2008 Legislative Session: Fourth Session, 38th Parliament

SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

MINUTES AND HANSARD

MINUTES SELECT STANDING COMMITTEE ON FINANCE AND GOVERNMENT SERVICES

Tuesday, September 23, 2008

1 p.m.

Courtyard Ballroom, Ramada Inn & Suites

1050 Eckhardt Avenue West, Penticton, B.C.

Present: Randy Hawes, MLA (Chair); Bruce Ralston, MLA (Deputy Chair); Robin Austin, MLA; Dave S. Hayer, MLA; John Horgan, MLA; Richard T. Lee, MLA; John Rustad, MLA; Diane Thorne, MLA

Unavoidably Absent: Harry Bloy, MLA; John Yap, MLA

1. The Chair called the Committee to order at 1:07 p.m.

2. Opening statements by Randy Hawes, MLA, Chair.

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

4. The Committee adjourned at 2:32 p.m. to the call of the Chair.

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

Tuesday, September 23, 2008

Issue No. 79

ISSN 1499-4178

[ Page 1863 ]

TUESDAY, SEPTEMBER 23, 2008

The committee met at 1:07 p.m.

[R. Hawes in the chair.]

R. Hawes (Chair): Just a note here. We were just noticing that every witness on the list today has a name that starts with the letter "J," which is a little unusual. I think we don't have a full agenda today. We have five presenters, probably because we advertised for only people with the letter "J" today. No. I'm just kidding.

Good afternoon, everyone. I'm Randy Hawes, and I'm the MLA for Maple Ridge–Mission. I'd like to thank you for taking time to take part in, we believe, this very important process and welcome you here today.

In preparing for budget 2009, the Minister of Finance is required to release both a fiscal forecast and a budget consultation paper by September 15 of each year. The consultation paper is required to provide a description of the major economic and policy assumptions underlying the fiscal forecast as well as identify the key issues that need to be addressed by the public in preparation for the next budget.

The Select Standing Committee on Finance and Government Services is charged with carrying out public consultation on the minister's behalf. This all-party committee is required to report back to the Legislature by November 15. If you'd like to review the consultation paper, there are copies available at the registration desk at the back.

Information on how you could make a presentation to this committee is available on line at www.leg.bc.ca/budgetconsultations.

As a reminder, any input that the committee receives in writing or in electronic form is given the same consideration as any oral presentations that may be made here today. Due to the recently announced federal election, we've extended the deadline for input to Friday, October 24.

Today we're going to hear from a number of presenters who have preregistered with the Office of the Clerk of Committees. The time slot is a maximum of 15 minutes. We recommend that you take ten minutes in your presentation and leave five for questions and answers. However, it's your time, and you can use it any way you wish, up to and including using the full 15 minutes for your presentation.

I'll give you the high sign when you're at ten minutes. If your presentation is longer, I'll also give you the high sign when you have two minutes left. Time permitting, at the end we'll have an open mike. If there are any presenters at that open mike, they'll be given five minutes. There will be no question period at the end of the five minutes.

I'll now ask the other members of the Finance Committee to introduce themselves, starting with Richard.

R. Lee: Hi. I'm Richard Lee, MLA for Burnaby North.

D. Hayer: Good afternoon. I'm Dave Hayer, MLA for Surrey-Tynehead.

J. Rustad: Hi. I'm John Rustad, MLA for Prince George–Omineca.

B. Ralston (Deputy Chair): Bruce Ralston, MLA for Surrey-Whalley and Deputy Chair of the committee.

D. Thorne: Diane Thorne, MLA for Coquitlam-Maillardville.

R. Austin: Robin Austin, MLA for Skeena.

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R. Hawes (Chair): Joining us today too, I'm pleased to introduce our Clerk, Kate Ryan-Lloyd. With us also is Stephanie Hansen. She's on the registration desk at the back, smiling at us. Also, we have Hansard Services, Michael Baer and Polly Vaughan, who are recording today's presentations and will prepare a written transcript of the meeting as well. The meeting is being broadcast live on the Internet. With that, I'm going to call on our first witnesses.

Before I do that, I'm missing probably the most important person here for us. That would be the Speaker of the Legislature and MLA for Penticton–Okanagan Valley, Bill Barisoff.

Bill, thank you for taking the time to come and visit with us. It's always an honour, Mr. Speaker, to see you anywhere.

With that, we'll move to our first presenters, John Winter and Jon Garson of the British Columbia Chamber of Commerce.

Presentations

J. Winter: Thank you very much, Mr. Chair. I'm here with Jon Garson, who is the vice president of policy development for the B.C. chamber, and we'd like to take this opportunity to thank you for allowing the chamber the opportunity to present the views of our membership on what the government's priorities for the 2009-10 provincial budget should be.

At this point, it's perhaps useful to provide you with some background as to the chamber's constituency. The chamber represents the views of 126 chambers of commerce and boards of trade representing over 32,000 businesses of every size, sector and region of the province. As such, we feel that the chamber is truly the voice of B.C. business.

Due to the time constraints that are placed on our presentation here today, we're unable to address all the policy recommendations of the B.C. chamber. However,
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we will be providing a written submission, which does provide detail on a full range of chamber recommendations for budget 2009.

On the first question, before we address the issue of tax cuts, our members would certainly expect us to address the issues of the carbon tax. It will come as no surprise to the committee that the carbon tax has caused significant concern amongst our members. While the chamber congratulates the government for its commitment to ensuring that the tax is revenue-neutral to the provincial coffers, it is clear that the tax is not revenue-neutral to business, as business will be responsible for 70 percent of the revenue but only receive 30 percent of the tax cuts.

Many sectors — for example, trucking, mining and agriculture — have already begun to develop a range of measures to mitigate the impact of the tax on their sectors. As such, the chamber believes it is critical that government partner with business to look to solutions outside the tax cuts provided that enhance the productivity and efficiency in the long run, allowing them to increase revenue, thereby offsetting the negative impact of the tax.

Further to this, the chamber recommends that the provincial government should (1) encourage solutions beyond tax cuts, including targeted incentives and changes to policy that would mitigate any financial impact of the tax; (2) enhance industry's ability to reduce emissions on a permanent basis as a mechanism to defray the tax burden; (3) introduce a carbon-smart program that will provide audits to small business on how they can save money by reducing their greenhouse gas emissions; (4) identify specific means to make B.C. a more attractive jurisdiction for carbon-neutral economic activities to mitigate the effect of the carbon tax on our jurisdictional competitiveness; (5) enhance current dedicated funding streams such as the ICE fund and the bioenergy network to ensure that B.C. is able to develop the new technologies that can be deployed on a domestic and international basis; and (6) undertake further initiatives to encourage the scientific discovery of technologies that allow B.C.'s vast carbon-based energy resources — in particular, coal and coalbed methane — to be used in an environmentally responsible manner.

The chamber was delighted to see the focus on tax cuts in the budget consultation paper. The chamber has been consistent. Government has a fundamental responsibility to reduce taxes whenever fiscal conditions allow. Tax cuts stimulate investment, growth, savings and innovation — the keys to long-term economic growth and prosperity.

Under our current tax regime, B.C. compares very well against other provinces in terms of personal and corporate taxation. Indeed, we would go so far as to say that the tax cuts at both the personal and corporate level that we've enjoyed over the past eight years are the primary reason B.C. is able to weather the current economic challenges facing most other jurisdictions.

