2002 Legislative Session: 3rd Session, 37th Parliament
SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES
MINUTES AND HANSARD

MINUTES SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES Thursday, September 19, 2002 10 a.m. Douglas Fir Committee Room Parliament Buildings, Victoria

The following electronic version is for informational purposes only.
The printed version remains the official version.

REPORT OF PROCEEDINGS
(Hansard)

SELECT STANDING COMMITTEE ON 
FINANCE AND GOVERNMENT SERVICES

THURSDAY, SEPTEMBER 19, 2002

ISSN 1499-4178

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THURSDAY, SEPTEMBER 19, 2002

           The committee met at 10:01 a.m.

           [B. Lekstrom in the chair.]

           B. Lekstrom (Chair): I would like to call our meeting to order at this time. It is shortly after 10 a.m., and I would like to welcome everybody here.

           My name is Blair Lekstrom. I am the MLA for Peace River South, and I am the Chair of the Select Standing Committee on Finance and Government Services, an all-party legislative committee.

           First of all, I would like to welcome everybody here and thank you for your participation. We're certainly looking forward to hearing from you on the financial activity and your views as to our province and the direction we should be headed in.

           Under the 2001 Budget Transparency and Accountability Amendment Act, the government has to submit a prebudget consultation paper to the Finance committee no later than September 15. This year the Minister of Finance presented the prebudget consultation paper to our committee on September 13 in the Vancouver offices.

           The information that we will be seeking and listening to is based on that paper , the release of that paper and the questions contained therein. There are three key questions and areas contained in the paper, and we're looking forward to hearing the views of all the presenters to the committee. Of course, this is our first committee hearing, beginning here in Victoria today.

           I know the members of the Finance Committee are very interested — and we spoke about this — in hearing the views of British Columbians and what direction they feel we should be taking; in hearing your views on the direction we have taken — as to whether it's working, whether it isn't, the positives, the negatives, and so on. Certainly, we're leaning towards hearing all kinds of information, I'm sure.

           This year our consultation process is conducting 13 public hearings around the province. As I indicated, Victoria is our first public hearing, which begins today and will run from 10 a.m. until 5 p.m., followed by tomorrow in Campbell River, which is a 9 a.m. to 1 p.m. slated hearing.

           We will receive submissions at the 13 public hearings, as well, for the people that are unable to attend any of the 13 scheduled public hearings. We will receive written submissions up until October 25, which is the deadline we've had to set, via either e-mail, written submissions or electronic. We're looking forward to that. Last year we had a significant number. Possibly very close to the same amount of written submissions were received, if memory serves me right, as we actually had oral presentations to the committee.

           Today we have a number of people with us. We have Wendy Collisson and Virginia Garrow, who are from Hansard, the branch that records and produces transcripts of the proceedings. Everything will be recorded and transcribed through Hansard today.

           Our researchers, from the office of the Clerk of Committees, are also here: Josie Schofield and Audrey Chan. As well, to my left we have Craig James, who is Clerk of Committees.

           Just before we start, I would like to ask the members of the committee to introduce themselves, and following that, we will begin by hearing from our first presenter. I will begin to my left with Lorne.

           L. Mayencourt: Good morning. My name is Lorne Mayencourt. I am the MLA for Vancouver-Burrard.

           H. Bloy: Harry Bloy, MLA for Burquitlam.

           R. Sultan: Ralph Sultan, MLA for West Vancouver–Capilano.

           A. Hamilton: Arnie Hamilton, MLA for Esquimalt-Metchosin.

           S. Orr: Sheila Orr, MLA for Victoria-Hillside.

           J. Bray: Jeff Bray, MLA for Victoria–Beacon Hill.

           I. Chong (Deputy Chair): Ida Chong, Deputy Chair, Oak Bay–Gordon Head.

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           B. Lekstrom (Chair): Thank you very much, members. It is now time to begin. The exciting part, and the part we look forward to as a committee, is hearing from our presenters. At this time I would like to call on our first presenters, representing WCG International Consultants Ltd. I believe Mr. Ian Ferguson and Dr. Jim Rae are presenting today. Welcome and good morning.

Presentations

           I. Ferguson: Good morning to you all, and thank you very much. It is really an honour, to be honest with you, to provide public input on what we see as community, business and government working together.

           The vision we have as small to medium-sized businesses is that when you get government, community and business working together, we all want to create a better British Columbia for all British Columbians, and I say that sincerely. That is why we are here this morning. I think it's an important message from small and medium-sized businesses, and I think it's a vision you will see throughout B.C. that we all share.

           Sometimes we don't agree on the policy and the approach to get there, but I think we all want to get there. We want to create the best province we can, and we want to do it by including all British Columbians. I'll start with that vision, if I might.

           Just for background, we are West Coast Group. We are a business consulting company. Our headquarters are here in Victoria. We do have offices and do business throughout 51 communities in British Columbia, so we understand what's happening in rural British

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Columbia. We have major centres in Victoria, Nanaimo, Vancouver, Surrey, Kelowna, Prince George and Fort St. John. We do business right now in all ten provinces in Canada, in the United Kingdom and in the United States. Having said that, we are still a medium-sized business. We were a small business. We are certainly not a major corporation.

           We currently do business in three arenas. We are the forty-fourth fastest-growing company in British Columbia, and it's easier when you're small. If you look at our business consulting, B.C. Business Magazine would rank us as the forty-fourth up-and-coming business consulting company in B.C. From a high-tech perspective, we are involved in software and systems development with technologies. We'd be a top 150 high-tech company in British Columbia as well.

           As an HR re-employment company we can talk to jobs in B.C. specifically, and we will. We're the eleventh-largest human resource re-employment company in Canada. In fact, we're the largest one west of Ottawa and Toronto and, in some ways, probably the only one headquartered in B.C. So we can talk to the job market in small and medium-sized business in B.C., and we will do so. One of our programs, Job Wave, put over 20,000 people back to work in 51 communities throughout B.C. We know what's going on in employment, believe me, in the small business community around the province.

           We currently work with 30,000 small businesses throughout B.C., Canada and the United Kingdom. They are our customers. We do very little work for major corporations, which is fine. Most of us come from major corporations. We've grown from 75 to 130 employees in the past year, and I'm going to tell you why that is so.

           Two years ago I had dinner with the Premier of Alberta, Mr. Klein. Mr. Klein personally suggested that the West Coast Group move its headquarters to Calgary. He pulled out all the stops for us to do so. We met with him personally; we met with his ministers.

           In those days, if you look at two years ago, the scenario we were facing in British Columbia was that the B.C. economy was dead-last in Canada. In Victoria, as a capital city, the economy was dead-last of any capital city in Canada. I think what was probably causing a lot of that was the lack of belief that the private sector had a role to play in creating a good economy that would allow us to reinvest in some very important things like education, health care and social services.

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           We were also invited by the Deputy Premier of Ireland to move our head office to Ireland. Advantages in Alberta, clearly, were that personal tax was lower and business tax was lower. In Ireland the business tax was 10 percent.

           We chose to stay in B.C. We're proud to be in B.C., and we want to grow our company in B.C. We have that vision, and we've invested in that vision. We look forward to working with you in the communities over the next five years to achieve it.

           If I look at goals and objectives in your report, we wanted to create — and we think you are creating — one of the top three economies in Canada, if not the top economy. I'll tell you: that's a better vision than being dead-last was. We congratulate you on that; we join you on that. We're working very hard to help you with that.

           We're going to get there. Whether it's two years or three years or four years, we are going to get there, and we're going to get there together. We believe one of the reasons we want to get there is that it's going to allow us all to reinvest, as I mentioned, in health care, in education and in social services so that people are going to want to live here in British Columbia for the next 20 years like we do.

           I forgot to introduce the gentleman on my left, who's my partner. I apologize. His name is Dr. Jim Rae. He's a partner in WCG International. Jim, in fact, is an economist. Any tough questions I will defer immediately to the economist on my left. I understand you have one on your left as well, Mr. Chairman.

           B. Lekstrom (Chair): Yes, we do.

           I. Ferguson: I'm sure they could share views on those.

           We believe that together we are creating an economic and political environment for growth and reinvestment in B.C. We think you're on track and doing a very good job to do that. We do need lower taxes, and we thank you for what you're doing in that arena to be competitive. I mentioned Alberta; I mentioned Ireland. When you compete internationally, it becomes very attractive if your costs are lower by living in Alberta or Ireland, but you've given us encouragement that we can be just as competitive with lower taxes in British Columbia. We thank you for that. Eliminating debt and deficit to attract investment is very important, and we support you on that.

           My sense, on the high-tech sector in B.C., is that we're starting to see for the first time in several years a reinvestment in high-tech by foreign investors in British Columbia. The number I use is that it's up 10 percent. That was not the case two years ago.

           We're also seeing reinvestment in industries like the film industry, which we've been involved in. In fact, I was just talking to some producers down in L.A. Quite candidly, they love British Columbia, and they're proud to say so.

           Reduce red tape. It's critical. I was doing this presentation last night at 11 o'clock, so if there are typing errors, I apologize. Most businesses, small or medium-sized, are doing paperwork at 10 or 11 o'clock. They're doing it for the federal, provincial or municipal government. Let me assure you: we have way too much.

           We just moved our offices from 707 Fort Street to 915 Fort Street, which is about two blocks. I had to get a new business licence. It wasn't getting the business licence and paying for it; it was the time it was taking to do it. I did have to move my operation within 30 days. We went through about 15 different series of red

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tape and forms just to move two blocks down the street. You're concerned always about your competitiveness, your competitors and what can happen to you in those periods.

           We'd also like to suggest — and I know you know it, Mr. Chairman — that there is but one taxpayer, and it's you and us. We pay taxes at the federal, provincial and municipal level. I'll talk about that in a second.

           By way of background, I think one of the hidden things in the economy, for some reason, that we discovered six years ago is small and medium-sized business. We ask you to focus on that sector. The economy is not just big business and big corporations. We know you know that. By way of example, in British Columbia there are 363,000 small and medium-sized businesses. I'm proud to say those businesses created 40 percent of all the jobs in 2002. That's pretty critical, as some of the key corporations were having difficulties that weren't controlled in B.C. — the New York Stock Exchange, NASDAQ, 9/11 and events totally beyond our control.

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           Small businesses are delivering and will continue to deliver on the vision over the next two years in British Columbia. I'll give you some sectors of small business. If you look at the service sector, our numbers indicate it's up 2.8 percent over last year. That's a great start. There's a pent-up energy there to reinvest in their companies and hire people, and they're committing to the long-term goal of getting the province turned around.

           Construction, depending on where you are across the province, is up 17 percent on average. On Vancouver Island, where we sit today, it's up over 46 percent. We're starting to see the economy shift. High-tech provincewide has increased about 5 percent. On Vancouver Island we're proud to say it's up 10 percent and will continue to be so. Most of the high-tech companies on Vancouver Island and in B.C., by the way, have ten or fewer employees, and we hope they grow to be mid-sized companies and then larger companies. Retail is up 5 percent on average throughout British Columbia, but the June numbers indicate 6.4 percent. Manufacturing is up 13 percent.

           You're starting to see that your policies are having a very positive impact on the attitude, investment and work of small and medium-sized businesses throughout British Columbia. That is true across this province. As I mentioned, we do business in 51 communities. We contact over 200,000 small businesses a year, and we pretty much know. Yes, there are some areas still having difficulty, and they're going to need time and assistance to get out of it, but by and large the small and medium-sized part of the economy is doing well under your new policies. This is, by the way, more than twice the growth of the big corporations.

           You can see what's happening. A lot of economists — none of them in this room — couldn't believe there were 88,000 jobs created year over year. We knew it. We could see them in small business. Job Wave, by way of example, last year found 13,500 jobs in B.C. We knew six months ago they were on track to find 24,000 new jobs in B.C. in every region of the province. We saw the pendulum switch in small business about six months ago, and they showed us that by getting rid of the pent-up demand and starting to hire people in every region of the province.

           As you know — it's the provincial statistic — there have been 88,000 jobs created since December. I think that speaks well for your policy. God bless small and medium-sized businesses. They're responding and hiring people and growing their businesses.

           Our recommendation is to stay on course. You're on exactly the right track. But I will caution you. Small business is still overburdened with taxes, fees and regulations at all levels. As you can, please address it. In a lot of areas we are much more overburdened than major corporations. In a lot of areas we pay more taxes than major corporations. Continue to look at us, please, as being an important part of the economy. If you can lower taxes and get rid of red tape, please do so. Why? We'll help create a better British Columbia for all British Columbians, and we'll hire people, and we'll reinvest in our businesses.

           Please don't just download the problems and responsibilities to the municipal level. There's been a lot of discussion around that, and, quite candidly, it scares the heck out of us. In this region, by way of example, there are 11 municipal governments. Can you imagine me trying to get 11 moving permits and going through that red tape or looking at ten municipalities raising taxes because it's been downloaded? That could stall out the small and medium-sized business economy in a lot of regions at the municipal level, because that's where most of us start. Then we look to the province and the federal government.

           The other comment I'll make is that it took ten years, to the best of our knowledge, to get into the situation we were in two years ago. I don't think any of us liked it, but it is going to take some time to get out of it. It can't be changed overnight. We respect that. We know you're working at a very, very fast pace, and I congratulate you for it. But as a business person, please make sure you don't get ahead of your organization's ability to deliver services to British Columbians.

           It's easy at the executive level — I am one — to set a policy and say, "We're going here," but unless my teams throughout Canada can deliver those services to our clients, we're slowly going out of business. In some ways, some days you have to speed up that organization to the best of your ability, or some days you have to slow down some of your policies.

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           But we will get there. Over the next three years together we will create a better British Columbia for all British Columbians. I think we'll be in a wonderful position to reinvest in health care, education and social services for the long term.

           In summary, I want to thank you for being open, accessible and accountable. This is the first presentation like this I've ever been to as a business person. As I say, it's an honour, and it's really a privilege to be here. I think we're important and our message is important. I hope you got that in my comments.

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           We look forward to moving forward with you. We look forward to being located in British Columbia for many, many years to come.

           Once again, my thanks. If there are any questions, we'd be pleased to answer them.

           B. Lekstrom (Chair): Thank you very much, Ian, for you and Jim coming to present to our committee. It's certainly a privilege for us as well, as Members of the Legislative Assembly, to be here to listen to British Columbians.

           As I've said many times before, it takes all British Columbians to make our province a better place: small business, large business, the legislators and the people of British Columbia. I think that's what we're seeing here. I thank you for your presentation.

           I will look to members of the committee if there are any questions regarding your presentation.

           R. Sultan: You say that we can realistically expect to be the No. 3 economy. I suppose some observers might say that we are No. 4. In your opinion, who are we going to push aside?

           I. Ferguson: I'll let Jim — my chauffeur, the economist — address that. I'll go back two years. Being dead-last in Canada — I didn't think I'd see that in my lifetime. I'm sure my grandfather's turning over in his grave in Cranbrook.

           We're behind Newfoundland. God bless Newfoundland. I love them dearly, but we do not deserve to be behind Newfoundland economically.

           I'm a sales and marketing executive. I'm not an economist. I would tell you that I think B.C. can be the top economy in Canada in the next ten years. We've got lifestyle, we've got intelligent people, and we've got wonderful universities. There's a $1 trillion high-tech sector just south of us. It goes from Washington down through California into Oregon. The gateway to that sector is not Ontario. It's actually British Columbia.

           As a sales and marketing person, I say that we should be No. 1. Jim is an economist.

           J. Rae: I can't add anything to that. That was great.

           B. Lekstrom (Chair): Are there any other questions from members?

           I see no further questions. I would like to thank you, Ian and Jim, for coming and presenting to our committee. I can assure you that your presentation will be given due consideration in the development of our report, which is due to be submitted to the Legislature no later than November 15.

           I. Ferguson: Thank you, and good luck. Thank you for all your hard work.

           B. Lekstrom (Chair): All right. We will move on to our second presenter this morning, who is with the Canadian Home Builders Association, Mr. Casey Edge.

           Just one thing I failed to comment on at the beginning of the hearings today. Our process is one in which the presenters have 15 minutes to present to the committee. Usually what we like to do is have the presenter try to conclude within ten or 12 minutes if they can, so that if there are any questions from members of the committee to clarify anything that was put forward, we would have a few moments for that. Casey, with that, I certainly won't eat up any more of your time. Thank you for presenting to us today.

           C. Edge: Thank you. I'll just speed right through this.

           My name is Casey Edge. I'm the executive officer for the Canadian Home Builders Association of Victoria. I would like to thank the Chair and members of the Select Standing Committee on Finance and Government Services for the opportunity to make this presentation today.

           I would like to provide a brief description of our association first. The Canadian Home Builders Association is a national organization of 6,000 builders, trades and suppliers, dedicated to promoting education, professionalism, consumer awareness and housing affordability.

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           CHBA's national headquarters is in Ottawa, where we work closely with the federal government and Canada Mortgage and Housing Corporation. Our provincial arm, led by CHBA's B.C. president, Peter Schultze, and executive officer, M.J. Whitemarsh, operates from the campus at BCIT and develops and promotes education and training programs like the certified residential builder, best practices and the R-2000 program.

           There are 12 local associations throughout B.C., including Victoria, Prince George, Kelowna and Vancouver. In Victoria we have 130 member companies, including Canada's chartered banks, home warranty companies, national retailers and a core of 50 of Victoria's top builders forming our builders council. We are involved in community initiatives ranging from building the teaching shelter at Swan Lake to raising $35,000 for the B.C. Children's Hospital at our parade of homes in November 2001.

           It will come as no surprise to this committee when I say housing starts are up since the provincial election in 2001. Prior to the election one of our members was sitting on two homes for a year. A week after the election he sold both. In 2001 we saw a 32 percent increase in housing starts in greater Victoria, from 872 to 1,264. Just as importantly, from a provincial perspective, communities like Prince George, Kamloops and Nanaimo are starting to rebound also. From January to June of this year housing starts are up 112 percent, 49 percent and 22 percent respectively for each of those communities. While times have been very tough in Victoria, it was doubly so for our counterparts in these regions. Now we have reason to be optimistic.

           There is no question the resurgence of the housing industry has significantly impacted greater Victoria's economy. A CMHC study confirms that the construc-

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tion of 100 new homes provides employment for 280 people for a full year.

           The government contributes significantly through its policies that encourage investor and consumer confidence. I receive calls from business people in eastern Canada, Arizona, California and, yes, even Alberta, looking to buy a home or start a business in B.C. This week I provided information to a Calgary home-building company investigating coming to Victoria. In our business that's unheard of. During the past decade Calgary has been the mecca for homebuilders and tradespeople.

           In 1998 B.C. had a 20,000 net loss of interprovincial migration — people moving from B.C. to other provinces, many of those to Alberta. In 2002 that net loss dropped to 5,000 people. CMHC expects that figure to balance out by 2003. This speaks well not only for home sales but also for B.C.'s competitiveness, young people's education and employment. That net loss of 20,000 people over the past decade — it's actually more than that; that was one particular year, 1998 — included many skilled trades which are the backbone of our industry. Young people graduating from carpentry programs at Camosun and other colleges left the province. Now, with a surging housing market, we face a serious skilled trades shortage. How serious is it? We are unable to secure enough trades to meet our needs now, and the present housing boom still only represents half of our historical peak years during the past 20.

           In B.C. today there exist tremendous employment opportunities not only for youth but also for the unemployed and those seeking new careers. To address this, the government is presently reviewing its delivery of traditional apprenticeship training. This is an absolutely essential initiative. We must include competency-based skills to take advantage of the employment opportunities. That is why CHBA would like to create training modules specific to the construction of single-family homes, such as framing, window installation and other skills that require less intensive training in commercial construction.

           We are talking to schools and colleges to address this issue. Next week we are meeting with a local school district to discuss incorporating a competency-based trade skills component for both students and adults seeking their high school diploma. Discussions like these are the direct result of recent government policies encouraging educational institutions to work more cooperatively with industry.

           What about affordable housing? It's true that housing costs are increasing in Victoria due to limited availability of land, skills shortages and development cost charges. However, CHBA Victoria, B.C. Housing, the district of Saanich and a local community association are working together in a public-private partnership to create a demonstration project showcasing well-designed, affordable market housing in greater Victoria. This initiative was the direct result of flexibility and vision by B.C. Housing and other participants.

           Flexibility and vision are not words one normally associates with government organizations, but we believe this government's emphasis on working creatively with the private sector is being taken seriously by agencies like B.C. Housing. Government, educational and private organizations recognize that solutions to social issues like affordable housing depend on collaborative partnerships. Even WCB officials sat down with us this week to hear our concerns. You could have knocked us over with a feather.

           Last, I would like to speak about the housing boom's opportunities and risks. As more people enter the industry to take advantage of the strong homebuilding market, there is a greater risk of questionable construction quality and even product failure. Presently, to sell homes in British Columbia, you must be qualified through an education and accreditation process. There is no such requirement to actually build the homes that realtors sell.

           Builders must be licensed through the homeowner protection office, but there is no educational requirement for a licence, only warranty coverage which does expire over time. This is like licensing people to drive as long as they show an insurance form. At CHBA, we have turned down warranty-covered licensed builders for membership because they don't know how to apply simple flashing.

           Through the government's core review process, B.C. has a tremendous opportunity to take advantage of the strong housing economy and create an industry rooted in education and training. The old government administrative structures that didn't work during the past decade must give way to industry-led initiatives. Organizations like CHBA and the Better Business Bureau are ready to work with the homeowner protection office and educational institutions to address consumer confidence, education and technical training. This will send a message that home-building is a career and a profession, not just a summer job as a framer.

           Partly due to Kyoto and similar environmental issues, the federal government wants to make energy efficient, R-2000 construction the standard within ten years. Quality houses have become systems requiring strong educational and technical expertise. The only way to build them is to create a provincial system based on those same values.

           None of these opportunities would be available without the recovery we are experiencing today in the housing sector. I want to express to the B.C. government the gratitude of every member of the Canadian Home Builders Association for the restoration of consumer confidence and a business climate that encourages investment and entrepreneurship.

           Stay the course, and thank you very much for your time.

           B. Lekstrom (Chair): Well, thank you very much, Casey, for your presentation to our committee this morning.

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           I will look to members of our committee if they have any questions. I will start with Lorne.

           L. Mayencourt: Thank you, Mr. Edge.

           The previous speaker referenced the 88,000 new jobs in British Columbia over the last year. I'm wondering if you have any figures for the year 2000 versus the year 2002. How many people were working in the housing sector — like construction workers? Also, do you have some sense of what those individuals earn annually?

           C. Edge: I don't have that specific information on hand. I can provide that to you. I believe they are looking at 19,000 to 20,000 housing starts in 2002. According to CMHC, 280 jobs are created per 100 housing starts, so you could calculate that figure. The construction industry, in general, is considered to be reasonably well-paying.

           L. Mayencourt: Thank you.

           S. Orr: Thank you for the presentation, Casey.

           Your ear is to the ground on all the home-building. Because of the boom, where is the shortage? What is the biggest shortage of the trades? What are you hearing they need the most on the sites?

           C. Edge: Framers.

           S. Orr: Framers?

           C. Edge: To a large degree, it's pretty much across the board — plumbers, electricians, framers. What we're looking at is…. I talked to a carpentry instructor out of Camosun College last week, and I asked him: "If I was an unemployed guy right now, didn't have any skills and was looking to get employed shortly, how long would it take to train me, to get me onto a framing crew?" He said: "Six months. In six months I can train you. You can't lead a framing crew, but you can be part of that framing crew, and you can be working."

           We believe the focus on getting a journeyman's ticket speaks more to the commercial industry and does not address the strong housing trades shortage. We are working on ways to get people working and training them in skills that qualify them to work in our industry.

           S. Orr: Thank you.

           I. Chong (Deputy Chair): Casey, following up on Ms. Orr's comments and inquiry regarding the trades, I'm curious as to what your association is doing in regards to going into the high school level to see whether or not there are opportunities to speak to grades 11 and 12 students. I know when I went to school, woodworking and metalworking were part of the curriculum. I don't know if that's the case anymore; I'm probably dating myself. Whether or not that activity still exists and whether there is any association with your group is the first question.

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           The second one I'd like to put on the table to you as well. I know you represent homebuilders, but there's another industry that is associated very closely with what you're doing, and that is the renovation business. I'm wondering if you can give me any information about whether…. Well, we hear housing starts are up. Is there also, similarly, a substantive increase in renovations, because that speaks to another industry that really shows that disposable income is available?

           C. Edge: I'll answer your second question first. That is that in attending a CMHC round table last week, I was told that, for instance, renovations in Oak Bay are through the roof. Anecdotally, all of our guys are working, and I know that because they're not hanging around the office. Renovations and housing starts are all going very strongly right now.

           People say: "Well, is that the result of low interest rates?" Except that we had our last big housing boom in 1989, and in fact we had high interest rates at that time. There are very low interest rates in Japan right now, and yet they have a flat housing market. It has more to do with the fact that we're not losing 20,000 people a year from the province of British Columbia, and we're employing people. That has far more to do with the housing boom than the interest rates, although certainly interest rates are a factor.

           With respect to what we're doing with the high schools, there has been a disconnect among industry, education and government over the past decade. We are finding now that the educational institutions are far more open to working with industry. They recognize that. I am meeting with Shoreline Community School next week. I'm working with Spectrum Community School right now, not just with the student issue but also with adults who haven't got their high school diploma and also to give them some skills so they can plug into the industry. We're working on all of those issues.

           I'd have to say that education and training really is the most important factor in our industry from students right on up to builders. The industry can be a bit of a cowboy industry, as I'm sure everyone here is aware, and, really, the only way to ensure that we have consumer confidence in British Columbia with respect to home-building is if we have educational standards in place.

           B. Lekstrom (Chair): Well, Casey, again, I would like to thank you for taking time out of your schedule today to come and present to our committee. Thank you very much.

           C. Edge: Thank you.

           B. Lekstrom (Chair): Our next presenter this morning presenting to our committee is with the British Co-

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lumbia Construction Association. With us is Warren Perks. Good morning, Warren.

           W. Perks: Good morning.

           B. Lekstrom (Chair): Welcome.

           W. Perks: Thank you for this opportunity to do this presentation to the Select Standing Committee on Finance and Government Services. I am here today representing the British Columbia Construction Association, and we are pleased to have the opportunity of participating in this public hearing.

           Allow me to take a moment and introduce our organization. The B.C. Construction Association represents 1,700 corporate members active in all areas of construction across the province. Many of our member contractors build industrial, commercial and institutional structures. Some members construct residential buildings while others are roadbuilders. We represent general contractors, large and small, as well as trade contractors. Our members work in the lower mainland, on Vancouver Island, up north and in the interior. We are the largest construction-related association representing this important industry.

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           Construction is an important industry. It employs over 112,000 men and women annually and on an average contributes 7.4 percent of the annual GDP to the province. The past 18 months have seen construction in B.C. finally begin to rise out of the sluggish economic activity of the previous few years. In 2000, housing starts in B.C. were at their lowest levels in 20 years. Now they are on the rise again, creating an active market for residential contractors. Investment in commercial construction has also been on the rise, albeit more slowly. However, while there is an optimism for future improvements in construction activity, there is still a long way to go before economic recovery can be achieved for this province. We recommend the following.

           Support private investment. A strong construction industry is fuelled by private investment. This government made some initial strides towards supporting investment by lowering taxes and initiating a thorough review of existing regulations and red tape. There needs to be continued work in this area. British Columbia must be competitive with neighbouring jurisdictions in order to attract investment into our province.

           Outsourcing. Government must take care of the public purse, and this government has clearly articulated that it intends to be accountable for how public funds are spent. We applaud this effort. The construction industry is very competitive. Our members work hard not only on the job but to get the job in the first place. They know only too well that efficiency in business is a necessity for survival, and as such we strongly approve of a more efficient government.

           One of the ways we see government improving its bottom line is through outsourcing of construction services. Putting an end to the excessive use of in-house forces within government agencies would result in more efficient use of the taxpayers' dollars. Contracting out construction works, including maintenance, will not only lower costs for government; it will provide expertise and innovation not available with the use of in-house forces.

           In times of reduced government spending, it becomes even more important to adhere to core competencies. Government agencies must look to their reason for being and get out of the business of private industry.

           There's no better example of this than construction work. Why should a school district be in the business of project management? Why should they maintain a millwork shop? Why should a municipality be spending its resources on staff for road and civil work when the private sector can get the job done for less? The easy answer is they shouldn't.

           Contracting out construction services allows government agencies to focus on their core mandates and provide better service to the taxpayer. Funding for education and health should be carefully allocated towards enhancing education and health, not used to compete with private industry.

           One of the key benefits of outsourcing is that it allows agencies to better accommodate fluctuating demand for labour, thereby reducing standby costs. Take, for example, the situation where an agency has need for architectural services. Why not contract out those services when needed? The alternatives are to either pay unnecessary cost to keep an architect on staff or to lay off staff to meet budget demands. Maintaining a steady staff level for a fluctuating workload is clearly not cost efficient. In addition to maintaining staff, many public agencies build up large amounts of machinery and equipment for use by their in-house forces on construction projects. Owning and maintaining such equipment is unnecessary and inefficient when there exists a clear option to outsource the work.

           Contracting out public construction services stimulates the economy by supporting private enterprise, which in turn creates work and opportunity for the community as well as a broader tax base. A strong economy is good business for everyone.

