest that you know a lot more about nursing than you do about economics, particularly when you hold forth and suggest that we have ravaged the health care budget of this province, that we've cut billions out of spending and indeed that we treated your union membership rather shabbily. I wonder how many British Columbians would be delighted to get the 24 percent salary increase that you very effectively negotiated for your membership. Are you aware, in fact, that the health budget of British Columbia went up $1.2 billion in the current year — $1.2 billion, about a 15 percent increase? Unfortunately, 15 percent on 15 percent on 15 percent is unaffordable. I appreciate that you spent most of your years studying nursing and not economics.
Finally, I would have to ask: when you talk about recklessness, how many of your 5,000 nurses who submitted their resignations actually resigned at the end of the day after they received their 24 percent pay hike? I'm very curious.
D. McPherson: Well, I thank you for your condescension. First of all, I want to say to you that little will be gained in improving the social determinants of health by the government's cutbacks, especially if they affect programs that go to our more needy. While it's true that I may know more about nursing than economics, I think you've had some very solid economic discussions here with my friends from the CCPA, so I don't think I need to rely on that. I do know about health, however, and I do know that the three-year budget freeze that is being imposed on the regional health boards will not allow for expansion of preventive programs, expansion in home care services, care for our elderly and seniors, and at the same time enforce more reductions in our acute care beds.
We have now, already, around this province hundreds of beds closed and people waiting for surgery because we do not have enough investment in the education of nurses and in keeping nurses in this province. In terms of how many nurses have left this province, you pose an interesting question. Quite frankly, the data on which this health care system is managed is pathetic. Any manager in private industry who ran the system the way this health care system is run, by guess and by golly rather than by solid data, would have been fired a long time ago.
The nurses of this province have been demanding for some time the consolidation of health care information including human resource information, the likes of which is not going to happen under your budget cuts. I guess we're going to continue to manage it by guess and by golly.
B. Lekstrom (Chair): We'll recognize Mr. Penner, and then we'll move on.
B. Penner: It's interesting to hear your acknowledgment that the private sector is better than the government in certain things. I, too, was curious about how many of your members followed through on your threat that you made this past summer that 5,000 nurses would resign. I heard you just try to dodge that question. You've encouraged accountability on the government's part in terms of how many new nurses will be attracted to British Columbia, and I think that's a salutary goal and a worthwhile measurement.
I note that so far this year, in fact, the number of nurses attracted to British Columbia is up significantly over previous years. Perhaps that's in no small part due to the wage increase that's already been completed for nurses. I think you were quoted, if I've got it here correctly, as saying: "The wage increase that we got is a good one in terms of overall wages across the country." That's a quote attributed to you.
I think there have been a number of steps taken to improve the lot of nurses in British Columbia. Certainly that's what I'm hearing from people in my community who are involved in that profession. As well, you're probably aware that the government has announced a multi-pronged strategy to open more training positions for nurses, to offer new initiatives, to encourage B.C. nurses who are not working in their profession to return to the health system, to recruit more foreign-educated nurses, to provide nurses the chances to upgrade their skills within our system, to fund new equipment to help nurses avoid workplace injuries and to forgive student loans for graduates of accredited nursing schools who go to work in underserved areas of B.C. Those are all steps that the government's taking. Do you have any additional ones that you can recommend? Do you wish to provide some feedback on how things are going in terms of those current initiatives?
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D. McPherson: As you know, those initiatives are underway, but I think what's actually happening here is an attempt to revisit the past in an effort to stop looking at the future. It's the future three years in health that I'm talking about here. These are three years which, according to the projections of our regional health boards, will force closures of hundreds more beds and cancellations of more surgeries and ease the movement of those things to the private sector.
They also will or will not allow for some of the key initiatives that we've talked about: improvement of primary health care, improvement of community health services and maintenance of high-quality health performance indicators such as the health of the population — the social determinants of health.
There are some really significant things the government could be doing about this. One of them would be to follow through with the ban on smoking in some of the public's workplaces, which is a proven health hazard and already drains the public purse by causing disease that later needs treatment. I think you need to reflect not on what's been but on what's ahead of us. I think what's ahead of us for health care is not good in the context of a three-year freeze on the health care budgets.
B. Penner: I'll give you a third opportunity to answer the question which you have so far steadfastly refused to answer, and that is: how many of your members followed through on their threats to resign this past summer? You said that 5,000 would.
D. McPherson: I didn't refuse to answer the question. What I said was that we have no data. Nobody in this province has any way of knowing that — neither the employers nor the government nor the Nurses Union nor the Registered Nurses Association. I believe I did give you that answer in response to the very first question.
B. Penner: But you said you had 5,000 letters in your hand.
B. Lekstrom (Chair): Order, please. Ms. McPherson, I would like to thank you. Fifteen minutes for the presenters, as I've indicated, is a very short time. The one comment I would like to make is on your view of what this committee is here for. I believe it is to improve the quality of life for British Columbians, and that's why I'm sitting here participating. If the take was that we're here just to be seen and not to listen, I would like to correct you on that. It's our job — and certainly I can speak for myself — to be here to listen and hear ideas on how we can better the quality of lives in British Columbia. Being a realistic person, I want to tell you that there are significant challenges ahead for each and every one of us. I thank you for coming forward today.
J. MacPhail: Mr. Chair, I have a point of order, please. This committee is an all-party committee. Just because there are ten Liberals and one New Democrat, it is not a committee to advocate the government's position.
There are presenters who come forward here….
B. Lekstrom (Chair): Your point of order, Ms. MacPhail?
J. MacPhail: No, I'll finish, thank you.
B. Lekstrom (Chair): Your point of order?
J. MacPhail: I'm getting to it.
B. Lekstrom (Chair): Then soon.
J. MacPhail: There are presenters who come forward that I don't agree with, but they have a right to express their opinions, and I ask questions. Committee members here are advocating a government position, arguing with the presenters and have done so for all those days…
B. Lekstrom (Chair): Okay. We will carry on, Ms. MacPhail.
J. MacPhail: …and I would ask you to stop. I am not interested in the government's position. I am interested in the presenter's position.
B. Lekstrom (Chair): I'm not sure if you just weren't listening to what I said, but that is exactly what I said this committee was here to do: listen to the people…
J. MacPhail: Well, then chair accordingly.
B. Lekstrom (Chair):…and we certainly will.
J. MacPhail: This witness was just cross-examined. She was just cross-examined by one of your members, and that's inappropriate.
B. Lekstrom (Chair): Order, please. Order, Ms. MacPhail.
J. MacPhail: It's completely inappropriate.
B. Lekstrom (Chair): Have you finished waving your finger, so we can continue? Because we will continue.
Thank you, Ms. McPherson.
D. McPherson: I'd like to acknowledge what you said, Mr. Chair, but I would say that if the goal is to have meaningful consultation, certainly a little more lead time would be important. For example, on Friday at 4 in the afternoon I received a fax from the Ministry of Health that I'm expected to make a presentation at a consultation tomorrow.
B. Lekstrom (Chair): I can certainly speak to that. The timing is something we all share that concern for. We have to report out. We are a committee of the Leg-
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islature and are mandated to complete our findings and recommendations and report by November 15. So I will apologize for the short timing on this. It has been a concern right around the province.
D. McPherson: It is in the whole of the consultation process.
B. Lekstrom (Chair): Fair enough. Thank you.
We will move on to our next presenters, who are Richard Rees and Robin Elliott with the Chartered Accountants of British Columbia.
R. Rees: Good afternoon. My name is Richard Rees, and I am the chief executive officer of the Chartered Accountants of British Columbia. The Chartered Accountants of B.C. represents 8,300 members in the province. As chartered accountants we provide expert advice to a variety of small and large organizations in both the public and the private sectors. With me here today is Robin Elliott, a partner with Manning Elliott chartered accountants in Vancouver and the first vice-president of the Chartered Accountants of B.C.
We greatly appreciate the opportunity to present our perspectives on the 2002 B.C. budget and look forward to seeing the committee's final report in November. You may be aware that the Chartered Accountants of B.C. have recently released the 2001 edition of the B.C. Checkup, a report that presents a comprehensive profile of B.C. as a place to live, work and invest. Copies have been provided to you today. The report highlights the challenges that our province faces as a place to invest. This has provided the base for the recommendations we are going to make in the presentation today.
To keep our presentation short, we will focus on two key areas: competitiveness and fiscal management. I'll now turn the presentation over to my colleague, Robin Elliott.
R. Elliott: Good afternoon. My name is Robin Elliott. I'm the first vice-president of the Chartered Accountants of B.C. and a partner with the CA firm Manning Elliott, with offices in Vancouver, Surrey and Abbotsford. We are a mid-sized firm that advises small and medium-sized businesses on business and certain investment decisions.
First, let me say that the Chartered Accountants of B.C. were pleased with the business tax cuts announced in July at the economic and fiscal update. Eliminating the sales tax on machinery and equipment, reducing the general corporate income tax rate and phasing out the corporation capital tax sent a strong signal to investors that B.C. is open for business. We feel that once the Canadian and U.S. economies begin to recover from the current downturn, B.C. will be better positioned to attract investment as a result of these business tax changes and because of the personal tax cuts that were announced in June of this year.
In budgetary terms, the Chartered Accountants of B.C. believe that the tax base is the most important asset the government has and that growing the tax base is one of the most important goals of fiscal policy. We believe the tax cuts will stimulate economic activity in the near future, which in turn will grow the tax base and provide for greater revenues for the provincial treasury.
However, serious challenges remain if we are to re-establish B.C. as an economic leader. We support the process of the core services review. We believe that targeted spending cuts are a better route to go than across-the-board spending cuts. However, we do not underestimate the difficult decisions ahead for the government as it attempts to bring expenditures under control in this time of economic uncertainty.
The government is facing some major challenges around competitiveness. As you know, both Alberta and Ontario have announced business tax reductions that will be phased in over time. By 2004 a company in B.C. with taxable income between $200,000 and $400,000 will face a general rate over four times higher than that in Alberta. By 2005 the equivalent firm will be three times higher than a similar company in Ontario. Both Alberta and Ontario are reducing their general corporate income tax rate to 8 percent by 2004 and 2005 respectively. While B.C. has made progress by reducing its general rate from 16.5 percent to 13.5 percent, effective January 2002, the province needs to clarify what business tax changes are going to take place in the future so that we can remain competitive with Alberta and Ontario.
While cutting business taxes in a slowing economy may seem questionable, we point out that B.C.'s corporate income tax revenues in 1999-2000 were $408 million lower than they were in 1996 and 1997, in which there was a poorer investment climate. It's the contention of the Chartered Accountants of B.C. that the biggest threat to corporate income tax revenues is a poor economy. While reduction of business tax rates may seem questionable at a time of economic uncertainty, it may be the only way to ensure that B.C. can attract new investment to the province and retain old investment and prosper in the future.
It should be noted that the Ontario government recently accelerated its business and personal tax cuts amid a slowing economy. Tax cuts that were to take effect in Ontario on January 1 of next year were implemented on October 1 of this year.
We are recommending to the government that a time line be set to reduce our business taxes to meet Alberta and Ontario. While we may not be able to meet the same time frame as they have set out, we do want to send a clear signal to investors that we are going to eventually match these tax levels. The importance of spelling out a multi-year approach to tax changes is that businesses often make business decisions years in advance of their actual implementation. Business models used to assess competitiveness will show B.C. as being more expensive than Alberta or Ontario in 2004 or 2005.
We believe that the Government Caucus Committee on Economy may be the appropriate vehicle to
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study business taxation levels and to advise on their timing of implementation.
I'd now like to turn it over to Richard Rees to discuss issues around transparency and accountability.
R. Rees: With the rapid pace of change taking place in the provincial government, we feel that transparency and accountability are more important than ever. We were pleased that the government amended the Budget Transparency and Accountability Act this year to legislate the use of generally accepted accounting principles, or GAAP as they are called, in government financial reporting. GAAP requires that the government include schools, universities, colleges and institutes, and health authorities — also known as the SUCH sector — in the summary accounts. This inclusion of the SUCH sector has been recommended for some time by the auditor general, the budget process review panel and the Chartered Accountants of B.C.
We acknowledge that changing accounting practices throughout government is a significant undertaking that will take some time. However, the information is available now, as it is currently disclosed as part of the auditor general's qualified audit opinion in the Public Accounts. A complete accounting for all government is essential to understand the impact of the government's actions on all parts of the public sector. Public accountability and transparency call for no less.
It would be unfortunate if the public accounts continue to receive a qualified audit opinion by the auditor general of B.C. This will not help the credibility of the government's financial representations. In this time of change and restructuring, we feel that quick implementation of GAAP would be in the public interest and would demonstrate the government's commitment to openness and accountability.
I would also like to touch on the issue of debt management. By the end of the 2001-2002 fiscal year, B.C.'s total provincial debt is estimated to reach $37 billion, and total taxpayer-supported debt is expected to be $28.3 billion, or 21.8 percent of GDP. While the province still boasts one of the lowest debt levels in the country, it has been going in the wrong direction for most of the last decade. B.C. had the lowest debt-to-GDP ratio in Canada in '91-92; it is forecast to slip to third in Canada by the end of this fiscal year.
According to the fiscal review panel report in July 2001, deficits in the short run and some associated increase in debt will be necessary in B.C. until the proper restructuring of government can take place. However, the panel pointed out that unless the deficit problem is addressed, there is a danger that the amount of debt will get out of hand. As deficits continue, mounting interest costs make future deficits even harder to control.
The Chartered Accountants of B.C. are pleased that the government strengthened the balanced-budget act in the last legislative session and are encouraged that the new government has mandated balanced budgets by 2004-05. We are aware of the tough challenges ahead for the B.C. government as it strives to meet this target.
An important element missing from the fiscal management goals for the province, however, is a long-term debt management plan. It is the opinion of the Chartered Accountants of B.C. that a debt management plan with measurable benchmarks for debt reduction is a crucial part of the government's fiscal management strategies. As you may know, the previous government introduced a long-term debt management plan back in '95 but eventually abandoned the plan. Currently, there is no long-term plan in this province to tackle the growing debt. We would like the government to address this omission in the upcoming budget.
Thank you very much for giving us time to speak to you today.
B. Lekstrom (Chair): Mr. Rees and Mr. Elliott, I thank you for your presentation here this afternoon. Just prior to going to questions, I will explain that the issue of what we're here for is to listen to the people and the business communities of British Columbia. Please, let's keep our questions in line so that we can move this process ahead, if I could ask that of the committee members.
I. Chong: In keeping with the goals of this committee to seek public input, I thank you, Mr. Rees and Mr. Elliott, for appearing before us. I know Mr. Rees appeared last year when this committee sought input. My questions to you are simply this. Firstly, are you working with other organizations and other groups who have confirmed that the tax cuts, both personal and business, have thus far begun to attract people and investment?
Secondly, you have heard from other presenters earlier today requesting that we do not proceed with tax cuts or that we not control government spending. If the government were to accept that approach, which has been an approach taken for the past ten years, what impact would you and your group, and other organizations you consult with, feel that would have on our economic growth and our job creation?
R. Rees: We're not working formally with any other group. We simply represent the membership. I might ask Robin to comment specifically on his experience. Robin advises people about investments — people who are here — and he might be able to give you some feedback.
I. Chong: Before you do, perhaps…. I know there are groups such as the Investment Dealers Association, who specifically go out and speak with people who want to invest in various provinces and various countries, so I thought there might be a connection with these other groups.
R. Rees: We have no formal association with any of those groups.
I. Chong: If you could answer those….
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R. Elliott: Certainly, I'd be pleased to. Having given advice to small business operators and larger ones as well, one of the questions that comes into play is: what is the tax rate in a particular jurisdiction? As I was telling Mr. Rees before we came over, I've had several clients who had been planning to move to Alberta and take business with them — very easily done, mainly an investment type of arrangement. Based on the tax reductions that occurred, they have decided not to do that. We quite often do analysis of business opportunities. That certainly is one of the variables we look at.
I. Chong: The second question: if we were to take a step back, as has been suggested by other presenters, have you heard people in the business community speaking about what their plans would then be?
R. Rees: I think the challenge there is that we've got to be competitive. Actually, again I refer to you to the Checkup report, which shows that in the second half of the nineties, when our tax rates were high and we didn't have a positive investment climate, corporate tax revenues in this province went down significantly because we weren't generating the level of economic activity.
As Robin said in his comments, the tax base is one of the most important assets. We heard here earlier about the people being an informed asset, and that's absolutely true, but to government, you've got to nurture your tax base. On the personal level, people don't move out of the province very easily, because it's a considerable upheaval to remove yourself and move somewhere else. But for businesses, where you're just talking about financial — money and things like that — it's really easy to move to another jurisdiction.
We've suffered for several years. We've appeared at numerous hearings and forums around the province and in front of the past government indicating what I've been saying for years. My members have been telling me again and again that people are taking investment dollars out of the province. When that happens, it costs us jobs, and it costs the government revenue.
I don't think we're going to say that Alberta and Ontario have got it right just because they've got low taxes, but British Columbia has to face up to the competitive situation. The fact is that if these people who have mobile capital have the choice — British Columbia or Alberta — and the tax rate is going to be two-thirds what it is in B.C., based on the current announcements, I think you know what they're going to do in terms of choice.
J. MacPhail: Mr. Rees and Mr. Elliott, thank you very much for your presentation. I'm particularly interested in the accounting principle, the GAAP, as it relates to SUCH. At one point we called it MUSH, because it includes…. You've left out municipalities, but municipalities are included in the reservation. It's the only reservation left on the budget. How has the Institute of Chartered Accountants looked at how one conducts estimates, when the GAAP is incorporated? There are elected officials for expenditures around education and municipal expenditures particularly that are beyond the control of the provincial government. Yet, if this were included in the budget — which I actually don't disagree with — you have one level of government explaining the actions of another level of elected government.
R. Rees: I'm familiar with that argument as well. I think that the bottom line as to who ultimately funds those entities and where they get their resources from is that it's the province, and it's ultimately the provincial taxpayer who provides the vast majority of the funds, particularly to the health care and educational institutions. We have a situation in this province at the moment where we're missing $5 billion of assets, $5 billion of liabilities, $2 billion of revenues and almost $2 billion of expenses that simply get left off when we don't just follow GAAP. We think it would be just greatly improved. I'm sorry that that may mean there are some appointed officials in regional health boards and universities who may feel or be disempowered by that. I know you didn't say that, but it's what….
J. MacPhail: I didn't say that, no.
R. Rees: No, it's what Paul Ramsey said to me when I had this same discussion with him.
J. MacPhail: I said the elected officials.
R. Rees: Yeah, I think that the provincial government is the elected group that ultimately funds all of this activity, and that is why the auditor general of the province says that it is right to include it.
J. MacPhail: Just one concluding…. Have you discussed that with the UBCM or the B.C. School Trustees Association? They're the ones that have the strongly held view, their being elected.
R. Rees: I wasn't aware that they had a strongly held view. I've only discussed it with politicians and people in the Ministry of Finance.
B. Lekstrom (Chair): Well, gentlemen, I would like to thank you for coming forward and making your presentation this afternoon. The information you put forward will be taken into consideration in the development of our report.
Moving along, our next presentation is from the Canadian Federation of Students, and with us is Summer McFadyen as well as Anita Zaenker. Good afternoon and welcome.
S. McFadyen: Good afternoon. My name is Summer McFadyen, and I'm the B.C. Chairperson of the Canadian Federation of Students. I'm joined by Anita Zaenker, who's the B.C. representative of the national executive.
The Canadian Federation of Students welcomes the opportunity to present a realistic set of choices for
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budget 2002-03 that will continue to place British Columbia as a Canadian leader in post-secondary education. We have not had the opportunity to meet many of you, so I would like to begin by providing you with a brief introduction to the Canadian Federation of Students.
The Canadian Federation of Students and its predecessor organizations have served as the voice of Canada's college, institute, university-college and university students provincially and nationally for more than 70 years. Today the Canadian Federation of Students is composed of over 60 college and university student associations across Canada with a combined membership of more than 410,000 graduate, undergraduate and college students. In B.C. roughly 120,000 students from 16 member student associations belong to the federation. Our membership includes students in Cranbrook, Prince Rupert and all the way to Victoria. Every six months we hold a provincial congress with delegates from around the province. It is at these meetings that the directions and policies of the organization are determined. It is with the mandate of 120,000 college, institute and university students in B.C. that we appear before you today.
The federation's mandate is to work towards a system of post-secondary education that is comprehensive, of high quality and accessible to all. As your government works towards a new era of hope and prosperity, particularly in these challenging economic times, there can be no better investment than in an accessible, affordable and high-quality post-secondary education system. It is a widely accepted view that for B.C. to excel in the new economy — the new knowledge-based economy — a skilled and educated workforce is required. Human Resources Development Canada estimates that 45 percent of all new jobs will require at least 16 years of education. It is projected that over 73 percent of British Columbia job openings between 1998 and 2008 will require a post-secondary education. The emerging high-tech sector places a high premium on workers with such an education.
We also know that within the next seven to ten years the 18- to 24-year-old cohort will increase by approximately 15 percent. Not everyone will seek out a post-secondary education, but given that education is a public good and that the basic ability to get a job depends on receiving some form of post-secondary education, everyone must have the opportunity to pursue an education without being hindered by their family's income or economic status. Without access to post-secondary learning, British Columbians are essentially condemned to a life of low-income jobs with little opportunity to improve their situation economically or personally.
As we all know, the federal government funding for post-secondary education has declined significantly in real dollars in the last decade. Between 1996-97 and 1998-99 alone, more than $100 million in federal funding for post-secondary education in B.C. was withdrawn. Despite these funding cuts, the B.C. government maintained modest increases in funding and increased the number of degree-granting public institutions while freezing tuition fees. In doing so, B.C. showed a greater commitment than most provincial governments to post-secondary education. This is the standard that we hope you would at least maintain and work to surpass in the 2002-03 budget.
The B.C. Liberal election platform, A New Era for British Columbia, makes an excellent case for expanding access to post-secondary education and also offers a number of concrete actions to achieve that goal. Most importantly for students, the New Era document committed the government to supporting the tuition fee freeze, implementing a 5 percent fee reduction and providing increased operating funding for colleges and universities.
B.C. students were pleased that promise was kept this year, and we look forward to further progress as government fulfils its ongoing commitment to expand access to post-secondary education. The Canadian Federation of Students is concerned, however, with government's interpretation of its promise to review the tuition fee freeze and by reports that fees may increase to offset budget cuts.
During the 1990s post-secondary capacity was expanded dramatically. In 1996 thousands of spaces were added with no additional funding, as B.C. sought to cope with increasing demand and declining federal funding. It appears now that the Ministry of Advanced Education seeks to hold the tuition fee freeze responsible for whatever consequences the unfunded expansion may have caused. The federation cautions the government against drawing conclusions and jeopardizing a policy which has helped to ensure that all British Columbians can afford the education they need and for which they are qualified.
Evidence shows that lower-income students are approximately twice as cost-responsive as middle-income students. The percentage increase or decrease in enrolment in response to a change in tuition fees shows that upfront user fees have the strongest and most negative effect of all other variables on accessibility. Therefore any change in cost for post-secondary education has a significant impact on accessibility for those from lower- and middle-income families.
Our message to you is that fees should not increase and consideration should be given to further reducing them in order to expand access. The argument that a tuition fee freeze or a reduction in fees leads to massive wait lists, overcrowded classrooms and poor student-instructor ratio is easily refuted with a glimpse into a typical university classroom in Ontario. The massive increase in tuition fees and the deregulation of fees for some programs has not resulted in a better quality of education.
A recent study by a UBC economics professor determined that university graduates pay more than $50,000 in additional taxes because of enhanced earning power. The total government cost of an undergraduate degree in B.C. is far less. It ranges from approximately $24,000 for the humanities and social sciences to about $39,000 for engineering, nursing, math and the physical sciences.
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We are not alone in the belief that post-secondary education is rendered inaccessible to some because of tuition fees. The government will find that British Columbians understand the importance of the tuition fee freeze and of lower fees — the means of providing hope and prosperity. The Canadian Federation of Students assumes this is the reason that this government campaigned in support of the tuition fee freeze and reduction. It is why the federation expects that the government will expand the mandate of the tuition fee review to examine the benefits of low fees and to examine broader questions of the consequences of recent changes in all funding sources for post-secondary institutions.
It is our view that the challenge of balancing the budget by 2004 is more a problem of revenue than of spending, with a few exceptions. First, we suggest that the government reduce its direct overhead costs by combining a number of ministries and reducing the size and cost of cabinet. At a minimum, the Ministry of Provincial Revenue should be combined with the Ministry of Finance, Solicitor General with Attorney General, and the Health portfolios into a single ministry. We also recommend that advertising and communications budgets be reduced and that government engage only in critically necessary advertising.
We do not accept the conclusion of the fiscal review panel that B.C.'s level of spending is unsustainable. We instead believe that as the B.C. economy continues in transition from a primary resource to knowledge-based economy, it is unsustainable to not adequately invest in B.C.'s knowledge and social infrastructure. We recommend that the government look at increasing general revenue rather than making dramatic cuts to necessary programs and that government spending on post-secondary education be increased as a means of stimulating economic growth and, correspondingly, government revenues in the longer term.
We believe that the government's decision to enact an approximate 25 percent provincial tax cut across all income brackets has seriously reduced the government's capacity to generate revenue. The government argued during the election that these significant individual tax cuts will pay for themselves through increased economic activity. Unfortunately they have not, and it doesn't appear that they will in the future, if at all. At the same time the government has made dramatic cuts to taxes paid by larger corporations. Again, it does not appear that these tax cuts will pay for themselves.