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This said, we continue to lag one particular jurisdiction on virtually every measure: Alberta. And while the chamber does not suggest that B.C. is or will be able to be a lower tax jurisdiction than Alberta, the implementation of TILMA has introduced a greater degree of competition for B.C. business, particularly small business, that requires attention from the provincial government.

While the chamber welcomes competition as good for the economy, the ability of B.C.'s businesses to excel in this competitive environment depends on government's ability to ensure a level playing field, particularly in terms of taxation.

Budget 2008 in Alberta included several measures that the chamber believes require a response from B.C. These were, firstly, a reduction in the small business rate to 3 percent; secondly, an increase in the small business threshold to $460,000, effective April 1, 2008, with a further increase to $500,000, which takes effect on April 1, 2009.

Further to this, Alberta has also made a commitment to reduce its corporate tax level to 8 percent. Therefore, the chamber recommends that budget 2009 include a reduction of the small business tax rate to 3 percent and an increase in the small business tax threshold to $500,000. The chamber also recommends that budget 2009 include a commitment that B.C.'s corporate tax rate will not exceed 125 percent of that of Alberta.

Chamber members have also recommended a number of targeted tax measures which will have a positive impact on the provincial economy. Full details on these measures will be provided in our written submission, but briefly, they are the elimination of the 7 percent PST on legal fees, the reform of the property transfer tax and harmonization of PST and GST.

It should also be noted that the tax system can also be utilized in a proactive way by providing incentives to encourage sectors to invest and to grow or to encourage beneficial behaviour, such as the film and television tax credit, the mining exploration tax credit and the scientific research and experimental development tax credit. The chamber believes that these have proved beneficial and should be maintained or even enhanced, as appropriate.

The number of tax measures mentioned above are just some of the taxes levied by the various levels of government in a complex tax environment. The chamber believes that there would be exceptional value in providing a clear understanding of the tax burden on the taxpayer — the overall tax burden at the personal and corporate level. If the overall tax burden were better understood, the effectiveness of tax measures and programs could be measured by changes in the overall tax burden itself. This would assist in providing clear direction to the public on the true impact of tax measures.
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This would be particularly important in the debate around the carbon tax.

As to the second question, the chamber remains committed to ensuring that government keeps public spending firmly under control. Significant increases in public spending feed an unsustainable cycle, as increases in public spending feed higher expectations, which in turn feed the need for further revenue, which results in calls for increased spending. As such, the chamber recommends that program spending be capped to increase by no more than 3 percent per annum, in line with the projected growth in the economy and the population.

Further to controlling the level of new spending, the chamber believes there must be a commensurate focus on ensuring that existing programs are effective and provide real results through an ongoing review of government program spending. Therefore, the chamber recommends that government 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 that program, its objectives and its goals.

The chamber believes that controlling public spending is of particular importance, given the commitment to utilize two-thirds of all new spending on health care. Without a firm cap on public spending, the seemingly insatiable black hole of health care spending will continue to drive increases far above the growth in the population or the economy.

We must realize that simply pouring more money into the system is not the answer; it is a recipe for disaster. Health care spending must be tied to a clearly defined ability to measure improvements in outcomes that is underpinned by a clear blueprint for reform.

On the third question. The chamber remains committed to the ongoing reduction of the debt burden we leave to future generations. And while the chamber recognizes that it's unrealistic to suggest that B.C. can become debt-free, the nature of surpluses is such that it's dangerous to direct revenues to program spending, as they simply increase government spending commitments in the longer term.

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It is critical that we reduce our debt while our economic conditions allow us to do so. The benefit of debt reduction is that it actually frees up sustainable revenue that government can reinvest without risking the economy. Therefore, the chamber recommends that the provincial government introduce legislation that will provide a legal requirement that the provincial budget dedicate 50 percent of anticipated or planned surpluses and no less than one-third of unanticipated surpluses directly to debt repayment.

On the fourth question, the chamber believes that the key to initiatives in budget 2009 should be investing in people and critical infrastructure that are critical to the growth of productivity. Given the time restrictions again today, we are unable to address each of our recommendations. Full details, however, will be included in our written submission.

We would like to focus, therefore, on two recommendations that we believe to be of particular importance to the economy.

Firstly, the northwest transmission line. The northern transmission line, NTL, is required to open up new opportunities in mining, green power projects, forestry and oil and gas in the northwest of British Columbia. This initiative will also help revitalize the region's tourism industry and provide clean green energy to small communities that are dependent on diesel electric power generation.

The government must consider the NTL as an investment opportunity in the long-term social, environmental and economic development of northwest B.C. for the benefit of all British Columbians and move forward on this project immediately, even in the absence of a private partner.

The second issue we would like to focus on is skills, and skills must continue to be the focus. The chamber was the leading voice calling for the introduction of the training tax credit that was introduced in Budget 2006. The chamber's recommendations were clear. The tax credit needed to be focused on small business and preclude any training already funded by the federal or provincial government.

Given that most SMEs do not use apprentices, there is a clear sense from the SME community that the government's focus on apprenticeships is at the expense of the need to enhance SME's formal and informal training needs. The chamber recommends, therefore, that the provincial government immediately review the training tax credit with a view to expanding the credit to training, besides apprenticeships or introducing a new small business training tax credit.

In conclusion, the chamber's recommendations focus on ensuring that we are well positioned to engage in the next phase of our economic development. We are entering a new phase in our economy, with some sectors and regions experiencing challenges while new opportunities to diversify present themselves. To ensure existing sectors flourish while ensuring the province can capitalize on new opportunities will take a careful mix of investments and incentives underpinned by the strong fundamentals of low taxation, competitive regulation and a commitment to debt reduction.

R. Hawes (Chair): Thank you, John.

B. Ralston (Deputy Chair): I was interested in your comments about the northwest transmission line. As I recall, the proposed cost is about $650 million, and Galore Creek was going to put in $200 million. You are advocating that the government bear the entire cost of the transmission line. Is that correct?
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J. Winter: We're suggesting that work can be underway in the short term to ensure that the transmission line is up and running and in place when the Galore Creeks of this world come back to the table. We're sure that Galore Creek will come back in another form in the not too distant future.

In the meantime, we are simply wasting time by cancelling the project. There is work that can be done to get that line — the preliminary work, the engineering and the other work that is going to need to be done…. The inevitability of the developments in that area is, I think, very real.

B. Ralston (Deputy Chair): But I think the plan originally was that Galore Creek and the government would go forward together. They have obviously made a fairly careful economic assessment and decided not to invest $200 million, so I'm wondering why the public should invest $650 million if the private sector is not prepared to invest $200 million.

J. Winter: Well, I think it is the responsibility of government to ensure, through organizations like B.C. Hydro and others, that economic development opportunities are presented. This would be somewhat precedent-setting if we were to wait until the private sector came along to invest. They are going to be making the considerable investment in the operation itself, and they are also going to be investing in connecting themselves up to the line. We feel that's the responsibility of the private sector.

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D. Hayer: Thank you very much, John. One of the things I have been still hearing, going to small towns in many parts of British Columbia, is that they have a shortage of people in different skills levels. As you know, we have the PNP program there. Is your organization still trying to say that we should expand the definition — classify a number of our workers in a different way in PNP so that it can bring more people in here?

J. Winter: Certainly, the recent efforts of government to increase the value of PNP have been effective — considerable investment in growing the number of candidates or people that come to British Columbia — but there's still a long way to go. I think if we're going to meet their employment needs in the coming decades, the growth of the workforce is going to depend almost entirely on immigration.