           Infrastructure. Improving the infrastructure of our province should be very high on the list of things to do for government. A strong economy is not possible without a strong backbone of roads, bridges, water supplies and sewerage. If we expect to compete with other jurisdictions, we have to have an efficient infrastructure network through which trade and commerce can effectively function.

           A strong infrastructure should also include proper maintenance of our public schools and hospitals. Public funds must be spent carefully and effectively and only on those projects where a need has been clearly identified.

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           Fiscal responsibility is essential. However, care should be taken not to disregard the value of maintaining and strengthening existing infrastructure. At times

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you must spend to save, and we urge the government to support those capital projects that are necessary for our province to maintain and, where possible, improve our current infrastructure.

           We applaud this government's work in pursuing public-private partnerships in British Columbia as an alternate method of delivering infrastructure needs. Our industry sees potential in this innovative approach to public construction. At the same time, we caution against using alternate delivery methods over traditional, except where it can clearly be established that there will be significant savings for government.

           Regardless of the delivery method chosen for a public construction project, we strongly recommend the use of industry-standard construction documents and established tendering procedures. Standard practices and procedures translate into good business. They provide equity for all parties by appropriately apportioning liability and ensure the transparent and accountable use of public funds.

           The provincial government, as trustee of the taxpayers' dollars, must be able to monitor and ensure the use of accepted tendering procedures whenever such dollars are involved in a construction project. This is sound policy. Requiring that the standard policies are adhered to guards against inappropriate inclusion of such potential problems as local preference clauses, hidden preferences, lack of transparency in the contract award and inequitable and oppressive liability in indemnity clauses, all of which have the potential of leading the parties into conflict.

           Education and training. Rejuvenation of the B.C. economy is imperative. For the construction industry, however, increased economic activity means an increased need for skilled workers to meet the new demands. Fewer entrants into the construction field, loss of workers to neighbouring jurisdictions and an aging workforce combine to create a potential skill-shortage crisis that is already showing signs of beginning.

           We recommend that the government work with our industry to deal with this problem. A strong industry-led apprenticeship system must be developed. Focus should also be placed on secondary school apprenticeship programs. Such programs have been shown to be effective in supporting and promoting construction as a viable career option in addition to effectively preparing students for a future in the industry. Also, we recommend that government seek to support industry initiatives designed to address potential skills shortages.

           In conclusion, I would like to express our support for this process. Government's open and inclusive approach to budget considerations is commendable. The construction industry is complex and intricately tied to our economy. As such, we believe that our recommendations will assist not only our industry but also the economy in general. We thank you for this opportunity to provide them to you.

           B. Lekstrom (Chair): Thank you very much, Warren, for your presentation. Mr. Bloy would like to have a question.

           H. Bloy: Warren, I just want to thank you very much for the presentation.

           W. Perks: You're welcome.

           H. Bloy: I'd like to second that, and I'll put the motion through. There are a number of points in there that we're working on now, and, hopefully, we can get to every one of them over the next little while.

           W. Perks: Thank you.

           B. Lekstrom (Chair): Are there any other questions of Warren?

           R. Sultan: In the prebudget document sent out, the Finance minister, who is seeking guidance in some detail, posed a question. He speaks hypothetically and hopefully of perhaps a small surplus in the fiscal year of '05-06, which is some ways away, but he's thinking of longer terms. He asks people appearing before this committee, if that hypothetical small surplus does arise, how they would see a possible rough distribution of it among health, education and other spending, or tax cuts or debt reduction. Do you have any opinion on that score?

           W. Perks: I'm actually more or less just delivering the message today and don't really have an opinion on that. It wasn't something that was expressed in our reports, so I'm sorry, I don't have a response to it.

           R. Sultan: All right.

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           B. Lekstrom (Chair): Are there any other questions? Seeing none, Warren, I would like to thank you for taking time out of your busy schedule today to come and present to our legislative committee. Thank you very much.

           Our next presenter to the committee this morning is Ms. Barb Wutzke. Good morning, Barb. Welcome.

           B. Wutzke: Hello. It's very nice to see some familiar faces.

           As a member of the community for a long time — local girl, all grown up now — I've been observing from Victoria, on these isolated shores, the way arts and culture in this country of ours have gone. Now, as we watch the province liquidate all the remaining assets, we have no space as artists. I'll just try to speak and refer to my little report. My computer did crash, and I've only had a day and a half to put it together, so there might be some typos.

           Miles and miles of videotape in this last decade have been used for pornography. Look at this amount of surveillance — okay? As a visual artist myself — and I was a dancer when I started out, but I didn't want to take my clothes off — I want to be able to use the electronic medium for a more artistic purpose than what it's being used for.

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           Over the years we've seen children looking at all these video games. They're all so extremely violent. Now we have more of a culture of violence going on. I think it's in part because…. Well, if I listen to the media and how the woman's voice is portrayed, in my opinion it's portrayed in a sadistic way. Instead of a woman being compassionate, loving, nurturing, giving and all those things that I consider I want to be as a woman…. I don't think they're being portrayed artistically.

           We are devolving. We tried to make some inroads. Persons like you, Ms. Orr, are the accomplished people, the women that did succeed. Some women have succeeded. They have surpassed the glass ceiling, but women like me have not been able to do that. As a widow, without a husband, what bewilders me is that so many wives aren't participating in the arts scene.

           I started out in my report to discuss the term called public-private partnership. As a matter of fact, that's the reason why I'm here today. I've heard this term bandied around since the last mayoralty election in Saanich, when I did run for mayor, and part of my platform was a public-private partnership. I will stand here today, and in my heart I will say to you that it was me, Barb Wutzke, who coined the phrase public-private partnership. The reason why I coined that phrase is because I feel housing issues supersede my interest as an artist.

           Then there reaches the problem of theft — intellectual property theft. When I ran for mayor and alderman in Saanich, many of my ideas were used without even a thank-you. I researched, wrote and racked my brain, and I got 1,000 votes, and Mr. Leonard got 15,000. Don't be expecting me to try to run again, because without any kind of recognition of my intellectual property when I run, there's no legal documentation. There's no legal: "This is what Barb Wutzke said when she ran for mayor. She said all those things."

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           We put in the Commonwealth Pool. Ida, you'll remember that maybe. The Commonwealth Pool was going to be up at UVic, and we moved it. We did the right thing for the people of Saanich. We knew that, anyway; they needed facilities.

           This goes beyond that. What I'm talking about here is ratio — ratio of space, square metres of commercial space. I'm telling you there's this situation. If we were to crunch the numbers and get the right ratios on what we have gotten as the visual arts community here in the capital city, I say that there's a strong deficit.

           It all started all those years ago when the lotteries weren't legal. They said: "You let us legalize the lotteries and bring the lotteries in, and we're going to give you some money for the arts and culture, because you're saying it's going to destroy the culture if we have all these lotteries." Guess what. As soon as they were made, not a nickel passed, as far as I'm concerned, to us. Because of the treatment we've had in B.C. all these years…. The B.C. government hasn't stepped forward and made the kind of demands on the federal government that we deserve.

           If I go federally and say: "Look at the deficit here. Look at how much Quebec got because they were important to Confederation…." Barb Wutzke's not important to this country. We want her out of this country. If she's going to show her art and get recognition for who she is and what her symbols and her designs are and not be ripped off and stolen from…. I could make a list, but I didn't have time, and I didn't want to bore you with all this stuff.

           I'm basically saying here: what is culture and creativity worth? Some artists say that creativity is the gate to the soul, that it has a value beyond this material existence we are having here. We are buying in, hook, line and sinker, to the media syndicate of the United States.

           I'm just telling you I'm perfectly willing to make a two-year plan. There needs to be a space — a minimum 3,000-square-foot space. I'll work for welfare. I'll just do as I've been doing, carrying on. I would set up an organization like a club, and it would be, again, a public-private partnership. Over the next two years I would be able to creatively design and protect — copyright and all that — materials of a creative nature of a multimedia distribution style, whatever it is two to seven years from now.

           I'm proposing here that if there was some recognition of the lack of support for artists such as myself — dancers, painters, creative people that want…. I work in video, but I cannot afford a studio. I don't work at the TV station, where I could get the camera on the weekend. I couldn't even pull it off with the camera — okay?

           It's not just creative stuff. It's the other hard-nosed stuff — the building bylaw infractions and stuff like that going on in Vancouver. If I were to go over there, Sheila, and take a camera there, from those years when I lived in those cockroach-infested places, those places have not been changed. I believe they're still there, and it's contributing to the drug problem.

           Again getting back to my public-private partnership, if you had these properties — these crack houses or whatever…. They won't fix them up. They just leave them like that. We take them over. Pacifica Housing is an example. We take them over, we give the guy his suite and a cash settlement — say, take three or four houses — and then we sell some of the units to recoup the costs. There would be 20 units of social housing in there that we wouldn't be paying for. That's how I would see this public-private partnership actually working as I invented it in the housing arena.

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           What I want to see is a diversification of the types of housing available, based on the aging population and young families that can't afford the kind of housing available called single-family zoned. The fact is this has been called single-family zoned when there's no families there; there are bachelors.

           I hope you don't mind, if you might want to read this yourself. I know it's a long shot to come here and expect you all to do it, but you only believe in your province and your country and the people that are voted in to run it.

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           I think you know, Sheila, that I might be a mover and shaker. I certainly could get the kind of dough that I needed from the feds if there was some recognition by the province of B.C. that we cared about the arts here.

           I'll tell you something: if you don't do something and you just allow it…. With this four pillars approach, this last item that I did, when my adopted son, the guy I gave up for adoption, died of a heroin overdose, mid-report to the federal government…. Like, I got five condolence letters — okay? We know these problems exist. We are willing to tackle, again, the Woodwards building — you know, detox centre, shooting house, rehab. It would be a long shot to do that.

           Public-private partnership. Again, artists like myself would be willing to participate in a public-private partnership where we put our art out and contribute to revitalizing the community down there, in addition to getting these health issues squared out. Sheila, I was very shocked to find out that it hadn't been fixed — you know, when I was 18, and then all these years later, whoa, it's still….

           B. Lekstrom (Chair): Barb, pardon me just one moment. I thank you for taking the time.

           B. Wutzke: It's my pleasure. I hope I didn't go on too much.

           B. Lekstrom (Chair): No, it's fine. Certainly, under our prebudget consultation paper, if changes were able to be made through our financial picture…. I'm interpreting your presentation to be that the arts and culture are certainly first and foremost in what the government would be encouraged to look at. Is that a fair summation?

           B. Wutzke: Well, I do want to say that we can't rely on the media to do our investigative research. Artists have done these things in the past. We can bring our country and our province up to the kind of speed that we need by using the media for our own enlightenment. The fact that we're ignoring things like enlightenment…. There's a bunch of things that we've put off as being important. As artists, we communicate to that void. I feel that in the future we will be able to fill it. That's why I'm saying that we could start. When that void is there, we'll have something. When everybody's tired of everybody machine-gunning, maybe they'll want to….

           B. Lekstrom (Chair): Barb, we're going to have to carry on, but I thank you.

           B. Wutzke: Thanks.

           B. Lekstrom (Chair): We're running behind — one question. I will go to Sheila.

           S. Orr: Just a comment.

           Barbara, thank you. You're always very passionate about your issues.

           B. Lekstrom (Chair): All right. We will move on to our next presenter this morning. With us from the University of Victoria is Prof. Jamie Cassels.

           Good morning, Jamie. Welcome.

           J. Cassels: Thank you very much, Mr. Chair.

           I've passed around a set of slides and graphs that I'm going to be addressing my remarks to. As you said, Mr. Chair, my name is Jamie Cassels. I'm the vice-president academic at the University of Victoria. I want to thank you very much for providing us with an opportunity to address you today and also to commend you on establishing this open process where so many different segments and sectors of the community can be heard from.

           I'll be focusing my remarks to you on the central importance of universities in meeting the needs of B.C. in the future. I'll address the idea of innovation in the knowledge economy and make the case that universities are a critical part of the equation as we move forward together in the province. The slides that I hope to take you through and to speak to provide an analysis of how we're currently positioned, an idea of some of the challenges that we face and a reiteration of our enthusiasm in the university sector to work with the other key partners in both the public and private sectors.

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           The first point I want to make — excuse me if it's clichéd, but it's a cliché that's particularly important, I think — is about the nature of our modern economy. As the OECD and others have indicated, innovation is a key driver of economic growth. The creation of an exploitation of knowledge is central to wealth creation and better standards of living. Universities, of course, are absolutely central to the process of innovation and knowledge creation, both through their research and their educational functions.

           The key element in attracting investment and competing on a worldwide scale is our people, our most fundamental resource. This is one of the key roles of British Columbia's universities — assisting in the creation of our human capital, if you will.

           On the top of page 3 you have a slide showing that the fastest-growing occupations require the most education. This chart shows, in ascending order, the economic sectors that are growing fastest in Canada and British Columbia. Without exception, areas of growth and vitality are areas requiring an increasingly educated workforce. As HRDC put it several years ago, post-secondary education is already required for most of the new jobs in today's economy and will be demanded for almost all new jobs in the twenty-first century economy.

           How are we doing? What challenges do we face, and how can we meet those challenges? If you look at the first slide on page 4, what you'll see is a measure of research intensity from the OECD. We see, unfortu-

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nately, that Canada and especially British Columbia have fallen behind over the last decade. This slide shows the rank of Canada as fourteenth and B.C. as twenty-second in the percentage of gross domestic product spent on research and development.

           We're very encouraged that governments at all levels, the federal government and provincial government, have recognized this challenge as part of the innovation agenda that British Columbia has signed on to and strongly affirmed. We've set a goal to move from fourteenth place to fifth place, which is where the yellow portion of the arrow would move us to on this chart.

           When we turn from research to education opportunities for our citizens, we see the same pattern and the same challenges. We're seriously behind. Indeed, British Columbia ranks tenth out of ten in the number of baccalaureate degrees awarded amongst that critical youth and young adult segment of the population. The universities of British Columbia ? the system ? are ready to do their part to try to expand that capacity so that we can do better.

           Let me spend a minute comparing the capacity of the B.C. university system to other jurisdictions. I'm at the slide on the top of page 5. You'll see that the number of students per capita in British Columbia is 20 percent lower than the national average. Just to achieve average Canadian enrolments, the B.C. university system would have to create 20,000 new places today, and the gap will grow if we don't do something about it.

           The capacity of the university system, of course, is a function of the resources available. Part of the reason I'm here is to answer the question I've heard this morning several times. As the economy improves, if there are — I think I heard the word — modest amounts available for reinvestment, I'm here to suggest that education is a very high priority. It hasn't been a high priority in the last decade.

           The chart at the bottom of page 5 shows that unlike the United States, where over the past two decades public investment in university education has grown by 25 percent, in Canada public investment in university education has shrunk by 25 percent. You should be aware that at the starting point for that picture, which shows us both at the same point, in fact, American investment per capita in higher education was higher than Canadian investment even at that time. It's not as though these changes are simply reducing a gap.

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           As the next slide shows, even within Canada, B.C. is ninth out of ten in its provincial investment in university education on a per-capita basis. As I said, the capacity and quality of the university system is a function of total available resources. At the same time that government investment has been declining, tuition has, of course, until this year been frozen. The chart at the bottom of page 6 shows that even with the increases permitted this year, B.C. tuitions for B.C. students are still the second-lowest in the country.

           This year the University of Victoria has used its revenues from tuition to meet its costs and obligations in light of the decreasing grant per student, the decreasing amount of government investment available per FTE. We were also able to make some very significant and sorely needed improvements in our program and in access to our program. Our tuitions are still well below the national average, yet we were able to very substantially increase student financial aid, reduce wait lists and increase quality in many areas of our program. We're excited for the first time in many years to have had the opportunity to make those reinvestments.

           To this time I've been speaking mostly of undergraduate education and the critical need to provide opportunities for young people in undergraduate programs. An equally serious challenge is the need to provide advanced qualifications for our students. There is a huge social need and demand for graduate education in the province and across the country. At the University of Victoria we've seen a 39 percent increase in graduate applications in the last three years. Our enrolments have substantially increased at the same time.

           At the same time that we have been trying to create new spaces for these graduate students who are seeking the advanced qualifications necessary in the knowledge economy, there has been no new government investment in graduate programs in ten years. There have been no new funded spaces for graduate programs.

           I have already spoken about the need for increased research funding. Compared to other provinces, such as Alberta, support for research has seriously deteriorated over the past decade in British Columbia. Agencies like the B.C. knowledge development fund and Genome B.C., which provide critical matching dollars for federal and other research grants, are absolutely critical to the research project and the innovation agenda that we share.

           What are the goals and challenges that we're setting for ourselves? We should have a university system that is superior and not inferior to the national average. We should not be exporting our best and brightest to other places but making space for them here at both the graduate and undergraduate levels. We should aspire to a world-class research infrastructure to attract and support the key people that we need to stimulate economic growth and investment and the social progress that we all desire.

           In terms of capacity-building within the system, this government has taken very significant steps in the right direction with its new-era commitments. The leading-edge chairs will be a wonderful platform for world-class research in some key areas. We're already seeing substantially increased capacity in both undergraduate and graduate programs in targeted areas in relation to the new-era commitments to double the number of computer science, engineering and high-tech spaces available, and in the medical education initiative to double the number of physicians. The Uni-

[ Page 834 ]

versity of Victoria is a very enthusiastic partner in both those initiatives.

           Nevertheless, much still remains to be done. Even with the full completion of both of those initiatives, that would close only 10 percent of the capacity gap that I spoke to earlier between the British Columbia and the Canadian national system. This government has set itself an ambitious goal to do better, aiming to increase the number of university graduates and to ensure that we maximize our opportunities for our research functions.

           In conclusion, I simply want to thank you again for allowing me to come to remind you that universities play a key role in economic and social progress, to reiterate the need that we have to enhance our system, to tap the full potential of our universities and to allow our citizens to meet their full potentials, and to reiterate that the universities very much look forward to working with this government to achieve those goals.

           B. Lekstrom (Chair): Thank you very much, Jamie, for your presentation this morning.

           I will look to members of our committee. I do have Ida, and then I will go to Jeff.

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           I. Chong (Deputy Chair): Thank you, Mr. Chair, and also Professor Cassels for presenting today. I appreciate your presentation. A lot of the statistics and information here will be very useful for us as we go to other communities and see comparisons.

           Indeed, our prebudget 2003 consultation paper does ask the question of the public about where government's fiscal priorities should be for any available funds in 2004-05 or 2005-06. Of course, you indicate that your preference would be for education, and I appreciate that. I would like to know, though: are you recommending that should funds be available, they be invested in infrastructure for education — in other words, bricks and mortar? Or would you see that investment in education could also be diverted to distance education and programs of that nature? Moving into this, our twenty-first, century, things are changing. Three years out from now there will also be those kinds of initiatives that the universities are going to explore. While I appreciate the additional available funds of your requests going into education, have you thought about the differences of providing that?

           J. Cassels: Of course, my answer to the question is: "Both" — as you probably expect it would be. We're very significantly enhancing our distance education programs. Of our 13,000 FTEs, a very large proportion already are distance students, so we would welcome the opportunity to build our distance programs. That still requires fairly significant increased funding simply for the programming itself. You're right. It relieves us of the need for bricks and mortar, but to create good on-line courses and to provide good distance education, there is still a fairly intensive upfront investment that has to be made to create the platform for the distance program and also for the continuing delivery of the program.

           So the first answer is yes, if this government's priority is to enhance distance education, we're right with you, and we would very much welcome the opportunity to do that. Having said that, distance education is highly suitable to individuals who are living away, often who want to participate in higher education on a more flexible part-time basis, where they can customize it more to meet their own family needs and so on, but we shouldn't forget that we still have a very, very large cohort of the more traditional students. I didn't speak to it, but one of the charts I've presented to you shows that British Columbia, unlike most other provinces in Canada, is expecting a very substantial increase in the 18-to-24-year-old cohort over the next decade. Those are students who want and who deserve, frequently, to come to a university campus to have the wonderful experience that can be had there.

           As I've said, my answer is: both.

           I. Chong (Deputy Chair): A further question. You spoke of the need to increase FTE enrolments as well. I'd like to ask you, though, whether you have any information or statistics regarding students who do receive their post-secondary education here in British Columbia and graduate and whether you're still finding that they are, after graduation, leaving British Columbia. If so, why? Or has that trend now stopped? We hear things differently in our communities as MLAs. It would be nice to hear whether at the university levels you know of any other statistics that are more accurate.

           J. Cassels: We have some of that data, and I'd be pleased to provide it to you, but I think it would be wrong to try to remember off the top of my head. I can, however, tell you that the social science on this issue indicates that if one of the things we're trying to do is recruit and retain highly qualified people, one of the very best ways to do that is to educate them in the province. Indeed, in terms of the medical expansion that is part of this government's new-era commitment, that's the theoretical basis for that. If we want physicians to stay in the province to serve remote, rural, coastal communities, we have to educate them here, because once they leave, they don't come back. I think the social science on this issue indicates that that's generally true.

           J. Bray: Thank you very much, Professor, for the presentation. Certainly, from my colleagues from the lower mainland I can echo, I think, the other South Island MLAs that UVic has become a very strong partner in our community and has worked very hard in the community, and we certainly appreciate that.

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           On that, I had two questions. The first is that last year we had a lot of presentations from the university and college sector as well as, in particular, UVic. We hear anecdotally of some increases in those applying to get to UVic notwithstanding tuition increases. Can you

[ Page 835 ]

give us some sense of where your applications for entry are?

           The second is that I was quite stunned at the 39 percent increase in postgraduate desires. Where are those areas? Is it art history? Is it computer science? Is it education? If you could give some sense of where the greatest demand for those postgraduate positions are….

           J. Cassels: Thank you. So two questions. The first is about how our enrolments, applications and so on are doing. Applications have been up this year despite the increased fees — not hugely, but overall our applications were up by about 2 percent. What that caused, you may recall…. We only have so much space. That also, unfortunately for a lot of students, means that the GPA cutoff for entering students is also up very significantly. It was 81 percent this year for high school graduation to get into university. There's a good right-on-the-ground statistic that I think illustrates this issue about capacity. There are a lot of students who don't quite get an 81 percent, who would still flourish in the university system. Applications are up, demand is up slightly, and our enrolments are up, as well, this year — higher than before.

           The increase in graduate enrolments. I'd be happy to provide you with specific data on this, but in fact they are right across the board. As you would expect, of course there are increases in areas where a graduate degree is nearly an entry credential to a particular profession. The MBA degree, for example, has become the standard entry degree into many executive positions — professional masters programs. However, it's also the case that demand is up in the humanities, the social sciences, and there is huge demand for these limited numbers of graduate students.

           B. Lekstrom (Chair): I do have time for one more quick question. I will go to Patrick.

           P. Wong: In view of the increasing demand, does your university have any plan to have a year-round operation or to maximize the capacity during the summer?

           J. Cassels: We have a year-round operation as it is as one way of trying to respond to that year-round demand. The University of Victoria has the third-largest co-op program in Canada and the largest in western Canada, and as a result of that, our students move in and out of academic into workplace terms throughout a 12-month period. So we have academic programs in the summer into which they return.

           Approximately 15 percent of our enrolments are in the summer at this point. We'd be keen to increase the amount of summer utilization if possible. However, it's not simply a function of moving resources out of the winter term and into the summer term. There comes a point where you cannot increase summer enrolments without additional resources, and the most obvious example of that is that if you want to have a true trimester system where students can go to school all year round, you have to have entry classes in the summer. That means you actually have to put on entry classes in the fall and entry classes in the summer. We'd love to do that if we received the funding to do that.

           The other limitation, I should say again, is despite the fact that we are in an economy environment and in a learning environment, they are much more flexible and much more customized to individual students. There still is, interestingly, a rhythm of life that young people seem to be accustomed to, and even universities with fully funded trimester systems can't get much further than 20 percent in terms of their summer enrolments. Even without the adequate resources to do it, we're getting pretty close to what the natural state of summer enrolments would be.

           B. Lekstrom (Chair): Well, Jamie, I would like to thank you for your presentation to our committee this morning. I know 15 minutes is a very limited time to get it all in, but I think you've done a terrific job. Thank you very much.

           Our next presenter this morning is with Myra Systems, Mr. Jack Murphy. Good morning and welcome.

[1125]

           J. Murphy: Morning. Thank you, committee, for actually allowing me to make this presentation.

           I'd like to start by talking about Myra and who we are in a basic sense. Myra Systems is a Victoria-based company. We are a family-owned business. We supply government and private sector with infrastructure products and services to support their computer environments. We have a staff of about 40 people. We have about 500 years of combined capability or experience relative to doing what we do in terms of managing and organizing infrastructure for organizations.

           What I'm here to talk about today is the onerous nature of the PST, and then I would like to go through some examples and share with you what it actually is like trying to administer the PST.

           To begin with that, hopefully you all have a copy of the folder I've got out, because I'm going to refer to that. If you look on the left-hand side of the folder, there is a summary of what I'm going to be saying. On the right-hand side, you'll start to see some bulletins and things that I've had labelled. This one, in particular, is labelled A, and I'm going to talk about it first of all. This is in fact the consumer tax branch's discussion of topics or subject matter that is addressable by the PST. Each of these in fact has a corresponding set of regulations associated with this subject matter that's within it, which applies to different kinds of companies. Some companies obviously deal with many more than others.

           What I have here is a printout of all of the regulations for the PST. What I'd like to say about that is that I think what's important is to try and compare that with the second piece of literature I've prepared for you, which is B. Now, B is in fact how the GST is administered. The GST is administered in such a way that

[ Page 836 ]

what you see on this one sheet of paper is a series of groupings of products and services that are not applicable to GST. I would compare these in terms of complexity, in terms of administration, and say: do you think there's something wrong?

           Fundamentally, I'd like to next go through an example of how Myra actually goes through applying these regulations in our own environment. If you look at appendix C or exhibit C, which is called time sheet, this is a standard time sheet that one of my staff would fill in for providing some level of service to perhaps yourselves if we came to support your PC on your desktop. What we've done is divided out the activity in terms of the different kinds of activities that are involved in the support. On the far side, which is on the right-hand side, you'll see whether PST applies or not.

           It's important to understand we have to collect and we have to administer these regulations as they apply to each line item, because it's service and because there are special rules in here that pertain to service. What's important is…. Even the example here where you talk about fixing the computer, there we said yes and no. The labour to fix the computer is not PST-able, but the actual hardware replacement components are. This is the level of detail that's required to administer this tax.

           The time sheets for a small company like us represent about 40 sets of these time sheets, where you get, for us, about 800 time sheets a month, which results in about 5,600 line items where we look at and determine whether they're PST-able or not.

           I'd like to now take the next step in terms of saying that…. First of all, I'd like to say the cost of that roughly represents somewhere between eight and ten man-days per month of activity per month for a company of 40. Try and envision what that is in terms of how it impacts business in general.

           Any organization that's dealing with service — and service is one of the largest and fastest-growing aspects of the economy today…. Any one of these environments, any company that's involved in that, is in this area of regulation.

            [1130]

           I'd now like to point to handout D. Handout D is really a simple invoice. If you look at handout D, you'll see that there's $28,884.25 worth of services which are being billed to this customer — a typical kind of invoice we would ship to our customers. Of that, you see $1,274.25 worth of collected PST. Now, if you calculate that, it doesn't take a math genius to show that that's 4.41 percent of the total, not 7.5 — 7.5 being the standard number that's applicable to all products across the board in terms of PST. We think it's pretty clear that you could tax everything and reduce the rate and make our lives a hell of a lot easier.

           The second issue that I wanted to talk about is enforcement. The enforcement is an extremely costly and bureaucratic process that is very detailed. We recently had an auditor come into our environment, and they went over six years' worth of material at the line item level. They went through approximately $40 million worth of transactions. They yielded about $3,500 worth of underpayment on our part, but they also identified just over $3,000 worth of overpayment on our part. The net result of four days' work of an auditor and four days of my people's time was $500.

           As an exhibit to show you the level of detail that's gone through in terms of the actual audit process, I have exhibit E. Exhibit E is actually a page taken out of the auditor's book where he billed us back for some of these dollars. This wasn't the final audit, so that's why my numbers don't match. Fundamentally, if you look at the last three transactions, they're kind of interesting. He's deemed that we owe him 70 cents, and he also deemed that we owe him 2 cents interest on the money. My point is this was a transaction where the product was bought across the border, and we self-remitted the GST on the product, which is what we're supposed to do, relative to the regulations. What we failed to do was realize that the shipping component of $10 was PST-able. This is the level of detail that was gone through in the audit process to determine what we additionally owed.

           The next issue I'd like to talk about is PST complexity versus GST and the political aspects. The PST has largely been modified to become a social engineering tool as well as a tax collection mechanism. The social engineering components of that have largely…. If you look at all of these bulletins, you'll find that they've been either written or modified during the nineties. What we would say is that a lot of the policies and a lot of the regulation associated with that is related to the specific social engineering of that period.