We're concerned that to pay for the tax cuts, the Finance minister has mandated that funding be frozen in health care and education and be cut by 35 percent in remaining ministries. If implemented, the funding freeze and cuts will dramatically reduce the level and quality of service provided to British Columbians by the government. The federation recommends that government repeal those tax cuts for which it did not seek or receive a mandate to restore a portion of its revenue-raising capacity. As I stated earlier, the best long term investment in economic growth that a government can make is in post-secondary education and training. In the knowledge-based economy, the competitive advantage is derived from the knowledge and skill of the labour force more than it is from its capital and its resources.
Despite progress made in the last decade, British Columbia continues to lag behind the national average in degrees granted. At the same time British Columbia faces significant growth in the 18-to-29-year-old population in the next five years. For these young people to develop the skills and knowledge necessary to contribute to British Columbia's economic growth, B.C.'s post-secondary capacity must be expanded.
Moreover, stagnating family income levels and declining resource sector employment mean that growing numbers of families do not have the means to support their children's post-secondary education and training. For these families, the tuition fee freeze and reduction along with the comprehensive system of student financial aid have been critical in enabling their children's participation in post-secondary education. We therefore recommend that the government fully fund the expansion of capacity in the post-secondary system at a rate equal to the growth in high school graduates, plus an additional percentage to close the gap in B.C.'s degree-granting rate and make B.C. first within ten years.
We recommend that the government expand funding and capacity for graduate-level programs at B.C.'s universities and that the government fully fund a further tuition fee reduction of 5 percent in all public post-secondary programs for the 2002-03 school year.
We were concerned to learn earlier this year that government has frozen capital spending, putting a stop to a number of college and university infrastructure projects. We recommend that the government allow previously approved post-secondary capital and infrastructure projects to proceed, that the government develop and implement a plan of capital over five years to ensure that B.C.'s post-secondary institutions have the physical capacity to meet the demand, that B.C.'s Liberal government begin its mandate with a good start in the area of post-secondary education, and that implementing a 5 percent fee reduction and expanding funding for post-secondary institutions showed British Columbians that the government was committed to providing a new era of hope and prosperity for young people.
Subsequent news that the government plans to freeze the budget for post-secondary funding for the next three years indicates, however, that they plan to break their promise to support the tuition fee freeze and reduction. This news is generating great uncertainty for families as they plan their children's futures. We hope the government will act quickly to assure British Columbia families that government will keep its promise and will keep the tuition fee freeze and reduction. Moreover, we hope the government will reconsider its plan to freeze funding for post-secondary education. At this time of economic transition and a growing youth population, expanding access to post-
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secondary education is the best investment this government can make.
The planned cuts to funding for post-secondary education will close doors for young people and will deny British Columbia businesses the skilled and knowledgable workers they require to compete successfully in the knowledge economy. Alternatively, by investing in post-secondary education, government can set British Columbia on a path to a new era of hope and prosperity for all. The federation and its 120,000 members across British Columbia expect that this is the choice government will make. This concludes our formal presentation, and we welcome your questions.
B. Lekstrom (Chair): Thank you very much, Ms. McFadyen. I do have questions.
I. Chong: Thank you, Ms. McFadyen. First of all, perhaps you could just advise, at the end of my questions: is there a page 10 to your presentation? I see it jumps from page 9 to page 11, and there is a page missing. I don't have it in my package.
S. McFadyen: Okay. I'll take a look, and if it's missing, I'll get it to you.
I. Chong: I am reading through it.
I want to especially tell you that I have met with the University Presidents Council on a number of occasions and with other groups, and I acknowledge that there are conflicting views as to the cost and benefits of the tuition fee freeze.
I hope the review will be able to flesh out some facts that everyone can agree on. My question to you is simply this: has the Canadian Federation of Students any statistics, facts or data of any kind that would provide any relationship or comparison of the number of students graduating from post-secondary education to finding jobs here in British Columbia? You know, we all talk about getting our students educated, which I agree with. They will therefore provide more to the tax base. But if there are no businesses and job opportunities here, then we could be losing out on that end. I'm just wondering if you've made any attempts to find that data or if you can.
S. McFadyen: Yes, that data is fairly readily available through the University Presidents Council's own university graduates outcome survey that's conducted. The most recent survey, if I'm not mistaken, was published on 1998 graduates of the four major British Columbia universities, and it shows how successfully and in what fields and areas they've been able to find employment post-graduation. Although I don't have the exact figures at hand — I can get you that study — it does show that the majority of university graduates are able to find work within one year of graduation and that the vast majority of them do find work within British Columbia. It's only a small percentage that either move from British Columbia or leave Canada to find employment elsewhere. What the survey does not do is attempt to find a correlation between why students are leaving British Columbia as it relates to their education, but it does show where more students have headed within one year of their education.
H. Bloy: Thank you very much for your presentation. I have Simon Fraser University in my riding, and when I speak to the students at Simon Fraser University — and I've spoken with Britta up there — there's a lot of concern about the tuition freeze in that it's now taking five and six years to complete a degree. There are a number of students up there that would say: "Increase the tuition. You know, it's hurting us."
S. McFadyen: I think the study that you are referring to….
H. Bloy: No, it's not a study; I'm talking about individuals I've spoken to on many occasions.
S. McFadyen: I can give you individual accounts of the statistics. The statistics from Simon Fraser University actually demonstrate that over the period of the tuition fee freeze, the length of graduation or the time it takes to complete a degree has actually quickened. So over the period of the tuition fee freeze, it's now slightly faster for people to earn their degrees.
H. Bloy: What time frame is that?
S. McFadyen: That's over the period of the tuition fee freeze.
H. Bloy: Yes, but how long? Over four years? Less than four years?
S. McFadyen: It's more than four years, but the time has increased. It hasn't taken longer to graduate; it's now taking less time to graduate. I know some people are saying that there's a correlation with the tuition fee freeze and that it's making it harder to get your degree and it's taking longer to graduate. The statistics actually show the opposite. The only institution that can demonstrate a difference is Simon Fraser University. It shows that it now takes slightly less time for students to get their degree.
There was a study that showed that it took 5.2 years to graduate. That was based on students who entered the University of Victoria in 1988 and graduated. Between 1988 and 1993, it took them 5.2 years to graduate, but of course there was no tuition fee freeze between 1988 and 1993. There has been, through the popular media, a correlation made between these two statistics which is patently false.
H. Bloy: Okay. That's not the impression I get, but anyway….
S. McFadyen: That's what the statistics will show.
H. Bloy: We agree to disagree. That's fine. There are a number of programs where the tuition fees have been
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frozen. When the government froze the tuition fees, it was on one day that they were frozen. There is some unfairness between some universities and some courses, especially the MBE program. We are charging fees that are half or 30 percent of what is going on the world market. It's an international study today where universities, by extended learning — long-distance learning — come into the province. They're picking up these degrees, and they're paying a lot more than they would at Simon Fraser University downtown campus.
S. McFadyen: Sorry. What's your question?
B. Lekstrom (Chair): We are going to have to move on. We do have other questions on that one.
H. Bloy: Okay, one question. It's costing a lot less. We could equalize the tuition on some courses. It could be increased so that all universities are on the same level playing field.
S. McFadyen: I agree that they could be equalized, but they could also be equalized the other way and be decreased so they'd get more equitable. We could then make up for that equalization through government funding. We could race to the top of high tuition fees or also make it more accessible to get a degree.
H. Bloy: I just have one more question.
B. Lekstrom (Chair): I am going to have to move on, Harry. I do have a list, and our time is short. I will recognize Tony for a quick question, and then we are moving on.
T. Bhullar (Deputy Chair): Hi, Ms. McFadyen. I'd like to know, approximately, the moneys that you receive at the Canadian Federation of Students from Simon Fraser. It's one of the reasons that I got involved in politics, as Mr. Clift can tell you. What is Simon Fraser currently contributing in the way of the budget, and what are they getting back?
S. McFadyen: How does that relate to the government's finances?
T. Bhullar (Deputy Chair): I'm just concerned that perhaps if there wasn't the CFS, those moneys could then…. It's mandatory that we pay student fees, as opposed to having a choice. Perhaps there should be a choice, and those students should be entitled to then take those moneys off their fees.
A. Zaenker: With all due respect to your question, I would suggest that this is not the appropriate venue for that question. Further to that, students have made a….
B. Lekstrom (Chair): We will entertain the question. It has not been answered.
With that, Ms. McFadyen, Ms. Zaenker, I would like to thank you for your presentation this afternoon.
We'll move right into our next presenter. We are behind schedule, so I would encourage our committee members that if there are questions to be asked, they be pointed questions directed to the prebudget consultation process we are in the process of undertaking.
Our next presenters are Jerry Lampert and Jock Finlayson with the Business Council of British Columbia. Good afternoon, Jerry. Thank you for coming.
J. Lampert: Thank you very much. I could make a crack about driving Joy out of the meeting, but she assures me she'll be right back.
As Jock and I were sitting in the back, I told him to put away the 60-minute PowerPoint slide projection. I don't think we have time for it today.
Let me get right into this. Thank you for this invitation. My name is Jerry Lampert. I'm president and CEO of the Business Council of British Columbia. I have with me Jock Finlayson, our vice-president of policy.
Many of you will know that the Business Council of British Columbia represents major business and enterprise in the province, and we are active in all major economic sectors in the province. In that sense we are what is called a multisectoral association.
We consider this to be our preliminary advice to the committee. We're living in a fast-moving world, as we all know, and we hope that in the weeks ahead, we'll have an opportunity to further update our thoughts and forward them to the committee.
I just wanted to begin by congratulating the current government on its bold initiatives taken in the early days of the new administration that touched on changes to personal taxes and business taxes. I think, and I speak quite confidently in this, that the reaction within the broad-based business community was one of optimism and encouragement. Perhaps for the first time in ten years people in the business community were raising their heads and beginning to say: "You know what? There is a future for us in this province." So I want to extend congratulations.
We have been buffeted over the last number of weeks, particularly following September 11 and the economic fallout of those horrendous events. We are confident, though, that moving ahead, we in British Columbia — and, hopefully, in other parts of Canada and throughout the world — will be able to recover economically, psychologically and in many ways.
I wanted to indicate that the Business Council of British Columbia believes that the government is on the right course. My colleague Jock Finlayson is going to discuss why we believe that is the case, so I'm going to turn it over to Jock at this point.
J. Finlayson: Thanks, Jerry. I'm going to deal with two issues: firstly, the current economic setting and then, secondly, some preliminary advice on the budget for next year.
To be candid, this is a very difficult environment in which to be trying to forecast what's going to happen to the British Columbia economy. We are caught up in an unusual set of events globally. We are watching
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anxiously the economy to the south of us to see what is going to happen in the United States, which is more important to B.C. today than it's ever been in modern history as an export market and as a trading partner. Will consumer confidence come back? Will the investment recession that has been underway in the U.S. for the last year even out, and will we begin to see a recovery into next year? All of that is very uncertain at the moment, and it makes the task of formulating a budget next February much more difficult than usual for the B.C. government.
We do know that before September 11, North America was already hovering very close to a recession. In fact, the world economy more broadly has been losing momentum throughout the entire calendar year of 2001. Industrial production in the G-7 countries, for example, declined at annual rate of 7 percent over the first six months of 2001, which does not bode well for the sort of annual average numbers we're going to see for this year as a whole.
In terms of the terrorist attack south of the border and the fallout from that, we do know a few things about how that will affect our province. First, it's going to result in a decline in output in the transportation sector, primarily airlines but also in tourism. That is going to continue certainly through the balance of this year and perhaps into next year. Second, it's going to result in a weaker U.S. and global economy than we expected prior to September 11, which will dampen demand for B.C.'s exports and manufacturing shipments, again over the balance of 2001 and through at least part of next year.
Third, it's delivered a blow of uncertain dimensions to consumer confidence, which is crucial, because two-thirds of all spending in the economy, both here and in the U.S., depends on the decisions made by consumers to spend their incomes. At the moment there is conflicting data on exactly what is going to happen in that area.
Prior to September 11, even though the world economy had been softening, there were some positive signs in B.C., which we summarize on page 2. We did actually see some growth in our exports, in retail sales, in building permits and, most importantly, in disposable incomes. The question going forward is how long those positive trends will be interrupted as a result of the deterioration in the economic environment that we're facing.
I should add one other sort of macroeconomic point. It has to do with the crisis in the lumber industry. Crisis is not too strong a term to use in the present circumstances, especially in coastal British Columbia. There is a strong prospect of substantial layoffs occurring in the coming weeks in the coastal solid wood industry which will have a ripple effect through the supplier industries and the communities dependent on forestry, and that itself is going to shave off some fraction of economic growth for 2001.
As an initial guess — and it is nothing more than that — we would say that the terrorist attack and the fallout that is still unfolding has probably shaved between a half and one full percentage point off B.C.'s real GDP growth this year and next year. As we get more data coming in, we'll be better able to firm up those estimates. Those are not our preliminary estimates; they're estimates done by some of the forecasting firms.
As Jerry mentioned, looking beyond this current unsettled period, we think the province is quite well positioned to enjoy a substantial upsurge in economic performance once the North American economy recovers its balance and begins to move forward.
In terms of next year's budget, a few things, I think, are worth emphasizing. First of all, because of the unsettled outlook we would recommend — and we summarize our recommendations on the last two pages of this submission — that the government adopt a rather conservative assumption about the performance of the economy in calendar year 2002, certainly using a real GDP growth number of less than 2 percent. Relatedly, we would recommend that the government include or incorporate into next year's budget a large forecast allowance so that the fiscal targets will be met even if the economic performance turns out to be less robust than predicted.
Secondly, with the size of the summary operating deficit in B.C. that we're now facing, it's clear that a significant reduction in government spending will be necessary. The Minister of Finance described that to members of the cabinet at the open cabinet meeting a bit earlier in the month. We're talking about a fairly large cut, I think, in government spending in some ministries and perhaps something along the lines of 10 percent over three years in the total government budget.
Our position — and we want to make this clear — is that we think the government should stick with the fiscal commitments previously made to balance the summary accounts budget by 2004-05. If subsequent events require that to be revisited, it can be revisited later. At the moment we think that is the soundest advice we would offer.
We also believe — and the chartered accountants alluded to this briefly — that we need debt management legislation in B.C. as a companion piece to the Balanced Budget and Ministerial Accountability Act. We think such legislation should set a ceiling on the debt burden in B.C., measured as a share of our economy to ensure that it doesn't rise above that. We also believe that B.C. should continue to aim to have a debt burden below the average for all provinces in Canada, which we currently do.
Thirdly, we think there are opportunities for the provincial government to realize some revenues by disposing of Crown assets where a strong, compelling case for public ownership can no longer be made. We have a vast array of enterprises and other assets in the provincial public sector in British Columbia. Many other jurisdictions have tapped that kind of resource to restructure their public sectors and generate revenue. We have not been doing that in B.C. We think the time has come to take a look at that.
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On the health and education side, one of the recommendations we would offer is that health care and education institutions no longer be funded on the basis of annual grants from the province, which creates enormous uncertainty for the managers of those institutions. Rather, the province should commit to three-year rolling funding so that those critical parts of the public sector know what their budgets are going to be, at least in terms of the provincial contribution. They could manage around that more effectively than what we have seen, which has been a rather chaotic and ineffective process in the province.
We would also recommend strongly in terms of capital spending, which does not affect the operating budget but does affect the debt, and that B.C. take a page from the book written by Britain's Labour government which is moving aggressively to develop private finance initiatives that enlist private firms in obtaining financing for designated public sector capital projects. They then actually operate and finance those projects going forward.
There are a lot of other innovative things being done around the world in terms of public sector capital spending, how to finance it and how to build and operate it. We think there's an opportunity in B.C. to learn from some of that and have actually recommended that the government appoint a task force to look into that over the next three months and come up with some recommendations.
On tax policy, and I'll end there, we do not advocate any new tax reduction measures in the 2002 budget in light of the fiscal situation facing the province. Like many, we have our wish list going forward beyond 2002, which is summarized in the paper, but realistically there is no room, in our view, for additional tax reductions in the budget that your committee is about to offer advice for. With that, we'll close, and if you have time for questions, we'll take them.
B. Lekstrom (Chair): Thank you very much, gentlemen, for your presentation.
I. Chong: Thank you, Mr. Lampert and Mr. Finlayson, for making your presentation today. You've brought a lot of issues forward, and I appreciate the effort you've put into it. There's only one question I have for you, because I didn't get a chance to ask the Canadian Bankers Association. You've addressed it on page 12, regarding the capital tax which is their major area of concern. Your quote here is: "There is a danger that investment employment in this dynamic and important sector will migrate out of B.C. if the tax burden on financial services firms is appreciably greater here than in competing jurisdictions." I wasn't able to ask them whether they had any evidence of how the capital tax here in B.C. is in fact a deterrent. Is that an assumption that you're making, or have you had discussions with people who have said that the provincial capital tax is in fact doing that exact thing?
J. Finlayson: I think it has deterred over a number of years, not necessarily a snapshot at this moment. I guess it's deterred over a number of years investment in expansion and employment in some parts of the financial services sector. There are capital taxes in place in some other provinces in Canada. One should be quick to realize that. Part of our challenge is that we're next door to Alberta, which not only doesn't have a capital tax at all; it removed the one they had on financial institutions last year.
There is probably some quiet out-migration of investment and some employment occurring in some parts of the financial industry to Alberta. I'm not aware of how significant that would be. Looking ahead over a period of years, if there continues to be a big disparity in the tax treatment of that industry — I would remind you, the total financial services industry employs more than 100,000 people in B.C. — I would worry about some outflow of activity. It's certainly something to keep in mind.
I. Chong: Thank you.
B. Lekstrom (Chair): I'll entertain one further question, Mr. Penner, and then we will move on.
B. Penner: I was intrigued by Mr. Finlayson's brief reference to Tony Blair and his Labour government in Great Britain facilitating private sector capital funding of public sector projects — infrastructure projects, presumably. Are you in a position to give us a slightly more expansive description of what they're doing in Great Britain to encourage that type of funding?
J. Finlayson: I've actually just started some research on that. It's only a slight expansion.
B. Lekstrom (Chair): That's how much time we have.
J. Finlayson: The reason that the British government has stated that they are looking to private sector solutions to meet the capital spending and infrastructure requirements of the country is they believe they can build and manage public sector capital projects at a lower cost and more efficiently go forward by tapping into pools of expertise in finance in the private sector. Government will still be in the driver's seat, in a fundamental sense, in determining what the priority investment projects will be. But there appear to be, at least on the British experience and some other…. Ontario, for example, has a whole highway that has helped alleviate some of the congestion, although not all of it, around metro Toronto that would not have been built, in all likelihood, by the province of Ontario.
There's a lot happening out there in the world around public-private partnerships and how public sector capital projects get funded and operated. All we're saying here is that we think B.C. can learn from that. We don't have a particular blueprint for it, but we've been very non-innovative in that area in this province in recent years. There's a need to move off that.
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B. Lekstrom (Chair): Well, once again, I would like to thank you very much for putting your presentation forward. I can assure you that your presentation will be given due consideration in the development of our report. Thank you very much, gentlemen.
Just prior to moving to our next presenter, I would like to recognize Ms. Adriane Carr, who is in the gallery. Adriane, leader of the Green Party of British Columbia, welcome.
Our next presenter this afternoon is Jeff Anderson, with the B.C. Persons with AIDS Society. Good afternoon and welcome.
J. Anderson: Members of the government, members of the committee, thank you for this opportunity to contribute to the work of this committee on this matter of fiscal urgency presently before the government of British Columbia. In shaping your budget and budget priorities for the coming years, you have a challenging and daunting task. I would not presume to advise you about the details or directions for your efforts.
If I am effective here today, you will understand more clearly the huge human and financial benefits delivered, year upon year, by the consumer-based health movement. More exactly, my task is to explain, as I can, the way the B.C. Persons with AIDS Society saves health care dollars, improves the condition of its members and empowers us to return to work and perform the important tasks of developing public policy and improving treatment effectiveness. I will endeavour to explain how our critical mass of efforts has created a peer-driven society which performs a critical role in people's lives — as an information centre, as a healing centre, as brother and sister and neighbour and friend. It's our community.
We've developed the voice of experience through thousands of HIV-positive British Columbians who thereby collectively share that knowledge with our province's doctors and health providers with regional health authorities and Health Canada. From research to education, to care and treatment and support of persons with AIDS, from outreach to counselling, the experience of these thousands of British Columbians creates a community where peers come to learn, to serve and to contribute to improved health for all British Columbians.
The British Columbia Persons with AIDS Society exists to enable persons living with AIDS and HIV disease to empower themselves through mutual support and collective action. Since 1985 this has been our mission. As any of you who have worked with us know, we do so with dedication, zeal and courage.
Our successes over the past 16 years have brought a shift in the burden of health care delivery so that persons with AIDS now play a sizeable role in patient education, treatment research and volunteer participation in treatment counselling and ethics bodies, in addition to our substantial contributions to national, local and provincial policy and health care delivery itself.
Since your task is to assess prudent public investments, as treasurer to BCPWA NEWS, I will turn to the matters of fiscal consequence that bring us here today. During the past fiscal year the provincial government spent $10.4 million on community AIDS organizations. Some 90.3 percent of this money went to AIDS service organizations formed to do a particular job, mostly AIDS information, prevention and support programs. The other 10 percent of your AIDS community dollars went to support two grass-roots community PWA groups in British Columbia: BCPWA and Victoria Persons With AIDS.
What has Persons with AIDS done with their 10 percent of the community money? I have brought modest folders of our work for each of you members of the committee, and they're being distributed to you. They contain a summary report of the treatment information program, a summary sheet of our values, our annual report, a copy of my remarks to you and the Living + magazine.
It is unique in its scope and thoroughness. The Canadian AIDS Treatment Information Exchange calls it an excellent resource, and Dr. Michael O'Shaughnessy, the chief of the B.C. Centre for Excellence in HIV/AIDS, states: "As treatment of HIV disease becomes more complex, the need for HIV positive persons' perspectives is absolutely necessary. Living + is an invaluable resource and a source for practical information."
This came from a partnership that started between our provincial government and us. It goes to every AIDS doctor and every one of our 3,600 members across the province who provide us with an address and, sadly, not much further. Your confidence and support have allowed us to secure matching funds from other sources to bring us to 3,500 copies only, and we are presently engaged in negotiating with a corporate sponsor who wants to distribute Living + across the country.
We can all be proud of the depth of its reporting and the scope of its success. It helps keep people with HIV healthy through accurate and current treatment information. It keeps AIDS doctors up on current research and the issues of their patients, and it keeps our provincial community united through a shared experience of stories and articles from across the country and around the province.
Our communications department creates two electronic forums to complement our print materials — first, the website, which will be re-unveiled in two weeks, just prior to our AGM, and also the B.C. AIDS News, the only AIDS news service by and for British Columbians concerned about AIDS.
Your support of these communications programs accounts for about a fifth of your financial support of BCPWA this fiscal year. Our treatment information program also receives about a fifth of your support. It has been matched nearly dollar for dollar by corporate and Health Canada contributions.
The pharmaceutical industry recognizes the achievements in excellence in the programs designed to be delivered by Persons with AIDS. Though we do not hesitate to bite the hand that medicates us if we feel it warrants it, mostly we benefit from an arm's length
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yet co-beneficial and co-supportive relationship with the pharmaceutical industry.
A recent independent audit of AIDS treatment programs across Canada had the highest praise for the mostly volunteer BCPWA tip program. This success has inspired spin-off partnership programs from the Health Canada partnership in our complementary therapies project to our joint effort with private industry in the B.C. Centre for Excellence in HIV/AIDS to operate Treatment ABCs on the Road, an AIDS primer with Dr. Enders, a treatment counsellor with AIDS, touring 26 towns and cities in B.C. Without contributions from the public, the corporate and the health care sector, this landmark program would not be saving lives.
The third 20 percent slice of provincial money goes to various support programs, and we are proud to provide peer counselling, three health retreats a year and Poly and Esther's Free Clothing Store, along with a dozen other programs to alleviate poverty and lessen the personal difficulties of this illness.
Only one-tenth of your support is dedicated to our advocacy department, which helps people with HIV and AIDS when they are most in crisis, when they don't know their rights, can't figure out a government procedure or require help with their wills. Our team of professional-led volunteers help our members secure their rights and eligibility for financial support in numerous settings where the issues are technical and legally complex.
With the recent completion of the action kits, persons with HIV/AIDS learn how to tackle the top ten challenges we face in advocating for our own health, legal and financial security. These kits were developed through a grant from the Law Foundation, with technical support provided by the province of B.C. In financial terms, this department secured $1.6 million in health emergency and insurance benefits for our members this year alone. The Ministry of Health assists with about half of the operational funding for this program. The return on investment of nearly 700 percent reflects a prudent investment for our members and a respectable return for your provincial support.
The last 30 percent of your support allows us to unite as a membership to administer our efforts and supply a modest computer and office system to our society to do its business. Our operations funding allows us to concentrate considerable efforts on additional fundraising. So successful were we that 45 percent of our gross revenues last year came from sources other than governments.
Please come and see us in action. Our door is always open to you. We will be proud to show off our modest assortment of hand-me-down tables and donated chairs. I'm afraid ours are more Spartan than even most government offices.
As you can see, we strongly believe in the need to build synergies as much between government and private sector as between doctor and patient. Community will not materialize from thin air, however. It requires those private, public and volunteer sector synergies. We match every paid staff hour in BCPWA with a volunteer hour, and we match every provincial dollar with $1.17 from private, public and corporate support. There is not another AIDS organization in the country, much less the province, that can cite such dedication of purpose or prudent fiscal management.