One of the things that we've been talking to government about is trying to make this a two-way street. So instead of having an employer out there seeking a candidate as a PNP, people around the world who are looking to Canada as a place of opportunity and employment can be facilitated through some kind of Internet access or some kind of database or whatever. Right now, if you're somebody who has skills that British Columbia is looking for and you don't know about British Columbia and there's no employer knocking on your door, then you are not likely to make the connection.

So we feel that the PNP value can be greatly enhanced by making it a two-way street. By and large, the PNP program has made a significant contribution and certainly will continue to do so.

R. Hawes (Chair): Thank you, John, and thank you for the presentation, both John and Jon. We'll look forward to your written — and, I know, more comprehensive — report that will come before the 24th of this month.

Next we have Omland Heal Chartered Accountants and Jeff Omland.

J. Omland: Good afternoon.

R. Hawes (Chair): Good afternoon. Welcome.

J. Omland: My name is Jeff Omland, and I am a partner in a chartered accountancy firm here in town. I have practised here for 25 years. My reason for being here is to bring the voice of my clients. I represent mostly clients within this valley, but I have approached before, and I believe it's important that you hear the voices of the people here and some of the issues that they discuss with me on, probably, a daily basis, as they relate to B.C. policy and taxation.

Firstly, as a bit of overview. I echo some of the things that were said by the chamber, but I'll try and keep it in context. We've been through a period where this area has been hurt by the slowdown in the forest industry. We have a couple of glaring examples: the Weyerhaeuser mill in OK Falls and the Canwood Furniture plant here in town.

I think it has been a process. People have been kind of expecting it, following the price of lumber down and such. It has impacted a lot of families in this area, and I think we've been fortunate that there has been a bit of a construction boom within the area. I think a lot of those people that were forced into unemployment have found other work. Our concern is, probably, going into the future.

People have moved back in to the valley, and there have been jobs, and I think there has been expansion here. It's been welcomed. It's been far overdue. Definitely in the tourism area, the construction of resorts, second homes and vacation properties has created quite a stimulus. My concern is that that may not be long term.

We are seeing reinvestment in the agriculture, viticulture, manufacturing areas. I think there have been modest steps in those areas that have contributed to employment gains. The concern, again, is just the slowdown in the U.S. and the somewhat financial crisis that
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we seem to be hearing about every day. It definitely has everybody's guard up and looking to the future and where things are going to take us. We know that isn't under the control of the government, but…. The things, I guess, that to me are important…. One thing raised by the chamber representatives is competitiveness with neighbouring jurisdictions. It's really important.

I watch some of my clients make decisions about moving parts of their business or even smaller, self-employed individuals moving to Alberta for work. The draw of the tar sands and those kinds of things — all of those things pull people away.

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What we can control is our taxation policy, and to stay competitive, it would take, probably, greater minds than mine to do the calculation of the cost to the province of increasing the small business threshold. I can assure you that I deal with at least in the tens of my clients that work in that area…. Those dollars stay in the business and create jobs in a real, lasting way. That is one of the best policy areas to focus on. Let small business be the grower of employment in this area.

So being competitive, raising the limit of small business income to $500,000 over a fairly short period of time or staying even close to Alberta is, I think, important. It doesn't have to be dollar for dollar every time, but it is one area that I would strongly encourage the government to consider.

The second area was harmonization, and we've struggled with that. I presented — I think, two budgets ago — against it. But I am hearing my clients say that it's cumbersome, and maybe it's time to be addressed — harmonization — so that there would be one tax form for PST and GST. Take some of that administrative burden…. Particularly the small individuals struggle with it more than businesses that have their own accounting staff.

Probably beyond that, I think that looking at sales tax reform…. Some of the areas that were touched — the property transfer tax and that — are a significant burden to small businesses and individuals in this area.

Basically, I'd just like to conclude and say that I think we are moving forward. B.C. has its eye on the ball. I just encourage…. Don't let up. Anything you can do to reduce taxes will make this a stronger province.

Any questions?

R. Hawes (Chair): Thanks, Jeff. Anybody have any questions? Your presentation is pretty clear and pretty concise.

J. Rustad: Thank you for your presentation. You mentioned tax reduction. You've mentioned some targets on the business side. The chamber talked about debt reduction and personal income taxes. Where do you see a balance there, with regards to how government's priorities should be?

J. Omland: Personally — and I'd probably echo most of my clients — I'd say definitely that that is a balance that has to be maintained — to really focus on not letting spending exceed any of those. Those two are critically important. I think we are in a time when surpluses are there. A lot of my clients have expressed that "it's not a surplus; it's my money. Give it back to me." I hear that. It may seem like a joke, but it's really true. It would do so much good back in the hands of individuals or small business men. Everyone understands the need for program spending but not to ever let it get ahead.

D. Hayer: Thank you very much, Jeff. Very good presentation. I've got a question about the PST and GST harmonization.

We heard it last year, too, in the Finance Committee, and we've been hearing it in some other places. When you talk to your clients, what is the feeling of the clients and the customers? Were they generally supportive? Or will the people say that because some things are not charged PST right now, if you harmonize, you might end up having more items covered? What's the view of the ordinary people that you look after?

J. Omland: Probably I've heard those comments. I think the hope would be that there would be less administration and no increase in the number of items covered. I guess that is something that has to be considered in that. But I think there are a lot of people that just find it tough to keep up with that, and it would be better to have one, as long as it doesn't result in increased taxes.

On study, if it did feel that…. I think people would be against…. There's been sentiment to move towards harmonization from where we were, say, three years ago. I think we're one of the last provinces. There was always fear that the control over the revenue might be lost. So people would have to be happy that that wouldn't be the case. But there are more people who want harmonization now than in the past.

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R. Lee: I don't know if you have the correct answer or not, but say they increase to $500,000 the threshold for small business. How much will that reduce the tax revenue to government?

J. Omland: On the provincial side, probably $10,000 on that hundred — roughly, I think.

R. Lee: So $10,000…?

J. Omland: On increasing from $400,000 to $500,000. I probably haven't specifically calculated, but it's in that neighbourhood.
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R. Hawes (Chair): But in terms of cost to the government….

R. Lee: Yeah — cost to government.

R. Hawes (Chair): As he said, he's not sure.

J. Omland: That would be a hard question to answer.

R. Hawes (Chair): Jeff, thanks very much for your presentation. You're quite right; it kind of backstops the one from the chamber of commerce — very similar.

J. Omland: I do appreciate that you have made the effort to come to Penticton and see what's here. I realize you're going to a lot of communities, but I think it's really great that you do. It's appreciated, too.

R. Hawes (Chair): The next presenter will be the British Columbia Fruit Growers Association, Joe Sardinha and Glen Lucas.

Welcome back. I think we heard from you last year.

J. Sardinha: Yes, you did, and yes, I am Joe Sardinha, president of the B.C. Fruit Growers Association — also, an apple grower here in Summerland, very close to Penticton. With me is Glen Lucas, general manager of our association.

Yes, this is, I think, our seventh presentation in a row. So we've got a little streak going here that we don't want to break.

And yes, you do have a true health snack today, so I hope that you enjoy the apples I brought. They are a late Gala apple. Not that much red colour, but they're delicious, believe me.

A Voice: Thank you.

J. Sardinha: Well, thank you again for allowing us to come here and present. We do have a fairly extensive brief for you, and I want to go through, as fast as possible, the first sections of it and get to the questions. I do have some comments to make in general about agriculture and the tree fruit industry as it pertains, of course, to budgetary considerations.

Agriculture in B.C. is still an economic force; however, recently, rising input costs have had a negative effect on net farm income. Livestock and greenhouse sectors have been particularly hard hit.