           What we'd like you to understand is that the GST by comparison has a very limited component of social engineering. Because it eliminates the social engineering component — not totally eliminates, but reduces significantly — it simplifies compliance, and it also simplifies enforcement. What the feds have done is provided low-income groups, for example, with protection through prepayment of their GST. The mechanism for doing that, it should be noted, is outside of the collection mechanism for the PST. What the federal government is doing more and more is trying to not complicate the tax collection process with social engineering but to take the dollars collected from taxation and do the social engineering through programs that are independent of the tax collection processes. Rebates, for example, are outside of the administration of the GST environment.

           In summary, what we've said to you is that this tax has a hideous administration, as we call it, that's required to accomplish it. It's expensive for business and government. It has poor ROI in terms of people's time in particular. It's fundamentally an inefficient tax collection vehicle, and we ask: to what end?

[1135]

           We've basically decided that we'd put three suggestions forward as far as what we would like to see done about this. First, we think there's a really good rationale for reducing the actual PST and yet keeping the amount of revenue-neutral relative to government by

[ Page 837 ]

simply including more things under the GST and eliminating or reducing dramatically the regulation.

           We think that the audits for PST should be made more like GST. On the GST, when you think about it, we hadn't been audited for six years, and they came and audited us for six years' worth of material. How many companies went out of business? How many companies did the government lose opportunity on because they weren't proactive in their audit processes?

           How many people flagrantly disrespectful of the law did they miss, and how much money did they lose? Fundamentally, the audits need to be smaller and more frequent. They need to use trend analysis so that when companies are going off trends, they immediately intervene and do phone audits the way the feds do.

           The third suggestion we have is automation for collection of payment. We all hear about e-commerce and e-government and whatever. This is one of them. This is one where less human effort would be required, if, in fact, taxes were collected on line — or at least the ability to.

           In conclusion, we suggest that changes to the PST, which we're suggesting, are consistent with reducing costs, consistent with deregulation and less administration, consistent with improved ROI, consistent with maximizing tax revenue for the effort. Also, we think it's consistent with economic stimulation. Think of the people that are wasting their time in these kinds of detailed processes when they could be more effectively utilized in the economy. We think all of the above things are consistent with what we think is the new-era philosophy. Thank you for hearing me.

           B. Lekstrom (Chair): Well, thank you very much, Jack, for your presentation. You've raised a couple of very interesting issues — one focusing on the deregulation initiative that's well underway — and you've certainly made it very clear that we have some work to do. We do know that. I think that when we operate with over 400,000 regulations in British Columbia, we have a lot of work to do.

           The other initiative you talk about is really a provincial revenue issue on taxation policy, and I can assure you that our committee will forward your package to the minister responsible for consideration. I think it's very appropriate to look at ways we can better run the province to make it a better place. I thank you for your presentation.

           We do have a short amount of time for questions, if there are any members of the committee that would have a question. I will go to Ralph and then to Patrick.

           R. Sultan: Thank you for a graphic and illuminating and startling and amazing depiction of the lunacy of the apparent administration of the current PST and what has happened over the last decade. Perhaps for the record, I would point out that you were holding up one single piece of paper as opposed to a three-inch pile of paper when comparing what regime applies under the GST versus the PST. I must say I'm surprised. I never thought somebody would speak admiringly of the GST. Would it simplify life, in fact, if the provincial government merely collected the same amount as the GST and let it go at that?

           J. Murphy: It's not so much the amount that's collected. That is a political statement. It's the question of what you're collecting it on and the regulation relative to the complexity of how you collect it that's our concern and our issue. How much you collect is a political issue. We're not saying don't collect taxation. We're saying collect taxation in a rational and reasonable format that's relatively easy to administer. The message is really one to say clear, concise rules and simple.

           We think the GST people — probably because they're new, probably because the lobbyists haven't figured out how to get their concerns integrated into the GST the way they have into the Income Tax Act of Canada or the way they have in terms of the PST….

           One of the things I would point out is that the New Era document talks about renewal. Renewal, to me, means the opportunity to go back and look at these things that have evolved and have the political courage to make change. It's clear that when you change this much regulation, you're going to be impacting a lot of people. You'll be impacting some negative and some positive, so it takes some political capital to make that happen. I don't know if that answered your question.

[1140]

           P. Wong: I fully understand your concern. As a chartered accountant, I know what you're talking about. You just talked about harmonization of PST and GST. I think provinces in the east are working on that.

           The other thing is that I really agree with you about a six-year period audit. It is quite different for GST, which is usually three years.

           J. Murphy: GST is in fact audited on a regular basis in the sense that if you go out of a trend…. We do frequently, because our sales are up and down in a particular quarter. Depending on your reporting period — ours is monthly — if your numbers are different than they have been for that period in the last year or two, then you will get a phone call, and they will pick some specific transactions that you must fax to them as part of the audit process. That gives them an indication about whether they need to send somebody out or not.

           P. Wong: We'll definitely look into that. Thank you.

           B. Lekstrom (Chair): Jack, once again, on behalf of the committee, I would like to thank you for your presentation. It is certainly very interesting and will be given due consideration by our committee.

           J. Murphy: Thank you for the opportunity.

           B. Lekstrom (Chair): Moving right along this morning, our next presentation is from the Victoria Real Estate Board and the British Columbia Real Estate As-

[ Page 838 ]

sociation. In cooperation, we have Glenn Terrell, Dennis Wilson and Allan Trelford.

           Good morning and welcome.

           G. Terrell: Committee members, my name is Glenn Terrell. I am the executive officer of the Victoria Real Estate Board. We would like to thank you very much for allowing us the opportunity today to present to you some of our thoughts in terms of real estate and the province of British Columbia — something that's on many people's minds these days. I'm told that any time is a good time to buy real estate, but that's not a commercial.

           With me on my immediate left is Dennis Wilson. Dennis is the president of the British Columbia Real Estate Association. That is the provincial association to which individual boards belong. Next to Dennis is Allan Trelford, who is the president of the local board, the Victoria Real Estate Board.

           I would like to ask Dennis to start the presentation.

           D. Wilson: Thank you, Glenn, Mr. Chairman and members.

           The British Columbia Real Estate Association represents 12 regional real estate boards throughout the province and, of course, 12,000 realtors. The Victoria Real Estate Board, of course, is one of our larger and very important members. I'm really privileged to share this moment with the Victoria board.

           [I. Chong in the chair.]

           We want to congratulate the government of British Columbia on its encouraging news with respect to the early results from implementing measures to meet the commitment to gradually eliminate the deficit and thereby halt the increase in the provincial debt.

           BCREA and the Victoria Real Estate Board are on record as supporting the target of balancing the budget by fiscal year 2004-05 and continue to support this timetable for eliminating the deficit.

           We also urge the government to continue to monitor economic conditions carefully, remaining flexible in its approach. Therefore, BCREA and the Victoria Real Estate Board support the government's need to include a forecast allowance in each provincial budget. We believe that such a cushion will ensure that the government achieves its financial forecasts and is also able to protect important social programs from unforeseen events.

           Last year B.C. realtors sold over $15 billion of residential real estate through our Multiple Listing Service. Additionally, commercial realtors facilitate billions of dollars in investment, commercial, industrial and institutional transactions. As such, the residential real estate market is leading the province's economy in growth and job creation. In fact, our sector is expected to lead the economic growth expected through to 2005.

[1145]

           [B. Lekstrom in the chair.]

           As British Columbians become more confident about the future of this province, that confidence translates into housing sales which in turn stimulate the retail market and the retail industry. However, consumer confidence is easily undermined. Therefore, the provincial government must ensure that its new policies and planned legislation do not negatively impact consumer confidence and the current economic recovery.

           The government has taken action in two areas that we believe will impact B.C.'s economic recovery, and we're going to comment on those two areas. The first one is the community charter, and the second one is several items that would come under affordable housing.

           The first one, the community charter, is intended to help lead the province towards a future that is more prosperous, certain and globally competitive. However, BCREA and VREB share the concern of our colleagues in the construction and development industries that the proposed charter will lead to increased government control over business activities in a manner that would undermine the government's efforts to encourage economic growth.

           For example, greater authority and discretionary powers to local governments may give rise to some municipalities discouraging development and setting up roadblocks to investment. Moreover, we are concerned that the charter will result in less uniformity and standardization, which will increase the costs of doing business in this province. At a time when the B.C. economy needs to continue to be stimulated, implementation of the proposed charter could damage the province's economic recovery.

           Having said this, BCREA and the Victoria Real Estate Board were pleased to learn recently that the implementation of the community charter and its legislation has been delayed to provide for more input. Full and meaningful consultation with the business community is essential, and we applaud your decision in that action.

           Now, under the broad category of affordable housing, we want to mention a couple of areas. BCREA and the Victoria Real Estate Board support the government's stated intention to make affordable housing a priority in British Columbia, and we trust that the government will involve our provincial association in its initiative. While the housing market in most areas of the province has improved remarkably in the last year, housing affordability remains a major issue. Economists forecast that interest rates will begin to rise over the next few years, putting the dream of owning one's own home further out of reach for many of our citizens.

           A. Trelford: Now I'm going to talk a little bit about some of the issues that impact on affordable housing. I'm just — bear with me — a different voice. Maybe it'll keep you awake a bit longer through this.

           Development cost charges pose the greatest obstacle for potential buyers of new housing. The Urban Development Institute estimates that these costs increased 300 percent from 1992 to 2002. We recommend

[ Page 839 ]

that the government place limits on development cost charges and levies that are tied to the actual cost of development. We further recommend that the government standardize the development application process and set fixed turnaround times for the various steps involved in development and construction.

           The property transfer tax. For several years BCREA and its members have recommended that steps be taken to phase out or eliminate the PTT, as it's referred to. Since its inception, buyers have had to pay a tax of 1 percent on the first $200,000 of the purchase price and 2 percent on the balance. In past submissions to the government, BCREA has shown that removal of the PTT would be good for the real estate industry and for government. Removal would mean 6,400 additional Multiple Listing Service residential sales, 2,600 additional housing starts, 20,640 person-years of employment in the sales and construction industries, a $1,274 million increase in gross domestic product and a $357 million increase in government revenues through MLS sales and new housing starts.

           BCREA and VREB believe that the immediate elimination of the PTT or implementation of a program to phase it out will boost the construction industry and cement consumer confidence. Even raising the ceiling with respect to the application of the 1 percent charge would show consumers that the government is serious about addressing this capital tax against the purchasers of homes.

           According to the government's current forecast, there will be a surplus in fiscal year 2005-06. We recommend that the government maintain health care and education levels of spending, but we also recommend that any additional funds be earmarked for reductions in taxes such as PTT and to pay down the debt. This will reduce the burden on future generations of taxpayers and be a major factor in the ultimate success of the government's objective of making British Columbia more attractive to investors.

[1150]

           D. Wilson: That's basically all we wanted to present at this point, Mr. Chairman. We just want to thank you again for the opportunity to make this submission. On the back of our letter in our submission we've given you the name of Robert Laing and his phone number. He's our manager of government relations at the British Columbia Real Estate Association and is an incredible, valuable source of information. He has a lot of documentation and a lot of supporting documents for the material that we have presented here, if there are any questions.

           B. Lekstrom (Chair): Thank you very much. It's certainly always interesting to hear what's taking place from the different sectors out there, and it's encouraging to hear.

           I will look to members of our committee at this time if there are any questions regarding your presentation.

           L. Mayencourt: When did the property transfer tax first get introduced in those levels set at $200,000 and at $200,000 and above?

           A. Trelford: I'm guessing, but I think it's probably around…. I think it was the former government, the Socred government, that instituted it. I think it was in the late eighties. It's always been at that level. It's always been 1 percent on the first $200,000 and 2 percent on anything over $200,000.

           D. Wilson: At that time they phased out some of the other ways — they had charges at land title and things like that — and brought in the straight-across tax. It was probably the late eighties. I can't remember exactly, but we can get that for you.

           L. Mayencourt: You believe that if we were to eliminate that, say, in future years, it would actually generate more revenue for government because more people would be buying houses, and there'd be more people working, etc.?

           D. Wilson: Absolutely. We did a detailed analysis of that with economists and put together a report in 2000, which we have submitted to government more than once, I guess — several times, actually. It demonstrates that quite well. I understand at that time government's economists supported and certainly didn't disagree with any of the projections we were making. That report is still readily available. We have a copy here, and we can provide copies for you. It breaks it out specifically on how we calculate that.

           L. Mayencourt: I'd greatly appreciate having a copy of it.

           D. Wilson: We'll make sure you do.

           B. Lekstrom (Chair): Probably the easiest method would be just through the Clerk of Committees office, if you would submit that information there.

           I do have one further question.

           S. Orr: DCCs are always good for debate. I know there's been talk before about maybe not having any DCCs if you're going to build affordable housing. Has there been any kind of study or any figures put together on what that would cost? I know how the municipalities feel about them — about collecting them, anyway. Is there any more information on that?

           D. Wilson: I will check around, and I think that would be a very interesting thing to look at. I have not received a report of that nature. One of the big problems, too — and this is why we go back to our concerns about the charter — is that it's very different in different areas. Some municipalities have very high DCCs.

           Also, there's a concern that a lot of money has been accumulated and is sitting somewhere in a pool. The estimate is some $200 million that has never gone back

[ Page 840 ]

into what we thought it was intended for. One of the requests we would make in our specific proposal on the charter is that we get those books open and see how much money is there and where it's been going and if it's being used. The DCC just seemed to continue to grow with no real purpose that either developers or ourselves in the real estate industry could understand.

           A. Trelford: The other major problem there is that it varies so much from one municipality to another. We see that even in greater Victoria, and I'm sure it's much worse over on the lower mainland. It's an area that needs to be addressed.

           S. Orr: It does.

           B. Lekstrom (Chair): Dennis, Allan and Glenn, I would like to thank you for your presentation. As I said to presenters before, 15 minutes is a very limited amount of time.

           Our next presenter this morning is with the Greater Victoria Chamber of Commerce. With us is Rebecca Grant.

           Good morning, Rebecca.

           R. Grant: Good morning. I'm here representing the Greater Victoria Chamber of Commerce as the vice president of the chamber. I'm also an associate professor in the faculty of business at UVic.

[1155]

           Let me start by saying thank you for the opportunity to speak to you this morning. The chamber believes that hearing from a wide range of British Columbians will result in a budget that reflects the difficult choices the province faces, sets priorities we can live with and presents a vision for the future.

           I sit before you today representing approximately 1,600 business owners, managers and operators from greater Victoria who couldn't be here because they're at work creating jobs, creating wealth and building our future.

           The first important point we'd like to make is that small and medium-sized businesses, which make up a large portion of our membership, are the engine of the economy in British Columbia. While we still rely to a large extent on our natural resources, the entrepreneurs and small and medium-sized enterprises are the people who build revenue sources.

           We're also here to talk about strategic investments for what is euphemistically referred to as "growing the pie." How can government create the atmosphere to grow the economy so we can deal with deficit reduction and be in a position to invest in the nice-to-haves instead of the must-haves, knowing that sometimes it's hard to tell the two apart?

           We recognize that you're making structural changes to address the gargantuan deficit in this province. However, we'd be remiss not to use this opportunity to reinforce the need for deficit reduction. Deficit financing of the proportions in B.C. is unacceptable, even if it turns out to be $3.4 billion instead of the projected $4.4 billion.

           Budget flexibility evaporated with the ten-year downward trend in our economy and ended with the inability of any government to deliver programs at an affordable level. As such, we encourage you to continue with your direction toward a balanced budget. We know this is difficult and unsettling, but it must be done.

           Returning to my opening premise, business is the engine that drives the economy and contributes to our way of life, but we know that social programs maintain our humane and caring society. Businesses serve communities of people. Balance and certainty serve everyone.

           The provincial government must decide what spending is in the public interest, knowing that many political careers have been lost trying to define that term. We know the magnitude of the problem. We know the dangers of short-term savings delivering long-term costs. We need to consistently and repeatedly hear the vision for alternative delivery systems for social services, and see the action both in the short term and in the long term. It isn't good enough for government to say, "We're not spending," unless government can also demonstrate that the need has been met in some other manner, no longer exists or, simply and directly stated, is not a priority for the government.

           We need to hear your vision and strategy to ensure that alternative service delivery programs can be accepted by the public and ultimately succeed. We encourage your ongoing efforts to balance regulation in the public interest. We believe there are regulations that are necessary precautions for safety and environmental protection. There is no need to gut public-protection policy, but it is necessary to be rid of those regulations that don't add value, as you heard earlier.

           For example, we applaud the recently announced review of the motor carrier branch. One of our members reports that delays and inefficiencies in the system for approvals have resulted in lost opportunities and lost jobs. Yet we also wonder how the community charter might further complicate the matter if, as you've heard is the case in greater Victoria, there are multiple municipalities within the jurisdiction who could create their own contradictory regulations. You can see how this situation could quickly become cumbersome and discourage business.

           It is our belief that the decisions your government makes to improve fiscal management of public funds will make British Columbia better able to take full advantage of economic renewal as it unfolds. Therefore, we believe that any new program spending should make the same tests of the core review process — namely, public interest, affordability, effectiveness in the role of government, efficiency and accountability.

           We encourage the government to require that programs be evaluated on measurable and predetermined outcome-based criteria. Whenever a program misses its targets, there should be an automatic review of the program, its goals and its objectives.

[ Page 841 ] 

[1200]

           On to economic stimulus for a bit. Many people are questioning the role recent tax cuts play and whether they serve the public interest. We agree that the tax cuts you have given will return money to the provincial treasury over time, but only as part of a careful fiscal plan that balances rationalized government services with economic stimulus. Tax cuts alone are not enough to encourage economic growth. To attract capital investment and job creation, British Columbia must demonstrate a reasonable regulatory structure with strong leadership, signalling that the province is open for business. You've made the promised tax cuts, and we applaud the bold move.

           B.C. residents want the ability to direct funds to social, health and education programs rather than be forced to service the rising taxpayer-supported debt. To afford our continuing way of life, a fundamental shift in government spending is required. While reducing costs is one part of the equation, strategic investment of taxpayer funds is also necessary to encourage growth. It is time to turn attention to the other part of the equation: economic stimulus.

           It is a legitimate role of government to ensure that the free enterprise system in British Columbia thrives. Promoting the economic engine will provide the funds you need to supply the programs British Columbians want delivered in a manner that is affordable and accessible.

           We need to see a plan from this government that will address not only the management and implementation of change but also the promotion of British Columbia. We need to improve our global reputation so we can be known as a can-do place.

           Part of that economic puzzle of stimulus is an investment in promoting and delivering trade surpluses. While non-resource exports have increased since the early nineties, there is much work still to be done. We believe that the provincial government should work with the private sector to undertake an ongoing national and international trade development program. This program would promote British Columbia's business, technology, education and tourism in selected major centres.

           Our chamber also understands the need for change in education and training. We support a flexible system that will meet the competency-based training requirements of industry while still allowing students the best instruction and on-the-job experience. That said, we urge you to bring certainty to the situation by devoting the necessary resources to make the change, both in the enabling legislation and in the program delivery, happen expediently. Uncertainty is damaging for students, for programs and for employers. We urge you to consider a mix of different models that meet a specific need and produce unique outcomes, that encourage trades as a career choice and that encourage youth to stay in school.

           Part of the restructuring of government involves your commitment to public-private partnerships, or P3s. Our chamber shares your desire to build private sector capacity in P3 expertise so that B.C. business can competently lead in these projects at home and worldwide.

           We also believe there's an important role for business to play in the development of the proposed new capital organization. By initiating a B.C. Chamber of Commerce policy, the Greater Victoria Chamber of Commerce is the driving force behind a P3 forum slated for spring 2003 and an ongoing P3 centre. The P3 forum is intended as a mechanism to provide information, education, best practice and public relations for small and medium-sized businesses and for the sector that includes municipalities, agencies, schools and hospitals. Most importantly, we believe that a primary goal should be developing capacity, capability and expertise so B.C. can lead innovative P3 projects at home and abroad.

           Now that your government has acted on creating fiscal balance, it's time to prepare the ground for delivering the vision. We encourage you to continue a strong stance protecting our softwood and resource industries and to encourage building markets and our ability to create value-added industries that manufacture products and services to sell to the world. We need a vision and a plan for a diversified economy that builds capacity in B.C. The commercialization of technology, for example, will include P3 development and demands long-term measures of success that bring knowledge and sustainable investment strategies to the region.

[1205]

           In conclusion, let me summarize the chamber's strong recommendations in the following areas: staying the course in deficit reduction; continuing on the path of prudent fiscal responsibility; continuing to recognize the impact of taxation and regulation on business, the economy and ultimately our society as we work to provide accessible and affordable programs in health, education and welfare; working to support a diversified economy; supporting meaningful trade programs; creating and delivering on a vision for the future that goes beyond what is politically expedient; and, most of all, creating pride in British Columbia.

           Again, thank you very much for the opportunity to speak to you today on behalf of the chamber. We look forward to seeing your vision unfold.

           B. Lekstrom (Chair): Thank you very much, Rebecca, for a very detailed presentation. I thank you for that.

           I will look to members of our committee if there are any questions of Rebecca.

           B. Kerr: Thanks, Rebecca. It was a good presentation. A couple of comments I've got here relate to it. I'm reading your written report that you gave me. On page 2 in the very final sentence you said: "We need to hear your government's vision and strategy to ensure alternative service delivery programs can be accepted by the public…." I guess my concern is: are you not hear-

[ Page 842 ]

ing our vision, or what would you like us to do so that you do hear our vision?

           R. Grant: I think we need to continue to hear your vision. The government has been forthcoming in many areas, and the chamber applauds that. I think we are recognizing that this is not an easy job for the government. These are treacherous waters that sometimes you must manoeuvre in. The chamber is supportive of your manoeuvring in those waters. We want to encourage the frequent and open discussion about those delivery alternatives and the impacts they will have. We would like to be involved in those discussions.

           B. Kerr: Okay.

           Turning to your economic stimulus, in the third paragraph down you say that tax cuts alone are not enough to encourage economic growth and that to attract capital investment and job creation, B.C. must demonstrate a reasonable regulatory structure. Are you seeing that happening now? Are you seeing any of that happening now? Are you concerned that it's not happening?

           R. Grant: No, we are seeing it happening, and we think that's terrific. We think there's still a long way to go. I think the committee recognizes that in the comments you've made to earlier speakers and in the things you've heard from the earlier speakers — that the government is doing an admirable job attacking regulation and inviting comment on regulation. We encourage that. It's happening, and we look forward to more of it happening.

           B. Kerr: Thank you.

           J. Bray: Thank you — a great presentation. You made a comment near the end that I thought was tied to economic stimulus, and that was the increasing of value-added manufacturing and production — those types. Are there any particular things specifically around value-added, whether that be lumber or other types of value-added activities, you think the provincial government could do to increase these that it isn't doing now — targeted tax…? Is there anything you're thinking of?

           R. Grant: Well, I wouldn't comment on specific targeted tax moves. One of the areas that I could point out, for example, is the investment in technology and the encouragement of technology businesses to bring their businesses to Victoria or to British Columbia in general. I'm here in Victoria, so I say that first.

           J. Bray: I quite like that, actually.

           R. Grant: Yeah. I thought you might. I'll acknowledge my bias.

           Stimulation for education programs in technology, for apprenticeship programs in technology, for businesses to relocate to British Columbia that support technology and that use technology to add value to businesses that we already have in the softwood lumber industry, in the resource industries…. These are all areas where the government could make a big difference in promoting added value to those industries.

           J. Bray: Great. Thank you.

           B. Lekstrom (Chair): Are there any further questions?

           Seeing none, Rebecca, I would like to thank you again for taking time. Thank you.

           R. Grant: Well, thank you very much.

           B. Lekstrom (Chair): Our next presentation this afternoon is from the Canadian Federation of Independent Business. Suromitra Sanatani and Jeff Nugent are with us today.

           Good afternoon. Welcome.

           S. Sanatani: Good afternoon. Thank you for inviting us to appear before you this afternoon. It's very similar to the previous presentation, so it's good news if we're all firing on the same page.

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           We're here today on behalf of CFIB. We have 102,000 members across the country. We're the largest organization in the country that represents the interests of small and independent business owners. Our members are the non–stock market economy. We have 10,000 members in the province. They are in all sectors of the economy: forestry, high-tech, retail, construction. We are completely member-driven. The positions we take before you and in the media and before other agencies are based on one member, one vote.

           During the course of a week our district managers — we're completely funded by our members; we don't take any money from government — visit 4,500 businesses across the country. When we're meeting with you, we're talking to you about what these individual business owners are saying. It's not just being made up out of our heads, which might be comforting.

           I really just want to emphasize three points today. In a way it's not rocket science, but at the same time I don't think we can emphasize it enough. That is, as you just heard previously, that most of this province is made up of small business. I'm relieved to know that most people now are finally getting that. I remember when CFIB started — not that I was around then — back in the seventies. It was sort of small business, and people would kind of go: "Oh." Now it's becoming more accepted that people recognize the role that small business plays in the economy.

           The other thing I want to emphasize is that the tax reductions your government has introduced thus far have had a positive impact on the small business community.

           The third point is that the government needs to stay on track with its fiscal plan to eliminate the province's budgetary deficit. Not only are most firms in the prov-

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ince small, but half the workforce is employed in these small firms. That has been a gradual shift over time. Whereas, while you could say that three-quarters of the businesses in the province were small business, still the majority of workers were employed in the big firms — the big forestry firms and that. That has been gradually changing.

           As you know, we survey our members on a wide range of issues, and after September 11 there were a lot of gloom-and-doom forecasters that said: "The economy is in the tank. Everything is over." We started asking our members what they were thinking and what their economic outlook was. They told us they were hanging on. Yes, they were struggling, depending on what part of the province, but they were hanging on. They kept their staff, and in some cases they hired more people.

           Since that time, we've continued to conduct a quarterly business barometer of our membership's expectations a year from now. When we asked our members in June about their prospects, the numbers in B.C. were slightly higher than the national average, where 59 percent were saying they expected things to be better next year. It turns out our members were right. Even the Bank of Canada is asking for our survey results and takes them into account for their forecasting, and they give that serious consideration.

           We're releasing a quarterly business barometer next week — unfortunately. I was wishing we would have it ready for today, but it's next week, and we're eagerly awaiting the results. That barometer captures our members' views for the first two weeks of September, and that's already coming out next week. It's a good point to make that we have the fastest turnaround on economic indicators. You all know Statistics Canada. You wait a long time. Because our members have been right in the past about their outlook, it is something to listen to as you go forward with your planning.

           In terms of our members' priorities, they remain consistent. They want stability. They want to know that government policies are rooted in common sense and that they won't hamper business growth. For that reason they cite taxes, red tape and government spending as the priorities they want government to focus on.

           The most important taxes, as you see in the materials, after Workers Compensation — which I suspect has more to do with the service at the WCB than with the premiums, although they're high in B.C. — are personal income taxes, local property taxes and corporate income taxes. Jeff will talk to you a little bit more about some specific research we've just done on those.

           J. Nugent: As Suromitra just mentioned, government debt and deficit are top priority for our members in British Columbia and also across the country. Small business realizes very well that running a deficit, increasing debt, actually represents a future tax burden and erodes effectiveness of the tax dollar. Not surprisingly, when we recently surveyed our B.C. members and asked them whether the government should in fact stick to its commitment to eliminate the deficit by 2004-05, an overwhelming 84 percent said yes. They said: "Eliminate the deficit as planned. Stay on track. Don't back down. This is a key component of economic recovery." As Suromitra mentioned earlier, we have every reason to believe that the small business community has a good sense of what is good for the economy.

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           Total tax burden, again, is consistently a top priority for small business. In the past year and a half in British Columbia several significant strides have been made to reduce the overall tax burden. Now, I have to stress that we've just conducted a survey, but we realize the true impact of tax reduction will be felt in the longer term. We did conduct a survey to see if, in the short term, small business in the province actually felt an impact of the tax reductions made, and yes, they had. In terms of reduced personal income tax, reducing personal income tax rates has put more money in the pockets of every citizen, which in turn is money that can be spent in the economy, which of course stimulates growth. When we surveyed our members on this particular initiative, over three-quarters of small businesses surveyed have already seen a positive impact as a result of reduced personal income tax rates.

           The other major initiative is increasing the small business threshold to $300,000. It was $200,000 previously. This brings British Columbia in line with other provinces and removes what was, essentially, a disincentive to growth. Increasing the threshold means that small businesses will now have more retained earnings, and they can use this money to invest in their operations, expand and create more jobs. Again, although it's been less than a year since this important initiative was launched, a majority of those surveyed have also felt a positive impact thus far. We expect this impact will only become greater as time goes on, and that's a positive impact.

           Reduction of the corporate income tax rate has also had a significant positive impact on our members. This reduction means there's more retained earnings and more money to invest in growth and thereby create jobs. In this instance nearly three-quarters of our members have already felt a positive impact from reduced corporate income tax rates.

           The other important one that we surveyed our members on is reduction of the corporate capital tax rate. The corporate capital tax rate, of course, was halved last year, and that's the basis on which we surveyed our members. Just two weeks ago it was eliminated completely. Based on the rate being reduced, already the majority of our members had indicated a positive impact. Now that it's been reduced, we can only predict that this positive impact will increase in the future.

           S. Sanatani: In terms of non–tax-related issues, where there's also been some progress that our members welcome is on the reduction of red tape. Specifically, our members welcome the changes to the employment standards regulation, some of which are only

[ Page 844 ]

going to go into effect later this fall, we understand. Some of the changes went into effect right away, around the hours of work. Those are things that we have consistently identified as barriers for running your business efficiently — the way the regulations used to be for the agreements you were making with your employees.