Is our job done? I'm afraid it is not. There are three rising challenges for our next three budget years — ours and yours. One, AIDS prevention. Infections are rising again, and nowhere yet in government plans are persons with AIDS targeted as participants in the prevention of the spread of AIDS. It sounds shocking to say it, but it's a terrible oversight on everyone's part. It will take this government to share the resources dedicated to prevention with persons with AIDS and the groups that represent them. We're the only community that can spread AIDS, and we are the logical community to prevent it. Help us with that work.
Two, access to treatment and community-based research. Recent studies estimate that a third or more of those with AIDS in the downtown east side of Vancouver do not receive the medicines needed to control the virus. Studies show that those with HIV are significantly more prone to hepatitis C infection than those without. Add a liver disease to a body challenged with AIDS, and death is all too often the result. We must find a way to reach and enable these people to make healthy choices. A healthier person with AIDS is less likely to succumb to opportunistic infection and less likely to result in hospitalization. We hope you will work with us to try some new approaches to proposed crucial positive health habits through combined peer and professional approaches. Our community is desperate for information on such a quickly changing epidemic. The quicker we can develop strategies that have adjusted to the changing face of the spread of HIV, the more accurate our campaign to help the right people make healthy choices. The message that works is best developed by and with those infected — and delivered by peers. Our membership holds the key to prevention and health behaviour. We need your support for the information technology to do research and respond appropriately to the needs of treatment and prevention.
Three, a home for the AIDS community. The two largest AIDS organizations in the province, accounting for 20 percent of your community AIDS dollars, will be without a home in less than a year if we are unable to find new quarters. We are under the gun now, and the writing is on the wall. It is a high-rent wall in a high-rent neighbourhood. After thorough strategic planning and much soul searching, AIDS Vancouver, the largest — by staff — AIDS service organization in the province, and BCPWA, the only provincial AIDS consumer organization, each support continuation of the current cohabitation and economies of scale we share through computer, security and office environments.
To tackle these challenges, we will need every support possible from the public sector to partner with our corporate and health care communities to develop solutions to these most daunting challenges facing the
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AIDS community in the next three years. To slow the spread of the illness and lessen its effects, we must continue to enjoy your support and the support that your endorsement breeds with private and public funders. We hope you will continue to see BCPWA as a partner with you in the front-line battle against AIDS and its devastating effects.
Again, thank you for this opportunity to speak with you today.
B. Lekstrom (Chair): Mr. Anderson, I thank you for your presentation. We do have time for one question.
L. Mayencourt: I actually have two, so I'll be really quick with them. The first is on AIDS prevention. You say that the AIDS community is best able to educate people about the spread of AIDS and that you need our help in doing that. I wonder if you could tell us what we could be doing to facilitate the AIDS community and BCPWA to do that better.
The second question is with respect to the downtown east side. You talked about the access to treatment. I see so many people in the downtown east side who aren't even aware of some of the treatments that would be available to them and that might prolong their life and might improve the quality of their life. Can we do something better there? If so, what?
J. Anderson: Back to your first question about AIDS prevention, there is no current plan in the memorandum of understanding between the Ministry of Health and the regional health authority to put specific prevention dollars into the hands of persons-with-AIDS groups. They end up in the hands of professionals or clinics which do some of that work, but that work has sort of reached its limit of effectiveness, and there's a lot of people currently not getting that message. That message, we have found, is best conducted by persons with AIDS on a peer-to-peer level. We listen to one another. We often don't listen to our own professionals. That's why we need to develop our own programs within the B.C. Persons with AIDS Society to bring prevention to the streets of Vancouver.
As to the downtown east side, these are very marginalized communities. Again, they are difficult to communicate with and have a different set of values. It is within those communities that programs need to be developed to put their peers on the street, maybe with medicines in their hands. There's a variety of possible solutions. We definitely need to work on new programs, and we need to have the regional health authorities consult the AIDS community on how to develop those. That has not happened.
B. Lekstrom (Chair): Thank very much again, Mr. Anderson, for your presentation. As I've said to the previous presenters, certainly your presentation will be taken into consideration in the development of our report.
Our next presenter this afternoon is Sheila Puga. Good afternoon and welcome.
S. Puga: I'd like to start off by telling you who I am. I've lived in the province of British Columbia for most of my life. I've been a resident of the lower mainland for the past ten years, and I am an advocate for low-income people. I've been doing work of that nature for the last eight years.
I'd like to start off, as well, by just telling you that I'm thankful for this opportunity to be before you today to express my view regarding the government's proposed provincial budget for the upcoming years. I don't actually expect that anything I say today will have a significant impact on any decisions that are being made, but I do appreciate the opportunity to come and express my views.
It's clear to me, over the events of the past few months, that this government has set an agenda and that nothing will sway the government from that agenda in terms of the budget it's proposing and the goals it hopes to attain through that agenda. That became quite apparent to me when this government reiterated its budgetary plans even following the catastrophic events of September 11, 2001. Where other governments were relooking at their financial commitments and plans for the future following those events, which did have a significant economic impact on the world, this government has proceeded as if the economic climate hasn't changed. I find that shocking, but that's how I've perceived this government proceeding.
The agenda set by this government is to cut publicly funded agencies and programs by as much as 35 to 50 percent. This appears to be regardless of what those services may be and what impact those services may have on the people they are currently serving.
From what I've seen so far as a result of amendments to various pieces of legislation already, the welfare of British Columbians is not what concerns this government. This government is only concerned with the bottom line, and it has no regard for how its actions are going to hurt the people of British Columbia.
The perfect example of this is the government's announcement of the repeal of section 2(1)(l), schedule C, under the B.C. Benefits legislation. This happened recently. The section that was repealed provides individuals, most of whom suffer from severe disabilities, with health care goods where that individual is facing a life-threatening health care need.
With the section of the B.C. Benefits legislation, which was used by many HIV/AIDS sufferers to obtain additional nutritional supplements required as a result of their disease…. However, it was also used by many others who were not suffering from HIV or AIDS to obtain just as equally important health care goods that were not provided anywhere else in the legislation. This government managed to mask the impact of this change to the legislation by announcing a new benefit, a nutritional allowance, for HIV/AIDS sufferers and others with similar types of conditions and by telling the public that the old section of the legislation under schedule C was no longer necessary. Unfortunately, the repeal of that particular section of schedule C will mean that many other individuals who suffer
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life-threatening health needs will no longer be able to get the health benefits they need to stay alive, essentially. This, to me, demonstrates that the government is not concerned with its decision on real people in this province.
The proposed budget cuts to other agencies and programs will also result in too many people of this province falling through the cracks and putting more strain on an already strained system. Having worked with low-income people for the past eight years, I'd like to spend some time talking to you about how I think the budget cuts will affect the people of British Columbia in general and low-income people in particular.
First, for those working in the public sector in the target of the budget cuts, the government has created an economic freeze. People will no longer spend extra money created by the tax cuts that this government promised, because they're not sure what their future is going to be. Those people are not spending their money. They're sitting at home, saving their pennies and wondering if they're going to have a job in the next year. They're not going to be going out to dinner at restaurants. They're not going to be going to movies. They will not be making any big purchases such as furniture, cars or homes. The ripple effect is going to be devastating on an economy that's already struggling.
For those who already have little or no income, such cuts will have the following effects. These, again, are in my own words and what I see. There'll be increased homelessness as more and more people search out cheaper accommodations. Those who can afford the least will end up on the streets. There'll be increased family pressures leading to an increase in the number of family breakdowns caused by economic stressors, putting more pressure on the Ministry of Children and Family Development. There'll be an increase in drug and alcohol issues as people seek outlets for their stresses. There'll be increased health care costs as people will be forced to use emergency services instead of seeking ongoing care. There'll be increased incidences of violence. There'll be increased incidences of property offences as people struggle to make ends meet. There'll be increased demands on law enforcement and on the courts to deal with these problems. There'll be an increase in the number of gated communities as those who have any assets try to protect them from those who don't. There'll be increased demands on food banks, charities, community agencies, all of which rely on the public for support.
Government services need to be maintained, not decimated by concerns for a balanced budget regardless of the effect on the people of this province. When this government promised the people of this province a new era, this was not, I would hazard a guess, the vision that those people had in mind: living in gated communities, fearing an increase in crime and putting people's lives in jeopardy. It certainly isn't the type of society that I would aspire to.
B. Lekstrom (Chair): Are there questions from any members of the committee?
J. Bray: Not so much a question, but I think you opened up your comments by saying you're not sure whether or not your comments will have any impact. Certainly, speaking for myself — in 16 communities, we have lots of organizations and associations and union executives that come forward and speak — I still think the most powerful statements actually are from private citizens representing their own views. Your statement is probably going to be one of the most powerful statements that we'll hear today. I thank you very much for making the effort.
T. Bhullar (Deputy Chair): I'm sorry; I didn't catch which organization you work for.
S. Puga: I'd rather not say. I'm an advocate for a publicly funded agency that represents low-income people.
T. Bhullar (Deputy Chair): Why would you not want to reveal which organization?
B. Lekstrom (Chair): We won't have to. You're here on behalf of yourself.
S. Puga: I'm here as a private citizen, and I don't see that where I work has any relevance to what I have to say.
B. Lekstrom (Chair): It doesn't, and that's very fine, actually. Just in closing, I would like to thank you for your presentation, Sheila. It will be given due consideration, I can assure you.
We will move on. Our next presenter is Marilyn Young.
M. Young: Thank you for letting me speak to you today. I have to echo what the previous speaker said. I also do a fair amount of volunteer work on the downtown east side. From where I stand, I am very concerned as to what direction this government is going.
I've lived here for 16 years. I have a master's degree in ECE, early childhood education. I now have cancer. I've been coping with this for some time, and I've had to cope with it in previous years as well. I'm on disability 2, and I am very upset about a number of issues.
One is this confrontational effect, the direction the government seems to be going in. It's telling one group — for example, government employees — they have to cut ministries. People are scared about losing their jobs. They're telling another group they have to get off welfare and go and look for a job; otherwise, they're going to be cut off. This is very, very frightening. With the events of the last month in New York and in Washington, and with war all around us, I think this should be a cause for concern. It's affected our economy.
The tax cuts, I believe, were very wrong. Only a small fraction of the population of B.C. really benefited from that. For me, I guess it was about $6. I'd be very happy to send my cheque back if Premier Campbell will take it back.
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Just to echo some comments that Jim Sinclair made…. He was asked the same question. I have some problems, but I happen to admire Jim Sinclair. I like what he stands for.
I might also mention that I am in the primary stages of Parkinson's disease, and I also suffer from aggravated arthritis. With the changes I can tell you that I'm very affected by this. I know there won't be any changes in disability 2, but many of my friends who are low income are out there trying to do the best they can for the community. For example, Joy MacPhail is out there trying to help people in the downtown east side, in the Hastings area. I certainly respect her for the work that she's doing.
You have to be out there. You have to talk to people. You have to hear their concerns. Unfortunately, the people in Victoria don't seem to want to listen. I don't think this is the best way to go. This isn't the best direction to go in.
You'll have to forgive me. I'm a little green at this.
B. Lekstrom (Chair): You're doing very well.
M. Young: Being a senior, I'm also concerned. There are many seniors out there who are scared about the cuts in Pharmacare, the increase in the cost of drugs, and that this will cost them, particularly people who are on a limited income, a pension, and who have worked very hard in this province and helped to build this province. They have to be heard. I mean, their voices have to be heard. I'm hoping you will listen.
I have some recommendations, and I hope you will listen. I think that for our well-being in our community, we have to really consider the strength of our people. We have to make sure that they are healthy and strong. That helps to build a strong, healthy community. Second, investment in people, as a society, as a whole, saves dollars. Third, financial, social and human costs of prevention and early intervention are far less. For every dollar spent in early childhood services and education, we save two dollars in future medical expenses, welfare, crime control and social costs. Therefore increase dollars spent, impacting us in our communities.
Trying to solve one problem is not good enough. We need simultaneous solutions for the many issues our communities face. I recommend that the provincial government work more closely with the public sector in an integrated, collaborative effort as necessary for healthy economic development and social improvement, as the issues facing B.C. are complex and interrelated. This is necessary to realize our community sustainability. If people are healthy and productive, this will be much more cost-effective in the long term.
I mentioned that I had cancer. I have breast cancer, but so far I'm managing. My mother, my grandmother and my aunt all died from breast cancer; therefore, I'm in a very high-risk group. I am also concerned about the fact that with further cuts in alternative medicine, people who have…. For example, cancer patients and heart and stroke patients will not have that choice of holistic treatments. I understand that may just disappear. I'm very concerned about that, as I hold to a holistic lifestyle. In other words, I'm a vegetarian. I have fresh vegetables and fresh fruits and only bottled water. I don't smoke, I don't drink, and I don't take hard drugs. I should not be punished for that.
I'm just really trying to do the best I can. I don't want to be patronized, and I don't want people to feel sorry for me. I do want a measure of respect for trying to overcome these health problems and, in the meantime, trying to be a productive member of my community.
I have one other question. Why did the government not wait to get the findings from this panel before they made those tax cuts? After all, because they didn't, they increased the deficit from $3.8 million to $5.3 billion, and only a fraction of people in this province are actually benefiting. Where does that leave the rest of us? That's my challenge to you, and I'd like you to take that back to Victoria, please.
B. Lekstrom (Chair): Ms. Young, I thank you for your presentation.
M. Young: I've also listed some recommendations and questions that I'm…. Well, this probably isn't the best venue for it, but I'm hoping you can take this back and maybe get some answers for me.
B. Lekstrom (Chair): I can assure you we will do that, certainly.
M. Young: Okay. Thank you.
B. Lekstrom (Chair): I will look to members of our committee if there are any questions.
L. Mayencourt: Ms. Young, you were in Kits, and because you lost your job and were living on a much lower income, you've now moved to the downtown east side?
M. Young: No, because I lost my job…. I was living in the West End, and because of limited income I had to go to the downtown east side. That was quite an education for me — more of a culture shock. However, I did meet some wonderful people down there who work as advocates. With the social programs being in danger of being cut, this is putting a huge amount of pressure on these people. They're out there trying to do the best they can. They don't need any more pressure than they already have. Because of the people I've talked to and the input they have given me because they knew that I was speaking before you today…. This feedback is from a lot of different people who work down there, from advocacy groups to church groups. This is what their biggest concern is. I would like the government to really take a close look at what they're doing before they start cutting social programs — actually, slashing them — and the effect that this will have not only on the downtown east side but right across the region.
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L. Mayencourt: I assure you that we'll look at this with compassion and do the very best we can for you and for other British Columbians. Thank you.
B. Lekstrom (Chair): Thank you, Ms. Young.
Moving along to our next presenter this afternoon, we have Margaret Burrell with the B.C. Coalition of People with Disabilities.
T. McGregor: Actually, I'll be speaking for Margaret Burrell.
B. Lekstrom (Chair): Good afternoon. For the purposes of Hansard, could you please identify yourself? It'll make their job much easier.
T. McGregor: My name is Tom McGregor. I'm the co-director of advocacy with the B.C. Coalition of People with Disabilities.
Review committee members, thank you for affording me this opportunity to speak on behalf of the B.C. Coalition of People with Disabilities. Our executive director, Margaret Burrell, sends her regrets. She is dealing with the loss of a personal friend of the coalition, a past president and fierce advocate for rights of people with disabilities, Mary Williams, who died this weekend.
Recently we heard talk of cuts, including cuts to Pharmacare, the income security program and frozen health care budgets. These impending cuts mean devastating and far-reaching consequences for British Columbians with disabilities, and the cutting has already begun. On Thursday we received word that Hon. Murray Coell, Minister of Human Resources, was implementing a new health allowance to purchase nutritional supplements which would be made available to people with disabilities who have severe wasting illness. Upon investigation of this announced benefit, we have found that amendments to schedule C of the disability benefits program regulations would be made. Schedule C of this provision is for medical goods, services and supplies under the disability benefits program regulations. These amendments include some changes to sections 2(1)(b) and 2(1)(l) of the schedule. Whereas the ministry announced this allowance as an increase of benefits, it really amounts to a decrease of benefits for the majority of the 45,000 disabled British Columbians who find themselves in need of assistance. Section 2(1)(l) was the very safety valve of schedule C, the medical provision package.
Further, our investigation found that provision around the administration of crisis grants for these 45,000 individuals will change. The result will be that people will no longer be able to access medical goods and services using this provision in the legislation. These changes came shortly after the Health minister suggested that drastic changes to Pharmacare would also be required. Hence, not only will people with disabilities have to suffer through severe and dangerous hardships, but more often than not the removal of these safety valves within our social safety net will result in individuals needing to acquire more acute care. Acute care is the most costly form of health care. None of this, of course, happens in a vacuum. When you look at these announcements combined with the frozen health care budget, clearly the province is prepared to spend less money on health services per individual.
Home support has already been substantially reduced. In fact, the previous government removed home support services from home care in 1994. The result was that 20,000 British Columbians who previously received enough care in the form of grocery shopping, cooking and housecleaning to live independently in the community have gone off the homemaker list, and the government has not provided a mechanism with which we can track them. It is our conclusion that they are now institutionalized. Not only is independent living desirable on compassionate grounds, it is cheaper than institutional care.
Within the first 90 days of its mandate this new B.C. government introduced substantial tax cuts. The justification for these cuts was that by putting more disposable income into the pockets of British Columbians, our economy would benefit from an infusion through increased spending. However, by cutting ministry budgets by between 20 and 50 percent and freezing health care and education, British Columbians will have less disposable income as we now must purchase goods and services formerly provided by the government. This is a recipe for economic disaster.
We urge this government to take a holistic view of its budget. British Columbians will be ill-served by a system which makes drastic budgetary changes in one ministry at the expense of another ministry, thus saving money. I have statistics and paper on that. Thank you.
B. Lekstrom (Chair): Thank you very much, Mr. McGregor. I will look to members of our committee, if there are any questions.
L. Mayencourt: You mentioned schedule C, and it was my understanding that the B.C. Coalition of People with Disabilities actually lobbied the minister to make that amendment.
T. McGregor: We had worked with other community groups on making that amendment, but we were also advised and assured by the government and their senior staff that no amendments to section 2(1)(l) would be made. Now that part of the schedule has been rescinded. Therefore, it's not any of the program that we've signed off on.
L. Mayencourt: Who assured you of that?
T. McGregor: It was an assistant deputy minister who was negotiating with the community at that time.
L. Mayencourt: When was that? The reason I ask is that I was part of those discussions in the last few months.
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T. McGregor: It was in the fall, as the process left the closed-door negotiations with PWA and went to the community as a whole, when it changed to a wasting illness as opposed to just people with HIV/AIDS.
L. Mayencourt: Is that the fall of 2000?
T. McGregor: It would have been, yes.
J. Bray: I actually worked for the Ministry of Human Resources for 13 years prior to being up here and spent several years in the east side of Vancouver, so I worked quite a bit with your organization and always found it to be exceptionally helpful on behalf of people with disabilities and also for front-line ministry staff. I think, in some fairness to the minister, one of the things that was raised with 2(1)(l) was that while it was the safety net for those unexpected health needs, it actually was used more often, outside of the issue with wasting illness, on things that were won at tribunal. I could think of lots of examples from my own part of East Vancouver where under that emergent health need — in other words, life and death issues — we bought a $10,000 computer and things like that.
I think what would be very helpful for the minister — when cases come up of a person having a health need they can't get in any other fashion or are denied because 2(1)(l) is gone — is that you record and submit that to the ministry. Some of the information was that 2(1)(l) was often used for things that may not qualify under the if-I-don't-get-it-I-may-not-survive category. It would be very helpful, since your organization is so well-equipped on the ground to provide that data, to provide that data to the minister.
T. McGregor: I only hope that while we're collecting that data, the lives of too many British Columbians aren't impacted to the point where they're severely ill or dying.
B. Lekstrom (Chair): I see no further questions at this time. I would like to thank you, Mr. McGregor, for coming forward and putting your presentation to our committee.
T. McGregor: Thank you, all.
B. Lekstrom (Chair): Our next presenter this afternoon is with AIDS Vancouver, Mr. Andrew Johnson.
A. Johnson: Good afternoon. Thank you for this opportunity to speak before you. Before I begin, I want to take this public moment to acknowledge the contribution and life of Mary Williams. It's indeed a very sad loss for all of us in the community.
I am Andrew Johnson, executive director of AIDS Vancouver. Founded in 1983, AIDS Vancouver is Canada's oldest and second-largest AIDS service organization. Our mission is to alleviate individual and collective vulnerability to HIV and AIDS through care and support, education, advocacy and research.
To highlight some of how we do this, we provide case management services one on one to some 3,000 clients from all over the lower mainland. Our grocery program, the only one of its kind in Canada, provides 500 free bags of groceries every week to people living with HIV and AIDS. We have a training institute that provides HIV professional training all over this province. Last year we contacted over 1,000 individuals in B.C. Our library is the second-largest HIV/AIDS collection of materials open to the public in this country and recently had a joint project with the Canadian Liver Foundation around hepatitis C.
Our community development program has been a leader in the recent activities around harm reduction in this province. Our action research has resulted in the publication of an HIV health promotion model recognized globally and by Jonathan Mann. More recently our work has extended at the international level in partnership with a group in Mexico. We're very proud of these accomplishments, but we also must recognize that we don't do them in isolation. We do them in partnership with other groups and members of society, volunteers, government and people living with HIV and AIDS.
I don't have any fiscal solutions for the tremendous task before government today, but what I'd like to propose is an ethical framework for considering how you might make those decisions. Naturally, we'll come from a place of health care and social services. I want to focus on what is now accepted in this country and in this province and in this region as a theoretical framework for the delivery of health, and that's population health, addressing the determinants of health. Canada has been recognized as a global leader in this area and in health promotion, and much of that reputation comes from the innovative leadership of people here in British Columbia.
Research funded by the British Columbia government has demonstrated that targeting the determinants of health does save health care costs immediately and, more importantly, in the long term with reduced morbidity, reduced utilization of high-end health care costs such as hospital stays, and shorter terms of high levels of care for those living with chronic conditions. The list goes on. The government's recent announcement on schedule C clearly demonstrates an awareness of the link between income, health status and determining health. This action is as wise and fiscally sound as it is just and compassionate.
Another more recent example is the municipal, provincial and federal governments' attention to harm reduction approaches which have proven that by addressing the determinants of health, we reduce deaths, expensive overdoses and hospital stays. We increase success with treatment, reduce crime, increase public safety and confidence, increase the rate of entry into the workforce, decrease HIV rates, decrease hepatitis C rates and other communicable disease. All of these result in significant reduction in costs to government and in some areas help to increase tax revenues.
When we address the determinants of health at the individual level, we strengthen a community's overall
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capacity to care for itself and further decrease its dependence on government. Our experience at AIDS Vancouver concurs with that of the United Nations and the world health policy based on scientific research that the key to addressing the HIV epidemic and its related costs lies in addressing vulnerability to HIV.
In Vancouver the B.C. Centre for Excellence in HIV/AIDS has clearly demonstrated that those most at risk for HIV and subsequent high morbidity related to HIV are marginalized groups in society: the poor, aboriginals, injection drug users, gay men, youth, women — and the list goes on. Indeed, the work of Dr. Evans at UBC in health policy was groundbreaking and paved the way for our understanding of the link between health determinants and costs and social factors. Again, this work clearly identifies vulnerability as a key concept that must be considered when budgeting for health care delivery.
The role of community-based organizations in population health is critical. AIDS Vancouver has embraced the population health framework and has become a leader in defining it through an outcome-planning evaluation protocol which is now being used as a demonstration for other agencies in this province and across Canada. We're delighted that we have the support of both the provincial and the federal governments to do that work. This experience has now extended to Mexico and before that to Belarus.
Respectfully, we submit that we're perhaps a little bit more advanced in this area than some of our traditional health care systems, acute care and community care and the regional health board alike. Though they're coming along, it's taking some time for us to bring them along with us. What we have learned is that the regionalization of health care has raised many concerns across many sectors of society. To date, our experience has been supported by much evidence to lead us to the conclusion that regional governance does not necessarily result in regional accountability or efficiency.
As a community organization we work on the front line, and while championing the rights and dignities of those most vulnerable in society, we have struggled with stretching our fiscal and human resources to extraordinary limits, far beyond the limits any traditional health care agency or system might even consider acceptable.
As I said before, yours is no easy task. Our hope is that the government will consider the determinants of health in developing a fiscal plan for the future and that it will consider it as an ethically sound framework upon which to make its decisions. In doing so, justice and dignity will indeed be better served for all. I thank you for this opportunity.
B. Lekstrom (Chair): Andrew, I thank you very much for your presentation. I do have questions.
J. MacPhail: Thank you, Mr. Johnson. One of the trends that's been reported, certainly outside of Canada, is the increased incidence of HIV-AIDS amongst seniors. Is there any linkage between AIDS Vancouver and seniors organizations? Maybe this is not occurring in Canada. I was thinking more in line with other presentations about prevention.
A. Johnson: We haven't really seen any significant increase. Most of that has come from data in the United States. We haven't seen any significant increase in Canada. I will tell you, though, that we do have links with the seniors community — not formal relationships, but many of our volunteers are seniors. Some of our strongest and most reliable and long-term volunteers and leaders are seniors. They've been the backbone of our organization for many, many years. They've been the grandparents and the parents of many people who have died with HIV and AIDS. Some of the groups in the downtown east side are also led by seniors in terms of championing those rights.
J. MacPhail: Would the Centre of Excellence be able to pick up that trend? Is the collection broad enough?
A. Johnson: They would, yeah. The tomography studies that would be done there would…. Statistical modelling would pull that out and let you know that.