The value of agriculture. Let's look at agriculture as a whole. It is a resilient sector that continues to operate 24-7, 365 days a year, regardless of economic recession or bullish economies. It provides steady jobs, economic growth, tax revenue and safe, healthy food for British Columbians.

I would like to recap and tell you that the current health of the tree fruit industry is actually very positive. I would also like to say that 2007 saw the industry very resilient. In fact, we were one of the few exporting industries that did quite well, considering we had a Canadian dollar that was, on average, at par with the U.S. and above the U.S. dollar.

We had some record-high returns for some of our apple varieties that were exported into markets such as California and Arizona. We have done quite well, and it's a tribute to the industry also changing its many practices, including the quality that we're putting into the marketplace.

In January 2007 the B.C. Fruit Growers Association and the industry released an industry strategy. That industry strategy took eight months in its development. It followed on the heels of a very disastrous 2005 year, in which this industry was brought to its heels by unfair U.S. competition. We've rebounded very well, largely in part to industry strategy — the industry moving forward, restructuring and adopting five pillars of focus that are actually in the brief as well.

One of those areas of concentration that has been with the industry for many years, since the early 90s, has been the replant program. It is a very important initiative in our industry, part of our industry strategy implementation. It is a pivotal program in our strategy, and it is where we feel that there is still work to be done in the industry to take us to a level where this activity will be self-sustaining in the future.

In the document you will find that we are seeking from the province a further five-year commitment of $10 million to the replant program. This is half of the previous level that the replant program was funded at, simply because a lot of the orchard renovation has taken place, but there's still more work to be done.

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In the time of the replant program, $51 million has been contributed by the provincial government to this program, but it has required over $100 million of grower investments. So this has been one heck of an incentive program, and it has many economic attributes.

As a result of replanting, we calculate today that the industry is realizing $24 million in additional revenue per year. That translates into provincial tax dollars as well, so the province does recoup on its investment.

As part of our industry strategy, we'd like to thank the provincial government for having come through with some initial support for the implementation. We receive $43,000 for our labour project from the Ministry of Small Business and Revenue, and we received $3 million from the B.C. Ministry of Agriculture and Lands to continue with the replant program. That is bridge funding.

I must say, though, that we have enough funding for possibly next year. After that, there is great uncertainty. One of the reasons why we are asking for replant money at this point in time is that we must have that commitment well in advance of actually needing it. The nature of replanting orchards is that you must order trees two
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years in advance, and growers are also looking for long-term leases with landowners, so the plans have to be made. That is why the request comes before the money is actually needed.

In terms of labour, the industry is very proactive in its approach to labour issues, particularly when it comes to retaining and attracting domestic workers and also participating in the seasonal agricultural worker program. Labour is vital to horticulture. We are extremely labour-intensive in our industry, as with other hort sectors in the province.

One of the top priorities for the industry is, of course, worker housing and worker facilities. We have a lot of small farms in this province when you compare us to Ontario, for instance, and that is a challenge. We also have the additional competitive challenge of programs in Washington State contributing significant dollars to their industry for worker housing.

We feel that dollars for worker housing could possibly be linked to the social housing measures being undertaken by the province, and perhaps combine the two programs. What we have proposed is $13 million over five years not just for the tree fruit sector but also for the horticultural industry in general where labour is an issue and facilities are also an issue.

That is, of course, one of the items that we'll answer. Another question, too, is the dollars being requested.

In terms of the carbon tax, we do have some comments on the carbon tax. We are proposing, actually, a rewrite of the carbon tax law so that an alternative use or distribution of the carbon tax can occur. It currently punishes agriculture by driving up the costs of input significantly at a time when many sectors, such as cattle and greenhouse, are suffering terribly. It also places a disproportionate redistribution of the tax reductions in the hands of the highly urbanized centres, so the rural economy and the rural residents lose out once again.

There is quite a bit of reading in here, so I'll let you peruse the document on your own. I will now step to the questions, as we did put some thought into this.

Firstly, to deal with the carbon tax issue in question 1, the question is rather confusing. The choice is not only to reduce taxes. For example, the government paid $100 to every British Columbian, and this was really not a reduction in taxes. It was actually a rebate.

We propose that the law governing the carbon tax should be rewritten so that the carbon tax can be reprofiled and be more effective. That reprofiling would be in the form of incentives and programs to reduce carbon emissions; to encourage practices and research to sequester carbon; and finally, really, to finance programs for adaptation to climate change.

For our sector this would include areas such as investing in public transportation. This is a real issue for the Okanagan. There is no intercommunity north-south public transportation system in the Okanagan Valley. This is a problem for our industry, because we have transient workers here who are quite often hitchhiking at the side of the road simply because there is no public transportation.

Furthermore, if we had public transportation intercommunity, we could also ask for extensions during the harvest period, as well, to move those workers around. Not only would this help with farmworkers; it would help immensely with the huge retirement population that is in the Okanagan and their mobility ability to go intercommunity. Many of them no longer drive. It would also help with workers actually going to work and taking a bus system.

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Investing in a research fund which can create pilot projects and provide incentives for adapting new technology…. In our industry there is not a large opportunity to capture carbon, as horticulture, and especially our tree fruits and field crops, is not a large emitter of any consequence. However, there may be an opportunity to create some biofuel and make a modest carbon recapture from culled fruit such as grapes, after the juice has been extracted for winemaking, or culled cherries or even some culled apples that have portions of the apple that are rotten that can't be pressed for processing in the juicemaking business.

In No. 3 we create a directorate with a budget to prioritize and fund projects for industries impacted by climate change. No doubt, agriculture and forestry are going to be impacted severely by climate change. We feel that strategic investment — for instance, in our production insurance program — will greatly assist our industry in containing short-term climate risks, thus enabling long-term adaptations to the impact of climate change.

Going on to No. 2. What choices will we make on other priority investments in 2009? I've mentioned replant, a $10 million commitment over a five-year period; the farm labour housing; the $13 million commitment to all of agriculture; and to take note of the negative impact of the carbon tax on agriculture in rural areas and make corresponding adjustments.

I must point out that page 7 has a very bold announcement by one of the federal political parties as to how they are going to mitigate the effect of a national carbon tax on agriculture. I will point out that in calculating B.C.'s benefit, it's actually larger than the agricultural budget. If this particular party were elected and followed through, it's larger than B.C.'s provincial agricultural budget.

No. 3, debt reduction. How would we invest the savings from lower interest payments on reduced operating debt? Certainly, debt reduction is prudent, but it should not be an exclusive approach. Now that the province's credit ratings are in good standing, we feel that rebalancing towards economic development programs should start now to strengthen the resilience of the business sector.
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Certainly, one of those programs, being our replant program, has a fit.

Productivity and competitiveness need to be emphasized, and growth of the business sector will provide the added tax base needed for health care and education programs.

Finally, No. 4. The B.C. Fruit Growers Association strongly encourages — and this is for other measures that we would like to see in the budget — the Finance and Government Services Committee to support the proposed or administratively efficient PST exemption refund system for agriculture. This effectively expands the list of eligible legitimate farm inputs for farmers and eliminates the administrative burden of the current system on the business sector.

There are a number of graphs in here that I'd like you to look at. I also have one additional last comment, and it is the realization that agriculture does compete with a vast array of priority and urban issues. There are very large expenditures in this province on health, education, social services, but more investment must take place in agriculture. This is the type of investment, such as our replant program, that encourages innovation, excellence and competitiveness. These are not handout programs but strategic investments that partner with the sector and build sustainability.