           Also, other measures that our members have supported include the elimination of business subsidies. That's never been a priority for CFIB members. We've always said that there's no rational basis for taxpayers' dollars being used to prop up firms.

           Our members would like to see government continue to do more work in the area of public-private partnerships, with over three-quarters of our membership viewing this concept favourably, recognizing that even if they're not participating directly in it, there are spinoffs and that overall these could be good for the economy.

           As your previous presenter also said, there are people still out there who question whether the tax reductions were really the right thing because of the fact that we have a significant deficit. The real question is: where would we have been had the government not introduced the tax reductions? Ten years of lagging the rest of the country…. It was desperately needed to send a signal that this is a good place to do business. In that sense, it has been bang on. Historically, we know it takes a while for tax cuts to pay for themselves. Our members are willing to wait for that. Yes, in some parts of the province they are finding it very tough, but they still do believe that that was the right thing.

           We talked to one of our members just two days ago who said that because of the reductions on the taxes, he was able to absorb the increase to the health care premiums. He didn't pass that on to his employees or to his customers. He absorbed that. Those are some of the choices people are making with the tax reductions.

           To conclude, we want to again emphasize the important role of small business. We appreciate that your government recognizes that, and we would ask that you continue to consult with small business as you implement further policies. Indeed, most of these 88,000 jobs that have been created in the last while in the province have been in small firms or by the self-employed. That's something to bear in mind as government policies unfold.

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           The big thing is that government needs to stick to the accountability measures that were introduced in the last budget. It was refreshing to see those — a three-year plan. We want to see more of that. That, again, gives the business community confidence. As you've heard and will hear more in the next month, I hope, that is what the business community wants. They want the confidence to know that government policy is being developed based on common sense and that there is stability. Most importantly, a prosperous economy is of benefit to all British Columbians, not just the business community. With a healthy business climate, we will have the revenues to fund the social programs that we all place value on.

           Thank you.

           B. Lekstrom (Chair): Thank you very much, Suromitra and Jeff, for your presentation. It's always interesting, as I indicated to previous presenters, hearing the views of the different organizations which present to our committee who certainly have the wide range and the representation of British Columbians out there. I thank you for that.

           Questions?

           S. Orr: As always, thank you for a very thorough presentation. Because you represent so many people, the question I'd like to pose to you…. I don't think you're going to answer it today, but I would really like you to pose it to your membership. In our plans, when we balance the budget in 2004-05, there could be, hopefully, a little surplus. We're asking the question early — because we plan ahead, as all good business people do — of your membership: how would they see the surplus money being spent? Obviously, I don't expect you to answer now, but I think it's a really good question I'd like to see posed to your membership, and maybe you'll come back and advise us what they think surplus money should be spent on.

           S. Sanatani: Thank you for the question. You're right. It's a question that should be asked from here onward, but we have traditionally asked our members how government should spend. In fact, just earlier this week, we were presenting our health care report to Ministers Hansen and Hawkins. What we said is in terms of spending, like British Columbians, 61 percent of our members support spending in health care; education is 58 percent. Right at the bottom is business grants and subsidies, and then there are things like income assistance, the elderly, environment, infrastructure. They rank above the business subsidies.

           They have indicated to us over time where they want to see the priorities of spending. There's no question that when we come to that day of surplus, there should be a proportion towards debt reduction and then the other things.

           S. Orr: Again, I think it's good to plan ahead and have that debate early rather than all stand there at the end.

           S. Sanatani: Yes, and we'll go to them again on that.

           S. Orr: Great, thank you.

           B. Lekstrom (Chair): Other questions?

           B. Kerr: Thanks for the presentation.

           Clearly, we've got two elements we are dealing with, and they are building a strong and vibrant econ-

[ Page 845 ]

omy and eliminating the deficit. I think you've addressed those two issues.

           I've got one question here on one of your slides where you've given us information about the components of the small and medium-sized enterprises. You've given 1998 statistics of 1.6 million people working. We've just hit, for the first time ever, two million people being employed in British Columbia. I'm just curious as to whether the proportions would still be the same or whether you're noticing a change in the proportions. Is there a trend, moving from that 1.6 million to now the two million people working, which is more heavily weighted towards the small business of fewer than 50 employees?

           S. Sanatani: That's what we understand. It's toward the small and medium sized. They are making up an increasingly significant portion of the GDP, and it is at 45 percent of the GDP.

           Unfortunately, yes, you're right: 1998 is seemingly the most recent ones we can get sometimes. From our understanding, the trend has been more towards employment in SMEs.

           B. Kerr: You brought in corporation capital tax. That's clearly for people who have invested a lot of capital, and you've determined the makeup of the organization based on numbers of employees. Now, the other question I have is: have you weighted that? Is there any way to determine what the size of capital investment would be? For instance, there could be a company of five employees which has $10 million or $20 million in capital invested. Have you done any of that work, so we could see how the numbers come out?

           S. Sanatani: We have that in some of our crunching, in terms of our membership, about where their assets are. We've always said with the corporate capital tax that even if they don't have those assets, they're paying it indirectly through their leasehold.

           B. Kerr: Yeah, that could be some of the triple-net costs that are included, by all means.

           S. Sanatani: But we do have that breakdown. We have various breakdowns in terms of what our membership is earning and what this, that and the other are. I can get that to you.

           B. Kerr: Yeah, I would just be curious.

           S. Sanatani: Yup.

           B. Lekstrom (Chair): We do have time for one more question.

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           J. Bray: Actually, mine falls very much on what Sheila asked, but was looking at our service plans over the next two years — whether or not you could poll your membership to find out if there was any ability within the total aggregate spending package, if there would be any fine-tuning of the priorities which are currently existing in the service plans of the various ministries and whether or not you might move some between ministries, or whether or not you think, by and large, your membership views the current spending structures to be appropriate.

           That would be very helpful as well. I do know that the Minister of Finance is always open, within the spending envelope, to seeing if priorities need to be shifted slightly. That would be very helpful, too, since you have so many people.

           S. Sanatani: Okay, we'll do that.

           B. Lekstrom (Chair): Suromitra and Jeff, again I thank you for a quality presentation to our committee, certainly well worth our listening ability to take in what you've said representing your members.

           S. Sanatani: Right. Thank you very much.

           B. Lekstrom (Chair): Moving right along, our next presentation this morning comes from VIATEC. Mr. Bill Cooke is with us. Good afternoon, Bill, and welcome.

           B. Cooke: Thank you very much and good afternoon. I would like, first of all, to thank the committee for giving me an opportunity to provide a brief update on the technology sector as it relates to Vancouver Island and the work the committee is doing on financing and government services issues.

           What I'd like to do is just briefly provide a bit of an overview of VIATEC as an organization, as a non-profit industry association on Vancouver Island. The specific mandate is to facilitate the growth of the technology sector on Vancouver Island, so we really are in the economic development business. We currently have about 650 members in the organization.

           We are a small business organization. The average company size is six to seven people, and a lot of our companies are in fact probably in the three-to-four-person range. We have a few that are 100 to 200 and are offsetting some of our data, so we truly are small business. Now, that being said, we are not small business from the standpoint of contribution to the provincial economy or the Vancouver Island economy. The technology sector on Vancouver Island last year generated nearly $1 billion in revenue, so on that basis we are on a fairly equal footing with the tourism sector on Vancouver Island.

           Our goal at VIATEC is to facilitate and continue to facilitate the growth of the technology sector to what we would consider a critical mass, where it will tend to grow by itself, where we actually have companies growing and where the owners are looking at perhaps getting out of those businesses, selling them and recouping some of their capital, reinvesting, starting new businesses and continuing to grow them up. That's our eventual goal. As we say, that's probably five to ten

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years away. We're behind Vancouver on that basis, and the leading light in the technology sector is, of course, the Ottawa-Kanata area.

           One of the areas we'd like the provincial government to deal with and that we'd like to talk about is reducing the level of taxation. That work has, in fact, already been started. I think you should be congratulated on that. There's no question our members are dealing with part of that, but having more dollars in their pockets is important. All the people we have here at the early stage in their business development are taking every cent they have and putting that back into their businesses to try to grow them out.

           If we look, basically, across the country and down through the States at the issues on a comparative basis, where we're looking at income tax, corporate taxes, capital gains taxes and payroll taxes, they are still high in a lot of cases compared to other jurisdictions. But all the efforts you're making in that area or could be making in that area are or would be, I believe, very worthwhile to the industry.

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           The one point I'd also like you to remember is that although this is a large number of companies in the tech sector, they are very small companies in the tech sector. Everybody is globally focused. It's important to remember that if we are in the technology business on Vancouver Island, whether we are a one-person company or a 200-person company, there is no market for product on Vancouver Island to any large extent. That means every company that starts, starts with a global focus on their marketplaces. They are starting looking to export, and they are having to recognize that their products have to compete worldwide. They are competing in the labour market for the people they need to help them grow their business with the jurisdictions across the country, down into the U.S., California, Pacific Rim, etc. It is a very competitive marketplace that we're dealing with.

           That leads us into the "go global" issue, item No. 2 on what I have said there. We're dealing with microcompanies. The standard SME definition given in a lot of cases talks about small business as companies that are 200 people or fewer. When we talk about small business, we actually talk about two people or fewer. For the most part, they say, it's fewer than ten.

           One thing has always been a concern to our members — and not just to our members here. This is fairly typical across the country. If I'm starting a new business, I've got a world-beater product, and I want to take it out to the marketplace, I'll find that in the technology sector, for the majority of our very successful companies, the initial products have been sold outside of Canada. Historically, federal and provincial governments that could very well be buying those kinds of products are not buying at the very early stage.

           That is a significant barrier in how fast a company can actually take a product to market. One of the first things somebody in Japan or Australia says is: "Who are you selling to in Canada?" If there's no support from the provincial and federal governments, it's a really hard slog going out.

           I know we have NAFTA in place, but I think we have to consider a "buy B.C." policy. It's important to do that to support the industry on the front end. We're not talking about grants. We're talking about buying products that the government can actually use, and those products can be compared with similar products from any country or jurisdiction in the world. These are not handouts. These are not dollars going into the companies just to provide a little credibility.

           The other issue, No. 3, is staying the course on the government downsizing. A quick comment: steering, not rowing. With our government we have in place now, I believe that is in fact happening. I'd like to just ensure that it is continuing to happen. The reductions in red tape and the overall efficiencies that can be gained in the government, I think, are important for all of us.

           One of the thrusts that we have at VIATEC is trying to figure out how best to grow our small businesses. One of the issues that all of our companies are facing, and that we've been dealing with for the past five years at VIATEC, is access to capital. When you're trying to grow out your business, there's no question that you're going to need dollars to do that.

           We instituted, in a program in partnership with Industry Canada about five years ago, a project to help our companies get access to capital. What that is, in quick terms, is that if a company needs $20,000, $50,000 or $100,000 to continue with R and D, to do some sales and marketing, to expand their manufacturing capabilities, there are basically two ways of doing that. You can take a product to market, sell the product, take the revenue, reinvest it in the company and continue to grow. We would call that organic growth or bootstrapping a business. In the tech sector that's pretty tough these days, because a lot of the sectors are moving so fast you really don't have time to do that.

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           The next most important way of getting that money, then, is to look for somebody to put the dollars in — an equity investor, a partner in your business. These are basically private individuals who are investing in the business. It's also important to recognize that these investors — we call them angel investors — typically invest at the $100,000 to $1 million level. It's their own money. More importantly, they're not just putting their money in, but they're providing their business skills, their networks. They're becoming very active partners in a business. In a lot of cases with our very small businesses, if you put just money in, it's almost like owning a yacht or your own boat. You put the money in, and it just keeps going without a lot of significant return. It's really important to have smart money.

           We were approached about one thing in early August by the Ministry of Competition, Science and Enterprise. Their business investment branch brought along a copy of a White Paper they had put together on some proposed amendments to the Small Business

[ Page 847 ]

Venture Capital Act. They asked us to take a look at the amendments, take them out to a number of our members and provide them some feedback on how we thought those amendments could either help or hinder the growth of business within our sector. There was a lot of feedback that went back directly to the ministry from our members.

           I've left you a copy of the White Paper, if you haven't already seen it, and I am sure most of you have. From your standpoint here, I would suggest: fully support the proposals that are in there. In particular, one item in there is the creation of a direct investment capability very similar to the venture capital corporation. It reduces a huge amount of paperwork. It is more likely for us to go to an investor who might be able to put in $50,000 if he has some tax incentive to do it. From the company standpoint, we don't have to create a whole new capital corporation in addition to trying to run our own business. It's really important to try to do that.

           A couple of the other initiatives. I'll just briefly go through these. I think it's important, wherever you can, to look at opportunities for leverage and partnering. There are a lot of programs. I've talked about the access to capital program. That was an Industry Canada program, partnered with VIATEC. I think there the same opportunities for the provincial government to partner with VIATEC and other similar organizations like ASI, the Science Council, etc. The whole trick is to get leverage on your money. With the access to capital that we did over the past five years, the leverage we got was about a $500,000 investment from the federal government to a $15 million investment from the private sector. It is possible to get those kinds of leverages.

           There are a lot of programs where I believe it's important that the provincial government agencies and the federal government work together. You know, we talk about the public-private partnerships. Public in this particular case is provincial government; in our case it's federal government as well. Private are industry associations and our private businesses.

           Some of the issues coming along. Encourage, wherever possible, some of the environmental and sustainable technology initiatives. They're going to be key, as we move forward.

           Vancouver Island has a very specific issue that relates not just to the technology sector. We're going to be running out of power on Vancouver Island. The technology sector takes a fair amount of that power, but it certainly doesn't take it all. We're going to have to take a look at encouraging whatever we can do to develop alternative energy sources and support projects that will bring clean power to the Island. The bottom line is that we have to get more power on the Island, or we're all going to be in the same situation that California was in a while ago with rolling blackouts, and none of us want that. There have to obviously be reliable power sources.

           The proposed natural gas pipeline is probably a reasonable start. Doing something to ensure that some of the cables that are currently coming across the straits…. That is important.

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           The last thing I'd like to leave you with is really a kudo to the government: encourage clustering of companies in different locations. There is an extremely successful cluster started up now at the Vancouver Island Technology Park that was led by BCBC. VIATEC and its members have been fully supportive of organizations like that and clustering initiatives like that.

           Finally, there are a couple of projects that are coming along. I've left a footnote on there. VENUS is a $10 million project led by UVic, and it's going to perform R and D and test instrumentation in shallow waters locally. VENUS will be leading into a $300 million project called NEPTUNE. These are both projects right off our shores. The $300 million project is led by the U.S., proposed to be one-third funded by Canada, putting fibre optic cables and instrumentation packages on the ocean floor. What we're going to be looking at through our sector is to ensure that our marine tech companies, both here and in Vancouver, are able to participate fully with their products and services in these kinds of initiatives.

           The other initiative that will potentially happen, we're hoping, is the oil and gas initiative. Again, our marine tech sector is well positioned to deal with all aspects of that from the initial environmental studies right through to production, should it ever move to that stage. They have a lot of capability and a lot of experience. Most of us out of the tech sector, on the marine side, worked here, worked around the world, worked in Newfoundland. We're very familiar with what we can and should do to protect our environment but still develop our resources.

           I'd like to leave it there. Thank you very much for the time and the opportunity. I welcome your questions.

           B. Lekstrom (Chair): Thank you very much, Bill. It's always interesting. The high-tech sector is something that is very difficult to keep up to the pace, I can tell you.

           Are there any questions?

           H. Bloy: Thank you very much for the presentation. I just wanted to point out your No. 2 about going global. I really encourage that.

           The B.C. government has just signed on to a policy trying to remove all the trade barriers for British Columbia. I'm pulled by that. Do we go with the very lowest price by one penny, wherever it comes from, or do we support B.C. business? I think it still needs an initiative to look at that again.

           B. Cooke: That's an extremely good question. I believe you still should be supporting B.C. initiatives. If they're anywhere near competitive, go with the B.C. companies. These are global initiatives. Let's create the jobs here, and let's generate wealth. That means selling

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products outside of the country and bringing the money back and creating our jobs here.

           R. Sultan: Is there a shortage of venture capital on Vancouver Island for the sorts of ventures your companies represent?

           B. Cooke: Yes — well, probably not a shortage of capital. There certainly is a reluctance by the people who are holding onto that capital to invest it. I believe one of the initiatives that we've done is to try to educate the investors as to the risks involved, the kinds of companies they could invest in and what in fact they can bring to the companies to help them grow their businesses and reduce the risk. I would say we're probably not short of money. We certainly have to figure out a better way of getting it from the private investor into the company.

           R. Sultan: Do you think the proposed amendments to the Small Business Venture Capital Act will make a significant difference in this regard?

           B. Cooke: I believe they will, as long as we at VIATEC and other organizations continue to build the bridges and provide some of the education that's required to bring up the investment knowledge of not just the investors but the companies themselves. We've been doing it for five years now, and it is a hard slog. If I'm looking for $50,000 or $25,000 — there are a number of investors out there who are looking to invest that kind of money — I think some of those changes in the Small Business Venture Capital Act will help.

           R. Sultan: Is there more this government could be doing to facilitate this?

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           B. Cooke: Probably supporting organizations like VIATEC better. I'll give you the blatant commercial on that one. We really are working very hard to facilitate this with the local companies. We've been asked to provide help and support in Kelowna, Kamloops, Prince George and Whitehorse. It's a hard slog, but we've had a lot of successes.

           B. Lekstrom (Chair): Well, thank you very much, Bill, for your presentation to our committee here this morning. It's certainly very much appreciated by each and every one of us. As I indicated earlier, it's our job as a committee of the Legislature to listen to the input from British Columbians and the people they represent, so I thank you.

           B. Cooke: Thank you very much. For those of you that are going to be attending our MLA breakfast with our CEOs, this is only sort of a brief overview.

           B. Lekstrom (Chair): We will move along to our next presenter, the Insurance Bureau of Canada. With us we have Lindsay Olson and Dennis Prouse.

           Good afternoon and welcome.

           L. Olson: Thank you very much. We appreciate the opportunity to meet before you. To introduce ourselves, we're with the Insurance Bureau of Canada, which is the trade organization for the property and casualty insurance companies that are non-government. We represent over 90 percent of the premium volume written in this country.

           British Columbia is a major property and casualty insurance market. By property and casualty I mean we insure homes, cars and businesses, generating over $1.5 billion in insurance premiums for home, commercial and optional auto coverage. In addition to that number, of course, the Insurance Corporation of British Columbia adds another $2.4 billion in insurance premiums.

           The economic prosperity of a province is highly correlated with its capacity to compete and provide choice for consumers and investors. British Columbia's competitive P and C insurance industry envisions a dynamic provincial economy that is competitive, efficient and effective in delivering good value for both consumers and investors. Such an environment would help foster greater competition, investment and innovation for the benefit of consumers and generate growth in the provincial economy.

           Nevertheless, British Columbia's economy contains numerous restrictions and barriers to competition. From the perspective of the property and casualty insurance industry, the automobile insurance sector is dominated by a public monopoly in what is, elsewhere in Canada and the industrialized world, an innovative and competitive sector of the economy. There are many issues we can talk about today, but we have chosen to focus on a couple, and automobile insurance is one of them. I would like to ask my colleague to go through a few of the details.

           D. Prouse: Thanks, Lindsay.

           What I'll be speaking to is the set of coloured slides we gave you. We also gave a written presentation you can read at your leisure. I know you won't have very many written materials to read through in the next few weeks, so we thought we'd give you a little bit.

           I want to speak to a few issues, number one being what ICBC's fiscal performance has actually been and what the impact has been in terms of tax revenue and investment in British Columbia. I have never known a jurisdiction that uses the deliberate exclusion of private sector capital as a tool to build the economy. That's the current policy in British Columbia as it pertains to auto insurance, and I think a number needs to be put on it as to what this has cost.

           The first slide I did put up is the economies of scale and scope in insurance. One of the greatest shopworn myths we hear is about economies of scale and why economies of scale work. Well, they don't work in P and C insurance. This slide you'll see is 60 insurers ranked by size for the year 2000. "Combined ratio" is one of those fancy industry terms. High is bad and low is good, if you want to simplify it. As you'll see, there

[ Page 849 ]

are 60 companies plotted along a graph. There is very little or no correlation between size and combined ratio, which is, in essence, profitability. The largest one, which is pushing ICBC size, in about the $2 billion category, was in fact ranked in the middle. Small is beautiful in this industry. Given that we represent over 200 companies across the country, none of whom have any more than 11 percent market share anywhere, I think it's fairly illustrative of the fact.

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           If we move on to the next slide, I talk about the disappearing fiscal dividend. This, again, is one of the issues we run across. I'm sure every one of you has heard this from constituents — that ICBC is a cash cow for government. I think this perception comes from the fact that people don't feel like they're getting value — we have polled on value in the past — and so they assume the money is going somewhere. Well, it certainly isn't going to the coffers of government. I mean, you saw a turnaround here from a budget presented in March 2001 projecting a $75 million surplus to a $250 million loss less than a year later. That's over a quarter billion tax dollars turned around in less than the space of a year. ICBC has never — and we bold underline "never" — paid a fiscal dividend to government. At no time in that corporation's 28-year history has it written a cheque to government and said: "Please go build some roads, schools and hospitals." It has not happened — not once. That myth needed to be addressed.

           If you go to the next slide, the fiscal performance '75 to present, we're just putting a number to where profit and loss has been. There's been negative income eight times in this 25 years. You'll note the injection in late '75, early '76 of $176 million — that's $500 million in constant dollars — that never was paid back, to keep the corporation solvent.

           The next slide. I know we're in the interests of time here. We wanted to do a side-by-side comparison of tax revenue paid. As Lindsay pointed out, our industry collects, in terms of premiums, over $1.4 billion. That's obviously mostly home and business, with a very, very small slice of auto — I believe in about the $115 million range. Despite that, we paid in that year — the last year measured, 1999 — $25.8 million in corporate income tax to the government of British Columbia. ICBC paid zero dollars in corporate income tax, because it's a Crown and it doesn't pay taxes. Again, I think it's important to do that side-by-side comparison to see what the cost actually is.

           The next slide actually shows you what the annual forgone taxes were. The green leading up to 1987 is the fact that prior to then, ICBC didn't charge premium tax. Well, now they do. The blue bar is corporate income tax. That's taxes forgone.

           If you go to the next slide, we do total it up in constant dollars: $730 million of forgone tax revenue and $500 million from the 1976 bailout equals $1.23 billion in terms of direct cost to B.C. taxpayers. If you want to put a price tag on what this policy has cost just in terms of forgone tax revenue, that's what the price tag is.

           Now, on the positive, sunshine news: open competition and what the net annual tax impact would be. This measurement came from a report done by CIBC World Markets. Some members of this committee may be familiar with that report. It was about the size of a phone book. Nonetheless, we're happy to share it with anyone who wants to see it. I know Mr. Sultan's been through it.

           I think the economists call this a soft landing. Eventually, by year 5 you're seeing a net new annual tax impact in the $25 million to $30 million range. Is that going to change your fiscal fortunes overnight? No. Does it help? Yes; there's no question.

           The last part I'll talk about is just investment in British Columbia. Again, this is a myth that we're anxious to tackle. One of the things we end up having to deal with is the accusation that we don't invest in British Columbia, that we spirit profits away to wherever it may be and that ICBC's money stays in British Columbia. Well, less than 12 percent of ICBC's investment portfolio is invested in B.C. — that's a fact they'll acknowledge — and that's 12 percent of an exceptionally small pool. They are exceptionally undercapitalized, probably to the tune of about $1 billion, if they wanted to be accepted by regulators. As a result, their investment pool is small.

           Our companies are exceptionally well capitalized, and despite some of the global woes we may read about in the financial pages, our member companies are better capitalized now than they've been at any time in the last quarter century.

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           Levels of capitalization are not a problem. As a result, we get impacts like this. Our member companies invested $1.15 directly into the B.C. economy for every dollar of premium we earned here. Our member companies are investing here not because they're forced to but because they want to. ICBC in turn only invested 10 cents directly into the B.C. economy for every dollar of premium collected, and that is simply due to the massive disparities in the amount of capital available and the fact that British Columbia, again, has a policy of excluding that capital.

           The last slide just shows another estimate by CIBC World Markets in terms of what the estimated new investment would be. There are a number of different scenarios. We have no idea what landing the government may come to on this issue. There are a number of different ways they could get to full competition and choice. The bottom line is that full competition and choice would increase direct investment in B.C. over the status quo by $200 million to $550 million over five years. Again, is this addressing all of the province's fiscal woes overnight? No. Will it help? Yes.

           Just to wrap up before my colleague Lindsay talks about effective regulation, this government has talked about creating a better climate for investment, about attracting private sector capital investment and about making British Columbia attractive again to financial institutions. I see a fairly easy and direct way in which that could be done. At present British Columbia has a

[ Page 850 ]

policy of legally excluding that kind of investment, and we don't think it makes very much fiscal sense for the province's health.

           L. Olson: The second item that we would like to touch on today is effective regulation. This government has undertaken to reduce regulatory red tape for businesses in this province. We acknowledge that and encourage the government. We think that's headed in the right direction.

           I would like to look at a little bit of our thoughts on regulation, seeing as the financial services sector is one of the most heavily regulated sectors in the economy — regulation that is required in order to enhance public confidence in the system. That regulation must be cost effective. It must be cost-effective for government, for the business that is being regulated and for the ultimate consumer. Regulations should not be overly prescriptive but should be goal based.

           We strongly support the initiatives of the red-tape reduction task force and the reviews of the various pieces of legislation that are ongoing currently. We encourage the government to continue this. In particular, we believe that a cost-benefit analysis for all new regulatory initiatives should be done before introducing that new regulation.

           We also believe that regulatory overlap between provincial and federal regulators should be identified and eliminated. We believe that barriers to improved customer service should also be eliminated.

           With that, we do thank you very much for your time today. That was a very quick once-over. It's amazing how fast you can talk when you know you only have ten minutes. Thank you.

           B. Lekstrom (Chair): Well, Lindsay and Dennis, thank you. It is a challenge — fitting all that information into such a short time frame, but I think you've done a marvellous job of getting your point across to our committee.

           We do have time for a question. I will go to Ralph.

           R. Sultan: Well, I would like to commend both Dennis Prouse and Lindsay Olson for once again presenting with great clarity and vigour the case for a much higher degree of privatization of the automobile insurance business in B.C. Indeed, I've heard this presentation and the backup material, which is voluminous, so many times and have seen these two…

           D. Prouse: We're a little persistent.

           R. Sultan: …outstanding individuals. This is like meeting with old friends. I would encourage you to persist, because it's quite clear that decisions are still to be made on a very vital public policy issue.

           Turning to the regulatory aspect alone and Lindsay Olson's presentation, could you give us some idea of how the regulation of the portion of the automobile insurance business that is in private hands in British Columbia is perceived? Have we succeeded in deregulating to some significant degree that sector of the industry?

           L. Olson: No, not at this point in time. Most of the regulation governing the private sector automobile insurance delivery is in the Insurance Act. The Insurance Act itself is many years old. That portion of the Insurance Act that deals with auto insurance is, quite frankly, hopelessly outdated. There are many other portions of the Insurance Act that are also outdated, which don't reflect the current economic and financial climate that we see ourselves in.

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           We certainly encourage the government, once we get past the review of the Financial Institutions Act, to cast its mind to a review of the Insurance Act as well.

           B. Lekstrom (Chair): All right. Well, I see no further questions from members of our committee. Again, Lindsay and Dennis, our thanks, on behalf of the committee, for your presentation.

           D. Prouse: Thank you, Mr. Chairman. I appreciate it.

           B. Lekstrom (Chair): Our next presenter joining us this afternoon is Irvin Kew with the Victoria Chinese Commerce Association. Good afternoon and welcome.

           I. Kew: Good afternoon, Mr. Chairman. Thank you very much for the opportunity to be here. I'd like to thank you for this opportunity for my presence, of course. My name is Irvin Kew, and I'm here today on behalf of the Victoria Chinese Commerce Association. Our organization represents many small businesses, and it is from this perspective I speak today.

           Firstly, there are a number of budgetary measures which have benefited small businesses, and we wish to continue these initiatives. For example, the increase of the cap on what qualifies as a small business for tax purposes was very helpful. Also, there has been a number of recent economic indicators showing a return of confidence. Retail sales were up in June, about 6 percent over last year.

           As small business owners, this trend is very important. Hopefully, it will continue. There has been some speculation that your tax cuts have partly been responsible for this. Again, thank you for your effort.

           Your prebudget paper asks some tough questions. I'm going to focus on one question only, and the question is: where should any excess funds be spent? Well, not all of us are informed at all of all sectors which are needy at the present, other than those that are constantly being reported in the news. As taxpayers, we probably would place such surplus funds into an assigned account first, then allow these sectors to come forward with their claims. We would then have an independent auditor review their claims, and if found bona fide, we would then put them on the list and prioritize them to be considered for access to the funds.

[ Page 851 ]

           This is speaking personally. I don't believe every claim is 100 percent or that some even have merit. For those of us in the private sector, whenever we have a shortfall, we have to look for savings and may temporarily have to do without.

           I trust this presentation will be of some use to your committee. Thank you.