L. Mayencourt: Andrew, you mentioned that perhaps the regional health boards haven't been as receptive to…. Population health as a model — you know, the social determinants of health — is that what you were…?
A. Johnson: No, I don't think "not receptive." I'm sorry if I left you with that impression. I think they've been overwhelmed with responsibilities and duties, and they just haven't got on that bandwagon yet. I think they're struggling with shifting from the old way of doing business to a new way of doing business. Unfortunately, the new way of business isn't clear, and nobody's picked a model within the regional health unit to do it.
What we're trying to do is stay focused on what individuals need to be productive and healthy members of society. The research is clear. It's black and white. It's global. Focusing on vulnerability and determinants of health is what keeps people active and healthy in society, reducing costs to government.
L. Mayencourt: You said something like: the model hasn't been picked for regionalization. What's wrong there? My understanding was that we'd picked regionalization. There was the model, and we were going to follow through on it. What isn't working? Does regionalization work anywhere?
A. Johnson: I don't know. There isn't a lot of evidence to suggest that it does. Ontario, Quebec and some other places in Canada are beginning now to see the difficulties and the problems with regionalization.
In a geographic area like British Columbia with such a rural emphasis and a problem with HIV, a
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communicable disease, you really need strong central, focused leadership in order to address the needs of an epidemic. If you regionalize a population health crisis, you're going to have a hodgepodge response. Like I said, regional governance does not equal regional accountability or an effective response. For something like an epidemic of HIV, that's a very dangerous thing to do.
We don't have a model. What is the government's model for the delivery of health care? What is the region's model? Every region seems to be going somewhere different. That's a concern, I think. A citizen of British Columbia should be able to move anywhere in this province and expect the same level of service delivery anywhere they are.
J. Bray: Just very quickly, Andrew. I'm also on the Health committee, so I'm back through.
A. Johnson: Oh, double bonus.
J. Bray: Although you had such a short time to speak, you spoke on a number of issues. I would encourage you to come back in front of the Health committee. You've touched on a lot of things that I think the Minister of Health and also the Minister of Health Planning are really trying to address, which is changing the health care system. I think you touched on a lot of very valuable points. I would encourage you to come back and make a presentation at that time.
A. Johnson: I accept your invitation.
May I make one point to address your question about seniors. It has come to me that one of the theories is that at the end of the baby-boomer population with the high rates of divorce, older people are now getting single and hitting the dating scene again. They don't have the message of safety in their minds around sexual activity that maybe the newer generations do. That has been posed as a theory as to why infection rates may be increasing in older generations. So that safe-sex condom thing is for everybody, no matter what age you are.
J. MacPhail: It requires education among seniors…
A. Johnson: It does.
J. MacPhail: …or us approaching seniors.
A Voice: We're all approaching it. [Laughter.]
B. Lekstrom (Chair): That I won't rule out of order, Joy, so we will continue.
Andrew, I'd like to thank you for your presentation.
Moving along, our next presentation is from the Vancouver Board of Trade. With us we have Darcy Rezac, Rick Mahler, Jim Mann and Jeff Black. Good afternoon.
D. Rezac: Thank you, Mr. Chairman and ladies and gentlemen of the panel. I'm delighted to appear here before you this afternoon. Mr. Richard T. Mahler is executive vice-president and chief executive officer of Finning International and is Chair of our provincial budget committee. Jeff Black, CA, is a partner with Arthur Andersen, Jim Mann is a principal with Capital Business Strategies Ltd., and I'm managing director of the Vancouver Board of Trade.
I believe you all have copies of my presentation.
First, we would like to commend the government on the measures they've taken so far in their term of office to return British Columbia to a competitive economic environment. The lowering of taxes, the reduction of corporate income tax, the reduction in aviation fuel tax and bunker fuel taxes and the elimination of sales tax on machinery and equipment used in production are all very, very positive measures.
We regret that the phasing-out of the corporate capital tax excluded financial corporations. In essence, that exclusion penalizes those firms for bringing capital into British Columbia and makes us less competitive than competing jurisdictions such as Alberta. The Vancouver Board of Trade did a study a few years ago which demonstrated that the banking system in British Columbia serves us well. In fact, we import more capital than we have on deposit. There are more loans given out than we have on deposit. So we should ensure that that is a competitive regime.
We applaud the government's commitment to eliminate the deficit over time and hence halt the increase in provincial debt, but we need to point out that the current situation we're facing today is quite different from that which existed prior to September 11 and prior to last summer when the financial statements were made.
The impact of the softwood lumber dispute is already costing jobs. The aftermath of September 11 is expected to have a substantial negative impact on both the U.S. and the Canadian economies and the British Columbia economy. We believe it's important, therefore, that the government carefully considers its fiscal strategies in light of the major changes that have occurred.
As a matter of record, the Board of Trade has supported the target of balancing the budget by 2004-5. However, while immediate steps are required to put the province on the path to sustainable fiscal performance, the uncertain economic situation may well result in economic growth being significantly worse than previously anticipated. As a result, we believe that a contingency plan should be prepared that reflects lower economic growth and correspondingly lower government revenues. This contingency plan should contemplate achieving a balanced budget later than 2004-5.
We have specific recommendations, and I will go over them. Given that the United States, Canadian and British Columbia economies are in danger of entering a recessionary period and given the economic uncertainty following the events of September 11, a contingency plan should be prepared with an extended target date to balance the budget if required.
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Secondly, tax cuts introduced in recent months were very appropriate. Further cuts scheduled for January will have the effect of stimulating the economy and should be part of the economic recovery strategy. In addition, further commitments are required to ensure that business taxes in British Columbia will be competitive with other jurisdictions, such as Alberta and Ontario. Testimonial to the fact that the tax reductions were appropriate were the tax reductions announced both in the U.S. and in Ontario recently in response to the devastating impact of September 11.
The government must proceed with its plans to reduce government expenditures. There is no doubt about that. These cuts should be made based upon the review of optimum resources allocation in combination with the emerging results of the core review. The core review, coupled with ongoing resource allocation assessment, should be extended to the next fiscal year to reassess the effectiveness of the cost-reduction measures and the adequacy of government services in light of the prevailing economic situation. That's in the context of the uncertainty in which we find ourselves.
We support maintaining government expenditures on health care and education at current levels. This is a reasonable approach, given increasing demand on one hand and reduced budgetary capacity on the other. Productivity and prudence should be pursued in both health care and education. Improved management processes, appropriate capital expenditures on technology, the use of private sector resources, public–private sector partnerships and the use of benchmarking based on best practices from around the world are some of the measures that should be employed.
Capital construction projects that result in a worthwhile return to government revenue should be pursued as one means of stimulating the economy. In particular, the Vancouver and Whistler convention centre expansions required for the 2010 Winter Olympics bid should be pursued. Expenditures through the construction sector provide one of the strongest multiplier effects for the economy.
Mr. Chairman, that is the basis of our recommendations. If you'd like us to go through answers to the other questions, we will. Or perhaps you'd rather do it in questions and answers. Fundamentally, we feel that the economic recovery in British Columbia will best be accomplished by having a very competitive economy with competitive taxes and an investment climate that draws private sector capital into the economy that will produce long-term, well-paying jobs. That is the essence of our economic development strategy, but I do want to underscore the uncertain times in which we find ourselves.
B. Lekstrom (Chair): All right. Well, I would like to thank you very much, and I note that there are questions from members of the panel. Possibly we could do that and carry forward that way.
L. Mayencourt: Mr. Rezac, you mentioned in point 2 of your recommendations that further commitments were required to ensure that business taxes in B.C. remain competitive. You mentioned the one about capital tax for, I guess, the banks. Did you have any specific taxes in mind when you talked about that?
D. Rezac: Well, the specific rate of tax on business in Ontario has recently been reduced again. I would use that. I would look….
L. Mayencourt: So just stay on top of what the competition is doing.
D. Rezac: Stay on top to make sure that we are competitive.
When you go through our report, we do underscore the need for a positive regulatory economy. It's what I call GICHs, government-induced competitive handicaps. We have to eliminate those. It's not only tax measures but other measures where government can inhibit the creation of capital and the employment of capital to create well-paying, long-term jobs.
L. Mayencourt: You mentioned that with September 11 and the softwood lumber deal — all those sorts of things — it's maybe time to readjust the date for getting a handle on the operating deficit. Is there ever a good time?
D. Rezac: Well, that's not exactly what I said. Mr. Chairman, I believe the budget is going to be produced in February. Is that correct?
B. Lekstrom (Chair): Yes, it is.
D. Rezac: Well, here we are in October. September 11 isn't that far behind us. It's probably too soon to say the government should extend that date. We're not calling for that. What we are calling for is a recognition where you have the governor of the Bank of Canada and senior Federal Reserve people in the United States saying that we're probably in a recession now. Those are different sentiments than we heard six months ago; those are different sentiments from July.
In recognition of that, we are suggesting that while sticking to the three-year target for balancing the budget, it would be wise to put into place a plan B, a contingency plan that could be put into place quickly and with no surprises should the revenues not materialize at the forecast rate. I will note that in your budget documents, in your documents of preparation for this meeting, the forecast rate for economic growth has dropped considerably. The forecast growth rates for revenues, therefore, can be expected to be less. That's been demonstrated as well. If that's a trend, if we assume that flattens out and it's going to improve, that's one thing. But if it continues to go down and we find ourselves in negative economic growth and in a recession, as many experts say we now are, then I think we have to have a contingency plan in place.
J. MacPhail: Good afternoon, gentlemen. I was listening to an interesting financial show this weekend.
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There was a debate amongst…. Basically, it was out of Wall Street, about the effect of September 11 on the economy. They were recommending, in order to distinguish between the real and perceived effects, the setting of benchmarks. We've had discussions in this province about benchmarks for economic outcomes. Is that a theory that you would hold to still? I note that there's basically a lot of discussion here about inputs but no output discussion.
D. Rezac: Oh, no. I'm sorry that I didn't go through the other details of my paper and you didn't have a chance to read it.
In fact, the board has been a longtime proponent of the Oregon benchmarks, based upon the Oregon Challenge experience. That's been honed down to some benchmarks that are really doable. We think that we should be measuring not only the amount of money we spend on education but also how much it costs to graduate a grade 12 student. How many drop out? How many go back and complete? How does that compare to national and international norms? What's the unit cost of an appendectomy? What's the unit cost to clean a square foot of hospital floor compared to, say, a hotel? That should lead you in the direction of coming up with prescriptions for efficiencies.
J. MacPhail: But also benchmarks on tax cuts, outputs from tax cuts.
D. Rezac: Benchmarks with respect to taxes. There's a number. For example, what is our investment ratio per GDP compared to other provinces? If you believe, as we do, that there's a direct relationship between investment and the tax regime, then it's quite appropriate to measure the rate of tax compared to other provinces and come up with competitive benchmarks there.
J. MacPhail: But you still support that concept of competitive benchmarks on that side as well.
D. Rezac: Absolutely.
J. MacPhail: Thank you.
B. Kerr: I have a couple of questions. I'll direct the first one to Jeff, because you're in the consulting business, I guess, with Arthur Andersen. We had chartered accountants in here earlier. Companies can easily migrate to Alberta, which is probably our closest competitive neighbour. Have you seen a lot of that happening in the past while? Has the tide turned? Has the mental attitude turned toward migration to Alberta for businesses?
J. Black: I would say yes, I have seen a fair bit of that and definitely a number of clients looking to migrate, whether it's to Alberta, Ontario or down south. The attitude has changed recently, over the last few months, but I don't think anything has been put in place since. I see the attitude changing, definitely, with clients. It hasn't worked out into actual action, as in staying or investing more in B.C. But definitely, the attitude is looking a lot better than it was, say, six months ago.
B. Kerr: To maybe summarize what you're suggesting, I'm not sure of the degree of deficit we should run, but you're saying not to worry too much about running a deficit over the next few years, because of the events that happened, but we should cut back on expenditures, stay the course of the tax cuts to encourage more investment in British Columbia, but borrow, increase our debt to go into more infrastructure programs as opposed to operating programs. I guess my question would be: at what stage do you say the debt is too high? At what stage do you think?
D. Rezac: That's a good question. Let me qualify it, just back to what Ms. MacPhail was saying in terms of benchmarks, and then I'll answer that question.
We recommend establishing benchmarks starting with what Canadian national averages are. That doesn't mean that those are the benchmarks we have to accomplish or have to shoot for. Once you do that and see how you compare, then we should ask where we want to be, say, with the graduation rate of grade 12 students. Do we want to be in the top 25 percent? That should be through some kind of consultative process.
With respect to your comment that we shouldn't worry about the deficits too much, that's not so. I think we should worry like heck. I think those looking after our funds should be worried all the time, but you have to believe that the solution to economic recovery in British Columbia is a recovery in revenues.
If our revenues are being impacted by economic growth which turns out to be negative, as some experts say, then I think we have to accept that we will be running a deficit for a few years — two or three or four years — before we can get the balanced budget. Nobody wishes it were that way.
Everybody wishes that last year, when we recorded economic growth — and the year before and the year before — those budgets should have been balanced, but those aren't the circumstances in which we find ourselves. We find ourselves in a different spot. I think it's realistic to anticipate deficits over the next couple of years. I think you should be worried very much about them at the same time.
B. Kerr: What about the debt situation? You mentioned we should get into more of an infrastructure program.
D. Rezac: Part of benchmarking, as Ms. MacPhail knows, is establishing targets. We've had this discussion before, when she and I and others participated in a benchmarking exercise with respect to debt management targets. Yes, I think that part of the core review process next year, the consultative process as we get a better fix on what the economy is doing, should be to establish realistic debt-to-GDP targets.
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We have the advantage in British Columbia that the result of a long history that goes back probably starting before ten years ago is keeping our debt levels fairly low. Our debt grew too fast in the past ten years. That notwithstanding, we still have better capacity than most jurisdictions to weather this shortfall in the next couple of years.
Once we get a good fix on balancing that budget, though, the Board of Trade feels that there ought to be a rigorous effort to pay that debt down and establish a benchmark number. We're not in a position to recommend today, but we'll be happy to participate with government in establishing that benchmark number, as we did, I believe, two times before.
B. Kerr: I have something I want to ask.
B. Lekstrom (Chair): Very quickly.
B. Kerr: Rick, I understand you moved your company to Alberta. Is there any way we can entice you to come back? What would it take?
R. Mahler: Well, number one, we didn't move our company to Alberta. We moved our Canadian operation to Alberta. Our international company is still here, and the people that were serving the British Columbia customers, which is about 1,200 people, are still in British Columbia. What we did move was 200 head office jobs to Alberta.
Today, for example, the vast majority of our revenue in our company is Red Deer North, which reinforces the decision that we move there to get closer to our customers.
B. Lekstrom (Chair): Gentlemen, I would like to thank you for taking the time out of your busy schedules to come and put presentations forward to the committee. I can assure you that they will be given due consideration in the formation of our report. I would like to thank you again.
Our next presenter this afternoon is Stephen LeBlanc. Good afternoon.
S. LeBlanc: Good afternoon. I'm quite confident that I won't be repeating any of the remarks of the previous speaker.
B. Lekstrom (Chair): Oh, darn.
S. LeBlanc: I come before you today as a citizen of British Columbia, as a taxpayer and as somebody who's very concerned about the current situation. I'm originally from Nova Scotia. I moved here seven years ago for employment reasons, ironically enough. I left there at a time when the Nova Scotia economy was struggling, and it continues to struggle. In response to that, the provincial government at the time was forcing unpaid leave days on all provincial government employees, in the neighbourhood of three days in the first year, five days in the second year and another three days in the third year, all this after about three or four years of wage freezes had been imposed on civil servants.
As a result, as a new social worker working in the field, I actually had a lower income after working for five years in my chosen profession than I did when I first started out. Despite that, I've continued to work primarily in the community social services sector. Almost half of the 15 years that I've been working in that sector has been here in British Columbia.
I want to talk a little bit about the kind of work I do. I actually work in Richmond. Some of the programs that I'm involved in cover the lower mainland. As an agency we provide counselling and related prevention and crisis intervention services. I serve on several committees related to issues affecting children, youth and families in addition to issues around mental health.
I work in a multi-purpose agency. Therefore, we have several sources of funding. Eighty percent of that funding comes directly out of several ministries of government. Our current level of funding does not adequately cover program costs. All of our contracts are currently running at a deficit. These contracts have not seen increases for the past three to five years despite increasing cost pressures on delivering those programs and services. Therefore, fundraising has become really critical to our agency's survival in order to ensure that we are maintaining an appropriate service level such that we can effectively respond to community needs. Most of the other non-profit agencies in this sector are also in the same position financially, having to rely very heavily on fundraising to subsidize their contracts with government.
Some of the programs in our agency have wait-lists already and have had for some time, as do many others in the sector. This is a fairly common experience. It means that British Columbians have to wait for service when they're in need. Particularly in my area, when you're talking about crisis services, often people are unable to wait very long for those services. The message I want to deliver to you is that current resources are already stretched to capacity, and some of them are stretched beyond capacity.
In order to put these program descriptions into some human terms, let me just describe for you the kind of work we do in this field. For five years I've been very proud to be an advocate and an activist in the labour movement. I am particularly an advocate in the community social services sector. We represent employees who are working in services to women, community living services, services for children and families, child care and other community services. We're the folks who provide services to women and children who are escaping violence and needing to find safe shelter in a transition house. We provide follow-up counselling, advocacy, support groups and education programs, all related to the issue of violence against women and children. We provide a variety of supervised housing programs, supported employment programs and life skill programs for those who have developmental disabilities. We provide a variety of child
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care services and programs, allowing parents to participate in the workforce and providing children with a safe, dynamic and educational early start in their lives.
We provide crisis intervention, drug and alcohol counselling, suicide intervention services, counselling for survivors of abuse and assault, and family support services. We provide education and prevention programs in a wide variety of these areas, thus building community capacity to respond to issues and problems as they arise.
We've been hearing a lot of talk lately about cuts. I woke up and thought I might be back in Nova Scotia, but no, I'm still here in British Columbia. The talk of cuts is definitely going to have a significant impact on the workforce in the sector in which I work as well as on the clients. A 35 percent cut in funding would represent millions of dollars in lost income in the community social services sector and the community health sector — and even more, when you add in the direct public service. That would represent a significant increase in unemployment. Thousands of British Columbians would likely be thrown out of work or have their hours severely reduced.
When significant job losses occur, the remainder of the labour market becomes far less pliable, so people in existing jobs will remain in those jobs for fear of job security. Some other people have made reference to the impact of September 11 on the tourism industry and the airline industry. We have mounting job losses in the forest industry. Add in a further several hundred million dollars in lost income from direct government services, particularly in the area of community social services, and those effects would be quite devastating on the economy. Through this, government can play a stabilizing role. These are tough economic times, no question about it, and leadership from government is really essential. But dramatic cuts will only escalate the economic crises, increase unemployment and create further problems. Therefore, any positive benefits from the tax cuts that have already been implemented will be negated several times over.
In terms of clients, a 35 percent cut means significant reductions to services for clients and patients, many of whom rely on these services for their physical and emotional well-being. It means long wait-lists for clients, which in turn means problems are more likely to become increasingly more acute, requiring more expensive interventions and placing an additional burden on an already overburdened system. It means some services may no longer be available for clients who need them, because there are no longer staff or programs delivering those services. It means that even if funding is restored three years from now, it will be restored to levels that are already inadequate today, therefore jeopardizing services for future generations as well. The increased unemployment means further strain on families and a potential increase in social problems as the result of this increased stress.
In terms of the community, I work in Richmond. Two of the largest employers are the airport and the Richmond Health Services Society. With both of these groups being affected by potential job losses or service reductions, no doubt the implications of any cuts announced by this government will be quite devastating for the entire community. The current freeze on health care funding doesn't mean that services will remain frozen at their current level. What it means is that annual cost increases of about 8 percent per year will go unfunded, leaving an accumulative shortfall of almost 25 percent over the next three years. All this is at a time when our health care system is already stretched beyond its limits.
Although education and health care have been sort of protected, if you will — I'm not quite sure that's the correct term — it's interesting that the Ministry of Children and Family Development has not been protected. This has the potential to create some very real and serious life-and-death risks for children and families in British Columbia. As well, when you look at communities like Victoria where there's a really high number of government employees, any potential cuts in the neighbourhood of 35 percent would have a very devastating effect on the local economy. I guess the question is: at what point do the risks and the costs of these dramatic cuts, in human terms, outweigh the assumed benefits in financial terms?
It's really difficult to try and make the decisions about cuts. These are tough economic times, and no doubt cuts need to take place. How do you decide what services to cut? Do you cut funding to the transition house so that women and children are more likely to remain in an abusive relationship because there's no shelter available for them? Do you cut funding to suicide prevention programs so that people in crisis have nowhere to turn when they're in distress? Do you cut social workers, leaving children unprotected from abuse and neglect? Do you cut home support workers, leaving British Columbians in fragile health to fend for themselves, becoming even more ill and requiring even more expensive hospital services that may or may not be available when they need them?
Do you cut child care? Oh, wait a second. Never mind, that's already been cut, even though there wasn't much there to cut in the first place. In cutting funding in the area of child care, it's even more difficult for parents to participate in the workforce and contribute to the economy.
A previous speaker referred to best practices in the field, and I want to assure the committee that in the field of mental health in which I work we've been implementing and utilizing best-practice models for many, many years. We're actually leaders in this area. I wanted to make some reference to those best practices already being in place. We are very focused on outcomes. We're very conscious of the need to measure outcomes in order to legitimize our funding. That's a situation we've been in for many, many years now. That's not new for us.
I want to talk for a minute about the implications in terms of public service work. I've given this a lot of thought in making the decision to work for a public service, and I've done so for the last 15 years. Many
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people look at me as though I'm a little off, but it is very important work. It's critical work and valuable work. It is a significant contribution to the well-being of your community.
There are already recruitment and retention issues in the public service. In the next five to ten years many of the baby-boomer generation will be retiring, and those recruitment and retention issues will become even more significant. I use the example of recruiting child protection social workers. This province has had to look to other provinces in order to recruit an adequate number of child protection social workers. That's been extremely problematic, extremely expensive and rather un-cost effective, if you will.
Unfortunately, the public perception is starting to shift. At one time you could get a government job, and that would mean job security, a living wage and all kinds of benefits. Those are not in place anymore. Job security for public servants is a thing of the past. Therefore, in five to ten years, when we need to replace a large number of our civil servants, the public is not going to be too keen to snap up those jobs if there are any available.
I guess decisions come down to options and priorities. They're not easy decisions to make. Obviously, there are tax cuts slated for the year 2002, which it's quite obvious to me the province can't afford. There is potential for these cuts to be deferred for a couple of years while the economy stabilizes and other opportunities present themselves. Maybe other presenters have had some ideas of what those opportunities might be. I don't, unfortunately.
Certainly government can play a greater role in stimulating the economy, and the planned funding cuts will definitely have the opposite effect. It's about making choices. They are difficult choices. I certainly wish you much luck with those choices. My hope is that the priority will be placed first and foremost on the citizens of British Columbia. Thank you for your time.
T. Bhullar (Deputy Chair): Mr. LeBlanc, could you describe which organization you're with so that we know which organization needs this assistance? You've made an excellent presentation.
S. LeBlanc: Okay.
B. Lekstrom (Chair): If it's relevant and you would like to.
S. LeBlanc: I won't be naming the organization by name. My employer has clearly indicated to me that I'm not speaking here as a representative of my employer.
T. Bhullar (Deputy Chair): But, sir, with the greatest respect, you've made numerous references.
S. LeBlanc: What I can describe, with all due respect, is the variety of services the organization offers. We offer a number of counselling programs for people who are in crisis.
T. Bhullar (Deputy Chair): Again, I was just saying that if we're going to help this organization, I need to know which organization it is.
S. LeBlanc: I'm not here asking for help specifically for my organization. I'm here to express my views as an individual citizen.
B. Lekstrom (Chair): I will clear this up as the Chair. Stephen came and said that he was presenting as an individual British Columbian, and I respect that. I will move on to the next question.
I. Chong: Thank you for your presentation, Mr. LeBlanc. Your comments appear to be based on an assumption or a perception that a 35 percent reduction in spending would translate to 35 percent directly in programs. I don't agree that that would necessarily be the case. However, my question to you, as someone who's worked in the community social services sector, is that certainly we're looking to yourself as a front-line worker to have a look at where there can possibly be some savings.
As an MLA for the past five years in opposition, I've heard stories. You may agree or not that there were as many front-line workers sometimes as there were supervisor-managers — in other words, a one-to-one ratio. I'm wondering whether you agree that that is appropriate or whether we should be looking in those kinds of areas. If there are savings to be found there, we would reinvest them into the front-line workers as an objective.
S. LeBlanc: I appreciate your question. Let me assure you that there certainly is no fat to trim. I work, actually, in a combined position. I have supervisory responsibility two days a week, and I provide direct front-line counselling work three days a week. This is as a result of the fact that our agency does not have in its infrastructure the ability to hire managers. There is no funding for administrative costs. Those have been the only fat that existed in contracts, and those have already been trimmed through previous spending freezes.
There hasn't been an increase in contract funding for many, many years. Therefore, in order to continue to provide the level of service that we feel is required and that is asked of us by our clients, these are the kinds of decisions we've had to make as an organization.
I. Chong: Just as a quick supplementary. I wasn't referring to you as a contracted-out agency, because I know that we went through this difficult process two years ago when there were cuts there. I meant in your contracted agency work with the ministry, for example. This is where I was hearing that perhaps there were. I don't know whether you have that relationship where you find that dealing with a ministry, for example, you say: "Wow, they have an awful lot more people. It sure would be nice if we got that extra funding." I'm just trying to find out.
