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

Monday, September 29, 2008

9 a.m.

Strategy Room 420, Morris J. Wosk Centre for Dialogue

580 West Hastings Street, Vancouver, B.C.

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

Unavoidably Absent: John Rustad, MLA; Diane Thorne, MLA

1. The Chair called the Committee to order at 9:02 a.m.

2. Opening statements by Randy Hawes, MLA, Chair

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

4. The Committee recessed from 12:10 p.m. to 1:08 p.m.

5. The Committee recessed from 1:58 p.m. to 2:02 p.m.

6. The Committee adjourned at 3:40 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

Monday, September 29, 2008

Issue No. 80

ISSN 1499-4178

[ Page 1879 ]

MONDAY, SEPTEMBER 29, 2008

The committee met at 9:02 a.m.

[R. Hawes in the chair.]

R. Hawes (Chair): Good morning, everyone. I'm Randy Hawes, and I'm the MLA for Maple Ridge–Mission. I'd like to welcome everyone in the audience and thank you for taking the time to participate in what we believe to be a very valuable exercise.

In preparing the estimates 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 major economic and policy assumptions underlying that fiscal forecast as well as identify the key issues that need to be addressed by the public in the preparation of the budget.

The Select Standing Committee on Finance and Government Services is charged with carrying out public consultations on the minister's behalf. This is an all-party committee, and we are required to report back to the Legislative Assembly by no later than November 15.

So far we've had public hearings in Kitimat, Smithers, Fort St. John, Prince George, Williams Lake, Kamloops and Penticton. This week we're going to be in Vancouver, Cranbrook, Nelson, Courtenay and Langford, near Victoria. In mid-October we'll also meet in the Lower Mainland and the Fraser Valley at four locations: Abbotsford, Surrey, Burnaby and Coquitlam. Then we will begin work on drafting our report.

If you'd like to review the budget consultation paper, there are copies available at the registration desk at the back. Information on how you may make a presentation to the committee is available on our website, 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 oral presentations that could be made here today. Due to the recently announced federal election, we have extended the deadline for submissions to October 24.

Today we're going to hear from a number of presenters who have preregistered with the Office of the Clerk of Committees. Presentations are not longer than 15 minutes, but we recommend that you try to take ten and allow us five minutes for questions. However, if you wish to take the full 15 minutes, or as much of it as you wish, that's your choice.

I will give you a heads-up when you hit ten minutes. Then, if you continue, I'll give you one when you have two minutes left. Time permitting, we will also have an open-mike session at the end of the hearings. Open-mike presentations are five minutes, and there are no questions.

[0905]

I'll now ask the other members of the Finance Committee to introduce themselves.

J. Horgan: John Horgan, MLA for Malahat–Juan de Fuca.

R. Austin: Robin Austin, MLA for Skeena.

J. Yap: John Yap, MLA for Richmond-Steveston.

H. Bloy: Harry Bloy, MLA for Burquitlam, the home of Simon Fraser University.

R. Lee: Richard Lee, MLA for Burnaby North. It's nice to see you here, Dr. Poutissou and Tim.

D. Hayer: Good morning. Dave Hayer, MLA for Surrey-Tynehead.

R. Hawes (Chair): Joining us today, I'm also pleased to introduce our Clerk, Kate Ryan-Lloyd. Also with us is Stephanie Hansen, who is manning the registration desk at the back. The staff of Hansard Services, Michael Baer and Tamara Checknita, are recording and will be preparing a written transcript of the meeting. As well, this meeting is being broadcast live on the Internet.

With that, I will call on Jean-Michel Poutissou and Tim Meyer of TRIUMF.

Presentations

J. Poutissou: Ladies and gentlemen, thank you very much for giving us the opportunity to introduce this laboratory, TRIUMF, to you.

First, I give you apologies from our director, Professor Lockyer, who is at this very moment opening a very large conference in Victoria with Minister Ida Chong and, obviously, could not be here today.

What we are trying to do is introduce you to a laboratory called TRIUMF, which is located on the campus of the University of British Columbia, and indicate to you the process by which the financing of this laboratory is obtained.

What is TRIUMF? TRIUMF is a fundamental research laboratory which was established back in 1968. Its main purpose is fundamental research and addressing questions in particle physics, nuclear physics, material science and nuclear medicine and also fostering practical application of the technologies that are developed by these experiments for the benefit of every Canadian.

Recently we were in the news. You possibly heard about this very large accelerator being started in Geneva, Switzerland. Well, TRIUMF is the laboratory that has produced the Canadian contribution to that enterprise.

What we do is fundamental research, which addresses very fundamental questions. We'll take only one of the key issues that we are addressing here in Vancouver. It's trying to understand how stars evolve and how stars are
[ Page 1880 ]
producing the material that we are made of here — all the elements that we find in the cosmos.

These same technologies and the same techniques are, in fact, used in nuclear medicine to try to understand how fundamental processes operate in the brain or to try to understand how tumours behave in the body. It's exactly the same technology. They are the same isotopes, in fact, that are the ones we are producing at TRIUMF.

TRIUMF is a unique facility in terms of the way it is organized. It was started by the three B.C. universities in 1968 and soon after was joined by the University of Alberta and is now run by a consortium of 14 Canadian universities. So it's a truly university-run laboratory.

The operation of TRIUMF is funded by the federal government, and the process of funding is established every five years through an international review. We just had the international review last week, and then funding is given over a five-year plan. We prepared a five-year plan, which is this book here, for the period 2010-2015, which describes what the laboratory will be doing or intends to do in that period.

The province of British Columbia plays a key role in providing the infrastructure on the campus of UBC that is necessary to run this laboratory. Although this is a national laboratory, it has a very large impact on the economic situation in British Columbia.

[0910]

Typically, it leverages a lot of resources that are needed to do the experiments on the site. We put in the docket a financial statement which shows the typical annual expenditure is $66 million. That includes grants coming from the national Science and Engineering Research Council, from the Canada Foundation for Innovation, from a medical research granting council and also, very importantly, from foreign institutions that come and decide to site their experiments at the laboratory.

An example of leverage that the laboratory has is that we just recently signed an MOU with a very large laboratory in India to develop a new accelerator, and they are interested in the technology that we have developed here in B.C.

Economic impacts. There is the fundamental science, which is very important, very interesting and so on, but I'm not going to focus on this aspect right here. I just would like to tell you a little bit of the social and economic impact of having such a laboratory here in B.C. In particular, the government of British Columbia has decided to invest in some new technologies in hospitals to better diagnose and decide the planning of treatment for cancer. There is a new laboratory being established at the BCCA, the B.C. Cancer Agency.

In the meantime, the program has started and is using TRIUMF-produced isotopes to treat patients. So far we are treating about 3,000 patients per year with isotopes that are produced at TRIUMF and sent twice a day to the BCCA.

Why is it very important? It's because we have discovered that using these new methodologies, about 70 percent of the patients that have been receiving this imaging technique are not receiving the same treatment that they would have had three years ago. So we are affecting directly the treatment planning for these patients. We have an estimated saving of about $20,000 per patient at the moment.

Eventually, BCCA will have its own cyclotron. It's a cyclotron that is actually produced by a company that was working with TRIUMF and has developed the technology to do so and is now marketing the cyclotron around the world. Eventually they will have their own cyclotron located in the BCCA building, and we will be acting as a backup to make sure that the supply of isotopes is continued.

We have also, on site, developed technologies that are used by the company MDS Nordion, which is producing up to 45,000 doses for isotopes that are used to image patients around the world. This is a very important business. MDS Nordion is the same company that you have heard in the news media, which is operating the reactor in Chalk River that is producing these other isotopes that are used around the world. It's a very important diagnostic tool nowadays in nuclear medicine.

Very recently the federal government awarded a $15 million fund to create a company, which is called AAPS, to try to promote the technology from TRIUMF and move it to the marketplace. This company has just started. The board has been formed using some of the top high-tech leaders in British Columbia. The company has already indicated that they have anticipated about a $55 million investment into these technologies that are developed at TRIUMF.

TRIUMF is a high-tech engine — high-tech for employment and training. We have 500 scientists working in the laboratory on campus. We have about 90 staff operating the medical isotope production facilities at Nordion. We have a thousand users coming from all over the world. About 50 percent of our users are from abroad.

We also get very involved in high school training — bringing high school teachers to our laboratory to try to enhance the curriculum, particularly in science. We also have a fellowship for high school students and Saturday lectures to try to engage them in this process of science.

B.C. has recently developed a research and innovation strategy, which is a very welcome thing from our point of view, identifying key priorities like life sciences technologies, clean technology and natural resources. It has promised some action items to support research and innovation through strategic and partnered investment.

[0915]

What we are finding difficult to identify is the mechanism for implementing this kind of strategy that the government has put forward.

What is the challenge? The challenge for us at the moment is to identify how we can engage the provincial
[ Page 1881 ]
government in this development, both in trying to get the funding for this laboratory for the next five years and also making sure that this company that we just started is developed to fruition and becomes a really innovative engine for developing technologies made in B.C.

The opportunities are that TRIUMF is at the point where, by strategic investment, we can really develop some very innovative breakthroughs. We mention a few of them in the document. We are engaging the B.C. universities to support this opportunity. UBC will lead a national CFI proposal in nuclear medicine, UVic is leading a proposal to develop superconducting accelerated technologies, and SFU has led a national proposal to develop a very important computing engine.

We have discussions with various ministries in the province — Ministries of Finance, Advanced Education, Economic Development and Health. I think what is really missing for us at the moment is to find a forum by which we can engage the provincial government in our discussion. In particular, as we approach the federal government for the funding for the years 2010-2015, we need the full support of the province of British Columbia when we go and negotiate with the government.

I mean, obviously we will do the scientific part. We just had a review last week, and I think we passed that hurdle with flying colours. Now we have to go to another level and convince the government that this is the right kind of investment for science and technology.

What we need is a process by which the province of British Columbia will get involved in these major ventures and try to identify how this science and technology strategy is going to be effectively implemented in British Columbia. That's what we are after in this presentation.

I think we have a real opportunity to make a strategic difference. The plan that we are putting forward in front of the government is asking for investment from the federal government of $328 million over the period of five years between 2010 and 2015.

Obviously, we have to have the strong support of our universities, and I think we have the strong support of our universities. But we need strong support from the B.C. government to be able to bring that money to British Columbia and try to fulfil our real opportunities that we see in front of us, which will benefit everybody in British Columbia.

Thank you very much for your attention.

R. Hawes (Chair): Thank you for your presentation. It's pretty understandable, and it's right to the point.

J. Horgan: I have more questions than I'm allowed to ask, unfortunately. I was going to ask specifically what sort of model you would propose. You said you were missing a forum here for the discussion about how we go from year-to-year funding to a more long-term stable funding base. That would be my question.

While you're answering that, maybe you could give me the amount of isotope produced here versus Chalk River, because that's just of interest to me.

J. Poutissou: I'll answer the first question. The isotopes produced in Chalk River are produced by reactors. With reactors, you tend to produce more neutron-rich isotopes. The isotopes that are produced in accelerators, like the one at TRIUMF, are more proton-rich. So when the crisis developed in Chalk River in December, we could not really pitch in and produce the same isotope. We could produce our isotopes and try to alleviate the problem.

What we are trying to do right now is a technology that we have identified in this book, this superconducting accelerated technology. We think we'll be able to compete with reactors and produce the same kind of isotope as the reactor in a different way and probably a cheaper way. We don't have to build new reactors to do it.

[0920]

We have a workshop on October 20, which is sponsored by Natural Resources Canada, to bring all kinds of specialists together to try to see if this is really an alternative to the reactors.

At the moment there are two reactors in the world producing these isotopes: one in the Netherlands and one in Canada. Thus, at the end of July and the beginning of August, it happened that both of them were down for maintenance, and the whole world was scrambling to get these isotopes. These isotopes have a very short lifetime of only a few days, so you cannot store them. You have to produce them continuously.

What we are looking for, in terms of your question about the strategy, is that we have to…. Now that we have had the scientific evaluation, the process is that this goes now to the National Research Council, which will produce a memorandum to cabinet by June. The federal cabinet will have to decide what the funding level for TRIUMF is in the next few years.

We are trying to engage the province to come with us and defend this proposal. We have identified some ministries, but we need some tangible support from the province behind us.

R. Lee: You outlined quite a few contributions from TRIUMF — for example, education. It's important to bring the school kids to see the facility and to learn about that. I myself benefited from that because my grade 12 physics teacher took me there, and then I ended up working there for 22 years.

My question right now is actually on the patient savings. You mentioned $20,000 per patient with 3,000 patients a year. So that means there are $16 million savings a year, just for that part of the contribution.

My question really is: in the future what kind of health science or medical research would be done in the TRIUMF facility?
[ Page 1882 ]

J. Poutissou: TRIUMF has a unique role to play because of this ability to produce these isotopes. Nuclear medicine is moving now towards an attempt to have personalized medicine, to try to understand how the various diseases are being generated and are evolving inside the body of a person by going to the very heart of the chemistry that's being introduced by the tumours, for example, in the body.

We now have the ability to tag certain molecules to really go into the tumour and find out what the tumour is doing. This is rather new; this is brand-new. Our expertise is in producing very specific isotopes and in attaching these isotopes to molecules.

For example, in one of the very recent tests that was done at the B.C. Cancer Agency with a molecule which we just developed at TRIUMF, they can identify the tumours that are not going to respond to certain kinds of treatments. So there's no point in going with radiation for that type of tumour. There's no point in putting chemotherapy to that tumour. It will not respond to it.

So if you can decide that from the beginning, you are not going to waste your time doing this kind of treatment on that particular person.

R. Hawes (Chair): Sorry. We are out of time, but I want to thank you for your presentation. It's very compelling, and thank you for all of the work that you do for all of us, to benefit all British Columbians.

I'd just like to note that Deputy Chair Bruce Ralston has arrived. I think he had trouble with a taxicab that broke down, which maybe shows why we need some new taxicabs in Vancouver. I don't know.

B. Ralston (Deputy Chair): This was actually a Surrey cab, I regret to say.

R. Hawes (Chair): Oh, it was a Surrey cab.

Okay. The next presenter is Shamus Reid from the Canadian Federation of Students.

Welcome, Shamus.

S. Reid: I should have taken more sciences in high school.

Good morning, everyone. My name is Shamus Reid. I'm the B.C. chairperson of the Canadian Federation of Students, and I have met with a number of you before. I'd like to thank the committee for hearing the priorities of B.C. students and their families today.

The Canadian Federation of Students, B.C., is the provincial voice of over 150,000 university and college students throughout B.C. at over 18 students unions, and over half a million students across Canada are members of the Canadian Federation of Students.

[0925]

For many years the organization has campaigned for accessible, high-quality post-secondary education in Canada, and more specifically, our priorities have included and still include increased government funding to improve the quality of B.C.'s universities and colleges and the elimination of any financial barriers that people face in being able to participate in post-secondary education, including reductions in tuition fees.

I'm sure you're aware that B.C. students were disappointed with last year's budget, which contained no new initiatives to make education more affordable, to reduce student debt or to improve the quality of post-secondary education in B.C.

Students in the post-secondary education community alike were further frustrated with the government's last-minute cutback to badly needed and promised operating funding in the range of $55 million.

Our concern is that the government has been building short-term wealth for some British Columbians at the expense of investing in the long-term shared prosperity of the province as a whole.

My remarks today will focus on the need for the government to invest in post-secondary education funding through increased government funding, reduced tuition fees and new upfront grants to assist students in pursuing an education.

A basic post-secondary education credential — which I know the committee has heard a number of times throughout the last couple of years — whether a degree, a diploma or a certificate, is almost essential in today's economy. According to Human Resources and Social Development Canada, 75 percent of new jobs will require some form of post-secondary education.

Few would question the benefit in B.C. of providing universal elementary- and secondary-level education to B.C.'s children. Yet even when the research is clear that the most effective way of increasing the province's overall standard of living is by investing in and building a knowledge-based and skilled economy, this government continues to limit access to post-secondary education. There is consensus across the country about the substantial benefits of this education, including the immense societal benefits that having a highly trained workforce will have on the economy.

This government has neglected its responsibility to ensure access to this important social program. Instead, more and more students are being saddled with mortgage-sized debt loads upon their graduation while thousands more cannot even get in the door.

Last year, when I was in Victoria presenting to the committee, I asked members to imagine the difficulty of starting out as a 22-year-old university graduate with $30,000 or more in debt and the interest payments to go with it. I can tell you that in the last two years it's become evident that actually fewer and fewer individuals from modest-income backgrounds are even making it to that point.

Over the last two budgets student loan disbursements have been budgeted to decline by $56 million, proving what can be seen anecdotally on campuses across B.C.
[ Page 1883 ]
Fewer and fewer families from modest backgrounds are making it into school. Today's students, meanwhile, are graduating with more debt than any students before us. The long-term effects of this highly indebted class of students on the economy is still to be seen — and certainly on the society as well.

Our focus for this budget is in two critical areas: reinvesting in B.C.'s universities and colleges so that those students who can afford B.C.'s record-high tuition fees currently stop returning to school each September only to pay more and get less, and reinvesting in making an education in B.C. affordable once again.

Our recommendations for the budget include the following five initiatives: the reduction of tuition fees commensurate with the approximately $110 million in extra funding received from the federal government for post-secondary education in this fiscal year; the development of a complementary provincial upfront grants program for the new program announced by the federal government; the reduction of interest rates on B.C. student loans to the government rate of borrowing; the restoration of per-student funding, accounting for inflation, to 2001 levels; and the indexation of base annual operating funding to inflation, ensuring that universities and colleges have the requisite public funding to meet the government's goal of carbon neutrality by 2010 and to not suffer further funding shortfalls as a result of the carbon tax.

There are many provinces across the country that have already made great strides in the above recommendations, including reduced tuition fees and loan interest rates as well as upfront grants programs. B.C. families deserve no less than other families across Canada and have been particularly disadvantaged as tuition fees continue to climb and the quality of education suffers.

In the 2007 federal budget an additional $800 million was allocated specifically for post-secondary education funding to the provinces. Of that $800 million, an estimated $110 million was transferred to B.C. for use in the 2008-2009 fiscal year. Instead, total spending in the Ministry of Advanced Education, far from increasing by $110 million, actually declined this year by at least $96 million. Tuition fees increased this year by over $30 million.

[0930]

Sadly, students and their families are left wondering what happened to the increase in funding provided by the federal government and why the badly needed money wasn't invested in post-secondary education. The additional federal funding was intended for B.C.'s post-secondary education system and must be reflected in the Ministry of Advanced Education's budget in the coming year.

For the past two years students have been calling for an immediate 10 percent reduction in tuition fees in order to stop waning domestic enrolment at B.C.'s post-secondary institutions and to provide much-needed relief to students struggling to pay the costs of higher education, housing, transportation and other increasing costs of living. A 10 percent reduction would provide an incentive for young British Columbians to get the training and education that they need to secure lasting jobs and to meet the demands of B.C.'s diversifying economy.

With tuition fee revenue collected by the provincial government now just under $1 billion annually, the approximately $110 million in extra funding announced in the 2007 federal budget can and should be used toward providing relief to students through a 10 percent reduction in tuition fees without putting any new pressure on the provincial treasury.

Unfortunately, with fees as high as they are, thousands of students will continue to need extra help beyond a 10 percent reduction, which is why our second recommendation is to develop an upfront non-repayable grants program to complement the new federal program and to help those students who are most in need to achieve their education goals.

A new grants program for B.C. would ensure that low- and middle-income families have the necessary resources upfront in order to pursue post-secondary education and training. Upfront grants are important for providing the much-needed relief for students struggling to find the financial resources to participate in university or college as well as for students that are currently in the system and contemplating dropping out due to lack of funds.

In the 2008 federal budget the federal government made a good step towards helping to ensure that Canadians have access to post-secondary education through a new upfront grants program. The provincial government should follow suit and develop a system of upfront non-repayable grants for those students who need financial support the most. A need-based grant program would also ensure that students in B.C. graduate with much less debt and are therefore able to much more fully participate in the economy after graduation.

Under the current loan reduction program, with no guarantee as to how many students will qualify to have their loan reduced in any given year, there is no guarantee that students will receive the same funding from year to year. Additionally, the program does little to encourage lower-income students to attend post-secondary education, given its lack of guaranteed funding for students who demonstrate the same need year over year and because it is tied to completion rather than delivered upfront. Providing a guaranteed grant upfront would go much further in addressing declining enrolment.

Our third recommendation also relates to student financial assistance and fairness for students from modest backgrounds.

Members should be aware that following graduation, student loan borrowers pay interest on their public
[ Page 1884 ]
student loans substantially above the government's cost of borrowing. Members may not be aware, though, that nearly every province charges a lower interest rate on student loans than B.C.

As you know, students with higher debt levels upon graduation pay more for their education through higher interest rates than those who had to borrow less or nothing at all in order to get an education. Fundamentally, the reduction of interest rates is an issue of fairness. Low- and middle-income students should not be expected to pay more for their education than those who can afford to pay for it upfront.

By keeping interest rates as high as they are, the government is penalizing those students and their families with the least amount of financial resources. Meanwhile, in terms of the impact on the provincial treasury, the annual cost of even complete elimination of interest on student loans is nearly negligible.

Our recommendation is that the government immediately reduce interest rates to the government's rate of borrowing and then eliminate them to ensure that those who can least afford an education no longer have to pay the most for their education.

Our fourth recommendation today is to see a reinvestment of operating funding to our universities and colleges.

Following the spring funding cut to expected operational funding, the public was deluged with stories of hardships at B.C.'s post-secondary institutions. Faculty and staff jobs were cut, class offerings reduced and long-planned expansions scaled back or halted. Entire programs were put on the chopping block. And the list does go on.

The reality is that these were not the effects of one $55 million funding cut or a cut to expected funding. It was simply the straw that broke the camel's back. The reality is that before the cut, colleges were budgeting significant deficits for years to come. The last budget planned for the collective annual college deficit to climb to $30 million by year 3 of the government's three-year plan. University funding increases were budgeted to find themselves behind inflation, not to mention enrolment, by the third year.

While the government has publicly touted funding increases as high as 40 percent in post-secondary education, the reality is actually a decline in funding when measured accurately. Since 2001, accounting for inflation, per-student operating funding to universities and colleges has declined from $8,786 to $7,736. That means that with tuition fees doubling since 2002, every year students return to school to pay more for less.

[0935]

Included in this recommendation is also ensuring that post-secondary institutions have the necessary funding to meet the government's goals of becoming carbon-neutral by 2010. Students have long taken an active role on campus and in our communities in support of environmental sustainability practices. We're pleased to see that the government has also made environmental sustainability a core goal, as the government has the greatest role to play in ensuring environmental standards and regulations in all of B.C.

However, we are concerned that without adequate funding, universities and colleges will download the additional cost of retrofitting and other green measures onto those who can least afford them — students. To assist with the environmental sustainability goals of this government and to augment the work of students and others already on campus, we're seeking funding to green campus buildings and operations, and we are also seeking a sustainability framework from government for all public buildings and operations, in addition to the regulation of emissions in the private sector.

Furthermore, we'd like to express concern with any impact that the carbon tax may have on the resources of universities and colleges. We do not believe that the loss of badly needed resources in the post-secondary education system is an appropriate means of achieving sustainability objectives. Universities and colleges should be funded for sustainability upgrades and offset any additional emissions through the research and teaching that are developing more sustainable industries and communities.

In total today we have five recommendations that could immediately begin to improve B.C.'s post-secondary education system. We're seeking a 10 percent reduction in tuition fees, a new upfront grants program to complement the federal program, the reduction of student loan interest rates to the government's rate of borrowing, per-student funding returned to 2001 levels and indexed to a minimum inflationary increase annually, and we're urging the government to recognize that the most important investment that it can make for the province's future is in post-secondary education.

I look forward to your questions.

R. Hawes (Chair): Thank you, Shamus. That was pretty straightforward. Your requests are easy to understand.

J. Yap: Thanks for your presentation. Shamus, have you or your group costed out the five recommendations that you talked about? What would that number be — your guesstimate? And have you thought about where in the province's financial program we should fund the costs of these recommendations? In other words, would you be suggesting changes to taxes — increased taxes — or deficit funding or reallocation from other government programs?

S. Reid: Well, I think that we've seen average surpluses in the multi-billions over the last several years of this government. We're looking for that surplus. In fact,
[ Page 1885 ]
almost $1 billion of that surplus is built off the back of student tuition fees rather than the funding that should be going to post-secondary institutions. We're looking for some relief from that and some reinvestment in the students of the province. I don't think it would actually hurt the provincial treasury too much.

We've seen that $110 million extra in funding from the federal government for post-secondary education, and that forms almost half of the funding that would be needed for these initiatives. It's estimated that to eliminate student loan interest rates would be over $30 million. That's based on the Ministry of Advanced Education estimates.

Obviously, in terms of per-student funding, in total our recommendations would be about $250 million. We're finishing the costing-out currently. We'll be providing that in a written submission to the committee, but it's well below what the average surpluses have been over the last several years.

B. Ralston (Deputy Chair): School boards and cities have pointed out that the carbon tax is coming straight out of their operating budget. Last week the Premier, I think in recognition of that, announced a program of conditional grants for municipalities and school boards to offset the payment of the carbon tax. I'm wondering whether, on behalf of your members, you would advocate the same thing for the university and college sector.

S. Reid: Absolutely. I think there's a lot of great work that is being done by universities and colleges in terms of building sustainable industries and sustainable communities, and that certainly needs to be recognized in the government's plan for carbon neutrality. There should be funding for institutions to fully green their operations.

[0940]

The fact is that resources are badly needed in the post-secondary education system. It's not the most appropriate way to make our institutions carbon-neutral — by further forcing our institutions to be cashed out.

R. Hawes (Chair): Again, thank you, Shamus. Your presentation is very clear and straightforward.

Next we have the Business Council of British Columbia — Jock Finlayson and Virginia Greene.

Welcome.

V. Greene: Thank you. It's very nice to be here. Good morning to you. I'm Virginia Greene, president and CEO of the Business Council. The Business Council is a provincewide business organization representing over 210 of the largest enterprises operating in British Columbia. We cover businesses in all sectors and in all geographic areas, and our membership represents in excess of a quarter of the jobs in the province of British Columbia.

We have a presentation for you today, and Jock Finlayson, our chief economist, is going to lead off.

J. Finlayson: Well, the committee is meeting at a time of remarkable uncertainty for the global economy. I think that in your deliberations you'll have to take note that we're living through a period of unusual times, and it's still unfolding. It's going to pose a challenge for your report and a challenge for the province as it puts together the 2009 budget.

While the September quarterly report indicates that a surplus is available — and we've all been asked to come up with ideas on how to spend it — the reality is that the economic picture is deteriorating in Canada, and that includes our part of the country. That surplus may not in fact be there by the time we get to February of 2009.

I would note that our first point to the committee is that any recommendations that you're going to entertain or that we're going to offer in a moment for spending or tax measures should be conditioned by that uncertainty about the true fiscal picture for the province in an environment where growth projections are being downwardly adjusted, almost on a weekly basis, for a lot of major economies.