           B. Lekstrom (Chair): Thank you, Irvin, for your presentation. I thank you for taking the prebudget consultation paper and addressing, certainly as you put it, the very important questions that are asked in there.

           I'll look to members of our committee, if there are any questions for Irvin.

           B. Kerr: I'm sorry, I don't understand what you're talking about here when you say put it into an assigned fund and have this sector come forward.

           I. Kew: Sorry, I didn't….

           B. Kerr: You're saying to put the excess funds into an assigned account and then have this sector come forward.

           I. Kew: Well, I presume there are various sectors within our community now looking for government funding or increases or whichever way, which is what the excess is supposedly to be assigned for, presumably. What I was trying to say is that we're just looking at it as taxpayers, as private individuals who don't get government assistance of any sort. How will we do it? Well, if we have surpluses, we will put that aside, and then we'd look at those cases or ourselves, whichever — we have to police ourselves in the private sector — and so consequently this is the method we would deal with it. I'm sure that at this moment in time, the finance community is probably doing the same thing. This is just our view.

           B. Lekstrom (Chair): Are there any other questions from members of our committee?

           R. Sultan: I understand. If in fact we did that — if we were not here as representatives or people who are advising the government, at least — and we left this decision to the members of the Victoria Chinese Commerce Association, do you think they would be inclined to take that assigned account and give it back to the taxpayers by way of a tax cut or to indeed rank all of these supplicants for that money? Would they be more inclined just to cut taxes?

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           I. Kew: I couldn't answer for the VCCA at this point, because these are different views from the members. What I would imagine is the fact that if we have assigned funds to assist with bona fide courses and the reasons are correct, then obviously those funds will be allocated for those purposes. I would imagine that how you prioritize them is going to be the next question. I don't know whether that answers your question. Does it?

           R. Sultan: Well, I guess another way of interpreting your reply is that you don't think taxes are unnecessarily high at the present time.

           I. Kew: I guess, again, in the private sector we know that if we want a certain luxury, we have to pay for it somehow. Obviously, cutting taxes in certain sectors could encourage economic expediencies. Therefore, your cap figure is in the right direction, and obviously, again, you will have to evaluate what you will be cutting and what you will be increasing to see whether that's either going to stifle activities or encourage them.

           B. Lekstrom (Chair): I see another question. Sheila.

           S. Orr: Thank you, Irvin. The Victoria Chinese Commerce Association is a really good organization to look at as a benchmark for small business, and I noticed here that you said you have a lot of retail small businesses. It's a really good indicator as to how you're doing when we look at your businesses. You say your retail sales were up in June. Have you had any more up-to-date figures through the summer — July, August, now, over the last couple of months? Have you heard how business has been?

           I. Kew: Not as yet.

           S. Orr: Not as yet.

           I. Kew: No.

           S. Orr: Could you let us know when you do? It would be interesting to know how it went.

           I. Kew: I could pass the information back to the committee and have them look further into it.

           S. Orr: That would be great. Thank you.

           B. Lekstrom (Chair): Well, I see no further questions at this time. Irvin, I would like to thank you for taking time out of your schedule to come and present to our committee this afternoon.

           Our next presentation this afternoon comes to us from LogicLynx Technologies. With us we have Chris Holt, Tim Vasko, Dennis Pinvidic and Andre De Souza, and hopefully I've done those names justice. Good afternoon, gentlemen. Welcome.

           T. Vasko: I'm Tim Vasko. I'm the strategic officer for LogicLynx Technologies.

           D. Pinvidic: I'm Dennis Pinvidic. I'm vice-president of sales with LogicLynx. 

[ Page 852 ]

           C. Holt: I'm Chris Holt, the CEO of LogicLynx.

           Thank you very much for having us here today. We were invited, I believe, to come down and give some feedback on the government's fiscal direction and policies. We thought about that a little bit, and we thought we should come down and give you some positive feedback. We thought that would be a good idea.

           As a high-tech company, of course, we're rather focused on that particular sector in that particular domain right now. We want to applaud the government on the direction they're taking with the Premier's Technology Council and on the direction they're taking in high-tech in order to use information technology to create better efficiencies in government and to streamline and bring things together. We think this is, obviously, the right way to go. We're also encouraged that the government is looking for private and public partnerships in order to achieve these kinds of directions.

           What we're going to do today, in the next few minutes, is introduce what we see as a strategic direction that can assist in creating greater government efficiencies. We've developed two technological solutions that we really want to have some further discussion with you about, which we can't get into today because we don't really have enough time. We'll look at doing that at another time.

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           What I wanted to stress is that this is not an idea that we're presenting. We're going to present some reality today. Often technology companies come in and it's vapour ware and it's great ideas and all this stuff, but we have an actual implementation that we're working on. It's funded by Health Canada in partnership with the Vancouver Island health authority and local community partners to streamline the way our organizations integrate their information systems to create greater efficiencies. We think this is going to change the course of Canadian health and social services for years to come. Now I will pass it over to Dennis, who will lead us into our presentation.

           D. Pinvidic: It is going to change the way things are done. There's just no question about that. In fact, we're nearing the end of a million-dollar contract that we have with Health Canada via Vancouver Island health authority. That's a million dollars of federal money brought into the province by us. We'll be completing that contract at the end of this year.

           What we want to talk about as it applies to this committee is "integration slack." That's a term that describes the waste that occurs because there's just a difficulty in transmitting information from one source to another.

           If you have the various sectors involved — say, one ministry for health, for example — you may have six, ten, 20, 100 different databases that actually don't communicate between each other. What we've done is developed a system that now can actually do that irrespective of the kind of database they have in place. We're currently doing it to accomplish the task of elimination of integration slack — that is, waste that occurs because of duplicating resources and things like that, where one section of a ministry doesn't know what the other section of even the same ministry is doing, let alone between ministries.

           One of the things we do when we integrate is remove the cost of duplication. That's very expensive. It eliminates costly mistakes made because people have made decisions without accurate information. It allows people to make decisions with real-time information that comes from all the sectors that are required to make proper decisions. That's what we do right now. We're doing that with the Vancouver Island health authority in terms of integrating the community mental health records.

           I'm just paraphrasing the information that you have there. It's only a couple of pages anyway. What we're doing here is solving the big problem that's occurred in the past. First of all, security has always been a problem, but it's been dealt with in terms of giving permissions at various levels. Where the difficulty comes in, though, is where somebody at a certain level has a permission, it means that theoretically they would have permission to access information at all levels.

           The complication exists there when privacy comes into this situation. In other words, just because a certain person may have a level of access to information doesn't mean it's appropriate that they have all of the information that's available out there. That's where the privacy issues come into play, and that's one of the main issues that LogicLynx has solved for Vancouver Island health authority and the other areas we're working with in the community.

           [L. Mayencourt in the chair.]

           We are dealing with mental health records in this case, so the security and privacy is a major issue. Those are the areas that have not been able to be solved in terms of data management and the discrepancies between data systems held at different places. That's why there's been no ability in the past to actually put these together. That's the main project that we are working on right now — the integration of all of these various sectors.

           In fact, there are two systems that we've developed. One is called SectorLynx. What it does is link the various sectors within a ministry. In this case we're dealing with the Ministry of Health. The other part of that is administered through a framework called EDSA, which is the ethical distribution of security access. That's where the privacy issues are dealt with.

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           The interesting part here, as I feel it applies to this committee, is that we have developed this program, this platform, for the government, and in fact the government owns the program.

           On the third page of what we've given you — really, it's just the front page of part of the information that we have — is an example of the kinds of documents that we have relating to the integrated community mental health information system. That's the sys-

[ Page 853 ]

tem that we developed for Health Canada being administrated through Vancouver Island health authority. That system is owned by the government. You already have this system available to you at no cost.

           What we are looking to do now is expand into other areas. We're now linking the various sectors within the health industry. We're now going to be looking at linking the various sectors that don't communicate currently and cause this duplication and waste of resources. We're looking at linking those within other aspects of other ministries and linking ministries together themselves.

           [B. Lekstrom in the chair.]

           As I say, the important thing here, I think, is to realize that the government already owns the framework, the whole protocol, how to do it. It's all there. It's a matter now of implementing it in other areas where you'll be able to see some significant cost savings.

           T. Vasko: I think one of the primary objectives…. Just to put a fine point on this, what we're talking about is information, and presumably this committee is together to gather that information to make better decisions. It's my understanding that on November 15, you're going to issue a report as to what some of those recommendations may be.

           That's an efficient way of getting information by calling people and corporations like us in. Imagine that exact same process happening real time, where intelligent decisions can be made from extremely disparate sectors throughout the government, and they can be made by people who have security access at various levels. Imagine for a moment that privacy is not an issue. Imagine for a moment that you can take all the systems that exist for gathering information, which have been there for years and years and developed over a long period of time, and you can overlay a system that talks to them and integrates various services' sectors, and you can look and see what the efficiencies are.

           We've heard a lot of presentations about how many billions of dollars can be saved here, how many millions of dollars can be saved here, what the tax base is, what the tax structure is. We're currently in negotiations with a financial presentation company that does financial software and technology for the federal government. We were brought in specifically for managing and allowing or enabling these technologies to integrate systems and the use of capital. That in essence is what we're talking about here: the use of capital and information to make intelligent decisions.

           As Dennis said, this program is already successful. It's not a beta. It's going into full service in January.

           I will say one more thing and cut this off. This technology has not ever been available before. In fact, if we follow the technology sector at all — and I know none of us are concerned about that…. But if you have followed the technology sector at all, what you know is that technology changes very quickly.

           The foundation on which this system is built is only about three years old. LogicLynx was one of the first developers in this. Microsoft, which is one of our partners, regularly refers business over to LogicLynx to help solve problems.

           In short, if we can have better access information, we can remove duplication of services, and we can see this information at various levels with extreme security and privacy. Relying on infrastructure that's already in place, it only makes sense that government will save a significant amount of money and maybe allocate that money more wisely.

           D. Pinvidic: I just wanted to reiterate a little bit. We've included on the last page an e-mail simply to show you that Health Canada is pretty impressed with the implications that this integrated community mental health information system provides for them. They're going to be looking to expand that as well.

            [1320]

           The other thing that I think is very important to recognize here, too, in terms of how it can save money is people are able to make decisions based on all the information that's available, not just the portions they may have access to here. What about this person they're dealing with here today who has had interactions with another ministry over there? This may have implications. Of course, they wouldn't know that until they were able to integrate this information. The outcomes information is significant. We're talking about real-time outcomes, so you can find out exactly what's going on in the real world out there through this kind of integration, which up to now has not been available.

           To close off at least our portion of this, we really want to make you aware that here we are, a B.C. local company that is developing and has completed the development, really, of some of the most significant changes in software that there are today. Amazingly enough, the government already owns it. We simply developed it for the government, and all the rights have been turned over to the government. It's just a matter of where else we can implement it. If you have any questions, we'd be happy to entertain them.

           B. Lekstrom (Chair): Thank you for your presentation. It's something we've all been challenged with. When you look at the technologies out there and how quickly they change, as you indicated, trying to be able to integrate systems together has been a challenge for everybody. I'm quite aware of that.

           We do have some questions, I believe. I'll begin with Jeff.

           J. Bray: Thank you very much for the presentation. I'm somewhat aware of this system. Maybe, if I can paraphrase, you can let me know whether or not my understanding is correct. What you've essentially developed is an effective way of case-managing an individual who may be accessing services from a variety of different points so that the service providers have an opportunity to better deal with that individual, both in

[ Page 854 ]

terms of just a basic collection of tombstone information — name, birthdate, everything — but also of treatment protocols — where they're at in the system, who else they're dealing with. So government's interaction, often through social service agencies, can be most effective for that individual and at least enhance each other's services and certainly not stop the cross-work. Is that pretty accurate?

           T. Vasko: Basically, yes, that is accurate. However, I'd like you to expand your understanding of this by using the word "individual." Let's replace that with "element," because that individual can be any element that's applied. Let's assume it's a project that's within a completely different sector. That project can now be managed throughout many different services or ministries at my touch, and all of the information can be passed along by element.

           You're exactly right. All the way down to an individual level, we could replace that with the presenter that was up here before and talk about small business. We can talk to those systems and share that information securely and privately, then make intelligent decisions based on each and every element of that. The unique capability of integrating systems is part of it. The other unique capability is how far you can drive down through those systems to protect that information and share that information. It's not just for case management. However, that is the implementation right now.

           J. Bray: I just want to follow up. The reason why I'm so intrigued is that the provincial government and the federal government currently spend hundreds of millions of dollars in community social services, all with the best of intent but often at cross-purposes, with the same clients or the same family or in the same community.

           Is it fair to say that the integration model, the software…? At least, the opportunity it provides for the community to better deal with cases might drive government to perhaps look at better ways of contracting with social service agencies to get to, as you call it, the integrated model and deal with the fact that maybe we need to get the agencies working together through our contracting system as well as having the ability to share information back and forth on the same client to better enhance their services. Is that it?

           T. Vasko: Exactly.

           J. Bray: It's a leap from high-tech, but could it lead that improvement in general?

           T. Vasko: Not only can it lead that improvement, you will see where the efficiencies are and where the inefficiencies are. You will be able to make a decision as to exactly where to allocate funds.

           J. Bray: With a wide implementation, you'll be able to actually map client flow patterns through the whole system.

           B. Lekstrom (Chair): All right. Time for another question.

[1325]

           R. Sultan: Well, I'm tempted to ask: as sophisticated as the system is, don't you start to run into the human factor that people don't want to share information, because information is power?

           T. Vasko: Exactly. The beautiful part about the system is that the people who have access and who are given access have two capabilities: (1) at every level they can see who's looking at their information, and (2) they can flip the switch. Therefore, you eliminate the legal, moral, ethical and perhaps abusive possibilities for taking information and using it the wrong way. We put that power right back with the individual user. At any time they can see through a complete audit trail. Who's seeing their information? If they don't like it, they flip the switch.

           D. Pinvidic: I just want to add to that. That's exactly the point. Right now that capability doesn't exist virtually anywhere, and no one really knows who is looking at their information nor has any aspect of control of that in that way. Under this system it's a tremendous improvement.

           C. Holt: That's the basis of why we call it the ethical distribution of security access for the privacy framework. The clients themselves have to be involved in their own care. We're really looking at more holistic health models and more involvement from community and government and working together within a framework to provide better care.

           T. Vasko: Just to add one more thing, we actually protect the information, so there are limited things you can do with that information. For example, if you try and copy and paste that information, we can put in a protocol to shut that down. Just like I was told when I walked in here, "Please don't take notes," that's what our system says, and we police it.

           B. Lekstrom (Chair): All right. Well, with that, I know that, again, our time lines are very tight for presenters to bring all the information. But I think you've done a very effective job, and I thank you on behalf of the committee. The information you've put forward this afternoon will be given due consideration in the development of our report, which, as you indicated, is due to be submitted to the Legislative Assembly by November 15. Thank you very much, gentlemen.

           Our next presenter this afternoon is with Westpoint Multimedia: Mr. Nab Gill.

           Good afternoon, Nab, and welcome.

           N. Gill: Thank you, Mr. Chair, and thank you, everyone. Hello, ladies and gentlemen. I would like to talk about the Olympics. The Olympics are a once-in-a-lifetime opportunity for British Columbia. It will be the

[ Page 855 ]

best advertising B.C. could receive for the next eight years.

           Let's look at Expo 86. I would like to say that the vast majority of the people supported it. It left a very positive legacy for B.C., such as Canada Place, SkyTrain, Expo lands, Science World and jobs for young people. It put B.C. on top of the world stage, and most importantly, it created a sense of excitement among British Columbians. After all, life doesn't have to be dull.

           The Olympics are the biggest event in the world. I say we should go for it proudly and carefully. But we should not let the naysayers hold back the majority who embrace the idea. It's not lost on me that Calgary held the Olympics in 1988. The Albertans put on a good show, and it may be no coincidence that Calgary has emerged as the No. 2 city in Canada for head offices and has led the country in economic growth.

[1330]

           The Olympics will cost B.C. taxpayers some money, but consider the advantages. One of the advantages is that the federal government will pour in money that would not otherwise have been planned in relation to the Sea to Sky Highway. The highway may be funded in part by the federal government. If there's no Olympics, that highway will ultimately face huge upgrades solely at the cost of B.C. taxpayers. There will be a huge expenditure of corporate support for the Olympics. Our infrastructure will be upgraded along with the Vancouver convention centre, which may finally see the light of day.

           Thousands of jobs will be created, jobs that pay the taxes that fund our social programs that we have all come to rely upon. As mentioned before, you can't buy that amount of advertising. It would be the best commercial for B.C. you could ever imagine, not to mention the positive feeling it will engender. It will be nice to have people feel good about B.C. again. It will be nice to not be the butt of jokes anymore.

           The critics contend that any money spent on Olympic bids should be spent in other areas. Some oppose spending anything on the Sea to Sky Highway. The reality is that the people of Squamish and Whistler, one of the fastest-growing regions in Canada, deserve a safe road, Olympics or no Olympics. Over the past 15 years huge expenditures have been made upgrading the Island Highway and building the Coquihalla Highway and SkyTrain. Every region deserves its share.

           Some claim that the money should go into health care. The government has already increased the budget for health care by $1.1 billion this year. I'm tired of throwing money into the big black hole called health care. I want to know that money we spend on health care is having the desired effect. Unfortunately, it hasn't happened to date. We spend 41 cents of every tax dollar on health care. At some point, we have to say that money has to be invested in other projects in order to generate more tax money. To support health care, we need economic development, which the Olympics will generate.

           B.C. has the highest minimum wage, spends the most of any province on social housing and has the most generous Pharmacare program in Canada. We do a good job taking care of people in need in B.C. I don't agree with the critics who say that the Olympics will be at the expense of social programs. We can hold our heads up high and say that the Olympics are for all British Columbians and in fact will help those in need.

           Who can put a price tag on pride? A successful Olympic bid will inspire young people in B.C. over the next decade. It will show that we are world-class people and we are capable of accomplishing anything.

           Who started this Olympic bid anyway? It was, of course, the previous NDP government. It was one of the few good decisions on their part. It is my hope that all British Columbians, left and right, urban and rural, young and old, athletes and couch potatoes, will enthusiastically support this bid.

           Behind the rhetoric of these critics is the spoken refrain: "What's in it for me?" I say let's reject that. What's in it for B.C.? The answer is jobs, economic activities, a celebration of amateur sports. But most importantly, it is the positive impact it will leave on our young people for the next decade or even further on.

           I immigrated to Canada 12 years ago. When I look around and talk to my colleagues, I sense the optimism that people have. For the past ten years it seemed as if our province was in a deep sleep. We have become a have-not province. Our political institutions were being questioned. We had a revolving door in the Premier's office. It seemed to me to resemble a banana republic.

[1335]

           I am tired of playing second fiddle to Alberta. I came to B.C. because this is the place to be. This is my home, and this is where I plan to raise my kids. In my opinion, the Olympics will send a loud and clear message to people around the world: "B.C. is open for business again. Please come back to B.C. Invest your money. Raise your families. Help us put B.C. back to the front of the line instead of the back where it presently stands." At the end, let's not be a backwater. Let's be a world leader.

           Thank you, ladies and gentlemen. Any questions?

           B. Lekstrom (Chair): Thank you very much, Nab, for your presentation. I will look to members of our committee to see if there are any questions.

           I see no questions. I'm going to interpret that as a very direct presentation that members of our committee have interpreted very well.

           Thank you very much, Nab.

           Members of the committee, that brings us up to our recess for this afternoon. We will reconvene at 2:05 p.m. precisely.

           For committee members' information, lunch will be served in the Ned DeBeck lounge, which is just above the library. Again, our next presenter is scheduled to present at 2:05. We are adjourned until then.

           The committee recessed from 1:36 p.m. to 2:07 p.m. 

[ Page 856 ]

           [B. Lekstrom in the chair.]

           B. Lekstrom (Chair): Well, good afternoon. We will the call the meeting of the Select Standing Committee on Finance and Government Services back to order. In the interests of time — I know we have a number of presenters — we will begin this afternoon's session with our next presenter, with Shaw Communications, Mr. Chris Ewasiuk.

           Good afternoon, Chris, and welcome.

           C. Ewasiuk: Good afternoon, Mr. Chairman and members of the committee. Thank you for the opportunity to make a submission to you today as part of your prebudget consultation process. Although I'm representing a technology company, my presentation today will be remarkably not very high-tech.

           My name is Chris Ewasiuk. I'm the manager of government affairs for Shaw Communications in British Columbia. Today we'd like to take an opportunity to share with you some information about Shaw and our operations in British Columbia and to raise two key issues of concern to Shaw with respect to government policies and initiatives — namely, access to rights-of-way and its relation to bridging the digital divide, and the proposed community charter.

           Shaw has operated systems in British Columbia for over 30 years. In that time we've seen cable evolve from a small selection of analog channels to digital technology offering hundreds of broadcast networks, high-speed Internet services and an array of broadband telecommunication services. Today Shaw's core business is the construction and operation of broadband networks that deliver television, Internet and telecommunication services to residential and commercial customers throughout British Columbia and western Canada.

           Shaw is Canada's second-largest cable company, and with the acquisition of the lower mainland cable system from Rogers in 2000, Shaw became the primary cable company in British Columbia, with over one million customers, delivering broadcast signals to 90 percent of the homes in the province that receive cable services.

           Shaw employs approximately 2,700 people in British Columbia, operating out of six regional offices located in Cranbrook, Prince George, Kelowna, Nanaimo, Victoria and Burnaby. Shaw also has smaller offices, many with production studios, in communities such as Dawson Creek, Powell River, Squamish, Courtenay, Kamloops and Castlegar among others.

[1410]

           In the past five years Shaw has become British Columbia's largest provider of high-speed Internet services, with approximately 375,000 Internet customers and growing. To evolve from a cable system with a few channels to a broadband network capable of offering hundreds of audio and video channels and high-speed Internet has meant hundreds of millions of dollars of investment over the years, particularly over the last five years, as we've moved from analog to digital technology.

           In the most recent year, 2001, Shaw invested $230 million in capital upgrades in British Columbia. This is in addition to $300 million in the annual operating expenditures in the province. Shaw contributed $15 million in provincial taxes and paid an additional $8.2 million in local taxes.

           Finally, Shaw gives back to the communities we serve through a variety of charity fundraising activities, donations to various causes and the distribution of Shaw bears to agencies that come in contact with children who suffer some type of trauma. Most of you will be familiar with Shaw TV, including studio facilities in 15 communities and, of course, the bureau here at the Legislature. Through employment, investment and community contributions, Shaw has a strong presence in the communities we serve throughout British Columbia.

           Although our industry operates under federal legislative and regulatory authority, we take great interest in the policies of local and provincial government, as they can have a bearing on our operations in a variety of ways. Shaw applauds some of the specific tax cuts undertaken by the province, such as the elimination of the corporation capital tax. It was an important step in increasing the competitiveness of B.C.'s investment climate.

           Consumer confidence in the economy is something that all businesses value. While the past year has been turbulent, we're pleased to see signs of increased consumer confidence in British Columbia. For example, retail sales for June 2002 increased by 6.4 percent over the same period last year.

           Another commitment being explored by the government is the use of public assets, such as roads, railways and power lines, to bridge the digital divide. While statistics show that British Columbia leads the country in the percentage of residents who regularly access the Internet — tied with Alberta at 65 percent — further work is required. Shaw applauds the province's stated intention and urges this committee to carefully consider how the province makes access to these corridors available and that the terms, costs and process for access are reasonable and investment-friendly.

           In particular, Shaw would like to take this opportunity to highlight a few specific concerns that are directly relevant to your mandate — balancing revenue and expenditure pressures while benefiting all British Columbians. As a builder of broadband networks in the province, access to rights-of-way, be they located on highways or other corridors, is vital. A recent experience with Land and Water B.C. and its predecessor provides a helpful illustration of the barriers that discourage investment.

           Shaw had a project where we wanted to use already existing power poles of Aquila, formerly known as West Kootenay Power. We were simply going to add a fibre cable onto Aquila's existing pole line from Penticton to Warfield. However, Land and Water B.C. imposed upon us a lengthy and burdensome application process and terms for tenure that we simply could not accept. The licence that Land and Water B.C. was

[ Page 857 ]

going to issue was limited to two years. One condition that LWBC was seeking was to bind Shaw to enter into a replacement agreement upon termination of the licence. The new agreement would contain terms and conditions specified by LWBC at their sole discretion based on future government policy.

           From earlier discussions with LWBC, we feared that these new terms may include fees that would be applied retroactively to the licence period. In any case, no reasonable person would enter into an agreement that would give the other party sole discretion to set terms of subsequent agreements.

           Shaw's view with respect to fees for access to rights-of-way has been consistent for some time. We believe that taxpayers should not be out of pocket because of our occupation of a right-of-way, and we will pay all reasonable direct causal costs associated with our use of a right-of-way. However, the idea that LWBC would charge fees or rent for occupying an already existing right-of-way is something that we were not prepared to accept.

           Another term LWBC was insisting on was to know who and under what terms other parties would be using the fibre within our cable. Buying and selling capacity in fibre cable is fundamental to part of our business. We could not and do not understand why LWBC needed to know what was going on inside that cable once it was in place. Whether or not others were using the fibres in that cable for their telecommunications purposes should be of no concern to LWBC, as it would have no impact on the tenure of the actual cable in the right-of-way.

           Shaw had similar concerns with the B.C. Transportation Financing Authority and had an experience with that agency whereby a fibre optic project from Kamloops to Prince George was delayed because that agency was making similar demands. From our perspective, BCTFA added no value to the way the Ministry of Transportation and Highways has previously managed access to highway rights-of-way. We commend the government for effectively eliminating this agency and its burdensome and costly application and access policies. We would be happy to provide further information on this issue and this specific instance to members of the committee.

[1415]

           The other issue we wish to raise is the proposed community charter. Shaw has reviewed the discussion paper and draft legislation closely and has a number of concerns with the potential impact the charter could have if passed in its current form.

           A key concern again falls under the area of access. Shaw and other companies in the telecommunications industry want to work closely and establish good working relationships with municipalities, because a good deal of our plant and equipment is located on municipal road allowances. We have every desire to maintain these good working relationships. However, Shaw has a concern that certain sections, specifically sections 7, 15, 36, 40 and 41, of the proposed community charter could empower municipalities to place extra regulatory burdens on our industries or otherwise interfere with our ability to construct networks. This seems counter to the deregulation initiatives that your government has embarked upon.

           Shaw also has concerns with part 7 of the proposed act, whereby the power of municipalities to levy fees is broadened. We are concerned that sections of this part of the act could be used as a cash grab from our industry, thus curtailing the investment opportunities in B.C. and decreasing the likelihood that there will be increased access to high-speed Internet for British Columbians across the province.

           Shaw has made a submission to the Ministry of Community, Aboriginal and Women's Services on the community charter, and we'd be happy to share a copy of that submission with members of this committee.

           As we indicated earlier, Shaw has a significant presence in the communities we serve across British Columbia. Shaw has invested a great deal in this province so that our customers have access to the most cutting-edge technology possible. We are here for the long term.

           While we laud many of the directions outlined in Budget 2001, we urge the province to stick to its goals of improving British Columbia's economy, reducing the regulatory burden and bridging the digital divide by addressing the concerns we have raised.

           Thank you for the opportunity to address you today.

           B. Lekstrom (Chair): Thank you very much, Chris, for your presentation.

           I will look to members of our committee to see if there are any questions. I will go to Ralph and then to Brian.

           R. Sultan: I think it would be helpful to have a copy of your paper that you gave to the Minister of Community, Aboriginal and Women's Services on your views.

           Second, concerning the community charter, what are your opinions about the taxation authorities proposed to be devolved to the municipalities?

           C. Ewasiuk: I guess our concern is with their ability to charge fees over and above what their costs are, related to our being in their roadways.

           As I stated, our position has been quite clear for some time — that we're prepared to pay costs to government, be it provincial or municipal, for us to be in their roadways. That includes pavement, restoration and other costs.

           Where we have an issue is paying other fees over and above what costs they may be incurring with our being there. We're concerned that the community charter may open the door for them to try to do that type of thing. Doing that possibly sets up many different types of fee and tax regimes across the province. Each we'd have to individually deal with, the result being less money to spend on networks if we're having to pay more money in fees and taxes.

[ Page 858 ]

           B. Kerr: I am curious. At what time frame were you entering into negotiations with Lands and Parks B.C.? When was that?

           C. Ewasiuk: We were in negotiations with them for about a year, on and off.

           B. Kerr: Starting when?

           C. Ewasiuk: About a year ago now — September of last year.

           B. Kerr: Thank you.

           L. Mayencourt: Thank you very much for your presentation. I want to go back to your bit on the digital divide and the high-speed Internet and access to transportation corridors and stuff like that.

           You've ironed out your problems with B.C. Transportation Financing Authority now?

           C. Ewasiuk: I would say the government ironed out those issues for us.

           L. Mayencourt: That's good. Have the ones you mentioned regarding lands and parks been ironed out?

           C. Ewasiuk: No, they have not. Land and Water B.C. used to be the B.C. Assets and Land Corporation. They have responsibility for managing Crown land throughout the province.