J. Horgan: Thank you, Joe. I always enjoy your presentations, and it's not just that you come bearing fruit.

I wanted to focus in on your concerns about the carbon tax and, in particular, your assertion that it's having an adverse effect on the sector. Could you expand on that for the record? The tax reductions that were promised by the government were supposed to balance out the impact, but when you've got transportation costs and harvesting costs, they are not covered by an income tax reduction. Is that the inference that I can draw from your presentation?

J. Sardinha: That's true, and we're calculating that it's disproportionate — that where you have the highest population base, you are going to see the greatest tax benefit. We're looking at areas of rural B.C. — very rural. For instance, our sector is going to be impacted because we do a lot of trucking between our plants. You know, we're in the apple business, we're in the tree fruit business, and we have to move fruit around.

But you look at the cattle in the Peace River country, the miles that they have to drive, the livestock that they have to move, and there are some big impacts. You look at the greenhouse industry. The calculation is $7,500 per hectare under glass. That is the impact of the first introduction of the carbon tax at the current rate — $7,500 per year per hectare under glass.

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The B.C. Agriculture Council has calculated that it's going to be an impact of, I think, $13 million to the agricultural sector in year 1 of the carbon tax. So it's a hit coming at a time when some sectors are doing okay, some are holding their own, but others are definitely suffering. It's one more thing that agriculture producers don't need to deal with at this point in time, one more burden.

J. Rustad: I agree with you that the agriculture sector, particularly the cattle sector, is going through some real challenges, given the fact that they're price-takers not price-makers. It makes it really challenging with the input costs.

I want to ask you about carbon tax, in particular. The way we have a carbon tax set up, of course, is that it's very transparent, very straightforward. You can see how much revenue is collected. The question that we're asking is that when or if there are additional revenues, where you'd like to see some of those revenues go. You've given some response to that, and I want to thank you for that.

There are other suggestions around a carbon tax, in particular one that isn't transparent — one that is at a producer level and, therefore, wouldn't be able to be tracked. It would just go into general revenue. You wouldn't be able to see it directly in front. Therefore, there wouldn't be as much accountability around that.

I'm just wondering. With regards to the carbon tax that's in place and those opportunities, which do you think would give you more of an opportunity to be able to, say, focus funds?

I know this is a little bit leading, because…. With what we're doing, it's set up that you can say: "Okay. Here's the revenue, so here are the opportunities." There are others that are in place where, like I say, it just goes into general revenue, but gets passed on.

Maybe I should redirect that question, because that's not really fair.

J. Sardinha: I would say that direct carbon tax…. I wouldn't say refunds or credits to farmers, because of all that we do for the environment already. I don't think we're going to be able to develop in the short term a truly consistent and reliable cap-and-trade system for agriculture that's going to support agriculture the way it should be because of our role in the whole climate change scenario.

I think perhaps a system of carbon tax credits where some of the environmental things that we're doing, whether it's…. Take for instance in the Peace River country. If your forage field is feeding deer, well, you're providing an environmental good because you're helping raise those deer for the hunters that come along. Well, that's an environmental goods and service. So maybe there's a way to link some of the environmental aspects that we're doing on farm.

In the Okanagan here our industry has taken thousands and thousands of pounds of pesticides out of the
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environment simply by partnering with the regional districts and undertaking to control codling moths, one of our major pests, in an environmentally friendly way — trying to breed the codling moth out of existence by releasing sterilized moths.

Those kinds of things — you know, looking at what farming is doing for the environment already, and maybe flowing back some of the benefits in carbon tax credits.

Some of the ideas proposed you find on page 7. That's a federal party proposing…. They really heard it from farmers across the Prairies, in Ontario and everything else. They really heard it — that a carbon tax just simply wasn't popular with the farming community. So maybe it's a way to get elected or to get more votes in rural Canada — that's always a possibility — but obviously there are some very good ideas in there as well.

R. Hawes (Chair): Thank you very much, Joe and Glen. Your presentation is, as always, very helpful and certainly will be given a lot of consideration. I'm sure we'll come up with something.

Our next presenter is Okanagan College. It's Janet Shaw, Allan Coyle and Donna Lomas. Welcome.

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J. Shaw: Good afternoon, Mr. Hawes and committee members. I'd like to extend a personal and warm welcome to all of you to the South Okanagan. I've been a community member from Oliver for over 25 years, so I know we're all proud to be from the Okanagan. Thank you for allowing us to appear today to contribute our perspectives to your deliberations.

Noting the length of time allowed here today, I will be direct. I will begin by offering a perspective to a question posed in the background paper for this current budget consultation. That paper notes how much of the province's new spending has been devoted to health care in the coming years and then asks: what choices should be made for priority investments in 2009?

I would hope that your committee would recommend education as a top priority. Students, faculty, representatives of the education sector and even the Canadian Bar Association have appeared before you and spoken of the importance of supporting education. They have provided a solid factual foundation for you to work with as you prepare your brief to your colleagues.

In fact, I'll be even more specific in my recommendation about where to invest our public trust and taxes. Spend the money where it can do the most good in our current circumstances: in the college sector.

Here are the reasons I am making this suggestion to you. First, colleges have a very real role to play in answering the current skills shortage — maybe the most important role. A recent survey by the Canadian Federation of Independent Business revealed that 42 percent of skill shortages are in occupations that usually require college or apprenticeship training. That compares to just 7 percent of occupations that require university education.

This is something that has been extremely evident in our region, especially as we've weathered an unparalleled construction boom, complicated by the well-known demographic shift in our population. There are more people retiring than we currently have capacity to train.

The second reason to invest in colleges is that we provide tremendous return on investment. This is not just true for the individuals who invest in their education and training but also for the taxpayers. A recent independent survey of the economic impact of B.C. colleges has shown that taxpayers enjoy a 14 percent return on investment for money on B.C.'s colleges.

Individual students enjoy a similar return on their investment. To put that into perspective, investing in a college education will yield about $334,000 more in income over a lifetime for a student than they would earn with just a high school diploma.

We know too well what the projections are for the increased demand for health care services and the ensuing taxes we will have to pay. It's a perplexing and challenging problem. We believe a possible answer is to give people the education and training they need to earn more income so that they pay more in taxes.

That same study, which I referred to just a minute ago, showed that for every tax dollar that is invested in colleges, the province reaps a return of $3.80 through increased taxes collected from better-paid wage earners and through lower social costs.

The third reason to invest in colleges can be that we are innovative and responsive in meeting community and employer needs. Okanagan College opened its doors in 2005. Since then we have tripled the number of apprentices we have trained and significantly broadened the access to trades training throughout the region we serve. Today you can find trades students being educated and trained in Salmon Arm, Vernon, Penticton, Revelstoke, Summerland, Cawston and Kelowna. Five years ago the only trades training was offered in our Kelowna campus.

Some of you may have recently read in the Globe and Mail about Okanagan College working with the government of Jamaica, industry training organizations in British Columbia and our regional economic development agencies to develop an innovative program to bring skills people from Jamaica to B.C. We have helped them improve their credentials and qualifications and, by doing so, successfully assisted industry to respond to the pressure of a very significant labour shortage.

My fourth reason to invest in colleges is because we provide important access to education and training that we all know will be increasingly important as our economies continue to change.

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A high school diploma no longer provides our workforce with the education and skills needed to be globally competitive. Our communities must have an educated and trained workforce that will meet the challenges in response to issues such as the pine beetle infestation, changes in international markets, energy sustainability, global warming — just to mention a few issues.