As of September the Ministry of Finance was looking for a 1.7 percent increase in real GDP this year, followed by a pickup to 2.3 percent in 2009. Those rates are well below the growth that we've experienced in the province in recent years.

The revised forecast is reasonable as of September 2008, but the risks clearly are all on a downside. We could very easily end up, especially in 2009, with a much, much weaker growth profile, depending on how financial market turbulence is dealt with and what the impact of a slower North American and global economy turns out to be on some of the revenue sources in British Columbia.

Obviously, the situation in the U.S. housing market is of particular concern in a British Columbia context. Forestry is still the biggest export. About 40 percent of the province's exports come out of the forest sector. The downturn in American housing markets and home-building activity is unprecedented since the 1930s, and it's still unfolding.

Housing starts are continuing to decline, perhaps down to 800,000 this year relative to 2.2 million three years ago. That, coupled with the high Canadian dollar, the softwood lumber tariffs and the general jittery state of credit markets, has combined to create the worst economic conditions in half a century for the logging operators and lumber producers all across the province. That is going to dampen growth in B.C. this year and going into 2009.

Many other industries in our membership are also being challenged by the high Canadian dollar. It's worth noting that since 2003 the Canadian dollar has gone up more than 50 percent relative to the U.S. currency, and that has fundamentally altered the competitive landscape for manufacturing and a variety of other export-oriented industries in the province. Much of the
[ Page 1886 ]
discussion around this in Canada has focused on central Canada, but we're being impacted by it as well.

[0945]

The weakness we've seen on the trade side of the B.C. economy for the past two or three years has been more than offset until recently by very strong growth and domestic demand. We've seen record levels of construction activity, strong home-building, strong business investment, recovery of mineral exploration development spending and a very, very tight and strong job market in the province.

However, looking ahead rather than backwards, it appears that domestic demand is likely to slow in B.C. We're seeing slower retail sales growth and housing activity, and more of the major projects that are counted in the major projects inventory are now in the category of planned rather than currently underway. So some weakening, I think, is evident in domestic demand, which, coupled with softness in exports, points to a much more subdued growth profile this year and certainly for 2009.

If we look back, however, the province is in good shape in many respects to weather the current economic uncertainty and storms. Over the 2002-2007 period we've seen British Columbia outperform Canada on almost all indicators of economic success and prosperity. We've managed, as well, as we note in figure 1 on page 3 of our submission, to close the gap or narrow the gap that opened up with Canada on two key measures of economic well-being, which are real output per person and disposable income per person.

So we have made up a lot of ground. We've seen a fair amount of progress, and we shouldn't lose sight of that as we go through what I think is going to be a much choppier economic period.

The fiscal position of the province going into this time of economic uncertainty is quite strong, as we saw in the quarterly report issued by the ministry in September. The provincial debt has diminished significantly as a share of GDP — down to a little over 13 percent compared to 23 percent in 2003. That's low by the standards of Canadian provinces. We've had substantial operating budget surpluses over the past few years, and a large portion of the accumulated direct provincial debt, which is defined as all past operating deficits, has now been paid off.

So our credit rating is strong, and we're in a good position fiscally to navigate our way through the next year or two, which I think is going to be a much choppier period economically.

In terms of the budget 2009 proposals, ideas and recommendations, we have a number. I'll deal first with the ones that fall under the heading of tax policy. B.C. does have a pretty competitive tax system in place today. We've seen significant cuts in personal and business taxes, elimination of the job-destroying capital tax. We've got innovative tax rules in place for things like film production, financial services and mining exploration, and we have relatively low marginal tax rates now on individuals, up to income levels of about $111,000 a year.

That said, it's a competitive world that we're in. Taxes are falling in a lot of jurisdictions, and we remain under significant pressure to ensure that our tax system is fine-tuned with the goal of enhanced competitiveness.

In that connection, we have a couple of recommendations to offer. The first one is to consider a refundable manufacturing plant modernization tax credit. No part of the economy in this province or in Canada is under more competitive pressure today than the hard-pressed manufacturing sector, which is shedding jobs and finding it very difficult to compete with the 95- or 96-cent dollar.

The Canadian Manufacturers and Exporters have suggested — and we agree — that the province should introduce a refundable plant modernization tax credit designed to spur investment by manufacturers in B.C. in productivity-enhancing equipment and technology. The tax credit would be applied toward new investments in asset class 43, as defined by the federal capital cost allowance system, and we believe that eligible companies should be able to carry the tax credit forward.

Second, turning to the carbon tax. Although the carbon tax is levied at a low rate today, under the provincial policy, it's scheduled to rise over time. Most of the carbon tax revenue is actually going to be remitted by business, but a majority of the offsetting cuts in other taxes will flow through to households. The vast majority of households in B.C. will be better off with the tax shift that the government is engineering, but that is less true in the business sector, particularly for energy-intensive industries.

[0950]

To help our industries cope with the gradually rising carbon tax, there are a couple of things the province could do. One would be to institute a refundable tax credit designed to spur investment in energy efficiency and carbon-reducing technologies and equipment that would help our carbon-intensive industries adapt to a carbon-constrained world.

A second, for the commercial transportation business, would be to establish a rebate program to accelerate the retrofitting of large commercial vehicles, which account for a significant chunk of our transportation greenhouse gas emissions.

Third, we suggest that the province consider carbon tax offset mechanisms to assist B.C. businesses that are particularly exposed to a made-in-British-Columbia carbon tax. In particular, some of our businesses — notably in forestry, other parts of manufacturing — are not currently profitable and are unlikely to be generating profits in the near term, so they don't benefit from any reduction in corporate income tax. The Ministry of Finance should be looking at some other offset mechanisms that can become available and provide some financial assistance to industries that are in a loss-making position.
[ Page 1887 ]

Under the heading of innovation and commercialization. We have had success in B.C. in diversifying our economy, but we need to step that up and accelerate it. We all know that the forest industry is going to shrink, and shrink quite dramatically, as a consequence of the pine beetle. We're recommending that the province look at some new measures to try and stimulate innovation, commercialization and the growth of advanced technology sectors.

We noted in the 2008 Ontario budget that that province has brought forward a ten-year holiday from provincial income tax for companies that are formed to commercialize intellectual property. This is an area that we think B.C. should be looking at as well, because our universities and colleges have been quite successful in developing technologies and ideas. The trick is to find the commercial structure that will allow those goods to get into the marketplace and build local businesses.

Second, we would ask the province, as well, to look at further expanding the scope of the International Financial Activity Act, which we think is a key tool for building new wealth engines in B.C., to see whether the tax benefits of that legislation might be applied to some new types of business activity beyond those currently defined in the legislation.

Finally, we reiterate a recommendation made on the tax front by the B.C. Competition Council in 2006, which was to lower the personal tax rate on skilled workers earning between $70,000 and $150,000 a year. This could be done by raising the threshold at which B.C.'s highest personal marginal tax rate applies to $150,000 a year, from the $97,000 and change that it currently applies at, at an estimated cost to the treasury of $40 million.

Looking beyond the 2009 budget, we signal a couple of ongoing challenges for the province on the tax front.

One is reducing the impact of the provincial sales tax, 40 percent of whose revenues come from business inputs. We'd like to see the province, over time, move to a value-added-tax model and away from the current provincial sales tax.

Second is to come to grips with the mess in business property taxation. Across B.C. we have the worst business property tax regime in Canada because of the lack of any limits on the ability of local governments to shift the tax burden onto the shoulders of industry. This is hurting the ability of a lot of our industries in resource-dependent communities and other parts of the province to compete. So we need to look at what other provinces are doing with their business property tax system and see if we might emulate some of those ideas in our own system.

Finally, on the spending side, the two areas where we signal a recognition that additional resources could be well put to use. The first is post-secondary education, particularly focusing in on attracting more top-flight graduate students to our institutions. This has been a proven way to build new wealth in a number of other jurisdictions, and we should be doing the same thing.

The second is that we do acknowledge the important social challenges that are facing many of our communities in B.C. — homelessness, substance abuse, low levels of literacy. We applaud the steps that the government has been taking to put more resources into those areas, and we would be supportive of additional funding flowing into those program priorities.

R. Hawes (Chair): Thank you very much. We have just a little bit of time, if there are any questions.

J. Yap: Thank you, Jock and Virginia, for your presentation. I am interested in your thoughts on an alternative to the present carbon tax, which you've talked about. There are some who are suggesting that the carbon tax, which is a tax on consumption, be replaced by a tax at the producer level — manufacturers, on the business side. What are your thoughts on that possible alternative?

[0955]

J. Finlayson: The carbon tax in B.C. applies to all domestic use of fossil fuels, whether it's by a household or a business. Our members are certainly paying the lion's share, actually, of the carbon tax flowing through to the province.

Only 35 percent of B.C.'s greenhouse gas emissions come from industry. The rest of it comes from non-industrial sources — transportation, home heating, municipalities, agriculture, and so on. If the goal of public policy is to put carbon constraints on all consumption of fossil fuels, it doesn't make sense to only have a fiscal levy on industry.

In terms of the ultimate effect on consumers, most businesses facing an input tax are going to pass on the cost of that to consumers, at least in the domestic marketplace. It's much more difficult to do that into the export marketplace. The B.C. carbon tax has the virtue of being transparent, whether one is keen on it or not. Moving upstream and imposing the tax on producers simply disguises the tax from consumers, but it doesn't shield them from it.

R. Hawes (Chair): Thank you, Jock. Well, that's all the time we have right now, but I'm sure the committee members would be very interested in…. If you could make a further submission to us, just costing out…. You've got some costs on some of your proposals, but on others your estimated cost of what those measures would be would be perhaps something helpful that we could look at.

J. Finlayson: They're all small, but we'll do that.

R. Hawes (Chair): I'm sure they're all very small. Thank you very much.

We have Canadian Direct Insurance — Colin Brown.
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C. Brown: Thank you, Mr. Chairman. I do have a prepared statement, which you will all get a copy of. What I plan to do is just give you a quick idea of who we are and why I'm here and then ask for your consideration of something that we have in mind.

Good morning. Canadian Direct Insurance is pleased to provide this submission to the standing committee regarding the '08-09 budget. I'm Colin Brown, the chief operating officer of the company. I'd like to thank you for this opportunity to provide suggestions.

I'd like to begin by sharing with you a little bit of information about our business. Canadian Direct is a federally chartered property and casualty insurance company currently providing auto and home insurance in British Columbia and Alberta. We began operations in Vancouver in 1996, in competition with ICBC and a number of large private insurers.

Our head office is in Vancouver, and we employ over 240 employees, providing home, auto and travel insurance to over 110,000 constituents here in British Columbia. We serve customers right across the province, and their distribution more or less mirrors the distribution of population in the province.

We were the first optional auto insurance provider to enable all B.C. drivers to buy insurance and make claims conveniently by telephone, and we followed that by instituting a number of firsts for this province. For example, we believe, as you do, that insurance companies should do everything possible to support progressive public policies such as energy conservation, reduced carbon consumption and public safety.

In the past year we have launched a number of initiatives to transform this intention into reality. We were the first insurer in B.C. to provide substantial price incentives for drivers of hybrid and ultraefficient cars that emit significantly fewer greenhouse gases. Our premiums for hybrid and fuel-efficient vehicles are far below those offered by others — a minimum of 10 percent less and, in the case of certain vehicles, even more. Our green incentives are in keeping with British Columbians' growing interest in reducing their carbon footprint.

In addition, we offer all drivers, not just those with hybrid cars, an additional 10 percent premium reduction if they buy their auto insurance on line. By offering people the option to receive their insurance documents electronically, we have substantially reduced our use of paper, which has a significant environmental benefit.

On a different issue, in partnership with the Vancouver city police and the parking industry, we have initiated a safer parking program designed to reduce vehicle break-ins in the city of Vancouver. The safer parking initiative is fully funded by our company, and I'm pleased to report that it has certified more than 25 parking lots that have adopted best industry practices to reduce vehicle theft and vehicle break-ins.

The program presently operates across the city of Vancouver, and we are currently considering its expansion to other cities. We would welcome your thoughts on where and how this should be done.

[1000]

This brings me to the subject of your hearings — namely, issues that deserve consideration in the next year as government addresses important public needs. We believe the insurance industry has a responsibility to meet public needs. We are sure you also believe that government has a policy responsibility to ease unnecessary costs borne by the province's drivers, and I'd like to direct the committee's attention to one such area now.

It will be no secret to members of the committee that many families are finding it difficult to cope with the increasing cost of living. Debt charges and rising costs for fuel, food and housing are impacting many families and forcing many British Columbians to make tough choices. Anything government can do to ease this pressure should be done.

The area where this comes into play is basic automobile insurance. Optional auto is priced competitively. Consumers have the right to shop in the marketplace for a lower premium, and in fact rates for this product have come down year after year, possibly a comment on the benefit of the competitive structure. However, under B.C. law, auto insurance is available only from the government insurer at a price that that insurer dictates.

We submit that government has a responsibility to restrain the cost of basic auto insurance that is provided by a government monopoly so that people are charged no more for it than is reasonably necessary to cover costs. In these circumstances, and considering the financial position that many people now find themselves in, Canadian Direct feels that it is reasonable to ask why basic insurance rates are not lower. They are lower in most other jurisdictions of Canada, where rates have been coming down.

It is a matter of record that the Insurance Corporation of British Columbia is operating with a very large surplus. Recent quarterly projections indicate that profits for the first six months of 2008 are in excess of $255 million.

The security and peace of mind that auto insurance provides could not be more relevant or necessary than in these turbulent times that we currently face. We ask you to consider how to go about reducing the cost of basic auto insurance premiums, in recognition that ICBC now has financial reserves that are more than sufficient to meet projected future claims.

This will be the second year in a row that ICBC may report over $500 million — half a billion dollars — in profits. ICBC already has about $10 million in claims reserves, more than enough to meet any solvency test of any of the world's big insurance companies, which they must meet to ensure that they pay all their likely claims.
[ Page 1889 ]

Reserves are an important factor in assessing the financial stability of a company and are closely monitored by government regulators. Without going into all the technical detail, property and casualty insurers are required to meet something called the minimum capital test, MCT.

In 2004 the provincial government issued a directive setting out target levels of reserves for ICBC and the time frame in which they needed to be achieved. A fact that has gone almost unnoticed in B.C. is that ICBC has more than met those targets set by government. It has achieved 188 percent of its MCT against a target by government of 100 percent, and it has done it more than five years ahead of the target date of 2014.

While doing this, it continues to increase rates for basic insurance, the insurance that every motorist is required by law to purchase, including 3.3 percent in 2008. With projected two-year profits of over a billion dollars, it is hard to understand the logic of a rate increase, no matter how presented.

In 2003, after 30 years in business, ICBC had retained $586 million in total equity — $586 million. In just four years since that time, to 2007, ICBC retained a further $1.8 billion of B.C. consumers' money, to increase total equity to $2.4 billion. This additional equity is equivalent to over $600 from each licensed driver in the province of B.C. in just four years. With profits like these, mandatory insurance premiums begin to look an awful lot like a tax.

We estimate that the average cost of basic insurance could be reduced by up to $100 per policy without adversely affecting ICBC's reserves. Such a move will send British Columbians a message that government does not want to impose unnecessary financial burdens on families that are already facing pressures.

In closing, we look forward to reviewing your report and recommendations later this fall and hope that you will relay to government the significance of addressing this important issue.

On behalf of Canadian Direct Insurance, I thank you for the opportunity to appear before your committee today, and I'd be pleased to answer any questions that you might have.

[1005]

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

H. Bloy: Thanks for your presentation, Colin. How does British Columbia compare in the basic auto insurance to, like, Ontario and Alberta?

C. Brown: Well, I think you're all aware that those comparisons are difficult to make because the presentation of the benefits that are paid is different in each of the provinces. Ontario benefits would be higher, and therefore their costs are higher. Alberta benefits are similar but slightly lower. But ICBC's are in the middle of those two. Alberta's would be less; Ontario's would be more.

R. Hawes (Chair): Colin, would it be fair to say that under the ICBC model, the drivers who would have the highest premiums — because they have the highest risks — are being subsidized by those with lower risk, while where you have a more competitive insurance industry, higher-risk drivers pay the full shot and lower-risk drivers get a break? I won't call it a break, but they pay commensurate to their risk.

C. Brown: Certainly, Canadian Direct believes that. That's partly our business model. We have introduced additional discounts over the last ten or 12 years. I'd like to think we've saved every single driver in the province, whether or not they're our customer, a lot of money. ICBC did not offer discounts similar to ours before we came into business. We've helped them find the light and become somewhat more competitive, and I'm somewhat proud of that.

Yes, the reason that we've been able to do that is that good drivers get…. We give them a better discount. And to some extent under the model as it's currently built, there is a subsidy to poorer drivers — correct.

B. Ralston (Deputy Chair): At a time when the world's biggest insurance company has just collapsed, your advice seems a little oddly timed. You seem to be suggesting that ICBC is being too prudent in creating too large of a reserve. Do you not think that might be a prudent way to business model at this point in the cycle?

C. Brown: I think they've gone past prudent. Prudent was directed by the government at being…. You have to understand that a monopoly has no competitive issues. Their customers are always there; they're forced to buy. So the government in its wisdom suggested they should need to carry about 100 percent of the minimum capital test. They have exceeded that by almost twice now.

With regard to the largest company, AIG, it's actually their mortgage side. All of their P-and-C companies are well funded and have been set up separately. So the P-and-C industry is quite strong right now, but ICBC, as I say, is almost doubling what would be normally considered a prudent reserve philosophy.

R. Lee: Are there any studies on the payout on the basic part and the comprehensive part in ICBC? I don't know. For consumers, they don't get $100 coming from the comprehensive part or the basic part. Do you think it's a good idea to reduce the comprehensive insurance as well?

C. Brown: Well, I think some of those rates have come down. ICBC is reducing rates on the optional side,
[ Page 1890 ]
where they compete with us. So what we've seen over the last two years is a reduction on optional rates but a continued increase on basic. Of course, as the basic part of the insurance package is about two-thirds, if you put the two together, it's actually an overall rate increase. So there's a little bit of manipulation there of the optional rates going down and the mandatory rates going up. But as a combined package for every driver in the province, their rates are going up overall, yes.

D. Hayer: Good morning, Colin. When we see the stock markets sort of having large challenges around the world right now…. ICBC has some reserves, some of which are invested in stocks in different places. Do you think that maybe the cushion they think is much higher right now might not be as high because of the shift in what's happening in the world economy, not just in Canada — right?

Therefore, they might need, for the short term, to have an extra cushion just to make sure there are enough reserves over the long term. Would you say that or…?

C. Brown: Yes, sir. It's certainly a fair comment and goes to the question with regard to how conservative one needs to be. The MCT bears that in mind. It's a formula put together by OSFI, the federal superintendent for all the insurance companies in Canada. Part of its calculation and formula is to consider interest returns, and that is part of that.

[1010]

So if interest rates are dropping and so on, then that MCT test is adjusted automatically, whereas the government mandate was for ICBC to meet 100 percent of that. As I say, it's just our view that 188 percent of that, gathered from the people of British Columbia in about half the time the government felt it would be prudent to collect that money, seems a little excessive.

R. Hawes (Chair): Okay, thank you very much, Colin. Your comments are well noted.

We're going to move on to New Media B.C., Kenton Low.

K. Low: Good morning. Thank you very much for having me today. I actually recognize a few familiar faces here. Hi, Richard, Harry, John. I've been out to visit some of you over the past year.

My name is Kenton Low. I'm the president of New Media B.C. We're the industry association for the digital media companies in British Columbia. As to the purpose of my visit today — actually, forgive me John, Harry and Richard; I've told you some of this information before — the key is to get our industry on your radar screen and highlight some of the key challenges that we're faced with as we continue to grow over the next several years.

Really, the presentation that you have in front of you is a little bit of a primer on what digital media is all about. With that, I'd just like to walk you through the deck that you have in front of you.

The first thing on page 2 here is really a definition, because a lot of people have asked: "What is digital media?" Probably the clearest definition out there on digital media is the one in front of you. It's really all about the creative convergence of technology, art, science and business on four key things.

The first thing is entertainment. All of you've been out there. You've seen movies in digital formats. You've perhaps played video games. That's an example of entertainment.

Communication. I think you all have BlackBerrys. Digital media is used. I see that, Harry, right in front of you there.

Education as well, from an e-learning standpoint.

Then, social interaction, for those of you that have either Facebook or LinkedIn accounts and maybe go to YouTube. Really, there are different ways that you can interact using digital media.

So that's the definition. Now let's go to the next page, which basically highlights what the key sectors are. I've put next to them, in brackets, the companies within British Columbia that play in these sectors. You can see that we have major companies in all of these areas.

The first one is games. Of course, you all know Electronic Arts–Radical, which is now owned by Activision. Vivendi has merged with them. Propaganda is the Disney studio here in Vancouver. There is a host of other companies in this particular sector. In animation the big player in town is Rainmaker, and there's Bardel Entertainment and Studio B.

Visual effects. We've got a couple…. Actually, there are several companies, but notable are Spin Visual Effects and Image Engine.

The next area is digital marketing. These are the companies out there that create communication and marketing programs for companies like Nike or BMW. Actually, those two accounts are over at Blast Radius. Tribal DDB is a division of DDB, the big advertising agency that does digital marketing.

E-learning. Two major companies in British Columbia, WebCT and Bridges, have breakthrough products in that sector.

Mobile content. AirG, Nokia and Bell are all in town here, playing there.

The last one is Web 2.0. For those of you that do photo-sharing on line, Flickr actually began in British Columbia, but it has since moved on.

Givemeaning.org is a place where you can actually donate money. You may have heard of another company in the United States called kiva.org, based on the Pakistani economist that won the Nobel Prize for microfinancing. Givemeaning.com is a similar site there.
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Strutta is a new site out there, leveraging the whole Web 2.0 space, where you can actually compete with each other on anything you want under the sun. You can go to this site, and it's a very interesting site.

Let's move on to the next page, page 4. Really, as you can see from just the last couple of pages, digital media is impacting all facets of our lives, businesses and the communities that we live in. It really is a 21st-century industry here that has proven to be a significant engine for economic and cultural growth, not just here in British Columbia but all around the world. Right now, globally, revenues are approaching $30 billion. It's moving really fast. The latest estimates are that it can be a $60 billion industry in just a couple of years.

Moving on to page 5, let's look closer to home in Canada. Approximately 3,200 companies play in this space, employing over 52,000 employees and generating over $7 billion in revenue. B.C. really is the biggest player of all the provinces in Canada. We've got over 1,100 companies in the sectors that we just looked at on the previous page. There are over 16,000 people working in this industry, and we generate over $2.8 billion in revenue, so it is a sizeable industry here in British Columbia, with lots of job openings — high-paying jobs as well.

[1015]

Just for perspective, I thought page 6 would show you what everything looks like in an international perspective. If you kind of put British Columbia in there, we're just below California as one of the key players on a global basis in the digital media industry. Of course, South Korea and Japan lead the pack there with significant revenues, companies and employees. But B.C. is actually not that far behind.

Moving on to page 7, just more details about how the revenue breaks up between games, interactive marketing, digital film and animation, mobile content and applications, e-learning. You see that games and interactive marketing are the two big sectors in digital media in British Columbia.

On page 8 there's a little bit of historical perspective. Why did we get the way we got in British Columbia? Well, we got there, of course, originally because of the low dollar. It attracted a lot of service work here for British Columbia firms like the game companies. There was a big influx of talent because of the lifestyle. It created a large talent pool for the province, and when there's a large talent pool like in Electronic Arts, it ultimately breeds other companies as well.

Access to the western United States is critical, because digital media is big on the west coast of the United States. We've got an overall community here that is very strong — collaboration and convergence going on between the various sectors. We're also the gateway to Asia, which makes it really strong for British Columbia because of South Korea and Japan.

We have a vision as an industry. Really, British Columbia is a premier global centre for digital media creation and commercialization. We're there. We're one of the world players here, but there are some risks, and that takes us to our last page here.

The risks. There are four of them, and I'd like to talk about each one of them. The first one is that B.C.'s economic climate is not perceived to be favourable towards encouraging existing companies to expand in B.C. and attracting new companies to B.C. What we basically mean by that is that success breeds imitation. Because B.C. has been so successful, other jurisdictions have gotten into the game and have decided to develop digital media hubs in their jurisdictions.

In Canada alone the two most aggressive jurisdictions are Ontario and Quebec. You may be aware that they're offering labour tax credits of 30 percent plus, depending on where you are, to build their hubs.

Montreal has been extremely successful in building a digital media hub. Big companies like Ubisoft in France have located to Montreal. Recently in the past year Eidos decided between Vancouver and Montreal, and chose Montreal. Unfortunately, because of those labour tax credits that exist there, Electronic Arts, our own homegrown company here in Vancouver, has opened up a Montreal studio, once again because of the economic reasons.

Unfortunately, other jurisdictions are now attracting companies. Ontario continues to be aggressive, and the state of Georgia and the state of Utah have now entered the fray. Ireland and Singapore are also major players on a global scale, with generous tax credits.

British Columbia has none, so that just kind of puts it in perspective. We offer…. The playing field is not level between us and other jurisdictions. So at this time, while we have a very strong industry, we do have a risk. That risk is seeing companies now go to other jurisdictions like Electronic Arts, seeing companies shut down. Radical Entertainment just lost 120 jobs in the month of August because their new owner, Activision, sees lower-cost labour in other jurisdictions. That's one of the key things affecting us.

Second, I just want to draw your attention…. Post-secondary education in B.C. is becoming less connected with industry. There's a high need for qualified talent that continues while all this aggressive action is going on in other jurisdictions.

We've got the greatest schools globally that work in the technology space here, and the good news is that an organization like BCIT has stepped up to the plate. It may be surprising to know that their computer science department did not have any specialty option in areas like games development. Well, we've just finished great meetings and work sessions with BCIT. Starting next fall, BCIT will be offering a games development option in their computer science department, so good movement there.
[ Page 1892 ]

That's not the only institution. The dialogue has begun with SFU, UBC, Emily Carr, etc., and we're moving forward with programs there in addition to the program that exists at the Great Northern Way Campus for the master's degree in digital media.

[1020]

The third major issue is the time frame to bring qualified international talent. It's too long right now. You're all aware of the PNP program that exists. It's been anywhere from 22-plus weeks to bring in talent, and as you probably know, in the digital media industry we move at the speed of light. So we need employees to be sitting at their desks yesterday.

The good news. In talking with Ian Mellor, who heads up the program, and also Minister Oppal…. Some changes have already been made. So companies can now get pre-qualified, and companies can also pre-qualify a block of employees even though they haven't identified the talent yet. So I just wanted to report to you that that's great news. It's moving forward on PNP.

So for Nos. 2 and 3, post-secondary education, we're moving forward. It's looking good. Same thing with bringing in international talent — moving forward. The key thing that I've learned, being the new guy in British Columbia here, is the importance of talking to all of you to get these things on your radar screen, because you can help industry, and I've seen that.

The last thing is that for the medium- to smaller-sized companies it's difficult to access capital to fund growing companies. Right now you have the British Columbia new digital media venture fund. That's been available, and it's quite helpful to companies, because investors are coming in. But you may already be aware that it's gone in two months.