           As I was saying, over the past year we've tried to reach accommodation with them on this one specific project. The terms they were seeking in terms of a tenure document, a licence document, for us to have tenure over certain pieces of Crown land we needed to cross as part of this build were just unacceptable to us. Some of the terms were agreeing to enter into a future agreement on which they would settle the terms, basically. I don't think any reasonable person in business or otherwise could accept those types of provisions.

[1420]

           We also had some serious concerns with what they consider to be subtenuring. Imagine, if you will, what we're doing here. There's already a line of hydro poles existing through the south Okanagan and the West Kootenay region. All we want to do is add another cable to that already existing pole line. We're not making a bigger right-of-way. We're not doing anything; we're simply adding a cable to an already existing right-of-way.

           Another term that Land and Water B.C. wanted was not only…. They wanted to know who we were going to be selling or leasing to — or leasing capacity to, even — in that cable. Let's say that cable has 48 fibres in it. If we were going to sell one of those fibres to a third party, another telecommunications company, they wanted to know who that company was and what the terms of that sale arrangement were. We don't see that as having any bearing on the nature of that cable and the tenure we're trying to seek on the land. We just found that to be overly intrusive into our business interests.

           B. Lekstrom (Chair): Time for one more.

           S. Orr: Taking into account the cost of cutting blacktop, cutting up a road, and what it costs to remediate the repair of a road, when you're putting down your fibre optics lines and going through a main artery or a main highway, do you make arrangements to hook into the other lines under there, like Telus and everybody else?

           C. Ewasiuk: It depends. Historically, we have coexisted with the telephone company in their duct structures and what have you. Due to the newly competitive nature of the whole telecommunications industry over the past five or ten years, that's become less tenable for us. To be reliant on one of your competitors in terms of access becomes a real issue. They can find ways of making sure you don't get the access to the customers you need, thus shutting you out of business. More and more companies are wanting to build their own infrastructure.

           That begs the need for more work between municipalities and the telecommunications industry to make sure that we're making the best use of those road allowances. We've participated in utility coordinating committees with municipalities where all the players come together and say: "Okay, if this piece of roadway…." Let's say the city is going to repave that piece of roadway sometime in the next couple of years. How can all the parties sit down together and agree on a schedule to all do their work at the same time — rather than the road being paved, and then a year later someone comes along and starts tearing it up? The industry is interested in participating in those kinds of endeavours.

           B. Lekstrom (Chair): Chris, on behalf of the committee, I would like to thank you for coming and presenting to our committee this afternoon. As with the previous presenters, your presentation will be given due consideration in the development of our report, which will be presented to the Legislature by November 15.

           C. Ewasiuk: Great. Thank you very much.

           B. Lekstrom (Chair): Moving along in our presentations this afternoon, our next presenter is Terry Lalari. Good afternoon, Terry.

           T. Lalari: Thank you for allowing me to speak today. My name is Terry Lalari, and I'm a working person with a modest income trying to raise a family. I have a serious concern with the state of this province's finances.

           As a taxpaying citizen I find myself disgusted with the amount of debt this province has accumulated over the past 12 years. I can't tell you how angry it makes

[ Page 859 ]

me when I think of the casual way the NDP played with my money. I find it particularly frustrating when I look at my young family and know my children will be paying for a huge debt incurred by my generation. That is totally unacceptable to myself, and it should be for everyone.

           I hope this government understands how important it is to manage my money properly. Like everyone, I want the best infrastructure, the best health care and the best social services, but I don't want to have those on the backs of my kids, who will have to pay for them. Balancing the budget and paying down the debt must be this government's number one priority. If we can't do that, those services we want so desperately won't be there for any of us as we age. Perhaps, if we can't manage our tax dollars properly, we don't deserve them. I'm a firm believer that one must live with the consequences of one's decisions.

           Having said that, I do understand the basic concept of how governments generate revenue. The best way, in my opinion, is to expand the tax base. I don't want to pay more taxes. Quite frankly, I can't afford to pay more taxes. I'd much rather have businesses and people coming from Alberta or across Canada or even America to help pay for services.

[1425]

           I think some small communities are facing tough times right now simply because they cannot increase their population base fast enough. We need to import people to share the tax load and support our communities. I know government cannot and should not be creating jobs, but you do have the responsibility of attracting businesses that can create jobs.

           I believe to do that, we have to have a better business environment than Alberta, all of Canada and competing American states. We must have the best tax structure to attract business. That means lowering taxes to entice companies. I believe if we do that, the province will benefit financially, because the companies will create jobs, and those workers will begin paying taxes to help share the load being shouldered by the existing tax base.

           It is also important to make it easy for business to relocate here. Don't force companies to comply with useless regulations and spend hundreds of hours and thousands of dollars wading through bureaucracy unless it is absolutely necessary. In my opinion, the NDP discouraged business from coming here. I know there are people in the mining sector who lost jobs in the 1990s and had to move to Alberta to find work. It boggles my mind as to why this needs to happen. Do we not have the richest resources of any province, whether it's the mining or forest industries? It only makes sense that companies would want to invest here if we make it easier for them.

           I also think we need to actively pursue companies. This government should be marketing British Columbia on an international scale. Get out there and tell companies we want them to come to this province and create jobs.

           If you ask me, this relates directly to the Olympics bid. I support the Olympics bid for many reasons. First and foremost, I think it will give us the international exposure we need to attract investment. I have never heard a city that said the Olympics hurt them. Yes, it will cost money, but I think it will bring tangible benefits to this province in the long run. Not only will it provide unique opportunities for existing businesses in British Columbia, but it should also create opportunities for international companies who may never have heard of British Columbia.

           We need a plan to grab hold of those companies who come to B.C. for the Olympics and encourage them to stay and keep their jobs here. This government needs a plan to do that so the benefits of the Olympics aren't gone when the games are over.

           To conclude, I want to stress two points. The first is that you need to continue finding ways to attract companies and create jobs in the province. The second is that you must stay on the fiscal path you have laid out, balance the budget and pay down the debt. Those two points are directly related, and if we are successful at that, I think there will be a lot more opportunities for people now and in the future.

           Thank you very much.

           B. Lekstrom (Chair): Thank you, Terry. I look to members of our committee to see if there are any questions regarding your presentation this afternoon.

           H. Bloy: I thought it was very positive. I liked your presentation.

           T. Lalari: Thank you.

           B. Lekstrom (Chair): All right. Well, seeing no questions, Terry, I'd like to thank you for taking time out of your day to come and speak with our committee this afternoon.

           T. Lalari: It was my pleasure.

           B. Lekstrom (Chair): Our next presentation this afternoon comes from school district 63, with Helen Parker. Good afternoon, Helen.

           For the first time today, we're a couple of minutes ahead of schedule. I just wanted to say that.

           A Voice: It feels good, doesn't it?

           B. Lekstrom (Chair): It does.

           H. Parker: Well, I hope to improve your situation. This will be short.

           B. Lekstrom (Chair): Good afternoon and welcome.

           H. Parker: Thank you. I'd also like to introduce some other members of my board: trustee Nancy Mitchell, who represents the central zone of the Saanich school district, and trustee Marika Townsend,

[ Page 860 ]

representing the north zone of the school district. I am the south zone rep.

           Good afternoon. I'm very pleased to have this opportunity to present on behalf of the Saanich school board. As elected trustees, we are very aware of how public input helps us make better decisions about both our school district budget and how we work to improve achievement for students.

           In the Saanich school district we have always been dedicated to providing the best education possible to our students within the funds available. We do appreciate that education funding has been protected, given the situations other ministries are facing. However, we strongly urge the government to give priority to the Ministry of Education budget to cover current costs and expectations of public education and to consider how other budget decisions you make will impact on public education.

           Reduction targets, particularly in the ministry serving children and families, do negatively impact us, so we respectfully request that you allocate available funds in the future also to health and services to children and families.

            [1430]

           From 1995-96 to 2001-02, government funding did not keep up with the cost of public education, and the Saanich school board was forced to redirect services or reduce costs by $6.5 million. School districts across the province were forced to reduce services in 2002-03 as a result of imposed cost increases along with frozen funding levels. In Saanich that meant we were forced to reduce by an additional $3.8 million, more than half of what we had previously cut over a six-year period.

           Imposed costs include teacher and CUPE support staff salary increases, MSP premium increases, changes in the Pharmacare program, Workers Compensation Board and Canada Pension Plan increases, the provincial sales tax change to 7.5 percent, changes in funding received from the Ministry of Children and Family Development, and changes to the funding allocation system.

           We know that public education funding will be frozen until 2004-05. The result will be further reduced services to students. The known cost pressures faced by public education for the next school year include year 2 of the imposed teachers salary settlement, which equates to $850,000 in Saanich and $50 million across the province; implications of additional changes to the Pharmacare program; changes to Workers Compensation Board rates and further reductions in grants from the Ministry of Children and Family Development.

           Schools face increases each year in students with special needs who require additional supports to be successful in school. Over the past five years dependent handicap enrolment is up 16 percent provincially, and low-incidence enrolment is up 47 percent. The services for these students are costly and increasing annually. English-as-a-second-language and first nations student enrolments are also pressures in some school districts.

           As trustees, we are more than willing to meet the challenges of improving student achievement for all, and we welcome accountability measures that help us to demonstrate our successes to our communities. However, we urge you to fund school boards in a way that reflects the costs of meeting the increasing expectations of students, parents and the Ministry of Education, as well as the costs imposed through changes to legislation.

           School boards understand the government's need to effectively manage and prioritize the provincial budget. We believe it is simply common sense that strong communities and strong economies depend on how we support and educate our children and youth. In our view, public education is the most significant investment in our future.

           Attached are two documents that outline the 2002-03 operating budget pressures and decisions made in the Saanich school district. We hope that this information will assist in understanding the fiscal position of our school district. I thank you for the opportunity to share our concerns with you.

           B. Lekstrom (Chair): Thanks very much, Helen. I will look to members of our committee for questions.

           J. Bray: Thank you very much, and thank you for the additional information.

           I think by your presentation, then, you sort of answered question 2 on our prebudget consultation document — that should a surplus arise, where the priority would be.

           I'm wondering, though. On the first question. The Minister of Finance at our very first committee meeting did indicate that although the spending envelopes are fixed, because we're committed to balancing the budget, he is prepared to look at some fine-tuning, some moving things around. One of the questions is whether or not you see any opportunities where you might move some funding from one area to another. I'm assuming that education, primarily K-12 education, would be a place for it to come in. Do you see any places within the current fiscal framework of the provincial government where you might make some suggestions where some funding could come from another area into the K-12 system?

           H. Parker: From anywhere in the provincial government? Well, I think one of the things school boards have been working towards over the past few years is integration of services with other ministries, so I think if there is discussion between those ministries on how they can…. As I say, the Ministry of Children and Family Development can assist the Ministry of Education in providing services for children. I think further coordination of services could be really helpful.

           J. Bray: Just to follow up, then, just so I'm clear, let's say that some of that coordination activity occurs and there's a savings of $10. You wouldn't want that $10 to just necessarily go back into a big pot. You would like

[ Page 861 ]

to see that $10 saving also follow over to the Ministry of Education to help K-12. Is that…?

           H. Parker: I believe that $10 could perhaps even stay in the Ministry of Children and Family Development if it is going to be assisting children.

           B. Lekstrom (Chair): Are there any…? Yes, Lorne.

[1435]

           L. Mayencourt: Thank you very much for your presentation. I understand the difficult choices that you have to make as a school trustee. I was just reading some of the other opportunities for reduced costs or increasing revenues, and I just wondered how those options were panning out for you. How do they look?

           H. Parker: I think that we're in the very early stages of looking at some of those options. I know we have been given, in some ways, more flexibility around our budgets around, say, class sizes — that sort of thing. However, I think we need to keep in mind that when we start talking about class sizes, we are still talking about maintaining and improving student achievement. I don't believe that it's really appropriate — I say this facetiously — to load classes just because you can.

           I think that we really need to be looking at what we were doing for children's education in developing those kinds of flexibilities. In the case of the entrepreneurial activities, we believe that those activities should provide an educational benefit to our students. Certainly, those would be the extra enrichment-type activities rather than the school district becoming dependent on those revenues. At this point, I think I can also see some competition for extra revenue in those places where we have boards close together.

           R. Sultan: I'm impressed by the level of detail of the various areas that you have worked on to try and reduce your budget by $3.8 million: reorganizing the painting department, grounds maintenance, building maintenance, crossing guards, etc. On and on the list goes.

           This government passed legislation which gave additional flexibility to school boards across the province to explore other ways to reduce costs by looking at, maybe, non-traditional sources of supply for certain services. Has your school district explored any of those options?

           H. Parker: At this point we are working on having to cut this year. We are looking at sharing services with other districts to reduce our costs. That's one of the options. Certainly, we've had several discussions with the other districts in our area around sharing services to reduce those.

           R. Sultan: I take it you haven't actually contracted out any services?

           H. Parker: No. I don't believe we have contracted out. If you're talking specifically around maintenance and current activities, no, we haven't.

           I. Chong (Deputy Chair): Thank you, as well, for your presentation. I do find it really useful. A lot of information here.

           I just wanted to ask, with the three-year funding process that school boards are now permitted to develop their budgets, have you found that useful? How may that help in planning over the next two years? What are your thoughts on that?

           H. Parker: My thoughts are that we're in the very early stages of that. I know there have been changes to the funding allocation system. I think over time…. I have to give thanks to our secretary-treasurer for the actual numbers, the detail in what we do here, in my presentation. She's president of the B.C. School District Secretary-Treasurers Association, and I know she's had conversations with the ministry discussing some of the areas of the new system that may be somewhat problematic. I believe that those will be refined over time.

           I. Chong (Deputy Chair): But overall you would say that having a three-year plan is much more flexible?

           H. Parker: I think a three-year plan would be beneficial.

[1440]

           I. Chong (Deputy Chair): Okay. One other item that I just wanted to ask you very quickly, because you were specific on some of the costs that are associated with the financial challenges you have…. One in particular is WCB costs. I've heard this from other sectors, not just in education — that additional costs which provide no additional benefit to the quality of education or for students have created this fiscal challenge. Can you give me any suggestion or recommendation to consider as to what kinds of changes you think could bring that cost down and yet would still maintain safety and also allow you to have the extra room for improving education in the system?

           H. Parker: I think the areas around worker safety are very important to maintain, naturally. In our district, I think we paid very much attention to it, and we have made some changes that in fact improve the situation for our maintenance staff or custodial staff. I can't give you specifics on that, because I'm not totally familiar with all of workers compensation.

           I. Chong (Deputy Chair): Thank you.

           B. Lekstrom (Chair): We do have time for one more. I will go to Sheila.

           S. Orr: Thank you for your presentation. As always, Saanich does a very good job as a board; that's for sure.

[ Page 862 ]

           Two things. One, when you talk about your anticipated enrolment decline in Saanich, where you live…. There's a lot of growth. I mean, there are a lot of new building and a lot of families moving in. Has anyone looked into what they thought could be the projection? I know there was a regional growth strategy done within the capital regional district. Have there been any figures to look at to see if you can say you might be projecting more growth?

           The other question was that somebody mentioned some alternate forms of revenue. I'd heard somewhere that some school districts were actually recruiting students from abroad. Has your school district looked at that?

           H. Parker: With regard to the international student program, yes. In fact, we've had a significant increase this year, but I can't give you the exact numbers on that. They're in Parkland Secondary in a very vibrant program there this year.

           For the others around growth, we do have discussions with our respective councils where Saanich school district resides. The numbers we get for our enrolment are both from the ministry and through a particular program we use plotting families through what was family allowance.

           As for the growth, what I see is what I read in the paper. We do have an aging population, as well, so what we're finding is that families are aging out of the system as opposed to new families coming in. On our projected enrolment, in fact, we did have a better return. I believe we were up 100 students more than we had expected.

           B. Lekstrom (Chair): Helen, I would like to thank you very much for coming and presenting to our committee this afternoon, as well as thanking your colleagues, Nancy and Marika, for coming out in support. Certainly, it's nice to have that. Thank you very much.

           Our next presentation to the committee this afternoon comes from the Craft Brewers Association of British Columbia. Mr. Barry Fisher and Bill Baxter are with us. Good afternoon and welcome.

           B. Fisher: Good afternoon. Thank you very much for providing us with this time. The purpose of our coming forward to this committee is to make many of our valued MLAs aware of the circumstances and situations that are faced by the craft brewers in the B.C. liquor distribution system.

           The craft brewers group consists of ten members, although there are many small brewers working within the industry that benefit from the initiatives of our ten-member organization. We would like to bring forward to you an understanding of concerns we have with changes within the marketplace and activities that are taking place. The proposed changes within the LDB system does cause us some concern. We do not know what those changes will be yet, but as we're here presenting today, there are areas of unknown that concern us as small business people.

           The one thing I would like you to know is that we're not looking for greater tax relief. What we're looking for is consistency in what we consider to be a workable business environment today.

[1445]

           What we are facing from international competitors at this time is of concern to us. We have major international breweries accessing the marketplace, facilitated by and large by the major breweries of Canada and international brewers — Labatt being an international brewer, owned by Interbrew out of Belgium. That's why I make that statement. We consider them to be a Canadian brewery, but they are an international brewer. At this time our competition in the B.C. marketplace is very much the import beer brands. They're coming into our marketplace and causing us a great deal of difficulty, because they're very large companies with very, very large marketing budgets.

           Over the last year and a half approximately, we've benefited from a reduced liquor board markup. Bill is here to explain that formula to you. This was approximately a 20 percent reduction off baseline markups within the system. It has put the craft brewers into a position of being viable after years of struggle. We have started to reinvest in our companies now and are trying to build our companies beyond being small companies, only to find that the competition from other jurisdictions is hurting the potential for growth.

           We're not asking you to do anything about the competition. What we're here to ask you to consider is going forward with budgetary advice to perhaps impress upon the legislators of change that our status quo in markup is continued so that we can be viable small businesses investing in the economy of our communities. We're very much community operations. We're not international operators. We work within our communities. We do participate in many activities that are supportive of not-for-profit organizations, etc. We do not have the wherewithal, the economies of scale, etc., to compete with international brewers. That is the reason it was identified that there is a need for a different markup structure.

           This is a common position taken by almost all of the countries within the world that are major beer producers. In the U.S., right across Canada, in the provinces, as well as right through Europe there is a dual tax structure that gives a preferential tax, we'll call it, to the small brewer. Our objective here today is to make you as knowledgable as possible so that if there is a need for us to defend our position as small brewers, we have some allies that have some inside knowledge.

           I'd like to turn it over to Bill Baxter now.

           B. Baxter: Thanks, Barry.

           Again, it's not asking for a reduction today. It's a concern that as there are changes contemplated in the liquor taxation and distribution, presentations have gone forward from the larger breweries to change the system of taxation on beer from an ad valorem system

[ Page 863 ]

to a flat tax system. The proposal has been a revenue-neutral proposal, so understanding the fiscal situation that proposals have to be revenue neutral, this is a revenue-neutral proposal.

           However, it does shift the burden of taxation within the category of beer, and there is a significant reduction in the taxation of higher-priced beer, where we compete with the imports. It would result in approximately a $10 million saving in that category to the largest breweries in the world, and that's only going to result in either more marketing dollars being spent or reduced prices. Because there's no change in the taxation under this proposal, the craft brewer tax would stay exactly the same, we would have to reduce prices, and it would have a direct impact on our business.

[1450]

           As Barry said, the differential tax rate on small brewers is not unique to British Columbia. Right across Canada all provinces have differential rates. Some rates are more advantageous to the small brewers, and some are less. If we look at Alberta next door, they tax their small brewers at 40 percent of what they tax their large brewers. Our rate is based on the average commercial rate of between 80 and 90 percent. Alberta just made changes and implemented that rate in the spring to deal with some of the issues that Barry has said they were faced with in Alberta with the imported premium beers.

           Again, the small brewers do pay our fair share of tax today. Small brewers generate approximately $20 million in direct taxes with the markup, excise, PST and GST, and over half of that accrues to the provinces. We do pay our fair share of tax, and we don't want to change that. What we are asking, though, is if this issue arises, any changes in the taxation of beer not reduce the absolute difference in taxation between the large commercial breweries and the small craft breweries of British Columbia.

           Thank you for your attention.

           B. Lekstrom (Chair): Thank you very much for presenting to us this afternoon. I will look to members of our committee for questions they may have of our presenters.

           H. Bloy: Hi, Bill. Thanks for the presentation. Just your last statement there — are you supportive of the WBA and a flat tax similar to what Alberta did, with 200 hectolitres or less?

           B. Baxter: We haven't taken a position on that. We're not opposed to a flat tax in any circumstance. What we are opposed to is how they have proposed it. They would initiate the flat tax, keeping the craft brewers tax the same. What it would do is create a price compression between the current tax levels of the premium products and ourselves. By reducing that gap, two things would happen. Either prices would come down, which is good for the consumer…. We would have to match that. Since we didn't get any tax reduction, it would come right out of our pocket, and we would be back to where we were a year ago.

           H. Bloy: Our government has been opposed to any business subsidies at all, but one of the things with the flat tax in Alberta, where at 40 percent for under 200 hectolitres it reduces their costs for a 12-pack by about $6 a case…. Like Big Rock Brewery — it's allowed them to expand into B.C. and Ontario, which is hurting you. They couldn't have done it any other way without that.

           B. Baxter: That's right.

           H. Bloy: I wanted to comment on that, and also it's because what the large companies can pay in marketing…. Like, there's 300 or 400 percent more that Molson spends in Alberta versus here.

           B. Baxter: Well, our market share is 3 percent of the beer market. It's the economies of scale that are afforded to large companies.

           H. Bloy: Would you like to see an Alberta method, where it goes to the flat tax rate for 200,000 hectolitres or less for providers?

           B. Baxter: We'd like to see the 40 percent, because the rate in Alberta is roughly 40 percent. Even on an ad valorem basis, we're paying 65 or 70 percent. If we were to pay 40 percent, that would be a good system for us.

           H. Bloy: And there would be a few more people, because Western Brewers is a little bigger. There are a couple of other manufacturers in there.

           B. Lekstrom (Chair): Are there any other questions?

           R. Sultan: Let me first assert that I love craft beers — Granville Island and…. I'm a great fan. Standing back from the scene — and there has been a good deal of lobbying in all directions on this topic, as you're well aware — how can one say: "Well, why should different types of beer or different-sized beer companies be taxed differently"? Can you give me the cogent rationale for that, if I had to defend it?

           B. Baxter: Well, it's because taxation is such a high percentage of the product cost that it's found worldwide — this is in Europe as well — that under the European rules member states can reduce the tax on small brewers up to 50 percent and not be contrary to any of the European rules. Britain has just introduced a 50 percent reduction on small brewers. What it is, is that there will only be one or two breweries without…. Because of the economies of scale and the high tax component that most jurisdictions apply to beverage alcohol, without that, there will be no small brewery segment. Alberta is the same in terms of an example of providing a differential rate. Similarly, it's no different

[ Page 864 ]

than having a small business tax rate on a small business. We have a very small market share. It's not going to give us the competitive advantage to take over the beer market, because there are limits, and once you go over that limit, just like if you go over your small business tax limit, you're now into another category. I guess it's analogous to the small business tax.

           R. Sultan: Your position is that without a preferential tax, there wouldn't be a craft brewing industry.

[1455]

           B. Baxter: That's correct.

           B. Lekstrom (Chair): I see no further questions from members of our committee. With that, Barry and Bill, I appreciate your coming forward this afternoon and taking the time out of your schedules to present to our committee here. Thank you very much.

           Our next presentation this afternoon comes from the Camosun College Student Society. We have with us Lorisha Cook and Leah Hough.

           Welcome. It's certainly exciting to be able to hear from everybody in our province, and we're looking forward to hearing your presentation this afternoon.

           L. Cook: Hi. We've been introduced. My name is Lorisha Cook, and this is my colleague Leah Hough. We're students here at Camosun College in Victoria. Thank you for the opportunity to come to address you today.

           Camosun College and the rest of the college system cannot withstand another year like the last one. The block funding to our college has been frozen and will be gradually reduced thereafter. Yet the Ministry of Advanced Education expects a significant increase in full-time-equivalent students by 2004-05. Camosun will be expected to produce 80 more full-time-equivalent students by this time with $2.3 million less in grant funding than it's receiving this current year.

           On the surface, the idea of frozen provincial funding does not sound bad, considering all the other cuts the government is implementing. In addition to freezing funding, the government has removed the long-term envelope funding that Camosun and other institutions have come to rely on. At the end of the day, Camosun is left with considerably less funding. Other than the government, there is only one other major source of funding, and that is from us, the students.

           Last year Minister Bond announced she was giving autonomy to local boards of governors and deregulating tuition fees. I heard the minister say that the local boards of governors would be reasonable. What is reasonable? Students at my college are paying 40 percent more in tuition fees across the board. The average Camosun student is paying $600 to $700 more for our fall and winter semesters combined. This may not seem like a large amount of money to you, but to us it could be the cost of living for one month.

           Camosun is not alone in this, as all B.C. colleges have received significant tuition increases ranging from 20 percent to 500 percent. While the average increase is closer to 30 percent, most institutions are planning significant increases this year.

           If the government does not re-regulate tuition fees and reinstate envelope funding, the board of governors for Camosun College will raise tuition by another 30 percent this coming year.

           The common rationale I've heard for the necessary increases is because of the previous five years' tuition freeze. I can tell you that 70 percent over two years is not reasonable and far exceeds the cumulative costs of inflation and reductions from the previous years. Would B.C. accept a 70 percent increase in taxes?

           At Camosun College our students have received a raw deal. In addition to paying 40 percent more in tuition fees, our class sizes have increased, compliments of Bill 28. Furthermore, grants to first year students have been eliminated, and if a student finds that they don't have enough money, they are no longer able to get a work-study position to help pay for their living expenses.

           If the student gets depressed about this, there are two fewer counsellors at Camosun College to help them. Among the most reprehensible actions taken by this government is the removal of Students Aiding Students funding, which used to allow the hiring of students to help students with disabilities.

           At our college first nations programs have been largely protected this year because they are considered a priority. Other colleges have not been so fortunate, and we are concerned about this trend. Previously, colleges were able to receive a $75,000 grant for first nations coordinators. With the elimination of this grant, I know of four colleges — Vancouver Community College, Northwest Community College, Northern Lights College and North Island College — whose services have been severely impacted if not eliminated with the elimination of this grant.

           The success rate of first nations students is better at institutions that have dedicated faculty and staff and a coordinator that is highly insightful, enough to influence institutional policy. At a time when first nations students are beginning to receive the academic and cultural support they need to be successful, it would be shameful for the ministry, through its actions, to reverse this positive trend.

[1500]

           L. Hough: It is the traditionally marginalized students that are most at risk in this new era of high tuition fees and reduced services. Colleges used to get institution-based training funding from the ministry. This money was used to support students making the transition from social assistance to employment. At Camosun College this program was called Linkages. Without the program, there is no one left on campus who can help people on social assistance negotiate the red tape at the Ministry of Human Resources.

           We had thought that the intention of this government was to get social service recipients into the workforce. Considering that there is now a two-year limit on

[ Page 865 ]

social assistance, the removal of support programs like Linkages just adds additional barriers for those already faced with many.

           Giving boards of governors so-called autonomy is only forcing them to make difficult decisions that hurt their students and local communities. These increases will turn our community colleges into educational factories that produce low-value FTEs that are only accessible to those with significant financial means.

           If your intention is to preserve a vibrant, valuable, community-oriented college system, you need to urge your colleagues to increase funding and re-regulate tuition fees.

           Each generation has a moral responsibility to make conditions better for the generations that come after it. With huge increases in tuition fees and cuts to services, we would have to say that the government is not doing a good job fulfilling this trust.

           Having a highly trained and educated workforce makes economic sense. If this province is ever going to shed its dependence on the risky resource sector, potential workers need to have the necessary training to meet the demands of the new economy. Even a conservative Irish government realized that the economic benefits of removing tuition fees outweigh the cost of charging them.

           Students cannot shoulder the financial burden that government is placing on them. We urge this government to fully support public post-secondary education. Contrary to what many seem to believe, students do pay their share. Paying tuition and living costs leaves many students with huge debt loads. The average debt is upward of $25,000. As you well know, students only pay part of the upfront cost of their education. However, it is well known that those with a post-secondary education more than compensate for the subsidy through higher tax payments due to increased earning potential over the course of their working lives. A beneficiary of post-secondary education will likely pay much more money into the provincial and federal purse than someone without.

           We are calling out to you to re-regulate tuition fees, properly fund our public institutions and restore essential envelope funding. During the term of the previous government, B.C.'s post-secondary participation rate increased, largely due to the participation of more working- and middle-class students. It is these and other traditionally marginalized students who are more at risk with the rising cost of education. When the cost of education increased in Ontario, there were demographic changes in the student population. There were fewer poor participating.

           Here in B.C. we should not make the same mistakes as other provinces. If anything, we should follow the example of Quebec, which continues to have a well-subsidized and accessible education system.

           To close, I would like to stress again that college students cannot afford further tuition increases. During the last election both major parties campaigned on maintaining the tuition freeze. Because of this, students were not expecting the massive tuition fee increases and program cuts that have been imposed on them this year. We do not believe that it is the intention of this government to make post-secondary education available only to the privileged. However, this will happen if this year's budget does not insulate the colleges and their students from further economic turmoil.