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S. LeBlanc: That hasn't been my experience. In fact, my experience has been quite the opposite of that. Most of the ministry folks that I deal with are also commenting about the lack of resources. Certainly it hasn't been my experience that there are more supervisors than there are front-line workers.
I. Chong: Okay. I guess I'm hearing from different people.
S. LeBlanc: That may be reports that are happening in certain sectors. It's certainly not been my experience.
J. MacPhail: Very briefly. Mr. LeBlanc, you referred to the recruitment of people because of the turnover there's going to be for baby boomers. What's the nature of recruitment now? Are there younger people coming in or not?
S. LeBlanc: There are. Unfortunately, they're having to make some real difficult decisions about where they choose to work in terms of which organizations they choose to work for. Certainly many people are going where the economic times are better. That's one of the reasons I left Nova Scotia and came here to British Columbia. There weren't jobs in Nova Scotia at the time. They were making severe cuts. I came to British Columbia seven years ago, at a time when there were job opportunities. There was potential for career advancement.
I certainly see and speak to many volunteers. We have about 150 volunteers in our organization who provide services along with us. Many of them are also interested in pursuing a career in the field. My advice to them has been to make some really serious decisions about the field they want to work in and to look three, five, ten years out to see where the need is going to be greatest so that they can look at specializing in that area. Difficult decisions are going to need to be made, and some of the programs that have been around a long time may not be there in a few years' time.
B. Lekstrom (Chair): Stephen, I would like to thank you for your presentation. One of the key points you touched on is the issue of balance and trying to do all of this in a balance that is truly sustainable for the betterment of our society in British Columbia. Thank you.
Moving along to our next presentation, we have with us John Rea with Retail B.C. and Kevin Evans with the Retail Council of Canada. Good afternoon. Welcome.
J. Rea: Thank you. Good afternoon, everybody. My name is John Rea. I'm president and owner of Edward Chapman Ladies Shops. We have five stores, all located in the lower mainland. I'm here today as a retailer. I'm here also as the Chair-elect of Retail B.C., which actually was formerly known as the Retail Merchants Association. Retail B.C. has been the province's organization since 1910. In fact, 1910 was the same year that my grandfather came over from Ireland to start working for Edward Chapman in Vancouver. I'm the third generation in our family to work in the store. I myself have been involved in the store for the last 25 years.
Retail B.C. has 3,500 members across the province that really sell just about every kind of product and service that one can think of. Most members have one or two stores and annual sales of $1 million or less. So we are an organization that covers a good, broad spectrum of retail in the province.
K. Evans: My name is Kevin Evans. I'm the British Columbia vice-president for the Retail Council of Canada, which is a non-profit, member-funded organization much like Retail B.C. The Retail Council has been the voice of Canada's retail industry since 1963.
I'll just give you the quick snapshot, as John has done of Retail B.C. We've got about 9,000 members including national department stores, national and regional discount chains, mid-size specialty stores, e-tailers and independent retailers, much as are represented by Retail B.C. Retail Council has had a full-time office in British Columbia since 1998.
J. Rea: Really, both organizations are very happy to be here today to make this presentation. We feel that retail does play a very vital role in the economy of the province. On that note, there are a few interesting points I want to make about retail in B.C. I'm just going to fire through them here, if I can.
Retail provides jobs for more than 225,000 British Columbians. That's more than four times as many people as are employed in forestry, fishing, mining, and oil and gas put together. There are more than 30,000 retail storefronts. You find them pretty well everywhere you go in the province, when you think about it. Retail paycheques add up to almost $4 billion a year. What do they do with that money? They spend it in our economy.
Retail sales will top $36 billion this year. Retailers collect on the government's behalf more than $3.6 million in sales tax….
B. Kerr: Billion.
J. Rea: Excuse me — $3.6 billion. Yeah, a big difference. It's just one letter, I guess.
Retail has been a key contributor to the province's economic welfare. I read here that this year, on a monthly average basis, retail sales are up over 6 percent over last year and are really only second to Alberta in retail sales growth.
Really, more significant than any statistic is that as retailers we're sitting there on the front line, and every single day what happens at the till and customers' reactions…. It's all front-line stuff that we have to deal with. The success of any retailer's business — and my own is a great example — is all zeroed in on being to identify what the customer wants and giving it to her and making it right. I feel that in our perspective, insight from the retail floor is worth giving careful consideration to as you go about gathering your information here in this committee.
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K. Evans: When we appeared before the standing committee last year, there were really two key items on the agenda. The first was to increase personal disposal income through tax cuts. The second was to help restore consumer confidence in the future of British Columbia's economy. Those issues will comprise the twin focus of our presentation this afternoon.
The personal income tax cuts that were announced on June 6 really exceeded our expectations. Retailers in British Columbia would like to take this opportunity tonight to publicly acknowledge and commend the government for providing what we view as a long-overdue stimulus of consumer demand. Through the nineties average personal disposable income in B.C. actually dropped, and it's no coincidence that retail sales dropped along with that. It was absolutely essential, as we said last year, that the government address this issue, and it did so in dramatic fashion on June 6.
The impact of those tax cuts was felt even before they were announced. Consumer confidence in British Columbia spiked, in the second quarter of 2001, to levels we hadn't seen in over a decade. The Conference Board of Canada, which tracks consumer confidence, attributed it to voter anticipation of tax cuts before the election had been called.
The economic activity generated by this kind of tax cut is more complex than a sudden stampede of shoppers, although many of our members did report some immediate sales activity. The real benefit, in our view, is much more durable. While 13 percent of those surveyed by the Angus Reid Group said they would spend a tax cut of between $500 and $1,000, 28 percent said that they would use it to pay down their debt. When you consider that B.C. has the highest per-capita personal debt ratio in Canada, reducing that debt load has long-term benefits for the retail sector and the economy as a whole. Incidentally, for 34 percent of those, what would they do with their tax cut? They'd invest it. Another 19 percent said they would save it, both of which have the effect, in our view, of increasing feelings of security about the future, which is the essence of consumer confidence.
Though no one could have predicted on June 6 the events which have followed, the tax cuts will help buoy the B.C. economy at a time when softness in the global economy suggests it is most needed. I'd like to quote from the Toronto-Dominion Bank, which said recently:
"The U.S. slowdown, the U.S.-Canada softwood lumber dispute and the near-term impact on its important tourism industry from September's terrorist attacks in the U.S. are delivering a setback to the recovery of British Columbia's economy this year. But cuts to personal income tax rates implemented in 2001 are helping to cushion that blow. Finally, in assessing the impact of the personal and business tax cuts, it's important to reiterate that they remain absolutely necessary to prevent further erosion of B.C.'s tax-competitive position with neighbouring jurisdictions."
In our submission last year we raised the connection between consumer confidence and government stewardship of the province's finances. It's on that issue that we wish to focus the latter part of our submission this afternoon. One cannot overstate the importance of consumer confidence, because consumer spending, as you know, drives so much of our economy.
Retailers would like to commend the government for several initiatives introduced in its first 90 days to create a framework of certainty, stability, efficiency and accountability in the management of public finance in British Columbia.
In particular, we would like to point out the fixed annual budget dates, a commitment to cut red tape by a third over the next four years, the administrative justice review project to eliminate duplication and streamline the operation of more than 60 administrative tribunals and agencies, and the core services review. The four core questions that are being asked here are integral to any retail or any other business. Every day you ask those questions: what are we doing, why are we doing it, how is it being done, and how is progress being measured?
If we have a comment on the core review, it would be that we hope that the integrity of the review can be maintained — that the effort to look for cost efficiencies can be kept as separate as possible from the core review process. Now, that may be naïve, and in this day and age it may be impossible, but we would ask you to be wary of that and by any means possible maintain the integrity of the core services review.
Finally, we support the commitment to lay out a three-year deficit reduction plan in the February 2002 budget. We believe these initiatives and others like them have a cumulatively positive effect on consumer confidence, because they demonstrate renewed efforts to improve the business climate and a commitment to re-establish fiscal discipline in British Columbia.
We note, as we've just heard from the previous witness, that the government's plans to balance the province's books by 2004 are currently under intense pressure. The global slowdown and the events on September 11 have resulted in government announcing spending cuts deeper than anyone initially anticipated. Retail Council of Canada and Retail B.C. submit that government must continue to monitor economic conditions carefully and maintain the ability to adjust its plans. However, at the present time we support the current timetable for eliminating the deficit. We believe that the short-term risks of downsizing government are outweighed by the long-term risks of not doing so and perpetuating B.C.'s structural deficit.
Cuts of the magnitude proposed, phased in over three years, would represent an annual reduction of less than 1 percent of current provincial gross domestic product. We are not of the view that this would be sufficient to cause or prolong a recession in British Columbia. We urge the government to proceed with caution as it seeks ways and means to reduce spending and also encourage it to examine privatization and asset realization as additional methods of eliminating the deficit.
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J. Rea: In conclusion, maybe what we could do is just respond as best we can in point form to the questions that are asked in the government's budget consultation document. In addition to the points that Kevin mentioned, we just want to add the following.
Which programs and services should be restructured, expanded or terminated? Well, the first one is that in the current economic conditions, it just doesn't make any sense for the government to consider raising the minimum wage from $7.60 to $8. I can't think, as a retailer, of one positive that's going to come out of that.
It represents an additional cost to a retailer. It does not encourage a retailer to expand his employment at a time when retailers are just desperate to educate and train young people in our profession. It is a very, very difficult thing to do when the costs of that new employee go up. It also becomes a very difficult thing to pay those experienced people — the ratchet effect, as I call it — when the spread between the current minimum wage and current paid wages decreases. It increases the demand right across your labour force to increase the costs. To survive as a retailer, quite honestly, you end up just having to do more with less people, and it becomes a negative. So I feel very strongly about that.
A viable transportation infrastructure is crucial to maintaining a competitive economy. It should remain a priority under any spending review.
What revenue programs should be restructured, expanded or terminated? The tax exemption on children's clothing has to be dealt with. Honestly, in my own case it is unbelievable how, on average, once a week I feel that as a retailer I am breaking the law. On average, I have a customer coming into my store once a week and making a purchase, and I know in my heart that that purchase is not for her daughter. But after the course of that customer's situation, when we're at the till she tells me that it's for her daughter who's under the age of 15. I get her to sign the form, and I get her address. I'm covering all my concerns, but I know she's breaking the law and getting away with it, and I can't do anything about it. It just makes no sense to me why that has not been dealt with.
I'll let you finish, Kevin.
K. Evans: I would add that we are presenting our concerns about that to the red-tape review as well.
Very quickly, to the last points. Steps to ensure that B.C. has a leading economy. Please, government, work with business to change the perception of outside investors towards our economy. Certainly, as a national retail organization, we still see the perception. It's not going to be changed overnight. Secondly, accelerate efforts to reach modern-day treaties with first nations. Thirdly, invest in tourism through an expanded convention centre in Vancouver and an aggressive bid for the Winter Olympics.
Finally, in terms of measurement, we support the appointment of the progress review board by the Premier and encourage the use of the milestones that have been developed by the B.C. Business Summit. A lot of work went into that, and we believe that work could be of benefit to the people of British Columbia.
We thank you, Mr. Chairman, for your time and for the opportunity to make this submission. We'll be happy, if there's any time left, to answer any questions.
B. Lekstrom (Chair): Thank you very much for your presentation. I will look to members of the committee if there are any questions.
R. Sultan: Mr. Rea, I'm intrigued by your reference to the increase in the minimum wage. What I heard you intimate was that in fact you get by with less. Are you suggesting that raising the minimum wage actually decreases the number of people — young people in particular — employed?
J. Rea: I don't think it expands opportunities for any young people. I would tend to agree with that. I feel that the cost of wages is just representative on your income statement of a cost of doing business, like anything else. As that cost goes up, to survive you have to look to prudent measures to control that cost, just like you do your wrapping, your purchasing or anything in business. As minimum wage increases, as a prudent businessman you have to look at that. There's no question in my mind that you have to face reality, in some cases, of doing more with less people, yes.
B. Penner: Mr. Rea, you talked about the provincial sales tax exemption for people under the age of 15, or is it 15 and under?
J. Rea: It's under the age of 15.
B. Penner: Is it just provincial sales tax, or is it GST exemption as well?
J. Rea: No, it's just provincial.
B. Penner: Do you have any suggestions about how the government could maintain its social policy objectives of assisting people to clothe their young people while prohibiting or preventing abuse of the tax exemption?
J. Rea: Well, there are a couple of things that come to mind. One of them is the wording of the act as it currently states: "…allows youth exemption for clothing sizes that extend well beyond children's sizes." It can be expanded to include any size so that in my personal case, since I'm only involved with ladies clothing, a size 18 woman — who, I would argue, does not exist under the age of 15, for the most part — can get youth exemption. So the wording of the agreement is one thing. It could well be that if you were to eliminate it and transfer the increased tax revenue to some sort of tax credit system for those in need of such, it could be brought to the people that significantly need it and not be perceived, perhaps, as a tax grab.
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B. Penner: Something like a child tax credit?
J. Rea: I'm not a politician. I'm just looking at it from a retailer's point of view. It's just becoming a very, very difficult thing for a retailer to remain competitive if he or she chooses to say to the customer: "Look; you've got to pay the tax. We all drive the same roads." The answer is: "Fine. I'll just go down the street to the next store, and they do it for me." To remain competitive you do it, and it's not right.
K. Evans: If I may add to that very quickly, I've had some of our members say, "I don't want to be caught dead increasing prices for our customers by 7 percent," but on the other hand this tax is inefficient. It's wrong. It promotes cheating. It erodes employee morale by making them "age police," and there's got to be a better way.
B. Lekstrom (Chair): Mr. Rea and Mr. Evans, I thank you for your presentations this afternoon, and as to all of our other presenters, we will give due consideration to the words you've spoken here today.
Our next presenter this afternoon is Neil Campbell Davis. Is Neil with us?
Seeing that Neil isn't here, we are scheduled for our dinner break at this time, so I will call a recess, and we will reconvene at 6:30 p.m.
The committee recessed from 5:10 p.m. to 6:35 p.m.
[B. Lekstrom in the chair.]
B. Lekstrom (Chair): Good evening, ladies and gentlemen. I will reconvene the Select Standing Committee on Finance and Government Services prebudget hearings. I would like to thank you for taking the time to come and listen and present.
With that, we will move on to our first presenter this evening, who is Anna Dwyer. Anna is with Kino-I Productions. Good evening and welcome, Anna.
A. Dwyer: I am coming to you hot off the production of one of the few industries, I believe, that is not only going but growing and making money in British Columbia, which is the B.C. film and television association.
I would give you more business-like specifics, but my MLA is the Minister of Finance, Mr. Collins, and after our last annual general meeting we actually sent the minister a copy of our projection for the industry assessment. There's always a summary of the last budget year and an assessment of the coming future. In order not to bore you to death and in hopes that somebody, sometime, will read our business statements, I'll give you just a thumbnail sketch of what we were saying there.
First of all, I realize that I probably have the advantage on you, because I have held both elected and appointed office in the public service, in the industry and in the government services business — that is, the structuring of services delivered by government to the public.
I realize that most of you are new MLAs and don't necessarily have the kind of confidence that comes from knowing all the ropes. Whenever you think I'm making assumptions or drawing inferences from experience with government in British Columbia, Canada, the European Community and elsewhere, just interrupt me and ask.
First a little cautionary note. When I first encountered the science of economics, people made all kinds of prognoses. I found out that Adam Smith had one of these curious little insights when he said, in The Wealth of Nations: "There is no art which one government sooner learns of another than that of draining money from the pockets of the people."
With that as a little caveat, I'd like to say that the reason I'm here — and I had to motivate myself somewhat, because the industry has not had a very lucky relationship with government — is that I do believe I have a perspective to offer.
In British Columbia we're extremely lucky to have an industry that has absolutely no government support or services, no lucky breaks from our neighbours down south and no windfalls from the global economy. In spite of that, the ingenuity of the people who live and work here has built an industry that has grown in 15 years from a turnover of $12 million (Canadian) to $1.5 billion in 2000. When you look at how many people we employ, it's sometimes deceptive, because you think of the lumber industry, tourism and the masses of people those employ. I could go over that with you in detail if you wanted to, but according to the Economist and the Wall Street Journal, the ratio of employment and economic output in the film production industry is about 7.5 to 10. So $1.5 billion times 7.5 or times 10 would be the approximate income that is produced by a relatively small number of people.
If you knew the people involved, you'd find that very many of them are not born or bred here. They've come here because they see it as a place of great opportunity, and they have in fact made it a place of great opportunity. This industry is dependent on a great degree of entrepreneurial skill, enterprise, creative abilities, highly skilled people and people who know how to work together. There's no place for slackers, speculators or gravy-train riders — absolutely none.
When we speak about government finance and services, I would like to just recap one point. We all talk about the economy, and people tend to think — especially if they watch TV a lot — that the economy is the market. In fact, the economy is the laws of the household. I'd like you to think of British Columbia as a household with 4.1 million members — in a bigger family of households of 31 million — but since this is a provincial committee, I'd like to just stay with it.
Unfortunately, the one member who is not part of the government party is not here, and I do have something to say to her because, unlike the present government, I do have a lot of experience with…. The major
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growth period of the industry has been during the NDP.
Just a couple of weeks ago in the business section there was a summary of the new ministry under which our industry falls. It's the Ministry of Community, Aboriginal and Women's Services. The analyst listed about 40 things that this minister — his name is George Abbott, I believe — was supposed to take care of. As point 40 he said: "Changing the kitty litter." Then he said: "Unfortunately, only my last point is a joke, because no one can possibly handle this ministry and do justice to all the points there."
I'm aware that the present government has made a disposition whereby huge tasks have been distributed in a way that is not immediately apparent to the ordinary citizen and taxpayer. The reason I am trying to remind you of this is because you can only provide the services that we have a tax base for. When you look at the people who keep the economy going, you have to pay attention not to drive away those that make money and keep people not just employed but generating wealth that spreads throughout the province and the economy. I could go into detail on this if you want me to.
Unfortunately, because of the misrule of ten years of some extremely profligate and reckless budgeting by the government under Mr. Clark — mainly Mr. Clark — there is a great sense of expectation, even demand, that the present government not only redo all the mistakes but come up with a solution in one fell swoop. I must say, the government budget and declaration of the 90-day promises has fallen into the trap of giving in to those expectations.
Before the government came in, there were signs that there was going to be a downturn in the economy — not a recession, just a lessening of growth. This was in the second quarter. Before the third quarter started, the Ministry of Finance gave away a quarter of the tax base of the province. That means that whatever government services are going to be provided will be happening with three-quarters of the tax base. The pronouncement for the first year of the budget has been that all ministries except the two biggies, Health and Education, will have to cut their budgets considerably — that is, absolutely no growth and, if possible, a reduction of between 20 and 50 percent.
When you look at the demand on services, you'll find it's absolutely necessary that there be a complete restructuring of the delivery of health services in the province. Whatever you do, those services are expensive. Some of them are, as the government has realized, essential: that is, you cannot let people die in droves because you refuse to have hospital beds or refuse to fund services that our society deems necessary to keep going in an orderly fashion. In other countries this is not necessarily the case, you know. You just have to visit certain parts of Asia, Africa, Latin America, where it's not unusual for hundreds of people to die on the side of the street. But I don't think we're going to plan for that in British Columbia. At least, I hope not.
I was going to appeal to the one member of the opposition — at least, not of the government party. This person was Minister of Finance and minister of a number of other key government departments, including Deputy Premier. Ms. MacPhail now has the luxury of having no responsibility for coming through with promises she made as minister, because she's not getting a majority; she's not going to get a vote to defeat the government. I was going to appeal to her to give us, the citizens of British Columbia, the benefit of hindsight and to honestly own up to the, in some instances, billion-dollar mistakes of misrule and to leave recrimination and divisiveness behind and just give us the benefit of a genuine assessment of how we can do better.
Here I have to give tribute to what was, in my experience during the NDP period, the true loyal opposition — namely, Mr. Vaughn Palmer of the Vancouver Sun and the BCTV news team. Unfortunately, I have to say that we will not be able to rely on these persons to be Her Majesty's Loyal Opposition during your government.
Any democratic system that does not have balances in terms of a critical review…. There's always at least two ways of doing something sensibly. If you are honest and you look around cabinet, if you don't have to perform like a flea circus for the watching media, you will find that in any cabinet of thinking people you will have two or more different ways of delivering those services.
I appreciate that you at least gave one day to listen to Jane Q. or Joe Blow Public. I have just two things to say: only the people who work and generate revenue are going to be able to pay for them. So my advice is to tax the people who generate wealth, because we can afford it. And let me tell you, I love to pay taxes. I love to pay taxes because I think the reason why people come here to work and why we have a growing economy in spite of the negative growth expected is that people are here because they want to be here. They expect the infrastructure of good education, good health services and accessibility for everybody. They don't want to walk over people who are dying in the street. They don't want to walk over people that we have to carry for a lifetime. They want to build up the economy, and they're willing to pay for it. Just ask anybody in the European community. There's been a 30-year struggle of self-education going on there, and I was a consultant on a number of these occasions.
So be bold. There's going to be a lot of dirty tasks ahead. If you want to be looking back on some achievement in five years, you will look on the health of the public. You will enlist the trust of the public. They've given you a huge mandate that is tinged more with desperation than hope at this point. I think this province has the most positive, generous and creative people I've ever met, and I've lived in a lot of places. I think you can rely on them to put their services at your disposal if you claim the best that B.C. has to give, which is its human resources, not its mining or its softwood. Thank you.
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B. Lekstrom (Chair): Ms. Dwyer, I thank you for your presentation. When people come and speak from their hearts, it means a great deal. That is how your presentation has come through to the committee, and I thank you for coming forward this evening.
A. Dwyer: Do you have any questions about the industry? We did send you information on the annual general meeting and our accounting. You can get that from the B.C. Film Commission if the minister isn't willing to share his copy.
B. Lekstrom (Chair): I'm sure he would be. We can do that. Thank you very much again, Anna.
We'll move on to our second presenter this evening, Michael Goldberg, who is with the Social Planning and Research Council of British Columbia. Good evening, Michael.
M. Goldberg: Good evening. I'm sorry I don't have a written submission for you. We will send something by e-mail. We only have a draft at this stage.
I want to begin, very briefly, by explaining to the committee who SPARC, the Social Planning and Research Council, is. SPARC B.C. is a non-profit, registered charitable society that was formed in 1966. We just celebrated our thirty-fifth anniversary.
During the past 35 years SPARC B.C. has been committed to providing information and education on a range of topics concerning good public policy. In other words, we've kind of been a critic to all levels of government, including the previous one as well as this one. SPARC B.C. is committed to working with communities in building a healthy and just society for all B.C. residents. Our regional board members and the more than 11,000 members from around the province who are part of SPARC help us maintain linkages on community issues.
We know that it is critical to assess economic, social and fiscal policy together in order to ascertain if we are moving in a direction that helps us come closer to our vision. It helps us if we know what our vision is as well. We also recognize that budgets are mechanisms that put that vision into financial terms.
The budget consultation paper essentially asks for expenditure and revenue priorities that would help re-establish B.C. as an economic leader. While we are pleased to respond to these issues, we are somewhat perplexed if the work of the committee has been superseded by the recent PowerPoint presentation of the Minister of Finance at the open cabinet meeting last week.
We trust that the work of this committee can still influence the direction of the next budget. Otherwise, we are not only wasting our time but also wasting taxpayers' money by perpetuating a process of consultation where decisions have effectively been decided. Assuming that the committee's work can influence the direction of the budget and the resulting fiscal plan, our presentation begins with a look at some of the revenue issues, and then we consider some of the expenditure issues. You'll have to answer the other questions. I don't know what the status is.
We are somewhat confused, I must say, by both the economic and the fiscal forecasts that were attached to the consultation paper — I'm referring to this appendix that was sent out — and by the discrepancies in the minister's planning scenario, which was the famous PowerPoint presentation that people saw on Wednesday, and by the June 30 economic update and the forecast projected by the minister at that time. The June 30 economic update by the minister forecasted enhanced economic growth above that which was projected, which was originally 1.8 percent for this year and 2.9 percent for the next, by 22 percent for this fiscal year and by an additional 40 percent next fiscal year once the stimulus effects of the tactics have fully kicked in. He had raised the projections by those amounts.
Furthermore, we don't understand how the updated CRF — I'm sure you all know these acronyms; I'll save the time for the audience later — in the revenue side, less losses from Crown corporations of $24.7 billion projected by the review panel in here for 2003-04, has now suddenly fallen to $22.3 billion — almost a $2 billion drop by 2004-05. We're very confused by the information we get, on the one hand, and the information that literally came out within weeks of that presentation, on the other hand.
We're not sure if the minister is saying that there will be an actual shrinkage in revenue over the next three years. If he is saying that, is he saying that the $2.13 billion in tax cuts scheduled for next year will in fact not stimulate the economy? It's hard to imagine that there's only a 4 percent growth in revenue over a three-year period, according to his plan, given the stimulus effects that he enunciated a mere three months ago.
The same problem exists with the panel's economic and fiscal forecast updates on the effect of the tax cuts in the provincial budget. That's this one that I'm now referring to, just so we don't get all confused as to which pieces of paper we're dealing with. These forecasts show no additional economic growth due to the tax cuts — perhaps this was an oversight by the panel, I assume — while including a growing forecast allowance and the amount that you deduct later on to create the deficit, which is greater than the actual economic growth they're projecting.
In other words, as I'm sure the panel members are aware, each one percentage point in economic growth generates approximately $250 million in revenue for the province. They're estimating a forecast of $1.25 billion, which would have to be equivalent to five percentage points in economic growth. It doesn't make any sense to have that level of forecast there. In fact, the error factors that they're listing make up 5 percent of the provincial budget, which adds a huge amount in terms of the deficit.