Right now we've already had meetings with Todd Tessier. He's taking a look at that. So I wanted to put that on your radar screen as well. We don't have a specific amount to recommend, in how large it should be. Todd is taking a look at that right now as well.

Then also, they're examining the renaissance fund — that it can be more accessible to digital media companies. So we've got good meetings going on. Just last week we were invited to go in. The chairman of our board, Warren Franklin, who is the CEO of Rainmaker, and I went in. We were invited by Glen Armstrong and Paul Flanagan to come in for a prebudget consultation meeting. We did the same discussion with them.

They said: "Let us take a look at this as well. Perhaps we should do something here — not necessarily to level the playing field with Quebec and Ontario, but look to see what we can do, because we don't necessarily want to see companies hemorrhaging."

We gave examples. Walt Disney right now is looking, in their interactive world, to consolidate all of their quality assurance in one location. They're looking at Singapore, Georgia, Quebec, Ireland and another location. British Columbia isn't on their list to look at, because unfortunately, the economic incentives just don't come close to what the other jurisdictions are offering.

All in all, it's a strong and growing industry here in British Columbia. But as you can see, there are risks. Success breeds imitation, and this really is an industry for the 21st century. It's basically ours to lose in British Columbia. So I just wanted to get this on your radar screen. That was the key.

R. Hawes (Chair): Thank you, Kenton, and you've done a very good job in doing that.

R. Lee: We heard from the movie industry that sometimes some components of post-production are not getting the tax incentive.

K. Low: That's right.

R. Lee: For example, sound and voice should get the same as animation stuff. So do you think those kinds of changes will help digital media overall?

K. Low: No. If we had to recommend, we would look and say: "Well, you're considering expansion for sound and post-production. You should be thinking about other areas as it relates to…." Actually, let me just back up for a second.

When you go out there and consume entertainment content…. Nowadays people are consuming entertainment content across multiple platforms. So you can go see the movie, but now people are seeing the movie, they're playing the game and they're on line in social networking sites to talk about the games as well.

If you were going to expand it, you could expand it to include games, especially games in the development of new, original IP. The key thing here that we think is critical for the industry long-term is building original content in British Columbia. We've been a great service industry, but original IP is something that our industry believes is really critical for the future.

It can be a race to the bottom, possibly, from the standpoint of just playing the tax credit game. But if we could create original content that resides here in British Columbia, that's how we can win the long-term digital media game.

[1025]

H. Bloy: Thanks very much. I always enjoy your enthusiasm.

We were the only hub, basically, in Canada for a long time, and now we're losing that. At what rate are we losing it if we don't come up with educational programs? When will we not have the hub, where major films won't want to come here anymore?
[ Page 1893 ]

K. Low: I can't give you a specific date when that's going to all disappear, because the industry is still strong here. But you can see that it's cracking and we're hemorrhaging. It will it be gone in ten years. Well, it's started, so how fast will that move? Harry, I don't know.

EA has already opened up the Montreal studio. Radical has already downsized 120 employees. Backbone Entertainment closed in the month of August.

So what's Disney going to do? In two years will Disney Interactive still be in Vancouver? Don't know. Will Relic still be here? There're a division of THQ. Will they still be here? Don't know. Will Rainmaker Entertainment say: "You know what? It's great making animation here in Vancouver — for now”? Will they decide that Singapore is the place that they should be? Don't know.

I've talked to all the companies, and they've come back to me and said: "We can't tell when we're going to choose to leave. But right now the ground is getting a little bit shaky in British Columbia."

I wish I could be more specific, but I can't.

R. Hawes (Chair): Kenton, that's the end of our time. Thank you very much for your presentation. I think you've hit your mark.

K. Low: Okay. Thanks very much. I know you had a question. Give me a call — okay?

R. Hawes (Chair): I'm sorry we didn't have time for it.

We have the Canadian Parks and Wilderness Society and Chloe O'Loughlin.

Welcome. I'll try and let you know when you've gone ten minutes, if you go that long, and then we'll have time for questions and answers.

C. O'Loughlin: Okay. Thank you.

Since 2001 the province of British Columbia has established 57 new parks, 129 conservancies, one ecological reserve and eight protected areas and has expanded more than 50 parks and six ecological reserves, protecting more than 1.8 million hectares. So on behalf of my organization, our donors and all British Columbians who love this beautiful province, thank you. It's been a remarkable achievement, unique in the world. It's outstanding.

It's my honour, then, to be here in front of you and make two recommendations. The first one is to make the same commitment to our oceans and coastal waters that you've done for our lands. Currently our entire coastal waters are unplanned and mostly unprotected. So we recommend that you allocate $20 million per year over the next four years for this task. The second is to make sure that B.C.'s world-class parks and protected areas are funded appropriately, and we recommend that you allocate $10 million for this task.

Our oceans and coastal waters are an essential part of B.C.'s environment. In terms of protecting nature, it's where we're really, seriously falling behind. Oceans are increasingly the focus of conservation efforts around the world, especially with our neighbour states that share this coast. Our oceans and coastal waters are in danger and in urgent need of attention. Biodiversity in ocean ecosystems can be protected through planning that results in the network of marine protected areas and sound fisheries management.

The governments of Canada and the province of B.C. have made international commitments without the budget or staff to achieve them. So let me talk about that.

Canada signed the convention on biological diversity. Its goal is to establish a network of marine protected areas in Canada by 2012 — just four years from now. We have nothing in place and no staff and no budget to achieve that.

Oceans health and marine planning and marine protected areas are included in the following international agreements: the World Summit on Sustainable Development; the G8 leaders' action plan; the World Parks Congress; the North American Commission for Environmental Cooperation; and the leaders' statement by Prime Minister Martin, President Bush and President Fox of Mexico in March of 2005.

[1030]

Further, the province itself has signed memorandums of understanding with California, Oregon, Washington and Alaska this year to work together on oceans health and to establish a network of marine protected areas. Just in July the government has recently given the Ministry of Intergovernmental Relations the responsibility to work with our coastal colleagues from Baja to Bering to ensure our oceans' health. These are significant and important announcements. Congratulations for making them.

We believe the province wants to stand proudly with the U.S. states that share our coastal waters, yet we have so few staff, so little budget and so little political direction that little, if anything, can be achieved in B.C.

In order to be proud of our work, much more work needs to be done. Oceans health needs to be a significant focus of the province's work over the next four years. We urge the Finance Committee to make strong recommendations that oceans health be funded appropriately.

We need places that are rich with marine life to be identified and set aside as marine protected areas so that we have nurseries for the fish and marine life. Fish in protected areas live longer, they grow bigger, and they produce more fish. The commercial fishing industry understands this. Coastal mayors are keenly interested. The coastal first nations are calling for marine planning to get underway.

We recommend that the Ministry of Agriculture and Lands and the Ministry of Environment each be given $10
[ Page 1894 ]
million a year for the next four years for this important work — look what you achieved in the last four years with land use planning; it's a major international achievement — and that the new Pacific Coast Collaborative, which is the initiative that IGR has established, is funded appropriately to ensure that B.C. can be an equal partner with our colleague states in the oceans health initiative.

This $20 million per year for the next four years will enable us to protect our oceans from the impacts of climate change, ensure the social and economic well-being of our coastal communities and first nations, be an equal and proud partner with our colleague states from Baja to Bering — from California, Oregon, Washington and Alaska — and continue to provide the world-class leadership for British Columbia that British Columbia has been known for internationally.

As I mentioned at the beginning of my presentation, your government has done an excellent job of land use planning and establishing new parks and conservancies. Yet for over 20 years the budget of B.C. Parks has been eroding. Stepping in now to bring B.C. Parks funding up to necessary levels would contribute to the overall health and well-being of British Columbians, increase tourism revenues, and prepare our parks for the 2010 Olympics and the 100th anniversary of our parks system in 2011, which is a huge opportunity for the province.

B.C.'s parks system contributes to the active and healthy lifestyles of British Columbians, and healthy people create fewer demands on the health care budget.

Your government needs to provide funds so that groups, municipalities and citizens can be full participants in the parks. These partnership funds will engage youth, citizens and seniors in their parks and will help to make B.C. the healthiest jurisdiction in the world by 2010.

B.C. parks add about $45 a year per hectare to the province's GDP, but the visitor numbers are not increasing significantly because of our inadequate services and our outdated facilities.

Substantial funding for conservation work and park interpretation is needed, and the new conservancies that were established over the last four years on the coast need new funding for rangers, conservation and park management planning. You don't put up a bridge and just leave it there. You provide the money for the management.

B.C. Parks urgently needs attention. Now is the time for the province to address this issue and get ready for the 100th anniversary of our parks system in 2011. If this is done well, we'll be able to showcase B.C.'s parks to the world before, during and after the Olympics.

Once again, congratulations on your fine work and outstanding leadership. It's really my honour to make these two recommendations to you today.

R. Hawes (Chair): Thank you very much, Chloe.

Questions? It's pretty straightforward.

[1035]

R. Lee: For marine protection, which area or priority do you think the funding should be directed to?

C. O'Loughlin: It's all of our coastal waters. In British Columbia we decided to do land use planning for the province. Land use planning is important, because it provides security and clarity so that industry knows where it can work or not work. We know we have areas that we'll protect.

On the coast we have no planning. There's no planning in place. There's one staff person in the integrated land management bureau who is responsible for marine planning. He has no budget and no assistance at all. There needs to be a department that deals with marine planning.

R. Austin: I just had a question around jurisdiction. There's an article in today's paper about which level of government has responsibility for ocean or coastal management. Some are arguing that, for example, fish farms should have been managed entirely by the federal government, because that's the Oceans, and constitutionally, that's where it was. But I guess there was a memorandum of understanding done in the '90s to give away some of that jurisdiction to the province.

In terms of your major recommendation, is it the opinion of your organization that the province should be organizing marine habitat protection areas, or do you think this is really still more a federal matter?

C. O'Loughlin: The answer is both. The fish that travel, like salmon, are the responsibility of the federal government, and the fish that stay in a location, like rockfish, are the jurisdiction of the provincial government. It really depends. There's a lot of confusion about that.

R. Austin: But in creating a marine protected zone off the shores, is that a provincial responsibility?

C. O'Loughlin: Right now there are marine protected areas that are the responsibility of the provincial government, and there are marine protected areas that are being worked on by the federal government. We just did a review and interviewed 75 people within all levels of government to ask why we haven't got marine protected areas in 20 years of trying. The number one reason was because there's no political leadership.

What I'm saying here today is that whether or not it's your jurisdiction, the federal government is doing a very slow, poor job in our coastal waters, and our coastal waters are really, really in danger — and our coastal communities. You see our fishing industry is in great difficulty. With climate change, our coast is going to be changing.

This government needs to stand up and say: "What's the action plan? What's the time? Here's our money; here's our staff. We're going to do it."
[ Page 1895 ]

Then we have these memorandums of understanding with California. We've promised to California and Oregon to put together a network of marine protected areas and look at oceans health with Alaska, and we have no money. There is no money within either the Ministry of Environment or Agriculture and Lands to really effectively take this task on.

You've done a great job on the land. In the next four years we need to deal with the oceans. It's the next major task for this government. As I said, the commercial fishing industry is interested. The first nations are calling for this. The coastal mayors really see this as a priority. It's a real opportunity, I think, for you to do what you've done on the land and now do it here — do that same kind of fantastic work that's been done.

R. Hawes (Chair): Thank you very much, Chloe. Great presentation.

Next we have Galaxy Multimedia Corp., Bruce Sanderson.

B. Sanderson: Thank you for the opportunity to speak to you this morning. As mentioned, my name is Bruce Sanderson. I'm the president and CEO of Galaxy Multimedia as well as the president of Skybridge Communications, two IT- and communications-based companies founded and based here in B.C. We are classed as small business, and we provide wholesale and retail telecommunication services as well as research into green options for the communications industry.

[1040]

Now, I don't want to reiterate some of the comments made by the gentleman from the multimedia industry. They were very appropriate comments, and I endorse and support them fully, so I'll short-form a little bit of my presentation here.

I would also like to say that we have enjoyed and applauded the changes that this current government has made since coming to power and sincerely hope that it continues for many years to come. I would, however, like to see more done to help small business in B.C.

We know that globally, as a country and as a province, we are going to be facing some tough times over the next few years. In the light of those challenges, small business and entrepreneurial spirit will be called upon to help as much as any group, organization or government.

We have already seen globally the first stages of how big business has suffered and had to make dramatic cuts in their workforce. As such, those people are left to look either to the public sector for financial assistance or jobs or to small business — and, in some cases, to create their own opportunities.

In any economy, small business is able to adapt faster and can afford to make necessary changes to keep operations going. With assistance from the current government and the upcoming budget, small business will potentially be able to continue to employ its current staff as well as offer employment opportunities to those who have lost positions due to these impending conditions.

A few of the potential changes we would like to see include the continuation and expansion of financial assistance incentives to small business to hire more displaced personnel and further assistance in retraining and tax cuts, including personal, small business and corporate taxes, to assist in the creation of new jobs and new business opportunities. We would also like to see the small business tax rate cut to 2.5 percent now, not in the future.

A commitment to regulatory reform must be followed with legislation, not just discussion. We need to act on that with legislation.

It is imperative that we do not follow in the footsteps of others and that we make debt reduction a priority for our future.

Increases to the small business threshold from $400,000 to $750,000 would create incentives for those small organizations to grow.

Further, although we all applaud the government's work towards a green initiative, the carbon tax does not necessarily provide an economic advantage — rather, a potential disadvantage — and does little, in reality, to improve our position on this extremely important issue.

If it is not dropped altogether and replaced by a more favourable alternative, it should at least be held to its current rate rather than any future increases. It would be far greater to see the government pushing ahead with many of the opportunities and options available today, which include financial incentives to small business for showing a move towards a green initiative — which could include such simple items as flex work schedules, telecommuting and the development of remote community offices, such as the attempt by the city of Coquitlam to promote a local presence within the community rather than all employees driving to downtown Vancouver.

B.C. has the potential to be one of the greenest places on earth, and there are some good plans in place to ensure that what's made in B.C. stays in B.C.

Having said that, in the upcoming budget there needs to be a much greater effort to promote independent development of alternative forms of energy such as wind, geothermal, run of the river, solar as well as exploration into the new thorium nuclear reactors. We see this as an opportunity for continued financial growth within B.C.

It's interesting to note that Canada has had two designs under development that are based on its reliable Candu reactors. It has flexible fuel requirements, which include recovered uranium from reprocessing spent fuel rods and also from thorium. These new reactors virtually eliminate the potential hazards associated with previous nuclear fuel options.

Lastly, promote local government buying for and from small business. Although it may be simpler for the
[ Page 1896 ]
government to offer one contract for services to one or two large providers, it would help promote more jobs at the adaptable and sustainable level of small business as well as a better product to those local business communities, as the local businesses have a much greater understanding of the needs of the local community and have greater interest in seeing that those services given are of the highest value.

[1045]

In summing up, I'd like to thank you again for this opportunity. It is our hope that you will continue to recognize and support the business community in B.C. It is of paramount importance — not for a select few, as some would have others believe, but for the environment, the community and for the general health and well-being of all in B.C.

R. Hawes (Chair): Thank you, Bruce. That was very succinct and to the point.

J. Horgan: Thank you, Bruce, for your presentation. We heard from the Vancouver Board of Trade two weeks ago with respect to the carbon tax, and they suggested that it be frozen at its current rate until there was some demonstrable evidence that there had been a reduction in greenhouse gas emissions.

You touched upon the carbon tax in your presentation. I'm wondering if you could expand on your views on how that tax should be managed from now into the future.

B. Sanderson: I believe, as the board of trade has stated, that at this point in time we need to put a hold on it. I think there are, as I mentioned, other opportunities, other avenues to proceed to endorse the green initiative. I think I mentioned a few of those. If we can promote some of these independent businesses to moving towards the green initiatives — the wind power, the solar power, the run of the river…. These are all excellent opportunities.

R. Lee: Thank you for the presentation. For large companies there, they can do their promotion — say, export. For small business — you're promoting for independent businesses — how can the province help you to expand your markets?

B. Sanderson: Well, I think, again, as I mentioned, historically the governments have looked to a large supplier. I would encourage the government to look at some of the smaller suppliers, such as the small independent business men, and open the tendering process.

I recognize the need to ensure quality and value for the government, but it would be helpful if the tendering process was cut a little shorter than what it currently is. It's very difficult for small business to allocate resources to respond to some of the tenders. And perhaps they could be a little more localized rather than an over-the-entire-province opportunity.

J. Yap: Thanks for coming out to present. A couple of questions on carbon tax. You're advocating that we keep it at the present level and look at the impact. If we do that, then there will be the scheduled reduction in income taxes that kicks in next year. Are you advocating that those be cancelled as well, so that we would be revenue-neutral?

Second question, also on carbon taxes. There are some who are advocating a carbon tax on greenhouse gas emissions from burning of fossil fuels only at the producer level or in industry, on businesses. What are your thoughts on that approach as opposed to this approach that is in place now?

B. Sanderson: Certainly, we recognize that there is not an unlimited amount of funds to go around. As a small business we have to balance our budget just as you do.

What I foresee, or an opportunity as far as the carbon tax goes, is that if we apply those funds towards development of industries that are green initiatives — the green wind power and these types of industries — and help promote that, I think that'll add to the tax base and encourage that type of growth. That will additionally fund opportunities as well as bring financial resources into B.C., because we could sell that power and offset any tax reduction that we have to fulfil.

Secondly, relative to the greenhouse gas issue, I would like to see a lot more emphasis put on independent organizations developing these greenhouse initiatives. If we were to go ahead and tax the big greenhouse gas producers, unfortunately B.C. Hydro would be right at the top of the list, or one of the highest producers of greenhouse gases, with the Burrard Thermal plant. They're certainly not the only industry, obviously, producing greenhouse gases, but they would be a consideration on that.

I think it needs to be something that we promote to these industries to get this sort of thing going.

[1050]

D. Hayer: Thank you very much, Bruce. I'm going to ask you about the carbon tax because many constituents bring this to my office too. The argument is: do you put on the carbon tax and then say that whatever revenues are raised from that are put back to the people who paid for them so that you become carbon-neutral but, at the same time, try to change some sort of behaviour? So they're putting less carbon, less pollution in the air.

Or do you sort of put in a carbon tax…? You hide it so you don't really know how much of the money is coming, and then you use it for the pet projects of the government, depending on who the government is. This
[ Page 1897 ]
project might not be what you're thinking of. It might be, whoever is in government, their own personal project.

Do you support the ones where government takes the money and then uses it on pet projects? Or do you think it's better if you take the money from the public and then try to bring it back to the businesses or the individuals who raised it? Just trying to get your opinion on that.

B. Sanderson: Well, obviously, that fund is taken from everywhere, so the carbon tax and everything else is being taken from everybody across the board, with the gas and everything else. I think, at the end of the day, we'd like to see that money put back to organizations and small business, independent organizations, to help promote the options in terms of energy.

R. Hawes (Chair): Thank you very much, Bruce.

Next we have the Confederation of University Faculty Associations of British Columbia and Rob Clift.

Welcome, Rob. I don't think you're a stranger to this committee.

R. Clift: No. I think I've actually been presenting every year since these consultations started. I don't know what that says about me.

A Voice: Security of employment.

R. Clift: Well, there is that, yes.

Good morning. Thank you for the opportunity to appear before you today as you consider your recommendations for the 2009 budget priorities.

As you know, my name is Robert Clift. I'm the executive director of the Confederation of University Faculty Associations of British Columbia. We represent 4,600 professors, instructors, librarians and other academic staff at UBC, SFU, UVic, UNBC and Royal Roads University. I'm also a doctoral student at UBC and a published author on higher education policy in Canada.

I bring regrets from our president, Dr. Paul Bowles, who was unable to travel here today from Prince George. I know that some of you heard from him last year when he made a presentation in Prince George on behalf of the UNBC Faculty Association.

The higher education system in British Columbia is in transition. Over the past 40 years the system has evolved from a small, selective enterprise based primarily in the Lower Mainland to a broadly accessible and diverse network of universities, colleges and institutes located around the province serving both British Columbians and students from abroad.

We are moving towards what the scholars of higher education call a massified system of higher education. Currently over half of high school graduates make an immediate transition to post-secondary education, and another 20 percent will make the transition within four years of graduation. This is almost double the rate of post-secondary transition of 20 years ago.

Both this government and the previous government contributed to huge strides in improving access to higher education in this province. It is an achievement that will serve all British Columbians, as it provides the basis for the province to effectively compete in the knowledge economy of the 21st century.

This rapid expansion has not been without its problems, however. Despite large increases from government in overall funding for post-secondary education, our per-student funding levels are still slipping. The challenge is to ensure that the new, broad-based, more accessible post-secondary education sector is provided with sufficient resources to match the expectations placed upon it and which maintain the high quality that the selective system of 20 years ago provided.

We have a disagreement with Minister Coell as to whether the government funding has increased by 40 percent since 2001. Our calculations, based on government documents reporting actual spending rather than budget estimates, show a 24 percent increase. I have attached to your package detailed calculations, and we can discuss those later if you'd like.

What is clear is that since 2001, the number of full-time-equivalent students has increased by 26 percent and inflation has increased by almost 17 percent. So in order just to keep pace with the growth of student numbers and the erosion of purchasing power, funding would have had to increase by 43 percent since 2001. This doesn't take into account the fact that university costs like books, journals and scientific instruments increase at a faster rate than the general consumer prices. Often this gap is as much as 2 percentage points per year.

In 2005, when government limited tuition fee increases to the rate of inflation of consumer prices, there was an implicit agreement that the government would also increase its share of funding by at least this rate of inflation. Unfortunately, this has not happened.

If you look at the graph on the second page of the package that I provided, you can see that the red bars, which represent per-student funding adjusted for inflation, have generally slipped over the past eight years.

[1055]

I know that others have told you about the effects that this underfunding is having on post-secondary institutions, so I won't recount those stories here. What I will talk about briefly is a lost opportunity for British Columbia.

Between 1994 and 2006 the provincial government provided virtually no money to fund new graduate student spaces at our universities. We are grateful that this changed in the 2007 budget and that this funding was made ongoing with the 2008 budget. We are also happy that in 2007, government acted upon our longstanding recommendation to establish a provincial scholarship program for graduate students.
[ Page 1898 ]

Although we have made progress in this respect, our neighbours in Alberta have made much greater progress through aggressive recruitment of top-flight researchers and the development of the next generation of researchers through a substantial graduate student scholarship program. Where our program provides about 250 scholarships per year valued at $10,000, the Alberta program provides 1,000 per year worth up to $15,000. Also, the Alberta program provides scholarships for about 10 percent of its graduate students. Our program provides scholarships for about 2 percent.

In earlier years, when per-student funding was at higher levels, the universities had the capacity to offer scholarships and fellowships from institutional funds to a larger proportion of graduate students than is the case today. We do the best we can with the government and private money we have, but there are a great many potential future leaders in our graduate programs who are not receiving any financial support from us.

This means that we lose out in recruiting top students from across the country. More importantly, we lose out when British Columbians are enticed to better-funded universities elsewhere in Canada and internationally.

Our written submission will be ready in about two weeks, and we will go into these matters in more detail in that document. At this time we make six preliminary recommendations to you, as you'll see from the top sheet of the package that we've provided.

These are: (1) immediately restore the 2.6 percent reduction in the 2007-08 base budgets for public post-secondary institutions; (2) increase average per-FTE funding by at least the rate of growth in the consumer price index for the 2009-10 budget year and onwards; (3) for each new full-time-equivalent student space mandated by government, provide at least the average per-FTE funding for the previous year adjusted for inflation, and fund new graduate student and specialty program spaces at approximately double the average per-FTE funding; (4) restore real per-FTE student funding to 2001-02 levels; (5) increase the value of the Pacific Century Graduate Scholarship from $10,000 to $10,800 for master's students and $15,000 for doctoral students, to match the province of Alberta; and (6) increase the number of Pacific Century Graduate Scholarships from 250 per year to 1,250 per year to match the province of Alberta's target of one scholarship for every ten graduate students.

We will make additional recommendations in our written submission, but these six will be our primary recommendations. Our universities are irreplaceable sources of innovation and creativity to the province and vital institutions regarding our social and economic futures.

The challenge that the government faces is to speedily fix the ongoing problems with funding stability and graduate student support so that we can get back to working towards a mass system of higher education that is accessible to and serves the diverse needs of all British Columbians.

I'll take any questions you might have.

R. Hawes (Chair): That was very brief. You've left lots of time for questions, so we'll start with Bruce.

B. Ralston (Deputy Chair): Sometimes when recommendations come from the university sector, I think some people are a little bit skeptical because they think they're a bit self-serving. But I did notice in the Business Council of British Columbia that they make a similar recommendation about increasing funding for programs designed to attract top-flight international graduate students to B.C.

They go on to say that recruiting world-class graduate and post-graduate students will help to build a knowledge economy, particularly in fields where academic-industry partnerships exist or can be developed. So would you be consulting with them in preparing your further written brief?

R. Clift: I'll have a look at their submission. I wasn't aware they were making that type of submission. I'm happy to hear it. Certainly it's consistent with the discussions we've had with them over the years on the importance of supporting higher education both in the education component and in the research and development of highly qualified people. So I'll have a look at their document and speak with them about that in preparation of our final submission.

B. Ralston (Deputy Chair): It seems to me that items 5 and 6 might be unduly modest requests, given the strong support that this recommendation appears to have from them.

R. Clift: Well, I do prefer to come here with modest requests. I know there are lots of immodest requests that come forward to this committee, so we try to be somewhat reasonable.

B. Ralston (Deputy Chair): It never stops anyone else from asking.

R. Hawes (Chair): The Deputy Chair doesn't need to encourage bigger requests.

[1100]

J. Yap: Thanks for coming out to present to us. I appreciate your first page with the recommendations and costing. They roughly come to a total of about $350 million plus or minus. What are your thoughts on where this funding could come from? In other words, would you be advocating an increase in tax revenue to fund this or postponing other programs in government?
[ Page 1899 ]

R. Clift: Our organization doesn't make recommendations to government on how it comes up with its revenues. That's simply not our job. The only recommendation or note we can make, as we've already made in the brief, is that if we're going to compete in the 21st century economy, there are lots of things we need to do.

We heard earlier from the New Media folks about things to be done for their industry and the fellow from the telecommunications industry, but fundamentally, none of that really works unless you have a well-educated populace. So I guess what I would say is what I've said before, which is to invest now by making an expense to generate those revenues later on.

J. Horgan: Thanks, Rob, very much for the presentation. Also, we've been hearing, in other cities and towns across B.C., concern about the 2.6 percent reduction that you highlight as your primary or No. 1 recommendation.

I'm wondering. In past years — in my time on the committee, in any event — your organization and other faculty across the province have supported tuition reductions that have been advocated by the CFS and others. I don't see that in the presentation this year. Is there any reason why, or are you making the case that increasing FTE funding will help alleviate the tuition hit that students have been taking over the past five years?

R. Clift: Actually, our organization has never advocated a specific tuition policy for the government. I know that other organizations have. What we've always said is that tuition fees have to be as low as possible in order to keep the costs low to students. But at the same time, if we starve the system of the money it needs to operate, what are the students paying for?