           Thank you for your time.

           B. Lekstrom (Chair): Thank you very much for your presentation to our committee. I'm going to look to members of the committee to see if there are any questions. I will begin with Brian.

           B. Kerr: I'm just curious. What are the rates in real dollars, not in percentages? What were you paying for your tuition, and what are you paying now?

           L. Cook: You want to know the percentage increase?

           B. Kerr: No, I want to know the dollars.

           L. Cook: I think per credit last year was $45, and this year it's around $65.

           B. Kerr: What do you do — 15 credits?

           L. Cook: No. A normal credit class is three credits. On average, a student will probably take about 12 credits.

[1505]

           B. Kerr: Twelve credits. All right.

           R. Sultan: Has there been any visible increase in financial aid to offset these tuition increases at Camosun?

           L. Cook: I actually haven't visited the financial aid office to inquire about that. Financial aid was only increased about $60 more per month to help a single student, and those students with children didn't receive any increases at all. So $60 more per month does not offset $600 for our semester, but I more than anticipate increased financial aid in the future as this was our first year of increases in tuition.

           R. Sultan: Do a rather large proportion of students take advantage of financial aid? Is that your impression?

           L. Hough: Yes, definitely.

           R. Sultan: Thank you.

           S. Orr: Thank you for the presentation. Have you noticed a drop in enrolment?

           L. Hough: I'm not sure about the exact numbers, but I know from working in the student society office that there are definitely a lot of students who are taking

[ Page 866 ]

fewer classes because of this. I know of some who are also not going to school this semester at all in order to save up money.

           B. Lekstrom (Chair): Are there any other questions, members of the committee? If not, possibly I will ask one. Certainly, your presentation was much appreciated. On the issue of funding — and you spoke on that quite eloquently — would you have any suggestions for the government? Part of our prebudget consultation package which was put out asked the question that if you had the ability to move some funding within the envelope of what government has, do you have any ideas of where that funding might come from, from what area, to move over into Advanced Ed, as you talked and the need is there.

           L. Cook: Well, I'm not a professor or any expert on finances, but what I do know is that without the reinstatement of envelope funding and without re-regulation of tuition fees, our college system won't be a good, functioning college system.

           Where would we get that money from? I actually don't know any budgets, and I'm not familiar with your system, but that's what we're asking for — the reinstatement of that envelope funding. That can range for some colleges from as little as $75,000 to as high as half a million dollars. So, to where it comes from.…

           B. Lekstrom (Chair): All right. No, I was just curious.

           I see no further questions. I would like to thank you both, Lorisha and Leah, for coming out and presenting to our committee this afternoon. As with the other presenters who have come before you, your presentation will be given due consideration in the development of our report, which we will present to the Legislature by November 15.

           L. Cook: Great. Thank you for your time.

           B. Lekstrom (Chair): Thank you.

           Our next presentation this afternoon comes from the University of Victoria Graduate Students Society. They are not with us at this present time. We do have somebody who was waiting to speak to us from the open-mike session, which we conclude with at 4:30 p.m. this afternoon. Seeing the time is allowed at this present time, I would ask Jacquie Burden to come forward if she would like to address the committee.

           J. Burden: Hello, everyone. I've been sitting back there watching everybody all day.

           B. Lekstrom (Chair): Good afternoon. Welcome.

           J. Burden: Good afternoon. Who am I? I'm somebody who is trying to exercise their democratic responsibility for the first time ever.

           I am a child care consultant. I work with the Sooke child care resource and referral program. I'm a mother of a ten-and-a-half-year-old special needs daughter. She's mentally handicapped and in the public school system here in Victoria at Oaklands. More than anything else, I'm an early childhood advocate.

           I also am somebody who visits parks with my children in the summertime. I have run-ins with logging companies as a caver sometimes as well. I'm the treasurer of the Canadian Caving Conservancy. Anyways, that's me.

            [1510]

           My first hat is that I'm a child care consultant. I work with 32 child care providers in the Sooke area as a friend, a support and a watchdog for the child care providers providing service to about 200 children in the Sooke area.

           It's a very unnatural thing to give your baby to a stranger and a very, very scary thing to fall in love with a stranger's baby. The burnout rate is really high in that industry. There's isolation being in a house full of seven children and yourself.

           What we do is invite all the caregivers in. Every Monday and Friday we have coffee. All the kids play. We run circles, and once a month we offer professional development. On Monday night we were learning how to shoot fire extinguishers off, because it's not something you want to learn in the middle of a fire — right? Anyway, that's what we were doing. We provide professional development opportunities, as well as networking, to these family day care providers.

           Our funding has been cut for March 2004. We're just thinking that it's an essential service for those day care providers and for the public who put their children into day care centres and family day care homes. That's my first thing.

           The second one is: please, please, please don't cut any funding. Continue to fund provincial special ed integration services. In my role as a parent of a child in Oaklands Elementary School, we have a policy of inclusion in school district 61 in Victoria, but we just don't have any procedures to go with it. My daughter hasn't been included in her class all the way through. She sits there, and she's very non-included. She's quite isolated herself.

           It's taken me till this year — and I have a teaching background — to find out who actually can teach the teachers and the assistants. I don't think my daughter's talked to her teacher yet this year, because there are 33 kids in their class. It's taken till this year to find somebody in Victoria who's the provincial special ed integration program coordinator to get some actual programming that's logical for my daughter.

           There's some information-sharing integration. Integration of services and systems is a really good area to focus on. When we were moving with her from the health care system with Queen Alexandra to the education system, there was a complete drop of information. Everything that everybody held over here was just not seen by anybody in the education system.

           That coordination of services. If I ever get the right job, that's where I'm going to end up: trying to smooth

[ Page 867 ]

that integration over, just from my personal experience there.

           That's all. Thank you very much.

           B. Lekstrom (Chair): Jacquie, thank you very much. You indicated this was your first effort at exercising your democratic right. I think you did a marvellous job.

           I will look to questions from members of the committee.

           J. Bray: You heard the presentation earlier of a group that developed some software that actually helped to do some of that coordination. One of the issues, of course, that government deals with is some very prescriptive rules around freedom of information. I'm presupposing that when you give some information to the coordinator at QA, it must stay there and only be used in certain circumstances. So when you go to another service provider, you literally have to start all over again. Although those two entities are working with your child, they can't talk to each other because of the prescriptive rules around freedom of information. What you've outlined is that when you went from one major system to another, everything just fell apart with a sense of no coordination.

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           As a parent, would you be willing to see freedom-of-information rules that were designed from your child's perspective in terms of a continuation of services with your permission in advance so that agencies that are working with your child — be they QA, the public schools or the Ministry of Health — can share that information if it's deemed to be to the benefit of services for your child? Does that make sense to you?

           J. Burden: Completely. What do they say? A life is formed in the first six years, a personality, everything about a basic sense of trust, initiative and all those things — zero to six years. It's a very short time frame to work with when you suddenly drop all that information at age five and start anew.

           B. Lekstrom (Chair): Are there any other questions from members of the committee?

           R. Sultan: Your testimony was very eloquent and moving.

           When you say the grant is to be cut, do you mean eliminated? You referred to funding being reduced or perhaps eliminated. I wasn't quite sure what was in prospect for this program.

           J. Burden: The provincial special education program or the child care resource and referral program?

           R. Sultan: I'm not sure what you were referring to. You tell me.

           J. Burden: Okay. I have a daughter who has special needs, and I have a job working as a child care consultant….

           R. Sultan: You said funding was going to be cut.

           J. Burden: Both of those. I know that my job is cut. I think it's a small but very critical little piece that shouldn't be. I don't know if there are any plans to change that — okay?

           In the provincial special education program, they're very worried about having their funding cut. I don't know. I was just speaking to her the other day, and I said: "Can you go in, in October?" She said: "Well, it all depends."

           R. Sultan: That's the source of my confusion, and I apologize. When you say "cut," do you mean reduced or eliminated?

           J. Burden: For her, I don't know. That's just a parent hoping. For the other one, we have a cut — plain and simple.

           B. Lekstrom (Chair): I see no other questions at this time, Jacquie, but I would like to thank you for presenting. I would encourage you. The prebudget consultation paper, which is available on the back table, has some direct questions in it and an opportunity to share your ideas. Between now and the deadline which is laid out in there, if you have any further ideas on what our government should look at, please don't hesitate to put them down in writing and submit them to our committee.

           J. Burden: Thank you very much. I'm sure that my job organization will be putting in a submission.

           B. Lekstrom (Chair): At this time we will move on to our next presenters this afternoon. Representing the University of Victoria Graduate Students Society is Basil Alexander.

           Good afternoon. Welcome.

           B. Alexander: Good afternoon. If you could just give me a minute to make sure I've got all of my documentation out here, it'll give a little bit of time for the documentation to get passed around as well.

           B. Lekstrom (Chair): You bet — whenever you're ready.

           B. Alexander: Thank you very much. My name is Basil Alexander. I'm the director of finance for the Graduate Students Society of the University of Victoria.

           Before I begin, I'd like to thank you for having an opportunity to make a submission to the Committee on Finance and Government Services for this prebudget consultation. What has been passed around is a brief slide overview of pretty much what we're going to be talking about today and what I'm going to be talking about. I'll just be basically speaking to the points as we go through, and I'll take questions at the end as per usual.

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           The first slide is just a little bit of generally where I'm going to be going in terms of this. I'll be talking a little bit about where we are as a society and how we fit into this; a little bit of a disclaimer in terms of what I'm going to be talking about today; then some other contextual issues and also what we think are the real issues that are important, which all of you and the government should be considering during the next budget phase; and the benefits that come out of our recommendations. A final summary, hopefully, will also answer the three questions posed by the government in its document on the Finance website.

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           To begin, to give a little bit of background, the Graduate Students Society is the elected student voice at the University of Victoria. We represent approximately 2,200 graduate students out of a total population of about 15,000 to 17,000 students, depending on the year and the numbers that you go with. So we represent a very specific voice in the university sector. While we do work with the undergraduates on several issues that are common to both of us, there are issues that are specific to the graduate students, and that's what we're going to be talking about today.

           As well, in terms of knowing where we fit into the greater picture, we're members of the National Graduate Caucus, which is made up of graduate student societies across Canada as well as members of the Canadian Federation of Students.

           One of the things that is unfortunate when you have a ten-minute time limit is that you have to be very focused in what you're going to be talking about, so today we're going to be talking mainly about graduate student issues and specifically graduate funding.

           However, this is not to say that we don't think that other issues are very important, particularly things like tuition and student financial aid — several changes that have happened in the university sector over the last little while. This is particularly pertinent since the University of Victoria had a 30 percent increase last year in tuition. There's probably going to be another 30 percent increase in the next year and 30 percent the year after. All of these will be compounded increases, so it's not 30 percent relative to this year; it's 30 percent relative to the new increased rates that are going to be coming in.

           Student financial aid is also an issue for us. Because we are graduate students, one of our major concerns is that we're coming in already having accrued a fair amount of undergraduate debt, and we're still pursuing our studies. Those are issues that'll be talked about by other people today, from what I understand, and we completely endorse and affirm those positions in that sense.

           Let me turn the focus, very much so, towards graduate students. Why are we important, when it comes to universities?

           Well, No. 1, we're integral to the present and future development of research and innovative research in British Columbia. We're the ones who are working with faculty members. We're the ones who are at the front lines doing the chemical analyses and those analyses of historical documents, reading and generating the new knowledge that is so vital in the new knowledge economy. We're the ones who are thinking of the new ways. We're the ones in training for the future. We're the ones who actually end up creating a lot of the material that is used by both business and society and, hopefully, for the benefit of both.

           We're also integral to university teaching. Faculty members are very important to this, because they are the people that people usually think about when you go to university. You remember that wonderful prof or that horrible prof, depending on your viewpoint. But the TAs are the ones who often do a lot of the marking. We are the ones who often do a lot of the teaching — a lot of the teaching directly of undergraduate students and working in the community. We do a lot of the academic teaching side and making sure that the quality of the university and the quality of the experience received by all students at the university is very, very good.

           We're also important for British Columbia's future prosperity. One of the things that's very important with the knowledge economy is that knowledge is power. Knowledge is how one is able to leverage future economic growth and strength and being able to build on those foundations, in order to actually turn the province into a powerhouse.

           You'll see — this is my own personal view — that all the jurisdictions that view education and higher education as a priority are the ones that are doing well: the western world, Europe and the United States, where there are tons of money thrown into research, universities and education. Graduate students are an integral part of making all that happen and making those benefits felt elsewhere.

           Given that background as to where we fit in, we need to understand a little bit about the British Columbia context. There is right now a very large shortage of facilities and student spaces at the graduate level. There is a systemic shortage in the university-wide system, as I'm sure anybody who has been familiar with the university sector has heard, in that sense, in terms of British Columbia. We're about 20,000 full-time-equivalent students systemwide relative to Ontario and Nova Scotia, in terms of the same participation rates and the spaces we actually provide to our students. A good chunk of those are graduate students, in terms of funding.

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           As well, there's been generally, for the last few years, a building freeze, and there's not been a lot of money available for capital improvements and building a lot of the facilities that are needed to create those world-class research centres and teaching centres, and just to replace a lot of the aging facilities on our university campuses that were built mainly in the sixties, the seventies and the post-war boom.

           As well, British Columbia is an underfunded system compared to other Canadian and North American jurisdictions. When you compare the per-capita

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amount of funding — I mean this relative to the population — that British Columbia provides to advanced education, we're right at the bottom with Ontario. That's because we have a shortage of spaces, so what ends up happening is that our students end up going elsewhere for their education.

           What you also see, when you look at other jurisdictions in the United States, is that they've been pouring money into the university sector in terms of infrastructure, in terms of making sure there are accessible spaces at their state universities, in terms of being able to try to ensure that every possible student who can, can go. That's one of the major things they are constantly doing. In terms of a pure dollar value, it's very underfunded relative to the national average and relative to what other jurisdictions on the continent are doing.

           Finally, one of the other things of concern, particularly to graduate students, is that there has been expansion at the undergraduate level over the last ten years — we have seen a growth of about 15 to 25 percent — but there's been no growth at the graduate level for funding. This is obviously a concern for the graduate students, because graduate students are integral to making the undergraduate experience work so well. This is something that we are very concerned about. The funding is provided for the undergrads, but if the funding is not provided for the grad students who also end up teaching and making the undergrads' experience that much better, the quality isn't the same. As well, this also means that our graduate students are going elsewhere. They aren't staying in British Columbia, because the spaces or the funding aren't here.

           What are the issues and the recommendations that we believe would be beneficial? The first one is that we would need additional base funding in order to actually fund spaces and in order to fund the overhead of universities to actually make sure they can afford us and can actually take care of the teaching of us. We are students as well, and while we are integral to the undergraduate side of things, the faculty members are the ones who are teaching us. We need to make sure that capacity is there.

           One of the other things that is important is making sure there is funding for the fellowships. To give you a little context of how the graduate system works, we've got two things that really draw graduate students to a university and to a continent or to a jurisdiction. They are mainly: what are the facilities you've got? What are the costs that are going to be there? What are you doing in order to try to help mitigate my costs, and what are the fellowship opportunities in terms of reducing my costs on that side? This is very important for us, since we are not eligible for grants that are often available at the undergraduate level, such as the Canada Millennium Scholarship Foundation or B.C. grants.

           As well, this is a concern since the graduate research and teaching fellowships recently funded by the province were cut, and the university made up some of that money out of tuition increases to other people rather than directly from the province. Those fellowship moneys are needed. It's important because while tuition has gone up, the amount actually allocated for individual fellowships hasn't. The number is still not enough to really deal with the true situation that's needed in order to make sure you can grow graduate students and make sure you have a solid base of your grad student support there.

           The second thing is that capital funding is needed for universities to make sure we have the facilities in order to learn, in order to teach and also to make sure we can conduct the research. Natural sciences, as faculty members in any of the faculties will tell you, require lab space, and we need lab space, as well, to be able to conduct the research.

           We also need additional moneys to enhance the experience and the fellowship and the debt issues for existing graduate students. We need to improve the experience and make sure we don't fall any further relative to our counterparts in Canada and in the United States.

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           The benefits of this are, really, fourfold. First, it can be part of a comprehensive decision funding mechanism for universities. The point is that when you're thinking about providing funding to increase undergraduate enrolment, you have to increase graduate enrolment and faculty members, as well, in order to have everything balance out and to provide an appropriate experience. The spillover effects are large, both in terms of the undergraduate student experience — because undergrads will want to stay here, as well as creating new research that stays within the province — and society. When we attract the best from elsewhere, they're more likely to stay close to the university where they did their graduate work.

           It also has an important effect in terms of counteracting the brain drain and losing our best and brightest to other jurisdictions. Because our universities are not able to provide the same kind of experience that other universities elsewhere can, they are going elsewhere. They are leaving British Columbia, and that has serious concerns down the road. It's something everybody should be working towards and ensuring that those effects are not felt by the province.

           Finally, it creates a foundation for continued innovation and research in British Columbia in creating that tradition and continuing it, as well as future economic prosperity with business and the economy and societal effects in terms of what our research can be used for in helping people make better decisions and thinking about the way they do things in all fields.

           To summarize and to answer the three questions, when I read the three questions, really, for me…. Because I'm speaking from a graduate student perspective, I'm obviously coming from advocating a certain perspective when it's all said and done. Really, what it comes down to is that there should be additional funding put towards the areas I've talked about: (1) additional funding for increasing the number of spaces and fellowships so that we have more students who are able to access the system; (2) capital to ensure that we

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have better facilities; (3) additional funds to improve the graduate experience.

           The benefits will be felt throughout society and throughout the economy both in the short term and the long term, because we will be able to keep our students here and attract more people into British Columbia. It also has a gigantic spillover effect in terms of the universities. Whenever a dollar is put into a university, it is always returned severalfold, both initially and long term, to society. That is pretty much my submission, and I'd be more than happy to answer any questions.

           B. Lekstrom (Chair): Thank you very much. As you indicated earlier, like many of our presenters, 15 minutes is a very short time frame to try and address the many issues that face us, but you've done a terrific job. I will look for questions and will begin with Jeff.

           J. Bray: Thanks very much, Basil. That was an excellent presentation. In terms of the prebudget consultation document, you answered the second question — "Should the province find itself in a surplus situation, what priorities would you give?" — that clearly, advanced education and recognition of the graduate component within that is certainly a high priority.

           Do you have any suggestions, though? One of the things the Minister of Finance asked us to go find out is this. Although the overall funding envelope isn't going to change in terms of the provincial budget, he indicated some interest in hearing whether or not people would like to see some shifting of priorities from within the government service plans that are currently there for three years. If you were to attract more funding to meet some of these requirements, where do you think they should be drawn from within the provincial budget over the next couple of years? Or do you think you would prefer to wait until there was a surplus situation?

           B. Alexander: To be perfectly honest, I'm not familiar enough with all of the government's budget to be able to give a fair answer to that question. If you're taking the money from somebody, you are hurting someone as a result. It's not something I feel comfortable answering, just because I'm obviously going to advocate for my perspective. But there are a lot of other people there, whereas here I'm presenting a graduate student perspective. I think my role in this particular aspect is to advocate the views of the society and leave those kinds of decisions up to the decision-makers and up to other citizens in terms of their opinions. I have a very large bias as to where the money should go, but where it should come from is very different, because that's not necessarily my area of expertise.

           J. Bray: All right. Thanks, Basil.

           B. Lekstrom (Chair): Are there any other questions of Basil?

           I. Chong (Deputy Chair): Basil, thank you. Earlier today we had a presentation from Professor Cassels, Jamie Cassels. You can check Hansard and read his presentation and see how that aligns with your comments as well. He made the same pitch. He would like, at the end of the day, when the economy grows and more revenues might be available, to direct them to education, which is what you're saying as well.

           I asked him a question, and I would like to see your perspective as well, on whether or not funds were available to increase the budgets for education, whether it should be in things such as infrastructure — bricks and mortar — or whether distance education can be accommodated and perhaps whether the current facilities are being underutilized.

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           From your perspective as a graduate student, then, what would you say to that, given, as well, that the University of Victoria is pretty limited in terms of land where you're able to build? When you say, "Well, we'd like more spaces, and we'd like more facilities," and things like that — upgrading — that's possibly able to be accommodated. But where you've got limitations in real space, would we not have to look at this in such a case? If you want to comment on that, I'd like to hear that.

           B. Alexander: For certain programs, distance education works very well. I know that at the University of Victoria, it works really well for the masters of education. A lot of masters of public administration courses are taught at that level. The problem, though, is that when you start getting into a lot of the graduate programs, it depends on what kind of research they're doing. Of course, I'm taking a very specific perspective. If you'd like me to broaden it, just say so. If you're doing your research out in the field, the amount of space isn't required as much. But if you're doing something that requires a lot of lab space, you need those facilities actually on campus, whether that be through renovations or better use of existing facilities or realignment or reconstruction of aging facilities or that kind of thing.

           Distance education has a role, but when it comes to graduate education, for a lot of it you need to have that face-to-face contact with your professor, and you need to be on campus to be able to do that. There's a certain amount of synergy that happens when you have your graduate students and your faculty members all in one location. They're able to talk to each other, bounce ideas off each other and just sort of interact and come up with new ways of thinking that they wouldn't have come up with otherwise. E-mail and other forms of distance education have made great ways to augment that, but they have not completely replaced it in that sense.

           I. Chong (Deputy Chair): One last comment. As well, both yourself and Professor Cassels talked about retention of the best and brightest, which is certainly what we'd like to ensure happens. How would you see the province be able to implement a policy where the best and brightest could stay here? Do you believe we

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should tie in graduating students — staying in British Columbia for a number of years after they graduate? Is that even a consideration that you discuss amongst graduate students? You're alluding to the fact that people are leaving here. Certainly, we don't want to see that. How would you stop that?

           B. Alexander: It's one of those things that's difficult in that sense. From my perspective and when I talk to other graduate students, it's like when they decide to come to graduate school, that's where they end up staying. I'm originally from Ontario, and when I was looking at where I wanted to go, I ended up looking at a whole bunch of factors. When I looked at the living context, the school and everything else and the programs that were offered, I decided that I wouldn't mind a change, that I'd like to go here. It's more about trying to make sure that you attract…. You're trying to retain those people who are within who might consider going elsewhere because there are better opportunities elsewhere. I'm a strong believer that it's the environment. When I came in a few years ago, it was a very different environment than it is now. That environment is continually changing.

           In terms of actually tying in requirements, it gets a little bit dicey in that situation, because what you've got is the freedom of the academic to be able to move and to have mobility, to be able to go where they need to and wherever the research is. I think the better thing is to have those other contextual factors that are important to retaining people to do it and to attract them. Once you get them here, they're going to stay.

           B. Lekstrom (Chair): Thank you, Basil.

           Ralph, we have time for possibly one quick question, and then we'll move on.

           R. Sultan: One quick question. Philosophically, as a long-range goal, what proportion of the cost of educating a graduate student in British Columbia should be borne, in your opinion, by the student and his or her family resources, by the society as a whole through its taxpayers or possibly even by the wealth of the university itself? Do you have any observations?

           B. Alexander: Do you want a straight number, or do you want a very long answer?

           R. Sultan: Some percentages would do.

           B. Lekstrom (Chair): A straight number would work very well with our time frame.

           B. Alexander: I don't think I'd be able to do that, because I'm one who doesn't believe there's a straight proportion. I think there's a lot of different contextual factors, and it varies on an individual, case-by-case basis.

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           B. Lekstrom (Chair): Basil, I would like to thank you. Again, our time constraints don't permit the type of in-depth discussion, but I thank you for your presentation to our committee here this afternoon.

           Our next presentation this afternoon comes from the University of Victoria Students Society. With us we have Jonas Gifford and Scott Payne.

           Good afternoon. Welcome.

           J. Gifford: Thank you very much. Would you like me to wait a few moments? I see some empty seats.

           B. Lekstrom (Chair): They will be coming and going, I'm sure, so if we would begin…. Otherwise, I'm certain we'll back up the rest. It's the mandate of this committee. If they aren't here, they go through the Hansard files. They will read all of the presentations. I'm sure that hundreds will come in under written submissions as well.

           J. Gifford: All right. My name is Jonas Gifford. I'm the director of finance of the University of Victoria Students Society, and so I'm a close colleague of Basil and his neighbouring organization. Joining me to make a joint presentation is a fellow member of our board of directors, Scott Payne.

           We have a fairly brief presentation. We won't take up a lot of the committee's time this afternoon. I see that's not a problem with any of the members.

           I would like to start by thanking the members for allowing us to make a presentation. I realize there are numerous presentations and a lot of people with a lot of opinions, and so I do thank you for allowing us this opportunity.

           I would like to start by being, perhaps, a little bit frank and expressing a concern I have about the process. I did read the consultation paper, and it states that the government must maintain overall spending targets set out in the three-year fiscal plan. To me, that imposes a very harsh limitation on the scope of what this consultation process can consider. In particular, those of us who represent organizations who find that funding freezes and funding limitations in sectors of the public operations are a problem are not necessarily being considered in this consultation process. I do certainly believe that is a limitation imposed by a philosophy of tax cuts, which is not part of this debate. I would certainly entertain a debate on the merits of what taxation levels are compared to what those imposed on cuts for social services instead of being forced with the situation where taxes have been cut, and we have to make our policy decisions accordingly.

           I think everybody in this room agrees that advanced education is an essential part of our province's economy. Study after study has shown that an educated economy is a thriving economy and is a successful economy. I think everybody in this room, including us, wants to see a very successful economy in this province.

           The New Era document states that education is our top priority, because it's key to any healthy, prosperous society. I take it for granted that the members of this committee accept that that's a very important principle.

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           Our main reason for making a presentation is that we would like to see the government invest more in public education in order to make that priority realized. I'm going to let Scott carry on a little bit from here.

           S. Payne: Thank you very much for your time, by the way. I didn't have a chance to thank you as well.

           Given the common acceptance that advanced education and post-secondary education are no longer just a privilege but a necessity in today's economy, I thought it would be interesting to take a look at what the current picture facing students is right now. In the last provincial budget this government made the decision to freeze funding to the University of Victoria. That had a direct effect on undergrad students and graduate students at that institution in the way of a minimum 30 percent increase in tuition fees.

           I don't think any student at the University of Victoria or any student in B.C. is surprised to see that their tuition has gone up, considering that for the last six years we've had a tuition freeze going on. However, what's frustrating as a student — and I hear this echoed over and over, and I feel it myself — is that with an increase as dramatic as 30 percent to tuition fees — and, believe me, that's felt automatically as a student; 30 percent is not a small amount — we would hope that that money we're being forced to come up with would go somewhere toward bettering our education.

           However, the problem is that the major issues that are facing undergraduate students today are not being dealt with by those increases in tuition. We still have amazing wait-lists for classes. We still don't have enough classes to accommodate all the students who want to get an education. A lot of the equipment we're using is still going unrepaired and falling to pieces.

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           Basically, this major burden that's falling on students to come up with this money is just keeping the university open. The last people in this province who are in a position to be managing those affairs of an institution that large are students who are trying to get to a position where they're in a financially prosperous situation and contributing to the economy as a whole.

           Now, the new-era commitment — which I don't need to lecture you folks on; I'm sure you're more familiar with it than I am — lays out a three-year funding plan for the university that doesn't make the situation for students look any better and that really presents us with a fairly depressing and distressing picture of what we're facing in the future.

           There will be a continued freeze on funding to the University of Victoria over the next three years. In year 3, I was surprised to see that we're looking at a $3 million cut in funding. Basically, what this government is asking the University of Victoria — which I think is very unfair, and I sympathize with the administrators at the University of Victoria — is to do more with less, because there's going to be an increase in FTEs that the university has to admit. So you want more students, but they have to be funded with less money.

           Again, as inflation rolls along and as increased costs pile up year after year, the 30 percent that's projected for each continuing year for tuition fees that Basil touched on, which again is a cumulative thing, is simply not going to be increasing the quality of our education. We're not getting anything out of it really.

           At the end of this three-year period, for the average tuition fee for an entire year at the University of Victoria and I'm sure for other institutions around the province, we're looking at $5,000. To put that in perspective, over the term of a degree you're looking at, just in tuition fees, the same amount as the average student debt overall for a degree right now.

           The average student debt is somewhere in around $25,000 once they finish up a degree. Now you're looking at that entire amount just in tuition fees. That doesn't take living expenses into consideration. That doesn't take all the various things that come along with going to school into consideration.

           Not only is that difficult for tuition, but the amount of loans that students are looking at having to take out is going to skyrocket. Literally, it's going to make getting an undergraduate education near to impossible. It's not even close to the difficulties that come along with doing it right now and the creative accounting that one has to employ in order to remain a student and hopefully go on to service this province and its economy and become a flourishing member of it.

           In addition, the students that are going to school right now, both prospective and continuing students, are looking at diminishing resources. Already this has become an issue for students. No longer is there a Student Summer Works program. The Work-Study program is gone. Environmental youth teams are gone. Minimum wage just got knocked down to $6 if you're just entering a particular field of labour. All of this basically adds increasing stress and inability to come up with the resources that we're being asked to come up with.

           There are cuts in funding. There are freezes in funding. There are problems already inherent in the system. Then what little resources we had at our disposal to try and deal with this, to try and claim responsibility for our own education, is now being threatened as well.