The access that colleges provide isn't just about geography and proximity. We are also about adult upgrading, literacy programs, student support initiatives, short-term training, transferable credits. Colleges also provide access by opening our doors to mature students, our first nations people, people changing careers, people who might not have had the prerequisites required by our universities, people who need the help of their families and neighbours to go to school, people who cannot walk away from their jobs to get the education and training required to improve their circumstances.

I want to tell you just a very small personal story of a mother, a married woman in Vernon who wanted to improve her career. She was thrilled to learn that our institution offers a new program that allows home support care attendants to upgrade their education to become licensed practical nurses. At her graduation ceremony just a month ago, and with her child in her arms, she explained that if Okanagan College had not offered the program at our campus, she would not have been able to achieve her goal of becoming a licensed practical nurse. She, like so many others, is best served by accessing her education in the community in which she lives.

These are just some of the reasons why the investment in colleges is so important and should find its way to the top of your recommendations. But there are other considerations that I would like to spend just a couple of minutes talking about.

For the last three years and against initial expectations, Okanagan College has exceeded our government-mandated targets. Even as we've grown dramatically, courtesy of provincial investment in new seats for students, we have been able to outperform our student FTE profile.

We are seeing that trend repeat itself this year, with enrolments continuing to grow at all of our campuses. We want that to continue, not just because it means we're living up to our obligations to the taxpayer but because it means that we are fulfilling a very real demand being expressed by our students and employers in this region. But our ability to sustain this is in jeopardy.

We have had the advantage of using the momentum of a new institution and the success of our first three years of operation to cushion us through this year's unexpected change in provincial funding. Our ability to cope with unplanned reductions and changes to funding is limited.

Next year we have to address a structural deficit of $2.2 million. This will have a very real impact on our ability to meet the needs of our students and the great expectations of the communities that we serve.

I would respectfully ask this committee to recommend the following to the Minister of Finance, the Treasury Board and the Ministry of Advanced Education and Labour Market Development: (1) that we return to a stable three-year funding commitment, (2) that the issue of unfunded inflation in our budget is addressed and (3) that we collectively agree on the sector accountability measures.

To attain the goal of being the best-educated province in Canada, it is imperative to continue to fully invest in our colleges. Not only does it make good fiscal sense, but it especially makes sense for those individuals who will personally benefit and will continue to contribute to the wealth and well-being of our communities.

Thank you very much for the opportunity to present to you today, and I would be most pleased to answer any questions and, certainly, with the support of my colleagues.

R. Hawes (Chair): Congratulations. You've done very well. You're just under ten minutes.

J. Shaw: Thank you. I did time it.

R. Hawes (Chair): You've left lots of time.

R. Lee: Thank you for the presentation. I have a question. You raised the term "sector accountability measure." Can you expand on that?

J. Shaw: Yes. We are given funding by the province, and with that funding we are expected to meet what are called "full-time-equivalents" within our institution. The unfortunate part of that is that each institution is different.

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We all are challenged with different situations in how we have to provide education for our students. It's a measure that does not particularly reflect how success should be measured or how accountable we are to the government for how money sent to the colleges is spent.

R. Lee: Do you have any specific changes you want to make to that kind of measure?

J. Shaw: Well, I can't speak exactly to the best accountability measures, but we're asking for the sector and the provincial government to come up with accountability measures that would truly reflect performance.

D. Thorne: I was interested in what you were talking about with skills training. We've been hearing that in other submissions as well, and talking about the colleges as obviously the best vehicle for doing that, especially in the smaller centres.
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Have you found that it has been difficult in the past few years, or for any length of time, to get more funding to increase those programs, or have they been steadily increasing, and you just want to make sure that that continues?

J. Shaw: Certainly, the new growth funding has been targeted for trades training and health care occupations. I think the Okanagan, in particular, over the last many years had fewer seats per student than anywhere else in the province. When Okanagan College was remandated and opened its doors, we recognized that the great need that needed to be addressed was around skills training.

As long as our economies continue to demand skills-trained people, we hope that we will continue to have the funding to provide that type of training.

I think it also reflects a shift in how we value education. For so long the focus was on university-trained people. We recognize, not only in B.C. but across Canada, that we have huge shortages of skilled people. I think there was just a lack of emphasis put on skills training.

D. Thorne: Obviously, you'd like to see us move more toward a European model, really, which is an emphasis on those kinds of skills. So is it fair to say that for Okanagan College this is going to be one of your priorities across the board and that you'd like us to know that?

J. Shaw: Yes, absolutely.

B. Ralston (Deputy Chair): You mentioned the 2.6 percent reduction which occurred in the spring. Obviously, you heard the Minister of Advanced Education say it wasn't in fact a 2.6 percent reduction. I'm wondering: what impact did that have on your budgeting process? How is that related to what you described as a structural deficit, and what are the implications for the funding of the college going forward?

J. Shaw: First of all, I can share with you that when Okanagan College was remandated, we inherited a significant structural deficit of over $5 million. We put a plan together to reduce that structural deficit within five years, and it was approved by ministry. The reduction in our base funding for this year has further delayed our ability to right our structural deficit and has actually added to the structural deficit.

This year we've addressed our budget by holding off on some of our program developments. We've certainly had to hold back on some of the support systems that we would have liked to have put into place within the college, certainly deferral of maintenance and cost-cutting around utilities — all of those things were basic things that we've done this year.

We've been fortunate in that we've had some one-time money from government to offset some of the concerns we've have around our structural deficit.

We have been fortunate, unlike many of our other colleagues in the college sector, to be able to manage without cutting to our students at this point. But for next year I can't tell you what we're going to have to deal with, at this point. Our cost analysis within the institution is underway now, and we have not had any recommendations from administration as to how we'll manage our budget and right the structural deficit in the short term.

R. Hawes (Chair): I have a question for you about skills training and the change that was made a few years ago from the old Red Seal program, which had a very structured time limit, to the certification program where students can jump in and jump out, get a certificate, work at that for a while and then come back in and, ultimately, over a much longer time, if they choose, get their Red Seal.

Have you noticed a big change in that? Is that helpful to attract more people into trades, or is there less of a dropout rate? Are people getting their certificates — I'll put it that way — and then moving out and coming back and that sort of thing?

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J. Shaw: I'm going to make one comment, and then I'm going to ask for my colleagues to give you more detail on it. I can say that since we've been offering trades training up and down the valley through a rotating trades program, we've had wait-lists for all of our trades programs. I'm going to ask Donna or Allan — if you want to speak more specifically to any of the better ideas that you would have, because you come in contact with students, whereas I'm behind a board table with paper.

D. Lomas: We have experienced wait-lists for a lot of what we call rotating trades. Literally, we have three programs that are going up and down the valley in order to try and meet — especially the construction trade industry....

One of the biggest challenges we have faced was to keep those students in the program the entire length of the time, because you end up with employers who need them really quickly. And so they're trying to attract them to the workplace before they've actually completed. There are examples of where people are.... We're trying to keep them in class getting those certificates. Then they go into the workforce, and then when opportunity arises, they are coming back and they are working on their apprenticeships and moving towards that Red Seal.

So apprenticeship training is a very, very fast-growing area for Okanagan College, and it's been a high priority in terms of our educational focus in making sure that
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that training is available, not just in Kelowna but in fact up and down the valley, to meet local needs.

The idea of the rotation was so that you weren't producing, let's say, 20 plumbers every six months — that you, in fact, were producing 20 plumbers, then 20 electricians, and then 16 welders, with the idea that you weren't saturating local markets and that you could keep it moving.