Just recently, I made a presentation to the Canadian Federation of Students general meeting in Victoria at the end of August. One of the things I noted there is that, at this point, students are paying proportionately more for their education now than I did when I was an undergraduate student, and frankly, they're getting a lower-quality education. It's still a good-quality education, but it's lower quality.

What the rub is here is that although we need the money to pay for the system, it does not feel good that we're charging students more for something that we know is not as good.

I think the other aspect of this is on the student financial assistance front, which we will be making recommendations on in our final submission. There needs to be a significant revamp of that, particularly in light of the way the federal government has changed its support for student financial assistance.

R. Lee: Thank you for this presentation. I have one clarification and one question. The clarification is on No. 2 in your proposal for, say, 2009-10 — a $3.7 million increase for FTE funding. But for the year after, it says $51.1 million. Why is there a big jump of $50 million to increase the average per-full-time-student funding?

R. Clift: Sorry. I guess you'd have to ask the minister or the ministry because these are based on the service plans of the ministry. So when we do the calculations, we find that in 2010-11 the per-student FTE funding figures have slipped below the 2009-2010. That's where the number comes from. It's based on the projections in the ministry's service plan.

R. Lee: Okay. A question. This is a clarification. The question is on, say, the number of funded seats in the graduate division. The government has initiated some funding, I believe — up to 1,000 now, or maybe 1,500. So that actually creates more seats to support the post-graduate students.

R. Clift: Indeed, it does. That was two years ago, I believe, that government made a commitment to fund 2,500 new graduate student seats at the research universities over four years, which we dearly loved and appreciated having. Then last year that funding was made ongoing, which was a recommendation from this committee, and I'm very happy that you made that recommendation.

The problem was that for the 12 years preceding that, there was virtually no new funding for graduate student spaces, and that's both in the mandate of this government and in the previous government. Undergraduate growth was the primary impetus of government, and we understand that. I will put it in the final written document, but I believe that over that period we created about 4,800 unfunded graduate student spaces. So the new graduate student spaces, which are now funded, don't take in the fact we have these 4,800 unfunded spaces from the years before.

At this point, based on a release that the ministry put out last week, our total enrolment in the province is about 12,500 graduate students.

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D. Hayer: Thank you for your table of summary. You provide some stats there. Do you have the numbers…? What was the Advanced Education budget for 2000-2001 in total value, total dollars, and what is the true sum of '08-09?

R. Clift: I'm sorry. Did you want it in current dollars or 2008 dollars?

D. Hayer: No. Just actual dollars.

R. Clift: In 2000-2001 the actual current dollars spent….
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D. Hayer: No. Actual dollars, not the current dollars. Actual dollars.

R. Clift: "Current dollars" means non-inflation-adjusted. If you want inflation-adjusted, we….

D. Hayer: Without inflation.

R. Clift: Without inflation, in 2000-01 the actual spending in the public accounts is $1.4 billion, say, for the sake of argument. This year it's effectively at $1.8 billion.

R. Hawes (Chair): Okay. As always, your presentation is well received. Hopefully, we'll come up with some recommendations that are going to alleviate some of the problems we see.

R. Clift: Thank you. If there are any questions you have in the next week or so, please forward them to me, because we will then incorporate those answers into our written submission for you.

R. Hawes (Chair): We'll look forward to receipt of that.

Next we've got the Institute of Chartered Accountants of British Columbia, Richard Rees. Welcome, Richard.

R. Rees: Hello. I think I, too, have been here every year since this process was started, and I congratulate the committee on your continued interest in the finances of the province.

My name is Richard Rees. I'm the chief executive officer for the Institute of Chartered Accountants of B.C. We welcome the opportunity to present to the Finance and Government Services Committee our recommendations for the 2009 B.C. budget, the final budget before the upcoming provincial election.

I'm here today on behalf of about 9,700 chartered accountants, and we also have over 1,500 students in our programs. Our members work throughout the province, and there are likely few significant business investment decisions that do not involve one or more of our members. I'm sure you've met a few of them in different towns. Through our newsletters we encourage them to take an interest in this process, and we also ask them, if they do present to you, to give you a flavour for the business — how the business is going in different areas of the province.

CAs are respected business leaders who provide insight into B.C.'s economy through the soon-to-be-released B.C. Check-Up and also our CA business outlook survey. As the government begins to develop the budget, we strongly encourage you to consider the recommendations put forward by our institute in today's presentation and to include them in public policy discussions that might stem from these proceedings.

Let me start by saying that the 2008 B.C. Check-Up echoes the government's First Quarterly Report and has found that our economy has been resilient during the past year. In the face of an economic slowdown in the United States, a high Canadian dollar and a troubled forestry sector, B.C.'s economy has continued to grow and create jobs.

In the government's First Quarterly Report the CAs of B.C. were encouraged by some fiscal trends in the province, including the surplus, which was considerably higher than previously forecast, and the $6.3 billion decline in overall debt from government operations. We're pleased with the fiscal management approach that the government has been taking.

We agree with conservative forecasting, as this is sound management, particularly in turbulent economic times where economic risks increase. We have already seen a situation where's B.C.'s economic growth is forecast to decline by 1.7 percent this year from the original 2.4 percent forecast. Fortunately, the underlying fiscal situation is sound.

Of course, the economy is going through some very challenging times, and the extended troubles in the United States are very concerning. In these uncertain economic times it is imperative that the government uses all of its policy tools to stimulate investment, boost productivity and maintain sound fiscal management. We know that there are many things that are beyond the province's control, such as the U.S. housing slump, commodity prices and international exchange rates. However, the government can enhance our competitive position and provide strategic investments that assist our economic and fiscal position.

In the light of what's happening in the economies of the U.S. and central Canada, it is more important now than ever for the B.C. government to remain diligent with respect to economic policy. Government has the ability to improve our competitiveness through tax policy. An example of this is the last provincial budget, where the capital tax on financial institutions was eliminated. This was a positive step toward strengthening our financial services sector and attracting jobs and investment in British Columbia.

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Similarly, the government has the ability to make more positive changes. For example, increasing the small business tax threshold can help our small business sector grow and prosper. In Alberta the small business tax threshold was raised in their last budget to $500,000, which is consistent with the rate in Ontario and Saskatchewan. It would seem appropriate that B.C. should match these other jurisdictions and also increase our small business tax threshold.

Similarly, government has the ability to make businesses more competitive through the simplification of tax administration. In B.C. the simplest way to achieve
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this may be sales tax harmonization. Support for harmonized sales tax continues to grow. A recent KPMG study found that the combined value-added tax would make Canada and B.C. more competitive internationally. The C.D. Howe Institute recently noted that the current tax structure in many provinces, including the PST and varying depreciation rates, could prop up inefficient industries at the expense of those that are important for future growth. A harmonized sales tax would provide a level playing field for all business.

The current sales tax structure is also onerous for small business, who currently struggle with the administration of two separate sales taxes. The lack of a harmonized sales tax translates to higher costs for businesses in two ways.

First, B.C. businesses require separate recordkeeping, reporting and remittance for the GST and PST, creating unnecessary costs of accounting administration. In addition, businesses deal with two sets of auditors enforcing compliance at the federal and provincial level.

Second, the provincial sales tax paid on the purchase of inputs for businesses — for example, supplies and materials — is not a tax credit, as it is under the GST, thus imposing additional cost for business.

I would recommend that the government seriously consider the harmonization of its provincial sales tax with the GST. A comprehensive review of our sales tax system, examining the costs and benefits of harmonization, would be a reasonable approach to sales tax reform. A review of the existing sales tax was conducted by the Ministry of Small Business and Revenue. However, what I'm talking about here is a specific study on the merits of harmonizing the PST with the GST or simply replacing the PST with a value-added tax like the GST.

While CAs believe that harmonization is the best approach, we would also be supportive of a made-in-B.C. value-added tax modelled after the GST. This is an alternative to harmonization that still addresses the disadvantage related to input costs and is the policy course followed by the province of Quebec. In a comprehensive study released in September 2008, the C.D. Howe Institute assessed the benefits of a made-in-Ontario value-added tax and is urging the Ontario government to adopt this policy.

In addition to tax policy, government has the ability to encourage productivity, which is crucial to a prosperous future, as B.C. continues to lag other jurisdictions in the national average in many of these statistics. In the 2008 Check-Up report, which will be released soon, we found that B.C.'s productivity slipped slightly in 2007, and this is an issue that warrants attention from policy-makers.

There are three main ways to affect productivity: greater investment in public and private infrastructure, faster technological innovation, and improvements in human capital through education and training. In this regard, the B.C. government has done a good job of increasing access to post-secondary education by funding additional student spaces, but as the economy contracts, this investment will prove to be more crucial than ever.

Many of the statistics indicate that post-secondary education is a prerequisite for so many jobs that are becoming available, and we have the lowest graduation rate in the country. So we need to keep our eye on that ball.

One area where the government is to be commended for its effort to enhance productivity is infrastructure development. Whether it is highway expansion, bridges or hospitals, these types of investments benefit everybody by giving us the basic network that we need to move products and take care of our people.

We encourage the B.C. government to continue building on its legacy of sound fiscal management and to keep its eye on the ball with respect to the economy. In these tumultuous times, stability and a strong guidance are paramount if we are to ride out the economic storm that has already engulfed many of our trading partners and many of B.C.'s resource-dependant communities.

Today I've given you some recommendations on tax policy and productivity. However, ensuring a sustainable, competitive position is an ongoing challenge. To fully take advantage of new opportunities and mitigate challenges as they arise, the CAs of B.C. would strongly endorse the creation of a permanent advisory council on economic competitiveness that could provide ongoing advice to the government. Further, an advisory council could develop a competitiveness agenda for the province, ensuring B.C. has a plan for future investment and economic development and diversification.

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We feel that the Competition Council was a worthwhile exercise that wrapped up in 2006 and that such an exercise should be done on an ongoing basis. We note that Alberta recently created a Premier's Council for Economic Strategy and that this body may be worth looking at as a possible model for application in this province.

That concludes my remarks today. We will submit a final submission and copies of the 2008 Check-Up by the October 24 deadline. I very much appreciate the opportunity to address you today and welcome your comments.

R. Hawes (Chair): You've done very well.

B. Ralston (Deputy Chair): I was interested in your comments about a provincially based value-added tax. I haven't read the C.D. Howe Institute study that you referenced. I guess it looks like it just came out.

The PST. I think the projection for 2008-2009 is a revenue of $5.2 billion. What would be the hit in the transition to a value-added…?

R. Rees: As you may be aware, in terms of sales tax harmonization, Quebec and the eastern provinces have done it. Alberta, obviously, doesn't have a sales tax, so
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basically, the holdouts are Ontario and three of the four western provinces. The experience in those provinces was no revenue reduction. In terms of how they applied it, they deliberately applied it in a way to make it revenue-neutral, so they didn't get an uptick either. I think it's a case of management. I don't think that it should be a hit.

Now, in terms of the application, there are perhaps some changes, in that there are some things…. I think food, in terms of restaurant meals, is something that is currently exempt from the provincial sales tax. So the food services folks object to that.

I think that, frankly, in relation to the business as a whole, what you have to remember is that just about every other business in the province has to pay an input tax which increases their costs by 6 percent, whereas at the moment what we have is a situation where Quebec and the provinces in the east get an input tax credit. If things start to happen in Ontario, which they're looking quite likely to do, then I have a feeling it's going to spread west, and all businesses in B.C. will be at a 6 percent disadvantage.

R. Lee: My understanding is that the GST actually is moving, replacing the manufacturing tax. Then you are advocating, at the provincial level, going back to a manufacturing tax. I think the argument for the move to GST is that the tax is on consumption instead of manufacturing. In B.C. we don't have too many manufacturers already, so if you add on the tax to manufacturing, that will be…. For job creation, I don't think that would have a positive impact.

R. Rees: Firstly, I don't know that I understand what you mean by a manufacturing tax, and again, I don't think there are any stats. I think if you look at the C.D. Howe studies, the provinces that have already done this have had economic benefits, not problems with employment or anything like that. I think the data just doesn't support that assertion.

J. Horgan: Thank you, Richard, for your presentation.

We've heard from at least two CAs in our northern tour. Those individuals, on behalf of their clients, expressed concern about the impact of the carbon tax on small businesses. I suspect that when we go through the suburban parts of Vancouver and the Lower Mainland, we're going to hear from commuters and others.

I'm curious as to why there's no reference in your brief on the carbon tax and the impact on productivity and competitiveness, as we are the only jurisdiction in the western part of North America, or in fact all of North America, that has one.

R. Rees: I think that in a sense we don't see ourselves as really, necessarily, having the expertise to look at it from a sort of environmental point of view. But you have hit the nail on the head, John. It is a great concern that if we forge ahead with a carbon tax policy that creates a competitive disadvantage for B.C. business, we are potentially going to cut off our nose to spite our face.

My sense is, though, from reading the budget documents and my understanding of how the carbon tax has been structured in this province, that there appears to be some sort of flexibility in how it's implemented. My take on it was that, firstly, the decision of the government was to try and step out there and make a sort of political statement about the importance of the environment and try to do something.

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At the same time, I think, with the way it's structured, they have the flexibility to adjust the rate and try and make sure that we don't go too far too fast and cause a problem for ourselves competitively. It's going to be a very interesting next little while. As you know, there's been some success in terms of other jurisdictions getting involved in the western initiative.

But equally, our biggest neighbour is a holdout. Alberta has not shown a whole lot of interest, so it's going to be interesting to see how it goes. I guess we'll sort of see what unfolds in 2009.

J. Yap: Thank you, Richard. Has the institute taken a look at the alternative to our government's carbon tax, which is based on, as you know, price per tonne and applied equally, whether you're a consumer or producer or industry?

Others have suggested that they would eliminate the carbon tax but replace it with one which would be directed only at industry, at producers. What would be the view of the institute on such an approach?

R. Rees: Well, again, I think our core competence is really in financial things. So in many ways a lot of the issues around sustainability and carbon taxes are around behavioural stuff, which we're not really that knowledgable about.

Whether the focus is on producers at the industry level or consumers at the public level, I guess that really, in terms of the fundamental approach of trying to disincent pollution, it probably makes sense to take different approaches. I think we'll leave it to the Legislature to determine what's the best approach for British Columbia.

Interjection.

R. Hawes (Chair): Sorry, Dave, but I think we're out of time.

R. Rees: Thank you very much.

R. Hawes (Chair): Thank you.
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D. Hayer: Mr. Chair, I just want to….

R. Hawes (Chair): Dave, we do have to move on.

D. Hayer: I just want to ask you. Can we ask the Clerk to check…? The CA that presented in Smithers — did he say he supports carbon tax, or was he against it? My recollection was that he was supporting it.

A Voice: We can check the transcripts.

R. Hawes (Chair): Next we have the Canadian Mental Health Association, British Columbia division, Bill Wright, Dr. Suzanne Gessner and Bev Gutray.

B. Wright: Thank you. I'm Bill Wright, and this is Dr. Suzanne Gessner on my left and Bev Gutray.

Thank you for this opportunity to speak to you today. We're from the Canadian Mental Health Association, B.C. division. This is our fifth presentation to the committee, and we welcome this opportunity to provide you with an outline of what we see as priorities for spending in budget 2009.

By way of background, B.C. division is part of a national charitable organization. In addition to our division office we have 20 branches across the province that serve 85 communities.

We provide a variety of mental health services to the public through our branches, including supporting housing. We have nearly 500 units of housing, with 145 more in development.

Last year we helped 1,334 individuals obtain and retain housing. In addition, over 1,770 were served through our homeless outreach program. However, the services we provide are certainly not enough to meet the need, and that's one of the reasons we're here today.

We would like to commend the government for the leadership that Minister Abbott has shown by working with health authorities and community partners to focus on the development of the ten-year mental health and addictions plan.

We believe that the creation of the Ministry of Housing and Social Development is a positive step as it focuses the coordination of mental health and addictions in one ministry. We would also like to recognize that the ministry's emphasis on outreach to homeless individuals over the last two years is important, but expansion still needs to continue.

We share the vision that all British Columbians should have safe, affordable housing with appropriate supports to enable them to live successfully in their own communities.

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In order to address the needs of those with mental health and addiction issues in the province, we would like to highlight three priority areas for consideration. The first is mental health planning and public accountability, the second is homelessness and income assistance, and the third is mental health and addiction services.

In the area of mental health planning and public accountability, we'd like to say that the comprehensive road map for mental health and addiction services is crucial. We commend the government on the development of the ten-year plan and are eagerly awaiting its release.

However, in order for a plan to be successful, accountability measures must be implemented. We would therefore recommend that the new ten-year plan be a rolling interministerial and cross-sector plan and that the Auditor General be required to report to the public on its process on an annual basis.

Another issue is the institutionalization process. While the process has been successful in some areas of the province, there have been some specific failures in planning. To date there are not enough replacement beds or community supports for the existing population of deinstitutionalized individuals or for the next generation of those who will need them. The problem is especially acute with respect to Riverview replacement beds in Vancouver Coastal Health, where currently nine out of 209 beds are in place.

We recommend that Riverview replacement beds for Vancouver Coastal Health be treated as an urgent issue and that concrete steps be taken to ensure the development of the required beds during the next year. We also recommend, in the event the Riverview lands are redeveloped, that revenue from the sales of those lands be specifically designated for a citizen-managed trust for the ongoing development of the community-based system.

Dealing now with homelessness and income assistance, we know there is a disagreement on the number of homeless individuals, but the truth is that there is not enough supported housing available for even the lowest possible estimate. We applaud the steps taken to reduce homelessness in Budget 2008. We recommend that this funding be continued and enhanced with an emphasis on community-based supported housing.

In terms of actual numbers and costs, the B.C. Ministry of Health commissioned SFU's Centre for Applied Research in Mental Health and Addictions to prepare a report on the scope of homelessness in B.C., with recommendations for action and associated costs.

The report concluded that focusing on the 11,750 absolutely homeless individuals, the average street adult with severe addictions and/or mental illness is estimated to cost the public system over $55,000 a year. "Provision of adequate housing and supports is estimated to reduce this cost to $37,000 per year. This results in an overall 'cost avoidance' of about $211 million a year." This cost represents both the provision of safe, affordable housing and support services.

The other issue with respect to housing is that it's expensive, and it's scarce. For individuals on income
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assistance, the shelter maximum for a single individual is $375 a month, and for a four-unit family, the maximum is $700 a month.

As you can see in the chart in the executive summary, these amounts do not match the real cost of housing in the province, even in smaller communities. In addition, the vacancy rates are generally so low provincewide that it is difficult to obtain any housing at all. We therefore recommend that the real market costs of housing be linked to income assistance rates.

Now, dealing with mental health and addiction services. Many individuals with mental illness in B.C. also have a concurrent drug addiction. We know from our own outreach services that approximately two-thirds of those individuals served through outreach need to access detox services. In British Columbia an individual with a drug addiction who wishes to be treated must wait two to ten days for a detox bed and four to 12 weeks for long-term beds. B.C. has a total of 502 detox and long-term beds. This is equivalent to only 12.11 beds per 100,000 people, the fourth-lowest in Canada.

We recommend more beds for individuals with concurrent mental health and addiction issues across the continuum of care — detox, long-term treatment, low-barrier supported housing and independent housing.

We also would like to recommend capacity-building in the social services sector for training of new staff and ongoing support of existing staff to enhance the services available to those afflicted with mental health and addiction issues.

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This is the last budget before the Olympics. The time to act is now. It will not take only one budget but a sustained effort over several years to provide a supportive system for individuals who really need it. The province has made several significant steps already, but much more is required. It will take all of us working together — municipal, provincial and federal governments, along with the partners in the community sector — to ensure that all British Columbians have the homes and supports that they require.

Thank you for your attention today. We'd be happy to answer any questions you may have.

R. Hawes (Chair): Thank you very much for your presentation.

J. Yap: Thank you, Bill — good to see you — and your delegation, for coming to present today.

On the third point, mental health and addiction services, I'm interested in your organization's position on the harm reduction strategy, specifically the Insite operation in Vancouver.

B. Gutray: That's a good question. We haven't dealt with it at a board level or with our branches, but generally speaking, the research is very clear that it works. If we're going to serve people who have a mental illness and a co-occurring addiction disorder, we have to address their needs and make that possible.

S. Gessner: I'd just like to add that the addition of the Onsite clinic above Insite is, I think, an important addition, because it's getting people who come into the Insite clinic into detox services if they want them immediately.

R. Hawes (Chair): Maybe I could just ask a quick question. Again, on your point 3, mental illness and addiction services, you say here that B.C. has a total of 502 detox and long-term beds. Yet I do know that there are literally hundreds of beds that are not funded through Health, so they're probably not…. I don't think anybody knows how many there are out there that are in neighbourhoods, that are in recovery homes. Mostly the clients in those homes are funded through income assistance rather than through Health.

I guess my question would be this. I know we have been following a policy that looks at harm reduction, particularly methadone usage, in order to get funding through the Health Ministry. Many of these other recovery homes that do not offer…. They're actually abstinence-based. They don't get funding through Health.

Do you think that there is a place for funding both through the Health Ministry and that the abstinence model, for some people, is as effective as the methadone and harm reduction type of model?

B. Gutray: I think that what we know for sure is that when somebody is in that stage of wanting to deal with their addiction, we have to provide it. I think there's everything very appropriate about a full range of housing. For some people who have concurrent disorders, in fact, abstinence is the way.

So yeah, absolutely. I do recognize what you're saying — that there are sort of community organizations who provide that kind of housing, which wouldn't be reflected in these numbers.

R. Lee: In terms of dealing with mental health, I understand that for different ethnic backgrounds or probably for the aboriginal community, there are special challenges. Does your organization have some programs to deal with that?

B. Gutray: As far as the specific aboriginal community or any…?

R. Lee: Or ethnic communities too.

B. Gutray: At a branch level, in the various communities that Bill had mentioned and through the 80 different communities that we work in, a number of
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our branches work in partnership with other organizations. So if there's a multicultural-serving organization or there's a band or a native friendship centre, often that happens at the local level.

Just to sort of highlight how important your point is, certainly through our homeless outreach program specifically, which we did across the province…. For example, in the aboriginal community over 22 percent of that population was aboriginal people, which is compared to the population of B.C. at about 4 percent. So there needs to be a lot more done in that area, and we've done a little.

Anyway, we've done a bit of that work through partnership, but that needs to be strengthened.

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B. Wright: I might just add that I'm also involved in the Richmond branch of CMHA, and we do focus on the ethnic communities there, in particular through partnerships as well as through clubhouse activities directly. So there is a focus, but it depends on at what level and in what cities.

B. Ralston (Deputy Chair): One of the issues that comes up in many communities is unregulated recovery houses. They're seen to be providing little in the way of services to recovery and more as simply a way of fleecing people of their welfare cheques and making some money out of it. What sort of advice do you provide, or are you asked to provide, to municipal governments about the regulation of recovery houses?

It is a jurisdictional football to a certain extent. The Ministry of Health doesn't necessarily, as the Chair of the committee has noted, fund those houses, and they're basically using the social services cheques as a way of financing themselves. I'm wondering: are you asked by cities to provide assistance in developing standards or bylaws or any form of regulation?

B. Gutray: We haven't been asked as a provincial organization to date, and I have no knowledge of our local branches being asked to participate in that. But I definitely think that the way into that issue is to provide funding, and through that funding, you set the standard. That's one way to deal with it. But certainly, we haven't been involved in any discussions.

R. Hawes (Chair): Can I just ask you, then…? Further to that question, I do know that the ministry right now is trying to work with municipalities, and I know that many municipalities are trying to figure out how to regulate these non-licensed homes. They are very important. The ones that are good are very good. I know, as the Deputy Chair has noted, there are a number that are just kind of ripoffs.

Any input that you could provide. I don't know. We have until the 24th to receive written submissions. It could be helpful if you have any thoughts on how these things could be regulated in a way that makes sense, that makes sure that the people who need access to those services are given real service and not just a ripoff. Any help you can give would be much appreciated.

B. Gutray: We'll definitely respond by the time frame and see what we can do. I just want to say in addition to that, that I think there's another part to the problem. The problem is really decent, safe, affordable housing for at least….

We're talking 11,000 British Columbians who are absolutely homeless. Of course, they're going to be vulnerable to all kinds of situations when you've got vacancy rates like we have right across B.C. Once you make a commitment to that population and you make a commitment to a social service system that supports them not only to get their housing but to keep that housing…. I mean, there are models that work. The evidence is strong.

I think that's the other way of addressing the problem that you raise: to make sure that you're providing the housing, the supports and the treatment. That's through that new mental health and addictions plan. That has to be an emphasis of it.

R. Hawes (Chair): Okay, thank you very much. We look forward to your further submission.

Next we have Jenny Francis.

Welcome, Jenny.

J. Francis: Hi. I think I'll just introduce myself as a concerned citizen of B.C. and Canada. Thank you for the opportunity to address you today.

I'm glad to follow those people. I'll use a slightly higher estimate from the SFU study than they did. Actually, there are a conservatively estimated 15,000 homeless across B.C., and there are 14,000 on B.C. Housing waiting lists. So I imagine, or at least I hope, that you've been hearing at lot about housing through this consultation process, and I'm also here to contribute to that.

I want to make sure that one particularly vulnerable group of people is included on the agenda, and those are refugees. There are basically two kinds of refugees that come to Canada. There are government-assisted refugees, which are known as GARs; and there are refugee claimants. Both are facing huge challenges in regards to housing in B.C. I'll explain the differences between them in a moment.

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First, I would like to clarify why refugees are in fact a provincial responsibility. First of all, refugees settle in a particular province, and that's where they work and where their children go to school. Housing is a provincial responsibility, and it's the province of B.C. and the citizens that pay the price for homelessness and the social issues that result, not the federal policy-makers in Ottawa.
[ Page 1906 ]

Also, the federal government transfers money to the province through the B.C. settlement assistance program to assist government-assisted refugees, so they are definitely a shared responsibility. On the other hand, the federal government rejects any responsibility whatsoever for refugee claimants, so they're wholly under provincial jurisdiction. Overall, I think we can agree that refugees are indeed a provincial responsibility.

To explain the difference between the two types of refugees, government-assisted refugees are selected by the Canadian government from UNHCR refugee camps overseas. Unlike immigrants who arrive with qualifications, money, professional contacts, education, urban experience and English and French, GARs have spent some or all of their life in a refugee camp. They tend to have lower educational attainments, they usually don't speak English or French — not that French is useful in B.C., anyway — and around half are under the age of 15.

Also, in refugee camps it's usually forbidden to work. There are usually no schools either. So the time spent there is really one of enforced dependency and extreme poverty. As a result, GARs are a really high-needs group that needs comprehensive orientation to life in a modern, western urban environment.

What's more, they've been through severe trauma. Many of them saw their families killed right next to them, and they only managed to escape with their lives. Not surprisingly, they've lost all of their documents and other possessions, and they arrive with only the clothes on their backs and a massive debt.

Most Canadians are under the false impression that the Canadian government pays for refugees' tickets. But the truth is that refugees pay for their own medical costs, and they buy their own tickets. The government only lends them the money to do so, and the cost per person is around $1,500 to $2,000.