           As well, we have the fact that student loans are not rising in conjunction with the increases in costs to students that we're seeing over a period of time, which means that there again is another resource. It's a resource that we as students don't like going to, but sometimes it's just necessary. We're not able to meet the demands that are being made on us, basically.

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           Compounded, you've got a fairly serious situation that's facing not just the students that are looking to go to school and acquire just the basic minimum education that's necessary in order to be a competent member of society, be that study in the sciences, humanities, trades work, regardless — we're not just talking about academics; we're talking about any form of post-secondary education — but it's also facing the province itself. We're the people that you're looking to, to step in

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and make sure that this province keeps rolling along, keeps doing well and keeps progressing.

           At this point, I'll hand it over to Jonas for closing remarks.

           J. Gifford: I just have a few remarks to make before we conclude our presentation. This government was elected on a mandate to put education at the very top of its priority list. It was not elected on a mandate to make program cuts and certainly not to make program cuts to the extent we've been led to believe are going to take place. This government campaigned on a platform that tax cuts would pay for themselves. It seems apparent to voters and to taxpayers in British Columbia that that is in fact not the case.

           I think we all agree that post-secondary education is important, but I think the policies this government is forcing universities to undertake are definitely clear barriers to what I think we all want to see take place. We have Ontario as a perfect example of what government policies we're starting to see here in B.C. do to a post-secondary education system. The average family income of students in post-secondary education in Ontario has risen dramatically, because people who come from less fortunate backgrounds simply either choose not to, because they don't want to go into a lifelong debt, or cannot attend post-secondary education. I think that's very, very clearly a barrier to the education of our society, which we all agree is an important priority.

           I think the government policies we're seeing are going to hurt our economy and are going to hurt the education we see in our population. I would very much like to engage, as I said before, in the debate about whether tax cuts are worth what they cost our social programs. That debate is not one the government has given us an opportunity to consult on. I urge the government to reconsider that issue, to reconsider tax breaks which were not part of the new-era commitments and to look at how we fund our social programs, because I think that's a very important thing for us.

           B. Lekstrom (Chair): All right. Thank you, Jonas. Thank you, Scott.

           I will look to members of our committee, if there are any questions following your presentation.

           R. Sultan: I would ask the same philosophical question I asked your colleague. As you stand back and look at it, what proportion of the cost of educating a student at the University of Victoria do you think should be borne by society as a whole through its taxpayers? What proportion should be borne by the student or his or her family and other resources? What proportion should be funded, be it so fortunate, through the wealth of the institution itself? Do you have any observations on that point?

           J. Gifford: Like Basil said, that is a difficult question to answer. I definitely can't answer it in any precise numbers. I do believe that in any system, students will pay for their education. That's been very well researched, in particular, by an economics professor at UBC. University students earn higher incomes and pay taxes that are far in excess of the full cost of educating them. I certainly believe students do pay for their education, even if tuition is zero.

           Now, what tuition should be is a difficult question. I think students do have to feel like university is not something they're entitled to. They do have to earn it. I don't necessarily think tuition should be completely eliminated, but when tuition is at a level where it's preventing people from attending, that's where I see a major social problem.

           R. Sultan: Could I follow up with a question? Are applications for enrolment at the University of Victoria falling or climbing?

           J. Gifford: It's my understanding they're increasing, and I know that's the case. I know the admission cutoff has increased. I think a major factor in that is everybody knows this is only year one of the increases. If people knew it was a one-time 30 percent increase, I think you might expect different results. Everybody knows they're going to be doubled in two more years if the government policies remain the way they are. If I were a student, I'd get in while I could.

           R. Sultan: Thank you.

           P. Wong: Can you tell my why students in Ontario and Alberta can afford to pay higher tuition fees than what you are paying, even though the minimum rate is much lower?

           J. Gifford: Why students in Alberta and Ontario can afford to pay more?

           P. Wong: Right.

           J. Gifford: Because you have a different demographic of students, and because the students who are attending in Ontario and Alberta are people who are from wealthier families than people in B.C., and so in B.C. you'll get a more representative cross-section of people's economic backgrounds. That is not the case in Ontario and Alberta.

           The short answer is that, apples to apples, students can't afford the same tuition. Students who can't afford $4,000 here can't afford $4,000 in Alberta or Ontario, and that's why they don't go.

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           P. Wong: So you're telling me the average income in British Columbia is lower than that in Ontario?

           J. Gifford: The average family income, particularly for professional programs. The average family income for a medical student in Ontario is far in excess of $100,000 a year; it's hardly a representative sample of

[ Page 874 ]

economic backgrounds. That's less so in non-professional programs, but the trend is definitely there.

           S. Payne: I think it's also worth mentioning that when you're looking at students here, there are a great many students in Alberta and particularly in Ontario who can't afford those tuition rates. That's to a large degree why you see a lot of students who have come from Ontario and wound up in B.C., because in the past B.C. has been a place where accessible education has been maintained and promoted. Those students are coming here to receive the same quality education at not unreasonable rates.

           B. Lekstrom (Chair): We'll entertain one further question — Harry, you had your hand up — and then we're going to have to move on.

           H. Bloy: Thanks for your presentation. We're still the third-lowest rate in Canada with our tuition fees right now. I represent a riding that includes Simon Fraser University. At Simon Fraser University there are more courses offered this year, and there are more teachers there. This is directly related to the tuition increase.

           You don't think the tax cuts have worked, and I guess the debate is out on that. I believe that it does work. We have to stimulate the economy so that there is more money for education, health care and the social services. They have to be able to support themselves. All the programs have to become sustainable. Without that, we were going backwards.

           J. Gifford: I'm not sure about Simon Fraser. I'm not all that familiar with how that institution works.

           I do know that the University of Victoria experienced a 30 percent increase in tuition and a minimal increase in services to students. There are very small increases in what the university's offering. I also know that course offerings are down and waiting lists are up at UVic. I would have a very hard time believing that the tuition increase has done anything for students and the quality of education at UVic.

           I do know that students pay considerably more at other universities across Canada and that UVic continues to rate very highly and continues to be an excellent school, despite having lower tuition than a number of its competitors across Canada. I don't know much about Simon Fraser, but I certainly don't believe that the argument applies to UVic.

           H. Bloy: Okay. Thank you very much. UVic is an excellent school.

           B. Lekstrom (Chair): Jonas, Scott, I would like to thank you for taking time out of your schedules — I know they're as busy as ours, I'm sure — to come and present to our committee this afternoon.

           We will move on with our presentations this afternoon. Our next presentation comes from Gurparit Gill.

           Good afternoon and welcome.

           G. Gill: Good afternoon, everybody. My name is Gurparit Gill. I'm presently attending Camosun College, taking business administration there. I know that I have something to contribute to this province and that I have to work hard for my opportunities here. I urge the government to encourage excellence, not mediocrity, in our young people.

           As a student, I had been frustrated with the previous government's refusal to let universities and colleges set their own course rather than hog-tying them to a political tuition freeze. As a young person I'm expected to oppose lifting this tuition freeze, but on the contrary, I support it. I would rather have an excellent education that costs more than a mediocre education. Everyone says education is an investment, and we should treat it that way.

           I also support the decision taken by universities and colleges to increase financial aid. Let's face it: there are a lot of students that can afford increased tuition, and there are some who have a tough time making ends meet. Let's support those who need help, and let those with more resources pay more of their own way.

           Furthermore, I would rather see students finishing a four-year program in four years rather than five or six. It's not the tuition fees that's the killer; it's the housing costs. An extra year because you can't get the right courses is a needless waste.

           I would like to turn my attention to other government measures that can help young people. Reducing income tax was a very valuable incentive to young people. Labour is mobile. Young people, particularly those who are single, will move to Calgary, Toronto or the U.S. if they cannot get ahead in life. Until recently, many young people didn't have that sense of hope here in British Columbia.

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           Why would a government lower tuition fees and scare the best and brightest out of the province? It doesn't make any sense. Your tax cuts are on the right track. Keep it up. I want you to emphasize that I like the tax cuts and to keep it up.

           Creating jobs for young people is another imperative. I don't mean creating government jobs. I mean getting the economy rolling so that small businesses and entrepreneurs can thrive here. Let's create a culture of success and opportunity in B.C., not punishment. It's so simple. The more jobs, the more tax revenue, the better social programs — it all makes sense.

           I noticed that B.C. led the country in job creation this year, which is a good sign. I also support the government's measures to move people off social assistance and into jobs. A job gives one dignity. Someone may have to start at $8 an hour, but soon they will move up to $10 and $12 an hour as they gain experience. People have to start somewhere, and as my father has always said, there's nothing for free in this world.

           Also, I support the Education minister's move to measure the performance of students. I heard the other day that students were surveyed, and 61 percent said they weren't gaining the skills they needed to prepare them for the workforce. To me, that's an economic is-

[ Page 875 ]

sue. We need to focus on the output of the education system, not the input. There's already lots of money going in. It's time that we used the resources more effectively to give students what they need.

           To conclude, I am hopeful for the future, but I want a government that is committed to success, not a government that holds everyone back and accepts failure. This government is doing some good things and can march on. The silent majority supports these changes.

           I would like to end my presentation by saying this: please don't let the professional protesters and agitators sway you away from what you have to do. I voted for change. The people of this province voted for change. I'm appalled when I see professional protesters taking to the streets. I come here today to let you know that the vast majority of us are too busy working or studying to take to the streets and protest the protesters. I wanted to come in today and tell you that you're doing the right thing and that it's too bad the previous government forgot the very people they purported to represent.

           B. Lekstrom (Chair): Thank you very much. I will look to members of our committee if they have any questions regarding your presentation.

           H. Bloy: I just wanted to thank you very much for the positive outlook.

           R. Sultan: The prebudget document of the minister asks the question: should we be so fortunate, be such good managers and have the economy rebound so strongly that there is a surplus, however small, in the year 2005-06, how would you favour distributing any surplus there might be between health, education, other spending, tax cuts or debt reduction? Do you have an opinion on that?

           G. Gill: I believe that the government is putting money in the right places. I know that they're putting money into education. It's just not being used properly right now. It's not being spread out the right way.

           Health care does deserve its share. I understand that. I've been in the hospital. I've seen the long waits there.

           R. Sultan: Tax cuts?

           G. Gill: Tax cuts indeed. That attracts more business to the province.

           R. Sultan: Over debt reduction? Or maybe we should pay off the debt.

           G. Gill: That as well. We have to pay off the debt as well. But you've got to get jobs going to get money into the province.

           B. Lekstrom (Chair): I see no further questions. For fear of pronouncing your name wrong, I'll go with Mr. Gill. Thank you very much for your presentation this afternoon.

           Our next presenter with us this afternoon, with BC3P Consulting, is Naveen Bains.

           N. Bains: Good afternoon, ladies and gentlemen. My name is Naveen Bains, and I'm honoured to take the opportunity to make a presentation to the Select Standing Committee on Finance and Government Services.

           I'm presenting here today because of my concern for the future. My plea here today is to consider the younger generation when you are making policies. For too long, governments have recklessly incurred debt. I remember hearing a former B.C. Finance minister talk about good debt and bad debt, as if we were simpletons out here in the public.

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           Debt is debt. Sometimes you have to borrow money, but oftentimes borrowing begets more borrowing, and debt spirals out of control.

           Look at the federal government. The federal debt ballooned in the 1970s, and it took almost two decades to balance the budget. In the meantime, federal taxpayers were seeing over a third of their hard-earned tax dollars going to big banks instead of health care, post-secondary education and even national defence. In effect, the federal government made a massive intergenerational transfer of wealth. The taxpayers of today are paying massive bills that were incurred years ago. My perception is that those funds did not go into legacies. They went to pay day-to-day expenses.

           Here in British Columbia our debt position is not as severe as Canada's, but it has worsened dramatically since 1991. Under the NDP our debt doubled. Did our province realize a huge net gain in our assets or our worth? No. I look at expenditures like Skeena Cellulose, fast ferries, power plants in Pakistan, Surrey Place Mall, ICBC rebates, Hydro rebates. These weren't prudent investments; they were fiascos.

           Every dollar that goes to pay interest on the debt is one dollar we don't have for health care. That is the price we pay for this reckless spending. Borrowing can be a good thing, if it is planned well. Infrastructure, highways and the Olympics, for example, are projects that may require financing but could return their value in terms of increased productivity and economic activity. The important thing is that there needs to be an overall plan to reduce debt.

           I have read the B.C. Liberal government's budgets. I realize that debt is still going up — way up. As bad as this makes me feel, I understand the situation. It's akin to somebody buying a new home. Once you buy the home, you realize it's in even worse shape than when you first bought it. This necessitates spending money to fix it up to bring it up to snuff. I believe the new government faced such a scenario when it was elected. I'm heartened by the fact that there is a plan to reduce debt.

           I remember that the NDP had numerous debt management plans that were discarded year after year. I

[ Page 876 ]

still remember the famous line of Mike Harcourt, when he stated: "We know it's your money." I can also recall Glen Clark telling me in 1996 that he was on my side. God help me, with friends like that.

           Once the B.C. government balances the budget in 2005, it then needs to go down the long road of reducing debt. What a wonderful legacy — to leave B.C. debt-free someday. Municipalities are forced to balance their budgets. I am glad that B.C. is now forcing itself to do the same. Some will say that we need to spend, spend, spend for this to happen. Yes, tough choices will have to be made, but we must maintain the discipline of the balanced budget.

           We all know that necessity is the mother of invention. When governments have their backs to the wall, creative ideas must flow. Once it is clear to bureaucracy and to the decision-makers that there is no money, they have to find another way. We have reached that point in B.C., and I am pleased that the government did a core review to find those new ways to spend better instead of spending more.

           In conclusion, I urge the committee as follows. Don't spend on the backs of future generations. Stay the course with plans to balance the budget. Reduce debt over time. Don't bribe me with my own money. I don't want any more fast ferries or aluminum smelters or power projects in Pakistan or a jobs and timber accord or Carrier Lumber scandals or Bingogates or fudge-it budgets.

           All I want from government is quality health care and education, a low tax regime which promotes investment and job growth, and the ability — and this is the important part — for someone like myself to earn a decent living without having big government tell me what to do and where to do it. Believe it or not, this province is full of people who are entrepreneurs who are capable of creating jobs and investment with big government.

           I thank you for your time.

           A. Hamilton: First of all, I'd like to thank you for taking the time to appear in front of us. It's much appreciated by all of us. From your comments and as asked by my colleague Mr. Sultan, I take it that if we had a surplus, you would think that should go towards reducing the deficit.

           N. Bains: I'm a big fan of that. If you look at a household, if you want to get ahead, the first thing you have to eliminate is your debt. Otherwise, you're going to be making payments to things that are irrelevant. I really believe in reducing the debt.

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           A. Hamilton: You've said that.

           B. Lekstrom (Chair): Are there any other questions?

           Well, seeing none, Naveen, I would like to thank you, along with my colleagues, for coming out this afternoon to present to our committee.

           N. Bains: Thank you again.

           B. Lekstrom (Chair): We are slightly ahead of schedule at this time. I will call our next presenter, Connie Sarrazin, if Connie is with us.

           Good afternoon, Connie, and welcome.

           C. Sarrazin: Hi. My name is Connie Sarrazin. I have passed out just a few handwritten notes. Sorry if you can't understand my writing. I don't have any pie charts to show you or a PowerPoint presentation. I just have me and my point of view — one person, one taxpayer, one B.C. resident, one juggler.

           I work in the education system. I have two special needs sons who are also attending school here in B.C., and I am raising two other future voters. Every day in my job as a special student assistant, or SSA, at Oak Bay high school, I juggle more and more responsibilities under the label of my job. I have worked for seven years and would say that for the most part, I have been pretty good at handling any challenge to come my way. However, this year has been incredibly tough.

           Now, I have no figures to show you the exact dollar amounts that have been scraped off each special needs student designation, but I do know how it has affected me and, most of all, the students that I desperately try to help make it through the day, the hour, the next ten minutes. Last year we had 13 SSAs in our learning resource area, and this year we're down to seven.

           As you can well imagine, things are pretty crazy. Our workload has doubled. We're supposed to have two paid breaks in the day, and often we're lucky if we get ten minutes at 9:30. It's pretty wild. As we assist students back and forth to classes, we're seldom alone, because we always have a student at our side — you know, "What am I doing next?" — so sometimes we wait two or three hours just to go to the washroom. We don't have time.

           Since the cuts have happened, our teachers on our learning resource end of things, who are really amazing teachers and are trying really hard, have had to take us to a minute-to-minute system — that's what we call it, at least — where you count, as I've written down, every single minute you're there. The first bell rings at 8:25, and we're already…. If we're not there by 8:25, then our student's late, so we usually get there like 15 minutes before 8:30, and then we just run from the moment we're in the door. It's crazy.

           One of the most alarming and potentially dangerous situations this year is, of course, the number of students we're expected to integrate into classes and assist with notes. In many of our classes we have one or two low-incidence students who require one-to-one assistance to maintain an active role in the class, plus we're expected to do accurate notes for up to seven other students who have a high-incidence designation. Some of them are unable to do notes because of disabilities, and for some we actually just assist students who are absent. If your son or daughter went to Oak Bay and they were absent that day, they can come to our resource area and get the notes from that teacher.

[ Page 877 ]

           If I could give you an example, one student with autism cannot focus for even a third of a science class and begins to act out by goofing off and doing stuff to other students. Not only do we go in unprepared, as we don't have time to photocopy the information on photosynthesis and make it into a larger size and create a colourful way for him to see it visually, but we have to try our best, between correcting the poor behaviour, to taking accurate notes and keeping this autistic child from touching the chemicals on the demo table set up for later in that block.

           I'm afraid that no matter how hard I try, I can only do so much. Each block that I have in a day is different but the same in the fact that I truly feel that I am stretched too thinly to do the kind of job I can be proud of. This is a burnout situation.

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           I worry about student safety as well as my own, as I try to teach two students at once to sew, chop vegetables in a foods class where the one student has a fascination with knives. He's twisting it around, and I'm sort of keeping my eye on him, but there's the other student who's digging into stuff and taking food from people. It's pretty crazy.

           Anyway, I also have two students who I take to photography — in an overcrowded darkroom with two students, if you can imagine. The one boy has just been pushing people in the hallway, and I'm trying to keep him contained, while the other student with autism is seeing if you could put your finger into the developer. Then he's seeing if his finger will turn black if he puts it in the fixer. I'm trying to keep him out of the chemicals, and I can hardly see them. As humorous as I make that sound, it's really quite a potentially dangerous situation.

           The number of students in each class is also totally crazy. Cramming five more desks into small classrooms makes it even harder to do our jobs. There are a few classes where my fellow employees are literally stuck in the back of the class. They can't get out without having students move their desks aside. The problem with that is if you have a low-incident student who's not able to stay, you have to disrupt the entire class to get them out. That's not all that great.

           Also, textbooks become hard to come by in a system desperate for up-to-date books and no money to buy them. If your objective is to make students first, then we have to look at how these changes affect all of them, from students who need my support or help to the average student who finds it hard to get to see a teacher for extra help because the lineup is that much longer on a Friday teacher-assistant pupil block.

           "Educational spending will be protected throughout three years." If I understand this correctly, then, you're saying that I have three years of this to look forward to. I can't guarantee I can hang in there that long, especially with our personal leaves now also being removed within my position.

           "This is to ensure continuity of educational programs for our students." That's article 21.06, collective agreement. The thing is that if you overload your employees, they may need to take short personal leaves in order just to come back refreshed and be able to do their job.

           As much as I am only one person, I worry more about the impact of these cuts on my disabled sons in the system. This year they returned to school to find several familiar SSAs laid off or gone. The one SSA they know from last year is now doing the job of two. They are juggled in a system that would take money off of each of their names and not understand that they haven't magically become less disabled this summer. At least, I haven't noticed that. They're not walking, they're still not talking, and they still have the G-tube. They're still them. They're not able to toilet themselves or get in and out of their wheelchairs. They have both, however, gained weight and grown, so this makes it even more difficult for the person working with them to lift them, even with Wispa.

           These cuts mean that they will only receive range of motion every second day. They may not be able to go swimming on a weekly basis. They'll have to rotate their outings. Even though both my sons are in the same classroom, one will go one week, and they'll have to explain to the other one: "No, it's not because you're screaming or you're having trouble that you can't go this week. It's because we have no one to take you." With more volunteers possibly in the picture too, I worry for their safety. It also means that their SSA will be doing up to eight diaper changes a day, which I don't think anybody really wants to do. He has to feed both of them. Attempting to fulfil the aspects of all their IEPs makes it pretty tough.

           If I could make a small change, I might increase…. I'd try to find a way that a person could get more money into an educational system without affecting the cuts you're making and where you're headed. I think that as much as property owners wouldn't be all that happy with me, I'd increase each household by $100, and I'd do that for the three years and really try to scrape together this little pot of money so that you could put more SSAs into positions to give people like me a bit of a break.

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           I think that moneys available in 2005 and 2006 should be used to supply our schools with up-to-date textbooks for our students. We have some classes where the books are 14 years old. It makes no sense. You're studying B.C. economics, and it's just silliness. The teacher keeps saying: "Ignore that. Ignore that." It's pretty crazy.

           Anyway, smaller class sizes would be nice, or more staff moneys, also, for more of me, who are an integral part of the education system and should be treated in that manner. Quite frankly, the educational excellence you wish to attain is jeopardized by the cuts you make to what was a bare minimum before.

           B. Lekstrom (Chair): Thank you very much, Connie. I will look to members of our committee for questions. I see Brian has a question.

[ Page 878 ]

           B. Kerr: Thanks, Connie. It looks like you've got a very good disposition for handling what appears to be a tremendously stressful job.

           Some of the things you mentioned appear to be a lot of just supervision: helping out, walking them from classrooms and, as you mentioned, changing diapers. Things like that can probably be done by volunteers. I'm wondering. For instance, a person in your position is trained for what you're doing. Could you be a team leader and have a team of volunteers to do some of that type of work, to free other people up to do the work they've been trained for?

           C. Sarrazin: I guess I really have nothing against more volunteers for certain areas of the job. I mean, anyone could write notes, basically. It would be great if we had some volunteers who could come in and write notes for us. But the one-to-one time you spend with students, especially something like toileting…. I mention that through my boys' school, because at Oak Bay we obviously do personal care, but we don't have to do a lot of toileting. I'd have major, major issues, as a parent, having volunteers toilet my sons. There are a lot of issues around positioning. There's all kinds of things that come up when it comes to that type of a thing.

           I think that maybe the point I was trying to make was that you could have, yes, a team leader who trained volunteers to go into classes, but they…. I don't know how you can put that. Within my field, anyway, you deal with people with behavioral issues. You get hit, you get spit on, you get water thrown in your face, and you get hit by water balls. These are daily occurrences.

           I fully understand that, because I'm willing to accept it under the heading of my being an SSA, but I seriously, seriously think it would jeopardize the system to have more volunteers doing the one-to-one work. You're acting like a clown to try to get their minds off the fact that they're not understanding and they're being frustrated. You're getting them to just focus on you for a few minutes so that you can redirect them. Those are things that — I don't know; you know what I mean? — I don't think volunteers could adequately do.

           Like I was saying, I do understand why you need to make cuts. I really do. I really respect the fact that you are getting in there and doing the cuts and stuff. But like I said, with my sons, you cannot make them less disabled by taking a few thousand dollars off there. Then what happens is, if I make $24,000 a year and you're saying that for one of my sons, let's say, it's $19,000, you can't even cover the amount of hours to be with them on a full-time basis. You're sticking two of them with one person, and it gets totally crazy — like, really crazy.

           B. Kerr: Are there some areas where you could see using volunteers? Like, if you actually had to get down to the crunch, where you could say: "If we could use volunteers in this area…." I know there would be a number of people that would volunteer. They volunteer for Special Olympics. They volunteer in all kinds of areas for special needs children. There are grandmas out there that would be prepared to come in.

           C. Sarrazin: Yeah, and we do have a resource block where one person like myself is with four or five students. That would be a great time to have a volunteer in there, but I'm not even touching on that with this. Those aren't even the crazy blocks. Those are the blocks where if somebody does something really crazy, I can call to the office and get the vice-principal to come in. That's a little bit different. It'd be great to have a few extra hands there.

           The real time in classes, where you need to have that focused one-to-one time…. I can only think of maybe a third of our students that would fit into the category where you could just send them off. It's like peer tutors. We have peer tutors, but some of our students go beyond peer tutors. With the seven staff, we're spread too thin to go with all of the students who fit that category.

           B. Lekstrom (Chair): I know that Ida had a question.

           I. Chong (Deputy Chair): Thank you, Connie, for your presentation. I appreciate you giving us the written…. I read through that.

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           Before I ask you a question, I just wanted to also make a comment. If it's incorrect, then please correct me. School district 61, in particular, is where you're affected. I know that the funding for a number of areas which previously were block funding or targeted funding was still maintained. They were not cut, although I think people think they were. We had just removed the need to target it there so that school districts could decide where they wanted their funds allocated.

           I guess what I'm wondering is…. You noticed, then, that the choices that have been made in some schools have been to perhaps shift it from special needs to another program. If that's the case, maybe you could share that with me. That's one thing. The other is this. You're a special student assistant, and I'm wondering whether the time you're at work is all dedicated to providing services to students.

           I say that because when I was in opposition, I heard from a number of counsellors and other aides that they found that when they first started in the school system, they would spend 90 percent of their time with the students and 10 percent on paperwork. Seven years later, they were spending 30 percent of their time with students and 70 percent on paperwork, bureaucracy, regulations, red tape or whatever. Again, I'm wondering if there has been any kind of improvement there or whether you have any ideas or thoughts on that.

           C. Sarrazin: Okay. I'll answer your second question first. I know that from my point of view, from where I am within the system, I don't do a lot of paperwork. Part of it is that there just isn't time. I know our teachers

[ Page 879 ]

take care of things like the figuring out of hours and things like that for staff. We interact directly with parents, but it's only on a limited basis. We make phone calls if there has been an emergency or whatever. Of course, we write in tracking books and things. I have been doing this for seven years, so I have noticed that seven years ago, obviously, there was a lot more room. That's fine. I don't mind the walls coming in a little, but when it gets to the point where it's like this, it's pretty crazy.

           As far as the amount of money allocated, I do understand that. Obviously, I don't have figures, but I understand from what I've seen that there are certain students that last year fell within a designation and this year don't. I know that in several cases they haven't even had time to retest them, so how do they know that they don't have that condition any longer? Like, we're still servicing them. They're still coming in at lunchtimes. They're unable to function with their peers.

           You know, it's kind of a silly system. By looking at amounts of money that have trickled through to us at my level, I know it's not the same. It used to be that we'd have a $26,000 designated amount for a fully dependent student. A few thousand come off each year, to the point that now it's just so low. It's such a low amount. Maybe it's our school. Maybe I'm totally wrong. Maybe it's just Oak Bay or just Victor, where the boys go, but I know for a fact that those two schools, for sure, have been cut way back.

           I. Chong: That's helpful. Thank you.

           B. Lekstrom (Chair): All right. Thank you very much, Connie. From our perspective as a committee, to hear the firsthand effects certainly helps us listen and find out what's going on out there, so I appreciate your presentation this afternoon.

           C. Sarrazin: Thanks for your time.

           B. Lekstrom (Chair): That concludes the registered presenters for today's session, but at the end of each session we have allotted time for an open-mike session for people that have an interest in presenting to our committee. At this time, I will call forward Anne Marie Stewart, who would like to speak to the committee.

           Good afternoon, Anne Marie.

           A. Stewart: Good afternoon. Thank you for this opportunity. I had no intention of making one. However, the last presenter, I'm sure, touched all our hearts. At the same time, I'm feeling and thinking that perhaps

it's our system that needs revamping in terms of the educational system, the way special needs are integrated, the curriculum that exists for special needs children.

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           With this real-life situation of having a different budget to work with, which is real, perhaps we will be able to get resources from the system as was mentioned previously. That may even turn out to be entrepreneurial, perhaps with private enterprise that can develop better systems that would therefore dovetail with government programs.

           I would like to encourage the government to continue on the path it's taking in terms of revamping our educational system and calling forth the resources that do exist in our country and our province, which are now not even being tapped and are literally…. It could be on the waste report — the fact that we have many people with gifts that can be used and would be happy to use them.

           I hope that if there's an opportunity for the entrepreneurial spirit to take place regarding education in that way, then people will feel free to be called upon, and the entrepreneur will be able to be in a position to call upon assistance, since in that case there would no union involved in the small, private educator's domain. At present many volunteers cannot be called upon in the school system because of the union action that says they would be taking away a job from an employed person. Though I totally identify with the position the previous presenter described, I do feel that perhaps now we will be calling upon the creative resources that are in our communities.

           Thank you.

           B. Lekstrom (Chair): Thank you very much, Anne Marie.

           The time that we've allocated for open-mike session is precisely as it's being used here — to hear from people that have concerns, who have sat through and listened and brought their views forward. I thank you for taking the time to speak to us this afternoon.

           That concludes all of our presenters that we have registered, as well as the open-mike session. I see no further people wishing to address the committee this afternoon. With that in mind, I will adjourn our committee meeting, and we will reconvene tomorrow morning in Campbell River for our second session.

           Thank you very much, members.

           The committee adjourned at 4:32 p.m.

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