I raise these issues because I think it's important to say that if you're looking at his planning documents, are we in fact understating by significant degrees the revenue side of the equation and significantly overstating the expenditure side of the equation? If one does so
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in a way that is less than prudent, it's one thing to think of it in somewhat conservative terms and another thing to think of it in terms of major areas like they have now. In fact, very bad decisions will be made. These are some problems we have with that side.
The forecasts in here, by the way, show no additional economic growth due to the tax cuts, as I've already mentioned. While we believe there is a need for some prudence in the forecasting, the levels of forecast in these are way too high and, I think, give a very false picture.
We realize there have been changes that affect economic forecasts, and this government can't control the external world any more than the previous government was able to. But are they of such magnitude that we are heading into a prolonged recession, as the Finance minister's planning scenario would seem to suggest? In either case, it would seem folly to us that the minister would rush headlong into trying to balance the budgets by 2004-05, via massive spending cuts of up to 35 percent in what he refers to as the rest of government. If the economy is in such trouble as he claims, then a more prudent course of action is required.
One option available to the minister and the government is to delay or slow down the pace of the tax cuts. The minister may wish to phase in the remaining tax cuts rather than proceeding with full implementation as announced in his economic update in July. A second option is to proceed with the tax cuts as announced and allow them the time to work through the economy. This would require some fortitude on the part of the government, which they haven't been showing in the last three months, at least by their minister. We would have significant deficits — he announced that in his economic update, and we would agree with him — until economic growth recovered the lost revenues as promised by the minister. This may require repealing the balanced-budget legislation to allow more time for the economic cycles to take effect. That's another option the government has.
One option that is not open to government is to increase fees on those items previously covered through tax revenue, such as medical insurance premiums, Pharmacare exemption levels, etc. Such will only move money from one pocket to the other, and it will not be available, therefore, for the economic stimulation that he planned. I would argue that the mention of such changes may have already weakened people's consumption patterns in fear that what they received in tax cuts will simply go into increased fees for the same service.
This same problem exists on the expenditure side as well. An absolute 10 percent cut to the government is a much larger real cut once inflation and population growth are taken into account, and the 35 percent cut in the rest of government would lead to major job losses in the sectors affected by those cuts. Again, the mere mention of such actions is most likely undermining the potential economic stimulus of the tax cuts as thousands of people fear for their jobs.
There are just a very, very few options on the expenditure side which can be implemented at this time. I'll mention one in a few moments that I think may be important. One of the things we need to do is first have the core review completed and the results of that core review openly debated. That, after all, is what defines the vision of government, and we need that. The people of B.C. must be involved in helping to decide, having that core review material and being able to fully discuss it, what services government ought to provide and what tax levels they are willing to pay to provide those services. This is not to imply that there should be no changes, for there may be some administrative efficiencies that can be found, and the core review may help identify such efficiencies.
I would also suggest to you that one of the expenditures that probably is never considered by any government, the previous one and this one as well, is that of raising income assistance rates. Our studies show — and we'll be releasing the report within a month — that existing rates fall far below what their purchasing power was in 1982 and continue to have been eroded, even including the 2 percent increase that was given a year ago.
I think it's important to be very clear that what we all need is the information that will emerge out of the core review. We'll have a chance to debate that publicly to help identify and be clear about what the vision is. In our minds, it's important to remind the members of government that the government was elected on the promises that whatever dramatic tax cuts they brought in, in the long term they would pay for themselves.
B. Lekstrom (Chair): Thank you very much for your presentation, Mr. Goldberg. I will look to the members of the committee if there are any questions. I see no questions at this time, Mr. Goldberg. Again I want to thank you for taking the time out of your schedule to come and present to our committee this evening.
Our next presenter this evening is John Van Luven. John is with the St. James Community Service Society. Welcome.
J. Van Luven: Mr. Chair, committee members, thank you for this opportunity. As stated, my name is John Van Luven. I'm the executive director of St. James Community Service Society. I'm going to have a slightly narrower focus than the previous two speakers.
Our society, while predominantly present in the downtown east side of Vancouver, has numerous programs in other areas of Vancouver as well as in Burnaby and Surrey. We offer a diverse range of programs to the community. Our community service program is a job training program, operating a thrift store, as well as training people for building-maintenance jobs in the downtown east side. Cordova House is a hard-to-house residence for seniors in the downtown east side. We have a financial administration adult guardianship program that provides financial management services
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to many members of the community who are not able to manage their own finances for a variety of reasons.
Home support offers a closer-to-home care model in the downtown east side. Our hospice services operate both May's Place and Cottage Hospice in the downtown east side and in east Vancouver. Just as a note, our May's Place was the first freestanding hospice in western Canada, opening in 1991. We offer residential service to a range of mental health clients in the downtown east side. We offer a forensic community integration model in Burnaby. We offer women's and children's services in the downtown east side for women and children leaving abusive environments — this, in conjunction with a transition house to help these women and children find new roots so that they can re-enter a safe environment and also re-enter the workforce. We operate a number of residential programs, such as the New World Hotel and the soon-to-be-opened Summerville Place, to offer various models of social housing in the community. We're also constructing a new women's and children's shelter to move our children's programs out of the downtown east side.
I list these programs to demonstrate the scope of experience that our society has in delivering services to the community. This is our fortieth anniversary, and I would venture to say that in our 40 years of delivering services to the community, we have a very detailed knowledge of this process. All of these years have been years of fiscal economy. In looking back over 40 years of reports, I cannot pinpoint one year where anybody said: "The government has given us too much money." They have been years of scrimping and saving and trying to find enough money to adequately deliver these services. This is not a complaint. It has taught us frugality and economy, and we would like to offer our experience in this model of service delivery to the government to help them in their current search for new efficiencies.
While we at St. James deliver a diverse range of services to the community, we also never forget that we are part of a larger community. We are only one agency in a sector that has many agencies and many residents. We are a member of the Vancouver Urban Core Community Workers Association, a loose association of service-delivering agencies and residents who meet monthly to exchange information and to seek common solutions to the problems and issues of the day. Staff and management at the agencies, especially in the downtown east side, meet on a regular basis. None of us operates in isolation but in a spirit of cooperation and collaboration.
I've also included in the handout a report that was done back in 1998. Before we had heard of core review, we did our own core review. That was to demonstrate to the Vancouver-Richmond health board that there is a degree of cooperation and shared services that occur in the downtown east side community. I include this to demonstrate that this type of analysis is not new to our sector and probably, unbeknownst to government, has been going on for many years.
Again, we offer our experience in service delivery management to this committee and to the government to assist them in their efforts. In our community and in our delivery of service, all agencies recognize the need for diversity and choice. We do not operate in isolation, but we do operate with a uniqueness of service delivery model. Many of us offer residential services to people with persistent mental illness, but each of us offers these in a slightly different way to suit the needs of a very diverse population. Each agency offers a slightly different service. Although it may be thought that there is much overlap of service delivery, in fact, closer examination will demonstrate that each agency tends to specialize in a range of services and does not overlap with other agencies. This specialization has occurred in the last five or six years, more so than previously, as the service delivery in the not-for-profit sector has matured and grown.
We acknowledge that there are always ways to improve services and service delivery. The not-for-profit sector would like to work with government as an equal partner to bring about economies other than those that focus on job cuts and service cuts. It is our contention that there are many other ways to bring about the economies that are desired.
As a demonstration, I give you an example of what has been happening in our financial administration department for several years. We administer GAIN benefits to approximately 800 recipients at our Powell Street location. For years we received a cheque for each one of these individuals — 800 windowed envelopes, 800 individual postages, all going to the same place. As part of the fee for delivering this service we were paid $25 per client — another 800 cheques in another 800 windowed envelopes, all going to the same location and all made payable to the same people for the same amount of money. We would receive these cheques between noon Monday and noon Tuesday, just before welfare Wednesday, which was a huge logistical problem for our very limited administrative staff.
We had discussions with the government over several years about the possibility of doing this by electronic funds transfer and then just faxing us a list of the recipients. We have yet to achieve this level of efficiency. It's a bit better because the cheques have started coming to us in batches. However, we calculate that this one area, although it's very simple — and it is an example — would save the government approximately $140,000 a year — not a lot when you're trying to trim billions, but it is 13 percent of the budget to administer this program. If we could cut all our programs by 13 percent, we'd be well on our way to getting where you want to go.
Again, I refer to the report I've given you, which comments upon common purchasing and shared service. The not-for-profit sector is no stranger to this type of accommodation. We would ask that the government consider allowing our sector to participate in the problem-solving rather than preparing a strategy in isolation and sending it out. We would rather be given targets than orders. We want to be part of the solution,
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not part of the problem. We would also like to have some time to digest these issues and be able to evaluate them and work with them, rather than to react in panic.
The not-for-profit sector has become very intertwined with government administration over the past decade. There is no greater example of this than the current round of collective bargaining. It is fine for the government to issue marching orders to the sector, but the government frequently forgets that they have mandated liabilities on this sector that are very similar to those liabilities of the government. I use one example of the Health Labour Adjustment Agency, which in 1998 the government mandated that the not-for-profit sector, the community subsector, become part of. It means that if we lay off a worker, we have to give them a year's notice with pay. The Health Labour Adjustment Agency pays six months. Normally, what would happen is that you would continue to work for six months, but if not, the agency is responsible for that six months. The only ministry that has changed their contract termination notice period is the Ministry of Health. All the other ministries of government have flatly refused to change this, which means that every time an agency in our sector signs a contract with a government ministry other than Health, they're accepting that liability themselves. This does not seem fair, given that the inclusion of this provision was a government mandate.
This is another good reason for wanting to be part of the solution — self-preservation. We ask that the government involve the not-for-profit sector management in the deliberations of the various committees involved in finding economic solutions to the current situation. We wish to be given an opportunity to cooperate with a change that will benefit both the community and the people we serve. We are willing to work both on and with the various committees as equal partners for a common goal. We ask for the opportunity to show our skills at managing the service-delivery model that we have practised for so long.
Thank you for the opportunity to make this presentation.
J. Bray: Thank you very much for a very detailed presentation. Certainly, having been employed with the Ministry of Human Resources at one point in east Vancouver, I am very familiar with many of your services.
I wanted to ask a couple of questions. You made a point about the admin fees of the individual cheques. One of the factors of production, one of the costs with that, is the number of people who handle the cheques along the way. To counter an earlier statement you made, to eliminate that process could actually have impacts on employment. So I just want to point that out. Those are some efficiencies that might be there and that might not affect the service to the community but may have an impact on employment. I just wanted to make that point. It's a good point, but I wanted to make that.
Do you know how many contracts St. James has with various ministries in government right now?
J. Van Luven: Seventeen.
J. Bray: So you have 17, and each of those contracts generally has some portion of an FTE attributed to managing that contract. Is that so, generally speaking?
J. Van Luven: That's correct.
J. Bray: Would it be fair to say that one way for you to be able to capitalize on your expertise is, as you say, to have the targets and receive core funding for the range of service delivery rather than individual contracts with various contract administrators and various ministries to essentially do what you're already doing now? Is that a fair statement?
J. Van Luven: Yes.
J. MacPhail: Thanks, John. Nice to see you. Just for the benefit of my colleagues, St. James Community Service Society services a great many of my neighbours — probably yours too, Lorne, and Jenny's as well. The work is an unbelievably wonderful service to the community.
One of the issues you've touched on is the relationship between you as a not-for-profit and government ministries. I know that this current government is considering more contracted arrangements. Could you expand on the contracted arrangement that you have with the ministries? I understand that over the years it has been fairly successful.
J. Van Luven: We've actually got a very good relationship with all of the ministries. Some of them have their own little quirks of stubbornness, such as not wanting to acknowledge that little section of the Health Labour Adjustment…. But for the most part, it's very much a pick-up-the-phone-and-make-the-arrangement type of relationship. It's very easy, very comfortable on both sides.
J. MacPhail: Just one other question. Most of my colleagues and Lorne will know this as well. You operate two freestanding hospices, one of which is in my riding. Do you know whether the Ministry of Health is looking at an expansion of hospice service, which I think reduces health care costs?
J. Van Luven: I don't know the answer to your first question. I can tell you that, depending on who you talk to, it's $750 to $1,100 a day for a hospital bed and $220 a day for a hospice bed. We've demonstrated those savings many times.
J. MacPhail: Have the people been visiting you to talk about that for the Ministry of Health?
J. Van Luven: No.
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R. Sultan: Mr. Van Luven, I'm somewhat familiar with your society through a friend and neighbour who is a full-time professional with your society. I would like to add to Ms. MacPhail's comments about what I understand to be the outstanding service you're providing to some people who are in great need.
My question relates to some letters which our government sent out recently suggesting that certain social assistance recipients in the province should be prepared to explain whether or not they might be capable of employment. I wonder, given your perspective and expertise and the type of clientele you're serving, if this would impact the sort of people you're working with, and would it be effective? Could you perhaps just give us your observations?
J. Van Luven: Boy, there's a loaded question. I think the perspective from the downtown east side is that we've seen it all before. We've seen training programs with no jobs at the end of them. We've seen an attempt to cut welfare rates. Everybody had to go out and register. I won't say that it's the most compliant group of individuals down there, so there was certainly some dislocation while everybody had to go out, visit a doctor and bring in the requisite pieces of paper. Basically through all of it, when it's all shaken out, it's business as usual.
The comment I have on the letters to all the recipients to go out and get jobs is that at a time when you pick up the paper every day and see them laying off 5,000, 10,000, 15,000, 20,000 skilled workers, where are the jobs going to be found for the people who are certainly at the lower end of the skill set, who are looking for work? That's our big question. Is this just shuffling paper around again?
You know, I agree that it would be really nice if everybody could go out and have the security of a full-time job or even a part-time job in many cases, but what the reality of that is…. I don't think it's going to go very far in our location.
L. Mayencourt: John, I'll just echo everybody else's comments. Good on you. You're doing a great job down there, and I greatly appreciate it, and I've had a chance to work with you a bit.
You mentioned the administrative overload that happens on welfare Wednesday. Have you ever discussed with the ministry a different schedule for delivering the welfare cheques — not just for your agency but for perhaps the whole province — as a way of getting rid of the bulge, if you will?
J. Van Luven: We actually wrote a letter to the government in 1994 when Joan Smallwood was minister and suggested a change in the welfare Wednesday syndrome and doing a different method of administration. Based on a weekly distribution, you would get rid of the big boom and bust of welfare Wednesday. You would move a lot of the ills that build up the sort of Mardi Gras syndrome. It would just ease the load. It's like back in the old days when everybody would go and get their driver's licence or licence plates in February. You know, it was just a madhouse in the motor vehicle branch. Well, it's a lot better now when it's spaced out over time. There are some administrative issues that have to be overcome, but with technology today it's a very simple solution.
L. Mayencourt: Would that maybe produce greater efficiencies with the Ministry of Human Resources, do you think?
J. Van Luven: I would think that it would, very definitely. It would certainly balance caseloads, and if you are managing for the maximum number of visitors, it would certainly even that out and probably reduce the number of people necessary to administer the caseloads.
B. Lekstrom (Chair): One final question.
T. Bhullar (Deputy Chair): Mr. Van Luven, I've been making notes here, and you referred to the Mardi Gras syndrome. What is that?
J. Van Luven: Well, Mardi Gras is welfare Wednesday. It's party time. If you go to the downtown east side on the night of welfare Wednesday and go through some of the pubs and beer parlours and even down some of the streets, you'll soon see what the party syndrome is.
B. Lekstrom (Chair): Mr. Van Luven, thank you very much for your presentation this evening. Thank you for taking the time.
Just prior to calling our next presenter, I'd like to recognize Heather Dunsford, a councillor for the district of North Vancouver, in the crowd. Welcome.
Our next presenter this evening is Keith Sashaw with the Vancouver Regional Construction Association.
K. Sashaw: Good evening. My name is Keith Sashaw. I'm the president of the Vancouver Regional Construction Association. Our association represents over 630 companies involved in all aspects of construction, primarily in the non-residential sector. Although our market area goes from Whistler to Hope, our members do work across B.C. and around the world.
The construction industry in the lower mainland has been suffering over the last five years. We have seen employment in the construction industry in the Vancouver census metropolitan area decline from 68,000 in 1994 to just over 54,000 in 2000 — a decline of 20 percent. Total building permit values in the greater Vancouver regional district have declined from $3.6 billion in 1996 to $2.7 billion in the year 2000.
Much of the decline in construction activity has been in the residential sector, which has seen housing starts decline from over 44,000 units in B.C. in 1994 to barely over 15,000 in 2000. Notwithstanding this, the non-residential sectors have also been hit hard, especially in the other regions of British Columbia.
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Construction activity is closely linked to investor confidence — everything from a couple deciding to purchase a home to a major corporation deciding to relocate a business. The business climate in B.C. over the last decade has not fostered any confidence on the part of investors to make those important decisions. Young people have not had the income or the certainty of employment to make major spending decisions. Companies have not been confident that any investment they make in B.C. will be beneficial in the long run. There has not been any certainty that the policies of the provincial government will remain constant and fair.
The members of VRCA applaud the decisions taken by the new government in attempting to re-establish confidence in the economy and in government. The bold steps taken to increase the disposable income of all British Columbians early in the mandate sent a very strong message that people could start planning for major purchases. The array of measures taken to reduce business taxes and improve the climate in which business operates were most welcome and will do much to encourage investors from both within and outside the province.
There's no doubt that the events of the last couple of months and the deteriorating economic conditions will complicate the economic recovery of B.C. I believe, however, that we must be looking past the short term and start to prepare the business environment for that time when the economy begins to function on all cylinders once again.
Meeting these goals will require some hard and painful decisions regarding expenditures. The government should not lose sight of its goal of reducing the deficit and getting the provincial debt under control. We support the initiative to reduce red tape and to streamline the process of obtaining government approvals. In order to increase business activity and health in the province, a serious reduction in existing regulation and red tape must be accomplished.
According to David Fenn in his report The Regulatory Burden on the B.C. Construction Sector, excess regulation of the B.C. construction sector costs the industry $900 million per year. There are over 100 separate pieces of legislation that impact the industry. In addition, there are within those acts multitudes of regulations. To add to the confusion, many regulations are conflicting and location-specific, changing from one municipality to the next. Duplication of fees and taxes must be eliminated.
Overregulation is not just a problem with the construction industry. From 1985 to 1995 alone the province passed 4,970 regulations which impacted many industries. This is particularly troublesome for industrial, commercial and institutional construction, which not only has to deal with the specific regulation of its own industry but must also suffer the loss of business from other industries labouring under costly and profit-killing regulations.
With most construction businesses being small, it is increasing difficult to stay abreast of changing regulations and maintain an adequate profit margin. It is one of the reasons that companies feel the need to leave B.C. for less onerous business climates in other provinces or countries. Certainly it discourages new companies from locating in B.C.
The excessive regulation of the industry also results in an ever-increasing burden of liability. Added to the onerous ultimate liability period of 30 years found in the existing limitations legislation, it creates a litigious and anti-productive environment. The ultimate limitation period should be brought in line with other jurisdictions and be reduced to ten years.
An important expenditure as far as the construction industry is concerned is that of training skilled workers. For the construction industry, the shortage of skilled labour and equipment in Canada is no longer simply a matter for discussion. Recently the Globe and Mail reported that such shortages could soon result in cancellation or postponement of key projects across the country. Their estimates, received from the Canadian Construction Association, indicated that Canada is already short between 25,000 and 60,000 workers. The results predicted? Rising costs and reduced productivity as companies struggle to attract and retain skilled workers. B.C. is in no way an exception in this Canadian trend.
A poor economy results in workers hanging onto jobs longer, and those with skills who can't find work go looking for employment in jurisdictions with more to offer. Fewer people are interested in entering the construction field if they cannot be assured of work at the end of the day.
Statistics show that those who choose to further their education have a much higher opportunity for employment. Often, however, parents direct their children towards a university degree program rather than a vocational or technical one. Government traditionally shares this bias, allocating more funds to university programs as opposed to vocational and technical ones. Academic enrolments increase as vocational enrolments decline. At the same time, however, demand for technically skilled employees steadily increases. As this trend continues, it contributes to the shortage of good skilled labour. A government committed to increased funding for trades education and apprenticeship is needed to address this growing concern. B.C. requires a well-trained and efficient workforce to obtain the excellent quality of construction that B.C. can be proud of.
A strong, established and reliable construction industry is the result of using strong, established and reliable construction practices. Industry-accepted rules and guidelines for construction tendering are articulated in such documents as the CCDC(23) and the Public Construction Council's procedures and guidelines. Government needs to re-establish these industry-accepted standard tendering practices, and it needs to enforce them on a consistent basis. Government should support and make use of the bid depository system to ensure a fair and equitable process for the submission of trade contractor bids.
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Industry-accepted standard contracts are an essential element to good tendering practices. The B.C. construction industry has a variety of such contracts at its disposal through the Canadian Construction Association, the Canadian Construction Documents Committee and the B.C. government. Government must use and uphold industry-accepted standard practices, for doing so provides consistency and certainty within the industry, reduces costs and assists in the avoidance of disputes and potential litigation.
Essential to any viable economy is an efficient and well-maintained infrastructure. It's a primary concern for any responsible government. The ability to run any commercial activity is severely impacted if the infrastructure is allowed to deteriorate. The B.C. economy relies heavily on trade, particularly with our neighbours. Well-maintained roads and bridges are important elements in the equation if we expect to compete effectively.
An effective transportation system must be maintained. The B.C. government should work with the federal government in seeking an appropriate cost-sharing formula for investment in transportation infrastructure. The taxes we pay at the pumps should be reinvested in our roads.
Schools and hospitals through B.C. need to be maintained and upgraded. Public investment in infrastructure is necessary in order that we may continue to enjoy the standard of living we have come to expect from Canada and B.C. We should also be taking a look at other opportunities in terms of public-private partnerships to achieve some of the infrastructure goals that we may be setting.
Government must address infrastructure investment on an ongoing basis. Waiting until the last possible moment to effect repairs or build replacement infrastructure is a recipe for disaster and is more likely to result in higher costs in the long run. Any spending of public funds should only come after appropriate public consultation. Capital spending must be fiscally responsible, not politically motivated, and targeted towards facilitating economic development. Following proper consultation to ensure maximum accountability processes for procurement or provision of public infrastructure must be open, transparent and fair.
We are pleased with the government's stated goal of establishing a three-year rolling capital plan, as this will allow the industry to properly allocate resources in anticipation of the building programs of government. VRCA also supports the core review program currently being undertaken. Every program should be analyzed as to whether or not it is continuing to meet the purposes for which it was originally intended.
This is especially the case with the Workers Compensation Board. This is a program that has stifled business through a maze of incomprehensible and confusing regulations and requirements. The core review and the recommendations that must surely flow from such an exercise will be beneficial for everyone involved in construction.
VRCA believes that a strong economy that attracts investors and in-migration from across Canada and from around the world will create opportunities that will help meet the social objectives of our province. Supportive initiatives such as the 2010 Olympics and the Vancouver Trade and Convention Centre expansion will not only create well-paying jobs in the construction sector in the short term but also serve as a showcase to the world as to the opportunities and benefits our province has to offer.
We appreciate the invitation to meet with you tonight and share our views as to the direction that this government should be considering. On behalf of all our members, we would be pleased to work with you further in developing policies that support a strong construction industry and a vibrant B.C. economy.
B. Lekstrom (Chair): Thank you very much, Mr. Sashaw. What do you have, Mr. Mayencourt?
L. Mayencourt: A few days ago we had some teachers here, then we had university faculty, and then we had nurses, and so on. Now we have you. Constantly we hear that we have this shortage of skilled labour and that we need 25,000 here and 10,000 over here. What are we missing? If there are all these shortages of skilled labour, what is the cause of that? What are we doing wrong? I don't even know where those numbers come from. I mean, are they real?
K. Sashaw: They certainly are real. When one looks at the construction industry, I would suggest there are all sorts of reasons why they are real. Certainly, what we have seen is that because of the decline in construction over the last few years, we have lost many skilled tradesmen to other jurisdictions. They have gone to Alberta and elsewhere.
When one looks at the average age of a journeyperson in the construction industry, they're approaching 45 or 50 years old. We have not seen a pickup of trades training, and it is a problem. Quite frankly, I don't know if there are any easy answers. Some of it is access to get into it. I know contractors are very often reluctant to take on young people in terms of summer employment and those kinds of opportunities, because of liability concerns and liability issues.
Certainly, what we want to be doing as an association is sitting down and trying to identify some of those barriers, where young people can get an opportunity to experience firsthand the construction industry and make a career out of it. What we've also seen is a failure on the part of the industry and others to really demonstrate to young people that coming in as an apprentice four years later is not the end of your career.
I think what we have to be doing, and where it's a cooperative venture between government, colleges and the industry itself, is to demonstrate to young people that by getting involved with a skill, you can become a journeyperson, a site superintendent — ultimately own your own company.
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There are things that can be done. It requires some focus and direction. Certainly, the industry has a big role to play, and this is what we want to be doing. Some of it is making the spaces available, and I would suggest that's part of the role of government.
L. Mayencourt: There is an Education committee that's going to be travelling, much as this one is. You may want to attend that one as well. There's a bunch of young people here today, and I just don't know if people look at your industry as something that they want to go into. Do they want to be an electrician or whatever? I guess that's a problem.
K. Sashaw: We have many people in the industry today who don't even know if they want to stay in the industry. However, once the economy turns around….
That's a very good point, and we will certainly be making a presentation to the Education committee.