In 2002, in an attempt to better meet its humanitarian obligation, the Canadian government changed its policy from accepting the best and the brightest from refugee camps, to the neediest. Clearly, a single mother of seven is more vulnerable than a single man, if only because it's much harder for her to run from her persecutors with her kids.

As a result, those who are selected…. And it's important to remember that they are selected. They don't apply to come to Canada; they are invited to come here. They don't request Canada. So as a result, a single mother of eight from Sudan — who doesn't speak English or French, who was tortured, who spent the last ten years in a refugee camp where several of her children were born and who has never been to school — arrives with a $16,000 debt.

She and her family arrive at Welcome House, which is operated by Immigrant Services Society — it's located in downtown Vancouver — after having travelled for several days, almost certainly without eating. The very next day she is given a map that she can't read and a newspaper that she also can't read — she may never have even read a newspaper before in her life — and she's told to go look for an apartment. Even the idea of a classified ad might be completely new for her. Like all refugees, she has to be out of Welcome House within 15 days to make room for new arrivals. And this happens every single day.

There is one person at Welcome House whose responsibility it is to find housing for every single government-assisted refugee that comes to B.C. That's just over 1,000 a year. Six people have held this position in the last three years since it was created. One of the reasons for that high turnover rate is because this position only pays $16 an hour, even though I would argue that finding housing for every refugee that comes to B.C. is one of the most important jobs in the province.

If any of you have searched for rental accommodation, you know how difficult and time-consuming it is, and you can imagine how much help this one person — who is also a newcomer — is able to give. And they have to stay at ISS in any case.

The next problem is that even if they do manage to find a place, GARs can't afford adequate or suitable housing because the rates of government assistance they receive, which are known as RAP, are so low. They're based on a welfare model. For example, for a family of three, their shelter allowance is $655 a month. For a family of five, shelter allowance is $725 and for a family of seven, $795. Even a family of 11 — and there are several of these in the GVRD — receives less than a $1,000 a month for their shelter allowance.

Out of that, they also have to pay back their transport loan to Citizenship and Immigration Canada that I mentioned, and they have to start paying that back within six months of arrival. They have to finish paying it off within three years, regardless of the amount or family composition or any other factor, or they're charged interest, month by month, at 3.8 percent.

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National occupancy standards, which are meant to protect people, are another barrier. GARs can't afford apartments with enough bedrooms, so they're forced to convince a landlord to allow them to have eight people, for example, sleeping in three bedrooms. When you throw in discrimination based on skin colour or other characteristics, then I'm sure you can imagine how many landlords want to rent their apartments to a large refugee family.

I have to say that B.C. likes to present itself as a family-friendly province, but I don't think that one- and two-bedroom apartments are family-friendly.

Amazingly, ISS is the only immigrant-serving agency to receive money for housing assistance. No other agency has any obligation whatsoever to assist refugees with housing, beyond the compassion of individual workers, who prac-
[ Page 1907 ]
tically have to operate in secret or risk losing their funding, because they're not funded to assist with housing.

The result is that refugees end up living in overcrowded, run-down, substandard housing complexes like Hillside Gardens in Burnaby or Gateway in Surrey, where there are effectively no standards. They get taken advantage of in a million different ways by unscrupulous landlords in the private rental market as well.

The other kind of refugee is refugee claimants. They're similar in that they've also been through a terrible traumatic experience. They're denied the protection of their home government, but they make their own way to the Canadian border to claim asylum here.

Thankfully, the provincial government has recently given refugee claimants access to social assistance, but it takes at least two months to get into the system. In that time virtually all of them are homeless. They might be sofa-surfing, so you might not see them on the street, but nevertheless, they are homeless.

Then it takes up to one year to get a work permit. During that time, refugee claimants basically have no other option but to accept welfare, even though they desperately want to work. Welfare rates are even lower than the refugee assistance program, so it's basically impossible to find a place.

For example, as those other people mentioned, the total welfare income for a single so-called employable is only $6,500 a year. And nobody is funded to help refugee claimants with housing — not ISS either.

So when you compare the average rent for a three-bedroom apartment in Vancouver of $1,500 with the total refugee assistance — not the shelter allowance but the total — of $1,447 for a family of five, then you can just see how impossible it is.

In case you think this is a small problem, I have to say that I don't think it's small. I would say rather that it's hidden in run-down housing complexes and apartments across the province. It's just waiting to explode, because it will only continue to grow if nothing is done to address it.

The people I've spoken to and the research I've done…. They predict increases in poverty, homelessness — B.C. is going to look great with thousands of refugees wandering the street — gangs, violence and also a backlash from nativist groups, who blame newcomers for our social problems, when they're actually the victims of those problems.

You might be wondering why refugees don't just move into subsidized housing, because surely if there is a group of people who need it and deserve it, it's got to be refugees. Unfortunately, there are very few co-ops, because none at all have been built in the last six years. Co-ops also don't accept large families. They don't want to allow a family of eight to live in three bedrooms.

Of course, it's impossible to fill in the application form if you don't speak English, if you don't know how to use a computer.

Refugees don't qualify for the rental assistance program or B.C. Housing because of various criteria that exclude them. There are residency requirements, which refugees can't meet. There's a requirement to have worked in the past year, and refugees…. Practically, it's impossible for them to work in their first year.

Debt is another exclusion criterion. As I have explained, GARs arrive with a huge debt. History of evictions is another exclusion criterion. Refugees are regularly evicted for reasons that are related to the lack of orientation and follow-up by immigrant-serving agencies and discrimination from private landlords, rather than through any fault of their own.

Furthermore, B.C. Housing is constrained by national occupancy standards, and there are almost no apartments with four or more bedrooms. What happens is that refugees actually end up living in even smaller apartments and paying more.

One couple that I know had a two-bedroom apartment. They have seven family members. They were told by B.C. Housing that they couldn't have a four-bedroom apartment, even though there was one available. They would have to wait for a five-bedroom apartment, which will obviously never materialize.

On the other hand, in B.C. Housing–owned market properties, like Hillside Gardens, national occupancy standards are completely ignored, so refugees pay full market value to live three or four or five people in a bedroom. There are hundreds, if not thousands, of refugee families living like this across B.C.

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My two recommendations. First one, either expand the mandate of and provide funding for existing organizations so that they can effectively assist newcomers, especially refugees, with housing, or a possibility is to create a centralized housing centre for newcomers that works closely with immigrant-serving agencies, landlords and other housing providers.

The second recommendation, which I think is a pretty obvious one, is to expand social housing and subsidy availability by building more affordable housing and more co-ops and by making the rental assistance program and B.C. Housing subsidies available to newly arrived refugee families so that they can go to apartments that are suitable, appropriate and affordable whatever their family size.

The government has recognized that a preventative approach to health care saves money in the long run, and the same is also true of housing. Basically, we can spend a little bit of money now, or we can spend a lot of money in the future to clean up the problem.

I would just like to conclude by reiterating that refugees have a lot to offer. They are people just like you and me who have been through a terrible experience. They have a lot to contribute, and they really do want to contribute to Canadian society and be accepted in their new
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home. But they need extra supports, and that starts with housing first.

R. Hawes (Chair): I think your two requests are pretty straightforward. I don't know if anybody has any questions. Thank you very much, Jenny.

Next we have the British Columbia Teachers Federation and Irene Lanzinger — no stranger to presenting here. Welcome.

I. Lanzinger: In your consultation paper you ask the question: what choices would you make? I am here on behalf of the 41,000 public school teachers in the province to urge you to make the choice of improving the lives and education of children. There are five particular points that we think would address the lives and education of children and improve those lives.

One is the elimination of child poverty. Second, a universal child care program. Third, restore the level of service to students with special needs. Fourth, reduce class sizes for all children to get adequate attention when they're in school. Finally, fully fund costs for services that provinces have downloaded onto school boards.

First, child poverty. B.C., one of the richest provinces in the country, has the highest level of child poverty. One out of every five of our students lives in poverty. There's a graph on page 2 that gives you a provincial comparison of the child poverty rate. Even among working families, poverty in British Columbia — the rate among children with families with full-time, full-year employment — is almost twice as high as the Canadian average. In B.C. it's 14.5 percent. The Canadian figure is 8.7 percent.

Child poverty is not inevitable. It can be eradicated, and other provinces are taking significant steps in that regard. We would urge you to look at those other provinces and to put in place a plan to eliminate child poverty. Quebec has adopted a strategy to combat poverty and social exclusion. Newfoundland and Labrador has legislated a poverty reduction strategy. These plans include employment-related programs, income assistance and affordable housing. We would urge you to adopt a similar plan.

With particular respect to schools, the charging of school fees has been found to be illegal. There are some exceptions to that, I understand, introduced by legislation. But many school boards continue to charge fees in spite of that. Those fees, of course, have a disproportionate impact on children who live in poverty. So we would urge the government to ensure that school boards are in compliance with the law now, in terms of the charging of fees.

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Child care. We urge the government to fund a universal, accessible child care program. Early learning is child care, and good, high-quality child care accessible to all families does provide early learning experiences for children. Children will be better prepared for school. Children who are well looked after from zero to five, who have their health care needs met and who have early diagnosis of any physical or mental illnesses will come to school ready. But for that to happen, we need a well-funded child care program in this province.

Students with special needs. On page 6 you will see a graph of reduction in specialist teacher services that has occurred from 2001 to 2007-08. We have 20 percent fewer teacher-librarians, almost 8 percent fewer counsellors, 15 percent fewer special ed teachers, 22 percent fewer ESL teachers and 7 percent fewer aboriginal teachers. All of those areas, particularly ESL and aboriginal, are areas where there is increasing enrolment, not decreasing enrolment.

If you look on the next page, page 7, there's a graph of increases in particular areas of students with special needs. We do not have declining enrolment in the area of students with special needs, but we have declining support from specialist teachers. We need that support.

What has happened in many schools is that a school will be funded 0.2 for an ESL teacher, 0.2 for a learning assistance teacher and 0.2 for a special ed teacher. What they're doing, understandably, is hiring one teacher to cover all of those roles. Because of reduction in teacher specialists, we've seen a blending of those roles. It really is not meeting the needs of anyone, because a learning assistance teacher is not necessarily qualified to handle ESL children. So we need our specialist teachers back.

We hear that support for students with special needs is the number one issue for teachers in this province, and it has been for a long, long time. I hear from teachers everywhere in the province that this is a critical issue that requires more funding and support from the province.

On page 8 you will see a graph of the number of classes with four or more students with special needs in the province. It was 10,900 in '05-06. In '06 the government introduced the class-size and composition legislation, and you can see that the number of students with four or more students with special needs has not declined at all significantly since then. So we continue to have some very, very difficult teaching situations.

At the round table in June the ministry provided us with a table that showed classes over about 26 with four, five, six, seven, eight, nine, ten students with special needs in them; many classes greater than 30 with large numbers of special needs students in them; and many classes between 25 and 30 with large numbers of special needs students in them. Those classes are, frankly, classes where students are not getting the attention they need and deserve to get a good education. The government needs to address that problem with more funding.

The situation of support to students with special needs is intricately interwoven with the issue of class size. How teachable a class is, is a combination of the size of the class and the number of students who need extra attention. So if you have a class of 29 with six students with
[ Page 1909 ]
special needs, that's very different from a class of 21 with six students with special needs.

One way the government could address this problem is to have some method of reducing class size when there are large numbers of students with special needs. We need to look at those two issues together. We had 3,000 classes of over 30 last year, and many of those, as I said, had large numbers of students with special needs.

On page 10 you will see a graph of the student-educator ratio. The trend in Canada has been downward, but not in British Columbia. British Columbia also has the worst student-educator ratio of any province in Canada. It has gone up and then gone back to where it was in '99-2000, whereas in all other provinces, the trend is downward in the student-educator ratio. Every other province provides a greater number of teachers and other professionals to address the needs of children.

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This doesn't tell the whole story, because the number of administrators in our school system is going up and the number of teachers is going down. So if you actually did a student-teacher ratio, you would have worse data.

On page 11 is a graph from the ministry's own figures of kindergarten enrolment. We have been saying that we shouldn't be closing schools because what we are experiencing is a temporary dip in enrolment. The graph on page 11 proves that. This is the ministry's own data about kindergarten students.

We see that we're actually at the bottom of the dip right now and heading back up again with kindergarten students. By 2017 we will have more children enrolled in kindergarten than we did when enrolment started to decline in 2002. We need to look to the future for those kindergarten children who will be entering our schools in greater numbers over the next few years.

On page 12 you see a graph of real education funding, which has increased again in other provinces in the country. Well, it's actually gone down and back to where it was again in '99-2000. This is from the Statistics Canada data available to '05-06. Again, where other provinces are increasing their education funding, that is not true of British Columbia. In fact, we've seen significant declines over the years from '99 to 2005-2006.

On page 13 is our public education spending as a percentage of GDP. That has gone down everywhere in Canada but has gone down dramatically in British Columbia. If we were to spend the same percentage of GDP now as we did in '99-2000, there would be another billion dollars spent in public education in this province.

Finally, we often hear from the government that this is the highest funding ever. But the piece of the story that isn't told is the costs that have been downloaded on school boards. There have been very significant costs downloaded on school boards. That has meant, really, that there hasn't been enough funding to take care of those costs, and there hasn't been enough funding to address increasing costs.

If you look at the cost of salary increases, of MSP premiums, of moving to the generally accepted accounting principles, of the carbon tax, none of those costs have been provided by the government for school boards. That has meant significant underfunding, the closure of 177 schools now, the loss of many, many specialist teachers and classroom teachers, and a worsening situation in our public schools.

So I would urge you in your budget to consider the needs of children, both their needs in their lives…. I would echo the previous submissions on homelessness, a serious problem in this province, and it does impact children dramatically as well. The lack of housing for children is very much a piece of that child poverty that I talked about at the beginning.

My final plea to you is to increase funding to reduce child poverty and to restore and improve public education. We would urge you to make this a children's budget.

J. Horgan: Thank you very much, Irene, for your presentation.

In my community, and I suspect in communities represented around this table, we hear from educators, we hear from trustees that the funding model — the per-pupil funding formula — doesn't meet the real needs of students, teachers and administrators in districts across the province.

I'm wondering if the Teachers Federation has any proposals to modify, amend, restructure the funding process so that we don't have this endless debate of groups deeply steeped in education policy and in practices saying that the money is not there and the government saying: "Well, gosh. It's a very large number, larger than last year." Just two ships passing in the night. Maybe you can help us out here.

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I. Lanzinger: Yeah. I think it's a good idea. We should consider doing that.

I just want to point out two pieces of the problems with the funding model that I think are very, very significant.

One is that we have two kinds of students with special needs, two broad categories: high incidence and low incidence. The low-incidence students are funded per student, with the particular amount depending on their disability or their issue — whatever category they fall into. The high-incidence students used to be funded on a per-pupil amount, but they are no longer. That went into the block.

That's a kind of crazy idea for me, because what it means is that if you as a district have a disproportionately high number of students with special needs, you have no additional funding for those students. I think that we need to have funding for students with special
[ Page 1910 ]
needs that's targeted and that is based on the number of students with special needs. It is now only based on the number of low-incidence students with special needs.

The second issue is funding for smaller and rural communities, because there are provinces — again, Ontario, Quebec and Newfoundland — that have particular funding to guard against the closure of schools. In other words, they have funding that allows schools to stay open through changes in enrolment. That formula, I understand — we're investigating that formula, actually — is based on the importance of the school to the community. So where we've seen hundreds of schools close in this province and we'll no longer have access to those schools, and they'll be very difficult to recover, other provinces have evened that out by providing additional funding to take care of what we claim — and argue strongly, according to ministry data — is a dip in enrolment and not an ongoing decline.

So the two things, I think, could be addressed in better funding formulas.

R. Lee: Thank you for your presentation. On page 2, where you have table 1 there, it says that it's a provincial comparison of the before-tax child poverty rate. Do you have the after-tax graph?

I. Lanzinger: This is from First Call — right? This is a particular table that is developed by First Call. That's where we got it from, so I don't have that, but we could…. I'm not sure what difference it would make.

R. Lee: It's because we have a lower tax rate than other provinces, so that could make a difference in terms of….

I. Lanzinger: Yeah. I don't think so. The StatsCan report also shows that we have the highest rate of child poverty — I have seen no one dispute those statistics — and we have had for a number of years in a row. Four years, I think, in a row we've had the highest child poverty rate, and I have seen no legitimate challenge of that statistic.

R. Hawes (Chair): Robin, very brief.

R. Austin: Yes. Thanks, Irene. I just have a quick question around the number of children with IEPs in the classroom. You mentioned here that in terms of the class size teachers have to consent, so that you don't have so many classes with over 30 kids. However, with children with IEPs, my understanding is that according to Bill 33, there shouldn't be more than three kids with an IEP. But for example, in my district I've got teachers with six, seven and eight.

How is it that, essentially, we're allowing that? We're breaking our own laws here.

I. Lanzinger: Yeah, the consent actually only applies up to grade 7. From grades 8 to 12 the board can override the number 30, even, after consultation with the teacher. We have a number of class-size grievances around that, so whether that stands the test of time, we'll see.

But you're right. You can exceed the number three after consultation with the teacher as well, as long as the superintendent and principal say that the class is educationally sound. I agree. I mean, the data that we got at the round table highlighted classes with more than six students with special needs, as though somehow the number had changed from three to six.

The legislation outlines three as the limit for students with special needs, and that used to generally be limits in collective agreements, two or three. After that there's a process where you reduce the class size and you provide additional support. I mean, it wouldn't be so bad if we exceeded three if the class size was reduced and additional support was provided, but none of that is happening.

It is happening in some cases, but in many cases, there just isn't the funding to provide the additional support. So I agree. The board should try and limit the number to three, and if in some very exceptional circumstances they can't, that should only be in cases where the class size is dramatically reduced and support is provided to the teacher.

R. Hawes (Chair): Thank you very much for your presentation, Irene. We'll certainly be taking all of your recommendations into consideration.

With that, committee, we're going to recess now for lunch, and we will be back at 1:05. So the committee is now recessed.

The committee recessed from 12:10 p.m. to 1:08 p.m.

[R. Hawes in the chair.]

R. Hawes (Chair): We'll call the committee back to order. Now that we're back on line and running, our first presenter this afternoon will be from the Capilano College Faculty Association, John Wilson.

You probably know that it's 15 minutes, and I'll give you the high sign at ten. If you want your presentation to go longer, that's fine. You can go to 15. But at ten minutes, if you allow some time for questions, that would be a good thing.

J. Wilson: Well, I've got very few slides.

Thank you for the opportunity to present to the committee. I appreciate this. I did present to you once two years ago in Victoria, and it's a pleasure.

What I wanted to do today is structure my speech around care. In this context here, for the post-secondary system, I think there are four things I want to touch on:
[ Page 1911 ]
capacity-building, a good parent, real funding and your ability to enable.

First, I'd like to look at capacity-building. Capacity, in the post-secondary system, is not just simply buildings and bandwidth and classrooms and equipment. It's also something that must be planned for. It must exist ahead of the demand. It has a quality aspect to it. It includes curriculum design and delivery systems ready for the oncoming increase in demand, and it depends on being able to attract qualified employees — especially after today's news.

As I was driving in, I see that Congress rejected Bush's $700 billion bail-out package, and they were talking about the impact on the B.C. economy.

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The province, in this analogy, is the parent of all the institutions that it creates and funds. I note, in my years of being a parent, that children learn really quickly from me and my actions. If I want a desired behaviour, I need to be consistent and reliable with my consequences and rewards around how they're treated.

So I pose a question to you, because I'm sure many of you are parents. That question is: would you teach your child the value of financial planning by promising a predictable allowance and then reducing it at the start of the school year, after they've already made their financial commitments? I think most of you would say no, and the feedback you'd get from your children would be swift and to the point.

In the post-secondary system, the 2.6 clawback meets that test, at least from our point of view. The province demonstrated that it was a bad parent. It's preventing students from enrolling in classes that they want and need and thus is causing unnecessary pain, and it undermines desired behaviour.

Real funding. First of all, this must be based in reality. I note that it's not real to fund operating costs through capacity FTE increases and pretend that you're actually improving the system and the opportunities of students to take courses.

It is not real to ignore the real cost increases of the non-salary-related costs. There have not been inflationary adjustments that equal the inflationary cost increase of the non-salary-related cost items.

It's not real to ignore the real cost increases of the carbon tax. In our institution that's $50,000. That would be up to 175 student seats that would not be offered because of that additional cost.

We deliver real education to real students in real buildings through real networks using real people, and real money is needed.

That brings me to the enabling part. This is your role. You can enable the post-secondary system to meet the educational challenges facing our society as we enter the next phase of the economic cycle — low or no growth. Maybe I should have revised that slide, but I didn't have time on my way in. Now it looks like a recession is entirely possible, even in Canada.

The education industry, or public sector, is at odds with the business cycle. The business cycle booms; everybody has got jobs. They don't think they need education. As soon as the business cycle slows down, everybody looks around and says, "Gee. How can I get a better leg up on somebody else?" and goes back and enrols in institutions.

That's why I mentioned capacity at the beginning. If you don't have the capacity ahead of that demand, then you're not going to be able to give those students what it is that they're going to require to be better positioned when the economy turns around or better positioned to make the best of where the economy is at, at that point in time.

You have the ability, through your recommendations, if adopted by the government. You can enable that future capacity. You can ensure that there's reliable real funding. In short, you can be a good parent.

Lastly, I'd like to thank you, at least as representatives of the Legislature that passed the legislation that created Capilano University. The faculty appreciates the new university status. Capilano University's special purpose teaching mandate is consistent with our history of teaching excellence and innovation. However, I note that there is no additional funding to support our new teaching mandate. And although our improved status will enhance our ability to attract international students, it is poor public policy, in our opinion, to rely on international students for adequate post-secondary funding.

That concludes my presentation, and I'm happy to field any questions the committee might ask.

R. Hawes (Chair): Thank you, John. You were quite brief. You took much less than ten minutes.

J. Wilson: Well, you never know quite how long it's going to take.

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J. Horgan: Thanks very much, John. It's your last point that I want to focus on. We've had a number of faculty associations. We've had administrators come. And of course the recent change from many of the colleges in B.C. to university colleges happened without a lot of consultation that I was aware of, outside of, perhaps, the university and college community.

Your comment right at the end — that in your view, Cap College, now Cap University, is now going to be focused on attracting offshore students to meet budgetary needs — seems to me to be shortsighted. Maybe you could expand on that. When the name change happened, what accompanying budget increases came with it, if any?

J. Wilson: Well, first of all, accompanying budget increases…. There would be some one-time costs in
[ Page 1912 ]
doing a switchover. Other than that, it's basically business as usual. But if it's business as usual, then you're not accomplishing the expanded mandate.

We've always had international students. We've always had a policy in the past that the dollars received from international students would be used to put on replacement sections so that there were no domestic students without seats as a result of international students coming. This particular year, because I was on the board until recently, is the first time that we've changed and abandoned that policy and dipped into the net contribution from international students — being $500,000 — to help balance the budget in the current year.

R. Hawes (Chair): Thank you for your presentation.

We are now going to move to the B.C. Trucking Association and Paul Landry.

P. Landry: First of all, good afternoon, Mr. Chairman and committee members. Thank you for the opportunity to address the committee today.

I will be talking about the carbon tax today and, very briefly, possibly about a permit fee that we think is a bit problematic.

In October 2007 we made a submission to this committee proposing, essentially, to accelerate the replacement of B.C.'s existing truck fleet with newer engine technologies. The recommendation was based on known smog-reduction benefits of the new engine standard. BCTA also recommended a program to support the purchase and use of fuel-efficient technologies to decrease greenhouse gas emissions from many heavy-duty diesel trucks in B.C.

The committee was supportive of BCTA's recommendations in its report to the Legislature. However, only one small aspect of BCTA's recommendations was incorporated into the 2008 budget, and that was a limited PST exemption for some aerodynamic devices. But of course it also included a 2.7-cent-per-litre carbon tax on diesel. This tax is scheduled to double every two years, to be over eight cents per litre by 2012.

Of course, what I want to do today is reiterate the importance of the government working with industry to introduce important and effective air quality and climate change initiatives.

The trucking industry has an important role to play in reducing greenhouse gases, but we are concerned about the disconnect between the objectives of the carbon tax and the ability of the trucking industry to exercise responsible choices and reduce fuel consumption. This tax will only be a policy success if it reduces energy consumption and greenhouse gases. Otherwise, it's just another tax adding to the cost of doing business in British Columbia and negatively impacting provincial, national and international competitiveness.

The trucking industry does not need a carbon tax to persuade it that fuel consumption should be reduced, since fuel comprises either the first- or second-largest operating cost component for most trucking companies, at as high as 50 percent. The skyrocketing cost of fuel associated with ever-escalating world oil prices, limited refining capacity and the competition for distillates is causing havoc in our industry and for our customers. The loss of energy associated with new smog-free engines and ultra-low-sulphur diesel fuel only compounds the problem by reducing our fuel efficiency.

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At this point the trucking industry is in the midst of a perfect storm — rising costs, declining freight volumes related to problems in the U.S., as well as U.S.- and Canadian-imposed border security measures and a forest industry that is in dire straits. And of course, in some markets there is extreme competition.

As a consequence, there are few companies in our industry that have the capital or cash flow to invest in new technologies and strategies to reduce fuel consumption. The carbon tax adds to the financial burden while reducing the capacity for change.

As a reflection of the B.C. industry circumstances, it's important to note a distressing trend involving trucking companies deferring the purchase of new vehicles. Now, this is the exact opposite of what we want.

This is based on ICBC data. Between 2000 and 2007 the average age of truck tractors increased by two years, from seven years to nine years. We believe this reflects tight margins in the industry as well as the fuel efficiency losses associated with the newer smog-free engines. This will not help improve air quality.

Our industry is made up of thousands of small companies with a handful or fewer trucks. Some 90 percent in our industry have five or fewer trucks. This presents immense communications challenges. Many of these companies lack credible and valid information on the value of investing in various proven technologies and strategies.

Longstanding misguided beliefs about the importance of idling to engine maintenance and a legacy of snake oil, anti–fuel consumption devices adds to the problem of misinformation. The small carrier segment of our industry cannot afford to be ignored if policy objectives are to be achieved.

In a nutshell, many in the trucking industry have neither the financial nor information resources to make informed choices that the policy-makers assume will be made due to the carbon tax. Simply taxing these companies compounds, rather than solves, the problem.

Many carriers will try to pass on some or all of this tax to their customers. Of course, that's the advice we give to our members. Their success in doing so will not contribute to climate change in any way. It will simply morph into a tax on food, clothing, construction supplies and all the other necessities of life in B.C. This will just be another tax on companies, communities, families
[ Page 1913 ]
and British Columbians who are already dealing with declining economic conditions.

Finally, given the trucking industry's role in trade, the carbon tax will contribute to diminishing global competitiveness of B.C. products.

BCTA is not opposed to mechanisms that put a price on greenhouse gas emissions, but the carbon tax is too blunt an instrument. Tax neutrality may apply provincewide, but no amount of personal, small business or corporate tax reductions will compensate for the negative impact the carbon tax will have on a carbon-intense industry like the trucking industry. Unless much of the tax collected from our industry is returned to us in the form of incentives to invest, we will achieve nothing more than cross-subsidization of other taxpayers.