It's also very cost-effective, because you have to envision with this program that all the equipment, literally, is put on trucks, shipped to the next campus, where it's then reused in that campus, and then it just literally keeps rotating. It's meant that we've been able to offer more educational training with a one-time investment than if we were investing repeatedly on every campus and duplicating. In that sense, it's been pretty viable and has been very cost-effective.

Just to Diane's question, too. I think, you know, that there is lots of demand for apprenticeship training, but here in Penticton, which I'm most familiar with, the challenge is also going to be facilities. You can put on apprenticeship training. You can put on trades training, but it's very specialized space. You can't run a welding shop right next to someone's residence, for example. So facilities are always a challenge, and one that certainly I know you're probably well aware of.

R. Hawes (Chair): Thank you very much for your presentation. It will certainly be considered strongly by the committee, and hopefully, we'll come out with recommendations that will please you.

J. Shaw: Thank you very much for your time today.

R. Hawes (Chair): And now we have the Kelowna Chamber of Commerce, with James Paterson, Jennifer Dixon and Weldon LeBlanc.

J. Paterson: So you made it. We're last.

R. Hawes (Chair): Welcome, and thank you for coming out to share your thoughts with us.

J. Paterson: We'd like to take this opportunity first to thank you for coming to our region and giving us the opportunity to present to you today. It's very important that we're able to provide this type of forum and input. It's something that we support wholeheartedly.

I'm going to talk about a few of the issues that are affecting our chamber in particular, and if you have any questions, please don't hesitate to ask me. Once we're finished there should be some time.

Firstly, the Kelowna Chamber of Commerce is a membership-based business organization representing in excess of 1,700 business members. As the second-largest chamber of commerce in British Columbia, our mission is to foster a positive business environment by providing members with leadership, advocacy and services of value.

As a growing region, Kelowna and the Okanagan are faced with significant issues such as organized crime, transportation, infrastructure needs, homelessness and taxation. This presentation will briefly delve into these issues as we see them.

We are appearing here today before the select standing committee to discuss a number of select issues relating to fiscal policy of the provincial government. These specific issues can be linked to the common theme of economic sustainability. We believe that it is imperative to maintain a smart fiscal policy agenda with the goal of assuring the economic sustainability of our economy.

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In essence, economic prosperity and growth are directly impacted by both the quality of our natural environment and by the quality and character of community life in our region. In turn, we need a strong economy to provide the tax base to address social and environmental programs. The Kelowna chamber believes that economic sustainability should be a high priority for the provincial government.

Dealing with organized crime. Organized crime poses a serious long-term threat to Canada's institutions, society, economy and our quality of life. In 2007 the Canadian criminal intelligence community identified approximately 950 organized crime groups that were found to operate in communities throughout Canada. The vast majority of organized crime groups use or exploit the legitimate economy to some degree by insulating their activities, laundering proceeds of crime and committing financial crimes via a legitimate business front.

With the expansion of organized crime throughout the provinces and regions in Canada and the necessity to reduce its growth, there must be plans and priorities established to guide our law-enforcement efforts towards reducing the threat and impact of organized crime in Canada.

The coordinated law-enforcement effort must be undertaken that provides for a regionalized approach to combatting organized crime, utilizing the services of the RCMP, municipal and provincial police forces and other agencies in a coordinated effort. The Kelowna chamber recommends that organized crime task forces be established in the Okanagan region and that the federal and provincial governments work jointly together in providing funding for these organizations.

Transportation. It's a big issue for our membership, usually number one in our survey every year. As the heart of the Okanagan, Kelowna is the fastest-growing urban centre in British Columbia. Kelowna has achieved a bustling economy with high commercial growth, near full employment and increased international recognition as a tourism destination. However, this success has
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generated traffic flows that are higher than anticipated, thus creating significant strains on the region's highway infrastructure.

The Kelowna Chamber of Commerce urges the provincial government to ensure that the Okanagan highway corridor becomes and is maintained as a high priority and recommends that the provincial government work with all levels of government to create and implement an Okanagan transportation corridor strategy and ensure continued economic prosperity of this region and the improved safety of this region's residents.

The Central Okanagan Bypass is one of the areas that needs to be addressed as well. The Central Okanagan region is expected to continue to grow at approximately 3 percent per annum — from 160,000 persons at present to some 225,000 persons in 2021, a growth of 65,000 people.

With the current growth and increased volume of traffic, the efficient movement of goods and services becomes critical to the success of business. The Kelowna chamber recommends that the province of B.C. participate in the construction of the Central Okanagan Bypass to address the increased traffic flow in Kelowna.

The region also enjoys the services of a comprehensive transit system that provides conventional fixed route service and handyDART service. Transit ridership has been growing from just over one million passengers per year ten years ago to almost three million passengers in 2003, a growth of 10 to 12 percent per annum. A more modest growth of 4 to 6 percent per annum is projected over the next ten to 15 years.

This strong growth in population and employment, coupled with the substantial growth in transit travel demand, provides an opportunity to pursue smart growth and smart transit — i.e., a land use plan that supports and encourages efficient modes of transportation such as transit, walking and cycling.

The Kelowna Chamber of Commerce urges the provincial government to support the initiatives of the city of Kelowna to develop a long-term transit vision for the region that will provide frequent, rapid and reliable limited-stop transit service linking the majority of the town centres in Kelowna. Additionally, the city of Kelowna, in partnership with other stakeholders, is currently undertaking a planning study of the Central Okanagan Bypass corridor through Kelowna, between Spall and McCurdy roads.

As part of the official community plan of the city of Kelowna, the COB, as it's known, is intended ultimately to bypass the busy commercial corridor along Highway 97 that will function as a multi-use corridor. This corridor is intended to provide safe and efficient movement of goods and services while striking a balance between mobility, the environment and adjacent communities for all modes of travel, including rail, pedestrian, cyclists, trucks and passenger vehicles.

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We recommend that the province of B.C. work with the city of Kelowna to establish a location for a second crossing of Lake Okanagan as part of the official community plan review and an overall Okanagan corridor transportation plan.

In respect of the Coquihalla Highway tolls, we say the following. On January 13, 1977, the government of B.C. announced its intention to build the Coquihalla Highway. In the following years the Ministry of Highways and Public Works proceeded with the design and construction within the limits placed by budget and staffing levels. With the economic recession and consequent reduction in the rate of traffic increase, the construction was slowed at the beginning of 1981. By the beginning of 1983 work had barely begun on the construction.

On June 5, 1986, Hon. Alex Fraser announced that a toll would be installed on the Coquihalla Highway to help pay for the carrying charges for the step-up in the construction of the Coquihalla. The sole purpose was to offset the costs involved in accelerating the schedule.

The total revenue earned from the toll on the Coquihalla Highway from 1986 to January 31, 2007, is almost $750 million. By the second year of operation the tolls had collected over $25 million. Sufficient money was collected to pay the accelerated costs as indicated by the highest independent estimate of accelerated costs, which was about $43.7 million by the third year of the toll.

We recommend that the tolls on the Coquihalla be reduced by 50 percent commencing January 1, 2009, and be removed entirely by January 1, 2010.

In dealing with homelessness, the statistics of Kelowna's homeless population indicate that approximately 400 people are living either on the street or in a shelter. This presents a distressing portrait of the homeless in Kelowna. Many are dealing with significant addictions and mental illness challenges. Some good work has been done here, but there still is a lot of work to be done.