B. Lekstrom (Chair): One final question.
R. Sultan: Mr. Sashaw, are you suggesting, perhaps on the margin, reallocation of resources away from the universities and institutions such as BCIT?
K. Sashaw: Well, certainly not BCIT. What we are seeing is that apprenticeship training is a very cost-effective way of giving somebody some skills that are very transportable. They're usable. They launch a young person on a career. When one compares the average cost of educating a tradesperson as opposed to a university degree, there's really no comparison. It's very cost-effective.
We have an excellent relationship with BCIT in terms, as I mentioned earlier, of developing a career path so that when young people enter an apprenticeship program, there are some alternatives. It's through the delivery system of BCIT and the community colleges.
I think what we have to be doing is taking a very clear look at whether that is the most effective way: taking, in the case of electricians, a productive member of your crew out of operation for ten weeks a year and sending him off to a community college that may not be in your local community. Is that the best way of doing it? Probably not. We've got to be taking a look at some other things. In terms of the allocation of the global advanced education, I think that one can certainly get much better bang for their buck if they look at enhancing the skills on the trades training side.
B. Lekstrom (Chair): Mr. Sashaw, I'd like to thank you for coming out. As I indicated earlier, 15 minutes is a very brief time in which to put a presentation forward. I thank you for the effort you've put into it this evening.
K. Sashaw: I appreciate the opportunity. Thank you.
B. Lekstrom (Chair): Our next presenter this evening is Karen McBride. Good evening.
[T. Bhullar in the chair.]
K. McBride: Good evening. I don't particularly have a formal presentation. I basically wanted to maybe, in a sense, form my own kind of question. You have a very strong mandate to govern, and it is certainly government's mandate to govern. I have some concerns around some of the programs that I hear have been cut, which you could consider to be soft enforcement programs or crime prevention programs.
I am, actually, a single granny. I'm a new employee to the province. In a sense, I have come with fresh eyes to the division that I work with. They have very few resources, and yet they seem to have quite a bit of an impact throughout the community. They provide a lot of peer mentoring for young children. I kind of bring this to your attention because it's actually happening to my grandson in that he's also experiencing being bullied at school.
Although we want to change the focus of some of our programming, a lot of studies indicate that to go to just strictly enforcement is not a smart idea. You have the national longitudinal survey of children and youth, which has come out with some very startling observations. One of the best skills you can give your children is good parenting skills, whether you're a lone parent or you come from a wealthier class.
You also have what's called the national strategy on community safety and crime prevention. In their first paragraph: "Crime in Canada has traditionally been dealt with through reactive measures: the apprehension, sentencing, incarceration and rehabilitation of offenders. This approach, while important, is not sufficient to prevent crime." That is why the government of Canada launched this.
We work in partnership with the federal government to deliver a lot of programs throughout B.C. Most of our population is centred in the lower mainland. If these programs or services are cut back, then once again you marginalize the people living in the rural areas. I find that rather disheartening. A lot of these programs do give a good benefit. While I agree with the core review, I feel that what we're hearing is: "We're cutting, we're cutting, we're cutting." We're not being told why, other than: "It's the dollar."
When these things are important to people, what you've done with your great mandate — and maybe other administrations that have not done as well — is put your own mandate in jeopardy. I find that actually quite disturbing, because I think B.C. at this time really does need a very good strong government and good leadership.
I find that even when I look at the paper on the Ministry of Human Resources, you're talking about your staff as important, yet again the message we're hearing is that we're not. If you looked at the statistics, you would probably find that there isn't one department in the government that doesn't have at least one
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or two auxiliary employees. They wouldn't be there if they weren't needed. You're already, in a sense, hamstringing departments that in some cases are terribly, terribly overworked trying to provide services to the citizens of B.C. Basically, that's what I want to say.
T. Bhullar (Deputy Chair): Do members have any questions?
[B. Lekstrom in the chair.]
B. Penner: I'd just like to say thank you very much for your presentation. In a previous lifetime I did a lot of legal aid work with young offenders and was constantly frustrated at the fact that until a young person ran afoul of the law, many programs and services were not available to that young person. It created the perverse incentive for some kids — and some kids actually followed through on it — to break the law in order to get the attention of adults which they otherwise couldn't get. That happened more often than I care to think about from children whose parents were either non-functioning or not available.
K. McBride: This is true. We also have some involvement in what is called a provincial prostitution unit. Because you want to go towards a more enforcement perspective, our division is being asked to withdraw, in a sense, from this program. Again, I don't deliver the programs, but I certainly hear and see the public calling in or people looking for information. I find it very upsetting that some of these programs are very, you might say, soft. They will have a very strong impact in the next ten to 15 to 20 years, because you have these children growing up in a multicultural, diverse community. I truly believe that we are going to face a recession, and I think we need to be able to provide as much support to build character.
The federal government was asked to have presented to them ten different scenarios on what's going to happen with the economy. As we go through this phase of going from an industrial to a technological age, you have to take into consideration that there is a strong adjustment. I don't know how else to express my concerns other than that we are looking to you for wisdom. I know you were elected on a strong platform, but I truly believe that in light of things that have happened in the world economy, you can't pick up the paper without people being laid off. We need to rethink and retrain the people we have.
B. Lekstrom (Chair): Ms. McBride, thank you very much for coming out this evening.
Our next presenter is Steve Hansen.
S. Hansen: Good evening. I'm Steve Hansen, and I work in the Ministry of Human Resources in the information technology branch. I've been there for five years. Before I go further, I would like to acknowledge the assistance of two of my colleagues in putting together this presentation: Walter Parolini and Brian McLaren.
This submission focuses on how to obtain the best value for information technology from a human resources perspective. There is an underlying theme, and that is that I really don't want my job contracted out. The basic problem is that government is chronically and severely understaffed in the IT sector. At the same time, government heavily backfills with expensive contracted resources in order to get the job done. This is due primarily to unrealistic staffing levels placed on the ministries. This restriction forces the ministries to circumvent the hiring process by hiring contracted staff.
For example, the ministry I work in, the information technology branch, operates with about 200 people. By the way, all these numbers that I give you are as of approximately August 2000. It's been a bit of a moving target in order to put everything together. At that point we had roughly 200 people. Of those 200 we are allowed to staff only 120 full-time employees, better known as FTEs. In order to make up the shortfall, the balance are hired from contracting agencies. These contracts cost an average of two to three times the rate of a staffed position. Repeatedly, we've asked the employer to post vacant positions and to create new positions where needed. The employer responds that they cannot hire, because there are no FTEs available. This is a Treasury Board decision.
Instead, a contractor fills the position — again, at two to three times the rate that a staff position would have — because the employer can only justify filling a position that way. The contractor does not bring any added value beyond what an employee could provide. In all but the fewest cases, contractors fill positions that would normally be permanent. They report to a supervisor, attend regular meetings, take vacations without fill-ins, use ministry equipment and in every respect act and perform like an employee or staff member. My fear? I'm concerned that the government will outsource much if not all of information technology. I believe there is great risk and far greater cost in this scenario.
I would just like to bring a footnote to your attention regarding the FTE counts. This operation includes both staff and contractors performing all of the IT functions at the Ministry of Human Resources except for network infrastructure, e-mail processing, mainframe hosting of B.C. Benefits applications and monthly income assistance cheque runs — the actual physical printing of the cheques. All development, analysis work and operational issues are done within our 200-person organization.
The risks. A case in point that comes to mind is ICBC's next generation of insurance systems. This is well documented, by the way, through legislative transcripts, and I think every IT employee in B.C. is aware of the situation that happened. In the end, tens of millions of dollars in software development were written off. The size and scope of the endeavour were too much for ICBC and the company contracted to perform the work. What they were trying to do was re-engineer the entire suite of ICBC applications — a huge undertaking.
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Economy of scale. There is no employer that has a greater economy of scale than government. It therefore follows that we are best suited to staff and run our own infrastructures, including IT. I recognize there are certainly times when contracting of senior and highly specific skill sets — and there is a long list of them, such as data architects, data engineers, service quality consultation — is encouraged and needed. Contracting, though, should be the exception rather than the norm.
The cost. In information technology contracting agencies typically charge $90 to $125 per hour, yet the contractor, the individual person doing the work, will receive roughly 25 to 35 percent of that fee. This works out to $30 or $35 an hour. This amounts to a surcharge of at least $60 to $80 per hour for each and every contractor that has supplied networks in our technology branch. The public perceives that the contracting of government services can save them money. This is not true for information technology. In fact, here lies a huge opportunity for cost savings by not contracting out.
I'd like to refer to appendix A, "ITB Costs." There is a simple spreadsheet that tries to honestly reflect the costs to the employer for staffing and for contractors given the flavour of the information technology branch of Human Resources and the particular configuration that we had as of one year ago. In a nutshell, the total cost of our staff and contractors — excluding ITSD and ISM services, which were those network infrastructures, e-mail, etc., — is roughly $24.5 million. If we were to go to a simply staffed configuration, that would work out to roughly $17 million, yielding a savings of $7.5 million. By the way, the total budget for the information technology branch at the Ministry of Human Resources is roughly $48 million. Despite repeated appeals from employees, virtually no new positions or vacancies have been filled by staff. This is over roughly a five-year period.
The potential savings. I acknowledge the public perception that government is overstaffed. If, however — just suppose — we were to convert all of the contracted staff that we currently have, which includes personal services contracts to bulk services contracts, which at roughly 15 to 20 people are relatively small, into employees, the minimum savings would be $7.5 million, as I have already said. Many of the current contractors would willingly join us as staff. The balance can be filled through promotion and new hires.
General observations. It is far too easy to contract out and far too hard to hire. In order to make government fiscally responsible, these two processes need to be reversed. Technology implementation must be driven only by business needs. We should avoid making wholesale changes, especially those that involve the contracting out of large parcels of work.
Some possible solutions and initiatives. I think we need to return to a competitive process for filling positions — we currently do not have a competitive process, because no postings are made — so that employees have a chance to apply for positions that are currently only awarded to contractors.
A simple adjustment to both the FTE levels and/or wages should contribute directly and immediately to budget cut initiatives. This, again, may seem like a hard sell to the public, yet if the public were educated on the total cost of contracting, this should be an acceptable position for the government to take.
Staffing for both development and analyst positions means that ministry business knowledge is retained and rework is minimal. Staffing operational positions also requires business knowledge to serve the customer. We should implement technology based only on businesses' needs rather than technological trends.
I also believe that a service quality initiative, probably governmentwide, would revitalize the workforce. We should allow advancement and backfill with new recruits. I also believe that PSERC, Treasury Board and the union, BCGEU, need to become more effective in order to allow managers to staff appropriately. Therefore I repeat this plea: the union and PSERC need to develop a separate component and a correspondingly more attractive pay grid for information technologists.
To summarize, given a more reasonable recruiting scenario, it just doesn't make sense to pay contracting agencies huge fees for supplying a person that would be willing to work for far less. Thank you.
B. Lekstrom (Chair): Thank you, Mr. Hansen.
I. Chong: I thank you, Mr. Hansen, for your presentation. I really do appreciate your providing all this detail and having done so much work in showing exactly what some of the ministries are attempting to do, which is to find savings where, in finding those savings, jobs are not necessarily lost. What you're suggesting here is a good example, which the ministry should be looking at. The indication I get from you is that you've already presented this once to the ministry. Is that correct?
S. Hansen: No. Actually, I think I may have inadvertently skipped a piece here. No, I have not presented this before.
I. Chong: So you wouldn't have any objection to us passing this on to the appropriate ministry to have a good look at?
S. Hansen: Absolutely. Go ahead.
I. Chong: Thank you.
L. Mayencourt: Mr. Hansen, thank you very much for your presentation. I've had comments like this from other people working in the public service, at WCB or other agencies where they are doing a lot of contracting out. I'm hearing that message from other employees of the government as well.
I think what's really neat about your presentation is appendix B, where there are several memos that go back and forth between some employees. What I see in
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that is a professional civil service trying to solve problems, knowing that there are some better ways to do things and not having anybody really listening to them. It's very great to see that, and that's exactly the kind of thing that you as a public servant can give us that helps save a little bit of money without cutting jobs. That's so helpful to us, so I thank you very much for your presentation on that one.
B. Lekstrom (Chair): Can we do one final question?
R. Sultan: Thank you again for your boldness, indeed, in coming forward with such an excellent presentation. It pops into my mind: is what's going on here a reluctance to hire full-time people perhaps because of the virtual lifetime tenure liability that arises? Is this a crazy phenomenon? What's going on here?
S. Hansen: That is a good question. I think a lot of it stems from government's perception to show that government is being reduced and that it's lean. It doesn't look good in the paper to show that we're hiring people. The mechanics of the way it works is that the job ratings, based on a combination of PSERC and the BCGEU, do not yield really competitive wages for outside private sector people. They're not quite attractive enough, and I think that needs to be dealt with.
We have appealed to the BCGEU to have a look at this, and we've appealed to the government to have a look at it, as well, because we are wasting a lot of money for absolutely nothing. I will say that we have a lot of contractors on site — or we had, but we're sort of in a holding pattern right now. Every one of them is qualified to do the work, but none of them deserves to be charging $100 or $125 an hour. It just does not make sense. We're talking two to three times the rate that a staff position could make.
We need to tweak two things: the FTE count, and show the cost of government as a total number rather than public sector numbers and this other fuzzy number that seems to get lost. We need to make the positions more attractive for people to come to. It's that simple. It's an easy fix, as far as I'm concerned. Yeah, you'll get raked over the coals for a while in the papers, but sensibility will prevail.
B. Lekstrom (Chair): Mr. Hansen, I thank you for coming and putting such a thoughtful presentation forward. As I've stated to the other presenters, you can be assured that your presentation will be considered in the development of our report. Thank you very much.
S. Hansen: Thanks.
B. Lekstrom (Chair): Our next presenter this evening is Colleen Lunde. Good evening, Ms. Lunde.
C. Lunde: Good evening. I'm Colleen Lunde. I'm with the Ministry of Transportation. Good evening, Mr. Lekstrom, members of the Select Standing Committee on Finance and Government Services, and ladies and gentlemen. I would like to express my sincere thanks for the opportunity to speak this evening. I was on a wait-list, and I've been able to present the presentation.
My name is Colleen Lunde. I'm a development approvals technician with the Ministry of Transportation. I would like to share with you tonight some information about the role of development approvals in the Ministry of Transportation, which was formerly known as the Ministry of Transportation and Highways.
Development approvals provide the public with the service of the approval of the development of the land specifically involving the subdivision of property, both private and Crown land. In rural areas of the province the Ministry of Transportation is the agency responsible for maintaining public highways, including those dedicated and constructed by subdivision plans. The Ministry of Transportation thus has a regulatory role regarding access and highways for rural and certain municipal subdivisions, which is established by the Highway Act, the Land Title Act, the Local Government Act, the Strata Property Act and other statutes. These statutory authorities are administered by the provincial approving officer who is appointed by cabinet to rule on subdivision proposals for those municipalities, regional districts and the Islands Trust bodies that do not have the rural subdivision approving authority.
There are two components of the regulatory role of development approvals. The first role of development approvals is to ensure that suitable access and highway dedication is obtained for rural subdivisions. The Ministry of Transportation establishes the rural subdivision highway standards, determines suitable highway dedication, inspects highway construction and approves the highways component on the final subdivision plan for all rural subdivisions. The Ministry of Transportation also determines highway alignments for highways in the subdivision; acquires highway dedication for subdivisions adjacent to existing highways; ensures necessary and reasonable access to the lots, lands beyond and water bodies; and grants relief to these access provisions and other highway functions. The highway regulatory role is thus administered concurrently with the subdivision approval process where the Ministry of Transportation is the subdivision approving authority.
The second role of development approvals is to regulate subdivisions adjacent to controlled-access highways in municipalities and rural areas. The Ministry of Transportation is involved to ensure that provision of alternative access by highways other than the controlled-access highway is available to the subdivision. The ministry is concerned with right-of-way, highway drainage and access. Controlled-access highways are usually high-speed highways and freeways or important urban arterial streets where accesses such as driveways or commercial entrances are regulated to maintain safety, traffic flows and the traffic-handling capacity of the highway.
Development approvals technicians must ensure that the subdivision follows provincial acts and regulations as well as local government bylaws and that the best interest of the whole community is protected. Fac-
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tors that development approvals technicians and the provincial approving officers —of which there are six in six regions of the province — who give the final approval to the subdivision proposal must consider include the size and shape of the lots; the adequacy of the buildable area; adequacy of roads, lanes and emergency vehicle access; natural hazards such as flooding, erosion, landslides or avalanches; adequacy of open spaces and walkways; preservation of natural features; compatibility of overall subdivision pattern with the neighbourhood; adequacy of sewer, water and other services; opportunity for future subdivisions; and legal and reasonable access to all lots being created, to lands beyond and access to water as per the requirements of section 75 of the Land Title Act.
In June of 2000 two major highway districts in the lower mainland were amalgamated, these being the lower mainland and the Howe Sound districts. The Howe Sound district office at 1690 Main Street in North Vancouver was closed permanently. The staff of both offices were brought together under one roof in half the office space that the previous lower mainland office once enjoyed.
Fortunately, there were no layoffs. There has been a gradual reduction in staff, particularly the administrative staff, by over half through attrition over the last year. Approximately five out of the original eight have transferred without being replaced. We now, thus, have half of the original administrative component of a year ago. As for the development approvals team, we currently have one manager and five technicians. If this group is reduced to half, the remaining technicians will be faced with an overwhelming workload of twice as much volume as they are now coping with.
The development approvals group is already stretched to the maximum capacity. The technicians provide optimum service in terms of turnaround time. With any further reduction of staff, public service will be compromised. The staff often drive long distances to perform site inspections for subdivision approvals and access and utility permits.
As the regulatory agency for the approval of subdivisions in the rural areas, our ministry coordinates the responses from the various referral agencies, including Water, Land and Air Protection — formerly the Ministry of Environment, Lands and Parks — the Ministry of Forests, the Ministry of Health, the archaeology branch, B.C. Hydro and the Islands Trust. As the coordinating agency we expedite the program for the preliminary layout approval for subdivision. We also ensure that the necessary steps are met for the final approval of the subdivision plan. Development approvals thus performs and provides an invaluable public service that should be supported and not compromised.
B. Lekstrom (Chair): I see no questions from members of the committee — possibly a question from myself in looking at the terms of what our committee is seeking to gain from the input of the public and knowing the challenges we face. I don't think that's a secret to anyone in British Columbia. Do you have any recommendations as far as financial consideration goes? I believe it's fair to say that what we've done for a number of years isn't sustainable, and we're looking for ways to try and maintain a quality of life and yet live within our means. I'm looking to see if you have any direction on that.
C. Lunde: I think we're all faced with the possibility of reduction of staff and resources. We're basically holding our own right now, as I emphasized in my report.
About five years ago, when we went through this with the lower mainland district of Highways, roads were devolved to the municipalities in the lower mainland. It was downloaded from the provincial government onto the municipal governments. This has created greater stress on the municipal governments. I don't believe we should be downloading to municipal governments. I think we should maintain the integrity of our provincial highways.
I also think that as an additional factor, we offer a lot of service for a very minimal amount of fees for subdivision approvals, and permits are gratis. We do this as a public service. I did put forward a paper, a suggestion, five years ago for increasing the fees for developers, because these developers are benefiting from their developments and their services, particularly in the unorganized municipalities or regional districts. Both municipal and provincial governments could be gaining more in terms of revenue, and I have made that suggestion before.
B. Lekstrom (Chair): I see no further speakers, Ms. Lunde. I would like to thank you for taking the time, and I'm happy that you were able to fit into the schedule this evening.
Our final presenter before the open-mike session is Paul Czene. Is Paul with us? Good evening, Paul.
P. Czene: I just have some oral notes. I'll try and make this as to the point as possible. My name is Paul Czene. I am presenting as a private individual. I am employed, however, as a youth worker for the city of Vancouver and have been doing so for the past 12 years. My predominant experience is in east Vancouver, having been in Chinatown, in the neighbourhood around the PNE and in South Vancouver. I've had an opportunity to work with various cultural groups on various issues. I have a good sense of watching how the system operates in an urban area. Beyond that, I had a six-month secondment with the provincial government in the community justice branch as a community coordinator, putting me in the position of a funder responsible for the Fraser Valley.
Just to put that into a further backdrop, I have also been doing consultations with the federal Department of Justice on non-traditional partners around prevention and intervention on youth crime and on reintegration of young offenders back into the community, which is, frankly, one of our weakest links right now.
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Finally, I have a bit of a perspective beyond the lower mainland. I did my master's in Los Angeles. Part of that required six months working with the California Youth Authority in south-central Los Angeles at the start of the explosion of the latest gang operations down there in the eighties. It gave me both the history and an opportunity to see systems that work and systems that don't work, so you get a sense of where I come from and a perspective.
There are basically three roles in my position. There's mentorship that ranges from eight- to 24-year-olds. I'm at the point now where kids I worked with are doing the same job I'm doing now. Some are getting married, some have kids, and I'm getting grey hair. Basically, that role is finding positive options for youth. Where do they fit? "Here's what's available for you; here's how it fits." I'm going to come back to that theme.
I will find myself doing conflict resolution. We will deal with situations where 911 may not feel it's important enough to show up. My staff and I will find ourselves amongst a group of angry young men who are yelling at one another. I'll go out there and play stupid and go: "So what's the problem?" I'll just have to stand and try and do that. We will also deal with issues between parents and between schools and students and services and students, so there's also an advocacy component.
There's also a referral element. My job is the mentorship to a point, and then I will work with youth to find services that are available for them. I've had to walk through the services just like the parents. Frankly, if I didn't know where things were, I wouldn't understand how parents could find things, because at points in time the system is very intimidating.
This just shows how much of a life I have. I've actually read the Hansard Blues on this committee so far, from the time you met up to about partway through Williams Lake. So you can tell I had an exciting Thanksgiving.
Some of the questions that came out are: what is it that government should do, how can government do it better, and what is it that government shouldn't do? Then there are terms like effective, efficient and achievable, measurable results. A lot of that has fiscal elements, but I would like to push you to go beyond strictly the standard cost-benefit to seeing how we can achieve. Later on I'll explain some of the issues that I'll go through.
We've also talked about how to change the culture of the province from one of entitlement to one of responsibility, which is something that my parents, who were refugees, completely…. They always repeat it in my ear in trying to understand exactly what it is that I do. I hear a lot of support from a general community level but with a lot of tentative fear when they hear the cuts. Of course, things are always played up to the worst possible situation, but there is a tentative fear in terms of what will happen.
I think the best way to describe the system right now is to put it into business terms. I'm front-line sales staff, the provincial government is my supplier, and the value chain doesn't work. We don't get supplied consistently. It is very hard to go out and talk to a kid and say: "Okay, if you stop, if we can get you off drugs, we can get you this spot, and we can do that." Well, no. If they're not clean, they don't qualify for some beds. If they've relapsed, they don't qualify for other beds. We can't make a strong sales pitch in terms of what's available.
I know that in the drop-in alcohol area, there's over $100 million being spent right now. So where is it? How come it's not getting to the people who need it? Where are the beds? This has been a recurring question for at least 12 years. From talking to people who work at the Odyssey, which is a system here in Vancouver run by the Boys and Girls Club, you're expecting someone to get off drugs to take at least four times. It's not going to be on the first kick. It's not going to be on the second kick. It's at least four times to get off of that.
You had heard from Bob Scott in Prince George, where he talked about the aftercare element. We get them detoxed. In the worst-case situation we send them to jail, and they detox in jail, but we don't have any aftercare to ensure that it's there, so you can sort of understand my concern. I also understand that when there's a deficit, we can't spend out of it and expect the services to be there.
I guess one of the most frustrating elements for me in dealing with services right now is hearing "It's not our mandate" and "We don't fund that" or "We don't have room." Again, going to a customer service model, so far the government functions more on the basis of "if the customer doesn't fit our model, get out of here," as opposed to trying to find an innovative way to get to the point of "What's the issue? How can we help it? How can we get it done? How can we expedite it?" instead of depending on some policy manual.
I'll give you two quick stories. I worked with five children. I got a phone call from a principal saying: "I have parents calling me. They want these kids out of the neighbourhood. They want the parents gone. They're pulling up flowers. They're setting things on fire. They're torturing people's animals. Get rid of them." The oldest kid was seven years old, and that was the response of the community: "Throw them out." That's something you're going to have to challenge the community about when you're providing funding for certain unpopular children. It's almost like watching the end of Aladdin. The genie takes the thing with the evil wizard in it and flicks it away over the sunset, never to come back. Disney's a business. It made a lot of money. We had the return of the wizard. The kids come back to their community.
That's the leadership you need to show. If we do have these cuts — and I'm hoping for the 10-10-and-10 as a worst-case scenario — you are also going to be in an extraordinary leadership position of having to say why you're funding certain things that are unpopular in the community. I can think of what happens in Surrey sometimes when there's a group home. I can think about Burnaby at times. In Chilliwack we've got a
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community services group that does great work with street kids. They struggle for funding right now.
I would argue that the funding isn't being well allocated. I would say that at this point, you have managers who are building little fiefdoms, little internal kingdoms. I'll repeat that they allocate their money into such tight little silos that the front-line person is almost helpless in trying to get to that source. If it doesn't fit that particular manager's little silo, that money doesn't become accessible, except when it's almost the end of the fiscal year and we've got to get rid of it so that Treasury Board doesn't get it back.