Let me make it absolutely clear. You could abolish corporate taxes, small business taxes on trucking companies in British Columbia, and it would not come close to compensating for the loss in terms of carbon taxes. Similarly, if you were to eliminate personal income taxes for owner-operators, it would have no bearing whatsoever.

An average owner-operator in British Columbia operating on a long-haul basis next year will earn an income tax reduction of about $55. That owner-operator will pay another $3,000 in carbon taxes.

Similarly, a profitable trucking company earning something like a 5 percent return — and I'm talking about a $10 million company here that would normally have a $500,000 profit — would pay taxes in the order of about $50,000. Their income tax will be reduced by $5,000; their carbon tax will go up by $78,000. That's the difference we're talking about.

All in all, our industry will contribute $190 million in carbon taxes over the first three years of the tax and $460 million by 2012 cumulatively. No doubt some carriers and owner-operators will recover all of the tax in their freight rates or fuel surcharge. Some will recover some of this, and some will recover none. And those are the folks that I'm particularly concerned about.

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It all depends on their customers and the market power that the individual carriers have. However, it's safe to say that many of the smaller carriers, particularly those serving customers in rural B.C. in the resource sector, will suffer the most. The burden will be obviously lower for extraprovincial carriers who operate between here and the United States and the rest of Canada, and locally operated trucking companies as well as for operators of smaller commercial vehicles.

So how can we be part of the solution? Well, I'll tell you this. I think the province is really going to have a lot of difficulty achieving its greenhouse gas targets without a sea change in the trucking industry. We need dramatic change. Modest efforts will beget modest results. Older smog-emitting vehicles need to be replaced, and newer vehicles need to be equipped with cost-effective energy-saving technologies.

Rather than simply cross-subsidizing other taxpayers, the trucking industry needs to be provided with the tools and mechanisms to effect change. We need financial support and credible, verifiable information about possible technology and management solutions.

We envisage a full program to help the industry reduce fuel consumption and corresponding smog and greenhouse gas emissions. It should consist of some or all of the following components. First of all, we need consolidated and coordinated dissemination of credible and persuasive information, using a variety of media.

We need a demonstration centre in a high-volume truck corridor to provide for one-stop shopping in terms of information for, particularly, smaller carriers and owner-operators to go in and touch and feel and smell and have a look at what is available to them for their specific application, for their specific operation. They need to be provided with the business case for what it is that they would be investing in as well as information on financing and, of course, training materials.

We're recommending regional workshops and a mobile outreach centre to bring the message to trucking companies and owner-operators in B.C.'s heartland. We're recommending a one-year licence fee exemption as an incentive to purchase 2009 or newer smog-free trucks. You will recall what I said earlier about the fleet in B.C. getting older. It's not getting newer. We have to deal with that.

We're also recommending no-cost loans issued by partnering financial institutions and guaranteed by the provincial government.

In terms of the demonstration centre that I talked about previously, we are suggesting that demonstration centre staff would help companies and owner-operators to complete the paperwork. We also believe that provincial sales tax exemption that was provided in this year's budget be extended to a broad array of other environmentally friendly technologies.

Anyhow, all of the technologies that we're talking about — the products and the services — would be supported by information and advice received from the U.S. Environmental Protection Agency SmartWay transportation program, of which BCTA is a member.

Mr. Chairman and committee members, I've outlined what we feel is appropriate funding for a program like this. We think these sorts of financial incentives that are included in here are the kind that are necessary to bring about the sea change that we're referring to. Otherwise, I can pretty much assure you that not very much will change in the industry over the next five years, except to say that we'll be out about half a billion dollars in terms of taxes.

There is also, attached to my submission that you have in your hands, a small item which deals with a permit problem involving the Ministry of Transportation. It's a bit of a complex issue. I'm not going to try to go into
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that in any detail today, but I would be pleased to take any questions that you might have with respect to this presentation.

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

J. Horgan: Thank you very much, Paul. This, of course, is a huge challenge for your sector, and we as a committee need to be able to frame that in a way that the minister and staff can understand.

You're saying that we're looking at half a billion dollars in taxation. What will the positive impact be on greenhouse gas emissions over that same period of time? Do you have any data to demonstrate that there is any benefit whatsoever?

P. Landry: From the carbon tax?

J. Horgan: For your sector. Yeah.

P. Landry: There will be no benefits.

J. Horgan: Zero.

P. Landry: Zero.

J. Horgan: So I believe that it's 20 percent. In the transportation sector, non-single-occupancy vehicles are about 20 percent of the emissions.

P. Landry: I think it's in the order of 10 to 12 percent for heavy commercial vehicles.

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J. Horgan: Okay. So the cost to you is half a billion dollars — much of that passed on to retailers — and the impact on climate change is zero.

P. Landry: If it's passed on to retailers, the climate change impact will be zero. If our industry just simply absorbs it, the result will be zero.

J. Horgan: Or a 3½ percent increase in output of GHGs. You had a 3½ percent increase in consumption. I assume that that would….

P. Landry: On an annual basis, yes, consumption of diesel fuel will continue to increase.

J. Horgan: And greenhouse gas inputs will increase as well.

P. Landry: In tandem, yes.

R. Hawes (Chair): Thanks, Paul. Your presentation is pretty straightforward.

Next we have Brian Bonney, Canadian Federation of Independent Business.

B. Bonney: Mr. Chairman and committee members, thank you very much for allowing me to speak to the committee today and for having these hearings. In front of you is a presentation, a slide deck from a PowerPoint presentation, which I'll go through slide by slide. I have to say upfront that Paul spoke a lot of what was on the minds of some small businesses in our association as well — CFIB, Canadian Federation of Independent Business.

I'm first going to go through our latest data on our business barometer. It's an economic indicator that we've been running across Canada in excess of 30 years. These survey results were conducted between September 2 and September 12. I think it's important to note that it was 1,681 responses, and it's accurate within 2.4 percent, 19 times out of 20.

Again, our economic indicator is a little bit different than most economic indicators in Canada. With StatsCan or the Bank of Canada, they all look at historical data, what's happened in the past, where our barometer asks business owners to project into the future, to actually give us an idea of what their prospects are for business and the economy in the next 12 months and what their hiring plans are in the next 12 months, as well as looking at historical data.

When you combine the two of them, what you actually get when we release these — and we released these last Wednesday — is a really good picture of what's happening today in B.C., as opposed to other economic indicators that give you an indication of what has happened maybe a month or two ago in British Columbia.

We're ahead of the national index by just one point, as you can see on the first graph, the national index being 101.8; in B.C. we're at 102.9. We've dropped from the last quarter another 2.3 points, and that puts us at four quarters of consecutive drops in the index, in British Columbia. A year ago to this day, B.C. was one of the optimistic provinces in the country, at 114.9 on our index. That represents a 12-point drop in one year in British Columbia, and we're now ranked seventh out of Canadian provinces.

It's also interesting to note, when you look back to 2001 on the first graph, that CFIB was the first to show the turnaround after 9/11 and SARS and what was going on in the economy back then. Laura Jones, the director of provincial affairs at the time, saw these results, was a little bit surprised — certainly we were way ahead of any other economic indicator at the time — and was bold enough to take these to the public. Sure enough, what happened weeks afterwards was a dramatic turnaround in our fortunes in British Columbia. I think it shows that our index is accurately reflecting what is happening in B.C. today.
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The third graph, "External business influences, past three months." I'm going to point to a few things on this graph. It's interesting to note some of the significant changes in external influences, the first being climate for investment, the second item on the list. That's increased from 27 percent of small businesses in B.C. last quarter saying that their climate for investment has worsened to 40 percent this quarter.

On access to bank financing, 14 percent indicated the last quarter that it had worsened; this quarter it's up to 21 percent.

On borrowing costs, towards the bottom, 16 percent indicated that borrowing costs had worsened in the last quarter, and that has now increased to 28 percent this quarter.

Finally but most significantly, energy costs remained fairly constant over the last three quarters. Some 81 percent of businesses are indicating that that is the primary influence on their business today.

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The next slide, page 4, Business performance over a 12-month expectation. Forty percent of small businesses in British Columbia are indicating that they're expecting the economy to perform stronger over the next 12 months, and 21 percent are indicating that they expect it to be weaker. It's interesting to note again that last quarter 51 percent of small businesses were indicating that they expected a stronger economy over the next 12 months.

Slide 5, "Full-time employment plans over the next 12 months." This is the one that I find most revealing: 27 percent of small businesses in B.C. are indicating that they plan to hire, where 11 percent of small businesses in B.C. are planning to lay off.

Why I say this is the most telling is that three quarters ago 41 percent of small businesses were indicating that they were going to hire, so that's dropped down now to 27 percent. And three quarters ago only 4 percent of small businesses indicated that they were going to be laying people off, and that's now increased to 11 percent, so fairly significant numbers that we're seeing. Again, quarter after quarter we're looking at a continual slide.

Now I'm moving into our prebudget survey. This is a survey that we started last Friday. September 19 it hit the field, and the final results came in around the 23rd, so this is relatively fresh data. We sent it out to over 10,000 businesses in B.C., and this represents in excess of 500 respondents. Again, I'll go through these relatively quickly now.

Small business confidence in B.C. is waning. You can see that from our economic indicator, the business barometer. We said to small businesses: "Which approach should the B.C. government take in the upcoming budget to restore confidence in B.C.'s economy?" Clearly, 63 percent of small businesses are indicating that you should focus on the economy, on economic and tax competitiveness; 15 percent are saying focus on spending and program infrastructure spending; 12 percent, on debt repayment; and you can see the rest of the numbers there.

The next slide, page 7, "If the provincial government were to reduce taxes, what should be the priority?" We asked this question this year differently than we have in the past. Normally we've allowed businesses to choose as many as they want, and this year we asked them to only select three. We forced them to look at all of the potential responses and only pick three.

It's very telling that 59 percent of small business owners are saying that a personal income tax reduction is the priority they would see that you should have in the next provincial budget; 41 percent are saying fuel tax; 40 percent, small business threshold. Now, I'll also note that we had two responses on the cost of gas fuel tax and carbon tax. I think it's very significant that when you've only got three potential choices, a significant amount of our members chose fuel tax and carbon tax.

Page 8, "How should the government spend in the following areas?" This is asking what spending priorities should be if the government is going to increase spending. Clearly, the top three are health care, infrastructure spending and crime prevention. Health care is topping the list at 66 percent of our members indicating that you should increase spending. Government administration — I don't think it's any surprise to anybody here — is coming in at the bottom, with 77 percent of our members asking that you decrease spending on administration.

Slide 9, "Should the government introduce a carbon tax and lower other taxes to compensate for it?" This is the second time that we've asked our members this. Again, the results are very constant: 56 percent of our members continue to say no, that the government should not introduce a carbon tax and lower other taxes to compensate for that. The Canada-wide results on this question, because we asked right across the country, is that 49 percent said no.

Page 10, "Should the government abandon plans to increase the carbon tax in 2009 and in 2010?" It's important to note that when you look at the left side of this slide, the for-and-against arguments were given to our members, so they had the opportunity to read those first and then answer the question. Still, 63 percent of small business owners in British Columbia were indicating that the government should abandon plans to increase the carbon tax in 2009 and in 2010.

Again, I would note that on June 27 CFIB actually sent out a press release on behalf of our membership asking the government to do just that.

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Also in your package you'll find a list of our members' comments. It's long. There are a lot of comments there. I'm not going to go into any details. I've highlighted a few in this presentation, but I would strongly urge you
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to take a look at some of those comments. I think they're quite revealing.

Page 12, "How do you expect the carbon tax to impact your business in the next few years?" "I will be better off" — only 5 percent of members are indicating this. "I'll be worse off; the fuel tax increases will outweigh the tax cuts that I've been offered" — 61 percent are saying that. Some 83 percent of them said that they would be worse off or the same.

Page 13, in the words of our members — again, I'm not going to get into that, but I just highlight those comments for you.

"How much of the carbon tax — on page 14 — will you be able to pass on to your customers, clients or suppliers?" This is very revealing. Some 31 percent said they'll be able to pass on some of the cost. None of it — 46 percent. So 77 percent of the small businesses are indicating they'll be able to pass on some or none of the cost.

Why this is significant. It means that they're going to have to absorb it. When you're looking at small businesses in British Columbia, 86 percent of them have less than ten employees. The majority of small businesses in B.C. have five. Both the mother and the father in the family are usually running the business and operating in it.

These are small business owners that spend 60 hours a week doing the business and working in the business. They work on very small margins, yet they say they're going to have to absorb it and reduce their margins even further. This is not good for investment and expansion plans for small businesses in B.C.

Page 16, "Do you agree that the B.C. government has taken into consideration the realities of running a small business...?" Seventy percent said they "somewhat or strongly disagree" that the government took into consideration small business when bringing out the carbon tax.

Page 17, "Which of the following should be mandatory when developing new environmental policies?" I won't get into each of these, but you can see that small businesses wanted you to look at other regions, wanted you to look at the economic cost-benefit analysis and wanted you to be able to be flexible when the world price of oil is increasing so significantly, as we've seen in the past little while.

Page 18 is showing you more words from our members, so we've highlighted a few there. Again, I'm not going to get into those right now.

Page 19. This is the last question that we asked our members. "Were you consulted on the B.C. government's plan to reduce greenhouse gas emissions by 33 percent by 2020...?" Clearly, 97 percent of small businesses in B.C. are saying no, they were not consulted. They were asking to be consulted.

Page 20 is some more words from our members, and then our recommendations are on page 21. Quickly, B.C. government should send a strong signal to small businesses that it is concerned about the recent decline in small business confidence in the economy. CFIB and our small business members are asking that you consider a minibudget or a fall economic update to reinforce the government's commitment to tax cuts and regulation. They're asking us to pass on a message to you that it's time to get back to tax-cutting in B.C. rather than tax-shifting.

Clearly, small businesses see the last budget as one that didn't offer any net decrease in the income tax reductions to small businesses. They saw the decreases in the carbon tax plan as a wash, and they didn't actually see a net decrease. They see this as being the first budget since 2001, since you formed government, where you didn't offer a net decrease to small businesses. It's a concern to them. That was probably the strongest message we got back from small businesses.

No. 2. The tax cuts, including personal, small business and corporate taxes, should be a priority and not dependent on increases elsewhere. The real tax cuts should ensure our economic competitiveness, and not tax shifts. Hold the line on current carbon tax rate for 2009 and 2010, as we first asked in June.

Increase the small business threshold from $400,000 to $750,000. Cut the small business tax rate to 2.5 percent today and not wait until 2011. They're asking that a commitment be made to regulatory reform, and it should be enshrined in legislation.

B.C. is the leader, clearly, in Canada when it comes to regulatory reform. Your government has been, above and beyond any other government in Canada, the best when it comes to helping small businesses on this front. It wouldn't take a lot for you to actually legislate what you're doing in regulatory reform, and that's what businesses in B.C. would like to see happen.

Finally, debt reduction. Small businesses are looking to the government to go back to looking at debt reduction. I would like to read this one out. This is in the words of one of our members, and I don't think I could have said it better.

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"Things have been good in B.C. I'd like to see our debt eliminated so that when times get tough — and they will again someday — we're not paying our interest but rather putting the money towards health and education. I would also like to open up the coast to offshore oil exploration. Just think of the jobs and revenue that we would create. We must keep taxes down if we can, keep the good times rolling. I believe when taxes come down, we can fund our needed health care and education systems."

Again, that was in the words of one of our members.

I would ask you to take a look at some of the other comments, and I will be willing to take some questions.

R. Hawes (Chair): Well, Brian, you managed to take the full 15 minutes.

B. Bonney: Sorry.
[ Page 1917 ]

R. Hawes (Chair): It's all right. You had lots of information in there, but we do have other presenters. Certainly, I know people can ask you questions off line, and there is room for further submissions from you.

J. Horgan: Just one brief comment. I would advise the witness that this isn't an appendage of the government. It is a standing committee of the Legislature, so when you are referring to "you," I'm assuming that you are referring to the government and not the standing committee.

B. Bonney: Yeah, you're right. It's a message to government. Thank you.

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

Now we're going to move to Carol Simpson.

C. Simpson: Good afternoon. I want to thank the chairman and members of this committee for the opportunity to speak to you today. I am speaking on my own behalf, representing only myself.

I have five recommendations that I'm wanting to put forward for you to consider. I'm going to go through each one of them, one at a time. The first one has to do with health care. It is to allow extended care funding to travel with the patient.

My mother is 79 years old. She is suffering from myelofibrosis, a dreadful blood disorder. She does not have much longer to live. For 74 of her 79 years she lived in Vancouver. She was born in VGH, grew up, married and raised three daughters in Vancouver. I am the oldest.

When she could no longer live on her own due to her myelofibrosis, she sold her condo in Vancouver and moved to Courtyard Gardens in Richmond so she could be closer to me. At that point in time she was a patient of the cell separator unit at VGH under the care of Dr. Benny. While at Courtyard Gardens, she continued under Dr. Benny's care.

Late last winter my mother's health took a turn for the worse. She went through several months in and out of VGH and Richmond Hospital, always being admitted through emergency. In June it became apparent she needed to be admitted to an extended care facility.

Because of her Richmond address she was not entitled to carry her funding into Vancouver. The catch was that once she was in extended care in Richmond she could no longer have access to VGH. Instead, all cross matches and transfusions would have to be executed in the Richmond hospital. My family decided to opt for the Richmond option of Minoru Residence.

It turned out that the Richmond Hospital was not equipped to handle our mother's medical needs. First, there's only one hematologist in Richmond. His caseload was too heavy to add my mother to it, so 100 percent of my mother's care became the responsibility of her family doctor.

Second, the walk-in clinic at Richmond Hospital, where my mother received her transfusions, after three short weeks refused to provide services to her because their policy is that patients must be able to walk in and out of the clinic on their own and must be able to sit up during the transfusions. My mother requires a wheelchair and she needs to lie down during the transfusions.

We were presented with two alternatives: palliative care with no more transfusions, which would have meant her death, or weekly transfusions in emergency. We chose a third alternative. We crossed over the bridge. We moved her into an extended care facility in Vancouver. She now resides at Point Grey Private Hospital. She is back under the care of Dr. Benny at the cell separator unit in VGH.

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She is getting the appropriate level of medical care that we would expect for any B.C. resident. My sisters and I can breathe more easily these days, knowing she is getting the best possible medical care available. However, when we crossed over the bridge, we left her funding behind in Richmond. She is now on a wait-list in Vancouver. She may not live long enough to benefit from the funding when it does come through.

The priority in a health care system should be accessibility to appropriate health care services. Not all communities can service all conditions. Some patients need to access services not provided in their community. Denial of these services due to arbitrary geographical boundaries is unacceptable. Cutting off previously approved funding when a patient moves to a different geographic location where they can access needed health care services is also unacceptable.

My second point is to increase and target accountable funding in education for special needs students. I am a single mother of two boys on the autism spectrum. My older son is 21 and is in second-year university at UBC, majoring in biochemistry in the faculty of science. Ever since he was a little boy, he wanted to study biochemistry and enter the field of research. His dreams are coming true. He takes advanced courses when they are offered in his university subjects and receives marks in the 80s and 90s.

When he graduated from high school, he received several scholarships and bursaries. He is indeed a very bright young man. However, it was a struggle to get him through high school. After several failed attempts at public high schools in two different districts, out of desperation he enrolled at the Greater Vancouver Distance Education School. Using the extended autism funding for university students to tutor him through his various subjects, he excelled and graduated with his Dogwood. If he had stayed in the public high school setting, he would not have graduated with a Dogwood.

My younger son is 16 and in grade 11, attending a private school. For grades 8 and 9 he attended two public high schools, both with devastating and disastrous results. He started private school in grade 10. The
[ Page 1918 ]
transformation was astounding. This year he is taking English, math, science, social studies, art and PE. He is doing well, and I have hope for him.

The public school system in the traditional school setting failed both my boys. As a society we cannot afford to lose out on the potential of our special needs students. They want to contribute to society; they want to lead meaningful lives.

We have a responsibility to ensure that they get the best education possible. What we are currently providing our special needs students is inadequate. We are depriving them of their potential; we are depriving them of their future. We are condemning them to being more dependent upon social systems than need be.

We need to appropriately fund special needs education. Teachers need to be better trained and supported. Teacher aides need to be better qualified and better paid, and there needs to be more of them. Best practices need to be identified and implemented. Information-sharing among school districts needs to be facilitated. Curriculum materials need to be developed and distributed.

The special needs funding needs to be increased and transparently targeted and managed. School boards need to be accountable for how these funds are allocated and spent. The Ministry of Education needs to be accountable to the public to provide education that is relevant and meaningful to these students.

My third recommendation is to remove the IQ-over-70 constraint for access to services for persons with disabilities. First, I would like to say that I found the process by which this legislation was passed reprehensible. To pass it off as a temporary measure just adds insult to injury. The fact that we have unforgivably long waiting lists for services needed by persons with disabilities is no excuse to artificially shorten the waiting lists by imposing such poorly thought-out policy.

With this policy in force, my older son does not qualify for social services. My younger son will not qualify either. I am an older mother. I will not live forever. What will happen to my sons after I am gone? Imagine, if you can, the worry and the unspeakable nightmares that parents like me live with. From our perspective, the future is not friendly, and neither is the present.

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My fourth recommendation is to increase the monthly rent allowance for the persons with disabilities benefits. Right now the PWD rent allowance is set at $375 a month. Where are these people expected to live for that kind of money, especially in the Lower Mainland?

And if you can find a place at that price, ask yourself if you would want to live there. Or would you want your son, daughter, grandson or granddaughter to live in such a place? Or are persons with disabilities expected to live with their parents while they wait to get into affordable housing, which may not be available to them because they have IQs over 70?

My fifth recommendation. Do not fund the building of an autism resource centre. We do not need another building. We need more services. We already have access to swimming pools and sports fields in our own communities. We already have assessment facilities. We already have research facilities. What we don't have is enough funding to access much-needed services. Families are disintegrating while waiting for access to services.

Given this desperate need for services within our communities, I can't see how we can justify the expense of another building at a cost to taxpayers of $20 million. Furthermore, how many people are going to make the trek to SFU to access this facility? I know I certainly won't; neither will my boys. And we live in Richmond. What about families living in Squamish, Prince George, Victoria?

I predict the building will eventually house professionals, academics and administrators. It will become a cement-and-glass embarrassment of wasted money and poorly conceived ideas.

Those are my five recommendations. I've hit upon health care, I've hit upon education, and I've hit upon social services. I've exposed very private parts of my life to this committee, and I did so to make my point. I certainly hope that you have listened and understood.

R. Hawes (Chair): Thank you very much, Carol. I can assure you that I'm sure all of us do understand what you're saying. So I'll move to questions.

I think your presentation is very poignant, and we will be taking a look at your recommendations.

C. Simpson: Okay. Well, thank you very much for the time and the opportunity to speak to you.

R. Hawes (Chair): At this point the committee will take a break. We're going to have just a short recess while we wait for the next presenters.

The committee recessed from 1:58 p.m. to 2:02 p.m.

[R. Hawes in the chair.]

R. Hawes (Chair): Our next presenter is the B.C. Wildlife Federation, and it is Patti MacAhonic and Rod Wiebe. With that, I'll turn it over to you. You have 15 minutes. I'll let you know when you're ten minutes in. If you want to go beyond that, that's fine. We have a maximum of 15 minutes. If you want to leave time for questions and answers, that's probably a good thing too.

P. MacAhonic: Okay. Yeah, I don't know if we'll go the full ten or 15 minutes.

First of all, thank you for having us here today. My name is Patti MacAhonic. I'm executive director of the B.C. Wildlife Federation. This is my colleague Rodney Wiebe. He's the vice-president of the federation.
[ Page 1919 ]

We actually have 11 recommendations. We've done up a report. You should have it in front of you. Basically, the context is mostly around wildlife management and inventory.

R. Wiebe: If we're going to go through item by item…. A very top priority for our members and for myself especially is the matter of fish and wildlife inventorying. We feel there should be quite a bit more resources put into that because of its being so important to all British Columbians. It's not just the anglers and the hunters whom we represent that would benefit from this.

It's discussions surrounding agreements with first nations. So many times…. I wouldn't say we get hung up, necessarily, but in the wildlife chapter the issue of the actual numbers always comes up. There are issues with first nations actually being fully disclosing about their harvest.

Regardless, good conservation demands that you have a fundamental knowledge of the numbers. That's really, really important. Also, when it comes to addressing conflicts with anti-user groups…. The question of how many grizzly bears there actually are, how many of anything there actually are…. Industry — when they do their environmental assessments over development, it's really important to have good, solid data on fish and wildlife inventories. I just would like to stress how important that is.

P. MacAhonic: We also believe that the agricultural land reserves are a good thing, and we support that. We oppose the privatization of Crown lands and have some information in the report about that.

On the forest recreation sites. Our members are on the ground. They're connected to the land. They're out and about all over our province. We have 30,000-plus members.

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What's happening is that the forest recreation sites — a lot of them — are a real mess. There don't seem to be standards that are set in place or dollars available for maintaining them. What's happening is that when people from other parts of the country or visitors from other countries come, it's really a big mess.

It has a conservation concern, and the dollar value is that people won't be coming back to our province when they're dealing with those kinds of things. For a small amount of input, it would really make a difference if we could have some standards and some implementation on that — the conservation service enforcement.

R. Wiebe: CO service enforcement budgets have been cut significantly over the years. There have been some studies, particularly in freshwater fisheries, of the compliance rate on licensing. It has been noted that at some times in some areas the non-compliance rate is in the area of 40 percent because of a very poor CO presence in the field.

Their jobs are being made even more difficult by cuts in their staffing, so they have to spend more time doing reporting and office work as compared to actually being out in the field.

It doesn't take much of a financial rocket scientist to realize that capturing those freshwater fish licence fees, which people normally would pay, would more than pay for the small addition of CO enforcement that would be needed in that area. It's a complaint that we've heard from the chief CO officer ourselves, because we met with him recently.

That's one part of the difficulty with the CO service. The other one is that they're constantly in a mode of retraining because other jurisdictions in the ministry that need enforcement pillage the COs for enforcement in their ministry, which pays a lot better and is a little bit easier than trying to wrestle some fisherman to the ground and make him pay his licence fee or something. It becomes a constant concern and cost for the CO service, to be retraining.

P. MacAhonic: An example that they used was Salmon Arm. The CO office shut down there last year or maybe two years ago. There's no enforcement on the ground there. What happened is that they took a contingent — I think there were four COs — went to the Shuswap and actually did some checking. That's where they were able to identify 40 percent.

If people think that there is no enforcement, it tends to make a difference where people — not all of us — aren't in compliance. We're losing dollars that would very well be able to pay for that service, so it doesn't really make sense.

The next one is invasive species. This is a real high priority on our list.

R. Wiebe: Programs to deal with eradicating invasive species in some of our Interior lakes has become a really critical issue, because these yellow perch — and there are a couple of other guys — are seriously invading salmon waters. They displace the indigenous freshwater fishery stocks.