The provincial government is encouraged to continue along the path to providing affordable housing to address homelessness issues in Kelowna and the province of B.C. The provincial government is also urged to work with the city of Kelowna to determine a strategy to end homelessness.

In dealing with specific taxation matters, firstly I'll focus on the repeal of the property transfer tax. The property transfer tax has a negative impact on affordable housing throughout the province. The PTT adds to the costs of relocating to B.C., adding to the difficulty of attracting employees. The PTT adds increased upward pressure on wages, making it more difficult for businesses to be competitive.

We recommend that the provincial government undertake an immediate review of the property transfer tax and move to eliminate the property transfer tax within three years.
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PST. The province of B.C. has undertaken two key initiatives to reduce regulatory burdens on high costs for small business to operate in the province of B.C. Two consistent themes that have been raised at all meetings include (a) simplify and/or reduce the burden of PST so that small businesses can have a more competitive edge with jurisdictions that do not have PST; and (b) work with industries to address the shortage of skilled workers, especially in the trades.

The Kelowna Chamber of Commerce recommends that the provincial government consider a reduction of the PST by 1 percent and work to minimize the distinct competitive disadvantage for those businesses competing with jurisdictions where no PST exists.

PST on legal fees. Legal fees are the only professional fees that are subject to the provincial sales tax, which is both discriminatory and unfair. The tax directly impacts the cost of doing business in B.C. for large and small businesses and affects their competitiveness against similar businesses in other provinces. The PST on legal fees is also an unnecessary additional cost for British Columbians seeking access to our justice system and is inconsistent with creating a competitive, accessible and equitable environment for B.C. businesses.

The chamber recommends that the provincial government amend the Social Service Tax Act to remove the PST on legal fees in British Columbia.

Fair property assessment system. Significant yearly increases in property tax assessments present challenges to businesses and communities remaining competitive with another jurisdiction — namely Ontario, which has moved to a four-year property assessment system. The existing property tax assessment appeal process also causes obstacles and leads to confusion, duplication of effort and inefficient use of resources.

We urge the provincial government to introduce changes to the B.C. Assessment Act in order to enhance fairness and predictability of assessments to property owners while continuing to value properties on a regular basis and enable the municipalities to rely upon a stable source of revenue to fund important public services.

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Specific recommendations in this regard include the adoption of a four-year reassessment cycle; mandatory phase-in of assessment increases; the establishment of a review panel to determine if the proposed mandatory phase-in program should be expanded to other properties and applied to commercial, industrial or multi-residential property classes; and the implementation of a consultation process aimed at improving the fairness and effectiveness of the present property assessment appeal system.

Responsible long-term fiscal policy is our last point. It is predicted that the provincial surplus will be approximately $2 billion by the end of 2008. This may be somewhat off, but I think we're…. We've gotten the numbers from the EDC.

J. Dixon: Yeah, through an Internet search. I think it was fairly reliable.

J. Paterson: Regardless of what it is, it's the chamber's recommendation that the government direct the surplus, along with all unused reserves, to debt reduction. Economic prosperity is by no means guaranteed. However, we can enhance our chances of success by adopting strategic policies that make British Columbia an attractive location for individuals, businesses and the environment.

In conclusion, we believe that the provincial government needs to find the responsible fiscal balance between investing in our economy, meeting the social needs of the residents of B.C. and paying down the total debt burden. Thank you for this opportunity to expand upon a number of the issues that have been relevant to our business community.

R. Hawes (Chair): Thank you for your presentation. We'll start with some questions.

B. Ralston (Deputy Chair): There's a lot to talk about here, but I was struck by the mention of organized crime. It's not something that I had associated with the Okanagan at all in the past. Have you had any discussions informally with police agencies that suggest that there is support for your first recommendation — that organized crime task forces be established in the Okanagan region?

J. Paterson: Correct. Yes, we have — a number of discussions. We actually were fortunate enough to have Superintendent Ryan, who's in charge of the organized crime task force on the Lower Mainland, come and give our membership a speech. As a result of a business study that they undertook, there was a need for the establishment of an organized crime task force in our region.

Now, subsequent to that, we've been fortunate enough…. Some time ago we asked for…. The RCMP has various crime units, and one of the requests we made was for the proceeds-of-crime unit to come to Kelowna. We've had an announcement that there are three members now coming to Kelowna, so we're quite pleased with respect to that.

We also understand, although there has been no formal announcement, that there's an opportunity that an organized crime task force will be formed in the Okanagan region fairly shortly. Certainly, we're very much in support of that.

J. Rustad: Thank you for your presentation. In particular, I like the balance between capital spending, some tax reductions and debt reduction — that's quite
[ Page 1877 ]
the trick, of course — as well as a little bit of program spending.

I guess the question I've got is around debt reduction. The last proposal you had in here was to put all of our surplus towards debt reduction. I guess that over time we've been reducing our debt-to-GDP. Throughout the last seven years we've managed to do significant infrastructure investments.

With this infrastructure request that you have in here for the region, do you think we should continue with that balance of trying to reduce our debt-to-GDP and pay for infrastructure as we can go, or do you think it's a higher priority to perhaps accelerate some infrastructure spending?

J. Paterson: I think that as a general rule our membership is quite pleased with the debt reduction. I'm not sure they would say it would be something that should replace infrastructure improvement. However, I think it should be something that you look at very carefully in terms of…. If there is going to be some sort of surplus, while accommodating all of the infrastructure spending that you have contemplated….

For instance, on this second crossing. We understand that this is a 20-year plan for the second crossing. We just want to get it as part of the planning process. The debt reduction is more of an immediate concern. Certainly, the planning process needs to be undertaken with respect to the infrastructure improvements. I think it's a balance so that, as to the two parts of your question, I would agree with the first part.

J. Horgan: Thanks, James, for your presentation. It's really useful for all. We all have transportation issues in our communities, but it's good for the committee to come and hear in different parts of the province what the issues are so that we can better understand where we fit in the priority list for the minister.

[1430]

I wanted to focus on your recommendations with respect to the PST. You suggest that there's a distinct competitive disadvantage as a result of that tax, yet you didn't mention in your presentation the carbon tax, which is unique to British Columbia. I'm wondering why you chose to leave that competitive disadvantage off your inventory.

J. Paterson: Well, the carbon tax is an interesting issue for us. We're actually just in the process of finalizing our carbon tax position at the Kelowna Chamber of Commerce. As is normally the case once the budget is announced, we have microphones placed in front of our faces to say: "What do you think?" Our initial reaction was: "We don't know."

Obviously, the environmental aspect is quite laudable, and we're very much in support of that. We weren't sure of the effect on our membership. We had some questions around things like "revenue-neutral." What does that mean exactly? How is it going to coincide with any federal programs? Those were all issues that our membership felt that we needed to address.

Basically, I think that's what you're going to find. We're probably in the process where I can say that we're just about ready to release our position with respect to the carbon tax. We think it's actually a really well-founded position. We've spent a long time dealing with it. Until it's approved by my board, I can't tell you what it is, but I can tell you that's it's a very well-thought-out position.

R. Hawes (Chair): Once you've developed that, I'm assuming that that's going to be submitted to us. Would that be by the 24th of October? Our deadline for submissions here is the 24th.

J. Paterson: Of October?

A Voice: I think we can. Yeah, I think we can do that.

R. Hawes (Chair): Okay. Thank you very much.

J. Paterson: Thanks for having us.

R. Hawes (Chair): Are there any open-mike presentations? Hearing none, we will adjourn this public meeting. We will be reconvening on Monday in Vancouver.

The committee adjourned at 2:32 p.m.

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