I'll break down what you will need to look at in terms of revenue priorities. Another way to reach out to kids in terms of when you do your expenditures — instead of depending on, say, policy manuals — is a simple way that is not intrusive. It won't bother or intrude upon people's privacy. We should have our front-line staff, our social workers, be able to simply enter things into a database. What are the issues they're dealing with? What is coming up at the front-line level? In business they call it customer-relationship marketing. In this case you're getting a sense of finding out what is coming up, what people are coming to, instead of saying: "Does this fit our policy? Is this in our manual? Is this in our mandate?" There it is. You're getting it front-line from people. There is a stigma for a lot of people to go in and ask for help, so for a lot of people it's a big step.
If you've ever been with a parent and a child at a case conference…. Picture a table this size, the parent and child at one end. All these professionals, who out of the goodness of their hearts have scheduled their time to meet with you, are there, and the parent is dumbfounded and won't say anything. Those are the types of things I'm concerned about when I see what happens.
In terms of revenue priorities…. Again showing my lack of a life, I was reading your biographies. I'm going to pick on Mr. Sultan because of his experience with Harvard. This is something he could exploit. Maybe I could challenge him, if I were daring; Harvard is one of the leaders in social entrepreneurship.
Social entrepreneurship — a quick, dirty example is Newman's Own salad dressing. He slapped his face on some salad dressing, and he sells it. All the profits, once expenses and everything are taken care of, go to fund camps for children with cancer or similarly the hospice situation at Canuck Place — that type of operation. I think it's been in operation 15 years, and they've donated $89 million (U.S.)
What you are looking at doing in terms of trying to rebuild the business environment is necessary. If you looked at where corporate sectors donate their money, it is primarily in their headquarters cities. Seattle does great; Calgary does great; Toronto does great. The rest of us are going after the same corporate sector, and groups like the Royal Bank locally are down to giving out $500 grants — or slightly larger grants that hit their national average.
If you were to take up that lead, though, it's another area where you'll need to show some leadership: the non-profit sector. I'm half employed city, half employed non-profit. I report to a community board in terms of the type of work that needs to happen. What they are worried about is that when these cuts come, it's not just that it's going to be downloaded to the city. No, no, it's going to hit the non-profits, and there is a fear that they are going to be left with more services and less access to funding.
In B.C. and, I would say, predominantly in Canada we have a very narrow sector that we draw money from. That is, we go to grants, we go to government, we go to donations, and that's it. We haven't really pushed to the next level. I would say that in the U.S. they're probably five to eight years ahead of us on this.
B. Lekstrom (Chair): Paul, we will have to wrap it up in a couple of minutes.
P. Czene: Okay. B.C. government does tend to say: "Made in B.C." I would suggest that sometimes we're myopic B.C. In terms of targets and social issues, the national longitudinal study on children and youth, which is done by HRDC, is setting the baseline material. It's the first all-Canadian research on children and youth in this country, as well as the national survey on giving, volunteering and participating.
Just in the ministry that I did work in, they were very dependent on volunteers and lived by the myth that volunteers will run everything. If you're familiar with how volunteering operates, it's the small group who do 90 percent. We burn them out, and we can't afford to do that.
I thank you for your time.
B. Lekstrom (Chair): Thank you very much, Paul. If you would, we do have time for one….
R. Sultan: I can't fail to respond to such an erudite analysis of the situation. If I'm permitted an observation, I think you've made this point much more eloquently than I. A thriving business and corporate sector is so vital to solve many of the social problems we're dealing with, both in terms of the tax revenues they generate and, as is so common in head office United States, the philanthropy and the leadership they provide in supporting the programs you're talking about. I commend you for stating what to me is obvious but has caused some raised voices in these hearings.
I just ask this question, though. You refer to a $100 million, possibly even overfunded maze of programs in the detox-rehab area, perhaps even too much money being thrown at it and people building…. [Laughter.] No? Okay.
I'll tell you where I'm coming from. The Kaiser Foundation puts out a booklet about an inch thick which lists dozens — I presume it must be in the hundreds — of programs, and Ed Kaiser Jr., whom I first met at Harvard, suggests that we just don't know
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which of these programs work. He thinks there is rampant competition among people trying to build their own little fiefdoms, as you've implied, and that we better sort this out because we're wasting an awful lot of money. At the same time I hear on the North Shore that if we find our youngsters — and our youngsters in West Vancouver do get involved in drugs, not just on the east side — there's really nowhere to go. Does this square with your impression?
P. Czene: The money goes somewhere. It does sort of fall into these fiefdoms. There are core groups that always seem to get funded and that always seem to know before anyone else. It almost seems like insider trading. They know that the funding is going to be there. There are rules and hoops set in place that just infuriate parents, where their kids, for one reason or another, don't qualify for one system or another system.
In working with schools, I see the same frustration from school counsellors. Drug and alcohol counsellors in Vancouver, for instance, were cut back from one per school with an average population of — right now all our schools are maxing out — close to 1,500 students per school to over 2,000 at some.
Again, accessing the service. It's a puzzle. It's that you happen to meet the right person who happens to have the right connection who happens to have a favour. That's how you get treatment, and it's frightening.
B. Lekstrom (Chair): Well, thank you very much, Paul, for your presentation this evening, and you can be assured that we will consider it in the development of our report. Have a good evening.
That concludes the presenters that had registered prior. We have had a number of people express interest in our open-mike session. The open-mike session is five minutes per person, and we will be doing a lot of listening versus questioning. First we have Vincent Haraldsen.
V. Haraldsen: Good evening. I guess I'm here to provide the perspective of a person who's recently graduated from university, has just entered the workforce, is five months into articling at a local law firm, is also recently married and who is, hopefully over the next year or so, in the market to maybe get into a very entry-level home.
Given some of the recent concerns put forward by certain segments and interest groups with respect to the tax cuts put forward by the government when they first came in, I just wanted to come down and let you know what the impression was from people working at my office — lawyers, other articled students, people working in the mail room and legal assistants. I can tell you, being in the lunch room on the day the tax cuts were announced, the discussion from everybody was how they were going to spend that money.
Some people were going to buy a car stereo. I was going to possibly look into buying a home. A lot of people were looking at putting the money into required car repairs. Every single person around the lunch-room table was talking about how they were going to spend that new money coming into their households. I just want to come down and offer the perspective of someone who's just entered the workforce and encourage the government not to waver in their commitment to putting that money back into the economy, because I can tell you that money is going to be used by average people to generate growth and generate activity in the economy that wouldn't otherwise be there.
Given the events of September 11 and the fact that the economy is faltering across North America, there are some rumblings from certain segments of the population that maybe those tax cuts were a mistake. I'm here to submit that putting that extra capital into the economy, giving that extra boost to the economy, is more important now than it was before. It's more important to have those extra dollars flowing through the economy than it was, perhaps, before we saw the faltering in the economies of the rest of the country.
There's some real resentment out there from individuals who feel they've been left out of a bit of an economic boom, quite frankly, in North America over the past decade. They're quite grateful, I think, that the current government is willing to step up to the plate and do what's necessary to jumpstart the economy and try and provide people with the confidence to go out and spend their money. I can only speak for myself, but I know that over the next eight to 12 months, hopefully, my wife and I will be spending a lot of the bank's money when we invest in buying a new starter home. I guess that's about all I have to say.
B. Lekstrom (Chair): Mr. Haraldsen, thank you. We do have time for one quick question.
T. Bhullar (Deputy Chair): I'm a lawyer and Mr. Penner is a lawyer, and both of us are wondering how an articling student got time off from his principal to come down here.
V. Haraldsen: I snuck out. I'm going to be down there very early tomorrow morning.
B. Lekstrom (Chair): You'd better get back to work. Thank you very much, Vincent, for coming forward.
Our next presenter is Jag Bains. Good evening.
J. Bains: Hello to the committee members. I'm a student in the high-tech field who will be graduating shortly. I'm attending school at CompuCollege and looking forward to finding work in the high-tech sector. I came here to let you know how the problems like Nortel is facing…young people that it's not good in this field.
I would like to compliment the government on tax cuts, but it's going to take more to revitalize the high-tech field in B.C. We don't need any more fast ferries, and we don't need any more government intervention in the economy. High-tech entrepreneurs need to feel that B.C. has a government that understands their
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needs and will support a high-tech culture. The Premier's council on technology is an important first step that I would encourage the government to continue to work towards.
Restoring confidence in this industry. I think one of the most important ways you could accomplish this is to continue to encourage people willing to take risks. One of the best ways to do that is to remain flexible when developing public policy. An example is flexible hours at work. If we don't do this, I don't know how I will be able to stay in B.C., which is a loss to the province after investing so much into our education. That's it.
B. Lekstrom (Chair): Thanks very much, Mr. Bains. I would look to members of our committee if there are any questions of Mr. Bains.
B. Penner: Please feel free to refuse to answer this question if you think it's too personal, but how do your job prospects look at this time? I take it you've not completed your program yet.
J. Bains: Actually, I have one more test to write. I currently live in Victoria. I've lived there for 23 years, my whole life. I'd love to get work there, but I don't see myself getting work there. I'd at least have to move to Vancouver, but I don't know if I can find work in Vancouver. I know if I go to Seattle, I can find work.
B. Lekstrom (Chair): Thanks very much, Jag, for coming out this evening.
Our next presenter is Cameron Walls.
C. Walls: My name is Cameron Walls. I'm a fourth-year student at UBC, and I'm in the commerce program. I would like to thank the committee for the opportunity to address them. I know it's been a long day, so I'll be brief.
I'm here to discuss the tuition freeze. I believe there was a speaker here earlier who discussed it, and I'm just here to discuss it also. My four years at UBC have all been during the tuition freeze. This is my last year, and my education has been quite inexpensive. In fact, during my time at UBC the province has always advertised the fact that B.C. has the lowest education rates in the province. It's the cheapest place to go to school.
What I've always questioned about the tuition freeze is: why does education being cheap necessarily make it so good? I've always wondered why the focus hasn't been more on quality and on returns. I know that B.C.'s universities are still excellent universities, but the tuition freeze has not had the best effect on students. Is cheap education necessarily good?
In the case of UBC, the university has done fairly well. It's still fine, but a lot of their funding is through what is called the UBC Fund which is this enormous company that UBC set up to basically call their alumni and ask for donations. We're turning our universities into beggars by begging their alumni for more money.
UBC can do that, and they can call their alumni and ask for donations. Then we look at UNBC. UNBC was put under the tuition freeze before they even had a graduating class. I'm from Prince George, and they had to set their tuition at a point when their full program wasn't even established yet. It wasn't really fair to them; they didn't really get a chance. That's one thing to look at.
The other thing is for students who were up here earlier — I can't remember what his name was, but I think it was Jag — in high-tech. I'm sure Jag would pay more for his program if it meant that he would be getting better equipment to work with and that his training would be better when he graduates. If his education were to be of higher quality, then students would pay more. We pay for what we get.
My last point is about access to universities. That has always been the big thing about the tuition freeze; it improves students' access to schools. Anyone can get into university because it's so cheap. However, that's not quite true because what we've done is, instead of having now…. When I came into UBC, the entrance-grade average was somewhere in the range of 72 percent. If you had 72 percent coming out of high school, you'd get into UBC. This year it was 86 percent. That's four years later.
What the universities have done, because they've had no money to actually add seats, is what the government asked them to do. The government said: "Add 4,000 seats this year. Give us 4,000 new students." However, the universities haven't had the money to add 4,000 new seats. They can't make 4,000 new students just invent themselves when we're stuck under a tuition freeze and we can't really increase our funding. Even if we are getting more funding, it mainly just covers inflation over the year. We can't create more spots, so what they've been doing is just increasing what it takes to get into university. Fewer B.C. students can actually get in so that the university can avoid having to do this. It just seems so wrong and so anti-everything the government wants to do.
We want to let more people into education, but what you're guaranteeing is that only the elite students in high school can get into university, which doesn't seem right to me. I think every student in high school should have a chance. At 72 percent, it's a possibility; at 86 percent, frankly, its not.
That's largely all I had to say. I've appreciated paying less; I really have. It's been nice, but I think my degree should be a sign of the quality of my education most of all. I'm concerned that maybe in this case it's not. It's more a sign of the cost of my education, and I don't think that's why we issue degrees in B.C.
There are other ways the government can do it. There can be changes to the student loan program to make student loans more accessible to every student who needs them. I personally think that any student who applies for one should get one. I don't understand why it's so hard to get one. I was turned down for mine this year. I really appreciated that.
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That's all I have to say. I thank the committee for its time. If you have any questions, I'll be pleased to have them.
B. Lekstrom (Chair): Cameron, I thank you for your presentation. I look to members of the committee if there are any questions.
L. Mayencourt: Cameron, you got turned down this year. What percentage of students applying for student loans get them?
C. Walls: I can't say, but I can say why I was turned down this year. Last year my mom cashed in RRSPs, and I was turned down because of the RRSPs my mom cashed in. It made her appear to have a higher income than my father, so apparently my parents have enough money to give me $14,000 thanks to my mom cashing in RSPs, which is very questionable, in my opinion. The appeals process is long and arduous.
B. Lekstrom (Chair): I see no further questions from members of our committee. Again, Cameron, I'd like to thank you for coming out. Take care.
Our next presenter is Sameer Ismail. Good evening.
S. Ismail: Good evening. Thank you for the opportunity to speak to all of you tonight. I'm here to offer the perspective of a university student on the situation in the province here. I'm a full-time second-year student at UBC, and I'm hoping to graduate in 2004. That is assuming I can actually get all my classes.
Through my high school years I actually watched with a great deal of concern as a number of companies left British Columbia for Alberta and elsewhere. I also saw B.C.'s post-secondary education system lose a number of noted professors who left for other places where they felt their time was better valued. In spite of those concerns, I chose to stay here because I really believe that this is an excellent place to be. It's got a very vibrant and multicultural community, and that's something you can't find in a lot of places. B.C. is truly unique.
However, I can tell you that as a student one thing my friends and I are very much concerned about is what's going to happen to us after we graduate, just as we heard with Jag, who says he can't get a job in Victoria. He probably can't get one here, but if he goes down to Seattle he can. While tuition fees are indeed an issue and, just like Cameron, I certainly enjoy paying low tuition, I think the greater issue for people my age is whether or not we're actually going to be able to stay here in B.C. after we graduate and whether or not we'll still have a job if we stay here.
I would submit that the best thing this government can do for you is to leave us with an economy that leaves us comfortable with our ability to actually stay here and find a job. I think the best way for us to accomplish this is to make sure that individuals and companies located both in B.C. and elsewhere feel that this is the place to invest their money and thereby create more jobs. This confidence has been eroded over the last number of years, and it's really vital that it's restored.
I'm not an economics major. I'm actually majoring in political science, but I don't think it takes an economics major to understand that if we don't have a more competitive scheme of taxes and regulations, we're not going to have companies investing here. They'll go elsewhere, and people like me are going to have to follow suit. B.C.'s economy and B.C.'s government have been so bogged down in red tape that it seems that very few people want to be here anymore. That's a tragedy for myself and for everybody in B.C. We deserve the best; we can be the best. I think it's time we make sure that our system is the best so that we can have the best people here.
B. Lekstrom (Chair): Sameer, thank you very much. I will look to members of our committee if there are any questions. I think you touched on an important point. Whether it's a household or a student going to school or a government, it's certainly clear that we can't live beyond our means. That's the reason we're out listening to the people and trying to find ideas so that we can bring our house back in order. I thank you.
Our next presenter this evening is Steve McGuinness. Is Steve with us? Good evening.
S. McGuinness: Good evening. I'm Steve McGuinness. I'm also a UBC student, in third-year history. I'd just like to say, first of all, that it's an honour being here, being part of the public policy process. It's great to be involved. As a young person I'm starting to become interested and more involved in politics. On the other hand, I've also become skeptical of a great many workings of the government. One thing that I am specifically skeptical about is the spending of government money. Actually, the term "government money" is not a term that I particularly like, because I believe that ultimately it's the taxpayers' and people's money. I think we have to realize that. It is the people's money that the government is spending, and where this money is spent should be very carefully looked at.
One of the reasons I've been skeptical over the past years is that there have been many examples, I consider, of government waste and make-work projects. The fast ferry thing is an obvious example, where I believe approximately $400 million was essentially wasted. If one is to take a look at the fast ferry project and all the blunders that were committed, it's almost humorous what happened and the money that was wasted. When you realize that it's really your own money that's being thrown out, then you realize it's not that funny.
What I would really like to see happen is restoring public confidence in government spending. I think this is essential. I believe that even if you don't believe or agree with the government's policies, it's essential that people trust the government and trust that when they say they're going to do something and spend money on certain programs, they do what they say they're going
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to do and there's very little waste in money management.
The truth-in-budgeting legislation, which I believe was passed recently…. I think maybe you could start in this direction. I'm not sure if it goes far enough. I think more possibly should be done to ensure that governments spend people's money responsibly.
B. Lekstrom (Chair): Thank you very much, Steve. I will look to members of the committee if there are any questions.
B. Penner: Thank you, Mr…. Is it Mr. Guinness? I see your shirt says "Guinness."
S. McGuinness: McGuinness. It's almost the same.
A Voice: Any relationship?
S. McGuinness: Possibly. I like to think so.
B. Penner: What specifically do you think should be changed about the truth-in-budgeting legislation?
S. McGuinness: Specifically, I think the process should be open. Possibly open cabinet meetings might be one thing. I think that everything the government proposes should be known. For example, look at the fast ferry project again. When this was going on — all the wasted money that was spent on this — the public wasn't really aware of all this money being wasted. I think big, huge make-work projects like this should be looked at very carefully and should be scrutinized. Make sure there's a plan to implement these projects before they're done. Don't just go ahead and do projects and just throw money at the problem without carefully planning it.
B. Lekstrom (Chair): Any further questions? I see none. Steve, I would like to thank you for taking the time out of your schedule to come and give us your views. Thank you very much.
Our next presenter is Constantine Bonnis.
T. Havill: A point of personal privilege?
Hi. My name's Terri Havill. I've been here since 1 o'clock, and I've enjoyed all the presentations. I was hoping to get on an open mike, and I've stood in line, because I thought maybe…. Do I get to go?
B. Lekstrom (Chair): If you don't take up too much more time, you may get to the open mike, because you are next on the list.
Is Constantine Bonnis…? Thank you.
C. Bonnis: Thank you, Mr. Chairman and all the hon. members here on this committee. I would like to say a little something about myself. As you know, my name is Constantine Bonnis. Another thing about myself is that I've been raised in a restaurant family. I know firsthand the problems small businesses face. The issues I will present to you right now have not just affected us, actually, but also fellow restaurateurs and small businesses in general.
There is a concern I really have, and I believe it to be an important one. It concerns the provincial government regulations. We all know them as red tape. It is a stumbling block, to tell you the truth, to expanding a business. How can I put it? It's like if you have a restaurant, and you want to make it something bigger. You've grown it from scratch, and you want to expand and make it something, but you can't exactly, because many things come as stumbling blocks. Of course, there are federal regulations, but there also are provincial regulations.
There's also another problem. This is concerning the people we hire. It's as if it's a disincentive to hiring more employees. I have done all the work that should be done, from sweeping the floor, doing the payroll, even in the kitchen — everything. We have the opportunity to hire more people, but I see it as a disincentive to do that.
I'm not here to make a long speech or say a manifesto or anything like that. I just want to let the government know that I supported, and I still actually support, their effort and commitment to cut these red tapes. I also want to further encourage that effort, because I can guarantee you that small businesses really appreciate it. They want to grow. They don't want to be known as small businesses forever. They want to be known as businesses. As I said, cutting back red tape would really help us all. I appreciate your time in hearing me out.
B. Lekstrom (Chair): Are there any questions?
B. Kerr: Do you have any suggestions in regard to minimum wage in the restaurant business?
C. Bonnis: Well, certainly employees do deserve to get paid. But sometimes you wonder. If they do get $10 an hour, for example, that means they'll have to do more work. I'll have to put them to more work. In the end it might cost us more, because we might hire them to do extra work for overtime. Now, small businesses don't have all that kind of money, as I said, to pay extra for employees.
Whatever is reasonable in this day and age, considering inflation and all that, they should rightly be paid that. But when minimum wage is very high, that will mean I might have to get rid of some employees, and I'll have to take on the responsibilities myself. I personally don't mind that. It is my business, and I want to make it grow. I would think there would be a lot of incentive in hiring more employees.
H. Bloy: Just talking about the minimum wage, would you see something different for a training wage than for people that are on gratuities?
C. Bonnis: I haven't really thought about that too much, because for training there is already a one-month delay period for new employees in the restau-
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rant business. So they get the training through that month. You can learn a lot the first weekend. There's really no problem in training with regards to the restaurant industry.
As for other small businesses, I'm not too sure about their concerns. The minimum wage is good, but it should be comparable to the standard of living, rate of inflation and all that, and not double that, for example, because it might gut that business. It might have to close its doors. I'll guarantee that it will have to fire employees. That's not progressive, to say the least.
B. Lekstrom (Chair): All right. Constantine, thank you very much for your presentation.
Now it is very close to nine, but we will go to Terri Havill.
T. Havill: Thank you very much for taking me. I am a nurse. I work at Vancouver Pretrial. I'm also a BCNU steward. This is good news, because it entitles me to speak. As a public servant, I'm not allowed to speak because of an oath of employment. I'm not allowed to tell you what I learn from work. As a steward, I can investigate complaints and let you know what I've learned at work.
Currently, we've had 27 full-time-equivalent positions eliminated at Vancouver Pretrial, Vancouver Jail. Those are all front-line workers, including two nurses positions. Yet there hasn't been any cut in the empire-building within the corrections branch. It's a very large bureaucratic quagmire of what I would consider redundant positions in management and excluded management. In excluded management when they err, they tend to get a promotion instead of removal from our programs.
I want to let you know that I do work in the largest detox centre in British Columbia. The prisons are our largest detoxes. Yet we have one nurse in care of 80 people during days and one nurse in care of 160 on nights. Prisoners are dying from dehydration in prisons.
We need to improve the ratio of the direct caregiver — that's the front-line nurse — for the inmates during withdrawal or for inmate health care service in prisons. We know that many addicts are going there. That's where they're detoxing, and sometimes that's where they're dying. Yet they wouldn't die in a detox centre during withdrawal because they have safer ratios of nurses to persons in withdrawal.
Currently the employer has left two director of care nursing positions, the most sophisticated levels of nurses available. Two directors of care are now in charge of four nurses on days. That's an $80,000 position, plus benefits, which is left to take charge of four nurses. But they're not doing direct caregiving.
What I find in the corrections branch is that they limit the information that the front-line worker has, and consequently it's a less safe institution. We need direct caregivers. We need front-line nurses. We don't need more management.
I also believe that other cuts can be made. We have six wardens that are in charge of a jail. Think of a jail having 160 people — and 80 at the Vancouver police jail — and we have six wardens, or directors, as they call themselves. When you look at 1,500 to 2,000 youth in high schools, they have one principal and one vice-principal. I don't think we need six wardens.
There's a director of classification. What is classification? Classification is when you decide where a prisoner goes once they're sentenced. It isn't rocket science. There are only a few places that they can go to in the lower mainland. So you don't need a director to look after two classification officers.
We have a director for staffing and training. Is that really necessary when we have a separate public body that looks after the staffing and training of people? We have directors for scheduling. We have a couple of very well-paid directors that do scheduling, when this is something a clerk can do. I really want to add to the information that Steve Hansen gave you from information technology, saying that cuts can be made efficiently within the public service.
One other place to look at is in privatized health care and corrections. Corrections privatizes most of its health care services. Several prisons are run by contractors. The BCNU did a freedom-of-information request. It took two years through the Supreme Court. We found that the cost of an inmate's care in private contracts exceeds that in public service. Why? Because the private contractor wants to make money, so they decrease quality labour, for example. Medications are now given by unregulated technicians — methadone, anticoagulants, oral hypoglycemics. All medications at privatized correctional centres in the lower mainland are given by unregulated people, yet it costs more. Why aren't nurses doing what is a delegated medical function: dispensing methadone to inmates at the privatized facilities? Because the privatized contractors want to make money. They make it off of labour, and they make it off of decreasing services.
It's interesting that it's in IT. Well, it's certainly in health care services in the corrections branch. I hope that the committee, as an idea, can find ways to get information from the front line, the people that usually have unsafe workloads. It's nurses. Ask them where they see the fat and where streamlining can be done. I hope, as a steward, that I'm free from repercussion and discipline from my worksite for telling you that we have six directors looking after our jail. It's too many. We have two directors of nursing care, yet they reduce the front-line nurses.
Thank you very much for hearing me. It's just something that spilled from my heart. I didn't prepare anything, but I do have a lot of experience in the branch — ten years.
B. Lekstrom (Chair): Well, Terri, thank you very much. I applaud you for your tenacity in sitting through the hearings and listening to what has to be said. What you've brought forward is exactly what we're here to listen to. It's ideas on how we as government can become more efficient at providing services
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to British Columbians. That's what this exercise is all about. So I thank you very much for coming forward.
R. Sultan: Could I just comment, Ms. Havill, that we depend on dedicated public servants such as yourself to bring these issues to our attention. If you didn't speak out, we'd be in the dark. I wouldn't predict it would happen, but if there is any retaliation, shall we say, I hope this committee finds out about it real fast.
B. Lekstrom (Chair): It is now after 9 p.m.. I am going to bring the meeting to a close. There are a number of people that were unable to get to the mikes this evening. There is a process to submit your presenta-tions to our committee. There is information on the back table on how to get that information to us. I would encourage anyone who was unable to get to the mikes or who, having sat through today's hearings, has thought of a number of ideas to please forward those ideas. The more information we gather, the more ability we have to formulate a report that reflects what we've heard through the province and from the people of British Columbia.
With that, I want to thank you very much for coming out today and expressing your views. Please have safe travels home. The meeting is adjourned.
The committee adjourned at 9:06 p.m.
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