These creatures are being moved around on purpose by people who are really, really quite shortsighted in what they're doing. It's becoming really, really critical in terms of preserving our salmon stocks.

Once these fish get into the Fraser River system, our salmon resource, on which first nations, the public, recreational and commercial sectors really rely, is seriously at risk — another very significant impact on these stocks other than the usual kinds of impacts that we're used to thinking of, like habitat degradation, overfishing, sea conditions and that.

[1410]

It's the kind of item — addressing these invasive species — that's actually not a really big bill. It's a place where the clubs of the Wildlife Federation can be a real
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resource with on-the-ground work, data, observation and reporting, because they know where all the problems are. If there could be some attention and funding directed towards that, it could a really significant payoff in the future, we believe.

P. MacAhonic: There's an example that was done this year of a lake up in the Shuswap region where government came in, and they treated the lake. Very limited funding. Members of the local Shuswap Fish and Game Club actually volunteered and took the course. The substance that they use needs special handling. They took the course on their own volunteer time and parked their trailer out there. It takes a week. There's another one going on right now.

When it's that limited funding, where they can actually treat the lake…. They don't have anybody to man the lake, but they have to have someone there. So we think that it's really important. Huge, huge loss of recreation dollars. And once these fish are gone, a lot of times they can't come back.

The one right now that we're talking about as well is the invasive spiny-ray fish. These fish produce really, really fast. They just overtake the lakes when they're in. So we think it's really, really important. A small amount of funding — big returns. We think that that's really important. We are willing to work with government across the province on that in the best way that we can.

Wildlife conflicts. We have a wildlife conflicts committee, and we've been doing this for many years. The federation has over 50 years' history, and throughout that time, human-wildlife conflicts have grown exponentially. When we're talking human-wildlife conflicts, it can be agricultural. It can be vehicle-wildlife conflicts.

Also, what we have right now is railway-wildlife conflicts. Last year up in the Prince George–McBride corridor, the amount of wildlife kill was huge. There's also the problem of grain cars attracting more wildlife. You get the ungulates — the moose and different populations — going in and eating that, and then they're killed. Then we have carnivores coming in and eating that too. There's a huge, huge amount of wildlife kill.

So we'd like to encourage the ministry to put some funding towards that. In 2003-2004 we worked with ICBC, B.C. Conservation Foundation to develop a wildlife collision reduction strategy. This is being used around the province.

There's also a conservation plan produced by the Ministry of Transportation, and they did step back from that. So the strategy has never actually been approved by the government. A lot of this work is done and can be pulled up and updated. A lot of money and a lot of time has gone into this already.

The ministry has developed a provincial agricultural zone wildlife program, and then we have a wildlife damage compensation program. There's also the Bear Aware program. I think this year it's been in the news quite a bit. Actually, I live out in the Chilliwack River valley. We've got a couple of bears wandering around right now.

We believe that a modest budget increase of about $3 million to the Ministry of Environment, with similar increases to the Ministries of Agriculture and Lands and Forests and Range, would go a long way to have these specific recommendations and key action items implemented. If this budget increase was continued for two to three years, the full strategy could be put into practice in B.C. We think this is a pretty important piece as well. We hear a lot of media around wildlife conflicts. I think this would really help a lot with that.

R. Wiebe: I was wondering if I should mention our outdoor passport, or is that…?

P. MacAhonic: Yeah, you could mention that. I think that's a good thing to add to that.

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R. Wiebe: Further to the matter of wildlife conflict in the agricultural sector, we've developed a program. We call it the BCWF outdoor passport program. The idea is that it identifies one of our members as a hunter who subscribes to a code of ethics, a code of conduct, has liability coverage and is wanting to connect with ranchers, farmers, whatever, for access to their lands. There would be certain conditions that would be connected to that access and obligations on the part of the hunter.

At this point it's being well received by associations, but we've got a request for some funding sitting on Stan Hagen's desk that he hasn't moved on. I don't know if any of you know Stan Hagen, but tell him that we'd like to hear back from him on this.

P. MacAhonic: I'm just going to touch on one more thing. This is the e-licensing for hunting. I don't know who here is a fisher, fish-angler. Anyway, we have angling licences available electronically, and it's worked very, very well in increasing recruitment for angling.

We were promised last year that there would be e-licensing available for hunting licences. We've kind of heard through the grapevine that this is being pulled back. This is very important for us to have, and it goes along with supporting the recruitment and retention that the province has identified that they are behind. We just want to give that a little mention as well.

Outdoor education for children and youth. This kind of falls not just under environment, but it falls under health as well. I think research is supporting more and more the fact that if kids aren't connected to nature — they're calling it nature deficit disorder…. There are a lot of things happening.

Some of our member clubs have been around for 100 years. We are very connected to the land. Our families
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are. We really believe that it's a healthy lifestyle, and as such we run different kinds of programs. We're hoping to run a…. We call it the wild kids program that connects kids with nature, wetlands, taking them out. We're hoping to do some inner-city programs this year.

We think that we're a leader and have the background and the values, and we are looking at expanding our programs to really connect with young people and families as well, so looking at some programming for that.

R. Hawes (Chair): Well, I want to thank you on behalf of the committee — both Rod and Patti. You are obviously very dedicated to your cause. The B.C. Wildlife Federation is well known, especially in rural B.C., for all the great work that you do in promoting general life in the outdoors, so thank you for that. We've got all of your recommendations. They will be considered.

P. MacAhonic: Thank you. Do you have any questions?

R. Hawes (Chair): Well, we've kind of run out of time.

P. MacAhonic: Okay.

R. Hawes (Chair): Our next presenter is Dr. Jonathan Kesselman. Good afternoon, Dr. Kesselman.

J. Kesselman: Okay. Shall I proceed?

R. Hawes (Chair): Sure. You have 15 minutes. If you have time in the 15 minutes, if you leave time for questions….

J. Kesselman: I will leave time, for sure.

Thank you for the opportunity to offer recommendations for the next provincial budget and for longer-term fiscal policies. My focus here on taxation policies should not be taken to mean that the province has no pressing needs for additional spending in diverse areas, including mental health, drug rehabilitation, foster care and homelessness.

I shall present two principal recommendations for B.C. tax policies, one that could be addressed in the next provincial budget and the other a high-priority item that will take longer for the province to implement. Substantive economic analysis underlies each of my recommendations, but for brevity I shall simply cite the basic intuition. I shall also note several more tax changes that warrant this committee's consideration.

My first major recommendation is one that might initially appear as regressive or even retrograde. The provincial personal income tax should have its upper bracket rates cut and the income levels at which they apply raised.

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Currently, B.C.'s marginal tax rates range from just over 5 percent to 14.7 percent. In fact, the rates ramp up quickly from 8 percent at $70,000 to 14.7 percent above $97,600. The ratio of the top to bottom rate for the provincial tax, at 2.8 times, is higher than even federal rates, which run from 15 to 29 percent for a ratio of less than two times.

Given the great interprovincial mobility of highly skilled workers, professionals and managers, provincial tax rates should be less progressive than federal tax rates, not more progressive. An illustrative proposal would cap the top provincial rate at 12 percent rather than the current 14.7 percent and apply it at incomes above $150,000 rather than the current $97,600, which itself is well below the $123,000 threshold for the top federal tax bracket.

Then B.C.'s income tax rates would range from just over 5 percent to 12 percent. This tax change would make B.C. a more competitive destination for firms and industries that intensively employ higher-paid types of labour, albeit still above Alberta's flat rate of 10 percent. Moreover, no U.S. state applies a top marginal income tax rate of more than 9.5 percent, and nine states have no such tax apart from the federal tax.

The great mobility of highly skilled workers and the types of firms and industries that employ them — such as the knowledge-based sector, high-tech firms and corporate headquarters — means that this tax cut would not ultimately go into the pockets of the top-paid workers. Rather, it would result in reduced competitive salaries for such workers in B.C., thus attracting new firms and expanding existing firms that employ lots of highly paid workers.

Over a period of several years this will expand the provincial revenue base, particularly for workers who pay far more in taxes than they draw in public benefits from the province. Thus, capping the upper end of income tax rates can benefit residents of B.C. at large and not undermine effective progressivity. Policies for greater tax progressivity should be pursued at the federal level.

My second major recommendation is one that has unanimous support from tax experts across the country. The provincial sales tax should be harmonized with the federal GST, or alternatively, the PST should be reformed to remove its burden on business.

The current PST is an inefficient form of consumption taxation that poses heavy burdens on business and investment. Estimates find that harmonizing B.C.'s PST would do as much to encourage productive investment as would result from abolition of the provincial corporate income tax. PST reform is the top-priority item for making the B.C. economy more productive and growth-oriented. It will yield much greater returns than simply lopping a couple more percentage points off B.C.'s corporate income tax.

To remove the roughly $1.5 billion of B.C. sales tax burden on businesses will require both policy innovation at the provincial level and policy flexibility at the federal level. Making the shift without any other adjust-
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ments would constitute too large and too visible a shift of tax burdens from businesses to households for any legislators to contemplate.

In an attachment to my written submission, I offer several suggestions for how this critical transition could be managed. For example, new home purchases might be subject to a harmonized tax on only the construction costs and not the land value. And tax credits for business purchases of some inputs might be phased in over several years.

Finally, I'll list four additional tax policy changes that I believe warrant careful consideration for possible action in the next or subsequent provincial budgets.

First, property tax rates on businesses, and particularly industrial properties, are very high relative to rates on residential properties in B.C. and relative to their counterparts in other provinces. The effect is to discourage business investment and expansion in the province, with resultant adverse effects on productivity, employment and wages. The provincial government should constrain the tax rates that municipalities can impose on business and industrial properties relative to rates on residential properties. This may require some fiscal compensation to the municipalities to ease the transition.

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Next, the provincial retail sales tax should no longer be applied to resale of used vehicles that have already borne sales tax when they were originally purchased new. The federal GST exempts these sales other than the markup portion arising on dealer sales of used vehicles, which is appropriate given that the tax has previously been paid on the full vehicle value. This change would create more efficient vehicle markets and would, overall, be most favourable to low- and moderate-income purchasers of used vehicles.

Next, homeowner grants should be phased out and replaced with a general refundable tax credit equally available to homeowners and renters and targeted to low to moderate incomes.

The current homeowners' grants discriminate against renters who now bear property tax burdens via their rents and are on average more in need of relief than homeowners. Moreover, the current grants are paid to almost all homeowners except those with the 5 percent of highest-valued properties and irrespective of their income or financial need.

Last, the property purchase tax paid by an individual should be credited against property purchase tax levied on any subsequent property purchases. The current system penalizes people for moving; retards the mobility of workers and, thereby, rigidifies the economy; prevents the efficient reallocation of the housing stock — such as families wishing to downsize; and constitutes an unfair form of multiple taxation.

Clearly, most of the tax policy changes that I recommend here would require educating the public about their long-run benefits. My challenge as an economist specializing in tax policy is to formulate proposals that would best serve the economy and the public at large.

Your challenge as elected representatives of the public is to translate economically sound proposals into saleable and effective policies. I thank you for your time and attention, and I'll be glad to respond to your questions.

R. Hawes (Chair): Thank you, Dr. Kesselman. I don't mind starting with a question — if I don't see any other hands up — that's with respect to the homeowner grant recommendation you have.

I'm assuming, then, that if this were replaced by a general refundable tax credit, landlords would get that tax credit. Today they don't get a homeowner grant on rental properties, as far as I know. Also, the tenant would get it. Would that be correct?

J. Kesselman: No, that's not the way I would envision it or the way that comparable kinds of credits work. I can't name the province, but I believe there are one or two. The credit would be simply like the GST credit, the federal one. I believe there is a provincial credit in B.C. as well. It would go to the individual tax filer. So it would go to individuals, whether they were homeowners or renters. It would not go to the landlords. It would be meant as relief against part of their property tax burden.

The landlord nominally, at least in residential properties, pays the property tax. But it is shifted forward as part of the cost embedded in the rental payment by the renter.

R. Hawes (Chair): Just so I understand that, what you're proposing here is that the general refundable tax credit would be…. You would benefit from that when you file your income tax. Is that…?

J. Kesselman: That's right. Yes. And it would not be based on actual rent paid or property tax.

R. Hawes (Chair): Or even ownership.

J. Kesselman: It would be based simply upon low and moderate incomes, as a number of refundable credits are done provincially and federally.

R. Hawes (Chair): Okay. Thank you. I understand what you're proposing.

Thank you, Dr. Kesselman. I know many of us do subscribe to the notion of reducing our taxes as much as possible to be competitive. We will certainly be reading and going further into your proposal with interest.

Now we have the B.C. FamilyNet Society — Anita Dadson, Judy Carter-Smith and Cathy Grant.

[1430]

Welcome. As you know, the presentation time is 15 minutes. You can take all of the 15 minutes. If you take
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part of it, that will allow time for questions. I'll let you know when you get to ten minutes.

A. Dadson: We really appreciate the opportunity to come again. This, I believe, is our fourth presentation to your Finance Committee.

I'll just quickly introduce Judy Carter-Smith, who has a sibling with a disability, and Cathy Grant, of course, has lived with the reality of a disability all her life. I'm a parent with a daughter who….

The B.C. FamilyNet Society actually was organized about 12 years ago, so we've been operating. The main focus was to be a voice for families and to try to work with government, which we have over the years, and of course with Community Living B.C. when it was set up some five years ago.

I guess the story and the appeal each time we come is the same — that many, many families are not in receipt of the services that they desperately need to meet the challenges of having a son or daughter with a disability. Of course, even the self-advocates themselves are in that challenge constantly.

There was a massive cutback when the Liberals took power. There was a hope that through developing an authority, this would save money, with a whole new different approach to delivery of service for community living. Sadly, this has not been the case.

I guess when we were coming together with our presentation and submission, we were almost feeling that we might as well just copy last year's brief. The concerns are still the same, although I believe there is an additional concern that has come on the table because of the decision by government not too long ago to set 70 IQ in legislation.

As I am sure you are well aware, there is an outpouring of concern over the no planning for people with IQs over 70 who have incredible needs. They may be brilliant in one aspect of life, but they may have trouble getting on a bus, dressing themselves, tying their shoes or whatever. That obviously is one area that the government…. We plead for them to come up with a proposal on how families suffering and coping with a loved one with an IQ over 70…. That has to be addressed. We're aware of many families who are just devastated by this.

I guess the point we just keep making is that…. I was very active some years ago with B.C. Association for Community Living. I happened to be their president during the mid-'90s. We submitted a brief to government at that time called Hitting the Wall. It was related to the wait-lists. They are now called "the black hole," I believe. Families who have had fairly good service, as they are into the school system and when the children are younger, suddenly hit a black hole, as we say, or hit a wall.

There has not been adequate funding and, therefore, adequate planning for these people who are leaving school. Suddenly, the services that had really helped them and given them hope for the future often aren't there. This is a very serious problem still that Community Living B.C. and the families are facing.

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Funding. There was always the question of how much this meant. What was the wait-list? I think Community Living B.C. came up with a very comprehensive list, and Treasury Board somehow felt perhaps that they'd better go back to the drawing board. They weren't quite convinced this was it. That was rather disappointing because I think they really did a good job.

This has been a serious problem, especially in terms of people as they reach adulthood. We really feel that budgeting and financing have to be increased to address at least that one and, of course, the new one to do with the old 70 IQ, which is pretty scary.

We recognize that there have been budget increases since the major cutback when you first came into government. But it has not made up the difference, because there is a growing need. More and more people are being born with disabilities. They're not dying at birth like they used to in my day. When our daughter was born, she was a miracle 40-some years ago. But now they're really bringing kids into the world with much higher care needs and so on, and that is reflected, obviously, in the need for more funding.

I guess the plea that we are making from the families' perspective is that they really need to take a hard look at the funding base, because many, many people are suffering — especially older parents. A lot of parents are, as you know, living longer, and many have their sons and daughters at home with them still. They're worrying about what's going to happen to them when they are not going to be here any longer.

So there are a lot of issues that have to be dealt with. Community Living certainly is getting a handle on a lot of them, but the funding is a crucial part.

I'll stop now. Perhaps, Judy, you would like to speak.

J. Carter-Smith: I always like to speak, Anita.

I have a sister Barbara with a developmental disability. She lives in a L'Arche home in Burnaby. Some of you may be familiar with L'Arche. I hope they're presenting. I think they are.

I was the provincial executive director of the B.C. Association for Community Living. Anita was one of my presidents. Subsequent to that I was a special adviser to the Ministry of Children and Family Development on community living issues. I'm just saying that because I've had some experience in government and outside of government as an advocate.

I guess, yes, everybody is going to ask you for money. One of the things I'd like to just talk a bit about — you can read what our recommendations are — is the point around fading vision, today's reality.
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In 1996 B.C. was very proud because we were the first province — in fact, the first country — to close institutions for people with developmental disabilities. We closed Woodlands. I was there the day the last person left. It was incredible for me because my sister was in Woodlands when there were no services in community.

I guess the resources come if there is a vision and a commitment. I think what's been lost over the last eight or nine years or so is that vision — the vision for community living, the commitment of government to community living and to supporting people in community. That was the vision when we brought people out of community, and unlike some of the people with mental health challenges, this was a planning approach. It took us nine years to take people out.

So there were group homes built. There were all kinds of other resources and supports that were put into place. Now they have been consistently eroded. The formation of Community Living B.C. was supposed to inject more of an individual approach to delivery of services. But unfortunately, what seems to have happened is that CLBC has become a vehicle for cutting costs and cutting services.

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It's easier to do it when it's a Crown corporation than it was when government had the full responsibility for it. That's my opinion and having been in the movement for years, that certainly is what I see happening.

I guess the other plea we would make is for some revitalization of the vision and commitment to vulnerable people — in this case, people with developmental disabilities. Community living has now been shifted around so many times. Adults for community living have recently been moved over to Rich Coleman's ministry, the Ministry of Housing and Social Development.

The responsibility for children with special needs remains with the Ministry of Children and Family Development. How that linkage is going to be made in terms of addressing the transition when children become adults at age 19 — and we've spoken to that — remains to be seen.

When the community — and I talk about the community living community; there still is one, although it's in tatters — questioned this move, which was made without any consultation whatsoever, we were told that, well, it was a process and that there would be consultations.

I guess the other thing would be: what kind of vehicle is going to be established for discussion around how adults for community living are going to be positioned within this new ministry and how the connection is going to be made with the Ministry of Children and Family Development? Not only that, but how is the connection going to be made with the Ministry of Health and all the other ministries that need to be concerned with people with disabilities and developmental disabilities?

We have made recommendations. Anita has spoken to these challenges. This report…. If you look at last year's, not much has changed. That is really a shame.

When I was rushing to get here to be part of this presentation — and yes, we appreciate the opportunity — I thought: hmm, I wonder what's going to happen. Four years of presentations, four years of lobbying, ten years, 15 years for families…. When will the government pay attention? So I'll be quiet. It's hard.

Cathy, maybe you could speak to how services have gone down the tubes, so to speak.

C. Grant: Well, you guys keep changing things, and I keep dodging things. What used to take one phone call takes…. I'll give you a good example. My door opener for my front door was broken, and it took three months to get it fixed. It is now fixed, but why did I have to go through that struggle? That's just one out of many in the last four years.

And we need more money. Sorry, but it is the truth.

J. Carter-Smith: And we need a delivery system that works. I mean, more money is one thing. Vision and spirit and commitment should go hand in hand with resources, but the way in which services are delivered is something, I think, we really need to look at.

As Cathy talks about, one phone call used to do it — right? You'd phone your case manager or your primary person, and they would stickhandle things for you. They'd go after things for you. Now we have a separation — I can never remember the names — of a planner and a financial person.

A planner is to come and talk to you about what you need in your life, and then it goes to the financial person who says: "No money." It's such a lack of caring about this, and it's such a loss in terms of the prestige, if you will, or the power that the people had, but also the good that the province of B.C. did.

A. Dadson: Is there still time to talk, or do you want questions?

R. Hawes (Chair): We're down to two minutes.

A. Dadson: Well, if there are any questions, please. I think you've heard us, and you can read it.

B. Ralston (Deputy Chair): Well, I want to thank you, Judy, Anita and Cathy, for what you've said. These are sometimes the most profound issues that we face, presentations that we hear in the committee.

I did want to ask you, Judy. Given your experience, what's your assessment of the government's stated reason for overturning the Fahlman decision — the 70 IQ requirement? What's your assessment of that?

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[ Page 1925 ]

J. Carter-Smith: Well, two things. One is that it was what's becoming usual. It was very arbitrary. You know, we read about it one…. It was an instant decision; it was an arbitrary decision.

I don't want to say the old days, but in the days when there was mutual respect and when we had dialogue, that particular decision would have been talked about with BCACL, with the families, with individuals. Not a whole big, long consultation, but it would've been a point of discussion, and maybe we would've decided to part ways on it.

That is a huge element in terms of the way that government is currently operating. My reading of it is that it was a way to close the gate, to not allow…. It was a way to have people not have services who had IQs of 70.2, because, I think, the government didn't want to keep that open. So it was a gate-closer, essentially, in my opinion.

I think there could have been lots of other ways to deal with it, having been part of discussions about how we deal with this when I was working with government. I hope that the promise — not a promise; no one makes promises anymore — but the comment that was made around having some real forum for discussion happens in this case, because I think there are ways that we can deal with it.

R. Hawes (Chair): Before we go to the next questioner, I want to tell you that I have asked the minister about that, about the 70, and what he tells me is that he is engaging in dialogue with Community Living to come up with an individual needs assessment formula that would work.

J. Carter-Smith: But all of us have been involved, and we're in touch with people throughout the community living community, and to my knowledge, there have been no overtures at all — none.

J. Horgan: Thank you very, very much for coming. As government and opposition members, we hear the ministries and the staff say: "Funding is increasing; life is good." Then we go back to our constituency offices or we go as a committee and travel around and hear witnesses and testimony like you've just given us, and we can't reconcile that without you.

My question, then. It's the one that really troubles me. It's a result of the number of people that come into my constituency concerned about aging parents and what happens when we're gone.

What recommendations could you give to us that we could take to the ministry to solve that fundamental issue so that you can have some peace or parents can have some peace in their golden years, not concerned that their children are going to be abandoned when they disappear? Is there anything that you could throw out to us that we could take and run with as a committee so that we can have some tangible demonstration that there's been change?

J. Carter-Smith: Well, first of all, you have to identify them. There needs to be a way, regionally or however, on a community basis, which can be done. I think social workers — in the old days, social workers, or whatever they're called now, facilitators — would have some idea. So I would do an inventory. Start with an inventory of those family members, and then the issue becomes: what kind of resources? It's an individualized planning process, essentially.

It's probably a bit of an educational process for the families as well. It's going to be difficult for them, unless they're totally desperate, when they've had their relative at home for 30 or 40 years, their whole life. It's the same issue we had in bringing people out of institutions. Some families were scared because they were safe in the institutions, they thought, so we had a whole process to bring them along.

That's where I would start, and then I would look at what resources are needed and put some extra dollars into that, but it would have to be ongoing. It can't just be a one-shot deal, obviously.

A. Dadson: I just want to….

J. Carter-Smith: And families would be able to help with that. If you convened a group of…

A. Dadson: Yes. That's my point.

J. Carter-Smith: …family members, a forum or whatever…. Forums don't work all that well. Give the families some authority to give you advice. We're the best people to do that. So some forum like that, like a task force that's sponsored by government.

A. Dadson: Yes, because there's a lot of financial….

R. Hawes (Chair): We're at the 15 minutes. But your presentation is a very good presentation, and we want to thank you for bringing all of this. I know you have before, but….

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J. Carter-Smith: But this time it's going to be different.

R. Hawes (Chair): I'm saying that we certainly give everything strong consideration.

J. Carter-Smith: Well, I guess what we would say is that we are prepared to help, but our voices are not being…. No one's asking us; we're taking opportunities. We're not just here complaining. We're all here to help if you need us.
[ Page 1926 ]

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

Our next presenter, I'm sure, is going to be similar in some respects — Vancouver Parents for Successful Inclusion, Dawn Steele.

D. Steele: Thank you.

Just to let you know, for disclosure, that I'm also a board member of B.C. FamilyNet. I have a younger one, so I'm speaking today on the special education issue, which is the one we're more directly confronting in another organization that I work with.

The adult community living issues are something that a parent like myself will have to look forward to with great trepidation, particularly the 70 IQ issue. I don't know if you know that we have a petition now that's started, an on-line petition. We now have over 4,000 signatures. We're sort of wondering: how far do we have to go to make this compelling? It's certainly a concern.

Just to comment a little bit on John's question. How can you address this? One of the ways you can do it is entitlement.

If an individual clearly can't function on their own in society without support…. This may be the case for my son when he reaches adulthood. He may be able to hold a job, but he just needs someone who can supervise the banking and…. So if there's some way of assessing and just seeing that those individuals who need some sort of supervision will get that supervision to whatever need is necessary to support their independence — some sort of entitlement that's scaled. It's not that you get everything if you're under 70, and you get nothing if you're over 70. It needs to be scaled to need.

Switching to special education. I know it's been a long day, and you guys have probably looked at a lot more figures than you ever want to see. I really admire and respect your ability to sit through this stuff and to listen to us over and over. I've tried to make this a little bit — to condense it and keep it as brief as possible.

To speak briefly on VPSI — Vancouver Parents for Successful Inclusion. It's an ad hoc volunteer parent group that's been around since the 1990s. We work in Vancouver collaboratively with all the education partners. For example, we are represented on Vancouver school board's special education advisory committee. We do parent advocacy, informal information and support network for parents in Vancouver.

We represent the whole spectrum of disabilities and special needs, and we're not dogmatic about inclusion. A lot of people equate integration and inclusion and think that supporting inclusion means all kids have to be integrated all the time. Our name spells it out. It needs to be successful inclusion; 100 percent integration is not right for every child all the time.

The default is that you assume it's a culture of respect for individuals, and you assume the individual is going to be integrated. If their needs dictate otherwise, then you make your accommodations to suit. Absolutely. We don't want to be dogmatic about integration having to be there whether it works for people or not.

Just to talk a little bit about the provincial context. I am going to go through some numbers just to start with. That first table looks at enrolment. We know we've had enrolment declines in our public schools. If you look at that first column, the head count, total enrolment in the last eight or nine years has gone down quite significantly. In the provincial reporting we know that reports of special education and gifted enrolment are all rolled into one bundle. When you look at that, it has gone down, again, from 66,000 to 57,000.

But when you pull out, as I did, the gifted enrolment, and you look at the fact that that has been cut in half in the last ten years…. Some 10,000 gifted students have disappeared in the last ten years since we stopped identifying and funding them. So when you take out those gifted students, half of whom seem to have disappeared, and you look at special ed students only, you find that the numbers have actually increased in the last eight or nine years.

That's what's in that final column. Excluding gifted, special ed students over the last eight or nine years have gone up — slightly, but they have gone up — which has bucked the overall declining enrolment trend. Basically, what that means is that our incidence rates for special needs students are actually going up.

[1455]

In the meantime, when you look at the funding — and I'm talking about targeted funding for special education in the province — that is down, and it's down quite a bit.

Aside from a few provincial resource programs, as they're called, the bulk of our special education funding is provided via supplemental grants to school districts. Depending on the categories of students, you might get $6,000 or $16,000 or $32,000. My son is autistic, so he guarantees a grant of $16,000 to the Vancouver school board on his behalf.

In 1999-2000 the special education budget for B.C. was $422 million, and that's from the review of special education in B.C., the independent review that was commissioned by the ministry. In 2007-2008 it was down to $284 million, and the reason for this is quite simple. In 2002 we changed the way funding is done, and we eliminated targeted funding for two main categories of students: high-incidence — which are learning disabilities, kids with dyslexia, that sort of thing — and also gifted students. So there was a whole bunch of students for whom targeted special education funding was removed.

At the same time, the minister increased the per-student amount that every student in B.C. gets. So yes, you can say that overall funding has been consistent or has gone up, but targeted special education funding has actually gone
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down. The question is: since districts are free to spend their money how they want, does it matter?

I think it does matter. When you look at autism, which is the category that my son is in, the ministry very kindly expanded that definition from the classic autism to now include autism spectrum. So the number of students identified with autism has tripled from 1,500 to over 4,000 in the last couple of years since we expanded that category.

In the meantime, we eliminated the targeted funding categories for gifted and high-incidence students. As I showed you in that first slide, the number of gifted students has been cut in half. We have had 10,000 gifted kids who have just disappeared off the books.

The number of high-incidence students is actually down by about 2,000, although we know that in general incidence numbers are up. If we look just at the learning disabilities stats, the Learning Disabilities Association of America reports that the estimated incidence of learning disabilities is about one in seven students, which is 15 percent. The percentage of U.S. students currently receiving special education services for learning disabilities is 6 percent. In B.C. we have 3 percent. So we know that we have a lot of unidentified students, particularly with things like learning disabilities and gifted.

I think the lesson there is that what gets funded gets identified, and that we have a lot of unidentified students in our system, in addition to the ones who are formally categorized.

Turning to Vancouver. When you look at the loss of targeted funding, what that translates to is that since 2001, B.C. overall has lost about 15 percent of its special education teachers. In Vancouver we documented that we've lost 26.4 percent of our special education teachers since 2001. That's over a quarter of our special education teachers.

Bill 33 was the class-size and composition legislation, which was trying to address some of these challenges in overly large classes with too many kids with special needs. What that has ended up creating in districts like Vancouver is that you've had to create an extra classroom to meet your class-size requirements. Without extra funding for extra teachers, that meant you really ended up cutting the special education teacher to put her in charge of this extra classroom. So we've actually had more of an erosion of special education teachers since that's been introduced.

What we documented in Vancouver was that despite a growing number of students with special needs, we actually have fewer special education teachers, and the caseloads for special ed teachers have gone up by about 60 percent in Vancouver since about 2001.

Caseloads for resource teachers at the secondary level in Vancouver are 60, 100 and 120 students per teacher. Integrated placements for students with special needs like my son, who has just started secondary school, are now rare. We had to fight tooth and nail for our son to be allowed to attend school in an integrated class, because it meant extra support that just simply wasn't there. Many students are being left behind.

The table below just spells out a little bit more detail. I won't go into it, but that just shows the breakdown of figures that were all obtained from the Vancouver school district and from the Ministry of Education to compile that previously.

[1500]

I just want to say…. You know, this is not a problem that I think any one of us is going to be able to resolve on our own. What we started to do in Vancouver was see what we could do to start tackling this. VPSI did a presentation to our school board last year that resulted in a really quite strong response from our board.

They approved a series of measures in March. That was about six months ago, and that's trying to sort of do our part to start tackling what we can of this problem.

The first one is inviting other Metro districts to join with the Vancouver school board in conducting an independent audit of special education costs and revenues and comparing the various district models. One of the things we might be able to learn from that is that perhaps other districts are spending their money differently and more effectively and that we can learn stuff from each other in that process. But it will also help us target what the discrepancy is between what's being received from the province in special education funding versus what it costs to live up to the needs of the students.

A second one is that we're working with the ministry to develop a learning disability centre in Vancouver, which will provide student support, outreach and teacher training.

Two others are that we're looking to review ways to track and allocate the district special education staffing so that we can stop further erosion of these specialized teachers and at least be aware of it when we're doing it — it was a shock to the district to find out that they'd lost a quarter of their special education teachers, because they weren't tracking it that way — and also to start doing more tracking of outcomes for students with special needs.

Basically, to come to my conclusions, we're trying to start doing what we can in Vancouver to start tackling this crisis that our students are in. The province is helping us in one respect with a small start, with this pilot program for students with learning disabilities. But what we need to do to really make any progress is…. We're going to have to have a significant increase in targeted funding for special education. We can just say that we can increase education funding overall, but what I tried to explain earlier is that if you don't target it, it doesn't get funded.

I was in a meeting with a student who was in crisis, whose parents don't speak English very well and who
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had asked me to come and support them at the meeting with the staff. The vice-principal just looked at them and said: "Look, your son is only entitled to a half-time aide because that's all we get funded from the provincial government. We get $16,000. That's roughly half the cost of an aide, and you're not entitled to anything more."

I had to explain that provincial policy requires that the student's needs be met according to need. There is no entitlement. But the perception that this is what's funded and therefore this is all the school has to provide is very widespread throughout the province.

I just want to say that like most districts, Vancouver is spending about twice as much as we're getting in provincial supplemental grants for special education. And when our kids don't get served, all the kids suffer and confidence in the public schools erodes.

That's basically it. Allan is the student whose family I had to support last week. This is just the start of the school year. This is a kid who is already in crisis because he's not getting enough supports and has been told that he's not entitled to any more supports. That's it.

R. Hawes (Chair): Thank you very much for your presentation.

Questions?

R. Lee: Thank you for the presentation. I believe it's on the fourth slide there, comparing the funding from 1999 to 2007. Do you have the figures in 1999 for the low-incidence supports?

D. Steele: I haven't brought them with me.

R. Lee: I just want to see which component of the $432 million is for low-incidence supports.

D. Steele: Based on the changes in the funding categories, the big decline there would have been the loss of funding for the high-incidence and the gifted students, which were the two categories that were no longer receiving….

R. Lee: It's in the block funding?

[1505]

D. Steele: Technically. You know, we have block funding per student, for every student, and now the argument is that well, we eliminated targeted funding. You now take it out of the block funding.

But it's not there as a targeted fund anymore. The message that we hear, as parents, from the district is that this block funding is to provide the school buses, the principals, the janitors, the teachers, everything else. That's where it goes, and you're only entitled to supports that are in line with the targeted funding that we receive.

R. Lee: That's why I want to compare apples to apples and to see what the $284 million is corresponding to, say, seven years ago.

D. Steele: It's no longer possible to do that.

B. Ralston (Deputy Chair): I just want to understand the recommendation, then, that you're making, because one of the powers that the committee does have, if we can reach consensus on it, is to make a recommendation to the Minister of Finance about budget priorities.

Are you saying that you're happy with the existing categories and that you're calling on...? Your recommendation is to fund the special education part of each district's budget to a greater degree, then. Do I have it right?

D. Steele: Basically, to increase the targeted special education funding that districts receive. One of the ways of doing that is to restore targeted funding for kids with learning disabilities and for gifted kids. Start funding those kids so that schools and teachers aren't telling them that they're not entitled to extra support because they're not funded for extra support.

Restoring targeted funding for those categories would certainly be a huge step forward.

B. Ralston (Deputy Chair): Just, if I may, one follow-up question. Could you help the committee, if not now then in a written submission, just as to what that might cost and what that recommendation might look like?

D. Steele: Sure, yes.

R. Hawes (Chair): I was just curious if I could get a little clarification on that too. Are you suggesting that the current block funding, which does include some of the funding that you're talking about — that the onion be peeled back a little bit and then from the block funding that some of the money becomes targeted? We put the strings back on the budget?

D. Steele: All things being equal, if the overall pool of funding doesn't go up, schools are still going to face the same choices. It's going to be a little harder to say: "Well, I can't take this money away from special education and spend it on fulfilling my class size obligations." It's going to be a little more difficult to do that when that funding is specifically targeted. You need to provide the funding for both.

I'm not suggesting to simply take it out of that pool. If the districts are saying that they need that pooled funding, their basic grant, to meet the basic needs of public education, you then have to provide supplemental funding, additional supplemental funding for special education, to make it all work.
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At the end of the day the overall pot has to increase, but having some of that increase specifically targeted for special education will help make sure that the kids who are getting left behind will not be left behind.

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

We have Students Unions of Vancouver Community College, with Vijaya Krishnan and Tiffany Kalanj.

We have a copy of your presentation, and we will be photocopying it and providing it to each member of the committee. The floor is yours.

V. Krishnan: Good afternoon. My name is Vijaya Krishnan, and I am the chairperson of the Students Unions of Vancouver Community College, locals 73 and 76 of the Canadian Federation of Students. The Students Unions of Vancouver Community College approximately represent 11,000 full- and part-time students.

I'd like to begin by thanking the committee for the opportunity to present today. Our presentation will focus on our students unions' recommendations on how to increase access to post-secondary education. I will also be addressing the issue of the need for increased transit funding earmarked towards creating a standardized youth pass program to all public post-secondary institutions in Metro Vancouver.

[1510]

The primary purpose for our students unions is to advocate for students' rights to obtain a high-quality and a financially accessible post-secondary education. For example, along with the Canadian Federation of Students we campaigned for the elimination of fees for adult basic education …. We were able to report that the elimination of these fees has meant an immediate and dramatic increase in ABE enrolment at our institution.

The numbers don't lie. In January 2007 total enrolment in ABE courses in humanities, math and science was 1,479 full-time-equivalent spaces. In the first semester that ABEs were eliminated, enrolment in these programs jumped to 1992 FTE levels. These numbers represent real students whose lives are improving because they are getting the education they need.

At the same time that an educational door was opened for ABE students, many other VCC students and students across the province suffered from the effects of crushing funding cuts. While the B.C. government was making good-news announcement after good-news announcement about post-secondary education, VCC students were facing the closure of the Alberni campus, the reduction of hundreds of FTE spaces and a projected $5.8 million budget shortfall.

The list of courses that were cut is too long to go over. I'm happy to provide the committee with a full list of programs that were cut and reduced because of the funding cuts.

My remarks today will focus on the need for the government to reinvest in post-secondary education through increased government funding, reduced tuition fees and a new upfront grants program to interest students in pursuing an education. I will also be discussing the need for immediate dedicated funding for the implementation of a fair-priced U-pass for all public post-secondary institutions in the Metro Vancouver area.

A basic post-secondary credential, whether a degree, diploma or certificate, is almost essential in today's economy. According to Human Resources and Social Development Canada, 75 percent of new jobs will require some amount of post-secondary training.

Few would question the benefit to B.C. of providing universal elementary- and secondary-level education to B.C.'s children. Yet even when the research is clear that the most effective way of increasing the province's overall standard of living is by investing in and building a knowledge-based and highly skilled economy, this government continues to limit access to post-secondary education.

Since 2002 we have seen B.C. slip from being the second most affordable jurisdiction in Canada for post-secondary education to the sixth. Tuition fees have more than doubled. Average student debt in B.C. has increased to $27,000 higher than what students face in Alberta and Ontario.

Our recommendations for the 2009 B.C. budget include the following six initiatives: the reduction of tuition fees, reflecting the additional $110 million extra received from the federal government for post-secondary education for this fiscal year; the development of a complementary provincial upfront grants program to the new program announced by the federal government; the reduction of interest rates on B.C. student loans to the government's rate of borrowing; the restoration of per-student funding accounting for inflation to 2001 levels, and the indexation of base annual operating funding to inflation; ensure that universities and colleges have the requisite public funding to meet the government's goal of carbon neutrality by 2010 and do not suffer further funding shortfalls as a result of the new carbon tax; and immediate resolution to TransLink's discriminatory policy of revenue neutrality by providing dedicated funding for the expansion of the universal pass to all public post-secondary institutions in Metro Vancouver.

In the past two years students have been calling for an immediate 10 percent reduction in tuition fees in order to stop the weakening domestic enrolment at B.C.'s post-secondary institutions and to provide much-needed relief to the students struggling to pay the costs of higher education, housing, transportation and other increasing costs of living.

With tuition fee revenue collected by the provincial government at just under $1 billion annually, the approximately $110 million in extra federal funding announced in
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the 2007 federal budget should and can be used towards providing relief to students through a 10 percent reduction in tuition fees without putting any new pressure on the provincial treasury.

Unfortunately, with fees as high as they are, thousands of students will continue to need extra help beyond a 10 percent reduction, which is why our second recommendation is to develop an upfront non-repayable grants program to complement the new federal program and help those students who are most in need achieve their educational goals.

A new grants program for B.C. would ensure that low- and middle-income families have the necessary resources upfront in order to pursue post-secondary education and training. Our third recommendation also relates to student financial assistance and fairness for students from modest backgrounds.

[1515]

Members should be aware that following graduation student loan borrowers pay interest on their public student loans substantially above the government's cost of borrowing. Fundamentally, the reduction of interest rates is an issue of fairness. Low- and middle-income students should not be expected to pay more for their education than those who can afford to pay it upfront. Our recommendation is that the government immediately reduce interest rates to the government's rate of borrowing and then eliminate them to ensure that those who can least afford an education no longer have to pay the most for their education.

Our fourth recommendation is to see a reinvestment of operating funding to our universities and colleges. The reality was that before the cut, colleges were budgeting significant deficits for years to come. While the government has publicly touted increases as high as 40 percent in post-secondary education funding, the reality is actually a decline. In 2001, accounting for inflation, per-student operating funding to universities and colleges has declined from $8,786 to $7,736.

Included in this recommendation is also ensuring that post-secondary education institutions have the necessary funding to meet the government's goal of becoming carbon-neutral by 2010. We are concerned that without adequate funding universities and colleges will download the additional costs and retrofitting and other green measures onto those that can least afford them, the students.

We would like to express a concern with any impact that carbon tax may have on the resources of universities and colleges. We do not believe the loss of badly needed resources in the post-secondary education system is an appropriate means of achieving sustainability objectives. Universities and colleges should be funded for substantial upgrades and offset any additional emissions due to the research and teaching that are developing more sustainable industries and communities.

Our sixth and final recommendation is related to the increasingly high-profile issue of universal transit passes, or U-pass, for public post-secondary students. We would like to first congratulate the B.C. government on its ambitious climate change action plan that aims to double transit ridership by increasing travel choice for people. We share the government's hope that students will become lifetime transit riders and thus play an active role in helping to reduce greenhouse gas production now and in the future.

Our members participate in the Canadian Federation of Students We Ride campaign, which has now collected signatures of over 15,000 students calling for action on high quality, affordable public transit. This clearly demonstrates an ardent student support for government's transit goals. Unfortunately, TransLink is actively undermining our ability to achieve these goals by pushing a large contingent of students out of the transit system.

Currently, our members pay $73 a month or more, depending on which zone they live in, for access to TransLink services, while their counterparts in other institutions pay between $23.75 at UBC and $38 at Langara College. The dramatic disparity in transit access among students is exclusively due to TransLink's refusal to expand the U-pass program in an equitable fashion in the name of so-called revenue neutrality. In this we believe TransLink follows a misguided model that undermines not only its role as an essential public service but also the provincial government's goal as it is set out in the transit plan.

If British Columbia is needed to be a global leader in providing safe, comfortable, reliable services that will highlight green technologies, TransLink, as a publicly funded entity, must provide equitable access to its services. We are asking the B.C. government to intervene to impel TransLink to implement a standard U-pass for all students in Metro Vancouver and, moreover, substantiate its own stated commitment to its cause by assisting in the funding of the U-pass program.

To summarize, students are seeking a 10 percent reduction in tuition fees, an investment supported by over 80 percent of British Columbians. We are seeking an upfront grants program that will complement the new federal grant program. We are seeking the reduction of interest on student loans to the government rate of borrowing and then the elimination of that interest.

We are seeking to have per-student funding return to 2001 levels and indexed to a minimum inflationary increase annually. We are seeking immediate resolution to TransLink's discriminatory policy of revenue neutrality by providing dedicated funding for the expansion of the universal transit pass to all public post-secondary students in Metro Vancouver.

I'd like to thank you for this opportunity, and I look forward to any questions you have.

[1520]
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B. Ralston (Deputy Chair): I just wanted to ask you for a little bit more detail on the universal transit pass. When I was on the board of Vancity, we initiated that as a partnership with TransLink, and I believe it led to the single biggest annual increase in transit ridership in any system in North America. It was very effective in drawing new riders to the transit system.

I'm concerned by what you say — that TransLink is not prepared to advance this goal, given what the government has said about its sustainability objective. What's the stumbling block there?

V. Krishnan: They are refusing to negotiate with us.

T. Kalanj: I can add some background. My name is Tiffany Kalanj. I'm a staff person for the students union.

TransLink currently has a policy of revenue neutrality, which means any revenue that they generate prior to the implementation of a U-pass has to be protected under this policy. That means that because VCC has a ridership of approximately 60 percent, which is TransLink's own survey number, and Emily Carr has a ridership of over 75 percent, they generate quite a bit of revenue, which means that a U-pass at a rate that, say, UBC pays would constitute a loss in revenue.

So what you have are students from the most modest backgrounds who are high transit users being punished for being high transit users and being excluded from the program. Conversely, say, at Kwantlen University College students are being offered an $18-a-month U-pass, which they are rejecting because of the lack of infrastructure.

You have a system that's been poorly planned based on short-term revenue numbers instead of looking at the broad picture of students who want to be on transit, students who would benefit from it and, frankly, a system which is already highly integrated — students who are already friends, neighbours of students at Langara College, at UBC, who are getting up in the morning and travelling on the same bus as their friends but paying double or triple the price by virtue of being a community college student or being from a small institution.

R. Hawes (Chair): Any other…?

I think your presentation is pretty clear and, other than the U-pass, not unlike some of the other presentations we've heard. We appreciate the time you've taken to present it, and it will all be considered as we get to our recommendations. Thanks very much.

Next we have Dr. Stephen Drance. Welcome, Dr. Drance.

S. Drance: Thank you for seeing me. I have been lucky to live in British Columbia for the past 46 years. My credentials for seeking an opportunity to address you are that I was responsible for creating the Eye Care Centre for UBC and VGH in 1982. I also served on the board of the Vancouver Art Gallery, was president of the Vancouver Chamber Choir board of directors and currently serve on the board of Vancouver's early music society. In the year 2000 I was the founder and main fundraiser for Festival Vancouver, now in its ninth year.

I am not here to represent any of these organizations but to tell you the wonderful story of the renaissance fund set up by the government of British Columbia to match new private moneys raised by the arts organizations for their endowments. The fund's original $25 million was made available in 2004, to be administered by the Vancouver Foundation. As the moneys will be completely spent by the end of 2008, I would like to tell you of its accomplishments.

Firstly, let me acquaint you with the sad reality that ticket revenue only represents 25 percent to 35 percent of the budgets of most arts organizations in British Columbia. That is the norm for most western countries. The well-known Barbican in London, England, which is the home of the London Symphony Orchestra, currently receives approximately 30 percent of its budget from ticket sales, while the Wigmore Hall, which is fully sold out most of the year, has a similar figure. There are exceptions to this rule, but I think that is the norm.

[1525]

Let me also remind you that the smaller arts organizations in British Columbia have recurring difficulties with their budgeting due to fluctuation and uncertainty of their tight incomes. The creation of endowments makes their survival less hazardous and allows them to plan more effectively for the communities in which they serve.

When the renaissance fund was established, Dr. Don Rix and I met with Colin Hansen, in his first term as Minister of Finance, to make sure that there was an annual upper limit on the amount to be matched for any organization. Otherwise, the eight to ten large organizations in Vancouver and Victoria would have depleted the fund in pretty short order.

The government had the wisdom and the foresight of doing precisely that. Whether this was due to our advice or not, I have no way of telling.

You have a sheet of information, I think, that I have left for you, but I want to tell you that up to the present moment $22 million of the $25 million has provided 209 matching grants to 29 communities in British Columbia. This has added $60 million to the infrastructure in endowments.

Why $60 million as opposed to $50 million is that there is a matching fund from the federal government, Department of Heritage, which also matched some of those new-found moneys so that the $25 million became $60 million. In normal times this should provide $3 million annually in perpetuity to the arts of the province.
[ Page 1932 ]
We don't live in normal times, but that would have been the normal expectation.

I want, however, to draw your attention to the fact that 50 arts organizations in 27 communities outside the cities of Vancouver and Victoria received 75, or 36 percent, of the 209 matching grants, to the tune of $5.9 million. There were also 49 matching awards to small organizations in Vancouver and Victoria worth $1.3 million.

The total amount awarded in the heartlands of British Columbia and to the smaller organizations in Vancouver and Victoria was $7.2 million, so 33 percent of the entire fund went to these smaller organizations and not just to the big ones.

The $2.7 million of interest on the money the government made available for the renaissance fund has also been used to create the MEDICI fund, which has resulted in 36 organizations being able to hire individuals to help set up their fundraising and audience development, another very forward-looking initiative.

Let me conclude by reiterating that the renaissance fund set up by the government to match new moneys to the endowments for arts has resulted in $60 million for new infrastructure for the arts in British Columbia, which is a tremendous accomplishment and a wonderful success story. That success story is not well known in the province. It seems to be a secret known to a few insiders. I'm hoping to make this widely available to the media and to the MLAs, because it is a wonderful success story.

I was informed that the B.C. Arts Council will not use any of its existing and new funds for matching of new endowments. The government would be prudent to invest a similar amount for the next four or five years to keep this very successful fundraising opportunity alive to benefit our citizens and their communities in perpetuity.

I'm grateful to you for the time that you have allowed me to speak.

R. Hawes (Chair): Dr. Drance, I'd just like to assure you that your wisdom, and the wisdom of Dr. Rix, is really one of the main reasons for the success of this program.

[1530]

B. Ralston (Deputy Chair): I don't want, really, to say too much. I've heard of you, of course, and I've been very impressed by your philanthropy and your vision, particularly in creating the Vancouver festival and your dedication to the arts and the cultural life of the province. I think every citizen in British Columbia owes you a debt of gratitude. I'm sure that's not what you came here to hear, but I think it should be said, nonetheless, on an occasion like this.

S. Drance: Let me assure you that my volunteering is because it is a passion. I get as much satisfaction not from hearing but from experiencing, and I'm most grateful to you for what you have said.

R. Hawes (Chair): I think that the request that goes with your information is that the fund be renewed.

S. Drance: Yes, basically, that is what I would propose. It is a relatively small investment, and it has really produced wonderfully well the first time around.

I have been in the fundraising business since the Eye Care Centre in 1982, and I can assure you that matching funds is one of the keys to opening philanthropic pockets.

R. Hawes (Chair): Well, thank you very much for your presentation. It was very well received.

S. Drance: Thank you for hearing me.

R. Hawes (Chair): We've now come to the open-mike portion of the meeting. We have one presenter so far, and that would be Donald MacKenzie from the ARA Mental Health Action Research and Advocacy Association of Greater Vancouver. Good afternoon.

D. MacKenzie: Yes, good afternoon. My baptismal name, as you say, is Donald MacKenzie. My Indian name is Umpas Hadanee, father of sablefish. My tribe is Raven, Ganhada, expressing appreciation for the privilege of gathering in traditional territories.

I am the board president of what we commonly call ARA, which is a consumer-driven mental health advocacy entity. I also serve within two other boards as well. I am vice-chair of the executive committee of the board of First United Church Social Housing Society. I'm also vice-chair of the executive committee of the board of Fin Donnelly's rivershed organization

I wanted to touch lightly — relevantly, I hope — on those three involvements and perhaps briefly on one or two other matters as well.

With regard to the ARA entity, I have sort of a note that I jotted down here under the heading of "Honest Statistics" re concurrent diagnosis. I say here: "Persons presenting with combinations of mental health and addictions issues tend to soak up treble, quadruple, quintuple the helping resources of others singly presenting. Such persons constitute many, if not most, of those served by ARA."

I feel that it's unfortunate from the perspective of the entity and not in the best interests of the funder, the province, that it seems we are required to disguise the reality of our workload. So I would like to recommend — with regard to this particular entity and other such entities, when the truth is that the workload is much more heavy and demanding and complex than the sta-
[ Page 1933 ]
tistical protocol permits to be conveyed — that there be greater honesty. I honestly feel that it would be in the best interests of both sides of the equation.

[1535]

With regard to First United Church Social Housing Society, again I have a note here, which says: "Adequate supported housing initiatives for existing entities, as well as contemplated for new initiatives…. If non-clinical supports are provided, but clinical supports are lacking, the venture may still fail."

The last part of the note I have here is: "Decades of indefensible neglect will take many years to compensate for."

But we're happy, of course, that protocols have been worked out, for example, between the city of Vancouver and the province. The province, I believe, has made it clear: they fully intend that within these supported-housing initiatives there will be at least an intention to provide adequate non-clinical supports.

Using First United Church Social Housing Society as an example, we came into existence actually under Rev. John Cashore back in the early 1980s. So we've existed for more than a quarter of a century. We have three locations, and we're in dire need of having arrangements in place for non-clinical supports for our residents. It's seen as justified in terms of these new projects. I think it logically follows that it's just as justified for projects that presently exist.

With regard to the third entity, within the board of which I have the privilege of serving, Fin Donnelly's rivershed organization…. Just so that it's clear in your individual minds and corporate mind, Fin, who is presently a city councillor with Coquitlam, swam the Fraser River twice back in 1995 and 2000. The year following the first swim, 1996, my friend Shawn Atleo, who's now the regional chief for British Columbia for the Assembly of First Nations, and who also, as some of you may know, as of last Thursday became the chancellor of the university in Nanaimo, actually helped Fin get rivershed going and served on the board for a while.

We have various initiatives. One we refer to as SLLP, sustainable living leadership program. Each summer for three or four weeks in the month of August, young people spend those weeks coming down the Fraser River main stem. Some of them are aboriginal; some of them are not.

I just want to briefly convey to you a story that Fin told me on the telephone the other day about a young aboriginal woman who took part in the event, in the SLLP iteration, that particular year, a few years ago. She realized at the time that it was very important to her but has communicated just in the past number of weeks or months that a few years later she's realizing at a much deeper and more profound level what a truly life-changing experience it was. She's expressing this realization in terms of proactive initiatives within her own aboriginal community.

I offer that particular story as a specific illustration of a generic reality. Many times we realize that something good is happening and people realize that at the time, and then later sometimes it's sort of an exponentially enhanced realization about some of the benefits that accrue.

R. Hawes (Chair): This session is for five-minute presentations, and you've now reached six.

D. MacKenzie: Okay. Sorry. I didn't realize that I was allotted one-third of the others. Thank you very much.

R. Hawes (Chair): You're welcome, and thank you for your presentation.

With no further presentations that I can see at the moment, we will adjourn this hearing.

We will be reconvening tomorrow in Cranbrook, so any of you that make your way to Cranbrook, we'll see you there. Other than that, we will be on line tomorrow morning in Cranbrook.

The hearing is adjourned for today.

The committee adjourned at 3:40 p.m.

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